Haydon Private Clients Ltd

• Jurisdiction: Ireland
• Judge: Ms. Finlay Geoghegan
• Judgment Date: 23 November 2012
• Neutral Citation: [2012] IEHC 505
• Court: High Court
• Date: 23 November 2012

[2012] IEHC 505

THE HIGH COURT

[No. 404 COS/2009]

Haydon Private Clients Ltd (t/a Haydon Investments)(in liquidation), In Re

No Redaction Needed

IN THE MATTER OF HAYDON PRIVATE CLIENTS LIMITED T/A HAYDON INVESTMENTS (IN LIQUIDATION)

AND

IN THE MATTER OF THE COMPANIES ACTS 1963-2009

COMPANIES ACT 1963 S280

MISSFORD LTD T/A RESIDENCE MEMBERS CLUB, IN RE 2010 3 IR 756 2010 1 ILRM 187 2010/36/9069 2010 IEHC 240

ESG REINSURANCE IRL LTD (UNDER ADMINISTRATION) & ANOR, IN RE 2011 1 ILRM 197 2010/18/4511 2010 IEHC 365

MOULDPRO INTERNATIONAL LTD (IN LIQUIDATION), IN RE; FARRELL (OFFICIAL LIQUIDATOR) v PLASTRONIX INVESTMENTS LTD UNREP FINLAY GEOGHEGAN 9.10.2012 2012 IEHC 418

CAR REPLACEMENTS LTD (IN LIQUIDATION), IN RE UNREP MURPHY 15.12.1999 2000/3/1105

SHARMANE LTD & ORS, IN RE 2009 4 IR 285 2009/53/13279 2009 IEHC 377

MARINO LTD & ORS, IN RE UNREP CLARKE 29.7.2010 2010/33/8259 2010 IEHC 394

RED SAIL FROZEN FOODS LTD (IN RECEIVERSHIP) & ORS, IN RE 2007 2 IR 361 2006/51/10956 2006 IEHC 328

MIRROR GROUP NEWSPAPERS PLC v MAXWELL & ORS (NO 2) 1998 BCC 324 1998 1 BCLC 638

COMPANY LAW

Liquidation

Official liquidator - Remuneration - Measurement - Reports in relation to work done - Objection to amount of remuneration by steering committee appointed by investors - Estimate of fees given - Principles applicable to determination of remuneration - Fees to be determined not only by charge-out costs - Regard to be had to nature and complexity of work and value of work to client - Regard to value of work and cost of rendering work - Reasonableness - Increases in charge out rates - Whether significant increases objectively justified - Re Missford Ltd [2010] IEHC 240, [2010] 3 IR 756; Re ESG Reinsurance Ireland Ltd [2010] IEHC 365, [2011] 1 ILRM 197; Re Mouldpro International Ltd [2012] IEHC 418, (Unrep, Finlay Geoghegan J, 9/10/2012); Re Car Replacements Ltd (Unrep, Murphy J, 15/12/1999); Re Sharmane Ltd [2009] IEHC 377, [2009] IEHC 377, [2009] 4 IR 285; Re Marino Ltd [2010] IEHC 394, (Unrep, Clarke J, 29/7/2010); Re Redsail Frozen Foods Ltd [2006] IEHC 328, [2007] 2 IR 361 and Mirror Group Newspapers plc v Maxwell (No 2) [1998] 1 BCLC 638 considered - Payment of reduced sum permitted (2009/404COS - Finlay Geoghegan J - 23/11/2013) [2012] IEHC505

Re Haydon Private Clients Ltd

Facts: This application concerned the measure of remuneration that could be charged by the Official Liquidator of Haydon Private Clients Ltd for two distinct periods between the 20th July 2009 to 12th November, 2010 and the 13th November 2010 to 13th November 2011. Haydon Private Clients Ltd had become an incorporated company in 2006 engaged in property investments. As a result of its poor financial position, a winding up order was made on 23rd October 2010. An agreement was ultimately reached to pay €640,000 to investors with the aim of providing a percentage dividend at settlement to unsecured creditors.

The liquidator sought approval of the figure of €128,024.96 for the first period and €51,799.77 for the second. A payment of €90,000 and €30,000 in respect of each period had already been paid by this point. The liquidator based the figures on the time spent, the number of individuals from the firm involved in the process, and their hourly charge rate whilst also taking into account the delegation of work to specialised professionals and the applicable fees. A committee of investors challenged the rate of remuneration, particularly in respect of the second period, on the basis that he liquidator had provided a much lower estimate for remuneration in April 2011 and then repeated in July 2011. It was the liquidator's contention that a number of fees from the early stage of liquidation had been inadvertently omitted from the estimate, which was the period up to 12th November 2010 estimated at €31,425.59 (exclusive of VAT). It was also submitted that additional work was completed which was not envisaged at the time of the estimate and which amounted to a further €27,097.75. The committee alternatively submitted that the amount of remuneration regardless.

The defendant contended that as a highway authority, they could be held liable for misfeasance but not nonfeasance. It was their contention that this case was one of nonfeasance and denied any liability for the subsequent injury to the plaintiff. Whilst the plaintiff's consulting engineers insisted that the only explanation for the tripping surface was defective workmanship, the defendant's engineers contended that it could have occurred for a number of reasons.

Held by Finlay Geoghegan J that there were a number of considerations when determining the appropriate fee of remuneration. The value and cost of the work were the key concerns with costs calculated at not only the time spent and the hourly charge rate for individuals involved in the process whether they be delegated or not. A further consideration was a level of profit for the liquidator's firm. Based on the evidence before the court, it was accepted that the estimate originally given by the liquidator was considerably lower than the figure sought by him due to an inadvertent admission and this could be seen when regard was given to the work generally.

In terms of the rate of remuneration, the liquidator had submitted that it was the firm's practice to keep the same individuals involved in the work even when they have been promoted within the firm. The promotion gave rise to an increased hourly rate for the applicable employees. It was held that this could not be justified on the basis that the value of the work being doing did not increase with an individual's promotion. It was considered a reduction to the value of €25,000 of the figure sought (€10,000 for the first period and €15,000 for the second) to be appropriate in the circumstances.

1 JUDGMENT of Ms. Finlay Geoghegan delivered on the 23rd day of November, 2012

2 1. This judgment is concerned with an application by the Official Liquidator of Haydon Private Clients Limited for the measurement of his remuneration for two distinct periods, the first being from 20 ^th July, 2009, to 12 ^th November, 2010, and the second from 13 ^th November, 2010, to 13 ^th November, 2011. Orders have already been made permitting payments on account to the Liquidator of part of the remuneration sought in respect of each period and orders are also now sought for the payment of balancing figures in accordance with the sums sought to be measured.

3 2. The notice of motion upon which this application was made is dated 7 ^th December, 2011, and also included applications in respect of the measurement and payment of sums to the solicitors for the Official Liquidator. Prior to the final hearing, agreement was reached with the notice party in respect of the solicitors' fees.

4 3. The Official Liquidator is Mr. David van Dessel, an experienced insolvency practitioner in the firm of Kavanaghfennell. He was appointed provisional Liquidator of Haydon Private Clients Ltd. ("the Company") on 20 ^th July, 2009, and as Official Liquidator on the making of the winding up order on 23 ^rd October, 2010. The Company had been incorporated in 2006 and was engaged in property investment activities. In particular, it had invited investors to participate in an indirect acquisition of a property at Frunze Street, Kiev in the Ukraine. A sum in excess of €9 million was received from investors and placed in five separate accounts. The investment in the Frunze Street property was unsuccessful and is described as having been the subject of a "corporate raid". Prior to the appointment of the Provisional Liquidator, two sets of proceedings had been issued against the Company in this jurisdiction by investors, including Quotumas Investments Limited ("Quotumas"), in the Frunze Street property claiming to be entitled to monies standing to the credit of two bank accounts of the Company, both with Allied Irish Banks plc. The total amount was in the order of €1.9 million.

5 4. The Liquidator brought a motion pursuant to s. 280 of the Companies Acts 1963-2009, seeking directions as to whether the monies held in the bank accounts were the Company's monies or whether they were held on trust for the investors in the Frunze Street property as contended for in the proceedings. The investors appointed a Steering Committee (the "Steering Committee"). Ultimately, in July 2011, the Liquidator reached a settlement with the Steering Committee and Quotumas of the issues in the s. 280 motion and the proceedings which was approved by the Court. Pursuant to the agreement, a sum of €640,000 was paid to the Steering Committee and Quotumas (in 90% and 10% proportions, respectively) and there was agreement as to the amount for which the investors and Quotumas were to be admitted as unsecured creditors in the winding up. It was envisaged at the time of the settlement that there would be a percentage dividend for the unsecured creditors.

6 5. The present application was brought on notice to the Steering Committee which was represented by solicitor and counsel. One of the members of the Steering Committee, Ms. Rita McDonagh, has sworn two affidavits in response to the affidavits sworn by the Liquidator.

7 6. In this application, the Liquidator seeks the measurement of his remuneration in the following amounts:

8 (i) For the period from 20 ^th July, 2009, to 12 ^th November, 2010, in the sum of €128,024.96 (inclusive of VAT and outlays); and

9 (ii) For the period from 13 ^th November, 2010, to 13 ^th November, 2011, in the sum of €42,097.75 plus outlay of €711.98 and VAT of €8,990.04, amounting in total to €51,799.77.

10 7. In respect of the first period to 12 ^th November, 2010, the Liquidator had previously brought an application grounded on an affidavit filed on 14 ^th December, 2010, and...