Spotlight on insolvency practitioners – new authority on challenging fees

28 March 2011

On 25 March 2011 the Court of Appeal handed down judgment in what looks set to become the leading authority on challenges to the remuneration of trustees-in-bankruptcy and the application of the 2004 ‘Practice Statement: Fixing and Approval of the Remuneration of Appointees’.

David Richards J (sitting as a judge of the Court of Appeal) confirmed that the value of an officeholder’s services “has rightly been emphasised as the touchstone” for the courts when determining the proper remuneration for a trustee-in-bankruptcy and that this should not be “measured by a mechanical totting-up of hours multiplied by charge-out rates“. He went on to note, however, that, although a consideration of the realisation and distribution of assets was of central importance in determining the value of an officeholder’s services, this was not the only consideration. Regard must also be had to all the circumstances of the insolvency (including the conduct of those interested in the insolvency including, in Brook v Reed, the bankrupt).

David Richards J’s judgment is notable for its excellent summary and detailed analysis of the case law dealing with insolvent officeholders’ remuneration (in which he cited with approval Proudman J’s judgment in the appeal in Hunt v Yearwood-Grazette [2009] BPIR 810). It is likely to be of great assistance to lower courts faced with disputes over insolvency practitioners’ fees.

The full judgment is available here: http://www.bailii.org/ew/cases/EWCA/Civ/2011/331.html.

If you have any questions about the decision or officeholders’ remuneration then please contact Edward Cumming (who was counsel for the successful respondent in the appeal in Hunt v Yearwood-Grazette [2009] BPIR 810) on 020 7691 2424 or clerks@xxiv.co.uk.