The High Court dismissed the Director of Corporate Enforcement’s application to disqualify Patrick McGowan and Patricia McGowan from company management, finding their conduct irresponsible but short of the threshold for disqualification.
Miss Justice Laffoy delivered the judgment on 24 February 2005 in proceedings concerning Wood Products (Longford) Limited. The Director had sought orders under section 160(2)(d) and/or (f) of the Companies Act 1990, as amended. The court made no disqualification order against either respondent and dismissed the application.
The company was struck off the register in June 1999 after failing to file annual returns and was dissolved the following month. It was restored by court order in May 2001, which required the respondents to file outstanding company returns and tax returns within three months. Those filings remained outstanding when the Director began these proceedings in November 2003.
The Revenue Commissioners had obtained two judgments against the company, for €33,525.41 plus €589 costs and €246,287.63. Neither had been paid when the disqualification proceedings began. The judgment debt was secured against company property in County Longford. The judgment records that more than €400,000 in tax liabilities was due at the end of 2003, with further liabilities having accrued.
The first respondent acknowledged failures to file returns and comply with the earlier court order. He said the company had faced difficulty collecting money owed for subcontracting work and was in a healthy financial position by the end of 2003. He also cited the second respondent’s depressive illness and his own resulting stress and anxiety.
After the application began, the company filed the outstanding annual returns and accounts, and the tax returns were submitted. The second respondent resigned as a director from 27 February 2004, and accountant Vincent Fox was appointed in her place. The company continued trading and had 12 employees. Evidence before the court included a possible bank loan to address the tax liabilities, subject to the lender’s conditions.
The judge found that 13 consecutive years of annual returns had been missed and that the respondents had failed to comply with the 2001 court order. However, she was not satisfied that the Director had proved “persistent default” under section 160(2)(f): in her view, that required more than prolonged default and had not been established on the evidence.
On section 160(2)(d), the judge condemned the failure to pay tax liabilities and described the respondents’ conduct as irresponsible. She found it came close to, but did not reach, the lack of commercial probity threshold for disqualification. She was satisfied a disqualification order was not necessary to protect the public. The court also declined to make restriction declarations under section 150 against either respondent, taking account of the company’s solvency and trading position, the first respondent’s role in its continued operation, and evidence about the second respondent’s health.