Simion v Brown

When fixing a bankruptcy trustee’s remuneration, the court must balance the value of the service, proportionality, and fair and reasonable remuneration for work properly undertaken. Time spent is relevant but is not, by itself, determinative. The court should consider the factors in rule 6.138(4) and the guiding principles in the remuneration Practice Statement. The appointee must justify the amount claimed, and any remaining doubt is resolved against the appointee. Remuneration may exceed scale fees where the work and responsibilities warrant it, but substantial reductions are required where charges are inadequately justified or disproportionate.

The appeal concerned the remuneration of the respondent, the sole trustee in bankruptcy of Martin Bradley. The District Judge dismissed the petitioning creditor’s application to limit the trustee’s remuneration, and ordered costs against him. The trustee’s separate application to obtain remuneration on a time basis had been stayed.

On appeal, the High Court transferred the bankruptcy proceedings and lifted the stay so that the trustee’s remuneration could be determined finally. The central issues were whether remuneration should be fixed by reference to time and, if so, what amount was fair and reasonable under the Insolvency Rules 1986 and the applicable Practice Statement.

1. Disposition. The appeal was dismissed, save in relation to the costs order. The trustee’s remuneration was fixed at £13,613.50.
2. Under rules 6.141 and 6.142 of the Insolvency Rules 1986, the court should have regard to the factors in rule 6.138(4), although the Rules do not expressly prescribe criteria for the court’s determination. This approach was consistent with Mirror Group Newspapers Ltd v Maxwell [1998] BCC 324.
3. The Practice Statement required remuneration to be fair, reasonable and commensurate with the nature and extent of the work. Relevant principles included justification, resolving doubt against the appointee, professional integrity, the value of the service, fairness and proportionality. Remuneration should reward value rather than simply reimburse time expended.
4. The scale remuneration under rule 6.138A, calculated at £5,050, was insufficient because the boat created non-routine problems concerning security, insurance, repairs, marketing and possession proceedings. Nevertheless, the trustee’s charges had to be scrutinised for duplication, excessive time, inappropriate seniority and ineffective planning.
5. The court reduced charges for arranging insurance, communications with the petitioning creditor’s solicitor, attendance at execution of the possession order, and preparation and review of time costs. Other challenged items were allowed where justified by the evidence and the principle of professional integrity.
6. The trustee had taken the wrong procedural course by staying his remuneration application. Both applications should have been heard together, subject to the proper procedural guidance.

• High Court (Chancery Division): The appeal from the Medway County Court was dismissed, save as to costs. The trustee’s remuneration application was lifted from stay and determined in the High Court.
• Medway County Court: District Judge Grand dismissed the petitioning creditor’s application to limit the trustee’s remuneration and ordered him to pay costs. The trustee’s separate application had been stayed.