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Successful Challenge To Expenses Agreed By Former Administrators

In the recent case of Hosking & Bonney v Slaughter and May (2014) EWHC 1390 (Ch) the High Court held that it was not prevented from exercising its discretion to order a detailed assessment of costs, where costs had been agreed by the former administrators. The recent case concerned a company incorporated in Luxembourg. The company went into administration in 2009 and the administrators engaged solicitors. The company was subsequently placed into liquidation in late 2011. The solicitors presented a bill to the former administrators, after the administration had ended and after liquidators had been appointed. The former administrators agreed the bill. The liquidators challenged the former administrators’ power to agree the bill. The High Court held that it would not ordinarily be open to it to order an assessment of solicitors costs where the costs have been agreed by a responsible insolvency practitioner; however, in this case the former administrators had not agreed the costs in the normal course of office. The bill had been presented after the administration had ended at a time when the former administrators had no power to agree the costs.

Although this decision was based on old Rule 7.34 IR 1986 it is likely to be applied to administrations where the replacement rule (Rule 7.34A IR 1986) applies. The decision is a useful reminder to insolvency practitioners that they should not seek to agree invoices relating to a period of office, after the terms of office have ended. The decision also highlights the importance of service providers providing bills promptly. If you require further information regarding this decision or insolvency issues generally, please contact Rachel Brown, Associate in Druces LLP’s Commercial Litigation team.