Whenever I receive notification of a fine incurred before the liquidation, I advise the relevant authority of the liquidation and thereafter ignore the fine. I suspect most of my colleagues in the profession adopt a similar approach. Fines and Penalties are dealt with under Section 308 Companies Act which provides that:
“Nothing in this Part of this Act (Liquidations) limits or affects the recovery of –
(a) A fine imposed on a company, whether before or after the commencement of the liquidation of the company, for the commission of an offence; or
(b) A monetary penalty payable to the Crown imposed on a company by a court, whether before or after the commencement of the liquidation of the company, for the breach of any enactment; or
(c) Costs ordered to be paid by the company in relation to proceedings for the offence or breach.”
Additionally, Section 303(2) states that “Fines, monetary penalties, and costs to which section 308 of this Act applies are not claims that may be admitted against a company in liquidation.”
Exactly where this leaves authorities who have imposed a fine is unclear. How is the fine to be recovered? The Companies Act is unhelpfully silent on this. So, liquidators continue to ignore these fines as there is no apparent process for these to be dealt with by a liquidator as they sit outside the liquidation. One wonders what the intentions of the legislators were when Sections 303 & 308 were drafted. It seems that they had something in mind but then failed to properly express this.
Section 308 seems to imply that authorities could proceed directly against the company, effectively ignoring the liquidation and somehow creating a super-priority. However, this would cause a huge conflict with the process of liquidation which sets out the liquidator’s duties to realise assets and distribute to creditors in the relevant order of priority.