The recently decided case of Hunt v Yearwood-Grazette ([2009] EWHC B4 (Ch)) involved appeal against the Court’s determination of the trustee’s fees in an annulment case. The case report records that in response to the debtor’s request for details of his remuneration in January 2005 the trustee first indicated that costs should be no more than £2,100 including VAT, which appeared to have been based on the statutory scale. There was then a delay in the trustee providing precise information about the level of remuneration he was seeking, but in April 2006 he indicated that it was in the region of £10,000. The debtor took issue with this and ultimately the trustee applied to Court on various matters, but the principle issue for consideration was the quantum of his remuneration. The claim considered by the Court was for £19,611.75 comprising: £11,420.50 remuneration; £500 for closure; £891.37 trustee’s disbursements excluding legal fees; and £6,345.88 legal fees plus £454 legal disbursements. However, the Court only permitted the trustee to recover from the estate the sum of £2,100 in respect of remuneration and £1,296.43 in respect of expenses and disbursements. He also ordered the trustee personally to pay the debtor’s costs of the application, assessed at £4,840.75.
From reading the report of the judgement it contains some salutary warnings for IPs when dealing with debtors in such cases.
1. Ensure that you respond accurately to a request from the debtor as to the amount of remuneration you are seeking. Clearly a debtor will be more likely to take the matter to Court themselves, or complain to your regulator, if there is a significant increase in the amount that you are claiming as remuneration for no apparent reason.
2. In connection with the above, consider whether or not it would be cheaper and easier in the long run to “do a deal” with the debtor to avoid the matter being considered by the Court and possibly also your regulator, rather than seek to recover your remuneration in full.
3. Do not delay in responding to requests from the debtor for information about the level of your remuneration, particularly if it increases in the period between the first request being made and the final figure being given. Such a delay will clearly fail to impress the Court given that you are an officer of the Court in such circumstances, and will almost certainly lead to a complaint being found proved against you should one be made by the debtor.
4. The Court will apply the Practice Statement, “The Fixing and Approval of the Remuneration of Appointees 2004”. The judgement referred to the Court’s task as being “to balance all the various criteria, resolving any conflict between them arising in the particular case, in order to arrive at the proper level of remuneration. In doing so, it is settled law that the court has to reward the value and benefits of the services rendered rather than the cost of rendering such services. Thus, in fixing the remuneration, time spent is less relevant than value provided.” This is a timely reminder of the approach that the Court will take and it appears that in this case the Court concluded that there was little value provided by the trustee given the level of remuneration approved.
