Capewell (Respondent) v. Her Majesty's Revenue and Customs (Appellants) and another

A statutory management receiver appointed under the Criminal Justice Act 1988 remains subject to the ordinary law of receivership unless legislation expressly provides otherwise. Remuneration and expenses are ordinarily payable from the receivership assets. CPR 69.7 is a procedural provision and does not authorise a fundamental departure from that statutory and common-law scheme by making the prosecutor responsible for remuneration because the receivership should have ended earlier.

An unappealed order governing payment also gives the receiver legitimate security that the terms of appointment will not retrospectively be altered.

Customs obtained a restraint order and the appointment of a management receiver over Mr Capewell’s realisable property while he faced charges connected with alleged VAT carousel fraud. The appointment order provided that the costs of the receivership were to be paid under an agreement which contemplated payment from assets brought in by the receiver.

Lindsay J declined to discharge the receiver on the basis of unquantified allegedly excessive remuneration. Davis J later discharged the receiver and made an interim award of remuneration. The Court of Appeal, in [2005] EWCA Civ 964, concluded that the receiver should have been discharged from an earlier date and ordered Customs to pay remuneration from that date under CPR 69.7(2).

The central issue was whether CPR 69.7 had changed the established rule that a statutory receiver’s remuneration is payable from receivership assets.

1. Appeal allowed unanimously. Lord Walker delivered the substantive speech. Lords Nicholls, Hoffmann, Rodger and Mance agreed. The House set aside paragraph 4 of the Court of Appeal’s order, which had made Customs responsible for the receiver’s remuneration after 1 June 2004.

2. Per Lord Walker, a receiver appointed under Part VI of the Criminal Justice Act 1988 is, unless statute expressly provides otherwise, a court receiver subject to the ordinary law of receivership. The basic rule is that a receiver is indemnified for proper remuneration and expenses from the assets under the court’s control. The statutory provisions concerning payment following a confiscation order do not displace that rule. Section 88(2) is a statutory long-stop where the receiver has not been paid in full.

3. CPR 69.7 applies generally to receiverships, but its procedural terms do not override the scheme inherent in the detailed provisions of the 1988 Act. Rule 69.7(2) therefore did not confer a discretion to shift the receiver’s remuneration from receivership assets to Customs because the ordinary rule might cause hardship. The Court of Appeal was wrong to hold that the rule had made such a fundamental change.

4. Lord Walker also identified an independent, narrower ground. Jackson J’s unappealed appointment order directed that the costs of the receivership be paid under the remuneration agreement. A receiver accepts substantial responsibilities in reliance on the terms of appointment. Those terms should not be retrospectively changed merely because an appellate court later decides that the receivership ought to have ended earlier.

5. The parties were invited to make written submissions within 14 days on the remaining costs provisions in the Court of Appeal’s order and on the costs of the appeal.

• House of Lords: Allowed Customs’ appeal and set aside the part of the Court of Appeal’s order making Customs responsible for remuneration.

• Court of Appeal: In [2005] EWCA Civ 964, held that the receiver should have been discharged from 1 June 2004 and, at the consequential stage, ordered under CPR 69.7(2) that Customs should pay remuneration from that date.

• High Court: Lindsay J dismissed an earlier application to discharge the receiver. Davis J later discharged the receiver and made an interim award of £100,000 towards remuneration.