The High Court has declared Patricia Courtney restricted from acting as a company director after finding that private purchases made with a company credit card showed a lack of responsibility. The court did not make a restriction declaration against her husband, Gerard Courtney, in the application brought by the liquidator of Zuccini Café and Restaurant Limited.
Mr Justice Barrett delivered the judgment on 25 July 2014. The application was made under section 150 of the Companies Act 1990, which required the court to consider whether each respondent had acted honestly and responsibly, and whether any other reason made an order just and equitable.
Zuccini operated a restaurant at Blackrock Shopping Centre in County Dublin. It was incorporated in 1999, stopped trading in July 2008 and entered liquidation in May 2009. The judgment identified an under-declaration of tax found in a Revenue audit and falling turnover following the opening and success of a rival shopping centre in Dundrum as factors in the company’s collapse.
The liquidator cited six possible grounds for restriction: unpaid tax, inadequate company records, gaps in documents relating to a lease assignment and company assets, repayments of loans to the directors, non-business purchases on a company credit card, and some lack of cooperation with the liquidation. His affidavit also described mitigating circumstances, including the strain of the company’s difficulties and his view that better records would probably not have increased returns to creditors.
The judge said the evidence did not show that the tax underpayment was deliberate. He considered the record-keeping failures unwise and reproachable, but not dishonest or irresponsible in the circumstances, relying in particular on the liquidator’s assessment of their effect on creditor recoveries. The court also found that the loan repayments and gaps in assignment documentation did not establish grounds for restriction. It described the respondents’ shortcomings in cooperation as reproachable but not irresponsible.
The court reached a different conclusion about Ms Courtney’s use of the company credit card for non-business purchases. No explanation had been offered for the purchases, and the judge concluded that they showed at least a want of responsibility in her role as director. He said it did not appear that Mr Courtney had been involved in that use of the card.
Ms Courtney had argued that she was a passive director appointed to meet the two-director requirement. The court did not decide whether that argument could succeed in another case; it held that it could not assist her here because of her involvement through the credit-card purchases.
The court was not satisfied that a section 150 declaration was required against Mr Courtney. It declared Ms Courtney restricted on the terms provided for by section 150. The judgment does not specify a duration or further terms beyond that reference.