The President of the High Court has indicated there may yet have to be a forensic examination by the court of the actual work done to justify a further €563,000 fees being sought by the special manager of Newbridge credit union and his staff.
From the point of view of a credit union with small depositors - who will have to pay the fees - the sums sought are "enormous", Mr Justice Nicholas Kearns said.
The total costs of special manager Luke Charleton of Ernst & Young and his team and lawyers, appointed in January 2012, are now expected to be close to €2 million. It was stressed today there is no issue with the validity of Mr Charleton's appointment, his qualifications, expertise and entitlement to be paid for his work.
Mr Charleton's rates are now €375 an hour, with descending rates for his staff, the court heard. Those rates are in accordance with the rates of other insolvency practitioners over the past two years, his counsel Rossa Fanning said.
In opposing the latest fee application, the credit union's directors complained they were given an A4 page of hours worked by the special manager and his staff but neither that nor other material indicated precisely what work they were doing.
Bernard Dunleavy, for the directors, said while it was said the special manager had tried to use the services of credit union staff where appropriate, the directors did not understand how that measured up with the fees bill. There was no detail on foot of which the court could decide the value of work done, he added.
It seemed the members were charged even for changing key fobs to access the credit union but, while that seemed to involve "a phone call", there was no detail if the special manager himself did that or his staff, counsel said.
Mr Justice Kearns said, while recognising the "great value" of Mr Charleton's work, he was acutely conscious everyone was experiencing financial difficulties and the members needed assurance in a tangible way the fees charged are reasonable and necessary.
If agreement could not be reached on fees, the court may have to engage in examining the nature of the work done "from A to Z" in special manager appointments, the judge indicated.
He also suggested the Central Bank - which sought the special manager's appointment in January 2012 - might take on a more "active role" as to what fees are appropriate.
The Bank, which approved higher rates of fees on Mr Charleton's initial appointment, had indicated it had no difficulty with the fees sought, regarded Mr Charleton's work as necessary, proportionate and of a high standard but was "in the court's hands".
Mr Charleton previously agreed to cap his fees at €9,500 weekly for "business as usual" work during the period from July 2012 but that cap, also by agreement with the Central Bank, does not extend to any additional work.
After discussions, Mr Fanning told the judge this afternoon Mr Charleton was offering to cut his fees by 5 per cent, following a 11 per cent cut imposed by the court in February 2012 (on the fees apporved in January by the Central Bank). The directors would be given access to time sheets and material relating to work done by Mr Charleton who was also willing to have his rates subject to review by his peers, counsel said.
Mr Dunleavy said Mr Charleton's offer of access to documents was "very helpful". Given this was the first appointment of a special manager under new legislation, the court should not at this stage approve the proposed five per cent cut as that would be a cut on "premium rates", counsel urged.
The directors hoped, after an examination of the offered material, the special manager may come to "a more realistic assessment" of what would be an "appropriate" fee level, he added.
Some €646,000 fees are sought for the period from June 2012 to January last, including €83,000 legal fees for the firm Arthur Cox. The amount legal fees was not objected but the directors suggested there might be more details about the work done.
If approved, fees to date will total some €1.3m but, as Mr Charleton's appointment has been extended to next July, total costs are expected to be €2 million.
Mr Charleton was appointed under the Central Bank and Credit Institutions Resolution Act 2011 amid concerns about the credit union's financial position. Last December, the Central Bank said, while the position at the Credit Union had stabilised, the conditions requiring Mr Charleton's appointment continued. The Minister for Finance supported the extension of the appointment.
