England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
ADMINISTRATIVE DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		6 June 2008

Mr Justice Charles:

1. This case returns. It has a number of moving parts to it. There is a helpful note of the judgment that I gave on the last occasion which should be read with this judgment. In very broad outline the relevant background is as follows.
2. The individual parties, who I shall refer to for convenience as "the husband" and "the wife", are engaged in proceedings under the Matrimonial Causes Act. They are also engaged in proceedings under the Children Act. So far as the proceedings under the Children Act are concerned, the subject of those proceedings is their son, who, if memory serves me right, is 10 but I may have got that wrong. At present in those proceedings, there is a residence order relating to him in favour of his older brother, who is of university age and has taken time out from university to look after his brother.
3. The husband is at present in prison. The reason for that is that he was convicted of offences relating to the non payment of tax. The position concerning his release is something set out in the note of my earlier judgment. The committal proceedings referred to which have been brought by the Revenue and Customs Prosecution Office, who I shall simply refer to as "the Revenue", have yet to be heard. I mention them because the result of those proceedings could be that his time in prison is extended.
4. In the criminal proceedings under the earlier regime, namely the Criminal Justice Act regime, a confiscation order has been made and a receiver has been appointed. In broad terms, the confiscation order became crystallised in the sense that there were no further outstanding appeals against conviction and there were no further outstanding matters relating to the amount in November of last year. The Receiver had been appointed at a much earlier stage, and in January 2007 -- although the order is misdated January 2006 -- Munby J had made an order relating to the earlier order of Langstaff J of 10 June 2006. Munby J's order varied that order and provided for certain sums to be paid out from the restrained funds for the benefit of the husband. I say certain sums because there is an issue which has not been fully argued out before me as to what the extent of that order was. I do not criticise the lack of that argument, I simply note it. That order also gave the husband liberty to apply to vary or extend the variation given.
5. The background that followed after January 2007 was effectively that the husband's litigation costs in the context of the ancillary relief and, as I understand it, Children Act proceedings, were met from the restrained funds. During that period the confiscation order had not in my terminology become crystallised in the sense I have described, and the position taken on behalf of the Revenue by reference to authorities to which I have been referred both on this occasion and the last occasion, namely the Briggs-Price case (RCPO v Briggs-Price & Anor [2007] EWCA Civ 568) and the Peters case (Martin Peters v ZNAV [1983] ECR 987), indicate that there is a watershed at the time of that crystallisation, the stance of the Revenue being that up until that time the effect of the order is very much closer to a Morava or freezing order, because a number of matters remained to be decided and it is much easier for the defendant in the criminal proceedings to obtain access to the funds. The position, it is said on behalf of the Revenue, changes on crystallisation and I will return to that in a moment.
6. The sum that was determined in the criminal courts on that crystallisation is a large sum of the order of £900,000. The ancillary relief proceedings were due for trial in January 2008. Taking a bird's eye view immediately before those proceedings were due to come on before the court, the position was that the wife was in receipt of legal aid and was instructing solicitors and counsel on that basis. The husband was, as I understand it, instructing solicitors and counsel on the basis that he was being funded and would continue to be funded from the frozen assets and thus the Receiver would provide the relevant funding, and the Revenue were also to take part represented by solicitors and counsel.
7. In or about November of last year a client of the husband, a Mr Jafali, made a claim against the husband in respect of a sum of the order of £250,000. The existence of that claim was known to the husband and to the Revenue shortly thereafter, but, as I understand it, and I think this is common ground, not to the wife and her advisers until very shortly before if not at the January trial date. Mr Jafali has become an intervener in the ancillary relief proceedings. It was accepted, in my judgment rightly and inevitably, that the existence of the Jafali claim and the husband's cross claim rendered the ascertainment of the assets subject to the discretion under the Matrimonial Causes Act if not impossible exceptionally difficult, and meant that the ancillary relief proceedings simply could not go ahead.
8. The matter was therefore adjourned and Munby J made a number of directions, and within the directions he made were directions as to disclosure and directions for trial, and those directions for trial have been overtaken by subsequent events.
9. The other matter addressed by him at that stage was that he made an order for maintenance pending suit in favour of the wife in the sum of £1,213 per calendar month plus rent and utility bills and continued a payment relating to the child. At that stage, as I understand it, albeit that the confiscation order had become crystallised, no issue was raised before the court relating to the continued funding of the husband and the wife. The expectation, it seems to me, was at that stage that the position I have described, taking my bird's eye view shortly before that period, would continue. There is, however, correspondence to which I was referred on the last occasion, passing between the Revenue and those advising the husband, raising points as to the continuation of his funding but not reaching, as I read it on the last occasion, a final conclusion. The upshot, as I recorded on the last occasion, of Munby J's order for maintenance pending suit in favour of the wife was that she started to be in receipt of regular rather than irregular payments because the Receiver was responsible for them, and this had the knock on effect that her funding from the Legal Services Commission was terminated.
10. The Jafali claim, as I understand it, has developed as the matter has proceeded. On the last occasion when the matter was before me in April, it was the position that I was told, as I remember it, that the husband would have a counterclaim against Mr Jafali and Mr Jafali's claim would include a Quistclose trust claim in respect of monies standing to a certain bank account which are part of the assets over which the Receiver now has control. In general terms, the underlying dispute between the husband and Mr Jafali is as to the nature of their business arrangements and/or contract. The husband says that he has performed his part and Mr Jafali owes him money, now, I think, put in a sum in the order of £900,000 by way of counterclaim. Mr Jafali, on the other side, says that far from that being the case he has paid over a sum of the order of £250,000 which is held on a Quistclose trust in this particular bank account. There will be issues of fact as between Mr Jafali and the husband which fall for determination. There are also issues of law which fall for determination relating to the existence of the Quistclose trust as to which the Revenue will be particularly interested, because they would wish to argue that, even if Mr Jafali is right, the monies standing to the bank account are not trust monies so that their confiscation order still bites on them. As I see it, the Revenue would also wish to argue along the lines that they are arguing before me: that if Mr Jafali is simply one of the husband's creditors, he comes after them.
11. The position remains, it seems to me, that it is extremely difficult to see a way through deciding the ancillary relief argument whilst the Jafali claim remains undecided. Against that backdrop, last April I made orders which had the effect of providing a procedure for the determination of the Jafali claim and a date for that claim. On that occasion it was made abundantly clear by the Revenue, and this was followed up in correspondence, that they were not prepared to continue funding as they had been in the past beyond a certain date. Very properly, as the matter did not come back to court in quite the time expected, the Revenue continued that agreement to fund to today's date. The battle lines as between the husband and the Revenue on funding were therefore identified as at the latest April of this year.
12. The husband seems to have done little or nothing about the problem relating to funding to start with. I have little information as to that because I think in about mid-May he parted company with the solicitors that had then been acting for him. My understanding is that he has another firm acting for him in respect of the committal proceedings, and he has sought advice from the firm that now act for him and instruct counsel before me. He has only made an application for public funding very recently, and the Revenue had written before that, alerting the solicitors to the point that -- they say -- the husband, if he is to be represented, should be publicly funded. It is with the benefit of hindsight counsel for the husband and their solicitors accepted that it would probably have been more prudent for them to have made an earlier application for public funding but pointed out to me, and I accept, that they were faced with a difficult task: not least amongst the problems was the fact that their client is in prison and there were considerable difficulties placed in their way in seeing the client in prison; there are a number of documents in the case which somebody new to it would have to familiarise themselves with; and in any event from mid May until now there was not much time anyway.
13. I propose to deal with the husband's position first. He, through his counsel, accepts that he has the problem that he has been convicted and that the confiscation order has been made, and that renders applications that he makes for the court to exercise its discretion to allow restrained funds to be used to meet his costs in respect of the Jafali claim and the ancillary relief claim and the Children Act claim one which has some obvious difficulties. Additionally it is accepted that the husband's failure to address with urgency the funding problems relating to the Jafali claim, it having been clearly flagged up in April that the Revenue were no longer agreeing to fund him in respect of the ancillary relief claim and therefore that part of it, is a difficulty placed in his way so far as the exercise of discretion is concerned. It is said on his behalf, however, that this court does have a discretion. Against that the Revenue's position is that, now that the confiscation order has crystallised, the court should not vary the relevant orders so as to enable monies to be paid to the husband to fund any of his legal costs. In that context, in addition to the cases I have already referred to, I was referred to a decision of Buckley J as he then was in Re W [1990] The Times 15 November 923, and a decision of Davis J, Re X (Restraint Order) [2004] EWHC 861 (Admin). In that context, the sections of primary relevance, it seems to me, are sections 77 and 82 of the Criminal Justice Act 1988. Section 77 (and I take this from, actually, this citation in the Briggs-Price case) provides in subsection 1 that:

"(1) The High Court may by order (referred to in this Part of this Act as a "restraint order") prohibit any person from dealing with any realisable property, subject to such conditions and exceptions as may be specified in the order."

And:

"(2)  Without prejudice to the generality of subsection (1) above, a restraint order may make such provision as the court thinks fit for living expenses and legal expenses."

That contains two generalised discretions so far as the court is concerned. That has to be read with Section 82:

"82 Exercise of powers by High Court or receiver

(1) This section applies to the powers conferred on the High Court by sections 77 to 81 above or on the Court of Session by sections 90 to 92 below, or on a receiver appointed under this Part of this Act or in pursuance of a charging order.

(2) Subject to the following provisions of this section, the powers shall be exercised with a view to making available for satisfying the confiscation order or, as the case may be, any confiscation order that may be made in the defendant's case the value for the time being of realisable property held by any person by the realisation of such property.

(3) In the case of realisable property held by a person to whom the defendant has directly or indirectly made a gift caught by this Part of this Act the powers shall be exercised with a view to realising no more than the value for the time being of the gift.

(4) The powers shall be exercised with a view to allowing any person other than the defendant or the recipient of any such gift to retain or recover the value of any property held by him.

(5) An order may be made or other action taken in respect of a debt owed by the Crown.

(6) In exercising those powers, no account shall be taken of any obligations of the defendant or of the recipient of any such gift which conflict with the obligation to satisfy the confiscation order."

Of particular importance are subsections 2, 4 and 6.

14. As one can see from the Briggs-Price case, referring to the earlier case of Peters, the prosecuting authorities have in the past argued that the legislative steer given by Section 82 is such that the court should not allow, in the exercise of its discretion, a defendant to have access to restrained funds to meet third party claims; and the costs of proceedings not relating to, or directly to, the criminal proceedings or the confiscation proceedings.
15. The Briggs-Price decision of the Court of Appeal was that those arguments did not succeed in persuading the Court of Appeal to reach the conclusion that the judge, in exercising his discretion there, had gone wrong. That was a case before what I have termed "crystallisation" took place, because the level of the benefit still remained to be determined.
16. The conflict at first instance between Buckley J and Davis J can, for my purposes, be taken as being that, once crystallisation has taken place, is there a discretion to allow restrained funds to be used for third party claims, or, if there is such a discretion, is the court precluded in a judicial exercise of that discretion from exercising it in such a way? Buckley J's conclusion, largely based upon subsections (4) and (6), was that either there was no such discretion or, if there was, it could not be exercised in that manner. Davis J's conclusion was that there was such a discretion and that there were certain circumstances in which it could be so exercised; but in any exercise of the discretion after crystallisation it was important to have regard to the legislative steer relied on by the prosecuting authority in the Briggs-Price case that the monies should be preserved and retained to meet the confiscation order and therefore should not be used to meet third party claims and, in this case, costs.
17. I asked whether the position was that the matter was effectively equivalent to a fixed charge so the court did not have a discretion. Counsel for the Revenue did not put the case quite as high as that because of the authorities I have referred to, but the stance and position was that, now that the confiscation order has crystallised, whether I have the discretion or not, I certainly should not be exercising it so as to make an order for the payment of the husband's costs, because to do so would fly in the face of the legislative steer and would mean that restrained funds would be reduced with the prospect that the confiscation order would not be met in full and therefore the statutory purpose of those provisions and the confiscation order would in part be defeated.
18. As a matter of the history of this case, the Revenue have the slight problem that that was not a stance taken by them immediately upon crystallisation of the order, but I accept that it was something that they flagged up reasonably shortly thereafter. But, if their primary submission is correct, it would have meant that it should have been made clearly to Munby J at the time of the hearing in January, and nobody should have been attending on that occasion against the background; they were expecting the husband's costs of the ancillary relief proceedings to be borne from the restrained funds.
19. I am told that a case is at the moment before the Court of Appeal on the later legislation which may provide guidance on this point as to the existence of a discretion in the court after crystallisation of the confiscation order to order that sums be paid to creditors, and thus to provide for Mr Stodgell's costs, and, if there is such a discretion, as to how it should be exercised. Clearly the focus of that decision will be on the provisions of poker rather than of the Criminal Justice Act, but as I understand it, it potentially has wide impact as to the nature of a confiscation order and the position that the relevant prosecuting authority, which is charged with the recovery of those monies, has, as against ordinary third party creditors, other Crown debts, etcetera, etcetera, etcetera.
20. Where does that leave me? My preference is for the later decision of Davis J, in the sense that in my judgment there is a discretion. There is clearly a discretion on the face of Section 77 -- the issue is whether or not the combined effects of the provisions of Section 84 either preclude the exercise of that discretion in certain circumstances or limit what can be done in its exercise. In my judgment there are factors based upon the legislative steer referred to in the cases which are powerful, but they are not such as to preclude the court in a given case from providing a variation that enables a third party creditor to be paid. Those circumstances may well be exceptional. Here, therefore, I have to determine whether or not I should exercise my discretion so as to enable the solicitors presently instructed by the husband to continue with their work. The Revenue assert, it seems to me, with force that, if you have regard to the legislative steer, this is a case in which the husband should be funded by the Legal Services Commission, namely they say that the court should exercise its discretion; there would therefore then not be any other available funds and the husband would be so funded.
21. That, as I say, seems to have force, if assessed standing back and saying: which government paper bag should the money be taken from, having regard to the continuing problems relating to budget faced by all government departments? No doubt if the matter was funded by the legal aid fund, the issues relating to the legal aid fund charge may arise in the future in the competition between those seeking to enforce the order and those seeking to enforce the charge.
22. As a matter of legal principle the Crown is indivisible, but I accept that there are different statutory purposes and budgets which come into play. The Revenue also say that if the husband is not funded he can represent himself in respect of all aspects of this litigation. Standing back from that, I do not dispute the proposition, but it seems to me that if that were the case there would be a very high probability, if not an inevitability, that the court would be driven to adjourn the Jafali claim set for hearing at the end of this month. It would simply not be properly prepared. The Revenue, albeit interested in that claim in particular as to the trust aspect of it, are not in a position to deal with the factual elements of it and would be reactive and are not proposing to take on a larger role than that reactive role. There would be formidable difficulties of a practical nature in preparing the case for trial following from Mr Stodgell's incarceration and also, I have to say, his attitude, so far as it has been demonstrated since last April. Notwithstanding my view that in the battle between the Legal Services Commission and the Revenue as to which government budget should bear these costs in the first instance, without having the benefit of hearing from the Legal Services Commission, I see force in the Revenue's stance; it seems to me that the fact that the dispute is between funds of central government is a relevant factor in this case. Put more generally, if the Revenue preserve all of the monies, they will all go back to government in any event; and what they are saying is that it should not be their part of Crown monies who pay for this litigation but another budget distributing Crown monies. I again repeat that I accept that there are distinctions between the relevant departments and budgets.
23. The other side of the equation in my judgment in this case brings into play the position that if the ancillary relief trial had gone ahead in January as had been planned, and may well have happened but for the Jafali claim -- as I understand the position, whether by agreement or estoppel or a product of legitimate expectation -- the Revenue would have been compelled to pay or agree to the payment of the husband's costs of the ancillary relief proceedings from the restrained monies. Additionally, and it seems to me importantly in this case, it has been continuing for a considerable period of time. In addition, one of its moving parts, and a very important one of its moving parts, is the position relating to the ten-year-old child. It may be possible for the court in July to reach decisions as to where that child should live, even though the money claims have not been then determined, but that would add to the difficulties. I have recently been involved in the Court of Appeal in a relocation case closely linked with the available funds in which the Court of Appeal have indicated that, with hindsight in that case, it would have been sensible to try to deal with all matters together. That was the course adopted in April when I was giving my directions. It seems to me that the magnetic features in the balance that I have to have regard to are: the legislative steer that the Revenue have pointed me to and which I accept exists, which is to preserve the restrained funds for the purpose of meeting the confiscation order. Against that, it seems to me, in the exercise of the discretion I have found that I have. Other factors are: the position that was reached in January as to the funding of this litigation; the lack of urgency by the husband since then, but to my mind the almost inevitability that if funding is not provided for the Jafali claim, that claim will not be ready for decision on 23 June when it is set down for hearing, which will have the knock-on effect that decisions may not be possible in respect of the ancillary relief and, importantly, the Children Act proceedings. In that context, I recognised on the last occasion that there is perhaps some advantage to the husband of delaying the Children Act proceedings until he is released from prison; but I concluded that the overwhelming balance of fairness in this family was to have those decisions decided as soon as possible, so far as the ten-year-old is concerned and his older brother is concerned.
24. Notwithstanding the force of the legislative steer and the inactivity of the husband, and my perhaps cynical suspicion that he would wish delay to enable the Children Act proceedings in particular to be decided after he is released from prison, I have concluded that in the very special circumstances of this case, which relate to a competition as to whether costs should be paid by the legal aid fund or the restrained fund (and I should add that in that competition, albeit that there have been some indications from the Legal Services Commission as to an early decision) the earliest decision indicated from them is in fact one which will take place on the first day fixed for the hearing, and therefore in my view there is little prospect of a decision from the Legal Services Commission enabling funding to be made by them so as to ready the case for the Jafali part of the hearing.
25. I have concluded that the strength of the two arguments as to the need for these proceedings to be decided as quickly as possible -- not least the points made in Section 1 of the Children Act relating to those proceedings concerning the child -- the essential dispute being between two government controlled bodies and funds and the position that had existed when the matter was first set down for full hearing and was adjourned, at least in part, because of the existence of the Jafali claim that it would be correct for me to permit a variation of the order. I give a direction that the costs of the husband estimated at £15,000 in respect of the Jafali claim should be paid from the restrained funds.
26. A further issue arises as to any further costs of the husband. The upshot of the Jafali claim could be that there would be a surplus as and when the husband recovers from Mr Jafali. There may not be that surplus, and the upshot may be a reduction in the monies available to both husband and wife and the Revenue. As to the next stage of the proceedings, if the husband were to be successful it is then difficult to see why he should have any costs from the restrained funds. If he were unsuccessful, again it seems to me difficult to see why he should have costs from the restrained funds in respect of the ancillary relief claim and the Children Act claim. In the context of both, it seems to me prima facie as an entitlement to legal aid on the basis that it would be an improper exercise of the court's discretion in those circumstances to release any further funds from the restrained funds.
27. It is asserted, and raised in argument, that the husband may fail the merits test so far as the Children Act case is concerned because he would be in prison at the time that those proceedings fall to be decided. I would wish to make it clear that in my view that is a point I can understand being raised on behalf of those who represent the husband, but it is in my view a very, very bad point. I would wish that conclusion to be conveyed to the Legal Services Commission. In my view it is a very, very bad point for these reasons: The primary reason is that the court will not be concerned with only where the child will live for a short period of time, but will be concerned with setting the regime as to where he should live for the remainder of his childhood. There is no prospect unless he is convicted of some other offence that the husband will be in prison for that period of time. The major issues that the court has to determine are therefore not confined to a period in which the husband will be in prison.
28. The other point that I would raise in this context is, as I understand it, the favourable reports made by the guardian in respect of the husband's case concerning residence. It would therefore seem to me that he has an arguable case in the Children Act proceedings which merit funding by the Legal Services Commission on the basis that he has no other assets. There is, I accept, the complication that, should he succeed against Mr Jafali, then it may be that there would be other assets free of the confiscation order. In that context again, as I have indicated, although this is not determinative of any further application that may be made at this stage, I do not think it appropriate for any indication to be given that any further funds would be or would be likely to be released to the husband to meet any further costs of these proceedings from the restraint funds.
29. That, I think, deals with the husband's position, subject to this: that the order should be drafted so as to ensure that the costs are reasonable costs, with a cap of £15,000. That is the figure put on it by the solicitors, or the one I was referred to by counsel, and that is £15,000 net of VAT. Therefore £15,000 plus VAT is the figure that I have in mind. That should certainly enable the solicitors to prepare for the hearing so that even if at that stage they were embarrassed so far as costs were concerned for the continuance of the hearing if it were to go on longer than would otherwise be the case, the court would then be at least in a position of having the battle lines properly drawn for the factual determination in that hearing and the legal points, if necessary, could be argued by others.
30. I will hear submissions as to whether the provisions should be costs approved by the Receiver as being reasonable or whether it would be more appropriate, and this would be the position I would favour, that sums should be released to the limit of £15,000 plus VAT on the undertaking of the solicitors to provide an account of expenditure, so that if any dispute arises as to reasonableness then it can be resolved thereafter.
31. I now turn to the position relating to the wife. Here matters are different because her claims are based under the Matrimonial Causes Act. There is authority relating to the conflict between that Act and the confiscation provisions. That was referred to in my earlier judgment, and on this occasion I was again referred, in particular, to the decision of CPS v Richards & Richards [2006] EWCA Civ 849, but also to the decision in A v A (maintenance pending suit: provision for legal fees) [2001] 1 WLR 605.
32. Of particular background relevance is paragraph 26 of the judgment of the Court of Appeal in Richards, where Hedley J giving the judgment of the court said:

"Where assets are tainted and subject to confiscation they should ordinarily, as a matter of justice and public policy, not be distributed."

33. Here, as I understand it, an unexpected side wind or product of the maintenance pending suit order made by Munby J was that the legal aid funding came to an end. On the last occasion, as explained in my judgment, because of that it seemed to me that the appropriate course was the one that I set which in broad terms reduced the payment to be made to the wife to a level in which I understood that she would satisfy the means-testing requirement for legal aid and in which she would receive housing benefit over and above the sum I ordered to continue to be paid by way of periodical payments. Perhaps unsurprisingly, an indication that I gave in that judgment that if legal aid were not reinstated I would think it appropriate to make an order to cover the wife's costs, has triggered a reaction with those responsible for decisions relating to the provision of legal aid to say that the application for those monies by way of maintenance pending suit should be pursued before any legal aid. That stance seems to have been: "And we won't be paying for that application either".
34. I confess that it seems to me that that is not the appropriate reaction to the position reached as a result of the last hearing. It however does give rise to a different set of battle lines between the department responsible for administering the funds available for legal aid and the Revenue, which I accept raise, potentially at least, some complicated points. Here again, the Revenue say that the appropriate course is for the wife to pursue her legal aid applications, and if she fails in that, then she will have to act in person. It is accepted that she will have effectively no role in the first round, namely the Jafali claim, but she does have a significant role in the other two sets of proceedings.
35. As I indicated on the last occasion, it seems to me that in this case the wife would be very disadvantaged if she had to litigate, essentially against the Revenue, in the ancillary relief claims as a litigant in person. That is a relevant factor having regard to the approach to be taken under the Matrimonial Causes Act: see, in particular, the Moses-Taiga decision in the Court of Appeal ([2005] EWCA Civ 1013) but also both A v A and G v G ...Maintenance Pending Suit: Costs) [2002] EWHC 306.
36. The position as to the wife's entitlement to legal aid is also bedevilled by the timing problem that exists in this case. Here this has come about following the consequence of the order first made by Munby J and then the order made by me. The prospects of reaching a solution unless the relevant heads of the legal departments, and potentially the administrative departments, of government sort it out amongst themselves are minimal. The prospect, it seems to me, therefore, is that if I was not to include an element of costs in any maintenance pending suit is that the wife would be unrepresented in these proceedings. Again the Revenue's argument, by reference to the steer of the Criminal Justice Act, namely that the restrained funds should be made available and made available only to meet the confiscation order, is a powerful factor to be brought into account. It can and could lead to the proposition argued on behalf of the Revenue that the wife's costs would be so paid and would be lost to the confiscation order and therefore the confiscation order would not be met in full. That is certainly a possibility. An A v A order, however, is one in which, generally and in this case if I were to make one, is to provide that the monies paid by way of maintenance pending suit in respect of any matter can be brought into account by the judge making the order in the ancillary relief proceedings. And thus, therefore, if by way of simple example (because the maths are easy) the court were to consider that the wife should receive £100,000 in the ancillary relief proceedings and the total of monies paid out to her both by way of maintenance pending suit and costs was £50,000, the court would, absent a further direction, net the two off and the wife would only receive £50,000. On that basis it is her share of the matrimonial assets, as determined by the court, which would be bearing the costs.
37. I therefore asked counsel for the Revenue to set out to me the nature of the Revenue's case that they will be 100% successful in the ancillary relief proceedings. I am not in a position to make any properly informed decision on that, and the judge who hears the ancillary relief proceedings will pay no attention to my present estimate of it. The nature of that argument is that the assets that are subject to the confiscation and restraining orders are tainted assets in that they were either acquired or created during the period of criminality and are therefore all tainted monies, and applying paragraph 26 of Richards judgment, as a matter of public policy should all be retained by the Revenue.
38. The Moses-Taiga decision in the Court of Appeal indicates that even if that was thought by me at this stage to be a very powerful argument, it would still be open to me for the purposes of ensuring a fair hearing nonetheless to order a costs element so far as the wife's maintenance pending suit is concerned. That was a passage cited in the position statement put in on behalf of the wife. However, my preliminary view as to that argument is that, although I accept it is arguable, to my mind it is not an argument that is obviously going to succeed. The counter-arguments advanced on behalf of the wife by reference to timing and by reference to the fact that the criminality relates to non-payment of tax and penalties, but even with the penalties not to 100% of the relevant income stream through the relevant years, certainly found arguments the other way that all of the assets should not be treated as tainted. And it seems to me that the wife has a reasonably arguable case that she would receive a lump sum from the assets, even if that had the result that the confiscation order was not met in full, and therefore in that context there is also the ability in the court in determining the competing public policy considerations between ensuring that confiscation orders are met and that there is fairness as between husband and wife to provide that the person who bears those costs at the end of the day should be the wife rather than the public purse.
39. I therefore propose to include within a restored order for maintenance pending suit a costs provision in the amount that I indicated on the last occasion, but also to include what I understand to be a shortfall of the order of £4,000 that has come into existence over the last few weeks. So that would then make it £44,000 plus VAT.
40. Another element of the argument relating to the wife's claim for maintenance pending suit is that on the last occasion I reduced the amount below to the figure which, as I understood it, would render her financially able to claim legal aid. The statement put in on behalf of her solicitor and the responses from the Legal Aid Fund, as I have already indicated, show that, at its lowest, there is real doubt that she will obtain legal aid on the basis that I put forward in the last judgment. In that judgment, I said for that purpose, which was to seek to obtain funding by way of legal aid rather than placing the burden upon the restrained monies, the wife should tighten her belt. In this context the Revenue argue, although accepting that the present position will only last for a short period of time, that the wife has fallen short in her duty of full and frank disclosure in essentially two ways. First, as I accept in this context, that she has given contradictory information as to her actual employment and prospects of employment. Second, a point was raised that information very recently obtained by the Revenue from the relevant department indicate that contrary to the wife's evidence -- direct evidence and evidence on instructions through her solicitor -- that she has been until recently in receipt of child tax credit and has been in receipt of child benefit. So far as that information is concerned it only came into the hands of the Revenue yesterday. Complaint is made on behalf of the wife that it has arrived very late and her advisers are not in a position to properly deal with it. The wife's assertion remains that she does not receive those benefits.
41. There was a knock-on so far as that is concerned by reference to discussions between the wife and an independent social worker in the context of the Children Act proceedings where there were indications by the wife that she could not do any more work because this would affect her recovery of benefit. The inference from that is that she is in receipt of benefit, the knock-on inference from that being that if she is in receipt of means-tested benefit then she would be passported for legal aid. The Revenue do not assert that there is evidence other than indirect from that non-disclosure and indirectly from the discussion with the independent social worker to found an assertion that the wife is in receipt of means-tested benefit. The argument therefore, properly to my mind, was not put that I should proceed on the basis that she is passported for legal aid. In this context certain issues of fact remain outstanding relating to disclosure and assertion by the wife. It seems to me that if those issues of fact at the end of the day go in favour of the Revenue this would provide powerful material for them to argue that any costs that have been funded from the restrained funds should at the end of the day be borne by the wife's share. That, of course, does not help the Revenue if they win their 100% argument, but it would be a factor that would come into play if they did not.
42. Those points also go to the quantum of the maintenance pending suit. The purpose of the reduction that I made on the last occasion is no longer extant within a reasonable timeframe, namely the obtaining of legal aid for the final hearing. The more recent budgets of the wife put in a figure some £350 in excess of the sum ordered by Munby J. In my judgment, looking at her budget in the circumstances of this case by reference to the competing public interests and the public interest in preserving so far as possible the restrained funds, and applying the broad approach to the budgets that is urged upon the courts in these situations, what I propose to do is to return to the figures in the order made by Munby J, which will enable her present rent to be paid, her utility bills to be paid and her payment to be a rate of £1,213 per calendar month.
43. In this context a further factor in this case was it was urged that the wife could move again in the short period leading up to the hearing on the basis, it seemed, that she might be able to borrow money over that period. That, it seems to me, would presuppose that she would be likely to receive a payment as a result of the ancillary relief proceedings. It is difficult to see how she could raise funds in any other way. Given the regime put in place by Munby J in January it seems to me that at this stage it would be unfair to require the wife to move and to incur the expenses that that would involve. Additionally, so far as the points made about her being able to obtain employment are concerned, it seems to me that if that line is pursued as a matter of fact and findings are made as asserted by the Revenue as to the wife's ability to work, that again would provide powerful material for the Revenue to argue before the trial judge that the living expenses part of the maintenance pending suit should be taken into account and netted off as to any payment made to the wife at the end of the day.
44. That I think deals with the issues that have been raised before me today.