Szepietowski v Assets Recovery Agency
| Jurisdiction | England & Wales |
| Judge | Mr Justice Silber:,MR JUSTICE MITTING,MR JUSTICE COLLINS,Mr Justice Collins |
| Judgment Date | 12 December 2006 |
| Neutral Citation | [2006] EWHC 3228 (Admin),[2006] EWHC 2406 (Admin),[2006] EWHC 3343 (Admin) |
| Docket Number | Case Number: C08611 2005,CO/8611/2005 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 12 December 2006 |
[2006] EWHC 2406 (Admin)
THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
MR JUSTICE SILBER
Case Number: C08611 2005
Jonathan Fisher QC and Nicholas Vineall (instructed by Bivonas) for the First Respondent
David Barnard and Piers Harrison (instructed by Treasury Solicitor) for the Claimant
None of the other respondents were represented or present
Hearing date: 5 September 2006
APPROVED JUDGMENT
The Honourable Mr Justice Silber:
I. Introduction
The issue raised on this application is whether on an application for the appointment of an interim receiver over certain property, an enforcement agency (such as the Assets Recovery Agency) is entitled to rely on information about that property which had only come to light in result of investigations conducted pursuant to a previous interim receiving order which related to different wrongdoing by the proposed defendant.
II. The facts
The background to this application is that the Director of the Assets Recovery Agency ("the applicant") on a without notice application obtained an interim receiving order on 27 July 2005 ("the first order") against John Szepietowski ("the defendant"), his wife and two companies, both of which were called Countess Investments Limited with one of them having been incorporated under the laws of England or Wales and the other having been incorporated under the laws of British Virgin Islands. Ms Sarah Dayman was appointed as an interim receiver under the first order.
While performing her duties under the first order, the interim receiver obtained information relating to alleged different wrongdoings and some of this information led to the applicant applying for and obtaining a second interim receiving order on 25 October 2005 ("the second order") against the defendant, his wife and three different companies, which were Merchant Taylor Company Limited, Cobham Investments Limited and Cobham Investments Leisure Limited. Ms Sarah Dayman was also appointed as an interim receiver under the second order.
The defendant and his wife have applied for a discharge of the second order. The only application before me today is that of the defendant because his wife's application for a discharge has been adjourned. The defendant has raised a substantial number of issues as to why the second order should be discharged. They include contentions first that there has been non-disclosure by the applicant when she applied for and obtained the second order, second that certain property covered by the second was not "realisable property" as it fell outside the regime of the Proceeds of Crime Act 2002 ("the Act") and third that the applicant had delayed in serving a claim form. For a whole series of reasons, these matters could not be dealt with at the present hearing and have had to be adjourned.
The only issue left outstanding at the hearing in front of me was whether the defendant was entitled to use on the application for the second interim order information obtained on the first order but which related to different alleged wrongful conduct from that which led to the first order. The defendant submitted that the applicant was not so entitled while the applicant's case was that she was entitled to use this information. This issue was heavily contested but during the early part of the application before me, Mr. Jonathan Fisher QC, counsel for the defendant, conceded that:
"the second interim receiving order was not granted on the basis of improperly obtained evidence when the Director of the Asset Recovery Agency relied on information obtained by the interim receiver as a result of the execution of the first interim receiving order"
Mr. David Barnard, counsel for the applicant, then contended that as the issue had been fully ventilated in written skeleton arguments and as the Act did not deal with this issue, I should make a declaration as against the defendant that the applicant was entitled to use on the application for the second order information obtained on the first order but which related to different illegal conduct from that which led to the first order. He also said that the applicant and the interim receiver would welcome guidance on whether the permission of the Court had to be obtained by the applicant or by the interim receiver before such information could be used on the second application. I considered that I should if possible try to resolve these matters.
III. The Statutory Regime.
The Act contains various relevant provisions explaining the rights and duties of an interim receiver. As I will explain, it is noteworthy that the Act specifically refers to the powers of the interim receiver with regard to recoverable property "in relation to the same unlawful conduct". The specific issue which I have to consider relates to the different position, which is where the property discovered by the interim receiver relates to different unlawful conduct.
The interim receiver's functions are set out in section 247 of the Act, which provides (with my emphasis added) that:
"(1) An interim receiving order may authorise or require the interim receiver-
(a) to exercise any of the powers mentioned in Schedule 6,
(b) to take any other steps the court thinks appropriate,
for the purpose of securing the detention, custody or preservation of the property to which the order applies or of taking any steps under subsection (2).
(2) An interim receiving order must require the interim receiver to take any steps which the court thinks necessary to establish-
(a) whether or not the property to which the order applies is recoverable property or associated property,
(b) whether or not any other property is recoverable property ( in relation to the same unlawful conduct) and, if it is, who holds it.
(3) If-
(a) the interim receiver deals with any property which is not property to which the order applies, and
(b) at the time he deals with the property he believes on reasonable grounds that he is entitled to do so in pursuance of the order,
the interim receiver is not liable to any person in respect of any loss or damage resulting from his dealing with the property except so far as the loss or damage is caused by his negligence"
The interim receiver has reporting obligations under the Act which are owed to both "the court" which appointed him (which, in this case, is the Administrative Court) and to the '"enforcement authority" (which, in this case, is the body of which the applicant is the Director). Section 255 of the Act provides (with my emphasis added) that:
"(1). An interim receiving order must require the interim receiver to inform the enforcement authority and the court as soon as reasonably practicable if he thinks that-
(a) any property to which the order applies by virtue of a claim that it is recoverable property is not recoverable property,
(b) any property to which the order applies by virtue of a claim that it is associated property is not associated property,
(c ) any property to which the order does not apply is recoverable property ( in relation to the same unlawful conduct) or associated property, or
(d) any property to which the order applies is held by a person who is different from the person it is claimed holds it, or he thinks that there has been any other material change of circumstances.
(2). An interim receiving order must require the interim receiver-
(a) to report his findings to the court,
(b) to serve copies of his report on the enforcement authority and on any person who holds any property to which the order applies or who may otherwise be affected by the report."
IV. The Relevance of the Statutory Provisions and a Discussion.
It will be noted that both sections 247 (2) (b) and 255 (1) (c) of the Act specifically contain the limiting words "in relation to the same unlawful conduct". Thus under the terms of his or her interim receiving order, the interim receiver is obliged to take steps which the court thinks necessary to establish "whether or not any other property is recoverable property (in relation to the same unlawful conduct) and, if it is, who holds it." It follows that where an interim receiver discovers "recoverable property" "in relation to the same unlawful conduct", he or she must first inform the court and the enforcement authority as soon as reasonably practicable "if he or she thinks that …any property to which the order does not apply is recoverable property …or associated property" (section 255(1) (c) of the Act).
The Act is silent on the consequences of an interim receiver finding in the execution of the order recoverable property which is not in relation to the same unlawful conduct which led to the interim receiving order being made but which relates to different unlawful conduct. In my view, the absence of any provisions on this issue does not mean that the interim receiver cannot use this information and counsel for the defendant does not suggest otherwise. Four factors individually and cumulatively lead me to this conclusion and I will now set them out in particular order of importance.
First, if the applicant could not use information obtained by the interim receiver relating to different unlawful conduct, this...
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