The High Court cut fees sought by the administrator and his solicitors for two insurance companies under administration, setting lower hourly rates and requiring a fresh court application for payments after 30 September 2011.
In a judgment delivered on 2 November 2010, Mr Justice Kelly fixed remuneration and costs for ESG Reinsurance Ireland Limited and Accent Europe Insurance Company Limited for work from 18 December 2009 to 6 July 2010. The court said it had a statutory duty to fix the costs, expenses and remuneration of an administrator appointed to an insurance company, and had to scrutinise the payment request.
Administrator Jim Luby had sought €368,646.25 plus VAT for ESG and €222,680 plus VAT for Accent. The judge approved €309,238.95 for ESG and €186,786.20 for Accent. With €594.84 in expenses, the approved administrator fees, charges and expenses totalled €496,619.99.
Luby also sought solicitor costs of €35,394.15 plus VAT for ESG and €25,607.70 plus VAT for Accent. The court reduced these to €27,961.38 and €20,230.09 respectively. The judgment refers to the first company as “ESB” in this part of its account, although it identifies the company as ESG elsewhere.
The judge set a maximum hourly rate of €375 for a partner, reducing the €450 sought for the administrator’s partner-level work. He applied a 16 per cent reduction to the rates for more junior staff. For the solicitors, he also approved €375 an hour for the partner and applied a 21 per cent reduction to junior staff rates. He said he saw no good reason for an administrator’s legal adviser to charge more than the administrator himself.
The companies’ shareholder, a Bermudan company in liquidation, had expressed contentment with the fees through its liquidator. Luby’s evidence also described the complexity of the administrations, including international business relationships, staff in Dublin and Lisbon, and legal work involving the Netherlands, New York, the United Kingdom and Brazil. The judge accepted that the administrator’s work had distinctive features but said it drew on the same insolvency expertise used by other office holders.
The court had already allowed payments on account of €200,000 for ESG administrator fees, €20,000 for its legal fees, €150,000 for Accent administrator fees and €12,000 for its legal fees. Those payments are to be credited against the approved sums.
The judge refused the request to let the administrator invoice and retain future fees and legal costs quarterly without further court reference indefinitely. He permitted payments at the rates set in the judgment until 30 September 2011, subject to later court approval of the amounts. After that date, an application must be made to the court to approve remuneration and legal costs.