COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CENTRAL CRIMINAL COURT
HHJ HAWKINS QC
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE OPENSHAW
SIR GEOFFREY GRIGSON
|(1) ALEXANDER WINDSOR (Defendant)
(2) KULWANT SINGH HARE (Defendant)
(3) AVTAR SINGH HARE (Defendant)
(4) PELVINDER KAUR HARE (Interested Party)
(5) EASTENDERS CASH & CARRY PLC AND OTHER INTERESTED PARTIES
|- and -
|THE CROWN PROSECUTION SERVICE
Mr J Pickup QC and Mr R Ashiq appeared for Kulwant Singh Hare
Mr A Jones QC and Mr R Bowers appeared for Avtar Singh Hare & Pelvinder Kaur Hare
Mr G Jones QC and Mr M Glover appeared for Eastenders Cash & Carry plc and others
all instructed by Messrs. Anami Law, Epping, Essex.
Mr B Stancombe and Mr C Convey appeared for the Crown Prosecution Service
Hearing dates: 25th & 26th January 2011
Crown Copyright ©
Lord Justice Hooper :
All members of this court have contributed to the preparation of this judgment.
My career dealing with Customs work now spans over 23 years and for the last 20 years I have specialised exclusively in cases involving the restraint and confiscation of the proceeds of crime. I believe I can fairly state that this is the most complex restraint and receivership case I have ever managed, more so even that the case of Louis Glatt in which we have all been involved for the last 15 years.… The restraint and receivership application itself was very complex and the paperwork it generated substantial…. This case is far removed from what might be described as a "typical" restraint case.
The Crown Court may exercise the powers conferred by section 41 if any of the following conditions is satisfied.
The first condition is that—
(a) a criminal investigation has been started in England and Wales with regard to an offence, and
(b) there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct.
If any condition set out in section 40 is satisfied the Crown Court may make an order (a restraint order) prohibiting any specified person from dealing with any realisable property held by him.
On an appeal ... the Court of Appeal may—
(a) confirm the decision, or
(b) make such order as it believes is appropriate.
(1) Evidence must not be excluded in restraint proceedings on the ground that it is hearsay (of whatever degree).
(2) Sections 2 to 4 of the Civil Evidence Act 1995 (c 38) apply in relation to restraint proceedings as those sections apply in relation to civil proceedings.
(3) Restraint proceedings are proceedings—
(a) for a restraint order;
(b) for the discharge or variation of a restraint order;
(c) on an appeal under section 43 or 44 [appeal to the Supreme Court].
(4) Hearsay is a statement which is made otherwise than by a person while giving oral evidence in the proceedings and which is tendered as evidence of the matters stated.
(5) Nothing in this section affects the admissibility of evidence which is admissible apart from this section.
(3) Rules of court may provide that where a party to civil proceedings adduces hearsay evidence of a statement made by a person and does not call that person as a witness, any other party to the proceedings may, with the leave of the court, call that person as a witness and cross-examine him on the statement as if he had been called by the first-mentioned party and as if the hearsay statement were his evidence in chief.
1) In estimating the weight (if any) to be given to hearsay evidence in civil proceedings the court shall have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence.
(2) Regard may be had, in particular, to the following—
(a) whether it would have been reasonable and practicable for the party by whom the evidence was adduced to have produced the maker of the original statement as a witness;
(b) whether the original statement was made contemporaneously with the occurrence or existence of the matters stated;
(c) whether the evidence involves multiple hearsay;
(d) whether any person involved had any motive to conceal or misrepresent matters;
(e) whether the original statement was an edited account, or was made in collaboration with another or for a particular purpose;
(f) whether the circumstances in which the evidence is adduced as hearsay are such as to suggest an attempt to prevent proper evaluation of its weight.
The Crown Court may by order appoint a receiver in respect of any realisable property to which the restraint order applies.
(a) must be exercised with a view to the value for the time being of realisable property being made available (by the property's realisation) for satisfying any confiscation order that has been or may be made against the defendant;
(b) must be exercised, in a case where a confiscation order has not been made, with a view to securing that there is no diminution in the value of realisable property;
In relation to—
(a) proceedings under this Part, or
(b) receivers appointed under this Part,
Criminal Procedure Rules may make provision corresponding to provision in Civil Procedure Rules.
(1) Any witness statement required to be served by this Part or by Parts 58 [confiscation proceedings], 59 [restraint proceedings], 60 [receivership proceedings] or 61 [restraint and receivership proceedings] must be verified by a statement of truth contained in the witness statement.
A statement of truth is a declaration by the person making the witness statement to the effect that the witness statement is true to the best of his knowledge and belief and that he made the statement knowing that, if it were tendered in evidence, he would be liable to prosecution if he wilfully stated in it anything which he knew to be false or did not believe to be true.
The statement of truth must be signed by the person making the witness statement.
If the person making the witness statement fails to verify the witness statement by a statement of truth, the Crown Court may direct that it shall not be admissible as evidence.
(2) The application may be made without notice.
(3) The application must be in writing and supported by a witness statement which must—
(a) give the grounds for the application;
The applicant for a restraint order must—
(a) serve copies of the restraint order and of the witness statement made in support of the application on the defendant and any person who is prohibited from dealing with realisable property by the restraint order
The application must be in writing and must be supported by a witness statement which must—
(a) give the grounds for the application;
Applications in restraint proceedings and receivership proceedings are to be dealt with without a hearing, unless the Crown Court orders otherwise.
In this case the Court must, rightly, have directed that an oral hearing was required to consider the applications which were to be granted on 6 December.
(1) When hearing restraint proceedings and receivership proceedings, the Crown Court may control the evidence by giving directions as to—
(a) the issues on which it requires evidence;
(b) the nature of the evidence which it requires to decide those issues; and
(c) the way in which the evidence is to be placed before the court.
(2) The court may use its power under this rule to exclude evidence that would otherwise be admissible.
(3) The court may limit cross-examination in restraint proceedings and receivership proceedings.
(1) The general rule is that, unless the Crown Court orders otherwise, any fact which needs to be proved in restraint proceedings or receivership proceedings by the evidence of a witness is to be proved by their evidence in writing.
(2) Where evidence is to be given in writing under this rule, any party may apply to the Crown Court for permission to cross-examine the person giving the evidence.
Section 2(1) of the Civil Evidence Act 1995 (duty to give notice of intention to rely on hearsay evidence) does not apply to evidence in restraint proceedings and receivership proceedings.
(1) This rule applies where, in the course of restraint proceedings or receivership proceedings, an issue arises as to whether property is realisable property.
(2) The Crown Court may make an order for disclosure of documents.
(3) Part 31 of the Civil Procedure Rules 1998 as amended from time to time shall have effect as if the proceedings were proceedings in the High Court.
(1) Every appeal will be limited to a review of the decision of the Crown Court unless the Court of Appeal considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.
(2) The Court of Appeal will allow an appeal where the decision of the Crown Court was—
(a) wrong; or
(b) unjust because of a serious procedural or other irregularity in the proceedings in the Crown Court.
(3) The Court of Appeal may draw any inference of fact which it considers justified on the evidence.
Reasonable cause to believe that the alleged offender has benefited from his criminal conduct
(3) The application must be in writing and supported by a witness statement which must—
(a) give the grounds for the application
The evidence before HHJ Hawkins on the first ground of appeal
…information supplied to me by Douglas McGill, an officer of HMRC who is in charge of the criminal investigation and from information and material collected by me and my colleagues in the course of my financial investigation.
….A receiver is therefore required to conduct the trade of the companies in their interests and those of the defendant as well as to preserve assets for the making of any confiscation order in the event of prosecution and conviction.
Essentially the fraud is operated either by:
(1) the straightforward smuggling into the UK of alcoholic goods obtained abroad, with no UK duty or VAT being accounted for or paid; or
(2) the more sophisticated method of diverting non duty paid, bonded, alcohol products in transit to the UK home market without payment of the required duties.
22. On 16th October 2008 French authorities intercepted a UK registered HGV belonging to Trident Continental Transport Ltd. The vehicle was found to be travelling from Belgium with a consignment of beer which had earlier been loaded at the bonded warehouse Demetrans Logistics sprl. An AAD produced by the lorry driver showed the consignee as IEFW, a French bonded warehouse. A search of the driver's cab however uncovered a second and effectively duplicate AAD on which the consignee was shown as Rangefield Import Export Ltd. The matter was brought to the attention of the Belgian authorities who subsequently conducted a full audit of Demetrans in December 2009. It was discovered that Demetrans, which stored mainly UK branded beer and other wines and spirits, did not buy or sell any goods in its own name and had also never supplied or released any goods for consumption on the Belgian market. Documents produced to the Belgian authorities revealed that goods were despatched from Demetrans on to other bonded warehouses in France including IEFW, which was itself a supplier to Demetrans, and that Demetrans also despatched goods, apparently owned by Super Brew (Europe) Ltd, to the UK bonded warehouse Rangefield. There appeared to be no sound commercial reason for such movements considering the apparent additional logistics costs incurred, particularly in the case of UK produced products. One of the haulage companies regularly used in these movements was Trident Continental Transport Ltd.
23. The Belgian investigation also revealed that, in December 2007, Eu80,000 and Eu70,000 had been provided by Eastenders Cash and Carry and Super Brew (Europe) respectively, apparently to pay costs incurred in setting up Demetrans. These included a deposit to rent the warehouse premises, purchase of handling equipment and office costs.
The Belgian authorities suspected that a fraud was being conducted utilising the Demetrans bonded warehouse. Their investigations appeared to confirm that regular consignments of alcohol were despatched under cover of duplicate AADs, one showing IEFW as the consignee and the other showing Rangefield. It was suspected that goods were being transported to the UK and that any consignment not checked at the UK border was being diverted on to the UK market. It was also suspected that if a consignment was intercepted by UK authorities, the Rangefield AAD would be produced and the goods delivered there. (Emphasis added)
24. The Belgian authorities recovered all inward and outward AADs from Demetrans. These purported to show that since commencing operations in July 2008, Demetrans had supplied 148 consignments of alcohol to Rangefield and 925 consignments to IEFW. It is believed that the goods which on paper were consigned to IEFW were diverted to the UK. I have been informed that 925 diverted consignments would equate to a loss of revenue in excess of £23m.
25. During their examination, the Belgian authorities also noted a further 38 AADs showing goods consigned to a bonded warehouse in Spain. I have been informed that the stamps on the consignee copies of these AADs have been proved to be false and it is suspected that the goods involved may also have been diverted to the UK market. (Emphasis added)
The HMRC investigation has confirmed that suspicions of the Belgian authorities and that an attack on the UK tax regimes has been committed and is ongoing. It has revealed that bonded alcoholic products, primarily UK produced brands, have, in the first instance, been exported to bonded warehouses on the continent, namely IEFW and Cotrama Logistique in France. It has also been noted that since the intervention by the Belgian authorities a further bonded warehouse, Gold Drink Tomasz Szuba in Aachen, Germany, appears to have been utilised by the OCG.
It is not currently known what records may exist at Eastenders (Slough) in relation to this consignment but it is suspected that any paperwork will be false, probably originating from one of the suspected buffer traders, to give the appearance that the alcohol has been purchased legitimately.
The restraint and receivership orders in so far as they affected the Eastenders group and the minority shareholders
In relation to Kulwant Hare [and] Windsor... , the court is asked to restrain assets held in the name of the companies that are concerned in this fraud. There is evidence, in my view, that the company is involved and the company has been used to hide the individual's crime or their benefits from it. The companies - - I have been shown a chart - - operate under the Eastenders name, controlled and substantially owned by Kulwant Hare and Windsor. ... [S]o I grant the restraining orders that are applied for in this case and are set out in the bundle of papers'.
I conclude that there is a good arguable case that Kulwant Hare and Alexander Windsor have attempted to shelter behind a corporate facade, or veil, to hide their crimes and their benefits from it; and also that the business structures constitute a device, or cloak, or sham that is an attempt to disguise the true nature of what was going on, so as to deceive third parties or the court.
44. When a restraint order is applied for, the court is not only ignorant of the defendant's future fate at the hands of the jury. There may be other defendants; the court is, of course, equally ignorant of the jury's future view of them. Indeed it may be unclear who, if anyone, will stand his trial beside the defendant whom the court is considering. There may be large unanswered questions as to the respective roles of different defendants, as to who did what with the crime's proceeds, and the ultimate extent and destination of those proceeds. There may be other uncertainties. In all these circumstances, it may often be appropriate in a case where there are several prospective defendants to make restraint orders against each of them, so as to protect, as against each, the whole sum which represents the proceeds of the crime so far as the court can at that stage ascertain it. While of course the Crown must lead evidence as to the amount of the proceeds, and the defendant's acts in getting- "obtaining"- the proceeds, and also the defendant's assets so far as they are known, the exercise is quite unlike the later exhaustive investigation undertaken by the trial judge in deciding what, if any, confiscation order to make. At the restraint order stage the court makes no final decision as to the defendant's "benefit" or "realisable property". It is concerned only, as I have said, to make a protective order so that in the particular case the satisfaction or fulfillment of any confiscation order made or to be made will be efficacious. Given the court's obligation under section 82(2) of the 1988 Act, there will be cases where it will advisedly make orders to preserve the same sum of money in the hands of multiple defendants.
… There is a risk … in using the phrase "piercing the corporate veil" as if it had a specific defined meaning to be applied in the same way in all contexts. In my judgment the real question which a judge faced with an application for a restraint or receivership order is whether the order of the extent sought and now obtained is appropriate or necessary in view of the … legislative objectives … The question whether the effect of such an order is to pierce the corporate veil or whether some particular test related to that concept requires to be satisfied is not, in my judgment, the ultimate object of the inquiry which the court has to carry out. The object of the Act is to enable proceeds of crime to be ascertained, protected and realised. The first question therefore is whether there are corporate assets which should be treated as the defendant's assets and the second question is whether, if that is the case, a restraint and receivership order of the extent sought is necessary. The position, in my judgment, is the same where there is an intermingling of the assets of a criminal, who is seeking to evade the effect of the confiscation order, with the assets of innocent business partners in a company. If it is established that some or all of the assets of the company are to be treated as assets of the defendant, the question of how their intermingling with the assets of someone who is innocent of wrongdoing is to be dealt with, is a matter for resolution by deciding whether an order should be made and if so on what terms, rather than a matter which has to be resolved by simply asking whether the corporate veil should be pierced. As I have said, the question is whether it is necessary to impose an order of the terms sought bearing in mind that there would be, necessarily, someone who is innocent whose interests would be adversely affected by such an order. This involves a balancing of interests as is inherent in the statutory provisions …'
I also invite the Court to lift the corporate veil on the Eastenders [group] ..., treat the assets of these companies as assets in which the [Kulwant Hare] has an interest and restrain him (and the relevant company) from dealing with those assets. I ask that this Court complement this with an order appointing a receiver in order to all the companies to run [sic], if they can. As I have said, the evidence set out above indicates that they are the wholesale and retail arm of the OCG. It is through these companies that the non-duty and non-VAT paid alcohol is sold onto the legitimate market. It is probable that these companies also conduct legitimate trade, in the sense that they buy and sell duty and VAT paid goods as well. However I do not know the ratio of legitimate to illegitimate activity. … .' (Emphasis added)
Does this Court have the power to suspend the effect of the final order in relation to the first ground to permit the respondent to make a speedy fresh application to a judge sitting in the Crown Court
On an appeal ... the Court of Appeal may—
(a) confirm the decision, or
(b) make such order as it believes is appropriate
Every appeal will be limited to a review of the decision of the Crown Court unless the Court of Appeal considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.
Note 1 Rule 59.4 of the Criminal Procedure Rules provides:
The Crown Court must not require the applicant for a restraint order to give any undertaking relating to damages sustained as a result of the restraint order by a person who is prohibited from dealing with realisable property by the restraint order.
Note 1 Rule 59.4 of the Criminal Procedure Rules provides: The Crown Court must not require the applicant for a restraint order to give any undertaking relating to damages sustained as a result of the restraint order by a person who is prohibited from dealing with realisable property by the restraint order. [Back]