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1. A Petition to appoint an Examiner in relation to this company was presented to the High Court on the 19th February 1996 and on the 26th February of that year, an Examiner was appointed to the company. The examination of the company proceeded until May 1996 when the Examiner, Mr Rory O'Ferrall, found it impossible to put in place a scheme of arrangement and thereafter informed the High Court on or about the 8th May 1996 that as there was no possibility of a scheme of arrangement being put in place, the protection of the Court should be withdrawn. On the 8th May 1996 the High Court made an Order withdrawing the protection of the Court from the company thus terminating the Examinership. On the 16th May 1996 a Petition to wind up the company was presented to the High Court and on the 21st May 1996 a provisional Liquidator was appointed. On the 10th June 1996 a winding-up Order was made by the High Court in relation to the company.

2. Mr O' Ferrall now claims payment of his costs remuneration and expenses in the winding up in the amount of IR£54,210.28 (inclusive of VAT). Mr O' Ferrall applied to the High Court on the 29th July, and 9th October, 1996 and obtained Orders from the Court sanctioning payments of sums amounting to £54,210.28.

3. The question which this Court is asked to determine is the priority of the remuneration costs and expenses claimed by the Examiner Mr. O' Ferrall in relation to the work done by him on behalf of Springline Limited in liquidation in his capacity as such Examiner.

4. The principal function of an Examiner appointed under the provisions of the Companies (Amendment) Act 1990 is to investigate the possibility of whether a company, which is unable to pay its debts, is capable of surviving as a going concern. The effect of the presentation of a Petition, which results in the appointment of an Examiner, also results in protection being available to a company for a limited period during which time the property of the company is preserved from the clutches of its creditors. The 1990 Amendment Act makes provision for liabilities incurred by a company during the protection period. In particular, Section 10 deals with circumstances under which the Examiner may incur certain liabilities and Section 29 of the Act deals with the payment of costs and remuneration of examiners appointed by the Court.

5. It is appropriate I believe to start with Section 244 of the Companies Act 1963 which provides as follows:-

6. That is a provision, as appears clear, which deals expressly with the costs charges and expenses incurred during the winding-up, it is not a provision which deals with in any way the debts which are provable in a winding-up.

7. As is apparent from the foregoing subsection, one of its effects is to provide that debts provable in a winding-up are to be determined in accordance with the rules in force for the time being under the law of bankruptcy.

8. As I have already noted, Section 284(1) of the Companies Act 1963 makes provision for the application of the Rules in force for the time being under the law of bankruptcy to debts provable in the winding-up of an insolvent company. The debts which are subject to such rules in bankruptcy are those debts which are defined by Section 283(1) of the Companies Act 1963 as:-

9. I have already referred to Order 74 of the Rules of the Superior Courts and in particular Rules 108 and 128 of Order 74. This Order sets out in detail the procedure for ascertaining the creditors of a company and the proof by those creditors of their claims, that procedure is succinctly described by Keane J. in his work "Company Law in the Republic of Ireland" at paragraph 38.71 as follows:-

10. Whilst this Section remains unrepealed the fact is that the costs, remuneration and expenses of a liquidator in a compulsory winding-up are usually fixed by the Court on application made from time to time by the liquidator to the Court.

11. In addition, of course, the priority of the liquidator in respect of his costs remuneration and expenses is determined by Order 74 Rule 128 which I have already referred to in detail. Where there are disputes or differences of opinion as to the amount of the remuneration claimed by a liquidator such differences are usually referred to the Examiner's Office for consideration and reporting finally to the Court. As the authors of Corporate Insolvency and Rescue (Irene Lynch, Jane Marshall and Rory O' Ferrall) note at paragraph 2.85 of their work McCarthy J. observed in Re. Merchant Banking Limited [1987] ILRM 260 that the inquiry conducted by the Examiner is;

12. The foregoing analysis of the provisions of the Companies Acts and of the Bankruptcy Act 1988 and its rules, makes it clear that an entirely different approach is adopted relating to the proof and ascertainment of debts and the means whereby the remuneration, costs and expenses of a liquidator are determined. It is equally clear that the Bankruptcy Code has over time given a clear and unambiguous meaning to the words "debt" and "claim".

13. It was argued by Mr Shipsey that the effect of Section 29(3) of the Companies (Amendment) Act 1990 is that while the costs, remuneration and expenses of an Examiner have priority over secured or unsecured claims of creditors of the company, they do not have priority over the costs, remuneration and expenses of a liquidator appointed by the Court to an insolvent company. He argued that if the Examiner was to be entitled to his costs, remuneration and expenses in priority to the liquidator, he would have to satisfy the Court that the words "other claim" appearing in Section 29(3) of the Companies (Amendment) Act 1990 embraced the remuneration, costs and expenses of a liquidator appointed by a Court in the winding-up of an insolvent company. He drew attention also to Sections 244, 281 and 283 of the Companies Act 1963 . Section 244 as I have already indicated deals with the situation where the assets of a company are insufficient to satisfy the liabilities of the company and that section provides that the Court may make an Order as to the payment out of the assets of the costs, charges and expenses incurred in the winding up in such order of priority as the Court thinks just. Section 283 deals with those debts which may be proved against the company. Mr McBratney for the Examiner, argued that Section 29 (3) of the Companies (Amendment) Act 1990 providing for the priority of the remuneration, costs and expenses of the Examiner expressly gives that priority over "any other claim, secured or unsecured...." . He contended that this phrase was so wide as to necessarily embrace the costs, charges and expenses of a liquidator or the costs, remuneration and expenses of a liquidator referred to in Order 74 Rule 128 of the Rules of the Superior Court . He also pointed to Section 281 of the Companies Act 1963 (as did Mr Shipsey, but for a different reason). Mr McBratney argued that in relation to Section 281 there was a reference again to "all other claims" in a provision which provided for the priority of the costs, charges and expenses incurred by a voluntary Liquidator in a winding up and payable out of the assets of a company in priority to all other claims.

14. The real issue in this case is whether the liquidator's costs, charges and expenses (or costs, remuneration and expenses) can under any circumstances be described as representing a debt or claim against the company. If such costs, remuneration and expenses can be regarded as "a debt" or "a claim" against the company then, Section 29(3) of the Companies (Amendment) Act 1990 has the effect of giving the costs, remuneration and expenses of the Examiner a priority over the costs, remuneration and expenses of a liquidator, in a winding-up by the Court. In my opinion the liquidator's costs, charges and expenses cannot be regarded as constituting "a claim" or "a debt" against the company. The costs, expenses and remuneration of the Examiner, Mr O' Ferrall in this case, of course, represents a debt provable against the company in the winding-up of the company under the supervision of the Court. But as I have said the real issue, of course, is whether the costs, expenses and remuneration of the liquidator can be regarded as "a claim" or "a debt" against the company. Section 283 of the Companies Act 1963 refers to the fact that all claims against the company present or future, shall be admissible to proof against the company upon a winding-up of the company. Section 75 of the Bankruptcy Act 1988 provides that debts and liabilities "present or future" shall be provable in the bankruptcy or arrangement.

15. I do not think that it can be argued that references to a future "claim" or a future "debt" (as appears in the Bankruptcy Act 1988 and the Companies Act 1963 ) can be argued to refer in any way to the cost expenses remuneration or charges of a liquidator in a winding up by the Court. It seems to be clear that the notion of a future debt or a future claim at the date of a winding-up or at the date of an adjudication of bankruptcy relates to obligations of the company or the bankrupt, incurred before the date of winding-up or the date of adjudication, but in respect of which obligation its discharge follows the date of winding-up or adjudication. That this is the proper construction of "future claims" or "future debts" is reinforced by the wordings of Section 75 of the Bankruptcy Act 1988 and Rule 15 of the Schedule to that Act. Because debts and claims under the Bankruptcy Rules are provable as of the date of adjudication (or in the case of a winding-up as of the date of the commencement of the winding up) obligations incurred by companies after the date upon which the company was wound up cannot fall into the category of future claims or future debts. Such is the position of the liquidator's costs, expenses and remuneration. They were not obligations incurred before the winding up Order was made: they were obligations which necessarily occurred after the date of the winding-up Order and therefore do not fall to be proven as debts in the liquidation or as claims in the liquidation in the manner provided for in Order 74 of the Rules.

16. While the Examiner is given a priority by Section 29(3) of the Companies (Amendment) Act 1990 it is not a priority in respect of anything other than all other claims against the company whether secured or unsecured: It does not give the Examiner priority over the costs, expenses and remuneration of the Official Liquidator in this case.

17. I am conscious that it is the duty of the Court in all cases where it can possibly do so to construe an act in such a way as will give effect to the intention of the legislature. I am equally conscious that the Legislature would not have wished to leave an Examiner in the position that Mr O'Ferrall finds himself in now, namely, having done work for which he is not to receive any remuneration other than the remuneration he can recover by dividend (if any) in the course of the winding-up. It does seem to me that there is no way, without doing violence to the subsection, whereby subsection (3) can be construed in such a manner as to allow for the payment to Mr O' Ferrall of his remuneration ahead of that of the Liquidator. As Mrs Justice Denham said in the case of Mahon & Others, Applicants -v- Butler & Others, Respondents in a judgment delivered on the 1st August, 1997:-

18. If it could be argued that what the Examiner had in substance done was to preserve, realise and get in the assets of the company, or to do any of those things alone, then it might be arguable that he was entitled to be paid his fees for such, before the Official Liquidator was paid his costs, remuneration and expenses. However it seems to be clear on a perusal of the provisions of the Companies (Amendment) Act 1990 that the principal function of the Examiner is to investigate the viability of the company and, in certain circumstances, to formulate proposals for its survival and to present a scheme of arrangement to the members and creditors and, ultimately, to the Court for the survival of the company as a going concern. It is true, that while the Examiner is performing the functions and exercising the powers given to him by the Companies (Amendment) Act 1990 the assets of the company are preserved. However, this is not by anything done by the Examiner himself but rather it is the consequence of the Order of the Court which extends the protection of the Court to the company during the period of the Examinership. Accordingly, it seems to me that nothing which the Examiner has done which gives rise to his claims in these proceedings could colourably be regarded as properly incurred " in preserving, realising or getting in the assets" of the company. Consequently it does not seem to me that it is possible to use the wording of Rule 128 of Order 74 to make provision for the costs, expenses and remuneration of Mr O' Ferrall.

19. In my view the Examiner is not entitled to his remuneration costs and expenses in priority to those of the Official Liquidator of the company.