Briefing

How should the Courts approach the approval of liquidators’ remuneration?

The Privy Council’s decision in Attorney General of Trinidad and Tobago v CL Financial Ltd (in Liquidation) provides important guidance on how common law courts should approach applications seeking approval of liquidators’ remuneration. The decision, which will be persuasive before common law courts in key insolvency jurisdictions, provides welcome clarity for insolvency practitioners and creditors across the globe.

The Privy Council’s judgment in Attorney General of Trinidad and Tobago v CL Financial Ltd (in Liquidation) [2025] UKPC 41 concerns an application by liquidators seeking approval of their remuneration (i.e. their fees for time spent on the liquidation and disbursements such as legal fees, expert fees, costs incurred on investigations), which is paid out of the company’s liquidation estate. Creditors have an interest in such applications because the remuneration paid to liquidators reduces the company’s liquidation estate and, therefore, the sum available for distributions to creditors.

Background

CL Financial Ltd (Company) was a sprawling Trinidad‑based multi-national conglomerate with dozens of subsidiaries. It operated in multiple industries, across various jurisdictions. In 2008 the Company suffered severe financial distress and required a bailout exceeding TT$23 billion (c. US$3.4 billion) from the Government of the Republic of Trinidad and Tobago (Government).

In 2017, the High Court of Trinidad and Tobago appointed liquidators over the company (Liquidators). The liquidation of CL Financial is a complex, cross-border liquidation. The Government is the Company’s single largest creditor: by 2017, the sum owed by the Company to Government was still in excess of TT$15.5 billion (c. UD$2.3 billion).

The Liquidators’ remuneration application

In July 2020, the Liquidators filed a remuneration application at the High Court of Trinidad and Tobago (High Court) seeking approval of fees and expenses amounting to approximately TT$3.1 million (c. US$455,000) for the period January – December 2019 (Application).

The Government opposed the Application, arguing that, amongst other things, the Liquidators had failed to provide sufficient evidence to justify the remuneration sought, challenging the work carried out and comparing the costs incurred with those incurred on other liquidations.

The Liquidators’ Application was granted by the High Court on the basis that the fees and expenses incurred were reasonable in the circumstances of this complex liquidation and that sufficient detail had been provided.

The Government appealed.

The Court of Appeal’s approach: a line by line review

The Court of Appeal took a different approach to the High Court, holding that a detailed review of the fees and expenses incurred by liquidators was required. The Court of Appeal also took the view that the Government was in a “special position” because public money was at stake and it had to “account to the people as to how public funds are spent”.

The Liquidators appealed to the Privy Council, the highest court of appeal for various Commonwealth and former Commonwealth jurisdictions (such as Trinidad and Tobago), UK Overseas Territories (e.g. the BVI) and British Crown Dependencies (e.g. Jersey).

Privy Council: pragmatic and proportionate

The Privy Council analysed existing case law which deals with the remuneration of insolvency office holders (liquidators, receivers, administrators etc) from various jurisdictions – including Australia, England & Wales, Hong Kong and Singapore – and clarified the proper approach that the court ought to take when assessing the work carried out and the fees and expenses incurred:

The burden rests firmly on liquidators to justify their fees and disbursements.
Liquidators must demonstrate that the work carried out was necessary, reasonable and proportionate, without duplication and was carried out at the appropriate level of seniority.
The remuneration approved by the court must be a “fair and reasonable” reflection of the work carried out.
A liquidator is an officer of the court and a regulated professional. The court should therefore assume that they behave with integrity “unless the evidence suggests otherwise“.
The court must rely on its own judgment and should not “rubber stamp” a liquidator’s remuneration.
A line‑by‑line audit of liquidators’ time records is not necessary and the liquidation estate should not be “burdened” with the cost of producing “an overwhelming amount of detailed evidence” which would be a “disproportionate way to proceed”.

The Privy Council also clarified that claims involving the ‘public purse’ do not merit special treatment and liquidators must treat all creditors equally. This aspect of the judgment reaffirms an important, and long-standing, principle of insolvency law: pari passu treatment of creditors of the same class.

Having confirmed the applicable principles, the Privy Council examined the Application at hand and the evidence filed in support of the Liquidators’ remuneration. The court concluded that the information provided by the Liquidators was “far from sufficient” and the matter should be reheard after further evidence had been filed.

Commentary

The Privy Council’s decision strikes a careful balance: ensuring transparency and accountability while avoiding an unnecessarily burdensome remuneration process that would drain the liquidation estate’s resources.

Liquidators carry the evidential burden: Liquidators must satisfy the court that the work carried out was necessary, reasonable and proportionate and file sufficient evidence in support of their remuneration applications.
Reporting must be detailed, but proportionate: General progress reports will not suffice. On the other hand, a liquidator should not waste estate resources by preparing overly detailed evidence in support of their remuneration applications. It is a balancing act and the level of detail in a remuneration application should reflect the scale, complexity and value of the liquidation. As such, a ‘one size, fits all‘ approach to remuneration applications is not appropriate and careful thought should be given to the level of detail needed for a particular remuneration application, with reference to the circumstances of the liquidation in question.
Supervision and delegation: A liquidator’s remuneration application should explain why work was retained by the liquidator, delegated to junior employees, or outsourced to external professionals (e.g. lawyers) and how the liquidator retained oversight of work that had been delegated / outsourced and the costs incurred.
Time recording and record keeping: A liquidator, and their team, should accurately record the time spent on a liquidation and be able to evidence the decision-making process and rationale for time being spent. Although a liquidator, as an officer of the court and a regulated professional, is assumed to act with integrity, this does not relieve them of the obligation to produce sufficient evidence in support of their remuneration applications and they should be prepared to produce time records and other evidence, if required by the court (i.e. in the event that fees are queried by the court or challenged by a creditor).
No line-by-line review: It is not necessary for the court to carry out a ‘line-by-line’ review of the liquidator’s time records. Again, this is underpinned by the principle of proportionality: such an exercise would not be a proper use of the Court’s time. Creditors should bear this in mind when seeking to challenge a office-holder’s remuneration application.

Wider common law impact

Although this case originated in Trinidad and Tobago, the Privy Council’s reasoning has broad application because it will be persuasive before courts in jurisdictions in which the Privy Council remains the ultimate appellate authority, for example the BVI, Cayman and Bermuda and in other common law jurisdictions with similar insolvency regimes such as Australia, England and Hong Kong.

This judgment therefore provides welcome guidance for insolvency practitioners and creditors in a number of jurisdictions, including key international finance centres where some of the world’s most complex and valuable liquidations take place.

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