Frances Coulson
- Partner
- Insolvency & Restructuring
Attorney General of Trinidad and Tobago v CL Financial Ltd
The “golden age” of controversy and dispute over insolvency office-holders’ fees is generally associated with decisions such as Mirror Group plc v Maxwell and the Ferris Report. The judgment of the Privy Council in Attorney General of Trinidad and Tobago v CL Financial Ltd (Trinidad and Tobago) [2025] UKPC 41 demonstrates that remuneration disputes are very much alive and kicking and arise in jurisdictions other than the UK. Giving the judgment of the Board, Lord Richards, no newcomer to remuneration disputes, remarked that “fixing the remuneration of liquidators and similar officeholders, such as administrators, receivers and trustees in bankruptcy, has caused considerable problems of principle and practice,” but not, it seems generally in Trinidad and Tobago: the Court of Appeal of Trinidad and Tobago, whose judgment was the subject of consideration, had said that cases such as the one before it represented “a novel area in our jurisprudence.”
The liquidation at the root of the dispute was that of CL Financial Ltd, a substantial company incorporated in Trinidad and Tobago, which was in compulsory liquidation, having been wound up by the High Court in September 2017 on a petition of the government of Trinidad and Tobago claiming TT$15.5 billion.
The company was the holding company of a group with interests in a number of countries. It had seven sub-holding companies with over 40 subsidiaries, primarily in the insurance, real estate and spirits sectors, but with minor interests in other businesses. It got into financial difficulty in 2008, particularly in its insurance and banking businesses which included one of the largest financial institutions in Trinidad and Tobago. Such was its importance that the government provided financial support in excess of TT$23 billion to prevent its collapse.
The extent of the company’s interests and the corporate structure of which it was the summit meant, as Lord Richards acknowledged, that the liquidation was complex. The liquidators said that it had suffered from inadequate management; the liquidation was extremely labour intensive; and they had inherited substantial litigation that had been commenced by group companies.
In 2018 the court made an order which included provision for the payment of the liquidators’ fees on a time cost basis as well as for expenses and disbursements. A first application for remuneration for the period to the end of 2018 was not opposed and an order was made. On 28 July 2020 an application was made for approval of the liquidators’ fees for 2019 in the sum of TT$3,1 million odd plus other fees and expenses. This application was opposed by the Attorney General on behalf of the government, largely on the basis that it was not supported by sufficient information. In spite of that, it succeeded at first instance, and the remuneration was approved as sought. The judge communicated his decision by email to the parties on 6 July 2021, and an order was made on the same day.
The Attorney General appealed to the Court of Appeal. On 9 November 2021, before the appeal was heard, the first instance judge gave detailed reasons for allowing the application.
On 1 December 2022 the Court of Appeal gave judgment allowing the appeal, setting aside the order of the judge at first instance and remitting the application to the High Court for re-determination. However, as Lord Richards noted,
“Very regrettably, the Court of Appeal overlooked the High Court Judgment. It follows that the principal ground for the Court of Appeal’s decision was wrong, and it cannot be upheld on that ground. It does not follow that the Judge’s order was correct, and it is the responsibility of the Board to decide whether it was correct and, if not, whether to leave the Court of Appeal’s order undisturbed or to make some other order.”
The company appealed to the Privy Council. Two grounds on which it did so related to the Court of Appeal’s failure to take account of the High Court judgment. The third ground was that the Court of Appeal had adopted the wrong approach to the approval of a liquidator’s fees and expenses by requiring “a line by line examination by the court” of the fees sought, i.e. too much detailed information; and, it was said, a similar approach had to be taken to the expenses incurred. A fourth ground went to the costs order made by the Court of Appeal (a non-party costs order against the liquidators personally).
The Privy Council readily found that the first two grounds were made out so that the Court of Appeal’s order could not be upheld without examination of the merits of the order made by the first instance judge.
Having reached that initial conclusion, Lord Richards went on to examine the law on liquidators’ remuneration in Trinidad and Tobago, England and Wales and a number of other common law jurisdictions applying similar legal considerations. Before doing so, he identified two central propositions as to the level of information to be given in support of an application:
“This cannot be reduced to a single formula and will always be dictated by the circumstances of the particular case. The two high-level principles are, first, that there must be sufficient information to enable the court to have a clear view of what the officeholder has done and, secondly, that the information should be proportionate to the size of the insolvency and to the cost of preparing the information.”
He dealt with a number of points which arose from the authorities which may be summarised as follows:
(1) In large insolvencies time spent is either the only means by which remuneration is assessed or, more usually, a major component and the starting point.
(2) Although time was the basis for remuneration, there was an overriding requirement that the remuneration should be fair and reasonable.
(3) Whilst it is for the office-holder to establish that the hours claimed were indeed worked, that will rarely be the issue with a reputable office-holder who has maintained proper time records. Courts should proceed on the basis that office-holders have acted with integrity unless there is reason to believe otherwise.
(4) The office-holder must establish that the time costs were reasonably incurred: see Mirror v Maxwell in which Ferris J said that the office-holder “must explain the nature of each main task undertaken, the considerations which led them to embark upon that task and… to persevere in it. The time spent needs to be linked to this explanation, so that it can be seen what time was devoted to each task;” and Templeton v Securities and Investments Commission, an Australian case in which the receivers themselves accepted that they had to demonstrate that (a) it was necessary and appropriate for the work claimed to be done, (b) the work was done at an appropriate level of seniority and (c) the work was done efficiently in the sense that a reasonable time was taken to do it, taking account of the quality and complexity of the work. Whether time costs were reasonably incurred depended principally on two factors: first, it must be shown that the work in question was reasonably undertaken; secondly, it must be shown that the work was performed by a person of appropriate seniority.
(5) Whether work was reasonably undertaken involves a number of factors. These include the obligation to perform statutory duties, the performance of which will rarely produce a financial result; and there may be other legal obligations with which the office-holder must comply (e.g. where the company holds assets on trust for others).
(6) The steps taken to deal with assets forming part of the estate must be reasonable. Whether any particular action is reasonable will depend on the particular circumstances but, in general, where the liquidator has a discretion as to the action to be taken, it means taking those steps which make commercial sense in terms of their potential return for the benefit of the estate. An office-holder is expected to behave as a prudent person looking to their own commercial interests.
(7) The office-holder must be able to show that work was performed at an appropriate level of seniority. The simpler or more routine tasks should be undertaken by more junior staff, leaving the more senior members of the team to do those things which require their level of experience and expertise, recognising that the office-holder and other senior personnel will have an important supervisory role over the insolvency process as a whole.
(8) The information presented to the court must be sufficient for the court to be satisfied that the liquidator’s work did not unnecessarily duplicate work done by other members of staff or by outside advisers such as lawyers.
(9) The evidence must enable the court, in cases where applications are not opposed (which in practice make up the great majority of applications) as well as those which are opposed, to satisfy itself that the remuneration is justified. The court must always apply its own judgement and not act as a rubber stamp to office-holders’ applications. The evidence must also enable a creditor, or (where a surplus is a real prospect) a shareholder, to identify any areas of concern.
(10) At the same time, the court should not be burdened with an overwhelming amount of detailed evidence, nor should the estate be burdened with the cost of producing it.
(11) Similarly, the court should not engage in a line by line analysis of the office-holder’s claim: this would be a disproportionate way to proceed: see Templeton v ASIC and other Australian cases, Re Roslea in New Zealand and Re Nortel in Canada.
Thus, the Court of Appeal had been wrong to say that “an exercise akin to a line by line examination is necessary if the choice is made by the [liquidators] to engage in a time approach rather than a job or piece approach to their task.”
The Board declined to determine the competing contentions as to the adequacy of the office-holders’ records: the issue could be investigated by the court on the re-hearing of the liquidators’ application.
A further criticism of the Court of Appeal’s judgment was of its approach to the government as a creditor. Lord Richards said:
“The Court regarded the Government as being in a special position in view of the responsibility of the State ‘to account to the people as to how public funds are spent’ which distinguished it from other interested parties and which distinguished this case from other insolvencies. In the view of the Board, this is a misdirection. In dealing with the Government as a creditor, the court and liquidators must treat it in the same way as other creditors. There is no basis in law for according a special position to the Government as a creditor. It is of course true that the Government is a very substantial, and indeed the largest, creditor in this liquidation and as such it is in a good position to advance and argue for the interests of the creditors generally, but the same would be true of a similarly placed private creditor.”
The appeal was dismissed.
Of interest is what Lord Richards said about the use of assessors. (The appointment of assessors became a feature of remuneration applications in London some years ago when substantial provisional liquidators’ fees were in issue in connection with the winding up of insurance companies.) He said:
“In the course of argument, there was discussion initiated by the Board as to whether in a complex case such as the present there might be a role for an assessor, with relevant experience of the conduct of such liquidations, to examine a liquidator’s claim for remuneration and report to the court. The court has power to appoint assessors: rule 33.13 of the Consolidated Civil Proceedings Rules 2016. It has to be said that neither party expressed much enthusiasm for such an appointment. It was pointed out that it would be difficult to identify a suitable assessor in Trinidad and Tobago, so an external appointment would be needed. The question of the assessor’s costs, and who would be responsible for paying them, was also raised. Assessors have been appointed in large insolvencies in England and other jurisdictions: see Re Independent Insurance Co Ltd (Nos 1 & 2), Re Nortel Networks France SAS and Re Bulb Energy Ltd. In none of those cases did the assessor’s report lead to any material reduction in the amount of the claimed remuneration but they may be said to have provided reassurance to the court and to creditors. The Board does nothing more than remind the courts below that the power to appoint an assessor exists.”
Whatever the status of the Board’s judgment might be (as to which see Willers v Joyce [2016] UKSC 44), Lord Richards’s judgment is an important contribution to the case law on remuneration for its breadth of jurisdictional coverage and because it comes from a judge who speaks with exceptional authority on insolvency law and in particular that governing the remuneration of office-holders (see Brook v Reed [2011] EWCA Civ 331).
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