The National Crime Agency v Amanda Nuttall
| Jurisdiction | England & Wales |
| Judge | Deputy Master Hill |
| Judgment Date | 04 January 2019 |
| Neutral Citation | [2019] EWHC 10 (QB) |
| Docket Number | Case No: HQ17XO2535 |
| Court | Queen's Bench Division |
| Date | 04 January 2019 |
[2019] EWHC 10 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Deputy Master Hill QC
Case No: HQ17XO2535
Andrew Sutcliffe QC and Anne Jeavons (for the Claimant)
Barry Stancombe (for the Third Defendant)
Hearing date: 6 December 2018
Approved Judgment
I direct that pursuant to CPR PD 39A para. 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Deputy Master Hill QC:
Introduction
By this Part 8 claim the National Crime Agency (“the NCA”) seeks a recovery order under the Proceeds of Crime Act 2002 (“ POCA”), s.266. The claim is valued at some £6,500,000 and relates to recoverable property said to be linked to a Mr Jonathan Nuttall. The NCA's claim is fixed to be tried by a High Court Judge for 13–15 days, commencing on or around 30 April 2019. The issue before me is whether to grant the NCA's application dated 8 May 2018 for summary judgment in respect of its claim against the Third Defendant (“Towerdene”), and thus whether to make a recovery order in respect of the property to which that claim relates.
The factual and procedural background
The NCA has carried out an extensive civil recovery investigation into the activities of Mr Nuttall and his family and associates. Its case is that he has benefitted to a very large extent from money laundering, mortgage fraud and contravention of the Company Directors Disqualification Act 1986.
In aid of its investigation, the NCA obtained two Property Freezing Orders under POCA, s.254A, one granted by Phillips J on 19 October 2015 (and subsequently extended by Garnham J) and one granted on 14 July 2017.
On 18 July 2017 these proceedings were issued. The NCA's Points of Claim against all the Defendants run to some 66 pages plus schedules. All the Defendants are said to be linked to Mr Nuttall. Mr Nuttall is not a Defendant himself, as he is said to have arranged his property in such a way that he does not hold legal title to it. The estimated value of the claim at around £6,500,000 comprises (i) Mr Nuttall's property portfolio (valued at around £5,500,000); and (ii) a further £1,000,000 that he is said to have paid to the Fifth Defendant.
At the time the claim was issued, Towerdene had been struck off the Companies House register and dissolved, such that its assets vested in the Bona Vacantia Division of the Crown (“the BVD”).
On 8 May 2018 the NCA issued an application for summary judgment on its claim against Towerdene. The application was supported by the ninth witness statement of Ruth Davison of the NCA. At the time the application was made, although several of the other Defendants had served Points of Defence to the NCA's Points of Claim, Towerdene had not. The BVD and other Defendants had not sought to oppose the application. The Bereweeke Trust (the Second Defendant), which held the shares in Towerdene prior to its dissolution, had taken a neutral stance in relation to the claim.
On 11 June 2018 Master Davison granted the NCA's application and made the recovery order sought in respect of Towerdene on the papers.
On 9 July 2018 Towerdene was restored to the Companies House register.
On 10 July 2018 Towerdene issued an application to set aside the 11 June 2018 order on the basis that it did not appear that Master Davison had been made aware that it had in fact filed evidence in response to the application in the form of a statement from Timothy Becker (one of its former directors) and that the parties had thus sought to have the issues resolved at a hearing. Towerdene also argued that summary judgment was not appropriate because it had a real prospect of successfully defending the claim and because there were other issues that meant the case should proceed to trial.
On 16 July 2018, following receipt of the application, Master Davison stayed the power of the trustee under the recovery order.
The 10 July 2018 application came before me on 6 December 2018. By then it had become apparent that Master Davison had not in fact been fully apprised of Towerdene's position before making the 11 June 2018 order. Accordingly, at the outset of the hearing on 6 December 2018, the 11 June 2018 order was set aside by consent and I was invited to consider the 8 May 2018 summary judgment application afresh.
In addition to the contents of its 8 May 2018 application, the NCA relied on the fourteenth and fifteenth witness statements from Ms Davison, dated 15 and 28 November 2018. In addition to the contents of its 10 July 2018 application, Towerdene relied on witness statements from Dilipkumar and Ravin Kotecha dated respectively 14 and 15 November 2018, and two statements from Mr Nuttall dated 14 and 30 November 2018.
An overview of the parties' positions
The NCA's claim against Towerdene relates to (i) freehold property situated at Flats 2 and 3 Embley Green and Embley Kirby, Embley Park, Romsey SO51 6DL; and (ii) lease property situated at Embley Kirby, Embley Park, Romsey SO51 6DL (known collectively as “the Embley Park properties”). Towerdene is the registered owner of these properties. The NCA argues that:
(i) The original purchase of the properties was funded by way of a £35,000 deposit (which the NCA contends was associated property) and a mortgage from Allied Irish Bank (“AIB”) in the sum of £180,000 (which the NCA contends was obtained by fraud) ( “the mortgage fraud allegation”); and
(ii) The monies used to redeem the Embley Park properties in March 2014 (there being no capital repayments in the interim) were the proceeds of crime, principally funds that came from a Hong Kong company called Amerco International (Far East) Ltd (“Amerco FE”) ( “the redemption monies allegation”).
Towerdene denies both of the allegations. In summary, it avers that:
(i) The original mortgage for the Embley Park properties was not obtained by fraud as the information provided was in material respects true; and
(ii) The monies used to redeem the properties were not the proceeds of crime, but were derived in large part (£100,000 of the £165,000) from a loan made by Dilipkumar Kotecha, to his nephew Ravin Kotecha (Towerdene's Company Secretary). The loan came from Dilipkumar Kotecha's savings, which had been largely accrued from his legitimate businesses in Scotland including a Tie Rack franchise and a health food shop. The loan was actually paid from the account of Ravin Kotecha's mother (Mrs S Kotecha), and he then loaned it to the Nuttall family trust.
The legal framework
There was no significant dispute between the parties as to the appropriate legal framework. As is well-known, CPR Part 24.2 provides that the court may give summary judgment against a Defendant on the whole of a claim or on a particular issue if “ (a) it considers that…(ii) that defendant has no real prospect of successfully defending the claim or issue, and (b) there is no other compelling reason why the case or issue should be disposed of at a trial”.
The notes to the White Book confirm that in order to defeat an application for summary judgment, is it sufficient for a respondent to show some prospect of success. That prospect must be “ real”, meaning that the court will disregard prospects which are false, fanciful or imaginary. A respondent has to have a case which is better than merely arguable ( International Finance Corp v Utexafrica Sprl [2001] CLC 1361 and ED and F Man Liquid Products Ltd v Patel [2003] EWCA Civ 470). A respondent is not required to show that the case will probably succeed at the trial, which is the criterion used to determine success at trial: rather, the criterion which the judge has to apply at the CPR 24 stage is “ the absence of reality” (Lord Hobhouse of Woodborough, Three Rivers DC v Bank of England (No. 3) [2003] 2 All ER 513).
ED and F Man Liquid Products Ltd supports the proposition that the overall burden of proof rests on the applicant to establish that there are grounds to believe that a respondent has no real prospect of success and that there is no other reason for a trial. The court must apply a negative test. The standard of proof required of the respondent is not high. The respondent's case must carry some degree of conviction, but the court is not required to accept without analysis everything said by a party in his statements before the court.
An application for summary judgment is not appropriate to resolve a complex question of law and fact, the determination of which necessitates a trial of the issues having regard to all the evidence ( Apvodedo NV v Collins [2008] EWHC 775 (Ch)).
The parties agreed that it is relevant that this is a complex case of fraud. Counsel for Towerdene referred to the case law about the standard of proof imposed on a claimant alleging fraud in civil proceedings. Phipson on Evidence (19 th Edition) at paragraph 6–57 indicates that where a serious allegation of fraud is made in a civil case, such as an allegation of criminal conduct, the standard of proof remains the civil standard but the civil standard is flexible in its application. This means that if a serious allegation is made, more cogent evidence may be required to overcome the unlikelihood of what is alleged, in order to prove the allegation (see, for example, the explanation of the concept by Lord Nicholls in H (Minors) [1996] AC 563). It has also been held that the more serious the consequences for an individual if allegations are proved, the...
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