The Gazette 1994

GAZETTE

JULY 1994

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

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.