Revenue queries €558,750 fee for liquidator of building firm

The official liquidator of a building firm has been ordered by the High Court to provide more details about time worked on the liquidation after the Revenue Commissioners complained about a fees bill of €558,750.

The Revenue, a substantial creditor of the liquidated company Denis Finn Ltd, had said it could not properly assess the reasonableness of the fees claimed without detailed time sheets from liquidator David Hughes.

The bill from Mr Hughes, appointed liquidator in 2008, related to his own fees, costs and expenses, plus fees of his solicitors for the liquidation.

In his judgment, Mr Justice David Keane said the courts are obliged to be vigilant about fees sought by examiners and liquidators and he ruled time sheets from Mr Hughes were necessary to assess if these fees were reasonable.

Those time sheets should be given to the Revenue, he directed. The Revenue had not complained about time sheets sought from, and provided by, Mr Hughes’s lawyers, he added.

As the liquidation is almost complete, Mr Hughes had sought court orders determining the total fees at €558,750. He has received €465,746 to date and wanted orders permitting him retain the remainder, some €93,000, out of the firm’s assets.

Insufficient information

The Revenue argued Mr Hughes provided insufficient information to support that further payment and the level of fees sought was too high.

Mr Justice Keane noted the court previously granted Mr Hughes’s interim fees application for €330,181, for remuneration, costs and expenses relating to some 1,856 hours of work between May 2008 and October 2010, and including fees of €266,000 and VAT. It also granted a second interim fee application for €135,565 for some 781 hours worked between November 2010 and September 2013.

This third application was for €93,004 for 328 hours of work between October 2013 and the conclusion of the liquidation. If granted, Mr Hughes would have received a total of €558,750, comprising €451,613 in professional fees, €2,655 outlay and about €104,482 VAT.

Mr Hughes had summarised his work under 10 headings, including statutory and court requirements and dealing with claims, the judge said. His reports set out hours worked by his staff on the liquidation and their grade and he had sworn the remuneration sought represented true and fair value for the work done.

After the Revenue sought a further breakdown of work done by the liquidator and his lawyers, the solicitors forwarded a single-page breakdown in relation to their work during the final period of the liquidation. That outlined hours worked, the grade within the law firm of the person who did it and the “rate per hour” charged.

That breakdown was similar to one provided by the liquidator in his final report except the solicitors had provided detailed time sheets, setting out hours worked and the type of work done on a day-by-day basis.

Strike a balance

The Revenue complained Mr Hughes’s report did not include similar time sheets. It claimed paragraphs in his report stating “significant time” had been spent was not sufficient for “a fee application of this magnitude” but Mr Hughes maintained there was adequate information in his report.

The judge said he had to strike a balance between requiring sufficient information be provided so a creditor and, ultimately the court, could decide what is reasonable remuneration and not imposing unnecessary requirements resulting in extra work and expense for a liquidator without proportionate benefit for creditors.

He was satisfied time sheets from the liquidator were necessary to form a view on the reasonableness of the fees application and that providing these would not entail disproportionate expense in the liquidation.

It was for Mr Hughes to satisfy the court, on the evidence, the amount he was seeking was reasonable remuneration for work done in the liquidation and there was no onus on the Revenue to show it was unreasonable, he added.