In re Andrews

A court-appointed receiver’s reasonable remuneration and properly incurred expenses are expenses of the receivership. They are payable from assets under the court’s control and do not constitute costs of or incidental to the proceedings for the purposes of the court’s general costs jurisdiction.

This remains so when the property owner is acquitted and successfully obtains discharge of the receivership. Any claim to recover the resulting loss from the prosecutor must satisfy the statutory compensation regime, including its requirement of serious default. The court cannot circumvent those conditions by characterising the receiver’s charges as litigation costs.

Following allegations of tax fraud, restraint, charging and receivership orders were made against the appellant under Part VI of the Criminal Justice Act 1988. A court-appointed receiver took control of property including cash seized from him. After sums were released for his defence costs, the remaining £10,011 was used to meet the receiver’s remuneration and expenses.

The appellant was acquitted and obtained discharge of the restraint order. Owen J subsequently dismissed his application for an order requiring the Commissioners of Customs and Excise to repay the £10,011 as part of his costs.

The central issue on appeal was whether a successful party could recover the remuneration and expenses of a receiver as costs of or incidental to the High Court proceedings under section 51 of the Supreme Court Act 1981.

1. Appeal dismissed unanimously. Ward LJ delivered the leading judgment. Aldous LJ gave concurring reasons, and Hirst LJ agreed. The receiver’s remuneration and properly incurred expenses were expenses of the receivership. They were not costs of or incidental to the proceedings within section 51 of the Supreme Court Act 1981.

2. A receiver appointed by the court is its officer, not the agent of either party. The ordinary rule is that the receiver must look for indemnity to assets under the court’s control, so far as those assets extend. The party seeking the appointment does not become personally liable merely by making the application. A receiver’s lien may continue after discharge of the appointment.

3. The statutory definition of costs included fees, charges, disbursements, expenses and remuneration. That breadth did not determine whether a particular expense was incurred “of and incidental to” the proceedings. Charges arising from taking control of property and managing a business were management expenses of the receivership. Treating them as litigation costs would also require inappropriate inquiries into whether the receiver’s management had conferred a corresponding benefit.

4. Ward LJ acknowledged that the result appeared unfair because the appellant had been acquitted and his money had been used to meet expenses substantially associated with managing a company later found to belong beneficially to his son. Fairness could not create a jurisdiction which section 51 did not confer.

5. Section 89 of the Criminal Justice Act 1988 provided the statutory avenue for compensation following an acquittal. It required serious default by a person concerned in the investigation or prosecution and consequential loss arising from action taken under Part VI. No such default was alleged. The statutory conditions could not be avoided by presenting a compensation claim as an application for costs.

6. The possible application of article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms was left open because it had not been argued. The application for leave to appeal to the House of Lords was refused.

1. Court of Appeal: The appeal was dismissed unanimously. The court affirmed Owen J’s refusal to order the Commissioners of Customs and Excise to repay the receiver’s remuneration and expenses as costs. Leave to appeal to the House of Lords was refused.
2. Queen’s Bench Division: Owen J dismissed the appellant’s application for repayment of £10,011 used to meet the receivership expenses. No report or neutral citation is stated.
3. Queen’s Bench Division: Keene J had earlier discharged the restraint order against the appellant by consent and granted liberty to apply concerning costs. The receivership order was treated by the parties as discharged.