|Karole Cuddihy||John Breslin|
A lender appointed receivers over certain assets, which ITC held on trust for a sub-fund. The lender placed the usual advertisement in a newspaper and notified the CRO of the appointment.
Before the High Court (Judge Hunt), ITC argued that the relevant provisions of the Irish Companies Act 1963 (Act), did not apply where a company had no beneficial interest in the property. Evidence was given that creditors, customers and business counterparties of ITC had been alarmed at this development. ITC argued that the label 'receivership' implied that it was insolvent, which was not accurate.
The CRO argued that the Act did not allow for a separate category where a receiver is appointed over property of a company held in trust for a third party. It further argued that the true position was readily apparent to a careful reader of the filed documents and that, in any event, receivership does not necessarily imply insolvency.
Judge Hunt agreed with the submissions made on behalf of the CRO. The court held that the use of a single 'receivership' label was justified, because the CRO had on its website an explanatory note alerting persons inspecting the Register of the various possibilities regarding ownership of assets. It also had an invitation to review Form E8, which clearly noted that the receiver had been appointed over only some of ITC's assets. The court held that by electing to hold the legal interest in the property, the plaintiff 'engaged all the relevant provisions of the Acts'. The court said that legal ownership of the trust property was not a 'mere formality' for ITC – rather, it had enabled ITC to raise considerable finance and to derive income from the management of the trust asset.
Judge Hunt agreed with the submission that the 'careful reader' of the Register could ascertain the true position. He expressed surprise at the reaction received by ITC to publication of the notice, given that many of the persons who contacted ITC must have been familiar with the long-standing nature of the trust business which ITC carried on, and with 'the fact that the trust administration business primarily carried on by [ITC] was unlikely to be seriously affected by the receivership of one asset managed by it'.
Judge Hunt also held that there was no ambiguity in the wording of the statutory provisions. If the legislature had wished to create a special category for companies such as ITC, then it could have done so. The consequences of which ITC now complained could have been avoided, Judge Hunt stated, 'by measures to segregate the day-to-day business of trust administration from individual asset holding'.
Karole Cuddihy and John Breslin