In a recent costs decision, the English High Court partly disallowed an indemnity sought by receivers in respect of costs payable to certain third parties and the receivers' own costs and expenses for certain steps.
The Court noted the long established position that a receiver is entitled to be indemnified out of the relevant assets of the estate, but emphasised that this only applies when the relevant expenses are reasonable and were properly incurred by the receivers. Justice Morgan decided that in relation to certain costs, the receivers were entitled to a 2/3 indemnity from the assets of the estate, and that they could recover only 85% of their own costs, given certain failings in the receivers' conduct. In particular, Justice Morgan highlighted the fact that the receivers had acted unwisely in attempting to obtain inappropriately wide ranging orders that affected a third party that was not named as a respondent to the application, and noted that the costs related to the application had been increased by the inappropriate conduct of the receivers.
This decision is a good reminder to receivers of the importance of being careful not to incur unreasonable or unnecessary costs and expenses. As demonstrated in this case, receivers may find themselves personally liable for any such unreasonable or improperly incurred costs.
See Court decision here.