Hockey, R. v

On 21 March 2006 in the Bristol Magistrates Court, the Applicant pleaded guilty to six offences: two of obtaining a money transfer by deception (Charges 1 and 2), one of attempting to obtain a money transfer by deception (Charge 3), and three of using false instruments (Charges 4, 5 and 6). He was committed to the Crown Court at Bristol for sentence where, on 17 November 2006, he was sentenced to 9 months imprisonment suspended for 2 years, with an unpaid work requirement of 240 hours.

The facts underlying these charges may be very shortly stated. By separate fraudulent applications, the Applicant obtained mortgage advances from the Bradford and Bingley Building Society (Charges 1 and 4) and the National Westminster Bank (Charges 2 and 5). A third fraudulent mortgage application, which was the subject of charges 3 and 6, was unsuccessful.

On the day that HHJ Lambert passed sentence, the Prosecution applied under s. 6 of the Proceeds of Crime Act 2002 for a Confiscation Order against the applicant in the sum of £298,457. That was the amount of two mortgage advances that the Applicant had obtained, from the Bradford and Bingley and the National Westminster Bank respectively. The money had been used to buy property which the applicant still held. HHJ Lambert refused the prosecution’s application. However, on 12 June 2007, a different constitution of this court (Pill LJ, Dobbs J and Lloyd-Jones J as he then was) allowed the prosecutor’s appeal: see [2007] EWCA Crim 1577. In the course of its judgment, the court identified that the sum claimed came within the definition of “benefit” under the Act: see [25]. It also held that the realisable assets greatly exceeded the sum to be paid under the order, thereby drawing a distinction between the loan monies and the property that had been purchased with them: see [28]. Both of these conclusions were the result of agreement between the parties: see [10]. In those circumstances, the Court followed previous authority in holding that the statutory intention and wording required an order to be made. The order was duly made in the sum agreed by the parties, to be paid in 6 months with a sentence of 3 years in default of payment. The sum was duly paid.

After a false start in 2017, which involved a decision of another constitution of this court (Sir Brian Leveson PQBD, Haddon-Cave J, HHJ Inman QC: see [2017] EWCA Crim 742), the applicant now applies for permission to bring an appeal pursuant to s. 10 of the Criminal Appeal Act 1968 against the confiscation order imposed in the agreed sum by the Court of Appeal in 2007. His application is accompanied by an application for an extension of time of over 10 years.

We deal with the substantive application first.

The Applicant submits that the decisions of R vPattison [2007] EWCA Crim 1536 and R v Waya [2012] UKSC 51 are authority for the proposition that the assessable benefit in his case should have been the value of the properties he bought less the amount of the encumbrance in favour of the Bradford and Bingley and National Westminster Banks respectively. In oral submissions, it was asserted that the present case is on all fours with Waya. At the same time, Mr Bown, who appears for the Applicant now but did not act for him during 2006-2007, was at pains that this is not an application that is brought on the basis of a change in the law.

Waya was a case where fraudulently obtained mortgage advances were used as part of the purchase price of a flat, the balance of the purchase price being untainted by fraud. The decision depended upon the precise nature of the transaction that was undertaken, which was analysed by the Supreme Court at [43]-[54]. The Supreme Court accepted at [48] that “in the case of an ordinary loan induced by fraud, there is no doubt that the defendant does obtain the loan sum advanced. The facts that he is under an obligation to repay it, and even intends to repay it, do not mean that he does not obtain it. … Nor does the fact that repayment is secured mean that he does not obtain it.”: However, the legal machinery in Waya was that:

“The purchase and mortgage were completed in the usual way, with the mortgage lender putting Mr Waya’s solicitor in funds shortly before completion. The solicitor would have held the funds in his client account, in trust for and to the order of the mortgage lender, until they were paid direct to the vendor’s solicitor on completion.”: see [36]

This was evidently an assumed or agreed basis, as appears at [49], but it was the basis upon which the appeal proceeded:

“The appeal has proceeded on the agreed or assumed factual basis that the same solicitor was acting for Mr Waya and the mortgage lender; that the mortgage advance was paid to the solicitor to be held in the solicitor’s client account, until completion, in trust for and to the order of the mortgage lender; and that on completion the jointly-instructed solicitor transferred the advance to the vendor’s solicitor, receiving instead an executed transfer of the lease. Mr Waya would already have executed a charge of the lease in favour of the mortgage lender.”

The decision of the Supreme Court, relying upon earlier high authority, was that this legal machinery meant that Mr Waya never obtained the mortgage funds. Thus, at [50] the Supreme Court adopted the analysis of Lord Oliver in Abbey National Building Society v Cann [1991] 1 AC 56, 92-93:

“The reality is that the purchaser of land who relies upon a building society or bank loan for the completion of his purchase never in fact acquires anything but an equity of redemption, for the land is, from the very inception, charged with the amount of the loan without which it could never have been transferred at all and it was never intended that it should be otherwise. …”

Applying these principles, the Supreme Court referred at [51] to “the well established principle that in this sort of case the mortgage advance remains in the beneficial ownership of the lender until completion, when it passes direct to the vendor”; and at [53] said:

“True it is that in this case the mortgage advance was paid to the vendor’s solicitor at Mr Waya’s behest. But he had no control over its disposal in the recipient’s hands; the sole and predetermined purpose of the payment was to form part of the purchase price of the flat, with the mortgage lender having security for its repayment from the moment of completion.”

While holding that “the loan sum never became [Mr Waya’s] or came into his possession” the Supreme Court made clear that this was a result of the particular financial machinery that was assumed or agreed to have been adopted and said expressly that “the analysis would of course be different if the loan had ever been at the defendant’s free disposal… .”

The Applicant in the present case has not supplied any evidence (documentary or otherwise) to show the nature of the transaction by which he came to use the two fraudulently obtained advances to purchase property. There is no basis for any assumption (still less any agreement) about the legal machinery that was adopted. The Applicant’s solicitors from the time have (not surprisingly) destroyed their file and give no evidence about the legal machinery. Counsel from the time has not responded to that request for information, and has no general recollection of the application. The only information about the nature of the transactions comes from the advice written in support of the present application by Mr Bown. It is equivocal and may suggest that the legal machinery was not the same as in Waya:

“The reality of this case is that the applicant’s offences enabled him to obtain the mortgages to purchase “buy-to-let” properties. It is the properties, not the mortgage monies, which was his true “benefit” from his criminal conduct.”

What is certain is that there is no evidence that these transactions adopted the legal machinery that was adopted in Waya and it is by no means self-evident that they did so.

Turning to Pattison we are not satisfied that it is on all fours with the present case. Pattison was not a case of using a fraudulently-obtained loan to purchase other property; instead it was a case where property was transferred directly to the defendant but was subject at all material times to an encumbrance in favour of a third party. The question that arose in Waya and arises in the present case, namely whether the Defendant/Applicant ever obtained the loan monies, therefore did not arise. The point in Pattison was whether, when calculating the value of the property that had been transferred to the Appellant, the amount of the encumbrance should be deducted from the value of the property.

We do not regard these distinctions as mere technicalities. The Applicant wishes to re-open an order that was made in an agreed amount on the basis that the wrong legal analysis was applied. Yet he provides no evidence at all about the legal machinery or the basis upon which the sum was agreed. He merely says that he was not present at court when the order was made. In our judgment this is an inadequate basis upon which to bring an application. It is a well-established principle of law that confiscation orders made by consent can only be set aside in “the most exceptional circumstances” and “there would need to be a well-founded submission that the whole process was unfair” – see Morfitt [2017] EWCA Crim 669 and Perkes [2017] EWCA Crim 10. Further, in Kirman [2010] EWCA Crim 614 it was made clear that the Court would not save in exceptional circumstances go behind the consent order, even if it is subsequently asserted that it was made on erroneous advice. We would therefore refuse the application on substantive grounds.

We turn to the application for an extension of time, which we consider particularly in light of the authorities and approach set out above.

We would reject the application. We agree that this is not a “new-law” case. If there were any merit in the substantive application, it could have been advanced at any time during or after the 2007 Court of Appeal hearing. In fact, the obvious reason why no application was made sooner was that the sum ordered to be confiscated was agreed. A constituent and important component of the interests of justice is that there should be finality in litigation. The real complaint in the present case, if it is justified, is that the applicant was ill-advised to accept the figure that was incorporated by agreement into the original Confiscation Order; or that he was wrongly advised that there were no grounds of appeal. That is not of itself an injustice that would have required an extension of time of 10 years, though it might have given rise to cause for complaint against his then legal advisers if wrong advice had been given. We should not be taken as expressing any view on the merits of a possible claim against his earlier advisers or about whether such a claim would now be statute-barred; but if it were right to assume that the Applicant was given wrong advice, his primary remedy would be against those who advised him wrongly.

We also note that the information about the circumstances of the delay is extremely thin. Counsel’s advice records that the Applicant was advised at the time of the 2007 Order that “there were no grounds of appeal” and that “years later having been given an iPhone by his son he researched the proceeds of crime and formed the view that the order made in his case may be wrong. He then instructed” his present solicitors. A witness statement from a solicitor at that firm states that they were “formally instructed” to consider grounds of appeal on 13 April 2016. It does not specify when the Applicant was given the iPhone or carried out his research. The bare facts as recounted merely serve to emphasise that the Applicant could have carried out his researches and instructed solicitors at any time after the making of the 2007 Order.

For these reasons, we are not satisfied that a good reason has been given for the exceptionally long extension of time that would be required.

Accordingly, the renewed application is dismissed.