04 July 2016
In a recent High Court case, NAMA was ordered to pay the costs of preparing and finalising company accounts where an order had been made restoring the company to the register.
The company's loans were acquired by NAMA in 2010. On 28 March 2014, receivers were appointed to the company by NAMA and the company was also struck off the register of companies for its failure to file annual returns. NAMA wanted the company to be restored to the register so that the receivers could take steps to realise the company's assets.
A director of the company stated on affidavit that he had no objection to the company being restored and he was willing to cooperate with the receivers. However, he further stated that the company had been struck off because NAMA had appropriated the revenue and income of the company. He added that although NAMA had instructed the company's accountants to prepare the annual returns it had not approved payment of such work by the company to the accountants and ultimately the returns had not been filed. It was argued on behalf of NAMA that payment of the accountants had been approved and notwithstanding this fact the outstanding returns was entirely a matter for the directors and such responsibility was never taken on by NAMA.
The Court made the order on the basis of a section of the Companies Act, which allows the Court to make such orders ‘as seem just’ for placing the company and all other parties in the same position as if the company had not been struck off. The Judge said that ‘all other persons’ included NAMA and the directors of the company. He stated that it was clear that NAMA had agreed to pay the accountants' fees for preparing the annual returns in 2010 and 2011 in order to protect its security and as a result NAMA should bear the costs of the returns for those years. He said that on the basis of commercial logic it was likely that NAMA would have continued this arrangement of funding for the next two years but he had heard no evidence of such an agreement by NAMA. He concluded that it would be just and fair to order that the costs for preparing the returns for 2012 and 2013 be borne 50:50 between NAMA and the directors.
This decision derives from the specific relationship between NAMA and the company in this case. However, it serves as a cautionary judgment for any lender or creditor who takes similar steps to protect its security.