Marino Ltd and the Companies Acts 1963-2006 and Others

• Jurisdiction: Ireland
• Court: High Court
• Judge: Mr. Justice Clarke
• Judgment Date: 29 July 2010
• Neutral Citation: [2010] IEHC 394
• Date: 29 July 2010

[2010] IEHC 394

THE HIGH COURT

[No. 524 COS/2009]

Marino Ltd & Ors, In Re

IN THE MATTER OF MARINO LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1963 - 2009

AND IN THE MATTER OF PERFECT PIES LIMITED AND IN THE MATTER OF THE COMPANIES ACTS, 1963 - 2009

AND IN THE MATTER OF VIKRAM LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1932 - 2009

AND IN THE MATTER OF MOUNT STREET PUB LIMITED AND IN THE MATTER OF THE COMPANIES ACTS 1963 - 2009

(AS RELATED COMPANIES WITHIN THE MEANING OF SECTION 4(5) OF THE COMPANIES (AMENDMENT) ACT 1990 )

COMPANIES (AMDT) ACT 1990 S29

MISSFORD LTD T/A RESIDENCE MEMBERS CLUB, IN RE UNREP KELLY 17.6.2010 2010 IEHC 240

COOMBE IMPORTERS LTD, IN RE UNREP SUPREME 22.6.1995 1995/6/1949

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

COMPANIES (AMDT) ACT 1990 S29(3)

COMPANY LAW

Examinership

Costs - Reasonable rate of remuneration - Court's obligation to scrutinise application - Priority given to payment of examiner's costs - Whether rate too high - Whether amount of work claimed for reasonable - Whether there should be a uniform rate - In re Missford Ltd T/A Residents Members Club [2010] IEHC 240, (Unrep, HC, Kelly J, 17/6/2010) and In re Sharmane Ltd [2009] IEHC 377, [2009] 4 IR 285 followed - In re Coombe Importers Ltd (Unrep, SC, 22/6/1995) considered - Companies (Amendment) Act 1990 (No 27), s 29 - Order made (2009/524COS - Clarke J - 29/7/2010) [2010] IEHC 394

In re Marino Ltd

Facts: An examiner had applied to Court for an order for the payment of his remuneration pursuant to s. 29 Companies (Amendment) Act 1990 and by the time of the application, a received had been appointed. The issue arose as to the rate of fees being charged. A judgment had at this time been reserved and then was delivered by the High Court (Kelly J.) in Missford Limited t/a Residence Members Club [2010] IEHC 240 and the Court had sought to consider that judgment prior to deciding the present issues. In Missford, significant reductions in the rate of personnel of an examiner had been directed by the Court

Held by Clarke J. that the Court would fix the rate similar to Kelly J. in Missford as it was difficult to accept that it would be appropriate to allow a rate in excess of Eur 375 per hour for those at partnership level. The Court proposed allowing Eur 375 per hour for those at partner level and the rate for Associate Director would be Eur 300 per hour, 260 per Manager per hour, Eur 200 per hour for Senior Accountants and Eur 80 for Trainee Accountants.

Reporter: E.F.

1. Introduction

2 2 1.1 The Companies named in the title of these proceedings form part of the Capital Bars Group of Companies ("Capital Bars"). Kieran Wallace of KPMG was appointed as an interim Examiner of Capital Bars on the 18 ^th September, 2009. Subsequently, on the 6 ^th October, 2009, Mr. Wallace was confirmed as Examiner of Capital Bars.

3 3 1.2 The examinership continued, with various extensions of time being granted, right down to the wire. However, for reasons which are not relevant to the issue which I now have to decide, the examinership process in respect of Capital Bars ultimately failed.

4 4 1.3 On that basis, the appointment of Mr. Wallace as Examiner was terminated and the protection of Capital Bars under the Companies (Amendment) Act 1990 ("the 1990 Act") ended. Thereafter, Mr. Wallace applied, under s. 29 of the 1990 Act, to the court for an order for the payment of his remuneration and costs together with his reasonable expenses. By the time that application came to be heard, a receiver had been appointed to Capital Bars. The receiver suggested, through counsel, that the rate of fees being charged by Mr. Wallace was too high and suggested a reduction to which I will refer in due course. The fees sought were based on a number of different hourly rates depending on the seniority of the personnel involved.

5 5 1.4 At or around that time, Kelly J. had reserved judgment in a similar application in Re Missford Limited T/A Residents Members Club and the Companies Acts. I, therefore, indicated to the parties that I wished to consider the judgment which Kelly J. was due to deliver in that case, but that I would afford the parties a further opportunity to be heard in the light of that judgment. I am of the view, which I expressed at the time, that there is an obligation on the courts to ensure reasonable consistency in the approach adopted to applications for the payment of examiners costs. It was for that reason that I wished to have the opportunity to consider the views then to be expressed by Kelly J. in Missford.

6 6 1.5 Thereafter, judgment was delivered on the 17 ^th June by Kelly J., ( Missford Limited T/A Residents Members Club & the Companies Acts [2010] IEHC 240). I subsequently afforded the parties an opportunity to make further submissions on the matter. This judgment is directed towards the conclusions which I have reached. I should turn first to the decision in Missford.

2. Missford

2 2 2.1 In a review of the case law in Missford, Kelly J. quoted the observations of Hamilton C.J. in Re Coombe Importers Limited (Unreported, Supreme Court, Hamilton C.J., 22 ^nd June, 1995), where the following was stated:-

"There is no doubt that the court has jurisdiction to review and disallow the remuneration, costs and expenses of the Examiner and in view of the priority given to such remuneration, costs and expenses there is an obligation on the court to be vigilant in scrutinising an examiner's application for sanction of payment."

It should be pointed out that one of the issues which arose in Missford was as to whether some of the work in respect of which costs were being sought by the examiner in that case, was work which was properly required of an examiner in the context of the examinership concerned. There is no equivalent issue in this case. I indicated at the initial hearing of the application that I was satisfied that the amount of work being claimed for by Mr. Wallace was reasonable, having regard to the course of the examinership. As is normal practice, the examinership remained with one judge for almost its entire course (that judge being me), with only a number of minor matters being dealt with by another judge due to my unavailability on one occasion. I was, therefore, fully familiar with the course of the examinership and have no doubt but that the volume of work specified in the Examiner's bill in this case is fully justified. In addition, counsel on behalf of the receiver did not seek to suggest that the volume of work being charged for was in any way inappropriate.

3 3 2.2 While the issues in Missford, therefore, turned not only on the rate of remuneration but also on the amount of work to which that rate should be applied, the issues in this case concentrated solely on the rate of remuneration. While agreeing fully with the comments of Kelly J. concerning the need for the court to apply scrutiny to the question of the volume of work being charged for when determining the appropriate costs of an examiner, I am satisfied that no such issues arise on the facts of this case.

4 4 2.3 Like Kelly J., I also agree with the views expressed by Finlay Geoghegan J. in Re Sharmane Limited [2009] IEHC 377, where she said:-

"There are no statutory criteria according to which the Court should determine what constitutes reasonable remuneration for the purpose of section 29. It does not appear to me that this can be determined by reference only to the total charge-out costs computed from the hours spent and relevant hourly rate for the Examiner and those working with him. This may, of course, comprise one element to be taken into account in determining what reasonable remuneration is. However, in my view, it should not be the only element, and in determining what is reasonable remuneration the Court must also have regard to the nature of the work carried out, the complexity of the work and the importance or value of the work to the client. These would be common elements taken into account by professionals charging or seeking to agree fees with clients."

5 5 2.4 The examiner's costs in Missford were based, as is common practice and the case in this application, on an hourly rate, differentiated having regard to the seniority of personnel involved. As noted by Kelly J. at p. 10, the examiner in Missford charged an hourly rate of €425.00. Other staff had respective charge out rates ranging downwards from €210.00 to €100.00 per hour.

6 6 2.5 The principal conclusions of Kelly J. commenced by noting that the charge out rate at partner level of the examiner in that case of €425.00 had remained unchanged since January, 2007. Having searched for a comparator, Kelly J. noted that fees payable in respect of publicly funded criminal work in the legal profession had been subjected to reductions of, at least, 16% since 2007. Kelly J., therefore, imposed such a reduction across the board leading to a rate of €357.00 in respect of the examiner, with rates ranging down from €176.40 to €84.00 for other staff.

7 7 2.6 In addition to Missford, I raised with counsel for Mr. Wallace another practical example of costs of an examiner which had, as it happens, come before me in the period between the initial application for the approval of costs in this case and the final hearing. The case in question involved the examinership of B.A. Engineering. In that case the examiner and a member of the examiner's firm of accountants, at partner level, operated a charge out level of €300.00 with...