Sinclair v Glatt and Others

JurisdictionEngland & Wales
JudgeLord Justice Longmore,Lord Justice Elias
Judgment Date13 March 2009
Neutral Citation[2009] EWCA Civ 176
CourtCourt of Appeal (Civil Division)
Date13 March 2009
Docket NumberCase No: C1/2008/2240, C1/2008/2272, C1/2008/2832, C1/2008/2837 & C1/2008/2887

[2009] EWCA Civ 176

[2008] EWHC 798 (Admin)

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM HIGH COURT OF JUSTICE

ADMINISTRATIVE COURT

THE HONOURABLE MR JUSTICE MUNBY

[2008] EWHC 798 (Admin)

QUEEN'S BENCH DIVISION

Before : The Right Honourable Lord Justice Longmore

The Right Honourable Lord Justice Stanley Burnton and

The Right Honourable Lord Justice Elias

Case No: C1/2008/2240, C1/2008/2272, C1/2008/2832, C1/2008/2837 & C1/2008/2887

Between
Heath Sinclair in his Capacity as the Former Receiver
Respondent
and
1) Louis Glatt
First Appellant
and
2) Executors of Estate of Chaja Glatt and Leslie Glatt
Second Appellant
and
3) Esther Glattfirst
Third Appellant

Mr Louis Glatt (in person) The First Appellant

Mr Michael Gadd (instructed by Olswang) for the Second Appellant

Mr Andrew Bodnar (instructed by HCL Hanne & Co) for the Third Appellant

Mr Andrew Mitchell QC & Ms Abigail Barber (instructed by Asset Forfeture Division, Revenue and Customs Prosecutions Office) for the Respondent

Hearing dates : 26 th & 27 th February 2009

Lord Justice Longmore

Lord Justice Longmore:

1

This appeal is about the entitlement of a receiver, appointed pursuant to section 77 of the Criminal Justice Act 1988 (“the Act”) to get in the assets of a money launderer who has been convicted of various money-laundering offences, to recover his remuneration costs and expenses. It is now settled that such a receiver, like a receiver at common law, is entitled to recover his remuneration, costs and expenses from the assets which he has been appointed to receive (“the receivership assets”). That is so whether or not he ought to have been appointed in the first place or the order appointing him has been discharged, see Mellor v Mellor [1992] 1 WLR 517. Even if the defendant, whose assets have been caught by the order appointing the receiver, is subsequently acquitted or has his conviction quashed, the receivership assets must bear the costs of the receivership; this is also the position if, as in the present case, a confiscation order is made but subsequently quashed, Hughes v Customs and Excise Commissioners [2003] 1 WLR 177. Even if the receiver carries on his receivership unnecessarily and should have agreed that his receivership should have been discharged at a time before a court application is made to terminate his receivership, the receivership assets bear those costs reasonably incurred up to the date he is actually discharged. Capewell v Revenue and Customs Commissioners [2007] 1 WLR 386.

2

This is all settled by authority. The question in issue on this appeal is whether the right of the receiver to recover his remuneration costs and expenses from the assets caught by the order extends to assets which do not belong to the defendant in the sense that they are not beneficially owed by him but by some other person e.g. a member of his family or a third party.

3

To some extent that will depend on the terms of the order of the court under which he is appointed. Obviously a receiver cannot recover sums due to him from assets which are not mentioned in the order. But suppose assets are mentioned in the order which either do not belong to the defendant at all or are not beneficially owned by him, what is then the position?

4

Sections 75–89 of the Act have a general title “Enforcement etc of Confiscation Orders”. Under this title the Act gives the High Court power to make a restraint order in aid of any confiscation order likely to be made in the future; this is a power to prohibit any person from dealing with “any realisable property”, (section 77(1)). Section 77(7) provides that an application to discharge or vary the order may be made by any person affected by it. Power is given to appoint a receiver to take possession of “any realisable property” and manage or otherwise deal with it whether pursuant to the restraint order before a confiscation order is made (section 77(8)) or after a confiscation order has been made (section 80(2)). In the latter case the court can order any person to give up possession of “realisable property” to the receiver and can empower the receiver to realise any “realisable property” (section 80(4) and (5)) but section 80(8) provides:-

“The court shall not in respect of any property exercise the powers conferred by sub-section … (5)…. above unless a reasonable opportunity has been given for persons holding any interest in the property to make representations to the court.”

5

“Realisable property” is defined by section 74 of the Act to mean “any property held by the defendant” and any property held by a person to whom the defendant has made a relevant gift. (No question about gifts arises in this present case). Section 102(7) provides:-

“property is held by any person if he holds any interest in it.”

6

Once a confiscation order has been made, sums in the hands of a receiver are to be applied on the defendant's behalf towards the satisfaction of the confiscation order (section 80(1)). The receiver will usually hand the money in his hands to a chief executive of the justices because it is the receipt by the justices' chief executive which will reduce the amount payable under any confiscation order. It is also the justices' chief executive who applies the money so received in the manner specified in the section (section 81(3)). The order in which the money is to be applied is first the payment of any relevant insolvency practitioner and secondly the remuneration and expenses of any receiver (section 81(5)).

7

Section 82(2) provides that the powers of the court under sections 77–81

“shall 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.”

Section 82(4) then provides:-

“The powers shall be exercised with a view to allowing any person other than the defendant or the recipient if any such gift to retain or recover the value of any property held by him.”

8

Thus a third party, whose assets have wrongly been included in any order appointing a receiver, can, by virtue of section 80(8), prevent a court from empowering the receiver to realise the value of such assets at the time the receiver is appointed or at any time thereafter. He can also apply to amend the order by removing an asset he can show is his; he can also, by virtue of section 82(4), require the court to have regard to his interest at the time when it is contemplated that the value of realisable property is to be made available to satisfy the confiscation order, see Re Norris [2001] 1 WLR 1385 paras 16–17 per Lord Hobhouse of Woodborough, dealing with the comparable provisions of the Drug Trafficking Offence Act 1986.

The facts

9

Louis Glatt, a solicitor, was arrested for money-laundering offences on 28 th January 1997. A restraint order was made by Keene J on 16 th April 1997 which remained in effect until Mr Louis Glatt was convicted on 12 th February 2001 and thereafter. On the application of the prosecutor Morison J made a receivership order on 15 th February 2001 and, in due course, on 29 th May 2002 a confiscation order was made. It became apparent that various persons had claims on the assets caught by both the restraint order and the receivership order and on 2 nd August 2002 Munby J ordered the executors of the estate of Mrs Chaja Glatt, Mr Louis Glatt's late mother, to serve points of claim to make clear what assets they were claiming in that capacity. The executors were Mr Leslie Glatt (Mr Louis Glatt's brother) and his wife Mrs Rita Glatt. They then claimed that they were entitled to the value of certain “Retained and Sold Shares” and a property known as the Chessington property in Finchley London N3. Mr Leslie Glatt had a further claim to further shares (“AB Ports Shares”) in his own capacity.

10

On 14 th July 2003 an application by Mr Louis Glatt to discharge the receivership order failed, Re G [2003] EWHC 1732 (Admin). On 17 th March 2006 the Court of Appeal quashed the confiscation order made on 29 th May 2002 and on 25 th April 2006 the restraint order and the receivership order were discharged. Mr Glatt's appeal against conviction had already been dismissed. On 10 th May 2007 it was decided that the executors of Mrs Glatt's estate and Mr Leslie Glatt were beneficially entitled to the shares which they claimed although Mr Louis Glatt had the bare legal title. On 10 th September 2007 the receiver asserted a lien for his charges against the assets caught by the receivership order. On 16 th January 2008 the executors also succeeded in their claim to be beneficially entitled to the Chessington property, although Mr Louis Glatt had the legal title. On 13 th May 2008 Munby J decided that the receiver had a lien for his charges against (inter alia) the shares and the Chessington property despite the fact that it had been decided that those assets belonged to the estate of Mrs Glatt or to Mr Leslie Glatt. Meanwhile the divorced wife of Mr Louis Glatt had made a claim that the receiver's lien could only take effect subject to her claim for relief in the matrimonial proceedings which she had instigated against Mr Louis Glatt. Munby J dismissed that claim also and held that the receiver's lien had the prior claim over all the assets of the receivership. The executors of Mrs Chaja Glatt, Mr Leslie Glatt, Mrs Esther Glatt and Mr Louis Glatt now all appeal against this decision.

The receivership order

11

The starting point must be the terms of Morison J's order of 15 th February 2001. Paragraph 1 of the order...

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10 cases
  • Re Glatt
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 26 March 2013
    ...out of the original Order of 15 February 2001, extended to assets legally vested in — even if not beneficially owned by — Mr Glatt: [2009] EWCA Civ 176. 13 On 3 December 2009 the receiver applied for permission to realise assets to meet his remuneration and costs. Interest was also claimed......
  • Serious Organised Crime Agency v Gale and another
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 7 July 2010
    ...for which a costs order could be made. The same approach had been taken in later authorities, most recently by the Court of Appeal in Sinclair v Glatt [2009] EWCA Civ 176 (again under Part VI of the 1988 Act). Girvan LJ regarded those authorities as establishing the position in respect of t......
  • Crown Prosecution Service v Eastenders Cash and Carry Plc and Others
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 23 November 2012
    ...the receivership falls to be discharged) will not have effect to deny the receiver payment out of what were the receivership assets. Sinclair v Glatt [2009] 1 WLR 1845, another 1988 Act case, is further grist to this particular mill. Longmore LJ said this at paragraph 1: "It is now settled ......
  • Serious Organised Crime Agency and William and Christine Wilson
    • United Kingdom
    • Court of Appeal (Northern Ireland)
    • 31 March 2009
    ...in which he is appointed.” [14] Subsequent case laws confirm this approach. Longmore LJ in the most recent authority Sinclair v Glatt [2009] EWCA Civ. 176 reiterated the approach which he considered was “all settled by authority”: “It is now settled that such a receiver appointed pursuant t......
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