Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE JACK
| Paul Hansford
Southampton Magistrates' Court
|HM Revenue and Customs
J Dennison and R Jones neither of whom appeared in the court below (instructed by RCPO) for the Interested Party
The respondent was not represented
Hearing date: Thursday 13 December 2007
Crown Copyright ©
Lord Justice Dyson:
"i) whether pursuant to section 75A of the Criminal Justice Act 1988, there is a discretion, in appropriate circumstances, not to make the Applicant liable to pay the full amount of interest due from the date interest becomes liable to the date of the enforcement hearing (in this case £35,983);
ii) whether, pursuant to sections 140 of the Powers of Criminal Courts (Sentencing) Act 2000 and 79 (2) of the Magistrates' Courts Act 1980, there is discretion vested in a District Judge (Magistrates' Court) (or lay Magistrates) considering a committal to prison to:
a) vary the default term to take account of sums realised by the date of the hearing (in this case approximately £120, 000 before Receiver's fees);
b) vary the default term to take account of money realised by the date of the hearing even if the sums realised have been taken up in Receiver's fees;
c) take account of an increase in Receiver's fees as compared with the estimate provided originally to the Crown Court Judge (£38,258) to the sum actually taken in Receiver's fees, £77,163.
iii) whether there is discretion to alter the default period to be served so as to reflect a realisation of £120,000 by the Applicant."
The relevant provisions of the CJA 1988
"Where a magistrates' court orders the defendant to pay an amount under this Part of this Act, that amount shall be treated as a fine for the purposes of section 78(4) of that Act of 2000 (general limit on the power of a magistrates' court to impose imprisonment not to apply in the case of imprisonment in default)."
"(1) If any sum required to be paid by a person under a confiscation order is not paid when it is required to be paid (whether forthwith on the making of the order or at a time specified under section 139 (1) of the Powers of Criminal Courts (Sentencing) Act 2000 or for the purposes of section 75(1) or (2) of the Magistrates' Courts Act 1980)-
a) that person shall be liable to pay interest on that sum for the period for which it remains unpaid, and
b) the amount of the interest shall, for the purposes of enforcement, be treated as part of the amount to be recovered from him under the confiscation order.
(2) The Crown Court may, on the application of the prosecutor, increase the term of imprisonment or detention fixed in respect of the confiscation order under section 139(2) of that Act of 2000 (as it has effect by virtue of section 75 above) if the effect of subsection (1) above is to increase the maximum period applicable in relation to the order under section 139 (4) of that Act of 2000.
(3) The rate of interest under subsection (1) above shall be that for the time being applying to a civil judgment debt under section 17 of the Judgments Act 1838."
"Where the High Court has made a restraint order, the court may at any time appoint a receiver-
(a) to take possession of any realisable property, and
(b) in accordance with the court's directions, to manage or otherwise deal with any property in respect of which he is appointed,
subject to such exceptions and conditions as may be specified by the court; and may require any person having possession of property in respect of which a receiver is appointed under this section to give possession of it to the receiver."
"(1) Subject to subsection (2) below, the following sums in the hands of a receiver appointed under this Part of this Act or in pursuance of a charging order, that is—
(a) the proceeds of the enforcement of any charge imposed under section 78 above;
(b) the proceeds of the realisation, other than by the enforcement of such a charge, of any property under section 77 or 80 above; and
(c) any other sums, being property held by the defendant;
shall first be applied in payment of such expenses incurred by a person acting as an insolvency practitioner as are payable under section 87(2) below and then shall, after such payments (if any) as the High Court may direct have been made out of those sums, be applied on the defendant's behalf towards the satisfaction of the confiscation order.
(3) The receipt of any sum by a justices' chief executive on account of an amount payable under a confiscation order shall reduce the amount so payable, but the justices' clerk shall apply the money received for the purposes specified in this section and in the order so specified.
(4) The justices' chief executive shall first pay any expenses incurred by a person acting as an insolvency practitioner and payable under section 87(2) below but not already paid under subsection (1) above.
(5) If the money was paid to the justices' chief executive by a receiver appointed under this Part of this Act or in pursuance of a charging order, the justices' clerk shall next pay the receiver's remuneration and expenses.
(6) After making—
(a) any payment required by subsection (4) above; and
(b) in a case to which subsection (5) above applies, any payment required by that subsection,
the justices' chief executive shall reimburse any amount paid under section 88(2) below."
The retention of fees issue
"b. power to draw every month from the assets under his management such sums as are required by him to pay the costs of the receivership;
e. power to sell any asset deemed by the Receiver to be appropriate so to sell for the purpose of application of the proceeds of sale in satisfaction of his costs provided for by paragraph 5 below PROVIDED THAT the Receiver gives not less than 14 days notice of the proposed sale to the Defendant;"
"The costs of the receivership shall be paid out of the assets received or managed by the Receiver and in priority to any other payment required or provided for by this Order or any other order (other than the costs of realisation provided by paragraph 3.f. above), the recoverable costs shall be reasonable costs and in the event of a dispute about the reasonableness the matter shall be referred to a costs judge in accordance with CPR Part 69, but if no assets or insufficient assets are so received or so managed, the costs of the receivership to the extent of the deficiency shall be paid by the Commissioners of Customs and Excise."
It is proposed to seek an order from the Court that your costs in this matter should be costs in the receivership; that is to say that your costs shall be paid out of the monies you bring in during the course of this receivership. Before drawing any remuneration you shall obtain the approval of the High Court and shall give HM Customs and Excise and the Defendant the opportunity to make representations as to the amount claimed. In all cases HM Customs and Excise reserves the right to insist upon detailed assessment of all your costs and the cost of any solicitors instructed by you. You will be allowed to draw such remuneration and pay any disbursements from any realisation every two calendar months provided that accounts have been submitted to and approved by the High Court."
"At first blush one of the respondents' stronger arguments is that section 81(5) really makes little sense if the receiver can in any event deduct his costs from the assets under his control. Why, they ask rhetorically, would he in those circumstances pay over to the justices' clerk a gross sum of money so as to enable the clerk then to pay his remuneration and expenses? Inevitably, he would first deduct them. There is, however, an answer to this question and it provides perhaps, the key to a proper understanding of the remuneration provisions of the statute. The reason why it is necessary, once a confiscation order has been made, for a receiver (whether appointed initially as a management receiver or only later as an enforcement receiver) thereafter to pay over any sum to the justices' clerk gross of his remuneration and expenses is because, as provided by section 81(3), that sum operates to reduce the amount payable under the confiscation order. In the great majority of cases the amount of the confiscation order is determined not by reference to the calculated benefit of the defendant's criminality, but rather by reference to the substantially lesser value of his realisable property. Once the latter has been established and the confiscation order made, it would clearly be wrong to deplete the value of the defendant's assets by deducting the receivers' costs until such assets have been paid to the justices' clerk and thus reduced the amount payable under the order."
These observations could be construed as stating that, once a confiscation order is made, a direction may not be made by the court within the meaning of section 81(1) permitting a receiver to deduct his costs and only pay over the net proceeds to the justices' chief executive. But Simon Brown LJ seems to have been considering the position generally and without reference to the possibility that the court may make a direction under section 81(1) which, as I have already said, gives the court the power to authorise the receiver to deduct his costs before paying the proceeds to the justices' chief executive.
The interest issue
Answers to the questions
Mr Justice Jack: