The Gazette 1994

GAZETTE

JULY 1994

rules shall apply relating to the respective rights of secured and unsecured creditors as are in force under the law of bank- ruptcy. Under s. 86(1) of the Bankruptcy Act 1988, if the estate of a bankrupt is sufficient to pay his debts in full along with interest at the rate currently payable on judgment debts, the court shall order that any surplus should be paid to the bankrupt, his personal representatives or assigns. In 1970 the court ordered that Hibernian Transport Companies Ltd ('the company') should be wound-up on the ground that it could not pay its debts as they fell due. The winding-up took a considerable period of time and a large amount of interest was earned on the proceeds from the sale of the company's assets and those of a subsidiary. As a consequence, there was a surplus left over after paying all the company's pref- erential, secured and unsecured credi- tors in full. The liquidator brought a mo- tion to havecertain questions determined regarding the manner in which the sur- plus should be distributed. The unse- cured creditors contended that any sur- plus should be used to pay interest on their debts. In the High Court Carroll J held that under s. 86 of the 1988 Act, both contractual and ordinary unsecured credi- tors were entitled to interest at the rate currently payable on judgment debts (see 11991] 1 IR 263). Furthermore, the con- tractual creditors were entitled to be paid the difference between the statutory rate and the rate they had contracted for so that they would recover their contractual interest i n fu 11. The shareholders appealed against this order. Held by the Supreme Court (Blayney J; Finlay CJ, O'Flaherty, Egan and Denham JJ concurring) in allowing the appeal: (1) It is only after all debts have been proved and all assets realised that it is possible for a liquidator to determine whether he is dealing with the liquidation of a solvent or an insolvent company. (2) In determin- ing whether a company is solvent the only relevant criterion is whether the liquidation has produced a surplus. It is immaterial whether that surplus arises from a realisation of its assets or from interest earned on the sums produced by the realisation or in any other way. (3) As the assets of the company were sufficient to discharge its liabilities in full the liqui- dation in the instant case had to be re- garded as that of a solvent company. Accordingly s. 284 of the 1963 Act did not apply and creditors who had no con- tractual right to interest were not entitled to interest at the rate pertaining to judg- ment debts under s. 86(1) of the 1988 Act. (4) S. 86(1) of the 1988 Act can never apply in the winding-up of a company because it deals with the distribution of a surplus. If a company is insolvent there is

no surplus and if it is solvent the bank- ruptcy rules cannot apply because s. 284 is restricted to the winding-up of insol- vent companies. (5) Creditors who had a contractual right to interest were entitled to interest at the agreed rate up to the date on which their debts were discharged. Dividends already paid to such creditors were to be treated as having first been applied towards the interest then due and then towards the principal. (6) Under s. 242 of the 1963 Act the shareholders of the company were entitled to any bal- ance remaining after the payment of con- tractual interest, all outstanding debts and liabilities, and all fees, costs and expenses due to the liquidator. Reported at [1994] 1 ILRM 48 Christos Georgopoulos v Beaumont Hos- pital Board: High Court 1991 No. 13252P (Murphy J) 9 July 1993 Employment - Dismissal - Validity - Inquiry by hospital board - Claim that purported dismissal was ultra vires - Re- quirements of natural and constitutional justice - Receipt of legal advice by tribu- nal - Alleged failure to perform duties under contract of employment - Stand- ard of proof - Plea in mitigation Facts The plaintiff was appointed to the post of registrar in neurosurgery at Beaumont Hospital for a period of 8 months from 1 October 1989. The ap- pointment was renewed and extended for a period of 12 months with effect from 1 July 1990. The plaintiff made written complaints to the hospital's medical ad- ministrator alleging the existence of cer- tain practices in the hospital which com- promised the treatment of patients. Sub- sequently complaints were made about the plaintiff's conduct and he was dis- missed from his post without being heard by the defendants in relation to the com- plaints. The plaintiff challenged the va- lidity of his dismissal, but these proceed- ings were compromised on the basis that the defendants would consider afresh the complaints regarding the plaintiff's con- ductand, immediately priortosuch hear- ing, vacate their decision dismissing the plaintiff. Both the hospital and the plain- tiff were legally represented at these hear- ings, and the board retained the services of a legal assessor. Following the inquiry the chairman of the board informed the plaintiff by letter that his failure to per- form his contractual duties had been established and that this warranted his dismissal with effect from 28 June 1991. The plaintiff challenged thisdecision and claimed a declaration that the board had acted ultra vires and breached the re- quirements of natural and constitutional justice.

contract or by some generally applicable principleof Irish law, an obligation which must be performed in Ireland. (3) It fol- lowed that where the evidence adduced by a plaintiff seeking to have a claim for breach of contract tried within the juris- diction of a contracting state, other than the state of domicile of the defendant, amounted to no greater standard of proof that establ ishing that the obi igation which it was claimed was bréached could have been performed in that state, the plaintiff would have failed to establish his entitle- ment to sue pursuant to Article 5.1 of the Brussels Convention. Unidarepic vJames Scott Ltd [19911 2 IR 88 and Athanasios Kalfelis v Bankhaus Schroder Munch- meyer Hengst and Co. (Case 189/87) |1988] ECR 5565 applied. (4)The learned trial judge was correct in concluding that the particular obligation which it was claimed was breached by the defendant, and which gave rise to these proceed- ings, was the obligation to place orders for specific quantities, at specific times, of the 8,000 computers. (5) Nothing in the terms and conditions relied upon by the plaintiff provided for the method of placing an order or where it had to occur. The contract did not contain a require- ment that an order should be in writing. In any event, the conclusion that per- formance of the obligation was to be effected by the defendant communicat- ing an order to the plaintiff did not resolve the question as to whether the obligation to place orders was an obligation to be performed in Ireland. The legal issues presented by a document executed in the United Kingdom which is then posted or faxed to the plaintiff's premises had not been addressed in the High Court. (6) Given the onus on the plaintiff to estab- lish its entitlement to sue, there was no evidence before the learned trial judge which justified the finding that the obli- gation of the defendant to place these orders was an obligation to be performed in Ireland. Reported at [1994] 1 ILRM 39 In re Hibernian Transport Companies Ltd: Supreme Court 1990 No. 296 (Finlay CJ, O'Flaherty, Egan, Blayney and Denham JJ) 13 May 1993. Company - Winding-up - Surplus re- maining - Whether unsecured creditors entitled to interest on debts - Whether shareholders entitled to surplus subject to creditors' contractual right to interest - Whether liquidation was of a solvent or insolvent company - Companies Act 1963, ss. 242 and 284 - Bankruptcy Act 1988, s. 86 Facts S. 284 of the Companies Act 1963 provides that in the context of the wind- ing-upof an insolvent company, the same

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