IP Briefing: The Reporter’s Remit

The Background

Lord Bannatyne has issued his opinion in the Note of The Provisional/Interim Liquidator of Equal Exchange Trading Limited [2018] CSOH 35 which stands in stark contrast to the Sheriff Court Judgement of Sheriff Jamieson in the case of S & M Livestock Limited of November last year.

The Facts

The Noter was appointed provisional and thereafter interim liquidator of Equal Exchange Trading Limited (“the Company”). She presented a note seeking that her accounts should be audited and that she should be remunerated for the period she was appointed provisional and interim liquidator of the Company. A court reporter (“the Reporter”) was appointed as per usual practice and raised concerns regarding the actings of the Noter as provisional/interim liquidator. The Reporter suggested that the Court should decline to fix remuneration at this stage until the Noter had rectified deficiencies so that the creditors of the Company were not affected by the Noter’s failures. The Noter lodged a written response to the concerns raised.The judgement does not set out what the concerns were.

The Decision

Lord Bannatyne concluded that the remit of a reporter included checking that work claimed had been carried out but also whether the work was reasonably undertaken. It was also within the reporter’s remit to bring before the court a whole range of concerns. Lord Bannatyne set out a non-exhaustive list of the concerns that can be brought before the court by a reporter. Counsel for the Noter argued that all of the concerns related to work the Reporter would have done had they been appointed liquidator and that this should not be considered as the remuneration was based on work already carried out. Lord Bannatyne decided that each concern raised by the Reporter was a proper concern which should have been brought to the court’s attention. Interestingly however he did not at any point indicate that the Noter had breached her duties, or not acted in the best interests of the creditors and accepted her explanation/remedy to each concern raised.

In distinction to S&M Livestock, Lord Bannatyne indicated that it fell within the Reporter’s remit to bring such concerns to the attention of the court. Sheriff Jamieson had opined that it was not within the remit of a reporter to carry out an extensive review and second guess the actings of a liquidator. Sheriff Jamieson seemed to agree that a reporter’s remit was to assess whether or not the time spent merited the remuneration awarded and it went no further than that.

Lord Bannatyne appeared to agree with the Reporter as to the scope of the remit but found no breach of duty by the Noter. He therefore awarded her remuneration as sought but found her personally liable for the expenses of the written response to the Reporter’s concerns and the hearings. Mixed success at best!

Advice

This judgement has serious implications for IPs. It also leads to uncertainty as to the correct approach for court reporters.  Guidance should be taken by reporters from the appointing court.  On the face of it, a reporter is otherwise free to bring a whole range of concerns before the court even where they do not amount to a breach of duty. Whilst this decision is not binding it will be highly persuasive.  Even where an IP successfully argues their remuneration should be awarded at the level sought, in light of any concerns highlighted by a reporter, the IP can still be found personally liable for the expenses of such a hearing. 

BBM Solicitors specialise in advising IP’s in both contentious and non-contentious matters (including transactional work). Contact: Eric Baijal (emb [AT] bbmsolicitors [DOT] co [DOT] uk). This briefing note is current as at 23rd March 2018 and is our understanding of the position described at that date.  Legal advice ought to be taken before relying on its terms (particularly to ensure the law has not changed).