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

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.

•