Pagden v Ridgley

The fees related to the realisation of a secured asset, and in each case payment had been made in accordance with terms agreed with the security trustee, a Mr Colin, who had appointed the administrator. The fees were calculated as a percentage of the sale proceeds of land owned by the companies but subject to a fixed charge and mortgage.

The applications were dismissed. ICC Judge Greenwood held that the court had no power under r 18.34 to review or determine the costs and remuneration of an administrator where they had been expressly agreed with the holder of a fixed charge security in respect of the realisation costs of that security, payable from the proceeds of its sale. He further held that Mr Pagden, who had replaced Mr Colin, was bound by the agreement made by Mr Colin, as his predecessor as security trustee, although he accepted that there could be other routes to a challenge, for example, under paras 74 and/or 75 of Sch B1 Insolvency Act.

Mr Pagden appealed, permission having been granted by Rajah J.

Three grounds of appeal were advanced: the first was against ICC Judge Greenwood’s finding that remuneration agreed in connection with an administrator realising property subject to a fixed charge was not governed by Part 18 Insolvency (England and Wales) Rules 2016 and could not be challenged under r 18.34; the second was that he should have heard and determined the challenge under the court’s inherent jurisdiction; the third was that the judge had been wrong to hold that Mr Pagden’s challenge was defeated by the contract entered into by his predecessor.

Foxton J dismissed all three ground (Pagden & Anor v Ridgley [2025] EWHC 2674 (Ch)). He agreed with ICC Judge Greenwood’s finding that r 18.34 did not provide a route to challenge the administrator’s fees and expenses in the circumstances of the case. He rejected the second ground on the basis that Mr Pagden was seeking on appeal to run a case which had not been advanced before ICC Judge Greenwood and on which he had therefore made no findings. In the circumstances he made no finding on the third ground.

Neither decision will come as a huge surprise to insolvency professionals. Secured assets do not generally form part of the pool available for realisation and distribution to the general body of creditors, and for the same reason the costs and expenses or realising them for the benefit of the security holder similarly fall outside the mainstream insolvency regime giving rise to that realisation. It should be noted, however, that both decisions envisage the possibility of a challenge by means other than under Part 18 of the Insolvency Rules.

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