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GAZETTE
March 1976
SUPREME COURT UPHOLDS APPEAL
BY TRUST BANK CREDITORS
The Supreme Court on 26 March 1976 upheld an
appeal brought on behalf of a number of creditors
of the Irish Trust Bank Ltd. against a.decision of
the High Court on Tuesday ordering the winding
up of the Bank under the provisions of the Central
Bank Act, 1971, and appointing the Official Assignee
as liquidator.
The Appeal Judges ordered that the Banks be wound
up under the provisions of the Companies Act (as
had been sought in the High Court by two sets of
creditors who were separately represented) and they
appointed Mr. Patrick F. Shortall as official liquidator.
Mr. Justice Kenny (with whose judgment Mr. Justice
Henchy and Mr. Justice Griffin agreed) said that the
Central Bank, having carried out an investigation by
two of its officers into the affairs of the Irish Trust
Bank and having had that investigation verified by
a well-known accountant, came to the conclusion that
there was reason to believe that the Bank would in
the near future be unable to pay the depositors and
would be insolvent and, accordingly, on February 18th
a direction was given by the Central Bank, which
suspended the right of the Irish Trust Bank, to take
deposits or make payments.
Hamilton J. had been faced with a difficult
situation which arose out of the fact that one group
of the depositors appeared before him and argued that
Mr. Shortall should be appointed official liquidator
while the other group opposed Mr. Shortall's appoint-
ment on the ground that he, having been involved in
the investigation, could not be expected to be
independent.
Conflict as to who should be liquidator considered
Hamilton
J. having been
faced
with
this
conflict between the parties, decided that, as this
conflict existed, he should make an order under the
Central Bank Act and appoint the Official Assignee
as liquidator. Mr. Justice Kenny said there was force
in the argument that had been made that in having
regard to the conflict as to who should be liquidator,
the High Court judge had not dealt with the question
of which manner of winding up was more in the
interest of the creditors of the company, who had to
be the main consideration in this matter, particularly
as the accounts showed that there were deposits of
approximately £4 million with this company.
He said that while there were certain advantages
in having the Official Assignee as liquidator there
were other features which had to be considered. The
Official Assignee was not a practising accountant and
he and his staff had not the expertise that was re-
quired in this highly complicated matter.
Australian purchases
It was obvious from reading the reports, he con-
tinued, that there had been a number of remarkable
transactions and that the funds of the Bank had been
applied for the purchase of land and property in
Australia or in making loans to companies incorporated
in Australia to purchase property in Queensland.
This, he said, made it clear that if the Official
Assignee was appointed liquidator he would have to
call in a firm of accountants who were experts in this
matter and who would have overseas contacts and
offices which would be necessary to investigate the
loans made to companies in England, Australia and
other countries.
Winding-up under Companies Act proper procedure
Mr. Justice Kenny said that as far as the element of
economy was concerned there seemed to be nothing in
the appointment of the Official Assignee. Nor had the
Official Assignee the .range of contacts with the com-
mercial world that an accountant's office would have.
It was also important to have single control in a matter
such as this where the day-to-day management of the
company might require speedy decisions to be made.
The Court was of opinion that the fact that an
accountant had reported on the affairs of the com-
pany was not likely to affect his impartiality.
Having regard to the fact that a winding up under
the Companies Act was an established procedure
whereas no winding up under the Central Bank Act
had been made up to now, the Court was of the
opinion that the proper order in this case was that the
Company should be wound up under the Companies
Act under the petition presented by the creditors.
Advantage of appointing Mr. Shortall
Regarding the appointment of the Official Liquidator,
Mr. Justice Kenny said there were many advantages
which Mr. Shortall possessed. He had made a report
on the company for the Central Bank; he had acted as
provisional liquidator, and had some opportunity of
making himself familiar with the affairs of the bank
and with the devious transactions which had been
entered into in connection with the purchase of land,
and the making of advances to companies outside
Ireland in connection with the purchase of land.
If someone other than Mr. Shortall was appointed
•that person would have to do again all the work that
Mr. Shortall had already done. Mr. Shortall's firm had
associated offices in England and Australia and would
be able to obtain information and take any steps that
would be necessary through those offices.
Order discharged
Mr. Justice Kenny would accordingly discharge the
order made by Mr. Justice Hamilton under the Central
Bank Act and he would make an order that the com-
pany be wound up under the Companies Act. Mr.
Shortall would be appointed official liquidator.
Mr. Justice Kenny said that no case had been made
at the moment for the appointment of a Committee
of Inspection but the order would reserve liberty to
apply to the High Court for an order under section
232 of the Companies Act that the liquidator be
directed to convene a meeting for the purpose of
electing a Committee of Inspection. He thought that
Mr. Shortall's security should be fixed at a sum of
£100,000.
The Court awarded the parties their costs.
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