Anthony Fitzpatrick v Aiden Murphy (as Official Liquidator)

• Jurisdiction: Ireland
• Judge: Mr. Justice Murray
• Judgment Date: 07 February 2022
• Neutral Citation: [2022] IECA 33
• Docket Number: Court of Appeal Record No. 2021/146
• Court: Court of Appeal (Ireland)

Between

Anthony Fitzpatrick

Applicant/Appellant

and

Aiden Murphy (As Official Liquidator)

Respondent

and

The Revenue Commissioners

Notice Party

[2022] IECA 33

Whelan J.

Costello J.

Murray J.

Court of Appeal Record No. 2021/146

High Court Record No. 2019/122 COS

THE COURT OF APPEAL

CIVIL

NO REDACTION NEEDED

Ex tempore JUDGMENT of Mr. Justice Murray delivered on the 7 ^th of February 2022

1 . In his judgment of 24 March 2021 ( [2021] IEHC 204) Keane J. decided that Mr. Fitzpatrick should be paid a sum pursuant to s. 645 of the Companies Act 2014 (CA 2014) by way of remuneration for his work as provisional Liquidator of United Power Limited (‘ the company’). Mr. Fitzpatrick was provisional liquidator of the company from 8 April to 29 April 2019, although the fees he sought also included work undertaken by him between 30 April and 31 May which, he said, had been undertaken to facilitate the official liquidator (Mr. Murphy). Section 645 provides that a provisional liquidator is entitled to receive such remuneration as is fixed by the court and, thus, mandates a court application before that remuneration can be paid.

2 . Mr. Fitzpatrick claimed a total sum of €126,206.01. Keane J. fixed the remuneration at €48,804.12. Mr. Fitzpatrick's claim comprised fees and expenses of €91,877.57 (being €89,126.25 fees and outlay of €2,751.32 together with €21,131.84 in VAT at 23% on the foregoing). He also sought to recover a sum of €13,196.60 in respect of legal costs of a failed interim injunction application brought by him qua provisional liquidator. In total, Keane J. allowed €37,000 by way of fees, and €2,751.32 in respect of outlay plus VAT.

3 . Keane J. disallowed the costs of the failed interim injunction application (which arose from an alleged detinue of some of the company's property) on the basis that this was not remuneration within the meaning of s. 645 and, in any event, that Mr. Fitzpatrick was not entitled to his costs of the injunction application. He explained the second basis for his conclusion in this regard as follows (at paras. 92 to 93):

‘ … it was the decision to institute those proceedings ultra vires, in the absence of any established urgency, shortly before the hearing at which Mr. Fitzpatrick knew his nomination as liquidator was to be opposed, in order to pursue a detinue claim of – to put it no higher – dubious merit, that deprived Mr. Fitzpatrick of the opportunity to apply in the ordinary way to have recourse to the assets of the company to pay his legal costs of those proceedings. Whether any such application could have succeeded had that opportunity been available is a question that, perhaps fortunately for Mr. Fitzpatrick, I do not have to consider.

It follows that I cannot accept the argument that, having missed out on that opportunity in those circumstances, Mr, Fitzpatrick should be permitted to apply to have the court fix his remuneration as provisional liquidator in a sum that includes those costs.’

4 . Mr. Fitzpatrick then sought his costs of making the application pursuant to s. 645. In a second judgment ( [2021] IEHC 306) Keane J. refused that application, directing instead that Mr. Fitzpatrick pay the costs of Mr. Murphy and of the Revenue Commissioners (‘Revenue’) (a significant creditor of the company) incurred in connection with the application. The first judgment not having been appealed, this is an appeal by Mr. Fitzpatrick against the second.

5 . Central to Keane J.'s reasoning in making these orders were the fact and terms of an offer made by Revenue to agree a specific level of remuneration for Mr. Fitzpatrick. This arose as follows. Mr. Fitzpatrick's application pursuant to s. 645 issued on 19 July 2019. The application was based upon a report submitted by him which detailed a breakdown of costs incurred during the period of the provisional liquidation. Mr. Murphy prepared a report in response itemising the costs he believed to be reasonable for the work in question and expressing the view that an appropriate fee for the work done in that period would be €37,000, the fees for the legal action as claimed being deemed by him to be not unreasonable. He recorded his position on the fees that had been sought by Mr. Fitzpatrick in an affidavit sworn by him on 30 August as follows:

‘ the claim for chargeable time of 429 hours at a cost of €89,126.25 incurred during the 22 days of the Provisional Liquidation is grossly in excess of that which would be reasonably expected in the liquidation of this Company.’

6 . Having regard to the position thus adopted by Mr. Murphy, on 5 September 2019 Revenue made an open offer to Mr. Fitzpatrick stating that, subject to the view of the court, it would not object to an order fixing his remuneration in a sum not exceeding €37,000 together with a sum of €13,196.60 as his legal costs in the failed application for an interim injunction and the application under s. 645. Altogether, this offer amounted to €58,706.60 (being €37,000, plus €13,196.60 plus VAT). On 30 September 2019, Mr. Fitzpatrick rejected Revenue's offer reiterating his claim for €91,877.57, plus VAT together with €13,196.60 in legal costs for the failed injunction application. He also insisted on his entitlement to seek a separate order for the costs of the s. 645 application.

7 . The reasons Keane J. concluded as he did were these:

• (i) 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. said that he could find nothing in the nature and circumstances of this 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.

• (ii) He rejected Mr. Fitzpatrick's submission that the figure of €37,000 proposed by Revenue was, or was intended to be, inclusive of fees and outlay and of VAT on that aggregate amount. In any event, Revenue's offer, which Mr. Fitzpatrick rejected, included a further €13,196.60 for the legal costs of the failed interim injunction application and of the s. 645 application, so that even on the construction of that offer for which Mr. Fitzpatrick contended (but which he did not accept) he had failed to beat it.

• (iii) He also rejected Mr. Fitzpatrick's submission that the all-in figure of €13,196.60 that Revenue was prepared to agree for his legal costs of both the failed interim injunction application and the application then in train for an order fixing his remuneration was, or has been shown to be, inadequate. He found that Mr. Fitzpatrick was not entitled to his costs of the injunction application and could not, in any event, have claimed such costs as part of his remuneration for the purposes of s. 645 of the 2014 Act.

• (iv) He said that if Mr. Fitzpatrick had applied to have his remuneration fixed at the level proposed by Revenue (and ultimately accepted by the court), that application would have been brief and unopposed, and his legal costs in bringing it correspondingly modest. The report from a firm of legal costs accountants that Mr. Fitzpatrick produced to the court assessing the legal costs he has incurred in the protracted s. 645 application that he chose to make to have his remuneration fixed at a substantially higher level, could not avail him precisely because he was entirely unsuccessful in that application. In short, Mr. Fitzpatrick failed to beat Revenue's offer on costs as well as its offer on an appropriate level of remuneration.

8 . The principles by reference to which this court will review a decision of the High Court on a question of costs were recently summarised by Collins J. in O v. Minister for Justice [2021] IECA 293 at para. 30, as follows (references omitted):

• (i) While costs orders are discretionary, this court nonetheless has “full appellate jurisdiction in respect of such orders”.

• (ii) It follows that the court “ may substitute its own discretion in place of that of the trial judge”.

• (iii) The jurisdiction “ is not dependent on having to establish an error of law or otherwise on proving that in the exercise of such discretion the trial judge acted erroneously”.

• (iv) At the same time, however, an appellate court “ will, in general, be slow to interfere with the exercise of a trial judge's discretion in awarding costs”.

• (v) Furthermore, an appellate court “ should not simply substitute its own assessment of what the appropriate order ought to have been but should afford an appropriate deference to the view of the trial judge who will have been much closer to the nuts and bolts of “the event” itself”.

• (vi) Absent some error of principle on the part of the trial judge, an appellate court should intervene only where it “ feels that the exercise by the trial judge of an assessment in relation to costs has gone outside of the parameters of that margin of appreciation which the trial judge enjoys”. Where the costs order is “ within the range of costs orders which were open to the trial judge within the margin of appreciation which must be afforded to a High Court judge”, there will be no basis for appellate intervention.

9 . The sixth of these propositions is, in the circumstances that present themselves here, the key consideration, and reflects an approach that has been consistently stated and restated in this court, notably by Finlay Geoghegan J. in Sony Music Entertainment (Ireland) Ltd. v. UPC Communications Ireland Ltd. [2017] IECA 96 at para. 9:

‘ Whilst there is … no a priori requirement that an appellant establish an error in principle for this Court to interfere, I nevertheless consider we should, in relation to costs orders, be very...