James Adams Vintners Ltd ((in Liquidation)) v Companies Acts

• Jurisdiction: Ireland
• Court: High Court
• Judge: Ms. Justice Pilkington
• Judgment Date: 21 July 2020
• Neutral Citation: [2020] IEHC 508
• Docket Number: [Record No. 2019/367 COS]
• Date: 21 July 2020

IN THE MATTER OF JAMES ADAMS VINTNERS LIMITED (IN LIQUIDATION)

AND

IN THE MATTER OF THE COMPANIES ACTS, 1963-2003

[2020] IEHC 508

Pilkington

[Record No. 2019/367 COS]

THE HIGH COURT

JUDGMENT of Ms. Justice Pilkington delivered on the 21st day of July, 2020

1 By originating notice of motion, the joint liquidators in this matter seek an order fixing their remuneration for the period of the liquidation, 6th September, 2011 to 9th September, 2019. The application is grounded upon the affidavit of one of the joint liquidators, David Van Dessel, sworn on the 3rd October, 2019. There is a replying affidavit of Michael Nugent who acts on behalf of certain of the creditors (of whom I understand he is one) on the 18th November, 2019 and a second affidavit from Mr. Van Dessel sworn in reply on the 2nd December, 2019.

2 The company itself (James Adams Vintners) was incorporated on the 26th day of February, 1985 and its sole activity was the wholesale business of alcoholic beverages within Ireland and internationally.

3 Essentially, the grounding affidavit records that the company traded successfully for over 25 years, but it suffered a downturn and a significant decline in turnover following the financial crisis in 2008 and 2009.

4 It was initially thought, in or about 2010, that the business could be wound down, the company's premises sold, and all creditors satisfied in full. Unfortunately, that did not prove possible and the decision was made to place the company in liquidation.

5 No issue arose (and the liquidator has confirmed this in their report to the Director of Corporate Enforcement) in respect of proceedings pursuant to s. 150 of the Companies Act, 1990. No issue arises in respect of this company save that it could not trade its way out of a significant financial downturn within the economy.

6 In respect of the liquidators' fees two firms acted; this was due to the fact that each liquidator was employed by a different firm. The total sum sought by the liquidators is €128,874.89 plus VAT, together with outlay of €2,321.89. That does not include the costs associated with this application.

7 Essentially, the liquidators contend that they have calculated their rates pursuant to the High Court decisions of Kelly J. in Re Missford Limite [2010] 3 I.R. 756 (‘ Missfor’) in relation to an examiner and in ESG Reinsurance Irelan [2010] IEHC 365 (‘ ESG Reinsurance’) in relation to the remuneration of an administrator. The sums sought break down to the sums of €81,913.25 and €46,964.64 for the respective joint liquidators, one of whom works for Moore Stephens Nathans and the other for Deloitte (Mr. Van Dessel).

8 If these payments were approved and considered, it is anticipated by Mr. Van Dessel that the sum of €61,039 would stand to the credit of the liquidation. As I understand it, this would involve payments to the secured creditors of approximately 75% of debts due, but nothing to the unsecured creditors.

9 Before dealing with the other affidavits, it is noteworthy that by letter dated 31st August, 2019, the Revenue solicitors wrote to the solicitors having carriage of this application and they state: -

(a) With regard to the joint liquidator's remuneration for the period of the 6th September, 2011 to the 9th September, 2019 measured at €75,000 plus VAT (€94,571.89) that Revenue considers that figure to be excessive and that the appropriate fee to be the sum of €52,000 plus VAT. In that letter they set out the rationalisation for the reduced figure.

(b) With regard to the fees sought in this application, again, Revenue believed the figure sought of €19,928 (€9,928 for the liquidator and legal fees of €10,000 plus VAT) to be excessive and, in their view, believed that a figure of no more than €10,000 plus VAT is a reasonable figure for the combined liquidator/legal costs for this application.

10 Those figures would appear to be figures with which the joint liquidators do not raise any strenuous objection in all the circumstances.

11 Mr. Michael Nugent, solicitor, who swore his affidavit on 18th November, 2019, makes certain submissions as to the entitlements of the joint liquidators to the magnitude of their proposed costs.

12 Mr. Nugent, initially, applies to be appointed a legitimus contradictor to oppose the application of the joint liquidator. Mr. Nugent, solicitor, has been instructed by a number of creditors and is entitled to act on their behalf and to put forward such arguments as he may advance with regard to their interests. I accept, of course, that he is entitled to appear on behalf of the creditors he represents.

13 He also seeks to be indemnified as to costs and entitled to his costs as legitimus contradictor either by the liquidators or out of the assets of the company in such sum as this Honourable Court may deem fit. The entitlement to indemnification is not understood and no basis is advanced for this unusual application. For the avoidance of doubt any suggestion of an entitlement to indemnity costs is rejected and the overall entitlement to costs will be a matter for consideration in due course.

14 Mr. Nugent takes issue with a number of matters including: -

(a) That the minutes of the creditors meeting are at variance with what transpired and he exhibits what he asserts to be the proper and correct minutes from meetings between December, 2013 to December, 2018. He further takes issue with the creditors' attendance list. These are not matters that I can resolve on affidavit and only one aspect appears to relate to his contentions within this application, with regard to s. 269 of the Companies Act, 1963 (‘ s. 269’) below.

(b) With regard to the liquidator's fees, he claims that the figure is initially high for a company that had long since ceased trading, was left in good order and had a liquidation lasting in excess of eight years.

(c) Pursuant to s. 269 at the creditors' annual meeting of 17th December, 2013, Mr. Nugent avers that the remuneration of the liquidators was agreed to be fixed at €10,000 plus VAT. He further avers that at the annual meeting of creditors on 10th October, 2014, the liquidator sought approval for an increase in their fees and in relation to that increase, a further resolution was passed pursuant to s. 269, that the remuneration of the liquidators be fixed at €10,000 plus VAT together with an extra amount for outlays in the sum of €3,039. Mr. Nugent avers that the liquidators stated on more than one occasion that they would apply to the High Court to have their fees increased but did not do so. It appears to me that they do so now. They may be late in doing so but I cannot discern any time limits that preclude them from now making this application.

(d) Separate from the submission pursuant to s. 269, there is a suggestion that the company premises were sold at significant undervalue. Linked to this is the fact that the creditors (or those whom Mr. Nugent represents) further point to their dissatisfaction at the delays in dealing with this matter.

15 In my view, it is not for this Court to seek to examine the sale of the company's sole significant asset. This is an application solely in respect of liquidators' fees and there...