The High Court has upheld the appointment of joint receivers and managers over the assets and undertaking of Diorama Limited, refusing an application by company directors and shareholders Patrick and Mary Jennings to discharge them.
The application was brought under section 316 of the Companies Act 1963. The Jennings argued that the appointment was invalid because the company was not in arrears, or that any arrears resulted from wrongful actions by Bank of Scotland plc. They also argued that the appointment was defective. Their counsel described the challenge as technical, the judgment said.
The court found that Diorama was in arrears when the receivers were appointed. On 16 December 2010, arrears on three loans totalled €883,436.47, and the company made no instalment payments under the loan agreements between December 2010 and May 2012. The judge said correspondence from the bank had regularly drawn the company’s attention to the arrears. He concluded the bank was prima facie entitled to appoint receivers under a 2005 debenture.
The applicants also objected to money being taken from accounts held by Harlequin Hotels Limited and Harlequin Developments Limited and set off against Diorama’s Loan 107. The judge found the bank was entitled to do so under the loan and general terms and conditions. He rejected the claim that the bank’s actions had caused the arrears.
A further challenge concerned the form and execution of the appointment. The bank was registered in Scotland, so the court considered Scottish law on the authority of the person who made the appointment. After considering evidence from two Scottish lawyers, including cross-examination of one, the judge accepted that Alexander Wolfe Murray Bruce was authorised to appoint the receivers.
Bruce signed a six-page appointment document in Scotland on 25 May 2012 and emailed copies to the receivers. They signed pages and returned them; the original was later sent to Ireland, where they signed it, backdated to 25 May. The applicants relied on an English case involving signature pages transferred from draft documents to final versions. The judge distinguished that case, finding the receivers’ signatures here confirmed their acceptance and that their actions on 25 May were sufficient for that purpose.
The judge held that the appointment was valid and refused the application to discharge the receivers. The ruling decided the validity of the appointment on the application before the court.