The High Court has ordered Mark Devey and Jacinta Devey to pay €1,234,508.99 to the liquidator of Devey Enterprises Limited, finding that company funds had been used to pay them or discharge their personal liabilities, with the effect of defrauding the company and its creditors.
The order was made under section 139 of the Companies Act 1990. The court found it just and equitable for the respondents to repay an equivalent sum to the liquidator on behalf of the company, which is in voluntary liquidation.
The case was heard on oral evidence on 14 May 2010 after the respondents did not attend or have representation at the hearing. The judge said they had been informed of the hearing and its nature. The liquidator gave evidence by reference to affidavits already filed. In his earlier affidavit, Mark Devey disputed the liquidator’s claim and sought a plenary hearing.
The liquidator’s review of the company’s records led him to assess the respondents’ liability at €1,241,677.99. After accepting that four items totalling €7,169 were genuine company expenses, he assessed the balance at €1,234,508.99. The first respondent had claimed credit for €2,043,322 in payments and transfers to the company; the liquidator said the lodgements he examined represented money due to the company for work it had carried out. The judge accepted the liquidator’s evidence and analysis.
The court rejected the claim that the payments amounted to fraudulent preferences under section 286 of the Companies Act 1963. It said the liquidator’s case was that the respondents had no entitlement to the money, rather than that they were creditors preferred over others while the company was insolvent. The court considered that section inapplicable to the claim as presented.
A separate schedule for the fraudulent disposition claim listed payments of €1,987,005.10, but the judge said that total appeared incorrect and should be in the region of €1.069 million. The judgment did not use that schedule figure for the repayment order. It relied instead on the reconciled directors’ account balance of €1,234,508.99.
The company ceased trading around 30 July 2007 and entered creditors’ voluntary liquidation on 10 October 2007, when its reported deficit was €1,971,857.54. The judgment also recorded that the respondents had previously been disqualified from acting as company directors for six years in separate proceedings.