Scottish Court of Session Decisions

 

OUTER HOUSE, COURT OF SESSION

[2015] CSOH 38

P1174/13

OPINION OF LORD STEWART

in Note by

TRUSTUNION LLC and JAMES MCDONALD

Respondents and Noters;

for

 

Recall of a restraint order granted on 3 June 2003 in the Petition at the instance of Her Majesty’s Advocate in terms of the Proceeds of Crime (Scotland) Act 1995 s. 28 whereby the first Noter was interdicted from dealing with its realisable property including specifically the dwelling house at 34 Kenilworth Road, Bridge of Allan, Stirling FK9 4EH, etcetera

 

and Answers to the Note for

 

HER MAJESTY’S ADVOCATE

Petitioner and Respondent:

 

Respondents and Noters:  Second Noter in person and as attorney for the First Noter

Petitioner and Respondent:  Divers; Crown Agent

 

28 November 2014

[1]        On 28 November 2014 I refused an application presented by way of Note for recall of the restraint order made by the Honourable Lord Kingarth on 3 June 2003. The restraint order of 2003 was pronounced in the petition process Her Majesty’s Advocate against Trustunion LLC, P804/03, in terms of the Proceeds of Crime (Scotland) Act s 28; the order was made in connection with pending criminal proceedings against Michael George Voudouri; and the order relates specifically to a dwelling house at 34 Kenilworth Road, Bridge of Allan, Stirling FK9 4EH. When I refused the application I gave brief reasons ex tempore and from recollection followed my usual practice of advising the unsuccessful party or parties to contact my clerk if a written note of reasons were required for the purpose of an appeal. No request was made to my clerk. On 10 March 2015 I was informed by the Inner House clerk that my interlocutor of 28 November 2014 had been appealed by reclaiming motion and that a note of reasons was required. I now respectfully offer this Note of my reasons.

 

Background, parties and representation
[2]        To avoid possible confusion the present proceedings have nothing to do with Mr Voudouri’s conviction for money laundering the proceeds of VAT fraud in 2012. The criminal proceedings pending against Mr Voudouri in 2003 were for actual VAT fraud. On 11 May 2004 in the High Court of Justiciary Mr Voudouri was convicted on his own plea of a contravention of section 72(1) of the Value Added Tax Act 1994. On 8 June 2004 he was sentenced to four years imprisonment. On the same day confiscation proceedings were initiated in terms of the Proceeds of Crime (Scotland) Act 1995 s 9. The statement of realisable property served on Mr Voudouri included the dwelling house at 34 Kenilworth Road, Bridge of Allan, Stirling FK9 4EH in which Mr Voudouri and his family had been living. It was agreed that the total amount of the benefit to the appellant from the fraudulent evasion of VAT was £3,041,114.07. On 28 November 2006 in the High Court at Edinburgh Lord Wheatley, after proof, held that the dwelling house formed part of Mr Voudouri’s realisable assets and made a confiscation order in terms of the Proceeds of Crime (Scotland) Act 1995 s 1 in a sum representing the value of the realisable assets. The value of the realisable assets was £1,292,942.34 of which £900,000 was attributed to the dwelling house. The confiscation order required Mr Voudouri to pay the penalty within six months. An appeal against the confiscation order was refused by the Court of Criminal Appeal on 2 July 2008 [Voudouri v HM Advocate 2008 JC 431].

[3]        The central issue at the proof and on appeal was the treatment of the dwelling house. Trustunion was involved in the confiscation proceedings at first instance and on appeal as a minuter. Trustunion claimed standing as heritable proprietor of the dwelling house on the face of the register, title no. STG39856. Trustunion is an entity incorporated in the State of Delaware, United States of America, and is wholly owned and controlled by Nicos Savva, Mr Voudouri’s father-in-law. Mr Savva has been resident in the United Kingdom and is currently resident in Cyprus.

[4]        Mr Voudouri failed to pay the confiscation order. Her Majesty’s Advocate then presented the petition for realisation, P709/10. The petition was for appointment of an administrator to realise the property owned or controlled by Mr Voudouri specified in the schedule to the petition in terms of the Proceeds of Crime (Scotland) Act 1995 s 34, etcetera. The scheduled property includes the dwelling house. Trustunion entered the process as third respondents, the first and second respondents being respectively Mr Voudouri and his wife. Neither of them entered the process.

[5]        On 16 November 2010 the prayer of the petition was granted by Lord Menzies under exception of certain matters in parts (1), (3), (4) and (5) of the prayer of the petition. The exceptions related to the excerise of the administrator’s powers in relation to the dwelling house. By interlocutor of 23 February 2011 Lord Hardie ordained Trustunion, the third respondent, to find caution for expenses in the sum of £10,000 within eight weeks. On 19 May 2011, Trustunion having failed to find caution and being then in default, I granted the prayer of the petition in respect of the excepted matters relating to the dwelling house. The administrator was thereby authorised to take possession of the interests of Michael Voudouri and Trustunion respectively in the dwelling house, etcetera. Trustunion’s reclaiming motion against that interlocutor was refused on 3 July 2012. (I am told that the reclaiming motion was refused because of the continuing failure of Trustunion to lodge caution but I do not know this.) As far as I know there have been no further proceedings in this Court in the realisation process.

[6]        The administrator raised summary cause proceedings for possession of the dwelling house in Stirling Sheriff Court. By interlocutor dated 19 November 2013 the learned sheriff granted decree in favour of the administrator. Trustunion appealed by stated case to the sheriff principal. By interlocutor dated 26 February 2014 the learned sheriff principal refused the appeal and adhered.

[7]        The present proceedings for recall of the restraint order of 2003 have been initiated by Note no. 11 of process, as if within and part of the 2003 petition proceedings, but with the separate petition process number P1174/13. Her Majesty’s Advocate is the respondent. An element of confusion creeps in by virtue of the fact that the instance of the “Note in the Process” refers to three Noters including Nicos Savva; and the backing narrates “The Petition of” Trustunion, Mr Savva and Mr McDonald. As far as I know Mr Savva is not a party to these proceedings although he did, unsuccessfully, try to join the realisation process, P709/10. At the hearing on the motion for recall in the instant proceedings on 28 November 2014 Mr Divers, advocate, appeared for Her Majesty’s Advocate, petitioner for the restraint order and respondent to the Note.  I think the simplest thing is to call the petitioner and respondent “the Crown”.

[8]        At the hearing James McFarlane McDonald appeared at the bar on his own behalf and as attorney for Trustunion. Mr McDonald described himself as an engineer and declares that he has served a prison sentence imposed by the High Court for a counterfeiting offence. I am aware that he has litigation experience. He appears to have a good grasp of the litigation process and of the substantive law relating to the issue in this case. On Mr McDonald’s account his interest in the dwelling house is a mixture of the personal and the representative: he occupied the property as an agent for Trustunion; he acted as caretaker; he carried out maintenance; and he used the property as an office and workshop. At this time I am unclear as to the circumstances in which the court authorised Mr McDonald to enter the process as a Noter in his personal capacity but it is difficult for me to complain since it seems that it was I who signed the interlocutor for intimation and service of the Note on 19 November 2013. The Crown however takes no issue with Mr McDonald’s presence.

[9]        Mr McDonald states that he also appears as attorney for Trustunion appointed by Mr Nicos Savva on behalf of Trustunion. He has produced a power of attorney bearing to be duly authenticated and an affidavit bearing to certify that the instrument is properly authenticated under Cypriot law conform with the interlocutor of Lord Burns of 7 November 2014. On the question of the locus standi of an agent Mr McDonald refers to the licensing case Goodall v Bilsland 1909 SC 1152: but again the Crown takes no issue. Accordingly I have heard Mr McDonald’s submissions without troubling to consider further questions of standing and representation. No application has been made in these proceedings for Trustunion to provide security for expenses. Neither party took exception to the fact that I had previous involvement in the realisation process, P709/10.

[10]      The present application is expressed to be “For recall of a Restraint Order in terms of section 31(1)(b), (3) and (4) of the Proceeds of Crime (Scotland) Act 1995”. It appears from the Crown’s note of argument that the Crown apprehends that the Proceeds of Crime (Scotland) Act 1995 s 31(3) prevents the dwelling house being sold by the administrator while there is an application for recall pending. This seems counterintuitive but the matter need not detain me. Still, I am left wondering why, with the administrator now in possession and the purpose of restraint having been served, the Crown does not concur in recall [see Crown note of argument [21]―[24]]. Perhaps the Crown has reason to be ultra‑cautious.  

[11]      The purpose of the application seems to be to mount a holding operation by invoking section 31(3) of the 1995 Act pending the determination of realisability which is piggy-backing on the recall. Section 31(4) empowers the Court “to order that property of the person at whose instance it was recalled shall cease to be realisable...” The “prayer” of the Note reads:

“... to Recall the Restraint Order... and... to hold that the dwelling house at 34 Kenilworth Road, Bridge of Allan, Stirling FK9 4EH belongs to Trust Union LLC; to order that the said property is not realisable property and shall cease to be realisable property and shall cease to be realisable [sic]; meantime to hold that any property in relation to which the restraint order was made shall not be realised during the period beginning with the making of this application and ending with the determination of this application by the Court...” 

 

The Crown’s answers do not in terms challenge the competency of the application to any extent although in argument the Note was described by Mr Divers as “incompetent”.

 

Submissions for the Crown

[12]      Lord Bannatyne’s interlocutor of 14 August 2014 appointed the Crown to lead at the hearing. Mr Divers for the Crown submitted that (1) the application comes too late in terms of the Rules of the Court of Session [RCS]; (2) that the “Third Noter”, meaning Mr McDonald, does not qualify an interest; and (3) that the Note is incompetent.

[13]      In M, cited by Mr Divers, Lord Glennie discussed the purpose of restraint orders under the successor legislation, the Proceeds of Crime Act 2002 s 120. His lordship said: “A restraint order is intended as a temporary measure, to prevent the dissipation of assets by a respondent until the court is in a position, if satisfied that it is right so to do, to make a confiscation or forfeiture order... the court must proceed on the basis of statements made ex parte on behalf of the petitioner” [HM Advocate v M 2006 SLT 203 at [4]]. Equally under the 1995 Act s 28 prosecutors were empowered to apply for restraint orders ex parte. The proposition that restraint orders are intended to be protective and generally preliminary is also reflected in the terms of RCS 76.4. The rule provides a tight timetable for challenging restraint orders:

“Applications in relation to protective measures

 

76.4―(1) An application under any of the following provisions of the Act of 1995 shall be made by a note in the process containing the interlocutor making the restraint order to which the application relates:-

 

...

(c) section 31(1) (variation or recall of a restraint order)

...

 

(2) In respect of an application by note under paragraph (1) by a person having an interest for an order under section 31(1)(b) of the Act of 1995-

 

(a) the note shall be lodged in process within 21 days after service of the restraint order on that person; and

(b) subject to rule 14.6(2) (application to shorten or extend the period of notice), the period of notice for lodging answers to the note shall be 14 days.”

 

Mr Divers’ submission is that the present application is late, over ten years too late. (The restraint order was granted on 3 June 2003 and the petition was presented on 19 November 2013.) The prayer should be refused.

[14]      As appears from the terms of RCS 76.4(2) just quoted the rule is addressed to persons “having an interest” who are empowered to apply for recall “in relation to any person or any property” in terms of the 1995 Act s 31(1)(b). (This does not extend to prosecutors.) In terms of the 1995 Act s. 45, “interest includes right”. Mr Divers submits that the interest of the attorney, Mr McDonald, cannot be larger than the interest of the principal, Trustunion. The prayer of the Note should be refused in relation to Mr McDonald. I also observe that this restraint is an interdict and is expressed and directed in personal terms against Trustunion so that Mr McDonald has no personal interest to challenge the restraint order.

[15]      Mr Divers submitted that the Note is incompetent because the challenge should have been made earlier, not by way of an application for recall but by way of opposition to the administrator’s appointment in relation to the dwelling house [Voudouri v HM Advocate 2008 JC 431 at [13] per Lord Mackay of Drumadoon; at [25]―[26] per Lord Coulsfield; In re Norris [2001] 1 WLR 1388 at [4] per Lord Hope of Craighead, at [15] per Lord Hobhouse of Woodborough]. The Norris case was about analogous procedures under the Drug Trafficking Offences Act 1986. A restraint order in relation to the matrimonial home was made before the conviction of the husband; and after conviction a confiscation order was made which included the value of the matrimonial home despite the wife’s evidence that the property belonged wholly or substantially to her. At the realisation stage the first instance court refused to entertain the wife’s application to vary the confiscation order by excluding the matrimonial home from the realisable property. On eventual appeal to the House of Lords Lord Hope said at paragraph 4:

“The scheme of the Act, so far as third party interests are concerned, is for their claims to be resolved in the High Court. The question for the High Court, when the proceedings reach this stage [application for realisation], relates not to the amount of money which the defendant must pay—that has already been fixed by the order made in the Crown Court—but to the powers which the receiver is to be authorised to exercise. It is at this stage that third parties are entitled to have their claims heard and determined. This is when, as a matter of both substance and procedure, representations may be made as to their interests, if any, in the property which the receiver wishes to realise. This is provided for expressly by section 11(8) of the Act, consistently with which RSC Ord 115, r 7(4) lays down the procedure by which those holding any interest in the realisable property are to be notified.”

 

[16]      Mr Divers also referred to the appeal judgment in the possessory summary cause Cleghorn v Voudouri and Ors SD37/13, 26 February 2014 ,where the learned sheriff principal said at [12]:

“... It is at the final stage of the process that the protection of the rights of the innocent third party comes into play and Lord Coulsfield [in Voudouri v HM Advocate 2008 JC 431 passages cited above] describes this final stage as “actual recovery of the sum fixed, by the appointment of an administrator if necessary” thus associating actual recovery with the appointment of an administrator. Had the court been confronted then with the particular factual circumstances of this case, I do not think it would have had any difficulty in concluding that the issue of the rights of third parties had been adequately and properly addressed as part of the procedure for the appointment of the administrator. It is of course conceivable that a third party [subject to a restraint order] might not have notice of an application to appoint an administrator but in that event there is a remedy under section 31(1)(b), which if successfully pursued will have the effect set out in section 31(4) [of the 1995 Act]... Be that as it may it seems to me untenable that, having had notice of the application to appoint an administrator and having attempted to vindicate their rights in that process but failed to have their position sustained, Trust Union LLC should now have further opportunity to do so in proceedings such as the present. In my view the matter has been finally determined by the interlocutors of the Court of Session...”

 

In the present case there were opportunities to make representations at the restraint stage and at the realisation stage.

[17]      The realisation petition P709/10 was served on Trustunion, who lodged answers as third respondents. I observe that it was averred by the Crown in the realisation process that because there were two restraint orders in place it would be expedient to proceed by way of a (single) petition rather than by way of a note in one or other or both of the restraint processes [petition, stat VII]. One of the restraint processes was P804/03 in which the restraint order currently under consideration was granted. (I infer that the other restraint order, in petition process P977/00, was directed against Michael Voudouri.) Whether or not the Crown’s averment disclosed a correct understanding of the statute, the fact is that Trustunion admitted it in their answers―admitted in other words the expediency of determining the issue of realisability in the realisation process [answers, ans VII].

[18]      Thereafter in the realisation process, P709/10, on 16 November 2010, Trustunion persuaded Lord Menzies to exclude the scheduled dwelling house for the time being from the order for realisation. On 23 February 2011 Lord Hardie allowed the Crown and Trustunion a two day hearing, the date to be fixed, on the issue between parties whether the dwelling house was realisable property and was to be included (as contended for by the Crown) or excluded (as contended for by Trustunion). Lord Hardie also required Trustunion for find caution for expenses. Trustunion failed to find caution and the issue was decided against them by default in terms of the interlocutor which I pronounced on 19 May 2011. As previously stated Trustunion’s reclaiming motion was refused. Mr Divers submits that the matter has been litigated and decided against Trustunion and cannot competently be relitigated.

[19]      In response to Mr McDonald’s submissions, Mr Divers commented that Mr McDonald had not addressed the three key considerations which the Crown had advanced. Mr McDonald in turn had advanced points not foreshadowed in the Noters’ note of argument and it was too late to entertain these. In relation to the convention rights argument Mr Divers referred to R v May [2008] 1 AC 1028 [at [43] per Lord Bingham of Cornhill giving the opinion of the appellate committee]:

“43       ... The confiscation regime serves an important, internationally recognised, social purpose. It is penal in intention and effect, as accepted by the European Court of Human Rights in Welch v United Kingdom (1995) 20 EHRR 247, para 30, and Phillips v United Kingdom (2001) 11 BHRC 280, paras 51–52. The legislation lays down a mandatory regime, and the court has no surviving discretion save as to application of the statutory assumptions. Lord Steyn's reference in R v Rezvi [2003] 1 AC 1099, para 15, to “standing back and deciding whether there is or might be a risk of serious or real injustice” if an order were to be made was not to be otherwise understood, as R v Ahmed [2005] 1 WLR 122 , para 10 and R v Neuberg [2008] 1 Cr App R (S) 481 , paras 29–30, explained. The legislation is not oppressive or disproportionate since (a) it does not target anyone who is not shown to have benefited financially from wrongdoing, (b) it imposes no liability beyond what the defendant is shown to have received or obtained as a result of the relevant wrongdoing, and (c) where the defendant's benefit exceeds the sum he is able to pay, his liability is limited to the latter sum. There is no warrant in any of the statutes for apportioning liability to pay among those who have benefited jointly, and R v Porter [1990] 1 WLR 1260 is not authority supporting such a principle. Where a benefit is obtained jointly each of the joint beneficiaries has obtained the whole of the benefit and may properly be ordered to pay a sum equivalent to the whole of it.”

 

Submissions for Trustunion

[20]      Mr McDonald reminded me of the width of the term “realisable property” as that term is used in the 1995 Act. By section 4(1)(a) “realisable property” includes “the whole estate wherever situated of a person (i) against whom proceedings have been instituted for an offence” to which part 1 of the Act applies; or “(ii) in respect of whom a restraint order has been made by virtue of section 29(3)” of the Act. It also includes by section 4(1)(c) “property in the possession or under the control” of persons subject to relevant proceedings or restraint. But “realisable property” is expressed by section 4(2)(a) not to include property “held on trust” by persons subject to relevant proceedings or restraint for third parties who are not subject to relevant proceedings or restraint. The dwelling house was held on trust by Mr Voudouri in terms of a power of attorney granted by Trustunion. The facts are stated in Lord Wheatley’s opinion. Lord Wheatley decided that the dwelling house was “realisable property” because it was “in the possession and under the control” of Mr Voudouri at the material time, not because it was his property [HM Advocate v Voudouri 2007 SLT 407 at [4]―[8], [18]―[28]].

[21]      I was referred to the protection of the rights of third parties as discussed in the Scottish Law Commission Report at paragraphs 10.1 and 10.3 with reference to international norms, specifically the European Convention on Human Rights, first protocol, article 1, and the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990, article 5 [Scottish Law Commission, Report on Confiscation and Forfeiture, Scot Law Com No 147, (Edinburgh, 1994), vol 1, 114―115].  Mr McDonald told me that, at the date of the restraint order, Nicos Savva had been charged on indictment along with Mr Voudouri. The Crown subsequently accepted Mr Savva’s plea of not guilty. It had never been suggested that Trustunion had done anything illegal. The Strasbourg court has made it clear that guilt cannot be presumed on the basis of “conjectural extrapolation” for confiscation purposes and that a presumption of guilt is incompatible with article 6(2) ECHR [Geerings v Netherlands (30810/03) (2008) 46 EHRR 49 at §§ 44―51].

[22]      Mr McDonald informed me that all of Mr Voudouri’s assets were frozen on 23 October 2001―I have not been given the precise details but this may have been by the effect of the restraint order in the petition process P977/00. The dwelling house was not the subject of restraint at that time. As narrated in Lord Wheatley’s opinion, the dwelling house was purchased from the Church of Scotland in 2002 in the name of Trustunion. The dwelling house did not become the subject of restraint until 2003 by the effect of Lord Kingarth’s interlocutor in the restraint process P804/03 which was directed against Trustunion. Mr Savva did not have service of the 2003 petition.

[23]      Mr McDonald submitted that while the test of “possession and control” may be enough to bring assets within the definition of “realisable property” in terms of the 1995 Act, it is not sufficient to displace the rights of interested third parties such as Trustunion and Mr Savva in the present case. Mr McDonald derived the following propositions from the authorities: the “confiscation” stage of the process leaves open the question of ownership; third parties have no right to intervene when confiscation orders are made in the criminal proceedings; the provision for recall of restraint orders gives third parties who are subject to restraint extra protection against expropriation; there is no definite provision about the timing of interventions to protect third party interests leaving it open for interventions to be made up to the point of sale [Voudouri v HM Advocate 2008 JC 431 at [7] and [8] per Lord Eassie, at [13] per Lord Mackay of Drumadoon and at [27] per Lord Coulsfield; In re Norris [2001] 1 WLR 1388 at [4] and [5] per Lord Hope of Craighead, at [15] per Lord Hobhouse of Woodborough]. Trustunion’s involvement in the realisation proceedings was curtailed because of the issue about caution for expenses; and the merits of Trustunion’s claim have never been determined. It was incumbent on the Court not to authorise the administrator to deal with the dwelling house until the Court was satisfied that Trustunion and Mr Savva were not the lawful owners.

[24]      According to Mr McDonald, Lord Wheatley stated that there was no evidence to link the VAT fraud to Mr Savva or Trustunion. The funds to purchase the dwelling house came from Mr Savva’s personal bank account in Greece. (At this point, there being no objection from the Crown, Mr McDonald tendered what bears to be an affidavit of Nicos Savva sworn before Manus Gerard Tolland, solicitor and notary public, at Paisley on 18 November 2013, the day before the Note was presented.) Referring to paragraph 21 of Mr Savva’s affidavit Mr McDonald stated that Trustunion was formed by Mr Savva on the advice of his accountant.

[25]      In Norris [above] Lord Hobhouse stated at paragraph 30:

 

“...the appeal has been decided upon the consideration and application of well established principles of English law and the natural, and I believe, clear meaning of the 1986 Act. Had the position been different, it would have been necessary to consider whether the appeal should be allowed on the basis that Mrs Norris's rights under the Human Rights Act 1998 would have been infringed.”

 

In the present case, Mr McDonald submitted, Trustunion, Mr Savva and Mr McDonald were entitled as innocent third parties to have their rights vindicated by intervening even at this stage. He referred to ECHR, first protocol, article 1:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

 

Given the uncontested prima facie evidence the onus was on the Crown to show that the dwelling house belonged to Michael Voudouri and not to Trustunion and Mr Savva.

[26]      I gave Mr McDonald an opportunity to comment on the Crown response. Mr McDonald submitted that May [above] was not about innocent third parties: it was about allocation of confiscation order liability among co-offenders. The case of Phillips v United Kingdom (2001) 11 BHRC 280 referred to by Lord Bingham in May had been overturned by the decision in Geering [above]. In the case of Rousk, the Strasbourg court held that expropriation of the claimant’s home for a tax debt was disproportionate and in violation of ECHR, first protocol, article 1. The claimant was entitled to intervene at the stage of sale by auction even though he could have intervened earlier and did not: but there was an absence of procedural safeguards and the final determination of the merits ought to have taken place before the sale and ensuing conviction [Rousk v Sweden (27183/04), 25 July 2013].

[27]      Mr McDonald moved me to grant the “prayer” of the Note failing which to allow a period for amendment of the Note and of the Answers.

 

Decision
[28]      I decided to refuse the Note on the motion of the Crown, taking the view that, on the whole, the submissions presented for the Crown were more persuasive. I agree with Mr McDonald that the case of May [above] is not in point. I do not find the case of Rousk of assistance except at a very general level. Trustunion has had ample opportunity to have its claim to the dwelling house determined by the Court and, on the information presented in this case, there are adequate procedural safeguards.

[29]      The authorities to which I was directed teach that the expression “confiscation order” is potentially misleading. Such orders are not concerned with expropriation. Confiscation orders fix the amount of the offender’s liability to the Crown in monetary terms. One of the determinants of the amount is the value of realisable assets. This is the relevance of property at the confiscation order stage. The legislative scheme assumes that it is generally inexpedient to try issues with third party claimants unless and until it is known that the offender will not pay the confiscation penalty and that there has to be a realisation of assets to satisfy the confiscation order. Issues about third party claims, rights and interests, generally come to be determined at the realisation stage. Third parties with a claim on assets and who are subject to or affected by specific protective measures have the option of contesting both the protective measures and the issue of realisability at an earlier stage.

[30]      Clearly there is more than one context in which realisability can be decided. In the present case we have seen that realisability can be decided in the context of an application for recall of a protective measure or in the context of a realisation process: but there is nothing in the statute to suggest that the same issue about realisability can be decided in more than one context and more than once. Deciding the same issue more than once in different processes is contrary to principle. The pleadings in the realisation process P709/10, to which Trustunion is a party as third respondent, demonstrate a consensus that “it would be expedient to allow this application [for realisation] to proceed by Petition”. The averments and pleas of Trustunion in that process show that Trustunion has clearly joined issue on the question of realisability. Trustunion’s fifth plea-in-law states:

“5.       Separatim and in any event, in the circumstances and given the interest of the Third Respondent in the said property at 34 Kennilworth Road that property should not be included in any order made by the Court under the Petition.”

 

The reason why the merits of the plea were not argued out and determined at the two-day hearing assigned by Lord Hardie was that Trustunion failed to find caution so that decree passed by default.

[31]      In other contexts a decree by default, being a decree in foro, supports the plea of res judicata [Esso Petroleum Co Ltd v Law 1956 SC 33]. Although Mr Divers did not use the res judicata terminology his submission was in substance the same: the matter has been litigated and decided against Trustunion and cannot competently be re-litigated. I accept this submission. I am not persuaded that resolving the matter by default is contrary to first principles or against the terms of the 1985 Act or incompatible with the European Convention on Human Rights. I would be surprised if it were not a feature of most if not all developed legal systems that foreign domiciled litigants, particularly corporations with no assets or no assets except the subject matter of the dispute, may be required to offer security for expenses. People who choose to hold their assets through foreign entities should understand this. Trustunion has had ample opportunity to have its case on realisability determined by the Court.

[32]      On the face of it, in terms of RCS 76.4, Trustunion’s application is years too late. No application has been made to dispense with the time limit. No explanation has been offered as to why for a period of more than ten years Trustunion has not sought recall of the restraint order. In the Note, paragraph 3 (though not in oral submissions), it is contended that the primary legislation, the 1995 Act s. 31(1), which authorises the court to entertain applications for recall “at any time” ought to be preferred to the time-limited rule of court. While this may be correct, I do not need to express an opinion, because the point is superseded. One thing that “at any time” cannot mean is “at any time whether or not the matter has already been litigated”.

[33]      I agree with Mr Divers that Mr McDonald has no standing as an individual and can have no interest greater than or separate from his principal and one time landlord Trustunion. The protective measure which is the restraint order is not directed against Mr McDonald personally.

[34]      It would be wholly unacceptable if my decision were to result in the eviction or expropriation of an innocent third party, particularly an innocent third party who had not had an opportunity to make representations, if that were the case. I remind myself that in HM Advocate v Voudouri [above] at paragraph 29, notwithstanding Mr McDonald’s submissions, Lord Wheatley said:

“Although this is not part of the petitioner's case, the circumstances appear to me to be such that, particularly in the absence of any other explanation that might seem remotely plausible, I am entitled to reject [Mr Voudouri’s] claim made in submissions that this was a legitimate arms length transaction in which [Mr Voudouri] had no interest or involvement. From the narrative of facts above described, I considered it would be perfectly reasonable to infer that [Mr Voudouri] had provided the funds for the purchase of the house at Kennilworth Road.”

 

Mr McDonald did not persuade me that circumstances had changed materially since Lord Wheatley looked at the matter. Trustunion was represented as “first minuter” in the proceedings before Lord Wheatley.

[35]      I have also now looked at the recent sentencing statement which was referred to in passing at the hearing before me. When sentencing Michael Voudouri on 27 June 2014 Lord Tyre said:

“You have pled guilty to two charges relating to the laundering of the proceeds of a very large VAT carousel fraud perpetrated by the company Q-Tech Distribution Limited, in the course of 2000 and 2001. I address both charges together because they relate to consecutive periods distinguished only by a change in the legislative provisions applicable before and after 24 February 2003, a change which has no significance for present purposes.

This was a complex money laundering operation. The sums of money which you, and others acting with you, transferred from Q-Tech’s bank account to accounts with banks in Cyprus, Greece, Switzerland and elsewhere were very large indeed, amounting in total to over £11,500,000 according to the narrative agreed with the Crown. You instructed the formation of companies in Delaware and in the British Virgin Islands to further conceal the true source and ownership of these funds. Eventually some of those funds found their way back to Scotland, to be used by you, among other things, for the purchase of a house in Bridge of Allan and to fund a designer clothes business in Stirling. Again you made use of third parties to conceal your personal financial interest in these assets.”

 

Companies in Delaware? A house in Bridge of Allan? It would have been of interest to see the detail of the narrative agreed between the Crown and the defence referred to by his Lordship.

[36]      At the hearing before me, in the course of discussing Lord Wheatley’s narration of the facts and circumstances about the purchase of the dwelling house it was noted that Trustunion in the person of Mr Savva had appointed Michael Voudouri as Trustunion’s attorney, with ample powers, on 21 January 2002. This was at a time when, according to Mr McDonald, all of Mr Voudouri’s assets had been frozen and when Mr Voudouri was awaiting trial for VAT fraud. I asked Mr McDonald whether he would have appointed an alleged fraudster as his own attorney in these circumstances. He thought not. The affidavit does not address the narrative as found proved by Lord Wheatley nor the issues raised by the narrative as to the good faith or otherwise of those involved in the Trustunion/dwelling house project.

[37]      I am satisfied that no injustice has been done to Trustunion or Mr McDonald. The one reservation I have is that, if the administrator is now securely in control of the dwelling house, and if Trustunion has been cleared from the register, it might have made for a neat and tidy outcome if I had granted the prayer of the Note insofar as relating to recall of the restraint order and quoad ultra refused the prayer.