Diaz v Lohan

• Jurisdiction: Ireland
• Judge: Ms. Justice Eileen Roberts
• Judgment Date: 25 May 2023
• Neutral Citation: [2023] IEHC 292
• Court: High Court
• Docket Number: 2019 COS 177

In the Matter of Adjudication of Costs, The Legal Services Regulation Act 2015 and Section 161 of the Legal Services Regulation Act 2015. (Adjudication Reference 2020:00688 and 2020:00689)

In the Matter of Lohan Consulting Limited (In Liquidation)

And in the Matter of the Companies Act 2014

Between

Aidan Garcia Diaz

Applicant/Respondent

and

Cormac Lohan

Respondent/Applicant

[2023] IEHC 292

2019 COS 177

THE HIGH COURT

JUDGMENT of Ms. Justice Eileen Roberts delivered on 25 May 2023

Introduction

1 . This application concerns two orders for costs made by the High Court against Mr Cormac Lohan – one order was made on 29 April 2019 and the other on 15 July 2019. The costs in each case have been adjudicated by the Chief Legal Costs Adjudicator (the “ CLCA”) and are now referred to this court for review pursuant to the provisions of s. 161 of the Legal Services Regulation Act 2015 (the “ 2015 Act”).

2 . Identical issues and arguments arise in respect of each costs order and the determinations of the CLCA dated 31 May 2022 (collectively and individually described hereafter as the “ Determination”). The adjudications arise under reference numbers 2020-000689 and 2020-000688. This judgment deals with both adjudications and is intended to refer to both even where only one is referenced. Where there are any relevant differences, they are set out separately.

3 . The costs orders were made in relation to the liquidation of Lohan Consulting Limited (the “ Company”). On 23 April 2018 the High Court appointed Aidan Garcia Diaz (the “ Liquidator”) as official liquidator of the Company on foot of a petition filed by the Revenue Commissioners on 21 February 2018. Mr Cormac Lohan is a director and shareholder of the Company. He is also a practising solicitor and is on record for the Company in these proceedings through his firm Lohan & Company Solicitors. In the course of the liquidation, various applications were brought before the High Court of which two are relevant to the present matter.

4 . The first order for costs arose when, in the context of the liquidation, the High Court directed that Mr Lohan, in his capacity as a director of the Company, file and serve a statement of affairs in respect of the Company. Order 74 rule 27 of the Rules of the Superior Courts (“ RSC”) prescribes that the format for a statement of affairs be in compliance with Form 13 of Appendix M of the RSC. The Liquidator issued a motion requiring Mr Lohan to comply with the court order when Mr Lohan failed to provide the required statement of affairs within the time prescribed. The motion was adjourned on several occasions. Mr Lohan swore a statement of affairs that complied with the RSC and the High Court then struck out the motion and awarded the Liquidator his costs as against Mr Lohan, to be adjudicated in default of agreement.

5 . The second costs order arose in respect of the books and records of the Company which were sought by the Liquidator from Mr Lohan as director of the Company. The Liquidator was dissatisfied with the documentation provided by Mr Lohan and the Liquidator issued a motion seeking to cross examine Mr Lohan as a director of the Company. That application was opposed by Mr Lohan but Ms Justice O'Regan determined that it was appropriate for Mr Lohan to be cross examined. The High Court awarded the Liquidator his costs of that motion against Mr Lohan, to be adjudicated in default of agreement.

6 . Neither costs order was appealed by Mr Lohan. The Liquidator's solicitor prepared a bill of costs in respect of each motion and served same on Mr Lohan. No agreement was reached by the parties regarding the quantum of the costs. Mr Lohan then applied to have those costs adjudicated by the CLCA. The following is the relevant chronology from that date leading to the referral of matters to this court for review:

DATE	STEPS TAKEN
23 September 2020	Notices of adjudication issue by Mr Lohan.
14 December 2020	Return date before the CLCA. Costs are adjudicated by CLCA. No appearance by or on behalf of Mr Lohan at this hearing.
22 December 2020	Mr Lohan files a Notice of Consideration of the decision by the CLCA under s. 160.
October 2021	Legal costs accountants exchange written submissions to CLCA.
18 January 2022	Following several adjournments in 2021, the CLCA s. 160 hearing takes place and is attended by costs accountants for both parties. Costs accountants for Mr Lohan raise procedural issues but do not address quantum.
31 May 2022	CLCA Determination issues, upholding previous adjudication in each case. Copy sent that day to both legal costs accountants by email.
20 June 2022	Mr Lohan serves motions issued on 15 June seeking relief under s. 161, returnable to 11 July 2022.
11 July 2022	Motions struck out on consent with no order (on basis that s. 160 process was not yet complete re the costs of the s. 160 consideration process).
28 July 2022	Costs of objection process determined by CLCA and this completes the process under s. 160 of the 2015 Act. No appearance by or on behalf of Mr Lohan – these costs are awarded against Mr Lohan.
10 October 2022	CLCA issues his Certificates of the Determined Costs. In matter 2020:000688 costs determined at €12,514 (deductions of €4,057.05 on amount claimed) on foot of High Court Order dated 15 July 2019. In matter 2020:000669 costs determined at €16,481 (deductions of €5633.40 on amount claimed) on foot of High Court Order dated 29 April 2019.
28 October 2022	Date asserted by Mr Lohan as the date of receipt by him of the CLCA Certificates of Determined Costs – from which date he says time to seek review by High Court should run.
28 October 2022	Date of motions by Mr Lohan in each case seeking review by High Court of CLCA Determination (pursuant to s. 161 of 2015 Act).
3 November 2022	Motions seeking review are filed by Mr Lohan.
14 November 2022	Motions are served by Mr Lohan on Liquidator and CLCA.

The arguments advanced by Mr Lohan

7 . Mr Lohan argues that this court should review the costs determined by the CLCA by reducing same or should refer the matter back to the CLCA for further review. In his affidavit sworn 28 October 2022, Mr Lohan says that the decisions of the CLCA were “ wrong or defective” and that the costs of the motions are “ excessive and should have been decreased significantly” by the CLCA. Mr Lohan argues that “ these motions were not necessary” and that the costs “ cannot in any way relate to time spent on the matter”. He describes the costs claimed and ruled on as “ excessive, unfair, disproportionate”.

8 . At the hearing of this matter counsel for Mr Lohan placed considerable emphasis on the argument that the CLCA did not comply with s. 155 of the 2015 Act. The CLCA confirms in his Determination that he was not furnished with any time breakdown by lawyers for the Liquidator. Mr Lohan argues that this means the CLCA did not properly assess the time spent. He says that the time spent is required to be considered by s. 155(5) when assessing the factors set out in s. 155(4) and that the use of the word “ shall” in that section confirms that such a consideration is mandatory for the CLCA. Not having assessed the time breakdown, Mr Lohan argues that the CLCA is not in compliance with s. 155 and his Determination cannot stand. He says that the CLCA acknowledges in the Determination that no evidence of the time taken was furnished to him. Mr Lohan states in his grounding affidavit at para 8, “ [I]n that regard the adjudicator accepts that he is not in compliance with section 155.” He avers in his replying affidavit (at para 14) that the CLCA “ failed to take account of the time taken to carry out work” and that the CLCA “ failed to carry out the full function provided by statute in his review”.

9 . Mr Lohan also argues in his grounding affidavit that the CLCA failed to address the reasonableness of the work asserted to have been carried out and he says the CLCA wrongly considered that the original motions were merited and did not, for example, consider whether such motions or adjournments of same were necessary. He avers at para 9 of his affidavit that “ the adjudicator closed his mind to the fact that the application was not merited”. He avers at para 12 of his replying affidavit sworn 12 December 2022 that “ both applications brought by the Official Liquidator were unnecessary and no order of costs should have been made in relation to these motions”.

10 . Mr Lohan also argues in his affidavit that it is difficult for the CLCA to vary a decision he personally made at first instance and that there was an element of bias in the decisions made by the CLCA who referred to the Liquidator's legal team “ with gushing praise”. However, neither of these matters were advanced at the hearing by counsel for Mr Lohan and I do not therefore consider them as part of the grounds for review.

11 . The written submissions filed by costs accountants on behalf of Mr Lohan in advance of the CLCA hearing on 18 January 2022 focused on alleged procedural defects in relation to the CLCA's initial adjudication on 14 December 2020. The submissions did not however provide any argument to establish that the CLCA had erred in the quantum of his initial adjudication and/or that the fees allowed on adjudication were in any way unreasonable in quantum terms. There was merely a general statement that “ the figures allowed on Adjudication are excessive in the circumstances”. The same approach was adopted by the costs accountants instructed by Mr Lohan at the hearing before the CLCA on 18 January 2022. Those procedural arguments were rejected by the CLCA. The specific objections raised by Mr Lohan in his costs accountant's written submissions dated 20 October 2021were as follows: –

“ (a) The Notice of Application does not have the correct address.

(b)...