Lamb v Revenue and Customs Prosecutions Office

This is the appeal of Stephen Lamb from the judgment and order of Mr C M G Ockelton sitting as a deputy high court judge in the administrative court. His judgment and order are dated 21 October 2008. The respondent is the Revenue and Customs Prosecutions Office or “RCPO”. The judge’s order provides for the appointment of a management receiver pursuant to section 77(8) of the Criminal Justice Act 1988 (“CJA 1988”) to manage a property known as 2A Belgrade Road, London N16 (“the property”) and a small number of other assets in the nature of personalty, on the basis that they are the realisable property of Mr Stephen Pigott.

On 3 May 2005 Mr Pigott had pleaded guilty to two counts of cheating the public revenue and money laundering (contrary to Schedule 11 paragraph 5 of the Value Added Tax Act 1994 and section 93(C)(b) of the CJA 1988 respectively) between 2001 and 2004. He was one of four co-defendants convicted of these offences, which arose out of an MTIC or carousel fraud. On 9 September 2005 Mr Pigott received an 8 year term of imprisonment. Confiscation order proceedings ensued. On 26 May 2006, by agreement, HHJ Adele Williams made a finding that the benefit figure for Mr Pigott’s part in the fraud was over £27 million. On 30 November 2007 Judge Williams made a confiscation order (as amended on 5 May 2008) requiring Mr Pigott to pay £1,498,887.60 as the realisable amount, with a term of 10 years imprisonment in default of payment. A schedule of realisable property was annexed which included the property at 2A Belgrade Road.

Judge Williams’ judgment of 30 November 2007 explained the background to and basis of that confiscation order. It was known that the property was registered in the name of Mr Lamb, the appellant in these proceedings, as the schedule to the confiscation order itself records. Moreover, Mr Lamb had served evidence in the confiscation proceedings stating that he was the sole legal and beneficial owner of the property and explaining how his purchase of it had come about. He had been summoned to give evidence before Judge Williams, but stayed away. Mr Pigott did not give evidence in the confiscation proceedings before Judge Williams either. Judge Williams nevertheless had a rich source of documentary material for her findings. In her judgment of 30 November 2007 she gave a detailed account of her finding that the property was included among Mr Pigott’s realisable property (at paras 18-28 and 43). She observed that although statute required the court to decide such issues only on the civil standard of proof, nevertheless in the light of the serious nature of the issues which had been raised before her she had in fact applied the criminal standard (at para 43). She cited documentary evidence of Mr Pigott’s background in the purchase and financing of the property (to the extent of £143,000, including a payment of £70,000 from a company called Zourn Technologies, which had been involved in the MTIC fraud).

While the Land Registry documents indicated that the property was ultimately purchased for £294,000 in the name of Stephen Lamb, as she recorded in her judgment, she concluded that –

“27.

The dealings in relation to this property bear all the hallmarks of fraud…There is confusion and obfuscation surrounding the whole transaction.

28.

What is inescapable is this:-

1)

Stephen Pigott had a flat in these premises. He attempted to conceal the key to these premises on his arrest. A safe in these premises contained part of the material in relation to false identities and concealing money.

2)

He applied for planning permission to change the use of the premises.

3)

He commissioned building work on the premises.

4)

Money for the purchase came from Zourn Technologies, a company involved in the MTIC fraud. It came through a bank account which includes transactions in all 3 of Mr Pigott’s main names, S.M.Pigott, T.J. Power and D. Chapman.”

She also recorded that Mr Lamb was a director of a company, Melgrave Properties Ltd, which had received £289,468 from other companies involved in the MTIC fraud (at para 23).

Mr Pigott appealed against his confiscation order. His appeal was heard by the Court of Appeal, Criminal Division, on 9 November 2009. That appeal was pending at the time of Mr Ockelton’s judgment and order below. This appeal, from Mr Ockelton’s judgment and order, has awaited the outcome of Mr Pigott’s appeal. That appeal failed, save for a reduction in the default term of imprisonment from 10 years to 8 years. So far as the property was concerned, Lord Justice Stanley Burnton recited para 28 of Judge Williams’ judgment and said that she had given substantial reasons for her finding and that no error of law on her part had been shown.

That is the underlying background to Mr Lamb’s appeal in these proceedings. However, it is common ground that none of this binds Mr Lamb so as to prevent him from raising at an appropriate time his case that he is the sole legal and beneficial owner of the property, that Mr Pigott has no interest of any kind in it, and that the property should in due course therefore be removed from the confiscation order in respect of it.

Nevertheless, the question has arisen in the current proceedings, in which the RCPO has sought and obtained a management receivership order in respect of the property, as to whether Mr Ockelton was correct to make the order that he did. On behalf of Mr Lamb, Mr Simon Perhar has raised two issues on this appeal. The first is that the judge lacked jurisdiction to make his order. Mr Perhar’s essential submission in this respect is that it is not open to a court to make a management receivership order over any property on the basis that it is realisable property as long as there is an issue to be determined as between the RCPO and an interested third party as to the true beneficial interest in such property. The second is that, even if there is jurisdiction for the judge’s order, the judge nevertheless erred in his discretion in making it: both because Mr Lamb was perfectly capable of managing it properly and safely himself, and because the costs of the receivership might unnecessarily and unfairly fall on Mr Lamb even though he might ultimately prevail in vindicating his total legal and beneficial ownership in the property.

In the light of these submissions it is necessary to say something about the course of these proceedings, and their statutory underpinnings.

Section 77(8) of the CJA 1988, which occurs in a section headed “Restraint orders”, provides as follows:

“Where the High Court has made a restraint order, the court may at any time appoint a receiver –

(a)

to take possession of any realisable property; and

(b)

in accordance with the court’s directions, to manage or otherwise deal with any property in respect of which he is appointed,

subject to such exceptions and conditions as may be specified by the court; and may require any person having possession of property in respect of which a receiver is appointed under this section to give possession of it to the receiver.”

A restraint order was made against Mr Pigott on 11 March 2004 by Mr Justice Hooper (as he then was) sitting in the administrative court. The order restrained Mr Pigott from dealing with all his assets, including those specified in the order. The property was not individually specified, but in due course, as related above, the Crown Court found that among Mr Pigott’s realisable property was the property at 2A Belgrade Road. That finding was of course binding on Mr Pigott, even if not on Mr Lamb. The restraint order was inter alia in terms of “any of his assets which are in England and Wales whether in his own name or not and whether solely or jointly owned…”

In early 2008, within a short while of Judge Williams’ confiscation order of 30 November 2007, the RCPO commenced correspondence with Mr Pigott concerning the appointment of a receiver over his assets. Mr Pigott was then still in custody (he was released on licence on 28 February 2008). Mr Pigott’s position was that he would agree to the appointment of areceiver. Since the confiscation order was “subject to appeal” (see section 102(13) of the CJA 1988), there was a statutory bar (see section 80(1)(b) of the CJA 1988) on the appointment of an enforcement receiver, that is to say a receiver for the realisation of realisable property under section 80, pending the outcome of such an appeal.

Mindful, however, of the need to preserve the value of the property, the RCPO turned its attention to the question of the appointment of a management receiver pursuant to section 77(8). This power exists (see above) in respect of a defendant’s assets subject to a restraint order even in advance of a criminal conviction or a confiscation order. At such a time there will have been no adjudication about “realisable property” of any kind. It follows that the test for what assets may prima facie come within a restraint order or a section 77(8) management receivership order is unlikely to depend on what could in the nature of things only emerge in later proceedings. Hence the observation in CPS v. Compton [2002] EWCA Civ 1720 that the test in such circumstances is the familiar one of “good arguable case”. As Lord Justice Simon Brown there said in relation to section 26 of the Drug Trafficking Act 1994 (which is in the same terms as section 77 of the CJA 1988):

“All that I think it appropriate on this appeal to add by way of comment on the approach to adopt to the exercise of section 26 powers is that if, on the documents, a good arguable case arises for the treating of particular assets as the realisable property of the defendant – here on the basis that the company’s corporate veil should properly be pierced – then the relevant restraint (and possibly receivership) order(s) should ordinarily be made. That essentially is the test for the grant of Mareva relief. So too should it be the test for the exercise of the section 26 powers. It is, of course, open to third parties (or the defendant himself where the order is made without notice) to apply to set it aside.”

In the present case, there had already been an adjudication as between the RCPO and Mr Pigott to the effect that the property was realisable property. On 25 March 2008 the RCPO therefore sent to Mr Pigott’s solicitors, Garstangs, a letter designed to elucidate the current state of affairs regarding the property. The letter included the following:

“2A Belgrade Road

This property is registered in the name of Stephen Lamb but was found to be owned by your client during the confiscation proceedings.

Can your client confirm the following?

Garstangs replied on behalf of Mr Pigott on 26 March 2008. In their reply Garstangs consented to the appointment of either a management or enforcement receiver over the property, pointing out that Mr Pigott still maintained he had no interest in it and that he was unable to answer the questions posed regarding it, and referring the RCPO to Avetoom & Co, solicitors previously instructed by Mr Lamb. So on 21 April 2008 the RCPO sent a copy of the letter of 25 March to Avetoom & Co, requesting the same information about the property, Mr Lamb’s consent to the appointment of a management receiver, and a reply within 14 days. There was no reply to the RCPO’s letter at that time.

The proceedings were commenced in the administrative court on 7 July 2008. An order for the appointment of management receiver under section 77(8) in the form of a draft order supplied was applied for. The draft order named Mr Pigott as defendant and Mr Lamb as an interested party and stated inter alia as follows:

“IMPORTANT: NOTICE TO THE DEFENDANT, STEPHEN LAMB AND ANYONE IN POSSESSION OR CONTROL OF THE DEFENDANT

1.

This Order appoints a Receiver to manage the assets of the Defendant subject to the Restraint Order made by Mr Justice Hooper in the High Court on 11^th March 2004…

The Defendant, Stephen Lamb and any other person affected by this Order are entitled to appear and object to the continuation of this Order or to ask for it to be varied. They and any other affected party have a general right to ask the Court to vary or discharge the Order…

As a result of the application THE COURT APPOINTS Richard Long of Richard Long and Co, as Management Receiver (“the Receiver”) of the realisable property of the Defendant limited to that listed in the Schedule to this Order.

AND IT IS ORDERED THAT

1.

The Receiver shall have the following powers without prejudice to any existing powers vested in him whether by statute or otherwise:-

a.

Power to take possession of, preserve, manage, collect, let, charge and sell the assets of the Defendant…

f.

The Defendant, Stephen Lamb and all other persons in possession of the assets of the Defendant shall take all reasonable and necessary steps as may be required to enable the receivership to be conducted and the sale of the Defendant’s assets to proceed…

5.

In this Order the realisable property of the Defendant or the Defendant’s assets includes but is not limited to the assets specified in the Schedule to this Order.”

The Schedule referred to the property, and to three items of personalty with a value in total of some £25,000.

In preparation for this application, the RCPO had written on 30 June 2008 to Mr Richard Long of Richard Long & Co, licensed insolvency practitioners, about his being appointed to the proposed receivership. That letter referred to the so-called Capewell Guidelines, that is to say to the guidelines for the appointment and conduct of a receiver appointed under the CJA 1988 approved by the court of appeal in Capewell v. Customs and Excise Commissioners [2004] EWCA Civ 1628, [2005] 1 All ER 900. Thus the letter dealt inter alia with the question of Mr Long’s remuneration, stating that –

“6.

REMUNERATION

(a)

It is proposed to seek an order from the Court that your costs (remuneration and expenses) should be costs in the Receivership and therefore your costs shall be paid out of the estate under management or the monies you bring in or property realised during the course of the Receivership…

(d)

In the first instance the RCPO will not object to a sum of £8,500.00 inclusive of agents’ and solicitors’ fees and expenses but exclusive of VAT…

(g)

Should your remuneration and expenses exceed the sum realised, the RCPO is prepared to indemnify you to the extent of £2,000.00 a sum inclusive of your remuneration, costs, expenses and disbursements, although exclusive of VAT…”

On 1 July 2008 Mr Long replied stating that he was prepared to accept the appointment, quoting his rates, and estimating his likely fees (on the basis that no other party would challenge Mr Pigott’s interest in the assets) at £4050.

It will be observed that the RCPO’s draft order was in certain respects inappropriate for a management receiver in circumstances where an enforcement receiver could not be appointed under section 80(1). It will also be observed that the proposed appointment contemplated that the costs of the receivership would come out of the receivership assets or their proceeds. This was recognised in the Capewell Guidelines at paras 3 and 20:

“3.

The witness statement should specifically draw to the court’s attention the proposition that the assets over which the receiver is appointed will be used to pay the costs, disbursements and other expenses of the receivership (even if the defendant is acquitted or the receivership is subsequently discharged)…

20.

Judges appointing receivers should always bear in mind that the costs of the receivership may fall on an innocent man. They should also bear in mind that the interests of justice dictate that receiverships are a necessary and essential tool of the criminal justice process for preserving and managing assets to satisfy confiscation orders if the defendant is convicted.”

It is obvious from those formulations that what was principally there in mind was a management receivership at an early stage of the criminal proceedings, before any conviction. The “innocent man” there contemplated was a criminal defendant who was subsequently acquitted. Nevertheless, it may be borne in mind that a third party with an interest in what has been taken to be a defendant’s realisable property may also find that his own property, if he succeeds in vindicating his interest and extricating it from a restraint, receivership and/or confiscation order, may have in the meantime carried the burden of providing the means for the costs of the receivership. Such a third party is also an “innocent man”. A further decision in Capewell went to the House of Lords (Capewell v. HMRC [2007] UKHL 2), but “Neither side has raised any criticism of the guidelines before your Lordships” (per Lord Walker of of Gestingthorpe at para 16).

The RCPO’s application, draft order, and evidence in support were served on Mr Lamb’s solicitors, Avetoom & Co, on 11 July 2008. In the meantime, put on notice of such an application by the RCPO’s letter to Avetoom & Co dated 21 April 2008, Mr Lamb had begun to seek to put affairs at 2A Belgrade Road in order by issuing a claim form on 4 June 2008 for possession against squatters at the property. However, nothing further was apparently done to serve or further that claim at that time.

There was a prompt reply to service of the application in the form of a letter from Avetoom & Co to the effect that Mr Lamb had sole legal and beneficial ownership of the property. In support of that they provided a copy of the witness statement which Mr Lamb had sent to the Crown Court in November 2007, and which had been considered by Judge Williams. Their letter indicated that a further statement from Mr Lamb would be served by 25 July 2008. Despite reminders from the RCPO, Mr Lamb failed to provide anything further until 20 October 2008.

However, Mr Lamb did take further steps in relation to the squatters at the property. On 31 July 2008 he served his claim form on the squatters (by affixing it to the premises). It appears from the papers in the possession action that the squatters had been at the property since at least May 2008, and had changed the locks there.

In the meantime, the hearing date of the RCPO’s application was drawing closer. In the circumstances the RCPO decided to put before the administrative court the evidence which had been before Judge Williams in the confiscation proceedings. They did this by exhibiting such material to a brief witness statement of Deborah Watt, who had been the appointed RCPO officer with conduct of those proceedings. Moreover a letter was sent to Avetoom & Co to say that they required the attendance of Mr Lamb for cross-examination. The letter also requested un-redacted copies of the bank statements which Mr Lamb had provided to the Crown Court to evidence the monthly payments by him of a Nationwide mortgage by which the purchase of the property had been refinanced. Those bank statements covered up every single entry except the one entry each month which showed the payment of the mortgage. There was no reply.

On 15 October 2008 the RCPO served their skeleton argument submissions in support of their application for the appointment of a receiver. It was drafted by their counsel, Mr Rupert Jones. The skeleton helpfully identified four (possible) issues, as follows:

“5.

Should the application proceed notwithstanding the fact that the Defendant has leave to appeal the confiscation order including the inclusion of the property as his realisable asset? (Issue 1)

6.

Are there grounds to appoint a management receiver over the property? (Issue 2)

7.

If so, is it open for Stephen Lamb (the Interested Party) at this stage in response to a management receivership application to argue that the property is beneficially owned by him and not the Defendant? (Issue 3)

8.

If so, who owns the property? (Issue 4)”

In response to these questions, Mr Jones’ skeleton gave the following answers. As to issues 1 and 2, he submitted that the fact that an enforcement receiver could not be appointed pending the outcome of Mr Pigott’s appeal should not argue against the appointment of a management receiver. Such a receiver was needed and relatively urgently so, to identify who controls and lives in the property, to maintain any outgoings upon it which preserve its value (mortgage and insurance), to deal with any dilapidation and repair issues and to manage any income from the property and to re-let it if vacant. The submissions took the court through the Capewell Guidelines. As to issue 3, Mr Jones submitted that “the time to argue about the interests of third parties is at the enforcement stage”, citing Re Norris [2001] UKHL 34 [2001] 1 WLR 1388. Thus Mr Jones suggested that “it may be premature and unnecessary to make a determination at this stage”. In such circumstances, Mr Jones asked the court to go on to consider whether the adjournment of the issue to the enforcement stage might be prejudicial to Mr Lamb (on the basis that it delayed the vindication of his interest in circumstances either where Mr Pigott’s appeal might succeed or at such later time as Mr Lamb might show that the property was his). However, Mr Jones submitted that it was unclear what any such prejudice might be. Mr Lamb was not living at the property, his whereabouts were unknown, the receiver could not sell the property without returning to court, and, as to costs, they were strictly circumscribed and it was in any event a general principle that a receiver may be entitled to draw his remuneration from the assets under management within the estate: see Capewell v. HMRC [2007] UKHL 2. As to issue 4, if nevertheless, the issue did arise for determination at the present hearing, the court should come to the same conclusion as Judge Williams, for all the reasons given by her and others available on the detailed material before the court.

It was only at this stage, and, whether or not in response to Mr Jones’ skeleton, on the eve of the application hearing, that Mr Lamb took any responsibility for the proceedings. On the evening of 20 October 2008, with the hearing due to take place the next morning, Mr Jones received Mr Lamb’s witness statement. In that statement (dated 17 October 2008) Mr Lamb again asserted that he was the sole person legally or beneficially entitled to the property. He said that it was the first time that he had standing to make representations to any court. He denied that Mr Pigott had any interest in the property. He said that Mr Pigott had been interested in buying it, but could not go forward in the absence of finance. He (Mr Lamb) had purchased it himself with a bridging loan which had been repaid on the remortgage to Nationwide. He said that the purchase had been conveyed by a solicitor called Mr Bryan Lewis who had worked for a firm called Garcia Martin. That firm had since been the subject of intervention by the Law Society and as a result he did not have access to the conveyancing file. He said he no longer had any contact with Mr Lewis “because he is both unscrupulous and dishonest”. He gave no reason for that accusation. As for the payment of £70,000 from Zourn towards the purchase price of the property, he said that he did not admit that, because Mr Lewis had only told him that the £70,000 had come from Mr Pigott personally. He believed that such monies were rent arrears which he had asked Mr Pigott to collect from other tenants in the property. He said: “If and to the extent that it can be proved by RCPO that the said monies came from Zourn, I will, without prejudice repay that amount to RCPO and thereafter make a claim against the professional indemnity insurance of Garcia Martin”.

Mr Lamb continued to rely on the banking evidence showing that he had made the monthly mortgage payments to Nationwide. He did not respond to the request to unredact his bank statements so that RCPO could investigate the source of his income. He said that the property was currently occupied by squatters. (I comment: he had still failed to obtain possession from them.) He said he also paid building insurance on the property, but disclosed no material in relation to such insurance. He said he had never arranged the insurance, and that it had previously been effected by Mr Pigott “but without my consent or knowledge”. He said that any planning application made by Mr Pigott and any building works commissioned at the property had been without his knowledge or consent. He said that he was currently engaged in a project to develop the property. All that Mr Pigott had done was to live in the top floor of the property, rent free, pursuant to the agreement which he had made with him to allow him to do so if he collected the arrears of rent. He closed with the hope that the property “will now be excluded from the effects of the Confiscation Order”, and a repetition of the offer to “repay” to the RCPO the £70,000 if the RCPO could prove its source as Zourn. (It is not clear to me why Mr Lamb believed that the £70,000 could come from arrears of rent so as to finance the purchase of the property, since only the previous owner of the property could at that time have had any right to such arrears.)

Mr Perhar’s skeleton submissions on behalf of Mr Lamb, dated 20 October 2008, came into the hands of Mr Jones at 9 am on 21 October, and into the hands of the judge at the hearing that morning. In it Mr Perhar’s only point concerning jurisdiction related to the assertion that the property was not subject to the restraint order, so that the section 77(8) application was “misconceived”. It is true that the property was not specifically identified in the restraint order, but, as set out above, the restraint order covered all Mr Pigott’s property, whether in his name or not, and since then the confiscation proceedings have determined, as between the RCPO and Mr Pigott, that Mr Pigott is the beneficial owner of the property. There can be no doubt whatsoever, therefore, that the property is, at present, within the restraint order, and that this point raised on behalf of Mr Lamb is a bad one.

Otherwise the points made in Mr Perhar’s skeleton submissions were all related to the judge’s discretion. It was submitted that “Mr Lamb is looking after the property…He has paid all of the outgoings upon it and has recently taken successful legal action to remove squatters”. Therefore, the circumstances could not justify the potentially wasted costs of a management receiver: reference was made to para 20 of the Capewell Guidelines cited above. As for the determination of Mr Lamb’s asserted beneficial ownership:

“this would require a close analysis of allegations revolving around seriously complicated transactions. It would be manifestly unfair to go and conduct such an exercise based upon the ill conceived application made today, without the Court giving Mr Lamb proper notice of the intention to conduct such an exercise.”

In my judgment, the administrative court had given Mr Lamb, served as an interested party, a reasonable opportunity to make his case that the property was owned by him. However, it was not clear that such an issue needed to be resolved at that point. Moreover, because of Mr Lamb’s late appearance on the stage, a matter which was entirely his fault, it may be that it was in practice too late for the issue to be resolved at that stage, especially as the RCPO’s draft order had not requested a declaration on that issue, and Mr Jones’s skeleton had flagged up the submission that the issue was premature (see para 26 above).

In this connection, although I would not go so far as to say that an interested third party cannot be heard, in connection with an application for a management receivership order under section 77, to make the case that property concerned is not realisable property and thus cannot be made or maintained subject to such an order, nevertheless it is to be noted that section 77(8) does not contain a provision similar to that of section 80(8). This is also reflected in RSC Order 115 rule 7(4)(c) which makes specific provision to allow the court, on an application under section 80 (see also rule 23(b)), to “make declarations in respect of those interests”, whereas there is no similar provision with respect to section 77(8). This also reflects the observation of Lord Hobhouse of Woodborough in Re Norris [2001] UKHL 34, [2001] 1 WLR 1388 at para 23 that –

“The time and place for Mrs Norris to assert her civil law rights over 7 Berryfield Close was when the Customs and Excise attempted in the High Court to deprive her of her interest. It is at this stage that she becomes directly affected and has the right to invoke the remedies of the court in the defence of her civil law rights.”

It is possible therefore that the high court might rule that it is inappropriate to go into the question of third party rights pending the appointment of an enforcement receiver. However, Lord Hobhouse was speaking in the context of a distinction, not between management and enforcement receiverships, but between the criminal and the civil courts. In the present case, it may be observed that the RCPO took the initiative of serving Mr Lamb and raising in its skeleton argument the issue of whether it was timely for the question of Mr Lamb’s interest to be determined then, and if it was, of going on to make its case on that question.

As it was, there was ultimately no issue before Mr Ockelton as to whether the question of Mr Lamb’s interest should be resolved on that day. Shortly before the luncheon adjournment on 21 October 2008 Mr Ockelton indicated that he did not consider a determination of interest in the property as a necessary precondition to the appointment of a management receiver. Given that indication, Mr Jones desisted from any attempt to resolve that question that day. However, Mr Perhar’s response, after the luncheon adjournment, was for the first time to raise the absence of that determination as between Mr Lamb and the RCPO as a reason for attacking the court’s jurisdiction to make any order for the appointment of a management receiver. His submission then went further than his skeleton’s reliance on the absence of the property from being specified in the restraint order, and appears to have been that since section 77(8) speaks of a receiver “to take possession of any realisable property” and section 74(1)(a) defines “realisable property” as inter alia “any property held by the defendant”, therefore no receiver can be appointed as long as it is in issue between the RCPO and any third party as to whether some property is in truth held by that third party and not by the defendant.

The judge dealt with that submission in the following way. He said that the RCPO had the task of showing that the property is realisable property within the meaning of section 74 assisted by section 102(7) (which says that “Property is held by any person if he holds any interest in it”). However, the RCPO met that task by reason of Judge Williams’ finding on that issue, which, pending the then appeal to the CACD, was “the last judicial treatment of the ownership of that property”. The judge then commented on the contents of Mr Lamb’s response to the RCPO’s application, but also on the lateness of it. He then concluded as follows:

“15.

That, I think it is right to say, is the sum total of the material from Mr Lamb which could assist any determination as to the legal or beneficial ownership of 2A Belgrade Road. In those circumstances, it seems to me that, insofar as it is an issue in these proceedings, the claimant has established that the property at 2A Belgrade Road is property held by the defendant; that is to say Mr P[igott] has some interest in it. That is as found by the trial judge, and that is not shown to be a wrong finding in these proceedings.

16.

So I reject Mr Perhar’s primary submission which is that these proceedings, insofar as they are an application under section 77, are misconceived. If then a receiver can be appointed, the question is: should a receiver be appointed?”

And the judge then proceeded to consider that question as a matter of discretion.

Submissions in this court have demonstrated that the reasoning in para 15 of the judge’s judgment is not entirely clear. Was the judge intending, contrary to his indication in the course of argument before him, to decide the issue, as between the RCPO and Mr Lamb as an interested third party, as to whether Mr Pigott or Mr Lamb had the legal or beneficial interest in the property? Mr Perhar submits that if he did, then that was unfair, and that if he did not, then there is no jurisdiction to appoint a receiver.

In my judgment, although the matter may not be entirely clear from the judgment, Mr Ockelton was not intending to decide the issue of beneficial ownership as between Mr Pigott and Mr Lamb. The judge’s intention is demonstrated by the terms of his order which states that –

“The Defendant, Stephen Lamb and any other person affected by this Order are entitled to appear and object to the continuation of this Order or to be asked for it to be varied. They and any other affected party have a general right to ask the Court to vary or discharge the Order…”

The order also states: “The Receiver shall not have the power to charge or sell the property at 2A Belgrade Road”. In any event, the judge had not determined that Mr Pigott had the whole legal and beneficial interest in the property, and that Mr Lamb had none (in which case Mr Lamb would have had no standing any longer to ask for the order to be varied or discharged), but only that Mr Pigott had “some interest in it”.

Thus it is no surprise to find that following Mr Ockelton’s judgment and pending this appeal, the following has occurred. By a part 8 claim form dated 1 September 2009 Mr Lamb as claimant has sought a declaration from the Chancery Division that he is the sole beneficial owner of the property. The claim form names Mr Pigott as the defendant. On 26 November 2009 the RCPO applied under section 80 of the CJA 1988 to the administrative court to appoint an enforcement receiver over the property and sought a declaration pursuant to RSC 115 rule 7(4) that Mr Pigott is the sole beneficial owner of it. On 30 November 2009 Deputy Master Hoffman sitting in the Chancery Division added the RCPO as a defendant to Mr Lamb’s part 8 claim and ordered that those proceedings be stayed until the determination of the RCPO’s section 80 proceedings in the administrative court.

It seems to me that what the judge had intended to say, even if he failed to say it clearly, was that, pending the determination of Mr Lamb’s claim to a beneficial interest, it was enough to give the administrative court jurisdiction to make a receivership order under section 77(8) that Mr Pigott had been found by the Crown Court to have the beneficial interest in the property so that the property was realisable property for the purposes of the confiscation order which Judge Williams made. That determination, now upheld by the CACD, is binding as between the RCPO and Mr Pigott and makes the property “realisable property”, even if that status may hereafter change, should Mr Lamb (or in theory any other claimant) prove that Mr Pigott has no interest in the property. Even if that is not what the judge intended to say, in my judgment it is what he was entitled to say, and it means that Mr Perhar’s submission on jurisdiction must fail.

That submission has to be to the effect that the administrative court has no jurisdiction to make a management receivership order in respect of any property as long as there is any issue outstanding as to the ownership of that property asserted by the Crown to be realisable property. However, that is an impossible submission. It would mean that every issue as to ownership, or as to whether any third person’s property was a “gift” for the purposes of the statute, would have to be fought out and decided before anything further could be done at all.

I refer to the question of a “gift”, because the definition of realisable property includes a gift. Thus section 74(1) provides:

“In this Part of this Act, “realisable property” means, subject to subsection (2) below –

(a)

any property held by the defendant; and

(b)

any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Part of this Act.”

Mr Perhar’s submission would mean that no restraint order could be made until such issues had been first determined, because that is an order prohibiting any person dealing with “any realisable property” (section 77(1)). It would mean that no confiscation order could be made until such issues had been first determined, because in making a confiscation order the Crown Court must limit itself to “the amount which might be realised at the time the order is made” (section 71(6)(b)), if less than the amount in which the defendant has benefited from his criminal conduct, and the amount which might be realised is based on “the total of the values at that time of all the realisable property held by the defendant” (section 74(3)(a)).

However, statutory provisions and jurisprudence alike demonstrate that such issues involving claims to beneficial ownership by interested third parties do not have to be determined before restraint orders or confiscation orders or management receivership orders are made. Thus it is only section 80, in dealing with enforcement receivers, which contains subsection (8) which provides:

“The court shall not in respect of any property exercise the powers conferred by subsection (3)(a), (5) or (6) above unless a reasonable opportunity has been given for persons holding any interest in the property to make representations to the court.”

Moreover section 82 provides:

“(1)

This section applies to the powers conferred on the High Court by sections 77 to 81 above…or on a receiver being appointed under this Part of this Act or in pursuance of a charging order…

(2)

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.

(3)

In the case of realisable property held by a person to whom the defendant has directly or indirectly made a gift caught by this Part of this Act the powers shall be exercised with a view to realising no more than the value for the time being of the gift.

(4)

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

It is inherent in these provisions, consistently with the other provisions of the statute, that “realisable property” may be subject to the vindication of the interests of parties other than a defendant (section 82(4)), that in the case of a gift, property may be held by a third party but still be “realisable property” to the extent that it is a gift from the defendant, but not beyond the value of the gift (section 82(3), and that may be relevant to the £70,000 which Mr Lamb admits receiving and says he is willing to repay, subject to proof of its source being Zourn), and, generally, that the function of a receiver is to exercise his powers with a view to making the value of realisable property available to satisfy a confiscation order even before it has been made (section 82(1)).

All these provisions emphasise three things. First, that as Simon Brown LJ observed in Compton, a restraint order or a management receivership order may be made over property on the ground that it is “realisable property” even in advance of a confiscation order, simply on the basis that there is a good arguable case that the property in question is realisable property. Secondly, that once a confiscation order has been made against a defendant in respect of the value of identified realisable property, it is possible to speak of such property as being realisable property (as it has been adjudicated to be as between the RCPO and the defendant) even though it is still open for third parties to vindicate their own interests in such property by proving that it is not realisable property or that the defendant’s interest in it is less than total. And thirdly, that for either or both of those reasons, on the facts of this case, there was undoubtedly jurisdiction for Mr Ockelton to make a management receivership order in respect of 2A Belgrade Road. If it were otherwise, and if Mr Perhar’s submission were correct, then it would never be possible to make a restraint order, a receivership order, or even a confiscation order in respect of any property until every issue concerning the claims of interested parties had been first adjudicated, which would be entirely inconsistent with and destructive of the structure of this part of the CJA 1988.

Indeed, in certain circumstances property may remain “realisable property”, even after an interested party has proved his beneficial interest in it, if the criminal defendant has some interest in it, such as a bare legal title, or a partial beneficial interest. In such a case, the property remains “realisable property” for he holds some interest in it (see section 102(7) “if he holds any interest in it”), but the interested party may still vindicate his own interest in it. That was the position in Heath Sinclair in his capacity as the former receiver v. Louis Glatt [2009] EWCA Civ 176 (“Glatt”), where the defendant had only a bare legal title in the property in question. There are still further provisions of the CJA 1988 which are designed to deal with circumstances where a receivership order is made, but it is ultimately established that it should not have been, or should not have been extended to certain property. Thus section 88(1) grants to a receiver an immunity for taking action in relation to property “which is not realisable property” in the reasonable belief that he was entitled to take such action, as long as he has not been negligent. That again contemplates that a receivership order may be made in respect of property which ultimately is freed from it on the ground that it is not “realisable property”. Moreover, section 89 grants the High Court a discretion to award compensation to “any person who held property which was realisable property”, but only in the limited circumstances where the criminal defendant is acquitted or pardoned and there has been some serious fault on the part of a person concerned with the investigation or prosecution. Otherwise there is no availability for the exercise of such a discretion to award compensation.

I would also observe that the above analysis would appear to be consistent with what this court said in Glatt, which was decided after Mr Ockelton’s judgment below, where the issue was whether a defendant’s bare legal title was sufficient to constitute property “realisable property”. Having referred to the same provisions of the CJA 1988 as I have been considering in this judgment, Lord Justice Longmore observed:

“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…

17… Mr Andrew Mitchell QC on behalf of the receiver accepted that, if the assets covered by the receivership order were not assets “held” by Mr Louis Glatt they could not constitute “realisable property” within section 74 of the Act and the owners of those assets would be able to come to court, prove their title and require that the assets which they owned should be taken out of the receivership order.”

I turn therefore to the second issue raised by this appeal, which is whether Mr Ockelton erred in the exercise of his discretion by granting a management receivership order pending the adjudication of the issue raised by Mr Lamb’s claim to be the legal and beneficial owner of the property. In this connection, Mr Lamb’s case was and remains that he could be trusted as the sole manager of the property, and that the costs of the receivership might unfairly fall on him even if at the end of the day he were to prove that the property was not “realisable property” but his own.

It seems to me, however, that it is impossible to say that Mr Ockelton erred in the exercise of his discretion. It was assumed for the purpose of the argument that even if Mr Lamb prevailed in proving himself to be the sole person interested in the property he would nevertheless be at risk of finding that the property, or income generated by it, would be liable to provide the source of the receiver’s fees and expenses. For the purpose of the argument on discretion, this was an assumption in Mr Lamb’s favour. However, in circumstances where the Crown Court and the CACD had already each looked at the wealth of documentary material concerning ownership of the property, and had done so knowing of the registration record in favour of Mr Lamb and of Mr Lamb’s own evidence as to his sole legal and beneficial interest in the property, and had concluded that the property was realisable property held by Mr Pigott, and even though those determinations are not binding on Mr Lamb, it seems to me to be very difficult to say that it would not be reasonable to appoint a management receiver meanwhile to protect the value of the property. This is especially so where Mr Lamb had suffered squatters to enter the property, had only moved to issue proceedings against them after his solicitor had heard of the RCPO’s interest in appointing a management receiver of the property through its letter dated 21 April 2008, and even then had only served his claim for possession against the squatters after service of the RCPO’s application to appoint a receiver on him, and had still not obtained possession from the squatters at the time of the hearing before Mr Ockelton. Moreover, Mr Lamb had done nothing further to disclose the source of his mortgage payments, and had provided no evidence in relation to insurance of the property, other than to admit that he had not insured the property himself, albeit he claimed to be paying for it.

As for the costs of the receivership, the fees quoted by the receiver were relatively small, and might well be covered by the realisation of the personalty itself. As the judge observed, if the burden of the management of the property were in fact to be carried by Mr Lamb, any future receivership costs in respect of the property might be anticipated to be correspondingly small. Moreover, Mr Lamb has all but conceded, subject to proof which has already satisfied the Crown Court (admittedly in the absence of Mr Lamb), of his liability to pay £70,000 to the RCPO. Indeed, if Zourn’s payment of the £70,000 was a “gift”, the property would in any event be realisable property at any rate to the extent of the gift, not only as against Mr Pigott, but also as against Mr Lamb.

In all these circumstances, it seems to me that it is impossible to say that in the interim the property should not be safeguarded by the appointment of a management receiver.

As for the costs of the receivership, I would add the following remarks. It is established that in the ordinary case a receiver is entitled to a lien on receivership assets for the costs of the receivership: Capewell and Glatt. That is certainly true where the assets are those of the criminal defendant (Capewell) and also where the assets are beneficially owned by a third party but in the bare legal ownership of the defendant (Glatt). In Glatt counsel for the RCPO submitted it was also true even where an interested party was able to show that the assets were not “realisable property” at all and thus was entitled to have them taken out of the receivership. However, Longmore LJ said that no decision need be made on that point in that case (at para 17). That, however, is a point raised by the present case. So it is not clear that, if Mr Lamb were to succeed in showing that Mr Pigott had no interest at all, not even by reference to the £70,000 payment from Zourn, the property would be liable for the receiver’s costs. Even so, that remains a question for another day.

In any event, and despite the decision in Capewell, it may be possible, as my Lord, Lord Justice Wilson remarked in the course of argument, in an appropriate case, for a management receivership order to be made subject to a special term that, if it should be shown in due course that property subject to the order is after all not “realisable property” but wholly in the legal and beneficial ownership of a third party, then the costs of the management receivership should be borne, not by the property, but, in the absence of any other source, by the RCPO. It seems to me to be at any rate arguable that such a special term could be imposed by the court pursuant to section 77(8), which provides that a management receiver may be appointed “subject to such exceptions and conditions as may be specified by the court”. After all, section 88(2) of the CJA 1988 provides for a statutory long-stop so that –

“Any amount due in respect of the remuneration and expenses of a receiver so appointed shall, if no sum is available to be supplied in payment of it under section 81(5) above, be paid by the prosecutor or, in a case where proceedings for an offence to which this Part of this Act applies are not instituted, by the person on whose application the receiver was appointed.”

In sum, the judge had jurisdiction to appoint a management receiver over the property, and the exercise of the judge’s discretion so as to appoint such a receiver cannot be said to have been in error. It was for these reasons that this appeal was dismissed at the conclusion of the hearing.

To the extent that any question may have arisen as to the need for time to be extended, of at most a week, to validate the RCPO’s respondent’s notice, and in the absence of any objection, I would be willing to grant such an extension.

I agree.

I also agree.