Administrators' remuneration: proportionality as a test of reasonableness

Particularly in smaller external administrations, the court will not blindly accept time-based remuneration as reflecting the value of the work, but will consider the proportionality of the remuneration.

In a number of recent judgments, the courts appear to be favouring considerations of proportionality coupled with an assessment of the realisations achieved when assessing application for the approval of remuneration for external administrators.

A liquidator's/receiver's remuneration must be "reasonable". The courts have held that what is reasonable cannot be assessed solely on the time spent as against a quoted hourly rate. Instead, there has been a move to review, particularly in smaller scale external administrations, reasonableness as against a number of factors including the risk assumed, the value generated, and proportionality.