Supporting Documents:

THE SUPREME COURT

DETERMINATION

BETWEEN

RESULT: The Court refuses leave to the applicant to appeal to the Supreme Court.

REASONS GIVEN:

1. The applicant seeks leave to appeal a decision of the Court of Appeal (Ms Justice Finlay Geoghegan, Ms Justice Irvine and Mr Justice Hogan) delivered on 26th July 2016.

2. Mr Fitzpatrick, the applicant, was appointed as liquidator at a creditors meeting held on 19th November 2010, of Ballyrider Limited, trading from premises known as Hazel Hotel in Monasterevin, Co. Kildare. The respondents, the Revenue Commissioners, are preferential creditors.

3. The hotel appears to be the only substantial asset that was owned by the company. The hotel was subject to a charge in favour of Allied Irish Banks and was sold by the liquidator at auction on 11th May 2011 for the sum of €630,000 with a deposit of €34,000 paid by the purchaser. This person did not complete the purchase of the hotel, forgoing the deposit, requiring an alternative purchaser to be found. The hotel was later sold for €479,000. Mr Fitzpatrick commenced proceedings against the original intended purchaser to recover the loss by reason of his default. In a progress report, Mr Fitzpatrick advised the creditors of this information. Mr Fitzpatrick had instructed a solicitor to conduct the conveyancing work for the hotel, for which he would be paid by an hourly rate for his services. The Revenue Commissioners had concern over the payment of the fees, in excess of €40,000; with advice given that a percentage or an agreed fee would be standard practice. There also appears to have been a significant delay in the conveyance, with three different solicitors being retained and ultimately with apparent issues involving outside intervention.

4. By motion dated 19th August 2014, the Revenue Commissioners brought an application to the High Court seeking a number of orders, including the removal of Mr Fitzpatrick from his role, an order directing the applicant to refrain from bringing any legal action in the name of the company and an order declaring that the costs of the action were not properly incurred. Following a hearing on 24th July 2015, the High Court judge, Murphy J, made the following orders: an order removing the liquidator pursuant to the Companies Acts 1963 and 2014 and the appointment of a new liquidator, Mr Maloney, an order that the costs incurred were not properly done and so could not be charged against the company assets and an order that all property belonging to the company be transferred to the new liquidator. Murphy J found that the applicant liquidator had “a flawed understanding of the role and duties of a liquidator” and that the respondent’s loss of confidence in his conduct was “both genuine and warranted”.

5. Mr Fitzpatrick appealed those orders to the Court of Appeal with judgment being delivered on the 26th July 2016. The judgment of the Court of Appeal upheld the decision of Murphy J in the High Court. Irvine J, writing for the Court, upheld the High Court decision stating that Mr Fitzpatrick “had not conducted the liquidation in an efficient and cost-effective manner and those provided good grounds for granting the relief sought”. The main issue for both the High Court and the Court of Appeal appears to have been that Mr Fitzpatrick’s proceedings against the original intended purchaser were not completed efficiently and the conveyancing fees in respect of the hotel were too high and not cost effective.

6. The Court of Appeal stated that the “role of the appellate court is not to substitute its own judgment for that of the trial judge but to assess whether the correct legal principles were applied and whether on the evidence the decision of the judge can be justified”. In assessing the removal of a liquidator for “cause shown”, the Court of Appeal set out eight principles that apply. The Court of Appeal adopted the views of Neueberger J in AMP Music Box Enterprises Limited for the removal of a liquidator. The Court concluded that “the High Court judge applied the correct legal principles” in considering the removal of Mr Fitzpatrick. Both courts concluded that section 269 of the Companies Act 1963 requiring a committee of inspection approving the payment of remuneration was not met.

7. It is the Court of Appeal decision for which leave for appeal is being sought.

8. Article 34 of the Constitution provides for the public administration of justice; describes the courts established by the Constitution and those which may be established by law; provides for the full and original jurisdiction of the High Court; and under Article 34.2 establishes the Court of Appeal and under Article 34.5.3° sets out its appellate jurisdiction. This reads:

4 1° The Court of Appeal shall—

i save as otherwise provided by this Article, and

ii with such exceptions and subject to such regulations as may be prescribed by law, have appellate jurisdiction from all decisions of the High Court, and shall also have appellate jurisdiction from such decisions of other courts as may be prescribed by law.

“3° The Supreme Court shall, subject to such

regulations as may be prescribed by law, have appellate jurisdiction from a decision of the Court of Appeal if the Supreme Court is satisfied that—

i the decision involves a matter of general public importance, or

ii in the interests of justice it is necessary that there be an appeal to the Supreme Court.

The decision of the Supreme Court under Article 34.5.6° is in all cases “final and conclusive.”

11. The Constitution has retained the entitlement of one appeal as of right from the High Court, subject to express exclusions or regulation by statute from the High Court to the Court of Appeal. What is sought here is a second appeal. The jurisdiction to bring an appeal to this Court is confined principally to cases where, as a result of the determination of the Court of Appeal, the decision of that court is such that the issues raised on a proposed appeal would involve a matter of general public importance or would be such that it is in the interests of justice that there be a further appeal to this Court.

12. The applicant in applying to this Court has stated that this is the first time in this country that the issue of a liquidator or office-holder being removed for “cause shown” has appeared before the courts. This, however, does not appear correct as there have been many such motions in the ordinary Chancery II list in the High Court of a Monday. It is suggested that the Court of Appeal erred in adopting “an excessively strict and unrealistic test” for what “cause” is. As such, the issue of what is meant by “cause” should be considered by the Supreme Court. Other issues raised by the applicant concern the appropriate fees to be charged by the liquidator. It is suggested that the Court of Appeal’s interpretation of section 269(1) of the Companies Act 1963 has deprived the general creditors in insolvency of the authority to agree the liquidator’s remuneration. The Court of Appeal, it is proposed, erred in fact and in law by upholding the High Court finding that the liquidator was responsible for and incurred the costs of the proceedings for breach of contract by the original purchaser. Similarly, his contention is that the Court erred in upholding the finding that remuneration was not cost-effective and that the committee of inspection had objected to the applicant’s remuneration being approved on account of the proceedings against the original purchaser.

13. The respondent’s lengthy response opposes the leave to apply for this appeal. It is asserted that the correct legal principles for removal of a liquidator were applied and the reasons of the High Court judge can be justified. On this point, the only dispute that arose was whether or not the liquidator has acted in an inefficient and cost-effective manner as to warrant his removal. Both the High Court and the Court of Appeal agreed that there was a sufficient evidence for such a finding. Evidence before both courts show that it was common practice at the time for a set fee or percentage to be charged in relation to conveyance and not an hourly rate and that the committee of inspection had correctly refused an interim payment.

14. The jurisdiction of the Supreme Court to hear appeals is set out in the Constitution. As is clear from the terms of the Constitution and many determinations made by this Court since the enactment of the 33rd Amendment, it is necessary, in order for this Court to grant leave to appeal, that it be established by the applicant that the decision sought to be appealed either involves a matter of general public importance, or that it is necessary in the interests of justice that there be an appeal to this Court.

15. Any ruling in a determination is between the parties. It is final and conclusive as far as the parties are concerned, and is a decision in relation to that application only. The issue determined on the application for leave is whether the facts and legal issues meet the constitutional criteria to enable this Court to hear an appeal. It will not, save in the rarest of circumstances, be appropriate to rely on a refusal of leave as having a precedential value in relation to the substantive issues in the context of a different case. Where leave is granted, any issue canvassed in the application will in due course be disposed of in the substantive decision of the Court.

16. The submissions of the applicant and of the respondent are available on the Courts Service website, together with this determination.

17. This case effectively concerns the interpretation of a single section of the Companies Act. The text thereof is the foundation for any proper application of the principles upon which a liquidator may be removed from office. Fundamental to any application of legal principles, however, is the factual basis for a decision. Here, the High Court found facts which, at the least, tilted the balance against the applicant. Thereafter, standard principles were applied both by the High Court and the Court of Appeal. In finding that there was no basis to overturn the facts as found by the High Court, the Court of Appeal acted according to established principles.

18. In all the circumstances, the Court is satisfied that the application does not meet the criteria in the Constitution upon which leave may be granted. Consequently, the Court will refuse leave to appeal.

AND IT IS HEREBY ORDERED ACCORDINGLY.