About €2.6 million should not have been paid to two directors of a company subcontracted to carry out part of a €30 million clean-up of the contaminated former Irish Steel site in Haulbowline, Cork, it has been claimed in the High Court.
The effect of the payments to Stephen Griffin and David Ronan, of CTO Greenclean Environmental Solutions, Sarsfield Road, Wilton, Co Cork, was to render the company insolvent and to deprive its creditors of their entitlements, CTO creditor Louis J O’Regan Ltd, of Staffordshire, England, along with CTO liquidator, Myles Kirby, have claimed.
Mr Justice Robert Haughton has ordered that Mr Kirby be joined as a co-applicant in a case by O’Regan seeking payment of €2.6 million from the two directors.
Mr Kirby argued he was in the best position to pursue the money and to act on behalf of all the company’s creditors.
Ireland’s only steelworks operated at the Haulbowline site from 1939 until its closure in 2001.
The clean-up of some 650,000 cubic metres of waste from steel production was initially expected to cost some €30 million. But when the real level of contamination was discovered in 2008, it was estimated to cost multiples of that figure with the result the government terminated the entire contract.
The main clean-up contract had been given to Hammond Lane Metal Company in Dublin, which subcontracted some of the work to CTO.
Payments
In the original O’Regan proceedings, it was claimed that, between February and May 2008, sums totalling €2,064,330 were paid to Mr Griffin, and €600,000 was paid to Mr Ronan in January 2009.
O’Regan claimed it should be paid €2.6 million which, it is argued, was unlawfully or improperly paid by the company to the two directors.
CTO was wound up in 2012 following a court application by O’Regan. A liquidator was appointed but he resigned in 2013 to be replaced by another liquidator whom O’Regan sought to remove.
After the second liquidator resigned, Mr Kirby was appointed in February last year. He carried out an investigation and found the firm was “barely solvent on a balance-sheet basis”.
Mr Kirby then asked the court to be joined with O’Regan as a co-applicant and also sought an injunction prohibiting Mr Griffin and Mr Ronan taking any steps to dissipate or utilise the money which is the subject matter of the proceedings.
Both men denied the company was insolvent and say the payments made to them were by way of remuneration/pension and also maintained they would not seek to dissipate funds.
Mr Justice Haughton said Mr Kirby could be joined as a co-applicant but he refused the injunction against the directors.
The judge took into account that Mr Griffin and Mr Ronan had given explanations as to why they would not dissipate funds.
Mr Griffin, of Spring Hill, Carrigtwohill, Co Cork, had sworn on affidavit he had €200,000 in a pension fund, some of which he got permission from Revenue to access because of his ill-health and because he is aged 54, unemployed and financially responsible for his son, diagnosed with a serious illness.
He had transferred €60,000 from the drawdown to his wife and his only other asset is his Carrigtwohill home, Mr Griffin said.
Mr Ronan, who described himself as a farmer from Castleblake, Rosegreen, Cashel, Co Tipperary, has €600,000 in a pension fund. He denies the liquidator’s claims payments into this fund by CTO was a fraudulent disposition and says the pension cannot by law be interfered with or assigned.
Mr Justice Haughton said, in the case of Mr Griffin, he was impressed by the detail given in his affidavit in which he gave “plausible accounts” in relation to drawing down funds from the pension. The drawdowns had taken place regularly since 2008 and could not be said to have been precipitated by the court application of O’Regan.
In the case of Mr Ronan, there was no evidence of any intention to dissipate his assets or any evidence such an inference could be drawn, he said.
