Commercial Law Practitioner

Commercial Law Practitioner

2014

*47 Time Limits and the Appointment of Receivers—An Analysis of Recent

Authorities

Mark Heslin*

Time limits arise in many contexts in legal practice. A statute may allow a specific period for

something to be done. A contract may require a particular act by a given time. Practitioners

unilaterally set deadlines for a response, in default of which there will be specific consequences.

For instance, a demand may seek payment “immediately” or “by close of business”, but what do

those phrases mean? Can one validly demand immediate payment outside “normal banking

hours”, and when do these start and end? This article proposes to examine the attitude of the

courts to compliance with certain important time limits, and how disputes and ambiguities in

relation to such phrases have been dealt with, particularly in the context of the appointment of a

The Belohn Ltd (“Belohn”) owned and operated bars and a restaurant on the corner of Merrion

Street and Merrion Row, Dublin, under the name “Foley's”. The company ran into financial

difficulties and on October 10, 2012, its bank appointed a receiver and manager over Belohn's

assets. On December 18, 2012, a challenge to the receiver's appointment was brought by

Belohn's holding company, The Merrow Ltd (“Merrow”). Judgment was given in the High Court on

the morning of March 22, 20131

appointment was void, a finding based primarily on a requirement in one of the relevant

debentures that the bank “appoint by writing under its seal a Receiver of the mortgaged

property”. The receiver's appointment had not been made under seal.

by Mr Justice Gilligan. The court held that the receiver's

Following the delivery of Gilligan J.'s judgment, the bank's solicitors made a demand on Belohn,

later the same day, for the repayment of in excess of 4 million. At the same time, a demand was

made on Merrow for in excess of 1 million then due. The demands, which were handed to the

relevant director at 16.15 on March 22, required payment by 17.00. In the absence of payment

being made, the bank, at 17.10, appointed the same receiver over all of Merrow's property and

assets. The only assets of Merrow were its subsidiary, Belohn. The appointment at 17.10 on

March 22 was not communicated to Merrow until approximately 16.30 on Sunday, March 24.

Petition to Appoint Examiner

Upon learning of the receiver's appointment, Merrow presented a petition in its name and that of

Belohn seeking to appoint examiners to each company. The application was heard, ex parte, at

about 21.00 at the home of Mr Justice Hogan on the evening of Sunday, March 24, 2013.2

petitioner impressed upon Hogan J. the importance of the petition being presented before

midnight. Under s.2 of the Companies (Amendment) Act 1990 (the “1990 Act”), the court may

appoint an examiner upon a petition being presented. Section 3(6) of the 1990 Act specifies an

important time limit, providing that the court shall not hear any petition if a receiver stands

appointed to the company and has been so “for a continuous period of at least 3 days prior to the

Of particular interest is the analysis by Hogan J. of the three-day time limit by which a petition

must be presented for the appointment of an examiner, following the appointment of a receiver,

and the court's comments on any effort to frustrate the bringing of such petitions. The court heard

that financial institutions often appoint receivers late on a Friday, because an application for the

appointment of an examiner will depend, first, on the company learning that a receiver has been

appointed, and, secondly, locating a duty judge over the weekend. The court found that if a

receiver is appointed on a Friday, an application on the following Monday would be too late,

having regard to s.18(h) of the Interpretation Act 2005. This provides:

Where a period of time is expressed to begin on or be reckoned from a particular date, that

day shall be deemed to be included in the period and, where a period of time is expressed to

end on or be reckoned to a particular date, that day shall be deemed to be included in the

Therefore, even if a receiver is not appointed until late on a Friday evening, that day will be

included in the computation of the relevant three-day period, which will expire at midnight on

Sunday. Financial institutions hoping that a petitioner seeking to appoint an examiner will not

become aware of such an appointment in time to access a judge before midnight on Sunday

should