England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand London WC2A 2LL
		8 July 2009

1. MR JUSTICE MADDISON: This is an appeal by Justin Owen Barnett against the decision of District Judge Hadfield, sitting at Sheffield Magistrates' Court, on 26 January 2009 to commit him to prison for 534 days under Section 76 of the Magistrates Court Act 1980 for default in paying the amount outstanding on a confiscation order made on 14 May 2007.
2. The relevant facts can be stated shortly. On 6 July 2005 the appellant was arrested on suspicion of money laundering offences and he was bailed pending further inquiries. On 8 July 2005 His Honour Judge Keene QC, sitting in the Sheffield Crown Court, made a restraint order under Section 41 of the Proceeds of Crime Act 2002 which, amongst other things, prohibited the appellant from disposing of assets specified in the order which included a property in Limb Lane, Sheffield.
3. On 24 November 2006, following trial at the Sheffield Crown Court, the appellant was found guilty of charges of obtaining money transfers by deception and using criminal property. On 15 December 2006 he was sentenced to serve 18 months' imprisonment.
4. On 14 May 2007 at Sheffield Crown Court a confiscation order was made under Section 6 of the Proceeds of Crime Act in the sum of £86,605.74 to be paid within six months, in default of which there was to be a sentence of 2 years' imprisonment. The main realisable assets on the basis of which the court determined the amount of the confiscation order were a credit balance in a Lloyds TSB bank account of more than £26,000 and the equity in the Limb Lane property then estimated to exceed £59,000. At the time the confiscation order was made the property was on the market for about £175,000 and had been since about August 2004. When the confiscation order was made a restraint order was also made prohibiting the sale of the property for less than that sum.
5. On 9 November 2007 the time for payment of the sum due under the confiscation order was extended to 13 April 2008. By the latter date the sum due under the order had been reduced by about £27,000 by the money in the Lloyds TSB bank account and the proceeds of sale of a watch and some jewellery. Thus a little over £59,000 remained outstanding. Enforcement proceedings were commenced in the Sheffield Magistrates' Court. It had been anticipated that the sale of the Limb Lane property for the price at which it was then on offer would enable the confiscation order to be satisfied completely. By now however the property had been on the market for a long time and had not been sold. Indeed in a letter dated 8 May 2008, Saxton Mee, the instructed estate agents, stated that although there had been no shortage of viewers, not a single offer had been made.
6. In the same letter Saxton Mee suggested reducing the price by £20,000 to generate interest and an offer. The Crown Prosecution Service agreed with this suggestion and on 31 July 2008, by consent, the price for which the property could be sold was reduced at the Sheffield Crown Court from £175,000 to £155,000. It appears from a document handed up during the course of this morning that that was expressed as a variation of the confiscation order pursuant to Section 23 of the Proceeds of Crime Act 2002. It ought, more happily, to have been expressed as a variation of a restraint order pursuant to Section 42 of that Act, but nothing in that matter affects the determination of this appeal.
7. Shortly before that variation down to £155,000 was made, an offer for the property was received in the sum of £130,000. It was decided to ask the Crown Court, by consent, further to vary the figure at which the property might be sold.
8. Coincidentally it was also on 31 July 2008 that the first hearing in the enforcement proceedings took place, this being before District Judge Hadfield. He was informed that an offer for the property had recently been made in the sum of £130,000 in the light of which it was now proposed to apply again to the Sheffield Crown Court for a further variation to permit the sale of the property at that lower price. In the circumstances the district judge agreed to adjourn the proceedings until 29 August 2008 to allow the application for that further variation to be made. Such a variation indeed was made on 28 August, again expressed in terms of Section 23 of the 2002 Act.
9. On 29 August the district judge further adjourned the confiscation proceedings until 24 October 2008 to allow the anticipated sale to progress. By October the sale was proceeding and solicitors had been instructed on both sides. The enforcement hearing intended for 24 October was therefore further adjourned administratively until 26 January 2009.
10. Unfortunately only a week before that date, on 19 January 2009, the proposed sale fell through. Jonathan Derby, the solicitor who had been dealing on the appellant's behalf with the intended conveyance, explained the situation in a memorandum to Laura Robinson who was representing the appellant in the confiscation proceedings. The relevant part of the memorandum read as follows:

"Around 12 January I spoke to the ..... Solicitors again who confirmed that they had again written to their client but had received no funds to carry out pre-contract searches and had received no information as to financial arrangements. I also spoke to Jackie at Saxton Mee who confirmed that they had not been able to get any response from the buyer. Every time they left a message it went to voice mail and no messages were ever returned. However she stated that the property had been back on the market since mid-November. It therefore appears to me that the prospective purchaser never really intended seriously to progress with this matter. But having said that, throughout the whole transaction Mr Barnett would be chasing me on a regular basis as he informed me that he wished the matter to proceed without delay. And on any occasion where I have written to him asking him to contact me he has responded promptly."

11. On 22 January 2009 Laura Robinson wrote to the Sheffield Magistrates' Court and the Crown Prosecution Service to request a further adjournment for three months to allow either for the sale of the property or to allow the mortgagee to re-possess the property given that the appellant was substantially in arrears by now with mortgage instalments. The Crown Prosecution Service agreed with this proposal but, due to the imminence of the court hearing, the Magistrates' Court took the view that the case should remain in the list for 26 January.
12. On that date Laura Robinson, the appellant's solicitor, attended Sheffield Magistrates' Court with counsel instructed. Before the case was called on Laura Robinson discussed the matter with David Friar who was representing the Crown Prosecution Service (the enforcement authority). The two agreed that the best way forward was to apply to the court for an extension of time to allow the building society to re-possess and sell the property.
13. As to what happened at the hearing, accounts are given in the witness statements before this court of Laura Robinson and the appellant. An account is also given in the case stated, and the accounts are not entirely consistent with each other. Clear it is however that counsel for the appellant applied for the adjournment that had been agreed with Mr Friar. The memorandum of 19 January 2009 from Jonathan Derby, from which I have quoted, was put before the district judge.
14. The application for the adjournment was refused. The district judge concluded that as things stood the only way of enforcing the confiscation order was to commit the appellant, which he did, for 534 days, reducing the period to be served from two years because of the extent to which the confiscation order had been partially satisfied. It is of note that Mr Friar did not apply for the appellant to be committed to custody. Indeed, according to Laura Robinson, Mr Friar informed the district judge that he was not suggesting that the appellant had delayed this matter and informed the district judge that the application for a further adjournment was a joint one. It was also accepted in the case stated that the district judge did not find that the appellant's wilful refusal or culpable neglect were the causes of the confiscation order not being satisfied.
15. Against that background, the three questions set out in the case stated for the opinion of this court are these:

(a) Was the district judge right to refuse the application to adjourn the enforcement hearing on 26 January 2009?

(b) Was the district judge right to conclude that there were no alternative methods of enforcement and that the appellant should be committed to prison?

(c) Before committing the appellant to prison, was the district judge required to make a finding that the appellant's default in paying the sum due was due to fault on his part whether by way of a wilful refusal to pay, culpable neglect in failing to pay or otherwise?

16. Referring first to question (b), there is no statutory requirement that a court should be satisfied that no alternative means of enforcement are available for it to commit a defendant to prison in circumstances such as these. But there is clear case law authority to that effect in cases such as R v Harrow Justice ex p Director of Public Prosecutions [1991] 1 WLR 395 and R v City of London Justices ex p Garotte [2002] EWHC 2909 (QB).
17. Subject to that, in my view, questions (a) and (b) are best considered together. In my judgment, the district judge was wrong in both of his conclusions. He should have granted the application for a further adjournment. The fact that the application was made with the agreement of the Crown Prosecution Service, as the enforcement authority, was not determinative of the issue but it was certainly an important matter to be taken into account. Despite the disappointing and very recent collapse of the intended sale of the property for £130,000, there was no reason to believe at the time that the property could not be sold for some such amount. There was never a suggestion that the property was inherently unsaleable. It could have been sold at auction if all else failed or by the mortgagees following repossession or indeed still on the open market. There was no suggestion that the appellant would block or refuse to co-operate with any such sale. The district judge had previously adjourned the enforcement hearings because efforts were being made to sell the property. The memorandum of 19 January 2009 which was before the district judge spoke of the appellant's wish that the sale proceed without delay. Depending on the price achieved, it might well then be necessary to apply to the court for a variation of the confiscation order under Section 23 of the 2002 Act by reducing the amount specified in the order to be paid. But there remained the prospect that the sum still due under the confiscation order would, at least in part, be satisfied.
18. It follows, in my view, that the district judge was demonstrably wrong to refuse the application to adjourn the proceedings and to conclude that no other method of enforcement remained other than to commit the appellant to prison. In my view, his decisions can be properly described as Wednesbury unreasonable. It follows that I would therefore answer questions (a) and (b) in the negative. I would allow the appeal. I would quash the order committing the appellant to prison and remit the confiscation proceedings to the Magistrates' Court for their further consideration.
19. That makes it unnecessary to consider question (c), as to which I would observe only that counsel agreed that in the circumstances of this case there is no statutory requirement to make an express finding of wilful refusal or culpable neglect.
20. LORD JUSTICE RICHARDS: I agree. The order will be (1) appeal allowed; (2) warrant of commitment dated 26 January 2009 is quashed; (3) the case is remitted to the Magistrates' Court; and query (4) anything about costs.
21. MR KNOWLES: I apply for the defendant's costs order. I am legally aided but it makes a difference.
22. LORD JUSTICE RICHARDS: Yes. There will be a defendant's costs order.
23. MR KNOWLES: My clerk will liaise with the associate to get the order faxed to the prison straightaway.
---