High Court dismisses premature discovery application for costs documentation pending substantive claim.

THE HIGH COURT

COMMERCIAL

[2025] IEHC 404

[Record No. 2024/6993P]

BETWEEN

MICHAEL FLATLEY AND BLACKBIRD FILM PRODUCTIONS LIMITED

PLAINTIFFS

AND

NOVELLUS FINANCE LIMITED, WILLIAM MCMANUS AND KIERAN

WALLACE

DEFENDANTS

JUDGMENT of Mr. Justice Mark Sanfey delivered on the 15th day of July 2025.

Introduction

1. This judgment concerns an application by the plaintiffs by notice of motion of

22 April 2025 for orders requiring the defendants to provide documentation and information relating to receivers’ costs, legal costs and contractual interest, which the plaintiffs say are necessary to enable them to bring a separate application (‘the substantive application’) for return of part or all of sums paid by them to the first named defendant, which monies are currently held in court.

2. The categories of discovery sought by the plaintiffs are set out in the notice of motion; the plaintiffs submit that the standard requirements for discovery of documents are met. The defendants however make a number of points; most notably, they argue that the application is premature, in that the substantive application, which the present application is intended to support, has not yet been brought or set out. It is submitted, that in any event, the plaintiffs have sufficient information to prosecute the substantive application, and will obtain “lawful and appropriate access to the Defendants’ files to the extent that process permits…” [written submissions, para. 23.2].

3. The application was heard by me on 28 May 2025. Both sides proffered extensive written submissions, supplemented by the submissions of counsel at the hearing.

Background

4. It is necessary to set out briefly the background to the matter to provide the context for the present application.

5. The first named defendant agreed to lend the second named plaintiff the sum of €5,696,851 by a commercial facility letter of 20 September 2023 (‘the facility agreement’). The purpose of the loan was to enable the second named plaintiff to refinance liabilities associated with the production of a film, “Blackbird”. The facility agreement was secured by a mortgage (‘the mortgage’) of 27 September 2023 between the first named plaintiff (or ‘Mr. Flatley’) and the first named defendant (‘Novellus’) over property situate at Castlehyde, Fermoy, County Cork (‘Castlehyde’ or ‘the secured property’). A guarantee and indemnity document of 27 September 2023 was also executed by Mr. Flatley in favour of Novellus.

6. The facility agreement provided for payment of interest on a monthly basis, with a capital payment of €500,000 on each anniversary of the drawdown of the loan, which occurred on 15 September 2023. Following what it alleges were breaches of the facility agreement, Novellus issued notices of acceleration and demand to the plaintiffs in early October 2024.

7. Mr. Flatley sets out in his grounding affidavit of 22 April 2025 the circumstances which caused difficulties in discharging the amounts due under the loan. In particular, he avers that the monthly repayments to Novellus were intended to be made with the benefit of rental income from a lease of Castlehyde to a third party company, but that this proved impossible due to what he alleges were negligent restoration works to Castlehyde by his former insurers following a fire which occurred in 2016. He accepts that it was necessary for Novellus to grant forbearance in respect of repayments from November 2023 to January 2024; Mr. Flatley appears to have initiated separate litigation in relation to the difficulties arising from the restoration works during this period.

8. The capital payment of €500,000 due in September 2024 was not paid. Ultimately, on 2 December 2024, Novellus appointed the third named defendant and Mr. Andrew O’Leary as receivers (‘the receivers’) over the secured property. On 5 December 2024, the plaintiffs obtained interim injunctive relief restraining the third named defendant “from taking any steps as receiver to enforce by sale or by auction or otherwise or to take possession of the security being the property known as Castlehyde, Fermoy, County Cork…”. This application was made in the Chancery List; by consent, an order was made on 16 December 2024 entering the proceedings into the commercial list. The defendants intimated that they wished to bring an application to set aside the ex parte injunctive relief obtained by the plaintiffs pending the hearing of the interlocutory injunction application, and the court made directions as to the exchange of affidavits and submissions in this regard, in addition to directions for the hearing generally.

9. The plaintiffs’ application for an interlocutory injunction and the defendants’ application to set aside the ex parte order were heard on 26 and 27 February 2025. I reserved judgment on the latter date. The plaintiffs by that stage had intimated that they were seeking to refinance the loan facility. Subsequently, redemption figures were provided by Novellus which were disputed by the plaintiffs. In order to progress the matter, it was agreed that certain disputed sums could be paid into court pending further order; on this basis, redemption of the loan facility took place, the interim injunction was discharged, and the plaintiffs agreed to pay the defendants’ costs of the proceedings to be adjudicated in default of agreement.

10. It should be noted that the parties attempted to resolve their differences by a mediation which took place on 3 April 2025. Unfortunately, this did not result in resolution of the dispute. The matter came back before the court on 8 April 2025, on which occasion counsel for the plaintiffs confirmed that it was the plaintiffs’ view that further documentation in relation to the disputed redemption figures was required, but accepted the need to bring an application specifying the documentation required and the basis upon which it was sought. Accordingly, the present application was issued by the plaintiffs by notice of motion of 22 April 2025.

11. By a letter of 10 April 2025 to the plaintiffs’ solicitors, the defendants’ solicitors enclosed fee narratives compiled by the receivers and a further invoice from the security company engaged by the receivers. This followed vouching documentation for legal and receiver costs provided to the plaintiffs on 20 March and

22 March 2025. By a further letter of 17 April 2025, the defendants suggested that the mediator who had presided on 3 April 2025 “would be well placed to adjudicate on the remaining issues in the case in relation to the payment out of the disputed amounts.” This overture was rejected by the solicitors for the plaintiffs in their letter of 22 April 2025.

The Present Application

12. The plaintiffs seek production of the following documents set out in the notice of motion:

“Category A

(i) The receiver’s report for period between 2 December 2024 and 14 March 2025 giving full particulars and breakdowns of task [sic] carried out by the receivers including an explanation of the considerations which gave rise to each items [sic] and the outcome linked to carrying out each task.

(ii) Contemporaneous records of tasks carried out including electronic records held by the receivers.

(iii) A full breakdown of the time charged to the performance of each task showing hourly rate.

(iv) A full breakdown of the invoices from each third party provider to the receiver for goods or services provided related to the receivers.

Category B

(i) Contemporaneous timesheets for each Solicitor working on the case.

(ii) Details and contemporaneous timesheets pertaining to each bill furnished.

(iii) Identification of work carried out by each Arthur Cox team member and their hourly rate, the date and time the work was carried out.

(iv) Confirm access to the file of Arthur Cox for analysing and comparison purposes by Shane O’Donnell

(v) Section 150 Notices

Category C

All documents showing the entitlement of the Defendants to charge penalty interest in the sums referred to above including a pre-estimate of costs together with a breakdown of penalty interest calculated.”

13. Mr. Flatley’s grounding affidavit of 22 April 2025 sets out at length his view of the background to the matter. At para. 20, he states that he was “ultimately compelled to lodge the sum of €1.4million into court as part of the redemption figures, as disputed costs.” He complains that this was a “ransom demand, designed to cause me further financial disruption, as incredibly, it was not vouched in advance [of] lodgement of the sum.”

14. Mr. Flatley then goes on to address the particular costs under dispute. He avers that the first item of disputed costs is “the legal fees of Novellus and the receiver at €793,991.08 Novellus and €186,074.40 receiver” [para. 20]. He avers in that paragraph that “…[t]he Plaintiffs consented to a costs order in respect of (i) injunction costs; (ii) the Defendants’ application to vacate the injunction; (iii) the discontinued plenary proceedings. They did not consent to the opaque mixing of costs or speculative costs and same being included in the claim of €793,991.08 which at present remains mainly unvouched.”

15. At para. 21 of his affidavit, Mr. Flatley avers that “…Blackbird’s position is that, included in the costs amount of €186,074.40 receiver’s costs and €793,991.09 Defendants’ costs, are in fact costs relating to litigation. It is Blackbird’s position that the Plaintiffs only agreed to pay contractual and legal costs which was [sic] lodged and included in the €1.4million claim…”. Mr. Flatley also complains at para. 22 of his affidavit of the “receiver costs at €86,100”. He avers that, despite repeated requests, “no adequate vouching documentation or timesheets have ever been provided for this sum and it is noteworthy that no assets were realised for the charge holder.”

16. The third item of disputed costs is the issue of interest. At para. 23 of his affidavit, Mr. Flatley sets out items of interest charged by Novellus from October 2024 to March 2025, averring that “…the above penalty interest was added by Novellus in addition to the actual monthly payments of €67,649.99 which were fully paid up to date when these outrageous penalty sums were added to the redemption figure.”

17. For the remainder of his affidavit, Mr. Flatley sets out his criticisms of the amounts charged, and the basis upon which he seeks documentation which he maintains will enable him to interrogate the sums which he has now paid into court. A brief affidavit sworn on 25 April 2025 is proffered by Fiona Hannigan, who is a director of the second named plaintiff. The purpose of the affidavit is to indicate the support of that company for the application.

18. Mr. Flatley exhibits to his affidavit a report of Shane O’Donnell of Flynn & O’Donnell, a firm of cost accountants. The report provides “an analysis of and recommendations in relation to the legal costs claim put forward by the Defendants in order to obtain further/appropriate vouching material.” In the “Global Conclusion and Summary” to the report, the view is expressed that “it is wholly inappropriate and unsatisfactory that bills of this nature and value have been presented to the Plaintiff with a demand for payment in the absence of corroborating and contemporaneous time records…[i]n the absence of the production of same to validate the fees claimed an inference can be drawn that contemporaneous time records supporting said fee claims do not support the fees reflected in the invoices or alternatively said appropriate time records would corroborate the Plaintiffs’ observations in respect of excessive fees, potential double charging etc.” The report accepts that “it is not appropriate to comment herein on the interest issue as that is a matter for the lawyers and potentially, the Court…”.

19. The primary affidavit relied upon by the defendants is that of Yvonne Tyndall, sworn on 6 May 2025. Ms. Tyndall is the “Head of Legal and Compliance” of Novellus. Ms. Tyndall makes the point that, in relation to the documents sought at Category A in the notice of motion (regarding receivers’ costs and fees) and Category B (regarding the defendants’ legal costs and fees), any such fees must be the subject of legal costs adjudication, but in any event are conceded by the plaintiffs to be the subject of a contractual indemnity pursuant to the mortgage. Ms. Tyndall refers to an affidavit of Mr. Brendan Cooke, a Legal Costs Accountant of Cyril O’Neill & Company sworn on 7 May 2025, pointing out that Mr. Cooke’s affidavit “states that it is usual to carry out an adjudication for both legal costs and receiver costs and that this can be on any of a party-party basis, legal practitioner-client basis or indemnity basis” [Para. 10, Tyndall affidavit].

20. Ms. Tyndall also points out that the plaintiffs have consented to an order for the defendants’ costs of the proceedings to be adjudicated in default of agreement, and that “this is patently a matter for a different forum and accordingly further discussion herein is unnecessary and unjustified. It cannot be the case that further documentation can be sought herein for that purpose” [para. 11]. Ms. Tyndall goes on then in her affidavit to deal with the various categories, responding to the averments in Mr. Flatley’s affidavit. She states that the defendants do not accept that the plaintiffs have insufficient documentation to permit them to bring the application concerning the disputed sums held in court, and in relation to the interest, avers that “[t]he Plaintiffs have been provided with a full breakdown of the calculation of interest on foot of the loan from the Defendants’ solicitors on 4 March 2025…[t]he Plaintiffs appear desirous now of challenging the imposition of the said interest which they have already discharged. The Plaintiffs have all of the information that could conceivably be required to commence an application for that purpose. Any additional information sought by the Plaintiffs now prior to bringing any such application comprises a trawl through the First Named Defendant’s commercially sensitive records, which the Plaintiffs have not justified their legal entitlement to receive…” [paras. 20-21].

21. In Mr. Cooke’s affidavit, he avers that “…for the purposes of a legal costs order on an indemnity basis of legal and receiver costs, the vouching documentation that has been provided in relation to the legal and receiver costs have been adequately vouched…” [para. 6]. He goes on to aver that “…[w]hile the Plaintiffs’ legal costs accountant would be permitted certain access to the Defendants’ solicitors’ records in a legal costs adjudication process, this is not done on an open basis and the Plaintiffs’ legal costs accountant would undertake that the contents of the Defendant’s solicitors’ documents would not be shared with the Plaintiffs or the Plaintiffs’ solicitors. Disclosure of the nature currently sought by the Plaintiffs would not be permitted where the Plaintiffs would have unfettered access to sensitive, privileged and confidential information…” [para. 7].

The Plaintiff’s Position

22. In his submissions for the plaintiffs, Ronnie Hudson BL set out at length the basis on which Mr. Flatley takes issue with the disputed amounts, and the reasons why he maintains that further documentation is required for the plaintiffs to be in a position to interrogate the charges and to bring an application to seek to have them deemed excessive by the court. He referred also to the views espoused by Mr. O’Donnell in his report exhibited to Mr. Flatley’s affidavit.

23. It was submitted that the principles set out by the Court of Appeal in Re Mouldpro International Limited (in Liquidation) [2018] IECA 88 were relevant to the issue of the receivers’ charges; that case involved the fixing by the court of the remuneration of an official liquidator. Counsel relied on the following dicta of Clarke

J. (as he then was) in Re Marino Limited [2010] IEHC 394 at para. 3.5 of that judgment, cited by the Court of Appeal in Mouldpro at para. 106: “…In litigation the successful party is entitled to have its costs paid on a party and party basis by the loser. It follows that the amounts which it may be reasonable to impose on that losing party need to be scrutinised. On the one hand parties should be entitled to incur reasonable expense in bringing successful cases to court and should not be unduly penalised by not allowing proper recovery of those costs in the event that they should succeed and have costs awarded to them. On the other hand, there must always be significant scrutiny in cases where one person is being expected to pay sums incurred by someone else.”

24. Counsel also refers to the dictum of Ferris J. in Mirror Group Newspapers plc v. Maxwell & Ors. [1998] 1 BCLC 638, cited with approval by Laffoy J. in Re Red Sail Frozen Foods Limited [2007] 2 IR 361 and by the Court of Appeal in Mouldpro at para. 115: “In my judgment it is vital to recognise three things in this field. First, time spent represents a measure not of the value of the service rendered but of the cost of rendering it. Remuneration should be fixed so as to reward value, not so as to indemnify against cost. Second, time spent is only one of a number of relevant factors, the others being, as I have said, those which find expression in r 2.47 and similar rules. The giving of proper weight to these factors is an essential part of the process of assessing the value, as distinct from the cost, of what has been done. Third, it follows from the first two points that, as the task is to assess value rather than cost, the tribunal which fixes remuneration needs to be supplied with full information on all the factors which I have mentioned.”

25. It is submitted that there is “no explanation provided by the receiver for the nature and necessity of each main task carried out or the consideration which led them to carry out the said task”, and that accordingly the documentation sought is relevant and necessary to the determination of whether the receivers’ costs are justified [para. 21, written submissions]. In relation to the category B documents relating to the legal costs, counsel relied on the report of Mr. O’Donnell, and submitted that “the Defendants to date have failed to provide sufficient corroboration of the fees charged and the narratives provided are inadequate…the documents sought are relevant and necessary…” [Paras. 25-26, written submissions].

26. In respect of the documents sought in category C regarding interest, counsel submitted that the interest charges between October 2024 and March 2025 referred to at para. 23 of Mr. Flatley’s affidavit constituted penalty interest, and that the plaintiffs are entitled to a refund of such sums. Counsel referred to the decision of the High Court in Governor & Company of the Bank of Ireland v. O’Boyle [2025] IEHC 219 in support of this position, and submitted that the documentation sought was “relevant and necessary to establish the entitlement of the Plaintiff to a refund of the penalty interest lodged to Court” [para. 30, written submissions].

The Defendants’ Position

27. Kelley Smith SC, on behalf of the defendants, made a number of succinct points in response. Firstly, it was submitted that “the contemplated application concerning the Disputed Sums is an entirely new and independent claim advanced by the Plaintiffs, and is therefore entirely separate to their Statement of Claim. It is, to put matters another way, an application which has no grounding in the current pleadings” [para. 7, written submissions].

28. The order of the court of 14 March 2025 vacated the interim injunction and all remaining directions in the plenary proceedings, and ordered that the plaintiffs pay the defendants the costs of the proceedings, to include, inter alia, the costs of the interlocutory injunction application and the defendants’ application to set aside the ex parte interim injunction, “all such costs to be adjudicated in default of agreement”. Effectively, as far as the defendants are concerned, the plaintiffs have withdrawn their proceedings and all allegations against the defendants, and the receivers in particular. The defendants argue therefore that there are no issues extant in the proceedings against which matters such as relevance or necessity could be assessed.

29. Counsel reviewed some cases in which the question of discovery prior to the delivery of the statement of claim was considered: see Walshe v. Gallagher, Furlong and Roarty Limited [1955-56] IR Jur Rep 51 and AL v MN (Unreported, Supreme Court, Murphy J., 4 March 2002). Counsel also referred to the established Norwich Pharmacal jurisdiction, in which it may be permissible in certain circumstances to order discovery in advance of the commencement of an action in order to establish the identity of a wrongdoer. It was submitted that none of those authorities assisted the plaintiffs. As the defendants put it at para. 14 of their written submissions:

“The inability to prepare a pleading thereby justifying pre-issue discovery, is altogether different from saying that a party cannot win his or her case without discovery [Cashin v Craddock (1875) 2 Ch. D. 140., Bacon V.C.]. He or she will be entitled to discovery prior to the delivery of pleadings only where he or she can show that the discovery is necessary to draft the pleading in question. However, particularly in the case of a plaintiff, in making this claim he or she risks the accusation that he or she is “trawling” or “fishing” for a case. That is precisely what the Defendants allege in the within application.”

30. Counsel was critical of the report by Mr. O’Donnell – which, as she pointed out, was not verified by an affidavit from Mr. O’Donnell – in a number of respects. Counsel emphasised that Novellus was, pursuant to the mortgage, entitled to a contractual indemnity as to the fees and costs of the receivers, in addition to the court’s orders for costs in favour of the defendants. It was submitted that the mechanism for dealing with these costs was adjudication rather than any application to court, and that s.138 of the Legal Services Regulation Act 2015 (‘the Act’) made this clear, and provided the statutory basis for Mr. Cooke’s assertion that “it is possible and usual to carry out an adjudication for costs of both legal and receiver costs and that this can be on any of a party-party basis, legal practitioner-client basis or indemnity basis” [para. 7, affidavit]. Counsel referred to the concluding paragraph of Mr. Cooke’s affidavit, in which he avers that “the proper venue for any dispute on the quantum of legal and receiver fees herein is the Office of the Legal Costs Adjudicator…” [para. 8, affidavit].

31. Counsel submitted that the Mouldpro and Red Sail decisions dealt with situations which were quite different; in the present case, the plaintiffs are entitled to receiver’s fees and costs on a contractual indemnity basis. Whenever the court exercises its supervisory function in respect of a liquidator’s or examiner’s costs, it does so knowing that any payment ordered will reduce the “pot” available for the creditors, so that the court is particularly mindful of scrutinising the fees and costs of the insolvency practitioner in question. The application before the court in Mouldpro was therefore of a completely different nature to the application presently contemplated by Mr. Flatley.

32. It was also submitted that the context in Red Sail was fundamentally different to the present situation; that case involved, inter alia, the receiver seeking directions from the court in relation to his remuneration, and in particular to the payment of future remuneration, costs and expenses. The receiver also sought an order, if necessary, for the court to exercise its discretion to allow the receiver to retain his remuneration, costs and expenses out of the assets of the company.

33. Counsel submitted that the application was brought “for an improper purpose and is abusive” [see transcript, p.58]. This amounted to a criticism of the manner in which the affidavit of Mr. Flatley made a range of allegations against the receivers with “lots of adjectives, lots of colourful language about professional persons…”, with many of these matters being read out in open court, in circumstances where the allegations in the proceedings had by that stage been withdrawn. It was suggested – not for the first time in these proceedings – that this approach was deliberate, and designed for “an audience beyond [the court] …” [transcript, p.58]. Counsel expressed concern that, notwithstanding that his application was “completely misconceived”, Mr. Flatley “…feels no fear of costs orders being made by the court…because [Novellus has] released the security that [it] held”, and had “no protection to fall back on in the context of these ongoing costs…” [transcript, p.70].

The Need for Pleadings

34. Mr. Flatley has refinanced the loan from Novellus and redeemed the mortgage, albeit that there remain issues regarding the disputed monies. He has effectively withdrawn the proceedings and consented to an order that he pay the costs of the proceedings to the defendants. As such, the issues between the parties as set out in the proceedings have been resolved, and the various allegations by the plaintiffs against the defendants must be regarded as withdrawn.

35. Notwithstanding this, Mr. Flatley now seeks to make a new range of allegations against the defendants in relation to alleged overcharging in respect of legal and receivers’ costs, and interest which the plaintiffs say is excessive and unenforceable as a matter of law. These allegations are set out at length in Mr. Flatley’s grounding affidavit in the present application.

36. Allegations of this nature are extremely serious, particularly for professional defendants such as the receivers. The allegations were not part of the original proceedings, and do not find expression anywhere other than in Mr. Flatley’s affidavit. The defendants strenuously deny that there has been any overcharge; they say however that any such allegations must be articulated in pleadings so that they can be met properly by the defendants, and that an application for discovery in the absence of such pleadings is premature.

37. In my view, pleadings are absolutely necessary to bring definition and clarity to the allegations made by Mr. Flatley. It is clear from his affidavit that he is exercised about what he sees as overcharging, and he sets out a number of reasons for this. He has been furnished with supporting documentation from the defendants, although he considers such documentation inadequate for him to make his case. He has engaged a Legal Costs Accountant who has expressed his views in a report as to the need for further documentation. While it might well be that further documentation may be necessary for the plaintiffs to establish the detail of their case, it cannot be said that the allegations and the basis for same cannot be articulated in pleadings so that a substantive application such as that envisaged by Mr. Flatley could be brought before the court, with the necessity for discovery then considered in the context of the pleaded issues.

38. The need for pleadings is particularly acute in relation to the issue of the interest charged by the defendants, which the plaintiffs regard as a penalty and thus unenforceable. The basis upon which it is alleged that such interest is not a legitimate charge should be pleaded so that it can be met by the defendants. The defendants’ claim to interest is contractual, arising out of the mortgage. It would be necessary for the plaintiffs to set out the contractual provisions for charging interest, and the precise basis upon which it is alleged that these provisions are infringed so as to render the interest charges unenforceable.

39. In this regard, counsel for the defendants drew the court’s attention to a divergence in the legal position in this jurisdiction and in the United Kingdom in relation to the test of whether “surcharge interest” is enforceable. There is a clear line of authority from Dunlop Pneumatic Tyre Company Limited v. New Garage & Motor Company Limited [1915] AC 79 onwards, requiring a court to determine whether such interest were a genuine pre-estimate of loss occasioned by a breach of contract; this test was adopted by the Supreme Court in Pat O’Donnell & Company Limited v. Truck & Machinery Sales Limited [1998] 4 IR 191, and subsequently by the Court of Appeal in Sheehan v Breccia [2018] IECA 286. However, the Dunlop test has been superceded in the UK by the decision in Cavendish Square Holding BV v. El Makdessi [2015] UKSC 67, in which the United Kingdom Supreme Court articulated a substantially different test. While the decision in Pat O’Donnell remains the law in this jurisdiction, there was an intimation by counsel for the defendants that the

decision in Bank of Ireland v. O’Boyle – in which Bolger J. considered herself bound by the test set out in Pat O’Donnell – would likely be the subject of a “leapfrog” appeal to the Supreme Court, with the bank advocating that the Cavendish Square test be applied by that court. It was suggested by counsel that the possibility of a development regarding the principles concerning allegedly excessive interest accentuated the need for clarity of pleadings in the present proceedings in relation to the issue.

40. It is not for this Court to advise as to the format of the plaintiffs’ proposed substantive application, or as to whether it requires new pleadings or an amendment to existing pleadings. However, the issues adverted to by Mr. Flatley in his affidavit are serious, and require to be set out in pleadings so that the defendants have a proper opportunity to interrogate and join issue with them. Once the issues are thus defined, a request for discovery can be assessed in relation to the pleaded issues.

41. Given the detailed exposition of his grievances by Mr. Flatley in his affidavit, I do not consider that the plaintiffs are not in a position to formulate the proposed substantive application. They are clearly in a position to do so, although it may be that discovery may assist them at some point in supplying further detail or documentation of relevance to the allegations. The pre-pleadings discovery case-law referred to at para. 29 above does not assist the plaintiffs in such circumstances.

Determination of Legal and Receiver’s Costs

42. In any event, it seems to me that an application by the plaintiffs to this court in relation to the legal and receivers’ costs is misconceived. The system of adjudication of legal costs is set out at part 10 of the Act. The definition of “legal costs”, in as far as relevant to the present matter, is expressed at s.138 of the Act as follows: ““Legal costs” means fees, charges, disbursements and other costs incurred or charged in relation to contentious or non-contentious business, and includes—

(a) the costs of or arising out of any cause or matter in any court, …

(c) the costs of a receiver appointed in any cause or matter, on the application of the receiver or of any party to the cause or matter…”

43. The definition of “non-contentious business” is “legal services that do not relate to contentious business…” [s.138].

44. S.139(1) provides that the Taxing Masters’ Office shall henceforth be known as the Office of the Legal Costs Adjudicators. The principles to be applied by a Legal Costs Adjudicator (‘LCA’) in relation to the adjudication of legal costs are set out in the Act: see particularly sections 155 and 157, and schedule 1 to the Act.

45. S.156(1) provides as follows: “(1) For the purposes of determining an application for adjudication of legal costs, a Legal Costs Adjudicator may—

(a) inspect documents relating to or relevant to the matter concerned, and

(b) where there is an oral hearing, summon and examine witnesses and administer oaths, and apply to the High Court for the enforcement of a summons.”

46. S.157 deals with the manner in which LCAs must determine applications. In particular, the following subsections are relevant: “(3) Subject to the other provisions of this section, and the principles relating to legal costs specified in Schedule 1, a Legal Costs Adjudicator shall confirm the charge in respect of an item of legal costs the subject of the application if, having regard to the matters that he or she considered and ascertained under section 155, he or she considers that—

(a) charging in respect of the item is fair and reasonable in the circumstances, and

(b) the amount charged in the bill of costs in respect of that item is fair and reasonable in the circumstances.

(4) A Legal Costs Adjudicator shall, if he or she determines that it is fair and reasonable to charge an amount in respect of an item but that the amount of the charge in respect of the item is not fair and reasonable, determine a different amount to be charged in respect of that item…

(7) If a Legal Costs Adjudicator is of the opinion that a party to the application has neglected or refused to provide documents, and that the refusal or neglect would likely be prejudicial to the interests of one or more of the other parties, the Legal Costs Adjudicator shall, in order to minimise the prejudice to those interests—

(a) determine the application to the extent possible in the

circumstances, and

(b) determine that only a nominal amount is to be payable to the party who has neglected or refused to provide the required documentation” [Emphasis added].

47. From the foregoing, it is clear that

• to the extent that receivers’ fees and expenses may be regarded as “fees, charges, disbursements and other costs incurred or charged in relation to contentious or non-contentious business”, or that they are “the costs of or arising out of any cause or matter in any court”, they may be the subject of adjudication by an LCA;

• “the costs of a receiver appointed in any cause or matter” may be adjudicated by an LCA;

• the LCA can inspect documents relevant to the legal costs being adjudicated, including receiver’s fees and expenses;

• where a party has neglected or refused to provide documents, the LCA is obliged to determine the application only to the extent possible, and to determine that a nominal amount only is to be paid where a party has neglected or refused to provide such documentation.

48. Pursuant to s.159 of the Act, an LCA may refer a question of law arising in an application for adjudication of legal costs to the High Court for the opinion of that court. S.161 of the Act provides, on the application of a party to an adjudication who applied under s.160 for consideration by the LCA of his or her decision, for a review by the High Court of the determination of the LCA pursuant to s.160; s.161(3) provides that “…[t]he court shall hear and determine the review on the evidence that was tendered to the Legal Costs Adjudicator unless the court orders that other evidence be submitted.”

49. In the present case, the receiver’s fees, costs and expenses, to the extent that they relate to the litigation in which the defendants have obtained an order for costs in their favour, are matters which are properly the subject of adjudication pursuant to the Act. The costs order in favour of the defendants provides for adjudication in default of agreement. The Act gives the LCA dealing with the costs – if that proves necessary – ample powers to inspect relevant documentation, and to penalise parties who neglect or refuse to produce such documentation. It also provides the means by which the plaintiffs can interrogate the defendants’ claims for legal costs, so that only properly supported claims are allowed by the LCA.

50. In the circumstances, part 10 of the Act provides an appropriate system for contesting the defendants’ claims for legal and receivers’ costs. This is consistent with the evidence of Mr. Cooke, referred to at para. 21 above; he sees no difficulty with adjudication of such costs by an LCA, and is in fact of the view that the documentation already furnished is adequate for that purpose. No sworn evidence to the contrary has been furnished on behalf of the plaintiffs. In view of the fact that a statutory system with appropriate safeguards which fully protects the interests of the plaintiffs is available to them, it is difficult to see what application could be made to the court to determine the issues of costs. The courts do not, except in very exceptional circumstances, determine the costs of proceedings, and certainly do not embark upon a wide-ranging inquiry into the costs awarded in a lis inter partes. The case-law relating to the exercise by the courts of a supervisory jurisdiction in relation to the fees of practitioners in insolvency matters relates to an entirely different situation, and is of no assistance to the plaintiffs in the present case.

Conclusion

51. The plaintiffs have, to use a colloquial expression, put the cart before the horse. The allegations of overcharging are very serious, and require to be pleaded appropriately before any question of the adequacy of documents furnished by the defendants, or the need for discovery of further documentation, can be considered. The plaintiffs’ application is premature and inappropriate; to accede to it would be to permit a trawl through sensitive and confidential documentation in circumstances where the allegations by the plaintiffs have not been formally articulated in pleadings. The defendants must be given an opportunity to meet the allegations made against them, and to respond as they see fit, before the question of whether they must provide supporting documentation for their claims arises.

52. An application to court such as is contemplated by the plaintiffs does not in any event seem appropriate in relation to the question of legal or receivers’ costs, in circumstances where there are statutory mechanisms for appropriate interrogation of such claims and production of documentation relevant to them.

53. In the circumstances, I am refusing the plaintiffs’ application. I will list the matter for mention on 22 July 2025 so that the parties may address the court as to costs, or any other matter relevant to the order to be made.