Jacob & Anor v UIC Insurance Company Ltd & Anor

Appellate review of an insolvency remuneration decision is ordinarily a review, not a rehearing. An appellate court may interfere where the lower decision is wrong in law or fact, or where the discretion exercised was one that could not reasonably have been reached.

Office-holder remuneration must be fair and reasonable and remains subject to assessment by the court. A direction permitting remuneration by reference to a firm’s usual rates does not displace that assessment. The court may examine remuneration, partners’ and staff costs, and disbursements. Success in the administration may be relevant, but it cannot cure inadequate evidence of work done or justify remuneration beyond what is reasonable.

The joint provisional liquidators of UIC appealed decisions of Registrar Nicholls fixing their remuneration for the 2003–04 period and determining the costs of the remuneration proceedings. The appeals concerned the treatment of independent consultants, the proposed reopening of remuneration fixed in earlier years, inadequate time narratives, a general deduction, the relevance of the provisional liquidation’s eventual success, and costs.

The court also considered the procedural fairness of reopening previously approved remuneration and the proper approach to reviewing a registrar’s discretionary decision under the Insolvency Rules 1986 and the Civil Procedure Rules.

1. Appeal standard. The appeal was governed by a review procedure. Under CPR 52.11, the court could interfere where the Registrar’s decision was wrong or unjust because of a serious procedural or other irregularity. It could not substitute its own view merely because it might have reached a different discretionary conclusion.
2. Reopening earlier remuneration. The Registrar’s decision to reopen approximately eight years of previously approved remuneration was procedurally unfair and wrong. The JPLs had not been given a proper opportunity to address the personal financial consequences, the earlier remuneration had been disclosed over time, and the proposed reopening followed a reversal of the Registrar’s earlier indication without adequate warning. That part of the order was set aside.
3. Mr Johnson. Mr Johnson was a self-employed independent contractor, not a member of the JPLs’ staff for the purposes of rule 4.30 of the Insolvency Rules 1986. His charges could not be increased by Grant Thornton and passed to the estate without justification. The appeal concerning the mark-up was dismissed.
4. Remuneration assessment. The court retains power to examine all expenses of provisional liquidators, including remuneration, partners’ and staff costs, and disbursements. A reference to a firm’s usual rates is only a starting point. The court must assess the value of the services and may reduce excessive or inadequately supported charges.
5. Evidence and success. The JPLs failed to provide adequate narratives and records. The Registrar was entitled to make deductions for null and unhelpful entries, apply a 1% overall deduction, and refuse to treat the eventual success of the liquidation as a substitute for proof of work done. Success could be taken into account, but only within the limits of fair and reasonable remuneration.
6. Mr Laventure and costs. The appeal concerning Mr Laventure’s fees was allowed, subject to confirmation that the earlier evidence established the work undertaken. The Registrar was entitled to take account of issues lost and unreasonable prolongation when assessing costs, but was wrong to require the JPLs to bear all trial costs personally. Written submissions were invited on the appropriate allocation of the hearing and appeal costs.

• High Court (Chancery Division): Appeals from orders of Registrar Nicholls dated 19 May 2006 and 25 July 2006 were allowed in part. The reopening order was set aside, the appeal concerning Mr Laventure’s fees was allowed subject to confirmation, and the remuneration and costs challenges otherwise failed or were left for further submissions on costs.