Baljit Singh Bhandal v HM Revenue and Customs
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE HICKINBOTTOM |
| Judgment Date | 18 November 2011 |
| Neutral Citation | [2011] EWHC 3018 (Admin) |
| Docket Number | Case No: CJA No 118 of 2001 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 18 November 2011 |
[2011] EWHC 3018 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
IN THE MATTER OF BALJIT SINGH BHANDAL
AND IN THE MATTER OF THE CRIMINAL JUSTICE ACT 1988
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Hickinbottom
Case No: CJA No 118 of 2001
Max Mallin (instructed by Harding Mitchell) for the Applicant
Michael Kent QC (instructed by The Solicitor's Office, HM Revenue & Customs) for the Respondent
Hearing date: 8 November 2011
Introduction
On 6 April 2006, Burton J discharged a restraint order earlier imposed by this court on Baljit Singh Bhandal ("the Applicant"), and, by paragraph 5, he directed that any application by the Applicant for compensation arising out of the imposition of the restraint order and supporting evidence be filed and served by 5 June 2006. He gave further directions dealing with the timetable for determining any application that might be made.
No application for compensation was in fact made until 4 March 2011. In the application before me, the Applicant applies for an order (insofar as such an order is necessary) extending the time limit imposed by Burton J for making the application for compensation. It is, procedurally, an apparently modest application; but one with potentially substantial practical consequences, because the Respondent submits that the application ought to be refused with the result that the Applicant can never bring the claim for compensation that he now wishes to pursue.
The authority that prosecuted the Applicant, and obtained the restraint order, was HM Customs & Excise, now subsumed within the Respondent, HM Revenue & Customs. For the sake of convenience, whatever its form at any particular time, I shall refer to the prosecuting authority as simply "HMCE".
The Confiscation Proceedings: The Relevant Statutory Provisions
Part VI of the Criminal Justice Act 1988 ("the 1988 Act") contains a scheme in relation to the confiscation of the proceeds of crime. Those provisions were (with the similar scheme of the Drug Trafficking Act 1994) repealed and replaced by Part 2 of the Proceeds of Crime Act 2002, which came into force on 23 March 2003 and applied to offences committed on or after that date. However, the provisions of the earlier Acts were effectively saved by the Proceeds of Crime Act 2002 (Commencement No 5: Transitional Provisions, Savings and Amendment) Order 2003 ( SI 2003 No 333), which provides that they continue to apply when the corresponding provisions of the 2002 Act have no application, e.g. when, as in this case, the relevant offences were committed before 23 March 2003. Part VI of the 1998 consequently continues to be applicable in many cases.
With a view to ensuring assets of an accused person are retained, sections 76 and 77 of the 1998 Act give the High Court a power to make a "restraint order" prohibiting a person from dealing with any "realisable property" whilst criminal proceedings are pending against him. By section 76(1), such an order can only be made after "[criminal] proceedings have been instituted in England and Wales against any person for an offence to which this Part of this Act applies" (subsection (a)), and before those proceedings are concluded (subsection (b)).
Section 77(6)(a) gives the court a general power to vary or discharge such an order. However, paragraph (b) (as amended by section 8(4) of the Proceeds of Crime Act 1995) provides that:
"A restraint order… shall be discharged on the conclusion of the proceedings or application in question."
The reference there to "proceedings or application in question" is to the relevant criminal matter. With regard to procedure, RSC Order 115 Rule 3 (retained by CPR Part 50 and Appendix 1 to the CPR) provides:
"Upon the court being notified that proceedings for the offences have been concluded… any restraint order… shall be discharged".
Looking at those provisions together, they effectively require the parties (in practice, the prosecuting authority) to inform the court as and when the relevant criminal proceedings are concluded, whereupon the court is bound to discharge the restraint order.
The statutory scheme does not provide for a cross-undertaking in damages when a restraint order is made. However, by section 89, where proceedings are instituted against a person which do not result in his conviction, then, on application, the High Court is given a power to order compensation to be paid to the applicant, if it considers such an award to be appropriate. However, by subsection (2), it cannot do so unless satisfied that (i) there has been a serious default on the part of a person involved in the investigation or prosecution of the offence (including an officer of HMCE: section 89(5)), and (ii) the applicant has suffered loss in consequence of something done to the property subject to the restraint order. Further, by virtue of section 85(3), the court cannot order compensation, even if satisfied there has been such a serious default, if it appears that the criminal proceedings would have been issued in any event. I will return to those conditions. Suffice it here to say that, for an applicant to succeed with a claim under section 89, he has some significant hurdles to surmount.
The Factual Background
In 2001, following an extensive investigation, HMCE considered that the Applicant, with many others, was involved in the diversion of duty-suspended goods held in London City Bond and another bonded warehouse to the domestic market, without payment of the appropriate duty. This was done, it was alleged, by the provision to the bonded warehouse of forged certificates indicating that the goods were destined for another bonded warehouse or export (such a transfer not attracting duty), whereas the goods were in fact illicitly and sometime circuitously diverted to the United Kingdom domestic market without the applicable duty being paid. The lost duty was estimated to be £60m. The Applicant's alleged role was particularly in the laundering of the profit so realised. It was alleged that he was especially assisted in that activity by two other men: Peter Michel (an accountant resident in Jersey) and Anthony Pearce.
London City Bond was the largest bonded warehouse in London. It was controlled by a Mr Alf Allington, who worked for HMCE as an informant.
Following an extensive investigation, HMCE made its move against the Applicant on 18 July 2001. A number of steps were taken that day. First, HMCE laid an information before Uxbridge Magistrates' Court alleging that the Applicant and Pearce had committed a number of offences involving the fraudulent evasion of duty, and concealing and disguising the proceeds of crime. On the basis of that information, the magistrates' court issued a warrant for the arrest of both men. The Applicant was then living in Los Angeles, having left the United Kingdom in February 1998 in breach of bail granted for unrelated charges arising out of an earlier fraud in respect of which there had already been one inconclusive trial of the Applicant and a co-defendant; although the Applicant asserts that he fled to avoid, not the re-trial, but death or injury at the hands of men who had threatened him. The re-trial proceeded without the Applicant, and resulted in his co-defendant being acquitted. No steps were taken thereafter to pursue the Applicant in relation to those earlier charges. However, it was hoped that the new charges would form the basis of an application for his extradition from the United States.
The second step taken by HMCE that day was to apply to this court, and obtain a restraint order against the Applicant from Newman J. That application too relied upon evidence that the Applicant had been involved in the fraudulent evasion of duty, as well as money laundering. Whilst referring to other property, the order effectively bit on only one asset, namely a mansion house known as Updown Court, Windlesham, Surrey, the value of which was uncertain but believed to be an 8-figure sum. The Applicant considers the property was worth £75m in July 2001. The property was owned by a British Virgin Islands company, with shareholders restricted to other such companies; but it is uncontentious that the Applicant was equitable owner of the property, having provided all of the purchase moneys.
The third event that occurred on 18 July 2001 was that HMCE was involved in a highly publicised raid of Updown Court.
The duty diversion fraud resulted in a number of prosecutions. Although the details are not relevant to this application, the integrity of those proceedings was brought into question because, in response to applications by defendants for disclosure of documents relating to Mr Allington, HMCE denied that he was an informant and substantially misrepresented the extent of its dealings with him; and, to HMCE's knowledge, Mr Allington gave perjured evidence by denying that he was an informant and denying that he knew of or participated in the diversion fraud. Further, HMCE failed properly to manage documentation produced to it by Mr Allington and, to maintain his cover, various important documents were removed by the Customs Officer who was the main contact between Mr Allington and HMCE, Mr Bernie Small.
The London City Bond investigation and prosecutions, together with other HMCE investigations during the 1990s, were themselves the subject of a number of investigations, including one by Sir Neil Butterfield, who, in his report of 2003, made findings adverse...
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R Bhandal v HM Revenue & Customs
...the investigation". 6 The background to the nature of the case he seeks to bring is set out in the judgment of Hickinbottom J in Bhandal v HM Revenue & Customs [2011] EWHC 3018 (Admin), where an extension of time so far as necessary was given to bring the claim. It also emerges from the poi......