Independent Insurance Company Ltd (in provisional liq) (No 2)

JurisdictionEngland & Wales
JudgeMr. Justice Ferris,Mr Justice Ferris
Judgment Date24 January 2003
Neutral Citation[2003] EWHC 51 (Ch)
Date24 January 2003
CourtChancery Division
Docket NumberCase No: 3827 of 2001

[2003] EWHC 51 (Ch)



Royal Courts of Justice

Strand, London, WC2A 2LL


The Honourablr Mr Justice Ferris

Case No: 3827 of 2001

In The Matter of Independent Insurance Company Limited
(Inprovisional liquidation)
In The Matter of the Insolvency Act 1986

Mr. Anthony Mann QC (instructed by Herbert Smith, Exchange House, Primrose Street, London EC2A 2HS) for the provisional liquidators

Hearing date: 19th December 2002


I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr. Justice Ferris Mr Justice Ferris

In this judgment I set out my reasons for my decision, made on 19th December 2002, to fix the remuneration of the joint provisional liquidators of Independent Insurance Company Limited ("the company") for the period from 16th July 2001 to 15th April 2002 at a total sum of £11,236,959 plus VAT, subject to a deduction of £20,000, the reason for which I shall explain.


The background is described in a judgment which I gave on 25th July 2002 ("my July judgment") ( [2002] EWHC 1577 (Ch); [2002] 2 BCLC 709). I will not repeat it except to the extent that is necessary to enable this judgment to be understood.


At the time of my July judgment there were two applications before the court. The first, dated 7th December 2001, sought approval of the remuneration of the joint provisional liquidators ("the JPLs") for the period from 16th July 2001 to 15th October 2001. The second, dated 7th May 2002, sought similar relief in respect of the period from 16th October 2001 to 15th January 2002. By the order made to give effect to my July judgment the further consideration of those applications was adjourned to a future date, when the court would be assisted by an assessor. I directed that a further application, not then made but intended to be issued at an early date, seeking similar relief in respect of the next three month period should be heard at the same time as the two existing applications. This further application was duly issued on 9th August 2002. It seeks the fixing of the remuneration of the JPLs for the period from 16th January 2002 until 15th April 2002.


Accordingly three applications were before the court for consideration on 19th December 2002. The amounts claimed by way of remuneration in respect of the three periods were as follows:

Period Amount claimed ( ex VAT)


th July 2001 to 15th October 2001 £ 4,940,464


th October 2001 to 15th January 2002 £ 3,447,919


th January 2002 to 15th April 2002 £ 2,848,576



This is by any standards what may be colloquially described as a 'mega-insolvency'. In paragraph 9 of my July judgment I quoted Mr. Batten's description of what it involves, which I entirely accept. A further feature which needs to be noted at the outset is that, the company being an insurance company, the provisional liquidation is likely to last for a long period, perhaps many years. In this respect the case differs markedly from what may be described as an 'ordinary' provisional liquidation.


Each application was supported by a witness statement made by Mr. Batten, one of the JPLs, explaining in narrative form some of the principal features of the provisional liquidation during the period covered by the application. The exhibits to those witness statements included a monthly fee summary for PricewaterhouseCoopers ("PwC"), the JPLs' firm. Each monthly fee summary extends to about fifty pages of information. This breaks down the activities of the JPLs and theft staff into a number of areas of work. The number of hours spent during the month on each main area of work and the amount claimed are set out in a table. This information is further elaborated in relation to each main area of work in a series of paragraphs which break down the work done into smaller subject areas, describe the kind of work involved and identify the individuals who have carried out that work, with particulars of each individual's grade, hours spent and charge recorded.


I pay tribute to the detail which the JPLs have included in their claims for remuneration and the clarity with which it has been presented. I would be tempted to say that this presentation constitutes a model of its kind, but for the fact that the exceptional size and complexity of this case justifies (and has received) a more elaborate degree of presentation than will be appropriate in a more typical case.


The main substance of my July judgment was that, in preference to other methods of dealing with the matter, I would appoint an assessor to assist the court in fixing the remuneration of the JPLs. I believe that this is the first case in which that has been done. I suggested in my judgment that two assessors might be needed, one with experience in insolvency matters and another with insurance expertise. In the event, however, I concluded that a single assessor experienced in insolvency would suffice. By an order dated 26th September 2002 I appointed Mr. Peter Graham Horrocks as such assessor. Mr. Horrocks is a solicitor and a licensed insolvency practitioner. He was until recently a partner in the firm of Lovells, the well-known London solicitors, where he was head of the insolvency department. He has had personal experience of a number of recent large-scale insolvencies.


I wish to record the very great assistance which Mr. Horrocks has provided to the court in this matter. He has shown that an assessor can provide most valuable expertise in this area. This is particularly welcome where, as here, the nature of the case means that the court is deprived of adversarial argument. I regard his appointment as an unqualified success. I recognise, however, that the elaboration and expense involved in the use of an assessor will be justifiable only in comparatively few cases, of which, happily for me, this is an example.


The way in which I made use of the services of Mr. Horrocks was as follows. I first asked him to read the papers in support of the three applications. We then had an informal discussion together, after which I asked him to prepare a written report. This he did on 25th November 2002. A copy of the report was immediately sent to the JPLs solicitors, with an invitation to submit comments on the recommendations made by Mr. Horrocks at a hearing which was fixed for 19th December 2002. By way of response Mr. Batten made a further witness statement (his tenth in this matter, and thus referred to by me hereafter as "the tenth witness statement") on 16th December 2002. At the hearing Mr. Horrocks sat with me. The JPLs were represented by Mr. Anthony Mann QC.


At my invitation Mr. Horrocks has prepared a slightly abridged version of his report, a copy of which is attached to this judgment. In my view this report represents a valuable contribution to the debate concerning the approach which should be adopted to office holders' remuneration.


Having described and paid tribute to the part played by Mr. Horrocks I should emphasise that the decision in this case is mine alone.


While I have found all the comments of Mr. Horrocks to be of value I propose in this judgment to discuss only those of them which seem to be of general importance.

Document Management


It is clear that the JPLs have faced a formidable task in compiling an inventory of the company's documentation, managing vast amounts of documents and storing electronic data. The claim for remuneration shows that, during the nine months under consideration, the JPLs and their staff spent over 14,500 hours on this task at a total cost (taking account of the varying charging rates of the staff involved) of about £1.3 million, an average hourly rate of about £90. As Mr. Horrocks has pointed out, it is the duty of the JPLs to adopt a proportionate approach, balancing the need to maintain the integrity of the documentation and data, with the advantages in the form of improved recoveries which may flow from this, against the cost of the process. In this case it appears that one reason for the high cost incurred is that the JPLs have had the various tasks carried out by their own staff, rather than engaging contract or agency staff which, in the experience of Mr. Horrocks, would have been likely to be significantly cheaper.


In the tenth witness statement Mr. Batten has given a substantial explanation of what was involved in these tasks in the present case. In particular he has explained the magnitude and exceptional importance of the work, the value of having a proper archive of documents in order to carry out the run-off of a major insurance business, the need to preserve confidentiality and the need to have a system which enables the JPLs to co-operate with outside agencies such as the Financial Services Authority and the Serious Fraud Office. I do not propose to explore the details of this explanation. It will suffice to say that I regard it as fully sufficient. It is possible that another office holder would have adopted a different and perhaps cheaper solution to the problem, but I am wholly satisfied that what was done in this case was well within the margin of appreciation which must be allowed to any office holder. Office holders are, after all, appointed in order to use their skill and judgment. It would not, in my view, be appropriate to reject what they have done unless there is material to suggest that they have mis-apprehended their duty. Nothing of this kind exists here.


There is a further observation which can usefully be made here. Document management of the kind which has had to be undertaken here may not necessarily involve the use of the office holder's own staff. Although I am satisfied that in this case the use of such staff was...

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