England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		19/12/2008

THE DEPUTY JUDGE :

1. On 21^st April 2001 at Birmingham Crown Court the Applicant B pleaded guilty to one count of being knowingly involved in the fraudulent evasion of VAT. On 2^nd January 2002 he also pleaded guilty to one count of conspiracy to cheat the Revenue.
2. On 20^th February 2003 B was sentenced at Birmingham Crown Court by His Honour Judge McCarthy. He was sentenced to imprisonment for a term of 2 years suspended for 2 years. Under section 71 of the Criminal Justice Act 1988 ("the 1988 Act") the Judge also made a confiscation order in the sum of £500,000 and in default B was to serve 42 months' imprisonment consecutive to any imprisonment that he might serve under the suspended sentence.
3. On 23^rd March 2007 B made an application to the High Court under section 83(1) of the 1988 Act for a certificate of inadequacy, on the basis that the amount realisable is inadequate for the amount remaining to be paid under the confiscation order. As at 3^rd November 2008 the amount remaining payable under the confiscation order was £648,273.97. There is no dispute between the parties that no payments have been made towards the confiscation order at all.
4. The Respondent to the application is the Revenue and Customs Prosecutions Office ("RCPO").

Factual background

5. On 9^th October 2000 a restraint order was made by Mr Justice Elias under section 77 of the 1988 Act against B in respect of his assets. Paragraph 1 of the order sought to prevent the Defendant from removing from England and Wales any of his assets within the jurisdiction and, secondly, to prevent him from disposing of or dealing with or otherwise diminishing the value of his assets whether in or outside the jurisdiction and whether in his own name or not and whether solely or jointly owned. Paragraph 2 of the order required the Defendant to inform HM Customs & Excise in writing as soon as possible of all his assets or all his assets under his control whether in or outside England and Wales. Paragraph 3 required confirmation of that information to be provided by B in a witness statement within 21 days after service of the order. The order specifically required B to specify any transfer from an account in excess of £500 which had taken place since 18^th September 2000. The restraint order was served on B on 11^th October 2000.
6. On 25^th January 2001 a consent order was made by Mr Justice Sullivan appointing a Receiver under section 80 of the 1988 Act.
7. On 21^st May 2001 an application was made in the High Court to commit B to prison for contempt of court on the basis of breaches of the order which had been made by Mr Justice Elias. The first allegation was that B had failed to disclose the nature and extent of his assets immediately after service of that order. Then it was said that B had deliberately dissipated or sought to place his assets out of the reach of the Courts immediately after his arrest during the 3 weeks or so before the restraint order had been made. B had been arrested on 19^th September 2000. In summary, it was said that instead of the assets under the control of the Court being worth in excess of £895,000 there remained only about £90,000 of assets under the Court's control.
8. RCPO said that on 31^st August 1999 B had opened a policy with Equitable Life and that between that date and 22^nd May 2000 he had made payments into the policy amounting to £650,000.
9. After his arrest on the 19^th September 2000 and before the making of the restraint order B withdrew all the sums in that policy. He withdrew £600,000 on 22^nd September 2000, £300,000 of which he sent to a Citibank account in Singapore. He also transferred £300,000 to a Citibank account in Hong Kong. That sum was returned on 9^th October 2000 to Equitable Life and then immediately transferred to an undisclosed Lloyds TSB Bank account. B then transferred that money to an account in Pakistan in the name of Zahid Shafiq. A balance of £69,715 was sent to that same Lloyds bank account on 9^th October 2000. RCPO submitted to the Court that none of those transfers had been disclosed by the Respondent in compliance with the order of Mr Justice Elias. It was said that between the date of his arrest and the making of the restraint order B had made undisclosed transfers to a value of £1,004,715.
10. In addition RCPO referred to two withdrawals of cash, first of all £60,800 from a Barclays bank account in Preston and secondly £23,550 from a bank account held by B at the Royal Bank of Scotland.
11. On 25^th February 2002 Mr Justice Newman ordered the contempt proceedings to be adjourned to await sentencing in Birmingham Crown Court. As I have said, sentencing took place on 20^th February 2003.
12. On 8^th October 2004 Mr Justice Davies held that B had acted in contempt of Court. He imposed a term of imprisonment of 4 months suspended for 9 months. The papers before this Court do not indicate the breaches which the learned Judge found proven. However, in paragraph 22 of his witness statement dated 2 October 2008 in support of the application under section 83, B says: "The breaches complained of related to the transfer of funds that ultimately came under Mr Ahmed's control in Pakistan. I accept that I made these transfers after my arrest". For completeness I note that B says at paragraph 23 that he complied with the terms of the suspended sentence imposed by the Birmingham Crown Court and has not breached the order made by the High Court in 2004. The warrant for committal was never executed.
13. On the application of the Receiver the receivership was ended by order of Mr Justice Calvert-Smith on 12^th December 2006.

The making of the Confiscation Order

14. B says in his witness statement that there was a dispute between himself and the Prosecution about the extent to which he had benefited from his criminal activities. Mr Christopher Convey, Counsel appearing in this Court on behalf of B, referred me to the Prosecutor's statement under the 1988 Act dated May 2002. In that statement the Prosecution claimed that the Defendant had benefited from his criminal activities in the amount of £4,141,640.41.
15. The prosecution had been based upon fraudulent claims for the repayment of VAT. B had registered a number of registered traders solely for that purpose. It was said that between 1996 and 2000 B had set up some 26 businesses. In each case a different identity had been used to register what ostensibly appeared to be separate sole proprietor businesses by using a number of addresses across the UK as trading addresses. Mail from HM Customs & Excise was collected by B at each of those locations, he would then complete VAT returns and return them to the relevant VAT office. If HM Customs & Excise required verification, B would then attend meetings with VAT officials posing as that particular trader. It was also said that during the period of the fraud B had set up over 30 different bank accounts using different identifies.
16. The Prosecutor's statement on realisable property fell into two parts. The first part referred to the statement of account which had been produced by the Receiver. That statement referred to a number of different types of assets including two properties, a car, a number of Bank and Building Society accounts, various policies, shares and dividends. The Receiver concluded that the funds he had been able to collect in order to meet a confiscation order then stood at about £34,000 after deducting various expenses.
17. The second part of the Prosecutor's case on realisable property was entitled "Hidden Assets". The Prosecutor said:

"It is clear from the financial investigation that not all of the Defendant's assets have been identified."

"B is a very intelligent man who has a PhD in maths, physics and computing from Manchester University. Proceeds from the fraud have been successfully laundered outside the jurisdiction. He is aware not only of how to commit and refine his crimes and cover his tracks but also the financial aspects involved in laundering the proceeds of his transgressions."

18. The Prosecutor then listed those assets over which B had had control at some time, but the whereabouts of which could not then be established. He referred to the setting up of the Equitable Life policy and the realisation of that policy during September 2000. He then referred to the transfer of £300,000 to a City Bank account in Singapore in the names of H. Vadher/B. The statement also referred to the remaining funds from the policy as having been transferred to a newly opened Lloyds TSB account. That account had been opened jointly with Saeed Ahmed but the latter's name was removed from the account on 8^th October 2000, which was the day before the restraint order was made. B closed the account on 24^th October 2000. The statement dealt with a transfer of £300,000 to a bank account in Pakistan in the name of Zahid Shafiq and also the withdrawal of remaining funds. The Prosecutor made the point that the current whereabouts of those funds was unknown. The statement concluded by listing 8 withdrawals from bank accounts held with Barclays Bank and with Royal Bank of Scotland between 21^st September and 28^th September 2000, totalling £98,230. That sum, when added to transfers out of the jurisdiction (in so far as they were known at that stage), produced a total of £767,945. The Prosecutor suggested that the hidden assets should be treated as forming part of the realisable property. The Prosecutor said this:

"It is clear that the information laid out above demonstrates how B liquidated his assets in a 2 to 3 week period following his arrest. I believe that these cash transfers represented a deliberate attempt to hide his assets and put them beyond the jurisdiction of any ensuing Court order."

19. By the time the matter came before the Crown Court for sentencing a compromise had been reached between the Prosecution and the Defence. I have not been shown any written basis for the guilty plea on the two counts in the Indictment. It is not suggested that there was any document setting out the terms of a confiscation order or the basis upon which it had been agreed. The only document I have been referred to is a transcript of the proceedings before the Judge in the Crown Court, which includes the plea in mitigation on B's behalf and the Judge's sentencing remarks. That is a document upon which B has relied in making this application under section 83. It is also necessary for me to refer to other parts of the same document upon which the Respondent has relied.
20. At page 30 of the transcript Judge McCarthy said:

"I certify that the Defendant has benefited from the proceeds of crime to the tune of £750,000, I certify that the amount realisable is £500,000 and I make a confiscation order in the sum of £500,000. The period in default I shall set in due course".

I am told that that language fully and accurately expressed the compromise reached between the parties.

21. In the middle of his plea in mitigation, B's Counsel (then Mr Henson) returned to the subject of the confiscation order in order to make submissions as to why the Court should give the Defendant time to pay the sum of £500,000. He suggested a period of 2 years. At that point, the Judge told Counsel that upon being told that a confiscation order was going to be made, he had assumed that the issue of time to pay the sum involved had "gone by the board". The Judge continued:

"I was obviously wrong in thinking that but doesn't the question whether he ought to be given time to pay really raise all the questions raised in the confiscation statements about whether or not he has got this money and whether I believe the explanation that he has given in his confiscation statement?"

22. B's Counsel replied that his instructions were unequivocal, namely that B had not wished to give evidence in the confiscation proceedings and equally would not wish to give evidence on an application for time to pay. B's Counsel continued that the Crown had made it clear to the Court that in their view B had the sum of £500,000 hidden away readily accessible and realisable. B's Counsel responded to that by saying that he was in a "rather artificial position" and "the Defendant accepts that he will be in a position to pay the £500,000 but….. he says those assets are not realisable instantaneously". B's Counsel explained that B had come to a "realistic assessment" of his situation and in particular the strong likelihood that the Court would find that B had realisable assets of £500,000. He stated that B had accepted the agreed terms for a confiscation order rather than face the worse possibility of the Court finding that he had benefited from criminal activities in the sum of over £4,000,000 and that his realisable assets might be as much as £801,000.
23. Once again the Judge's reaction to the request for time to pay was "but that is bound to make me enquire why he needs the two years to which your answer will be presumably what he says in his confiscation statement is the truth". To which B's Counsel responded "I don't want to say that though" to which the Judge replied "That makes it very difficult". B's Counsel accepted that difficulty and added "This man wants to pay the £500,000. Those are my clear instructions. As I think you know…here is a man that has the fortune of probably being able to earn a considerable amount of money, just for instance, from the one reference you have seen where there is a job offer". Counsel added "I know from instructions that I have that there are other things in the pipeline and I am glad to say legitimate things in the pipeline. There is a property deal…which potentially will earn him a great deal of money. He has been perfectly open with me and has said if I'm just given a little time I can pay this money".
24. During his sentencing remarks the Judge said:

"The two counts to which you have pleaded guilty represent a fraud on Her Majesty's Customs & Excise and Inland Revenue of significant proportions. They were protracted sophisticated frauds, meticulously planned down to every last dishonest detail.The amount of time, energy and ingenuity that you must have put into them is truly remarkable. They made you an amount of money that most people would regard as a fortune. Fraud became your obsession. You may have had an attack of conscience in August 2000 but your behaviour when you were caught continued to be equally and determinedly dishonest. Not only did you repeatedly try to lie your way out of it you made strenuous efforts to hang on to the profits of your dishonesty by secreting it away. Much time and effort has gone into detecting it".

25. In reaching his conclusion that the term of imprisonment could be suspended in this case, the Judge referred to exceptional circumstances including the fact that B's wife had suffered for many years from a very severe disability and that B had been her daily carer and was continuing to act in that capacity. He also relied upon B's own poor state of health. The Judge added that

"To this day I do not know for certain whether you have large sums of money hidden away. If you have then it is in your own interest to pay the agreed confiscation of £500,000 as soon as possible. You say you do not and I am not sure about it. Accordingly it seems to me that there is some risk of injustice if you are not given time to pay. You want 2 years and I will take you at your word. There will be 2 years to pay the agreed compensation from today's date. In default of payment of that sum there will be a sentence of 3½ years imprisonment."

B admits having misled the Crown Court and the High Court on dissipation of assets

26. In paragraph 3 of his witness statement of 2^nd October 2008 in support of the application under section 83 B says that:

"My assets are inadequate to pay the confiscation order as they are beyond my lawful reach. I transferred the proceeds of the offences that I committed into the control of a Mr Saeed Ahmed. Mr Ahmed had provided me with the means to hide those assets via bank accounts he controlled in Pakistan. He remains in control of those funds and refuses to return them to me. Despite strenuous efforts on my part I have been unable to recover them."

27. B continues in paragraph 16:

"I was required to produce statements in relation to both the contempt and confiscation proceedings. I accept that where it related to the dissipation of assets the version of events that I gave at that time were not truthful. The account that I gave then was untruthful for two reasons of which the primary one was that I was attempting to protect the identity of Mr Ahmed and the whereabouts of the funds."

Paragraph 17:

"Although I did not tell the truth at that time a matter I deeply regret by the time of my being sentenced in February 2003 I had come to terms with the situation I was in and made it clear that I no longer wished to rely on my earlier accounts."

Paragraph 18:

"During the course of 2002 and post-contempt proceedings (February 2002) I had sought repayment from Mr Ahmed of the funds I had provided to him. Those monies were to be used to discharge any confiscation order that may have been made. However Mr Ahmed refused to repay those monies. He told me that they had been invested in property in the United Kingdom and that there were ongoing property investments that needed to be completed. It was therefore at his insistence that I sought two years in which to pay off any confiscation order believing that by the end of that period Mr Ahmed would have returned the funds to me".

28. I should record that the Court has not been supplied with the earlier accounts to which B refers in paragraph 17 of his witness statement.
29. At paragraph 21 of his statement B says:

"It is right to say that I did not disclose to either the Crown Court or the High Court the identity of Mr Ahmed protecting him and his family (he purchased properties and registered them in his family member's names) from the consequences of his laundering the funds that I had provided to him. I only did this as he was the custodian of the funds and I needed to secure their return. At the time of my sentencing I did not have the possession or control over those funds, I believed that Mr Ahmed would repay the funds to me so that I could satisfy any confiscation order made."

B's evidence in support of s 83 application

30. I now summarise the way in which the evidence has been presented in support of the section 83 application.
31. The first part of the evidence is concerned with the results of the receivership process. As at 15^th June 2005 the Receiver had collected in assets totalling £104,666.72. At that stage the assets recoverable included an "uncertain" entry for anything to be obtained from Mr Ahmed. Of the assets collected in by the Receiver he was able to realise £72,173.82 but was unable to realise two pension policies totalling £32,830.75. They comprised a pension with Standard Life Assurance and a pension with Clerical Medical Fund. The position is that the sums realised by the Receiver have been wholly laid out on the Receiver's fees disbursements and other payments. Accordingly, the funds realised by the Receiver have been insufficient to satisfy even part of the confiscation order. That account of the results of the receivership has not been disputed by RCPO. The dispute in this Court has centred upon the claims made by the Applicant B to obtain a return of funds from Mr Ahmed.
32. In paragraph 29 of his witness statement the Applicant alleges that after the confiscation order was made he asked Mr Ahmed to return the funds to him so that he could comply with the order. Mr Ahmed refused. The Applicant says that because he had no other funds it became impossible for him to satisfy the order. The Applicant says "I therefore instructed Freedman Sharman & Co. to correspond directly with Mr Ahmed" and he relies upon a letter dated 22^nd December 2004. However it is to be noted that although the confiscation order had been made in February 2003 and a further suspended prison sentence had been imposed in February 2004 for contempt of court, that letter was not sent until about 2 months before the expiry of the 2 year period for compliance with the confiscation order.
33. In the December 2004 letter B's Solicitors wrote:

"We act on behalf of the above-named who instructs us that you are indebted to him in excess of £600,000 which represents monies that were provided to you by our client which has been duly acknowledged by you and upon which you have accepted responsibility for the said debt. However you have failed to discharge your indebtedness to our client either in part or in full".

The claim was expressed as a debt of about £600,000 and without any suggestion of monies being due under a partnership. The second paragraph of the letter read:

"Our client has a responsibility to discharge an existing confiscation order which was imposed by His Honour Judge McCarthy sitting at Birmingham Crown Court in February of 2003. The default period comes into play in February 2005 whereupon if our client fails to discharge his obligations under the said order he will be ordered to serve a term of imprisonment in default. We have been further instructed that this is something upon which you are fully aware with our client making it abundantly clear that this debt is discharged immediately."

34. On the same day Freedman Sharman & Co. also wrote to the Receiver pointing out that Mr Ahmed was a debtor who had acknowledged a debt for a sum of money in excess of the shortfall due under the confiscation order. The letter suggested that the Receiver should pursue that debt.
35. On 11^th February 2005 the Receiver replied to that suggestion having reviewed the information provided by B. He said

"Whilst this debt is a potential asset of the Defendant and could assist in discharging the confiscation order I am concerned with the possible level of the costs if I were to conduct such litigation the issue of how it would be funded would need to be addressed. In the circumstances it may therefore be more cost effective for the Defendant to set about pursuing the claim against Mr Ahmed under my control and I would therefore ask if you can confirm if community legal funding is available to him or alternatively if Freedman & Sharman would be prepared to be instructed on a contingency fee basis in this regard?"

It does not appear that B's Solicitors were willing to act on a contingency fee basis. Instead in March 2005 B's Solicitor made an application for legal aid.

36. On 1^st July 2005 the Legal Services Commission stated that funding had been refused because it was considered that the case arose out of the carrying on of a business and was thereby excluded under the Access to Justice Act 1999 Schedule 2 paragraph 1(h). In July 2005 B appealed that decision. That appeal was successful and a certificate was issued in September 2005 for him to obtain further evidence and Counsel's advice.
37. In January 2006 Counsel advised that LSC funding be extended to enable Queen's Counsel specialising in civil fraud and Chancery work to be instructed. That application was granted and Mr John McDonald QC was instructed. In paragraph 54 of his witness statement B says:

"Despite RCPO recognising the virtue of the civil action they have continued to maintain their request for the default sentence to be activated. However this is not a situation where the whereabouts of the assets are "unknown" or "hidden". Instead it is a situation in which the law will not allow me to recover them even though I can point to where they are."

I am bound to make two observations on that point. First of all nowhere in his witness statements does B give any real indication as to where these assets are. Indeed in paragraph 51 of the same statement B says: "Whilst there is a clear auditable trail showing funds going to the Allied Bank of Pakistan, I am unable to provide an auditable trace of those funds back to the UK." Secondly I do not accept that B has accurately summarised RCPO's position.

38. In a letter dated 3^rd February 2006 to West Midlands Confiscation Unit and copied to B's Solicitors, RCPO, having considered Counsel's opinion obtained by B, said as follows:

"……..we are of the view that the Defendant's prospects in relation to the Third Party claim are extremely limited. We note that we previously agreed to adjourn the hearing on the 7^th November 2005 for a period of 3 months so that this claim could be further investigated".

I interpose to note that that was a reference to the adjournment of a hearing for the enforcement of the confiscation order.

"In the circumstances therefore we would agree to adjourn the matter for a further period of one month only. At that time should the Defendant not be in a position to put before the Court his realistic proposals for full satisfaction of the order against him we will ask the Court to consider all available enforcement options including the activation of the default term of imprisonment."

39. In a further letter of the 10^th February 2006 RCPO wrote to B's Solicitors again for the specific attention of Mr John Barnes. The file reference on that letter is the same as appears on letters from B's Solicitors in 2008 from the same firm and includes the initials JB. Although there was a change of Solicitor later on in 2006, I was told that the Solicitor now acting for B was also acting for him at this point in time in 2006.
40. The letter of 10^th February 2006 states:

"As the Receiver has indicated that there are no further assets which could be realised we will shortly be writing to the Receiver requesting that they apply to be discharged from office. We further indicate that we would be likely to oppose an application for a certificate of inadequacy due to the hidden assets component of the order" (emphasis added)

It is significant that that letter did not produce any objection from B or his Solicitors to the effect that the confiscation order had not included or had been based upon any "hidden assets component".

41. In June 2006 B was told that because a Solicitor was leaving Freedman Sharman & Co. he would need to instruct alternative Solicitors.
42. On 25^th August 2006 the new Solicitors, Coley & Tilley wrote to Mr Ahmed at an address in Edgbaston, Birmingham stating

"We act on behalf of our above-named client who instructs us that you are indebtedness to him in the region of £800,000. This represents monies that were provided to you by our client for money laundering and investment purposes. However, you have failed to discharge your indebtedness to our client either in part or in full."

43. In paragraph 62 of his statement B says "My Solicitors had misrepresented my instructions or they were just plainly negligent". He explains that that referred to the statement that the monies provided to Mr Ahmed were for money laundering and investment purposes. However, he does not dispute other matters which are set out by those Solicitors in support of his claim. In particular, he does not deny that sums of cash totalling £500,000 were transferred by him to Mr Ahmed in addition to the monies transferred from the Equitable Life policy. In the Crown Court proceedings only the latter had been referred to. In addition there is no denial from B of the statement made on the second page of the letter "Our client informs us that you have repaid £400,000 of this money". It was on that basis that the Solicitors were claiming at that stage repayment of the remaining sum due to B of £798,230 net. Once again the claim against Mr Ahmed referred only to a liability in debt. It did not suggest that a business partnership had been established and that sums of money were due thereunder.
44. B points out that on 29^th October 2007 Coley & Tilley, who had ceased to act for B, wrote a letter confirming that the letter of claim sent to Mr Ahmed on the 25^th August 2006 had not been shown to B before it was sent to Mr Ahmed. Nevertheless I do not see how that can detract from those parts of the letter which have never been denied by B and which are consistent with material parts of the formal claim that he later made against Mr Ahmed.
45. In paragraph 63 of his statement B says that on 14^th September 2006 Leading Counsel advised him to bring proceedings against Mr Ahmed under the Partnership Act 1890.
46. On 11^th October 2006 the Legal Services Commission wrote to Coley & Tilley to discharge the funding certificate on the grounds that "It is quite clear from paragraph 28 of the Opinion of John McDonald QC that the proceedings against Mr Ahmed should be brought under the Partnership Act 1890 and therefore that was a matter which was excluded from public funding under Schedule 2 to the 1999 Act." B appealed unsuccessfully against that decision.
47. B tells the Court that on 25^th October 2006 he received a copy of the Particulars of Claim drafted by Counsel and that upon receipt of those particulars his Solicitors Coley & Tilley advised him that they were unable to continue to represent him because of the withdrawal of public funding. They came off the record on 26^th October 2006.
48. On 27^th October 2006 B served his claim on Mr Ahmed. In paragraph 7 of the Particulars of Claim B stated that "In or about November 2000 the Claimant permitted the Defendant to invest the sum of £300,000 held on his behalf in Pakistan". In paragraph 8 the Claimant set out other sums of money which he claimed had been forwarded to Mr Ahmed, firstly £95,000 in cash which had been drawn from his accounts held with Barclays Bank Plc and the Royal Bank of Scotland Plc. Secondly he relied upon a further sum of £300,000 which had been drawn by the Claimant from his account held with UBS in Switzerland and which it turns out derived from the second tranche of monies drawn from the proceeds of the Equitable Life Policy. Thirdly he once again relied upon cash sums totalling £500,000. In paragraph 9 of the Particulars of Claim the Claimant stated that he had made capital payments to the Defendant for the purposes of investment totalling £1,195,000. He then accepted that he had been repaid by the Defendant the sum of £335,000 thus making his capital contribution under the investment agreement and/or partnership about £860,000.
49. The Defendant, Mr Ahmed, made an application to strike out the proceedings which had been brought in the High Court. The matter came before His Honour Judge Brown QC on 18^th December 2007. At that stage B was acting in person. The Judge decided to strike out the claim. In his judgment the learned Judge drew attention to the letter from Mr John Barnes of Freedman Sharman & Co. of 22^nd December 2004 in which a claim for repayment of the debt of £600,000 had then been made. He referred also to the claim from the second set of Solicitors sent on 25^th August 2006 which had asked for the return of a debt in the sum of about £800,000. The Judge drew attention to the difference between the sums being claimed in those letters and also in the Particulars of Claim and especially the absence of any reference to a partnership.
50. The Judge decided to strike out the claim firstly on the basis of the evidential problems which it faced. He held:

"There is no evidence…to indicate that there is or was any partnership entered into between Mr B and Mr Ahmed back in late October or early November 2000. The payments which went into the bank account were, in fact, before that date and after Mr Ahmed's name was removed from the account. So on the face of the documents and the Particulars of Claim there is no linkage, no nexus, between Mr Ahmed and the Claimant which could possibly give rise to a partnership…".

"There is no linkage between the two of them until the letter which was sent in December 2004 and the only business dealings that have been indicated in the well documented papers have been in relation to other goods not related to properties whatsoever. So the claim must fall on those grounds alone."

I should add that I have not seen any of the documents to which the learned Judge referred, but it is not suggested that that finding was inaccurate. The Judge clearly took the view that there was no relevant evidence to support B's claim. The Judge also struck out the claim on the ground that B was asking the Court to enforce an illegal agreement because there was an abundance of evidence to show that the purpose of any transfers of money to Mr Ahmed had been for money laundering.

51. On 3^rd January 2008 B made an application to the Court of Appeal for permission to appeal. On 3^rd June 2008 that application for permission to appeal was refused.
52. On 14^th February 2008 Freedman Sharman & Co. wrote to RCPO. In that letter they suggested that although their client B was debarred by the decision of the High Court and the principle of "ex turpi causa" from pursuing his claim against Mr Ahmed, that principle would not apply to RCPO. The letter suggested that RCPO should pursue B's claims against Mr Ahmed in order to satisfy the sum outstanding under the confiscation order. That was a surprising suggestion because the second page of the letter clearly indicated that quite apart from the illegality ground upon which the Judge had struck out B's claim, the writer of the letter clearly understood that the Judge had also rejected the alleged partnership claim on the merits, not least because of the inconsistencies in the way in which the claim had been put forward.
53. Subsequently, having taken Counsel's opinion, RCPO responded to B's Solicitors to the effect that they were distinctly unimpressed with the evidence that B had produced in support of his claim. They expressed the view that it was not surprising that the Court of Appeal had refused permission to appeal. RCPO stated that they had been advised by Counsel to proceed with enforcement action against B regarding the overdue and unpaid confiscation order. They added that it was a matter for the Magistrates to decide what view to take of the application for a certificate of inadequacy. However, RCPO's opinion was that that was likely to be seen as a delaying tactic which lacked any reasonable prospect of success. They suggested that B should prepare to serve his default sentence.
54. The application for a section 83 certificate was lodged with the Administrative Court office as far back as 27^th March 2007. No evidence in support was filed until October 2008. I appreciate that at that stage B was acting in person. Nevertheless, he was pursuing the claim against Mr Ahmed for a sum of money in excess of the amount due under the confiscation order. Moreover, the application to strike out his claim was not made until 13^th November 2007 and not determined until the following month. No explanation has been given as to why the application for a section 83 certificate was made in March 2007.
55. On 11^th September 2008 Freedman Sharman & Co. wrote again to RCPO. In that letter the Solicitors state "It is accepted on our client's part that Mr Ahmed's collusion was originally solely for the purpose of concealing the funds, which he achieved. The oral "investment agreement" arose once the funds had been transferred to the control of Mr Ahmed and it was on this basis that the claim was brought. However as we know Mr Ahmed exercised the defence of illegality (based on the origin of the funds) and it is because of this our client becomes completely helpless. Our client states that the accounts in Pakistan were deliberately set up to achieve the objective of "concealment". To this end he states Mr Ahmed delivered on his objectives and in doing so he laundered the funds that arrived in Pakistan by removing the link between the funds arriving in Pakistan and their repatriation back into the UK. Therefore our client who is legally unable to pursue Mr Ahmed requested your assistance as the only claim he could make against Mr Ahmed. Therefore his proposal was to provide your office with the detailed transactions confirming the repatriation of these funds into assets in the UK thus allowing the RCPO to utilise appropriate legislation to achieve the objective of the confiscation order" (emphasis added)
56. By contrast, about 3 weeks later, in paragraph 51 of his witness statement dated 2^nd October 2008, B states that:

"I am unable to provide an auditable trace for those funds back to the UK. I have no direct or indirect means to obtain information relating to the transfer of these funds from the accounts at the Allied Bank of Pakistan. Mr Ahmed was in control of these funds and he did not disclose to me exactly how he brought them back to the UK."

Although that inconsistency was not raised during the hearing and my findings below are not based upon it, it is a matter which I should record in this judgment.

57. In summary, B's case before this Court is that, apart from the assets which were dealt with by the Receiver, his only asset of value as explained at the confiscation hearing in 2003 had been his interest in the recovery of funds from Mr Ahmed. B goes on to say that he has shown conclusively that he has been unsuccessful in realising that interest and as such should be considered as having discharged the burden upon him to show that it is irrecoverable.

The Respondent's evidence

58. The Respondent has relied upon a single witness statement dated 5^th November 2008 from Sophie Eloquin, a lawyer in the Asset Forfeiture Division of the RCPO. She points out that on B's own account the confiscation order was made after the Applicant says that he had made requests from Mr Ahmed for the return of the funds he had transferred to him (ie. in 2002) and in anticipation that he would be put into funds by that person (see paragraph 7). She continues "It appears that he knew of Mr Ahmed's position at the time of the order and was nevertheless prepared to consent to an order which seemed to acknowledge that he had hidden his assets and believed he had control over them" (see paragraph 8). Miss Eloquin also relied upon the Prosecutor's statements in the confiscation proceedings which had referred to the transfer of funds by B of "hidden assets". She adds that it was those assets upon which the Defendant appeared to be relying when agreeing the compromise figure of £500,000 as realisable property and the amount of the confiscation order (see paragraph 9). She refers the Court to the Defendant's concession that he knowingly made those transfers to Mr Ahmed as part of a scheme to remove his funds from the scope of the restraint order and therefore from the UK authorities after his arrest, an activity which he had described as money laundering. Miss Eloquin acknowledged that B had attempted through the Civil Courts to recover debts owed by Mr Ahmed, but she stated that "The fact that he has not succeeded does not in any way lessen his responsibility of demonstrating that he does not now have sufficient funds to meet the confiscation order" (see paragraph 13).
59. As to B's present financial position Miss Eloquin pointed out that B is silent as to his means, he does not state whether he has any current income or possible employment available to him, and he does not give any information as to whether he is able to or has sought any form of occupation or has any other assets or means of income which he may have acquired since the time of the confiscation order or the discharge of the Receiver.

Application by B for an adjournment

60. At the beginning of the hearing I was told that Miss Eloquin's statement had been served in draft on 3^rd November. The witness statement in its final form together with the Respondent's skeleton was served at the end of the afternoon on 4^th November 2008 on the Applicant's Solicitors. In reply B provided two additional witness statements dated 6^th November 2008.
61. What is described as the third statement seeks to deal with B's means. He refers to a statement of means and income provided to the RCPO and Birmingham Magistrates Court. He also refers to a means Inquiry which had been held before a District Judge at the Magistrates' Court on 8^th January 2007. He states that both he and his partner Pamela Collier are in receipt of a number of State benefits which allows them to exist on a day to day basis. He says that he has no capital assets or resources of any kind other than personal clothing or minor personal items which if sold would not realise any value. He then sets out the amount of carer's allowance and income support received each week in the sum of £237.08 producing a yearly total income of £12,328.16. B then sets out his expenditure totalling £1,122 a month or a yearly total of £13,464.
62. In paragraph 3 of his second witness statement, also dated 6^th November 2008 B complains that because of, he says, the late service both of Miss Eloquin's witness statement and also the Respondent's skeleton argument he was unable to place before the Court "independent evidence that goes to support my case". He says that there has never been a finding of hidden assets made against him and he declares that he does not hold any such hidden assets. In paragraph 6 of his statement he says that if he had been given proper notice of the Crown's case he would have been in a position to place evidence before the Court to demonstrate that the confiscation order had not been made on the basis of a finding of hidden assets. He says that that evidence would have been available from his original trial Counsel, Mr Henson. And lastly he says that he is unfortunately unable to place that evidence before the Court because of the timing of the material served by RCPO. He claims that he has been disadvantaged and exposed to potential injustice.
63. At the outset of the hearing I was asked to adjourn the application because of the late service of the material relied upon by the Respondent so that B could seek evidence from Mr Henson. The section 83 application made by B on 22^nd March 2007 had not been supported by any evidence at that stage. I was told by Counsel that in early September 2008 the parties had agreed a timetable for the exchange of evidence and written submissions. They agreed that the Applicant's evidence would be filed and served by 15^th September 2008 and the Respondent's evidence would be filed and served by 6^th October 2008. In fact the Applicant's evidence was some 17 days or so late in that it was not completed and sent until 2^nd October. B accepted that in consequence it would have been reasonable for the RCPO to serve its evidence in reply by 23^rd October. In fact the RCPO's evidence was not served in draft form until 3^rd November, some 11 days later.
64. At the hearing I refused B's application for an adjournment. In summary, certain of the documents exhibited by B to his witness statement of 2^nd October gave him fair warning that RCPO would raise the matter of hidden assets. First, there was the Prosecutor's statement which referred to hidden assets expressly. Second, there were the remarks of the sentencing Judge to which I have referred. Third, RCPO in its letter of 10^th February 2006 had stated that they would be likely to oppose an application for a certificate of inadequacy due to the "hidden assets component of the order". Fourth, it is apparent from pages 11A to 13 of the transcript of the proceedings before the Crown Court Judge that B's instructions to his Counsel did not include any clear statement as to the whereabouts of his assets. Indeed, B had instructed his Counsel that he did not wish to give evidence in the confiscation proceedings and his Counsel accepted that there was a risk that in the absence of a compromise the Court might find that the amount of realisable assets was as much as £801,000. Given the equivocal nature of the instructions which Mr Henson was asked to relay to the sentencing Judge, it is difficult to see what he could now add of any materiality to that which was stated at the time. Consistent with that equivocation in the Crown Court, B now admits that he concealed from the Judge the existence of Mr Ahmed and what he now says really happened to the transferred assets.
65. In any event I was not given by B's Counsel any real insight into the substance of the evidence which Mr Henson could give. Moreover, no adequate explanation was given as to why Mr Henson had not been contacted at an earlier stage. In the circumstances I did not and do not consider that an adjournment was justified in order for B's application to be heard and considered fairly.

The statutory framework

66. It is convenient first to summarise the provisions relating to the making of the confiscation order. Where, as in this case, section 71 of the Criminal Justice Act 1988 was applicable, the Crown Court had to follow a series of steps. Under sub-section (1A) the Court had first to determine whether the offender had benefited from any relevant criminal conduct. Section 71(4) reads:

"For the purposes of this part of this Act a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained."

67. Having determined the amount of any benefit as so defined, the Court then had to pass to the second stage. Section 71(1B) provides that:

"If the Court determines that the offender has benefited from any relevant criminal conduct, it shall then –

(a) determine in accordance with sub-section (b) below the amount to be recovered in his case by virtue of this section, and

(b) make an order under this section ordering the offender to pay that amount."

Sub-section (6) of section 71 provides that:

"…the sum which an order made by a Court under this section requires an offender to pay shall be equal to –

(a) the benefit in respect of which it is made; or

(b) the amount appearing to the Court to be the amount that might be realised at the time the order is made,

whichever is the less."

Section 74(3) provides:

"For the purposes of this Part of this Act the amount that might be realised at the time a confiscation order is made is –

(a) the total of the values at that time of all the realisable property held by the Defendant…"

By section 74(1):

"In this part of this Act, "realisable property" means, subject to sub-section (2) below –

(a) any property held by the Defendant; and…"

Section 102 is an interpretation section. By sub-section (1):

""Property" includes money and all other property, real or personal, heritable or moveable, including things in action and other intangible or incorporeal property."

By section 102(3):

"This Part of this Act applies to property wherever situated."

By sub-section (7):

"Property is held by any person if he holds any interest in it."

By section 102(1):

""Interest", in relation to property, includes right."

68. Section 71(7A) provides:

"The standard of proof required to determine any question arising under this Part of this Act as to –

(a) whether a person has benefited from any offence; or …..

(b) …..

(c) the amount to be recovered in his case,

shall be that applicable in civil proceedings."

Section 71(9)(a) provides that an order made by a Court under section 71 is referred to as a "confiscation order".

69. It is well established that in relation to the first stage of the exercise under section 71, namely to ascertain the extent to which an offender has benefited from any relevant criminal conduct, the burden lies upon the Prosecution to establish the extent of that benefit. At the second stage of confiscation proceedings there is a burden upon a defendant to prove to the civil standard what realisable assets he has, in particular if he is seeking to persuade the Court that the amount that might be realised is less than the extent of any benefit established by the Prosecution (See R v. Barwick [2001] 1 Cr App R (S) 129 and R v. Barnham [2005] EWCA Crim 1049). In order to discharge that burden the defendant should produce "clear and cogent evidence; vague and generalised assertions unsupported by evidence will rarely if ever be sufficient to discharge the burden on the defendant" (See Walbrook v. Glasgow (1994) 15 Cr. App. R. (S) 783 and R v. Lee (1996) 1 Cr. App. R. (S) 135).
70. Mr Convey referred me to the decision of the Court of Appeal in R v. Barnham [2005] EWCA Crim 1049 on the subject of "hidden assets". Although that case was decided under the Drug Trafficking Act 1994 there are no material differences between that legislation and the 1988 Act so far as the present case is concerned. In that case the trial Judge made an order for confiscation in the same amount as the extent of the benefit from the criminal conduct which he had found. The Judge made a finding that the defendant had failed to explain what he had done with his assets. In the Court of Appeal it was submitted on behalf of the Defendant that in a case where the Prosecution alleges that a defendant had hidden assets the Prosecution was required to make out a prima facie case before a defendant could be expected to deal with such an allegation. That submission was rejected by the Court.
71. At paragraphs 40-41 of his judgment Lord Justice Gage held:

"….Once the Prosecution has established the benefit there is no requirement on it to provide a prima facie case. At the second stage the burden of proof shifts to a defendant to establish, if he can, his realisable assets to the satisfaction of the Court. By the second stage a defendant will know exactly how the Court has determined benefit attributable to him and must prove by evidence what his realisable assets are. It is for him to show why the confiscation order should not be "the value of (his) proceeds of drug trafficking." If he proves that he has no or appreciably less, realisable assets than the amount of the benefit determined by the Court the order will be made in a lesser sum….

To hold that the Prosecution must, in some way show a prima facie case that the defendant has hidden assets in our judgment would defeat the object of the legislation. It is designed to enable the Court to confiscate a criminal's ill-gotten gains. The expression "hidden assets" is indicative of the fact that the Prosecution can have no means of knowing how and where a defendant may have dealt with or disposed of the proceeds of his criminal activities."

72. As to the present application, Section 83(1) provides:

"If, on an application made in respect of a confiscation order –

(a) by the defendant, or …"

the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be covered under the order the Court shall issue a certificate to that effect, giving the Court's reasons."

73. If such a certificate is issued, then on an application made to the Crown Court under section 83(3), that Court is to substitute for the amount to be recovered under the confiscation order such lesser amount as the Court thinks just in all the circumstances of the case and is to substitute for the default term of imprisonment a shorter term relating to that lesser amount.
74. A number of principles have been established with regard to the consideration of section 83 applications:

(1) The burden lies on the applicant to prove, on the balance of probabilities, that his realisable property is inadequate for the payment of the confiscation order (see Re O'Donoghue [2004] EWCA Civ 1800, per Laws LJ at para. 3).

(2) The reference to realisable property must be to "whatever are his realisable assets as a whole at the time he applies for the certificate of inadequacy. If they include assets he did not have when the confiscation order was made, that is by no means a reason for leaving such fresh assets out of consideration." (ibid and see also Re Phillips [2006] EWHC 623 (Admin)).

(3) A section 83 application cannot be used to go behind a finding made at the confiscation hearing or embodied in the confiscation order as to the amount of the defendant's realisable assets. Such a finding can only be challenged by way of an appeal against the confiscation order. (See Gokal v. Serious Fraud Office [2001] EWCA Civ 368, Per Keene LJ at paras. 17 and 24).

(4) It is insufficient for a defendant to say under section 83 "that his assets are inadequate to meet the confiscation order, unless at the same time he condescends to demonstrate what has happened since the making of the order to the realisable property found by the trial Judge to have existed when the order was made" (see Gokal at para. 24 and Re O'Donoghue at para. 3).

(5) The confiscation hearing provided an opportunity for the Defendant to show that his realisable property was worth less than the Prosecution alleged. It also enabled the Defendant to identify any specific assets which he contended should be treated as the only realisable property. The section 83 procedure, however, is intended to be used only where there has been a genuine change in the Defendant's financial circumstances. It is a safety net intended to provide for post-confiscation order events. (See McKinsley v. Crown Prosecution Service [2006] EWCA Civ 1092 per Scott Baker LJ at paras. 9, 21-24, 31 and 35).

(6) A section 83 application is not to be used as a "second bite of the cherry". It is not an opportunity to adduce evidence or to present arguments which could have been put before the Crown Court Judge at the confiscation hearing (para. 38 of Gokal and paras. 23, 24 and 37 of McKinsley).

(7) The clarification of a third party's interest in property may be a post-confiscation order event. The extent of any such interest may have to be decided by a civil court. (Re Norris [2001] UKHL 34 and McKinsley at para. 39).

(8) In a section 83 application the definition of realisable property includes a chose in action or a right to a sum of money which the applicant is entitled to recover, irrespective of any difficulty in its actual recovery, unless the applicant proves on the balance of probabilities that it is impossible to recover that sum (R v. Liverpool Magistrates' Court ex parte Ansen [1998] 1 All ER 692 at page 701d-e and Re Houssan Ali [2002] EWCA Civ 1450 at para. 1.11).

Conclusions

75. In his skeleton argument on behalf of B Mr Convey relies upon two grounds in support of this section 83 application:

(1) there is no longer any possibility of B being able to recover money from Mr Ahmed;

(2) the inability to encash two insurance policies justifies a certificate of inadequacy to the extent of their value.

However, if ground (1) fails Mr Convey accepts that ground (2) would also fail. He accepts that ground (2) cannot stand by itself.

76. Under ground (1) Mr Convey submits:-

(1) that the Judge's decision to make a confiscation order in the sum of £500,000 could only have referred to some part of the monies which according to the Prosecution statement had been transferred by B to Pakistan;

(2) that could only have referred to a debt owed to B by a third party; and

(3) it has been shown on the balance of probabilities that it is impossible for B to recover that debt from the third party who turns out to be Mr Ahmed.

77. Even if those three propositions are accepted for the moment, B's case is misconceived. The decision of the High Court to strike out B's application to recover money from Mr Ahmed, whether viewed as proceeds of a partnership or as a debt, is not a post-confiscation order event as referred to in McKinsley. For example, it was not a decision by a civil court declaring the existence or extent of a third party interest in realisable property. His Honour Judge Brown QC decided, leaving aside the lack of evidence to support the claim, that the agreement relied upon by B was tainted by illegality and therefore could not be enforced by him. That illegality referred to the money laundering transfers made by B so as to prevent assets from falling within the control of HM Customs & Excise and the English courts. It so happens that that decision was made in November 2007, after B had started proceedings in 2006 to recover the sums he claimed from Mr Ahmed. However, if, having transferred those monies to Mr Ahmed in 2000, he had sued for their return prior to the confiscation order hearing in February 2003, his claim would have been liable to be struck out on that same ground. He did not lose the right to recover any such monies after the making of the confiscation order. The legal nature of his claim did not change after that date.
78. The matter of irrecoverability which B now seeks to raise (and the facts upon which it is based) could and should have been raised by B at the confiscation hearing so that it could have been considered by the Judge in the Crown Court. That did not happen because of B's concealment from that Judge of matters upon which he now relies in his witness statement of 2^nd October 2008 (see also para. 8 of the judgment at first instance of Lightman J in Re O'Donoghue at [2004] EWHC 176 (Admin)). B did not raise those matters, even though he now claims (para. 18 of witness statement) that in 2002 he had asked for the return of the funds from Mr Ahmed so that he could satisfy any confiscation order that might subsequently be made and Mr Ahmed had then refused to do so. Instead, B consented to the confiscation order being made in the sum of £500,000. (At paragraphs 104 to 110 below I deal with the basis upon which the consent order was made in response to a further argument advanced upon behalf of B).
79. I do not mean to imply that if, at the confiscation hearing, B had disclosed those matters now set out in his witness statement, the Judge would necessarily have made a confiscation order for less than £500,000. Other legal and factual matters might well have been raised and indeed further investigations are likely to have been necessary. It is sufficient for me to say that even put at its highest, B's argument is not only deeply unattractive but contrary to the principles upon which section 83 certificates may be sought. The application therefore fails on this ground alone.
80. Nevertheless, I have gone on to consider the other arguments which have been raised by B. In making this section 83 application, the Applicant has assumed that he only has to show to the Court what has happened to those particular assets upon which he claims the confiscation order was based. In my judgement that approach is also misconceived. It is clear from the authorities to which I have already referred that B has to show on the balance of probabilities that his realisable property as at the date of the section 83 application is less than the amount of the confiscation order. During the hearing it emerged that B has failed to deal with further substantial sums of money identifiable from the papers produced to the Court by B himself. It should have been apparent to B and his advisers that such matters called for a proper explanation from B with adequate supporting evidence.
81. First, in their letter of 25^th August 2006, B's Solicitors when writing to Mr Ahmed stated that B had sent to Mr Ahmed £500,000. Likewise, in his Particulars of Claim served on 25^th October 2006 against Mr Ahmed, B alleged in paragraph 8.3 that during the course of 2001 cash totalling £500,000 had been sent by B to Mr Ahmed. Thus it is apparent that B was maintaining that, in addition to the proceeds of the Equitable Life policy which amounted to a figure in excess of £600,000, he had also invested a further sum of £500,000, which sum he had not previously disclosed to the Court. No explanation has been given by B to the Court as to where the £500,000 came from, nor how it was transferred to Mr Ahmed or indeed what has happened to that sum of money subsequently. This matter was raised during the hearing, as should have been anticipated by B and his advisers. It was closely connected to the very same transactions as formed the basis for B's application to this Court under section 83.
82. The matter does not stop there. The letter from B's Solicitors dated 25^th August 2006 pointed out that B had been repaid some £400,000 by Mr Ahmed of the total sum invested with him. Although in paragraph 62 of his witness statement B states that he was never shown a copy of this letter in draft before it was sent out and he denies that he authorised any reference to money laundering, he does not deny the accuracy of the reference to the repayment to B of £400,000. In paragraph 9 of his Particulars of Claim he again refers to a repayment from Mr Ahmed of a substantial sum of money but this time the figure given was £335,000. B's witness statement gives no explanation at all as to what happened to that repayment, whether it was for £400,000 or £335,000.
83. When this transfer to B was raised during the course of the hearing, Mr Convey stated on instructions that the money was applied by B to the repayment of funds which had originally been provided by a third party.
84. I am not prepared to accept that explanation without any reliable supporting evidence. First of all, B has not identified the third party or provided evidence to show when and how these transfers were made. Second, he has stated that the transfers of money via the Far East to Pakistan was a laundering operation to enable the money to be re-routed back to the UK for the purposes of investment in property in this country. No explanation has been given, nor any supporting evidence provided, to show that a third party would have wanted to invest their own funds in the UK property market via this very round about mechanism. Third, and in any event, it is clear from paragraphs 8, 9 and 16 of the Particulars of Claim that B regarded the £500,000 which he transferred to Mr Ahmed as his own investment. He regarded the repayment of £335,000 as the return of a sum of money to which he was entitled. That is plain because in his Particulars of Claim B required Mr Ahmed to "disgorge" any profits the latter had earned upon the sum of £335,000.
85. At this stage I should indicate the general approach I take to B's witness statements in these proceedings. About one month before the hearing took place, B admitted that the written statements he had previously submitted to the Crown Court and to the High Court (the latter in connection with contempt proceedings) had been untruthful. B accepts that the version of events that he had previously given to the Courts about the dissipation of his assets had been untruthful. The object, of course, of this concealment had been to facilitate money laundering. In those circumstances the Court is entitled to approach B's current explanation about the transactions in question with a good deal of caution.
86. Taking into account also the legal principles which I have summarized above, it should have been obvious that the Court would expect to receive a sufficiently detailed and transparent explanation by B of all matters relevant to the merits of his section 83 application, including supporting material in documentary form or from other relevant witnesses or both.
87. Given B's failure to deal properly with both the transfer of £500,000 of cash to Mr Ahmed and the repayment of either £335,000 or £400,000 to B by Mr Ahmed, I do not accept that the Applicant has discharged the burden on him to show on the balance of probabilities that his realisable property is less than the sum of the confiscation order. It is apparent that the Applicant has failed to provide a sufficient explanation of what has happened to his realisable assets as he has defined them together with other transactions closely connected with those realisable assets.
88. As I have said, B's application has proceeded on the basis that he only needed to explain to the Court what has happened to the property which, he claims, formed the basis for the confiscation order, namely the funds identified in February 2003 as having been transferred to a third party in Pakistan. Even on that limited approach, B has failed to discharge the burden of proof which lies upon him. The explanation which he has put forward in his witness statement is unreliable in a number of significant respects in addition to those set out above.
89. First, although B says that the transfers he made out of the UK related to an arrangement which he had entered into with Mr Ahmed, there are significant inconsistencies in the claim which he subsequently made against that person. In letters written by his Solicitors dated 22^nd December 2004 and 25^th August 2006, B's claim was expressed simply as a debt owed by Mr Ahmed and there was no reference to any partnership as having been set up between those two persons. The first time that that suggestion was made is in the Claim Form and Particulars of Claim served in the latter part of 2006.
90. Second, there were substantial inconsistencies between the figures put forward as the amount due to B from Mr Ahmed. On 22^nd December 2004 the claim presented was for £600,000 exactly. However, on 25^th August 2006 it was said that Mr Ahmed was indebted to B in the region of £800,000. In the Particulars of Claim served in October 2006 the claim for the return of capital invested in the partnership amounted to £860,000. The difference between the last two documents is to a large extent caused by a discrepancy to which I have already referred, namely the amount of capital which B says had already been repaid to him prior to the claim. No explanation has been given by B for these inconsistencies in the material which he presents to the Court, although His Honour Judge Brown QC had specifically drawn attention to them in his judgment in November 2007.
91. I then turn to paragraphs 42-52 of B's witness statement which purports to explain what has happened to the proceeds from the Equitable Life policy. B's Counsel Mr Convey agreed that the material was, to say the least, difficult to follow.
92. The third area of concern relates to the £300,000 which was transferred on 22^nd September 2000 from the Equitable Life account to an account held in Hong Kong with Citibank. No explanation has been given by B as to who was the holder of that account. A little later, on 29^th September 2000 an account was opened with Lloyds TSB in England in the joint names of S. Ahmed and B with a nil deposit. B does not dispute the Prosecutor's confiscation statement that Mr Ahmed's name was removed from that account on 8^th October 2000. The bank statements show that that account was then continued to be in the sole name of B as from 9^th October, again still with a nil deposit. Also on 9^th October 2000 the deposit in the City Bank of Hong Kong account was returned to Equitable Life. No explanation has been given as to why that happened. On 10^th October a transfer of £301,058 was made from Equitable Life to the Lloyds TSB account. On 13^th October a transfer was made of £300,000 out of the Lloyds TSB account to an account in the name of Zahid Shafiq held with Allied Bank of Pakistan.
93. There is no real explanation from B or any supporting material to show who Mr Shafiq is or what has happened to that money transferred to Pakistan. In paragraph 47 of his witness statement B says as follows: "I do not know who Mr Zahid Shafiq is. He may be a member of Mr Ahmed's family as I was originally informed by Mr Ahmed that Mr Shafiq was his brother-in-law in Pakistan. Consequently Mr Ahmed stated that he was trustworthy, that the funds would be safe and that he would ensure they came back into the UK. It was Mr Ahmed's sole intention to remove the link between the transfer of the funds to Pakistan and their repatriation back into the UK. He then invested these funds in real property in England in his own name, in the names of members of his family and in the name of companies he controlled."
94. According to his own witness statement, B's connection with Mr Ahmed was also tenuous. In paragraph 48 he says "My relationship with Mr Ahmed only came about as a consequence of another agreement I had already entered into with an associate of mine, Mr Gurdip Singh. In September 2000 I had originally agreed to provide these funds to Mr Singh in the UK. Mr Singh had introduced me to Mr Zulfiqar Ali who in turn had introduced me to Mr Ahmed to facilitate the provision of these funds to Mr Singh without any link to me." No evidence has been provided by Mr Singh or by Mr Ali to support B's evidence. B has not even supplied any contact details in relation to Mr Singh or Mr Ali.
95. It appears from paragraph 48 of the witness statement that B only came to know of Mr Ahmed in September 2000. There is no suggestion that he had known Mr Ahmed for any length of time. In the absence of any supporting evidence it is implausible that B would have entrusted so much money, whether for property investment in the UK or otherwise, to people who were so little known to him, such as either Mr Ahmed or Mr Shafiq.
96. In paragraph 16 of his witness statement B says that he had not previously disclosed details about the transactions as now set out in his written evidence because he had wished to protect the identity of Mr Ahmed. However, by February 2003 the identity of Mr Ahmed was already known to RCPO in relation to the Lloyds TSB joint account.
97. Taken as a whole the explanation given by B about what has happened to the £300,000 transferred to the Hong Kong Citibank account does not appear to me to be reliable. Some of the account is implausible and there is a serious lack of detail and supporting material on several important points.
98. The fourth area of concern relates to the second transfer of £300,000 from Equitable Life. Here the explanation by B is even more unsatisfactory. On 22^nd September 2000 £300,000 was transferred from Equitable Life to Account No. 275757 held with City Bank's branch in Singapore. This time the funds were not returned. The Prosecutor's statement says that the City Bank account in Singapore was held in the joint names of B and H. Vidher. The money stayed in that account for over 2 months. On 5^th December 2000 £302,617 was transferred to Union Bank of Switzerland. B does not say who held the Swiss account (see para. 46 of his witness statement). But it was pointed out that in paragraph 8.2 of his Particulars of Claim against Mr Ahmed B treats the Swiss account as his own.
99. On 4^th January 2001 the larger sum of £353,302.42 was transferred from that Swiss account to Zahid Shafiq's account held with the Allied Bank of Pakistan. When asked how the sum had grown to that larger amount, Counsel took instructions and told me that at some stage an additional sum in the region of £50,000 had been deposited in the Swiss account. In response to a question from me, Counsel was unable to say where that additional money had come from.
100. Although from documentation produced by B in the bundle before the Court it appears that the Swiss bank account was his own, no statements have been produced to the Court to show all the sums passing through that account over the relevant period. In addition B has failed to give any details about Mr Vadher the other joint holder of the Singapore account. Once again, B has failed to give sufficient information on a number of important aspects of these transfers and I am unable to treat his account as reliable.
101. Fifth, in paragraph 49 of his witness statement B says that once the telegraphic transfer of funds reached Pakistan, Mr Ahmed then convinced B not to pass any further funds through to Mr Singh as had previously been agreed. Instead Mr Ahmed would himself invest the funds in UK property. I note that the first £300,000 or so had only reached Pakistan on 13^th October 2000. On B's account he had only met Mr Ahmed for the first time in September of that year. I find it implausible that B would have agreed to Mr Ahmed investing all the funds in the UK property market so as to displace a recent agreement which, according to paragraph 48 of B's witness statement, Mr Singh had already entered into for that purpose with B.
102. Sixth, in paragraph 50 of his witness statement B states that he asked Mr Singh to repay the sum of £50,000 which B had previously passed to the latter in September 2000 for the purposes of their property investment scheme. B asserts that Mr Singh repaid this sum directly to Mr Ahmed in October or November 2000. Once again it is significant that no supporting evidence has been provided by B whether from Mr Singh or otherwise to support his evidence about that transfer.
103. In summary, in his witness statement dated 2^nd October 2008 B sought to put forward an explanation as to the transactions arising from the proceeds of the Equitable Life policy. He described a money laundering operation which was intended to defeat the restraint order made by Mr Justice Elias in September 2000. He accepts that earlier accounts which he had given to the Crown Court and to the High Court were untruthful. Self-evidently, B's own credibility is in issue, particularly when unsupported on important details. The account which he has given is seriously deficient in a number of respects. It fails to explain a number of key matters, it is not supported by any independent witnesses and there is a lack of supporting documentation. Overall, I do not consider that B's witness statement gives a sufficiently reliable explanation about those assets which he purports to deal with. Therefore, on this further ground I am also not satisfied that B has discharged the burden of proof upon him to show that his realisable property is below the amount stated in the confiscation order.
104. Lastly, I deal with B's argument that there was no finding by the Judge at the confiscation hearing that the realisable property comprised or included hidden assets. Even if it were to be accepted that the confiscation order was not based upon an assumption to the same effect, I have already explained why B's application under section 83 must fail in any event. However, for completeness I should give my views on the form in which the order was made.
105. In this instance it is clear from the transcript of the Crown Court hearing in February 2003 that the Judge was asked to endorse a compromise or consent order. He certified that B had benefited from the proceeds of crime in the sum of £750,000 and that the amount realisable was £500,000. The compromise which was put before him did not itself include any agreed basis or statements as to (a) the nature of the realisable property or (b) whether that property did or did not include hidden assets. The Judge made no findings on those matters.
106. It should be borne in mind that the certifying of the realisable amount related to the second stage of the confiscation process in which B (a) bore the burden of proof and (b) had an opportunity to establish that there were no hidden assets and to secure an agreement or finding to that effect. However, B did not take that course.
107. It is apparent from the transcript that B chose not to give evidence or to opt for a contested hearing on the realisable amount, because of the risk that the Judge might reject B's explanations given in his confiscation statement and decide that he had realisable assets which were worth substantially in excess of £500,000 and immediately available. The clear implication was that the Court might accept the Prosecution's case that B had assets hidden away (see pages 11A to 13 of the transcript). In those circumstances it is not surprising that the Judge should indicate during his sentencing remarks, without making any findings of fact, that it was possible, but not certain, that the Defendant had large sums of money hidden away (see page 26 of the transcript). His comment was entirely fair and showed that he was well in touch with the reality of the situation.
108. Certainly B did not ask the Judge to decide that the realisable assets related entirely to identified or specific assets, and in particular to proceeds from the Equitable Life policy which had been transferred to a third party, nor did he secure the Prosecution's agreement to that matter. Moreover, B asked the Judge to deal with him on the basis that he expected to be able to satisfy at least a part of a confiscation order for £500,000 from "a property deal in the pipeline which potentially will earn him a great deal of money" (page 13 transcript). No further details of that property transaction were forthcoming. It is not surprising, therefore, to find that the realisable assets were not specified in either the compromise agreement or the Court's decision.
109. In the light of the circumstances set out above and also paragraphs 40 and 41 of the judgment of Gage LJ in R v. Barnham [2005] EWCA Crim 1049, I do not think B is entitled to say that the order was made on the basis that none of the realisable assets comprising the sum of £500,000 specified in the order were hidden. Nor do I think that it is tenable for B to say that because of the nature of the order made by the Crown Court, B is entitled to a certificate under section 83 merely by demonstrating that the proceeds of the Equitable Life policy are no longer to be treated as B's "realisable property" or that the funds which arose from that policy are "inadequate for the payment" of the amount ordered to be confiscated.
110. This is not a case where the Crown Court Judge was bound by specific facts which had been agreed between the parties as to the nature of the realisable assets. Rather there was simply a compromise which was non-specific save as to the amount realisable (see by analogy R v. May [2005] 1 WLR 2902, 2926).
111. Lastly it was submitted on behalf of B that because he was unable to sue Mr Ahmed for the recovery of the funds transferred to the latter, his chose in action or right had become valueless, or had no market value within the meaning of section 74(4) of the 1988 Act. Given my conclusions that B is not entitled to rely upon the irrecoverability matter as a post-confiscation order event or, alternatively, he may not confine the exercise under section 83 to an examination of the fate of the funds transferred from the Equitable Life policies, this issue does not arise for decision. Given also that I am not satisfied about the reliability of B's account as to how he has dealt with the funds arising from the Equitable Life policies and, in particular, that he has disposed of those funds in such a way that they should no longer be considered realisable assets on his part, section 74(4) is not engaged. That provision is merely concerned with the valuation of property, including realisable property. It is not concerned with the definition or identification of items of realisable property.
112. For all these reasons the application for a certificate of inadequacy under section 83(1) is dismissed.