This section deals with restriction of the rights of creditor as to execution or attachment in the case of a company being wound up. I wonder whether there should be express provision for judgment mortgagees. As I understand it, as the law stands, it was decided in the case of Irish Attested Sales Limited that judgment mortgages whenever obtained give the judgment creditors priority. That seems inconsistent with the terms of this section. I should be interested to know whether it is necessary to make express provision for judgment mortgagees ?
SECTION 291.
Question proposed : " That Section 291 stand part of the Bill".
The section is new. Its purpose is to afford some additional protection to the general body of creditors whose interests may be affected by the execution of a judgment against the goods and property of the company being wound up. I am too remote from the law now to be able to distinguish in my mind at short notice the difference between an execution order and a judgment mortgage in the context used by Deputy Cosgrave.
The priorities would be determined by, say, the issue of a judgment mortgage as such but I see no reason why execution cannot be deferred until everything is looked at. It does not affect the priority of a judgment mortgage—or does it ?
The Minister might consider the effect of the decision in that case and further examine it in the light of this section between now and the Report Stage.
Yes, I shall do that. But I think we had an amendment the other evening on Section 284, to deal with the case mentioned by Deputy Cosgrave. However, I shall look into it again and I shall see if anything further is necessary.
In this and the next section I take it the principle is this: whatever about priority—which will be determined in accordance with usual law—execution against the assets of the company will not take place once there is a winding up until it is done under proper control?
That is so.
I think that is the point of the two sections. It does not affect priorities but it does ensure that everything is done in an orderly manner.
There is this other point about it. People " in the know " might be tipped off to make a fast move, get a decree and have a judgment entered or an execution order lodged with the sheriff. As Deputy de Valera says, the purpose is to make sure that things are done properly and that nobody by reason of prior knowledge gets a preference that he would not otherwise be entitled to.
Note the words : " commencement of the winding up ". This only applies after the commencement of the winding up—am I right in that ?
Yes.
It only applies after the commencement of the winding up so that anybody who has a prior judgment is quite safe, that is, if the assets are there.
The case I referred to apparently decided that whenever the judgment was decided it gave the judgment creditor priority.
Whether before or after ?
Yes.
May I raise one matter ? I do not know whether it is hyper-technical or not. We are providing for this contingency which is to arise unless the creditor has completed the execution or the attachment before the commencement of the winding up but we go on in subsection (5) to define what the completion is to be. It is defined that an execution, by way of the sheriff, shall be taken to be completed by seizure and sale, an attachment of debt shall be deemed to be completed by receipt of the debt and an execution against land shall be deemed to be completed by seizure and, in the case of an equitable interest, by the appointment of a receiver. Now receivers are appointed in instances other than where equitable interests are concerned and the courts appoint receivers by way of equitable execution which are not necessarily all equitable interests. Receivers are appointed on future debts and debts that might arise in the future which could not be the subject of an attachment order but are the subject of appointment of receivers by way of equitable execution. I wonder does this section cover completely such a contingency ? In other words, if a person has a receiver by way of equitable execution on a future debt due to the company how are we going to determine when the execution of that debt has been completed ?
That is a big question. I am sure it would take a judge a whole afternoon to decide that question.
Mr. Costello
It may be covered all right but perhaps the Minister would consider whether or not the words : " in the case of an equitable interest by the appointment of a receiver " cover the case ?
I shall inquire into that.
Question put and agreed to.