Hughes v The Revenue Commissioners  IEHC 750, High Court, Keane J, 21 December 2016 concerned an application by the official liquidator of a Company for final orders including an order determining the applicant's remuneration in the sum of €558,750.76. The liquidation had been ongoing since 23 June 2008 and the liquidator sought to retain €93,004 out of the assets of the Company in respect of fees, as the sum of €465,746.76 had already been received in the form of interim fee payments.
The Revenue Commissioners, as a significant creditor of the company opposed the making of the order; firstly on the basis that the applicant had provided insufficient information to support the payment in the amount claimed; and secondly, that the level of fees sought was too high.
The liquidator had summarised the work that he had undertaken since the commencement of the liquidation. He provided an appendix to his report which set out the hours of work carried out by reference to the grade of each member of staff who carried out that work and the 'rate per hour' attributable to each such grade. The appendix contained a table in which the hours worked by each staff member were broken down across 7 different subject headings. The liquidator also stated that all of the work involved was properly and necessarily carried out, and properly and necessarily delegated as appropriate. The liquidator argued that the remuneration sought represented true and fair value for the work done.
The Revenue requested a breakdown of the work carried out in the liquidation by both the liquidator and his legal representatives, to include 'details of task completed, caseworker, grade and rate of pay of caseworker, time to complete task etc.'. In particular, the Revenue sought time sheets in respect of the work done. The liquidator expressed the view that the level of detail and amount of information in the appendix to his report was no less than would be provided in the equivalent time sheets, were he to provide the latter. The liquidator also pointed out that the Revenue did not require the production of time sheets by him in connection with either of the two interim fee payments. The Revenue argued that the previous interim fee applications dealt only with payments on account, which were made expressly subject to the liquidator's undertaking to repay any monies due if required to do so at the final orders stage of the liquidation.
The Court noted that it is not 'the norm' to require liquidators to provide schedules containing a breakdown of time per topic or, in particular, to require liquidators to provide time sheets in support of an application for fees. However, in each case the Court must strike a balance between, on the one hand, requiring the provision of a level of information or documentation sufficient to permit a representative creditor (such as the Revenue) and, ultimately, the Court to form a view on what is reasonable remuneration and, on the other, not imposing unnecessary requirements that will result in extra work and expense in the liquidation without any, or any proportionate, benefit for creditors or contributories.
The Court held that, in the absence of disclosure of the time sheets, it was not possible for the Revenue, or any other creditor, to express a view, or for the Court to form a judgment as to the reasonableness of the fees and therefore it ordered the provision of the documentation sought. The Court noted that it has to be vigilant in scrutinising any application for costs brought in a liquidation.
With regard to the argument that the level of fees were too high the Court held that it would be premature to embark upon a consideration of this point prior to receipt of the time sheets.