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
		3 February 2012

1. LORD JUSTICE MOSES: This is an application to move by way of judicial review, permission having been granted.
2. The decision impugned is a decision of District Judge Qureshi on 21 March 2011, whereby he issued a warrant of commitment in respect of an outstanding confiscation order of the claimant, pursuant to section 76 of the Magistrates' Courts Act 1980. The order specified the period of imprisonment was to be calculated at 3,211 days, that is some 8 years and 80 days.
3. The subject of that order, Mr Johnson, was convicted of a count of cheating the Revenue and a count of conspiracy to commit false accounting in very substantial sums. He was sentenced to 10½ years' imprisonment after a trial and, after a plea to laundering some £6.24 million subsequently in October 2006, to a consecutive period of 2 years, making 12½ years in all.
4. On 20 November 2008 His Honour Judge Warner found that the benefit was the astronomical sum of some nearly £168 million, but that the realisable assets were just over £26 million. It is of note, and indeed was relied upon by Miss Small on behalf of the claimant, that although the sum represented assets which the defendant (as he then was) accepted were realisable, there was a concern that third parties would claim interest in them.
5. Mr Mitchell told the judge, when he was acting on behalf of this claimant, that he should add:

"... we both recognise that these assets have got other people's claims of interest in them. But I recognise that for the [purpose of] argument before you, as to what might be realisable but the benefit of any argument in that regard would have been against the defendant rather than for him because you just could not have resolved it. [But] third parties will, if they seek to resolve it through litigation in due course, as is their right under the Act but that is the position."

6. The schedule to the order that was made in the terms I have identified showed a vast amount of property within the United Kingdom and property of considerable value overseas, particularly in Dubai; for example, an interest of 50 per cent in plot 49 of Jangwani Beach. The reason for mentioning that I shall come to.
7. Subsequently, during meetings with the Enforcement Receiver who was appointed, this claimant contended that in respect of a large part of the assets overseas he did not in fact have an interest in them.
8. The representative of the Revenue at a meeting of 28 October 2010, at the prison where this claimant was imprisoned, asked him why he had agreed the asset schedule at the confiscation hearing if he knew it was not the truth. He repeated that he had no interest in the seven properties and argued that he had only agreed that asset schedule for the purposes of avoiding a hidden assets order, in short, to avoid the judge making an even greater order on the basis that the full extent of the assets and their value could not be ascertained. It must be remembered that the onus was upon this claimant to establish that the realisable assets were less than the astronomical figure given for the benefit.
9. Thus, this claimant starts with a considerable handicap.
10. With considerable fortitude and certainly great cogency, Miss Small, now acting on behalf of this claimant, contends that there was no evidential or sufficient evidential basis for the District Judge to be sure, as he had to be sure, of the two aspects identified in section 82(4), without which no committal order had to be made.
11. The first is that he was satisfied that the failure to pay was the result of this claimant's wilful refusal or culpable neglect (see section 82(4)(b)(i) of the Magistrates' Court Act 1980) and, secondly, that committal was a measure of last resort, all other methods being impractical: see section 82(4)(b)(ii) and the jurisprudence to which Miss Small draws attention in the course of her written argument, such as R (Munir) v Bolton Magistrates' Court [2011] EWHC 3794 (Admin).
12. In support of her argument, firstly, Miss Small draws attention to the fact that very shortly before this application before the District Judge there had been an application before Rafferty J to enlarge the order of the enforcement receivership to cover the assets outside the jurisdiction. There had been disagreement, if not dispute, between the Enforcement Receiver and the Crown. The Enforcement Receiver took the view that he ought to be allowed his costs of pursuing recovery of the assets outside the jurisdiction, particularly in Abu Dhabi and elsewhere.
13. The Crown, on the other hand, had thought it was disproportionate and futile to expend those sort of costs in their belief that nothing would be achieved. They had sought themselves to identify assets and recover them through the process of letters of request. Again, none of that had achieved much.
14. Rafferty J rejected the Crown's application to vary the enforcement order so as to exclude assets held outside the jurisdiction, but upheld the application of this claimant seeking permission for the Enforcement Receiver to pursue the out of jurisdiction assets. She expressed some doubt as to whether the claimant was in truth exhibiting a change of heart over and above an attitude of some recalcitrance initially with the management receiver, but made the Order.
15. But 18 days later or so, the Crown appeared before the District Judge seeking the warrant of commitment and this leads Miss Small to contend how unfair it is that so little time had been given to fulfil the order that a High Court judge had made so shortly before.
16. Miss Small's second limb on which she relies seeks to demonstrate that whatever initial inhibition the claimant felt in co-operating in the recovery of these assets, substantial assets had been recovered within the United Kingdom (some £8 million), and the Enforcement Receiver himself had shown and given examples of co-operation from the claimant with the Receiver in the Receiver's attempt to recover overseas assets.
17. The Enforcement Receiver had reported that:

"The recent approach by the Defendant to demonstrate his cooperation has been to sign letters of authority even in circumstances where he is fully aware that he is not the named account holder or signatory. The consequence of this is that the authorities have been ineffective and no progress can be made with the enquiries."

But he has on more than one occasion spoken of the co-operation of this claimant.

18. The current approach, he said in a letter of 10 June 2010, has been one of co-operation and assistance:

"To this end he has been signing all the letters of authority which I have presented to him for the offshore bank accounts and the potential Dubai properties, we have had two meetings and he is frequently in contact with me by telephone."

19. There has been produced a schedule detailing the very numerous occasions on which this claimant has clearly done what he has been asked to do in the form of signing letters.
20. The difficulty with the analysis of this co-operation is that it has proved totally fruitless. Indeed, when specific offshore assets have been investigated, the attitude of this claimant is that in fact he does not have an interest in them.
21. For example, in relation to the property to which I already drew attention contained within the Schedule of Assets, 49 Jangwani Beach, said to be valued so far as his interest is concerned at £64,000, Mr Johnson advised the Receiver that the property was rented and owned by somebody else. In relation to the asset worth 5.8 million, Bentash Holdings (a name clearly redolent of his own children), he has advised that he did not have any involvement with this company and believed that it was set up when he was in prison. Curious, then, that it should figure in the schedule of assets to the confiscation order.
22. Nothing has been recovered from offshore, save some dirhams in the sum of £2,250,000. But the rest of the £26 million remains outstanding, apart from that figure and the £8 million recovered from assets in this country with, it must be said, some difficulty.
23. The question then arises as to whether on that material it was open to the judge to reach the conclusion that there was wilful neglect. Whilst not in any way endorsing in certain respects the terms in which the District Judge expressed himself, it seems to me that it is abundantly plain that having accepted that there were realisable assets in the sum of £26 million, this claimant has done little or nothing to see that they were realised.
24. The claimant's stance has been that once the Enforcement Receiver was appointed it was up to the Enforcement Receiver and anything the Crown could do way by way of addition in their pursuit of letters of request to recover what they could. He was shut up in prison serving a very substantial sentence. What more could he do but sign those letters that he was asked to by the Receiver?
25. It is important that the claimant be disabused of the notion that that is a sufficient attitude to adopt to avoid a warrant for committal. It was his obligation to realise those assets within the time set by the judge in the confiscation order, lest he face imprisonment in default.
26. It was not open to the claimant merely to sit back, wait and see whether third party disputes arose, and leave it to others to realise those assets. If he sought to contend that those were not his assets, as he now contends, he should have disputed that at the hearing of the confiscation order and not allowed his counsel merely to hint that that was the case but decline to contest it.
27. If the assets have either disappeared or reduced in value, it was and still is open to the claimant to seek a certificate of inadequacy. He has chosen not to do so.
28. The claimant's reliance upon the application to Rafferty J arose out of the fact that, as he well knew, the Crown were seeking his committal on 21 March 2011. That was a very short time before he was due to be released on 8 April from his prison sentence.
29. In my view, the co-operation on which the claimant relies and of which the Receiver spoke was merely colourable; a cloak to his real approach as evidenced by his conversation with the Receiver and his attitude throughout that he was not going to strain to realise assets, but rather, having received what he must have regarded as a favourable order, to hope that he could subsequently persuade someone to accept they were not or were no longer his assets.
30. The District Judge was right to reject that approach.
31. In the light of the paltry sum that has been raised in satisfaction of the order it was open to the District Judge, and indeed in my view he was right to say that that was evidence leading to a conclusion of wilful neglect.
32. The next question is whether it was open to the Crown to reject the possibility of any other means of recovering that sum. At liberty, Miss Small would contend, the claimant would have a greater opportunity to assist in the recovery of those realisable assets.
33. The claimant has links with this country, both comparatively young children, other members of the family and a partner in this country. He is therefore no more at risk of disappearing once his prison sentence was over than of anybody else under threat should they not fulfil the order.
34. In my view that is a wholly unrealistic approach, however persuasively Miss Small sought to engage our sympathies.
35. Of course I have sympathy for a man who has spent a substantial period in prison, and faces, if he does not recover these sums, much longer. But my sympathy must be tempered with the knowledge that it remains within his own power to cure this situation. The more he pays, the shorter his sentence. And I am quite satisfied it is within his power to do far more to recover those assets which he had initially conceded were those in which he had an interest, and (be it noted) were realisable. If those words "realisable assets" are to mean anything, then it is plain to allow him at liberty with no sanction save should he remain in this country is mere pie in the sky. His assets on his own account remain substantially abroad, and the only incentive and realistic incentive can be that he should go to live amongst those ill-gotten gains, as they have been found to be.
36. There is, in my view, no alternative. It would have been wrong for the District Judge to adjourn at that stage, bearing in mind the prison sentence was about to come to an end. In those circumstances, I would refuse this application.
37. MR JUSTICE IRWIN: I agree, and I agree with the reasons given by my Lord, Lord Justice Moses. I add only this.
38. The test set out in section 82(4) for the approach of the court dealing with these kind of proceedings must be applied practically, with the specific evidence in mind arising IN the particular case. It is a mistake to approach the obligation set out in subsection (4)(b)(ii) in a formulaic fashion.
39. The phrase "has considered or tried all other methods of enforcing payment of the sum and it appears to the court that they are inappropriate or unsuccessful" must be read with care. It is enough for a court on the appropriate facts to have regard to such other methods, to consider that they are inappropriate. It is not a requirement, before an order may properly be made, that all other methods should have been tried and failed.
40. LORD JUSTICE MOSES: Yes. Anything else?
41. MR MUNDAY: I have no application for costs.
42. MISS SMALL: No thank you, my Lords.
43. LORD JUSTICE MOSES: Thank you both very much indeed.