Jacob and another v UIC Insurance Company Ltd and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE PETER SMITH |
| Judgment Date | 02 November 2006 |
| Neutral Citation | [2006] EWHC 2717 (Ch) |
| Docket Number | Case No: 4501 of 1996 |
| Date | 02 November 2006 |
| Court | Chancery Division |
[2006] EWHC 2717 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Peter Smith
Case No: 4501 of 1996
Mr Stuart Isaacs QC and Mr Lloyd Tamlyn (DLA Piper Rudnick Gray Cary) for the Appellants
Lexa Hilliard (instructed by Clyde & Co) for the Respondents
Hearing dates: 10th and 11th October 2006
Approved Judgment
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.
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Peter Smith J:
INTRODUCTION
1 This was the hearing of four appeals initially listed before me. The appeals in question were as follows:-
(1) The appeal of the Appellants who are the current Joint Provisional Liquidators ("the JPLs") of UIC Insurance Company Ltd ("UIC") from an order dated 19th May 2006 ("the Main Order") in which Registrar Nicholls fixed the JPLs remuneration for the period 22nd September 2003 to 26th September 2004 inclusive ("the 03/04 Period") at �1,380,856.19 rather than the sum �1,717,269.75 as originally claimed by the JPLs
(2) The JPLs' appeal from the order dated 25th July 2006 ("the Costs Order") which dealt with the costs of the remuneration application ("the Remuneration Application") relating to the 03/04 Period
(3) The appeal by Equitas Ltd ("Equitas") in relation to paragraphs 4 and 5 of the Costs Order
(4) An appeal by the JPLs which was consolidated shortly before the hearing in respect of the conduct of an intended meeting of the Informal Creditors' Committee, decided by the Registrar on 19th May 2006.
INITIAL MATTERS
2 On the day before the hearing I was informed that Equitas which had led the opposition to the JPLs remuneration claims before the Registrar effectively on behalf of the body of the creditors as a whole had entered into an agreement with the JPLs which partially resolved the various appeals.
3 The reason for this was because on 25th September 2006 the creditors of UIC (of which Equitas represented 84) voted to approve a Scheme of Arrangement. The court sanctioned the Scheme the week before the appeal. That Scheme follows a settlement agreement between UIC and Lloyds TSB ("LTSB") a share-holder in UIC. Under the terms of the settlement agreement the Scheme is required to become effective before 31st December 2006 and LTSB will ensure that there are �45,000,000 worth of liquid assets in UIC to transfer to the Scheme at the effective date of the Scheme (whenever that might be).
4 The result of the Scheme is that a return to Scheme creditors of approximately 145 pence in the � is anticipated. The position is in effect that if the JPLs' appeal is allowed before the Scheme becomes effective LTSB will simply be required to make up the deficiency to ensure the minimum amount is payable. Therefore the creditors of UIC have no interest in the outcome of the appeal whatever the result. LTSB do have an interest in the sense that they will suffer the burden of any increase and the shortfall required to achieve the minimum payment. They were aware of the proceedings but have taken no part. I understand that they were not notified of the decision that was made by Equitas shortly before the hearing of the appeal.
5 As a result of that Equitas withdrew its appeal with no order as to costs. The JPLs agreed to withdraw their appeal against certain costs orders made by the Registrar in respect of an issue concerning the capping of payments on account ("the Cap Application").
6 Finally Equitas agreed that they would not present any argument at the appeal hearing in opposition to any of the appeals of the JPLs that remained to be determined after the withdrawal of the appeals.
7 In my view this was unsatisfactory. The issues raised in this appeal were of importance beyond this case. Equally whilst the creditors had not suffered any loss there would be a residual potential liability to LTSB and it would not be aware that Equitas' stance would have an impact of removing opposition to appeals which would increase its liability. Accordingly I informed Miss Hilliard who appears for Equitas that I required her to assist the court in the hearing of the appeal. I did that on the basis that Equitas would in effect be instructing her as an amicus curiae or on behalf of the general body of creditors to present these arguments. I determined therefore that whatever the result of the appeal its costs would be met out of the funds. In this context also the JPLs made it clear that they no longer sought any costs against Equitas and their claim was limited to seeking to reverse Registrar Nicholls' orders (see below) but seek their costs out of the funds and not against Equitas as a Respondent to a successful appeal.
8 The Appeals proceeded on that basis.
PRELIMINARY MATTERS
9 At the start of the appeal Mr Isaacs QC who (with Mr Lloyd Tamlyn) appeared for the JPLs sought permission to adduce fresh evidence being the second witness statement of Charles Gordon dated 16th August 2006, the 47th witness statement of Ipe Jacob dated 5th June 2006, his 48th witness statement dated 3rd October 2006 and a third witness statement of Paul Malcolm Johnson also dated 5th June 2006.
10 I determined at the commencement of the appeal as a preliminary issue that the JPLs could rely upon that evidence.
11 I also made an order by consent dealing with the matters which had been resolved as set out above and disposed of the appeal in respect of the conduct of the Informal Creditors' Committee ("ICC") meeting by making no order on that.
BACKGROUND
12 The JPLs were appointed Provisional Liquidators of UIC initially by an order of Robert Walker J made as long ago as 12th August 1996.
13 That order made provision for the remuneration of the JPLs and provided for it to be fixed by the Court on application from time to time "by reference to the work done by the [JPLs] and consultants and employees of Robson Rhodes under their control to the time spent by them on the basis of those firms usual rates for the type of work involved together with any expenses incurred in connection therewith and any applicable value added tax".
14 The original JPLs were the first Appellant Ipe Jacob who at all material times had day to day conduct of the provisional liquidation and Neil Cooper. He was replaced by the second Appellant Nigel Ruddock on 26th January 1998. Both JPLs are licensed insolvency practitioners and partners in Grant Thornton. Prior to 1st January 2000 the JPLs were partners in the firm of Robson Rhodes.
15 The appeals are against the two extensive judgments of Registrar Nicholls. The first is dated 19th May 2006 ("the Main Order") and the second dated 25th July 2006 ("the Costs Order") referred to in paragraph 1.
16 Equitas who represented 40% of UIC's creditors to be dealt with in the Scheme objected to the level of remuneration sought to be fixed and was joined to the Remuneration Application as Second Respondent by Order dated 10th March 2005.
PROCEDURAL MATTERS
17 On 28th July 2005 Registrar Nicholls ordered amongst other things that Mr Peter Horrocks ("the Assessor") a retired solicitor be appointed by the Court as an assessor pursuant to section 70 of the Supreme Court Act 1981 and CPR 35.15. He was directed to report to the Court on certain issues raised by Equitas and by a second member of the ICC, a Mr David McGuigan who initially opposed the fixing of the remuneration in the sums sought by the JPLs. The Assessor produced a provisional report dated 20th October 2005 and after the JPLs and Equitas had made written submissions on the contents of that report a final report dated 5th December 2005.
THE FINAL REPORT
18 The Final Report contained a number of recommendations for the reduction of the remuneration sought by the JPLs. The following are pertinent:-
(1) He recommended that �115,143 be disallowed in respect of "null" narratives and �12,723 in respect of "unhelpful" narratives. This was because the time recording system used by the JPLs and their staff allowed for each time entry to be accompanied by a narrative but a significant number of the time entries contained no narratives and others were considered unhelpful.
(2) Second he recommended that �61,093 of time attributed to drafting the Scheme be disallowed. This was because the Assessor considered excessive time had been spent by the JPLs and staff and therefore recommended there be a reduction of 10% of the seven persons who had carried out the bulk of the work in respect of the Scheme.
HEARING OF REMUNERATION APPLICATION
19 At the hearing the JPLs' position was that:-
(1) It accepted the criticisms made by the Assessor in respect of the time recording practices and recognised a lack of discipline in this regard but submitted that they had justified the time and costs for the approval sought. They submitted this was particularly justified in the context of the fact that the Scheme creditors were expected to receive more than payment in full on the Scheme so that no deduction or alternatively no significant deduction should be made because their work was overwhelmingly beneficial for the Creditors.
(2) They did not accept that the time costs in respect of the drafting of the Scheme were excessive and opposed any deduction.
(3) They did not challenge certain Miscellaneous Deductions recommended by the Assessor.
20 Equitas' position was that:-
(1) All time cost entries with a "null" or "unhelpful" narrative should be disallowed in full rather than a percentage deduction recommended by the Assessor.
(2) The Assessor's...
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R (Harrison) v Birmingham Magistrates Court
...relevant to a slightly different (although related) point, the decision of Peter Smith J in Jacob & Anr v the UIC Insurance Company Ltd [2006] EWHC 2717. The practice statement relates to the applications to the court for the fixing and approval of his remuneration where it has not been oth......