The High Court refused a request by Terence and Ann Horgan for directions requiring the liquidator of Sutton Castle Developments Limited to conduct further investigations into financial support given to the company and its withdrawal before the company was wound up.
Mr Justice Tony O’Connor delivered the judgment on 13 November 2019. The application was brought under section 631 of the Companies Act 2014. The judge said the Horgans had not shown that the liquidator acted “utterly unreasonably”, the threshold they needed to meet for the court to direct further investigation and analysis.
The Horgans bought an apartment from the company in 2006. The company sold the apartment above theirs in 2007, leading to what the judgment describes as noise pollution and inconvenience. An arbitration resulted in an award dated 16 October 2015. The Horgans then served a statutory demand for €100,987, plus costs, and a winding-up petition followed.
A creditors’ meeting appointed James Butler as liquidator on 25 January 2016. The Horgans’ solicitor later sought information from the Office of the Director of Corporate Enforcement, including the liquidator’s report, without success. The applicants described the circumstances around the liquidation decision as suspicious. Those were their characterisations, not findings by the court.
Their concerns included MKN Investments’ withdrawal of financial support, the timing of the creditors’ meeting, unanswered questions and the liquidator’s account of an ODCE decision concerning whether to seek restriction declarations against the company’s directors. The judgment records that the 2013 financial statements showed continued support from MKN and disclosed an inter-company loan exceeding €9 million.
The liquidator said the Horgans had received a dividend of €111,882 from a total distribution of €6 million and might receive a further dividend from remaining property proceeds. He also said the parent company had given no written guarantee of the subsidiary’s liabilities and that pursuing it for those debts was outside his remit. These statements were evidence and submissions before the court.
The court was not deciding whether to appoint or replace the liquidator. It considered whether to direct him to investigate MKN and Sean McKeon’s support for the company and the withdrawal of that support. The judge found the evidence before him, contained in three affidavits sworn by the Horgans’ solicitor, insufficient to justify that direction. He said there was no evidence or suggestion that the liquidator had acted unprofessionally, without integrity or irresponsibly. The application for further investigation and analysis was refused.