Ketan Somaia v the Criminal Justice Act 1988
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Jefford |
| Judgment Date | 17 October 2017 |
| Neutral Citation | [2017] EWHC 2554 (QB) |
| Docket Number | Case No: HQ15X00077 |
| Date | 17 October 2017 |
| Court | Queen's Bench Division |
[2017] EWHC 2554 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Jefford DBE
Case No: HQ15X00077
Mr Kennedy Talbot QC (instructed by Edmonds Marshall McMahon Ltd.) for the Prosecutor
Nigel Hood and Jon Colclough (instructed by Thakrar & Co) for the Third Party
Penelope Small (instructed by DPP Law) for the Defendant
Hearing dates: 8 th to 11 th May 2017
Judgment Approved
Introduction
These proceedings arise out of a Confiscation Order made against Ketan Somaia in the Central Criminal Court (His Honour Judge Hone QC) on 12 January 2016 following his conviction on 13 June 2014 on several counts of fraud. His conviction followed a private prosecution brought principally on behalf of Murli Mirchandani who was defrauded by Mr Somaia of around £12 million between June 1999 and August 2000. The value of the benefit to Ketan Somaia was found to be £20,434,691.
The Confiscation Order was not paid and an application was made, pursuant to s.80 of the Criminal Justice Act 1988, to appoint a receiver to enforce it. This Act continues to apply where the crime was committed before the coming into force of the Proceeds of Crime Act 2002 and there is no issue that it is the relevant statutory provision in this case.
In that application, declarations were sought against Alka Gheewala (formerly Alka Somaia and the now ex-wife of Ketan Somaia) and others in relation to transfers to them. On 12 October 2016, Spencer J directed a trial of the Prosecutor's application for the declarations including a declaration that a number of transfers by Ketan Somaia (set out in a schedule to the draft order and derived from the exhibit to the 7 th witness statement of Tamlyn Edmonds, the Prosecutor's solicitor) were "gifts caught by s. 74(10) of the Criminal Justice Act 1988".
By the time the matter reached a trial before me, various settlements with other parties, and consideration of the evidence, meant that the only live proceedings related to Alka Gheewala and to 7 transfers of monies made to her by Ketan Somaia between April and August 2010. The purpose of the application is to have these monies declared as gifts caught by the Act and to open up the prospect that the Receiver may be empowered to enforce the Confiscation Order by recovering these gifts from the assets of Alka Gheewala.
For the reasons I set out below, the key issue in this case has, therefore, been whether the sums transferred were gifts (as Mr Talbot QC contends on behalf of the Prosecutor) or whether, as Mr Hood submits on behalf of Ms Gheewala, the sums were held on trust.
The legal framework
Part VI of the Criminal Justice Act 1988, the statutory predecessor to the Proceeds of Crime Act 2002, empowers the Crown Court to make a confiscation order which does not confiscate particular property but is an order to pay a sum of money (s.71(6)). Confiscation orders may be enforced by the appointment of a receiver as has happened in this case. Recognising that criminal defendants may often transfer assets to family members or trusted associates, s.74 makes provision for the amount that may be realised to include the value of gifts caught by the Act. In the terminology of the Proceeds of Crime Act 2002 these are "tainted gifts".
The provisions of section 74 which have been relevant in this matter are as follows:
(1) In this Part of this Act, "realisable property" means subject to subsection (2) below
(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.
….
(3) For the purposes of this Part of this Act 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 the values at that time of all gifts caught by the Part of this Act.
…
(7) Subject to subsection (12) below, references in this Part of this Act to the value at any time …. of a gift caught by this Part of this Act are references to –
(a) the value of the gift to the recipient when he received it adjusted to take account of subsequent changes in the value of money; or
(b) where subsection (8) below applies, the value there mentioned,
whichever is the greater
…
(10) 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.
…..
(12) For the purposes of this Part of this Act –
(a) the circumstances in which the defendant is to be treated as making a gift include those where he transfers property to another person directly or indirectly for a consideration the value of which is significantly less than the value of the consideration provided by the defendant; and …."
Section 102(2) expressly provides that property includes money. Section 102(10) provides that property is transferred by one person to another if the first person transfers or grants the other any interest in the property.
I address the issues of interpretation arising from these provisions later in this judgment.
The evidence
At the trial of these issues the evidence on behalf of the Prosecutor was given by:
(i) The 3 rd, 4 th and 5 th witness statements of Gavin Pearson, a Fellow of the Institute of Chartered Accountants and a forensic accounting and expert witness partner at Hagen Streiff Newton Oshiro Accountants Ltd.
(ii) The 7 th, 9 th, 12 th, 13 th, 17 th, 18 th and 19 th statements of Tamlyn Edmonds, director of the Prosecutor's solicitors, Edmonds, Marshall, McMahon Limited.
I mean no disrespect to her in saying that Ms Edmonds' evidence largely involved the identification and recitation of documents. It was not at all unhelpful to have the evidence presented in this way but Ms Edmonds' evidence could not go further and in this judgment I refer primarily to the documents rather than her evidence about them.
On behalf of Ms Gheewala, statements were tendered in evidence from Meera Mavani (Ms Gheewala's sister), Karan Somaia (her son) and Nurapati Neupane (who formerly worked as staff for the Somaia family). By agreement, these witnesses were not called for cross-examination.
John Muriuki gave evidence by witness statement and was cross-examined by video link to Nairobi.
Alka Gheewala gave evidence by her 1 st to 7 th statements. She too was cross-examined.
The transfers in issue
In 2010, Mr Somaia settled proceedings in Kenya (the nature of which is not material). The settlement was referred to as the Pattni Settlement. His Honour Judge Hone QC considered the Pattni Settlement in his ruling and he concluded that, apart from Mr Somaia evading UK tax on those monies brought into the UK, there was no taint of illegality or general criminal conduct in relation to the Pattni Settlement.
Monies from the Pattni Settlement were paid to Mr Somaia's lawyers in Kenya, Ochieng, Onyango, Kibet and Ohaga (also referred to as Triple O). It is not in issue that some (but not all) of these monies were then transferred in 7 transfers to Ms Gheewala, by payment by cheque into an account held by Ms Gheewala with Prime Bank in Nairobi. These payments amounted to 61,086,590 Kenyan Shillings. Mr Pearson's evidence was that the current value of the sums transferred (excluding the last amount transferred) was £516,383.78. Including the last sum transferred, the current value was said in submissions to be £576,071 although it remains unclear to me where that sum was set out in evidence.
In her first statement, Ms Gheewala provided a table which showed the payment of the Pattni Settlement monies into her account and out of it. It was not disputed and it showed the following:
(i) On 8 April 2010, KSH 10 million was paid in. On 9 April 2010, KSH 8 million was paid out to Simba Technology Ltd.
(ii) On 20 April 2010, KSH 5 million was paid in. On 22 April 2010, KSH 6 million was paid out to Simba Technology Ltd.
(iii) On 11 May 2010, KSH 5 million was paid in. On 21 May 2010, KSH 5 million was paid out to Simba Technology Ltd.
(iv) On 3 June 2010, KSH 18 million was paid in. The same day, the same sum was paid out in cash. At this point, there would have been KSH 1 million of the Pattni Settlement monies in the account.
(v) On 18 June 2010, a cheque for KSH 700,000 was paid to John Muriuki.
(vi) On 5 July 2010, KSH 10 million was paid in. On 7 July, KSH 7,760,000 was paid out to Arvind Patel; on 16 July 2010, KSH 522,621 was paid to Diamond Trust Bank; and on 22 and 28 July 2010, two sums totalling KSH 1,700,000 were paid to Simba Technology Ltd.
(vii) On 2 August 2010, KSH 6.5 million was paid in and on 5 August 2010, KSH 6.45 million was paid out to Allaudin Qureshi (who was Simba Technology Ltd.'s finance director).
(viii) On 26 August 2010, KSH 6,586,590 was paid in and on 30 August 2010 and 7 September 2010 payments were made to Allaudin Qureshi totalling KSH 6,560,920.
The evidence about the Prime Bank account
It was not in issue that Ms Gheewala held an account with Prime Bank in Nairobi which was an account in her sole name and of which she had control in the sense that she was the only person authorised to withdraw monies from the account. Her evidence was that the account was funded by her husband. She used monies from the account to pay for household bills,...
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