THE HIGH COURT
1998 No. 13COS
IN THE MATTER OF 
INDUSTRIAL SERVICES COMPANY (DUBLIN) LIMITED 
(IN LIQUIDATION)
AND 
IN THE MATTER OF 
SECTION 218 OF THE COMPANIES ACT, 1963
 
JUDGMENT of Mr. Justice McCracken delivered the 15th day of May, 2002.
	The background to this case and the question of whether payments made into and out of the Company’s bank account with Ulster Bank Ltd. were dispositions within the meaning of Section 218 of the Companies Act, 1963 were dealt with in the judgment of Mr. Justice Kearns in this matter delivered on the 23rd March, 2001.  As it was held in that judgment that they were dispositions, they are prima facia void and the only question before me is whether such payments should now be validated pursuant to the Section.
	The relevant dates for consideration are that the petition to wind up the Company was presented on 16th January, 1998, and accordingly any disposition since that date is deemed to be void, the petition was advertised on 27th February, 1998 and the winding-up Order was made on 23rd March, 1998.  It is accepted that the fact of the winding-up did not come to the notice of the Bank until the Order was made, and the Bank continued to operate the bank account in the normal way between the presentation of the petition and the making of the Order.  It is also conceded by the Bank that there was an advertisement of the Petition on the 17th February, 1998, and that it was due to an oversight that it did not come to the attention of the Bank.
	There is also no dispute as to the payments which were made into and out of the account.  Between the presentation of the petition and the advertising of it the sum of £4,961.77 was lodged into the account and payments amounting to £8,022.27 were paid out of the account.  In the period between the advertisement and the winding-up Order a sum of £11,041.76 was paid into the account and a sum of £8,761.97 was paid out of the account.  During almost all of this time the account was in fact in credit, but I do not think that fact really ought to influence the decision which I now have to make.  
	I have been given detailed figures of the sums paid out of the bank account, broken down into payments in the ordinary course of business before the advertisement, the amount of such payments as were pre-liquidation debts, payments made before the advertisement which were not in the ordinary course of business, and the amount of these which appear to have been in some way pre-liquidation expenses, payments made after the advertisement broken down in the same way.
	The purpose of Section 218 is to preserve the assets of the Company for the creditors, and to ensure that no creditor was given preference in the payment of his debts over other creditors in the same class.  It has been urged on me on behalf of the liquidator that I should not validate any payment made subsequent to the advertisement, as the Bank was on constructive notice at least of the winding-up during this period.  It was also urged that no payments which were not made in the course of business should be validated under any circumstances.  The view I take is that I should validate any payments made in the ordinary course of business which were in respect of current debts, whether these were before or after the advertisement, as these were payments which the liquidator would probably have to have made in any event.  To that degree, they are payments which could be said to be made for the benefit of the general body of creditors.  However, I do not think that I should validate any payments made which were not made in the ordinary course of business, and I note that many of these payments were in fact made to Directors of the Company or persons who were connected with Directors of the Company.  The result of this is that I would validate the payments set out at paragraph 9.1(b) of the liquidator’s Affidavit of 25th January, 2001 other than those which have been underlined in that paragraph, and I would further validate the payments set out at paragraph 9.2(b) of the same Affidavit, again limited to such payments as are not underlined.  In all, this totals the sum of £2,125.57.
	There is an argument to be made that I should declare all payments into the bank account to be void dispositions, and only validate the sums that I have mentioned above in relation to the payments out of the bank account.  However, to do so would lead to a windfall for the liquidator of the sum of £2,125.57, and would really be a form of double accounting.  Accordingly, I would also validate the payment into the bank account of the sum of £2,125.57 by the Company.  All other payments into and out of the account are accordingly void, but again I would like to prevent any form of double benefit to the liquidator, which would result if he were able to both recover the moneys paid in from the Bank and the moneys paid out from the recipients of the payments.  What I would propose to do to try to meet this situation is that, while I am not validating any of these payments, I will direct that if the liquidator recovers the moneys from the Bank, he shall not seek to recover them from the recipients, and shall not in any way hinder the Bank from making such recovery should they be entitled to do so.  It is then up to the Bank whether they wish to pursue the recipients themselves.
	Finally, it is urged on me by Mr. Hastings on behalf of the Bank that I should not make an Order directing the Bank to pay the invalid dispositions to the liquidator, and all that I am authorised to do under the Section is to declare payments which are prima facia void to be valid.  This is technically a correct argument, although I fail to see the practical point of making it.  If the liquidator has to apply to the Court for leave to take proceedings against the Bank, this will simply add to the costs of the winding-up, and the costs of any such proceedings would almost certainly be awarded against the Bank.  I would urge the Bank to reconsider their position in this regard, but I am asked to make such further or other Orders as shall seem just, and it appears to me to be just that I should make an Order under Section 236 of the Companies Act, 1963 requiring the Bank as banker of the company to pay within 21 days to the liquidator the sum of £13,878, or its Euro equivalent, being moneys which are prima facia an asset of the Company.  I should say that in calculating this sum I am in fact giving the Bank a slight benefit of some £781, as I am only requiring payment of moneys paid into the Bank which is a slightly lesser sum that the moneys paid out.
	I will discuss the form of the Order with Counsel.