Revenue and Customs Prosecutions Office v Briggs-Price& Anor

With permission granted on paper by Laws LJ on 12 December 2006, the Revenue and Customs Prosecution Office appeals against an order made by Wilkie J sitting in chambers on 3 November 2006 under the Drug Trafficking Act 1994 (DTA 1994) and the Criminal Justice Act 1988 (CJA 1988) arising out of criminal proceedings instituted against Mr. Robert William Briggs-Price (the defendant) for drug trafficking offences and the evasion of excise duty on imported cigarettes. In the proceedings before the judge, Mr. Nicholas O’Reilly (the receiver) was acting as the court appointed receiver and manager of the defendant’s assets pursuant to a restraint order (the restraint order) made by Newman J on 5 July 2000.

Wilkie J’s order, which was made on an application by the receiver for directions pursuant to CPR Part 69.6(1) granted him permission to release funds held pursuant to the restraint order to Messrs Henry Milner & Company, solicitors instructed by the defendant:-

The order went on to record that there was no obligation upon the receiver to make any such payment unless he was satisfied that the expenditure had “actually, reasonably and properly been incurred”. The judge ordered the appellant to pay the defendant’s costs of the application, and directed that the receiver’s costs of the application should be treated as costs in the receivership. The judge refused the appellant’s application for permission to appeal.

The appellant challenges the judge’s order on four succinct grounds. They are:-

Both the appellant and the defendant were represented in this court by leading counsel. The defendant resists the appeal. The receiver, who was represented by junior counsel in this court (as he was below) adopts the same stance as he adopted before the judge, namely that of neutrality.

It is, I think, important to record at the outset of this judgment that this appeal arises under DTA 1994 and CJA 1988 and not under the provisions of the Proceeds of Crime Act 2002 (POCA). The latter, as is common ground, changed the law. To put the matter in simple terms, if the offences in the present case had been committed after 24 March 2003 (the date the provisions of POCA came into force) a combination of POCA sections 40 and 41(3) to (5) (which I need not set out) would have meant that any exception to a restraint order which made provision for reasonable legal expenses would have to exclude provision for any legal expenses relating to the offences: - see the decision of this court in Re S (Restraint Order: Release of Assets)[2004] EWCA Crim 2374, [2005] 1 WLR 1338.

POCA only applies to offences committed after 23 March 2003. Parliament plainly could have made it applicable to offences committed before that date, but chose not to do so. This case, accordingly, is governed by DTA 1994 and CJA 1988. The position under these statutes is different. Section 77 of CJA 1988 provides that:

DTA 1994, section 26 both deals with restraint orders and makes provision for the appointment of a receiver in cases in which a restraint order is made. DTA 1994 section 26(1) is in identical terms to CJA 1988, section 77(1).

In my judgment, therefore, the judge directed himself correctly as a matter of law when, having set out the terms of POCA section 41(4) he added: -

That, however, is not quite the end of the matter, because, as we have already seen, Mr. David Perry QC, for the appellant, whilst properly recognising that it would be impermissible to construe DTA 1994 and CJA 1988 by reference to the terms of POCA section 41(4), nonetheless advances as paragraph 2 of his grounds of appeal what he submits was the judge’s failure to have regard to “the legislative steer” in both CJA 1988 section 82(2) and (6) and DTA 1994, section 31(2) and (6). These are in identical terms, and read:-

In order to understand the arguments addressed to this court, it is necessary to set out the somewhat unusual background to the case. I take the essential facts from paragraphs 4 to 8 of the judge’s judgment, which is reported at [2006] EWHC 2751 (Admin):-

A modicum of additional information and explanation needs to be added. We were shown the perfected grounds of appeal against the confiscation order settled by junior counsel for the defendant. These expand the initial grounds seen by the judge, as summarised in paragraph 8 of his judgment. I say no more about them save to record that Ms Clare Montgomery QC, for the defendant, submitted that they raised an arguable case.

We were also told that on 3 May 2007 the single judge had refused the defendant permission to appeal against the confiscation order, and that it was the defendant’s intention to renew the application in due course at an oral hearing before the Criminal Division of this court. No date has been fixed for the hearing of that application. It was, however, common ground between the defendant and the appellant that whereas public funding to apply on paper for permission to appeal against the confiscation order would have been available to the defendant pursuant to the representation order made in the Crown Court (and discharged by the circuit judge on 30 June 2006) such funding would have been withdrawn on 3 May 2007, when the single judge refused permission to appeal. It followed that had the defendant remained publicly funded, legal representation would not be available for the renewed oral application before the Criminal Division of this court, and the defendant would either have to represent himself or seek to obtain pro bono representation.

The restraint order, which also, inter alia, appointed the receiver, was made by consent. The appellant and the defendant were both parties to it. With two notable exceptions, it was, we were told, in absolutely standard, pre-POCA form. Paragraph 14 of the order appears under the heading “Exceptions to this order” and reads:-

As the judge has recorded, the defendant’s solicitor at the time, Ms Sarah Gathercole, was a sole practitioner, and it was, we were told, for this reason that the restraint order was phrased as it was, rather than providing (as would have been more conventional) for the receiver to have paid a percentage of the submitted bills, with the balance left open for taxation or assessment in default of agreement.

The second departure from the conventional was that paragraph 14 of the order was subject to an undertaking given by Ms Gathercole both to the court and to the appellant that in the event of; (1) her costs being assessed as provided by paragraph 14 therein and; (2) any sum being disallowed on such an assessment, she would within 21 days of assessment pay to the defendant a sum equal to the sums allowed.

What on the face of it is a surprisingly large sum of money was paid by the receiver to Ms Gathercole between the making of the restraint order in July 2000 and the application to the judge in November 2006. The judge recorded that up to April 2003, the receiver paid Ms Gathercole a total sum of £732,608.94 being £510,026.48 in relation to her own fees, £113,470.49 by way of disbursements and £109,111.97 in VAT. This payment was made in respect of invoices rendered by Miss Gathercole. Subsequently the Receiver paid Miss Gathercole a further sum of £74,421.59 in relation to the restraint proceedings for the period after she ceased to act in the criminal proceedings.

In fairness to Ms Gathercole, it has never been suggested by the appellant (nor was it suggested by the judge) that Ms Gathercole (or for that matter any of the firms of solicitors or counsel involved in the case) had acted improperly. Furthermore, although the receiver, in his evidence to the judge stated in terms on two occasions that he “did not consider Ms Gathercole’s costs to be actually, reasonably or properly incurred”, and that he had “notified her of the fact and started the laborious process of seeking detailed assessment of her fees”, it is quite clear; (a) that at no stage prior to November 2006 did he apply to vary the terms of the restraint order; (b) that all the payments he made to Ms Gathercole were known about by the appellant; and (c) that the receiver’s position before this court was that he no longer maintained his adverse view of Ms Gathercole’s fees. Indeed, his current position is that he is satisfied, following an inspection of Ms Gathercole’s files, that her legal fees have indeed “actually, reasonably and properly been incurred”.

Finally in relation to Ms Gathercole, it should be pointed out that in a letter dated 16 May 2007 addressed to Mr. Henry Milner, the defendant’s present solicitor, and exhibited to a statement made by the latter on the following day, she comes out fighting. She asserts that, quite apart from any question of her legal fees, her resistance to the sale of the defendant’s hotel business proposed by the receiver in 2001, and her action in purchasing property belonging to the defendant from the receiver and leasing it back to the hotel business has resulted in the business turning in very substantial monthly profits which would otherwise have been lost. Ms Montgomery was thus able to argue that, far from the defendant’s estate being diminished by Ms Gathercole’s activities, the fund available to satisfy the confiscation order (assuming it survived the renewed application for permission to appeal) was amply sufficient, and indeed increasing.

It seems to me that these points have a direct bearing on grounds 3 and 4 of Mr. Perry’s grounds of appeal, to which I will turn in due course.

It should, I think, also be recorded that the judge’s figure of nearly £1,000,000 (referred to in paragraph 5 of the extract from his judgment set out at paragraph 11 above) is reached by the fact that a sum of £195,815 was paid to Draycott Browne in relation to the defendant’s unsuccessful application for permission to appeal against conviction and the sentences of imprisonment.

The receiver’s application was made pursuant to CPR rule 69.6(1) which provides, very simply: “The receiver may apply to the court at any time for directions to assist him in carrying out his function as a receiver”. The relief which the receiver sought was a variation of the receivership order to provide for whatever directions were given by the court. The application was accompanied by a draft proposed order, which read:-

As will be apparent from paragraph 2 of this judgment, the order made by the judge adopted and adapted the receiver’s draft.

In his evidence to the judge, the receiver expressed concerns about Ms Gathercole’s fees, and his obligation, under the terms of the order made on 5 July 2000 to pay her 100% of everything she sought. Having set out the history of the case, he summarised his position in paragraph 11 of his statement in the following way:-

For the appellant, evidence was filed from a senior lawyer, which took the point that had the defendant persisted with the representation order provided by the Legal Services Commission in the Crown Court, that order would not only have covered representation in all the Crown Court hearings up to and including the making of the confiscation order on 30 June 2006, but would have included any appeal which the defendant sought to bring. It was argued that Henry Milner & Co had had the opportunity of taking the benefit of the certificate, but had declined to do so on the grounds that they did not undertake publicly funded work. Given the haemorrhage of funds which had occurred to date, it was argued that since the defendant had now been convicted and a confiscation order made, the flow of funds should “be abated in circumstances where alternative funding is available”.

Mr. Henry Milner, of Henry Milner & Co also put in evidence before the judge. His statement is dated 27 October 2006. His position was very simple. He had been asked by the defendant to take over “his one remaining Crown Court hearing and also his appeal against the proposed benefit figure in the confiscation order proceedings.” He had not been asked to take the case on a “legal aid” basis, and had he been so asked, he would have refused. He pointed out that in any event, legal aid did not cover what he described as “an oral application for leave to appeal”. He argued that, whatever was the position in relation to the defendant’s previous legal advisers, it should not be held against a new solicitor, particularly one who had made it clear in correspondence that he was prepared to agree to a variation of the current restraint order so that on submission of his bills of costs the receiver might, if he wished, only pay out 65% leaving the balance open for assessment in default of agreement.

Exhibited to Mr. Milner’s statement was a breakdown of the costs; (1) incurred up to and including the hearing in the Crown Court on 30 June 2006; (2) incurred in preparing and attending the application before the judge; and (3) incurred to date in relation to the application for permission to appeal against the confiscation order. Item (1) amounted to £29,912.70; item (2) amounted to £7,943.00; and item (3) amounted to £1,603.88. There will, in addition, be the further costs of preparing for the renewed application and the brief fee payable to junior counsel on the application itself.

In giving permission to appeal, Laws LJ commented that “Norris may present formidable difficulties for the appellant”. As Mr. Perry devoted a substantial part of his skeleton argument to the case, I think I should examine it before turning either to the judge’s judgment or to the arguments addressed to us.

Mr. Norris had been convicted of offences under DTA 1986 (DTOA 1986) and sentenced to a term of nine years imprisonment. Four months later a confiscation order in the sum of £715,748.99 was made against him and he was sentenced to a further term of five years imprisonment in default of compliance. Three months after that, he was granted leave to appeal against his conviction. He applied to vary the restraint order so as to release the sum of £10,000 to his solicitors to fund the cost of legal representation for his appeal against conviction. The judge refused the application.

This court allowed Mr. Norris’s appeal. Lord Donaldson MR gave the leading judgment. Firstly, he identified a critical issue in the case by reference to the restraint order:-

Lord Donaldson MR then cited what was then section 13(2) of DTOA 1986 (which is in the same terms as CJA 1988 section 82(2) and DTA 1994 section 31(2)) on which the Commissioners relied and continued:-

The judge was plainly concerned about the level of fees incurred to date, and equally troubled by the fact that the pre-POCA structure did give rise to a potential for abuse. Nonetheless, he regarded himself as bound by the decision of this court in Norris. His conclusion is succinctly stated in paragraph 20 of his judgment in these terms:-

For the appellant, Mr. David Perry QC sought to persuade us that a point of principle was at stake. As fore-shadowed in his grounds of appeal, he relied on; (1) the legislative “steer” found in the CJA and the DTA; (2) what he described as the “modern” approach to the release of restrained funds, including the ‘burden of persuasion’ placed on the defendant; and (3) the public policy consideration of whether or not a defendant should be allowed to reduce his assets following conviction, particularly where an alternative source of funding is available.

In advancing his arguments, Mr. Perry sought to draw a distinction between what he described as the “pre-conviction” cases (or cases in which an appeal against conviction was extant (as in Norris) and post-conviction cases, of which he submitted that the instant appeal was an example.

Mr. Perry’s submission was firstly that Norris was distinguishable on the ground that Mr. Norris had been given permission to appeal against his conviction. As a result, the question of his guilt or innocence was at large. If the appeal was allowed, not only would he be a free man, but the money subject to the restraint order would revert and belong to him.

Mr. Perry also argued that Lord Donaldson MR’s dictum that it was not appropriate to force a party to qualify for legal aid who would not otherwise do so did not apply in the instant case. The defendant had been content to draw upon public funds for his defence to what Mr. Perry described as “the vast majority of the criminal proceedings against him”. It had not been necessary for him to instruct his current solicitors privately, when he had the benefit of a representation order in the Crown Court.

Mr. Perry also relied on what he submitted was the change in the way the court approached the release of restrained funds for legal fees. Whilst acknowledging that POCA did not apply, it remained the function of the court to give effect to the intention behind by DTA 1994 and CJA 1988.

Mr. Perry took us through the reported cases, some of which, of course, relate to POCA, and a number of which are decisions at first instance. However, they included the decision of this court in Serious Fraud Office v X[2005] EWCA Civ 1564. In that case, which was a pre-conviction application to vary a restraint order, Sir Anthony Clarke, the Master of the Rolls cited extensively from the decision of this court in Re Peters [1988] QB 871, which, he said, set out the “correct approach” to an application for the release of funds from a restraint order designed to meet legal expenses, and in which CJA 1988 section 82(2) had been considered. In Re Peters, Lord Donaldson MR had said at pp 879 to 880:-

In Serious Fraud Office v X, Sir Anthony Clarke MR introduced another concept on which Mr. Perry relied, namely the “burden of persuasion”. At paragraph 35 he said:-

In summary, Mr. Perry submitted that the judge had been wrong to order a release of further funds at a time when funding from the Legal Services Commission was available. Norris was distinguishable as a pre-conviction case, and all four grounds of appeal were made out.

Moderately as the appellant’s case was advanced, I find myself unable to accept it. In my judgment this appeal only engages a point of principle in the sense that any pre-POCA application to release funds from a restraint order for the purposes of legal expenses has to have regard to the legislative purpose set out in DTA and CJA. In my judgment, however, what is engaged in the instant case is essentially an exercise of judicial discretion. The judge had a discretion to release funds. Was that discretion properly and judicially exercised on the facts of the case? In my judgment, it plainly was.

I start with grounds 3 and 4 of the grounds of appeal. In my judgment, these two grounds are simply not arguable. The appellant was a party to the consent order made by Newman J in July 2000. It was not disputed by the appellant that he had been kept informed by the receiver of all sums paid to Ms Gathercole. The appellant had agreed to the terms in the order on the basis of which Ms Gathercole had been paid. At no point did the appellant apply to vary the order nor, it seems, did it ever seriously question Ms. Gathercole’s fees.

There is now no suggestion that Ms Gathercole’s fees were improperly incurred. The receiver has abandoned any attempt to question them: indeed, his examination of her files apparently shows the fees to be both warranted and appropriate.

In my judgment, if the appellant is to rely on the fact of a substantial diminution in (let alone dissipation of) the restrained funds, it cannot simply stand by whilst those sums are extracted. Who is to be the watchdog of the funds? Plainly there are three: the appellant, the receiver and the court. The latter can only become involved if application is made to it. In the instant case, an application was made in July 2000. This resulted in a consent order which, by its very terms, permitted the very reduction of which complaint is made. The court was then not asked substantively to revisit the issue until November 2006.

In these circumstances, the two remaining candidates for the role of watchdog are the receiver and the appellant. I intend no criticism of them when I say that neither sought a variation of the order, notwithstanding the fact that each, it appears, knew precisely what was going on. The simple fact remains, however, that if either had thought funds were being improperly extracted from the restraint order, an application could and should have been made to the court to vary the order to prevent it.

Against that background, it seems to me that, contrary to Mr. Perry’s submissions, the judge was entitled to give little weight to the history. The diminution in the funds was nothing to do either with Mr. Milner or the reason why he wanted funds to cover the work he was instructed to undertake. On the facts, the value of the defendant’s estate as managed by the receiver was amply sufficient to meet the confiscation order: had it not been so, the position might have been different. But on the facts as they present themselves, and particularly in the light of the now general acceptance that all fees hitherto paid have been properly earned, paragraph 3 of the grounds seems to me to lose whatever force it may have had. Similar considerations apply to ground 4. If it accepted that all fees paid to date have been properly incurred and earned, there is diminution, but not dissipation.

I propose, in the same way, to take grounds 1 and 2 together. In my judgment, they fail on the facts. Clearly, any order made by the judge must be lawful within CJA 1988 section 82(2) and DTA 1994 section 31(2). The question for the judge was, it seems to me, a straightforward one. The parties had agreed that an exception should be made to the restraint order for legal expenses which were “actually, reasonably and properly incurred” in the criminal proceedings. What did the defendant want to do? He wanted to appeal against the confiscation order. If he was successful, it would not, it is true, affect his basic term of imprisonment, but it would affect (1) the amount of his benefit; and, possibly, (2) the length of the additional term of imprisonment which would be the consequence of non-payment of the confiscation order.

In my judgment, this is a legitimate purpose, and falls fair and square within Lord Donaldson’s criticism of the argument advanced by the Commissioners in Norris, namely that “it assumes that which is in issue in the criminal appeal, namely that there is a valid confiscation order which will be maintained and remain in force after the appeal has been heard”. Of course, this is a post-conviction case in the sense that the outstanding appeal will not affect the defendant’s conviction or the length of his original sentence of imprisonment. But for the reasons I have already given, it is not, in my judgment and in the Norris sense, right to categorise it as a post-conviction case. The defendant has a legitimate interest in pursuing what is, as Ms Montgomery rightly accepted, his “last throw”.

Mr. Perry also in my judgment, faces the additional factual difficulty that whereas public funding would have been available to the defendant to make the paper application for permission to appeal against the confiscation order, it is now common ground that public funding would not in any event be available for an oral renewal. Thus access to the restrained funds is the only way in which the defendant is going to be able to be represented on the renewed application.

Plainly, any exercise of discretion by the judge must be judicial and proportionate. Mr. Milner’s fees to date in relation to the confiscation order and the application for permission to appeal are set out in paragraph 27 above. The appellant has agreed that those fees should be paid. Neither Mr. Perry nor the receiver suggested that they were excessive or improperly incurred. What is sought in addition is the relatively modest amount – capable of being controlled by assessment – required to enable counsel to be instructed on the oral application. In my judgment, that is a proportionate expenditure of funds for a proper purpose.

In my judgment, these considerations dispose of both grounds 1 and 2 of the appellant’s notice. As a matter of fact, all other sources of alternative funding have been exhausted. Public funding is not available for the renewed application. The legislative purpose which the judge has to implement is that reflected in the restraint order. In my judgment, release of funds for the prospective appeal is properly within the terms of the order, and the statutory scheme.

It follows, in my judgment, that what the judge was actually being asked to do was very simple. The parties had reached an agreement in 2000 that the defendant should be entitled to the release of funds for legal expenses actually, reasonably and properly incurred in the criminal proceedings. The judge was being asked to give directions on the propriety of the release of additional funds for the costs involved in the making of the confiscation order and the appeal against it. He did so. As an exercise of discretion that seems to me unimpeachable on the facts of this case.

Although it formed no part of Mr. Milner’s approach, Ms Montgomery was, I think, minded to agree that if a line had to be drawn, it was properly drawn when the defendant had exhausted all his remedies within the domestic proceedings. She was therefore, I think, minded to accept that if the defendant had been seeking funds to go to the European Court of Human Rights, or to place his case before the Criminal Cases Review Commission other considerations might apply – as, indeed, Laws J (as he then was) found that they did in Re P (unreported 6 November 1998). She was, however, in my judgment entitled to point to the limited purpose for which Mr. Milner was requesting funds, and to argue that this request fell fair and square within the statute and within the exceptions to the 2000 restraint order.

Ms Montgomery was, I think, also minded to accept that (and this would certainly be my view) there would be pre-POCA applications to release funds which, on their facts would result in a refusal to vary the restraint order. Thus if, for example, the application for which the release of funds was sought was manifestly unmeritorious; or if the sums sought to be expended were clearly disproportionate to the proposed objective, the court would be entitled to refuse the application. She submitted, however, that neither consideration applied in the instant case. The defendant, notwithstanding the single judge’s refusal of permission to appeal against the confiscation order, had a point which he was entitled to argue before the full court, for which purpose it was legitimate for him to wish to be legally represented. This application was, moreover, the end of the road for the defendant. The expenditure thus fell within the exception set out in CJA 1988 section 77(2) and DTA 1994, section 26. It also satisfied the conditions contained in paragraph 14 of the restraint order.

For the reasons I have already given, I accept Ms Montgomery’s submissions. I wish to make it quite clear, however; (1) that I am expressing no view whatsoever on the likely outcome of the defendant’s renewed application for permission to appeal against the confiscation order; and (2) that in my judgment it would be unwise for this court to express any wider views than those expressly required for the resolution of this particular appeal.

I regret, therefore, that I would decline Mr. Perry’s invitation to give guidance on the point of principle which he argued the case raised. In my judgment it simply does not raise any point of principle. We are not, for example, being asked to decide whether or not the defendant should be permitted to fund the costs of his defence to the criminal charges from the money controlled by the restraint order. What is in issue is a narrow point, and involves the application of a judicial discretion within a specified legal framework to the facts of a particular case. Some judges might have been more proactive in their investigation: some might have expressed themselves differently; some might have wanted to know more. But in my judgment, the fundamental exercise of discretion by Wilkie J cannot be faulted.

I would, accordingly, dismiss this appeal.

I agree

I also agree