THE COURT of Appeal has given permission to have the Privy Council pronounce on the proper approach for a liquidation court when approving fees and expenses.
On Wednesday, Justices of Appeal Allan Mendonca, Prakash Moosai and Charmaine Pemberton approved the leave application.
In asking for the case to go to the apex court, attorneys for CL Financial said the Court of Appeal got it wrong in December 2022, when it ruled on a procedural application.
On December 7, Moosai and Pemberton sent back to the CL Financial (CLF) liquidation judge a decision on whether the conglomerate’s joint liquidators were entitled to $24 million in fees for their work in 2019.
The Attorney General had asked the judges to overturn Justice Kevin Ramcharan's approval of the fees asked for by the joint liquidators of CLF, Hugh Dickson and David Holukoff, of international accounting firm Grant Thornton.
Pemberton, who wrote the decision, was critical of Ramcharan’s handling of the case, saying it was incumbent on him to do a thorough analysis of the evidence and asked questions if necessary.
However, in their application for conditional leave, CLF’s attorneys – Fyard Hosein, SC, Sasha Bridgemohansingh and Krystal Richardson-Dumitriu – argued that the Appeal Court failed to recognise that Ramcharan, although delivering a preliminary decision, eventually did provide a “reasonsed and full” decision, a year before the appeal was heard and decided on.
“The Court of Appeal’s decision to remit the remuneration and expenses application back to the liquidation judge for re-hearing was based on the fundamentally flawed premise that no full, written reasons had been issued,” the leave application said.
The attorneys also argued that the Appeal Court did not take the time to consider Ramcharan’s full reasons, proceeding instead “in ignorance of it.”
“Indeed, the learned panel of the Court of Appeal in their judgment made determinations as to what the remuneration reporting duties of the joint liquidators entail, including whether third-party expenses incurred in course of the winding up are to be treated equivalently, in terms of reporting duties, to the fees and expenses of the liquidators,” CLF’s attorneys argued.
Hosein said it was important for the case to be adjudicated on by the Privy Council, since the question of the proper approach of a liquidation court in approving fees and expenses has never been considered locally.
He said the legal principles that had to be reconciled included the fiduciary obligations of a liquidator; their discretion in managing a winding-up; and setting rules and practices, since, according to international industry practices, they did not need approval for third-party expenses which were distinct from their own.
Also required to be settled, Hosein advanced, was the question of whether, along with remuneration, expenses and bi-annual reports, liquidators also had to provide time sheets for the liquidation judge to examine line by line before granting approval.
“There are no domestic statutory guidelines as to the degree to which liquidators or other insolvency practitioners are required to justify their fees and expenses.”
In granting approval to take the case to the Privy Council, the Appeal Court also agreed with Hosein that the eventual ruling in the matter would have a considerable impact on winding-up proceedings and insolvency cases.
“It would be undesirable to have domestic reporting standards that will lead to unnecessary, voluminous insolvency reporting that will increase the expenses of the liquidators, defy ease of comprehension, and thus run counter to the interests of creditors.”
Appearing for the Attorney General were Deborah Peake, SC, and Ravi Heffes-Doon.
The CLF conglomerate was put into liquidation in 2017 to clear its remaining debt arising from the multi-billion-dollar bailout by the government in 2009.