Senel Ahmet v David Paul Tatum

Some statutes providing for disputes to be determined in a particular way serve to preclude their resolution in any other manner. In British Telecommunications plc v Revenue and Customs Commissioners (No 2) [2023] EWCA Civ 1412, [2024] STC 23, the Court of Appeal concluded that a scheme for claiming bad debt relief established under the Finance Act 1978 had such an effect. Falk LJ, with whom Nugee and Warby LJJ agreed, explained in paragraph 35 that the relevant enquiry was into “whether Parliament intended the statutory provision in question to provide the exclusive or sole remedy, rather than asking whether an alternative remedy (or at least a particular alternative remedy) was intended to be ousted” and that, “[p]ut very shortly, the question can be formulated as whether Parliament intended the statutory remedy to be exclusive, or whether it intended that remedy to coexist with any other remedy”. “The question”, Falk LJ said in paragraph 35(a), “is one of statutory construction: what did Parliament intend?”

There are other contexts in which tax issues cannot be pursued otherwise than using the appeal process for which Parliament has provided. Thus, in Knibbs v Revenue and Customs Commissioners [2019] EWCA Civ 1719, [2020] 1 WLR 731, at paragraph 17, the Court of Appeal said:

“It is well established that if Parliament has laid down a statutory appeal process against a decision of HMRC, a person aggrieved by the decision and wishing to challenge it must use the statutory process. It is an abuse of the court’s process to seek to do so through proceedings in the High Court or the County Court.”

The mere fact, however, that, as a matter of statutory construction, it cannot be seen that Parliament intended a statutory regime to be exclusive does not necessarily mean that it is always proper to resort to common law remedies instead. As Lord Diplock observed in Hunter v Chief Constable of the West Midlands Police [1982] AC 529, at 536, “[t]he circumstances in which abuse of process can arise are very varied”. “Abuse of process”, Lord Diplock noted, “concerns the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people”.

Company law provides an illustration. Chapter 1 of Part 11 of the Companies Act 2006 (“CA 2006”) sets out a procedure to be followed where a shareholder wishes to bring a “derivative claim”, i.e. one “(a) in respect of a cause of action vested in the company, and (b) seeking relief on behalf of the company”: see section 260. The provisions do not produce a statutory bar on shareholders including claims for relief in favour of their companies in “unfair prejudice” petitions under section 994 of CA 2006, and it can be perfectly proper to do so. However, it could potentially be an abuse of process to seek relief in favour of a company by way of an unfair prejudice petition if that were the only relief sought or if, although the petition also contained a claim for relief which was available exclusively in unfair prejudice proceedings (such as an order for the purchase of shares), it could be discerned that the petitioner was not genuinely interested in obtaining such relief and was, instead, trying to bypass the filter for which Part 11 of CA 2006 provides: see Ntzegkoutanis v Kimionis [2023] EWCA Civ 1480, at paragraph 55.

Claims involving public law points can generate comparable issues. It was once considered that “it would … as a general rule be contrary to public policy, and as such an abuse of the process of the court, to permit a person seeking to establish that a decision of a public authority infringed rights to which he was entitled to protection under public law to proceed by way of an ordinary action and by this means to evade the provisions of Order 53 [of the Rules of the Supreme Court] for the protection of such authorities”: see O’Reilly v Mackman [1983] 2 AC 237, at 285, per Lord Diplock. The approach nowadays is more fact-sensitive. In Clark v University of Lincolnshire and Humberside [2000] 1 WLR 1988, Lord Woolf MR said at paragraph 39 that “[t]he emphasis can … be said to have changed since O’Reilly v Mackman”, going on:

“What is likely to be important when proceedings are not brought by a student against a new university under Order 53, will not be whether the right procedure has been adopted but whether the protection provided by Order 53 has been flouted in circumstances which are inconsistent with the proceedings being able to be conducted justly in accordance with the general principles contained in Part 1 [of the Civil Procedure Rules].”

There is no doubt that it can be appropriate for disputes over property ownership that are relevant to POCA proceedings to be determined in the Crown Court. Section 10A of POCA allows for just that. In Re Stanford International Bank Ltd [2010] EWCA Civ 137, [2010] Ch 33, Hughes LJ said in paragraph 208 that “Judges in the Crown Court should not of course shrink from deciding issues of civil law where they properly can, even if they are less familiar to them than is the daily round of the criminal jurisdiction”. Hughes LJ went on to say that “there will be a few cases where the complexities are such that a Crown Court judge should not fear to explore the possibility of onward allocation to another judge” and to refer to the possibility of finding a judge of “suitably mixed expertise” to deal with the case: see paragraphs 208 and 209. In paragraph 211, Hughes LJ said:

“The judge eventually hearing the restraint order proceedings should ordinarily have some experience of criminal cases, the nature of the confiscation regime, and the manner in which prosecutions and the defence thereto proceed. But there is no reason why a judge of the High Court should not sit in the Crown Court to deal with a complex restraint order case. He or she may be from the Queen’s Bench, Chancery or Family Division, or Commercial Court, according to need and availability. Some cases may be suitable for hearing by a specialist mercantile or chancery senior circuit judge. The presiding judge will be in a position to consult the appropriate head of division (in London) or liaison judge (on circuit) in order to explore availability. It will need to be remembered that the availability of the relatively few judges of suitable mixed expertise will be quite limited and calls upon it need to be judged carefully. The decisions involved are matters of pure case management and are most unlikely to generate appealable rulings.”

It is easy enough to think of reasons why it might be preferable for property issues to be resolved in the Crown Court. Applications for confiscation orders, restraint orders and orders appointing receivers are all assigned to the Crown Court. If in the context of such proceedings a question arises as to ownership of an asset, there is an obvious convenience in having it decided in that same context rather than in separate civil proceedings. The case for the Crown Court dealing with property disputes will be the stronger if it is suggested that there has been a “tainted gift”. Only the Crown Court could rule on such a point, and there may well be advantages in addressing issues as to ownership and “tainted gifts” together, the more so since the same evidence could be relevant to both.

Further, POCA safeguards the interests of third parties in a number of ways. The Court must not exercise the power conferred by section 10A(1) without giving anyone who it thinks may have an interest in the property a reasonable opportunity to make representations, and such a person can appeal if denied such an opportunity or it is arguable that giving effect to the determination would result in a serious risk of injustice. Again, a power of realisation is not to be conferred on an enforcement receiver without affording anyone with an interest in the relevant property a reasonable opportunity to make representations, and there is a right of appeal. On top of that, someone affected by a restraint order can apply for its discharge or variation, and has a right of appeal.

On the other hand, as Mr Evans recognised, there can be circumstances in which civil and confiscation proceedings can coexist. In Re Stanford International Bank Ltd, Hughes LJ spoke of “the manner in which an application for a restraint order under POCA 2002 may interlock with complex issues which arise in other litigation” and the desirability of “manag[ing] restraint order applications and associated litigation, so far as can be accomplished, in a co-ordinated manner”: see paragraphs 204 and 206. In Aquila Advisory Ltd v Faichney [2021] UKSC 49, [2021] 1 WLR 5666, a “secret profit of £4.55m” was both the subject of a civil claim and central to confiscation proceedings: see paragraphs 1-3. In R v Forte [2020] EWCA Crim 1455, [2021] 4 WLR 26, where a confiscation order had been made by reference to a property called “Hillside Lodge” and money in a Lloyd’s bank account, Edis J, giving the judgment of the Court of Appeal, noted at paragraph 10 that “[c]ivil proceedings to determine the extent of [the defendant’s former wife’s] beneficial interest in Hillside Lodge, or her mother’s interest in funds held in a bank account in her name, might arise in many ways”. Further, sections 58(5) and 59(5) of POCA expressly empower the Court to “stay … or allow … to continue on any terms it thinks fit” pending proceedings relating to a property in respect of which a restraint order or one under section 50 of POCA has been made or applied for, and the explanatory notes to SCA 2015 referred to Crown Court judges exercising the power to determine the extent of a defendant’s interest in a property under section 10A “only in those cases where their experience (including in respect of matters as regards to property law), the nature of the property, and the likely number and/or complexity of any third party interests allows them to do so”.

Even where the real dispute as to the ownership of a property is with the prosecutor, it is possible to envisage circumstances in which there would be a persuasive case for allowing a third party to bring civil proceedings. Suppose that, as can happen, a restraint order is made in respect of a property when a criminal investigation is in its early stages; that there is no likelihood of any ensuing criminal proceedings, let alone confiscation issues, being determined for a number of years; and that a third party has an urgent need to establish ownership of the property or an interest in it. The Crown Court might perhaps be able to render a civil claim unnecessary by arranging matters in such a way as itself to resolve the issue at an early stage. Alternatively, depending on the facts, it might not be reasonable to expect the prosecutor to be ready to address the issue yet. Even so, there could in such a case be a good reason for the third party to wish to resort to civil proceedings. Further, the ability of a civil Court to make a costs order in favour of the third party might be a relevant consideration. There is scope for argument as to the availability of such an order where the Crown Court makes a determination under section 10A of POCA: see in this connection section 19 of the Prosecution of Offences Act 1985 and regulation 3(1) of the Costs in Criminal Cases (General) Regulations 1986 (as amended).

In Capper v Chaney [2010] EWHC 1704 (Ch), (2010) 174 JP 377, on the other hand, Lewison J struck out civil proceedings in which the claimant had sought a declaration that he was the beneficial owner of cash which the police had seized under powers conferred by POCA. Lewison J said in paragraphs 19-21 of his judgment:

“19.

In the present case, Parliament has assigned the resolution of disputes about cash alleged to represent the proceeds of crime to the magistrates’ court (and on appeal the Crown Court). Mr Capper’s claim in the High Court to ownership of the cash is an indirect way of seeking to achieve the same result as would be open to him by presenting his case to the magistrates’ court when the [Metropolitan Police] Commissioner’s claim to forfeit the cash is determined. On that basis, as Lord Nicholls said [in Autologic], it is an abuse of process ….

20.

Even if there is a residual discretion in the High Court, the way in which that discretion should be exercised was encapsulated in the judgment of Robert Walker J in Glaxo Group Ltd v. IRC [1995] STC 1075, which Lord Nicholls expressly approved:

‘It is not easy to discern any clear dividing-line between High Court proceedings which are, and those which are not, objectionable as attempts to circumvent the exclusive jurisdiction principle. Possibly the correct view is that there is an absolute exclusion of the High Court’s jurisdiction only when the proceedings seek reliefwhich is more or less co-extensive with adjudicating on an existing open assessment - but that the more closely the High Court proceedings approximate to that in their substantial effect, the more ready the High Court will be, as a matter of discretion, to decline jurisdiction.’

21.

Before the magistrates’ court the essential factual issue is whether Mr Capper or Mr Chaney is the owner of the cash. The issue raised in the High Court is precisely the same. Thus even if the magistrates’ court does not have exclusive jurisdiction, the High Court ought, as a matter of discretion to decline jurisdiction. I respectfully disagree with the Master that the issue is not the same. But even if the Master was, in very formal terms, right he did not go on to consider how closely the issue in the High Court proceedings approximated to the issue before the magistrates in its substantial effect. Had he done so he must have concluded that there was a very close approximation.”

Capper v Chaney is, however, distinguishable from the present case. Whereas this case concerns Part 2 of POCA, Capper v Chaney involved Part 5. Moreover, Part 5 differs in important ways from Part 2. In particular, (a) Part 5 contains no equivalent to sections 58(5) and 59(5) (under which the Court “may either stay the proceedings or allow them to continue on any terms it thinks fit”) and (b) Part 5 includes a provision stipulating that, where an application for the forfeiture of any cash is made under section 298, “the cash is to be detained (and may not be released under any power conferred by this Chapter) until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded” (see section 298(4)), and nothing similar is to be found in Part 2.

I should also mention Re Norris [2001] UKHL 34, [2001] 1 WLR 1388, in which the wife of a defendant made an application in the High Court for an order appointing a receiver pursuant to the Drug Trafficking Offences Act 1986 to be varied on the basis that she had an interest in a property which had been included in a schedule of assets to be realised. Some of what was said in that case depended, however, on the fact that jurisdiction to make restraint orders and to appoint receivers had not yet been transferred to the Crown Court. I do not think that the decision is of any real help in the context of the present appeal.

Drawing some threads together, my own view is that there is no rule barring a third party from seeking to have the ownership of property relevant to confiscation proceedings determined by a civil Court, even where the issue is between the third party and the prosecutor. POCA nowhere states or necessarily implies that it is laying down an exhaustive code for the resolution of such disputes. To the contrary, it empowers a civil Court to stay or to “allow … to continue on any terms it thinks fit” a claim relating to a property in respect of which a restraint order or an order appointing an enforcement receiver has been applied for or made. As a matter of statutory construction, therefore, it is not apparent that Parliament intended POCA to provide the only ways in which any property questions relevant to confiscation proceedings can be decided. Further, while I would not exclude the possibility of a civil claim asserting an interest in what is alleged to be (or potentially to be) “realisable property” within the meaning of POCA representing an abuse of process in particular circumstances, I do not think such claims are generally to be regarded as abusive. Even where a civil Court considers it desirable that a property issue raised by proceedings before it should be decided by the Crown Court, it should typically, as it seems to me, stay them under section 58(5) or section 59(5) rather than striking them out. Having regard to the potential advantages of having ownership matters relevant to confiscation proceedings determined in the Crown Court, the better course will, as it appears to me, commonly be to grant such a stay. In principle, however, a civil Court should consider what is appropriate on the specific facts.

The Judge approached matters on the footing that “Parliament has provided a complete and exhaustive code for the resolution of disputed property rights in the context of restraint and confiscation orders in criminal proceedings”. In my view, he was, with respect, mistaken as to this, and, it not being suggested by way of respondent’s notice that his decision should be sustained on any other basis, it falls to be set aside.

I would allow the appeal and dismiss the application to strike out the claim. That is by no means to say that the ownership of Brindles Farmhouse should necessarily be decided in the High Court. It may potentially be appropriate for that Court to stay the present proceedings.