Anthony Fitzpatrick v Aiden Murphy (as Official Liquidator)

• Jurisdiction: Ireland
• Judge: Mr Justice David Keane
• Judgment Date: 24 March 2021
• Neutral Citation: [2021] IEHC 204
• Docket Number: [2019 No. 122 COS]
• Court: High Court
• Date: 24 March 2021

In the Matter of United Power Limited (In Liquidation)

And in the Matter of Section 645 of the Companies Act 2014

Between

Anthony Fitzpatrick

Applicant

and

Aiden Murphy (As Official Liquidator)

Respondent

and

The Revenue Commissioners

Notice Party

[2021] IEHC 204

[2019 No. 122 COS]

THE HIGH COURT

CHANCERY

Remuneration – Provisional liquidator – Companies Act 2014 s. 645 – Applicant seeking an order fixing his remuneration for the work he carried out as provisional liquidator – Whether the applicant had discharged the onus of establishing a claim to the level of remuneration that he sought

Facts: The applicant, Mr Fitzpatrick, was appointed as the provisional liquidator of United Power Ltd (the company) on the 8 April 2019. When the company’s winding-up petition came before the High Court on 29 April 2019, its application to have Mr Fitzpatrick appointed as its official liquidator failed and another insolvency practitioner, the respondent, Mr Murphy, was appointed instead. Mr Murphy was the nominee of the Revenue Commissioners (Revenue) who were a notice party to the petition and who opposed Mr Fitzpatrick’s appointment as official liquidator. Mr Fitzpatrick’s appointment was also opposed by a company named Bibby Financial Services (Ireland) Ltd (Bibby), which provided invoice finance facilities to the company and claimed €417,000 as a secured creditor under a debenture. Mr Fitzpatrick applied for an order pursuant to s. 645 of the Companies Act 2014 fixing his remuneration for the work he carried out as provisional liquidator in the sum of €113,009.41 (representing €89.126.25 in fees, €2,751.32 in expenses and outlay, and €21,131.84 in VAT at 23% on those sums), together with further remuneration in the sum €13,196.60 (representing the legal costs incurred by him in bringing an unsuccessful interim injunction application on 25 April 2019, in plenary proceedings issued on the same date). Mr Murphy and Revenue opposed that application. Relying on Mr Murphy’s comparison of the fees claimed against those that might reasonably be charged for the work that was done, they submitted that Mr Fitzpatrick’s remuneration should be fixed in the amount of no more than €45,510, representing €37,000 in fees and €8,510 in VAT @ 23% on that sum, and that the costs of the interim injunction application should be disallowed.

Held by Keane J that Mr Fitzpatrick had failed to discharge the onus of establishing a claim to the level of remuneration that he sought. Keane J accepted the view expressed by Mr Murphy that, based on the efficient completion of the work by appropriately qualified and experienced staff at the charging rates claimed by Mr Fitzpatrick, a reasonable amount of chargeable time would be 191 hours at a cost of c. €37,000. Mr Fitzpatrick’s claim of €2,751.32 in expenses and outlay had not been challenged and Keane J accept it. Applying VAT at 23% to those sums, Keane J held that Mr Fitzpatrick was thus entitled to have his remuneration fixed in the aggregate amount of €48,804.12. Keane J was satisfied that the sum concerned reflected the time properly required to be given by Mr Fitzpatrick and his staff to attending to the company’s affairs, the complexity of the case, the responsibilities that Mr Fitzpatrick had to deal with, the effectiveness with which he carried out his duties and the value and nature of the property with which he had to deal.

Keane J held that he would order accordingly.

Remuneration of applicant fixed in the sum of €48,804.12.

Appearances

Ronnie Hudson BL for the applicant, instructed by Herbert Kilcline, Solicitor.

Barry Cahir, Solicitor, of Beauchamps, Solicitors, for the respondent.

Sally O'Neill BL, for the notice party, instructed by the Revenue Solicitor.

JUDGMENT of Mr Justice David Keane delivered on the 24th March 2021

Introduction

1 Anthony Fitzpatrick was appointed as the provisional liquidator of United Power Limited (‘the company’) on the 8 April 2019. However, when the company's winding-up petition came before the court on 29 April 2019, its application to have Mr Fitzpatrick appointed as its official liquidator failed and another insolvency practitioner, Aiden Murphy, was appointed instead. Mr Murphy was the nominee of the Revenue Commissioners (‘Revenue’) who were a notice party to the petition and who opposed Mr Fitzpatrick's appointment as official liquidator. Mr Fitzpatrick's appointment was also opposed by a company named Bibby Financial Services (Ireland) Limited (‘Bibby’), which provided invoice finance facilities to the company and claimed €417,000 as a secured creditor under a debenture.

2 Mr Fitzpatrick now applies for an order pursuant to s. 645 of the Companies Act 2014 (‘the 2014 Act’) fixing his remuneration for the work he carried out as provisional liquidator in the sum of €113,009.41 (representing €89.126.25 in fees, €2,751.32 in expenses and outlay, and €21,131.84 in VAT at 23% on those sums), together with further remuneration in the sum €13,196.60 (representing the legal costs incurred by him in bringing an unsuccessful interim injunction application on 25 April 2019, in plenary proceedings issued on the same date).

3 Mr Murphy and Revenue oppose that application. Relying on Mr Murphy's comparison of the fees claimed against those that might reasonably be charged for the work that was done, they submit that Mr Fitzpatrick's remuneration should be fixed in the amount of no more than €45,510, representing €37,000 in fees and €8,510 in VAT @ 23% on that sum, and that the costs of the interim injunction application should be disallowed.

Procedural history

4 A notice of motion issued on 11 July 2019, returnable for 22 July. Although it has the same record number as the company's winding up petition, it identifies Mr Fitzpatrick as the applicant; Mr Murphy as respondent; and Revenue as a notice party. The motion is grounded on an affidavit of Mr Fitzpatrick, sworn on the 20 June (‘the first Fitzpatrick affidavit’). Mr Murphy swore a concise affidavit in reply on 30 August (‘the first Murphy affidavit’). Mr Fitzpatrick responded with a much lengthier affidavit of his own, sworn on 7 October (‘the second Fitzpatrick affidavit’).

5 Patrick Behan, an administrative officer in the Collector General's Division of Revenue, swore an affidavit on Revenue's behalf on 19 November (‘the Behan affidavit’).

6 Mr Murphy swore a further short affidavit on either 3 or 5 December – the date is not clearly legible (‘the second Murphy affidavit’).

7 Mr Fitzpatrick swore an affidavit on 23 December (‘the third Fitzpatrick affidavit’) in response to the Behan affidavit and another on 3 January 2020 (‘the fourth Fitzpatrick affidavit’) in response to the second Murphy affidavit.

8 Finally, Herbert Kilcline, Mr Fitzpatrick's solicitor, swore an affidavit on 22 January 2020 (‘the Kilcline affidavit’)

9 The application came on for hearing before me on 27 November 2020. I had the benefit of written and oral submissions from Mr Hudson BL on behalf of the applicant and from Ms O'Neill BL on behalf of the notice party. I also had the benefit of short oral submissions made on behalf of the respondent by Mr Cahir, solicitor, who joined in the arguments put forward by Ms O'Neill.

Background

10 The company's principal activities were electrical contracting and the provision of the specialist contract labour of electricians. It had 122 employees at the commencement of the winding up in April 2019 and contracts in Ireland, Holland, Germany and Switzerland. The director's statement of affairs estimated that the company was then €1,272,184.73 in deficit. In particular, Revenue claimed a debt of between €756, 132.43 and €812,147.27, depending on the availability to the company of certain tax credits.

11 In support of the present application, the first Fitzpatrick affidavit exhibits a document prepared by Mr Fitzpatrick entitled ‘ Provisional Liquidator's Fee Report and Analysis’ (‘the Fitzpatrick fee report’), covering the period between 8 April and 31 May 2019. Appended to that document is another, entitled ‘ Time Cost Schedule for Provisional Liquidation’ (‘the Fitzpatrick fee schedule’), recording total fees due of €113,009.41, comprising €89.126.25 in professional fees, €2,751.32 in expenses and outlay, and €21,131.84 in VAT at 23% on those sums. Mr Fitzpatrick furnished that report and schedule to Mr Murphy on 20 June 2019. The second Fitzpatrick affidavit exhibits the earlier ‘Report of the Provisional Liquidator’, dated 29 April 2019 (‘the provisional liquidation report’), that Mr Fitzpatrick had furnished to the High Court at the hearing of the winding-up petition.

12 The first Fitzpatrick affidavit also exhibits an invoice dated 6 June 2019 from Mr Fitzpatrick's solicitor in the sum of €13,196.60 as the legal costs of Mr Fitzpatrick's unsuccessful interim injunction application.

13 In opposition to the application, the first Murphy affidavit exhibits a document entitled ‘Review by Official Liquidator of the Fees and Costs claimed by the Provisional Liquidator’, dated 30 August 2019 (‘the Murphy fee review’). Appendix A to that document is an analysis, in tabular form, of both the time and costs claimed by Mr Fitzpatrick and those deemed reasonable by Mr Murphy for the completion of the relevant tasks (‘the Murphy fee schedule’).

14 The Murphy fee review concludes in material part that: (a) Mr Fitzpatrick's claim for 429 hours work over the 22 days he was in office as provisional liquidator is grossly in excess of what would reasonably be expected in the liquidation of the company (para. 72); (b) a reasonable amount of chargeable time would be 191 hours at a cost of c. €37,000, based on the efficient completion of the work at an appropriate staff level at the rates applied by Mr Fitzpatrick (para. 75); and (c) based on the size of the company and Mr Murphy's experience and knowledge of insolvency cases,...