Section 222 of the Companies Acts 1963 provides that leave of the High Court must be obtained in order to bring or prosecute proceedings against a company which is the subject of a winding-up order.  In In re MJBCH Ltd: Mary Murphy IEHC 256, the High Court confirmed it has jurisdiction to grant leave retrospectively under this section.

The applicant issued personal injuries proceedings against MJBCH Ltd in August 2012 in relation to an accident she suffered while on the company’s premises.  When the proceedings were served on the company in January 2013, the applicant was advised that the company had been wound up pursuant to an order of the High Court made on 25 June 2012.  

As the leave of the court had not been sought in advance of issuing the proceedings, the applicant issued an application pursuant to section 222 seeking the retrospective leave of the court.

The Court had to determine whether proceedings commenced against a company the subject of a winding-up order, without leave, are a nullity, or whether they are merely an irregularity which may be retrospectively validated by the court.

Finlay Geoghegan J stated that the purpose of section 222 is not simply to protect creditors, but is primarily to ensure that all proceedings in relation to a company being wound-up by the court are under the supervision of the court.  However, she observed that the restriction imposed by section 222 is a restriction on a potential plaintiff’s constitutional right of access to the courts and accordingly the requirement for leave should be strictly construed.

The judge noted the difficulties that could potentially arise if the section was construed as not giving the court jurisdiction to grant leave retrospectively:  proceedings would have to be discontinued; identical proceedings would have to be issued and served; and if the limitation period expired, there would be potentially severe adverse consequences for the plaintiff.

Accordingly, Finlay Geoghegan J took the view that section 222 should not be interpreted as precluding the court from granting leave after the event. 

She emphasised, however, that in the normal course leave should be sought prior to the commencement of proceedings.  Where this is not done, the court retains jurisdiction to consider, retrospectively, the granting of leave and in so doing it should take the same approach as it would have taken had the application been made prior to the commencement of proceedings.

On the facts of the case, Finlay Geoghegan J was satisfied that the applicant would have been entitled to such an order in the event of a leave application having been made prior to the commencement of the proceedings.  Accordingly, the Court exercised its discretion in favour of granting the leave sought.

Contributed by: Delia McMahon