Hughes v Revenue Commissioners

• Jurisdiction: Ireland
• Judge: Mr. Justice David Keane
• Judgment Date: 21 December 2016
• Neutral Citation: [2016] IEHC 750
• Docket Number: [2008 No. 202 COS]
• Court: High Court
• Date: 21 December 2016

[2016] IEHC 750

THE HIGH COURT

CHANCERY

Keane J.

[2008 No. 202 COS]

IN THE MATTER OF DENIS FINN LIMITED (IN LIQUIDATION)

AND IN THE MATTER OF THE COMPANIES ACTS 1963 TO 2009

BETWEEN

DAVID HUGHES

APPLICANT

AND

THE REVENUE COMMISSIONERS

RESPONDENT

The Companies Acts 1963-2009 – Fees of liquidator – Objection by Revenue – Breakdown of work done – Proportionality

Facts: In the application filed by the liquidator claiming fees for the relevant period for work done in relation to the liquidation of a company, the respondent had lodged an objection on the two grounds namely, insufficient information and reasonableness of fees claimed. The liquidator argued that relevant judgments of the High Court supported the view that it was not a norm to provide break down of time spent on different elements of work done by him and his staff. The respondent being the creditor of the company claimed that the present information supplied in the form of breakdown of time spent by each attorney was insufficient to judge the reasonableness of the remuneration of the liquidator.

Mr. Justice David Keane adjourned the application for final orders to an appropriate date. The Court in his order directed the applicant to furnish the breakdown of his fees which was sought by the respondent. The Court observed that without the disclosure of the time sheets, it was not possible for the respondent to discharge the claimed amount. The Court stated that the applicant was under an obligation to satisfy the Court that the amount sought by him was reasonable remuneration for the work done by him in the liquidation process. The Court observed that the office-holders were expected to give full particulars of the work done by them so as to judge whether the amount claimed was proportionate to the kind of services rendered.

JUDGMENT of Mr. Justice David Keane delivered on the 21st December 2016

Introduction

1 David Hughes (“the applicant”) was appointed as the official liquidator of Denis Finn Limited (“the company”) on the 23rd June 2008. The company's principal activity was building construction. The liquidation of the company is almost complete and an application for final orders is now before the court. Among the orders sought is one determining the applicant's remuneration in the sum of €558,750.76 and permitting the applicant to retain €93,004.00 out of the assets of the company, since the sum of €465,746.76 has already been received by the applicant from those assets in the form of interim fee payments.

2 The Office of the Revenue Commissioners (“the Revenue”), as a significant creditor of the company, is the respondent to the application in the guise of legitimus contradictor. The Revenue opposes the making of the order concerned on two grounds: first, that the applicant has provided insufficient information to support a payment to him in the amount claimed; and second, that the level of fees sought by the applicant is too high.

Background

3 The applicant first made an interim fee application on the 14th February 2011 to cover his remuneration, costs and expenses for the period between the 30th May 2008 and the 31st October 2010, representing 1,856.38 hours of work by the applicant and his colleagues. The sum claimed was €330,181.20, comprising fees of €266,000, outlay of €2,440 and VAT at 23% on those figures of €61,741.20.

4 The applicant made a second interim fee application on the 16th December 2013 to cover the same matters for the period between the 1st November 2010 and the 30th September 2013, representing 781.50 hours of work. The sum claimed then was €135,565.56. It comprised fees of €110,000, outlay of €215.90 and VAT at 23% on those figures of €25,349.66.

5 The court granted the applicant liberty to retain each of those sums.

6 The further payment of €93,004, which the applicant now seeks, is to cover his remuneration, costs and expenses for the period between the 1st October 2013 and the conclusion of the liquidation, representing 328.80 hours of work. It comprises fees of €75,613 and VAT at 23% on that figure of €27,391, there being no outlay for that period.

7 If liberty is granted to the applicant to retain the sum now claimed, the total fees received by him in the liquidation will amount to €558,750.76, comprising €451,613 in professional fees, €2,655.90 in outlay, and €104,481.86 in VAT at 23% on those figures.

8 The applicant summarises the work that he has undertaken since the commencement of the liquidation as including:

(i) Statutory and court requirements.

(ii) Investigation of the company's books and records.

(iii) Preparation and filing of taxation claims.

(iv) Investigation and preparation of preferential claims.

(v) Preparation of VAT returns to Revenue every two months.

(vi) Finalising all matters relating to the implementation of a settlement agreement between the company, in liquidation, and certain other entities in respect of a claim of professional negligence (“the professional negligence claim”).

(vii) Pursuing a dispute with a client of the company concerning monies due for construction works, which included a conciliation process before a decision was made to seek the sanction of the court to abandon the claim concerned on a risk/benefit analysis in the creditors' interest (“the client dispute”).

(viii) Attendances at the Examiner's Office and the preparation of liquidator's reports.

(ix) Preparation of receipts and payments.

Basis for the application

9 For the period between the 1st October 2013 and the conclusion of the liquidation, the applicant relies on the computation of his charges contained in an appendix (“the appendix”) to his 9th and final report to the court.

10 The appendix sets out the hours of work carried out during that period by reference to the grade within the applicant's firm of each member of staff who carried out that work and the “rate per hour” attributable to each such grade. The appendix contains a table in which the hours worked by each staff member are broken down across 7 different subject headings. Those headings are, in effect, the following:

(i) Administration.

(ii) Cash administration.

(iii) Tax matters.

(iv) Creditors.

(v) The professional negligence claim.

(vi) The client dispute.

(vii) Court obligations.

The appendix concludes with a further table in which a brief narrative statement appears opposite each of the subject headings just described.

11 The applicant avers to his belief that all of the work involved was properly and necessarily carried out, and properly and necessarily delegated as appropriate. The applicant further avers that the remuneration sought represents true and fair value for the work done.

The Revenue's position

12 The applicant's motion papers were served on the Revenue as an attachment to an e-mail dated the 10th December 2015. On the 15th December 2015, the Revenue e-mailed requesting a breakdown of the work carried out in the liquidation by both the applicant and his legal representatives, to include “details of task completed, caseworker, grade and rate of pay of caseworker, time to complete task etc.”

13 Two days later, the applicant's solicitors forwarded a breakdown in relation to their own work. It includes a single page document setting out the hours of work carried out by each lawyer involved during the final period of the liquidation, the grade within the firm of each such person, and the “rate per hour” charged by each. That part of the breakdown is very similar to the equivalent document that forms part of the appendix to the liquidator's final report. But in addition, instead of the breakdown of work across seven sub-headings, each linked to a short narrative description, that the applicant provided in the appendix to his final report concerning his own work, the applicant's solicitors forwarded daily time sheets, setting out the number of hours worked and a description of the work done on the liquidation by each lawyer involved on a day by day basis.

14 In the covering e-mail to which that breakdown was attached, the applicant's solicitors communicated their instructions that, in relation to the applicant's own fees and expenses, “such detail as [he] is prepared to provide is contained in the report exhibited to [his affidavit].” They suggested that the appendix to the report contains “a significant amount of detail on the work carried out together with a detailed breakdown of how the time was spent according to the various work streams.”

15 On the 21st December 2015, the applicant's solicitor e-mailed again, asking what additional detail was sought from the applicant concerning his fees. The Revenue replied by return, stating in material part:

“The level of information required by Revenue is similar to the fee earner/task/time spent/rate breakdown provided by your firm. The [applicant] is fully aware of the type of breakdown that is required by Revenue and that time sheets are required. Generic paragraphs indicating that ‘ significant time’ has been spent, is ( sic) simply not sufficient for a fee application of this magnitude. Revenue are not in a position to assess the value of the liquidation to the creditors in their [the Revenue's] role as legitimus contradictor.”

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