The liquidator of a plant hire company must follow the statutory order for making payments in liquidations and not pay fees to himself or make legal cost payments to his lawyers, without prior court approval, a High Court judge has ordered.

The order relates to Anthony J Fitzpatrick, as liquidator of Brandon Plant Hire Ltd (BPH).

Mr Justice Brian O’Moore said the order was necessary in the “very unusual” circumstances of the case before him “and given the track record of Mr Fitzpatrick”.

In other liquidations, Mr Fitzpatrick had not observed legal requirements in making payments, including to himself and, in this case, belatedly accepted the statutory order of priorities concerning payments in liquidations, the judge said.

He made the orders in a judgment this week on a pre-trial application by Cairn Homes Construction Ltd (Cairn) concerning proceedings by the liquidator against it.

BPH, the judge noted, was a subcontractor to Cairn in various projects of which three were relevant to these proceedings, and connected proceedings by BPH.

In March 2020, a month before Mr Fitzpatrick’s appointment as liquidator, BPH and Cairn entered into an agreement which resulted in a reduction by BPH of sums it claimed were due to it by Cairn and Cairn’s payment to BPH of the reduced sum.

The judge said Mr Fitzpatrick’s proceedings under the Companies Act effectively claim the agreement constitutes “a fraudulent disposition” in favour of Cairn for some €6 million. In related proceedings, BPH sought recission of the settlement agreement “for duress and other reasons”, according to an affidavit by Mr Fitzpatrick.

‘Somewhat unusual’

In a pre-trial application, Cairn sought various orders concerning payments in the liquidation, including that Mr Fitzpatrick not make payments to himself, directly or indirectly in respect of remuneration or otherwise, or to his lawyers for legal costs during the liquidation, except in line with the order of priorities in the Companies Acts and subject to retaining in the liquidation sufficient money to pay Cairn’s legal costs.

The judge said the only relevant relief remaining in the application was the “somewhat unusual” one relating to payments to Mr Fitzpatrick himself and his lawyers.

Cairn claimed it would incur costs of more than €1 million, exclusive of VAT, and that BPH’s realisable assets were estimated by its directors at €820,000, which might be “optimistic”.

It claimed Mr Fitzpatrick had, in other liquidations, been found to have paid himself fees on an interim basis without proper authority and had had judgments totalling €48,000 registered against him personally.

In opposing the application, Mr Fitzpatrick argued, inter alia, Cairn’s actions had brought about these proceedings and caused BPH’s insolvency. He denied he had not received approval from committees of inspection for his fees in previous liquidations and contended Cairn was effectively try to force him to withdraw his claims against it and seeking security for costs by the “back door”.

‘Utterly vacuous’

Noting counsel for Mr Fitzpatrick had said some €38,000 had been paid against the €48,000 judgments, the judge said he was not placing any real emphasis on those.

This was because, even without them, he could take into account the possibility any payments made in this liquidation not in accordance with statutory priorities may be incapable of repayment if that was required.

He said Mr Fitzpatrick’s evidence about his behaviour in other liquidations did not adequately address criticism of him by other judges in two separate actions involving him, including about circumstances in which he had paid himself fees. Mr Fitzpatrick’s reaction to the judicial criticism of him in those cases was “utterly vacuous” and he appeared to have not even acknowledged it, “let alone learned from it”.

The judge placed some significance on Mr Fitzpatrick’s acceptance he is always subject to the High Court’s jurisdiction.

While it was now agreed costs orders to date in Cairn’s favour in this case, and any further orders in its favour, would run ahead of the costs payable to Mr Fitzpatrick’s solicitor and Mr Fitzpatrick’s own remuneration, the judge said it was still necessary to make the formal order concerning payments for reasons including Mr Fitzpatrick had been “so slow” to acknowledge the proper order of priorities favoured Cairn.