Hellas Telecommunications (Luxembourg) II SCA, Joint Liquidators of v Slaughter and May (a firm)

The Insolvency Rules 1986 did not permit liquidators to obtain detailed assessment of solicitors’ fees agreed and paid by administrators during an earlier administration. Rule 7.34(1) applied to expenses of a liquidation, not an administration, and the court could not rewrite it. Administrators could agree and pay fees while in office and, subject to their statutory charge, after administration ended. A creditors’ committee could require assessment under rule 7.34(2), but none existed here. Liquidators’ remedies lay in statutory challenge and misfeasance proceedings. No wider inherent jurisdiction existed to alter that statutory scheme.

Joint liquidators of Hellas Telecommunications (Luxembourg) II SCA sought detailed assessment of solicitors’ fees agreed and paid by the company’s administrators, including a final invoice approved after the administration had ended.

The registrar held that administrators could agree and pay the fees and that the companies court had no power under rule 7.34 of the Insolvency Rules 1986 to order assessment after agreement. On appeal, the High Court dismissed the liquidators’ appeal on Issue 1 but held that former administrators could not agree the final invoice after ceasing to hold office: [2014] EWHC 1390 Ch. Both parties appealed. The central issues were whether administrators could agree the fees before or after the administration ended, and whether liquidators could require their assessment.

1. Disposition. The Court of Appeal unanimously dismissed the liquidators’ appeal and their respondent’s notice. It allowed Slaughter and May’s appeal concerning the December invoice.
2. Construction of rule 7.34. Rule 7.34(1) of the Insolvency Rules 1986 did not apply to administrations. Its reference to costs payable in relation to a company insolvency as an expense of the liquidation could not be extended by inserting words into the rule. The sub-rules did not need to apply to identical categories of insolvency proceedings. Rule 7.34(3), read with rule 13.9, referred to the insolvency practitioner responsible for the particular insolvency proceeding. In this administration, that meant the administrators, not the later liquidators.
3. Fees during administration. Administrators could agree and pay solicitors’ fees without authority derived from rule 7.34(1). If a creditors’ committee resolved under rule 7.34(2) that costs should be assessed, the administrator had to require detailed assessment under Part 47 of the Civil Procedure Rules. In the absence of such a resolution, deciding whether to agree a bill was a matter for the administrators’ judgment. The administrators could also initiate assessment under section 70 of the Solicitors Act 1974 or seek directions under paragraph 63 of Schedule B1 to the Insolvency Act 1986.
4. Position after administration. Former administrators had, and might still have, a statutory charge under paragraph 99 of Schedule B1 to the Insolvency Act 1986. They could retain or enforce that charge for proper outstanding fees and remuneration. Liquidators could challenge the administrators’ conduct through misfeasance proceedings and, where applicable, proceedings under section 168(3) of the Act. Those proceedings could address paid and unpaid costs, but would not generally affect the service provider.
5. Inherent jurisdiction. No inherent jurisdiction existed to order detailed assessment outside the statutory scheme. Parliament had provided the relevant remedies, and the court could not expand them merely because recovery against administrators might be less convenient than taxation.

• Court of Appeal (Civil Division): Liquidators’ appeal and respondent’s notice dismissed; Slaughter and May’s appeal concerning the December invoice allowed.
• High Court, Chancery Division (Companies Court): Appeal dismissed on Issue 1, but appeal allowed concerning the December invoice; former administrators were held unable to agree fees after ceasing to hold office: [2014] EWHC 1390 Ch.
• Registrar Jones: Held that administrators could agree and pay solicitors’ fees and that the companies court had no power under rule 7.34 to order detailed assessment after agreement.