When it comes to applications by office-holders for approval of their remuneration, the message in the case of Poxon and another v Wejo Ltd (in administration) [2025] EWHC 135 (Ch) was, the detail matters.

Background

Having failed to obtain approval from the creditors in respect of both their pre and post administration costs, the joint administrators of Wejo invited the court to fix the basis of their post-administration remuneration and expenses by reference to time properly spent by them and their staff in attending to the administration of the company pursuant to r. 18.23 of the IR 2016 and approve their unpaid pre-administration costs as an expense of the administration pursuant to r. 3.52(5) of the IR 2016 (the Application).

Certain creditors of Wejo intervened to oppose the Application on the grounds that the joint administrators’ evidence in support was insufficient to enable to court to properly consider the Application. 

However, the joint administrators sought to argue that r. 18.23 was concerned with fixing the “basis” of remuneration only, and the court need not be concerned to scrutinise the fees estimate delivered to creditors pursuant to r. 18.16(4)(a) (the Fees Estimate) – if the creditors had concerns regarding the amount of remuneration sought, their remedy was under r. 18.34.

Accordingly, the issues raised by the case where:

1. the extent to which, if at all, the court should scrutinise the quantum of the Fees Estimate, when it is asked to determine the basis of remuneration on an application brought pursuant to r. 18.23; and
2. the level of detail required more generally on applications bought pursuant to r. 3.52 and r. 18.26.

Outcome

Unfortunately for the joint administrators of Wejo, the judge was not prepared to fix the basis for remuneration (or to approve pre-administration fees) because the information provided by the administrators about the work done did not enable him to form a sensible view on the reasonableness of the fees, especially as the Fees Estimate now represented work already carried out.

One might be forgiven for thinking that when seeking to fix the basis of remuneration, there is a distinction between that, and the level of remuneration, given the wording in r.18.23 provides for the court to “fix the basis”, not the amount. But the two are linked.  

The insolvency practice direction, which the judge turned to in this case, sets out guiding principles for remuneration applications – the objective being to ensure the amount and/or basis of the remuneration to be fixed by the court is fair.

The basis upon which the fees were to be drawn could not therefore be determined without scrutiny of the Fee Estimate. The judge wanted to see more information to support  the time spent by reference to the work done.

The judge also disagreed with the joint administrators’ submission that a creditor’s ability to challenge the amount of remuneration pursuant to r. 18.34, extended to remuneration fixed by the court under r. 18.23.

As such, the Application was adjourned to allow the administrators to provide further information.

Key take-aways for Office-Holders

It is clear from Wejo that where the court is being asked to fix the basis of remuneration by reference to time properly spent that:

1. The onus is on the office holder to justify their fees.
2. The court will need to understand why the work has been undertaken and be satisfied that it is both reasonable and commensurate with the fees incurred.
3. In doing this the court will scrutinise the remuneration that an office-holder is seeking to recover by reference to their fees estimate and will require an office holder to follow the guiding principles in the practice direction.  In particular the requirements of paragraph 21 of the Practice Direction: Insolvency Proceedings [2020] BCC 698.

The costs of preparing such an application can often be quite steep, due to the level of information that the court requires, and as this case demonstrates, expects. 

Although office holders have 18 months from the date of their appointment, to make an application to fix the basis of their remuneration, there might be something to be said for making an application to court to fix the basis of remuneration early – the more work that has been done, the more information the court will require.