Glatt v Heath Sinclair (The Former Court Appointed Receiver)

The costs of an application to sue a former court-appointed receiver for conduct in that capacity may constitute costs of the receivership, even where the receivership has been discharged. The relevant question is whether the application concerns the administration or conclusion of the receivership and the receiver’s role as an officer of the court. Entitlement should not turn on the fortuity of when the claim or permission application was issued.

A court-appointed receiver’s indemnity is obtained from assets under the court’s control. The position is not governed by the principles applicable to trustees or fiduciaries. Statutory costs protection does not prevent recovery from receivership assets within the scope of the costs order, subject to the value of the property over which the receiver has a lien.

The applicant had brought an action against the former receiver of his estate, alleging breach of duty during the receivership. The court had previously held that the action had no realistic prospect of success. The respondent then applied for his costs of resisting the permission application, seeking recovery from receivership assets subject to his lien.

The receivership had been discharged before the claim and permission application were issued. The applicant argued that the costs were therefore outside the receivership order, that the dispute resembled a beneficiary dispute concerning a trustee, and that public funding and Access to Justice Act 1999 costs protection restricted recovery.

1. The application was dismissed in substance and the respondent’s costs were ordered to be paid from the receivership assets subject to his lien.
2. The relevant receivership order provided that the costs of the receivership were payable from assets received or managed by the receiver. The application concerned permission to sue the former receiver in respect of his role as receiver, not any personal capacity. It was properly brought in the Administrative Court and in the receivership proceedings. It therefore involved the administration of the receivership or the conclusion of its affairs.
3. The fact that the receivership had been discharged before the claim was issued did not alter the analysis. The application could have been brought during the receivership. Entitlement to costs should not depend on the fortuitous timing of the claim or permission application.
4. The suggested analogy with trustee or beneficiary disputes was rejected. A court-appointed receiver is an officer of the court, not the agent or trustee of either party. The receiver looks for indemnity to assets under the control of the court, so far as those assets extend. The reasoning in Boehm v Goodall was applicable, while the trustee analogy drawn from Alsop Wilkinson v Neary and In re Beddoe, Downes v Cottam was unhelpful and inapposite.
5. The applicant’s public funding and costs protection under section 11 of the Access to Justice Act 1999 limited any personal contribution but did not prevent the respondent relying on the costs order to recover costs properly falling within it from the receivership estate. Recovery could not exceed the value of the property over which the respondent held a lien.