Anthony Fitzpatrick v Aiden Murphy (as Official Liquidator)

JurisdictionIreland
CourtHigh Court
JudgeMr. Justice David Keane
Judgment Date05 May 2021
Neutral Citation[2021] IEHC 306
Docket Number[2019 No. 122 COS]

[2021] IEHC 306

THE HIGH COURT

CHANCERY

[2019 No. 122 COS]

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

Remuneration – Provisional liquidator – Costs – Parties seeking costs – Whether costs should follow the event

Facts: The applicant, Mr Fitzpatrick, applied to the High Court for an order pursuant to s. 645 of the Companies Act 2014 fixing his remuneration for the work he carried out as provisional liquidator of United Power Ltd (the company) in the sum of €126,206.01. That application was opposed by both the respondent, Mr Murphy, the official liquidator of the company, and the notice party, the Revenue Commissioners (Revenue), a significant creditor of the company, on the basis that the remuneration sought was excessive. On 24 March 2021, having considered the evidence and arguments, Keane J made an order fixing Mr Fitzpatrick’s remuneration in the sum of €48,804.12 ([2021] IEHC 204). Mr Fitzpatrick sought an order for his costs of the application as costs in the liquidation of the company. Mr Murphy sought an order for his costs of the application against Mr Fitzpatrick or, in the alternative, an order for his costs of the application as costs in the liquidation of the company. Revenue sought an order for its costs of the application against Mr Fitzpatrick; an order prohibiting Mr Fitzpatrick from having recourse to the assets of the company to discharge either his own costs of the application or the costs of other parties for which he was liable; and an order setting off Revenue’s costs of the application when agreed or adjudicated against the remuneration due to Mr Fitzpatrick, as provisional liquidator, under s. 645 of the 2014 Act.

Held by Keane J that Revenue was entirely successful in its opposition to Mr Fitzpatrick’s application and he was entirely unsuccessful in persisting in his claim to have his remuneration fixed in a sum greatly in excess of that which Mr Murphy and Revenue were prepared to accept as reasonable. Keane J could find nothing in the nature and circumstances of the case, or in the conduct of the parties, that would warrant the exercise of the discretion to depart from the general rule that a successful party is entitled to an award of legal costs against an unsuccessful opposing party. Keane J held that Mr Murphy and Revenue were entitled to their costs against Mr Fitzpatrick. Keane J held that Mr Fitzpatrick was not entitled to have recourse to the assets of the company in respect of the payment of those costs, both because his unsuccessful application to have his remuneration fixed at the level he sought was not one brought in a representative capacity and because it would be contrary to public policy to make the company’s creditors (including Revenue) bear the legal costs of those parties’ successful opposition to that application. For the same reasons, Keane J refused Mr Fitzpatrick’s application for an order that his costs of the application be made costs in the liquidation. In the circumstances, Keane J did not think any right of set-off in the accepted sense arose; what Revenue sought more closely resembled a garnishee order.

Keane J held that he would make the following final orders: (1) an order pursuant to s. 645 of the 2014 Act, fixing the remuneration of Mr Fitzpatrick as provisional liquidator of the company in the sum of €48,804.12; (2) an order directing Mr Fitzpatrick to pay Mr Murphy and Revenue their reasonable costs of the application, to include all reserved costs and the costs of submissions, which costs were to be adjudicated upon in default of agreement; (3) an order prohibiting Mr Fitzpatrick from having recourse to the assets of the company to discharge his own costs of the proceedings or those of Mr Murphy and Revenue for which he was liable.

Costs awarded to respondent and notice party.

RULING of Mr. Justice David Keane delivered on the 5th May 2021

Introduction
1

On 24 March 2021, I gave judgment on the application of Anthony Fitzpatrick 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 of United Power Limited (‘the company’) in the sum of €126, 206.01. That application was opposed by both Aiden Murphy, the official liquidator of the company, and the Revenue Commissioners (‘Revenue’), a significant creditor of the company, on the basis that the remuneration sought was excessive. In the event, having considered the evidence and arguments, I made an order fixing Mr Fitzpatrick's remuneration in the sum of €48,804.12.

2

This ruling should be read in conjunction with that judgment, which can be found under the neutral citation [2021] IEHC 204.

3

In accordance with the joint statement made by the Chief Justice and the Presidents of each court jurisdiction on 24 March 2020 on the delivery of judgments during the Covid-19 pandemic, I invited the parties to seek agreement on any outstanding issues, including the costs of the application, failing which they were to file concise written submissions, which would then be ruled upon remotely unless a further oral hearing was required in the interests of justice.

4

Mr Fitzpatrick, Mr Murphy and Revenue each filed concise written submissions within the period allowed. All of the submissions received are directed to the appropriate orders I should make on the legal costs of the application.

The position of each of the parties on costs
5

Mr Fitzpatrick seeks an order for his costs of the application as costs in the liquidation of the company.

6

Mr Murphy seeks an order for his costs of the application against Mr Fitzpatrick or, in the alternative, an order for his costs of the application as costs in the liquidation of the company.

7

Revenue seeks an order for its costs of the application against Mr Fitzpatrick; an order prohibiting Mr Fitzpatrick from having recourse to the assets of the company to discharge either his own costs of the application or the costs of other parties for which he is liable; and an order setting off Revenue's costs of the application when agreed or adjudicated against the remuneration due to Mr Fitzpatrick, as provisional liquidator, under s. 645 of the Companies Act 2014 (‘the 2014 Act’).

Applicable principles on costs
i. general principles
8

Order 99, rule 2(1) of the Rules of the Superior Courts (‘RSC’), as inserted by the Rules of the Superior Courts (Costs) 2019 (S.I. No. 584 of 2019), confirms that, subject to the provisions of statute, the costs of and incidental to every proceeding in the Superior Courts shall be at the discretion of the court concerned.

9

Order 99, rule 3(1) of the RSC provides in material part:

‘The High Court, in considering the awarding of the costs of any action or step in any proceedings … in respect of a claim or counterclaim, shall have regard to the matters set out in section 169(1) of the [Legal Services Regulation Act 2015], where applicable.’

10

Section 169(1) of the 2015 Act states:

‘A party who is entirely successful in civil proceedings is entitled to an award of costs against a party who is not successful in those proceedings, unless the court orders otherwise, having regard to the particular nature and circumstances of the case, and the conduct of the proceedings by the parties, including—

  • (a) conduct before and during the proceedings,

  • (b) whether it was reasonable for a party to raise, pursue or contest one or more issues in the proceedings,

  • (c) the manner in which the parties conducted all or any part of their cases,

  • (d) whether a successful party exaggerated his or her claim,

  • (e) whether a party made a payment into court and the date of that payment,

  • (f) whether a party made an offer to settle the matter the subject of the proceedings, and if so, the date, terms and circumstances of that offer, and

  • (g) where the parties were invited by the court to settle the claim (whether by mediation or otherwise) and the court considers that one or more than one of the parties was or were unreasonable in refusing to engage in the settlement discussions or in mediation.’

11

In Chubb European Group SE v Health Insurance Authority [2020] IECA 183, ( Unreported, Court of Appeal, 8 July 2020) (‘ Chubb’) (at para. 19), Murray J distilled from those provisions the following principles on the costs of concluded proceedings:

  • ‘(a) The general discretion of the Court in connection with the ordering of costs is preserved (s.168(1)(a) and 0. 99, r.2(1)).

  • (b) In considering the awarding of costs of any action, the Court should ‘ have regard to’ the provisions of s.169(1) (0. 99, r.3(1)).

  • (c) In a case where the party seeking costs has been ‘entirely successful in those proceedings’, the party so succeeding ‘is entitled’ to an award of costs against the unsuccessful party unless the court orders otherwise (s.169(1)).

  • (d) In determining whether to ‘ order otherwise’ the court should have regard to the ‘ nature and circumstances of the case’ and ‘ the conduct of the proceedings by the parties’ (s.169(1)).

  • (e) Further, the matters to which the court shall have regard in deciding whether to so order otherwise include the conduct of the parties before and during the proceedings, and whether it was reasonable for a party to raise, pursue or contest one or more issues (s. 169(1)(a) and (b)).

  • (f) The Court, in the exercise of its discretion may also make an order that where a party is ‘ partially successful’ in the proceedings, it should recover costs relating to...

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