Larkfield Ltd v HM Revenue and Customs Prosecution Office and Others
| Jurisdiction | England & Wales |
| Judgment Date | 22 July 2009 |
| Neutral Citation | [2009] EWHC 1826 (QB) |
| Docket Number | HQ08X03991 |
| Court | Queen's Bench Division |
| Date | 22 July 2009 |
[2009] EWHC 1826 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
His Honour Judge Mackie QC
(Sitting as a Judge of the High Court)
In The Matter of the Criminal Justice Act 1988
CJA No 124 of 2000 and
In The Matter of Raymond George May
HQ08X03991
JUDGMENT 22 JULY 2009
Mr McGuinness QC, Mr David Barnard, Mr John Law and Mr Tom Beasley (instructed by RCPO Solicitor's Office and Wright Son and Pepper) appeared for the Prosecutor and for the Enforcement Receiver
Mr Andrew Mitchell QC (instructed by Devonshires) appeared for the First and Second Claimants
Mr Aidan Casey (instructed by Clyde & Co) appeared for the Third Claimant
Mr Kennedy Talbot (instructed by Kingsley Napley) appeared for the Defendant
This has been the trial of a claim by the Prosecutor against the Third Claimant (“Larkfield”), that Larkfield is not the true (or the sole) beneficial owner of a flat in London's Docklands which had previously been identified as part of the realisable assets of the Defendant (“Mr May”) when a confiscation order was made against him by the Crown Court. As I shall explain other matters that were to be decided at this hearing have fallen away or been left over.
Background
On 5 September 2000 Mr May was arrested and charged with conspiracy to cheat the Revenue over a “missing trader” fraud. On 7 September this court made a restraint order over Mr May's assets and on 28 November a management receiver was appointed over them. On 24 September 2001 Mr May was sentenced to 5 years imprisonment (reduced to 4 years on appeal) at the Central Criminal Court. On 2 August 2002 after a contested hearing at Blackfriars Crown Court His Honour Judge Samuels QC made a confiscation order in the sum of £3,246,277 to be paid by 2 August 2005, with 6 years imprisonment in default. There is currently, with interest, a little over £4 million outstanding. Mr May's appeal against that order first to the Court of Appeal and then to the House of Lords was dismissed on 2 June 2008. On 28 June an application was made to the court under section 80 of the Criminal Justice Act 1988 for the appointment of an Enforcement Receiver. On that date I gave directions for the trial of claims by third parties to property identified by the Crown Court as Mr May's realisable assets. In the light of developing events those directions were modified by Beatson J on 3 November 2008 and McDuff J on 18 December 2008. On 15 January 2009 Treacy J made orders for the appointment of the Enforcement Receiver and for the oral examination of Mr May before a Queen's Bench master as to the extent and whereabouts of assets available to satisfy the confiscation order. A transcript of Mr May's examination was ordered to be available at the hearing before me. The examination took place before Master Eyre on 18 March and 6 April 2009. The hearing before me began on 21 April 2009 and was completed on 6 May.
As a result of receiving evidence in the possession of the Isle of Man Financial Crime Unit the prosecutor also sought on 28 June 2008 an inquiry into the extent of Mr May's assets and an order for that matter be heard after the third party claims and before the same Judge.
There were several unexpected developments in the period before the trial, some of which caused the Prosecutor to apply at the start of the hearing for an adjournment. I refused that application essentially on the grounds that the problems which had arisen could be overcome in the course of the trial or, if necessary, at further hearings later. The trial started half a day late because one counsel could not return from abroad in time and further time was lost at the end of the first week following a problem with witnesses and the unfortunate indisposition of Mr David Barnard who had given considerable assistance to the court.
The third party claims
Mrs Denise May, Mr May's former wife, claimed a half-share in the former matrimonial home at The Robins, Bickley in Kent and also the entire value of the art antiques and jewellery at that property. Early in the hearing those claims were settled on the basis that her claim to the half-share of the home was conceded and that to the art antiques and jewellery accepted as to 50%. The Second Claimant Mr George May, Mr May's father, claimed that properties in Rochester and Maidstone registered in the names of Mr May and Mrs Denise May were held by them on trust for his grandchildren James and Kelly. The Prosecutor also conceded that claim. Mr George May also made a claim in respect of a sea going boat. This too was conceded by the Prosecutor. This left the claim by Larkfield to which I refer in more detail below and the claims as to the further assets of Mr May.
Claim by Larkfield
Larkfield is a company incorporated in the Bahamas. Only two shares were issued one to Bankhill Limited and the other to Northquay Limited, both Liberian companies. Larkfield was incorporated on 30 March 1999. The directors of Larkfield were themselves companies represented at meetings by employees of an Isle of Man Trust administration company. Declarations of Trust dated 14 June 1999 stated that the shareholders held their shares on trust for the Magle Settlement (“Magle”) a trust established in the Isle of Man in about November 1996. Mr Peter Gleeson claims to be the sole beneficiary of Magle and thus to be the owner of Larkfield and in practice what I shall call “the flat”, 85 Dundee Wharf London E14. Larkfield bought the flat for £255,000 in July 1999. It is currently worth about £450,000, according to Mr Martin an estate agent who gave evidence. The Prosecutor contends that Mr May provided the money for the flat. Larkfield contends that Mr Gleeson bought the flat with trust resources.
The evidence for Larkfield was given by Mr May, Mr Gleeson, Mr Paul Quayle, a chartered accountant from the Isle of Man who is a trustee of Magle and a director of Larkfield, Mr Mark Hubbard the settlor of one of the trusts with which Mr May is claimed to be connected, Mr Christopher Martin an estate agent who handled an abortive sale of the flat in 2003 and Mr Francis Howard a former director of Coda Corporate Services Limited (“Coda”) an Isle of Man company dealing with corporate and trust administration and support whose business was later purchased by Caledonian & Manx Corporate Services Limited (“Calmanx”). Larkfield also relies on the witness statement of Elizabeth Ciarrocchi who lives at Flat 94 close to the flat in dispute in this case.
The Prosecutor relied on several statements from Mr Andrew Fatherly who at the relevant time was an officer of HM Customs & Excise, and live evidence from Mrs Emma Gilkes who, with her husband, had sold the flat to Larkfield in July 1999 and also from Mr Michael Jeffcock who had worked at times for Calmanx. Mr Jeffcock's live evidence was mainly directed to withdrawing something he had included in an earlier statement.
Legal issues
Mr McGuinness QC submits that the flat is a realisable asset within the terms of the Criminal Justice Act 1988 and is beneficially owned by Mr May. Mr Gleeson's claims on behalf of Larkfield fail on their facts. Larkfield's claim must therefore fail. Mr Casey for Larkfield contends that, on the evidence, Mr May had nothing to do with the flat but that even if this is incorrect, the claim fails on grounds of law. No question of a constructive trust arises. Any claim that Larkfield holds the flat on a resulting trust for Mr May must fail. Further there is no room for the Prosecutor to rely upon the law relating to “sham” trusts. Moreover any claim by the Prosecutor based on piercing the corporate veil fails also.
The relevant principles are not in dispute but I set them out so that it is clear what the court has to decide and so that I can refer in this judgment only to the relevant material. Some 70 bundles have been before the court, although fortunately only the 7 core bundles and a few others have been much relied upon.
Part VI of the Act deals with confiscation of the proceeds of an offence. Section 71 permits the Crown Court to make a confiscation order in a specified sum. By 71(6) the sum 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”.
By section 74(1) “realisable property” means, subject to exceptions which are irrelevant,
“(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(3) states that 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 a total of the values at that time of all gifts caught by this Part of this Act”.
Section 102 provides that “property” includes “money and all other property, real or personal, heritable or moveable, including things in action and other intangible or incorporeal property.”
Section 102(7) provides that property is held by any person if he holds any interest in it. Section 80 deals with the realisation of property and provides by sub-section 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...
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- Larkfield Ltd v HM Revenue and Customs Prosecution Office and Others