How does the court determine if a trustee’s fees are fair and reasonable?
On December 16, 2013, 0409725 BC Ltd (“0409”), made an assignment in bankruptcy. 0409 had formerly carried on business as Odenza Homes Ltd (“Odenza”), and was involved primarily in the construction of new single-family homes, and in residential renovations. At the time of its assignment, it had underway 17 homebuilding projects and a number of renovation projects in and around Vancouver.
Following the completion of the administration of the bankrupt estate, as well as the completion of a simultaneous claims process dealing with trust and lien claims that arose in respect of Odenza’s projects, the trustee applied for approval of its activities and accounts. There was a proposed $100,000 distribution to trust and lien claimants on claims filed of approximately $3,000,000.
- the value of the assets;
- complications and difficulties encountered by the Receiver;
- degree of assistance provided by Nican;
- time spent by the Receiver;
- Receiver’s knowledge, experience and skill;
- diligence and thoroughness;
- responsibilities assumed;
- results; and
- cost of comparable services.
Here, the trustee filed all the material one could wish in that regard, duly verified by affidavit. The trustee set out in its reports and affidavits a very thorough review and discussion of what it did and why, the problems and difficulties encountered, and the unforeseen challenges that arose in this complicated administration.
The court noted that despite providing suggestions on how to assess the trustee’s fees, the respondent did not identify work that was carried out improperly, or steps that were not taken in good faith.
Further, the court looked to the opinions of the inspectors of the bankrupt estate, noting that their views should be given a great deal of deference. The trustee put in evidence letters from two of the inspectors that confirmed the significant unanticipated challenges that the trustee faced. The letters explained that although the inspectors too were disappointed with the process outcome, they were satisfied with the administration of the estate.
On the basis of the trustee’s evidence, including the comments of the inspectors, the court was satisfied that in the unusual and rancorous circumstances surrounding the bankruptcy, the process followed and steps taken by the applicant were necessary and appropriate, and that an even more dismal result would likely have resulted otherwise. The trustee’s fees were approved. The only reduction was in respect of $11,880 that the respondent calculated as “unclaimable” administrative fees” being fees to cover overhead, administrative costs, and so on, which the court agreed should have been covered by the hourly fees charged.
Counsel: Geoffrey Dabbs of Gehlen Dabbs for the Claims Administrator, Magnus Verbrugge of BLG for the trustee and Adnan Habib of Baker Newby for the Respondent Standard Building Supplies Ltd.