Pagden v Ridgley: High Court limits scope of administrator remuneration challenges under Rule 18.34

Mr Justice Foxton has upheld ICC Judge Greenwood's decision that administrator remuneration for realising fixed charge assets cannot be challenged under Rule 18.34 of the Insolvency Rules 2016, drawing a clear line between company assets within the insolvency process and those held under fixed security.

The appeal arose from Craig Ridgley's appointment as administrator of Orthios Eco Parks (Anglesey) Limited and Orthios Power (Anglesey) Limited in March 2022. Mr Ridgley realised land subject to fixed charges for £35 million, receiving £2.765 million in fees (plus VAT), with his solicitors receiving £755,000. These substantial fees, representing approximately 10% of gross realisations, prompted a challenge by the successor security trustee and joint administrators of a related company.

The central issue concerned whether Part 18 of the Insolvency Rules 2016, which governs office-holder remuneration, extends to fees paid from fixed charge realisations. Mr Justice Foxton's judgement reinforces the fundamental distinction in English insolvency law between the "company's pot" – assets held for general creditors including those subject to floating charges – and assets subject to fixed charges, which remain largely outside the collective insolvency process.

The judgement emphasises that fixed charge assets do not form part of the statutory trust created upon insolvency. Unlike floating charge assets, which have been subject to various statutory reforms weakening their priority, fixed charges remain "inviolate" with charge-holders retaining primary control over realisation. This structural division proved decisive in interpreting Rule 18.34's scope.

Part 18's decision-making framework proved particularly problematic for the appellants' argument. Under Rule 18.18, creditors' committees or general creditors determine administrator remuneration bases, with secured creditors excluded from voting except where no distribution to unsecured creditors is anticipated. Mr Justice Foxton found it "fundamentally inconsistent" that fixed charge holders could be excluded from decisions about remuneration they would ultimately bear, particularly where no meaningful equity of redemption exists.

The court rejected arguments that excluding fixed charge remuneration from Rule 18.34 would leave affected parties without recourse. Alternative remedies remain available, including applications under paragraphs 74-75 of Schedule B1 to the Insolvency Act 1986, the court's inherent jurisdiction, or private law claims against security trustees. However, the appellants' attempt to invoke inherent jurisdiction on appeal, without first arguing it before ICC Judge Greenwood, was dismissed as procedurally improper.

Rule 18.38, which provides default remuneration scales for liquidators and trustees realising secured assets, supported the court's interpretation. Its express exclusion where office-holders agree alternative arrangements with secured creditors reinforces that contractually agreed fixed charge realisation fees fall outside Part 18's regulatory framework.

The decision clarifies that administrators accepting appointments from floating charge holders who subsequently realise fixed charge assets operate under different remuneration regimes depending on the assets involved. While this creates complexity, it reflects the longstanding principle that each fund bears its own costs – a principle the court was reluctant to disturb without clear statutory language.

This judgement provides important guidance on the boundaries of statutory remuneration controls in insolvency proceedings, confirming that fixed charge holders retain significant autonomy in negotiating realisation arrangements despite the general trend toward collective creditor control in modern insolvency legislation.