In the Supreme Court of Belize, A s1

IN THE SUPREME COURT OF BELIZE, A.D. 2005CLAIM NO: 471 OF 2005BETWEEN CEDRIC FLOWERS CLAIMANTANDRBTT TRUST LIMITED DEFENDANTMr. A. Courtenay SC, with Mrs. R. Magnus-Usher, and Miss. V. Flowers, for the claimant. Mr. C. Hamel-Smith SC, and Mr. P. Zuniga SC, for the defendant.AWICH J.4.10.2008. J U D G M E N T1. Notes: Receivership – remuneration of a receiver appointed, of company assets charged by debenture; whether terms in the debenture regarding remuneration of the receiver were adopted by the instrument appointing the receiver or whether no manner of determining remuneration was specified, and the remuneration would be determined solely by the rule that remuneration must be fair and reasonable. Considerations for a fair and reasonable remuneration. The meaning of the clause, “such receiver shall be entitled to remuneration appropriate to the work and responsibilities involved1 upon the basis of charging from time to time adopted by such receiver in accordance with the current practice of his firm”. The function and duties of a receiver. A trustee under the trust deed and debenture deed; appointment of the receiver made by the trustee for the benefit of the “bond-holder”. Bonds acknowledging the loans and binding the debtor company to perform the loan obligations; whether sale of the bonds during the receivership was sale of the charged assets for the purposes of determining the remuneration of the receiver.2 This case arose out of failure at commencement, of a much publicised intended business of a company known as InternationalCommunications Limited (Intelco), incorporated in Belize. The company had raised loan capital of US$25,000,000.00 from or through RBTT Merchant Bank Limited, a sister company to RBTTTrust Limited, the defendant. The two were parts of a conglomerate holding company. For the loan, Intelco issued fixed rate bonds toRBTT Merchant Bank Limited, the original bond-holder, by a deed of trust dated 24.3.2003. In the deed of trust, RBTT Trust Limited was appointed trustee for the benefit of the “bond-holder” for the time being. The same loan was then secured by a debenture that charged the assets of the company with the loan, in accordance with the terms of a deed of debenture of the same date. In the deed of debenture,RBTT Trust Limited as the trustee of the bonds for the benefit of the“bond-holder” was made the debenture-holder. I have used, and will2 use the term “bond-holder” to refer to RBTT Trust Bank Limited, because counsel for the parties in conducting their cases referred toRBTT Merchant Bank Limited by that term; and it is convenient.Strictly speaking, RBTT Merchant Bank must be a beneficiary of the bonds held in trust by another entity, RBTT Trust Limited, the trustee.3. The assets of the company were stated as, goodwill, rights of the company, land, communications equipment, plants and similar items.The debenture charged both fixed charge and floating charge to them.4. Intelco was not a successful business. On 1.11.2004, the claimant,Mr. Cedric Flowers, was appointed the receiver of the charged assets of the company. His main mandate was to sell the charged assets so that the proceeds would be applied to pay the loan principal sum, interests and costs. The appointment was made by the defendant,RBTT Trust Limited, acting as a trustee for the purposes of the bonds and debenture. 5. The evidence was that in the course of the receivership RBTTMerchant Bank Limited, “sold the bonds”, to Belize3 Telecommunications Limited for US$26,266,049.38, representing the principal sum and interests owed on the loan obtained by Intelco, and which the assets were charged with. When this claim was commenced, Belize Telecommunications Limited was said to be the“new bond- holder”, RBTT Trust limited remained the trustee, and also the debenture-holder.6. The core facts upon which, Mr. Flowers, based his claim were the following. On 1.11.2004, he was appointed under the terms of the deed of debenture, a receiver of the charged assets of Intelco. He was a professional certified public accountant practising in Belize City,Belize. He had experience of several years of practice, and at least of three company receivership works. The appointment was made by the defendant, RBTT Trust Limited in its capacity as the trustee for the“bond-holder”, at the time, RBTT Merchant Bank Limited. By a letter dated 1.11.2004, RBTT Trust Limited undertook to pay remuneration and costs to Mr. Flowers. He commenced his work straightaway. On 14.1.2005, RBTT Trust Limited terminated his appointment. It informed Mr. Flowers that the bonds securing the loan had been sold by “the bond-holder”, and “the new bond-holder”4 desired to terminate the receivership. The defendant did not disclose to Mr. Flowers the identity of the “new bond-holder”. Mr. Flowers demanded payment of his remuneration which he charged at 3.5% of the price at which the bonds were transferred to the new beneficiary of the bonds, and as the result Intelco was released from its loan obligations. He also demanded reimbursement for costs incidental to the receivership. The total sum he demanded and claimed wasUS$931,036.73, with interest. RBTT Trust Limited has not made any payment, and has refused to pay. Mr. Flowers says, the refusal was a breach of their agreement by which he was appointed a receiver, and was wrongful. He filed this claim in court.7. The reason for appointing a receiver of the assets of Intelco were the following. In the year 2004, Intelco became moribund; the reasons were not important for this case; suffice it to state that Intelco had several creditors; and it had come to the attention of the defendant that some creditors were taking action about default by Intelco to pay debts. It was also stated in evidence that one of the debts was guaranteed by the Government of Belize, and the Government was paying about 90% of US$350,000.00 (i.e. US$315,000.00 equivalent5 to about BZ $630,000.00) quarterly, to International Bank of Miami, in the USA. The payment by the Government was for services to be provided by Intelco, and which payment Intelco assigned to theInternational Bank of Miami. It was stated further, that the payment by the Government, “was a very sensitive issue for the Government”, and that, “politically it could have major implications for theGovernment”. It was in those circumstances that RBTT Trust Limited appointed Mr. Flowers a receiver of the charged assets of Intelco in accordance with the terms of the debenture deed of 24.3.2003. 8. The defendant admitted that in its capacity as trustee for the bonds, it appointed the claimant a receiver, and that it gave to the claimant receiver, an undertaking to pay his remuneration and costs, in the event payment was not obtained from Intelco, that is, from the sale of the charged assets. However, the defendant contended that: (1) the claimant failed to carry out his duty as a receiver or substantially; (2) the claimant was to recover, “his payment from monies coming into his hands as a receiver”, he did not sell any assets and did not received any money into his hands; (3) the claimant was not entitled to rely on the terms for remuneration stated in the deed of debenture, because he6 was not a party to the debenture; (4) the claimant was appointed,“without agreed fee structure, but on terms of reasonableness”, the demand by the claimant was for an unreasonable sum; and (5) the defendant was willing to pay reasonable remuneration which would be based on a hourly rate of US$150.00 per hour, and to pay reimbursement for costs of the receivership properly incurred. 9. DeterminationRight at the commencement of the trial, during crossexamination ofMr. Flowers, it became apparent that most of the contentions of the defendant were inconsistent with one another. For examples: (1) it was inconsistent to contend that the claimant failed to perform his duties, and also contend that the defendant was willing to pay reasonable remuneration based on a hourly rate of US$150 per hour; and (2) to contend that there was no agreement that the manner of determining the remuneration of the receiver would be the manner provided for in the debenture, and also contend that the manner adopted by the claimant in his practice (as required in the debenture) was a hourly rate and not a percentage rate, and the defendant was willing to pay remuneration based on hourly rate. The practical way7 to deal with the defences was to regard some of them as alternative to others. Because of that, the issues shifted from one to another. The difficulty had presented itself when counsel presented the cases for their clients. It led to unnecessarily long trial and excessively voluminous record of proceedings, some 509 pages. 10. But there were also some common grounds between the parties.After detailed and long crossexamination of Mr. Flowers for 3 days; and of Mr. Stephen Bayne, the managing director, and the only witness for the defendant, for one and one-half days, most of the material facts became common facts. That was largely due to Mr.Bayne eventually admitting most of the facts put to him by learned counsel Mr. A. Courtenay SC, for the claimant. Mr. Flowers had earlier been grilled in crossexamination about those facts, by learned counsel Mr. C. H. Smith SC, for the defendant, but Mr. Flowers maintained his basic account of facts. It was apparent that Mr.Flowers gave much more detailed instructions to his attorneys, thanRBTT Trust Limited gave to its attorneys.8 11. Mr. Bayne was in court when Mr. Flowers testified and was crossexamined, so Mr. Bayne had the advantage of considering the effect of the detailed crossexamination of Mr. Flowers. One of the consequences was that Mr. Bayne commenced his testimony by requesting court to grant permission for him to amend his written witness statement by including admissions that: (1) “ the receiver did take some steps in the course of the receivership”; and (2) “the receiver incurred certain costs of minimal amounts”. The claimant did not oppose the request of Mr. Bayne. Permission was granted and the two new admissions or partial admissions were added as evidence in the testimony of Mr. Bayne. 12. Nevertheless, it appeared from the crossexamination by Mr. Smith, that despite the above admissions by the defendant, it remained the contention of the defendant that Mr. Flowers did not perform his duties substantially. Mr. Flowers of course, claimed that he set about his duty professionally and exercised due professional skill and responsibility, and accomplished what was expected of a receiver up until his appointment was terminated on 14.1.2005, by the defendant.9 His answers to questions during crossexamination, outlined in much detail what his duties were and what actions he took.13. So, what was the function, and what were the duties and responsibilities of a receiver of a charged asset of a company; and which Mr. Flowers claimed he properly discharged?14. The Companies Act Cap. 250, Laws of Belize, unlike the enactments of some countries, does not define the term receiver, or set out the function, of a receiver, so we have to take the common law definition, and function of a receiver of asset, and apply it to company receivership in Belize, with necessary adaptation. The oldest common law general definition of a receiver which is regarded as accurate was stated in the case of, Re Manchester and Milford Railway Co. Ex parte Cambrian Railway Co. (1880) 14 Ch D 645, by Lord Jessel M.R. as follows:“A receiver is a term which was well known in the Court of Chancery, as meaning a person, who received rents or other income, paying ascertained outgoings, but also10 who does not,… manage the property in the sense of buying and selling or anything of the kind…”. 15. So, the function of a receiver of a charged asset of a company is to receive the income from the charged asset, and the proceeds of its sale, pay the costs and liabilities connected with the charged asset, and realise the security interest of the secured creditor, that is, pay off the debt charged to the asset. 16. The duties and responsibilities of a receiver arise necessarily from his function to sell the charged asset, pay incidental costs and realise the security interest of the creditor who appointed him or on whose behalf he has been appointed. In the first place, a receiver must exercise his power for the proper purpose and not abuse it– see DownsviewNominees Ltd v First City Corp. Ltd [1993] AC 295. He is the agent of the debtor company, not of the secured creditor, – see Gaskell vGosling [1896] AC 575. However, if the secured creditor gives instruction to the receiver, the creditor may be liable for lack of duty of care if it occurs – see, Standard chartered Bank v Walker [1982] 2ALL ER 938. The receiver must act honestly and bona fide in11 realising the asset so as to obtain the best price – see, Parker-Tweedale v Dunbar Bank PLC. and Others [1991] Ch 12.CA. He must also act honestly and bona fide so as not to harm the interest of the debtor company and the general creditors, except to the extent that it is necessary for realising the security interest – see Tse Kwong Lam v Wang Chit Sen and Others [1983] 3 ALL ER 54. He must avoid conflict of interests. He must protect and preserve the asset while proceeding to sell it. That may require him to secure and insure the asset. So in this claim, if the claimant has proved that he carried out the work assigned and observed his duties as a receiver, the defendant must disprove that by proving its averment that the claimant did not carry out its work substantially, or that he failed to live upto the above legal duties when he set about carrying out his work.17. In this claim, the function, and therewith, the powers, duties and responsibilities of this receiver were the usual common law ones, but enlarged by those given to him by the contract of appointment, which adopted by reference, the terms set out in the deed of debenture of24.3.2003. The enlargements were specified in paragraph 7.01 (a) to(j) of the deed. They were extremely wide and went far beyond those12 of a receiver, and included the function and powers of, “a receiver and manager”. The powers, duties and responsibilities included the powers, duties and responsibilities to take possession of the assets, develop, improve, repair, sell by public auction or private contract, grant licence over or otherwise dispose or deal with the assets, exercise the power of a landlord, appoint personnel to guard or protect the assets, insure the assets, and sign documents, and do all acts as the receiver may consider incidental or conducive to any of the above matters or powers, or to the realisation of the trustee’s security.`18. Did Mr. Flowers perform his duties?Mr. Flowers related the actions he took. He said that he hesitated to accept the appointment because the circumstances of Intelco were,“politically very sensitive”, and he was apprehensive about the consequence of accepting the job, to his practice. He started by stating that he cleared his desk so that he would concentrate on the receivership. He took steps to identify the charged assets, he made inquiries in Belize about some assets and got answers about their whereabouts. He mentioned that the auditor had a list of assets, but it was not an accurate list. He engaged Mr. Kimano Barrow, a13 telecommunications engineer, to locate, identify and inspect some of the assets; and he paid to Mr. Barrow BZ$1,995.00 for the services.He also inquired and obtained information that the Public UtilitiesCommission and some land-owners had large money claims againstIntelco which could cause difficulties in removing some assets. He further, said that some of the assets were in the possession of BelizeTelecommunications Limited, and that he and Mr. Barrow met some resistance from Belize Telecommunications Limited to their desire to access and inspect the assets. 19. The following, in particular, were matters that Mr. Flowers raised and required response from the defendant about. He requested information regarding the identities of the assets and relevant documents, he pointed out the practical need to take possession of, and transport, store, secure and insure the assets that were in the possession of Belize Telecommunication Limited when the arrangement by which it was given possession of the assets by Intelco would be discontinued. He raised the possible legal issues regarding the discontinuance of the arrangement, and regarding land on which telecommunications towers were erected. He also informed the14 defendant about an agreement by which payment owed by theGovernment to Intelco was assigned to the International Bank ofMiami, and requested instruction about discontinuing it and the likely consequences. He requested title documents for assets and copies of contracts regarding them. Further, he asked the defendant to provide money for costs incidental to the actions he would take. He enumerated many more actions he had taken and those that he sought information and instruction from the defendant about. I need not recount all the actions he took. Some details were in exhibits C(CF)17 and C(CF)19. 20. Mr. Flowers communicated with the defendant by letters and telephone discussions including a tele-conference. In particular, he dealt with Mr. Theron Quashie, the officer responsible for this receivership, and Mrs. K. Singh, the manager in the AssetManagement Department of the defendant. He also had discussion with Mr. Bayne himself.21. The defendant did not provide the information, the relevant documents or the documents of title requested, and did not respond to15 the questions raised and the instructions requested, although it wrote a letter exhibit C(CF) 18, appreciating the contents of the letters of Mr.Flowers, and sought more information about transactions and agreements it might have not been aware of, that might affect the interest of Intelco and the secured creditor.22. More directly to his effort to sell the assets, Mr. Flowers identified at least four interested and potential buyers, namely, BelizeTelecommunications Limited, Carlisle Group, Speednet and Ericsson(Latin America); he had discussion with them. He informed the defendant about the expressions of interests, and specifically requested that the defendant provide title documents for the purpose of further negotiations with the potential buyers. 23. All the letters that Mr. Flowers wrote about the actions he had taken and proposed to take, and seeking documents, information and instructions were exhibited. They were not denied by the defendant.The telephone discussions including the tele-conference, were also not denied. The more Mr. Flowers was crossexamined about actions he took, the more he extended the list of actions and gave details. 16 24. The defendant had no evidence to the contrary. Mr. Bayne had to concede that they should have responded to the inquiries and the other matters raised by Mr. Flowers. When pressed in crossexamination, his exact words were: “we could have been more reasonable and professional…, there could have been more frankness with Mr.Flowers”. He explained that they did not respond or were not frank because: “this was a short period of time in which a lot of different circumstances occurred or were changing on the ground, we were unsure virtually from moment to moment… and it was therefore difficult for us to be able to respond as quickly and as comprehensively… There were many issues surrounding this Intelco matter, some political in nature, had political implications or fall out, some had to do with contentions between the parties…” From the above evidence the reasonable inference was that the defendant was engaged in or was kept informed about the negotiation that led to the sale of the bonds for which it was a trustee.25. Undoubtedly Mr. Flowers proved that he carried out his duties diligently and with due professional skill, as far as was possible, given17 that the defendant was either uncooperative, unwilling or negligent in responding to the requests for information, title documents, instructions and money for costs incidental. He also proved that he was still carrying out his duties and desirous to proceed when on13.1.2005, he called the defendant to press for its response and instructions, and the defendant simply informed him that his appointment had been terminated. The reason that the defendant gave for the termination was that the bonds had been sold and, “the new, bond-holder”, desired the receivership ended. Mr. Flowers, the receiver, was not involved in the sale of the bonds although he was the one who informed the defendant about the interest of the buyer, BelizeTelecommunications Limited, to buy the assets of Intelco. The defendant had not discussed the intended termination of the appointment with him. The termination was confirmed in the letter of the defendant dated 14.1.2005, to Mr. Flowers. I have no hesitation in concluding that the defendant either deliberately participated in, or aided the sale of the bonds without the knowledge of Mr. Flowers so as to deny him his remuneration. After all, the defendant was the holder of the legal title to the bonds. 18 26. It is my decision that by terminating the receivership, the defendant breached the agreement by which the claimant was appointed a receiver. The defendant first pleaded denial of breach, but amended that by simply deleting the denial and pleading that it was, “willing to pay reasonable charges in connection with the functions as a receiver”. As the consequence of the breach, the claimant is entitled, against the defendant, to damages for his losses, which are not remote, arising from the breach. 27. Damages (remuneration and reimbursement).The next logical question for determination is the sum to be awarded to Mr. Flowers as damages. It is my view, that the appropriate remuneration in the circumstances of this case, and costs properly incurred, are to be regarded as the measure for damages.28. The contentions that the receiver was to obtain his remuneration and costs only from monies coming into his hands from sale of the assets, seemed to have been abandoned, and rightly so. It is true that the receivership did not bring in any monies and therefore was not beneficial to Intelco and the secured creditors. That, however, was not19 because of any fault of the receiver. It is the law that court will not deprive a receiver of his remuneration solely on the ground that the receivership has not proved to be beneficial to the secured creditor or the debtor company See – Mellor v Mellor and Others [1992] 4 AllER 10. In the case, the receivership pursuant to an order of court obtained by the claimant- father was discontinued by consent of the father and the defendant-son who controlled the companies, upon certain undertakings about the running of the companies having been given by the son. It was held that the receiver was entitled to his remuneration although the receivership had not been beneficial. 29. Another reason was that the defendant in the present case, through its witness, admitted the entire content of the letter of indemnity and undertaking dated 1.11.2004, exhibit C(CF)10, issued by it to Mr.Flowers. The content was an unconditional promise by the defendant to pay the remuneration of the receiver and costs properly incurred, except of course, for the fundamental condition that the receiver would carry out his duties. The letter stated as follows:20 “Dear Mr. Flowers:Re: International Telecommunications Limited.In consideration for your agreement to act as receiver of the Charged Assets of the above- mentioned company, pursuant to an appointment to be made by us as Debenture Holder andTrustee, we hereby undertake to pay or reimburse you (as the case may require) so much of the expenses properly incurred by you in the performance of your duties as Receiver and so much of your remuneration for so acting as you are unable to recover from the monies coming into your hands as Receiver”.30. It is usual that a receiver of charged assets of a financially troubled business, or a liquidator in company winding up will look to the person making the appointment or the applicant for the court winding up order, for remuneration in the event, payment has not been obtained out of the sale of the assets or the company. The instrument21 of appointment, or a letter of undertaking, or the court order, will usually provide for that. 31. In any case, on the evidence for both parties, it was never an issue that no monies came into the hands of Mr. Flowers; and it seemed to be conceded eventually in the course of the long trial, that in the circumstances of this case, Mr. Flowers was entitled to claim his remuneration from RBTT Trust Limited. However, the manner of charging the remuneration remained an issue. Whereas it was claimed by Mr. Flowers that under the terms of his appointment he was entitled to charge his remuneration on the basis of a percentage of the value of the assets, “assigned”, it was contended by RBTT TrustLimited that the manner of charging remuneration was not agreed and so remuneration was to be charged, “on the basis of reasonableness”, which in this case was said to be, charging for the hours spent on the receivership work, the hourly basis. The rate suggested wasUS$150.00 per hour.32. The submission for the claim of Mr. Flowers was, that the instrument of appointment in this receivership adopted the terms of appointment22 and powers of the receiver, specified in the deed of debenture of24.3.2003, in particular, the terms in paragraph 7.04 regarding the remuneration and costs of the receiver. I accept that submission. The meaning urged in the submission is the only one I can read from the last part of the instrument of appointment.33. The details of paragraph 7.04 regarding remuneration, said to have been adopted as a term of the appointment of Mr. Flowers are the following:“7.04. The Company hereby covenants with the Trustee on demand to pay all costs charges and expenses incurred by the Trustee or by any such receiver or which it or he shall properly incur in or about the enforcement preservation or attempted preservation of this security or of the charged assets or any of them on a full indemnity basis with interest at the default rate from the date of payment by the Trustee or such receiver. Any such receiver shall be entitled to remuneration appropriate to the work and responsibilities involved upon the basis of23 charging from time to time adopted by such receiver in accordance with the current practice of his firm”.34. The defendant does not contest the meaning of paragraph 7.04. Its submission against applying paragraph 7.04 of the deed, in determining the remuneration of Mr. Flowers, was that the terms of the deed of debenture, including those in paragraph 7.04 did not apply to the appointment of Mr. Flowers, because he was not a party to the deed. It was an ingenious submission by learned counsel.Unfortunately for counsel, that effort was wiped out by an unequivocal admission by the defendant’s witness, Mr. Bayne, on at least two occasions in crossexamination, that RBTT Trust Limited andMr. Flowers adopted the terms of the deed of debenture, and paragraph 7.04 in particular, by reference, into the instrument of appointment. The first relevant passage in the crossexamination is as follows: “Q. Now Mr. Bayne, can you take a look at the instrument of appointment signed by –…24 Q. You are familiar with this document?A. Yes, I am.Q. According to this document, Mr. Flowers was appointed pursuant to the terms and subject to the powers and provisions of the debenture, is that correct?A. Yes, that is correct.Q. You know what that means?A. I think it means just what it says: the details of that appointment will be contained in the debenture document itself by reference.Q. It’s incorporated by reference?A. Yes.Q. Incorporated as you understand clause 7.04 as well?A. That is correct.…Q. And did Mr. Flowers accept this appointment on the terms and subject to the powers and provisions contained in the debenture?25 A. Yes, he did.Q. Mr. Bayne you will agree with me based on what you just said that as between you, RBTT Trust, by this instrument of appointment, incorporating provisions of that debenture, and Mr. Flower’s accepting that appointment there was an agreement between RBTT Trust and Mr. Flowers, for him to act as a receiver upon the terms and conditions contained in the debenture, you agree with that?A. Yes, I agree.Q. And based on what you’ve said Mr. Bayne, you will agree also that one of the terms of that agreement between yourself and Mr. Flowers was that he was to be remunerated on the basis of the terms, the practice in his firm you agree?A. Yes, I agree”.35. I will take advantage of the flow of crossexamination from there, and continue the quotation to show that the witness admitted unequivocally, the liability of the defendant to pay the remuneration26 of Mr. Flowers. It confirmed my earlier decision based on performance of obligation by Mr. Flowers. The crossexamination continued as follows:Q. When you appointed Mr. Flowers a receiver, who did you understand was responsible for his fees, his costs ?A. My understanding was that in appointing the receiver, we appointed him as agent for the company who was responsible for his fees and costs as outlined in the debenture documents.Court. Can you repeat that – “We appointed him”, that is…A. Mr. Flowers.Court. Appointing him as agent…?A. Agent for the company INTELCO, which company was responsible for his fees and expenses, and we further, understood that we had a responsibility…27 Q. So you are saying that INTELCO was responsible for paying Mr. Flowers his bill?A. Ultimately yes.Q. Can you tell His Lordship when you contactedINTELCO to pay his bill; when did you do that?A. …A. The answer is I did not. We did not contactINTELCO to pay Mr. Flowers’ fees and expenses.Q. Why not?A. …A: At that time the company INTELCO was in default, the ownership of the company was unclear.Q: Are you telling the court that no attempt has been made to collect the fees and expenses related to this receivership from INTELCO?A: That is correct.Q: Since you did not do that, who is responsible for the receiver’s fees and expenses?A. …28 A. Given INTELCO’S condition… The person responsible for settling of receiver’s fees would have been the person appointing the receiver.Q. And that is a mystery to us, tell us who that is.A. RBTT Trust Limited.…Q. … based on this letter you would be responsible to meet the expenses and fees of the receiver even if no monies came into his hands?A. I would agree.Q: You agree, and I want to be clear there is no condition in this undertaking that RBTT TrustLimited would only be responsible if he (Mr.Flowers) sold the charged assets and received money, no such conditions.A. Yes, there is no condition in this letter that RBTTTrust Limited to meet the fees and expenses of the receiver, if and only if he sold the charged assets and received money”.29 36. To bring his claim for the relief of damages within the terms in paragraph 7.04, that is that: “any such receiver shall be entitled to remuneration appropriate to the work and responsibilities involved upon the basis of charging from time to time adopted by the receiver in accordance with the current practice of his firm”, Mr. Flowers presented evidence to prove that the practice adopted by him in his firm was to charge for his remuneration, a percentage of the proceeds of sale, or of the value of the assets sold or otherwise disposed of. 37. The items of evidence he provided were charges he made in three previous receivership works. In each of them his final charge was calculated as a percentage of the receipts from sale or other manners of transfer of assets. The question was raised as to why in one of the receiverships, and in this receivership, Mr. Flowers issued several bills based on hourly charge. In this receivership, the bills were forNovember, December 2004, and January 2005. I was satisfied with the explanation that, usually receivership work lasts a long time, and the usual practice is to charge interim bills based on hourly rate, and the interim bills are eventually deducted from the final bill which is calculated on a percentage basis.30 38. In this receivership, Mr. Flowers demanded 3.5%. of US$26,266,049.38, the price paid by Belize Telecommunications Limited toRBTT Merchant Bank Limited to have the bonds transferred to BelizeTelecommunications Limited. By my calculation, the sum isUS$919,311.72, not US$931,036.73. claimed by Mr. Flowers. He advised RBTT Trust Limited that the statutory law in Belize allowed receivers to charge not more than 5%, unless parties had agreed; and that he was, “flexible”, about the percentage he would charge. RBTTTrust Limited did not reply. I concluded from the evidence thatRBTT Trust Limited chose not to engage in negotiation for the receiver’s remuneration because, it was at that moment participating in the sale of the bonds, or it had known of a parallel negotiation or arrangement by which the bonds, and therefore the benefit of the charge over the assets, would change hands without the knowledge of the receiver, and RBTT Trust Limited desired that the assets no longer be available to the receiver to sell. It would be an embarrassing dishonesty for an ordinary person. I did not believe Mr. Bayne that the defendant was not a party to the negotiations to sell the bonds which it was a trustee of and held the legal titles to.31 39. My decision is that Mr. Flowers was entitled, according to paragraph7.04 of the deed of debenture, to charge by percentage of receipt of income whether by sale, assignment or howsoever obtained, in this receivership because that was the basis of charging from time to time adopted by him in accordance with current practice in his firm. 40. There is, however, one other requirement in paragraph 7.04 about determining remuneration of the receiver, that I have to take into consideration, namely, whether in the circumstances of this case, the remuneration based on a percentage charge of 3.5% ofUS$26,266,049.38, that is, US$919,311.72, is remuneration“appropriate to the work and responsibilities involved”, in the work done by Mr. Flowers. That clause invites the court to consider whether the sum determined on a percentage basis, fixed at 3.5% is a reasonable sum, taking into account the nature and extent of the work done, any risk in or arising from the work, the professional skill and experience of the receiver, the time taken to do the work and others.So the criteria of “reasonableness” urged by the defendant comes in. 41. The submission for the defendant about the reasonableness of the fees 32 was, of course, an alternative submission to the submission that the parties did not agree on a manner to determine the remuneration of the receiver. I restate it as follows. If the court decides that the term in paragraph 7.04 applied, namely, that: “any such receiver shall be entitled to remuneration appropriate to the work and responsibilities involved, upon the basis of charging from time to time adopted by such receiver in accordance with the current practice of his firm”, then the case for Mr. Flowers and the submission by his counsel, did not take into consideration that the remuneration must also be,“appropriate to the work and responsibilities involved”. The work in this receivership was very little, and so was the responsibility, counsel for the defendant submitted. The work was only preliminary and was done only in a short period of two and one half months, he continued.Counsel then urged that in the circumstances, a reasonable fee would be one based on the hours worked.42. The submission is correct that a fee must be, reasonable. The full legal expression is, “fair and reasonable”. That rule applies to fees of many professionals, including fees of attorneys – see Property andReversionary Investment Corporation Ltd v Secretary of State for33 the Environment [1975] 2 All ER 436, a case concerning remuneration of an attorney for a conveyance work. 43. The factors that are taken into account in determining a fair and reasonable remuneration are many. They relate to the work, the value of the asset or work, and the professional. The work may be a difficult one, or a tedious one, or a simple one, or may involve the risk of losing other clients. The professional may be a very skilled and experienced one, or an average one, or a beginner. Even reputation counts. The case cited by Mr. Smith and Mr. Zuniga, BarbadosSugar Industry Limited v Barbados National Bank and Others(No1) 50 WIR 51, is to the point. In the case, the Court of appeal ofBarbados stated: “Generally speaking courts have been reluctant to award remuneration based solely upon the time spent by the appointee in performing his duties.They have preferred to award either a lump sum or a commission upon the amount collected or realised by the receiver”. 34 An equally good guidance was given in the Canadian case, Belyea and Fowler v Federal Business Development Bank, 46 CanadianBankruptcy 244. Compare Re Eastmond (1995) 50 WIR 76 andMaltby v D.J. Freeman ]1978] 2All ER 913 concerning attorneys fees.44. The submission by Mr. Smith relied directly only on the time taken to carry out the work, and presumably the hourly rate of US$150 took into account the skill and experience of Mr. Flowers. The submission did not take into account the general responsibility for the care and conduct of the receivership, and the nature of the items of work undertaken by Mr. Flowers. Even if the items of work done were at a preliminary stage, the work has already disclosed complicated tasks ahead. Several side arrangements and contracts were disclosed.Efforts to trace assets have already disclosed difficulties. Mr. Flowers also said that the task was politically sensitive and he had hesitated because of what it might do to his practice. I think the several factors mentioned by Mr. Flowers should be taken together with the short time he worked, to arrive at a fair and reasonable remuneration. It is my view, that charging on a percentage basis takes into account all the35 factors I have mentioned, and the period (hours) over which the work was carried out. The hourly basis does not. Instead it brought in an assessment based on quantum meruit, which is totally inappropriate in the circumstances of this case. 45. When Mr. Flowers proposed discussion of a percentage to be charged he acted reasonably. Both parties would have considered a reasonable percentage, taking into consideration the complexity or otherwise of the work, the general responsibility for the receivership, the skill and experience of Mr. Flowers, the comparatively short period over whichMr. Flowers worked and the value of the assets in the receivership.The defendant declined to discuss that. Mr. Flowers, thought that3.5% was a fair and reasonable percentage rate in the circumstances.In court in crossexamination, Mr. Bayne, witness for the defendant, confirmed that the rate of 3.5% was not unreasonable for the type of work. I cannot avoid comparing the fact that for merely arranging for the loan to purchase the bonds, RBTT Merchant Bank charged 2% and was paid US$525,328.98. The time taken to arrange the loan was not disclosed in the evidence, but it was certainly shorter than the timeMr. Flowers worked.36 46. While I accept that the estimate of a rate of 3.5% is not unreasonable,I however, consider it to be fair and reasonable to take into consideration that Mr. Flowers fixed the rate at 3.5% when contemplating proceeding with his work to conclusion. He must have contemplated the work to last for more than the two and one-half months during which he worked. The evidence has shown that Mr.Flowers would have met many difficult tasks in the course of his work ahead had he proceeded to the end. He has been relieved of the trouble although wrongfully. It is my view that some discounting of the 3.5% rate is desirable to achieve a fair and reasonable remuneration, given that the work was not completed, and ended in a shorter time than expected. 47. One cannot be absolutely accurate in making this type of estimation. I think a more fair and reasonable rate in the circumstances is 3% ofUS$26,266,049.38, the price at which the bonds were sold to BelizeTelecommunications Limited. The sum I awarded for the remuneration of Mr. Flowers computed at 3% is US$787,981.48. No award is made for office expenses. That is the law. Pursuant to s: 166 of the Supreme Court of Judicature Act, Cap. 91, I award interest at37 3% per annum on the judgment sum, from 3.2.2006, when the claim was filed, until today Friday 10th October 2008, the date of judgment.Interest at 6% per annum, is of course, chargeable on the judgment sum, of US$787,981.48, from today until payment in full, in accordance with s: 167 of the Act. 48. Much was said about the fact that sale of the bonds was not sale of the assets, so there were no proceeds of sale on which to charge a percentage as remuneration. I do not see the merit in that argument.The bonds were sold so that the secured debt about which a receiver was appointed could be paid to the secured creditor, the beneficiary of the bonds. As the result of the sale, the debt owed to the beneficiary of the bonds was fully paid and the beneficiary ceased to have a charge on the assets of Intelco; and the receivership ended. Intelco was relieved of its debt. The sale of the bonds was a stratagem aimed at denying remuneration to Mr. Flowers.49. Judgment is entered for the claimant against the defendant for:49.1 remuneration of US$787,981.48;38 49.2 interest at 3% per annum on US$787,981.48 from3.2.2006 to 10.10.2008;49.3 interest at 6% from 10.10.2008, until payment in full;49.4 costs incurred in the receivership, BZ$1,950.00.50. I shall mention that it is the law that remuneration and costs of a receiver is a charge on the charged assets to be sold.51. An order as to costs of these proceedings is adjourned (delayed) at the request of the parties, to allow them to file a draft consent order if, agreed.52. Permission is granted to parties to apply for an order as to costs.53. Delivered this Friday the 10th, October 2008, At the Supreme Court of Belize Belize City Sam Lungole Awich Judge Supreme Court39

In the Supreme Court of Belize, A s1

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