New Judgment: Barnes v The Eastenders Group & Anor  UKSC 26
08 Thursday May 2014
On appeal from:  EWCA Crim 2436.
On 6 December 2010, the CPS applied for restraint and receivership orders against the Eastenders Group and its two joint owners under the Proceeds of Crime Act 2002. The Eastenders Group was a holding company for several cash and carry shops and the CPR suspected they were involved in tax fraud. The appellant, an accountant, was appointed as the receiver to manage the company assets under the restraint order and was to receive payment from the company funds.
The orders over the company were quashed by the Court of Appeal on 26 January 2011 as they held there was no arguable case that the order should have been made. However, the appellant had incurred costs of £772,547 in security, legal expenses and fees and applied for permission to receive these costs from the company’s funds. This application was denied under ECHR, Prot 1, art 1 and HRA 1998, s 3. The court held instead that the CPS could be ordered to pay the appellant’s costs.
The CPS appealed to the CoA, which held that they could not be required to pay the appellant’s costs. However, they also held that the company was not required to pay them either. The appellant appealed to the Supreme Court.
The court unanimously upheld his appeal against the decision to refuse to order the CPS to pay his costs. A receiver is entitled to remuneration from the assets of the company. However, when, the company is not a defendant and at the time of the order, the company’s assets could not be regarded as the defendants’, the company’s rights under ECHR, Prot 1, art 1 would be disproportionately interfered with should the receiver be allowed to receive his costs from their assets.
However, not to give the receiver any remuneration would violate his ECHR, Prot 1, art 1 rights. The receiver relied on an assumption given by the CPS, that he would receive remuneration from the company’s assets. Since this assumption turned out to be false, the receiver had a right to restitution from the CPS.