England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		01/04/2014

Mr Justice Tugendhat :

1. This is the appeal by Mr Coghlan against the decision of Master Yoxall on the Defendants' application to strike out his claim under CPR 3.4(2). The application notice was issued on 24 April 2013.
2. The claim form was issued on 22 March 2013. The brief details of the claim are that:

"On 1 March 2012 Simon J ruled that the Claimant's address known as the Brook Lane Chapel was recoverable under the Proceeds of Crime Act 2002. The Claimant maintains that this was procured by fraudulent representations made by the First Defendant and therefore seeks a declaration that the order be set aside and there be a retrial of the Second Defendant's action, together with costs".

3. By order dated 14 October 2013 the Master found that Mr Coghlan "has no real prospect of succeeding on the claim and that there is no other compelling reason why the case should be disposed of at a trial". He ordered that summary judgment be entered for the Defendants, and that, among other directions, the National Crime Agency ("NCA") be substituted as the Second Defendant instead of the Serious Organised Crime Agency ("SOCA").
4. The form of the Master's order reflects the wording of CPR r.24 (which was referred to in the Defendants' skeleton argument), rather than CPR r.3.4, but nothing turns on that for the purposes of this appeal. That is how the matter was argued before him, and no amendment to the application notice was considered necessary.
5. In order to understand the nature of the claim and the reasons why the Master made the order he did it is necessary to summarise the judgment of Simon J and the Master.

THE JUDGMENT OF SIMON J

6. The judgment is in 117 paragraphs covering 25 pages. It is not necessary to set it out at length in this judgment, since it is available on BAILII: Serious Organised Crime Agency v Coghlan [2012] EWHC 429 (QB). The following is a brief summary of those parts of it which are necessary to understand the judgment of the Master.
7. This was a claim for civil recovery brought by the SOCA under Part 5 of the Proceeds of Crime Act 2002 ("POCA") against Mr Coghlan and Ms Burgoyne seeking a Recovery Order pursuant to sections 243 and 266 in respect of an interest in a house and land at Brook Lane Chapel, Alderley Edge, Cheshire ("the Chapel"). Mr Coghlan and Ms Burgoyne are domestic partners and joint owners of the Chapel, which is their home. It was common ground that the legal interest in the Chapel was acquired by Mr Coghlan on 21 Sept 2007 by a sale to him from Blue Moon Holdings Ltd ("Blue Moon") for £450,000, with a 100% mortgage from Halifax Bank of Scotland ("Halifax"). The claim was issued against Mr Coghlan under CPR Part 8 on 31 July 2009. In order to succeed SOCA had to prove that Mr Coghlan had been engaged in unlawful conduct and that the Chapel represented property obtained through such unlawful conduct (paras [1]-[5]).
8. As Simon J recorded (para [11]) Mr Coghlan

"has no convictions for drug dealing and none for violence. He has been acquitted of two murders (Little and Barnshaw); and was able to show that a conviction for Assault Occasioning Actual Bodily in 1998, which was relied on by SOCA and for which he was sentenced to 18 months imprisonment, was subsequently quashed by the Court of Appeal. His antecedent record shows convictions for offences of dishonesty for which he has been sent to prison, but he has no convictions since 1997; and although he has been arrested, held on remand and prosecuted for a number of serious offences in addition to those identified above, these were the consequence of the enmity of the GMP and in each case either the charges were not pursued or he was acquitted…".

9. SOCA's case in summary was that Mr Coghlan was at the head of a large-scale and profitable drug dealing enterprise in Stockport from 1997/98 to 2003/2004 and had no declared income during this period; and, although he was employed from 2004/5 to 2005/2006, he was paid less than £30,000 per annum in those two years. SOCA contended that his drug dealing can be inferred both from his lifestyle and the lack of any alternative source of income.
10. In addition SOCA relied on evidence obtained in the course of the investigation of the murder of a man named David Barnshaw. This evidence fell into three categories: (1) Evidence of recorded conversations between Mr Coghlan and a criminal associate, Graham Mansell, who was imprisoned at HMP Lowdham Grange, during visits in February and March 2001 ("the Lowdham Grange evidence"); (2) A statement made by Kevin Durr ("the Durr evidence"); (3) A statement made by Christopher Gregory ("the Gregory evidence").
11. The Lowdham Grange evidence and the evidence of Durr and Gregory (who were drug dealers and later subject to a witness protection scheme) related to both Mr Coghlan's drug dealing at the relevant time and his interest in the Chapel.
12. Mr Coghlan's case in summary was that he denied that he had ever been a drug dealer, although he accepted that he had engaged in loan-sharking in the relevant periods. As to the source of the funds to pay for the Chapel his case was that The Chapel was bought by Mr Kayes and his wife in March 2000 on the understanding that Mr Coghlan would live there and act as project manager in developing it as a family house. Although there had been an agreement to pay rent, he was unable to do so from April 2001 to June 2003 when he was held on remand for the Barnshaw murder; and Mr Kayes did not insist on the payment of rent. The sale to Blue Moon was at a market price for the property, subject to a deduction to take into account that it was a sale with a sitting tenant. The subsequent sale to him by Blue Moon in September 2007 was also at a market value, again less a deduction to take into account the fact that he was a sitting tenant. He had developed the property as a tenant during the ownership of Mr Kayes and Blue Moon, but he had only done so on behalf of the landlords. He had purchased the property in September 2007 with a 100% mortgage at what was its market value.
13. Simon J set out the approach of the court to Part 5 of POCA. In para 14(6) he concluded that:

"…that there are two ways in which SOCA can prove that that assets derive from unlawful conduct: either by proving it derived from particular crimes or by evidence of the circumstances in which the property was handled, such as to give rise to the irresistible inference that it could only have been derived from crime, …"

14. SOCA in fact adopted the second way. The evidence it adduced was of the circumstances in which the property was handled, which it submitted were such as to give rise to the irresistible inference that it could only have been derived from crime.
15. In setting out the chronology starting at para [18] of his judgment, Simon J started with events in August 1999. These events related to another property, Blackshaw Farm. In August solicitors acting for Mr Coghlan had made on offer for the property. And in September the same solicitors had made an offer for the same property on behalf of Mr Kayes.
16. At paras [21] to [39] Simon J stated:

"21. On 4 February 2000 NatWest Bank valued the Chapel at £290,000; on 24 March 2000 it was sold to Mr Kayes by its owners, … for £180,000. SOCA pointed out three apparent anomalies in relation to this sale. First, although £162,000 of the purchase was raised by a mortgage from the NatWest Bank, it is unclear where the deposit of £18,000 came from. It was paid by banker's draft, but the SOCA evidence was that it did not come from any identifiable account of Mr Kayes and, when asked about this, Mr Kayes had no recollection of it…. [emphasis added]

27. Following the stay of the indictment [relating to the Barnshaw matter] Mr Coghlan returned to the Chapel; and on 1 May 2004 commenced his employment with Blue Moon as a project manager at an annual salary (2004/05) of £24,750. …

28. On 6 June 2004 an appraisal report was prepared by NatWest. This described the former chapel hall as awaiting refurbishment, but the rest of the Chapel as being in good condition, complete with premium quality fittings such as beech-wood floors and modern kitchen and bathroom fittings. There were also planning applications in relation to security, interior building and renovation work, in which Mr Kayes was the applicant, but where all the face to face dealings involved Mr Coghlan or his agents. Mr Bailey (a SOCA investigator) summarises SOCA's position in §7.25 of his 1st witness statement [dated 17 July 2009],

It has not been possible to identify any expenditure for the renovation work completed at the Chapel despite detailed analysis of the known bank accounts of both Kayes and Coghlan. This leads me to believe that all the works completed were paid for in cash by either Coghlan or his associates on his behalf.

29. On 8 June there was a NatWest valuation of the Chapel at £450,000; and on 9 July 2004 the Chapel was sold by Mr Kayes to Blue Moon for £300,000. When they were later asked why the Chapel was sold for 33% less than the valuation, Mr Kayes said he could not remember; and Mr Tomlinson said it was at least in part because Mr Coghlan was a sitting tenant….

39. On 12 June 2007 the Chapel was valued by Halifax at £900,000 at the current state of the property market; and on 21 September Mr Coghlan purchased the Chapel from Blue Moon for £450,000, with a 100% interest-only mortgage from Halifax."

17. So in September 2007 Mr Coghlan had acquired for £450,000, and with a 100% mortgage, a property recently valued at £900,000.
18. Simon J considered each of the other items of evidence adduced by SOCA. As to the Lowdham Grange evidence, he attached no weight to the transcript of one of the conversations between Mr Coghlan and Mr Mansell (para [76]). But he did attach weight to the transcript of the visit on 17 March 2001.
19. As to the Durr evidence Simon J stated at para [85]:

"I am prepared to give weight to the evidence of Durr's witness statement that Mr Coghlan was dealing in drugs through a gang of which Durr was a member at the material time. As such, this evidence throws light on whether Mr Coghlan was dealing in illegal drugs as SOCA contend or loan-sharking as he says."

20. As to the Gregory evidence Simon J stated at paras [96]-[97]:

"96. There is also force in Mr Coghlan's observation that the reference in Mr Bailey's 1st witness statement to Gregory's arrest for possession of 1 kilo of heroin as evidence of Mr Coghlan's criminal associations was an unfair view of the facts. While I do not criticise Mr Bailey for this, it appears the information which derived ultimately from GMP tended to give a misleading impression.

97. In these circumstances, although I am not however prepared to dismiss it entirely, since the general evidence that Mr Coghlan was a drug dealer is consistent with the Durr evidence, I consider the hearsay Gregory evidence carries very little weight in so far as it relates to drug dealing. However, I take a different view of the Gregory evidence in relation to the Chapel."

21. At para [98] Simon J concluded that he was satisfied from the evidence that, while he was at large between 1999 and at least April 2004, Mr Coghlan was engaged in unlawful conduct as a drug dealer, and that his drug dealing was the source of his income. He summarised his reason in seven sub-paras of para [99], the first of which was the lack of any evidence of either a legitimate, or any, source of income during this period. He also concluded that Mr Coghlan made a calculated admission of a lesser transgression in order to conceal the true source of his cash income, which was drug dealing.
22. Simon J did not need to consider Ms Harman's alternative submission (recorded at para [66]) that Mr Coghlan's admission of loan sharking (on the profits of which he had paid no tax) was a smoke screen which was simply the admission of a less opprobrious form of unlawful conduct. In other words, Ms Harman submitted that it made no difference which form of unlawful conduct was proved, so long as what was proved was that the Chapel represented property obtained through unlawful conduct.
23. Simon J then turned to consider how the Chapel had been acquired. He summarised the information given in interviews by Mr Kayes, Mr Tomlinson and Mr Coghlan. He concluded at para [108]:

"I find that from an early stage Mr Coghlan had available cash from his unlawful conduct and was highly sensitive to the risk of recovery under POCA. Although he took careful steps to conceal his interest in the Chapel, I am satisfied that it existed and derived from his income from drug dealing; and the steps he has taken to conceal his interest in the property and to put it beyond the reach of SOCA is further support for the conclusion that his income came from unlawful conduct."

24. This conclusion followed from the findings he made in para [107] in 15 sub-paragraphs. In three of these he found that the Chapel had been sold at an undervalue: to Mr Kayes in March 2000 (sub-para (2)), to Blue Moon in July 2004 (sub-para (8)) and again to Mr Coghlan in September 2007 (sub-para (12)). Sub-para (4) is the sub-paragraph which is most significant for this appeal.
25. In sub-paras (2) to (4) he stated:

"(2) The acquisition price of £180,000 which was agreed in March 2000 was significantly lower than the NatWest valuation of £290,000 in February 2000. This is in itself gives rise to questions, and no sufficient explanation has been given. Although it is unnecessary to reach a view about this, I consider that the most likely explanation is that a higher price was in fact agreed, with a side agreement which provided how the difference between such higher price and £180,000 should be paid. If the true price was in the region of £240,000 it would explain the obscure draft document and the references to a missing £60,000, with Mr Coghlan being mentioned in relation to both. However the evidence about this is not sufficient to enable me to be satisfied other than it was a sale at an undervalue; and the correspondence in February 2000 in relation to an outstanding sum of £170,000 throws no further light on the matter.

(3) Even if the true price was £180,000 it is difficult to see the commercial attractions of the property for Mr Kayes without any plans to develop it. The involvement of Mr Coghlan was plainly crucial, and yet was said by Mr Kayes not to have occurred until after he had bought the Chapel. I am satisfied that this was Mr Coghlan's project from before the Chapel was purchased.

(4) The purchase of the Chapel using a mortgage was an unusual transaction for Mr Kayes; and although £162,000 was advanced on the mortgage, Mr Kayes was unable to explain where the £18,000 deposit came from. Its source is still unexplained, but is likely to have come from Mr Coghlan." (emphasis added)

THE FRAUD ALLEGED

26. In his Particulars of Claim Mr Coghlan identified the bases of his claim as follows (the Master proceeded on the basis of a draft Amended Particulars of Claim, but none of the draft amendments affect the paragraphs referred to in this judgment). The proceedings before Simon J had been under Part 8, and evidence had been given for SOCA by Mr Bailey in his 1st witness statement which was dated 15 July 2009.
27. The Master recorded that there are three specific fraudulent misrepresentations alleged which he summarised under the headings: "(1) the source of the deposit; (2) the rent paid by [Mr Coghlan]; (3) the proceeds of sale by Kerry Kayes".

The source of the deposit

28. The first alleged fraudulent misrepresentation related to the source of the deposit of the Chapel when it was it was sold to Mr Kayes in 2004 (referred to by Simon J in his paras [21] and [107(4)]. In his first witness statement Mr Bailey stated at para 7.12:

"Analysis of the conveyancing files obtained under the Disclosure Order show that KAYES purchased the Chapel for £180,000 from Simon Harrington and Alexandra Wilkinson. Enquiries with the mortgage provider have shown KAYES to have obtained a mortgage with the NatWest for £162,000 with a 10% deposit of £18,000 being paid by bankers draft from an unknown source. During interview on the 26^th November 2008, KAYES was asked how he purchased the property to which he replied that he couldn't remember. When asked whether it was a cash transaction he again stated that he couldn't remember but he thinks their [sic] might have been a mortgage" [emphasis added].

29. Mr Coghlan pleads that the representation that there had been "a 10% deposit of £18,000 being paid by bankers draft from an unknown source" was false and was made fraudulently, knowingly or recklessly. He pleads that "the deposit was not in the round sum of £18,000 from 'an unknown source' but was in fact a payment of £18,030 known by [Mr Bailey] to have originated from the Instant Saver account of the purchaser, Kerry Kayes, held at the local branch of the Halifax Building Society".
30. Mr Coghlan has, since the judgment of Simon J, obtained from Mr Kayes' solicitors, Messrs Chafes, a copy of the draft in question. It is an order dated 8 March 2000 signed on behalf of Halifax plc and addressed to itself. It is an order to pay to Chafes the sum of £18,030. On the face of the document there is a reference number, which is the account number of Mr Kayes' Instant Saver Account. The branch is identified by the words "Branch's Suspense Account – 025 Denton".
31. Mr Coghlan pleads that since Mr Bailey stated that he had analysed the conveyancing file from which the draft was produced, and had examined the account of Mr Kayes bearing the number which also appears on the draft, he knew that the funds came from Mr Kayes' account: he made the statement that the funds came from an unknown source, knowing it to be false, or was reckless as to whether it was true or false.
32. There is now no dispute that the deposit was £18,030 and that the source of the funds paid by means of the draft was an account in the name of Mr Kayes. But Mr Bailey states (in his witness statement of 24 April 2013):

"3.1 … I entirely deny the allegations that I acted improperly or fraudulently in any way during my investigation or that I knowingly misled the Court in any way during the proceedings.

5.4.1 The provenance of the money represented by the banker's draft used to pay the deposit on the chapel was not known to me and I so stated in my evidence".

33. The Master held (at para [31] of his judgment) that Mr Coghlan has a real prospect of success in his contention that Mr Bailey's evidence as to the source of the deposit cheque was made recklessly. There is no challenge to this in the Respondent's Notice. In fairness to Mr Bailey I make clear that there is no finding of fact against him in the Master's judgment or in mine.
34. But the Master went to find against Mr Coghlan, saying:

"However, considering the judgment of Simon J as a whole I do not consider that [Mr Coghlan] has a real prospect of establishing that the judgment or order of Simon J was obtained by this alleged fraud or misrepresentation. It is apparent from the judgment … that there were a number of factors involved and that the question of the deposit was one issue among many.

32. The position would have been different if the source of the deposit had been the sole matter against [Mr Coghlan] but that is not the case.

33. Mr Cox submitted, in effect, that if this evidence was fraudulent, it contaminated the whole of [SOCA]'s case before Simon J. I do not accept that proposition in the circumstances of this case".

The rent paid by Mr Coghlan

35. In his first witness statement Mr Bailey had included three paragraphs which are pleaded by Mr Coghlan in para 9 of his Particulars of Claim, and which are referred to by the Master in para [34] of his judgment. As summarised by the Master:

"The thrust of the complaint against [Mr Bailey] is that his evidence was incomplete in that it failed to refer to various documents seized from [Mr Coghlan] which tended to support the validity of the tenancy agreement and the payment of rent. It is pleaded that [Mr Bailey] made statements that, in their context, implied that the arrears document found on [Mr Coghlan's] computer was the only documentary evidence that existed which tended to support the validity of the rental agreement".

36. The Master gave in para [35] a number of reasons for finding against Mr Coghlan on this point (the numbering is added):

"[a] The documents which it is said should have been referred to by [Mr Bailey] are set out in paragraph 10 of the Amended Particulars of Claim. I note that these were all documents which had been in the possession of [Mr Coghlan] and which [Mr Coghlan], obviously, knew existed. I do not see how these documents can be said to constitute new evidence discovered since the hearing before Simon J. In my judgment, what we have here is the failure by [Mr Coghlan] to place all his evidence before Simon J. [b] I consider that the contention that [Mr Bailey] was acting recklessly or fraudulently has no real prospect of success. [c] Furthermore, I consider that [Mr Coghlan] has no real prospect of establishing that the judgment or order of Simon J was obtained by the alleged misrepresentations. The question of rent for the property was considered at trial as well as the available underlying evidence. I note that paragraph 22 of the Amended Particulars of Claim pleads that the misleading effects of the incomplete representations were 'ameliorated, in part, but not in full, by the submissions made counsel for [SOCA] during the course of the hearing of the matter describing the nature and contents of the omitted rent book'. As I understand it, [SOCA]'s evidence that analysis conducted on the known accounts of Mr Kayes during the relevant period showed no trace of either a standing order, direct debit or cash lodgements in respect of rent income is not challenged. [d] I note also that no specific false representation by [Mr Bailey] in relation to the payment of rent is pleaded".

The proceeds of sale by Kerry Kayes

37. In his first witness statement Mr Bailey stated at para 7.26:

"Following the sale, KAYES received a redemption figure of £167,586.86. The final destination of the funds is not known".

38. In his Particulars of Claim Mr Coghlan alleged that this was fraudulent as summarised by the Master at para [37] of his judgment:

"[Mr Coghlan]'s complaint is that the assertion that the final destination of the funds was not known was false 'and/or' was so partial, fragmentary or incomplete that it was false and misleading, and was made fraudulently or recklessly. The thrust of [Mr Coghlan]'s case is that [Mr Bailey] was in possession of tax returns or information in relation to the payment of tax by Kerry Kayes which demonstrated that he had paid capital gains tax upon the proceeds of sale of the property. Furthermore, [Mr Bailey] was in possession of documentation concerning Kerry Keyes disclosed by National Westminster Bank which showed that the proceeds of sale were paid into the National Westminster Bank accounts and that the proceeds of sale remained in the accounts and were eventually used to account for capital gains tax on the sale of the Chapel Land and to purchase another property with his wife with a further mortgage from the National Westminster Bank".

39. The Master found against Mr Coghlan on this point for the reasons he gave in para [38] of his judgment (the numbering is added):

"[a] I do not consider that the Claimant has a real prospect of establishing that the said representation was made fraudulently. [Mr Bailey]'s case is that he did not have the said material in his possession. The question of the proceeds of sale was addressed by [Mr Coghlan] at the trial. [b] In any event, I consider that [Mr Coghlan] has no real prospect of establishing that the judgment was obtained by the alleged fraudulent representation. The destination of the proceeds of sale formed no part of SOCA's claim against [Mr Coghlan] and it is not referred to in the judgment. The statements made by Mr Kayes in his interview with the SOCA about the proceeds of sale were specifically relied upon by [Mr Coghlan] at the trial in a skeleton argument produced by a Mr Young on [Mr Coghlan]'s behalf. Mr Kayes mentioned a CGT liability in his interview and this was referred to by Simon J in passing. There is no other mention in the judgment of the proceeds of sale".

Whether there was any other compelling reason why the case should be disposed of at a trial

40. In para [39] of his judgment the Master held that there was no other compelling reason why the case should be disposed of at a trial. But he gave no additional reasons for this conclusion.

THE LAW

41. Mr Bompas invites me to adopt the concise summary of the law on setting aside a judgment obtained by fraud given by the editors of Dicey, Morris & Collins on Conflict of Law 15^th ed at para 14-138. It reads:

"Any judgment whatever… is, if obtained by fraud, open to attack. A party against whom an English judgment has been obtained may bring an independent action to set aside the judgment on the ground that it was obtained by fraud; but this is subject to very stringent safeguards, which have been found to be necessary because otherwise there would be no end to litigation and no solemnity in judgments. The most important of these safeguards is that the second action will be summarily dismissed unless the claimant can produce evidence newly discovered since the trial, which evidence could not have been produced at the trial with reasonable diligence, and which is so material that its production at the trial would probably have affected the result, and (when the fraud consists of perjury) so strong that it would reasonably be expected to be decisive at the rehearing and if unanswered must have that result…"

42. There is an issue of law that arises on the Respondent's Notice as to whether the words underlined are good law (the Master had held that they were not). But for the rest it seems to me that the statement of the law is consistent with the authorities relied on by Mr Cox. These include The Ampthill Peerage [1977] AC 547, Flower v Lloyd (1877) 6 Ch D 297, Meek v Fleming [1961] 2 QB 36, Dadourian Group International v Simms [2009] EWCA Civ 169. In The Ampthill Peerage [1977] AC 547 Lord Simon of Glaisdale had stated the test at p591A-B and E:

"To impeach a judgment on the ground of fraud it must be proved that the court was deceived into giving the impugned judgment by means of a false case known to be false or not believed to be true or made recklessly without any knowledge on the subject. No doubt, suppression of the truth may sometimes amount to suggestion of the false… The impugner of the judgment as obtained by fraud must adduce evidence of facts discovered since the judgment which show a reasonable probability (which I take to be a prima facie case) of such fraud as would invalidate the judgment, before he can call on the person whose judgment he seeks to nullify to make any sort of disclosure…"

43. However, Mr Cox emphasises the words of Holroyd Pearce LJ in Meek. That was an appeal from the verdict of a jury in an action for damages for assault and wrongful imprisonment. So it was not an action to set aside the judgment on the grounds of fraud. In his submissions on the issue raised by the Respondent's Notice Mr Cox submits actions to set aside a judgment on grounds of fraud are different, and do not require the application of the test in Ladd v Marshall. Nevertheless, he submits that the dicta of Holroyd Pearce LJ are applicable to both appeals and to actions to set aside a judgment for fraud.
44. Holroyd Pearce LJ said at p379-80 that

"where a party deliberately misleads the court in a material matter, and that deception has probably tipped the scale in his favour (or even, as I think, may reasonably have done so), it would be wrong to allow him to retain the judgment thus unfairly procured…

… since the defendant and his advisers thought fit to take so serious a step, they must, in the light of their own intimate knowledge of their case, have regarded the concealment as being of overwhelming importance to their success. Therefore I am not prepared to countenance their present argument that it may have made no difference to the result".

45. Mr Bompas accepts that Mr Coghlan does not have to show that the judgment was solely or exclusively obtained by the alleged misrepresentation. What he has to demonstrate at any trial is that it substantially contributed to the decision.
46. In an action to set aside a judgment on the ground that it has been obtained by fraud the question is how, if at all, would the conclusions of the trial judge have been affected if the witness alleged to have been fraudulent had given the trial judge the information which the claimant (ie the claimant in the action seeking to set aside the judgment) alleges he concealed? The question is not how would the judge's conclusions have been affected had he known that that witness was not a straightforward and frank witness? See the judgment of Phillips LJ as he then was in Gaillemer Sarland v McClelland (19 February 1996 unreported).
47. I take the second passage cited from Holroyd Pearce LJ to be a statement made in relation to the facts of that case. A similar approach may be appropriate in other cases. But it is not a principle of law.

THE GROUNDS OF APPEAL

The source of the deposit

48. Mr Cox submits that the Master misdirected himself when he said that the question of the deposit was only one issue among many and that it might have been different if the source of the deposit had been the sole matter against Mr Coghlan. There was no requirement to show that it was the sole matter. And if it had been known to Simon J that Mr Bailey had misrepresented the facts on this issue that would probably, or might well have, undermined his credibility on other points. Simon J expressly referred to the point in paras 21 and 107(4) of his judgment. It was a crucial fact. The £18,000 was the only part of the purchase price which is identified as coming from Mr Coghlan, and the implication was that it was input in cash. It supports the inference that Mr Kaye's involvement was a sham. The misrepresentation was all the more sinister in that during the trial Mr Coghlan asked for disclosure which was refused, and which the judge declined to order, but which would, if given, have included the draft for £18,030. The Master failed to consider the impact on the judge's mind that would have followed if Mr Bailey had been shown to have misrepresented the position.
49. Mr Bompas submits that SOCA advanced no positive evidential case as to the source of the deposit money. Simon J had reached the conclusion he did in relation to the Chapel for reasons set out in the fifteen sub-paras of para 107 and his reference to the deposit money (in sub-para (4)) followed a finding (in sub-para (3)) that Mr Coghlan probably had the beneficial interest in the property for reasons unrelated to the deposit money. It was clear that the deposit money was a minor factor. A factor of major importance in the judge's reasoning was the sales at undervalues, which are unaffected by the issue of the deposit money. This is an appeal by way of review, not a rehearing of the application before the Master. The Master has not been shown to have erred in law or been wrong within the meaning of CPR r.52.11.
50. In my judgment the Master in paras [31]-[32] of his judgment was not stating a principle of law, but giving his assessment of the matter on the facts before the judge and himself. He was stating, in his own words, that Mr Coghlan had no real prospect of establishing at any trial that the fraudulent misrepresentation (assuming that that is what it was) was so material that its production at the trial would probably have affected the result. And in my judgment the Master's assessment of the materiality of the misrepresentation alleged was one he was fully entitled to make.
51. If I had had to consider the matter afresh, which I do not, I would have arrived at the same result. I observe that it was SOCA's case, which Simon J upheld (para 23 above), that Mr Kayes' purchase of the Chapel was part of the steps Mr Coghlan took to conceal his interest in the property. The true position on the deposit, namely that the £18,030 was paid out of an account in the name of Mr Kayes, was entirely consistent with the case which Simon J upheld. The true facts as to the deposit did not cast a different light on the case at all. And the source of the deposit was not crucial to identifying the Chapel as the proceeds of crime. It was no part of SOCA's case that the Chapel derived from particular crimes. It was not SOCA's case that Mr Coghlan had obtained £18,000 or any other specific sum, and used that specific sum to invest in the Chapel. That was not the way the case was advanced.
52. I also note that Meek was described by Pearson LJ as "wholly exceptional" because what was concealed from the court at trial was the fact that the defendant police officer, who was presented to the jury as an Inspector, had been demoted to sergeant for a disciplinary offence of deceiving the court on an earlier occasion (p381). By contrast what was concealed in the present case in relation to the deposit was not dishonesty of Mr Bailey: it was that the deposit was funded from an account in the name of Mr Kayes.

The rent paid by Mr Coghlan

53. Mr Cox submits that the Master was in error in essentially three respects in relation to this point. First, he should not have determined that Mr Coghlan had no real prospect of succeeding on the issue whether the documents not referred to by Mr Bailey were fresh evidence. He failed to take account of the fact that Mr Coghlan's documents were seized by the police on more than one occasion and that Mr Coghlan was in prison for lengthy periods. Second, he erred in stating that no specific false representation is pleaded. Suppression of the truth is enough. And third the Master considered this alleged misrepresentation in isolation, when he should have considered it in the light of all the misrepresentations alleged. I shall consider the third point separately.
54. Mr Bompas notes that Mr Coghlan does not challenge the finding that all the documents he now seeks to rely on were in his possession at the time of the trial. It was his decision as to the evidence to be placed before the court. The representation is alleged to be implied, but that is falsified by his own pleaded case (namely para 22 of the Particulars of Claim, which is referred to by the Master) that the existence and content of the rent book was discussed at the trial ("… counsel for [SOCA] during the course of the hearing of the matter describing the nature and contents of the omitted rent book"). And, as the Master recorded, there is no challenge by Mr Coghlan to the evidence for SOCA that there was "no trace of either a standing order, direct debit or cash lodgements in respect of rent income".
55. In my judgment there is no merit in the point advanced by Mr Coghlan under this head. The Master's conclusion is unimpeachable. Mr Coghlan's case cannot be said to have had any prospect of success. It cannot be said that material evidence was fraudulently suppressed when it is expressly accepted that that same material was referred to by counsel for SOCA.

The proceeds of sale by Kerry Kayes

56. Mr Cox submits that the Master was wrong to have regard to the denial by Mr Bailey that he had in his possession. The implied representation was that Mr Kayes was not the final recipient and ultimate beneficiary of the proceeds of sale.
57. Mr Bompas submits that the pleaded case that "the final destination of the proceeds of sale was known", because Mr Bailey "was in possession of" financial documents which showed that, was mere assertion. The Master was correct to have regard to Mr Bailey's denial that he had the documents. In the face of that denial Mr Coghlan had not pleaded facts to support his case for saying that Mr Bailey did have the documents. In any event, Mr Coghlan in his skeleton argument before Simon J included at paras 24(i) and (ii) and 27(iii) ("[Mr Kayes] made a profit on the sale and [he] paid the capital gains tax") statements to the effect that Mr Kayes was the final recipient of the proceeds of sale. In his judgment Simon J made no findings adverse to Mr Coghlan on this point and cannot be said to have relied on the alleged misrepresentation in reaching the decision he did reach.
58. In my judgment the submissions of Mr Bompas are clearly correct, and the Master was entitled to reach the conclusion that he did reach on this point in para [38] of his judgment.
59. Since I have rejected the submissions of Mr Cox that the Master was in error in so far as he did not find that there was a sufficient case to go to trial on any misrepresentation other than the one relating to the deposit, there is nothing in the submission that he ought to have considered all three misrepresentations together.

Whether there was any other compelling reason why the case should be disposed of at a trial

60. Mr Cox submits that the fact that SOCA are a public authority, and that Mr Bailey was giving evidence in his professional capacity for SOCA, means that there is a public interest in the allegations of fraud being disposed of in the light of the full publicity of a trial. There is a public interest in determining whether an officer of a law enforcement agency has fraudulently misled this court in civil recovery proceedings.
61. Mr Bompas submits that on the Master's findings, which I uphold, Mr Coghlan's claim has no real prospect of success. It cannot be right in the circumstances of this case that in that context there should be another trial simply to ascertain whether Mr Bailey did perpetrate a fraudulent misrepresentation. The court must have regard to both principles.
62. I accept that the public interest is in principle engaged when it is an official of a public authority whose honesty is in question. But I cannot accept that in every case where a court finds that there is a real prospect of a claimant succeeding in establishing a fraudulent misrepresentation was made by a public official there must be a full trial of that issue, even when it is clear that the claimant has no real prospect of obtaining any relief. There remains the countervailing public interest in the finality of litigation.
63. The Master had to assess whether there was a compelling reason why the case should be disposed of at a trial. The reasons that he had given for his decisions up to that point in his judgment can in my judgment stand as reasons why on the particular facts of this case he was entitled to conclude that no such reason existed in this case.
64. Before leaving this judgment I record that Mr Coghlan also sought to challenge the judgment of Simon J by way of appeal. He relied on many points that are unrelated to this appeal, but also on the same matters on which he relied before the Master and before me. At that stage he was not legally represented. But his submissions were very detailed, covering 42 pages, of which 14 related to the source of the deposit (paras 59 to 115). On 28 September 2012 Hallett LJ considered the application for permission to appeal on paper. She refused the application as being totally without merit.
65. I have considered afresh the present appeal, as did the Master when he considered the application before him. He and I reached the same conclusion as Hallett LJ, but we did so independently.

CONCLUSION

66. For these reasons the appeal will be dismissed. In these circumstances there is no need for me to consider the point raised by the Respondent's Notice.