The Supreme Court has overturned a High Court finding that two directors of Squash (Ireland) Ltd, in liquidation, did not act responsibly in their conduct of some of the company's affairs.
It appeared from the company's history the directors had always acted responsibly and honestly and had put the interests of the company in the forefront of their minds, the three-judge court found. It found they had even lost their own money in an effort to assist the continuation of the company.
It quashed an October 1999 order of the High Court, made under Section 150 of the Companies Act, against the two directors - Mr David Balbirnie, Lower Pembroke Street, Dublin, and Mr Trevor Watkins, Knocknashee, Goatstown, Dublin. Section 150 restricts a person found in breach of it from acting as a director of another company for five years unless they meet conditions stipulated in the legislation.
Both directors had appealed against the order to the Supreme Court, which upheld their appeal. Giving judgment, Ms Justice McGuinness said it was clear the High Court's chief concern in the matter was the fact that subscriptions as a matter of routine were being sought during the end of November and early December 1997, at the time when the directors were becoming aware the liquidation of the company was imminent.
However, she said, the directors became aware only in December 1997 they would not be able to realise what they saw as the main capital asset of the company - a building in Clontarf which they had held on a lease from the Department of Education for many years.
They believed they held a valuable interest in that lease under the Landlord and Tenant (Amendment) Act 1980 which they could realise. But the Department told them about December 1st, 1997, that the provisions of the Act did not apply to State property. They sought legal advice and on December 10th, 1997, counsel confirmed the Department was correct in law.
When they received that opinion, the directors ceased to seek subscriptions, the judge said. There was no suggestion they had acted dishonestly.
It was unfortunate the directors did not identify the problem with the lease earlier but they had not acted contrary to any legal advice, the court found.