Costs against receivers

Mills v Birchall and another [2008] Civ 385 CA 18 April

The claimant agreed to purchase a long lease of a flat from a development company, the purchase price to be paid by way of set-off against a debt due from the development company to the claimant. The development company then sold its interest in the development to a company of which the claimant was the sole director. The company charged the property to its bank, which later appointed the defendants as receivers. The company, acting by the receivers, instituted proceedings against the claimant for damages for breach of contract equal to the balance of the purchase price. The judge rejected that claim and the company was unable to pay the claimant’s costs. The claimant had not made any application for the company to give security for costs and he sought an order that the receivers pay his costs personally on the basis that although the unsuccessful action had been brought in the company’s name, it had been brought by the receivers for the benefit of the bank.