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20.06.14

CPS liable for Receiver's fees

The Supreme Court handed down judgment to conclude the Eastenders litigation on 8 May (Barnes v the Eastenders Group [2014] UKSC 26). In this case, a busy Crown Court judge had granted applications for restraint and receivership orders brought by the CPS which involved the piercing of the corporate veil of the respondent company whose directors were prospective defendants. It transpired the order should never gave been granted and it was discharged by the Court of Appeal some six weeks later but not before the Management Receiver had incurred fees and disbursements if over £700,000. The Receiver sought his costs from the company deriving his authority to do so from the now discharged Crown Court order. This application was refused at finest instance by Underhill J who held that responsibility for the payment of the fees of the Management Receiver lay with the CPS. The CPS successfully appealed this decision to the Court of Appeal who ruled (Laws LJ dissenting) that the Receiver could not recover his fees from either the Company or the CPS. The Management Receiver then appealed to the Supreme Court. Lord Toulson gave the unanimous judgment of the Court that it would be disproportionate to the A1P1 rights of the company to deprive it of property by making it pay the fees if the Management Receiver in the circumstances: "the question is whether on those facts it strikes a fair balance between the general interest of the community and the protection of the company's rights to the peaceful enjoyment of their property that the companies assets should be taken to pay for the costs and remuneration of the receiver. It would not be a fair balance". However, he went on to say that the assessment of proportionality requires careful consideration of the particular facts of each case. The court as a public authority must not exercise its power in such a way as to breach the companies rights under a1p1 and thus the a Receiver cannot rely on the terms of the original order even though it was in force for six weeks. Lord Toulson went on to decide that the receiver is entitled to recover his proper remuneration and expenses from the CPS because the work done and expenses incurred by the receiver were at the request of the CPS and there has been a failure of the basis on which the receiver was asked and agreed to do so. He went on to give some important guidance about the proper scrutiny of such applications at first instance (para 122 onwards) which is a must read for all those who practice in this area.


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