Bloomberg Developments Limited., Re. [2002] IESC 65 (12th July, 2002)

THE SUPREME COURT

132/01
MURPHY J
Hardiman J
FENNELLY J

IN THE MATTER OF BLOOMBERG DEVELOPMENTS LIMITED AND
IN THE MATTER OF SECTION 12B (3) OF THE COMPANIES (AMENDMENT)
ACT 1982 AS AMENDED BY SECTION 46 OF THE COMPANIES (AMENDMENT)
NO. 2 ACT 1999
ON THE PETITION
OF
THOMAS GOODE

JUDGMENT OF MR JUSTICE FRANCIS D MURPHY DELIVERED THE 12th DAY OF July, 2002 [Nem Diss.]
_______________________________________________________________________

The company named in the title hereof was incorporated on the 19th July, 1977, under the name Goode Concrete Limited.  The name of the company was on the 26th November, 1992, changed to Bloomberg Developments Limited (Bloomberg).  Bloomberg was dissolved pursuant to the provisions of s.12 of the Companies (Amendment) Act 1982 (as amended by s.245 of the Companies Act 1990) on or about the 7th May, 1999, for failure to make annual returns.  The above named Thomas Goode was a director of and shareholder in Bloomberg.  On the 21st March, 2001, he presented the petition herein seeking an order that Bloomberg be restored to the Register of Companies pursuant to s.12 (b)(3) of the Companies (Amendment) Act 1982 as inserted by s.46 of the Companies (Amendment) No. 2 Act 1999.

The petitioner conceded that no annual returns were made on behalf of Bloomberg.  In his affidavit Mr. Goode explained that Bloomberg had sold the premises comprising his registered office in or about 1987 and for that reason the directors, as a result of their failure to notify the Registrar of Companies of the change of address, were unaware that the statutory notice had been served warning of the intention to dissolve the company.  The petitioner had not adverted to the notice subsequently published in Iris Oifigiul.  The petitioner undertook to file all of the outstanding annual returns in respect of Bloomberg and to make any outstanding returns in relation to tax of every description.

As required by the relevant legislation and the Rules of the Superior Courts, notice of the application to the Court was given to the Minister for Finance and the Registrar of Companies.  On behalf of the those State agencies the Chief State Solicitor by letter dated the 23rd April, 2001, confirmed that there was no objection to the restoration of Bloomberg to the Register of Companies pursuant to s.12(b)(3) of the Companies (Amendment) Act 1982.
A notice of motion claiming the relief sought by the petition was heard by Mr. Justice Smyth on the 30th April, 2001. The relief sought by the petitioner was opposed by Philips Electrical (Ireland) Limited (Philips).

The circumstances in which Philips were represented on the application to restore Bloomberg to the Register of Companies are as follows.  On the 5th February 1987 Bloomberg - under their then name of Goode Concrete Limited - instituted proceedings (the underlying proceedings) against Philips claiming damages for loss and damage alleged to have been suffered by Bloomberg “as a result of the negligence and breach of contract of the defendant in and about the supply of a concrete batching controller to the plaintiff in or about the month of August, 1981”.  It was the 18th May, 1992, before the statement of claim was delivered.  An amended statement of claim was delivered on the 13th August, 1993.  In response to a motion for judgment delivered by Bloomberg on the 15th October, 1993, Philips delivered their defence on the 26th November, 1993.  In 1993 and 1994 particulars were sought by Philips and provided by Bloomberg.  In addition Bloomberg changed their legal representation.  In December, 1994, Bloomberg sought and obtained an order for discovery against Philips.  In April 1995 Bloomberg sought an order striking out the defence of Philips on the grounds that it had failed to comply with the order for discovery aforesaid.  The affidavit of discovery was  filed on behalf of Philips on the 11th October, 1995.  The proceedings were set down for trial on the 17th June, 1996.  A notice of intention to proceed was served on behalf of Bloomberg on the 6th November, 2000.  Notice of trial was served on behalf of Bloomberg on the 6th December, 2000.  It was on the 15th January, 2000, that Philips applied for an order striking out or dismissing the proceedings on the basis that Bloomberg had been dissolved and ceased to exist.  That motion was heard by Mr. Justice O’Sullivan who, by order dated the 5th March, 2001, directed that:-
“[T]he proceedings be struck out and this order be stayed for a period of five weeks from the date hereof to allow the plaintiff [Bloomberg] liberty to apply to reinstate the plaintiff [Bloomberg] to the Register of Companies and in the event of the plaintiff [Bloomberg] being restored to the Register of Companies within that time this order is to be vacated if necessary the plaintiff [Bloomberg] to have liberty to apply to the Court hearing the petition to restore the plaintiff [Bloomberg] to the Register to extend the period of this stay.”

In addition it was ordered that Bloomberg should pay to Philips the costs of the motion and order when taxed and ascertained.

By order dated the 2nd April, 2001, O’Sullivan J. extended to the 16th May, 2001, the period in which Bloomberg was required to apply to be restored to the Register of Companies and that order again provided Bloomberg should pay to Philips the costs of the motion to extend the time as aforesaid.

It does not appear that any directions were sought or given in relation to the service of the application for restoration on Philips or any other party.  Counsel informed the Court that Philips had told Bloomberg that they wished to be represented on the application and that they were duly given notice of it.  Philips introduced into evidence the pleadings in the proceedings by Bloomberg against them and in particular the order made by O’Sullivan J. therein dismissing those proceedings subject to the stay aforesaid. 

On the 30th April, 2001, Smyth J. ordered that Bloomberg be restored to the Register of Companies and in relation to costs he made the orders following:-
1.	that within three weeks from the date of the order that Philips should furnish to the solicitors on behalf of Bloomberg “an up to date bill of costs to be paid by Bloomberg Developments Limited within one month of being furnished with same” and 
2.	that Philips recover from Bloomberg Developments Limited its costs of the application for its restoration when taxed and ascertained.

Bloomberg has appealed to this Court from so much of the order of the learned trial judge as awarded costs against them.  Philips do not contend that the order for the restoration of Bloomberg was invalid or constituted an inappropriate exercise of judicial discretion.
It was contended on behalf of Bloomberg that the learned trial judge erred in granting locus standi to Philips.  

On principle it is difficult to see what legal right Philips had to intervene in the proceedings for the restoration of Bloomberg to the Register of Companies.  Restoration is primarily a matter between the petitioner on the one part and the regulatory authority - who has the duty to ensure compliance with the relevant provisions of the Companies Acts - and the Minister for Finance - in whom would vest the assets of the company as bona vacantia - of the other part.  Indeed the precise issue was debated in Conrad Hall & Co Ltd [1916] W.N. 275 under the comparable provisions of the Companies (Consolidation) Acts 1908.  A Mr. Kennedy sought to intervene in an application for restoration of a company made under s.242 of the 1908 Act on the grounds that he was suing the company for rescission of two agreements he had made with it.  Whilst the Court heard Mr. Kennedy as amicus curiae it was specifically held that he had no locus standi to oppose the application.

The present case is distinguishable to some extent.  Mr. Justice O’Sullivan in imposing a stay on the order striking out the underlying proceedings expressly provided that Bloomberg should have liberty to apply to the Court hearing the petition to restore that company to the Register to extend the period of the stay.  Unquestionably Philips would have been entitled to notice of any application to extend the period of the stay. On the other hand that application would properly be brought in the underlying proceedings and not in the company matter.  Another material fact is that clearly Philips were in a position to bring before the Court evidence to which Smyth J. attached very considerable significance.  In the agreed note of the judgment the trial judge said that “the defendant (Philips) had been badly treated by the plaintiff (Bloomberg)”.  Indeed it is clear that counsel on behalf of Philips had suggested that there was “a murky aspect to the history of the corporate identities of the case”.  Whilst no directions were given in relation to persons to be served or advertisements to be published in relation to the application, it would seem that the Court was satisfied to hear counsel on behalf of Philips and that this course was not opposed by Bloomberg.  In the circumstances I believe that it was within the discretion of the Court to treat Philips as a notice party to the proceedings.  Having done so I believe the learned judge was entitled to exercise his discretion by allowing Philips their costs of appearing.

The order as to costs in respect of the underlying action was imposed, as I see it, by way of a sanction or penalty on Bloomberg for what the learned judge perceived as being some abuse of process by them.  It may be that Philips will be entitled to recover their costs against Bloomberg or to obtain security for costs of those proceedings but any such order must be made in the underlying action itself.  The concept of imposing a penalty on a company applying for restoration is not new.  In Brown, Bayley’s Steelworks [1905] 21 TLR 374 Mr. Justice Buckley, having expressed his concern about the frequency of applications to restore companies to the Register, explained that he would impose a penalty on the applicant if the relevant legislation permitted him to do so.  Having heard full argument on the matter he was convinced that the then comparable legislation - s.7 subsection 5 of the Companies Act 1880 - did not authorise the imposition of a penalty.  Issues as to penalties, sanctions and undertakings were revisited some time after the enactment of the Finance (No 2) Act 1947.  Part 3 of that Act imposed, in effect, stamp duty at the rate of 25% on a conveyance of land to a foreigner.  There was, however, an exemption in favour of bodies corporate incorporated in the State on or before the 15th October, 1947.  That exception created such a lucrative market in companies of that vintage that the stock of available companies was quickly exhausted.  No doubt it was that fact which encouraged interested parties to apply for the restoration of pre 1947 companies which had been struck off.  That distinguished jurist, Mr. Justice Kevin Dixon, would not permit the restoration provisions to be used for that purpose.  Where a particular justification existed for the restoration of the company, restoration was ordered but limited to the achievement of that purpose.  The petitioner was required to give an undertaking to wind-up the company as soon as it had been achieved.  That accorded with the practice which had been established in England in Langlaagte Proprietary Co Ltd [1912] 28 TLR 529.  I am satisfied that the law in practice in this jurisdiction does confer power on the High Court to ensure that the power to restore a company to the Register is used for the purpose for which it was intended but does not extend to the imposition of a penalty, such as was imposed in the present case, by an award of costs - whether taxed or otherwise - in proceedings which fall to be dealt with on their own merits independently of the application for restoration.

I would allow the appeal insofar as it relates to an award of the costs of the underlying action but otherwise I would affirm the order of the learned trial judge.