- Flynote
- Banking
- Case summary
- Under the Insolvency Ordinance a Liquidator no longer requires the sanction of the Court to commence proceedings, but due to the reasons set out below, the Court declined to sanction the proceedings. The starting point for fixing remuneration is the time properly spent. The Court does not need to act in the role of a self-appointed expert or to apply some sort of cost/benefit analysis: Rich Victory Investments Ltd v Sino Union (Caribbean) Holding Ltd et al Action No. BVIHCV 2008/0053 (unreported); and In the Matter of Unicorn Worldwide Holdings Ltd (In Liquidation) et al Action No. BVIHC (Com) 120/2017 (unreported). The factors to be taken into account are set out in s 464 of the Insolvency Ordinance. An hourly rate of $750 was out of line with the usual rate for Liquidators appointed by the Court in TCI, which is $450 per hour, or exceptionally, rates as low as $350 in straightforward cases. This case was far from complex and did not justify a fee greater than the usual rate of $450, and $250 for a paralegal. Rule 309 (5) of the Insolvency Rules 2019 provides that if the insolvency practitioner is a legal practitioner and he employs his own firm to act in connection with the insolvency, profit costs should not be paid unless authorized by the Court. Whilst an Insolvency Practitioner who used his own firm for litigation or to provide legal advice might be entitled to be paid profit costs, the work done here was that which would ordinarily be undertaken by the Liquidator and his team. Some of the work was not properly incurred and was irrecoverable from the liquidation estate. Other work involved an element of duplication of correspondence or total sums that were excessive. The sum fixed for the interim payment is broken down as follows: $44,199.43 (including disbursements) for the Liquidator’s remuneration (after a 20% discount down to reflect the routine nature of the liquidation and the modest value of the assets); $6,440.00 for work done by his firm in the liquidation and $9,376.00 for legal expenses relating to this application. Had the work done been set out in a single invoice as is customary, itemising the work done by each member, on each day, the Court (and the Applicant), would have been better placed to consider whether the time was properly spent; whether tasks were duplicated and whether the work had been billed at appropriate rates. Under the Insolvency Ordinance a Liquidator no longer requires the sanction of the Court to commence proceedings. In principle, the Court should defer to the Liquidator’s commercial judgment. But whilst there was a good chance of the proposed claim succeeding there was no evidence that the judgment would be satisfied, so the Court declined to sanction the proposed proceedings.
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