Re P (Restraint order) (Sale of assets)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Simon Brown,Lord Justice Chadwick,Mr Justice Rattee |
| Judgment Date | 23 July 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0723-5 |
| Docket Number | Case No: QBCOF 1999/0642/4 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 July 1999 |
[1999] EWCA Civ J0723-5
Lord Justice Simon Brown
Lord Justice Chadwick
and
Mr Justice Rattee
Case No: QBCOF 1999/0642/4
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM MR JUSTICE SCOTT BAKER
Royal Courts of Justice
Strand
London WC2
MR A NEWMAN QC and MS J POSTILL (Instructed by Messrs Alistair Meldrum and Company, Enfield) appeared on behalf of the Appellant.
MR K TALBOT and MR I PEARCE (Instructed by Messrs Tarlo Lyons, London, EC1) appeared on behalf of the Respondent.
This appeal raises a number of questions under the Drug Trafficking Act 1994 (the Act), some procedural, some substantive. They concern the circumstances in which a receiver appointed under s.26 of the Act should be empowered to sell an unconvicted defendant's assets prior to his trial and the approach to be adopted towards such sales. Before, however, the issues can be properly identified it is necessary first to set out the central facts.
On 3rd February 1999 the defendant (as I shall call the appellant), a man of 50, was arrested and charged with conspiring to supply controlled drugs. He has been in custody ever since and is likely to remain so until trial. It is unclear when that will be; he has not yet even been committed. Put shortly, the defendant had been under investigation by the National Crime Squad since February 1997 both here and abroad and is alleged to have been master-minding a conspiracy to import into this country a very large consignment of cocaine, 163 kilograms with an estimated street value of £11 million.
On 10th February 1997 D.C. Clarke, the officer responsible for enquiring into the defendant's financial affairs, swore an affidavit in support of an application by the Crown Prosecution Service for a restraint order and the appointment of a receiver, both under the provisions of s.26 of the Act. Paragraph 7 of the affidavit described in detail the defendant's realisable property which included two farms (Heathfields Farm in Essex and Russell Farm in Buckinghamshire), and a number of named horses, including most importantly for present purposes a gelding called Nipper Reed. The affidavit described how, prior to his arrest, the defendant had lived at Russell Farm with his second wife and there, through a company, carried on "a horse-breeding, stabling and training business". Some of the horses were recorded as being held in the defendant's name, some in his wife's name, some jointly, and some in the company's name. Mrs Piper has since 1996 been a "pupil under training" to become a horse trainer, the licensed trainer being a Mr Simpson. In paragraph 15 of his affidavit, describing the various orders being sought, D.C. Clarke deposed:
"Lastly I ask that this court appoint a receiver to receive and manage the realisable property of the defendant in particular the assets set out and specified in paragraph 7 above. The defendant is in custody and in no position to do so himself. No doubt he could make arrangements for agents to do so but, in any event, the nature of this sort of business and the value of the assets within it, in particular the horses held in his name, his wife's name and the name of the company make it necessary and desirable that these assets are brought under the control of the court through its receiver. I should also say that since the defendant's arrest one Mr Simpson, who I believe to be a trainer at the stables, telephoned the case officer and complained about the inability of the company to provide sufficient money to feed the horses and continue the running of the stabling business."
The affidavit concluded by saying that Sara Elizabeth Dayman of BDO Stoy Hayward (the respondent to this appeal) had agreed to act as Receiver.
Accompanying the affidavit was the draft order being sought, numbering in all ten pages. This was in common form (save, of course, for the detailed facts of the case) for restraint orders which include within them the appointment of a receiver. We are told that of the 450 odd restraint orders made each year, some 20—40 involve receivership and are therefore in this form. The draft has been developed down the years by the various prosecuting authorities concerned with the Act, its predecessor the Drug Trafficking Offences Act 1986, and the Criminal Justice Act 1988. Likewise there has developed the practice of seeking such orders by way of an ex parte table application to a nominated judge of the Crown Office List, the terms of the order stating that it will remain in force until variation or discharge by any further order that may be made.
On 10th February 1999 (the same day as the application was lodged) the order was duly made by Latham J in the form submitted to him. It was headed "Restraint Order prohibiting disposal of Assets" and by paragraph 1 enjoined the defendant against disposing of or dealing with his assets in any way. Paragraphs 2, 3 and 4 made essentially the same orders against Mrs Piper and the companies under which they operated. Paragraphs 5, 6 and 7 required the defendant to disclose certain information by affidavit. The critical paragraphs for present purposes are those under the heading "Appointment of Receiver":
"8. Sara Elizabeth Dayman … ('the Receiver') is appointed as Receiver and Manager of the assets of the defendant including but not limited to the assets specified in paragraph 1 above.
9. The defendant and any person having possession of the assets of the defendant do forthwith deliver up to the Receiver possession of all such assets …
10. The Receiver shall have the following powers without prejudice to any existing powers vested in her whether by statute or otherwise:
(a) Power to take possession of and manage the assets of the defendant.
…
(e) Without prejudice to any other power to sell, power to sell any asset deemed by the Receiver to be appropriate to so sell for the purpose of application of the proceeds of sale in satisfaction of her costs provided for by paragraph 13 below.
…
(g) Power to execute all such documents in the name of and on behalf of the defendant … and any other person holding an asset of the defendant as may be necessary to … sell that asset.
…"
Of the rest of the order I need note only paragraph 26:
"The defendant (or anyone notified of this order) may apply to the court at any time to vary or discharge this order (or so much of it as affects that person), but anyone wishing to do so must first inform the Crown Prosecution Service giving two clear days notice."
The defendant, following service of the order upon him, recognised that for purely practical reasons the Receiver would need to sell the majority of the listed assets including most of the racehorses, and to that he raised no objection. He did, however, object most strongly to the Receiver's proposed sale of three particular horses and one property, Heathfield Farm. As to Heathfield Farm I need say little. It is no longer in dispute. Rather it has been agreed that the defendant's wife will move there from Russell Farm when the latter property comes to be sold, as we are told it shortly will be for £1.2 million. The disposal of the three horses, however, and above all Nipper Reed, remains hotly disputed. Let me briefly explain the position about them. Nipper Reed is a racehorse of considerable potential, currently valued at about £125,000. On 16th March 1999 he came third in the Arkle Chase at Cheltenham, the most prestigious National Hunt event of the season, beating the favourite and winning some £13,000 prize money. It is the defendant's ardent wish that Nipper Reed should run in the Queen Mother Champion Chase in the year 2000 Cheltenham Festival, the prize in that race being some £70,000. Meantime he would hope to enter him for other races, also with large potential prize money. That, however, is not the only reason why the defendant and his wife are so anxious to retain the horse: he has been in the family for some years and is described as "their much loved pet." His value is thus sentimental as well as commercial. The other two horses are Just Flora and Gizmo, respectively Nipper Reed's half sister and half brother, each valued at approximately £5,000, certainly for less than Nipper Reed. The defendant's hope is that if Nipper Reed continues to excel then the value of these other horses will also increase; both are said to have good prospects not only as race horses but also for breeding purposes. Just Flora, I should note, is held jointly by the defendant and his wife.
On 23rd March 1999 the defendant issued a summons asking the court (a) to direct the Receiver not to sell the three horses "unless necessary to satisfy any confiscation order which may eventually be made", alternatively (b) for variation of the restraint order to like effect. Because the Receiver had already by then entered the horses for auction at the Doncaster Sales (Nipper Reed being the main attraction there) the defendant had to move speedily and on 24th March obtained from Eady J an ex parte injunction prohibiting the sale of the horses until after the hearing of the summons on 31st March.
Thus it was that the matter came before Scott Baker J whose order of 31st March 1999 dismissing the defendant's application is now under appeal. By that time there were, in addition to DC Clarke's affidavit, three further affidavits before the court: two from the defendant's solicitor and one from the receiver. The defendant's solicitor, besides explaining the situation with regard to the three disputed horses, as I have already sought to summarise it, set out the defendant's proposals for these horses. Essentially what was proposed was that the defendant's...
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