IF I GET A COURT ORDER AGAINST A COMPANY, AND THE COMPANY DOES NOT COMPLY WITH THE ORDER, WHAT CAN I DO?
If the company wilfully disobeys the court judgment/order, you can apply to the High Court to have it enforced. The application is made to the High Court, even if the judgment/order was made by a lower court. The High Court will typically deal with the application on affidavit only, and will not hear oral evidence.
The statutory basis for such an application is section 53 of the Companies Act 2014, which effectively provides for a statutory form of civil contempt. Section 53 came into effect on 1 June 2015. The Rules of the Superior Courts also provide for such an application.
On hearing the application, the Court can make orders for the following:
- sequestration against the company's property;
- attachment against the directors/ officers of the company; or
- sequestration against the property of the directors/officers.
The Court will only make an order under section 53 where the company wilfully disobeyed the relevant judgment/order (see below).
In all other cases, you must look to the usual litigation remedies, e.g. obtaining a judgment mortgage or an order for possession or appointing a receiver. These remedies are not specific to companies.
WHAT CONDITIONS MUST BE SATISFIED BEFORE THE HIGH COURT CAN REQUIRE THE COMPANY TO COMPLY WITH THE COURT ORDER?
You must have notified the company of (i) the judgment/order in respect of which enforcement is sought; and (ii) the consequences of non-compliance.
Notify the company of the judgment/order: You must formally serve the company with the judgment/order. You can do this by leaving the judgment/order at, or by posting it to, the company's registered office. If the company has not notified the Companies Registration Office (CRO) of its registered office, you can send the judgment/order to the CRO.
It is good practice to put the company's directors/officers on notice of the terms of the judgment/order and to indicate to them that the High Court may make orders against them personally if the company does not comply with the judgment/order.
Notify the company of the consequences of non-compliance: The judgment/order in respect of which enforcement is sought must contain a 'penal endorsement' in the following terms:
'If you the within named [insert name] neglect to obey this judgment or order by the time therein limited, you will be liable to process of execution including imprisonment for the purpose of compelling you to obey the same judgment or order.'
If the penal endorsement is not included on the judgment/order, you will not be able to get an order for attachment against the company's directors/officers or an order for sequestration against their property.
The High Court will require evidence of service of the judgment/order containing the penal endorsement.
WHAT IS 'WILFUL' DISOBEDIENCE?
'Wilful' means something more than casual or accidental or unintentional.
A company cannot oppose an application for enforcement by simply saying that it did not intend to disobey the order. A careless disregard as to whether the judgment/order was respected or breached may amount to wilful disobedience.
If, on the other hand, it is impossible for the company to comply with the judgment/ order due to a lack of funds, this will not be regarded as wilful disobedience. If the company cannot comply with the order, you cannot seek enforcement against the directors personally.
WHAT KIND OF ORDERS CAN THE HIGH COURT MAKE?
If the High Court finds that the company wilfully disobeyed the judgment/order, it may make orders against the company and/ or against its directors/officers personally.
An officer of a company includes its directors and the company secretary. It would be unusual for officers other than directors to have the wherewithal to comply with a court order since they must have the actual authority in the company to cause compliance. While it will vary from company to company, other officers such as the company secretary will not ordinarily have the delegated authority from the board of directors to sanction expenditure required to comply with an order/judgment or the authority to direct employees.
- Orders against the company:
Sequestration against the company's property. The company will be temporarily deprived of its property until it clears its contempt.
- Orders against the company's directors/officers:
- Attachment - An Garda Síochána (the Irish police) will be directed to bring the relevant directors/ officers before the High Court to answer their contempt. The Court may discharge the directors/officers on payment of certain costs or commit them to prison for a certain period. The High Court may impose a fine if it considers committal to prison to be inappropriate in the circumstances of the case.
- Sequestration against their assets - the directors/officers will be temporarily deprived of their property until they clear their contempt.
The Court can only make an order for attachment or sequestration against a company's directors/officers if the judgment/order in respect of which enforcement is sought contained a penal endorsement in the required form (see above).
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.