High Court of Ireland Decisions

1. On the 5th February, 1997 a Petition was presented to this Court in the names of Declan Campion and Norman Blakely seeking the appointment of an Examiner to Aston Colour Print Limited (the Company). On the same day an Interim Examiner was appointed to the Company by Shanley J..

2. On Monday the 17th February, 1997 the Petition was listed for hearing before me. On that occasion the two named Petitioners were separately represented by Counsel. Counsel for Mr. Blakely indicated that he was taking objection to the course which had been followed and he filed an Affidavit which seriously controverted material which had been placed before Shanley J.

3. On Monday last I made Orders, at the request of the parties, pursuant to Order 40, Rule 1 of the Rules of the Superior Courts requiring the production for cross-examination on their respective Affidavits, both Mr. Campion and Mr. Blakely. I also gave leave for the issue of subpoenae in respect of any other witnesses which either side wished to call.

4. On foot of this Order, yesterday, both Mr. Campion and Mr. Blakely were cross-examined and in addition I heard evidence from Mr. Lyons and Mr. Power.

5. The Company was formed in April 1996 under the name Rahan Holdings Limited. On the 15th June, 1996 the name of the Company was changed to Aston Colour Print Limited. It has a nominal capital of £1,000,000.00 divided up into 100,000,000.00 ordinary shares of 1p each. Its paid up capital is £1,000. Mr. Campion is a shareholder to the extent of 15,000 1p shares. Mr. Blakely holds no shares in the Company. The other shareholders are Sean Power, Eugene McCarthy, Paschal Taggart, Terry Cooney and Eugene Gibney.

6. The Company was acquired as a shelf company with a view to taking over the business of a company called Aston Colour Press Limited. Mr. Blakely was a Director of that company for three years.

7. The Company took over the plant and machinery of Aston Colour Press Limited together with its customers. It also took over the work force but reduced staff numbers from 79 to 59.

8. The Company traded since the take-over but it is clear that by January of this year it was in serious financial difficulties.

9. On the 27th January, 1997 a meeting took place which was attended by Messrs. Power, McCarthy, Lyons, Blakely and Campion. The meeting was chaired by Mr. Power.

10. Only two of those persons present were Directors of the Company. They were Messrs. Campion and Blakely. All of the others were shareholders, save Mr. Lyons who was the Financial Controller of the Company. He is an Accountant and prior to being Financial Controller was a consultant to the Company.

11. The evidence satisfies me that meetings of this sort involving the attendance of the persons in question were a matter of regular occurrence within the Company. They were known as executive meetings or sometimes were called management meetings. They were usually held on a weekly basis and discussed the day to day running of the Company. No formal notices were issued convening such meetings.

12. The meeting of the 27th January, 1997 was little different from its predecessors, save that the news given to it at the outset was gloomy indeed. Mr. Lyons gave the cash flow figures for December and on the basis of the financial information available indicated that the Company could not continue to trade.

13. I am satisfied that a number of options were discussed which might address this problem. They were:-

14. Mr. Lyons gave an explanation to the meeting as to the difference in function between a Liquidator and an Examiner.

15. I am satisfied on his own evidence that Mr. Blakely had, as a result of Mr. Lyons' explanation, a reasonable idea of what benefits might result from the appointment of an Examiner. He told me that it would give the Company a chance to freeze its cash-flow problems and allow time for investment.

16. I am also satisfied that at no stage was there ever put to the meeting a formal resolution to the effect that the protection of the Court be sought for the Company. Neither was any vote taken on the topic. This way of proceeding was, I believe, not by any means out of the ordinary since such meetings were regularly conducted in a fairly informal way with a consensus emerging rather than matters being put to a vote. Whilst such an approach may be understandable in the running of a small company, it suffers from the disadvantage that at the conclusion of such meetings, persons who were present may leave it with very different understandings of what was the subject of the consensus.

17. Mr. Campion believed that everyone agreed that the appointment of an Examiner would be sought. Mr. Blakely had no objection to the appointment of an Examiner but he did not understand that the meeting had decided to apply for such, still less that his name would be used as Petitioner. Mr. Lyons believed a decision was taken at the meeting to apply for an Examiner. Mr. Power, who chaired the meeting, thought that all at the meeting agreed that the examinership was the best route for the Company but no resolution was put or vote taken. He was under the impression that there was a form of tacit agreement for the appointment of an Examiner between all present and likened it to a rather homely analogy which he gave concerning the purchase of his first house in the joint names of himself and his wife, which was done with this wife's tacit but unexpressed agreement.

18. Following the meeting, Mr. Lyons did two things. He made a note in his diary concerning the meeting which had taken place, the relevant parts of which reads:-

19. He also made contact with Mr. McStay (who was ultimately appointed Interim Examiner by Shanley J.) on the following day, namely, Tuesday the 28th January, 1997.

20. Later in the week on the 29th of January, 1997, Mr. Blakely resigned as a Director.

21. On Friday the 31st January, Mr. Campion made a note or minute of the meeting of the 27th January, 1997. It is wrongly dated the 27th of February, 1997 but nothing turns on that. It has been produced in evidence at my request since the Affidavit of Mr. Campion verifying the Petition purports to exhibit as Exhibit DC2, a copy of the minute of the board meeting held on the 27th January, 1997.

22. Whatever else it may be, Exhibit DC2 is not a copy of anything contained in the minute prepared by Mr. Campion on the 31st January, 1997 which is apparently the only minute of the meeting of the 27th January, 1997.

23. Nowhere in the note or minute prepared on the 31st January, 1997 is it recorded that the meeting of the 27th January agreed or resolved to apply for the appointment of the Examiner. Rather it says, as one of the options "seek Examiner - J. McStay/P. Wise conflict?" . Neither does it record what is contained in the second paragraphs of Exhibit DC2 concerning Mr. Campion being entitled to act on his own in relation to the matter. Rather it speaks of Mr. Campion keeping all informed on actions and developments.

24. If anything, the note prepared by Mr. Campion on the 31st January, 1997 is supportive of Mr. Blakely's understanding that although examination was discussed at the meeting, it was not decided that such should occur.

25. I am of the view that Mr. Blakely left the meeting with a different understanding to the other participants as to what would occur.

26. Be that as it may, what was presented to this Court was a document which purported to be a copy of a minute of a board meeting. I am satisfied that Exhibit DC2 is not such.

27. Whatever the level of informality which operated in this Company, I must have regard to the legal requirements which must be met on an application to appoint an Examiner.

28. Under Section 3 of the 1990 Act, the right to present a Petition is given to certain persons. Amongst such persons are the directors. In this case it was represented on oath to the Court that a board resolution was unanimously passed on the 27th January, 1997 that Court protection should be sought for the Company.

29. Two issues arise for decision on this topic, they are:-

30. The Company had only two Directors. Both were present at the meeting on the 27th January, 1997. Mr. Campion has experience as a director of other companies. Non-directors sometimes attended them. This meeting was no different to other regular executive meetings held by the Company.

31. Mr. Blakely did not regard the meeting as a board meeting. It did not differ from earlier ones attended by him, including those meetings which he attended in Aston Colour Press where he had been a director for three years but never in his view attended a directors' meetings.

32. I have come to the conclusion that the meeting of the 27th January, 1997 was not a board meeting. I have so concluded for a number of reasons. They are:-

33. It appears to me that the gathering which took place on the 27th January, 1997 could not on any view be regarded as a board meeting in any real sense.

34. If I am wrong in the view which I have formed concerning the lack of a board meeting, was there passed at the meeting which did occur, the resolution which is contended for in the Petition and Affidavit verifying it?

35. It is common case that there was no formal resolution and certainly no vote taken on the topic at the meeting which took place.

36. The presentation of a Petition to this Court and the invocation of the jurisdiction given to the Court under the 1990 Act is a matter of some considerable solemnity and importance, not merely for the Company but also for its creditors and its work-force.

37. A decision by a board of directors to take such a step must be made in a manner which makes the will of the board clear. The usual way to do that is by the proposal of a resolution and its being voted upon. That did not occur here. Had it occurred, I think that Mr. Blakely would have voted against it since he did not want his name associated with the Petition.

38. In this case there is considerable doubt that any, even informal resolution, was put to the meeting. First, the minute of the 31st January, 1997 prepared by Mr. Campion does not make it clear that the decision was made to apply for the appointment of an Examiner. On the contrary, that minute merely says "no choice but examiner or liquidate". Secondly, Mr. Power cannot recall who decided that these steps should be taken. He was the Chairman of the meeting.

39. I believe that there was a general understanding arrived at between four of the five people present at the meeting. It was to the effect that an application would be made to Court for the appointment of an Examiner. But the fifth person was of course the second Director. He did not appreciate what was to happen. The level of informality was such that I do not think that he can be blamed or criticised for this. There was no resolution put before him nor was there any question put in such a way as to alert him as to what was to occur. Such being so, I do not accept that there was any resolution, formal or informal, passed by the board. Having answered both questions in the negative it is not therefore necessary for me to deal with the other submissions which were made, particularly those concerning the effect of Article 103 of the Articles of Association of the Company.

40. As a result of my findings, it is clear that the Petition was improperly presented to the Court. There was no entitlement to present it and it must now be struck out and the Interim Examiner discharged.

41. Before concluding, however, it is right that I should record that I do not believe that any of Mr. Campion's actions, or those of the other persons who have given evidence, were done mala fide. Neither do I believe that there was any deliberate attempt to misrepresent the position to the Court or to mislead the Court. On the contrary, I think that the steps which were taken were carried out with the genuine intention of doing the best for the Company. Unfortunately, such was the inattention to the necessary details and the level of informality that prevailed that these efforts have been unsuccessful.

42. Although this Petition is struck out for the reasons stated, I do not regard any of the matters which I have dealt with in this Judgment as precluding the presentation of a further Petition by a party or parties duly authorised so to do.