MTA Personal Injury Solicitors LLP (in administration) v Steven Wiseglass

The jurisdiction to review, rescind or vary an insolvency order is wide but exceptional. It requires a material difference from the evidence previously before the court, including fresh evidence or significant matters not previously disclosed.

An insolvency office-holder must justify remuneration, act frankly, and provide sufficient and proportionate information. Compliance with SIP 2 and the Insolvency Code of Ethics, including proper investigation and contemporaneous record-keeping, may be relevant to whether remuneration is justified. Where the evidence materially undermines the basis on which remuneration was fixed, the court may set aside the order and direct detailed assessment. A former administrator must account for assets, subject only to deductions for expenses properly incurred.

MTA Personal Injury Solicitors LLP, acting by its replacement joint administrators, sought review of an order made on 5 April 2023 fixing Steven Wiseglass’s remuneration as former administrator and approving pre-appointment costs and Category 2 disbursements.

The application relied on fresh evidence concerning alleged failures to investigate substantial transactions involving the LLP’s former designated member and connected entities, the underlease of premises, VAT registration, books and records, and the administration’s bank accounts. The central issues were whether the evidence justified review under rule 12.59(1) of the Insolvency (England and Wales) Rules 2016, and what assets Mr Wiseglass was required to deliver under rule 3.70(1).

1. Review jurisdiction. The court had a wide but exceptional jurisdiction under rule 12.59(1) of the Insolvency (England and Wales) Rules 2016. The applicant had to show a material difference from the material before the court when the original order was made. This could consist of changed circumstances, fresh evidence, or significant facts that existed earlier but were not disclosed. The absence of an interested party from the earlier hearing could also be material.
2. Remuneration. An office-holder is a fiduciary with no entitlement to remuneration except as provided by law. The office-holder bears the onus of justification and must be frank with the court and creditors, providing sufficient and proportionate information to explain the claim. These principles, reflected in [2012] 1 WLR 419 and paragraph 21 of the IPD, required the court to consider the value of the service, fairness, reasonableness, proportionality and the resolution of doubt against the office-holder.
3. Investigations and records. The administrator’s duties under SIP 2 included an initial assessment of potential recoveries and appropriate further investigations. The administrator also had to report clearly on steps taken and outcomes and document assessments, investigations and conclusions. Failure to comply could make remuneration difficult to justify. Similar consequences could follow from failure to assess and document a familiarity threat under the Ethics Code.
4. The evidence materially called into question whether Mr Wiseglass had carried out or documented even the required initial investigations, particularly concerning substantial sums apparently owed by Mr Taylor and connected entities. The court made no final findings of bad faith or that the appointment should never have been accepted, because those allegations had been raised late and without proper testing. Nevertheless, the evidential deficiencies meant that the previously fixed remuneration could not presently be justified.
5. The court therefore dismissed the application concerning approved pre-appointment costs, but set aside paragraphs 2 and 3 of the 2023 Order. If Mr Wiseglass wished to pursue remuneration and Category 2 expenses, those claims were to be subject to detailed assessment. He could retain sufficient funds to pay the approved pre-appointment costs, but had to account for the balance under rule 3.70(1). His remaining interest was protected by the statutory charge under paragraph 99(3)(a) of Schedule B1 to the Insolvency Act 1986.

This was a first-instance review application concerning an order made by the same court on 5 April 2023. The earlier order fixed remuneration and approved specified costs. The present court dismissed the challenge to the approved pre-appointment costs but set aside the provisions fixing remuneration and permitting Category 2 disbursements.