In two cases decided towards the end of 2012, the High Court applied reductions to the hourly charge out rate of staff members employed by the liquidator who had been promoted during the course of the liquidation.
While other factors were at play in the proceedings, such as delay (Farrell v Plastronix Investments Ltd) and the fact that an estimate had been provided to creditors (In re Haydon Private Clients Ltd), both cases demonstrate a continuation of the principles enunciated in Re Sharmane Limited and Re Missford Limited. In those cases, the High Court emphasised that it would not determine the remuneration payable to a liquidator solely on the basis of hourly charge-out rates, but would also have regard to:
- the nature of the work carried out
- the complexity of the work, and
- the importance and value of the work to the client.
In each case the Court reduced the general fees of the liquidator arising due to the foregoing issues and was also critical of the application of higher charge out rates for employees following from a promotion.
The Court acknowledged that liquidators should be able to recover rates which reflect the increased experience, ability and efficiency reflected in a promotion of a staff member. However, it held that in the particular circumstances, taking account of both cost (for the firm) and value (for the “client”, i.e. the creditors), the increased charge-out rates were excessive. In Farrell v Plastronix Investments Ltd, the hourly rates of the staff members in question were reduced by €20-€30 per hour. In In re Haydon Private Clients Ltd, the Court applied a general reduction of €25,000, which also took account of other matters in addition to the increased charge-out rates applied to promoted employees.
Farrell v Plastronix Investments Ltd  IEHC 418)
In re Haydon Private Clients Ltd  IEHC 505.