The Scottish Ministers V. Russell Stirton+alexander Anderson's Executor
| Jurisdiction | Scotland |
| Judge | Lord Justice Clerk,Lord Brodie,Lord Menzies |
| Judgment Date | 11 October 2013 |
| Neutral Citation | [2013] CSIH 81 |
| Published date | 11 October 2013 |
| Date | 11 October 2013 |
| Court | Court of Session |
| Docket Number | P1801/05 |
| SECOND DIVISION, INNER HOUSE, COURT OF SESSION | |
| Lord Justice Clerk Lord Menzies Lord Brodie | [2013] CSIH 81 P1801/05 OPINION OF THE COURT delivered by LORD CARLOWAY, the LORD JUSTICE CLERK in the reclaiming motion in the petition of THE SCOTTISH MINISTERS Petitioners and Respondents; against RUSSELL STIRTON First Respondent and Reclaimer; and ALEXANDER ANDERSON'S EXECUTOR Third Respondent and Reclaimer: for a Recovery Order in terms of Section 266 of the Proceeds of Crime Act 2002 _______________ |
Petitioners and Respondents: Crawford QC, Heaney; Civil Recovery Unit
First Respondent and Reclaimer: Weir QC, CC Wilson; The Glasgow Law Practice
Third Respondent and Reclaimer: CHS MacNeill QC, SM McCall; Ian Moir & Co, Glasgow
11 October 2013
Introduction
[1] These are petition proceedings for civil recovery under section 266 of the Proceeds of Crime Act 2002 ("POCA"). The proceedings have been substantial. They began in 2005. A 130 day proof was heard over a period of approximately two years between 2009 and 2011, albeit discontinuously. Ultimately, the recovery order now reclaimed against was granted on 14 February 2012. The Opinion of the Lord Ordinary extended to some 300 pages ([2012] CSOH 15).
[2] Part 5 of the POCA enables the respondents, inter alia, to recover any property which is, or represents, property obtained through unlawful conduct, whether or not any criminal proceedings have been brought for an offence in connection with the property (s 240). Civil recovery is thus not dependent upon criminal conviction and none had been secured against the reclaimers. "Unlawful conduct" is established on a balance of probabilities (s 241). It is sufficient for the grant of an order that a person obtains property by, or in return for, his own unlawful conduct or that of another person (s 242). It is not necessary to show that the conduct was of a particular kind. It is enough to show that the property was obtained through one of a number of kinds of unlawful conduct (ibid). Subject to certain exceptions, if the court is satisfied that any property is recoverable, it must make a recovery order (s 266). However, the court may not make in a recovery order any provision that is incompatible with any of the Convention rights within the meaning of the Human Rights Act 1998 (s 266(3)(b)).
[3] Prior "interim administration" proceedings (Scottish Ministers v Stirton 2006 SLT 306), founded upon averment that certain property would be recoverable (s 256), had been instituted against the reclaimers. An interim administrator ("the administrator") was appointed in these proceedings, whose task it was to establish the extent of any recoverable property and the identity of any persons holding it (s 257). Some of the grounds of appeal (infra) relate to the administrator's subsequent involvement in the recovery proceedings. In order to illustrate the circumstances into which the Lord Ordinary was placed, when making certain procedural decisions now complained of (infra), a number of aspects of the administrator's appointment require to be noted at the outset.
[4] By interlocutor dated 3 February 2005, "Louise Rivers" of "Mallard Associates", with an accommodation address in London, was appointed as the administrator. It was not until some time later, however, that the court was informed that both her name and that of her firm were pseudonymous. Although it was decided that the oversight in failing to inform the court of the administrator's assumed identity did not render her appointment fundamentally invalid, Lord Macfadyen, who was asked to recall the appointment, observed that:
"There seem ... to be grounds for concern in connection with the appointment of an interim administrator under an assumed name. For example, it might be thought that the respondents had an interest in knowing who it was that had acquired the extensive powers of the interim administrator to take possession of property and to require them to answer questions. The enforceability of a claim for damages under section 257(3) might be thought to require knowledge of the true identity of the interim administrator. ... [T]hese are matters to be taken into account by the court in deciding whether to make the appointment. But problems would only arise if there were reason to doubt the good faith of the nominee and her willingness to be held to account, if the need arose, in this court. In the context of a nomination made by a responsible public authority, ... the court would be entitled to rely on the good faith of the petitioners. The concern does not ... go to the validity of the appointment.
Where, as the petitioners say is usual, the matter is disclosed to the court at the time of appointment, ... the court is entitled to make an appointment under an assumed name if satisfied that there is good ground for doing so. The concerns for the safety of the interim administrator and her staff...seem ... to be capable of being accepted by the court as constituting good ground. [Counsel] did not impugn the good faith ... in putting forward that reason for making an appointment under an assumed name, or that there was good reason for concern about the safety of the interim administrator. [T]herefore ... the Lord Ordinary would have been entitled, if the matter had been explained to him, to make the appointment of Louise Rivers under that name" (Scottish Ministers v Stirton 2006 SLT 306, at 316).
[5] The interlocutor appointing the administrator was pronounced in separate proceedings and is outwith the scope of review in this reclaiming motion. However, the administrator was called as a witness for the respondents in the proof in the present proceedings. In that context, the Lord Ordinary's protection of the administrator's anonymity is the subject of criticism. Whereas her use of a pseudonym was not known to the court upon appointment, it was explained to the court at the outset of her testimony in these proceedings that she continued to use the assumed name. Throughout each process the court remained ignorant of her true identity. During the proof, the respondents provided the Lord Ordinary with a sealed envelope, with a request that it not be opened. This was said to contain the administrator's true name and designation. This was not done until the stage at which the reclaimers were about to cross-examine the administrator about her qualifications (see infra). The sealed envelope remains unopened even yet.
[6] It is not unknown for a witness to give evidence under an assumed name, particularly in criminal proceedings, where the revelation of a witness's identity would endanger his safety (see now Criminal Procedure (Scotland) Act 1995, s 271N). However, it is a matter of some not inconsiderable concern that the court has heard the testimony from a witness without knowledge of her true identity. This matter will be reverted to in addressing the grounds of appeal because of the importance of ensuring that the anonymity of witnesses, including administrators, is dealt with appropriately by the court in the future.
The Lord Ordinary's Findings in Fact
[7] The reclaimers had been investigated by the police between 2003 and 2005. The allegations against them concerned money laundering and extortion. The police had observed the first reclaimer on a ferry going from Calais to Dover in 1997, when controlled drugs and a firearm were imported into the United Kingdom. Evidence from the police at the proof was to the effect that this reclaimer had been associated with the importation of these drugs. Both reclaimers had, in addition, been stopped by the police on the M74 in 2000 in possession of a large sum of money. The amount was not established. Shortly before that, one of them had been seen in the course of a drugs deal in Liverpool. The Lord Ordinary concluded that money had been obtained by the reclaimers from unlawful conduct, notably drugs supply.
[8] Both reclaimers had appeared on petition, but no indictment had ever been served upon them. It was the reclaimers' position that they were legitimate businessmen and had not committed any crime. In that connection, it is an interesting feature of the case that, despite the terms of the record, it does not appear to have been argued by the respondents after proof that any money had been "laundered", in the sense of being put into a legitimate business surreptitiously and then taken out in an apparently legitimate manner (eg in terms of contractual obligations (see infra)). It was argued, that substantial sums of money were taken out of a legitimate business by way of extortion rather than as part of a process of laundering, and converted into assets, notably a filling station.
[9] As the Lord Ordinary noted, despite the length of the proof, many of the facts were not in dispute. In particular, and central to the respondents' case, it was agreed that there was a relationship between the reclaimers and a taxi company called Spring Radio Cars Limited ("Spring"), which was owned and operated by a Mr Gibson and a Mr McLeod. There were three aspects to this relationship. The first was a loan agreement whereby RS Construction, a company operated by the reclaimers, was recorded as having lent Spring £265,000 on extremely onerous terms. Secondly there was an open-ended contract between RS Construction and Spring for the provision of services at a cost of £2,500 per week. Thirdly, there was a contract between A & S Leasing, another business run by the reclaimers, and Spring for the sale to Spring of 15 Skoda cars, and in which Spring agreed to pay A & S Leasing £4,000 every week for a prolonged period. The respondents' contention, which was ultimately upheld by the Lord Ordinary, was that Spring had been intimidated into entering these contracts.
[10] The relationship between the reclaimers and Spring had an interesting history. In or about 1996 or 1997, a campaign of intimidation had taken place. Mr...
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