Brandon Plant Hire LTD v Companies Act (Preservation of Assets Motion) (Approved)

Factual and Procedural Background

The Plaintiff is the liquidator of Company A (In Liquidation), referred to as Company A throughout this summary. Company A acted as a subcontractor to Company B in various construction projects, with three projects being particularly relevant. In March 2020, Company A and Company B entered into a settlement agreement reducing the sums claimed by Company A, with payment made by Company B of the reduced amount. This agreement preceded the appointment of the Plaintiff as official liquidator in April 2020.

In proceedings, the Plaintiff alleges the settlement agreement constitutes a fraudulent disposition in favor of Company B for a sum exceeding €6 million. Related proceedings seek rescission of the settlement agreement on grounds including duress. Company B brought a motion seeking orders directing the Plaintiff to provide replies to particulars, to preserve Company A’s assets pending determination of the proceedings, and to restrict payments by the Plaintiff to himself or his lawyers without prior court approval or in accordance with statutory priorities.

Legal Issues Presented

1. Whether the settlement agreement constitutes a fraudulent disposition under the Companies Act 2014.
2. The correct statutory order of priorities for payments in the liquidation of Company A.
3. Whether the Plaintiff should be restrained from making payments to himself or his lawyers except in accordance with the statutory order of priorities and/or with prior court approval.
4. The appropriateness and scope of Mareva-type relief to preserve assets in the liquidation.

Arguments of the Parties

Appellant's Arguments (Company B)

• Company B argues that costs awarded in its favor should rank ahead of payments to the liquidator’s remuneration and legal costs under section 617 of the Companies Act 2014.
• Company B relies on evidence estimating Company A’s realisable assets at approximately €892,000, which may be optimistic, and anticipates incurring costs of over €1 million in the proceedings.
• Company B raises concerns about the Plaintiff’s past conduct in other liquidations, including unauthorized interim fee payments and unsatisfied personal judgments against the Plaintiff.
• Company B contends that the Plaintiff has refused to provide undertakings or clarify whether payments have already been made to himself or his lawyers in this liquidation.

Respondent's Arguments (Plaintiff)

• The Plaintiff denies the entitlement of Company B to seek the undertakings requested and refuses to provide them.
• The Plaintiff asserts that fee approvals are matters for the end of the liquidation or interim approval if necessary, and there is no Committee of Inspection in this liquidation to approve fees.
• The Plaintiff alleges that Company B caused the insolvency of Company A through non-payment, resulting in liquidation and job losses, and views the motion as an attempt to control the liquidation finances improperly.
• The Plaintiff disputes the characterization of his conduct in other liquidations and maintains he has a defense to the relief sought.
• The Plaintiff did not address in his affidavit the unsatisfied judgments against him personally, and his counsel clarified that while these judgments are currently enforceable, they are subject to ongoing appeals and stays.

Table of Precedents Cited

Court's Reasoning and Analysis

The court identified the central legal issue as the correct statutory order of priorities for payments in the liquidation, specifically whether costs awarded to Company B rank ahead of the Plaintiff’s remuneration and legal costs. The Plaintiff initially showed reluctance and ambiguity in accepting the priority order but ultimately, through counsel, conceded that Company B’s costs hold priority under section 617 of the Companies Act 2014.

The court considered the Plaintiff’s conduct in other liquidations, including findings of improper fee payments and failure to comply with court orders, as well as his refusal to clarify whether payments had already been made in this liquidation. The court found these factors significant in justifying the need for a supervisory order.

Regarding the Mareva-type relief sought to preserve assets, the court examined the principles from Hughes v. Hitachi and concluded that such an injunction was unnecessary given the order it intended to make, which effectively controls payments and ensures compliance with statutory priorities.

The court exercised its supervisory jurisdiction over the liquidation to make an order prohibiting the Plaintiff from making payments to himself or his lawyers except in accordance with the statutory order of priorities and with prior court approval. This approach prevents unauthorized payments and potential irreparable harm to creditors.

Holding and Implications

The court’s final decision is to GRANT the motion in part, making an order directing the Plaintiff:

• To make no payments to himself, directly or indirectly, including remuneration, nor to his lawyers for legal costs during the liquidation except (i) in accordance with the order of priorities under section 617 of the Companies Act 2014 and (ii) with prior approval of the court.

This order ensures adherence to the statutory payment hierarchy and introduces court supervision to prevent unauthorized payments. The court declined to grant Mareva-type relief as unnecessary given the supervisory order. No new precedent was established beyond the enforcement of existing statutory principles and supervisory jurisdiction.