Re G
| Jurisdiction | England & Wales |
| Judge | Mr Justice Munby |
| Judgment Date | 13 May 2008 |
| Neutral Citation | [2008] EWHC 798 (Admin) |
| Date | 13 May 2008 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CJA No 32 of 1997 |
[2008] EWHC 798 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Munby
Case No: CJA No 32 of 1997
In the matter of Louis Glatt
In the matter of the Criminal Justice Act 1988
Mr Andrew Mitchell QC and Ms Abigail Barber (instructed by RCPO) for the applicant (receiver)
Mr Alan Newman QC and Mr Paul Spencer (instructed by Edward Hayes) for the first respondent (Mr Louis Glatt)
Mr Andrew Bodnar (instructed by Hanne & Co) for the second respondent (Mrs Esther Glatt)
Mr Michael Gadd (instructed by Olswang) for the interveners (executors of Chaja Glatt)
Hearing date: 23–25 January 2008
A receiver appointed in accordance with the Criminal Justice Act 1988 seeks to assert a lien for his costs, expenses and remuneration over assets which he says were comprised in the receivership estate. Various third parties, while by and large not disputing that the receiver has a lien, dispute that the lien extends in the circumstances to those assets which belong beneficially to them. The question is who is right.
The background
Mr Louis Glatt ("Mr Glatt") was arrested on 28 January 1997. A restraint order was made against him pursuant to section 77(1) of the Act on 16 April 1997 by Keene J. Mr Glatt was convicted of money laundering on 12 February 2001. A receiver and manager of his estate was appointed pursuant to section 77(8) of the Act by Morison J on 15 February 2001 (originally there were two receivers but one of them subsequently retired from the receivership). He was sentenced to seven years' imprisonment on 23 July 2001. A confiscation order was made pursuant to section 71 of the Act on 29 May 2002. But it was quashed by the Court of Appeal, Criminal Division, on 17 March 2006, essentially because it served no proper legislative purpose and was neither necessary nor fair: R v Louis Glatt [2006] EWCA Crim 605 at paras [150], [154]. The receiver was discharged by an order made by Stanley Burnton J on 25 April 2006, that order discharging both the order made by Keene J and the order made by Morison J.
Various claims by third parties were made to certain of the assets which the receiver asserted were comprised in Mr Glatt's estate. On 2 August 2002 I gave comprehensive directions designed to ensure the orderly litigation of these claims. Paragraph 1 of the order I made on that occasion directed that certain persons, including the executors of Mr Glatt's deceased mother, Mrs Chaja Glatt ("the Executors"), and Mr Glatt's brother, Mr Leslie Glatt, were to be joined as interveners, the Executors to safeguard the interests of Mrs Chaja Glatt's estate ("the Estate") and Mr Leslie Glatt, who is one of the Executors, to safeguard his personal interests. Paragraph 2 directed that any intervener who had a claim against any property held by Mr Glatt must serve notice of that claim on the Receivers. Paragraph 3 directed that:
"In so far as the … Receivers have a claim against any property held by a third party as property of Louis Glatt they must serve notice of that claim on the particular intervener … by … 20 September 2002."
In accordance with that order, both the Executors and Mr Leslie Glatt served Points of Claim on 20 September 2002. So far as is material for present purposes, the Executors made two separate claims: first, a claim that various shares (referred to in the Points of Claim as respectively the 'Retained Shares' and 'the Sold Shares') belonged beneficially to the Estate; secondly, a claim for a declaration that a freehold property which I shall refer to as Chessington belonged beneficially to the Estate. So far as is material for present purposes, Mr Leslie Glatt claimed that the proceeds of sale of various shares (referred to in the Points of Claim as 'the AB Ports Shares') belonged to him beneficially.
I need not go into the details, but all these claims were in large part resolved in favour of the Estate and, as the case may be, Mr Leslie Glatt; the claims in relation to the 'Retained Shares', 'the Sold Shares' and the 'AB Ports Shares' by an order I made on 10 May 2007 and the claim in relation to Chessington by a judgment which I gave on 16 January 2008: Re Glatt, Executors of Chaja Glatt v RCPO [2008] EWHC 43 (Admin).
So far as is material for present purposes the only other relevant third party claim is that brought against Mr Glatt by his former wife, Mrs Esther Glatt, who seeks ancillary relief pursuant to the Matrimonial Causes Act 1973. That claim has not yet been adjudicated.
The issue
The order I made on 10 May 2007 contained a recital that the receiver had agreed not to make any claim to a lien ("the receiver's lien") for his remuneration costs and disbursements of the receivership over any of the shares belonging to the Estate (other than certain of the shares referred to as 'the Part A Shares'). That agreement, it should be noted, did not extend to either Chessington or the AB Ports Shares.
The order further provided for the determination of the issue whether the receiver's lien attaches to the Part A shares, to Chessington and (subject to the question of whether the receiver was entitled to assert a lien claim against the AB Ports Shares or whether such claim was out of time) to the AB Ports Shares.
It is that issue which is now before me. I need not analyse the pleadings save to record that, in accordance with directions contained in the order I made on 10 May 2007, Points of Claim were served by the receiver on 30 August 2007. Points of Defence were served by Mrs Esther Glatt on 10 September 2007, seeking to immunise from the receiver's lien the assets which she hopes to obtain from Mr Glatt as a result of the ancillary relief proceedings. Also on 10 September 2007, Points of Defence were served by the Executors and Mr Leslie Glatt.
The hearing
The matter came on for hearing before me on 23 January 2008. The receiver was represented by Mr Andrew Mitchell QC and Ms Abigail Barber, Mr Glatt by Mr Alan Newman QC and Mr Paul Spencer, Mrs Esther Glatt by Mr Andrew Bodnar and the Estate and Mr Leslie Glatt by Mr Michael Gadd. In the nature of things, Mr Newman and Mr Spencer did not have a particularly active role to play. Mr Gadd and Mr Bodnar made common cause against Mr Mitchell and Ms Barber, though on some points their submissions differed.
At the end of the hearing I reserved judgment, which I now (17 April 2008) hand down.
The legal framework
I need not rehearse the details of the statutory scheme. It has been done many times and the outlines of the scheme are very familiar.
For present purposes the starting point is the basic principle of receivership at common law that a management receiver is entitled to be indemnified in respect of his costs, expenses and remuneration out of the assets in his hands as receiver: see Capewell v Revenue and Customs Commissioners [2007] UKHL 2, [2007] 1 WLR 386, at para [21] per Lord Walker of Gestingthorpe. The classic statement of principle is that of Warrington J in Boehm v Goodall [1911] 1 Ch 155 at page 161:
"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. It would be an extreme hardship in most cases to parties to an action if they were to be held personally liable for expenses incurred by receivers and managers over which they have no control."
It is common ground, except for Mr Bodnar, that the receiver's right to be indemnified extends to all of the assets subject to the receivership, not merely those in possession, and that the right is not extinguished by the discharge of the receivership or even the return of the assets: Mellor v Mellor [1992] 1 WLR 517 at page 527.
It is also common ground that exactly the same principles apply in the case of a management receiver appointed under section 77(8) of the 1988 Act: In re Andrews [1999] 1 WLR 1236, Hughes v Customs and Excise Commissioners [2002] EWCA Civ 734, [2003] 1 WLR 177, and Capewell v Revenue and Customs Commissioners [2007] UKHL 2, [2007] 1 WLR 386.
As Simon Brown LJ said in Hughes v Customs and Excise Commissioners [2002] EWCA Civ 734, [2003] 1 WLR 177, at para [50], in a passage approved by the House of Lords in Capewell v Revenue and Customs Commissioners [2007] UKHL 2, [2007] 1 WLR 386, at para [18]:
"Statutory receivers are to be treated precisely as their common law counterparts save to the extent that the legislation expressly provides otherwise. The statute is not to be regarded as an entirely self-contained...
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