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Bankrupt woman takes IP to court over fees 19 April 2011

In the first appeal the individual, Helen Brook, successfully had a remuneration and costs package to trustee and solicitors reduced by more than half.

The district judge originally fixed the trustee’s costs and remuneration at £20,354, with added disbursements of £2,890. The solicitor’s costs were set at £23,086, with minimal disbursements.

The case concerned debts of less than £20,000 and two assets, a modest retail business and share in a matrimonial home.

At the first appeal judge Behrens reduced the trustee’s charges to £9,929, while allowing most of the original disbursements. The solicitor’s costs were reassessed at £10,038.

Speaking on the fees judge Behrens said: “They seem exorbitantly high. They are the sort of costs that give the insolvency profession a bad name.”

Brook then went to the court of appeal to try to get both sets of costs reduced further.

Lord justice Lloyd refused on the precise grounds advanced by the bankrupt, but he did find other reasons to review the trustee’s costs.

He believed there were grounds for appeal of the trustee’s charges but not for the solicitor’s fees. The trustee was Nicholas Reed who works for PricewaterhouseCoopers.

He said: “Judge Behrens was wrong in law not to reduce the amount of the trustee in bankruptcy’s costs and disbursements to a sum substantially lower than £12,820.50 (costs of £9,929.75 and disbursements of £2,890.75) because that figure is disproportionately high in relation to the circumstances of the bankruptcy”.

The second appeal rested on the argument that Judge Behrens’ approach had not conformed to the principles set out in the practice statement (2004).

But the court decided that after a close examination of the case, applying expressly the principles of the practice statement would not have led to a substantial reduction on Judge Behrens’ ruling.

The second appeal was dismissed by lady justice Arden, lady justice Black and justice David Richards.

The case was complicated by the fact that Mrs Brook applied to have the original bankruptcy ruling annulled. The court argued that had she met the requirements of the annulment application, the matter would have been resolved in 2007.





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