R v K
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LAWS |
| Judgment Date | 01 March 2005 |
| Neutral Citation | [2005] EWCA Crim 619 |
| Court | Court of Appeal (Criminal Division) |
| Date | 01 March 2005 |
| Docket Number | No: 200500417/A1 |
[2005] EWCA Crim 619
IN THE COURT OF APPEAL CRIMINAL DIVISION
Royal Courts of Justice
Strand
London, WC2
Lord Justice Laws
Mr Justice Toulson
Mr Justice Royce
No: 200500417/A1
MR S FARRELL QC AND MR A BODNER appeared on behalf of the THIRD PARTY
MR D BARNARD AND M STANGER appeared on behalf of the CROWN
The power to make restraint orders against criminal defendants who have not yet been tried, for the preservation of their assets against the satisfaction of any confiscation order that might be made in the event of a conviction or convictions, previously lay with the High Court under provisions contained in the Criminal Justice Act 1988. There was a separate regime in relation to drug trafficking offences. The Proceeds of Crime Act 2002 (" POCA") transferred this jurisdiction to the Crown Court along with the jurisdiction to make associated orders such as an order for the appointment of a receiver. The transfer related to applications for restraint orders linked with offences, or alleged offences, said to have been committed since 24th March 2003.
The POCA also conferred a new appellate jurisdiction on the Criminal Division of this Court. Section 65(1) provides that a person who applied for an order for the appointment of a receiver under POCA section 48 may appeal to the Court of Appeal against an order refusing appointment. Leave to appeal is required by section 89(1). Rule 12(3) of the Criminal Appeal (Confiscation Restraint and Receivership) Rules 2003 provides that:
"The Court of Appeal will allow an appeal where the decision of the Crown Court was —
(a) wrong; or
(b) unjust because of a serious procedural or other irregularity in the proceedings in the Crown Court."
In these proceedings, in circumstances which we shall shortly explain, HM Commissioners for Customs and Excise seek leave to appeal against the refusal by His Honour Judge Wadsworth QC sitting at the Central Criminal Court on 10th January 2005 to appoint a receiver under POCA section 48. It is, so we understand, the first such application which this Court has been required to consider.
On 19th November 2004 at a hearing without notice at the Southwark Crown Court His Honour Judge Elwen made restraint orders covering the assets of the three defendants K, S and M. The orders were made under POCA section 41(1) which provides that the Crown Court may make a restraint order if any condition set out in section 40 is satisfied. Section 40(2) provides:
"The first condition is that:
(a) a criminal investigation has been started with regard to an offence, and
(b) there is reasonable cause to believe that the defendant has benefited from criminal conduct."
The orders made on 19th November 2004 were specifically founded on section 40(2). On that occasion the judge also ordered that the assets of the following four companies should be treated as the assets of the defendant: MS, ME, MA (this is a haulage company), and, finally, DL. This company owns the properties where M and S live, the premises of MS and ME at an industrial estate in Chatham and a property in Spain. Notice had been given in the application to Judge Elwen that the appointment of a receiver to manage the companies would be applied for inter partes. Meantime the restraint orders made provided that the companies might carry on their lawful businesses, but must notify the Commissioners of the identity of any bank accounts used for business purposes, pay all business receipts into such accounts and make no payment out of the accounts without the prior approval in writing of the Commissioners.
On 10th December 2004, His Honour Judge Wadsworth heard and dismissed an application by the defendants for an order limiting the extent of the assets restrained. There was also before the judge on that occasion an application by the companies to discharge the earlier orders by which their assets were to be treated as assets of the defendants. That application was adjourned to 20th December 2004. On that day the companies gave notice of a further application to discharge the orders for want of jurisdiction. The argument was that the order should have been applied for and made, if at all, under the Criminal Justice Act 1988 and not POCA. The matter was further adjourned to enable the interveners, that to say the companies, to reply to certain fresh evidence which had been filed by the Commissioners and skeleton arguments to be served on the jurisdiction issue.
On 10th January 2005 at the Central Criminal Court His Honour Judge Wadsworth made orders as follows. (1) He dismissed the applications to discharge on grounds of want of jurisdiction. (2) He dismissed the applications to discharge the orders treating the companies' assets as assets of the defendants; this has been referred to as the corporate veil point. (3) He varied the order relating to M by providing that the assets of a further company, SL, should be treated as his realisable property. (4) He refused an application by the Commissioners to appoint a receiver to manage the affairs of the companies.
As we have foreshadowed, the Commissioners now seek leave to appeal against the judge's refusal to appoint a receiver. The application for leave was referred to the Full Court by the Registrar. A cross-notice has been put in on behalf of the companies seeking to uphold the judge's refusal to appoint a receiver, but seeking also to overturn his decision on the corporate veil point and, in addition, to have the restraint orders varied so as to cover assets up to a value of £477,000 only. These latter two matters really constitute a cross-appeal by the interveners, since they seek to overturn the judge's decision on the points referred to. Accordingly leave to appeal is required in respect of them, and also, we understand, an extension of time we believe of one day only.
We may describe the factual position as follows. On 11th January 1999 S and M, who are brothers, were both convicted in the Wood Green Crown Court of excise fraud, sentenced to three years' imprisonment and disqualified from acting as company directors for five years. The nature of the offending, or alleged offending, which gave rise to these applications in the Crown Court under POCA consists in a conspiracy to evade excise duty on goods being imported through the port of Tilbury. The defendant K was a serving customs officer there. He is married to the sister of S and M. The conspiracy to said to have run from October 2003 to November 2004.
The Crown case is that S and M arranged for containers carrying spirits, beer and cigarettes to enter the port bearing false descriptions, usually describing the goods in the containers as mineral waters or soft drinks. A decoy container bearing the name of fictitious consignees would earlier have been imported and on examination found to contain goods which accorded with the description at entry. The containers brought in later, naming the same fictitious consignees, would in fact be carrying excise goods, but would be let through unexamined. It is said that K, the customs officer, facilitated the execution of this scheme. There is a good deal of evidence by way of intercepted conversations relating to him.
As for the companies, it is convenient to point at once to a finding made by His Honour Judge Wadsworth on 10th January 2005 in dealing with the corporate veil point. He said that there was:
"… certainly a substantial arguable case that these defendants have used the companies as a facade behind which they are hiding the proceeds of their smuggling." (Transcript 112C to D)
In their cross-notice the companies accept (paragraph 10) that this was a finding open to the judge on the evidence.
None of the defendants is recorded as a director or office holder of any of the companies. Nominal officers of the companies are M and S's father, their sister, K's wife, and other family members. In particular Mrs K is a director of DL, whose registered office is on an industrial estate in Chatham. MS and ME, through which S runs a cash and carry business, operates from the same industrial estate. Mrs K is the company secretary of both companies. She is also company secretary of MA, the haulage or transport company, which is run by M and which also operates from the same address as DL.
There is a document that is of some importance from the Commissioners' point of view, namely a letter dated 21st May 2001 from M to his mother claiming the transfer to him of what he said was his half share in the businesses, ME, MA, DL and MS. There is also evidence, gathered in the course of an investigation called Operation Devour, showing S effectively acting in control of MS.
As for SL, investigations after the defendants had been arrested showed this company to have been involved in about 35 importations through or destined for Tilbury between October 2003 and July 2004. On the Commissioners' case these importations included an importation of vodka in March 2004. The estimated duty on the quantity of vodka seized was £107,000. There is evidence associating M with this importation. SL's activities also included a prospective importation of 1.7 million cigarettes, but they were seized by Dutch customs officers at Rotterdam in July 2004. The purchase ledgers, company annual returns and numerous other documents relating to SL were found at the home of M. It is unnecessary to rehearse all the evidence assembled by the prosecution, which is considerable in bulk. We should, however, refer in particular to events which happened on 22nd July 2004 when officers engaged in Operation Devour searched the business...
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