The Drug Trafficking Act 1994
| Jurisdiction | England & Wales |
| Judge | Mr Justice Munby |
| Judgment Date | 19 December 2005 |
| Neutral Citation | [2005] EWHC 2982 (Admin) |
| Date | 19 December 2005 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CJA No 2 of 2000 DTA No 90 of 2003 |
[2005] EWHC 2982 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Mr Justice Munby
Case No: CJA No 2 of 2000
CJA No 3 of 2000
DTA No 90 of 2003
Mr James Dennison (instructed by the Central Confiscation Branch) for the Crown
Mr Kennedy Talbot (instructed by Kaim Todner and by Garstangs in the case of RN) for the defendants
Hearing dates: 10–12 October 2005
Judgement
I have before me three cases each of which raises the same point of law. Put shortly the question is whether the court has power when appointing an enforcement receiver under section 80 of the Criminal Justice Act 1988 or section 29 of the Drug Trafficking Act 1994 to order that the remuneration of the receiver be paid under section 81(1) of the 1988 Act (or, as the case may be, under section 30(2) of the 1994 Act). The short answer, in my judgment, is that the court has that power.
Since the question before me is a pure point of law, I can take the facts very shortly:
i) HN and MN are cousins. On 3 November 1999 they were both arrested for conspiracy to defraud. On 20 January 2000 Maurice Kay J made restraint orders under section 77 of the 1988 Act against both of them. On 7 September 2000 both were convicted and each was sentenced to 3 1/2 years imprisonment. On 16 November 2000 confiscation orders were made under section 71 of the 1988 Act, against HN in the sum of £302,806.31 and against MN in the sum of £571,073.38. On 28 January 2002 the Crown Prosecution Service applied for the appointment of receivers under section 80 of the 1988 Act. Following various adjournments those applications came before me for hearing on 10 October 2005.
ii) RN (he is not related to HN and MN) was arrested on 9 May 2000 for possession of drugs with intent to supply. On 1 September 2000 he was convicted and sentenced to 11 years imprisonment. On 1 July 2002 a confiscation order was made under section 2 of the 1994 Act in the sum of £840,615.77. On 21 August 2003 Hooper J made a restraint order under section 26 of the 1994 Act. On 27 September 2005 the Revenue & Customs Prosecutions Office applied for the appointment of a receiver under section 29 of the 1994 Act. The application came before me for hearing on 12 October 2005.
The scheme of the legislation is well known and requires no more than brief summary here. (For convenience I refer to the relevant provisions of the 1988 Act; there are exactly comparable provisions in the 1994 Act.) The Crown Court can make a confiscation order under section 71 of the 1988 Act. The Administrative Court can make a restraint order under section 77 of the 1988 Act in relation to a defendant's "realisable property" as that expression is defined in section 74. The Administrative Court can also make an order under section 77 appointing a receiver (conventionally known as a management receiver) to manage or otherwise deal with the defendant's realisable property.
The powers of the Administrative Court under section 77 can be exercised before the defendant has been convicted and before a confiscation order has been made. Once a confiscation order has been made the Administrative Court can make an order under section 80 appointing a receiver (conventionally known as an enforcement receiver) to take possession of and realise the defendant's realisable property. Section 82(2) contains the "legislative steer" (see In re Peters [1988] QB 871 at p 879G) indicating how the court's powers under section 80 and the powers of an enforcement receiver are to be exercised:
"Subject to the following provisions of this section, the powers shall be exercised with a view to making available for satisfying the confiscation order or, as the case may be, any confiscation order that may be made in the defendant's case the value for the time being of realisable property held by any person by the realisation of such property."
It is established by the decision of the Court of Appeal in Hughes v Customs and Excise Commissioners [2002] EWCA Civ 734, [2003] 1 WLR 177, that a management receiver is entitled to recover his expenses and remuneration from the assets under his control. That power arises at common law, and not by virtue of any express provision in the 1988 Act: see Hughes v Customs and Excise Commissioners at paras [45] and [50]. But the position in relation to an enforcement receiver is quite different, for section 81 of the 1988 Act governs the application of the realisations on sale by an enforcement receiver.
Section 81 provides as follows:
"(1) Subject to subsection (2) below … the proceeds of the realisation … of any property under section 77 or 80 above … shall first be applied in payment of such expenses incurred by a person acting as an insolvency practitioner as are payable under section 87(2) below and then shall, after such payments (if any) as the High Court may direct have been made out of those sums, be applied on the defendant's behalf towards the satisfaction of the confiscation order.
(2) If, after the amount payable under the confiscation order has been fully paid, any such sums remain in the hands of such a receiver, the receiver shall distribute them –
(a) among such of those who held property which has been realised under this Part of this Act, and
(b) in such proportions, as the High Court may direct after giving a reasonable opportunity for such persons to make representations to the court.
(3) The receipt of any sum by a justices' chief executive on account of an amount payable under a confiscation order shall reduce the amount so payable, but the justices' chief executive shall apply the money received for the purposes specified in this section and in the order so specified.
(4) The justices' chief executive shall first pay any expenses incurred by a person acting as an insolvency practitioner and payable under section 87(2) below but not already paid under subsection (1) above.
(5) If the money was paid to the justices' chief executive by a receiver appointed under this Part of this Act or in pursuance of a charging order, the justices' clerk shall next pay the receiver's remuneration and expenses.
(6) After making –
(a) any payment required by subsection (4) above; and
(b) in a case to which subsection (5) above applies, any payment required by that subsection,
the justices' chief executive shall reimburse any amount paid under section 88(2) below.
(7) The justices' chief executive shall finally pay any compensation directed to be paid out of any sums recovered under the confiscation order under section 72(7) above.
(8) Any balance in the hands of the justices' chief executive after he has made all payments required by the foregoing provisions of this section shall be treated for the purposes of section 60 of the Justices of the Peace Act 1997 (application of fines, etc) as if it were a fine imposed by a magistrates' court."
The provisions of section 81 are crucial for, as Lightman J explained in In re Piacentini [2003] EWHC 113 (Admin), [2003] QB 1497, at para [20]:
"Looking at the statutory scheme as a whole, it is clear that section 81 sets out an exhaustive statement of the purposes for which the receivership property may be applied."
I do not read that observation, with which I agree, as conflicting in any way with Simon Brown LJ's comment in Hughes v Customs and Excise Commissioners at para [50] that:
"Statutory receivers are to be treated precisely as their common law counterparts save to the extent that the legislation expressly provides otherwise. The statute is not to be regarded as an entirely self-contained code incorporating nothing from the common law."
As Laws LJ said in Re Brian Roger Allen [2003] EWCA Civ 1168 at para [21]:
the position relating to an enforcement receiver, arising therefore after the confiscation order is made, is governed by section 81."
In short, and subject only to any contrary direction of the High Court – the Administrative Court – under section 81(1), the obligation of an enforcement receiver is to pay all realisations up to the figure of the confiscation order, without deduction, to the justices' chief executive. The question, therefore, is as to the extent of the powers of the High Court under section 81(1); in particular, whether the court has power when appointing an enforcement receiver to order that the remuneration of the receiver be paid under section 81(1).
Mr James Dennison on behalf of the Crown seeks to persuade me to answer that question in the affirmative. Put shortly his argument is as follows:
i) It is settled law that a management receiver is entitled to be paid out of the assets, whether the defendant is convicted or acquitted, and whether in relation to work done before or after the making of a confiscation order. Why should a convicted defendant be in a better position vis-à-vis an enforcement receiver than an acquitted defendant vis-à-vis a management receiver?
ii) To permit a convicted defendant in effect to have the costs paid for him by the...
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...out of realisations ahead of and in addition to the amount payable under the confiscation order"), In the Matter of HN and others [2005] EWHC 2982 (Admin) at para [11] ("power … to order that the remuneration of the receiver be paid under section 81(1)"), and Hansford v Southampton Magistr......
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