Sinclair (in his capacity as the former receiver) v Glatt and others [2009] EWCA Civ 176 [2009] All ER (D) 149 (Mar)
Court of Appeal, Civil Division Longmore, Stanley Burnton and Elias LJJ 13 Mar 2009
In respect of a receiver appointed pursuant to s 77 of the Criminal Justice Act 1988 (CJA 1988), the lien for his remuneration, costs and expenses extends to assets in which the person the subject of the order has a bare legal interest.
G appeared in person. Michael Gadd (instructed by Olswang) for the executors. Andrew Bodnar (instructed by HCL Hanne & Co) for EG.
The first defendant solicitor, G, was arrested for money-laundering offences in January 1997. A restraint order was made in April 1997, and receivership and confiscation orders were subsequently made. It became apparent that various persons had clams on the assets caught by both the restraint order and the receivership order, including the executors of the estate of CG, G’s late mother. The executors claimed that they were entitled to the value of certain retained and sold shares and a property. The confiscation, restraint and receivership orders were subsequently quashed or discharged. It was subsequently held that the executors were beneficially entitled to the shares and property, although G had the bare legal title.
The receiver asserted a lien for his charges against the assets caught by the receivership order. It was held that the receiver had a lien for his charges against, inter alia, the shares and the property, despite G only having a bare legal title. A claim by EG, the divorced wife of G, that the receiver’s lien could only take effect subject to her claim for relief in matrimonial proceedings, was also dismissed. An appeal was brought against, inter alia, those orders.
Longmore LJ:
It was settled law that a receiver, appointed pursuant to CJA 1988, s 77 was entitled to recover his remuneration, costs and expenses from the assets which he had been appointed to receive (the receivership assets). That was so whether or not he ought to have been appointed in the first place or the order appointing him had been discharged. Even if the defendant, whose assets had been caught by the order appointing the receiver, was subsequently acquitted or had his conviction quashed, the receivership assets had to bear the costs of the receivership. Even if the receiver carried on his receivership unnecessarily and should have agreed that his receivership should have been discharged at a time before a court application was made to terminate his receivership, the receivership assets had to bear those costs reasonably incurred up to the date he was actually discharged.
That was all settled by authority. The question in issue on the appeal was whether the right of the receiver to recover his remuneration costs and expenses from the assets caught by the order extended to assets which did not belong to the defendant in the sense that they were not beneficially owned by him but by some other person such as a member of his family or a third party.
To some extent that would depend on the terms of the order of the court under which he was appointed. Obviously a receiver could not recover sums due to him from assets which were not mentioned in the order. The instant case concerned, however, assets mentioned in the order which either did not belong to the defendant at all or were not beneficially owned by him.
It was clear that a confiscation order was made in respect of the value of the realisable property rather than in respect of the realisable property as such and that it was at the time of ascertaining that realisable value that the beneficial interest in the property was to be taken into account. The express mention of “beneficial interest” in s 74(4) of CJA 1988 not only pinpointed the time when it was appropriate to have regard to the defendant’s beneficial interest instead of his legal interest but also itself militated strongly against the contention that property as defined in s 102(1) and (7) was only property in which the defendant had a beneficial interest. It was clear that the draftsman of the statute could differentiate between a beneficial interest and a legal interest when he wished to do so and any such differentiation was notably absent from s 102(1) and (7).
“Realisable property”
A further reason why G could not be right to say that “realisable property” could not include a defendant’s bare legal interest was its artificiality. He had to accept that, if a defendant had a 10% (or even 1%) beneficial interest in the property, it would then be realisable property and that the receiver’s lien would then attach. Such a construction would create anomaly and defy practical sense.
Those conclusions were consistent with Hughes v Customs and Excise Comrs; R v Crown Prosecution Service; Anderson v Customs and Excise Comrs [2002] 4 All ER 633.
It followed that the legislation recognised that the receiver’s costs should be paid from the estate rather than from the public purse.
His lordship considered the decision in Hughes further, and concluded that the receiver’s lien for his costs, expenses and remuneration extended to assets in which G had a bare legal interest.
As to EG, she had not yet obtained any property adjustment or other order in her matrimonial proceedings; she was, therefore, in no position to make any claim to the receivership assets in her own name. The most she had was the hope that, in due course, a court might make a property transfer order in her favour. If she did obtain such an order, there was no reason why the receiver could not exercise his lien for his charge up to the time of any such transfer. EG’s claim would fail.
Lords Justices Stanley Burnton and Elias delivered concurring judgments.
