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HOUSE OF LORDS
SESSION 2007-08
[2008] UKHL 9
on appeal from: [2004] NIQB 33
OPINIONS
OF THE LORDS OF APPEAL
FOR JUDGMENT IN THE CAUSE
In re Maye (AP) (Appellant) (Northern Ireland)
Appellate Committee
Lord Bingham of Cornhill
Lord Scott of Foscote
Baroness Hale of Richmond
Lord Carswell
Lord Neuberger of Abbotsbury
Counsel
Appellants:
James McNulty QC
Desmond Hutton
(Instructed by Thomas T Montague Solicitors)
Respondents:
Terence Mooney QC
Jonathan Lowry
(Instructed by Director of Public Prosecutions)
Hearing date:
19 DECEMBER 2007
ON
WEDNESDAY 6 FEBRUARY 2008
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
In re Maye (AP) (Appellant) (Northern Ireland)
[2008] UKHL 9
LORD BINGHAM OF CORNHILL
My Lords,
- I have had the benefit of reading in draft the opinion of my noble and learned friend Lord Scott of Foscote. I am in full agreement with his reasoning and his conclusions and therefore, like him, I would dismiss the appeal.
LORD SCOTT OF FOSCOTE
My Lords,
- This is an appeal from the Court of Appeal in Northern Ireland. The Statement of Facts and Issues, agreed and signed by counsel for both parties, identifies two issues of construction of the Proceeds of Crime (Northern Ireland) Order 1996 ("the 1996 Order") for your Lordships to decide. One of these your Lordships must decide; the other, in my opinion, does not arise on the facts of this case. It is convenient, therefore, before describing the issues, to outline the relevant facts.
The facts
- At arraignments on 8 January 2002 and 15 January 2002 the appellant, Mr Maye, pleaded guilty to various counts of obtaining property by deception. Sentencing was adjourned in order, inter alia, to enable the court to consider making a confiscation order under article 8 of the 1996 Order and at a hearing on 26 June 2002 the court, first, determined that Mr Maye had benefited from his offences in the amount of £168,833 odd and, secondly, concluded that, for the purposes of article 5(1) of the Order, "the amount that might be realised" at that time out of Mr Maye's "realisable property" was £33,269.17. Accordingly the court made a confiscation order against Mr Maye in that sum, as it was bound to do (see article 8(2) of the 1996 Order).
- Before the confiscation order had been made some relevant occurrences had taken place. First, both Mr Maye's parents died intestate, his mother on 21 July 2000, his father on 28 September 2001. On 26 June 2002, when the confiscation order was made, Letters of Administration to their respective estates had not yet been taken out. That did not happen until 29 July 2002. Mr Maye had several siblings and his share in his deceased parents' estates has been valued by agreement between the parties to this litigation at £18,000. It is not clear whether this or any other sum has yet been paid to him. Second, and also prior to the making of the confiscation order, Mr Maye suffered the unpleasant indignity of false imprisonment by persons for whose actions the Chief Constable of the Royal Ulster Constabulary was responsible. The false imprisonment occurred between 21 and 22 October 1999 and proceedings for damages were issued by Mr Maye in the High Court on some date in 2000. On 26 April 2004 the proceedings were settled by a payment to Mr Maye of £2,500.
- In summary, therefore, Mr Maye had received, or become entitled to receive, two payments after the date on which the valuation of his realisable property at £33,269.17 and the confiscation order against him in that amount had been made. Both payments had, however, resulted from entitlements that had accrued to him before the valuation and confiscation order had been made. The facts that have been placed before your Lordships for the purposes of this appeal do not disclose what, if any, value was attributed to Mr Maye's interest in his parents' estates or to his cause of action for damages against the Chief Constable when the £33,269.17 valuation of his realisable property was made.
- On 5 November 2002 the respondent ('the DPP') applied to the court pursuant to article 21 of the 1996 Order, for a certificate that the amount of Mr Maye's "realisable property" should be increased by the value of his inheritance from his parents' estates. A certificate to that effect was issued, with the agreement of both parties, on 6 August 2003. The certificate said that:
"… the said amount has been increased in the sum of £18,000, by way of family inheritance …"
The DPP then applied for a corresponding increase in the amount of the confiscation order. But at the initial hearing of the DPP's application counsel for Mr Maye took the point that the £18,000 constituted assets untainted by any criminality that had been acquired by Mr Maye after the confiscation order had been made and that article 21 of the statutory confiscation scheme, whereunder the original valuation of "realisable property" and the amount of the confiscation order could be increased, did not apply to such assets. The Recorder of Belfast, Judge Burgess, heard argument on the point and agreed to adjourn the DPP's application for an increased confiscation order in order to enable an application to be made by Mr Maye to the High Court to have the 6 August 2003 certificate set aside.
- That application was accordingly made but was dismissed by Morgan J on 1 June 2004. The application had been made on the footing, accepted by counsel for the DPP, that Mr Maye's £18,000 constituted assets that had been acquired by him after the making of the confiscation order. The judge ruled that article 21 did apply to assets not acquired until after the making of the confiscation order and that the 6 August 2003 valuation certificate had been correctly issued.
- While, however, Mr Maye's application was pending, Mr Maye's false imprisonment action had been settled and, on 26 April 2004, the settlement payment of £2500 had been made to Mr Maye. The DPP's reaction to this was to apply for a further increase, an increase of £2500, in the valuation of Mr Maye's "realisable property". This application by the DPP was made to Morgan J and dealt with by him at the same time as Mr Maye's application to have the 6 August 2003 certificate set aside was dealt with. It is not clear whether Mr Maye opposed the DPP's application in relation to the £2500. Presumably he did not, for Morgan J, without referring to any grounds of opposition, simply granted the application and ordered that a further article 21 certificate be issued increasing the valuation of Mr Maye's realisable property by £2500.
- Mr Maye appealed to the Court of Appeal both against Morgan J's refusal to set aside the 6 August 2003 certificate and against the issue of the certificate increasing the valuation of his realisable property by the further £2500. The Court of Appeal agreed with Morgan J that article 21 did allow assets not acquired until after the original confiscation order had been made to be the basis of an increase in the valuation of a defendant's realisable property for confiscation purposes. In so deciding the Court of Appeal cited with approval the judgment of Rose LJ in R v Tivnan [1999] 1 Cr App R(S) 92, BAILII: [1998] EWCA Crim 1370 No reference was made by Nicholson LJ, who gave the judgment of the court, to any other ground of appeal that had been advanced on behalf of the appellant. So, presumably, there had been none. Mr Maye's appeal was dismissed.
- The apparently sole ground of appeal that had been advanced before the Court of Appeal has been addressed also to your Lordships. The written Cases, both on behalf of Mr Maye and on behalf of the DPP, have gone at some length into the question whether article 21 of the statutory confiscation scheme imposed in Northern Ireland by the 1996 Order permits an increase in the amount of a confiscation order by reference to the value of assets not acquired by the defendant until after the confiscation order has been made. I shall refer to this issue as the "after-acquired assets" issue.
- In addition, however, the certificate issued by Morgan J in relation to the £2,500 paid to Mr Maye in settlement of his false imprisonment action has been challenged on the ground that a chose in action of a personal nature, such as an action for damages for defamation, or an action for damages for pain and suffering or loss of amenities caused by an assault or by negligence, or any other tort action of a personal, as opposed to proprietary, nature, ought to be held to fall outside the class of assets that can constitute "realisable property" for confiscation purposes. An action for damages for false imprisonment is, it is submitted, of that nature. This challenge, not raised or referred to, so far as the judgments disclose, in either of the lower courts, is not based upon the language of the statutory confiscation scheme but upon an analogy sought to be drawn with the well-known rules in bankruptcy which allow to be excluded from the assets of a bankrupt that vest in his or her trustee in bankruptcy choses in action of the character described. And if it is right that Mr Maye's chose in action in damages for false imprisonment did not constitute an asset that could be taken into account for confiscation purposes, the £2500 that he received ought, it is submitted, to be regarded as an asset acquired after the confiscation order had been made. The after-acquired assets issue is relied on, therefore, not only in respect of the £18,000 but also in respect of the £2500.
The after-acquired assets issue
- The after-acquired assets issue does not, in my opinion, arise either on the facts relating to the £18,000 or on the facts relating to the £2500. As to the £18,000 the agreed Statement of Facts and Issues states that:
"the assets to which the Certificate of 6th August 2003 relates were acquired by the Appellant after 26 June 2002 when the original confiscation order was made" (para.25(iv))
My Lords, the £18,000 to which the Certificate relates is the agreed value of Mr Maye's share in his deceased parents' estates. His entitlement to that share, unquantified in amount, accrued to him on his father's death. It may be that his father's statutory legacy as a surviving spouse did not exhaust his mother's estate and that some part of the £18,000 represents a share in the residue of his mother's estate; but whether that is so is immaterial to any issue in the case. His father died on 28 September 2001, well before the confiscation order was made. The first question, therefore, is whether that share represented property of Mr Maye that fell to be taken into account for the purpose of the confiscation scheme established by the 1996 Order.
- "Property" is, for the purposes of the 1996 Order, defined in article 3(1) as including
"…money and all other property, real or personal, heritable or movable, and including things in action and other intangible or incorporeal property."
This is a comprehensive definition and it is difficult to think of any proprietary interest that it would not catch. It would seem, at first sight, apt to catch an interest in a deceased's estate, whether under a will or under an intestacy. There is no doubt that such an interest is assignable, whether by sale or as a gift or as security for some obligation. Why, therefore, is it not "property"? But counsel had agreed, as evidenced by the Statement of Facts and Issues, that Mr Maye's share in his deceased parents' estates did not constitute "property" for the purposes of the 1996 Order and had argued the case in both courts below on that premise. When questioned about this in the course of the hearing before your Lordships, counsel explained this premise as based on the fact that at the time, 26 June 2002, when the confiscation order was made, the estates were still unadministered - indeed Letters of Administration had not yet been granted. The proposition that interests in unadministered estates do not constitute property appeared to be based on the judgment of the Privy Council, given by Viscount Radcliffe, in Commissioners of Stamp Duties (Queensland) v Livingston [1965] AC 694. That that was so was borne out by an Addendum to Mr Maye's written Case, submitted to your Lordships after the oral hearing of the appeal had concluded. The Addendum argues that because Mr Maye did not at the date of the confiscation order have a legal or equitable interest in any of the specific assets of his deceased parents' unadministered estates, it follows that his interest under their respective intestacies did not constitute "property" as defined in the 1996 Order. Reliance was placed on the Livingston case as authority for that proposition. It is necessary, therefore, to pay some attention to what that case was about and to what Viscount Radcliffe's remarks were directed.
- The case was about succession duty. Section 4 of Queensland's Succession and Probate Duties Acts, 1892 to 1955, imposed succession duty on
"…every devolution by law of any beneficial interest in property…upon the death of any person…to any other person…"
A testator had died, domiciled in New South Wales, and with real and personal property both in New South Wales and in Queensland. By his Will he left one-third of his real and personal estate to his widow absolutely. She, however, died intestate, also domiciled in New South Wales, while her husband's estate was still in the course of administration. No clear residue had yet been ascertained and, consequently, no final balance attributable to the shares of residue had been determined. The question was whether the deceased widow's share in her husband's real and personal estate in Queensland, a share that had devolved on her death on those entitled under her intestacy, was subject to Queensland succession duty. Did she die owning a beneficial interest in any real or personal property in Queensland? The Privy Council, affirming the majority judgment of the High Court of Australia, held that she did not and, therefore, that no Queensland succession duty was payable.
- Viscount Radcliffe, at p.707, noted that the widow, when she died, "had the interest of a residuary legatee in the testator's unadministered estate" and then examined the nature of that interest. He pointed out that the estate of a deceased that devolves upon personal representatives comes to them "virtute officii…in full ownership, without distinction between legal and equitable interests" but that they hold the estate "for the purpose of carrying out the functions and duties of administration, not for [their] own benefit". At p.708 Viscount Radcliffe referred to and adopted the decision of the House in Sudeley v Attorney General [1897] AC 11, another case where a husband had died leaving a share of his residuary estate to his widow and the widow had died before her husband's estate had been fully administered. Both of them had died domiciled in England. The husband's estate had included mortgages of real property in New Zealand and the issue was whether, on the widow's death, probate duty was payable on the value of her interest in these New Zealand mortgages. Her executors argued that since the mortgages were foreign assets probate duty was not payable on the widow's share in them. The House, affirming the decision of the Court of Appeal, held that probate duty was payable. Lord Herschell at p.18 explained why that was so. He said this:
"…the whole fallacy of the argument on behalf of the appellants rests on the assumption that [the widow], or they as her executors, were entitled to any part of these New Zealand mortgages as an asset - she in her own right, or they as executors of their testatrix. I do not think that they have any estate, right, or interest, legal or equitable, in these New Zealand mortgages so as to make them an asset of her estate. What she had a right to - what they as her executors had a right to - was one-fourth of the clear residue of [her deceased husband's] estate - that is to say, what remains of his estate after satisfying debts and legacies; and a bequest to them of one fourth part of his residuary estate does not seem to me to vest in them or in her a fourth part of each asset of which that estate consists …" (emphasis added)
The House upheld the declaration that had been made by the Court of Appeal that
"…one fourth part of the value of the New Zealand mortgages, forming part of the husband's residuary personal estate, was liable to probate duty …"
The widow's interest in her deceased husband's unadministered estate had been described by Lopes LJ in the Court of Appeal [1896] 1 QB 354 at 363 as
"…an English chose in action, recoverable in England and [as]…an English and not a foreign asset, and as such …subject to probate duty."
Kay LJ at 367 described the widow's interest as "an asset of [her] estate" the value of which, "…as in the case of all English assets, [was] subject to probate duty in England". In his speech in this House Lord Halsbury LC (at 17) expressed his agreement "with the language of Lopes and Kay LJJ", and Lord Macnaghten (at 19) said he was "quite content to adopt the judgments of Lopes LJ and Kay LJ".
- Viscount Radcliffe, in the Livingston case, cited the sentence contained in the citation from Lord Herschell's speech that I have emphasised. It is clear that Lord Herschell was not suggesting that the widow's one fourth share in her deceased husband's unadministered estate was other than a proprietary interest, an asset, that had devolved on her executors, the appellants. He was saying that her estate did not have a proprietary interest in the specific asset of her husband's estate that the New Zealand mortgages constituted. Viscount Radcliffe, at p.717, held it to be "clearly established" that Mr Livingston's widow "was not entitled to any beneficial interest in any property in Queensland at the date of her death". He went on:
"What she was entitled to in respect of her rights under her deceased husband's will was a chose in action, capable of being invoked for any purpose connected with the proper administration of his estate …"
This last cited passage does not, and could not have been intended to, constitute a comprehensive statement of the widow's rights under the will. What she was entitled to was a one third share in his residuary real and personal estate. It is not, in my opinion, arguable that that share was other than a proprietary interest capable of assignment by its proprietor, of devolution as an asset of her estate on her death and of any other incidents of proprietary choses in action. Nothing said by Viscount Radcliffe in the Livingston case is inconsistent with that obvious proposition, borne out by the treatment of the issue in the Sudeley case both in this House and in the Court of Appeal.
- In my opinion, therefore, the premise on which the arguments on the after-acquired property issue were based in the courts below and on which the written Cases prepared for this appeal to your Lordships are based is a false one. Mr Maye's interest under the unadministered estates of his mother and father, his chose in action, was, in my opinion, "property" for the purposes of article 3(1) of the 1996 Order at the time the confiscation order was made. While it is true that, until the administration of the estates was complete, Mr Maye had no proprietary interest in any particular asset of the estates, his interest in their estates was nonetheless a proprietary interest.
- Article 8(1) requires the court, if the prosecution asks the court to proceed under the article or if the court thinks it appropriate to do so, to "determine whether the defendant has benefited from any relevant criminal conduct". If the court determines that the defendant has so benefited, article 8(2) requires the court to make a confiscation order requiring the defendant to pay an amount equal to the value of the defendant's benefit from the criminal conduct or to the amount appearing to the court to be "the amount that might be realised" ("the realisable amount") at the time the confiscation order is made. The realisable amount is the total of the values at that time "of all the realisable property held by the defendant" less the total of any obligations of the defendant that have priority (see article 5(1)). Mr Maye's "realisable property" (as defined in article 5(2)) would have included his interest, his chose in action, in his deceased parents' estates. Article 6(1) says, subject to provisions not here relevant, that "the value of property" is the market value of the property. It is that value that has to be taken into account by the court in the determination of the realisable amount (see article 5(1)).
- On 26 June 2002, when the confiscation order was made against Mr Maye, the market value of his interest in his deceased parents' unadministered estates, with no Letters of Administration yet taken out and with no information available as to the extent of the assets or liabilities of the estates, would have been negligible. It is a reasonable assumption that no value at all was attributed to Mr Maye's interest when the valuation figure of £33,269.17 was arrived at. However, later, after Letters of Administration had been taken out and the administration was progressing, it was possible for Mr Maye and the DPP to agree that his interest could be attributed a value of £18,000. Article 21 of the 1996 Order applies where the realisable amount "…is greater than the amount taken into account in making the confiscation order". The article was applicable, therefore, once the agreed value of £18,000 had been attributed to Mr Maye's interest and the DPP had made an application under article 21(2). The court was, in my opinion, obliged on that application to issue a certificate certifying that the realisable amount in relation to Mr Maye's realisable property was increased by £18,000. Article 21(2) allows the court no discretion.
- It follows, in my opinion, that regardless of whether the arguments advanced on Mr Maye's behalf, in support of the proposition that article 21 does not apply to untainted assets not acquired by a defendant until after the original confiscation order had been made, are right or wrong, the appeal against the refusal of the lower courts to set aside the Certificate of 6 August 2003 should be dismissed.
The "personal" chose in action issue
- Mr McNulty QC, counsel for Mr Maye, has submitted that the confiscation scheme established by the 1996 Order ought to be held not to apply to such choses in action vested in a defendant as have a "personal" character. An action for damages for false imprisonment is, it is submitted, of that character. However, the language of the 1996 Order relating to the property to which the confiscation scheme applies is, to my mind, clear and is inconsistent with counsel's submission. "Property", as defined in article 3(1), includes "things in action". An action for damages for false imprisonment, an action for damages for defamation, an action for damages for tortious injury to the person causing pain and suffering or loss of amenities, are all "things in action". There is no exception for choses in action of a "personal" nature and no process of statutory construction could, in my opinion, produce that exception.
- The 1996 Order was made under the statutory authority of the Northern Ireland Act 1974. It has not been suggested that the articles to which I have referred, articles 3, 5, 8 and 21, are not valid and enforceable provisions of secondary legislation. In these circumstances it is not, in my opinion, open to your Lordships to assume to amend the 1996 Order by writing in exceptions to the scheme that are not to be found in the text. It is clear, and accepted by Mr McNulty, that a right of action in damages to which a defendant is entitled at the time a confiscation order is made is, in principle, "property" as defined in article 3(1). It is accepted that if an award of damages has actually been made to the defendant by the time the confiscation order is made, the sum of damages will be "property" for 1996 Order purposes. But it is said that, if the action for damages is personal in its character and is still pending when the confiscation order is made, it should be held not to be "property" as defined. This is an impossible contention. It is supported by Mr McNulty by arguing that since the law of bankruptcy distinguishes between some causes of action which, being proprietary in nature, vest in the bankrupt's trustee in bankruptcy and other causes of action which, being personal in character, remain vested in the bankrupt and do not, your Lordships should feel at liberty to introduce a similar distinction to the statutory confiscation scheme.
- My Lords, for the reasons I have given your Lordships should, in my opinion, decline that invitation. Besides the impropriety of your Lordships assuming to amend the clear language of the 1996 Order, the invitation, if acceded to, would replace clarity with confusion and uncertainty. There is no reason why the judges who have to administer the confiscation scheme should be expected to have to delve into the intricacies of bankruptcy law in order to decide which causes of action do and which do not constitute "property" for 1996 Act purposes. In my opinion, the personal chose in action objection to the Certificate relating to the £2,500 should be rejected. So, also, should any suggestion that the £2,500 constitutes a new asset acquired after the making of the confiscation order be rejected. Just as the £18,000 represents the post confiscation order value of Mr Maye's pre confiscation order chose in action in his deceased parents' estates, so, too, does the £2,500 represent the post confiscation order value of Mr Maye's pre confiscation order chose in action for damages for false imprisonment. I would dismiss the appeal against the certificate issued by Morgan J.
Post script
- For the reasons I have given your Lordships can decide both the issues that arise on this appeal without addressing the question whether the confiscation scheme established by the 1996 Order does or does not permit an increase in the realisable amount judged to be obtainable from a defendant's assets, and thus an increase in the amount that a confiscation order can order the defendant to pay, to be based on the value of assets not acquired by the defendant until after the confiscation order was made. This question is both important and difficult and should, in my opinion, be left to be addressed in a case where, on the facts of the case, it needs to be answered.
BARONESS HALE OF RICHMOND
My Lords,
- For the reasons given by my noble and learned friend, Lord Scott of Foscote, with which I agree, I too would dismiss this appeal. May I also commend his opinion to property lawyers, to whom it is probably more interesting and important than it is to practitioners in the criminal courts?
LORD CARSWELL
My Lords,
- I have had the advantage of reading in draft the opinion prepared by my noble and learned friend Lord Scott of Foscote. For the reasons which he has given I too would dismiss the appeal.
LORD NEUBERGER OF ABBOTSBURY
My Lords,
- I too have had the benefit of reading the draft opinion of my noble and learned friend Lord Scott of Foscote. I too am in full agreement with his conclusions, and would also, like him, dismiss the appeal.
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