The Gazette 1983

JULY/AUGUST

1

GAZETTE

third heading listed in Rule 129? Rule 129 of Order 77 appears under the heading: "XXII Costs and expenses payable out of the assets of the Company" The Rule is in the following terms: "129. (1) the assets of a company in the winding-up by the Court remaining after payment of the fees and expenses properly incurred in preserving, realising or getting in the assets, including where the company has previously commenced to be wound up voluntarily, such remuneration, costs and expenses as the Court may 'allow to a liquidator appointed in such voluntary winding-up, shall, subject to any order of the Court, be liable to the following payments which shall be made in the following order of priority, namely: First,the costs of the Petition, including the costs of any person appearing on the Petition whose costs are allowed by the Court; Next, the costs and expenses of any person who makes or concurs in making the company's Statement of Affairs; Next, the necessary disbursements of the Official Liquidator, other than expenses properly incurred in preserving, realising, or getting in the assets hereinbefore provided for; Next, the costs payable to the solicitor for the Official Liquidator; Next, the out-of-pocket expenses necessarily incurred by the com- mittee of inspection, if any. (2) No payments in respect of bills of costs, charges or expense of solicitors, accountants, auctioneers,

brokers or other persons, other than payments for costs, charges or expenses fixed or allowed by the Court, shall be allowed out of the assets of the company, unless they have been duly fixed and allowed by the Examiner or the Taxing Master, as the case may be." The first question asked whether the tax could be regarded as covered by "expenses properly incurred in pre- serving, realising or getting in the assets", which are contained in the opening para- graph of the Rule. Carroll J., had answered this question in the negative. O'Higgins, C.J. noted that no appeal had been taken against this decision and added, obiter, that he did not think that any such appeal could succeed. By reason of this answer the second question did not arise. The third question asked whether the tax was a necessary disbursement of the Official Liquidator within the meaning of the third paragraph. Carroll J. had answered this question in the negative. She did so because she was of the opinion that corporation tax was entitled 10 priority payment only in accordance with its given priority as an "assessed tax" under Section 285(2)(ii) of the Companies Act 1963 (being a priority it was given under the Capital Gains Tax Act). This priority was given, however, only in relation to assessed taxes which were "assessed on the company up to the 5th April next before "the winding-up". As this tax was not so assessed but arose after the winding-up, it did not qualify for priority payment under Section 285 (2)(ii). Accordingly, in the view of Carroll, J., to give it priority under Rule 129 would be to make the Rule dominate the Section. While feeling that Carroll J. might well

have been correct in this view, O'Higgins, C.J. did not think it necessary to base his judgment on that reasoning. Jn the view of O'Higgins, C.J., Rule 129, as its heading indicated, was intended to deal with costs and expenses, and not with the liabilities of the Company. Each of the paragraphs dealt with either costs or expenses incurred by persons involved in the liquidation. The third paragraph must have the same meaning since the "necessary disbursements" there referred to were expressed to be "other than expenses properly incurred in preserving, realising or getting in the assets herein- before provided for". Such must, there- fore, be expenses of some other kind such as necessary maintenance on buildings or jwages for caretaking or for other purposes. In the view of O'Higgins, C.J., such could not include a liability of the Company for corporation tax and he agreed, therefore, that the third question should be answered in the negative as it was so answered by Carroll J., but for the reasons indicated by him. Appeal dismissed. The Revenue Commissioners v. John Donnelly. Supreme Court (per O'Higgins, C.J., Henchy, Hederman JJ.) 24th February 1983. Judgment of O'Higgins, C. J. (nem. diss.) — unreported. William Earley

Edited by Gary Byme

Copies ofjudgments in the above cases are available to members on request from the Society's Library.

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