The High Court has ordered Anthony O’Hora Senior to bear the costs incurred by the liquidator of Moypool Limited in investigating a restriction application, with any disputed amount to be taxed and ascertained.
In a judgment delivered on 15 May 2006, Ms Justice Finlay Geoghegan considered whether solicitor fees for reviewing conveyancing files could be included as investigation costs under section 150(4B) of the Companies Act 1990. The fees related to work requested by the liquidator in connection with matters investigated for a potential application against the respondents.
The court had made declarations of restriction against Anthony O’Hora Senior and Angela O’Hora on 8 December 2005. It had then ordered the liquidator to recover his costs of the application against the first named respondent, while adjourning the separate question of investigation costs so the liquidator could provide an estimate and the issue could be argued.
Counsel for the first named respondent argued that investigation costs under section 150(4B) were limited to legal costs connected with litigation. The judge rejected that interpretation, finding that the provision allows costs of investigating matters that formed the subject of the restriction application, separately from the costs of the application itself. She also said the provision did not include the liquidator’s own remuneration, referring to an earlier High Court judgment in Mitek Holdings Limited.
The judge accepted that the provision should be interpreted narrowly because it imposes a financial obligation on a director. She said recoverable costs must be necessary or proper for investigating the application. Solicitor fees for work requested by the liquidator on the relevant matters could fall within that category, but the judgment did not decide that all the work listed in the estimate qualified. Any dispute over necessity or propriety would be resolved on taxation.
The respondent also argued that no order should be made because the substantive application had made no finding of dishonesty against him and the liquidation was primarily caused by a radical change in the tax regime for projects of this kind. The judge accepted that there had been no finding of dishonesty, but ordered the first named respondent to bear qualifying investigation costs. The order was for costs to be taxed and ascertained if the parties could not agree.