Andrew Poxon & Anor v Wejo Limited (in administration)

When the court is asked to fix an administrator’s remuneration basis by reference to time under rule 18.23 of the Insolvency (England and Wales) Rules 2016, it must scrutinise the fees estimate proportionately. The court must be satisfied that the estimate is reasonable and commensurate with the work properly undertaken or to be undertaken.

Office-holders bear the burden of providing sufficiently granular information. The evidence should link time spent to particular tasks, explain why the work was necessary and identify why it was undertaken by particular individuals. The same approach applies to unpaid pre-administration costs. Where the evidence is deficient but valuable work has been done, the appropriate course may be to adjourn for supplemental evidence rather than dismiss the application outright.

The joint administrators of Wejo Limited applied for orders under rules 3.52 and 18.23 of the Insolvency (England and Wales) Rules 2016. They sought approval of unpaid pre-administration costs, approval of a time-costs basis for post-administration remuneration, and their discharge from liability.

Securis Investment Partners LLP and associated funds opposed the remuneration and expenses applications, contending that the evidence lacked sufficient detail and did not link the recorded time to the work said to have been undertaken. The central issue was whether the court could determine the remuneration basis without scrutinising the fees estimate and, if scrutiny was required, whether the evidence was sufficient.

1. The application was stood over for approximately two to three months. The joint administrators were permitted, if so advised, to file supplemental evidence addressing the deficiencies identified by the court. The CAM cost of £1,000 and the Hilco cost of £25,000 were approved.

2. Under rule 18.23 of the Insolvency (England and Wales) Rules 2016, the court cannot, at least in circumstances such as these, determine that remuneration should be fixed by reference to time properly given without scrutinising the fees estimate. The estimate has significance because it informs the creditors’ decision-making process and limits remuneration that may be drawn without further approval under rule 18.30.

3. The court must consider whether the estimate is reasonable and commensurate with the nature and extent of the work properly undertaken or to be undertaken. Relevant matters include the complexity of the case, exceptional responsibility, the effectiveness of the office-holder’s work and the value and nature of the property involved. This reflects paragraph 21 of the IPD and the office-holder’s fiduciary duty to justify remuneration.

4. The information supplied was insufficient. The timesheets gave dates, individuals, work categories, units, values and brief narratives, but did not link that information to the categories and tasks described in the evidence. Nor did the evidence adequately explain why particular work was necessary, why it took the time claimed, or why it was undertaken by particular fee earners. Given the sums claimed, greater granularity was required.

5. The same deficiencies applied to LCL’s charges and to the unpaid pre-administration costs. Although LCL’s charges were technically third-party expenses, its association with the administrators’ firm justified a higher standard of explanation. Privilege did not prevent the provision of a sufficiently detailed non-privileged narrative.

6. The court considered whether a broad-brush or irreducible-minimum award could be made, but the evidence did not permit a satisfactory assessment and neither party invited that course. The remuneration and the administrators’ own pre-administration costs were therefore not determined on the evidence then available.

Costs were provisionally to be reserved to the further hearing.