The High Court has made orders under section 150 of the Companies Act 1990 restricting Michael Rochford and David Rochford from acting as company directors, after finding they failed to manage the finances of MDN Rochford Construction Ltd responsibly.
In a judgment delivered on 18 August 2009, Mr Justice MacMenamin said the directors had not shown that they acted responsibly while the company was trading at a loss and accumulating unpaid tax liabilities. The court said the company’s collapse was attributable to the directors. It also stressed that the restriction was proportionate to the wrongdoing and noted there was no case that either director acted dishonestly.
The company entered liquidation in January 2008, when the directors’ estimated statement of affairs recorded a shortfall of €351,343. The liquidator reported that the company had incurred average monthly trading losses of about €26,281 in the preceding year, on average monthly turnover of about €52,887. The company also owed the Revenue Commissioners about €98,389 in VAT, PAYE/PRSI and corporation tax, liabilities not reflected in its trading figures.
The directors said they did not understand the extent of the financial problems until new accountants presented management accounts in late 2007. Michael Rochford’s affidavit blamed difficulties with the former accountants and delays in payment by Dublin City Council. He said the directors believed the company could recover, and pointed to loans they had made and personal guarantees they had given. The court noted that the council’s contracts were with a related company, Rochford Bathroom and Tiling Ltd, rather than the company in liquidation.
The judge found that the directors had failed to keep themselves informed about the company’s financial position. The available records did not show regular management accounts or a continuing assessment of profitability. The court also considered that the directors should have known about unpaid Revenue liabilities and the absence of a valid C2 certificate for the company. Responsibility for tax compliance could not be entirely delegated to accountants, the judge said.
The judgment states that orders should be made under section 150, but does not specify in the text the length or detailed terms of the restrictions imposed. It says either director may apply for relief under section 152 within one year of a declaration, subject to the court being satisfied that relief would be just and equitable. The judge cautioned that this was not a guarantee of the outcome of any future application.