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
		13 November 2009

Mr James Goudie QC :

INTRODUCTION

1. The First Applicant/Third Party, to whom I shall refer as "Mr A", applies to:-

i) Vary the terms of the November 2008 Order ("the Receivership Order") appointing the Claimant/Respondent a Receiver ("the Receiver");

ii) Set aside the Writ of Possession ("the Writ of Possession") granted to the Receiver on 10 September 2009; and

iii) Stay enforcement of the Writ of Possession.

2. The Second Applicant/Third Party, to whom I shall refer as "Mr S", applies to suspend the Writ of Possession.

THE PARTIES

3. The Receiver was appointed as such under the Criminal Justice Act 1988 ("CJA 1988") to enforce a Confiscation Order ("the Confiscation Order") made against the Defendant, to whom I shall refer as "N" on 11 April 2008. The Confiscation Order was in an amount of £778,550. That has not been satisfied. N was bankrupted in March 2007.
4. N was convicted in December 2003 of conspiracy to launder the proceeds of crime. A Restraint Order ("the Restraint Order") had been made against her on 22 July 2003. The Restraint Order has been varied on a number of occasions.
5. N's realisable assets include, and at all material times have included, a residential property at 475 C Road in Ilford. I shall refer to the entire property as "the Property".
6. The Restraint Order specifically forbids N from disposing of or dealing with or diminishing the value of the Property: paragraphs 2(b), 3 and 4(h). It is apparent from the variations to the Restraint Order both that the Property is subject to a mortgage and that rent or other income is derived from it.
7. Mr A is (or was) the assured shorthold tenant of a single room at the Property. He has the shared use of a kitchen and a bathroom with the occupants of 11 other rooms at the Property. Article 1 of Protocol 1 of the European Convention of Human Rights ("the ECHR") is engaged.
8. Mr A occupies his room as his home with his wife and baby daughter. Article 8 of the ECHR is engaged.
9. Mr A's tenancy was granted on 26 December 2008, following an earlier such tenancy granted in December 2007. His current tenancy (if it has not been validly terminated) expires by effluxion of time on Christmas Day 2009.
10. Upon its expiry Mr A enjoys rights pursuant to Section 21 of the Housing Act 1988 ("HA 1988"). He cannot lawfully be evicted without a Court Order. Such an Order is mandatory provided that certain conditions are satisfied.
11. These conditions include that the landlord has given 2 months notice that he requires possession. No such notice has been given to Mr A. It cannot now be given to expire earlier than 25 January 2010.
12. The position of Mr S is similar to that of Mr A, save that Mr S occupies a self contained flat, does so as a single man, does not have a written tenancy agreement, and has a weekly periodic tenancy.
13. It is common ground that the facts that both Mr A's tenancy and Mr S's tenancy were granted by N in breach of the Restraint Order to which N was subject does not affect the validity of their respective tenancies.

CJA 1988

14. Part VI of CJA 1988 relates to the confiscation of the proceeds of an offence. Sections 71-74 inclusive relate to the making of confiscation orders, and Sections 75-89 inclusive to their enforcement.
15. Sections 76 and 77 relate to restraint orders. Section 80 relates to realisation of property, and Section 82 to the exercise of powers by the High Court or a receiver.
16. Section 80(2) authorises the appointment of a receiver in respect of realisable property. Section 80(3)(b) authorises the empowerment of a receiver to take possession of any realisable property.
17. Section 80(4) is of particular importance for present purposes. It provides as follows:-

"The court may order any person having possession of realisable property to give possession of it to any such receiver."

18. Section 80(8) provides:-

"(8) The court shall not in respect of any property exercise the powers conferred by subsection (3)(a), (5) or (6) above unless a reasonable opportunity has been given for persons holding any interest in the property to make representations to the court."

19. Section 82 applies to the exercise of the Section 80 powers. Subsection (2) is subject to the following provisions of Section 82. Subsection (2) provides that the Section 80 powers shall be exercised with a view to making available for satisfying the confiscation order the value for the time being of realisable property held by any person by the realisation of such property.
20. Subsection (4) of Section 82 is of particular importance for present purposes. It provides:-

"The powers shall be exercised with a view to allowing any person other than the defendant... to retain or recover the value of any property held by him."

THE RECEIVERSHIP ORDER

21. None of the occupants of the Property were given notice of the application for a Receivership Order. They should have been given such notice: SCR 115, Rule 7(1).
22. Paragraph 1 of the Receivership Order is addressed not only to N, but also to "all persons having possession of N's realisable property. Paragraph 1 orders N, and such persons, to deliver up to the Receiver possession of all realisable property, expressed to include 100% of the net proceeds of sale of the Property.
23. Paragraph 2 of the Receivership Order confers upon the Receiver a number of specified powers. They include powers which are not controversial, but also, (a) and (d), "power to take possession of... the assets of N, including the Property.
24. The November 2008 Receivership Order was not notified to the occupants of the Property before a letter dated 13 August 2009.

WRIT OF POSSESSION

25. The application for the Writ of Possession was made on 9 September 2009. Again, no notice of the application was given to the occupants of the Property. Again, they should have been given such notice: RSC O 45 r 3.
26. The Writ of Possession is addressed not only to N but also to "all other persons" at the Property. The Receiver says that she believed that the only occupants of the Property were N and her family, and that she was not made aware by N that there were any tenants living there. None of the tenants have been offered the value of their respective property interests.

ANALYSIS

27. The first question is whether "any person" in Section 80(4) of CJA 1988 includes tenants protected by contract and/or under statute. There is apparently no authority directly on this point.
28. In my judgment, the answer is in the negative. Much clearer language would be required to expropriate a property right and to do so without compensation. The genera] scheme of the confiscation legislation is to realise the criminal's assets, but not to infringe the property rights, procedural and/or substantive, of other parties who may themselves be entirely innocent.
29. On the basis that CJA 1988 does not trump HA 1988, and in my judgment it does not, the Receiver's alternative argument is that the Court ought to carry out a balancing exercise of competing interests, referring to HMRC v A [2003] 1 FLR 164.
30. I reject that submission. I do not consider that the A case supports that approach. I accept the submission of Mr Burton at paragraph 19 of his Skeleton Argument for Mr A as follows:-

"The distinguishing feature of HM Customs and Excise v A is that the court was not considering a third party's interest which fell to be retained or recovered (paragraph 55) but the interaction between the enforcement provisions on the one hand and the discretions arising from the MCA on the other. Unsurprisingly the Court held that the former did not oust the jurisdiction of the latter but that when exercising the discretion under the MCA regard must of course be had to the existence of a confiscation order and the property declared to be realisable pursuant to it."

31. The "MCA" is a reference to Section 24 of the Matrimonial Causes Act 1973. This contains a discretionary power to make an adjustment to property rights.
32. I also accept Mr Burton's submission that the authorities are indeed to contrary effect, especially Re Norris [2001] 1 WLR 1388, in the House of Lords, and Gibson v RCPO [2008] EWCA Civ 645.
33. In the further alternative, the Receiver submits that Section 82(4) of CJA 1988 bestows discretion on the Court, and that an order under Section 82(4) should be made only in "exceptional circumstances".
34. I reject that submission. The authorities to which I have already referred seem to me to be couched in terms of rights and to be contrary to there being any discretion, save where there is a discretion under some statute other than CJA 1988, or the Drug Trafficking Act 1994, such as the MCA in relation to property adjustment orders.

CONCLUSION

35. There is of course an important public interest in enforcing the Confiscation Order against N and doing so promptly. On the other hand, in my judgment, that interest does not override the rights of tenants, and enable those rights to be expropriated without compensation.

DISPOSAL

36. I vary paragraph 1 of the Receivership Order so that it is addressed to N and to all persons having possession of N's realisable property who do not themselves have a subsisting interest in such property, subsisting interest in such property for this purpose to include a tenancy which has not been determined by Court Order, with consequential amendments to paragraph 2(a) and (d). I otherwise decline to vary the Receivership Order.
37. I decline to set aside the Writ of Possession. I do, however, suspend it as regards Mr A until a County Court order for possession against him has come into force and as regards Mr S until a like order against him has come into force.