Re Glatt
| Jurisdiction | England & Wales |
| Judge | Lord Justice Davis,Lord Justice Moses,Lord Justice Maurice Kay |
| Judgment Date | 26 March 2013 |
| Neutral Citation | [2013] EWCA Civ 241 |
| Docket Number | Case Nos: C1/2012/1844 and C1/2012/2781 |
| Court | Court of Appeal (Civil Division) |
| Date | 26 March 2013 |
[2013] EWCA Civ 241
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MITTING J
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Maurice Kay
Lord Justice Moses
and
Lord Justice Davis
Case Nos: C1/2012/1844 and C1/2012/2781
Mr. Kennedy Talbot (instructed by Fox Williams LLP) for the Appellants.
Mr. Edmund Cullen QC (instructed by Mazars LLP) for the Respondent.
Hearing date: 12th March 2013
Introduction
The principal question, although by no means the only question, sought to be raised on this appeal is this. Can a receiver who was appointed by order of the court under the Criminal Justice Act 1988 recover remuneration, disbursements and expenses for work done relating to the receivership after the order has been discharged?
The appellants, represented by Mr Kennedy Talbot, say that he cannot. The respondent receiver, represented by Mr Edmund Cullen QC, says that he can.
Background facts
The issue arises in this way.
The respondent is a chartered certified accountant and a licensed Insolvency Practitioner. On 15 February 2001 he and Lee Manning were, on the application of the Commissioners of Customs and Excise, appointed by Order of Morison J to be receivers and managers of the assets of Louis Glatt, a solicitor. The Order conferred the usual wide powers on the receivers. Paragraph 5 of the Order provided that "the costs of the receivership shall be paid out of the assets received or managed by the receivers…." It was also provided, by paragraph 7, that the receivers should be allowed remuneration in accordance with the appended letter of agreement. That letter provided, among other things, that the receivers' remuneration was to be paid out of the monies brought in during the receivership. The remuneration was to be agreed by the Commissioners and ultimately determined by the High Court. An indemnity for remuneration and expenses was given by the Commissioners in the event that they exceeded sums realised. The Order was made (a Restraint Order having previously been imposed by Keene J as long ago as 16 April 1997) pursuant to s.77(8) of the Criminal Justice Act 1988. In due course, Mr Manning was discharged from the receivership. Nothing turns on that. I will hereafter refer in this judgment solely to "the receiver".
The assets scheduled to the Order were significant. They included a number of properties; several bank accounts; numerous shareholdings; and the assets of the solicitors' practice of Louis Glatt & Co.
The receivership was highly complex. Numerous applications to court were made, including an application for committal of Mr Glatt for contempt. There were also significant disputes as to the ownership of assets said to be within the ambit of the Order appointing the receiver.
Mr Glatt had been convicted on 12 February 2001 at Southwark Crown Court of a count of conspiracy to launder money. He was sentenced to seven years' imprisonment. On 29 May 2002 the trial judge also made a confiscation order under the provisions of the Criminal Justice Act 1988 in the sum of £3,787,330.
In 2003 Mr Glatt sought discharge of the receiver. He made extensive criticisms of the receiver's conduct. On 14 July 2003 Munby J delivered a detailed judgment rejecting these criticisms. He declined to discharge the receiver.
Munby J noted that by this time the receiver had lawfully incurred very substantial remuneration, expenses and disbursements which remained unpaid and which in principle he was entitled to have paid. Mr Glatt was however seeking to appeal against his conviction (which subsequently, it is to be gathered, was dismissed), sentence and the confiscation order. In such circumstances, Munby J directed that the remaining litigation in the receivership be stayed and the receivership should be restricted to what was described as a "care and maintenance" basis. An appropriate order was drawn up accordingly on 25 July 2003.
For some reason there was great delay in the appeal against the confiscation order itself. But ultimately it resulted in success for Mr Glatt. The Court of Appeal Criminal Division ruled on 17 March 2006 that the confiscation order should be set aside: [2006] EWCA Crim 605.
In the light of that disposal by the Court of Appeal Criminal Division, on ex parte application subsequently made and (it is to be apprehended) on the papers, Stanley Burnton J on 25 April 2006 ordered that the Receivership Order of Morison J of 15 February 2001 (and the prior Restraint Order of Keene J of 16 April 1997) be discharged. The receiver was apparently not notified in advance of that application. The Order said nothing about the resolution of outstanding matters in the receivership or about remuneration.
The disputes between the receiver and Mr Glatt (and interveners, being individuals or trusts connected with Mr Glatt and who were said to be beneficial owners of various of the identified assets) did not abate. Amongst other things, on 28 September 2007 Mr Glatt made an application for the detailed assessment of the receiver's costs and remuneration. The receiver had by now asserted a lien for his charges over the assets covered by the Receivership Order. One dispute was whether the receiver's lien extended to certain assets said to be beneficially owned by persons (including family members) other than Mr Glatt: albeit legal title had been vested in him. Munby J decided on 17 April 2008 that it did. That decision was upheld by the Court of Appeal on 13 March 2009. The Court of Appeal ruled that the lien for remuneration, arising out of the original Order of 15 February 2001, extended to assets legally vested in — even if not beneficially owned by — Mr Glatt: [2009] EWCA Civ 176.
On 3 December 2009 the receiver applied for permission to realise assets to meet his remuneration and costs. Interest was also claimed. Settlement proved not to be possible and the application was pursued to a court hearing. A witness statement of the receiver (his 15 th) dated 7 December 2010 prepared for the purposes of that hearing made clear — as previously submitted documents had also made clear — that the claim for remuneration and costs included a significant element, particularly in what was called "the fourth tranche", for the period up to 19 November 2010.
The matter came before Mitting J on 14 December 2010. Mr Glatt was represented by leading and junior counsel (as was the receiver). The interveners had been named as parties and had notice of the proceedings but decided not to attend and were not represented at the hearing. As the Order of 14 December 2010 expressly recites, however, they relied on the submissions and arguments of Mr Glatt.
In his judgment, Mitting J recorded, among other things, that leading counsel for Mr Glatt in argument accepted that the receiver was entitled to be paid a substantial sum on account of costs and remuneration. Leading counsel is recorded as submitting that "the sum which should be allowed on the third and fourth tranches" should be 75%. Mitting J made an order for payment of remuneration, expenses and disbursements and also interest. His Order (as to the meaning and effect of which there is now a dispute) in the relevant respects provided as follows:
"2. The application for an order for a determination of the former receiver's remuneration, expenses and disbursements be granted on the following terms:
'There be a determination of the receivership remuneration expenses and disbursements (costs) pursuant to CPR 69(7)(4) following the appointment of Heath Sinclair and Lee Manning as Receivers of the Applicant Louis Glatt pursuant to s.77(8) Criminal Justice Act 1988 on 15 February 2001, that determination being referred to a costs judge pursuant to CPR 69(7)(5);
PROVIDED THAT any paying party must issue an application for directions on or before 31 January 2011 in the Supreme Court Costs Office as to the process by which the determination is to be carried out by the costs judge. In the event that an application for directions is not issued as aforesaid the costs claimed by the respondent up to and including 19 November 2010 (excluding the cost of the 107 Station Road litigation or any appeal arising therefrom) shall be deemed to have been determined by the court pursuant to CPR r.69.7(3) in the sum of £1,423,016.37 (against which the former receiver shall give credit for sums received) and are payable in full together with (a) the reasonable costs of the former receiver certified by him as payable in respect of any costs incurred after 19 November 2010 as a result of the order of Mr Justice Mitting and (b) those amounts of interest which are to be calculated pursuant to the order of Mr Justice Mitting made on 14 December 2010".
IT IS FURTHER ORDERED THAT:
3. The respondent is entitled to simple interest on sums due but not paid at the rate of 5% per annum until payment. The application of interest is to be calculated by reference to the following principles and is currently calculated in respect of the interim payment ordered to be made under paragraph 4 below as itemised in the spreadsheet annexed hereto:
(a) On the amount ordered to be paid to the former receiver with effect from 25 July 2003, from that date totalling £96,813.34 to 14 December 2010 and accruing daily thereafter;
(b) On the budgeted amounts...
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