The High Court ordered directors of Fintra Trawling Company Limited to repay money to the company after finding that a costs liability had not been disclosed during its voluntary liquidation.
In a judgment delivered on 18 July 2016, Mr Justice White considered an application by the Minister for Agriculture, Fisheries and Food, Ireland and the Attorney General under the Companies Act 2014. The company had been voluntarily liquidated. The court had previously declared its dissolution void, on 14 March 2016, while leaving other reliefs for later consideration.
The applicants had obtained a costs order against the company in 2011 in proceedings identified as [2010 No. 472 P.]. The company appealed, but there was no stay of the costs order. The judgment says a summons to tax the costs was served in February 2013, before the company entered members’ voluntary liquidation later that year.
The board approved a declaration of solvency on 10 October 2013, and a liquidator was appointed in December. The judgment says directors Kevin Boyle, Lee Mooney and Celine Mooney did not tell the liquidator about the costs due to the applicants. It also records that the company’s solicitors certified there were no outstanding claims or litigation.
The costs were later taxed at €31,594, and a certificate was issued on 26 March 2015. The judge held that a High Court costs order is an actual liability, even if its amount has not yet been assessed through taxation. He said section 210 applied where debts were not paid or provided for in full within 12 months of winding up, giving rise to a presumption that the directors lacked reasonable grounds for the solvency opinion.
The court considered repayment appropriate and ordered that directors who had received money repay it to the company. The judgment does not specify the amount to be repaid. It says credit must be allowed for costs that would have been due to the company under a separate 19 December 2011 costs award in judicial review proceedings [2011 No. 665 J.R.]; those costs had not been taxed.
The court declined to make an order concerning costs of the appeal, which was struck out in November 2015. It said that liability arose after the company’s liquidation and did not exist at the date of liquidation. The judgment also said that the applicants’ failure to respond to the liquidator’s notice seeking creditor claims did not prevent them from seeking relief.