Latzur Ltd ((in Receivership))

• Jurisdiction: Ireland
• Judge: Mr. Justice Mark Sanfey
• Judgment Date: 11 February 2021
• Neutral Citation: [2021] IEHC 94
• Docket Number: [Record No. 2019/235 COS]
• Court: High Court
• Date: 11 February 2021

In the Matter of Latzur Limited (In Receivership)

and

In the Matter of the Companies Act 2014

[2021] IEHC 94

[Record No. 2019/235 COS]

THE HIGH COURT

JUDGMENT of Mr. Justice Mark Sanfey delivered on the 11th day of February, 2021

1 On 20th November, 2020, I delivered a judgment in relation to an application by Mr. Ken Fennell (‘the receiver’) for an order pursuant to s.438 of the Companies Act 2014 (‘the Act’) giving directions in relation to certain matters arising in the course of the receivership of Latzur Limited (‘the company’). In essence, the issue in respect of which directions were required was whether or not the receiver was appointed as such on foot of a fixed charge or a floating charge. That judgment (‘the substantive judgment’), which is cited at [2020] IEHC 592, should be read in conjunction with the present judgment, which concerns the costs of the application and the form of order to be made.

2 The parties who would be affected by any directions given by the court at the receiver's request were Chelsey Investissements SA (‘Chelsey’), which appointed the receiver as receiver and manager of the company's assets by a deed of appointment of 28th November, 2013, and the Revenue Commissioners (‘Revenue’). If the court directed that the receiver was appointed on foot of a fixed charge, the position under the law governing the application – that is, prior to the coming into force of the Act – would be that the amount available to the receiver for distribution before deduction of receiver's costs and expenses of approximately €1.4m would be payable to Chelsey as the fixed charge holder. If the court directed that the receiver was appointed on foot of a floating charge, the preferential creditors would take precedence, and virtually all of the available sums would be payable to Revenue. Accordingly, having brought the application before the court, the receiver adopted a neutral position and indicated that he would abide by the court's order. The issue was thereafter contested by Chelsey and Revenue.

3 The findings of the court are set out at para. 145 of the substantive judgment. I held that the receiver was appointed under a fixed charge rather than a floating charge, and that the funds available to the receiver would be distributed to Chelsey. I invited written submissions within 14 days as to the terms of the orders to be made, and both parties duly made detailed submissions in this regard.

4 There is no dispute between the parties as to the legal regime which governs the award of costs. The applicable statutory provisions are ss. 168 and 169 of the Legal Services Regulation Act 2015 (‘the 2015 Act’) and the recast O.99 of the Rules of the Superior Courts as introduced by the Rules of the Superior Courts (Costs Order) 2019 SI 584/2019.

5 Revenue draws attention to the summary by Murray J. in Chubb European Group SE v. The Health Insurance Authority [2020] IECA 183 of the relevant principles which now apply as a result of the introduction of these provisions:

“…it seems to me that the general principles now applicable to the costs of proceedings as a whole (as opposed to the costs of interlocutory applications) can be summarised as follows:

• (a) The general discretion of the Court in connection with the ordering of costs is preserved (s.168(1)(a) and O.99, r.2(1)).

• (b) In considering the awarding of costs of any action, the Court should ‘have regard to’ the provisions of s.169(1) (O.9 r.3(1)).

• (c) In a case where the party seeking costs has been ‘entirely successful in those proceedings’, the party so succeeding ‘is entitled’ to an award of costs against the unsuccessful party unless the court orders otherwise (s.169(1)).

• (d) In determining whether to ‘order otherwise’ the court should have regard to the ‘nature and circumstances of the case’ and ‘the conduct of the proceedings by the parties’ (s.169(1)).

• (e) Further, the matters to which the court shall have regard in deciding whether to so order otherwise include the conduct of the parties before and during the proceedings, and whether it was reasonable for a party to raise, pursue or contest one or more issues (s.169(1)(a) and (b)).

• (f) The Court, in the exercise of its discretion may also make an order that where a party is ‘partially successful’ in the proceedings, it should recover costs relating to the successful element or elements of the proceedings (s.168(2)(d)).

• (g) Even where a party has not been ‘entirely successful’ the court should still have regard to the matters referred to in s.169(1)(a)-(g) when deciding whether to award costs (O.99. r.3(1)).

• (h) In the exercise of its discretion, the Court may order the payment of a portion of a party's costs, or costs from or until a specified date (s.168(2)(a)).”

6 Revenue submits that the new regime provides the court with greater jurisdiction to reduce the costs awarded to the party who prevailed on the “ event”. As Murray J. commented at para. 20 of Chubb:

“Insofar as there might be said to be any difference potentially relevant to this application between the new and old regimes, they appear to me to lie in two features of the 2015 Act. First, Clarke J. in Veolia – at least on one view – limited his explanation of the power of the Court to reduce the costs of the party who prevailed on the ‘event’ by reference to the costs incurred by the other party in addressing issues on which the former did not succeed to cases that were ‘complex’. No such express limitation appears on the face of the legislation. Second, whereas under the pre-existing law, costs presumptively followed the event the prima facie entitlement to costs is now limited to the party who is ‘entirely successful’. Given that the law was that the term ‘event’ fell to be construed distributively so that there could be a number of events in a single case ( Kennedy v. Healy), winning the ‘event’ and being ‘entirely successful’ may well not mean the same thing…”

7 It might be said that Chelsey, given the result, ‘won the day’ in relation...