Hughes v Customs and Excise Comrs (Anderson v Customs and Excise Comrs, R v Crown Prosecution Service)

A receiver appointed under Part VI of the Criminal Justice Act 1988 is to be treated as an ordinary court receiver unless the legislation provides otherwise. Before a confiscation order is made, the receiver may recover proper remuneration and expenses from assets under the receivership. Section 88(2) makes the prosecutor liable only for any outstanding amount which cannot be met in that way.

After a confiscation order, sums must be paid gross to the justices’ clerk so that they reduce the defendant’s liability before the receiver is paid. This allocation of receivership costs, together with the statutory safeguards and limited compensation regime, is a proportionate control of property under Article 1 of the First Protocol.

These conjoined appeals concerned receivers appointed to preserve and manage assets pending criminal confiscation proceedings. In Hughes and R & Another, Hooper J held that an unconvicted defendant’s assets could not be used for receivership costs, save for unreasonable obstructive conduct. In Anderson, Collins J permitted recovery from specified assets after conviction but before a confiscation order.

The prosecuting authorities appealed. The common issue was whether management receivers appointed under the Criminal Justice Act 1988 and materially identical Drug Trafficking Act 1994 provisions could meet remuneration and expenses from assets under their control before a confiscation order, and whether that result was compatible with Convention property rights.

Appeals allowed unanimously. Simon Brown LJ gave the principal judgment, with which Laws LJ and Arden LJ agreed. The lower courts’ restrictions on payment of the receivers’ costs from the receivership assets were set aside.

1. A receiver appointed under Part VI of the Criminal Justice Act 1988 remains a recognisable court receiver. The statutory scheme does not form a self-contained code which displaces the ordinary incidents of receivership, including the right to meet proper remuneration and expenses from assets under control. This applies before a confiscation order as well as afterwards.

2. Sections 81(5) and 88(2) did not require the prosecutor to meet all receivership expenses until a confiscation order was made. Section 88(2) concerns an amount still due because the receiver has not been paid in full. Once a confiscation order is made, section 81 requires sums to be paid gross to the justices’ clerk. That payment reduces the sum payable under the order before the clerk pays the receiver’s remuneration and expenses.

3. The allocation of costs was compatible with Article 1 of the First Protocol. Restraint and receivership orders serve the substantial public interest in preventing dissipation of assets available for confiscation. The absence of automatic compensation for an acquitted or unconvicted defendant did not make the scheme arbitrary or disproportionate. Such a claim was in substance one for statutory compensation, available only within the limits of section 89.

4. Third-party interests were protected by the right to seek variation or discharge of restraint orders, the duty under section 82(4) to preserve their property value, and the available remedies for negligent action concerning non-realisable property.

Simon Brown LJ added that courts must scrutinise the need for, scope of and continuation of receivership orders, and control receivers’ costs carefully. Arden LJ further observed that remuneration must be authorised by the court under RSC Order 30, rule 3. She reserved for a future case the position of persons never charged who may lack access to statutory compensation.

• Court of Appeal (Civil Division): By [2002] EWCA Civ 734, allowed the prosecutors’ appeals and restored the receivers’ ability to recover proper costs from receivership assets before confiscation.
• High Court, Queen’s Bench Division (Administrative Court): Hooper J, on 21 December 2001, decided Hughes and R & Another together and held that an unconvicted defendant’s assets could not meet receivership costs, subject to unreasonable obstruction.
• High Court, Queen’s Bench Division (Administrative Court): Collins J, on 18 February 2002, decided Anderson and allowed limited recovery from specified assets after conviction but before confiscation.