Most Read Contributor in Hong Kong, September 2016
Keywords: remuneration, liquidators, trust
Did you know that the court's guiding principle on assessing
remuneration for liquidators in respect of their administration of
trust assets held by the company is similar to the principle
applicable to liquidation work, that is, on a "value for
money" basis rather than as an indemnity against cost?
It was established in Re Berkeley Applegate Ltd (No.2)  1
Ch 32 that where a person seeks to enforce a claim to an equitable
interest in property (i.e., a trust asset), the court may order, as
a condition for giving effect to that equitable interest, that an
allowance be made for skill and labour expended and costs incurred
in connection with the administration of the property.
In Re CA Pacific Finance Limited & Another (HCCW 36 and
37/1998), the liquidators applied to the court for remuneration for
their work done in administering trust assets belonging to clients
of the wound-up companies. The Court of First Instance was asked to
determine the appropriate level of remuneration for the liquidators
and a written decision was issued on 28 August 2012.
The Honourable Madam Justice Yuen, Justice of Appeal, sitting as
an additional judge of the Court of First Instance, decided that
similar principles apply to claims for remuneration in respect of
liquidation work and administration of trust assets. This is
because both liquidators and administrators of trust assets are
The court also decided that as fiduciaries, the liquidators
"must be able to justify that it was prudent from the point of
view of the [beneficiaries of the trust assets] to expend cost on
the task in hand". Therefore, the guiding spirit in assessing
liquidators' remuneration in both liquidation and
administration of trust assets is "value for money". It
was further pointed out by her Ladyship that the assessment
exercise should not only be an audit of the liquidators'
charges, but also a question of whether the returns to the
beneficiaries of the trust assets are worth the entirety of the
Having said that, value of the trust assets will not be the sole
factor considered by the court in assessing liquidators'
reasonable remuneration. The court expressly recognises that
liquidators may have to assume certain exceptional responsibilities
in the immediate aftermath of the collapse of a company, which
require liquidators to mobilise a large work force at short notice.
The complexity of issues pertaining to the trust assets will also
be a relevant factor considered by the court.
The CA Pacific decision illustrates that the court will likely
consider the following factors (among other factors of relevance in
particular cases) in determining the reasonable remuneration for
liquidators in administering trust assets:
Mayer Brown is a global legal services organization
comprising legal practices that are separate entities (the Mayer
Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a
limited liability partnership established in the United States;
Mayer Brown International LLP, a limited liability partnership
incorporated in England and Wales; Mayer Brown JSM, a Hong Kong
partnership, and its associated entities in Asia; and Tauil &
Chequer Advogados, a Brazilian law partnership with which Mayer
Brown is associated. "Mayer Brown" and the Mayer Brown
logo are the trademarks of the Mayer Brown Practices in their
This article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
discussed herein. Please also read the JSM legal publications
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
A guide which outlines the procedures to wind up Jersey registered companies, the circumstances in which transactions entered into by an insolvent company may be set aside, and the circumstances in which a company’s officers and managers may incur civil or criminal liability.
issue a certificate of dissolution in the approved form certifying that the company has been dissolved.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).