Michael Richard Stannard v the Criminal Justice Act 1988

Hearing date: 22 April 2015

In 2001 the Defendant, Mr Stannard, who I regret to say is a former barrister, was convicted of two counts of cheating the public revenue. He was sentenced to 4 ¹/₂ years imprisonment on each count (to run concurrently) and disqualified from acting as a director for 9 years. He appealed against his conviction, sentence and disqualification as a director. All those appeals were dismissed.

After serving his sentence, Mr Stannard left the jurisdiction. He now lives in a flat that he owns in Verbier, Switzerland. It is said to be his only remaining asset of value. A letter from Mr Stannard dated 27 March 2012 estimated the value of that property to be £1,456,000 at the then prevailing exchange rates. The current value, some three years later, is likely to be even higher.

The Confiscation Order

Prior to his conviction, Mr Stannard was made the subject of a Restraint Order pursuant to s.77 of the Criminal Justice Act 1988 (" CJA 1988"). On 17 October 2003 HH Judge Fingret at Southwark Crown Court made a confiscation order against him ("the CO"). Mr Stannard's benefit from the fraud was assessed at £3,099,030. His realisable assets were assessed at £1,678,954. The assets which were taken into account in reaching that figure included a freehold property in Godalming, Surrey which was then valued at £395,000 ("the Godalming property").

A confiscation order is an order requiring a defendant to pay a sum of money to the court. It is not made against specified assets. The power to make a confiscation order under the applicable version of s.71 CJA 1988 was a discretionary power to make an order " in such sum as the court thinks fit" but that sum could not exceed the assessed benefit or " the amount appearing to the court to be the amount that might be realised at the time the order is made." On the premise that the benefit figure exceeded the amount that might be realised at that time, the CO was made in the sum of £1,678,954, to be paid by 17 October 2004. A sentence of 4 years' imprisonment was set in default of payment.

As the offences were committed (in part) before 1 November 1995, the amendments to the CJA 1988 brought about by the Proceeds of Crime Act 1995 did not apply to Mr Stannard's case. This means that the Court has no power to increase the quantum of the CO. There is no means by which the shortfall of around £1.4 million could be recovered – even if it came to light after the CO was made that Mr Stannard owned other assets of value, or if the known assets appreciated in value before they were realised in satisfaction of the CO. Moreover, interest does not accrue on the amount outstanding, and the entire debt would be expunged by service of the default term of imprisonment.

On the other hand, if further assets were acquired or came to light after the CO was made, there would be nothing to stop a receiver appointed under the CJA 1988 over all the defendant's assets ("Enforcement Receiver") from realising those assets and applying the proceeds towards the amount assessed to be due under the CO. An Enforcement Receiver may realise any realisable property for the purposes of satisfying a confiscation order (unless the Court directs otherwise) and is not constrained by the property identified at the time of the making of that order.

The powers of the Enforcement Receiver are generally to be exercised with a view to making available for satisfying the confiscation order the value for the time being of realisable property held by any person, by the realisation of such property. The High Court has the discretion to exclude property from the Receivership, which must be exercised in accordance with the general principles and guidance set out in s.82 of the CJA 1988. The discretion may be exercised, for example, in cases where the court has made a finding or the CPS has conceded that the property in question is not an asset of the defendant even though it may be in his name, or appears to have been purchased by him or with his money, or it was given by him to a third party.

If the value of all available realisable assets is insufficient to satisfy the amount remaining due, a defendant can apply to the Court for a "certificate of inadequacy" under s.83 of the CJA 1988. The onus is on the defendant to satisfy the court that his realisable property will not satisfy the confiscation order. "Realisable property" in this context means his total realisable assets at the time that he applies for the certificate of inadequacy ( not at the time when the CO was made).

Mr Stannard appealed against the CO, but on 1 November 2005 the Court of Appeal dismissed the appeal on all grounds R v Stannard [2005] EWCA (Crim) 2717. Once an appeal against conviction or sentence has been dismissed in a criminal case, the only basis on which the defendant can appeal again is if the matter is referred to the Court of Appeal (Criminal Division) by the Criminal Cases Review Commission ("CCRC"). The question whether to refer a case to the Court of Appeal is entirely within the discretion of the CCRC. If it refuses to make a reference, the remedy is to seek permission to bring judicial review, but such applications are rarely granted.

The Receivership Order

Mr Stannard had the opportunity to pay the CO before an Enforcement Receiver was appointed, but he failed to take any steps voluntarily. On 5 July 2006, Wilkie J appointed Mr David Ingram, a partner in Grant Thornton UK LLP, as the Receiver of all Mr Stannard's assets for the purposes of enforcing the CO.

By section 81 of the CJA 1988, the sums in the hands of an Enforcement Receiver shall first be applied in payment of the costs of realisation and then:

" shall, after such payments (if any) as the High Court may direct have been made out of those sums, be applied on the defendant's behalf towards the satisfaction of the confiscation order."

The Receivership Order contained the following provision in paragraph 5:

" The costs of the Receivership shall be paid out of the assets received by the Receiver and in priority to any other payment required or provided for by this Order other than the costs of realisation, the recoverable costs shall be reasonable costs and in the event of a dispute about the reasonableness the matter shall be referred to a Costs Judge in accordance with Part 69 Rule 3…."

Although it might appear obvious that paragraph 5 was intended to be a direction made under s.81 of the CJA 1988 that payment of the Enforcement Receiver's fees, disbursements and expenses should be taken out of the sums recovered by him before the balance was paid to the Magistrates' Court and applied towards satisfaction of the CO, Mr Ingram very properly sought clarification of the position from the Court on a later occasion, in 2011, by which time, despite Mr Stannard's best endeavours, he had managed to recover a sum of just under £900,000.

One of the reasons for Mr Ingram's concern was that there was a potential conflict between elements of Wilkie J's order, including paragraph 5, and the terms of a letter of agreement made between Mr Ingram and the Revenue and Customs Prosecution Office ("RCPO"), whose role is now undertaken by the CPS, concerning his remuneration. There was also some concern over the ambit of the expression "the costs of the Receivership" and whether, for example, it included the Enforcement Receiver's fees (his rates having been agreed with the RCPO).

The application was heard by Silber J. I have had the advantage of seeing the skeleton arguments filed for the purposes of that hearing by Mr Bird, who then appeared (as he did before me) on behalf of Mr Ingram, and by Mr Stannard (representing himself from afar). Mr Ingram sought an express direction from the court under s.81(1) of the CJA 1988 that he should take his remuneration, expenses and legal costs from the assets realised, but prior to making any payment to the Magistrates' Court in satisfaction of the confiscation order. It was contended that such a direction would serve the salutary purpose of providing Mr Stannard with an incentive to co-operate with the Enforcement Receiver in the realisation of his assets. Mr Stannard, who by that stage had already been held to be in contempt of court by reason of his singular lack of co-operation, (more of which below) strongly objected.

The evidence before Silber J was that the fees, costs and expenses Mr Ingram had incurred were in the region of £615,000 as at the end of January 2011. It was known to the Court and to all parties that Mr Ingram had not yet paid the sum of around £900,000 he had realised into Court in part-satisfaction of the CO. His failure to do so was something that Mr Stannard complained about at that time, and continues to complain about. One of the points he took in his skeleton argument for the hearing before Silber J. was that Mr Ingram was obliged to pay all the money recovered over to the Magistrates' Court and then claim his remuneration back out of what would then have become public funds.

Mr Stannard did not appear at the hearing, presumably because there was a warrant for his arrest for contempt outstanding (as remains the case). However, his written submissions were taken into account by Silber J, as is recorded...