Stephen J Hunt (as trustee in bankruptcy of Horace Yearwood-Grazette)

7 May 2010

INSOLVENCY GROUP

STEPHEN J HUNT (AS TRUSTEE-IN-BANKRUPTCY OF HORACE YEARWOOD-GRAZETTE) v (1) HORACE YEARWOOD-GRAZETTE (2) SONIA YEARWOOD-GRAZETTE [2009] EWHC 359 (Ch)

Insolvency – remuneration of officeholders – application by trustee-in-bankruptcy for fixing and approval of his remuneration – appeal against District Judge’s decision – Practice Statement on the Fixing and Approval of the Remuneration of Appointees (2004) – Statement of Insolvency Practice (SIP)9

In a judgment handed down on 7 April 2009, Proudman J held that a trustee-in-bankruptcy – and by extension a liquidator or other office-holder – when seeking the fixing or approval of their remuneration on a time-cost basis must explain how their work and time spent has benefited the insolvency and should not, by invoking the proportionality of information principle as outlined in the Practice Statement on the Fixing and Approval of the Remuneration of Appointees (2004) (“the Practice Statement”), be permitted to avoid giving sufficient information to explain this.

Mr Yearwood-Grazette, the first respondent, was made bankrupt on 5 May 1999. Stephen J Hunt was appointed as Mr Yearwood-Grazette’s trustee-in-bankruptcy, at the instigation of the Protracted Realisations Unit (PRU) in September 2004. Mr Yearwood-Grazette promptly offered to arrange for the only two bankruptcy debts – in a total sum of £11,858 – to be cleared forthwith as he wished to put the bankruptcy behind him. Mr Hunt estimated that on this basis his remuneration should be “no more than £2,100 including VAT”.

Mr Yearwood-Grazette cleared both debts by June 2005 as promised. In order to clear the expenses of the bankruptcy, he sought details from Mr Hunt of the remuneration he sought. Mr Hunt did not reply until 4 April 2006. By this time he sought more than £10,000 to bring the bankruptcy to an end.

Mr Yearwood-Grazette, the High Court found reasonably, took issue with this. Unable to reach agreement, Mr Hunt applied in February 2007 for an order that the court fix, on a time-cost basis, the remuneration which he was entitled to receive as a trustee-in-bankruptcy. Mr Hunt also sought an order for the possession and sale of property jointly owned by Mr and Mrs Yearwood-Grazette in order to pay his remuneration.

District Judge Sterlini heard the matter in the Clerkenwell and Shoreditch County Court on 7 May 2008. Mr Hunt’s claim was, by this time, for payment of a total sum of £19,611.75. The District Judge decided that this was unjustified and excessive, allowing Mr Hunt only to recover £2,100 by way of remuneration – on the basis that Mr Hunt had provided inadequate evidence to comply with the Practice Statement and justify the benefit to the bankruptcy of the work for which he sought payment on a time-cost basis – and £1,296.43 for expenses and disbrusements.