England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand London WC2A 2LL
		29 June 2012

MR JUSTICE MITTING:

1. On 14 December 2010 I acceded to an application by Mr Louis Glatt that the receiver's costs, expenses and remuneration should be the subject of a detailed assessment if not agreed.
2. In the course of conducting that detailed assessment, costs judge Gordon-Saker determined a number of preliminary issues. He identified the two of them with which I am concerned as follows:

i. "New Preliminary Issue

ii. Whether by reason of the orders of 15-2-2001 and 14-12-2001 the receiver is entitled to remuneration only down to his discharge of 25 April 2006."

3. and -

i. "Whether the respondent can recover any costs where the 'care and maintenance' budget is exceeded."

4. His answer to the two preliminary issues were as follows. As to the first:

i. "The first part of paragraph 2 in the order of Mitting J only entitles the receiver to receive remuneration for expenses and disbursements whilst he is the receiver. It is the determination of the receivership in relation to expenses and disbursements ..... It follows that the receiver cannot claim personal costs after discharge on 25 April 2006 because they do not fall to be allowed under paragraph 2."

5. He indicated that he was "happy for either party to return this matter to Mitting J for clarification".
6. As to the second issue, he stated:

i. "I cannot see how the court can override the clear mandatory nature of the caps set by the court."

7. The second issue in fact contains two subsidiary questions. The first question is whether the cap applies throughout the period in respect of which the receiver claims his remuneration; and, secondly, if not - and that it applies only to an earlier and more limited period - whether it can or should be exceeded retrospectively.
8. I turn to the first issue. The order which I made was drawn up by counsel for the receiver and for Mr Louis Glatt at my request following upon a reasoned oral judgment which I delivered at the conclusion of submissions. Paragraph 2 of the order stated:

i. "The application for an order for a determination of the former receiver's remuneration, expenses and disbursements be granted on the following terms:

ii. there be a determination of the receivership remuneration, expenses and disbursements (costs) pursuant to CPR 69 (7) (4) following the appointment of Heath Sinclair ..... receivers ..... pursuant to Section 77 (8) of the Criminal Justice Act 1988 on 15 February 2001, that determination being referred to a costs judge pursuant to CPR 69 (7) (5)."

9. There then followed a proviso which would have permitted the parties to agree costs before 31 January 2011. In the event they did not, and it is unnecessary for me to refer therefore to the terms of the proviso.
10. The costs judge and Mr Zelin (for the intervenors in the receivership) determined and submit respectively that paragraph 2 of the order is subject to only one interpretation in that what it provides for is remuneration of the receiver during the period between the appointment of the receivers and discharge in April 2006. On the judge's order and Mr Zelin's submissions, no remuneration for work undertaken thereafter is recoverable under paragraph 2 of the order. Mr Zelin submits that it is not open to the costs judge to refer the matter to me for clarification, still less for me to rack my brain to remember what I had in mind.
11. As to the latter point, I accept it. As to the former point, I do not. There is nothing wrong in principle or in practice in a costs judge, uncertain about the meaning and effect of an order made by a High Court judge, referring the matter back to him for clarification. What I am not permitted to do is, by reference to my memory, to state what I intended where there is no objective material to permit my intention to be discerned, nor to vary the order which I made by reference to that which I wished in hindsight I might have done.
12. I therefore turn to the objective material for the purposes of interpreting paragraph 2 of the order. It is trite and accepted by Mr Zelin that for that purpose I can refer to the terms of the reasoned judgment which I delivered before the formal order was made. I set out the reasons why, despite the costs of the exercise, I concluded that the time had arrived at which an order for a detailed assessment should be made. I expressed my conclusions as follows in paragraph 4:

i. "Accordingly, I propose to make a deferred order for the assessment of the receiver's remuneration under CPR 69.7 (5) on terms which Mr Mitchell has outlined to me which gives the parties a short period in which to reach agreement if they can. I will leave the detail of that order until later. That disposes of the second of Mr Glatt's applications."

13. I went on to conclude that that made it unnecessary to make any further ruling on another of his applications - for the detailed provision of information to the receiver - on the basis that that would in any event be forthcoming during any detailed assessment.
14. I was invited to decide a number of issues. One of the issues was whether orders for interim payments should be made in respect of work already done by the receiver and whether interest should be awarded on those sums. The work done was broken down into four tranches as I explained in paragraph 7 of my judgment:

i. "The first tranche was the subject of an order by Mr Justice Munby of 25 July 2003. He assessed the sum which should be paid as an interim payment at eighty-five per cent of that claimed by the receiver. The second tranche which the receiver seeks is for budgetted costs totalling £92,605 odd which there is no reason to discount. Those were the costs authorised to be incurred. They have been incurred, and no reason has been advanced by Mr Jones as to why the full sum should not be payable. The third tranche is costs incurred over and above those budgetted. On the basis that only eighty-five per cent of those costs are to be recovered, the amount sought is £75,865. The fourth tranche is for yet further costs. Again, those costs are costs connected with litigation brought by or on behalf of the receiver in an attempt to realise the assets, the subject of the order. Eighty-five per cent of those costs amount, I am told, to £277,945. The total amount claimed in all four tranches is £530,201. All but the second tranche is claimed at the rate fixed by Mr Justice Munby when he ordered payment of the first tranche of remuneration and costs."

15. I went on to determine that the interim payment should be based on eighty-five per cent of the first, third and fourth tranches and that interest should be payable on each interim sum. The fourth tranche was principally remuneration claimed and costs incurred since the discharge of the receivership order. I have therefore made an interim order plus interest in respect of costs incurred since discharge.
16. To discern the precise meaning of paragraph 2 of the formal order it is necessary to examine the basis upon which I was invited to make that order. It is set out in a skeleton argument on behalf of Mr Louis Glatt prepared by Mr Jones QC and Mr Wignall, the latter being counsel with possibly unrivalled experience in costs litigation. Paragraph 8 of the skeleton argument stated:

i. "The amounts claimed are sensibly divided into tranches and the basis of those tranches are described in the fifteenth witness statement of the claimant. They obviously relate to remuneration and costs incurred at different stages of the receivership, and tranche 4, in general terms, arises after the discharge. There are two months of overlap."

17. Paragraph 11 went on to deal with the basis on which interest was claimed on remuneration and costs after discharge:

i. "After discharge the basis of it is asserted that the claimant is entitled to interest and is not known to the defendant."

18. At paragraph 12 Mr Jones and Mr Wignall stated:

i. "Application for detailed assessment/further information -

ii. The sums claimed by the receiver are in any view considerable. It is the defendant's case that it is for the receiver to justify the claim for remuneration ..... "

19. Detailed submissions then followed about what was required to justify the claim for remuneration.
20. It is obvious from the material which I have cited that I was being invited by Mr Louis Glatt, with the concurrence of the receiver to order a detailed assessment of the receiver's costs and remuneration in respect both of the period before and after discharge. On that basis there can be no doubt about the interpretation of paragraph 2 of the formal order. I directed a detailed assessment of the former receiver's remuneration, expenses and disbursements before and after discharge. That is what the order means. I am happy to clarify it pursuant to the costs judge's requests in the terms that I have done.
21. I turn to the second issue. Again what must first be done is to interpret the order made by Mr Justice Munby. His order of 25 July 2003, sealed on 1 August 2003, contained the following provision in paragraph 3:

i. "The joint receivers shall utilise the most junior employee commensurate with work to be carried out and will ensure that their advisers, whoever they may be, incur costs applying the same principle. The joint receivers shall not incur costs in carrying out the terms of this order in excess of £12,500 plus VAT without further order of the court. The joint receivers shall not permit their advisers to incur costs of more than £35,700 plus VAT without further application to the court. Such applications, should they be necessary, can be made in writing to Munby J provided that full details of the request for increase in costs are communicated to the defendant and he is given an opportunity to make representations in writing to the court within five days of receiving notification. This paragraph ..... does not include any costs order relating to realisation of property."

22. Again that paragraph in form must be interpreted in the light of the reasoned judgment of the proceedings. At paragraph 92 of Mr Justice Munby's judgment he stated:

i. "I referred in paragraph 44 above to the three applications before me. It follows from what I have said so far that application 1 by the defendant fails, application 2 by the receiver succeeds, application 3 (also by the receiver) has in the event not proved controversial. As I have mentioned, I have with the agreement of all parties stayed the remaining litigation pending the final determination by the Criminal Division of the Court of Appeal of the defendant's appeals against conviction, sentence and confiscation. The receivers and the defendant are agreed that in these circumstances the receivership should, for the time being, be put on what I might call a mere 'care and maintenance' basis."

23. Mr Justice Munby went on to note that the appeal against sentence had been dismissed but that the confiscation appeal remained live. Paragraph 3 of his order therefore reflected the common position of the parties. That was stated in paragraph 92 of Mr Justice Munby's judgment. In terms, it was intended to apply to the period before Mr Louis Glatt's appeals to the Court of Appeal (Criminal Division) had been determined. They were concluded by an order quashing the confiscation order handed down on 17 March 2006. Mr Justice Munby's intention reflecting the common understanding of the parties was that paragraph 3 of the former should apply "for the time being", in other words during the period which I have identified.
24. I therefore reject Mr Zelin's submission that for the period after 17 March 2006 - or discharge of the receivership in April 2006, it may not matter - the receiver's remuneration is required to be assessed on a "care and maintenance" basis.
25. I turn therefore to the final sub-issue under this heading, whether or not the receiver can - or, if he can, should be allowed to - apply retrospectively for an increase in the sum to be allowed by way of remuneration in the period up to discharge. The wording in paragraph 3 of Mr Justice Munby's order plainly envisages that applications for raising the cap may be made but also that they should be made prospectively, not retrospectively. The order is prohibitory:

i. "The joint receivers shall not incur costs in carrying out the terms of this order in excess of £12,500 plus VAT without order of the court."

26. Any application to increase the cap -

i. "can be made in writing to Munby J provided that full details of the request for increase in costs are communicated to the defendant and he is given an opportunity to make representations in writing."

27. While there is no express prohibition on the making of a retrospective application, the tenor of the order is such as to discourage it.
28. Mr Cullen QC submits that the reason why no application was made in advance and has been left until now is that the receiver, who was in a highly contentious receivership, was reluctant to incur further costs by making his application prospectively. There is nothing in the contemporaneous documents to indicate that that was the receiver's thought process but, accepting the good faith in which that submission is made, as I do, I must consider whether or not it is one to which I should accede. It seems to me not to justify delaying making an application until the work has been done. The cost of applying to the court pursuant to Mr Justice Munby's order was not significant. Mr Justice Munby permitted applications to be made in writing on five days' notice. That exercise was performed once. It seems to have taken no more than two or three letters to achieve the receiver's ends. I simply do not accept that a prospective application would have resulted in significant expense.
29. Against that, Mr Louis Glatt and - if they wish to make representations about it and were able to do so in time - the intervenors lost the opportunity to object in advance.
30. Balancing that consideration against the receiver's understandable wish to be remunerated for work properly carried out, I consider that Mr Louis Glatt's position - in the light of the terms of the order - requires that I should not accede to the receiver's suggestion that I should entertain a retrospective application for the period prior to discharge. The sum involved in the total context is not large - it is just over £13,000 - but I do not accede to the receiver's application in respect of it.
31. I turn finally to an issue not the subject of an application but has been raised by Mr Zelin. To avoid yet further applications being made at the expense of the parties, I will deal with it. Mr Zelin submits that the receiver's entitlement to remuneration derives ultimately from paragraph 7 of the order of Mr Justice Morison made on 15 February 2001 which provides:

i. "The receiver shall be allowed remuneration in accordance with the said letter of Agreement."

32. That is a reference to the letter of HM Customs & Excise of 12 February 2001 appointing joint receivers, one of whom is Mr Sinclair. Paragraph 6 states:

i. "It is proposed to seek an order from the court that your costs in this matter should be costs in the receivership, that is to say that your costs should be paid out of the moneys you bring in during the course of this receivership. Before drawing any remuneration you should obtain the written approval of HM Customs & Excise to the payment being made and in default of agreement your remuneration shall be determined by the High Court."

33. Mr Zelin contends that the terms of paragraph 6 of the letter and paragraph 7 of Mr Justice Morison's order have the effect that the receiver can only draw his remuneration out of money received during the course of the receivership, ie, before discharge.
34. I do not accept that submission. The receiver is entitled to remuneration after discharge arises both by reason of his lien; and under CPR 69.7 he may charge for services if the court so directs. The issue has already been determined. In paragraph 118 of the judgment given by Mr Justice Munby on 17 April 2008 he concluded:

i. "It follows from the nature of the lien that the receiver is in principle entitled to go against whichever assets he chooses with a view to meeting his claim."

35. That ruling was upheld by the Court of Appeal in paragraph 30 of the judgment of Lord Justice Longmore. He stated:

i. "For all these reasons I, like the judge, would hold that the receiver's lien for his costs, expenses and remuneration extends to assets in which Mr Louis Glatt has a bare legal interest."

36. He made that observation having recited in paragraph 12 that paragraph 7 of Mr Justice Morison's order provided that the receiver should be allowed remuneration in accordance with the letter to which I have referred of 12 February 2001.
37. This issue having already been determined, it is not open to the intervenors to raise it again, and I reject Mr Zelin's construction of the order of Mr Justice Morison and its contention that it imposes any limit on the assets from which the receivers may recover their remuneration.
38. MR CULLEN: I am grateful. So far as the draft order is concerned, no doubt Mr Zelin and I can work something out. Can I cast an eye over it? I am conscious of the time. I suspect we will not be more than a couple of minutes.
39. MR JUSTICE MITTING: Can I invite you to discuss it and tell me what the answer is at five-past-two?
40. MR CULLEN: Certainly.
41. Adjourned
42. MR CULLEN: The first thing that has been suggested to me is that perhaps the order might usefully record that Mr Glatt is present in court.
43. MR JUSTICE MITTING: Yes.
44. MR CULLEN: So I would add that - Mr Glatt being present in court. So far as the substance of the order is concerned, I think there is no issue on paragraph 1. I think my friend and I are agreed on that, and paragraph 2. However on paragraph 3 there is an issue. It is this. I think my friend is agreed in respect of all of it save the reference to remuneration in line 3. In a sense, that is the point we have been arguing about today. I had thought it had been determined that we were entitled to interpret this judgment in relation to what paragraph 3 is intended to do - it is to try and cut off the scope of further argument by giving some clarity as to what is going to be included in the future. If it is now suggested that remuneration is not to come in in this way then there is just going to have to be another argument about it on another day.
45. The reason, as I understand it, why my friend does not like the reference to remuneration is that he suggests that the items that are set out below are in some way work that the receiver will be doing for his own benefit and therefore why should he be remunerated? So far as that goes, first of all, some of the items are not done for the receiver's own benefit, for example compliance with the order as set out in (a). In any event, as a matter of principle it is not right that a receiver is not entitled to charge remuneration for work which might be done, as my friend would put it, for the receiver's own benefit. In a sense, one need only look at the order that Mr Justice Munby made from July 2003 where he set the budgetted figures. Your Lordship will recall that the last sentence of that order provided expressly that it would not include costs or remuneration relating to the realisation of property. The realisation of property would only take place if the receiver can get in moneys that pay his own fees and costs.
46. The suggestion that my client should not be entitled to remuneration is not only inconsistent with what you decided this morning but it is contrary to principle. A receiver is entitled to charge for remuneration, for example, for the cost of realisations.
47. There is this point also that if one strikes out remuneration from that that leaves it open for argument another day. And also - if and to the extent that my client is not entitled to be remunerated for the expense - all that does is incentivise him to contract the work out, no doubt, to more expensive external workers who would do the work for him and then he could recover the costs.
48. MR JUSTICE MITTING: Paragraph 3 has not been the subject of an application to me. I have not been invited to determine it in those terms although it is implicit in what I decided. Paragraph 2 covers that which I have expressly decided and paragraph 1.
49. MR CULLEN: Yes. Paragraph 2 is intended to try an cover the position for the future so, to that extent, to stop further argument.
50. MR JUSTICE MITTING: I think that is a futile hope in this particular receivership. I see no prospect of there being an end to argument until all appeal rights have been firmly exhausted and then I suppose there will be Strasbourg.
51. MR CULLEN: That may well be right. It would be good if one could do what one can. This was the subject of the application. It is implicit in what your Lordship has decided that these items are allowable, and the only point that is taken is in relation to remuneration. There is simply no reason to make any distinction in this respect in relation to third party costs and remuneration.
52. MR JUSTICE MITTING: What was referred to me was two questions posed by the costs judge. I have answered those. I have, without there being an application, briefly answered a further point that was raised and that I think must be the end of it. I am not prepared to engage in a debate about the terms of an order. There is a paragraph in the order I have not been invited expressly to consider as part of my judgment.
53. MR CULLEN: So be it. Does that mean that the whole of 3 comes out?
54. MR JUSTICE MITTING: Yes.
55. MR CULLEN: So be it. That leaves 4 where, again, there is an issue about the inclusion of remuneration in respect of my client's costs of this application. I do not think it is accepted, in fact, that my client should have any costs of the application. I submit that it is obviously a case where it is appropriate for my client's costs to be paid in respect of the receivership. That would be the normal course where an application like this has to be made for clarification. This reflects the order you made when the matter was originally before you.
56. The added reference to remuneration flows partly from the nature of the argument that has been had here, and it is intended to exclude further reference. It is a reflection also of the fact that I am being instructed directly by the receiver, again in an effort to save costs. It is appropriate in those circumstances, I submit, that the order should include remuneration which follows from the view you have taken as to the matter generally.
57. MR JUSTICE MITTING: Mr Zelin, am I correct in anticipating that the only contentious issue on the drafting of the order is the words "and remuneration" plus whether or not there should be any order for costs?
58. MR ZELIN: Yes. There are two questions on that - whether there should be an order for costs and costs should be costs in the detailed assessment so that the question is effectively put back, and that is my first submission regarding further elaboration.
59. The second question is whether remuneration should be included. My friend is being instructed directly by a receiver. The receiver will get something for his time because he is doing in person. There are regulations about that. Effectively he will get a litigant in person rate which is not very great admittedly for what he directly does unless he can show that it calls for some special expertise on his part as a professional receiver - as a professional insolvency practitioner - in which case he might get more. That would be a matter for assessment by the costs judge, the litigation costs. Otherwise you have a party who is effectively being paid for litigating and that cannot be right.
60. MR JUSTICE MITTING: This litigation is one of the exercises of the receivership if it continues beyond the discharge of the receivership order.
61. MR ZELIN: At that point it would be going around in circles (?). If your Lordship is going to make the order my friend seeks, so be it.
62. Finally I am instructed to ask for permission to appeal on the question of whether or not matters that are for determination within the receivership are truly receivership matters or something else.
63. MR JUSTICE MITTING: I refuse permission to appeal. That was an issue, in effect, decided in December 2010. The appeal that was then made was abandoned. I think this is an appropriate case for making a discrete order for the costs of litigating the two issues. The receiver has - apart from a very minor extent - won. It is therefore appropriate that the receiver should have his costs. For the avoidance of doubt, those costs include or accompany remuneration as well.
64. MR ZELIN: I am grateful.
65. MR CULLEN: We will make a clean copy and lodge it with the court.
66. MR JUSTICE MITTING: I have initialled the draft that you have given up to me.