Dayman v Aziz [2008] EWHC 2244 (Ch)

[2008] EWHC 2244 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

St Dunstan’s House

Venue 133-137 Fetter Lane

London EC4A 1HD

Date Wednesday, 16th July 2008

Before

HIS HONOUR JUDGE MACKIE QC

(Sitting as a Judge of the High Court)

Between

DAYMANClaimant

AZIZDefendant

Wordwave International, a Merrill Communications Company

PO Box 1336, Kingston-Upon-Thames, Surrey KT1 1QT

Tel No: 020 8974 7300 Fax No: 020 8974 7301

Email Address: tape@merrillcorp.com

Mr J Hall (instructed by Messrs Pritchard Joyce & Hinds) appeared for Claimant

Mr O Kalfon appeared for Defendant

Judgment

[1]This is the hearing of a preliminary issue ordered by Master Moncaster on 20 February 2008 about whether the claimant is entitled to charge for her services as court appointed receiver at the date of the issue of these proceedings, namely 1 June 2007. The background is that a restraint and management receivership order was made by Ouseley J in September 2004 under section 77 of the 1988 Act. After the order was discharged in August 2006, the claimant issued a claim for an order for possession of some property belonging to the defendant to realise what was necessary to meet her costs and fees. She says she is entitled to a lien over the properties, notwithstanding her discharge, and that does not seem to be contested.

[2]The defendant contends that the claimant is not entitled to charge for her services at all and therefore that the lien does not arise because of the effect of CPR 69.7(1) which reads, under the heading "Receiver's remuneration". 69.7(1):

"A receiver may only charge for his services if the court - (a) so directs; and (b) specifies the basis on which the receiver is to be remunerated."

There are then provisions for implementation. Counsel for the defendant places emphasis on the statement in the commentary to 69.7.1 as follows:

"This rule makes it clear that a receiver may only charge for his services if the court has so authorised and that authorisation will be given in an order. A receiver may only therefore charge for services if the court so directs and specifies the basis on which he is to be remunerated."

[3]The claimant, Miss Dayman (the receiver) in her application contends that the relevant order which she obtained, although not ideally drafted, provides the necessary direction to comply with 69.7.1. The claimant submits that the order was always understood to have provided for the remuneration of the receiver, because this was approved by Collins J in January and July 2005 and referred to in a consent order later. But the receiver's central submission is that the long-standing and established right of receivers to be remunerated for their services out of the assets under their control, cannot be displaced by the terms of CPR 69.7(1).

[4]The substance of the case put forward by the defendant is that 69.7(1) means what it says; the commentary reinforces that and, since no order has been made at the relevant time for the claimant to receive remuneration, she is not entitled to it. So far as the point of construction is concerned, the order setting out the receiver's powers provides at paragraph 9 that it is "without prejudice to any existing powers vested in her by statute or otherwise". Paragraph 11 provides that the receiver shall "act in accordance with the letter of agreement exhibited to the witness statement of Trevor John Millington dated 21st September 2004" and the receiver "shall supply to the defendant copies of any accounts and reports supplied to HM Customs & Excise in accordance with the said letter of agreement". There is then a witness statement and a letter dated 13 September from the receiver in which she states, amongst other things:

"As a condition of nomination I do of course confirm my consent to adhere to the standard practice required, the provisions of which are contained in your letter under reference under paragraphs numbered 1 to 10 inclusive". [Quote unchecked] That, in turn, refers to further letters. At paragraph 6 of the 13 September letter to the claimant, there is the following: "

It is proposed to seek an order from the court and your costs in this matter should be costs in the receivership, that is to say that your costs shall be paid out of the monies you bring in during the course of this receivership. Before drawing any remuneration, you should obtain the approval of the High Court and shall give HM Customs & Excise and the defendant the opportunity to make representations as to the amount claimed…" [Quote unchecked] It is submitted, therefore, that in substance the court has approved remuneration of the receiver as required by the provision of the CPR in issue.

[5]Counsel for the defendant says not so. He submits that the matter is not explicit or implicit and that the reference to the receiver acting in accordance with the letter of agreement is not strong enough to include matters such as the application to the court for remuneration. In response, counsel for the claimant points to other passages which he says shows that paragraph 11 was broad enough to encompass the issue of remuneration under the receivership.

[6]The central point here, however, is that the receiver submits that whatever the position on construction, a right to remuneration does not depend upon compliance with the terms of CPR 69.7(1).

[7]Reliance is placed on a decision of Newman J in an unreported case in this court (the Administrative Court) in Re B

[2006] EWHC 2282 (Admin)

. At paragraph 7 the learned judge says this: "The underlying principle is that a receiver is appointed, not for the purpose of depleting the assets but for the purpose of preserving the assets in the circumstances in which a defendant finds himself. In my judgment, the entitlement to be paid does not become the subject of the exercise of the court's discretion simply because nothing is contained in the order. The position is, as was clearly stated again in one of the most clear authorities on this topic in Capewell [a case to which I will refer in a moment] but it was a basic principle of receivership that the receiver was entitled to be indemnified in respect of his costs, expenses and remuneration out of the assets in his hands as receiver and the scheme inherent in the provisions in the 1988 Act, his remuneration expenses to be paid out of the receivership assets. That is a long-established principle that falls entirely in line with the existence of a common law lien over the assets." [Quote unchecked]

[8]Counsel for the defendant submits first that the decision of Newman J is obiter because that case was concerned with the question of whether there was a discretion available to the court when considering whether, after acquittal, remuneration should be paid out of the receivership assets. That is as may be, but it does not, in my judgment, affect the sound wisdom of what the learned judge said.

[9]It is also submitted that Newman J did not have cited to him CPR 69.7, and therefore the quality of his reasoning may be eroded as a result of that. I suspect that the absence of citation may well be because the whole question of CPR 69.7 had been comprehensively disposed of, as I see it, in the case of Capewell

[2007] UKHL 2

, a decision of the House of Lords. The leading speech, indeed the only substantive speech, was that of Lord Walker. In that case, the point at issue was whether the Court of Appeal, exercising its discretion in place of the trial judge, was right to order part of the receiver's remuneration to be paid not out of assets subject to the receivership but by Customs. Lord Walker deals with the matter in stages. Amongst those stages are the following. At paragraph 17 he refers to the judgment below of Carnwath LJ, where the Lord Justice, when referring to 69.7 says this:

"Without more detailed information as to the background, I am prepared to assume that the rule was not intended to make a radical change to the previous practice. However, it seems clearly designed to give the court some discretion in the matter. Accordingly, in my view, we can and should order under rule 69.7(2) that Customs should be responsible for payment of the receiver's remuneration from 1 June 2004. We can make no corresponding order in respect of his expenses, which will fall to be met from the realisable assets in the ordinary way."

Lord Walker then deals with and approves the description of "statutory receivers" given by Simon Brown LJ (as he then was) in Hughes, and records at paragraph 21 that:

"It has always been a basic principle of receivership that the receiver is entitled to be indemnified in respect of his costs and expenses, and his remuneration if he is entitled to be remunerated, out of the assets in his hands as receiver."

[10]He refers to the characterisation adopted by Simon Browne LJ from counsel's submissions in the following terms:

"A receiver is a recognisable creature of the common law, an officer of the court, someone whose essential rights, powers and duties have been established down the years. It is not apparently disputed that a receiver appointed under the [CJA] - despite the statute's silence on the matter - will have the right, for example, to bring an action or to sell property. Why then, unless the statute expressly so provides, should he be denied the other ordinary consequences of his receivership, including not least the right (indeed the requirement) to recover the costs of the receivership from the assets under his control?"

The words "why then, unless the statute expressly so provides" are, for reasons I have difficulty in following, relied upon by counsel for the defendant in support of his submission that that is a reference to CPR 69.

[11]At paragraph 25, Lord Walker says:

"I have set out the decision in Hughes's case at some length because it does in my opinion state clearly and correctly the somewhat opaque relationship between the general law of receivership and the detailed provisions of the 1988 Act. The real issue in this appeal is not whether Hughes's case was rightly decided [which plainly it was] but whether it is no longer good law as a result of the coming into force of CPR r 69.7."

Then in paragraphs headed "CPR 69.7", Lord Walker says at paragraph 26:

"In my opinion CPR r 69.7 has not had that far-reaching and surprising result. The function of CPR r 69 is to set out a procedural code applicable to the generality of receiverships of all types."

He then goes on to develop that theme. He concludes at paragraph 27:

"The Court of Appeal was in my opinion wrong to suppose that CPR r 69.7 has made (or could have made) a fundamental change either in the general law of receivership, or in the position of receiverships under the 1988 Act and the other comparable statutory powers."

[12]Counsel for the defendant submits that the speech of Lord Walker is directed at 69.7(2) and is key to the decision, but I fail to understand how that point, even if it survives the fact that there is nothing in Lord Walker's speech that states that, can affect the statement of principle which this court should plainly adopt, which one sees in the rest of the speech which all the other Law Lords agree.

[13]It has been known throughout that the receiver was going to be remunerated. The point of construction relies upon material that equally makes it perfectly clear, as part of the court order, that the claimant was going to be remunerated. I therefore have some difficulty in understanding why this point was raised at all. Nonetheless, it seems to me overwhelmingly clear, on the basis of high authority, that there is nothing in the point that 69.7 precludes the receiver from receiving remuneration.

[14]It follows that this application by the claimant succeeds. I did not make myself popular with either party by raising the possibility that, even if there was anything in this point, the court might have power anyway, bearing in mind the nature of a receiver's office when appointed by the court, to authorise the receiver to charge for services, notwithstanding the lapse of time since the issue first arose. Since that is not a matter before me, I will not pursue it further.

[15]It follows that there will be judgment for the claimant. - - - - - -