In the High Court decision of Pagden v Ridgley [2025] EWHC 2674 (Ch), Mr Justice Foxton considered an appeal from a decision by ICC Judge Greenwood, who previously dismissed a challenge to the fees charged by an administrator for selling land subject to a fixed charge.
The background to this case is set in our earlier blog but in essence the key point of interest was whether the administrators’ fee for dealing with the sale of fixed charge assets could be challenged under r18.34 of the Insolvency Rules 2016. ICCJ Greenwood, concluded (for the reasons set out in our earlier blog) that they could not.
There were 3 grounds of appeal, the one of most interest to practitioners is whether ICCJ Greenwood’s findings that remuneration agreed in connection with an administrator realising fixed charge assets, is not within Part 18 of the 2016 Rules and therefore cannot be challenged.
In dismissing the appeal Mr Justice Foxton confirmed that an administrators fees paid from fixed charge assets are not part of the insolvency estate and therefore they are not subject to the statutory controls under Part 18 of the Insolvency Rules. Rule 18.34 applies only to remuneration that is payable from the company’s assets (including floating charge assets), not to fixed charge realisations.
However, that does not mean that a secured creditor has no basis on which it can challenge fees once agreed. As both the judge at first instance (ICCJ Greenwood) and Mr Justice Foxton on appeal note, there are other potential remedies.
The possible grounds of challenge included
- Under paragraphs 74 of Schedule B1. This provision enables a creditor to bring a claim if they think that the administrator is acting, proposes to act or has acted in some way to unfairly harm the interests of the creditor. At first instance the Judge recognised that in principle, it would be open to a fixed charge creditor to complain under this provision.
- Under paragraphs 75 of Schedule B1. This provision enables a creditor to bring a claim against an administrator alleging misfeasance, or a breach of fiduciary or other duty, or that the administrator has misapplied, or retained, or become accountable for some property of the company. At first instance the Judge also recognised that this might be a route to complain about an agreement between an administrator and a fixed charge creditor relating to costs and remuneration.
- Under the rule in Ex Parte James. As an officer of the court, administrators are subject to an obligation to act honourably and fairly. The Judge at first instance noted that this could provide a further basis of challenge.
- Under the court’s inherent jurisdiction. There was also an acknowledgment that there are cases (e.g., Re Hotel Company 42 The Calls Ltd [2013] EWHC 3925) where the inherent jurisdiction has been used to fill gaps in the statutory scheme. However, Mr Justice Foxton expressed doubt about whether that jurisdiction could be exercised in relation to assets which did not form part of the company’s estate.
- Private Law Claims. In addition to the above, Mr Justice Foxton added the possibility of a private law claim.
Because none of these grounds were properly raised at first instance, they could not be pursued on appeal and so there is no indication whether a fixed charge creditor might successfully challenge fees outside of Part 18 relying on any of these grounds.
Although an officeholder cannot assume that fees agreed for dealing with fixed charge assets can never be challenged, the bases for challenge are not easy ones to establish. If a fixed charge creditor is unhappy with the bargain it has struck in relation to the remuneration for dealing with a fixed charge assets this alone is unlikely to be a strong ground for challenge.
