A common area of concern to our Insolvency Practitioner clients is a challenge to their remuneration. This was an issue that arose in the recent case of Singh v Hicken.
Mr Singh was made bankrupt with debts of circa £17,000. He owned three properties with sufficient equity to discharge the debts in full. However, Mr Singh, on the Trustee’s evidence, did not cooperate in the bankruptcy and the end result was that the Trustee’s costs were circa £285,000.
Mr Singh sought to challenge those costs under Rule 18.35 Insolvency (England and Wales) Rules 2016. This Rule states that a bankrupt may apply to court for permission to challenge remuneration they feel is excessive. Permission may be granted only if:
the bankrupt can show that there would be a surplus of assets but for the remuneration being challenged, and
the court in its discretion decides to give permission.
Mr Singh satisfied the first requirement, but not the second. He appealed.
His main ground of appeal was that the burden was only on him to prove the first requirement (which he had done), and then there was a requirement for the Trustee to provide evidence of their remuneration and expenses, and to justify them.
The court disagreed, noting that the application was only for permission to challenge, and not a substantive challenge in itself. There was no requirement for the Trustee to “prove” anything. Rather, in exercising its discretion, the lower court in this case had taken into account the records produced by the Trustee and had decided not to give permission.
This case therefore provides strong guidance for a Trustee on what to bear in mind if and when such an application is made. There is no doubt that a detailed statement outlining the history of the bankruptcy and details of the fees incurred will assist in resisting a challenge to remuneration.
For more information, please contact Alexandra Withers on 0191 232 0283 or firstname.lastname@example.org.