Read the full judgment text of HCCW 000022/1998 on BabelCite. This High Court CFI judgment was delivered on 25 June 1998 before Le Pichon J.
Insolvency law – provisional liquidators – remuneration – fixing of fees – fiduciary duty to account – applicability of Maxwell principles in Hong Kong – time-basis remuneration – contemporaneous records – critical scrutiny of solicitors' bills – disbursements – taxation – application by Price Waterhouse as Provisional Liquidators of Peregrine Investments Holdings Limited (PIHL), Peregrine Derivatives Limited (PDL), and Peregrine Fixed Income Limited (PFIL) for court approval of approximately $27 million in their own fees, $13 million in fees of Deacons Graham & James, and $7 million in fees of Clifford Chance (totalling about $76 million in fees and disbursements for the 9-week period of the provisional liquidation) – whether the principles in Mirror Group Newspapers Plc v Maxwell apply to the fixing of provisional liquidators' remuneration in Hong Kong, including where the order of appointment expressly provided for time-basis calculation – held, the Maxwell principles apply in full; the basis of remuneration does not alter the fiduciary duty to account – the burden is on the office-holder to justify the claim by explaining the nature of each main task, linking the time spent to that explanation, keeping proper contemporaneous records, and demonstrating that a reasonably prudent man would have laid out or hazarded his own money in doing what was done – whether failure to keep contemporaneous records disentitles the office-holder – held, not automatically, but doubts are resolved against the office-holder – whether the Provisional Liquidators had discharged the burden of justification – held, no; Price Waterhouse lacked an adequate timekeeping system, the schedules were ex post facto reconstructions, and the self-imposed write-offs were admissions that the time could not be justified – whether solicitors' bills are subject to the same scrutiny – held, office-holders must subject the bills to critical scrutiny, negotiate reductions, and either pay the bills or have them taxed before seeking recoupment; passing the bills to the court without scrutiny is unacceptable – whether the solicitors' bills had been adequately scrutinised – held, no; the 5% (Clifford Chance) and 10% (Deacons) reductions were unsupported by specific details and category (2) disbursements (counsel and foreign lawyers) were largely unscrutinised – interim payment allowed to bring total to 33% of fees, with further procedures directed and a separate omnibus hearing on costs to be scheduled.
Legal issues: Applicability of Maxwell principles to fixing provisional liquidators' remuneration in Hong Kong · Standard of justification for time-basis remuneration of provisional liquidators · Treatment of solicitors' bills and disbursements of office-holders · Whether the Provisional Liquidators' fees in the Peregrine liquidation should be approved
Outcome: Application for approval of Provisional Liquidators' fees and solicitors' bills not approved as presented; further interim payment on account allowed to bring total to 33% of fees submitted; Provisional Liquidators directed to file further evidence justifying their claim and to scrutinise, negotiate, and either pay or tax the solicitors' bills before seeking recoupment; a further omnibus hearing on costs to be scheduled.