Kao Chai-Chau Linda v Fong Wai Lyn Carolyn: Dispute over Receivers and Managers' Fees in Airtrust (Singapore) Insolvency

In Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and others, the Singapore High Court addressed a dispute over the fees of receivers and managers (R&M) in the insolvency of Airtrust (Singapore) Pte Ltd. The R&M sought approval for $3.1 million in fees, later discounted to $2.18 million. The respondents, including Fong Wai Lyn Carolyn, Anthony Craig Stiefel, and Alvin Hong, contested the fees. Steven Chong J reduced the professional fees by 40% to $1.8 million, allowing the disbursements of $30,000 as charged. The court also proposed a system of 'costs scheduling' to improve transparency and fairness in insolvency practitioners' remuneration.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Quantum of professional fees reduced by 40% to $1.8 million; disbursements of $30,000 allowed as charged.

1.3 Case Type

Insolvency

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case concerning a dispute over the fees of receivers and managers in the insolvency of Airtrust (Singapore) Pte Ltd.

1.7 Decision Date

13 October 2015

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Kao Chai-Chau Linda	Plaintiff	Individual	Fees reduced	Partial	Jimmy Yim, Erroll Ian Joseph, Soo Ziyang Daniel, Mahesh Rai s/o Vedprakash Rai, Lee Yicheng Andrew
Fong Wai Lyn Carolyn	Defendant	Individual	Fees reduced	Partial	Tan Chuan Thye, Fu Qui Jun, Jonathan Lee Zhongwei
Anthony Craig Stiefel	Defendant	Individual	Fees reduced	Partial	Tan Chuan Thye, Fu Qui Jun, Jonathan Lee Zhongwei
Alvin Hong	Defendant	Individual	Fees reduced	Partial	Lee Eng Beng, Loh Chin Leong Ryan, Zhu Ming-Ren Wilson
Airtrust (Singapore) Pte Limited	Defendant	Corporation	Fees reduced	Partial	Manoj Pillay Sandrasegara, Rajan Menon Smitha, Chng Zi Zhao Joel, Tan Mei Yen

3. Judges

Judge Name	Title	Delivered Judgment
Steven Chong	Judge	Yes

4. Counsels

Counsel Name	Organization
Jimmy Yim	Drew & Napier LLC
Erroll Ian Joseph	Drew & Napier LLC
Soo Ziyang Daniel	Drew & Napier LLC
Mahesh Rai s/o Vedprakash Rai	Drew & Napier LLC
Lee Yicheng Andrew	Drew & Napier LLC
Tan Chuan Thye	Rajah & Tann Singapore LLP
Fu Qui Jun	Rajah & Tann Singapore LLP
Jonathan Lee Zhongwei	Rajah & Tann Singapore LLP
Lee Eng Beng	Rajah & Tann Singapore LLP
Loh Chin Leong Ryan	Rajah & Tann Singapore LLP
Zhu Ming-Ren Wilson	Rajah & Tann Singapore LLP
Manoj Pillay Sandrasegara	Wong Partnership LLP
Rajan Menon Smitha	Wong Partnership LLP
Chng Zi Zhao Joel	Wong Partnership LLP
Tan Mei Yen	Wong Partnership LLP
Chelva Retnam Rajah	Tan Rajah & Cheah

4. Facts

Airtrust was placed into voluntary receivership to gain reprieve from legal disputes.
The R&M filed four separate applications seeking court sanction for their bills of costs.
A 30% discount was offered by the R&M but did not satisfy the other parties.
The first, second, and third defendants offered qualitative critiques without suggesting appropriate quantum.
The plaintiff sought to restrain the defendants from holding an Extraordinary General Meeting.
The R&M's terms of reference included managing Airtrust's bank account and employment contracts.
The R&M practiced time-cost billing.

5. Formal Citations

Kao Chai-Chau Linda v Fong Wai Lyn Carolyn and others, Summons No 4976 of 2014 in Suit No 428 of 2010, [2015] SGHC 260

6. Timeline

Date	Event
1972-01-01	Airtrust set up by the late Mr Peter Fong
2008-01-01	Mr Fong passed away
2010-01-01	Suit No 428 of 2010 commenced
2012-01-17	Parties agreed to place Airtrust into receivership
2012-01-17	Consent order placing Airtrust into receivership
2012-06-08	First Bill filed
2012-09-04	Choo Han Teck J applied a further 12% reduction on top of the 30% discount offered
2013-02-08	Second Bill filed
2013-09-18	Third Bill filed
2014-08-12	R&M's solicitors informed respondents of $3.1m in fees and disbursements
2014-10-03	Summons No 4976 of 2014 filed
2015-01-12	Parties attended court; application adjourned for supplementary affidavit
2015-02-02	Mr Aaron Loh filed a supplementary affidavit
2015-03-04	Mr Aaron Loh filed another affidavit providing responses to queries
2015-03-09	Parties attended court; quantum of professional fees reduced by 40%
2015-10-14	Decision Date

7. Legal Issues

Remuneration of Receivers and Managers
- Outcome: The court reduced the quantum of professional fees sought by the R&M by 40%.
- Category: Substantive
- Sub-Issues:
  - Reasonableness of fees
  - Necessity of work performed
  - Duplication of work
  - Appropriateness of hourly rates
Costs Scheduling
- Outcome: The court proposed a system of costs scheduling to improve transparency and fairness in insolvency practitioners' remuneration.
- Category: Procedural
- Sub-Issues:
  - Implementation of costs scheduling system
  - Transparency in fee arrangements
  - Fairness to insolvency practitioners

8. Remedies Sought

Approval of receivers and managers’ fees
Determination of proper level of fees

9. Cause of Actions

Disputes over professional fees
Challenges to lawyers’ fees
Disputes over the fees of insolvency practitioners

10. Practice Areas

Commercial Litigation
Insolvency
Corporate Restructuring

11. Industries

No industries specified

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Airtrust (Singapore) Pte Ltd v Kao Chai-Chau Linda and another suit	High Court	Yes	[2014] 2 SLR 673	Singapore	Cited as one of the legal actions commenced against members of the late Mr Fong’s family and against Airtrust.
Fong Wai Lyn Carolyn v Airtrust (Singapore) Pte Ltd and another	High Court	Yes	[2011] 3 SLR 980	Singapore	Cited as one of the legal actions commenced against members of the late Mr Fong’s family and against Airtrust.
Liquidators of Dovechem Holdings Pte Ltd v Dovechem Holdings Pte Ltd (in compulsory liquidation)	High Court	Yes	[2015] SGHC 167	Singapore	Cited for the observation that any adjustment made by the courts in the absence of a mathematical formula for calculating fees can be criticised as arbitrary.
Lee Kuan Yew v Tang Liang Hong and another and other suits	High Court	Yes	[1997] 1 SLR(R) 328	Singapore	Cited for the principle that the central purpose of receivership is the interim preservation of disputed property pending its final resolution.
Mirror Group Newspapers plc v Maxwell and others (No 2)	High Court	Yes	[1998] 1 BCLC 638	England and Wales	Extensively cited for principles regarding the duties of office-holders, the burden of proof on receivers to justify their remuneration, and the concept that remuneration should reward value, not indemnify against cost.
Re Econ Corp Ltd (in provisional liquidation)	High Court	Yes	[2004] 2 SLR(R) 264	Singapore	Cited for the principle that the general principles regarding remuneration are applicable to other insolvency practitioners and for the definition of 'value' in terms of the difference the insolvency practitioner has made to the matter.
Capewell v Revenue and Customs Comrs and another	Court of Appeal	Yes	[2007] 1 WLR 386	England and Wales	Cited for the historical origins of curial receivership in the Court of Chancery.
Re Manchester and Milford Railway Company ex parte Cambrian Railway Company	Court of Appeal	Yes	(1880) 14 Ch D 645	England and Wales	Cited for the historical distinction between 'receivers' and 'managers'.
Bristowe v Needham	Court of Chancery	Yes	(1847) 2 Ph 190	England and Wales	Cited for the general principle that the court will not permit recovery of services performed without prior sanction.
Ide v Ide and others	Supreme Court of New South Wales	Yes	(2004) 50 ASCR 324	Australia	Cited for the principle that performing work that benefits the company is not a sufficient basis for remuneration if the work is outside the remit of the receivership.
Venetian Nominees Pty Ltd v Conlan	Supreme Court of Western Australia	Yes	(1998) WASC 273	Australia	Cited for the disallowance of costs for preparing statutory returns, as that was the duty of the directors, not the provisional liquidator.
In re Potters Oils Ltd	High Court	Yes	[1986] 1 WLR 201	England and Wales	Cited for the principle that the court is ill-equipped to conduct a detailed investigation of receivers’ charges on an itemised basis.
Re Stockford Ltd (subject to deed of company arrangement); Korda and Another (as joint and several deed administrators)	Federal Court of Australia	Yes	(2004) ACSR 279	Australia	Cited for the two-stage approach to determining appropriate remuneration: first arriving at a 'lodestar' amount, then adjusting it.
Re Roslea Path Ltd (in liquidation)	High Court	Yes	[2013] 1 NZLR 207	New Zealand	Cited for the principle that the court must exercise its discretion judicially, taking into account all relevant information presented by the parties.
Conlan as liquidator of ROWENA NOMINEES PTY LTD (rec and mngr apt) (in liq) (CAN 008 818 273) v Adams and Others	Supreme Court of Western Australia	Yes	(2008) ACSR 521	Australia	Cited for the criticism of an uncritical and impressionistic use of the 'broad brush' approach in taxing costs.
Re Independent Insurance Co Ltd (in provisional liquidation) (No 2)	High Court	Yes	[2003] 1 BCLC 640	England and Wales	Cited for the acceptance of assessors to assist the courts, particularly where the bill is very large and the issues very complex.
Re Carton Ltd	High Court	Yes	[1923] All ER Rep 622	England and Wales	Cited for the observation that even the best accountants might spend their time unproductively and on unnecessary work.
Jones v Secretary of State for Wales	Court of Appeal	Yes	[1997] 1 WLR 1008	England and Wales	Cited for the principle that what is relevant is not the charge-out rate of the practitioner in question but the general rate levied by a person of equivalent status and experience.
Re Peregrine Investments Holdings Ltd & Ors	High Court	Yes	[1998] 3 HKC 1	Hong Kong	Cited as an example of a case where the overall size of the bill and the sheer number of billable hours involved left the judge greatly troubled.
The Royal Bank of Scotland NV (formerly known as ABN Amro Bank NV) and others v TT International Ltd and another appeal	Court of Appeal	Yes	[2012] 4 SLR 1182	Singapore	Cited for the principle that transparency in the affairs of a distressed company is essential.
Paul’s Retail Pty Ltd and Another v Morgan	Supreme Court of New South Wales	Yes	[2009] NSWSC 1222	Australia	Cited for the principle that the presence of informed and free consent to remuneration to a particular quantum is a factor that militates against curial review.
Medforce Healthcare Services Ltd (in liq), Re	High Court	Yes	[2001] 3 NZLR 145	New Zealand	Cited for judicial criticism that the previous rates had failed to keep up with the times.
Medforce Healthcare Services Ltd (in liq) (No 2), Re	High Court	Yes	[2001] 3 NZLR 158	New Zealand	Cited for judicial criticism that the previous rates had failed to keep up with the times.
Re Independent Insurance Co Ltd (in provisional liquidation)	High Court	Yes	[2002] BCLC 709	England and Wales	Cited for the example of provisional liquidators applying for and being granted permission for monthly interim payments to be made out to them on account.
Re Micropolis (S) Ltd	High Court	Yes	[1998] 3 SLR(R) 265	Singapore	Cited for the decision that the wording of r 173 was unambiguous and required that the liquidators insist on a taxed bill before payments could be made out of the assets of the company.

13. Applicable Rules

Rule Name
Rules of Court (Cap 322, R 5, 2014 Rev Ed)

14. Applicable Statutes

Statute Name	Jurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed)	Singapore
Supreme Court of Judicature Act (Cap 322, 2007)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Receivers and managers
Insolvency practitioners
Bills of costs
Time-cost billing
Costs scheduling
Remuneration
Disbursements
Fees estimate
Over-servicing
Duplication of work

15.2 Keywords

insolvency
receivership
professional fees
costs scheduling
Airtrust
Singapore
court
fees
managers
receivers

16. Subjects

Insolvency
Professional Fees
Receivership
Costs Scheduling

17. Areas of Law

Insolvency Law
Civil Procedure
Receivership