Lewisham and Guys Mental Health NHS Trust v Andrews (Deceased)

JurisdictionEngland & Wales
JudgeLORD JUSTICE WARD
Judgment Date23 March 2000
Neutral Citation[2000] EWCA Civ J0323-12
Judgment citation (vLex)[1999] EWCA Civ J0225-11
Docket NumberCase No: EATRI 1999/0409/3,QBCOF 98/0522/4
CourtCourt of Appeal (Civil Division)
Date23 March 2000

[1999] EWCA Civ J0225-11

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE QUEEN'S BENCH DIVISION

(Mr. Justice Owen)

Royal Courts of Justice

Before:

Lord Justice Hirst

Lord Justice Aldous

Lord Justice Ward

QBCOF 98/0522/4

Thomas Charles andrews
Appellant
and
In the Matter of the Criminal Justice Act 1988
Respondent

MR. V. JOFFE (instructed by Messrs Goldkorn Davies Mathias, London, WC1) appeared on behalf of the Appellant.

MR. A. MITCHELL Q.C. (instructed by the Commissioner for Customs & Excise) appeared on behalf of the Respondent.

LORD JUSTICE WARD
1

This appeal gives rise to an interesting and difficult question in an arcane field at the intersection of the old equitable remedy of receivership and the modern procedures of the Criminal Justice Act 1988 designed to combat serious crime. The problem in a nutshell is this: if a receiver is appointed under that Act to receive and manage a defendant's property and incurs costs and expenses in so doing, who bears that cost and expense if the defendant is subsequently acquitted by the Crown Court and awarded his costs of defence out of public funds?

2

Although there is some risk of obfuscating the clarity of that issue by a recitation of the facts where, as Robert Walker L.J. observed when refusing leave on paper, "there seems to have been a good deal of muddle," I reluctantly set out more of the background.

3

In March 1994 the appellant and his son Daniel were arrested by officers of Customs and Excise and charged with VAT and later with PAYE offences to which Part VI of the Criminal Justice Act 1988 ("the Act") applied. The officers seized the sum of £42,305 which they found in the appellant's home. The Customs and Excise then applied ex parte in the High Court, Queen's Bench Division, under sections 77 and 78 of the Act for restraint and charging orders against both father and son "in respect of the realisable property of the defendants" and also for the appointment of a receiver. The affidavit in support gave particulars of the fraud which it was alleged the father and son and Daniel's wife, Christine, had committed. In essence the prosecution case was that a company, Avonmarsh Ltd, said to be controlled by Daniel and Christine, failed to render VAT returns. A second company, A J Kingsland & Sons Ltd, also under their control, had recovered VAT on invoices rendered by the third company, J & A Transport Ltd, which failed to declare the VAT due. J & A Transport Ltd also traded with Avonmarsh but did not account for missing VAT and used false invoices to distort the company's trading position in order to reduce the VAT liability. J & A also paid wages to the drivers of the lorries engaged in the transport business and either under-declared those wages or failed to declare them at all for the purpose of collecting PAYE. In the result substantial losses in excess of £300,000 were suffered by Customs and Excise and the Inland Revenue. The affidavit referred to the Companies House records relating to J & A Transport Ltd which "confirmed (the appellant) as Director and showed Christine Andrews as a shareholder." The allegation was that Daniel and his father "had full control of the business and assets of J & A Transport and A. J. Kingsland & Sons Ltd." though there was no evidence from Companies House to show that the appellant had any interest in the latter company. The realisable assets which were believed would be available to satisfy a confiscation order if it were to be made under the 1988 Act at the conclusion of the criminal proceedings included a property owned by the appellant and his wife, the sum of £42,000 odd which had been seized from the appellant and 56 heavy duty transport vehicles owned, one notes, not by him but by the companies, J & A Transport Ltd and A. J. Kingsland Ltd. The other realisable assets of the appellant disclosed in the affidavit were a Mercedes motor car, and four bank accounts and one building society account in his name. The relief sought against each of the father and son was for restraint orders in relation to their known realisable property, and disclosure on affidavit of all their realisable property. The affidavit concluded:—

"17. The above evidence leads me to believe that the first defendant's" (i.e. Daniel's not the father's) "interests are likely to be dissipated unless steps are taken to preserve and manage such assets pending the determination of this case." (I have added the parenthesis and emphasis.)

18. Sara Elizabeth Dayman, of Stoy Haywood, … has agreed to act as receiver in accordance with the letter of agreement dated 1st July 1994" (which was exhibited).

19. I respectfully submit that this is an appropriate case for the appointment of a receiver in respect of the realisable property of the defendant" (which must have been a reference to the son not the father.)

4

The emphasis is added by me to make the pedantic point that the allegation of a feared dissipation of assets, which was the justification for appointing a manager of the assets, in which management the receiver incurred the expense of £10,011 now in issue, was not actually made against the appellant yet the order was sought against him. I wonder if this was drawn to the attention of the judge who heard the application.

5

The letter of appointment drew the receiver's attention to the fact that she would become an Officer of the Court and would accordingly draw her authority and powers from the Court and she was referred to RSC orders 30 and 115. Her powers were said to include:—

"power to discharge all and any costs, charges and expenses of the receivership out of the assets and/or the proceeds of realisation thereof."

6

As for "remuneration", it was provided that:—

"It is proposed to seek an order from the court that your costs in this matter should be costs in the receivership: that is to say that your costs shall be paid out of the moneys you bring in during the course of this receivership. If the court declines to make such an order, or if you are unable to bring in sufficient assets to meet your costs they will be met by the Commissioners of Customs and Excise."

7

On 7th July 1994 four orders were made ex parte by Schiemann J, two against father and two against son. They were in similar terms. We are concerned only with the orders against the appellant. The one order restrained him from disposing of any of his assets and

"without prejudice to the generality of the foregoing in any way dealing with the undermentioned assets held in the following names:- Bank/Building Society Accounts"

(His four bank accounts and his building society account were referred to but so were the bank accounts of J & A Transport Ltd and A J Kingsland & Son Ltd.)

" Vehicles"

(The list comprised not only his own Mercedes but the 56 vehicles in the names of J & A Transport and A J Kingsland & Sons Ltd.)

" Cash

1. HM Customs and Excise shall be at liberty to pay over to any Receiver appointed herein the sum of £42,305 seized from the defendant…"

8

Then a charging order was made of respect of the property he owned with his wife. He was ordered to file an affidavit of his means and the order recorded that that affidavit should not be used as evidence in the prosecution of an offence alleged to have been committed by the appellant. He was allowed to expend a weekly sum for his general living expenses. There was liberty to apply. Costs were reserved.

9

The second order was for the appointment of Ms Dayman ( "the receiver")

"to take possession of preserve collect get in sell receive and manage any realisable property of the (appellant)."

10

It was further ordered that the appellant deliver his realisable property to the receiver that property including but not being limited to the items listed on a schedule which repeated the property which was subject to the restraint order. The order further provided:—

"That the Receiver have the following powers without prejudice to any existing powers vested in her by statute or otherwise:—

i. Power to take possession of preserve collect get in sell realise and manage the assets and/or the proceeds of realisation thereof."

11

The receiver was ordered to be bound to act in accordance with the letter of agreement. Paragraph 5 provided:—

"That the Receiver be allowed remuneration on a time cost basis and that the amount of such remuneration be agreed by the Commissioners of Customs and Excise or (in default of agreement) be determined by the Court."

12

There was liberty to apply. Curiously, in this order costs were not reserved but were ordered to be paid by the second defendant.

13

As will be seen there was no order that the receiver's costs should be costs in the receivership as the agreement letter had stated would be done. Counsel was unable to tell us whether or not the court had declined to make such an order.

14

No steps were taken to discharge those orders when served upon the defendants. The appellant duly served an affidavit of his means in which he disclosed that he had been a Director of J & A Transport Ltd,

"of which I am also a 50% shareholder along with my daughter in-law, Christine Andrews. I therefore have an interest in all the assets and liabilities of J and A Transport Ltd. I hold no other Directorships or shareholdings."

15

He said that his wife (or members of his family) owned some of the £42,000 which had been seized.

16

From time to time various amounts, agreed for the purposes of this appeal to total £32,294, were released from the seized sum to cover the appellant's legal costs of his defence. The balance of the sum is agreed to be £10,011. This is the sum now in dispute.

17

On 11th December 1995 the jury in the Crown Court convicted...

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