Spencer Dock Development Company ((in Liquidation)) and the Companies Acts 1963 to 2012

CourtHigh Court
JudgeMr. Justice Twomey
Judgment Date28 November 2022
Neutral Citation[2022] IEHC 656
Docket NumberRecord No. 2012/433 COS
In the Matter of Spencer Dock Development Company Limited (In Liquidation)


In the Matter of the Companies Acts 1963 – 2012

[2022] IEHC 656

Record No. 2012/433 COS


Costs – Liquidation – Inordinate and inexcusable delay – Liquidators seeking approval of revised fees – Whether the work behind the proposed fees was justified

Facts: In this case, there was a hearing on 25th October, 2022 and one of the two official liquidators (the Liquidators) of Spencer Dock Development Company Ltd (in liquidation) (Spencer Dock), Mr McAteer, sought court approval permitting the payment on account of liquidator’s remuneration and also legal costs due to his solicitors and barristers. The legal costs, for which approval was sought, were for the period 1st July, 2021 to 30th September, 2022 and amounted to €245,278.31, including VAT. The order, for the approval of the payment of legal costs by the High Court, was sought ‘pending taxation or measurement’ of those legal costs. In addition, the solicitors were providing an undertaking to reimburse the Liquidators in the event that the amount certified on taxation of those costs by the Legal Costs Adjudicator was less than the amount paid. There was no equivalent to the Legal Costs Adjudicator for a liquidator’s remuneration. In that regard, Mr McAteer sought the approval of the Court for the payment of €174,479.86 (including VAT) for the same 15-month period in respect of ‘professional fees and expenses due to’ the Liquidators. Those fees were payable to the Liquidators personally and not to the firm in which they were partners (Grant Thornton). The Liquidators also sought the Court’s approval for the payment of fees for the same 15-month period in the sum of €201,752.44 (including VAT) to a forensics accounting company called Grant Thornton Corporate Finance Ltd. Those fees related to forensic work which was done by that company in relation to litigation conducted on behalf of Spencer Dock. The forensic accounting services provided by that company related to accessing large and historic data on Spencer Dock’s server. The Court refused to approve the fees payable to Grant Thornton Corporate Finance Ltd. On 10th November, 2022, the Liquidators returned to court and instead of seeking the approval of the Court for the payment of €174,479.86 to the Liquidators and the sum of €201,752.44 to Grant Thornton Corporate Finance Ltd, the Liquidators sought the Court’s approval for the payment of one sum, €376,232.30, to the Liquidators. At the second hearing, the Court sought the views of the primary creditor, NAMA, since it was the party best positioned to consider whether the work behind the proposed fees of €376,232.30 was justified and whether the resulting fee was reasonable. In this case, NAMA indicated that it had no issue with the proposed fees in the sum of €376,232.30 payable to the Liquidators and the legal costs of €245,278.31, for the 15-month period in question.

Held by Twomey J that while the Court was obliged to bear in mind the interests of taxpayers, it had no reason to believe that NAMA had not approached the approval of those fees in a similar manner to that which would apply if the money was coming out of an individual’s pocket, rather than from taxpayers as a whole. Twomey J held that this will not always be the case, citing the decision In the matter of Treasury Holdings (In Liquidation) [2022] IEHC 643 where the amount payable to liquidators had been approved by a State agency creditor but the Court nonetheless refused to approve the payment until that part of the proposed remuneration which was not properly due to the liquidators, was removed from the invoice.

Twomey J held that, in all the circumstances, the revised fees in this case would be approved by the Court.

Revised costs approved.

JUDGMENT OF Mr. Justice Twomey delivered on the 28 th day of November, 2022


. This case considers whether fees incurred as part of a liquidation should be approved by a court, where they are payable, not just to the official liquidator but also, to a company in which the official liquidator has an interest.


. This Court has concluded that such an approach to fees in a liquidation is not best practice since it suffers from a lack of transparency, particularly when one bears in mind the position of unavoidable conflict of interest occupied by a liquidator in seeking payment for his fees, which payment will inevitably reduce the amount due to the creditors. Accordingly, this Court refused to approve the payment of the fees to such a company in this case.


. In considering the approach of a court to the approval of fees to be paid to liquidators, it is important to bear in mind that a liquidator occupies a fiduciary position (see Re Dr Developments (Youghal) Ltd [2011] IEHC 307 at para. 20 per Finlay Geoghegan J.). This is reflected in part by the fact that liquidators are personally appointed, rather than the company or partnership through which the liquidator practices. The corollary of their appointment being personal is that fees which are due to a liquidator are paid personally to that liquidator and not to his firm or a company associated with his firm.


. The role of liquidator is one of considerable trust because liquidators are expected to recover, in as cost-efficient a manner as possible, as much money as possible for the creditors of an insolvent company, who are inevitably going to be out of pocket.


. In addition, there will be a tension in every liquidation regarding liquidators' fees, because every euro that is paid to the liquidator in remuneration (and to his lawyers in legal costs) will lead to one euro less being paid to the creditors.


. In all of this, a liquidator is placed in an unavoidable conflict of interest position since he is deciding on the work that he should undertake in the liquidation (and thus generating income for himself) and then deciding on the amount he should be paid for that work, without any oversight from directors, as the company is in liquidation.


. For this reason, in cases such as this one, where the High Court is required to approve a liquidator's remuneration, this Court has an important role in approving what is in effect a payment by a liquidator of money out of the liquidation to himself. In essence, this Court is being asked to approve payment to the liquidator of a sum of money (which the liquidator says is reasonable) for work (which the liquidator says was justified).


. The important role of the High Court is accentuated by the fact that there is no independent specialist...

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