Student claims over fees properly disallowed: court

Claims by 190 students aimed at recovering €300,000 fees and other costs incurred when they could not complete courses at Eden College after its liquidation were properly disallowed as claims in the liquidation, the Court of Appeal ruled.

Given that and other findings, the three-judge court ruled that Anthony J Fitzpatrick was duly elected liquidator of Eden Further Education Ltd, the college’s operating company. The High Court erred in permitting Mr Fitzpatrick be replaced by a liquidator chosen by the students and certain other creditors, it said.

Eden College, based at Dublin’s Burgh Quay, blamed its closure in April 2014 on cashflow difficulties following its suspension, pending an investigation, from a register of approved colleges by immigration authorities.

At a creditors’ meeting in May, Mr Fitzpatrick was appointed liquidator to Eden Further Education Ltd, whose directors are Fakir Mohammad Zakir Hossain and his wife Hasina Akter.

The Irish Council for International Students, representing 216 students, objected to the choice of Mr Fitzpatrick as liquidator; he had been nominated by Mr Hossain who also chaired the creditors’ meeting.

The students argued that their nominee, Declan DeLacy — who was supported by two other creditors, the Revenue Commissioners and Dublin City Council — should have been appointed.

A High Court challenge aimed at having Mr DeLacy replace Mr Fitzpatrick was brought by a student who had paid €2,575 for a 52-week course but had 26 weeks’ tuition outstanding when the college closed. She said she was owed €1,386 and many other students were in a similar position. Her case was supported by the Revenue and council.

The High Court noted that the complaint was not against Mr Fitzpatrick himself but rather that Mr Hossain did not accept the correct proofs as to the voting rights of the creditors. The High Court upheld their claims that Mr Hussain wrongly disallowed some €300,000 claims of the students and some €98,846 of the council’s total rates claim of €220,943 and found, had those votes been allowed, Mr DeLacy would have been appointed liquidator.

Mr Hossain allowed various creditors’ claims for which he held proxies. These came to €639,281 in value and included Chillout Ventures Ltd, of which Mr Hossain was secretary and which claimed some €322,750 for accommodation services. The other creditors’ total votes amounted to €250,869 in value.

The three-judge court yesterday granted the appeal by Mr Hossain and Mr Fitzpatrick against the High Court decision in a judgment centring on the correct interpretation of court rules concerning the appointment of a liquidator at a meeting of creditors in a voluntary winding up and how those rules interact with relevant provisions of the Companies Acts.

Mr Justice Gerard Hogan said claims of some 216 students affected by the closure amounted to some €326,358. Of these, 190 had paid their fees for the full course but had not completed them when the company went into liquidation; the other 26 had paid fees in advance for courses which had not begun.

The chairman was not entitled to disallow the students’ claims on grounds the company had a no refunds policy as such a policy could not apply when a course was simply not provided or not completed by the company, he said.

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