Gokal v Serious Fraud Office
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE KEENE,Lord Justice Robert Walker,LORD JUSTICE SIMON BROWN |
| Judgment Date | 16 March 2001 |
| Neutral Citation | [2001] EWCA Civ 368 |
| Date | 16 March 2001 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | C/2000/2091/QBCOF |
[2001] EWCA Civ 368
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR JUSTICE NEWMAN)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Simon Brown
Lord Justice Robert Walker and
Lord Justice Keene
C/2000/2091/QBCOF
Mr A Mitchell QC & Mr K Talbot (instructed by Messrs Irwin Mitchell of London EC1N 2NS) appeared for the Appellant.
Mr A Hacking QC & Mr R Boyle & (Miss F. Jackson attended to receive the Judgment) (instructed by Serious Fraud Office) appeared for the Respondent.
This appellant was convicted in April 1997 after a trial lasting 122 working days on two counts of conspiracy to defraud and conspiracy to account falsely on a prosecution brought by the Serious Fraud Office. On 8 May 1997 he was sentenced by Buxton J. to a total of fourteen years imprisonment. In addition the judge made a confiscation order in the sum of £2,943,115 to be paid within two years, with a further term of three years imprisonment to be served consecutively in default of payment. A costs order and a compensation order were also made against him. On 11 March 1999 the Court of Appeal (Criminal Division) dismissed his appeals against conviction, sentence and the orders, including the confiscation order.
Through the passage of time the appellant on 9 May 1999, having failed to make any payment under the confiscation order, became in default of it. He has paid nothing under either it or the compensation order. On 1 November 1999 notice was given on his behalf of an application for a Certificate of Inadequacy ("Certificate") under section 83 of the Criminal Justice Act 1988 ("the Act").
However, the Serious Fraud Office applied to strike out the application for such a Certificate, and on 18 April 2000 Newman J. ordered that it be struck out as an abuse of process. He concluded that the issues which the appellant was seeking to raise were ones which had been adjudicated upon by a court of competent jurisdiction and which the appellant had had full opportunity to raise during the confiscation proceedings or on appeal therefrom. It is from that order that this appeal is now brought.
The background to the trial is helpfully summarised in Newman J's judgment:
"The defendant and his family ran a huge international business involving shipping and other activities. There were over 200 companies, known as the Gulf Group. The group's main bank was The Bank of Credit and Commerce (BCCI) who, over the years, lent vast amounts of money to the group. The Crown alleged and established that BCCI had to keep the Gulf Group going because, if it failed, its level of borrowing was such that BCCI would fail too. Gulf became unable or unwilling to pay its debts. The Crown alleged and established that by 1985 the Gulf Group was insolvent and dependent upon the continued funding and financial support of BCCI to avoid its total financial collapse. Further lending had to be done secretly. The allegation in relation to the first count of conspiracy was that, between 1985 and 1991, officers of BCCI and Gulf conspired to create false documents to deceive the auditors and to cover secret lending to keep Gulf afloat. The allegation in the second count alleged a conspiracy between 1987 and 1991, between the same people, to defraud depositors by a new, secret, financial structure, which deceived the auditors, Price Waterhouse, concealed the relationship between BCCI and Gulf and facilitated additional funding of Gulf; this, the Crown said, kept BCCI afloat."
However, in July 1991 BCCI was put into liquidation with huge debts, causing a very large banking collapse. The frauds ran into hundreds of millions of dollars. The appellant played a central and essential role in these events. He was a willing and dishonest participant in both conspiracies, masterminding them on behalf of the Gulf Group.
The statutory provisions applicable to this case are contained in Part VI of the Act, provisions which have been amended a number of times since their original enactment. But because these offences were committed before 1 November 1995, this court is concerned with the provisions as they stood before the Proceeds of Crime Act 1995 and subsequent legislation came into force. Section 71(2) as it was dealt with the conditions required to be met before a confiscation order could be made. Paragraph (b) thereof required the court to be satisfied, in respect of an offender, that:
"he has benefited from that offence or from that offence taken together with some other offence of which he is convicted in the same proceedings or which the court takes into consideration in determining the sentence, and which is not a drug trafficking offence."
By section 71(4):
"a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained."
Section 71(6) provided:
"The sum which an order made by the court under this section requires an offender to pay must be at least the minimum amount, but must not exceed
(a) the benefit in respect of which it is made; or
(b) the amount appearing to the court to be the amount that might be realised at the time the order is made, whichever is the less."
A definition relevant to para. (b) of section 71(6) is to be found in section 74(3):
"The amount that might be realised at the time a confiscation order is made is:
(a) the total of the values at that time of all the realisable property held by the defendant, less (b)
together with the total of all the values at that time of all gifts caught by this Part of this Act."
"Realisable property" is defined by section 74(1) as:
"(a) any property held by the defendant; and
(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Part of this Act."
Section 74(10) provides:
"A gift (including a gift made before the commencement of this Part of this Act) is caught by this Part of this Act if
(a) it was made by the defendant at any time after the commission of the offence, or, if more than one, the earliest of the offences to which the proceedings for the time being relate; and
(b) the court considers it appropriate in all the circumstances to take the gift into account."
. Finally, provision is made for a Certificate of Inadequacy by section 83, sub-sections (1) and (2) of which read as follows:
"(1) If on an application by the defendant in respect of a confiscation order, the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under the order the court shall issue a certificate to that effect, giving the court's reasons.
(2) For the purposes of sub-section (1) above (a) in the case of realisable property held by a person who has been adjudged bankrupt or whose estate has been sequestrated the court shall take into account the extent to which any property held by him may be distributed among creditors; and (b) the court may disregard any inadequacy in the realisable property which appears to the court to be attributable wholly or partly to anything done by the defendant for the purpose of preserving any property held by a person to whom the defendant had directly or indirectly made a gift caught by this Part of this Act from any risk of realisation under this Part of this Act."
It will be appreciated from the recital of these statutory provisions that the making by Buxton J. of the confiscation order in 1997 necessarily involved the making by him of findings, first, that the appellant had benefited from the relevant offences to the extent of £2.943 million and secondly that there was at that time an amount which might be realised to at least the same value. It will be necessary in due course to look a little more closely at how Buxton J. arrived at each of these two findings. For the moment it is enough to note that the major part of the benefit identified consisted of funds received into the appellant's personal bank accounts and that the judge, when dealing with "realisable property", rejected evidence from the appellant that the money from those accounts had been returned to his companies or otherwise dissipated. The judge added:
"But, even if that were not the case, I have to say I found Mr Gokal's evidence on that matter wholly unconvincing and I cannot act on it. He was entirely unable to explain how these alleged private funds had been deployed."
Apart from gifts amounting to nearly £636,000, Buxton J's conclusion on the amount which might be realised was expressed as follows:
"It is quite clear from evidence that I have heard and from what Mr Gokal has himself said in reply to cross-examination, and I confine myself to that, that he continued in active business after 1991. It is also quite clear from what he himself has said that his own affairs were mixed up with those of his companies and I have every reason to think that he will have taken steps to protect his funds.
In those circumstances I do not feel able to act upon his assertion that he has no funds. I do not feel able to find that he has discharged even the burden to the civil level that rests upon him of showing the amount that might be realised is less than the amount that I have found to be the amount of his benefit. On those grounds therefore I make a confiscation order in the sum of his benefit of £2,943,115."
As I have already indicated, the challenges to the trial judge's findings, both as to...
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