The Irish High Court recently considered the application of the general statutory time limits for bringing contractual claims in the context of the long-running liquidation of Money Markets International Stockbrokers Limited (In Liquidation): In Re Money Markets International Stockbrokers (In Liquidation) IEHC 214, (Unreported, High Court, McGovern J, 23 May 2012).
Under the Statute of Limitations 1957 contractual claims must be brought within six years of the breach of contract.
Prior to its liquidation in March 1999, Money Markets held shares in an unrelated company on behalf of Consulting and Investment Services Inc (the vendor) and brokered a sale of the shares to a purchaser. However, the sale was never completed, no payment was made and the shares remained in the possession of Money Markets.
In 2012 the liquidator of Money Markets made an application to the High Court for directions regarding, amongst other things, the ownership of the proceeds of the shares which had been sold by him in the interim following a High Court order made at a time when the shares were trading at a particularly high value.
The purchaser maintained that he had a valid contract to purchase the shares which the liquidator should honour. Given that the liquidator had sold the shares, the purchaser was effectively arguing he had a right to acquire the proceeds for the original contract price. In a preliminary hearing, the Court considered whether, given the passing of time, the purchaser’s claim was statute barred under the Statute of Limitations 1957.
The parties and the Court accepted the principles enunciated in Re General Rolling Stock Co Ltd (1872) that any claim in the liquidation of a company which is not statute barred on the commencement of a liquidation, will not subsequently become barred by virtue of the Statute of Limitations 1957.
However, in this case the liquidator and the vendor sought to distinguish the purchaser’s claim on the basis that it fell outside the liquidation. They argued that despite the fact that the shares/proceeds of the shares were held by the liquidator of Money Markets, the purchaser’s claim was against the vendor, not against Money Markets.
Ultimately McGovern J agreed and found that the purchaser’s claim was a contractual claim against the vendor, as opposed to a claim in the liquidation of Money Markets. Accordingly, the claim fell outside the liquidation and was subject to the limitation period set out in the Statute of Limitations 1957, with the result that it was statute barred.
While the Court did not set out any new rules for liquidators, the judgment provides a useful example of the types of claims which may be encountered in a liquidation and provides a cautionary lesson for creditors in long-running liquidations, particularly those involving brokers or agents.
Contributed by Ruairi Rynn
