High Court Holds Liquidator Not Obliged to Present Contemporaneous Timesheets in Fees Application
High Court rules Official Liquidator does not need to produce time sheets in relation to work done and in-crease in charge out rate objectively justified.

Introduction

In a recent application brought by the Official Liquidator of Custom House Capital Limited (In Liquidation) ("CHC") to determine the Official Liquidator's interim remuneration, fees and expenses, Ms Justice Finlay Geoghegan sitting in the High Court held that the Official Liquidator was not required to produce contemporaneous timesheets in the assessment of his remuneration1. The Court also held that the increase in the charge-out rate of the Official Liquidator's solicitor during the liquidation was objectively justified in light of the level of experience gained and increased seniority over the relevant period.  

Contemporaneous Timesheets

The onus was on the Official Liquidator to satisfy the Court, on the evidence put before it, that the remuneration he sought was reasonable for the work done by him.  The Court must be provided with "sufficient information" to enable it to "form a view as to the appropriate allowable fees whilst not adding unnecessarily to the cost of the liquidation". As a matter of principle there is an obligation on a liquidator to keep "proper contemporaneous records", however, the Court held that it does not automatically follow that a liquidator is obliged to produce all such contemporaneous records in an application for the measurement of remuneration. 

In each case it is necessary to strike a balance between requiring the provision sufficient information so that the Court may form a view on reasonable remuneration, while also not imposing unnecessary requirements that would result in extra work and expense without any proportionate benefit for creditors or contributories.

Finlay Geoghegan J. asked whether timesheets would assist the Court in assessing the value of the work done for the liquidation, or whether the time spent was necessary to achieve the work actually done, or indeed whether that work was necessary for the particular aspect of the liquidation to which it related. On the facts of this application it was held that the production of the contemporaneous timesheets would not assist in doing so. Therefore, the Court declined to make a direction requiring the production of contemporaneous time sheets. 

Increase in Solicitor's Charge-Out Rate

The application also included the determination of the legal costs of the Official Liquidator for the relevant period which gave rise to a dispute regarding an increase in the hourly charge out rate for a solicitor during the relevant period from €285 to €300. This was in a context where, since 2014, the solicitor's hourly rates had increased from €175.  

Finlay Geoghegan J. referred to her previous decision in In the Matter of Mouldpro International Ltd. (In Liquidation) [2018] IECA 88 ("Mouldpro") where she had held that in respect of an hourly charge out rate for persons in the liquidator's firm who were promoted during the period of the liquidation, the hourly increases in question were not objectively justified in the context of the work being done by the persons in the liquidation. 

Turning to the increase in the solicitor's fees in the within application, Finlay Geoghegan J. considered the fact that the solicitor increased her seniority over the relevant period and was able to relieve a senior partner from certain of the work in the liquidation. As such, the Court was satisfied that this provided the objective justification which was required in Mouldpro for the element of professional fees attributable to work done by the solicitor at the increased charge out rate and allowed the increase of the solicitor's hourly fees. 

Key Take Away Points

This decision will be broadly welcomed by practitioners where it has been widely regarded that fees and costs applications were becoming increasingly onerous and difficult.  However, the onus remains on liquidators and their solicitors to satisfy the Court that their fees, costs and expenses are reasonable in all the circumstances. 

The decision also clarifies the decision in Mouldpro and confirms that the onus is on practitioners to objectively justify an increase in an individual's hourly charge out rate in the context of the work being completed by that person in a liquidation.  

1 In re Custom House Capital Ltd [2018] IEHC 652

Contributed by: Rebecca O'Connor

 

Twitter
 
Follow us @WilliamFryLaw