Murli Mirchandani v The Lord Chancellor
| Jurisdiction | England & Wales |
| Judge | Sir Terence Etherton MR,Lord Justice Davis |
| Judgment Date | 02 October 2020 |
| Neutral Citation | [2020] EWCA Civ 1260 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2019/2119 |
| Date | 02 October 2020 |
[2020] EWCA Civ 1260
THE MASTER OF THE ROLLS
THE PRESIDENT OF THE QUEEN'S BENCH DIVISION
and
Lord Justice Davis
Case No: A2/2019/2119
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MRS JUSTICE JEFFORD)
[2019] EWHC 1277 (QB)
Royal Courts of Justice
Strand, London, WC2A 2LL
Dr Mark Friston (instructed by Thomas Legal Costs) for the Appellant
Mr Rupert Cohen (instructed by the Legal Aid Agency) for the Respondent
Hearing date: 14 th July 2020
Approved Judgment
Introduction
This appeal raises issues of interpretation of s. 17 of the Prosecution of Offences Act 1985 (“the 1985 Act”), as amended. The issues arise in the context of confiscation proceedings conducted under the provisions of the Criminal Justice Act 1988 (“the 1988 Act”), following the conviction for fraud of Ketan Somaia on 13 June 2014 on a private prosecution brought by Murli Mirchandani. There must be very few confiscation proceedings under the 1988 Act still extant.
In summary, the issues are these:
(1) On the true interpretation of s. 17 of the 1985 Act, may a private prosecutor recover out of central funds costs incurred by him in the enforcement of a confiscation order made in the criminal proceedings?
(2) On the true interpretation of s. 17 of the 1985 Act, may a private prosecutor recover out of central funds costs which the prosecutor has been ordered to pay to a third party in the enforcement proceedings?
The issues thus are jurisdictional. This court has not been concerned with the subsequent question as to how the jurisdiction is to be exercised, if there is such jurisdiction in either situation.
The appellant is the prosecutor, Mr Mirchandani. The respondent is the Lord Chancellor, who had intervened in the proceedings below and had successfully argued before Jefford J that the court had no jurisdiction to order that such costs be paid out of central funds.
The appeal was brought by leave granted by the judge herself. Before us the appellant was represented by Dr Mark Friston. The respondent was represented by Mr Rupert Cohen. I would acknowledge the very thorough and careful arguments which they presented to us. The defendant has not been represented on this appeal and has taken no part in it.
The Background
Mr Mirchandani, the prosecutor, and Mr Somaia, the defendant, were engaged in very substantial business transactions in 1999 and 2000. Subsequently, the prosecutor considered that he had been the victim of a sustained fraud on the part of the defendant, to the tune of several millions of pounds. The details are not important for present purposes.
In due course, in 2012 he commenced a private prosecution against the defendant. There were numerous counts of fraud on the indictment. Following a lengthy trial at the Central Criminal Court, the defendant was convicted by the jury on 13 June 2014 of nine offences of fraud. The trial judge, Judge Hone QC, sentenced him to 8 years imprisonment. An appeal against conviction was subsequently rejected by a constitution of the Criminal Division of this court.
The prosecutor then commenced confiscation proceedings under the 1988 Act (because of the dates of the frauds alleged, antedating 24 March 2003, the provisions of the Proceeds of Crime Act 2002, “the 2002 Act”, did not, as throughout was common ground, apply). In the result, a confiscation order was made by Judge Hone QC on 12 January 2016 in the amount of £20,434,691. The total benefit had been assessed in that amount. As to available assets, certain assets were identified. As to the balance, the court made a finding of hidden assets and determined the recoverable amount to be not less than the value of the benefit from the relevant criminal conduct, that is £20,434,691. A confiscation order was made accordingly, with a term of 10 years imprisonment imposed in default of payment. In addition, the judge was invited to exercise his power under s. 130 of the Powers of Criminal Courts (Sentencing) Act 2000 and s. 72 (7) of the 1988 Act to make confiscation orders in favour of the prosecutor, Mr Mirchandani, and a Mr Shah. The judge did so, in the amount of £18,220,723 and £200,233 respectively. The balance of the confiscation order represented the remaining assets of the defendant, in circumstances where the criminal lifestyle provisions had been applied. The judge directed, under s.72 (7) of the 1988 Act, that any money realised under the confiscation order should first be paid to satisfy the compensation orders. A subsequent application for leave to appeal against the confiscation order was unsuccessful.
The defendant failed to make payment of the confiscation order.
In consequence, the prosecutor sought the appointment of an enforcement receiver over the assets of the defendant. On 12 October 2016 Spencer J, sitting in the Queen's Bench Division (Administrative Court), appointed Christine Bartlett of HS Alpha Limited receiver over the assets of the defendant, with wide-ranging powers.
By that time, one particular point of contention, among others, had been identified. Significant sums had been paid by the defendant into bank accounts in the name of his (by now former) wife, Alka Gheewala. The prosecutor was claiming that these were to be regarded as tainted gifts for the purposes of the 1988 Act. Directions were given by Spencer J for a hearing of that issue. By the time of that hearing, the only extant dispute related to seven transfers of money to Ms Gheewala between April and August 2010.
Although the Order of Spencer J appointing Ms Bartlett as receiver had conferred on her the power to bring proceedings against Ms Gheewala (and others) to recover the value of alleged tainted gifts, in the result it was the prosecutor who himself, through lawyers, pursued such proceedings. There was a four day hearing before Jefford J, sitting in the Queen's Bench Division, in May 2017. At that hearing, each of the prosecutor, the defendant and Ms Gheewala was represented by counsel.
By a reserved judgment handed down on 17 October 2017, the judge refused to declare the payments in question to be tainted gifts: [2017] EWHC 2554 (QB). After detailed consideration of the background and the evidence, the judge decided there had been no gifts as such: rather the money in question had beneficially remained the defendant's money and had been transferred into his wife's account for his own convenience, primarily out of money legitimately acquired by him as a consequence of a settlement of certain legal proceedings in Kenya.
Having so decided, Jefford J in due course on 7 November 2017 among other things directed the prosecutor to pay Ms Gheewala's costs (including certain reserved costs) on the standard basis, with a payment on account of just over £125,000. By this stage the prosecutor had applied for his costs to be paid out of central funds. As to that application the judge directed written submissions.
That application, following detailed written submissions from the parties, was determined by the judge on 25 May 2018. She concluded that the prosecutor was entitled to apply for his costs of the proceedings (including the costs ordered to be paid by him to Ms Gheewala) out of central funds; that she had jurisdiction so to order; and that she should so order. She directed such costs to be the subject of a determination made on behalf of the court by the National Taxing Team.
In due course, the Lord Chancellor was made aware of this Order, given that the use of central funds was involved. (By this stage, the prosecutor had prepared a bill of costs seeking as much as £751,279, including £453,801 for the prosecutor's own costs and £297,478 for Ms Gheewala's costs.) The Lord Chancellor raised objections on jurisdictional grounds to the Order of 25 May 2018, as to which he had had no previous opportunity to make representations. He sought to have that Order set aside. The Lord Chancellor was given leave to intervene accordingly. It was the outcome of that intervention that led to the Order of the judge, following a hearing at which the prosecutor and the Lord Chancellor were represented, which is the subject of this present appeal. For Jefford J, in a detailed and careful reserved judgment dated 15 May 2019, decided that her previous decision was wrong and that she should set aside her previous Order of 25 May 2018. The judge's decision was ultimately reflected in an amended Order sealed on 1 August 2019; and it is against that Order that this appeal is brought by the prosecutor.
The Legislative Scheme
It is convenient at this stage to set out aspects of the relevant legislative provisions, in order to explain how it is that the current dispute has arisen.
(a) The 1988 Act
As previously explained, the 1988 Act has since been superseded by the 2002 Act. Although there is a conceptual and structural similarity in a significant number of respects between the two Acts, there are also significant differences.
For present purposes, the relevant provisions are those set out in Part VI of the 1988 Act.
Section 71, in outline, requires the court to determine whether the offender has benefited from any relevant criminal conduct (as defined). The court is then to determine the amount to be recovered; but that amount is not to exceed the benefit or the amount which may be realised, whichever is the less.
Section 72 (7) provides that where – as in the present case – the court is proposing to make both a compensation order and a confiscation order, it shall, if it considers that there is an overall insufficiency of means, direct that the compensation order is first to be paid out of sums recovered under the confiscation order.
Section 74 (1) contains a wide definition of...
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