The company, through its receivers, brought and prosecuted an unsuccessful claim against the defendants. The claim was financed from funds subject to the receivers’ control but the receivers had no beneficial or personal interest in those funds or the outcome of the proceedings. The first defendant sought to recover his costs of the proceedings from the receivers from funds realised in the course of the receivership on the basis that they were the real claimants, and had conducted the proceedings for the benefit of themselves and the bank that had appointed them. The receivers submitted that they were only acting as agents of the company, that the case was not exceptional and there was no impropriety or unreasonableness so as to justify making a third party costs order against them.
The court agreed. The company’s claim had involved an entirely normal case of receivers seeking to enforce a contractual right and there were no exceptional circumstances to warrant such an order. There was no impropriety or unreasonableness in the bringing of the claim. The receivers did not fund the proceedings and would not benefit from them in any relevant way. They were merely agents of the company which remained responsible for their acts or defaults. The defendants should have protected themselves, if they had so wished, by seeking security for costs against the company.
Dolphin Quays Developments Ltd (In Administrative and Fixed Charge Receivership) v Mills & others