The Court of Appeal dismissed an appeal by Tucon Process Installations Limited, in voluntary liquidation, over three payments credited to its overdrawn Bank of Ireland account shortly before its liquidation began. The court held that the company itself lacked standing to bring the application under section 139 of the Companies Act 1990. It also dismissed the company’s appeal on the merits, finding no basis to treat the ordinary-course payments as fraudulent dispositions under that section.
The company operated a current account at the bank’s O’Connell Street branch in Limerick. Its board resolved on 20 April 2012 to place it in voluntary liquidation, and a creditors’ meeting was advertised for 4 May. The bank knew by 23 April that liquidation was intended. At the meeting on 4 May, the winding-up resolution was passed and Anthony Fitzpatrick was appointed liquidator.
Three electronic transfers from the company’s debtors were credited to the account between 25 and 30 April: €1,947, €3,769 and €18,178.50. The judgment says they reduced the overdraft from €40,400 to about €16,000. The liquidator considered the money company property and argued that the bank’s retention of it preferred the bank over other creditors.
The liquidator first brought an equity civil bill in his own capacity, seeking recovery of €23,894.50, but discontinued it because proceedings brought by a voluntary liquidator in the company’s name and on its behalf had to be brought in the High Court. The company then brought the proceedings under sections 139 and 280. The High Court dismissed the application, and the company appealed.
On standing, the Court of Appeal agreed that section 139 allows an application by a liquidator, creditor or contributory, not by the company. It held that the liquidator’s general power to bring proceedings in the company’s name did not give the company standing to pursue this statutory remedy. The court also declined to declare that the liquidator could bring the application in the company’s name.
The court then considered the merits because they had been fully argued. It rejected the company’s argument that reducing the assets available to creditors, by itself, made the transfers fraudulent under section 139. The court said the section addresses improper diversion of company property and distinguished that from ordinary payments to a creditor to whom money is due. It found that neither the company nor the bank had been involved in the transfers, which were received in the ordinary course of business. Notice of the intended liquidation did not change that conclusion.
The court dismissed the second ground of appeal as well. It did not order repayment of the transfers. Its decision addressed the company’s statutory application and did not determine a separate application by the liquidator in his own name.