A High Court judge has reserved judgment on whether to approve fees sought by an examiner who investigated the viability of the insolvent Dublin “Residence” private members club.
Examiner Jim Stafford’s fees were based on an hourly charge of some €425.
The Residence club at St Stephen’s Green, owned by restaurateur brothers, Simon and Christian Stokes, went into receivership on January 20th after Mr Justice Peter Kelly refused to continue court protection for it.
The judge strongly criticised the Stokes’ brothers management, particularly the fact it traded using employees’ tax monies owed to the Revenue. Describing that as “a form of thieving”, he referred his judgment and papers in the case to the Director of Corporate Enforcement.
Mr Justice Kelly later queried whether a bill of more than €111,000 made up of €61,857 examinership costs and €50,000 legal costs - related to three court appearances - was acceptable in this economic climate.
Today, the judge was provided with further documents outlining the basis of the charges and heard legal submissions.
Brian Kennedy, for Mr Stafford, of Friel Stafford Corporate Recovery, said the €425 an hour fee was fixed three years ago and was still accepted. Mr Stafford charged a discounted fee of some €390 an hour when doing work for the Revenue and other State bodies, he added.
Mr Stafford had rounded the number of hours worked in the Residence examinership, 60 hours, down to 56 which effectively left a fee of €396 per hour and had incurred significant overheads as detailed in documents. Counsel said Mr Stafford does a certain amount of unpaid work and was not receiving a €425 per hour fee for every hour in the working week.
This was in some ways a “non-routine examinership” due to factors including a lack of financial controls in the Residence club and a substantial Revenue liability. Several issues had arisen, including issues relating to credit cards and payments to staff which, if left unresolved, would have had significant implications for the company, counsel added.
Mr Justice Kelly said he understood many other professionals, including lawyers, architects and engineers had reduced their fees in this very changed econmic climate and the cost of living had also fallen. “Nothing is as it was three years ago,” he added.
Mr Kennedy agreed but suggested there was perhaps not the same downard pressure on the fees of insolvency experts who, he said, are very busy now. Alison Keirse, for the Revenue, said she understood legal fees for work done for the Revenue had fallen by some 8 per cent.
Mr Justice Kelly remarked the examiner appeared to have become very involved in monitoring this company and asked would it not have been more appropriate to apply to the court not to have the management left in place.
Mr Kennedy said the examiner acted as he had so as to reduce costs and thought the best approach was to leave the management there but carry out close monitoring including of the cash flows in the company.
The Residence club opened in May 2008. At the time of going into examinership, it had 1,450 members and 41 employees.
