The Gazette 1984

GAZETTE

MARCH 1984

Fraud — Duties of Liquidators and their Solicitors The following circular has been received from Mr. David Munro, Examiner of the High Court. The question of fraudulent trading and other irregu- larities on the part of directors and other persons is arising with increasing regularity in Court liquidations. The summarised views of Mr. Collins, the Examiner, expressed in 1979 and approved by the then Chancery Judges provide a useful view of the realities. He said then: "Official Liquidators, when faced with improper conduct, like to take what they feel is a practical business decision and regard the financial aspect as the over-riding consideration. It is fair to say this is their main concern. Suspicion being one thing and proof another is no doubt one of the reasons why Receivers and Liquidators are often reluctant to report possible irregularities to the Director of Public Prosecutions. Expense is another factor but this I think is overplayed as the State in a proper case would have to accept responsibility for the prosecution expenses. Another is the under- standable feeling that they may involve the professional men in complicated, time consuming, and badly compensated investigations which may ultimately result in decisions either not to prosecute at all or acquittals at the end of the day, without any financial return. However, such consideration in my view should not be allowed to prevail. It seems wrong that prosecutions are rarely if ever brought and if the relevant authorities were seen to be more vigilant it might act as a deterrent, apart from teaching a salutary lesson to some of the culprits if convictions were secured. In liquidations we must rely almost entirely on the liquidators who are eminently fitted to apply their professional skill and expertise to the books to uncover fraudulent trading and other offences. If, as is generally accepted, the problem exists, those aware of the situation should act decisively and not acquiesce or ignore what may amount to a public scandal in some cases. I am particularly concerned about the fate of creditors who justifiably often feel they have been defrauded and are left without redress while those responsible may be seen to prosper and are left to start up new businesses which may be equally questionable to those which previously failed." Accordingly I am directed by the Chancery Judges to state that where an Official Liquidator or his Solicitors become aware of doubtful dealings and a prima facie case of fraud or of any offence under the Companies Act is apparent which may call for prosecution, it is their duty to make a report to the Examiner concerned for submission to the Judge. It should not be delayed till the completion of the case when the offences are stale. In those cases of apparent dishonest dealing where there is doubt about sufficient proof or where the course of conduct is not clearly covered due to the existing inadequacies of the law, a report of the facts should nevertheless be made. •

Vienna Site for 1984 International Bar Association Conference Vienna is the chosen location for the 20th Conference of the International Bar Association which will be held between September 2nd and the 7th, 1984. The principal topics to be discussed at the conference will be: 1. Business Crime — The Role of the Law in its detection, prevention and cure. 2. Lawyer's Professional Liability — Should the Lawyer exclude, limit, or insure? In addition more than 100 meetings to which all conferees are welcome will be held by the specialised committees of the I.B.A. during the Vienna meeting. There will be a major programme of social events headed by a special performance of the Vienna State Opera, and also including a ball in the Hofburg (the former Imperial Palace). Block bookings of accommodation have been made in all categories of hotels and in hostels. It is anticipated that there will be a sizeable Irish contingent among the 2,000 lawyers and guests who are expected to attend. Programmes from the Conference are available from Margaret Byrne at the Library in the Law Society, Blackhall Place, or from the International Bar Association, 2 Harewood Place, London W1R9HB. • Comment (continued from p. 35) Supreme Court to cases which involve significant points of law? There are precedents for such arrangements in other Common Law jurisdictions. Appeals cannot be taken as a matter of course to the House of Lords nor to the U.S. Supreme Court. In each of these jurisdictions there are Appellate Courts which deal with the great majority of cases coming from inferior courts on appeal. Only those which either the Appellate Court or the final court of jurisdiction deems suitable for consideration by such a final court can be taken to such final court. The alternative solution which presents itself, namely, the appointment of additional judges to the Supreme Court so that the Court could divide itself into a larger number of Chambers and thus dispose of a greater number of appeals, is less attractive, if for no other reason than that it might result in a lowering of the level of consistency in the Court's decisions, which might well be of considerable significance in that category of cases which most lawyers would feel ought not to have to go to the Supreme Court for the hearing of an appeal, namely personal injury cases. The interposition of a new Court of Appeal on the civil side should be considered as part of the comprehensive review of our Supreme Court system which is understood to be under way. •

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