Wednesday Law Report: Acquitted defendant bears receiver's costs

3 March 1999

Re Andrews

Court of Appeal (Lord Justice Hirst, Lord Justice Aldous and Lord Justice Ward) 25 February 1999

WHERE A receiver appointed under the Criminal Justice Act 1988 to receive and manage the property of a defendant incurred costs and expenses in so doing, those costs and expenses had to be borne by the defendant, notwithstanding that he had subsequently been acquitted and awarded the costs of his defence out of public funds.

The Court of Appeal dismissed the appellant's appeal against the dismissal of his application for an order that the costs of a receiver, appointed under the Criminal Justice Act 1988, should be borne by Customs and Excise following his acquittal on all criminal charges.

The appellant and his son were arrested by officers of Customs and Excise and charged with VAT and PAYE offences, to which Part VI of the Criminal Justice Act 1988 applied. The officers seized pounds 42,305 which they found at the appellant's home. Customs and Excise then successfully applied ex parte in the High Court under sections 77 and 78 of the Act for restraint and charging orders against both father and son, and for the appointment of a receiver.

The appellant's son was duly convicted in the Crown Court, but the appellant was acquitted on all charges. He was allowed his costs to be paid out of central funds. On taxation, the costs of the High Court proceedings were held not to be covered by the award of costs in the Crown Court.

The appellant applied in the High Court proceedings for the discharge of all the orders against him, including the receivership order. When the appellant's property was released to him his solicitors realised that the remaining pounds 10,011 of the amount which had been seized had not been returned.

The solicitors wrote to the receiver, who replied that there were no funds remaining to be returned to the appellant, all balances having been used to defray the prior costs of the receivership. The appellant applied for an order that his costs of the proceedings, inclusive of the fees, charges, disbursements, expenses and all other costs and remuneration of the receiver be paid by Customs and Excise. That application was dismissed and the appellant appealed.

Victor Joffe (Goldkorn Davis Matthias) for the appellant; Andrew Mitchell QC (Solicitor for Customs and Excise) for the respondent.

Lord Justice Ward said that in the present case there had been an agreement that Customs and Excise would indemnify the receiver if she were unable to bring in sufficient assets to meet her costs.

It was submitted for the appellant that, on a successful application for the discharge of a receivership order, costs should follow the success in that application, and that the remuneration and expenses of the receiver were part of those costs. Section 51(1) of the Supreme Court Act 1981 provided that ". . . the costs of and incidental to . . . proceedings . . . shall be in the discretion of the court".

However, the true position was that the investigation as to whether or not the defendant had suffered loss by reason of the receivership was an investigation which should and ordinarily would be conducted in deciding whether or not damages should be awarded for breach of the usual undertaking as to damages which a plaintiff would normally be required to give. In the present case no such undertaking had been given.

It was submitted for the respondent that section 89 of the Act provided a defendant with the only relief to which Parliament thought he was entitled. That section gave the court a discretion to order payment of compensation to a defendant who had been acquitted, but only where there had been some serious default on the part of a person concerned in the investigation or prosecution of the offence, and there had been no such default in the present case.

Furthermore, even if the expenses of the receivership were within the definition of costs, they were not costs "of and incidental to the proceedings". They had to lie where they fell.