Sinclair v Glatt & Ors

A common account concerns property actually received by a fiduciary and how it has been dealt with. A claim that property should have been received requires an allegation of wilful default or breach of duty; it cannot be recast as an objection to an ordinary account. Properly incurred receivership expenses may be challenged where they are unrelated to the receivership, self-evidently unnecessary or extravagant, but the challenge must be properly particularised and supported. A prior order determining remuneration, expenses, disbursements and interest cannot generally be reopened by collateral objections that could have been raised earlier.

The applicant was the former receiver of assets subject to a criminal confiscation receivership. The beneficiaries challenged deductions from the receivership receipts, payments to a beneficial co-owner, the receiver’s entitlement to interest, and expenses incurred in managing and realising the assets. They also contended that earlier orders and the subsequent costs assessment prevented the receiver from claiming certain disbursements. The court had to determine the proper scope of a common account and the effect of the earlier judicial and costs determinations.

1. The receiver’s application succeeded. The beneficiaries’ six objections failed. The parties were invited to agree consequential orders, with outstanding costs to be assessed if not agreed.
2. A common account focuses on assets that have entered the receiver’s possession and have either not been accounted for, have been inaccurately accounted for, or have been improperly removed. A claim that assets should have been gathered in is in substance a claim for loss caused by breach of duty. It requires an account on the footing of wilful default, or separate proceedings for negligence or another breach of duty. The beneficiaries had expressly disclaimed such a claim and could not advance it through the present account application.
3. Unauthorised or improper payments out may be challenged in an ordinary account where the relevant property was received by the receiver. That principle did not assist the beneficiaries because the disputed payments were not unlawful. The court-appointed receiver’s position also had to be considered in light of In re Maidstone Palace of Varieties [1908] 2 Ch 288, under which complaints against a receiver are to be brought before the appointing court or pursued through an authorised alternative route.
4. The criteria used to assess the receiver’s remuneration under Civil Procedure Rules 1998, rule 69(7)(4), did not govern challenges to deductions from gross receipts. Such deductions could nevertheless be challenged if unrelated to the receivership, self-evidently unnecessary, or extravagant in the circumstances. The evidence established that the challenged storage, agents’ fees and other payments were properly incurred.
5. The 2010 order and resulting costs proceedings concerned the receiver’s remuneration, legal costs and associated disbursements. They did not determine deductions from gross receipts, but they did determine the receiver’s entitlement to interest. The beneficiaries could not reopen that determination by arguments which had been, or could have been, advanced at the earlier contested hearing.
6. Receipts received by an agent could in principle affect the calculation of interest. However, the managing agents’ contractual lien justified retaining rent until the relevant transactions and fees had been resolved. The interest calculation was therefore not improper.

This was a first-instance determination of applications arising from a long-running receivership. Earlier decisions included [2003] EWHC 1732 (Admin), [2009] EWCA Civ 176, [2010] EWHC 3619 (Admin), [2011] EWCA Civ 1317 and [2013] EWCA Civ 241. The present court determined the remaining objections and allowed the receiver’s application.