The High Court has dismissed a liquidator’s application for leave to disclaim two properties owned by Ballymitty Supplies Stores Ltd., ruling that neither was burdened with onerous covenants within the meaning of section 290(1) of the Companies Act 1963.
Ms Justice Laffoy delivered the judgment on 9 December 2011. Philip Tubritt, the company’s voluntary liquidator, had sought leave to disclaim the properties during its creditors’ voluntary winding up. The application followed an attempted disclaimer in August 2011 and was served on Bank of Ireland, Wexford County Council and three adjoining owners. None appeared at the hearing.
One property was a secure yard with sheds on registered land in County Wexford. The other was unregistered land across a tertiary road, containing a former convenience store, hardware shop and post office, later described as a retail and storage premises. Bank of Ireland held a registered charge over the first property and an equitable mortgage over the second.
The liquidator cited debts to the council exceeding €31,000 for planning conditions, commercial rates and water rates, as well as maintenance and insurance costs. More than €183,000 was due to the bank under its security in September 2010. A May 2011 valuation put the properties’ estimated market value at €180,000.
The liquidator also described difficulties selling the properties. A civil engineer’s report obtained by prospective purchasers identified planning problems, particularly with the septic tank system and percolation area. The liquidator raised concern about access to the yard through a laneway relying on consents from five adjoining landowners.
The judgment found that the company acquired both properties without covenants. A 2006 easement deed provided shared rights and obligations relating to the septic tank, percolation area and connecting pipes. The judge considered the company’s obligation to contribute one third of maintenance costs proportionate to the benefit it received.
The court held that rates, maintenance and insurance liabilities did not make the land disclaimable under section 290(1). It also concluded that the statutory category for other unsaleable or not readily saleable property did not cover land in these circumstances. The two authorities cited by the applicant concerned land burdened by covenants and did not assist his case.
The judge concluded the court lacked jurisdiction to grant leave to disclaim. The properties therefore remained vested in the liquidator until dissolution; the judgment said they would then vest in the Minister for Public Expenditure and Reform under the State Property Act 1954. The application was dismissed. The court’s comments about the bank’s securities and the directors’ potential subrogation rights were observations; it did not need to decide their effect because the properties did not qualify for disclaimer.