Capewell v HM Customs & Excise & Anor

Receiver’s litigation costs arising directly from proceedings about continuation or discharge of a receivership may be dealt with as ordinary litigation costs. The court may order the party aligned with the receiver to pay them, instead of allowing recovery from realised assets.

CPR 69.7(2) gives the court a discretion, in special circumstances involving unfairness or hardship, to determine responsibility for a receiver’s remuneration. That power does not extend to expenses, which remain payable from realised assets in the ordinary way.

The appeal concerned consequential orders following an earlier appeal about a receivership made under section 77(8) of the Criminal Justice Act 1988. By the time of the earlier appeal, the receivership had been discharged by agreement and the substantive issue was no longer live. Questions remained about costs, remuneration and expenses.

The earlier appeal held that the receivership should have ended earlier and fixed 1 June 2004 as the appropriate discharge date. The present appeal addressed how the costs of the proceedings before Lindsay J and of the appeal, and the receiver’s remuneration and expenses between 1 June and 13 October 2004, should be borne.

1. The court made no order for costs as between Mr Capewell and Customs in the proceedings before Lindsay J, but ordered Customs to pay the receiver’s costs. Those costs were directly related to the discharge proceedings and fell within the ordinary litigation-costs jurisdiction under section 51 of the Supreme Court Act 1981 and CPR 44.3.
2. The ordinary practice is that a court-appointed receiver’s general costs are paid from realised assets. That practice did not prevent a different order for litigation costs. The receiver had no separate interest from Customs on the substantive issue and was jointly represented with it.
3. CPR 69.7(2) gives the court some discretion to determine responsibility for a receiver’s remuneration. It may be used in special circumstances where applying the ordinary rule would cause unfairness or hardship. The original payment arrangements could be reconsidered in light of changed circumstances.
4. The distinction between remuneration and expenses in CPR 69.7 and its Practice Direction had to be respected. The power to determine who was responsible for paying the receiver could not be extended beyond remuneration to expenses. Customs was therefore ordered to pay the receiver’s remuneration from 1 June to 13 October 2004, while expenses for that period remained payable from the assets subject to the receivership. The later Crown Court rules could not be used as a guide to interpreting the earlier procedural rule.
5. On the appeal costs, Mr Capewell was the substantial winner but had failed on whether Lindsay J should have discharged the receivership at the original hearing. Customs was ordered to pay half of Mr Capewell’s costs and all of the receiver’s costs.

• Court of Appeal (Civil Division): In the earlier appeal, reported at [2004] EWCA Civ 1628, the court held that the receivership should have ended earlier and fixed 1 June 2004 as the appropriate discharge date.
• Court of Appeal (Civil Division): In the present consequential appeal, the court made the costs, remuneration and expenses orders set out in the judgment.
• Queen’s Bench Division (Administrative Division): Lindsay J had dismissed the application to discharge the receivership and ordered that the receiver’s costs be costs in the receivership, with Customs’ costs payable by Mr Capewell: [2004] EWHC 1049 (Admin).