Larkfield Ltd v HM Revenue and Customs Prosecution Office and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Etherton,LORD JUSTICE ETHERTON,Lord Justice Elias,The Chancellor of the High Court |
| Judgment Date | 12 May 2010 |
| Neutral Citation | [2009] EWCA Civ 1565,[2010] EWCA Civ 521 |
| Docket Number | Case No: A2/2009/1735 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 May 2010 |
[2009] EWCA Civ 1565
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(HIS HONOUR JUDGE MACKIE QC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Etherton
Case No: A2/2009/1735
Mr Andrew Mitchell QC and Mr Aidan Casey (instructed by Clyde & Co LLP) appeared on behalf of the Appellant.
THE RESPONDENT DID NOT APPEAR AND WAS NOT REPRESENTED.
I shall give permission to appeal save in relation to the second alternative ground of appeal, that is to say the finding by the judge that the flat was purchased by Mr May alone, as to which permission is refused.
As to the first ground of appeal, the appellant has raised a sufficiently arguable case that, despite the judge's finding of fact that the money used for the purchase of the flat came from assets of Valeo belonging to Mr May, the judge's conclusion that the flat is the realisable property of Mr May within part VI of the Criminal Justice Act 1988 is not consistent with his statement that the flat was purchased with money borrowed from Valeo (in paragraph 59 of the judgment), and the absence of any finding that (1) any such loan to Larkfield was a sham, or (2) Mr May may well be the (direct or indirect) beneficial owner of Larkfield, or (3) Mr May was the sole beneficiary under the Magle settlement.
The second ground of appeal has no real prospect of success in view of the findings of fact of the judge, which he was entitled to reach.
Order: Application granted on ground 1.
[2010] EWCA Civ 521
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
His Honour Judge Mackie Q.C
Before: The Chancellor Of The High Court
Lord Justice Etherton
and
Lord Justice Elias
Case No: A2/2009/1735
Mr Andrew Mitchell QC and Mr Aidan Casey (instructed by Clyde & Co LLP) appeared on behalf of the Appellant.
Mr John McGuinness QC and Mr Rupert Jones (instructed by Revenue and Customs Prosecution Office) appeared on behalf of the Prosecutor/Respondent
Hearing Dates: Thursday 22 nd April 2010
Introduction
This is an appeal by Larkfield Limited (“Larkfield”) from an order dated 22 July 2009 of His Honour Judge Mackie QC, sitting as a Deputy Judge of the High Court, by which he declared that Flat 85, Dundee Wharf, 100 Colt Street, London, E14 (“the Flat”) is the realisable property of Raymond George May within the meaning of section 74(1) of the Criminal Justice Act 1988 (“the CJA”) and dismissed Larkfield's claim to beneficial ownership of the Flat.
Larkfield is registered at HM Land Registry as the proprietor of the Flat, having acquired it from Mr and Mrs Gilkes on 5 August 1999 at a stated consideration of £248,000. Larkfield was incorporated in the Bahamas on 30 March 1999, and had two Liberian corporate directors. It has two issued shares. The shareholders have executed declarations of trust, under which the shares are held for a trust called the Magle Settlement, which was established in the Isle of Man in November 1996. Peter Gleeson claims that he was the sole provider of the funds of the Magle Settlement, and that he, his issue, and any spouse for the time being of himself or his issue are the sole beneficiaries of the Magle Settlement and so the ultimate beneficial owners of the shares in Larkfield. The Respondent, the Revenue and Customs Prosecution Office (“the Prosecutor”), claims that Mr May is the beneficial owner of the Flat.
On 5 September 2000 Mr May was arrested and charged with conspiracy to cheat the Revenue in a VAT “carousel” fraud. He pleaded guilty on 24 September 2001. On 2 August 2002 His Honour Judge Samuels Q.C. made a confiscation order in the sum of £3,246,277. Included in that figure was the value attributed to the Flat on the basis that, subject to any successful claim by Mr Gleeson to the Flat, the Flat should be included within Mr May's realisable assets for the purposes of the CJA.
In due course the Prosecutor applied for the appointment under the CJA of an enforcement receiver over Mr May's assets, including the Flat. On 2 September 2008 Larkfield gave notice of its claim that it is the absolute beneficial owner of the Flat and that Mr May has no interest in the Flat. Pursuant to an order of Judge Mackie dated 26 June 2008 the Prosecutor filed Particulars of Claim in the Queen's Bench Division claiming a declaration that the Flat is part of the realisable property of Mr May, or alternatively a declaration as to the extent of Larkfield's interest. The Prosecutor's case was that the Flat is beneficially owned by Mr May, and the registration of title in Larkfield's name and the use of trust and company structures were designed to conceal Mr May's interest. Larkfield denied those allegations in its Defence. The Judge, after a trial with written and oral evidence, held in favour of the Prosecutor.
The statutory framework
The confiscation provisions of the Proceeds of Crime Act 2002 (“ POCA”) have replaced those of the CJA (dealing with non-drug offences) and the Drug Trafficking Act 1994 in respect of offences committed on or after 24 July 2002. Nothing in this appeal turns on that change. The following provisions in Part VI of the CJA are relevant.
Section 71 empowered the Crown Court and the magistrates' court to make a confiscation order against an offender if satisfied that the offender had benefited from the relevant offence. Section 71(6) provided that the amount required to be paid by such an order could not exceed the lesser of the benefit so obtained or the amount that might be realised at the time the order was made.
Section 74 contained the following provisions, relevant to this appeal, as to “realisable property”:
“(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) where there are obligations having priority at that time, the total amounts payable in pursuance of such obligations, together with the total of the values at that time of all gifts caught by this Part of this Act.”
“(4) Subject to the following provisions of this section, for the purposes of this Part of this Act the value of property (other than cash) in relation to any person holding the property—
(a) where any other person holds an interest in the property, is—
(i) the market value of the first-mentioned person's beneficial interest in the property, less
(ii) the amount required to discharge any incumbrance (other than a charging order) on that interest; and
(b) in any other case, is its market value.”
“(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.”
Section 80 contained the following provisions as to realisation of property:
“(1) Where—
(a) a confiscation order is made;
(b) the order is not subject to appeal; and
(c) the proceedings in which it was made have not been concluded,
the High Court may, on an application by the prosecutor, exercise the powers conferred by subsections (2) to (6) below.
(2) The court may appoint a receiver in respect of realisable property.
(3) The court may empower a receiver appointed under subsection (2) above, under section 77 above or in pursuance of a charging order—
(a) to enforce any charge imposed under section 78 above on realisable property or on interest or dividends payable in respect of such property; and
(b) in relation to any realisable property other than property for the time being subject to a charge under section 78 above, to take possession of the property subject to such conditions or exceptions as may be specified by the court.
(4) The court may order any person having possession of realisable property to give possession of it to any such receiver.
(5) The court may empower any such receiver to realise any realisable property in such manner as the court may direct.
(6) The court may order any person holding an interest in realisable property to make such payment to the receiver in respect of any beneficial interest held by the defendant or, as the case may be, the recipient of a gift caught by this Part of this Act as the court may direct and the court may, on the payment being made, by order transfer, grant or extinguish any interest in the property.
(7) …
(8) The court shall not in respect of any property exercise the powers conferred by subsection...
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