In a recent Supreme Court decision, Re Springline Limited, it was decided that an Examiner's costs would take precedence over all other claims including liquidation costs.

The issue before the Court was whether the remuneration, costs and expenses of an Examiner of a company must be paid in full out of the assets of the company before payment of any of the costs of a Liquidator appointed by the High Court after the Examiner had ceased to act. In this particular case an Examiner had been appointed, and having concluded that the company could not survive as a going concern, an Official Liquidator was appointed by the High Court. Shortly after the Liquidators appointment, the Examiner applied to the High Court for an order sanctioning his remuneration, costs and expenses. In the light of this application the Liquidator applied to the court for a determination as to the priority (if any) to be given in the winding up to that claim. The Liquidator had brought to the court's attention that it was quite likely that there would be a shortfall in the assets realised in the winding up to discharge the Liquidator's remuneration, costs and expenses in the event that the examiner's costs were discharged in priority. The High Court held that the Examiner's costs did not take priority.

On appeal to the Supreme Court it was submitted on behalf of the Examiner that the word 'claim' in Section 29(3) of the Companies (Amendment) Act, 1990 ('the Act') should be given its ordinary and natural meaning. On this construction the word meant a demand for something which was due and clearly included remuneration, costs and expenses of the Liquidator. The Supreme Court held that the word 'claim' must be given its ordinary and natural meaning and where an Official Liquidator performs work or incurs liabilities in respect of which he is entitled to be reimbursed he can properly be described as having a claim to such sums.

The Supreme Court also noted that in the event of any ambiguity in the construction of any section in the Act, the underlying policy had to be borne in mind, which in this case was to facilitate where possible the survival of companies as going concerns while the feasibility of a scheme of arrangement was looked into by an Examiner. The alternative construction, if adopted by the Court, would result in a serious dis-incentive to appropriately qualified people to act as Examiners which would be contrary to the policy of the Act.

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