Landmark Supreme Court win
20th May 2014
In the recent case of Brandon Barnes v Eastenders Cash & Carry & Oths  UKSC 26, the Supreme Court determined that, as an exception to long established common law and statutory rules, it would be a breach of a company’s human rights if it had to bear the burden of a receiver’s costs and expenses, thereby upholding the decisions of Underhill J at first instance, and the Court of Appeal  1 WLR 1494.
Marc Glover represented the Eastenders group of companies. David Perry QC and Martin Evans represented the Receiver. Michael Parroy QC and Rupert Jones represented the Crown Prosecution Service.
The applicant statutory receiver (R) had applied for an order for his remuneration and expenses that had been incurred during his receivership over the first respondent parent company (E), which had lasted for c.2 months. E had a turnover of c. £140M/annum and the sum in issue amounted to c. £1M.
In earlier proceedings, without notice restraint orders and a receivership order had been made which encompassed all the assets held by E, in which two alleged offenders each held a 20 per cent shareholding. On appeal in those earlier proceedings (Marc Glover was instructed on behalf of E) the orders were quashed by the Court of Appeal on the basis that no arguable case had been shown that E’s assets were held by the alleged offenders, see: Windsor v CPS  1 W.L.R 1519. However, it remained that R’s remuneration and expenses were ordered to be paid out of receivership property by the terms of the order originally appointing him.
The issues in the present decision were whether (i) E’s European Convention on Human Rights 1950 First Protocol, Article1 rights would be breached if E were to be held liable for R’s remuneration and expenses; (ii) the Crown Prosecution Service, as the party who had sought the receiver’s appointment, ought to bear R’s costs.
E submitted that as the Court of Appeal had earlier held that the restraint and receivership orders should never have been made, it could not be right that it, as an innocent third-party, should be liable for R’s costs and expenses in any event. To meet the obvious concerns that R should be paid for his work by someone, it was left to E to argue that the CPS should pay: The receiver had an obvious commercial interest in retaining good relations with the CPS, and their cases tended to support one another.
At first instance Underhill J found that he was able to “put to one side the preconception based on a century of practice”, and find in favour of E on the novel human rights argument advanced. He also found that the CPS could be required to pay, notwithstanding the express terms of Rs retainer which excluded that eventuality. The Court of Appeal upheld the core decision that R should not be able to recover his remuneration and expenses from E assets, but found that the CPS could not be required to pay.
The Supreme Court restored Underhill Js order. It found that A1P1 precluded E having to meet Rs remuneration. It further found that CPS had to pay Rs remuneration, on the bases of unjust enrichment. The Supreme Court’s judgment regarding the operation of unjust enrichment will be of real importance in future commercial disputes.
The Supreme Court’s Judgement can be found here.
The Supreme Court’s Press Summary can be found here.
The Supreme Court’s handown can be watched here.
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See “UK Human Rights blog” here.