Key points

Agreements relating to costs in the course of their office could not be set aside by liquidators subsequently appointed.

The facts

The company went into administration in 2009 followed by liquidation in December 2011.  The administrators agreed the costs of their lawyers including an invoice submitted  after they had left office (the "December Invoice"). The liquidators challenged (a) the quantum of the bills previously agreed and paid in the administration (which the Registrar at the initial hearing refused to order to be assessed); and (b) the power of the administrators to agree the December Invoice.

Decision

The Court held once costs had been agreed by the administrators, who were the responsible insolvency practitioners given the power to agree the costs under rule 7.34 of the Insolvency Rules 1986, it was not generally open for the court to require that the costs subsequently be assessed. Whilst Rule 7.34(4) allowed the court to order a detailed assessment for costs in proceedings before the court, the court had ordered that costs be an expense of the administration and had not required a detailed assessment. The liquidators had the right to request assessment of the December Invoice as they were the responsible insolvency practitioners at the time the invoice was raised. 

Comments

The decision to agree costs has a binding effect and liquidators cannot challenge costs agreed in the administration and demand detailed assessment of such costs. However, once an insolvency practitioner's term of office has ended, they cannot agree invoices relating to the period they were in office.

Hosking & Bonney v Slaughter and May [2014] EWHC 1390 (Ch)