BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!
 |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] | |
High Court of Ireland Decisions |
||
|
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Mountview Foods Ltd & Ors -v- Companies Acts & Ors [2013] IEHC 125 (11 March 2013) URL: http://www.bailii.org/ie/cases/IEHC/2013/H125.html Cite as: [2013] IEHC 125 |
||
[New search] [Help]
Judgment Title: Mountview Foods Ltd & Ors -v- Companies Acts & Ors Neutral Citation: [2013] IEHC 125 High Court Record Number: 2013 39 COS Date of Delivery: 11/03/2013 Court: High Court Composition of Court: Judgment by: Laffoy J. Status of Judgment: Approved | ||||||||||||||||||
Neutral Citation [2013] IEHC 125 THE HIGH COURT [2013 No. 39 COS] IN THE MATTER OF MOUNTIVEW FOODS LIMITED (IN VOLUNTARY LIQUIDATION) AND IN THE MATTER OF THE COMPANIES ACTS, 1963 TO 2012 BETWEEN ANIMEX SPOLKA Z OGRANICZONA ODPOWIEDZIALNOSCIA APPLICANT AND
MOUNTVIEW FOODS LIMITED (IN VOLUNTARY LIQUIDATION) AND ANTHONY WELDON RESPONDENTS Judgment of Ms. Justice Laffoy delivered on 11th day of March, 2013. The application 2. The reliefs sought on this application, which was initiated by originating notice of motion which was issued on 28th January, 2013, are:
(i) the decision of the Chairman of the creditors’ meeting to refuse to allow the applicant’s proxy to vote in favour of the applicant’s nominee for liquidator at the meeting, and (ii) the decision of the Chairman of the creditors’ meeting to allow the proxies of Castleknock Meats Limited, Corrib Foods Limited, Jim Franey Limited and Kildare Farm Foods Limited to vote in favour of Company’s nominee for liquidator at the meeting; and (b) an order pursuant to s. 267(2) of the Act of 1963 directing that Mr. Eamonn Leahy (Mr. Leahy) be appointed as liquidator in place of Mr. Weldon. 3. Section 266, section 267 and section 268 of the Act of 1963 are among the provisions of that Act applicable to a creditors’ voluntary winding up. As I stated, the meeting on 14th January, 2013 was summoned in accordance with s. 266. 4. Section 267 deals with appointment of the liquidator. Sub-section (1) provides that the creditors and the company at their respective meetings mentioned in s. 266 may nominate a person to be liquidator. It then addresses the eventuality that different persons may be nominated by the company and the creditors as follows:
5. Rule 71 of Order 74 of the Rules, which has also been invoked on this application, is to be found in Part X of Order 74 which is entitled “General meetings of creditors and contributories in a winding up by the Court and of creditors in a creditors’ voluntary winding up”. Rule 71 which is headed “Admission and rejection of proofs for purpose of voting” provides as follows:
The applicant 8. The applicant was represented at the creditors’ meeting by Krystian Boino, of J.C. Hoban & Co., Solicitors, the applicant’s solicitors. Mr. Boino is a Polish lawyer registered with the Law Society under EU Regulation 732/2003 practising in this jurisdiction. He swore the affidavit grounding this application on 28th January, 2013 and he swore a further affidavit on 1st March, 2013 in response to an affidavit sworn on behalf of the respondents by Brendan Doherty, a director of the Company, who was the chairman of the meeting, which was sworn on 27th February, 2013. 9. As is clear from the originating notice of motion, the applicant challenges the appointment of Mr. Weldon as liquidator on two grounds. A third ground is raised in the grounding affidavit of Mr. Boino. I propose considering each ground separately. First ground 11. Mr. Boino, in his grounding affidavit, averred the applicant “is extremely concerned by the fact that an extremely significant liability to the applicant was built up by the Company in the months preceding the commencement of the voluntary liquidation” and, for this reason, “is especially anxious to ensure that the manner in which the Company was managed is the subject of a full and independent examination and analysis”. The applicant, on the basis of advice from Mr. Boino, decided to seek the appointment of its own nominee as liquidator of the Company. The applicant requested that Mr. Boino act as its proxy at the creditors’ meeting. Mr. Boino sent a partially completed General Proxy form to the applicant for completion and submission to the Company. 12. The two forms of proxy, the General Proxy and the Special Proxy, which accompanied the s. 266 notice, had, apparently, gone directly to the applicant in Poland. The applicant, as Mr. Boino put it, “mistakenly understood” that it was necessary to complete the General Proxy and also the Special Proxy and return them to the Company. Counsel for the respondents emphasised that this was an acknowledgment of a mistake on the part of the applicant. 13. The General Proxy form, omitting the provision for a substitute proxy included in it but which option was not availed of, completed by the applicant was in the prescribed form (Form No. 21 of Appendix M of the Rules). It was headed with the name of the Company and it stated as follows:
14. The Special Proxy was also dated 9th January, 2013 and it was also signed by Mr. Nowakowski, who was described as an officer duly authorised to act on behalf of the applicant. The authority given to Mr. Boino in the Special Proxy was stated as follows:
15. As a comparison of the two discloses, the blank Special Proxy form sent by the Company to the applicant deviated from the prescribed form in the following material respects:
(b) It purported to identify the resolution or resolutions in question by reference to the notice convening the meeting, but there was no reference to any resolution in that notice. 16. At the meeting, the Chairman announced through his solicitor, who was in attendance, that he was excluding seven proxies on the ground that each of the creditors had completed and returned both a General Proxy form and a Special Proxy form, one of the persons being excluded being Mr. Boino as proxy for the applicant, because it was not possible to ascertain which form the applicant intended to rely on. Following objection on behalf of the applicant, it was confirmed that the only ground on which Mr. Boino was being precluded from voting on the applicant’s behalf was because both forms of proxy had been submitted by the applicant. 17. In his replying affidavit, having acknowledged that proxy forms must conform with Form No. 21 and Form No. 22 in Appendix M, the Chairman averred as follows:
9. I say and believe that the ambiguity in relation to the Applicant was caused by the completion and return to the Company by the Applicant of the General Proxy Form too. In this regard I say and believe that the effect of the General Proxy was to cause confusion as to the intentions of the Applicant. 10. In this regard, if one was to take the General Proxy in isolation, a reasonable interpretation of same would be to conclude that the Applicant was in fact giving Mr. Boino a ‘carte blanche’ with respect to any representations and actions made on the Applicant’s behalf. This is however completely at odds with the information apparently being communicated in the Applicant’s special proxy, i.e. that Mr. Boino was intended to be authorised to vote in accordance with a specific direction of the Applicant as a Special Proxy on matters pertaining to ss. 267 and 268 of the Companies Act 1963. Furthermore at no time did Mr. Boino (who at some point in the meeting indicated he practises with the Applicant’s solicitors herein) attempt to clarify matters by indicating whether he had any instructions as to which proxy form was intended by the Applicant as the correct proxy form to be returned. 11. I say and believe that it is crucial from my perspective that it is clear under what authority, if any, a person who attends a creditor’s meeting is entitled to act. If I do not satisfy myself in this regard I say and believe that I am doing the Company and the creditors as a whole a disservice, and am further not complying with my duties as chairman of the creditor’s meeting. In the circumstances, there was absolutely no clarity as to the capacity in which Mr. Boino was allegedly being authorised to act. Either he was authorised to speak, vote and make representations in whatever way he deemed fit, in the Applicant’s interests, or he was being instructed to vote according to specific directions of the Applicant on particular issues only. 12. I say and believe and am advised that a General Proxy and a Special Proxy are mutually exclusive, both in their intent and in their effect. In this regard I say and believe and am advised further that the Applicant’s instruction as to what capacity Mr. Boino was alleged to be acting was not at all clear from the totality of the evidence, and that on that basis alone I was correct in deciding to disallow the proxies in question.” 19. It is only fair to acknowledge that the Chairman and his legal adviser were faced with a very difficult situation at the meeting. It is also fair to record that the Chairman acted consistently in excluding the other six proxies from voting where both a General Proxy form and a Special Proxy form had been returned. The Chairman did so, notwithstanding that four of the six creditors were employees of the Company and all of the six had appointed him as proxy. The value of the debts of those six creditors amounted to €71,676. No allegation of bias has been, or could be, made against the Chairman for disallowing the applicant’s proxy to vote. Second ground 21. Consistent with the decision of this Court in Re Michael Madden Quality Meats Limited; Ballon Meats Limited v Leahy & Anor. [2012] IEHC 122, I must find that the proxy forms given by those three companies were not properly executed, because they did not comply with the mandatory requirement of rule 75 of Order 74, when read in conjunction with the relevant forms in Appendix M, as to the form of proxy and the manner of its execution in the case of a corporate creditor. I must also find that the Chairman was incorrect in accepting the appointees of those creditors as proxies for the purposes of voting. 22. The debts of the three creditors in question, as set out in the list of creditors attached to the statement of affairs, aggregate €110,518. Third ground 24. The Chairman has averred that he disallowed those proxies for non-compliance with the mandatory requirement which is expressed in Note 3 to Form No. 21 and Form No. 22 of Appendix M. That note states:
25. Counsel for the applicant referred the Court to a decision of the Chancery Division of the High Court of England and Wales in Inland Revenue Commissioners v. Conbeer & Anor. [1996] B.C.C. 189 and, in particular, to the following passage from the judgment of Laddie J. at page 194:
The facts of the present case illustrate the point well. Here the proxy form was sent both by post and by fax. Such being the nature of postal delivery, the creditor could not be certain whether his proxy was received at all or on time. On the other hand, when the fax is transmitted he knows that it has been received because, first, he obtains an answer back code and, secondly, an activity report is normally printed out. From the chairman’s point of view, there is nothing about a received fax which puts him in a worse position to detect forgeries than when he receives through the post or by hand delivery a document signed by hand by a person whose signature he has never seen before or one signed by stamping. The reality is that fax transmission is likely to be more reliable and certainly is a more speedy method of communication than post. It would be a pity if rule 8.2(3) required creditors to convey their views to the chairman by the older, slower and less reliable form of communication.” 26. Finally, on this point, the issue whether service by fax complied with Order 74 was considered by the High Court (Ryan J.) In the matter of Managh International Transport Ltd. (in voluntary liquidation) [2012] IEHC 444. In that case, Ryan J. recorded the evidence given by the finance manager of one of the creditors, Stena Line, as that he had filled out the proxy form and sent it by fax to the registered office of the company well before the relevant time. Apropos of that evidence, Ryan J. noted that there was no contradiction of that evidence on affidavit. He was satisfied that the creditor, Stena Line, had sent the notification by fax from Holyhead and that that was sufficient to comply with rule 82 of Order 74. Again, I respectfully agree with that conclusion. 27. Accordingly, I am satisfied that the Chairman acted incorrectly in disallowing voting by the named proxy (whether Mr. Kirk or Mr. McVeigh) on the proxy forms which, as I understand it, had been received in time by the Company at its registered office by fax. 28. The Chairman has, however, taken issue in his replying affidavit with the premise which underlies the third ground, namely, that the proxy for the two Polish companies, Mr. Kirk, would have voted for the applicant’s nominee for appointment as liquidator. It is undoubtedly the case that there is no evidence before the Court from Mr. Kirk or the Polish companies on the basis of which one could conclude that the Polish companies, as a matter of certainty, through Mr. Kirk, as proxy, would have voted for the applicant’s nominee. However, Mr. Boino averred in the grounding affidavit that it was Mr. Kirk who seconded his proposal that Mr. Leahy be appointed liquidator, although the minutes of the meeting record that it was Mr. Kirk who nominated Mr. Leahy “to act as liquidator on behalf of [the applicant]”. By way of general observation, there is a considerable difference between the facts averred to in the affidavits before the Court and what is recorded in the minutes, which cannot be resolved, which is a very unsatisfactory situation. Outcome of vote 30. As to the voting process, according to the minutes of the meeting, at the commencement of the meeting the creditors present were informed that Mr. Weldon had been nominated as liquidator at the earlier EGM of the Company. As regards Mr. Leahy, the minutes record that it was “proposed that the resolution to be voted on should be that [Mr. Leahy] be appointed Liquidator of the Company as this was the creditors’ nomination”. The result of the vote was recorded as follows:
31. If the Chairman had made a different decision on each of the issues raised by the applicant, the implications of the outcome may be partially tabulated as follows:
The outcome reflected in that table is based on evidence which must be regarded as uncontradicted. The figure included for the applicant’s debt is the unsecured value of its debt. 32. That table reflects the outcome only if different decisions had been made on the issues raised in the first ground and the second ground. As regards the third ground, although the evidence strongly suggests that Mr. Kirk, as the proxy of the Polish companies whose proxy forms were sent by fax, would have voted for the appointment of Mr. Leahy as liquidator, on the state of the evidence, as they have not participated in these proceedings, either as parties or by offering affidavit evidence, it cannot be assumed that that would have been the case. However, while it is not possible to conclude with certainty that the majority in value of the votes would have been for the appointment of Mr. Leahy as liquidator, if the faxed proxies were admitted, even in the unlikely event that the proxy voted against the appointment of Mr. Leahy, the total vote against (€587,297) would have been slightly less than the vote for Mr. Leahy, as shown in the bottom line of the table. Applicant entitled to relief? 34. The Company also advanced the argument that the applicant is not suffering any prejudice in the light of Mr. Weldon’s appointment, nor will it suffer any prejudice if he continues to act as liquidator. Counsel for the applicant submitted that prejudice is not a factor which the Court should have regard to in determining whether the applicant should be granted relief. He submitted that, in any event, if the Court was to have regard to the prejudice argument, it should be borne in mind that it is not disputed that the majority in value of the creditors did not want Mr. Weldon to be the liquidator of the Company. 35. It is only fair to record that from the outset, the applicant has not suggested that Mr. Weldon, who is an experienced insolvency practitioner, is not an appropriate person to be the liquidator of the Company. In his grounding affidavit, Mr. Boino averred that the applicant does not seek to cast any aspersions on the professionalism or independence of Mr. Weldon. Mr. Weldon, in his own affidavit, has averred that he is independent and that he has never acted for or advised the Company in any capacity prior to his appointment as liquidator. He also pointed out that he is obliged to fully investigate the conduct of the directors of the Company and to prepare and submit a s. 56 report to the Office of the Director of Corporate Enforcement. 36. The application of s. 267 of the Act of 1963 and Part X of Order 74 of the Rules has been addressed on quite a few occasions by the High Court in recent years, commencing with the judgment of O’Neill J. In the matter of Hayes Homes Limited (in Voluntary Liquidation) [2004] IEHC 124, where O’Neill J. observed, apropos of the rule under consideration by him in that case as follows:
37. The clear intention of the Oireachtas in enacting s. 267, as amended, is that the majority in value of the creditors, rather than the members of the company, should have the prerogative of choosing the person who is to act as liquidator in the winding up. Although subs. (3) of s. 267 was introduced since the coming into force of Order 74, as regards the issues which have arisen in this case, and, in particular, what I have referred to as the first ground and the second ground, the requirements of the relevant rules in Order 74 are appropriate to, and compliance with them should have the effect of, implementing the intention of the Oireachtas. 38. Accordingly, I am satisfied that the applicant is entitled to an order setting aside the decision of the Chairman not to allow Mr. Boino, as the applicant’s general proxy, to vote for the appointment of Mr. Leahy as liquidator at the meeting on 14th January, 2013. I am also satisfied that the applicant is entitled to an order setting aside the decision of the Chairman to allow proxies of the three companies, other than Corrib Foods Limited, mentioned in the notice of motion to vote in favour of the Company’s nominee for liquidator at the meeting. Form of redress 40. I have come to the conclusion that in this case the proper course is to make an order by way of declaration substituting Mr. Leahy as liquidator in the place of Mr. Weldon pursuant to s. 267 for three reasons. First, as the table in paragraph 31 clearly illustrates, if Mr. Boino had been allowed to vote, the value of the votes for Mr. Leahy would have been €589,814, which was considerably in excess of the value of the votes against the appointment of Mr. Leahy, when adjusted upwards to take into account the value of the debts of the six other creditors who submitted dual proxy forms, which comes to €463,026. However, the gap between the votes for and against the appointment of Mr. Leahy is considerably widened when the value of the debts of the three corporate creditors whose proxies in favour of the Chairman were not properly executed, which amount to €110,518, are deducted, as the table illustrates. The gap then is €237,306. Secondly, the imponderable outcome arising from the Chairman’s failure to admit the faxed proxies is attributable to the Chairman’s incorrect decision. Thirdly, as the statement of affairs as at 14th January, 2013 disclosed, the Company is wholly insolvent. It would not be in the interests of the general body of creditors if further costs and expense were to be incurred in giving notice of, advertising, and holding a further creditors’ meeting, particularly when, unusually, the outcome is reasonably predictable. 41. I am satisfied that to declare Mr. Leahy to be liquidator in place of Mr. Weldon is wholly consistent with the intention of the Oireachtas in enacting s. 267 as a whole, notwithstanding that, having regard to what transpired at the creditors’ meeting, the effect of the Court intervention at the behest of the applicant is not precisely in the terms of subs. (2) of s. 267. If the Chairman had not misconducted the meeting, Mr. Leahy would have been the liquidator of the Company ab initio by virtue of s. 267(1). Orders 43. The Court will hear any further submissions the parties want to make in relation to how Mr. Weldon is to be remunerated for the work he has carried out to date, which I have no doubt was for the benefit of the Company in liquidation. Comment |
