Fitzpatrick v Galvin

• Jurisdiction: Ireland
• Judgment Date: 04 December 2012
• Date: 04 December 2012
• Docket Number: [2012 No. 606
• Court: High Court

Fitzpatrick v. Galvin

In the matter of Tadgh O Conaill Heating & Plumbing Limited and in the matter of ss. 244A, 280 and 282B of the Companies Act 1963: Anthony J. Fitzpatrick

Applicant

and

Barry St. J. Galvin, practicing under the style and title of Barry C. Galvin & Son Solicitors

Respondent

[2012] IEHC 521,

[2012 No. 606 COS]

High Court

Company law - Liquidation - Insolvent liquidation - Solicitor - Legal fees and outlay - Priority - Undertaking - Lien - Proceedings brought by company prior to liquidation - Whether solicitor under duty to return case files - Whether solicitor having lien over costs recovered in proceedings continued by liquidator - Legal Practitioners (Ireland) Act 1876 (39 & 40 Vict., c. 44), s. 3 - Companies Act 1963 (No. 33), ss. 244A and 281.

Section 244A of the Companies Act 1963, as inserted by s. 125 of the Companies Act 1990, provides that, where a company is in insolvent liquidation, "no person shall be entitled as against the liquidator or provisional liquidator to withhold possession of any deed, instrument, or other document belonging to the company, or the books of account, receipts, bills, invoices, or other papers of a like nature relating to the accounts or trade, dealings or business of the company, or to claim any lien thereon…".

The applicant was appointed liquidator of a company in creditors' voluntary liquidation. The respondent had been acting for the company in a number of different debt collection proceedings, which were still in being when the company entered into liquidation, and was owed fees and outlay in respect of same. The respondent declined to continue acting in the proceedings and refused to hand over the case files to a newly appointed solicitor unless granted an undertaking that the outstanding fees and outlay would be discharged out of any costs recovered in the proceedings. The applicant refused to grant the said undertaking and informed the respondent that his fees and outlay would be admitted within the liquidation, in the normal course, as unsecured debts of the company.

The applicant brought an application seeking, inter alia,an order, pursuant to s. 244A of the Act of 1963, directing the respondent to deliver the case files and a declaration that the respondent was not entitled to a solicitor's lien over same. At the hearing, the respondent conceded that he was obliged under s. 244A to hand over the files, but maintained that he was entitled to an undertaking that his fees and outlay would be discharged out of any costs recovered in the proceedings in which he had been acting.

Held by the High Court (Gilligan J.), in finding that the respondent was entitled to the undertaking sought, 1, that the respondent maintained a lien over any costs which might be recovered from a third party in the proceedings in which he had been acting.

In re Galdan Properties Ltd. (In Liq.) [1988] I.R. 213 and Halvanon Co. Ltd. v. Central Reinsurance Corpn. [1988] 1 W.L.R. 1122 considered. Lismore Buildings Ltd. v. Bank of Ireland Finance Ltd. (No. 2)[2000] 2 I.R. 316 and Re Compustore Ltd. (in liquidation) [2006] IEHC 52, [2007] 3 I.R. 55 distinguished.

2. That the lien was in respect of fees and outlay for work done on the proceedings by the respondent up to the date of the commencement of the liquidation.

Re Compustore Ltd. (in liquidation) [2006] IEHC 52,[2007] 3 I.R. 556 considered.

3. That any fees and outlay not recovered through the continuation of the proceedings would be admitted in the liquidation, in the normal course, as debts owing to an unsecured creditor.

Cases mentioned in this report:-

Re Compustore Ltd. (in liquidation) [2006] IEHC 52, [2007] 3 I.R. 556.

In re Galdan Properties Ltd. (In Liq.) [1988] I.R. 213; [1988] I.L.R.M. 559.

Halvanon Co. Ltd. v. Central Reinsurance Corpn.[1988] 1 W.L.R. 1122; [1988] 3 All E.R. 857.

Lismore Buildings Ltd. v. Bank of Ireland Finance Ltd. (No. 2)[2000] 2 I.R. 316.

In re Wadsworth. Rhodes v. Sugden (1885) 29 Ch. D. 517.

Originating notice of motion

The facts have been summarised in the headnote and are more fully set out in the judgment of Gilligan J., infra.

By originating notice of motion dated the 5th November, 2012, the applicant sought an order, pursuant to s. 244A of the Companies Act 1963, requiring the respondent to deliver documents, and a declaration that the respondent was not entitled to a solicitor's lien over the documents.

The application was heard before the High Court (Gilligan J.) on the 15th November, 2012.

Cur. adv. vult.

Gilligan J. 4th December, 2012

Background

[1] The applicant was appointed liquidator of Tadgh O Conaill Heating & Plumbing Limited ("the Company") on the 12th July, 2011, by both a members' meeting and creditors' meeting. The respondent had been acting for the Company in a number of different court proceedings, largely related to debt collection, which were instituted prior to the commencement of the voluntary liquidation and which were still in being when the Company entered into voluntary liquidation. The respondent avers by affidavit dated the 7th November, 2012, that fees in the nature of EUR50,000 were outstanding as of June, 2012 by the Company for matters in which the respondent had acted on its behalf, including several sets of debt collection proceedings in which the respondent has expended outlay and incurred professional fees.

[2] The applicant did attempt to retain the respondent as solicitor to collect the outstanding debts on his behalf as liquidator of the Company, but the respondent declined to accept this proposal due to a perceived conflict of interest. The respondent was prepared to hand over the files to a newly appointed solicitor on the basis of the usual undertaking as to prior costs but the applicant would not agree to this course of action.

[3] By letter dated the 12th October, 2012, the applicant requested the return of the files held by the respondent in the matters for which the latter had been acting for the Company prior to the commencement of the voluntary liquidation. Invoices for work carried out by the respondent were also requested and it was stated that these would be admitted within the liquidation in the normal course, as an unsecured creditor. A further letter dated the 31st October, 2012, from the applicant to the respondent emphasised the claim for the return of the files in question and noted that legal redress would be sought should that return not be realised by 5 p.m...