The Supreme Court has dismissed an appeal by former directors of insolvent Verit Hotel & Leisure (Ireland) Limited who sought to have company-law restriction proceedings struck out because of delay.
The case arose from an application by liquidator Vincent Duignan under section 150 of the Companies Act 1990. That provision required the court, unless satisfied that a director had acted honestly and responsibly and that restriction would otherwise be unjust, to restrict involvement in company management for five years subject to specified capital requirements.
Verit Hotel & Leisure was ordered to be wound up in August 1994. The liquidator began restriction proceedings later that year. Those proceedings were then delayed while the directors mounted a constitutional challenge and while separate litigation brought by the liquidator over the management of the company was pursued.
The damages proceedings were eventually settled on terms including payment of £500,000 and costs to the liquidator. The restriction application was re-entered in March 2000.
The directors argued that the subsequent delay should prevent the application from continuing. The High Court accepted that a period of delay after the other litigation concluded was both inordinate and inexcusable, but refused to dismiss the case because the overall balance of justice did not favour doing so.
Mr Justice Fennelly, delivering the Supreme Court judgment, agreed. He said the directors had a constitutional right to a fair and reasonably prompt determination, but had themselves taken no steps during the relevant period to ask whether the restriction application remained live.
The court also rejected claims of general prejudice. No specific evidence was produced showing that faded memories, lost evidence or reputational damage would prevent a fair hearing. The directors had been aware of the restriction proceedings from an early stage and had spent years litigating related issues with the liquidator.
The appeal was dismissed, allowing the section 150 application to proceed.