The High Court has dismissed a shareholder’s motion seeking an order that receivers lease him agricultural land in Powerstown, Co Carlow, ruling that it lacked jurisdiction to compel them to grant the lease.
Mr Justice Twomey delivered judgment on 13 May 2022 after the court directed that the jurisdiction question be heard as a preliminary issue. The motion, dated 29 March 2022, sought a 10-year agricultural lease over about 110 acres from Allied Irish Bank plc and the receivers of Dan Morrissey (Irl) Ltd.
Philip Morrissey, a shareholder in the company, offered to rent the land for €200 per acre. He alleged that the receivers were mismanaging it, including by failing to follow proper crop rotation. The judgment says he relied on section 438 of the Companies Act 2014. For the preliminary issue, the receivers did not contest that he qualified as a person entitled to apply under that section. They disputed that it empowered the court to order the lease.
The judge held that section 438’s power to give directions or make orders “as the court thinks just” did not allow the court to override the established rights of secured lenders and receivers. Even if the alleged mismanagement were established, the court could not use the section to select Mr Morrissey to farm the land and require the receivers to lease it to him.
Mr Morrissey also relied on sections 16 and 27 of the Supreme Court of Judicature (Ireland) Act 1877 and 1870, respectively, arguing that he had an equitable interest in the company’s land because he claimed to own directly and indirectly one-third of its shares. The judge rejected that argument, explaining that company property belongs to the company as a separate legal person, not its shareholders. He also found those provisions did not give the court power to compel the lease. A text on receivers cited by Mr Morrissey concerned court-appointed receivers, whereas these receivers had been appointed under a deed.
The court dismissed the motion on jurisdictional grounds. It did not decide whether the land had been mismanaged or whether the proposed rent was reasonable. The parties were directed to engage over outstanding matters and provide any agreed draft court order to the Registrar. The case was provisionally listed for mention one week after judgment, at 10.45am, if needed to deal with final orders.