[2025] EWHC 2674 (Ch)

Fecha: 17-Oct-2025

Arguments from consequence

Arguments from consequence

75.

Mr Harty sought to support his contention by various arguments as to the consequences of the rival constructions. I address the issue of what other means there are to complain about the fees and expenses Mr Ridgley has charged below, but for present purposes I should note that Mr Harty does not complain Rule 18.34 is the only available route, albeit he submits that it is the superior and most obvious route.

76.

Mr Harty submits that unless he is right about the ambit of Rule 18.34, there may be cases in which the only persons with an economic interest in the amount of the administrator’s remuneration are the general creditors under the equity of redemption or to avoid dilution, but that they would have no ability to complain under Rule 18.34. In my view, there are the following answers to this point:

As already referred to, it is not suggested that there are no other means of complaints being brought by those with a proper interest in them.

ii)

As discussed at [49]-[67], Mr Harty’s construction would give the general creditors rights of control in relation to the remuneration where they had no economic interest in this matter, and deprive the security holder of control when it did have such an interest. I find that the more unlikely outcome.

77.

It is also said that Mr Weaver KC’s construction might require different routes to be taken by the general creditors to challenge an administrator’s fees depending on whether they were fees relating to the administration of the “company pot” (under Rule 18.34) or where it was said that the administrator’s fees in realising assets outside that pot impaired the equity in redemption or “diluted” the distribution. However, that reflects the very different nature of the issues:

The general creditors have a direct interest in the company pot, which is held by the administrator for their benefit.

ii)

By contrast, the interest in assets subject to a fixed charge is contingent on a surplus of realisable value over the debt secured by the fixed charge. There may (as in this case) be no such surplus.

iii)

It is the secured creditor under the fixed charge who has the primary rights in relation to the realisation of the fixed charge assets, and the basis on which the administrator should be remunerated for realising it.

iv)

Mr Harty accepts that a complaint by the general creditors that the equity in redemption had been damaged by poor marketing efforts or a sale at an undervalue would have to be subject to some other form of procedure. However, the suggestion that the net proceeds of realisation has also been reduced by excessive charges and expenses has more in common with that complaint (in that both concern the same duties by the administrator to the holders of the equity of redemption and involve prejudice to the same interest) than a complaint about the remuneration received by the administrator for its handling of the company’s fund.

78.

It is said that if the amounts received by the administrator from the proceeds of sale of assets subject to a fixed charge fall outside Part 18, the general creditors are deprived of the information they would obtain about such remuneration under Rule 18.3(1)(f) and 18.4. As those rules expressly require disclosure of “the basis fixed for remuneration of the office-holder under rules 18.16 and 18.18” I accept that this complaint may be true of those particular provisions. However, it is far from the case that there are no means by which the general creditors can obtain information about fixed charge remuneration (or, indeed, the fixed charge sale price or Berkeley Applegate remuneration). Mr Weaver KC pointed to Rule 18.3(1) which provides for the administrator to report on details of payments and receipts and, more pertinently, Rule 18.3(1)(i) which provides for disclosure of “any other information of relevance to the creditors”. The administrator will also have disclosure obligations under Statement of Insolvency Practice 9.

79.

Finally, it might be thought that a logical consequence of Mr Harty’s construction would be that Berkeley Applegate remuneration would be subject to the Part 18 procedure, including Rule 18.34 (although Mr Harty disputed this, saying as such remuneration was authorised under the court’s inherent jurisdiction it did not fall within Part 18). I can understand why Mr Harty made that concession:

The contrary argument would involve the application of Part 18 even though that jurisdiction can arise in cases in which the general creditors have no equity in redemption in relation to the assets in respect of which remuneration is sought (or any possible economic interest).

ii)

The authorities on Berkeley Applegate remuneration offer no hint of Part 18’s application and it is wholly unclear how the provisions in Part relating to rights to seek an increase in remuneration or reduce the amount to be paid could apply to remuneration fixed by the court or agreed with the owners of the relevant assets.

80.

However, that necessary concession has obvious implications for Mr Harty’s argument. First, it necessarily entails that the references to “remuneration” in Part 18 do not encompass all claims by an administrator to remuneration for work done in the course of or in connection with the administration. Second, it involves a distinction in relation to the application of Part 18 by reference to the legal source of the right to remuneration.