The Director of the Assets Recovery Agency v Gale & Ors

A respondent’s limited means, incapacity, or lack of personal blameworthiness does not by itself justify relieving her of liability for costs. A good reason beyond limited means is required. Costs may instead be paid from assets controlled by a receiver only following a court order on an application on which the relevant parties have had an opportunity to be heard.

The court had previously assessed the Interim Receiver’s costs at £9,500 and reserved the question of payment for written submissions. The fourth respondent, Mrs Peel, was unable to manage her own affairs and was involved because assets in her name were alleged to belong in reality to the first respondent. She was not alleged to be personally blameworthy in the substantive proceedings. The issue was whether those circumstances justified relieving her of liability for the Receiver’s costs, or whether payment should be made from assets controlled by the Receiver.

1. Liability for costs. Although the court had sympathy for Mrs Peel’s position, her limited means, incapacity and absence of personal blameworthiness did not constitute a sufficient reason to avoid an order for payment. A good reason beyond limited means was required.
2. Payment from receivership assets. The possibility that the costs might properly be paid from assets controlled by the Interim Receiver did not itself determine liability. Such payment required a further order of the court in the substantive proceedings. The first respondent and the Assets Recovery Agency would have to be given an opportunity to be heard on that application.
3. Scope of the application. The court did not determine whether liability should be attributed, as between Mrs Peel and Mr Gale or her solicitors. That issue fell outside the present application.
4. Mrs Peel was ordered to pay the assessed costs of £9,500 within six weeks. Any further application concerning payment from receivership assets should preferably be considered in the substantive proceedings by the judge hearing them.