Case against directors of collapsed Waterford building firm struck out

A legal action aimed at making the husband-and-wife directors of a collapsed building firm personally liable to the company for up to €1 million has been struck out by the High Court after it found there was an inexcusable seven-year delay in bringing the case.

Ms Justice Teresa Pilkington struck out the action against Terence and Mary McCarthy by the liquidator of what had been the successful Terence McCarthy Building Ltd, Dungarvan, Co Waterford.

She said liquidator James J Grant had properly determined at an early stage in the liquidation the position in relation to four houses in Stradballymore in Waterford, which the two directors owned but were built by the company.

The judge said there was a seven-year delay between the liquidation and bringing the case against the McCarthys, now aged in their 60s. Mr McCarthy works as a labourer for his son. The balance of justice required the liquidator’s application be struck out, the judge said.

Michael Fingleton-linked lands at centre of controversial housing plan in Shankill

---

Glenveagh attracts growing hedge-fund interest

---

New hotel planned for Dublin’s Liberties

---

Engineers call for €25bn development plan boost

---

Mr Grant was appointed voluntary liquidator of the company in 2009. In 2013 he brought successful High Court proceedings against the McCarthys that resulted in their being restricted from acting as directors of a company for five years. The McCarthys did not contest the application and the five-year period has now expired.

At the time of the liquidation, Mr Grant considered the available assets, stock and works in progress, as valued at about €1.1 million, with an ultimate balance of €113,664, which was deemed sufficient to pay the creditors.

Mr Grant said his initial investigations appeared to indicate the full nature and extent of the contractual commitments between the company and the directors was about €300,000.

However, he said he subsequently discovered the four houses were not in fact assets of the company, which he could sell. The land was owned by the directors, who had engaged the company to construct the houses, and there was no documentation to vouch for the nature of that relationship, he said.

Indebtedness range

Mr Grant was inclined to the view the McCarthys were indebted to the company for €300,000-€1,076,288.

He took legal advice as to the best means of recovering the money and, in 2017, brought new proceedings under the Companies Act seeking to make the McCarthys personally liable for just over €1 million.

Mr McCarthy disputed any suggestion of duplicity. He said there was a dramatic change in the valuation of the work in progress from when the liquidator did his first report into the conduct of the directors, in July 2009, to his next report in March 2010.

He also said the company’s records were in dispute with the liquidator’s records and he set out different calculations – primarily in relation to the four houses. Taking all the company’s property into account, Mr McCarthy arrived at €350,097 as the proper “work in progress” figure.

The properties were sold in 2012 for €622,000, and his bank had control and retained that money under personal guarantees, he said.

Ms Justice Pilkington said he had not provided documentary evidence to back up his work-in-progress figure and both he and his wife chose to execute personal guarantees on loans.

However, she accepted Mr McCarthy’s submissions in relation to the delay. There was a clear delay with proceedings threatened as far back as January 2010 and not issued until December 2017, and there had not been an adequate explanation for this, she said.

She struck out the case and said she would hear the parties later in relation to costs.