Re Lance Homes Ltd & The Companies Act; Lee Towers Management Company Ltd v Lance Investments Ltd ((in Liquidation)) No. 2

JurisdictionIreland
CourtHigh Court
JudgeMs. Justice Baker
Judgment Date01 February 2019
Neutral Citation[2019] IEHC 50
Date01 February 2019
Docket Number[2010 No. 196 COS] [2017 No. 245 CA]

[2019] IEHC 50

THE HIGH COURT

Baker J.

[2010 No. 196 COS]

[2017 No. 245 CA]

IN THE MATTER OF THE COMPANIES ACT, 2014 AND IN THE MATTER OF LANCE INVESTMENTS LIMITED (IN LIQUIDATION) AND LANCE HOMES LIMITED (IN LIQUIDATION) AND IN THE MATTER OF AN APPLICATION OF CARL DILLON (LIQUIDATOR) THE HIGH COURT ON CIRCUIT

IN THE MATTER OF THE MULTI UNIT DEVELOPMENT ACT, 2011 AND IN THE MATTER OF THE COMPANIES ACT, 2014

BETWEEN/
LEE TOWERS MANAGEMENT COMPANY LIMITED
PLAINTIFF
AND
LANCE INVESTMENTS LIMITED (IN LIQUIDATION), LANCE HOMES LIMITED (IN LIQUIDATION),

AND

IRISH IMMIGRATION FUND LIMITED
DEFENDANTS

No. 2

Costs – Application for directions – Mareva injunction – Parties seeking ruling on costs – Whether the liquidator was entitled to its costs

Facts: The parties agreed that the following issues arose for determination by the High Court: (i) the costs of the application for directions brought by the liquidator of the first and second defendants, Lance Investments Ltd and Lance Homes Ltd (the Companies), pursuant to s. 631 of the Companies Act 2014; (ii) the costs of the appeal by the liquidator of the interim Mareva injunction made by the Circuit Court against the Companies and the liquidator on 26 July 2017; (iii) an order was made by Barrett J sanctioning the plaintiff, Lee Towers Management Company Ltd, to commence the proceedings against the Companies, and directing that before any disbursement was made pursuant to any order of the Circuit Court, that application be made to the High Court, so the costs of the leave application, therefore, fell to be considered, as did the measurement and apportionment of those costs, to be deemed to be costs in the liquidation; and (iv) the measurement of the portion of Circuit Court proceedings to be deemed as costs and expenses in the winding up of the Companies.

Held by Baker J that the liquidator was entitled to its costs against Lee Towers and against the third defendant, Irish Immigration Fund Ltd, but to take account of the fact that Lee Towers was partly successful, the liquidator should be entitled to 80% of his costs against Lee Towers. Having regard to the fact that the hearing of the appeal took up no time or additional resources, it seemed to Baker J that the correct order was to make no order as to costs on the appeal and to vacate the order for the Mareva injunction and any order for costs made by Judge O’Brien. Baker J considered that the costs of the leave application should be deemed to be a cost and expense in the liquidation.

Baker J held that because the action for specific performance of the agreement to assure the common areas and the reversions involved a degree of legal and factual complexity, and because there was relatively little assistance in the authorities regarding the operation of the Multi-Unit Development Act 2011, the instruction fee and counsel’s fee as proposed by Messrs Behan and Associates, legal costs accountants on behalf of the liquidator, was too light. Accordingly, Baker J proposed the following measurement: instruction fee €11,000, counsel €4,500, outlay €1,000, motion fee for junior counsel not otherwise engaged with the litigation €250, all figures to be subject to VAT. Baker J proposed a figure of €2000, plus VAT in respect of mapping. Because of the view taken in the principal judgement that the only relevant costs to be measured were those of the action for specific performance simpliciter and not those in respect of the works of repair, Baker J did not consider that the fees of engineering experts were to be allowed.

Judgment approved.

JUDGMENT of Ms. Justice Baker delivered on the 1st day of February, 2019
1

This is my ruling on the costs of the application for directions brought by the liquidator of Lance Investments Limited and Lance Homes Limited (‘the Companies’) pursuant to s. 631 of the Companies Act 2014 (the Companies Act) and the appeal from an interim Mareva injunction made by the Circuit Court against the Companies and the liquidator on 26 July 2017.

2

I delivered judgment on 19 July 2018, In re Lance Homes Ltd. (No. 1) [2018] IEHC 444, in the application pursuant to s. 631 of the Companies Act and the logical consequence of that judgment was that the appeal from a Mareva injunction had to be allowed.

3

The application for directions by the liquidator raised a somewhat difficult question for determination which I considered White J., in In re Bohergar Developments Ltd [2014] IEHC 136, did not answer. The question essentially related to the interplay between the Multi-Unit Development Act 2011 (‘the MUD Act’) and the provisions of the Companies Act, in particular s. 617, which deals with the costs, charges, and expenses in the liquidation, whether the provisions of the MUD Act had the legal effect of displacing the scheme of priorities for which the Companies Act provides. The conclusion of my judgment was that the MUD Act did not displace the scheme of priorities provided in the Companies Act, that the costs ordered to be paid to Lee Towers by the Companies by the Circuit Court in an application under the MUD Act by the management company, Lee Towers Management Company Limited (‘Lee Towers’), did not, save for one part thereof, fall to be treated as priority costs, charges, and expenses in the liquidation and that the costs were to be treated to be as unsecured liabilities of the companies.

4

Briefly, the Circuit Court proceedings had sought mandatory orders directing the Companies and the other defendant, Irish Immigration Fund Limited (‘IIF’) to transfer to Lee Towers the common areas and the reversions on the purchase leases in the relevant part of the development constructed by the Companies in Cork City and in respect of which the development scheme agreements were made in or around January 2001.

5

The Circuit Judge made orders on 5 July 2017 directing the execution of a deed of conveyance of the common areas and reversions but also directing that the companies and IIF would complete the development in accordance with the development agreement and their respective obligations pursuant to the Planning and Development Act 2000, as amended, the Building Control Act 1990, as amended, to the satisfaction of the consulting engineer of the plaintiff. At para. 10 of my principal judgment I referred to those orders as ‘remedial orders’ and broadly speaking, the Circuit Court order directed works on external walls to deal with fire safety requirements, fire separation generally, and other remedial works to remedy defects in the roof, lobbies, and other internal common areas.

6

Judge O'Brien, after giving his judgment in the Circuit Court, awarded the costs of the proceedings against the companies and IIF jointly and severally to be taxed in default of agreement. The costs were taxed by the County Registrar for the County of Cork and affirmed on appeal by Judge Ó Donnabháin. Lee Towers” original Bill of Costs claimed a total of €191,823.34 and these were taxed in the sum of €132,423.96 and affirmed on appeal.

7

The liquidator took no part in the taxation of the costs or in the appeal of the taxation and for present purposes, it is material to note that no order apportioning the costs between the Companies and IIF was made.

Questions to be determined in this ruling
8

The parties agree that the following issues arise for determination at this juncture:

(i) the costs of the application pursuant to s. 631 of the Companies Act;

(ii) the costs of the appeal by the liquidator of the Circuit Court Mareva injunction;

(iii) an order was made by Barrett J. sanctioning Lee Towers to commence the proceedings against the Companies and directing that before any disbursement was made pursuant to any order of the Circuit Court, that application be made to the High Court. The costs of the leave application, therefore, fall now to be considered, as does the measurement and apportionment of these costs, to be deemed to be costs in the liquidation;

(iv) the measurement of the portion of Circuit Court proceedings to be deemed as costs and expenses in the winding up of the Companies.

9

The costs order of the Circuit Court as taxed is not under appeal but what is in question is the measurement of that part of those costs as may properly be deemed to be the costs and expenses in the liquidation, having regard to my conclusion at paras. 110 et seq. of the principal judgment that part of the costs of the Circuit Court proceedings are to be treated as being entitled to priority, that part as may fairly be attributed to the application for specific performance of the management company agreement by which the Companies were required to divest themselves of the legal title to the reversion and the common areas to Lee Towers.

10

I will deal with each of these questions in turn.

The costs of the application pursuant to s. 631 of the Companies Act
11

The liquidator seeks an order that his costs of bringing the application for directions be treated as costs of the winding up of the Companies. There is no great opposition to the making of that order which I consider ought to be made in the circumstances.

12

Separately, the liquidator seeks an order for costs of the directions application against both Lee Towers and IIF who both, in turn, seek an order for costs against the Companies.

13

Counsel for the liquidator argues that the correct starting point to the consideration of the costs...

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