The High Court has ruled that the official liquidator of Tipperary Fresh Foods Ltd can seek recovery of investigation costs under company legislation introduced after the company's liquidation began.
William O'Riordan was appointed official liquidator of the company by the High Court on March 26th, 2001. He later brought proceedings under section 150 of the Companies Act 1990 seeking restriction declarations against Joseph Coleman O'Connor, Joseph Peter O'Connor and Donal O'Connor.
The first and third respondents did not oppose the application and restriction declarations were made against them in October 2004. The liquidator then sought both the legal costs of the restriction application and the costs incurred in investigating the directors' conduct.
The dispute concerned section 150(4B), inserted by the Company Law Enforcement Act 2001 and brought into force in March 2002. That provision allows a court, when making a restriction declaration, to order directors to bear both the costs of the application and investigation costs.
The respondents argued that applying the provision to a liquidation which had begun in March 2001 would give the legislation an impermissible retrospective effect.
Ms Justice Finlay Geoghegan agreed that the investigation-cost provision was retrospective in substance. When the liquidation began, directors exposed to section 150 proceedings could face restriction and ordinary legal costs, but there was no power to make them pay the liquidator's investigation costs. The later provision therefore created a new potential financial obligation linked to earlier conduct.
However, the judge held that the legislation nevertheless applied. Reading section 41 of the 2001 Act together with the new enforcement regime, including the liquidator's reporting and application duties under section 56, she found that the Oireachtas had clearly and unequivocally intended section 150(4B) to apply to relevant applications even where the liquidation itself pre-dated its commencement.
The ruling therefore established that the liquidator could invoke the provision in the Tipperary Fresh Foods liquidation. It did not in this judgment quantify the investigation costs or make a final assessment of the amount payable.