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You are here: BAILII >> Databases >> The Judicial Committee of the Privy Council Decisions >> Attorney General of the Cayman Islands v. Cleaver & Ors (The Cayman Islands) [2006] UKPC 28 (6 June 2006) URL: https://www.bailii.org/uk/cases/UKPC/2006/28.html Cite as: [2006] 1 WLR 2245, [2006] UKPC 28, [2006] WLR 2245 |
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Attorney General of the Cayman Islands
v.Cleaver & Ors (The
Cayman Islands)
[2006] UKPC 28 (6 June 2006)
Privy Council Appeal No 20 of 2005
The Attorney General of theCayman Islands
Appellant
v.
(1) James Cleaver and Co
(as liquidators of Liberty Capital Limited and
Sun Holding Limited)
(2) Christopher Johnson and Nicholas Freeland
(as liquidators of Waterford Insurance Limited) Respondents
FROM
THE COURT OF APPEAL OF
THECAYMAN ISLANDS
- - - - - - - - - - - - - - - - -
JUDGMENT OF THE LORDS OF THE JUDICIAL
COMMITTEE OF THE PRIVY COUNCIL
Delivered the 6th June 2006
- - - - - - - - - - - - - - - - -
Present at the hearing:-
Lord Bingham of Cornhill
Lord Clyde
Lord Hope of Craighead
Lord Carswell
Lord Mance
- - - - - - - - - - - - - - - -
[Delivered by Lord Mance]
Introduction
"(2) No separate fees should be allowed for official liquidators' non-professional support staff save where there is a significant and identifiable task more complex or onerous than usual.
(3) Such non-professional support staff may charge fees, if applicable, at a rate of $50.00 per hour.
(4) Costs associated with applications for obtaining approval of fees will not be approved by the Court for payment out of the liquidation estate.
(5) Time records of official liquidators and their staff must be recorded at minimum intervals of 0.10 per hour.
(6) When considering the reasonableness of fees charged by official liquidators and their staff, the relevant creditors' committee, if constituted, should do so on the basis of the prescribed guidelines laid down by the Court ..
(7) Pre-approved international fee protocols accepted by a foreign court and presented for approval by the Grand Court must show evidence of the foreign court's informed consideration of the issues raised in the judgment.
(8) Current time rates generally adopted by insolvency practitioners for similar types of work are not accepted as a criterion for setting appropriate rates of remuneration for liquidators and their staff.
(9) Fees charged by liquidators and their staff are to be submitted to court for approval."
"(1) The English Insolvency Rules 1986 particularly Rules 4.127, 4.128, 4.129, 4.130 and 4.131 are the applicable rules in theCayman Islands
for fixing the remuneration of liquidators.
(2) In the absence of any challenge to the process set by the Insolvency Rules by the official liquidator or stakeholders under those rules, no recourse to the Court is required.
(3) There is, therefore, no requirement for the liquidator to make applications to the Court for approval of fees where the fees are approved by a liquidation committee or by a resolution of the creditors. They may, however, if they wish, make such an application to the Court. (Section 107(2) The Companies Law).
(4) The matters to considered by the committee are set out in Rule 4.127(4) of the Insolvency Rules 1986. Where there is no liquidation committee and the fees are approved by a resolution of a meeting of creditors, Rule 4.127(4) also applies.
(5) Where the committee has approved the fees but, nevertheless, the liquidator seeks the approval of the Court, an affidavit from the committee to the effect that the committee has approved the fees, should be filed with the application.
(6) Applications to the Court may be made by either the liquidator or the creditors if a dispute arises as to the amount of the fees to be paid to the liquidators.
(7) Where the Court is required to fix the fees, the market rates as charged in theCayman Islands
should be taken into account. The Court should be provided with expert evidence and should only fix the fees based on evidence before the Court.
(8) The remuneration of provisional liquidators shall be fixed by the Court on the application of the liquidator.
(9) Where applications are made by the liquidator to the Court for the approval of fees, costs may be awarded to the liquidator out of the assets."
The legislation
"There shall be paid to the official liquidator such salary or remuneration, by way of percentage or otherwise, as the Court may direct, and if more liquidators than one are appointed such remuneration shall be distributed amongst them in such proportions as the Court directs."
"Unless and until any rules are made under Section 174 of the Law, all applications to the Court made pursuant to Sections 49, 79 and Part V of the Law and all proceedings concerning or arising out of the liquidation of any company shall, so far as practicable, be made in accordance with The Insolvency Rules 1986 (SI 1986/1925), insofar as such rules are not inconsistent with the Law or such other rules as may be applied to the proceeding in question."
The power to make Grand Court Rules is conferred by section 19 of the Grand Court Law (1995 Revision) upon a Rules Committee consisting of the Chief Justice, the Attorney General and two legal practitioners appointed by the Chief Justice after consultation with the Law Society. The Chief Justice and one other constitute a quorum. Such Rules may under section 19(3) be made for specified purposes including
"(a) regulating pleading, practice and procedure in respect of the conduct of criminal business and civil business before the Court . And
(j) generally, providing for such other matters as may be reasonably necessary for or incidental to the administration of this Law".
Section 19(5) further provides that Rules so made
"may apply any Rules of the Supreme Court in England which regulate the practice and procedure in the High Court in England".
"4.127 Fixing of Remuneration
(1) The liquidator is entitled to receive remuneration for his services as such.
(2) The remuneration shall be fixed either-
(a) as a percentage of the value of the assets ., or
(b) by reference to the time properly given . in attending to matters arising in the winding up.
(3) Where the liquidator is other than the official receiver, it is for the liquidation committee (if there is one) to determine whether the remuneration is to be fixed under paragraph 2(a) or (b) and, if under paragraph 2(a), to determine any percentage to be applied as there mentioned.
(4) . ..
(5) If there is no liquidation committee, or the committee does not make the requisite determination, the liquidator's remuneration may be fixed (in accordance with paragraph (2)) by a resolution of a meeting of creditors .
(6) If not fixed as above, the liquidator's remuneration shall be in accordance with the scale laid down for the official receiver by general regulations.
.
4.130 Recourse to the court
(1) If the liquidator considers that the remuneration fixed for him by the liquidation committee, or by resolution of the creditors, or as under Rule 4.127(6), is insufficient, he may apply to the court for an order increasing its amount or rate.
.
4.131 Creditors' claim that remuneration is excessive
(1) Any creditor of the company may, with the concurrence of at least 25 per cent in value of the creditors (including himself), apply to the court for an order that the liquidator's remuneration be reduced, on the grounds that it is, in all the circumstances, excessive.
.."
The issues
Analysis
"The Attorney-General in a colony represents the Crown as the guardian of the public interest. It is his duty to bring before the judge any misconduct of a barrister or a solicitor which is of sufficient gravity to warrant disciplinary action. True it is that if the judge acquits the practitioner of misconduct, no appeal is open to the Attorney-General. He has done his duty and is not aggrieved. But if the judge finds the practitioner guilty of professional misconduct, and a Court of Appeal reverses the decision on a ground which goes to the jurisdiction of the judge, or is otherwise a point in which the public interest is concerned, the Attorney-General is a "person aggrieved" by the decision and can properly petition Her Majesty for special leave to appeal."
"The decision of the court may have important implications for prosecutions under similar legislation. There is a general public interest in the prosecution of offences. The Attorney General is an appropriate constitutional officer to be heard by the court having regard to his role representing the public interest."
"when pressed, counsel did, however, concede that the Court was not obliged to rubber stamp the decision of the creditors' committee but was bound to [e]nsure that the fees charged were fair and reasonable in the circumstances. In effect the argument came down to this: the Court should place great weight on prior approval by the creditors' committee".
Thus no argument was presented before, and nothing decided by, the Grand Court inconsistent with the Attorney General's current stance with regard to jurisdiction.
Conclusions
" . the court is ill-equipped to conduct a detailed investigation of receivers' charges on an itemised basis. A judge could not do so without being expensively educated by expert evidence."
The case before him concerned receivers appointed contractually "upon such terms as to remuneration and otherwise as [the appointor] shall think fit" (see p 206). But the problem regarding the Court's capacity to assess appropriate fee levels is one which will also face the Grand Court whenever it acts under section 107(2) of the Companies Law. It is not a problem of which the Board thinks that the Grand Court was unaware. Indeed, it was if anything aggravated by one particular condition of Cayman Islands practice which was of concern to the Grand Court, namely the limited number of expert practitioners in the relevant field and the perceived risk that there was no real competition between them on fee levels. The Grand Court sought to address this problem in 2002 by seeking information from liquidators, but met the difficulty that liquidators were not prepared to assist with material that the Grand Court considered relevant. If there is a rehearing before the Grand Court, at which the Attorney General was represented, it may be that either the liquidators or the Attorney General would supply further material to assist the Grand Court to determine whether it was appropriate to set any and if so what guideline fee rates under current conditions. Some assistance may now also be obtained from the fee levels submitted to and approved by creditors' committees pursuant to the Court of Appeal's decision and to the Practice Direction No. 2/2003 and the Rules Committee's Creditors' Guide to Liquidators' Fees dated 29th December 2003. The Court of Appeal criticised the Grand Court for setting guideline rates "without any evidence being before the Court as to whether a creditors' committee in any given circumstances is sophisticated or knowledgeable or properly informed". Whether or not there was justification for this criticism in 2003, the liquidators should now be able to put before the Grand Court evidence about the composition and nature of any creditors' committee which has approved fees pursuant to the Court of Appeal's decision, and the nature and extent of its deliberations. Similar procedures to those set out in the Creditors' Guide to Liquidators' Fees may in future also assist the Court to fix appropriate fee levels in the light of creditors' deliberations regarding proposed fees. The Board is not in a position to express concluded views about the right way forward. That will be for the Grand Court. The guideline fees indicated by the Grand Court's judgment in 2002 must on any view be out of date. In all the circumstances, the Board has reached the conclusion that, subject to the qualification already indicated in paragraph 37 above, the liquidators' applications in the present appeals should be remitted to the Grand Court for reconsideration in their entirety at a hearing when both the liquidators and the Attorney General can be heard, and when all options will be open to the Grand Court in the exercise of its powers under section 107.
(1) the Attorney General's application for leave to intervene and pursue these appeals should be granted,
(2) the appeals should be allowed,
(3) the liquidators shall be entitled to receive (a) all fees which have already been fixed under the procedures stated in the Court of Appeal's conclusions (2) to (7) in respect of work which has been done or may be done during the period until the Grand Court issues further directions covering future procedures, and (b) all further fees which may be fixed under the procedures stated in the Court of Appeal's conclusions (2) to (7) during, and in respect of work done during, the same period,
(4) paragraph (1) and for the future paragraphs (2) to (7) of such conclusions should otherwise be set aside,
(5) the question what further order regarding liquidators' remuneration should be made in the four liquidations before the Board should, so far as necessary, be remitted to the Grand Court for full rehearing with the Attorney General as intervener and with liberty to the liquidators and the Attorney General to adduce such further evidence as they may be advised,
(6) the parties shall have 14 days to make submissions in writing regarding costs in the light of this opinion.