Wood v Gorbunova & Ors

A court-appointed receiver who initiates an application against a third party is generally treated like a litigant in another capacity who brings proceedings. Costs therefore ordinarily follow the event, and the third party’s recovery is not limited to the assets in the receivership. A receiver’s separate right of indemnity is narrower. The receiver may recover from the assets only reasonable costs and expenses properly incurred in performing the receivership, and the court may withhold part of that indemnity where the application was handled unwisely or inappropriately.

The applicants were receivers appointed over the estate of Boris Berezovsky. They sought directions and further powers concerning documents and settlement agreements held by Addleshaw Goddard LLP and involving members of the Patarkatsishvili family. The substantive order was agreed, but the parties remained in dispute about costs.

The court considered whether the receivers should personally pay the costs of third parties involved in the application, whether costs should be paid from the estate, and whether the receivers should be indemnified from the estate for their own costs and adverse costs orders.

1. A court-appointed receiver is an officer of the court and derives authority from the appointing order. The receiver acts impartially in accordance with the court’s directions and is not the agent or trustee of the party at whose instance the appointment was made (paras [24]–[25]).
2. Where the receiver initiates an application against a third party, the receiver is treated like a liquidator, trustee or personal representative who initiates proceedings against an outsider. Costs ordinarily follow the event (paras [33]–[36]).
3. Addleshaw Goddard LLP and the Patarkatsishvili family had acted properly and cooperated with the receivers. The receivers were ordered to pay their costs of the application on the standard basis, not the indemnity basis (paras [48]–[61]).
4. Ms Gorbunova was not a third party or outsider. Her costs were therefore ordered to come from the estate, with no personal costs order against the receivers (paras [62]–[63]).
5. The receivers’ indemnity extended only to reasonable costs and expenses properly incurred. They were allowed to recover two-thirds of the costs payable to Addleshaw Goddard LLP, all recoverable costs payable to the Patarkatsishvili family, and 85% of their own costs (paras [64]–[68]).

First-instance decision on costs arising from an application by court-appointed receivers for directions and further powers. The substantive order had been agreed before judgment.