The High Court has ruled that a liquidator could not recover his and his colleagues’ remuneration for investigating a company restriction application as “costs incurred by the applicant” under section 150(4B) of the Companies Act 1990.
The judgment, delivered by Ms Justice Finlay Geoghegan on 5 May 2005, concerned costs sought by liquidator Tom Grace after the court decided on 21 February 2005 to make declarations restricting Jack Kachkar and Robert McClellan Carrigan under section 150. The earlier restriction decision was made for reasons set out in a separate written judgment. This costs judgment addressed the meaning of the statutory provision, not the basis for those declarations.
Grace sought orders under section 150(4B), which allows the court, when hearing an application for a restriction declaration brought by a liquidator, receiver or the Director of Corporate Enforcement, to order the directors to bear the application costs and “any costs incurred by the applicant in investigating the matter”. The issue before the court was whether that phrase covered the liquidator’s remuneration for investigative work and reporting to the Director under section 56 of the Company Law Enforcement Act 2001.
An affidavit from Bobby Waters, a PriceWaterhouseCoopers senior manager with day-to-day responsibility for the liquidations, set out the hours and rates for work by Grace, Waters and two other firm colleagues. The total claimed was €21,372 plus VAT at 21%. The judge said no distinction had been pursued between Grace’s time and that of his colleagues, and treated the question as whether the provision included the liquidator’s remuneration.
The liquidator submitted that the legislative scheme was intended to put investigation costs on directors following a successful application, rather than on the company’s creditors. The court rejected that interpretation. It held that the ordinary meaning of “costs incurred by the applicant” referred to sums the liquidator was liable to pay to a third party, not his own remuneration. The wording did not clearly impose a financial burden that included the liquidator’s and colleagues’ remuneration, and the court could not expand it on the basis of the broader legislative purpose argued for.
The court therefore disallowed the part of the costs claim relating to the remuneration of Grace and his colleagues. The judgment does not state the amount, if any, allowed for other costs, or set out a complete final costs order.