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1. This is an application by the Applicant (hereinafter referred to as Sligo Corporation) for an Order pursuant to Order 42 Rule 32 of the Rules of the Superior Courts for an Attachment and Sequestration directed against the second and third named Respondents who are the Directors of the Respondent company hereinafter referred to as Cartron Bay.

2. This matter comes before the Court pursuant to Notice of Motion dated the 18th day of May 1989 in which Sligo Corporation seeks an Order pursuant to Order 42 Rule 32 for leave to enforce an Order of the High Court made on the 16th of May 1988 directing the Respondent company Cartron Bay to complete on or before the 15th day of September 1988 certain works set out in the schedule to the Order made by Mr Justice Barrington at the Cartron Bay residential estate in Sligo in accordance with planning permission granted to Cartron Bay in the years 1974 and 1976. That order set out a lengthy schedule of works which were required to be completed and particularly related to the roads, footpaths, sewers and various manholes both in respect of foul sewers and surface water sewers and water supply at the housing estate in question on or before the 15th September 1988.

3. While the estate in question consists of 94 houses, Sligo Corporation contended that in respect of six of these they were being rented by Cartron Bay at a time when it was alleged that this company was not trading. It is alleged that the Respondent directors were using these houses to syphon off funds from the company through renting them out on a weekly basis.

4. Since the issue of the Notice of Motion in these proceedings a considerable degree of dispute existed between Sligo Corporation on the one hand and the Respondents on the other hand to the existence of defective workmanship on the estate or otherwise. This lead ultimately to a situation were in early 1996 a camera survey was completed in relation to the underground pipes in the estate. This survey revealed a host of deficiencies in regard to sewage pipes. The survey revealed defective manholes and connections and wrong bore of pipes relative to the planning permission obtained.

5. The defects in question in the estate have resulted in very defective footpaths, roads with potholes and severe flooding being experienced on the estate in question. It is clear that the defects in the estate have resulted in great difficulty for the residents of the estate. The residents have sought to turn to Sligo Corporation to address their difficulties and at the same time Sligo Corporation has sought through these proceedings to obtain some redress in relation to the state of the estate as against the second and third Respondents Thomas Maguire and Pauline Maguire in person.

6. The application is grounded upon the affidavits of John McNabola dated the 18th of May 1989. In his affidavit Mr McNabola states that the Respondent has failed to comply with the terms of the Order of this Court made the 16th of May 1988. He states his belief that the company and its directors the second and third named Respondents intend to continue in wilful disobedience of the said Order and that the same is being disobeyed not by reason of any negligence or mismanagement but by premeditated wilfulness and an anxiety to frustrate the rights of the Applicant authority, the rights of the citizens inhabiting the Cartron Bay Estate and the Order of the Court. Mr McNabola deposes his belief that the second and third Respondents being the principles of Cartron Bay have an intimate knowledge of the affairs of the company and are solely responsible for deciding the recalcitrant policy of wilful disobedience of the Respondent company. He further states his belief that the Respondent company and its directors are in contempt of court and seeks leave to apply to have attachment to issue against the second and third Respondents.

7. Mr Thomas Maguire swore an affidavit on the 30th June 1989 in reply to that of Mr McNabola. He swore this affidavit on his own behalf and on behalf of the third Respondent Pauline Maguire. In his affidavit Mr Maguire says that Cartron Bay did not wilfully refuse to make any efforts to rectify the defects in the Cartron housing estate. He says that it is not his intention or the intention of the third Respondent in their capacities as directors of the Cartron Bay to continue in wilful disobedience of the Order of the High Court and he denies the averments to this effect in the affidavit of Mr McNabola. He denies that he or the third named Respondent are personally responsible for the affairs of Cartron Bay and he denies that they are responsible for or have decided on a policy of wilful disobedience as alleged. He states that Cartron Bay is insolvent and has ceased trading. He states that it has no longer any assets. Mr Maguire says that in or about the month of January 1988 the company sold six of the houses on the Cartron Bay housing estate to him and the third named Respondent for the sum of £124,000 which he states represents the full market value of the houses. He states that the sum realised by the sale was used to reduce the Company’s liability to Allied Irish Banks plc. He states that the company’s liabilities are in the region of £50,000 approximately and that there are no assets to discharge of the same. He says that as a consequence there are no funds available to the company out of which to complete the work required. Mr Maguire claims that at all times he and the third named Respondent acted in a proper manner in the conduct of the affairs of the company and that there had been no impropriety on their behalf. He claims that they are not personally liable for any default on the part of the company.

8. John O’Dwyer, then acting Town Clerk, swore an affidavit dated the 19th of July 1989 in response to that of Mr Maguire. He states that from the month of January 1988 when the company sold six of the houses on the Cartron housing estate that it continued to hold out to Sligo Corporation, including its engineers and solicitors, that the company was not in any way insolvent and was in a financial and logistic position to complete the works which were required to satisfy the Applicant’s planning requirements in accordance with the Order of this honourable Court ultimately given. This Court was referred to certain correspondence between the parties some of which was written without prejudice. It is agreed that the import of the matter was that works were agreed to be carried out by the company without admission of liability. This is reflected in particular in a letter dated the 13th of April 1988 from Mullaneys Solicitors on behalf of the Respondents acknowledging receipt of the Notice of Motion herein. It evidences the fact that it was agreed that the Motion would be adjourned to enable the company to carry out works. The letter concludes as follows:

9. The Motion in question was that leading to the making of the Order by Barrington J. on the 15th of May 1988. Mr O’Dwyer states that he believes that the conduct of the directors of the company and of the company itself was such as to indicate a lack of candour and a willingness to trade while the company was insolvent in December 1986 and January 1987 as he does not know from the affidavit sworn by Mr Thomas Maguire how the company acquired any assets after the conclusion of the sale of the six houses to the second and third Respondents. He states that the company was negotiating with Sligo Corporation for the exclusion of remedial works necessary to comply with the planning requirements in relation to Cartron Bay while at the same time the directors of the company were in the course of the executing and closing a sale in conveyance of what appeared to be the last property of the company to its two directors.

10. Mr O’Dwyer points out that from a negative search carried out in the registry of deeds it appeared that no property was conveyed by the company from 1983 to 1988. He says that he is apprehensive that the long delay in conveying any more property was occasioned by the fact that the company was not trading in accordance with the Companies Act and was run for the purpose of defeating claims of not only creditors but also persons in respect of whom the Respondent company would have had a contingent liability such as Sligo Corporation and the residents of the houses in the estate who had suffered a diminution in the standard of services by reason of the wrongful lack of compliance with the planning requirements. Mr O’Dwyer says that the negotiations carried on between the company and Sligo Corporation were carried on only for the purpose of delaying proceedings so as to ensure that a final insolvent position could be arranged. Mr O’Dwyer says that his is advised by the Applicant’s Solicitor that the conveyances registered in 1988 and effected in 1986 are transactions which ought to be set aside on the grounds of same being effected and carried out while the Respondent company was insolvent. He believes that the Respondents have at all material times behaved contumaciously towards their duties to Sligo Corporation in relation to the duties and obligations arising from the Order of this Honourable Court directing them to complete the works referred to in the schedule thereof. He says that the conveyance from the company to the directors was not a transaction effected at arms length and he believed that the same was not executed bona fide for proper business purposes but for the purposes of defeating the Applicant’s claim and ensuring non-compliance with any Order which could be made by this honourable Court against the Respondent company.

11. A further affidavit was sworn on behalf of Sligo Corporation by Thomas P. Canning an engineer employed by it. Mr Canning says that he has made a study of the schedule to works which were necessary to be provided by the Order of the High Court made in 1988 in relation to the company’s development at Cartron Bay. He says that he inspected the estate on the 5th of April 1991. He has furnished a report to this Court which shows that the estate overall is not complete in accordance with the Order of 1988 and is seriously deficient in respect of matters referred to and states that in no respect can it be regarded as complying with even the most minimal of planning standards. He states that he is very apprehensive that severe and unpredictable health hazard may arise from the disarray of the sewerage system and that this could prompt action to impel Sligo Corporation to abate such nuisance at its own expense or perhaps so compel innocent house holders and purchasers who inhabit and occupy the problem areas in regard to sewerage. The Report of 1991 indicates that the roadway was then becoming ragged and potholing. He stated that it could be expected to get worse. The Report further indicates that repairs had been carried out to a large number of footpaths but quite a few remained ragged. He doubted that any of these footpaths would give the normal length of service expected namely forty years or more. Mr Canning refers to the fact that a six inch sewer had been laid from house number thirty-three to number thirty-six. The sewer at number forty-five was blocked to the top six foot deep as was the sewer at number seventy. He pointed out that manhole rings at number eighty-one were not seated properly and refers to a patch work job having been effected. He indicates that numbers seventy-nine and seventy-four had been repaired satisfactorily. He points out that the sewer from number forty-five to number seventy runs under house number forty-five. He states this is unacceptable. He concludes his Report by stating as follows:-

12. Mr Thomas Maguire has sworn a further affidavit in which he points out that the proceedings came before the Court on the 24th of July 1989 and were adjourned by agreement to enable him to carry out such repairs to the estate as it would bring roads, footpaths and sewers to a condition of satisfactory completion. He says that Cartron Bay is insolvent and that all the works referred to which were done by him were done in his personal capacity and out of his own personal funds. He points out that Cartron Bay was removed from the Registry of Companies on the 29th of May 1989 for failing to make its annual returns. He states further that on or before the 22nd of November 1989 arising out of an agreement reached on the 24th of July 1989 on the adjournment of these proceedings that all the work outstanding on the estate other than the work on the sewers had been carried out by him and an on site inspection by Mr Paul Canning of Sligo Corporation and Mr Padraig Heffernan, Consulting Engineer acting on his behalf had taken place on the 19th of October 1989. He says that at that meeting the only outstanding matter which was said by Mr Canning to be the cause of concern to him was the sewer and the fact that in two places on the estate a drainage pipeline was laid under the dwelling house. Mr Maguire says that he believes that Mr Canning was satisfied that considerable progress had been made on the estate and a considerable amount of remedial work to the sewerage and manholes had been done and he says that the difficulties which arose regarding sewers were

13. With regard to these particular concerns Mr Maguire responds as follows:-

14. All the other work referred to above other than work on the sewer referred to at subparagraph (e), (f) and (g) had been done within a month of the inspection which took place on the 19th of October 1989. Mr Maguire indicates that on the 14th of December 1989 his Solicitors wrote to Sligo Corporation’s Solicitors saying that most of the work ( with the exception of the sewer under the houses) had been done and saying that in a telephone conversation the Corporation’s Solicitors had agreed to obtain instructions and get in touch with his Solicitors. He points out further that on the 19th of December 1989 his Solicitors received a letter from the Corporation’s Solicitors totally refuting the suggestion that most of the work required to be done was completed. Mr Maguire points out that in December of 1989 his Solicitors then wrote to the Applicant’s Solicitors requesting details of what work remained to be done. He says that a further meeting of the Engineers was arranged and took place on the 22nd of January 1990 at which it was agreed:-

15. Mr Maguire says that all this work was commenced on the 29th of January 1990 and on the 26th of February 1990 Mr Canning on behalf of Sligo Corporation came on the site and expressed himself to be satisfied and instructed him to back fill the excavation as arranged. He says that the sewerage pipeline is laid alongside the gable wall of house number forty-five at a depth of approximately ten to twelve feet that the distance between the gable wall of house number forty-five and house number forty-four is such that any attempt at excavating to re-lay that pipe would endanger foundations of both of these houses and he says further that the pipe was laid in its present position in 1976 and that it has never been blocked nor has it caused any drainage problems. It appears that pursuant to such work as was carried out Mr Maguire’s Solicitors sought a statement from Sligo Corporation to clear the Respondents of any further responsibility in the matter. On the 18th of April 1990 Solicitors for Sligo Corporation wrote that although some work had be done, work has still remained unfinished and no contact has been made with Sligo Corporation to indicate what work was being done and that Mr Maguire had not facilitated any inspection. Further correspondence ensued between the Solicitors and on the 17th of May 1990 Mr Maguire states that his Solicitors again wrote that the Orders made in this matter were out of date in that the work required by them to be done had been done and any attempt to enforce them would be unrealistic and also referring to the letter of the 2nd of March and the inspection on the 26th of February by Mr Canning. Further letters were written by the Respondent’s Solicitors to the Solicitors for Sligo Corporation and on the 29th of June 1990 the Solicitors again wrote reminding the Applicant’s Solicitors that the matter was adjourned until August 1989 to enable certain work to be done and that work had been done suggesting that whatever cause of complaints might have existed in the past no ground for complaint then existed. It appears that on the 5th of July 1990 the Respondents’ Solicitors received a letter saying that the estate had been superficially improved but that Mr Maguire was trying to trivialise the amount of work required to be done. Further correspondence ensued between the Solicitors in relation to a suggestion that an enormous amount of money was necessary to put the estate into sound condition and on the 17th of September 1990 Mr Maguire’s Solicitors received a letter suggesting a joint survey by a suitably qualified consultant. Further correspondence ensued between the parties up to the 9th of April 1991 but no progress seems to have been achieved. Mr Maguire stated that he believed that all of the work required to be done on the estate had been done since the 26th of February 1990 and that despite numerous requests by his Solicitors there has been a neglect and a refusal by the Applicants to say what work further if any was required by them. He states that the work which he had carried out at his own expense is all the work that was contemplated to be carried out when the case was adjourned on the 24th of July 1989. He states that he has made every feasible effort to make good items of defect as he is aware and that all matters complained of by the Applicants in their affidavit grounding the application have been complied with since the 26th of February 1990. He further says that he is not aware of any complaint having been made of any blockage in the sewerage system which has occurred since the 26th of February 1990.

16. An affidavit has been sworn by Anne Kelly a Civil Engineer of Sligo on behalf of the Sligo Corporation. In her affidavit she said that she examined the planning documentation with a view to establishing the standard of finish required by same for the estate and examined the estate in June of 1997. She took photographs at the time which have been exhibited by her. She states and indeed this is borne out by the photographs that the estate is in an appalling state of dereliction. Visual examination has revealed that there has been consistent neglect of adhering to normal construction standards or the formal standards which were to be found from plan and specifications submitted for planning permission and subsequently agreed with officials of Sligo Corporation. She based her Report on a camera survey of the sewer system carried out by a specialist company retained by the Applicants which shows that the sewer, surface water manholes and gullies need total replacement. She says that in addition there are serious difficulties with house connections, water mains and footpaths and roads which require breaking up and complete replacement. She says that in June of 1997 she estimated the cost of same at £329, 333.80 plus and building prices since have risen in respect of same, at least on the same basis as the building construction index. In addition to the costs of remedial works there will be substantial disruption to residents of the estate during such works. Ms. Kelly states that she has considered the affidavit of Thomas Maguire dated the 19th of April 1991 and has consulted Mr Paul Canning who was then Engineer with the Applicant. She points out that Mr Canning has informed her that he agreed none of the remedial work which have been purported to have been carried out by Mr Maguire, with the exception of two short runs of sewer pipes which were replaced to the satisfaction of Mr Canning. The value of this work is only in the order of £2,000 or thereabouts and when this length of sewer is identified on the ground, the item given by her for bills may be reduced accordingly but perhaps not by the same amount. She states that other works were carried out, including surfacing for footpaths as described by Mr Maguire. She says that these were not done to an acceptable standard insofar as it was simply a patched job over a poorly disintegrating footpath and was therefore unsatisfactory. Approximately half the footpaths were purported to have been repaired by Mr Maguire over the years. She says the work appears to have consisted of skimming over the damage footpaths with a thin layer of concrete which while it may have looked reasonable at the time, would not last the normal lifetime of a footpath. She states that works which were carried out, such as improving manhole construction were done on a piecemeal basis and to a very low standard and during the whole of such works, the condition of sewer pipes was not known until the camera survey was carried out much later and at the expense of Sligo Corporation. She states that there is no record of surface water sewers having been installed and the deterioration of the road is partly due to the fact that no surface drainage of the road surface has been taking place. She says that the area of water mains is that about which least is known. The number of leaks which have occurred have shown that the water mains are not as they should be, or where they should be, but unless every water main is dug up it is impossible to know whether or not they are all laid in the same haphazard way. She says that she is familiar with the procedures and the standards required for the taking over and making public of housing estates and says that unless the estate is completed in accordance with her estimate the estate will never be in a position to be taken over by the local authority. She points out that the condition of the estate is such that the defects now constitute a severe nuisance and loss of amenity to the inhabitants of the estate.

17. An affidavit has been sworn on behalf of Sligo Corporation by Paul Horan Accountant. He is an Accountant with the firm of Kilroy Gannon Chartered Accountants in Sligo. He has examined a small number of documents which were the only financial statements furnished in respect of Cartron Bay from the date of its incorporation on the 9th of February 1976. He has noted the assertion of Mr Maguire that the company was insolvent and that works alleged to have been done were carried out at Mr Maguire’s personal expense. He says that having examined the various documents made available to him in relation to the Respondent and its financial affairs it appears that several houses built by the Respondent company on the estate appear to have been rented prior to sale. He has indicated that through the limited production of documents afforded to the Applicant to date it appeared that there has been none or no adequate accounting or crediting of such rents to the company as have been paid in relation to the renting of such houses with the exception of two years ending the 31st of December 1984 in respect of which a sum of £2,470 was credited as per the profit and loss account. He says that the amount of the rent credited seems to be inadequate having regard to the extent of the residential accommodation available for rental. He first states that on the basis of the only profit and loss accounts produced being for two years ending the 31st December 1984 and two years end of 31st December 1986 that the Respondents would appear to be in breach of the requirements of the Companies Acts in respect of the profit and loss accounts requirements. He points out that no profit and loss accounts have been made available outside the period 1983 to 1986 inclusive and the profit and loss accounts made available are for two year periods namely the two years end of the 31st December 1984 and the two years to the end of 31st December 1986. He says that the state of affairs of the Respondent company from incorporation on the 9th of February 1976 to the 31st of December 1986 have been set out only at the dates of 31st March 1979 and 31st December 1982, 31st December 1984 and 31st December 1986 in the form of Statements of Affairs or Balance Sheet and consequently it appears to him that the financial statements of the Respondent company as produced for this period do not and cannot give a “true and fair view of the state of affairs of the company as at the end of its financial years and of the profit and loss of the company for the financial year” in accordance with the requirements of Section 149 of the Companies Act, 1963.

18. Mr Horan states that no reference has been made in any Auditors Report on the balance sheet and the profit and loss account of the company covering the period from incorporation to the 31st of December 1986 with the exception of the balance sheet and profit and loss account for the two years ending the 31st of December 1984 or the matter as referred to in the 7th schedule of the Companies Act, 1963. He further states that no annual return was filed and registered until the 24th of April 1991 notwithstanding the fact that the company was incorporated on the 9th of February 1976 and annual returns of accounts for the years 1990 to 1993 were only filed and registered in the Companies Office on the 11th of November 1994. He further states that with regard to the limited information available it appears that the fixed assets of the company were not depreciated for either the two years ending on the 31st of December 1984 and the two years ending on the 31st of December 1986. He says that if the fixed assets had been depreciated in accordance with the standard accounting practise it is likely that a credit balance in the profit and loss account as per the balance sheet of the 31st of December 1986 as produced would have been in a debit balance meaning that the company was likely insolvent as of that date and prior to the property transactions which took place between Cartron Bay on one part and Thomas Maguire and Pauline Maguire on the other part in January of 1987. He further says that there is no record, documentary or otherwise, of any statutory meeting having been called or convened in accordance with the requirements of Section 40 of the Companies (Amendment) Act, 1983 which Section would have been operative in event of the company being insolvent. Mr Horan further points out that no income was shown in the financial statements for two years ending the 31st of December 1986 but expenditure of £43,359 was incurred. Yet it appears that a contract for sale relating to house number thirty-nine Cartron Bay was executed for the Respondent company or a company styled Cartron Bay Construction Company Limited to Thomas Maguire and Pauline Maguire on the 22nd of December 1986 for the sum of £24,000. Mr Horan further states that it is not possible to establish from the limited accounts made available how the company accrued trading losses of £43,359 for the two years ended the 31st of December 1986 and £38,283 for the two years ended the 31st of December 1988 having previously accumulated trading profits of £51, 844 to the 31st of December 1984.

19. Mr Horan has sworn a supplemental affidavit on the 25th of February 1999. This relates to documentation furnished by Mr Thomas Maguire by way of Discovery of Documentation. He points out firstly that prime books of account namely cash books, cheques/journal and purchase day books have not been furnished. He says that the record of VAT returns of Cartron Bay does not appear to be complete. He says that no copy of VAT returns for the taxable period May/June 1979 and July/August 1979 or any period prior to the 1st of March 1979 have been furnished. He says that the ledgers of Cartron Bay for the period from the 26th of March 1976 to the 31st of December 1987 are poor quality and are in parts illegible. He says that the bank statements of Cartron Bay with Allied Irish Banks for the period from the 1st of August 1980 are not available. He says that the absence of the prime books of account, the absence of bank statements with Allied Irish Banks prior to 1st of August 1980, the absence of profit and loss accounts for any period from incorporation to the 31st of December 1982, and the poor quality of the ledgers of Cartron Bay inevitably mean that a full and proper examination of the affairs of Cartron Bay from incorporation to the 31st of December 1982 cannot be undertaken.

20. Mr Horan goes on to say that he has examined the report of Victoria Stevens Consultant dated the 10th of November 1998 on the ownership and occupancy of the specific houses within Cartron Bay together with a Report of Murphy & Sons Auctioneers dated the 19th of November 1998 on the levels of rental income attributable to these types of property within Cartron Bay in the period 1979 to 1998. He says that following an examination of these Reports in respect of house numbers thirty-six, thirty-seven, thirty-nine, forty, seventy-one and eighty-three such houses being the property of Cartron Bay in the period 1979 to 1986 that rents in the region of £57, 600 could have accrued in the respect of the aforementioned six properties in the four year period 1979 to 1982 if full occupancy had been achieved and it appears that there is no record of such rents having been received by Cartron Bay. He says that the range of rental income accruing for the four year period from 1983 to 1986 in respect of these six properties would have been in the region of £33,630 based on occupancy levels established in the Report of Victoria Stevens for specific periods to a level of £64, 800 pounds if full occupancy had been achieved notwithstanding that the only amount of rental income recorded in the profit and loss account of Cartron Bay for the four year period 1st January 1983 to the 31st of December 1986 amounted to £2,470. He refers further to a correspondence from the Revenue Commissioners to Mr J.J. Murphy agent for Cartron Bay dated the 28th of January 1986 indicating

21. Mr Horan then refers to a schedule of likely rents in respect of the properties thirty-six, thirty-seven, thirty-nine, forty, seventy-one and eighty-three Cartron Bay for the years 1979 to 1986, he says that this schedule indicates that the likely rents in respect of the aforementioned properties over the years 1979 to 1986 based on 100% occupancy would have amounted to £132,400, based on 75% occupancy would have amounted to £91,800 and based on 50% occupancy would have amounted to £61,200. However the only recorded income in the period is £2,470. He says that even allowing for any incidental expenses that might have to be paid out of such rents and for any taxation liabilities that might attach to Cartron Bay in respect of receipts of such rents the lodgements of these levels of rental income in the range of occupancy 50% to 100% to the bank account of Cartron Bay over the period of 1979 to 1986 would have had a very significant impact on the financial position of the company its liquidity and ultimately its solvency.

22. Mr Horan continues that the lodgements of the likely level of unrecorded rent referred to would have had a significant impact on the level of interest charged by Allied Irish Banks Limited to Cartron Bay over the period 1979 to 1986. He says that the total savings in bank interest in the period 1979 to 1986 would have amounted to £77,793 in the case of 100% occupancy, £58,034 in the case of 75% occupancy and £38, 274 in the case of 50% occupancy. These projected a savings in bank interest in addition to the lodgements of the likely unrecorded rent previously referred to and would have had a further positive impact on the financial position of the company its liquidity and ultimately its solvency over the years 1979 to 1986.

23. Mr Horan then refers to the agreements relating to the conveyance by Cartron Bay of the properties number thirty-six, thirty-seven, thirty-nine, forty, seventy-one and eighty-three to Thomas and Pauline Maguire the dates of the agreement in question are in 1987 and December 1986 and show a total consideration agreed of £124,000. Mr Horan says that the trading and Profit and Loss Account for Cartron Bay for the year ended the 31st of December 1987 discovered subsequently to his affidavit of the 9th of March 1998 indicates house sale receipts of £124,000 and such figures may include house number thirty-nine Cartron Bay Estate where the relevant agreement as between Cartron Bay and Thomas and Pauline Maguire was dated the 22nd of December 1986. He says that a number of these properties may have been conveyed at undervalue by Cartron Bay Construction Limited to the purchasers outlined. In this regard he refers to a report of Murphy & Sons Auctioneers which indicates that the market value of each of such property in about 1987 in the region of £25,000 in the cases of number thirty-six, thirty-seven, thirty-nine, forty and seventy-one and £28,000 in the case of number eighty-three. He refers to correspondence from the Revenue Commissioners investigation branch to Mr J.J. Murphy agent for Cartron Bay Construction dated the 23rd of July 1991 requesting certificate of market value from a respected auctioneer familiar with the houses for each of the houses purchased from the company by the participators and by Mr Benjamin Maguire. He says that no reply to this correspondence has been furnished in discovery.

24. Mr Horan states that had Cartron Bay retained properties thirty-six, thirty-seven, thirty-nine, forty, seventy-one and eighty-three very significant amounts in rent would have accrued over the years 1987 to 1998 ranging from £143,100 at 50% occupancy to £286,200 at 100% occupancy. He says that had Cartron Bay retained these properties they could have been disposed of at up to date market values in the region of £60,000 in the case of house numbers thirty-six, thirty-seven, thirty-nine, forty and seventy-one and £70,000 in the case of house number eighty-three as indicated in the Report of Murphy & Sons Auctioneers dated the 19th of November 1998 and says that these additional rents over the years 1987 to 1998 together with the additional proceeds of the properties at current market values would have transformed the financial position of Cartron Bay. He goes on to say that in the circumstances of the level of likely unrecorded rent over the years 1979 to 1986 in respect of properties number thirty-six, thirty-seven, thirty-nine, forty, seventy-one and eighty-three together with the transfer of these properties in 1986 and 1987 at a possible undervalues it is reasonable to assume that Cartron Bay did not receive all of the income to which it was entitled in respect of its assets over the years 1979 to 1986 and did not ultimately receive full value on the disclosal of those assets in 1986 and 1987.

25. Mr Horan states that in the absence of the prime books of account of Cartron Bay consisting of cash book, cheques, journal and purchases day book together with the poor quality of the ledgers of Cartron Bay for a period from the 26th of March 1976 to the 31st of December 1987 and in the absence of full and proper accounts in particular from the time of incorporation to the 31st of December 1982 it would appear that proper books of account have not been kept in that these have not been kept such books of account as are necessary to exhibit and explain the transactions and financial position of the trade or business of the company including books containing entries from day to day and sufficient detail of all cash received and all cash paid, of all good sold and purchased, showing the goods and buyers and sellers in sufficient detail to enable those goods and those buyers and sellers to be identified. Mr Horan concludes that, having regard to the outstanding indebtedness of Cartron Bay after repayment of the Allied Irish Bank loan apparently from the proceeds of sale of houses, it seems that none of these debts have remained and would now be statute barred if they were overdue. He concludes by saying that as a result the insolvency of the company was not deep and any positive income from the rental of houses bought into accounts of the company would have the effect of significantly saving the company from insolvency and establishing its ability to trade provided no further activity resulted in losses.

26. Victoria Stevens a Marketing Consultant of Breeogue, Knocknahur South, Sligo, a Marketing Consultant retained by the Applicant to conduct a study of the Cartron Bay Estate, has made an affidavit, having carried out research and prepared two reports in respect of the ownership of houses in Cartron Bay and to identify who occupied the houses since they were built. She was to identify those houses in Cartron Bay that were currently owned and those that were owned by Thomas Maguire, Pauline Maguire and Ben Maguire being a brother of the second named Respondent and an active participant in the development since the estate was built. Her reports include information which was sourced from the Cartron Bay Residents Association and a search of the registry of deeds and the electoral register for the period 1979 to 1997. The belief of the Residents Association was that fourteen houses were owned by Thomas Maguire, Pauline Maguire and Ben Maguire since the estate was built and these houses have been identified as numbers three, twenty-six, thirty-five, thirty-six, thirty-seven, thirty-eight, thirty-nine, forty, forty-five, fifty-five, fifty-nine, sixty-one, seventy-one and eighty-three. Apparently five of these houses have been sold. These are numbers thirty-six, thirty-seven, thirty-eight, thirty-nine and forty. It is indicated that a caretaker is in residence in Cartron Bay for Mr Thomas Maguire and is responsible for letting these houses which were identified as belonging to Mr Maguire and his family. A search of the Registry of Deeds proved difficult as no house numbers were assigned to the majority of houses sold in the estate. The Registry of Deeds does however indicate that Cartron Bay sold three houses to Mr Ben Maguire one in 1978, one in 1979 and one in 1983. A further house was conveyed to a Mr Bernard Maguire in 1980. Three houses were conveyed to Mr Thomas Maguire one house in 1980, house number forty in 1987 and number seventy-one in 1987. Two houses to Pauline Maguire one house in 1980 and house number eighty-three in 1987. Five houses were conveyed to Mr Thomas Maguire and another two in 1981, number one in 1982 and house number thirty-six in 1987 and house number thirty-seven in 1987. One house was conveyed to Pauline Maguire and another in 1986.

27. In 1991 a house was sold by Thomas Maguire and Pauline Maguire to a Mr Melvyn Hayley and another. In 1993 house number thirty-seven was sold by Thomas Maguire and Pauline Maguire for consideration of £25,000 to Eamon McGowan. In 1994 house number forty-four was sold by Thomas Maguire and Pauline Maguire to James Cogan. In the same year house number thirty-eight was sold to Mr Hugh Lowry and another by Mr Thomas Maguire and in 1993 a house was sold to Mr Martin Feeney and another by Mr Thomas Maguire. In 1993 house number thirty-nine was sold to Mr Franklin Crowley and another by Thomas Maguire and Pauline Maguire for consideration of £30,000 and in 1996 number thirty-six was sold to Mr James White by Thomas Maguire and Pauline Maguire. Victoria Stevens concludes in her affidavit by saying that she believes that these houses were completed in late 1978 or in the early 1980s and believes that rental income derived from such properties would be considerable.

28. A further affidavit has been sworn by Thomas P.G. Canning an Engineer of Sligo on behalf of Sligo Corporation. He states that he is an Engineer employed by Sligo County Council and was formerly employed in Sligo Corporation. He refers to the affidavits of Thomas Maguire sworn on the 18th of April 1991 and rejects the assertion made therein that all the work outstanding on this date other than the work on the sewers had been carried out by Mr Maguire. He agrees that a joint inspection took place on the 19th of October 1989 with Mr Padraig Heffernan Consulting Engineer acting on behalf of Mr Thomas Maguire. He rejects the assertion made in the affidavit that his only concern was the sewer and the fact that in two places in the estate a drainage pipe was laid under a dwelling house. He says that he was concerned that a drainage pipeline had been laid under a dwelling house in two places but it was not his only cause of concern. He also denies that there was a considerable amount of remedial work done but he does assert that some work was done. He states that Mr Maguire is selective in the matters that he chooses to highlight and that his concerns embraced all the matters arising from the schedule in the original Order of Mr Justice Barrington heard on the 16th of May 1988. Mr Canning says that the matters addressed by Mr Maguire as having been carried out on this date in no way represent compliance with the requirements of the Order of Mr Justice Barrington as required. He accuses Mr Maguire of being selective with regard to the matters referred to at subparagraphs 9 (a),(b),(c) and (d). With regard to paragraph 9(d) he says that at all stages he had been pointing out the poor and inadequate flow in the manholes and this matter would have to be addressed.

29. Mr Canning agrees that a further meeting took place on the site on the 22nd of January and he accepts what was agreed to at paragraph 16(i) only; that the only solution to the problem was a sewer to the rear of the house number thirty-three and under it was to lay a new six inch pipe in place of the existing four inch pipe to a manhole at the rear of house number thirty-six. He says he believes that this work was carried out. He states that paragraph 16 (ii),(ii) and (iv) do not explain issues. With regard to the assertion that Mr Canning expressed himself to be satisfied with the work he rejects this assertion. With regard to the assertion by Mr Maguire that the sewerage pipeline alongside the gable wall of house number forty-five has never been blocked nor has it caused any drainage problems, he rejects this assertion and states that he specifically wrote a letter on the 5th of April 1991 referring to the fact that the sewer was showing signs of blockage. He states that he has a further record showing that this particular pipe continued to give problems. Mr Canning accused Mr Maguire of having engaged in a window dressing exercise and only addressing minor defects in the estate and choosing to ignore the major defects. He further rejects the assertions made at paragraphs 44 and 45 of the affidavit of Mr Maguire to the effect that all work was done prior to the reinstatement of Cartron Bay to the Register by Order made on the 21st of November 1989, and that he has made every reasonable effort to make good such items of defect of which he is aware and that all matters complained of by the Applicant have been complied with since the 26th of February 1990. He repeats his assertion that Mr Maguire only addressed the minor problems in the estate and choose to ignore the major ones. He states that he has examined the camera survey which was subsequently carried out and that this is confirmation of all his worst fears which he expressed on his first inspection of this site.

30. A number of affidavits have been sworn by residents and former residents of Cartron Bay. Mr Hugh Sullivan of nineteen Cartron Bay states that he is one of the original purchasers of property in the estate. He says that he purchased his home on the 15th of March 1977 from Cartron Bay. He states that he has been active in local community affairs and has been responsible with others in an effort to try and improve conditions for his family and other residents of the Cartron Bay Estate. He states that he has been a member of the Cartron Bay Residents Association from the time of it establishment in or about the year 1979. He says that he is aware of the numerous complaints, regarding the appalling condition of roads, footpaths and services made by Cartron Bay residents to one Mr Thomas Maguire, he being the promoter and director of Cartron Bay the company responsible for the development and also of similar complaints made to his brother Mr Ben Maguire who resides at number three Cartron Bay. He says that Mr Maguire amongst others appears to discharge responsibilities in the estate on behalf of the developer. He says that in the year 1983 the curate of the local Roman Catholic Church gave him responsibility for the local parish contribution envelopes every year and this is a job he continued to discharge since that time. He says that in his regard he has general knowledge of most of the houses on the estate and he is reasonably sure that every house with perhaps the occasional exception was constantly occupied by either owner occupiers, family rental occupiers or as multiple lettings. He says that the level of occupation of multiple dwelling seldom dropped below four people during the academic year and in certain instances would have been even higher occupational density. In addition to student lettings, accommodation was available to a wide range of individuals. He says that the estate enjoys a location within easy walking distance of the centre of Sligo town and has been popular with people seeking convenient accommodation. He says that the general road and footpath conditions of Cartron Bay Estate are appalling and that many of the properties that comprise multiple lettings are distinctive because of their outside appearance . He says that they give the impression of having been poorly kept over the years. He says they present a relatively substandard appearance. He says that he has assisted Victoria Stevens in her survey of the estate. He says that he agrees with the research results reflected in her report.

31. Mr Matthew Turley of number five Cartron Bay Estate states that he has resided there with his wife and family since 1983 and is very familiar with the estate from that time. He says that over the years he became very familiar with the properties on the estate along with other residents who were concerned to make their family environment as attractive and comfortable as possible. He joined the Residents Association. He says that five or six years ago he became the treasurer of the association and in that capacity he visited every house to collect the agreed ex gratia levy from householders which was then fixed at £10 per annum. He says that the fund was applied principally towards maintenance of the green area and was subsequently raised to £15 per house. He says that he was always aware that the developers of the estate Thomas Maguire and Pauline Maguire together with Mr Ben Maguire owned a considerable number of houses or had them under their control. He says that he could never really establish the exact number. He says that Mr Ben Maguire paid the association of £100 per annum to cover houses which were in the ownership of the developers and available for letting, that he and other members of the committee were never sure that this was the full extent of the possible commitment from the developers but that they were glad to take the amount tendered. He says that while there would be other properties available for renting in Cartron Bay it was nearly always possible to identify the houses in the ownership of the developers, since their external appearance was obviously not a priority. He says that Mr Bernard Conlon of sixty-one Cartron Bay has been involved in attending the making of letting arrangements and looking after the upkeep of the Maguire properties. He says that it has been represented by Mr Ben Maguire in more recent years that houses have been sold from the developers portfolio and accordingly the amount paid to the association has been reduced to £60. He says there has been no indication, however, what houses are involved. He confirms that the roads, footpaths and services in the estate are a disgrace. He says it is a well known fact that complaints have been made by almost every house owner over the years to one or other of the developers. He states that some of the complaints have been attended to but the services are of such a poor quality that they only work towards a fashion.

32. Mr Michael Gillespie purchased his family home at ten Cartron Bay in February of 1984 and has lived there since that time with his wife and family. While his affidavit testifies to the efforts made on behalf of residents in the area in his capacity as chairman of the Residents Association it is clear that he is not in a position to advance the Applicant’s contentions to any substantial degree in this case but his affidavit is testimony to the ongoing concerns of residents of the Cartron Bay Estate.

33. Mr Aaron Conboy has sworn an affidavit in which he states that he resided previously at thirty-five Cartron Bay where he and his wife had a ground floor rented from Mr Ben Maguire at a weekly rent of £50 that was approximately five years prior to the swearing of the affidavits in 1999. Similar evidence is available to the Court from Mr Gerard Casey who was offered a ground floor letting for £50 per week in May of 1995.

34. Mr Thomas Maguire swore a further affidavit on the 22nd of June 1999. In this affidavit he says that the financial difficulties of Cartron Bay were due to the fact that the National House Building Guarantee Scheme was set up while the houses in Cartron Bay were under construction. He says that Cartron Bay had laid foundations for the houses in the estate before the scheme came into operation. When they then attempted to get the remaining unbuilt houses registered with the National House Building Guarantee Scheme, the Scheme refused to register them as it had not been able to inspect the foundations prior to their being poured. He states that as a result of this none of the houses in Cartron Bay were registered with the National House Building Guarantee Scheme. He states that most if not all of the banks and building societies which lent money to purchasers of houses similar to Cartron Bay introduced a requirement which was that before they would lend money on a new house it had to be registered with the Guarantee Scheme and it had to have a six year structural guarantee. He states that Cartron Bay Construction Limited was not in a position to register these remaining houses with the scheme and consequently it was very difficult to sell the last remaining houses, because of the lack of registration and also because of the down turn in the economy. He says that as a result Cartron Bay Construction was left with six houses which it was impossible to sell at the market value. He then proceeds to state that it was decided to retain those houses for rental purposes until there was an improvement in the market and he says that for the years 1981 to 1985 or thereabouts Cartron Bay rented out these houses mostly to students attending Sligo Regional Technical College. He says that the lettings involved were mainly short term lettings and at no stage to the best of his knowledge and belief was there ever full occupancy of these houses. He says that the cost of maintaining these houses was high because of the high turnover of tenants and the fact that some of the houses were left unoccupied for long periods. His says that the company’s expertise was in property development and construction and as a result the returns in terms of income from these properties was very small as is reflected in the company’s accounts.

35. Mr Maguire states that the decision to dispose of these houses in or about January of 1988 was the correct one as Cartron Bay at this time had extensive borrowings at high interest rates with Allied Irish Banks plc. He says that the company came under considerable pressure from the bank to deal with this mounting liability. He says that he and Pauline Maguire purchased the six houses from the company for £124,000 which he contends represented the market value of the houses in question. Mr Maguire says that the purchase price for the house number thirty-nine was incorrectly stated to be £24,000 in the contract whereas in fact it should have been £20,000 and the purchase price for house number eighty-three was incorrectly stated and £20,000 whereas it should have been £24,000. He states that number eighty-three is a detached house and all the other five houses are semi-detached houses. He states that the error in the contracts did not change the overall purchase price of £124,000 paid to Cartron Bay by himself and his wife. Mr Maguire says that the sum raised from the sale of the houses was used to reduce the liability of Cartron Bay to Allied Irish Bank plc.

36. Mr Maguire states that from 1988 to 1993 he and Pauline Maguire have attempted to let these houses but due to the nature of the market, the low levels of occupancy and the high maintenance costs, the rent generated was low and not sufficient to service the interest repayments on the loans obtained by them to purchase the houses. He states that he sold a number of these houses as follows:-

37. No. 39 for £30,000 in August 1993

38. No. 36 for £36,000 in October 1995.

39. Mr Maguire takes issue with the market value for the houses number thirty-six, thirty-seven, thirty-nine, forty and seventy-one as set forth in the affidavit of Paul Horan. He says that the valuation is not correct as the houses were in poor condition, required painting, did not include central heating or garden walls or fences and were not covered by the National Housing Building Guarantee Scheme. He says that £20,000 was the value of these houses at the time and he says that six years later in 1993 house number thirty-seven was sold to one Eamon McGowan for £25,000. He refers to the Report of Murphy & Son and states that in relation to the market values on the above it is important to note that this particular estate had a history of structural defects which may make it more difficult to sell the houses.

40. With regard to the market rental values contended for in the affidavits of Paul Horan and the Report of Murphy & Son Auctioneers he says that the rents referred to were not achieved at any stage in the 1980’s or 1990’s. He says that the low level of occupancy along with the high turnover of tenants and high maintenance costs means that the income and returns were low. He says that the affidavit of Victoria Stevens and the report exhibited by her confirms that the tenants were in the main students of the Regional Technical College in Sligo and that the occupancy rates for the houses in question were low as reflected in the Register of Electors. On this basis he says that the projected figures prepared by Paul Horan Accountant have no basis in fact.

41. With regard to the Register of Electors he states that because of the passage of time he cannot confirm if the persons referred to in the Register of Electors did in fact occupy the houses for the periods referred to but he suspects that many names remained on the Register for considerable periods after they had left the estate.

42. Mr Maguire complains of delay in the proceedings and says that due to the delay many of the documents necessary for the defence of the action as sought as part the discovery in 1998 were either destroyed or lost as a consequence of which the Respondents are prejudiced in their defence of the action. He says that because of the passage of time it has been impossible to obtain records of or trace the tenants of various houses referred to in recent affidavits made on behalf of the Applicant. He also complains that as a consequence of delay the VAT returns for the taxable period May/June 1979, July/August 1979 and for the period prior to the 1st of March 1979 are not available. He also complains that as a consequence of delay the banks statements of Cartron Bay prior to 1983 with Allied Irish Bank plc are no longer available. Mr Maguire further points out that the delay in pursuing the proceedings has meant that the cost of remedial work to the estate according to the affidavit of Anne Kelly Engineer dated the 7th of July 1998 is now estimated at £329,333.80 and he says that these could have been carried out for a fraction of the cost had this matter been concluded when it should have been in the early 1990’s. He says that he and Pauline Maguire are seriously prejudiced by the delay and as a result face financial ruin if there assets are sequested to meet the costs of this remedial work.

43. Mr Maguire takes issue with the assertion by Mr Hugh Sullivan that there was a high level of occupancy in the houses rented by the Respondent company. Mr Maguire accepts that there were numerous complaints made about the condition of the estate but he attributes this condition to the insolvency of the company and in this regard he did not have the means to carry out the works ordered by the High Court in its Order of the 16th of May 1988. He says that he and Pauline Maguire have at all times acted in a proper manner in the conduct of the company’s affairs.

44. An affidavit has been sworn by Mr George Draper Auctioneer of Sligo on behalf of the Respondents. He says that with regard to the six houses sold by the company to Thomas and Pauline Maguire that in all cases except number thirty-nine the contract provided that the selling price excluded the cost of painting, provision of central heating system and erection of garden walls and fences. It is clear from this affidavit that Mr Draper has relied in part upon what he has been informed by Mr Thomas Maguire in relation to the condition of the six houses and the alleged difficulty in relation to the letting of these houses and the cost of reinstating them insofar as they are alleged to have been in poor condition. Mr Draper takes issue with the Report of Murphy & Sons Auctioneers in relation to the valuation of the six houses in question. He says that the market was not particularly buoyant at the time and it would have been difficult to sell the six houses to six individual purchasers and any purchaser buying six houses would expect to get a reasonable discount against the overall asking price for same. He continues by saying that the valuation of Murphy & Sons does not take into account the fact that no Auctioneer was used in the sale of the six houses and therefore auctioneers fees did not have to be paid by Cartron Bay. On this basis he says that the sale price of £124,000 represents a fair and reasonable market value for the six properties involved at the dates of the agreements. Mr Draper put forward letting values for comparable houses in good condition between 1979 and 1995. This appears to be based upon his knowledge of the letting of one particular house in the estate only.

45. An affidavit has been sworn on behalf of Mr J.P. Heffernan Consultant Engineer who is in practice in the Sligo area. He states that at the end of 1985 he was engaged by Mr Maguire to inspect the estate known as Cartron Bay with a view to meeting with representatives of Sligo Corporation’s Engineering Department to see if agreement could be reached as to the extent of remedial works which were needed to be carried out to the estate. At that time High Court proceedings were pending against Cartron Bay. He says that his brief from Mr Maguire was to deal with the Corporation’s Engineering Department on or without prejudiced basis informally and to try to work out in practical terms on site what the minimum requirements were to make this estate reasonably satisfactory. He says that he had series of meetings with members of Sligo Corporation’s Engineering Department and in particular Mr Canning between September 1985 and February 1990. He refers to Mr Canning’s memorandum exhibited in his affidavit and says that it confirms that substantial work had been carried out to the estate and that repairs had been carried out to a large number of footpaths and that a lot of repair work had been carried out on the sewers. He says that his recollection is that in 1989 the roadways were satisfactory.

46. Mr Heffernan refers to a portion of the affidavit of Thomas Maguire of the 18th April 1991 and states that what is said by him at paragraphs 7,8,9 16 and 17 in that affidavit are “substantially correct to the best of my recollection”. He says that there were a number of meetings with Mr Canning and members of the engineering staff of Sligo Corporation all of which were expressed to be without prejudice to the Court proceedings. He says that certain lists of works were agreed and carried out and certain other lists of work were not agreed and not carried out. He says that any works that he agreed on behalf of Mr Maguire were carried out by him. Mr Heffernan says that he cannot comment on the affidavit of Anne Kelly Engineer, who has swore an affidavit on behalf of Sligo Corporation, as he has not inspected the overall condition of the estate for upwards of nine years.

47. Mr John H. Murphy of Dublin Road Longford, a Chartered Accountant practising under the style of John H. Murphy Chartered Accountants has sworn an affidavit which he says that he took over the business of J.J. Murphy who prepared the accounts of Cartron Bay prior to his retirement from practise. He says that the statement of affairs prepared up to and including the 31st of December 1982 by their nature of their preparation do not show any details of the amounts of rental income received by Cartron Bay. He says it is not possible therefore to quantify the rent over the period as it was applied to the payment of the company’s ongoing expenses. He says that in relation to the rents received by the company and recorded in the accounts for the two years ended the 31st of December 1984 and the two years ended the 31st of December 1986 he has been advised by the directors, that is the second and third Respondents, that the amounts shown in respect of rents is a net figure. The figures shown would be after the deduction of the various expenses and maintaining the houses and paying overheads such as insurance. He says that he has been advised that during periods of non-occupancy these houses required ongoing maintenance so as to avoid the houses falling into a complete state of disrepair. Mr Murphy says that a decision was made in or about 1986 or early 1987 to dispose of the properties at Cartron Bay and he understands that the price paid was the market value of these houses. He says that Thomas Maguire and Pauline Maguire borrowed personal monies in the sum of £27,353 in addition to the purchase price of £124,000 for these houses to enable the companies bank borrowing to be repaid. On this basis he says that the assets of Cartron Bay were increased at this time at the expense of Thomas Maguire and Pauline Maguire.

48. As to whether the company should have continued to try and trade out of its difficulties he makes the following points:-

49. In the view of the report he contends that the directors of the company namely Thomas Maguire and Pauline Maguire acted in the bests interests of the company and could in no way be responsible for the inability of the company to meet the requirements of the Applicants in relation to works to be carried at the housing estate herein.

50. A supplemental affidavit has been sworn by Anne Kelly in which she says she attended at the estate at Cartron Bay in Sligo in respect of work which Sligo Corporation was undertaking following a leak in a pipe. She took photographs of the pipe work which was exposed as a result of the most recent leak. These photographs have been exhibited by her. She states that the leak concerned a surface pipe to a house on the upper road near houses number twenty seven and twenty eight. Initially a service connection to the water main had loosened and a saddle had come away from the main pipe. When the pipe was exposed and the repair carried out on the service main by Sligo Corporation it was discovered that there was another pipe where water was coming from which was located adjacent to the water main. The pipe appeared to be a surface water pipe, but there were no manholes in the area or any gullies feeding into the pipe. Part of the pipe had to be removed in order to repair a leak to the pipe. When this was done it was found to be blocked. The pipe was approximately three quarters full of sediment. The excavation works revealed the presence of large stones and concrete blocks immediately over the pipes. This would indicate a work practice which was inexcusable and bound to lead to distortion and fractures in pipes. This is totally unacceptable practice. This was consistent with another leak that had occurred at the other end of the estate. Sligo Corporation workmen had sought to find the water main in the road and footpath but failed to do so. When they dug up the garden to number sixty eight they eventually found a pipe seven foot ten inches below the surface. This water main was a two inch water main which is totally undersize as it should be at least a four inch water main. There was no bedding present and it was covered with rocks and large stones. The photographs illustrate the appalling state of the estate and the haphazard manner in which the piping was laid.

51. Mr Maguire was cross examined at some length in relation to the condition of the estate. He did not appear to be familiar with the Foras Forbaithe standards in relation to the roads which were incorporated in the planning application. He said that he bought the lands with an initial planning application pertaining to them in 1974 and applied for fresh planning in 1976. This resulted in the increase of the number of houses in the estate from eighty seven to ninety one. He stated that the 1974 plan involved fourteen three bedroomed houses with the remainder being four bedroomed houses.

52. He conceded that he owned various other companies including Ballincar Developments since the time of the inception of Cartron Bay. He indicated that after establishing Cartron Bay he went back to the Allied Irish Bank to borrow money for other companies. He indicated that the bank was putting pressure to sell houses. Nonetheless he said that the bank gave money before the loan was paid off this is the money in respect of other companies.

53. He indicated that a number of houses on the estate including the first initial houses built were converted into flats. At first he indicated that none of the six houses that were the focus of the application had been converted. He later conceded that numbers eighty three and seventy-one were converted. This arose from a letter from Jennings and O’Donovan of the 17th of October 1977 to the Town Clerk of Sligo Corporation in which an application was sought for the conversion of numbers one to five into flats to the ground and first floors involving also the conversion of the garage into one bedroom. Mr Maguire conceded the six houses in question were built between 1977 and 1978. He said that number thirty-six was not finished when it was bought. It was constructed between 1979 and 1980. He believed that number eighty three had been completed in 1978. It was a show house. Mr Maguire said that he didn’t start to rent the properties until 1981 or 1982 he indicated that his brother Ben had three or four houses let.

54. Mr Maguire complained that one of the water mains on the estate had been built too high and this has caused problems. This pertained to numbers forty seven to sixty four on the estate. Mr Maguire conceded that he set for rental purposes all the houses in question which he had purchased. He said that the houses were selling for £17,000 or £18,000 in 1981.

55. Mr Maguire stated that his accountant had advised him to sell the houses but he took the view that renting was a better way to go. He said that the accountant had given this advice before he bought the houses. He stated that he had to pay stamp duty on these houses.

56. Mr Maguire was examined in relation to the keeping of records. He indicated that he kept lodgement slips and gave these to his accountant. However it is clear from discovery that no such documents have transpired in the discovery process. He stated that his wife Pauline Maguire was a bookkeeper for the company. He said that he had no record of lodgements save the lodgement slips which he again stated he had given to the accountant. He stated that his accountant had got everything he had, including lodgement slips for rent. He was then asked about VAT books kept by the company and he stated that his accountant had these.

57. Mr Maguire said that tenants were sometimes there for two or three weeks. He said that he had to do up the houses when renting them saying that he had put in carpets, curtains, cookers etc.. He stated that his brother Ben preferred going full-time into setting his own houses. He said that Ben arranged the lettings for him, fitted out the houses and that he had given him a free hand. While he stated that he put money into the houses he had no idea how much money he put into the houses. He was then cross-examined by Counsel in relation to correspondence between the Revenue and his accountants regarding VAT between March 1979 and the 31st of December 1982. It is clear that the Revenue was seeking as late as July 1991 details of bank statements, rents and outgoings on the six houses let. It appears that an Order made by Costelloe J. on the 14th of May 1990, restoring the company to the Register at a time when it had been struck off, was made on the basis that the company’s returns would be furnished within the period of two months. He stated further that his accountant had asked him to get copies of bank statements. He says that his accountant would have got the VAT books.

58. Mr Maguire was further cross-examined in relation to the limit of discovery that had been made including records of the accounts of the company, which had a very limited return of rental income, which had been apportioned over a number of years. Documents had been sought in relation to the completion of sales and lettings of the houses.

59. With regard to the state of the estate generally he agreed that he never surfaced the roads since the Order of Barrington J. in accordance with the planning permission granted.

60. Again Mr Maguire was cross-examined in relation to the keeping of records and accounts and he stated that he would be interested in keeping his accounts up to date in as much as he could keep them up to date. This assertion on his part is at variance with the facts of this particular case. With regard to VAT it was pointed out that there was one lodgement shown in the bank records of £14,500 on the 6th of November 1984 in this regard to the reference in documents to Ballincar Developments. It is suggested that there was a payment by Cartron Bay on behalf of Ballincar. Mr Maguire stated that the rent received was used to do up other houses. He said that some students paid no rent and if they left the premises they would come back and reoccupy another premises with another friend on a fresh letting.

61. Mr Maguire was cross-examined at some length in relation to the affidavit of Victoria Stevens in relation to the occupancy of a number of the houses in question namely thirty-six, thirty-seven, thirty-nine, forty-eight, seventy-one and eighty-three. Mr Maguire indicated there was difficulty in getting tenants but he conceded ultimately that he was not saying that there were no tenants in the premises. He conceded that there would be some health board tenants and social workers, nurses etc. who had lettings on the estate. When asked about receipts, Mr Maguire stated that his brother gave receipts for rent. He said that these were to all types of people in houses but he suggested that no copies were kept of any receipts furnished. With regard to the six houses he stated that he was trying to get any income he could get by renting them. He stated that he had no income coming in from these houses. When further asked about the selling of the houses he said that he was hoping to get somebody with cash to buy them.

62. In the course of cross-examination Mr Maguire conceded that he had also bought more than the initial six houses referred to but had also purchased three other houses on the estate numbers thirty-five, thirty-eight and fifty-nine which were owned by him. He said that the prices paid were over the valuation of the houses because the houses weren’t finished at the time.

63. Mr Maguire was asked about the profitability of the company. He said that he didn’t know what insolvency means. With regard to the water main problem he conceded that the houses in question which related to this particular area of the estate has been sold. Mr Maguire stated that all documents that he had, he had produced.

64. Mr Maguire was asked about a camera survey on the sewers in the estate and a letter sent by his Solicitor forbidding Sligo Corporation from carrying out a survey at one stage on the estate. He stated that his Solicitor Mr Tom Mullaney was against a camera survey of the estate.

65. With regard to the compliance with the Order of the High Court made by Barrington J. he said that there had been a settlement and that there was nothing to be done. He asserted that the sewers were working, he conceded that the roads were a problem. He conceded there were problems in relation to gullies on the road.

66. On the basis of the assertion that the matter had been settled, he was asked why he did not move to the Court when faced with Motion for Discovery in 1991 to assert that there had been such a settlement. With regard to the houses which Mr Maguire purchased he contends that the consideration was £20,000 for each except that number eighty-three was bought for £24,000. When asked was he able to find anyone during all the period these houses were for sale who was prepared to pay as much as he and his wife paid for the houses he said that he wasn’t but he said then that houses were being sold in Cartron Bay, houses that might have been set as well, but at least they were second hand houses.

67. Mr Maguire was asked about a letter sent by his Solicitors to the Solicitors for Sligo Corporation in March of 1991 in which his Solicitors asked for statements by way of affidavits as to what work was then required by Sligo Corporation. He was asked whether he got a list of what works were outstanding he said No. He said that after that agreement as far as he was concerned the thing was being “put to bed, finished”. He said that “we had to get the Corporation to take over the site.”

68. A letter from Mullaneys Solicitors on behalf of the Respondents was sent to the Solicitors for Sligo Corporation on the 4th of May 1993 in which it was made clear by the Respondents that no undertaking had been given to conduct a camera survey.

69. With regard to the delay complained of in these proceedings Mr Maguire stated that he never delayed anything and that he always co-operated.

70. These proceedings were adjourned from the 26th November to the 17th of December 1999 at which stage further information was furnished in relation to the sale of three properties to Mr and Mrs Maguire by the company. These related to properties number thirty-eight, thirty-five and fifty-nine on the estate the considerations shown on the contracts for these properties were £19,000, £20,000 and £32,000 respectively. It was indicated that number forty-six and number forty-four were sold in 1981 for £32,000. The documentation furnished to this Court shows that Thomas and Pauline Maguire bought number forty-six on the 16th of October 1981 and number forty-four on the 29th of August 1982. These prices were some £12,000 more than the prices paid for properties by Mr and Mrs Maguire in 1987 and 1988. It was indicated by Counsel on behalf of the Corporation that it was agreed that there probably was some depreciation of these six houses for various reasons but nevertheless it was submitted that the depreciation of the houses was not of the order suggested by these figures. In relation to the properties thirty-eight, thirty-five and fifty-nine and numbers forty-four and forty-six the information supplied to the Court on 17th of December 1999 had not been furnished in discovery prior to that date. The contract shown in respect of number thirty-five showed a consideration of £32,000 and the date of the contract is the 23rd of November 1981. This is the same price as paid for number forty-four and number forty-six. Number thirty-eight was purchased by Mr Thomas Maguire on the 28th of February 1979 for the sum of £24,000. Number fifty-nine relates to a conveyance of the 18th of July 1980 between Cartron Bay and Pauline Maguire in the sum of £19,000. It appears that the date of the property for number thirty-eight should more properly read 28th of February 1980. A number of these properties have been sold on by the Maguires.

71. On the 17th of December 1999 documentation was supplied for the first time to the Applicant’s Solicitors by Solicitors for Mr and Mrs Maguire in the form of a sheet seeking to explain that the contract prices on the properties numbers thirty-five, thirty-eight, fifty-nine, forty-four and forty-six had been inflated for the purposes of obtaining a loan for a given percentage. This was something that had never been notified to the Applicants at any stage in the course of these proceedings. Insofar as the contracts stated a higher price than that alleged to be due on foot of the contractual arrangements, an issue arises as to whether this Court can ignore the contracts themselves or otherwise.

72. In light of this belated disclosure of documentation to the Applicants Sligo Corporation an adjournment was sought of these proceedings which was granted by me.

73. Discovery ensued between the parties and as a result of this discovery it is to be observed that in respect of number thirty-five Cartron Bay both the conveyance in respect of same and the contract cited a consideration of £32,000. This was a figure which was alleged to have been to be inflated in the contract itself but as can be seen the conveyance showed that this was the sum that in fact is declared to have been paid on foot of the contract. However, the position is that Mr Maguire concedes that less than £32,000 was received by the company in respect of this sale. While the conveyances for number forty-four and forty-six were not furnished the Court was asked to infer that the conveyances for those properties would also have shown that the sum of £32,000 had been declared to have been paid on foot of the contracts, but in fact was not paid.

74. With regard to number fifty-nine Cartron Bay it appears that the conveyance showed a sum of £19,000 having been paid, a loan application was for £22,000 but a loan appears to have been paid in the sum of £14,000. It is submitted that insofar as the directors were in a fiduciary position to the company that it was a serious matter where they executed deeds in respect of the sales of property on behalf of the company acknowledging the receipt of money which in fact were never handed over to the company itself.

75. Third Party Discovery was sought from the Electricity Supply Board by Sligo Corporation. This related to the consumption of electricity in houses on the Cartron Bay estate. Discovery showed that in 1985 and 1986, for example, that in the case of number thirty-five there was strong consumption indicating a full occupancy for the full year by a family or a number of people whether students or otherwise. Similarly in relation to house number thirty-eight, which was a house bought either on the 28th of February 1979 or 1980, an analysis shows that in 1985 there was a full years occupation and the last quarter in 1986 was also full in that house. With regard to number forty-four it was shown by reference to the ESB consumption records that there was full occupancy in 1985 but there was no occupancy in 1986. Furthermore, the records for number forty-six show full occupancy both in 1985 and 1986. A similar situation is shown in relation to number fifty-nine. These are all properties that were bought by the Maguires before they bought the six houses at issue. With regard to the houses directly at issue in these proceedings, number thirty-six was full in both years, number forty was also full in both years; there are no readings for thirty-seven and no readings for number thirty-nine. With regard to numbers seventy-one and eighty-three the records of the ESB are not satisfactory. However in relation to the houses at issue in these two years there were three houses which had strong occupancy at the time when by any stretch of the imagination there was an allegation that there was no rent entered from them. These matters are addressed in the affidavit of Anne Cox which was opened to this Court. On behalf of the Respondents Mr and Mrs Maguire no objection was made to admitting the particular documents which show billing and amounts paid over the various years. It is submitted that this did not mean consumption of electricity. Anne Cox was cross-examined on her affidavit and having heard her in evidence she expressed the view that the records of the electricity supply board were 90% accurate. I am prepared to accept the testimony of this witness.

76. The information supplied to the Court by Anne Cox reveals that in relation house number thirty-five which wasn’t one of the houses at issue, but one of the houses bought before the houses at issue were bought, that there were full years of consumption of electricity which suggests that the premises were occupied for a full year at least by a family or a number of persons whether students or otherwise. Similarly in relation to house number thirty-eight, a house bought on the 20th of February 1979 or 1980, there is some dispute as to which year is correct. The analysis shows that in 1985 there was a full years occupation and the last quarter of 1986 was also one of which there was full consumption of electricity. With regard to house number forty-four the indication is that it was in full occupation in 1985. With regard to number forty-six the indication is that it was in full occupation in 1985 and 1986. With regard to house number fifty-nine the indication is that it was also in full occupation in 1985 and 1986. With regard to the particular houses at the centre of these proceedings the indication is that house number thirty-six was full in both years, 1985 and 1986, number forty was full in both years also. With regard to house number thirty-seven there are no readings. With regard to house number thirty-nine again there are no records in relation to consumption of electricity for these years. It is conceded that the records for houses number seventy-one and eighty-three or not satisfactory. However, in relation to the houses at issue in these two latter years, there were three houses which showed strong occupancy at a time when it is suggested that no rent was accounted from them.

77. Ms. Cox indicated that the reading of the accounts was achieved by recording the consumption levels on meters which were located outside the houses in question. While this is done electronically today she doubted that such readings took place in the early years in question 1985 and 1986 and it is therefore to be presumed that the readings taken at the time were manual in nature.

78. The records for number thirty-five show consumption of electricity at the end of 1985 and throughout the years 1986 and 1987 with an account being closed in February or March of 1987. With regard to the consumption records themselves these were reflected on different sheets to those produced in relation to the amounts billed and the amounts paid for electricity in the several premises in the periods in question. Ms. Cox indicated that an average family with two adults and two children who lived conservatively could consume anything from 700 units up to 1100 units in a two month period. It was indicated that 1000 units approximated to about £70 in charges in that period. The precise figure was 7.14p per unit to 7.43p per unit in that period. As opposed to the bills paid, the readout for the actual consumption shows that electricity was being consumed in the entire six periods of two months in 1985 and was consumed in each period thereafter from 1985 to 1999 inclusive. The records show that the tapes from 1990 and 1991 were not considered particularly reliable and this is demonstrated by the fact that in four of the periods in 1990 the same figure appears as in the corresponding period in 1991.

79. With regard to number thirty-eight on the estate the records show a disconnection in 1989 and a reconnection in 1990. No records exist prior to 1989 for the previous two years. Ms. Cox did have records from 1985, 1986 and 1987. With regard to the absence of the records this may show that the account was disconnected at the time or that simply records were not available. It was indicated that in the case of a disconnection and a reconnection that this may throw out the records for the following two billing periods on the accounts records.

80. With regard to the records for number thirty-seven Cartron Bay the summary of consumption shows consumption between the years 1990 and 1993 with nothing available for the year 1989. Insofar as consumption over certain periods in 1990 and 1991 are replicated it suggests that the records for those periods in those years is not 100% accurate. With regard to number thirty-six Cartron Bay the records show significant consumption in 1985 and 1986 however this suggests that there was no consumption in the second and third periods in 1986.

81. With regard to number thirty-nine the summary records suggest inaccuracy in the years 1990 and 1991 in the consumption of electricity as in four billing periods in each of those years the same figure appears. The readings prior to that suggests a significant consumption in the years 1986, very little consumption in 1995 and higher consumption in 1994.

82. With regard to number forty Cartron Bay the records suggest that in 1985 a total consumption of 2714 units occurred.

83. With regard to number forty-four the accounts may not have been connected in the years 1989 and 1990 insofar as figures at nil are revealed. This relates to the years 1986, 1988, 1989 and the best part of 1990 with the exception of a two month period in 1987. However if one looks at the bills paid in respect of the property number forty-four during the various years it can be seen that bills issued and were paid for in 1986 in the initial period in a two month period in 1987 and further bills issued in 1988. One account was closed in 1986 and a further account was closed in 1988. The witness indicated that she considered that the closing of an account could be interpreted as a disconnection.

84. While the witness indicated that in relation to some of the consumption records it can be stated that the records are not correct, she asserted that the bulk of the figures were in fact correct. The witness further indicated that insofar as electricity was consumed in the house she assumed that the house was occupied when this was the case. With reference to number fifty-nine Cartron Bay, while it was clear that there was some inaccuracy in the individual periods of consumption in the years 1990 and 1991 the witness expressed herself happy that the totals reflected in the consumption figures for those years was in fact accurate.

85. On the basis of an inspection of property records relating to sales on the estate certain information was extracted by the Applicants. This indicated that in the case of site number thirty-four it was sold by contract on the 21st of April 1991 for £27,000. This is a property in the middle of a block of four bedroomed houses. With regard to property number forty-one on the estate it was sold in on the 20th of October 1981 for £24,000. This was some five years prior to the disposal of the houses at issue to the Respondent directors in that particular row of houses at £20,000. Furthermore in relation to property number forty-six an agreement was entered into on the 6th of October 1981 for the sale of that property for the sum of £32,000. Similarly in relation to property number forty-four the contract was for the figure of £32,000. The records for number thirty-five shows the sale for £32,000 which is in the middle of a block of properties apparently purchased by the Respondents from the company for £20,000. This contract was dated the 23rd of November 1981 and the conveyance in question was on the 17th of December 1981. With regard to number thirty-eight on the estate the contract price was for £24,000 and £20,000 for number thirty-five. With regard to number fifty-nine the consideration reflected in the contract was for the sum of £19,000 while the sum of money returned to the company in respect of the sale appears to have been £13,651.06.

86. A further affidavit was sworn by Mr Thomas Maguire exhibiting applications to building societies for loans in respect of some of the properties which were purchased by the second and third Respondents. With regard to number fifty-nine, it appears that on a questionnaire from the building society a question was asked ‘Is the property for your immediate occupation solely as a private dwelling house?’ The answer given to that question was yes. It appears that the dwelling in question was never occupied by either the second or third Respondent as a private dwelling house. On this form the purchase price for the property shown is at £22,000 while the contract and conveyance was for the sum of £20,000. This suggests that the purchase price on the loan application form was inflated to £22,000. It was submitted that insofar as the Applicants were seeking to obtain loans to cover the entire purchase price of these properties that in doing so they did so in circumstances that they must have known that they could pay for these loans on the basis of letting them at the time.

87. Further evidence was given by Mr Maguire on the 21st of June 2000 dealing with the sales of properties numbers thirty-five, thirty-eight, fifty-nine, forty-four and forty-six Cartron Bay to himself, his wife or to both of them. Each of the five houses is a four bedroomed house. In relation to number thirty-five the date of the contract was the 23rd of November 1981 and a loan was obtained in respect of that house from the Allied Irish Bank and the contract price in the contract is stated to be £32,000 the loan amount was £25,000. Mr Maguire stated that he would not have been able to fetch anything more than maybe £20,000 at the time. He says that the houses were being sold at the time from £17,000 upwards. Mr Maguire then stated that the price of the house would have been around £20,000. He said that he agreed to pay the company the figure of £25,000 for the house. He stated that he believed that this was a reasonable price at the time notwithstanding the fact that the market value of the houses wouldn’t have been anything more than £20,000 and besides he wanted to get the most money he could get into Cartron Bay Construction. When asked why was the price stated in the contract to be £32,000 if the contract was for the sum of £25,000 he replied that at the time he could only get 75-80% loan on the purchase of the house. He stated that he tried for a £32,000 loan from Allied Irish Bank but that he got a loan of £25,000. When asked whether the Bank would have been aware of the purchase price in the agreement, he replied that to get a loan of £25,000 he would have had to fill in a form for £32,000.

88. With regard to number thirty-eight Cartron Bay, the contract is dated 28th of February 1979 and the lender is stated to be Midland & Western. The contract price was for £24,000 and the loan amount was £20,000. Mr Maguire says that the loan would have been for £20,000 and that this would have been the price of the house. When asked to account for the fact that the contract price was higher than the agreed price he said that this to be able to get a £20,000 loan on the house. When it was put to him that he had sold the house on some fifteen years later for £32,000 and made a profit in the sum of 33 % he said that that didn’t occur and that the house was a disaster. In fact the increase in value in the house from £20,000 to £32,000 is an increase of 60% on the initial price of the house.

89. With regard to number fifty-nine this was a house purchased by Pauline Maguire on a contract of the 22nd of July 1980. The loan amount was for £14,000. The contract price is stated to be £19,000 but the amount lodged to the account of the company was £13,651.06 lodged on the 26th of November 1980. Mr Maguire was asked whether there was an agreement as regards the price for which the property would be sold to his wife. In answer to that he said £19,000. Mr Maguire said that the only loan he could get was £14,000. Mr Maguire stated that the balance of £5,000 was lodged into Cartron Bay. When asked when the sum was paid Mr Maguire was invited to refer to a document in the form of a company bank statement showing lodgements in the sum of £3,190 and £2,000. It is stated that Mr Maguire was not aware whether the balance of £5,000 was paid before the date of the contract in anticipation of the purchase between the date of the contract and the date lodged.

90. It was stated by Mr Keane on behalf of Mr Maguire that he felt that the consideration is likely to have been paid before the date as they made the decision to buy the house themselves before they instructed Mullaney Solicitors to convey the house to them. Mr Maguire referred to two lodgements to the credit of Cartron Bay, one was on the 23rd of July 1980 and one was on the 21st of July 1980 the latter for £3,190 and the former for £2,000. This property was sold on to a Mr H. Doyle for £56,500 on the 25th of June 1999.

91. On behalf of Sligo Corporation submissions were made to the Court by Counsel. It was submitted that the essential failure on the part of the Respondents included the failure to surface dress the roads in accordance with the planning permission. In this regard the surface dressing of the roads should have been in accordance with the planning permission granted which incorporates the Foras Forbaithe standards. Secondly in relation to the footpaths there was a requirement under the Order of 1988 to relay the footpaths within the estate, in particular outside certain specified houses. Thirdly there was a failure on the part of the Respondents to deal with the sewers in accordance with the Order of this Court. These matters have be supported by the affidavits of Anne Kelly. In addition to the affidavits of Anne Kelly there is an affidavit of Paul Canning in relation to the sewers. This relates to the findings from the camera survey carried out by Sligo Corporation. The Order provided for an examination of the sewers to ensure that they had adequate capacity. The survey shows that a number of the pipes had a wrong bore in them and wrong construction and wrong layout of manholes. An affidavit has been sworn on behalf of the Respondents taking issue with the factual findings stated in the affidavits of Anne Kelly. This in particular relates to paragraph 4 of the supplemental affidavit of Anne Kelly, and the subsequent paragraph in the same affidavit which referred to the failures on the part of the Respondents. With regard to the pipe work, the pipes laid failed to conform with the plans submitted, with the planning application and in particular Plan S 1136A. The plans show that the relevant standard of the surface dressing should have been BS1621. With regard to the footpaths they should have been four inch concrete class A, three on top of six inch minimum dry filling and vehicular entrance to be strengthened and dished as referred to in the plans. I do not consider the affidavit of Mr Heffernan filed on behalf of the Respondents deals with the allegations contained in Ms. Anne Kelly’s affidavit. In particular Mr Heffernan has not been in the estate for a number of years.

92. Sligo Corporation relied essentially on the provisions of Order 42 Rule 32 of the Rules of the Superior Court which provides as follows:-

93. The Applicant’s case is that there has been wilful disobedience of the Order of the High Court of Mr Justice Barrington made in 1988. Particular reliance is placed upon the alleged failure to return the rents derived from the properties of the company to the account of the company. It was submitted that the Respondent directors did not account for all the assets of the company.

94. Counsel for Sligo Corporation has referred this Court to the case of Lewis -v- Pontypridd, Caerphilly and Newport Railway Company 11TLR 203. In this action a judgment was obtained by the Plaintiff by which the Defendant company were ordered to make certain connections between their railway line and the Plaintiff’s premises. The Judgment having been disobeyed the Plaintiff applied for writs of attachment against the directors of the company. This was under Order 42 Rule 31 of the Rules which was in similar terms to the provisions of the terms of Order 42 Rule 32 relied upon in this case. The directors alleged that, owing to want of funds, it had been impossible for the company to comply with the Judgment. In this case the directors asserted on appeal in the Court of Appeal that the company had never been able to comply with the Judgment and therefore could not be said to have wilfully disobeyed it. The Master of the Rolls stated that if from the time when the Judgment was given it had always been unable, through want of funds, to do the work probably they could not be said to have wilfully disobeyed the Judgment. But it was necessary for the directors to make that out. They said that they had never had any funds out of which they could do the work, because they had paid away all the money which they earned in the ordinary expenses of carrying on the railway. The Master of the Rolls held that they were bound so long as this obligation was lying upon them to keep their expenses to the lowest point possible. They failed to show that they could not have obeyed the Judgment if they had used proper economy. In this case it is submitted that the directors have an onus to show that they could not have obeyed the Judgment if they had used proper economy in the affairs of the company. It is submitted that in the instant case the onus lies on the Respondent directors of proving that the company had no funds at the relevant time to comply with the Orders of the High Court.

95. Reference has been made to the decision of the Queens Bench Division in Guilford Borough Council -v- Smith & Ors reported in the Times 18th of May 1993 where in the course of the Judgment of the Court it was indicated that although it may be a defence to show that compliance with the Order was impossible, the burden of proving such impossibility is upon the Defendants. The Court in that case referred to the earlier decision in Lewis -v- Pontypridd, Caerphilly and Newport Railway Company as having being cited by Professor Miller in his book on contempt of court and also by Lord Oliver in Barry and Bowes Law of Contempt 2nd Edition where reliance has been placed upon what was stated by Lord Esher in the Pontypridd Case .

96. Mr Abbott for Sligo Corporation has invited this Court to lift the corporate veil on Cartron Bay and thereby to make the directors amenable. In this regard reliance is placed upon the decision of Costelloe J. in a case of Power Supermarkets Limited -v- Crumlin Investments Limited (High Court, Unreported, 22 June 1981). In this case the High Court pierced the veil of incorporation to ensure that two companies, one being a subsidiary of the other, were treated as a single economic entity and the rights of the Plaintiff’s Company could not be defeated by the mere technical device of creating a company that had no independent existence.

97. Counsel submitted, in view of the gross irregularities in relation to the accounting procedures and likely removal of funds out of the company and of gross and serial neglect of the requirements of the Companies Act in relation to the return of records into the Registrar of Companies which are designed for the purposes of alerting creditors and alerting the public as to the position of the company, that I should lift the corporate veil.

98. In this context Counsel has referred this Court to the decision of Hamilton P. as he then was in the case of Dun Laoghaire Corporation -v- Park Hill Developments Limited [1989] IR 447. In this case an application was brought under Section 27 sub-section 2 of the Local Government (Planning and Development) Act, 1976 which empowers the High Court to require a person “to do or not to do, or to cease to do, as the case may be, anything which the court considers necessary to ensure that the development is carried out in conformity with” a permission. The second and third Respondents in this case were Directors of the Respondent Company. The directors were cross-examined on affidavits that they had filed before the Court and at the end of cross-examination it was stated on behalf of the Applicant Dun Laoghaire Corporation that no Order was being sought against the third Respondent. An Order was sought against the second Respondent on the grounds that he and the first Respondent were indistinguishable in law for the following reasons:-

99. On the particular facts of that case, Hamilton P. concluded, having heard the evidence of the second Respondent, that he was in effective control of the Company and that he failed to comply with the requirements of the Companies Act, 1963 but he stated that he found no evidence of any fraud or misrepresentation on his part, of any siphoning off or misapplication of the funds of the Company; nor of any negligence in the carrying out of the affairs of the Company. The President continued in that case at the end of his Judgment to state as follows:-

100. In the course of his Judgment Hamilton P. concurred with the views expressed by Murphy J. in the case of Dublin County Council -v- O’Riordan [1985] IR 159 at p.166 where he (Murphy J.) stated as follows:-

101. Counsel further referred this Court to the decision in Dublin County Council -v- Elton Homes Limited [1984] ILRM 297 where the Applicant County Council sought an Order under Section 27 of the 1976 Local Government (Planning and Development) Act against both the company and its former directors in circumstances were the first named Respondent, an insolvent company in the process of liquidation, had failed to observe the conditions of a planning permission granted by the Applicant Local Authority. The evidence in that case established that the directors had been guilty of no fraud. The liquidator was willing to co-operate with the Applicant in seeking payment to the Applicant of the balance of monies due under an insurance bond that the company had taken out as a condition of the planning permission. Barrington J. declined to make the Order sought but indicated that in certain circumstances it would be quite proper to join the directors of the company as Respondents when a Section 27 application is made. In the course of his Judgment at page 300 of the report Barrington J. stated:-

102. In that particular case Barrington J. stated that the worst that could be imputed against the directors was mismanagement. The concluding paragraph of the Judgment reads as follows:-

103. Counsel expressed some doubt as to whether Murphy J. In the O’Riordan Case intended that in any case of an application under Section 27, in which it was sought to bring an Order against the directors, that an investigation in the first instance would be conducted by a liquidator under the provisions of the Companies Act. He submitted that if such is the construction to be placed on the judgment, this is not an appropriate construction what ever about the position at the time when the decision was given.

104. Mr Keane on behalf of the Respondents submitted that the problems in this case arose from the fact, common to other cases at the time, that the bond required to be lodged with regard to the planning application granted was a sum of £3,000 under the terms of the permission for planning granted on the 22nd of August 1974. A similar clause appeared under the 1976 planning permission.

105. Mr Keane on behalf of the Respondents indicated that from the authorities no case was identified where a director was held personally liable under Section 27 of the Local Government (Planning and Development) Act, 1976 when application was brought primarily against a company. Mr Keane submitted that insofar as Section 27 gave a wide discretion to the High Court to make an Order against a director, this could be contrasted with the situation in the instant case where the Court was exercising a more restrictive jurisdiction. It was submitted that the Court had to be satisfied that there was wilful disobedience by the company irrespective of whether there was siphoning off of the assets by directors of the company prior to an Order being allegedly disobeyed. It is submitted that it could have not be wilful disobedience if the company was not in a position to comply with the Order. As a consequence of this it is submitted that you could not have the directors guilty of wilful disobedience in relation to the Order. In this regard it is submitted that you cannot have a director wilfully disobedient if the company is not itself wilfully disobedient.

106. In reliance upon the authorities referred to by Mr Abbott it was submitted by Mr Keane that having regard in particular to the Judgment of Murphy J. in the O’Riordan Case that the appropriate procedures in the instant case should have been by way of a Plenary Action in the first instance. It is further submitted that insofar as it is suggested in the Judgment of Murphy J. that this may be taken in the context of an application by a liquidator or creditor of a company in applying under the Companies Acts, this has not been done in the instant case. Counsel for the Respondents referred the Court to the provisions of Section 297 of the Companies Act as being a method by which directors may be amenable to the Court. However, at no time was it conceded on behalf of the directors that Sligo Corporation was a creditor of Cartron Bay and therefore capable of invoking the jurisdiction under Section 297 of the Companies Act. Mr Keane referred this Court to the decision of the High Court in the case of Irish Shell Limited -v- Ballylynch Motors Limited and Morris Oil Company Limited (Unreported 5th March 1997) as establishing a principle that contempt arises firstly only when the Order could have been complied with and wasn’t and, secondly, that the liability of the directors effectively can only arise where the company itself is liable.

107. With regard to the payment alleged to have been made by Mr Maguire of the balance of £5,000 arising out of the sale of the property of number fifty-nine Cartron Bay, this Court was referred to some of the documentation discovered by the Respondents and in particular a journal or copybook entitled Cartron Bay Construction Limited and also Ballincar Developments Company Limited. This book contains some financial information relating to these companies and it records reconciliation of amounts received on homes and bank lodgements. However in this regard it is noted:

108. While this indicates that a cash book was maintained it doesn’t say for what year but it appears to be for the two years subsequent to 1982 and the two years subsequent to 1984. The cash book referred to has not been furnished or discovered by the Respondents. Mr Maguire when asked about the lodgement of the £3,190 on the 21st of July and the £2,000 on the 23rd of July stated that the £2,000 was from “ our own account ”. He repeated the words “ our own account ”. He was then asked was this out of his own personal account and he replied “ yeah”. He was asked whether he had any record of his personal account to show that to which he replied “ No”. He was asked did he try to obtain a record and he said he did not. He was asked why was he not able to get a record and he said that the records didn’t go back that far. With regard to the £3,190 he then stated that this was from the sale of cattle. He stated that the £2,000 would have been a cheque. When asked about the sale of the cattle he was asked would he have been paid by cheque and he said that it was a cheque.

109. Mr Maguire was asked about the sale of number forty-six Cartron Bay by the company to himself and his wife. He stated that they were prepared to pay £24,000 for the house and he was then asked why was £32,000 put on the contract to which he said it was to get a loan. He said that in relation to number forty-four the amount in question was £24,000 this was clarified to be £23,901.27 after the deduction of legal costs. It was put to him by way of a question to which he replied “ yeah I think so yeah .” He stated that the loan in question for that property was £25,500 and on the contract was inserted £32,000. He was asked how much had in fact been agreed to be paid for the house to which he replied £25,000.

110. Mr Maguire stated that the houses in question were on the market all the time for sale but he didn’t sell them. He asserted that he would not have been able to get a better price for the house than that paid for by himself and his wife. He stated:

111. He said that it was hard to get money in.

112. Mr Maguire was asked about the electricity consumption details given in evidence by Anne Cox in regard to the houses in question. When asked to explain the consumption of electricity he suggested that some electricity may have been used because building work was being done on the site at the time. When it was suggested that some of the accounts were in the names of third parties he then stated that some others where in his own name at the time. He said there was nobody in them. There was nobody in those houses at the time. He stated that when he bought the houses there was still a lot of work to be done on those houses. When asked about the use of electricity on the houses he said it would be for doing garden work, “for everything”. He stated that some of the tenants did not pay for the electricity that they used during their tenancy. He said that certain accounts were put into his name and that they would then have to get the money from the tenants. He stated if it wasn’t paid out of his own account that the ESB would cut off his own home account.

113. Mr Maguire was asked what the position would be when a tenant would leave the house as to whether electricity ceased to be consumed in the house in question. He stated that there was electric central heating so there could be a bill run up quickly with emersion heating. He said that the emersion heater would be left on nearly all the time. He said that this was because it was cheap. He then said there was no central heating in those houses. When asked about the finishing of the houses in question he stated that the houses were never properly finished. “They were never properly finished”, he reiterated. He said that some windows were put into some of the houses and some central heating was put into some of them since. When asked about the use of electricity for carpentry work etc. he said he was not saying the amount; he was only saying that it was used. When asked what percentage of electricity which had been identified by Anne Cox had been consumed in the eleven houses was being used in the work on the houses he said he would not be able to go into that. Mr Maguire was asked whether he would quantify it as 1% or 2% or whatever and he said no he would not give the percentage. With regard to number seventy-one Cartron Bay it was put to Mr Maguire that there were eight people in the house in 1984 and 1985 as shown on the electoral register to which he replied that he was not arguing with this but he stated that there was no central heating in the house and that in a few weeks they pulled out. He said at first there was no attic and then he stated that the attic wasn’t even insulated and all the work had to be done and paid for. He said the house was fairly cold. He conceded that he kept no account of it. Mr Maguire took issue with the evidence of Anne Cox in relation to house occupation as reflected by the electricity consumption in them. He was asked by what percentage he considered her to be wrong to which he said that he could not go into any percentage. Mr Maguire then said that people would move into the houses mainly in June or in the months of September, October or November. He said that in a weeks time or fortnights time they would probably move out again. While his brother Ben collected the rents he was asked whether he consulted him since he start giving evidence to which Mr Maguire replied “no”. When questioned about the account books that had been discovered Mr Maguire said that he gave all the information to his accountant with all the receipts and bank notes and that he did up the books according to the information which he obtained. Mr Maguire conceded that no cash book was in fact maintained notwithstanding the entry on the ledger furnished to the Court

114. When pressed in relation to this he was asked was this incorrect to which he replied that he wouldn’t say that it was incorrect. Mr Maguire conceded that the entry recorded on the book to say that cash received was not recorded would have been correct. He was asked was cash ever recorded to which he replied “ not really no ”. When further pressed about the books of the company he conceded that he didn’t have a proper set of books. When further pressed why he did not record cheques or cash he said that he didn’t have time to do everything. He stated that he was working from 7 o’clock in the morning until 12 o’clock at night, he was trying to make ends meet and that he was doing a job of four or five people.

115. When asked about the sale of the houses where the consideration stated on the contract and on the conveyance was in excess of that allegedly paid into the company he stated that he was not aware what a deed was. He was asked did he not sign deeds nearly everyday of his life to which he replied in the affirmative. He said that if he signed it he signed it. He said as follows:

116. When questioned about his signing deeds on behalf of the company acknowledging receipts of sums in excess of that which was paid by loan in circumstances where he said that all the company got was the amount of the loan he said that when he would be signing that he wouldn’t know exactly what was in the conveyance. Mr Maguire stated that his Solicitor would not know how much money he was getting on foot of the sales of the houses on behalf of the company. When pressed later to the effect that all the contracts which had been produced were wrong in relation to the money the company received, he stated that the contracts would have been put down as the same price as the loan. He stated afresh that they would have been put down at the same price as the loan application. Mr Maguire stated that his accountants and his Solicitor would be in touch with one another on a general basis. Nevertheless Mr Maguire stated that his accountant would not know the difference between the money received and the contract prices existed in respect of the five houses in question.

117. While Mr Maguire asserted initially that he and his wife did everything together, at a later stage in the course of his testimony when pressed in relation to his wife’s involvement in the letting of the houses he stated that his wife didn’t have anything to do with renting houses. He was then pressed in relation to number fifty-nine which was the property in his wife's own name and for which a loan in the sum of £14,000 had been received by her. It was put to him that she rented number fifty-nine to pay back the loan to which the witnessed agreed. Mr Maguire was pressed further in relation to the number of loans that had been obtained in relation to the purchase of five houses numbers thirty-five, thirty-eight, fifty-nine, forty-four and forty-six. He suggested that the rent would not cover the loan of the properties. Mr Maguire was asked in relation to such a loss would it be reflected in his accounts to which he replied that they would. He was asked did he have these accounts showing the loss at this stage. He indicated that he did not ever have accounts in relation to these houses. When asked would he have paid tax he said yes his accountants looked after all that.

118. Mr Maguire was further questioned in relation to number thirty-four Cartron Bay estate which was sold for £27,000 in 1981. This he accepted. This is on the same block as house number forty-one which was sold on the 20th of October 1981 for £24,000. Mr Maguire stated that number thirty-four was a house with two entrances one on the side and one on the front. He stated that it was the best house on the site. He was then questioned in relation to number thirty-five which he agreed was on the same block. He stated that this was a semi-detached house. Mr Maguire agreed that someone from a building society would attend at the houses in question to survey them and to value them. He agreed that they would be there to ensure that the value of the house measured up to the value put in the contract. Mr Maguire then proceeded to state that the houses were overvalued. When he was pressed as to whether this meant that the building societies had valuers or surveyors attend the houses and overvalue them he stated that 90% of the time the surveyor or whoever would be valuing would go along with the contract and that they would be happy enough.

119. Mr Maguire was pressed further in relation to the houses that he purchased from the company. He stated that he bought these mainly to rent them. He stated that he bought them to make money. Later Mr Maguire stated that the thing was to get to buy them, get them out a second-hand house and hopefully be able to sell them later on. Mr Maguire indicated that where tenants left the estate without telling anybody and without paying rent that his brother was there fairly constantly and that he would find out fairly quickly.

120. Counsel for Sligo Corporation referred this Court to the provisions of the Companies Acts in regard to the keeping of proper books of account. Such books as were necessary are those that give a full and fair view of the state of the company’s affairs and to explain its transactions. It was conceded by Mr Maguire and on his behalf that he had failed to keep proper books or accounts for the company. With regard to the suggestion by Mr Maguire that the company was insolvent it was submitted on behalf of Sligo Corporation that if he didn’t keep proper books of accounts of the company then he was flying the company blind. It was submitted that there was no means whereby the solvency or otherwise of the company could be ascertained or by which he could prove to the Applicants or this Court that the company was insolvent or solvent owing to the absence of proper books of account, particularly in the absence of books relating to the rental receipts of the company properties. Counsel referred this Court to the decision of O’Hanlon J. in the case of Ross Co. Limited (in receivership) and Anor. -v- Patrick Swan and Ors [1981] ILRM 416 in which O’Hanlon J. dealt with the nature of civil contempt. At page 417 of the Report O’Hanlon J. Stated:-

121. In the course of his judgment in that case O’Hanlon J. stated that the jurisdiction of the Court to imprison for an indefinite period for what is known as civil contempt of court is one which is exercised sparingly for a number of reasons. He stated that the procedure is primarily intended to be coercive rather than punitive.

122. In reliance upon this Judgment Mr Abbott S.C. on behalf of Sligo Corporation states that the contempt which he is dealing with in the instant case is civil contempt. It was submitted that in the instant case the Court would be in a position to lift the corporate veil on Cartron Bay Construction Limited insofar as the business of the company and that of the other Respondents Thomas and Pauline Maguire was being run as one business and in these circumstances there should joint and several liability. Nevertheless, in the instant case it is submitted that, insofar as the Court was being asked to make an Order pursuant to Order 42 of the Rules, no injustice could be done having regard to the general principles of liability of the directors in proceeding in the instant case in the manner followed by Sligo Corporation. Counsel referred this Court to the decision in the case of in re Earle [1938] I.R. 485 where the Court was dealing with contempt of court and in the course of his judgment FitzGibbon J. referred at page 501 of the Report to the well recognised distinction between attachment at the instance of a party to a cause which is part of a process of execution of a decree of a court and committal by a court in exercise of its own inherent jurisdiction to punish or prevent interference with the property or persons in its custody, of with the course of justice.

123. Counsel referred this Court to the decision in Guildford Borough Council -v- Smith and Ors the Times 18th of May 1993. Reference was made to a portion of the judgment of Sedley J. where Warrington J. stated in Stancomb -v- Trow bridge Urban District Council [1910] 2Ch 190:

124. This is the standard which Mr Abbott on behalf of Sligo Corporation contended for to be applied in the instant case. Later in the course of his judgment Sedley J. referred to the use of the term “intentional” by Lord Oliver of Aylmerton in Attorney General -v- Times Newspapers Ltd. & Anor. [1992] 1A.C. 191. He says that this must connote little, if anything, more than “conscious”. Earlier Lord Oliver stated at page 217 of the Report:-

125. Sedley J. indicates that this quotation is authority for the fact that the threshold conditions for sequestration and attachment are to be contrasted with those for contempt. Contempt is committed simply by doing that which is prohibited or not doing that which is required by an order of the court.

126. Counsel referred this Court to the decision in the case of Con-Mech (Engineers) Ltd. -v- Amalgamated Union of Engineering Workers (Engineering Section) [1973] ICR 620 at 627 where Sir John Donaldson stated in the course of his Judgment:-

127. Counsel referred this Court further to its decision of the Chancery division of the High Court of Justice in the case of Multi-form Displays Limited -v- Whitmarley Displays Limited [1957] Reports of Pattern Design and Trademark Cases 137 where at page 138 of the report Lloyd-Jacob, J. indicated that sequestration should issue upon the grounds that the respondent company had in fact treated the order of the court as “unworthy of notice”. Mr Abbott adopted this language in support of his description of the behaviour of the Defendant company and its directors in this case. He said that they gave scant notice to the Orders or the proceedings and even the present proceedings.

128. Counsel referred this Court to a number of authorities and other writings dealing with the distinction to be drawn between civil and criminal contempt. He concluded by asking this Court for an order of sequestration of the funds of the Respondent directors pending the work being done as such order of the court would require, or if the court was not disposed to sequestration then the Applicant relies on other aspects of the Notice of Motion which is for attachment.

129. In reply to the submissions made by Mr Abbott on behalf of Sligo Corporation Mr Keane on behalf of the Respondents commenced his submissions by asserting that there appears to be a perception in this case that the Order of Barrington J. was made against the Respondents and that the Respondents have wilfully disobeyed it. He wished to point out to this Court that this would be to proceed on a fundamental flaw as no Order has ever been made in relation to works to be done against either Thomas Maguire or Pauline Maguire. The Order of Barrington J. was directed solely against the company. Mr Keane submitted that at the time that these proceedings were commenced under Order 42 it appears not to have been known that there was a difficulty in relation to the funding of the Respondent company. He submits by reference to the grounding affidavits that it appears from those affidavits that it was implied that the company was well able to do the work and had by premeditated wilfulness an anxiety to frustrate the rights of the Applicant and decided not to do it. Mr Keane asserted that it was common case that the company did not have funds and in these circumstances did not even have funds to make an application to come off record or have the Order of Barrington J. varied. It was submitted that unless there was wilful disobedience by the company there could not be wilful disobedience by either of its directors. Counsel referred this Court to the decision of the Chancery Division of the High Court in England in the case of Phonographic Performance Ltd. -v- Amusement Caterers (Peckham) Ltd .[1964] 1Ch. 195 where is was indicated that under the Rules of the Superior Court Order 42 Rule 31 in England no proceedings for contempt could be taken against directors unless, proceedings could also have been taken against the company, but where such circumstances existed, proceedings could be taken against both the directors and the company. In the course of his judgment in that case Cross J. stated in reference to the note appearing in the Annual Practice or White Book which reads under 42 Rule 31:-

130. Reference is made to Iberian Trust Ltd. -v- Founders’ Trust and Investments Company Ltd. [1932] 2 K.B. 87; 48 T.L.R. 292 Cross J. says the word “alternative” is ambiguous. He continues at page 202 of the Report:-

131. It can be seen from a reading of the head note in that case that one of the issues that arose was whether the court had power to commit the directors under Order 42 Rule 31 which only provides for attachment and sequestration.

132. Mr Keane asserted that insofar as it had been claimed that the company was in debt in the sum of £50,000 that before the company or its directors could be guilty of wilful default it would have to be shown that the sums alleged to have been siphoned off as alleged exceeded the sum of £50,000, because if it did not then the company remained insolvent and incapable of complying with the Order of Barrington J. Reference in this regard was made to the affidavit of Mr Maguire of the 30th of June 1989 where he stated inter alia that he believed that the Respondent company’s present liabilities at that time were in the region of £50,000 approximately. It is to be noted, however, that the affidavit does not state what the precise position was of the company at the time when the Order of Barrington J. was made.

133. Mr Keane dealt with the three essential propositions advanced on behalf of the Applicant: firstly, that the original six houses in Cartron Bay estate that is numbers thirty-six, thirty-seven, thirty-nine, forty, seventy-one and eighty-three were sold by the company to one or both of the second and third Respondents at an undervalue of a total of £29,000 being the difference between the £124,000 actually achieved for the houses and £153,000 which allegedly ought to have been achieved for the sale in question; secondly, the contention by the Applicants that the rental income received by the company was not credited to its account; and thirdly, the assertion that in regard to the five houses which were purchased by the directors from the company in addition to those previously referred to, namely, numbers thirty-five, thirty-eight, fifty-nine, forty-six and forty-four that the company was not credited with the amount in the contract in question. It is submitted by Counsel on behalf of the Respondents that provided the acts or omissions alleged against them occurred prior to the Order of the 16th of May 1988 that there could not be wilful disobedience on the part of the first Respondent and consequently there could not be wilful disobedience on the part of the second and third Respondents in relation to that order. It is submitted that in the instant case one must ask whether there was wilful disobedience by the company. It is conceded that any such disobedience would have to post date the order. With regard to the alleged siphoning off of assets it is submitted that the siphoning of assets would have to have occurred since the making of the order in order for there to be wilful disobedience, on the basis of the company’s now saying it cannot carry out the work.

134. Without conceding any alleged siphoning off to have occurred, it is submitted that if siphoning off of assets occurred prior to the Order of Barrington J. on the 16th of May 1988, that siphoning off of assets would be irrelevant from the point of view of the Applicant trying to prove that there was wilful disobedience on the part of the Respondents in relation to the Order. Furthermore, it is submitted that insofar as misappropriation of assets is alleged, that no case has been made of any relevant assets having been misappropriated since the making of the Order by Barrington J. on the 16th of May 1988. In this regard Counsel refers to the fact that the initial six houses relied upon by the applicant Council had all been sold by the company prior to the making of the Order of Barrington J. Reference was made by Counsel for the Respondents to the affidavit of Mr Maguire of the 10th of June 1999 and to the affidavit of his auctioneer Mr Draper in support of the contention that the sale of the houses in question by the company to Mr. and Mrs. Maguire have been adequately explained. With regard to the alleged undervalue in the amount of £29,000 it is submitted that the affidavit of its valuer filed on behalf of the Applicant fails to address the points made by Mr Maguire in his affidavit of the 10th of June 1999 which would reduce the value of the houses involved and that these factors included the inability to register the houses under the National House Building Guarantee Scheme. Other factors relied upon in this regard were the fact that building society required registration with that scheme before lending money to purchasers, the down turn in the economy, the fact that the houses were in poor condition and required painting, and the fact that the houses did not include central heating or garden walls or fences.

135. With regard to the allegation that the rent was not accounted for to the company, counsel has referred to the fact that Mr Maguire has made a frank admission in relation to the keeping, or, more appropriately, the failure to keep the company’s books of account. Counsel conceded that proper books of account were not kept by the company. However it is submitted that the fact that the rents were not adequately recorded was not such that it follows that the rents were not paid and there is explicit evidence that it was recorded by the accountant that cash received was used to buy material and equipment etc. It was conceded that this was an irregular way of dealing with matters. Counsel on behalf of the Respondents submits that the evidence produced by the Applicants, some of which it is contended to be inadmissible, fails to substantiate a case that rents received were not accounted to the company. It is conceded that this would be an extremely difficult thing to do in the absence of proper records. It is submitted that after all the efforts of the Applicant that it does not prove anything conclusive in relation to the allegation that rents were not accounted for to the company. This is notwithstanding what was described as a free admission that there should have been memoranda of all rents received and there should have been memoranda of all expenditure out of that income or out of the assets of the company to pay for running expenses.

136. Counsel referred to the unfortunate reality of life borne out by a number of the Irish cases cited by Counsel for the Applicant that it is not unusual for directors of companies not to keep their books in ideal order.

137. With regard to the authority of Lewis -v- Pontypridd Caerphilly and Newport Railway Company referred to, Counsel relied upon a portion of the note of the judgment were it is stated that if from the time when the judgment was given the directors had always been unable through want of funds to do the works, probably they could not be said to have wilfully disobeyed the judgment. In this case it is submitted that the same situation applies with the exception that counsel says that the word ‘probably’ does not apply. It is submitted that one cannot be in wilful disobedience if at the time of the making of the Order they were not in a position to comply with it and it is submitted that that is the position which the company was in at the time of the making of the Order.

138. With reference to Guilford Borough Council -v- Smith and Ors . Mr Keane relied in particular upon the quoted passage of the Judgment of Lord Russell C. J. in Fairclough & Sons -v- Manchester Ship Canal Co. (2) where he stated:-

139. Counsel referred to the quoted passage from Miller’s Contempt of Court Second Edition where it is stated that:-

140. It is submitted that this is applicable to the instant case. Counsel further referred to a passage at page 7 of the judgment in the Guildford Borough Council Case where it was stated inter alia :-

141. Counsel further referred this Court to a passage from the Law Reform Commission Report on Contempt of Court where at page 163 it is stated as follows:-

142. It is submitted that it is a drastic remedy designed to coerce rather than to punish and insofar as coercion is concerned that can only refer in the context of Order 42 Rule 32 to coercing the company which is the only Respondent which has been ordered to do something.

143. In reply Mr Abbott submitted that in regard to the valuer’s affidavits that he did not have the benefit of the comparative sales which became known to this Court in the course of this hearing. With regard to the Phonographic Performance Ltd. Case , referred to by Mr Keane, Mr Abbott indicated that that case turned on the fact that the Order in question had not been served on the company and the company therefore could not be made to observe the Order in question. It is further submitted that there is no reality to Sligo Corporation having moved under Section 297 as a creditor in circumstances when all that was owed it was the sum of £1,500 approximately in relation to the taxation of costs. Furthermore in relation to Section 27 it is stated that if the Corporation knew in 1988 what it knows today having regard to what was revealed in the course of these proceedings that it would have moved in 1988 to join the Defendant’s as Respondents to the Order made by Mr Justice Barrington.

144. I have reached the following conclusions in relation to these proceedings:-