Fitzpatrick v The Revenue Commissioners

JurisdictionIreland
JudgeMr. Justice Robert Haughton
Judgment Date30 April 2020
Neutral Citation[2020] IECA 123
Date30 April 2020
CourtCourt of Appeal (Ireland)
Docket NumberRecord No. 2018/237

IN THE MATTER OF THE COMPANIES ACTS 1963-2009 AND IN THE MATTER OF CHERRYFOX LIMITED (IN VOLUNTARY LIQUIDATION) AND IN THE MATTER OF SECTION 280 OF THE COMPANIES ACT, 1963

ON THE APPLICATION OF:

ANTHONY J. FITZPATRICK
Applicant/Appellant
-and-
THE REVENUE COMMISSIONERS
Respondent/ Respondent

[2020] IECA 123

Donnelly J.

Faherty J.

Haughton J.

Record No. 2018/237

High Court Record No. 2015/219 COS

THE COURT OF APPEAL

Costs – Companies Act 1963 s. 281 – RSC O. 74 r. 128 – Appellant seeking to appeal against costs order – Whether costs should follow the event

Facts: The Court of Appeal, in an ex tempore decision delivered by Haughton J following the hearing on 11 March 2020, dismissed the appeal of the appellant, Mr Fitzpatrick, from the judgment of the High Court (Gilligan J) of 9 May 2018, and his subsequent order on 11 May 2018, on an application made by the respondent, the Revenue Commissioners as preferential creditors, pursuant to s. 280 of the Companies Act 1963 in relation to the fixing the fees and remuneration of the appellant as liquidator of Cherryfox Ltd. In bringing the application in the High Court, the Revenue Commissioners challenged the fees and remuneration of €65,981.55 including VAT sought by the appellant as being unwarranted/excessive. In that court the trial judge fixed the fees/remuneration at €37,500 plus VAT making in total €43,125 plus €10,157.69 for outlay. The trial judge then made a consequential order on the basis that the appellant had recovered total funds of €95,444 in the liquidation. He directed that as the fees/remuneration plus outlay totaled €53,282.69, the balance held in the liquidation fund in the sum of €42,161.31 be paid to the Revenue Commissioners as sole preferential creditor. He declined to make a costs order against the appellant and made no order as to costs. The appellant appealed that order, and the Revenue Commissioners cross-appealed the costs order. Following dismissal of the appeal the Court of Appeal heard argument on the costs, and (1) declined to make any variation of the High Court order on costs, and (2) ordered the appellant to pay the costs of the appeal personally. In making the costs order in respect of the appeal, the court accepted a submission on behalf of the Revenue Commissioners that costs should follow the event, and that the court should not depart from the normal rule because the appeal had been brought in the appellant’s own interest, not in the interest of company creditors, and that to allow the appellant to have recourse to the liquidation fund would negate the reasons given in the High Court and affirmed in the Court of Appeal for directing payment out of a specific sum to the Revenue Commissioners. As this meant that the court would be ordering that the appellant would be personally liable for the costs of the appeal, at his counsel’s request a further opportunity was granted to make further written submissions on the appeal costs prior to perfection of the order, and on the basis that these would be considered without a further oral hearing. The Court of Appeal received and considered the appellant’s further submission, and the reply submission of the Revenue Commissioners of 6 April 2020. The additional matter to which the appellant referred in support of his claim for an indemnity in respect of the costs of the appeal from the assets of the company was the unapproved decision of the Supreme Court in Re Ballyrider (Record S: AP:IE: 000082), and in support of his submission he further relied on s. 281 of the Companies Act 1963 and O. 74 r. 128 of the RSC.

Held by Haughton J that he had not been persuaded by any of the appellant’s submissions and saw no reason to alter the decision previously made that costs should follow the event.

Haughton J held that he would confirm the award to the respondent of the costs of the appeal and that for the avoidance of doubt the order should note that they are awarded personally against the appellant.

Award to respondent of costs of appeal.

Ruling of Mr. Justice Robert Haughton delivered electronically this 30 th day of April 2020
1

This court in an ex tempore decision delivered by me following the hearing on 11 March 2020 has already dismissed the appellant’s appeal from the judgment of High Court (Gilligan J) of 9 May 2018, and his subsequent order on 11 May 2018, on an application made by the respondent (the Revenue Commissioners as preferential creditors) pursuant to s.280 of the Companies Act 1963 in relation to the fixing the fees and remuneration of the appellant as liquidator of Cherryfox Limited. This ruling relates only to the costs of the appeal.

2

In bringing the application in the High Court, the Revenue Commissioners challenged the fees and remuneration of €65,981.55 including VAT sought by the appellant as being unwarranted/excessive. In that court the trial judge fixed the fees/remuneration at €37,500 plus VAT making in total €43,125 plus €10,157.69 for outlay. The trial judged then made a consequential order on the basis that the appellant had recovered total funds of €95,444 in the liquidation. He directed that as the fees/remuneration plus outlay just mentioned totalled €53,282.69, the balance held in the liquidation fund in the sum of €42,161.31 be paid to the Revenue Commissioners as sole preferential creditor. He declined to make a costs order against the appellant and made no order as to costs.

3

The appellant appealed this order, and the Revenue Commissioners cross-appealed the costs order. Following dismissal of the appeal this court heard argument on the costs, and (1) declined to make any variation of the High Court order on costs, and (2) ordered the appellant to pay the costs of the appeal personally. In making the costs order in respect of the appeal, the court accepted a submission on behalf of the Revenue Commissioners that costs should follow the event, and that the court should not depart from the normal rule because the appeal had been brought in the appellant’s own interest, not in the interest of company creditors, and that to allow the appellant to have recourse to the liquidation fund would negate the reasons given in the High Court and affirmed in this court for directing payment out of a specific sum to the Revenue Commissioners. As this meant that the court would be ordering that the appellant would be personally liable for the costs of the appeal, at his counsel’s request a further opportunity was granted to make further written submissions on the appeal costs prior to perfection of the order, and on the basis that these would be considered without a further oral hearing.

4

This court has now received and considered the appellant’s further Submission, and the reply Submission of the Revenue Commissioners of 6 April 2020.

5

The additional matter to which the appellant refers in support of his claim for an indemnity in respect of the costs of the appeal from the assets of the company is the unapproved decision of the Supreme Court in Re Ballyrider (Record S: AP:IE: 000082), and in support of his submission he further relies on section 281 of the Companies Acts 1963 and 074 r 128 of the RSC.

In Re Ballyrider
6

The appellant relies on this decision for the proposition that a liquidator is ordinarily entitled to an indemnity in respect of his costs, and that the costs of the application to fix the fees of the appellant were cost “properly incurred” within the meaning of s.281 of the Companies Act 1963 which provides:

“All costs, charges and expenses properly incurred in the winding up, including the remuneration of the liquidator, shall be payable out of the assets of the company in priority to all other claims.”

7

There are some notable comparisons between Ballyrider and the present case, but also some differences which I will highlight later. The appellant happened to be the liquidator involved in that liquidation. The Revenue Commissioners were the preferential creditor and became involved due to dissatisfaction with the manner in which the liquidation was being conducted, and the fees/costs being incurred/charged. It is helpful to give some summary of the various judgments in the case before considering the relevant part of the judgment of McKechnie J. in the Supreme Court:

(1) In the High Court [2015] IEHC 477, the Revenue Commissioners applied for and obtained an order from Murphy J. removing Mr. Fitzpatrick as a liquidator, primarily because he...

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3 cases
  • Ballylea Developments Ltd [in Voluntary Liquidation] v Companies Act 2014
    • Ireland
    • High Court
    • May 16, 2023
    ...Supreme Court, McKechnie J 31st July 2019) (a case to which I return), Re Eteams International [2020] IESC 23 and Re Cherryfox Limited [2020] IECA 123 in support of this position. They described the moving parties' solicitor's letter as containing a “ threat to bring an application for secu......
  • Anthony Fitzpatrick v Aiden Murphy (as Official Liquidator)
    • Ireland
    • Court of Appeal (Ireland)
    • February 7, 2022
    ...the liquidator was defending himself and his reputation so that the challenge was personal to him. 18 . Thus, in Re Cherryfox Ltd. [2020] IECA 123, having described as ‘ questionable’ the extent to which these principles had any application where the liquidator came to court seeking approva......
  • Anthony Fitzpatrick v Aiden Murphy (as Official Liquidator)
    • Ireland
    • High Court
    • May 5, 2021
    ...of a generalised nature and may have to yield to individual but rather specialised circumstances where required.’ 21 Re Cherryfox Ltd [2020] IECA 123, ( Unreported, Court of Appeal, 30 April 2020), concerned the costs of an unsuccessful appeal by a liquidator (once again, Mr Fitzpatrick) ag......

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