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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Glatt v Heath Sinclair (The Former Court Appointed Receiver) [2010] EWHC 3069 (Admin) (01 December 2010) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2010/3069.html Cite as: [2011] Lloyd's Rep FC 143, [2010] EWHC 3069 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		01/12/2010

Mr Justice Kenneth Parker :

1. On 4 November 2010 I held that the Applicant, Louis Glatt, had no realistic prospect of success in bringing an action against the Respondent, Heath Sinclair. Heath Sinclair is the former receiver of the estate of Louis Glatt, having been appointed under the provisions of the Criminal Justice Act 1988. The appointment was terminated following the quashing of the confiscation order.
2. I refer to my judgment of 4 November 2010 for the full reasons why I concluded that the Applicant had no realistic prospect of success in the action that he had already commenced against the Respondent alleging breach of duty during the course of the receivership.
3. The Respondent now applies for his costs of that application, such costs to be recovered from the assets falling within the terms of the receivership which are subject to a lien in his favour. Both parties have submitted written submissions on this application for costs.
4. The short point on this application for costs is whether the costs of successfully resisting the Applicant's application for permission can properly be taken from the assets over which the relevant lien extends.
5. The entitlement to costs from the estate derives from paragraph 5 of the receivership order made by Mr Justice Morrison under the provisions of the Criminal Justice Act 1988 on 15 February 2001. The relevant part of that paragraph reads as follows:

"The costs of the receivership shall be paid out of the assets received or managed by the receivers in priority to any other payments… but if no or insufficient assets are so received or so managed the costs of the receivership to the extent of the deficiency should be paid by the Commissioners of Customs and Excise."

6. There is no dispute between the parties that the terms of paragraph 5 which I have cited fell properly within the powers of the Court under the Criminal Justice Act 1988. A succinct and authoritative statement of the law in this area was given by the Court of Appeal in Glatt v Sinclair [2009] EWCA Civ 176 by Longmore LJ:

"It is now settled that such a receiver, like a receiver at common law, is entitled to recover his remuneration, costs and expenses from the assets which he has been appointed to receive ("the receivership assets"). That is so whether or not he ought to have been appointed in the first place or the order appointing him has been discharged, see Mellor v Mellor [1992] 1 WLR 517. Even if the defendant, whose assets have been caught by the order appointing the receiver, is subsequently acquitted or has his conviction quashed, the receivership assets must bear the costs of the receivership; this is also the position if, as in the present case, a confiscation order is made but subsequently quashed, Hughes v Customs and Excise Commissioners [2003] 1 WLR 177. Even if the receiver carries on his receivership unnecessarily and should have agreed that his receivership should have been discharged at a time before a court application is made to terminate his receivership, the receivership assets bear those costs reasonably incurred up to the date he is actually discharged. Capewell v Revenue and Customs Commissioners [2007] 1 WLR 386."

7. In Glatt v Sinclair the Court of Appeal held that the former receiver held a lien over the estate that was under his control even though some of the property was merely held by Mr Glatt because he held a bare legal interest in the material. Mr Zelin, on behalf of Mr Glatt, contends that the costs of the present application were not costs of the receivership within the terms of paragraph 5 of the order made by Mr Justice Morrison. He says that the receivership was discharged on 25 April 2006, two years before the claim form was issued. The application to which the costs relate was not launched until 5 September 2008. The costs of the application were incurred long after the receivership was discharged.
8. However, in my judgment the application before the Court was for permission to sue the former receiver in respect of his role as receiver and not in any personal capacity. That application was for permission to sue the Court's officer and it was properly issued in the Administrative Court and in the receivership proceedings notwithstanding the discharge of the former receiver. It therefore involved the administration of the receivership and/or the conclusion of its affairs and was not unrelated to his role as receiver.
9. Furthermore, it was simply fortuitous that the Applicant did not commence the action until the receiver had been discharged. That application could have been brought and arguably should have been brought during the time before the discharge of the receiver. If that had happened there appears to be no question at all that the costs would be costs of the receivership in accordance with the terms of the order of 15 February 2001. Whether or not the receiver should be entitled to the costs out of the receivership assets in respect of an application of this kind should not depend upon the fortuitous event of when the action and the application took place. With respect, I do not believe that Longmore LJ in Glatt v Sinclair had in contemplation a case of the present nature when he formulated the last sentence in the passage cited at paragraph 4 above. The issue is one of principle, and in my view the answer in the present context should not depend upon the fortuitous contingency of when an applicant launches his claim against the receiver and when he seeks permission from this Court.
10. Secondly, the Applicant submits that the position in the present case is similar to that where a trustee's conduct is attacked by a beneficiary. It is said that this is the kind of dispute that was categorised in Alsop Wilkinson v Neary [1996] 1 WLR 1220 as a beneficiary dispute, and a passage from the judgment of Mr Justice Lightman in that case is relied upon where he draws a distinction between a trust dispute and a beneficiary dispute.
11. However, a very similar argument was advanced and rejected in Manning and Heath Sinclair v Louis Glatt and Esther Glatt [2003] ECHC 1732 (Admin). As regards that argument, Munby J (as he then was) made the following observations:

"55. All that is necessary for present purposes is to emphasise, as those authorities show, that a receiver appointed under the 1988 Act is, like any other receiver appointed by the court, an officer of the court, not the agent of either party, and that such a receiver, like any other receiver appointed by the court, is entitled to look only to the assets under the control of the court for his indemnity and not to the parties. As Warrington J said in Boehm v Goodall at p161:

"Do the principles of the cases with reference to trustees or persons standing in a fiduciary capacity apply to the case of a receiver and manager appointed by the Court? I cannot come to the conclusion that they do without running counter to the decisions in all the cases relating to receivers and managers appointed by the Court. Such a receiver and manager is not the agent of the parties, he is not a trustee for them, and they cannot control him. He may, as far as they are concerned, incur expenses or liabilities without their having a say in the matter. I think it is of the utmost importance that receivers and managers in this position should know that they must look for their indemnity to the assets which are under the control of the Court. The Court itself cannot indemnify receivers, but it can, and will, do so out of the assets, so far as they extend, for expenses properly incurred: but it cannot go further"."

12. As to the specific argument advanced, Mr Justice Munby said as follows:

"59 Mr Krolick sought to draw an analogy between a receiver and a trustee and in that connection referred me to In re Beddoe, Downes v Cottam [1893] 1 Ch 547 and Alsop Wilkinson v Neary [1996] 1 WLR 1220. The analogy is not helpful, indeed as Boehm v Goodall shows it is wholly inapposite. I therefore say nothing more about these cases."

13. Given the position of a court appointed receiver as explained in the authorities, I also reject the suggested analogy as unhelpful and wholly inapposite.
14. Thirdly, the Applicant points out that he is in receipt of public funding and enjoys costs protection under Section 11 of the Access to Justice Act 1999. The extent to which he can be required to contribute to the former receiver's costs is accordingly limited. His contribution is limited to an amount to be determined in accordance with Section 11 and the Community Legal Service Costs Regulations 2000 (see the costs practice direction, Sections 21 and 22, the guidance notes on the application of Section 11 Access to Justice Act 1999 issued by the Senior Costs Judge set out at p1459 of the White Book, Vol 1).
15. However, the former receiver's claim to costs can only extend to the value of the property over which he has a lien and can extend no further. It does not seem to me that Section 11 of the Access to Justice Act 1999 has the effect as contended by the Applicant of denying the former receiver the ability to rely upon a costs order to the extent that he is entitled to such costs from the receivership estate if they fairly and squarely fall within the terms and within the purpose of such order, as is the case here.
16. In short, the receiver's costs of resisting this application in the Administrative Court were costs of the receivership within the meaning of paragraph 5 of the receivership order made on 15 February 2001, and there is nothing in the authorities or in Section 11 of the Access to Justice Act that precludes this court from giving effect to that order and declaring that the costs should be paid out of the receivership assets which are subject to a lien in favour of the Respondent.