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	High Court of Ireland Decisions
You are here: BAILII >> Databases >> High Court of Ireland Decisions >> Re Clubman Shirts [1988] IEHC 27 (8 June 1988) URL: http://www.bailii.org/ie/cases/IEHC/1988/1988_IEHC_27.html Cite as: [1988] IEHC 27

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THE HIGH COURT

1981 NO.1825P

IN THE MATTER OF CLUBMAN SHIRTS LIMITED

AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 1977

AND IN THE MATTER OF SECTIONS 205 AND 371 OF THE COMPANIES

ACT 1963

Judgment delivered by Mr. Justice O'Hanlon on the 8th day of June 1988.

Further to the judgment already delivered in this case on the 19th November, 1982, Mr. N.V. O'Neill FCA was appointed to carry out a valuation of the shareholding of the Petitioner, Mr. Neal Duggan, in Clubman Shirts Limited as of 31 July, 1980.

Mr. O'Neill prepared a valuation of the shareholding and it was furnished to the Court and to the parties in or about the month of November, 1987.

The Respondents, Peter Mooney and Leonard Hayes, being dissatisfied with the said valuation, applied for liberty to bring evidence before the Court and make .submissions for the purpose of seeking to establish that the valuation was made on an incorrect basis, and leave was given to have the matter brought before the Court for further consideration. At the resumed hearing the Petitioner, Mr. Neal Duggan, contended that the Court could not re-open the matter or go behind the valuation already made by Mr. O'Neill.

Having considered the submissions made by the parties and having considered the further evidence which was tendered I have come to the conclusion that the report already submitted by Mr. O'Neill should be regarded as provisional or conditional in character. In paragraph 4 it states as follows:-

"4. Valuation

Subject to the availability of audited financial statements and a valuation of the fixed assets I value the shares of the Petitioner Mr. Neal Duggan at IR Pounds 1.96 per share or IR Pounds 68,600 in total."

In Paragraph 6 he indicates that he experienced difficulty in obtaining satisfactory evidence about current assets and current liabilities and says that he was not in a position to ascertain if queries raised by Ernst and Whinney about the adequacy of debtors and stock provisions were taken into account by the company or Arthur Young and Co. in the intervening period.

This refers to unaudited management accounts prepared by Messrs. Arthur Young and Co., Auditors and Accountants, at 31st July 1980, and to unaudited group accounts at 31st January 1980 prepared by Messrs. Ernst and Whinney.

Notwithstanding the objections raised by Mr. Duggan I concluded that it was proper to admit further evidence which the Respondents wished to tender in relation to the contents of Mr. O'Neill's Report de bene esse, and having heard this evidence it confirms my belief that Mr. O'Neill had to operate under considerable difficulties in preparing his Report and was justified in qualifying his Report in the manner already referred to. In particular, the Respondents contend, and adduced evidence in support of these contentions, that the figure of IR Pounds 300,000 taken by Mr. O'Neill as the value of the Factory Premises in his valuation of the shares, was unrealistic and that the true value at the relevant time was in the region of IR Pounds 135,000; that the stock figures in the unaudited accounts as of 31st July, 1980, were grossly overstated by reason of the fact that these accounts were prepared in great haste at a time when the affairs of the Company had reached a critical stage, and that revised figures were accepted as correct by Messrs. Arthur Young and Co., shortly after the 31st July, 1980, when further information was made available to them; and that the figures given for creditors and accruals were considerably understated in the said unaudited accounts.

I consider that Mr. Duggan is justified in his complaint that these matters should have been brought to the notice of Mr. O'Neill for his consideration without waiting for the case to come before the Court again, but I consider, having regard to the reservations and qualifications contained in his Report that even at this late stage he should be put in possession of any relevant information which is accessible to the parties and which has not already been brought to his attention, so that he can make the best possible attempt to arrive at a correct valuation of Mr. Duggan's shares as of the 31st July, 1980.

For this reason I propose to refer back Mr. O'Neill's Report to him for further consideration, with a direction that he is to be free to consider any further material relevant to his task which any of the parties can make available to him. This direction is accompanied by a particular reference to the figures for stock-in-trade and creditors and accruals as of the relevant date. I propose to direct, however, that it is not appropriate for the Respondents to seek to re-open at this stage the question of the value of the Factory Premises as the evidence established that an assignment of the said premises was effected for a sum of £300,000 as part of the arrangement under which a new company took over responsibility for all liabilities of Clubman Shirts Limited, and in doing so, application was made for a grant-in-aid from the Industrial Development Authority and a sum (which I believe may have been as much as £160,000) was paid over on foot of this application. It does not appear to me that it should be open to the Company or to the Respondents, having taken the benefit of that arrangement at the time, to seek to challenge the basis upon which the grant-in-aid was then made. Mr. O'Neill also notes in his Report (Par.5) that Ernst and Whinney had noted in June 1980 that a valuation of the premises of IR£275,000 had been obtained, and while no further evidence was forthcoming on this point, neither was it contradicted by the Respondents. In these circumstances I take the view that the valuation of the factory premises at IR£300,000 as referred to in the said paragraph of Mr. O'Neill's Report must stand.

In view of the long delays that have already taken place in connection with the valuation of the shares only a limited period can now be allowed for the submission of any further material to Mr. O'Neill. I propose to direct that the case be listed again on Friday 8th July, 1988, at 10.30 a.m. for further consideration.