Trustee's Remuneration discussed in the High Court by Mrs Justice Proudman - Hunt v Yearwood-Grazette [2009] EWHC B4 (Ch)

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Tarquin said…
This is an interesting case and should sound a warning to insolvency practitioners when it comes to their fees...
The outcome of the case is now well-known. What is unfortunate is that the approach I adopted (which was intended to ensure that the costs burden on Mr Yearwood-Grazette did not increase unduly) resulted in the Court finding that I had provided insufficient information to comply with the Practice Direction and that the total amount he was seeking in fees was, therefore, unjustified. The judgments provide useful clarification of the information that the Courts require from office holders on cost assessment hearings.
Shortly after the decision of Proudman J, an article appeared in Recovery Magazine about Yearwood-Grazette titled "Officeholders' Remuneration: a cautionary tale". Whilst no mention is made of this in the article, the article was written by Mr Cory Bebb and Mr Edward Cumming the solicitor and barrister who represented Mr Yearwood-Grazette for the purposes of my application. Messrs Bebb and Cumming have used the judgments to support the content of the article but have a wider knowledge of the background which led to the application. There are certain statements made by Messrs Bebb and Cumming in their article which I wish to clarify:
“Mr Yearwood-Grazette promptly offered to arrange for the only two bankruptcy debts, in a total sum of £11,858, to be cleared forthwith as he wished to put the bankruptcy behind him."
Mr Yearwood-Grazette in fact disputed the level of his main debt and sought to oppose the placing of a restriction on his property. Whilst the Court found that Mr Yearwood-Grazette had informed me that he wanted to settle his debts so that he could put the bankruptcy behind him, it was not suggested that they would be cleared forthwith. In fact, it was not until June 2005 that Mr Yearwood-Grazette reached a settlement with HMRC.
“Mr Hunt estimated that on this basis his remuneration should be ‘no more than £2,100 including VAT."
My professional fees were in fact £1,314 in January 2005 (exclusive of VAT and disbursements). The estimate of costs provided at that time was based on the debts to the bankruptcy being settled in full and promptly. They were not.
“Mr Yearwood-Grazette cleared both the debts by June 2005 as promised.”
This is apparently so but Mr Yearwood-Grazette did not inform me that both debts had been settled. Whilst Mr Yearwood-Grazette had indicated his intention to settle the debts he had not promised to do so. He disputed tha amount of tax claimed, saying that he had been in prison at the time covered by some of the assessments.
"By this time he sought more than £10,000 in remuneration and expenses to bring the bankruptcy to an end, which included time-cost charges for the period between December 2005 and 4 April 2006 for what was recorded on his time sheet as a file review and two annual reviews, which took place within a month of each other, as well as various letters.”
The article omits to record the fact that Proudman J had made it clear in her judgment that the figure of £10,000 included the costs of annulment proceedings and also the Secretary of State's costs. My fees at this stage had risen to only £2,370.43, and this included only a single file review in anticipation of the bankruptcy being brought to an end. Messrs Bebb and Cumming also do not make it clear that my costs for dealing with the bankruptcy were not significantly more than the sums originally quoted and that the costs that were later disallowed were in fact those that were incurred by me in dealing with the dispute over fees and commencing possession proceedings. said…
I am amazed at the level of Remuneration sought, it is so small relative to the near £50,000 they are charging my wife on a bankruptcy debt of less than £3,500. My wife is a victim of KPMG's greed and unproffessionalism which has caused debt where I had previously settled it. It is obscene that KPMG appear to have no formal complaints procedure and use it as a means of boosting their fees.

We complained:

a/ they took more than three months to acknowledge an urgent phone call at a ciritical moment in negotiations with a Creditor

b/ Will not give an explanation as to why they pursue a policy which increases debt and reduces revenue to settle Creditors claims

c/ took 9 months to gives us the contact details of the person we must write to in order to access their complaint's procedure.

They then inform us if we keep insisting on making a complaint they will increase their bill to the Estate

As we have discovered KPMG can't even calculate 10% of a figure. They are definately not worth the national minimum wage let alone the champaigne fee they demand.

Another example of an organisation that is in bed with our corrupt Politicians and Civil servants doing as they please. tax dodging, Fraud and other financial crimes seem to be common place within KPMG. A fine from the North Americans of more than $£465mollion, tells a lot and still they are still practising and fiddling the facts for profit. Our Govenment which serves the interests of Transnational organisations won't do anything because it too is self serving