Assets Recovery Agency v Customs and Excise & Ors

MR JUSTICE COLLINS: This is a claim by the Director of the Assets Recovery Agency, pursuant to Part 24 of the CPR, for summary judgment. The relevant test is set out in CPR 24.2 which enables summary judgment to be given if the court considers that the defendant has no real prospect of successfully defending the claim or issue and there is no other compelling reason why the case or issue should be disposed of at a trial.

The claim concerns a sum of money which now amounts to some £3.5 million. That reflects an amount of approximately £2.25 million which was seized in June of 1992 when Charrington, the second respondent, was arrested in connection with the importation of substantial quantities of cocaine into this country.

I can set out the background relatively briefly. On 19 October 1991, four containers containing lead ingots were landed at Felixstowe. Those ingots concealed approximately 500 kilograms of cocaine, which would have had a street value of approximately £80 million. That importation was not detected and the containers were taken by rail to Liverpool and stored at a warehouse in Aintree. The drugs were removed, the ingots disposed of as scrap and the drugs no doubt placed upon the market.

Charrington at this time had entered into an arrangement with an officer of the Cleveland Force to act as an informant, and this involved, in addition to informing against burglars, robbers and relatively small time drug dealers, informing about the arrival of substantial consignments of cocaine. The person who was largely behind those importations was the fourth respondent, Curtis Warren. I can say that because there is, as I understand it, from the submissions that have been made, no issue that Warren was indeed the mastermind behind the importation I have been describing.

In addition, a man called Mario Halley, who was a Dutch citizen but who was part South American by origin, was also deeply involved. There was no direct evidence before me as to the precise nature of his involvement, but it clearly was at a relatively high level. Charrington appears to have been used, among other things, as a launderer of the proceeds of the sales of the drugs. In addition, he may have arranged for some transport. Further, he assisted Halley in November and December 1991 in purchasing a number of BMW motorcars. Those were paid for in cash. They have been seized by the Customs and have been sold, and the claim includes a sum of money representing the proceeds of those sales. There is no dispute, certainly no issue has been raised before me, that those BMWs did belong to Halley. They were no doubt part of his benefit from the enterprise, and therefore, it is appropriate that their proceeds be the subject of summary judgment. I will deal with the precise amounts in due course.

I should say that Halley has disappeared. Mr Barraclough, who has appeared on behalf of Warren, had instructions to represent Halley, but has been in the very difficult position that he has not been able to contain his client. His original instructions were simply to oppose the application for summary judgment.

Following the first consignment, in December 1991 a second consignment left Venezuela en route to Felixstowe where it arrived on 12 January 1992. In the meantime, a number of containers, which should have been part of the first shipment and which were apparently destined for Greece, arrived in Holland. They were seized by the Dutch authorities and were found to contain 800 kilograms of cocaine. That led to a number of arrests in Holland, including that of Halley, who was sentenced to a term of six years' imprisonment because of his involvement in that importation, which itself was part of the first importation that got through Felixstowe successfully.

The second importation was not immediately collected from Felixstowe, perhaps because it was appreciated that the Customs might be aware of it as a result of what had happened in Holland. But eventually arrangements were made for its collection and the containers were moved between a number of warehouses until, on 30 March 1993, Customs officers arrested several of the principals and seized the ingots, which were found to contain 900 kilograms of cocaine with a street value of about £150 million.

Charrington was not immediately arrested. He was, as I have said, acting as an informant, and indeed there is some evidence that he was permitted to launder a very substantial sum of money in order to further the conspiracy and, no doubt, to be able, as the police and Customs believed, to tell them what was going on so as to enable them in due course to arrest those who were principals in the enterprise. Unfortunately, it seems that Charrington was playing one side off against the other and was taking advantage of the position he was placed in in order to advantage himself. Far from carrying out the laundering process for the benefit of the law enforcement agencies, he was doing it for his own benefit, which is perhaps not entirely surprising.

In due course, he was arrested. It is suggested that he knew that he was going to be arrested, he having been given some weeks warning that that would take place. Be that as it may, after his arrest, he having arrived at Teesside Airport from Tangiers, in the attic in his home were found 12 holdalls containing a total of £1,759,210 in cash (Sterling). In addition, in his bedroom were found 1,184,490 Swiss Francs, with a value of approximately £500,000. When tested, the cash was found to be contaminated with cocaine to a greater extent than would be expected for cash which had been in general circulation. There was also found at his business premises a note on an envelope on which had been written "Mario debt". It appeared to be a record of sums received and paid out between December 1991 and March 1992, and the total recorded for the end of February was £4,845,396. The suggestion was that this was a record of the money laundering that Charrington had dealt with on behalf, it was said, of Halley.

He was interviewed the next day by Customs officers. He admitted that he had travelled to Venezuela with Warren in September 1991, that he knew Halley and he had been involved in the purchase of motor cars for Halley. After the conclusion of the formal interview, he spoke to the officers in private. He told them that he had been acting as informant and that he had been asked to launder money from the sale of drugs, and that the monies which had been seized were bagged up ready to be laundered. He said that, after the money was changed, it went to Mario's people in Holland. Indeed, as later appeared, it seems that what was being said was that this money was to go to Halley and he was to pay the suppliers of the cocaine.

He was charged with conspiracy to import cocaine. His solicitors obtained statements from two police officers and one Customs officer, who had been using him as an informant. I have seen those statements and I emphasise those were statements obtained on his behalf in order, it was believed, to assist him, as indeed in due course they did. The statement of the police officer who was his main contact, a police officer called Weedon, who I think was a Detective Sergeant at the time, consisted of what effectively was a record of information that Charrington had given him mainly during the latter part of 1991 when he indicated that there was, he was pretty sure, 500 kilograms of cocaine en route to the United Kingdom and that a further shipment of 2,500 kilograms was being prepared to come in within a few weeks.

Halley and Warren, he said, had asked him to get more involved and to provide transport, and had also asked him to become involved in the laundering of the money. On 11 November it is recorded that Charrington had told the officer that he had been with Halley to London and had changed £1.4 million into US dollars and that that was part of the money laundering. Charrington, on 19 November, is recorded as having told the officer that he was heavily involved with Halley in importing cocaine and he organised the transport and subsequent laundering of cash on behalf of Halley.

Finally, in February 1992, there is a record of Charrington having told the officer and a Customs officer that he had purchased a ship financed by Halley and that he had a large amount of Halley's unlaundered cash. That was on 29 April 1992, some two months before the money that I have referred to was discovered in his premises.

Since his arrest, largely as a result of the information that he was being run as an informant, and in circumstances in which there had been, I need not go into the details, a less than satisfactorily liaison between the police and the Customs about what was really going on, it was decided after seeking advice from leading counsel, who was then instructed on behalf of the prosecution, that Charrington should not be prosecuted. Warren was prosecuted, and of course Halley was in custody in Holland at this time.

In due course, Warren was acquitted. Again, the circumstances do not matter for the purposes of my decision in this case. Suffice it to say, he was acquitted on direction of the trial judge because the evidence which was presented was, in the judge's view, insufficient to justify the case going on at the end of the prosecution case. Warren was, no doubt, exceedingly pleased at his acquittal, and there is some indication that he boasted about it to the prosecuting authorities and to the Customs officers after his release -- perhaps, again, that is unimportant for the purposes of this case.

Since then, Warren has been convicted in Holland of an offence involving the smuggling of cocaine into Holland, for which he received a sentence of 12 years' imprisonment, running from 1996. He killed a fellow prisoner, was further convicted of manslaughter and received a further sentence of four years' imprisonment. In addition, he is the subject of some confiscation proceedings. I do not have the details, but I am informed that they are somewhat similar to our confiscation proceedings, whereby the court can set out the sum which is the subject of any confiscation order, and a failure to pay will result in a sentence of imprisonment in default which will normally be consecutive to any other sentence which is imposed.

Warren is in the position that, if he is able to show that the money in question in this case was in fact his, the Dutch authorities will, or he expects that they will, be prepared to reduce the sum which they require by way of confiscation, no doubt on the basis that it is already being confiscated in this country, and, as a result, he may save himself up to six years' imprisonment. That is Warren's obvious motive, and understandable motive, for asserting that the money is not Charrington's and not Halley's but his.

So Charrington, for his part, is now asserting that the money is indeed his. I will go in a moment through the accounts that he has given, but he says it is not right that he was holding this money: it was not the proceeds of the drug smuggling exercise; rather it was his lawfully obtained commission resulting from sales of diamonds, he being the commission agent who was able to arrange for the sale, over a period of about two years, of some £50 million worth of diamonds. It so happened that the commission which was due to him was paid in cash and that the persons who were due to pay it and were holding it in Belgium, for some reason best known to themselves and to himself, instead of transferring it as one might have expected through a bank, if it was a perfectly legitimate exercise, got it in a combination of Sterling and Swiss Francs, took it from Belgium to his home address in this country and presented it to him in cash. That was about a fortnight before the police descended upon him. That is now the story that is told. It is bolstered by a statement from a gentleman, whom I shall refer to as Mr K, as did Charrington, who was the gentleman, he says, who was selling the diamonds and who arranged to pay the commission. There is a second statement from this gentleman which gives further details of the arrangements. It is said that there was a contract in writing and that there is a broker who will be able to confirm the arrangements that were made.

Mr Barnard submits that this is complete nonsense and wholly inconsistent with all the material that existed before this particular claim was made, and I can disregard it as being wholly incredible. It also incidentally is contrary to the case being put before me by Warren, that the money is accepted to be the proceeds of the unlawful activities in the smuggling of cocaine into this country.

I have referred to the note found referring to Mario (this is of course Halley's first name) and the explanation given to the Customs in the interview. Charrington now says that the "Mario" note was a fabrication and the interview was equally a fabrication. I am not quite sure how he deals with the evidence that he obtained, or his solicitor obtained, from the police and Customs. They are all rather strange fabrications, if that is what they are, because they hardly fabricate admissions which are against the interests of the claimant. Indeed, they were obtained for the purpose of enabling him to be able to escape prosecution, and very successful they were in that exercise. I suppose it may now be said: "I was telling lies in order to further my claim". But clearly, those do not assist him at all.

Following his acquittal, his solicitors, on his behalf, wrote letters to the Customs and Excise and indeed threatened proceedings against them with a view to seeking the return of the money. As the law then stood, the 2002 Act not being in existence, there were problems faced by the Customs in holding on to the money, although I believe that they could have done so and required civil proceedings to be taken in order to seek its recovery. Be that as it may, no proceedings were ever in fact taken, although threats were made. But perhaps more significantly, nowhere in any of the correspondence from his solicitors was it suggested that the money was actually his, money obtained lawfully as a result of a perfectly proper lawful business transaction involving diamonds.

Mr Wolkind submits that there was no need for his solicitors to refer specifically to the diamonds. All that they had to do and all that they did was to assert that the Customs had no right to retain the money. That seems to me to be a wholly unrealistic view. If the solicitors had been told that this was actually a perfectly lawful transaction, it frankly beggars belief that they did not put this forward as a basis for seeking its return.

It was suggested that nowhere had there been any reference to diamonds. As a result, enquiries were made by the claimant of the Customs and of the police. There had been an investigation by the Devon and Cornwall Constabulary into alleged corruption between the police officers and Charrington, and indeed he was, in due course, arrested and all stood trial. That trial collapsed because evidence which was essential was ruled inadmissible. But a document was apparently recovered from one of the officers concerned which has on one sheet notes to this effect:

Let us see then what Charrington actually now says in his statement about the way in which the diamond enterprise commenced. I do not propose to read it all. It is in a statement that he has provided for the purpose of these proceedings dated 16 March 2004. He says:

He goes on to say that he contacted his brother, David, who had had some friends in the diamond business, and he then contacted Mr K. Mr K was an Israeli and he said he was interested in purchasing the diamonds. So there was a view, and an arrangement was made that he should indeed sell them over a two-year period. He would get a commission of 10 per cent of the purchase price, that is Charrington, but he would not be paid that commission until 80 per cent of the diamonds had been sold. That is why he had this large sum only a fortnight before the Customs descended upon him. He said that the money brokers themselves arranged for the money to be exchanged predominantly into Sterling and Swiss Francs " ... and it was they who transported it to my address. This money arrived within a fortnight before the police raided my house".

I have indicated what the story now is. It is supported by Mr K and it is submitted by Mr Wolkind that there is sufficient to say that there is a real prospect of success and all will depend upon the assessment of the evidence given both by Charrington, if he gives evidence, and Mr K and any supporting evidence that may be discovered as a result of the extra information that has been given by Mr K.

Of course, it is a strong thing to give summary judgment without the matter being tested by the giving of evidence by, and cross-examination of, relevant witnesses. But it is necessary for me to form a view if this application is brought before me. It seems to me that the story that is now given is truly incredible. Everything that was said at the material time and the note that was discovered (and I, of course, recognise that he now says it was a fabrication) all point in the direction that Charrington was indeed involved and heavily involved in these importations of cocaine and was laundering the money on behalf of those who were behind the importation. That is what he admitted, that is what he told a number of officers, that was the information that he himself obtained in order to enable him not to be prosecuted. At no time was the diamond suggestion raised until the question arose of seeking this confiscation, for want of a better word, on behalf of the Director of the Asset Recovery Agency.

In those circumstances, I have no hesitation whatever in rejecting the evidence that is now sought to be relied upon and in deciding that Charrington's account is simply unbelievable. I cannot imagine that any judge would believe it, were it to be put forward, even if Mr K appeared to be a satisfactory witness -- I say appeared to be because one knows that witnesses can come forward and can appear to be very plausible, but when the story that they are conveying is so incredible, one is entitled to reject them. I do not forget or put out of my mind the fact that Charrington, albeit in custody at the moment in Germany as a result of a conviction for drug smuggling (incidentally he apparently asserts that that was another wrongful conviction), has made, and there is reason to believe that he has made, millions out of his activities. It is not difficult to find people who are prepared to speak on one's behalf if financial rewards are in the offing. I do not, of course, have any direct evidence that that has happened, but all I can say is that I am singularly unimpressed with the evidence that has been put forward about how this diamond enterprise was begun and how it happened. It is not entirely consistent with the note that has been discovered, to which I have already referred, and the suggestion made is that that note was merely a suggested possible route in due course for trying to get his hands on the money and pretending that it was legitimate rather than from the proceeds of drug smuggling.

That disposes of Charrington. As far as Warren is concerned, he has not put in any evidence as yet. The reason for that was that he was concerned that, if he, as he put it, told the whole story, he might find himself prosecuted for something that was contained in the whole story and he wanted to have an order from this court the effect of which would be that anything he said in making his statement could not be used against him in any prosecution. That, I was not prepared to order. But Mr Barraclough has drawn to my attention the fact that, in 1996, in a telephone conversation from Holland which was intercepted by the Dutch authorities, he did assert that that money was his.

Furthermore, there is no doubt that he was the so-called mastermind behind this importation, at least certainly one of the masterminds. It is not in the least impossible, indeed it is quite probable, that even if he were the prime mover behind this importation, nonetheless Charrington was used by Halley for the purpose of laundering the money that Halley needed to pay the suppliers, or indeed for his part of his profits from the enterprise. Warren would not need a launderer, it is said, because he would have his own arrangements which he could perfectly well carry out for himself. Halley was in a different position because he was not in this country and therefore did need someone in this country, where the cocaine was to be sold, to be prepared to act on his behalf to launder the part of the proceeds that he (Halley) had to deal with. Accordingly, it seems to me Warren's case is one which is, without some very compelling evidence, unlikely to succeed. Without any such evidence, I would not have been prepared to do other than grant summary judgment.

However, since this suggestion on his behalf has come somewhat late in the day, Mr Barnard very fairly accepted that the claimant had not had an opportunity to consider it in depth, and more importantly, had not had an opportunity which was taken in respect of Charrington's case of checking to see whether indeed there was any material which the Customs had in their possession or indeed perhaps the police in theirs, to support Warren's contention that the money was his. Warren, of course, made no admissions at the time, as one might expect. But he has asserted through Mr Barraclough that it is his belief that the Customs do have material which might well point to the money being his and that that should be disclosed. In those circumstances, I am prepared to grant an adjournment to enable these enquiries to be made because clearly time does need to be taken in order to investigate them.

Mr Barraclough suggested that a shopping list would be provided by his solicitors, but I do not believe that this needs to, or should, become a large discovery exercise. If there are any documents or matters which are specific, then instructions can be taken from Warren about them and they can be identified. A vague fishing exercise is not something that can be condoned.

For their part, the claimants have indicated that they will carry out a similar exercise to that which they carried out in respect of Charrington, that is to ask specifically whether there are any documents which could point in the direction of the money being Warren's rather than Halley's.

In those circumstances, perhaps somewhat reluctantly -- because I feel that it is likely, I put it no higher, that this will merely result in a delay and will incur yet further costs -- but in the interests of justice and to ensure that it cannot be said that Warren has not had every possible proper opportunity to put forward material which supports his case, I will adjourn further consideration in relation to Warren until the beginning of next term.

MR BARNARD: My Lord, just before your Lordship makes that the order, behind me has been sitting somebody who was the head of the London region for Customs and has sent us this message, that he thinks it should be entirely possible within the next two weeks to provide this information. It is not something --

MR JUSTICE COLLINS: I can see that. The problem is really I think on Mr Barraclough's side. If the answer is: no, there is nothing, then I can see that there is no point in going further. If there is anything that comes out of this then different considerations arise. But also I ought, I think, to give Warren the chance to identify any specific matter. I am as reluctant as you are to delay things but, in a sense, the money is going to remain there and interest is going to accrue. Is it really going to matter if it takes two months more rather than two weeks more?

MR BARNARD: The suggestion that was put to me and which I am going to put to your Lordship is this: the matter could be listed for the last day of term. It would be very short if the answer is "no" and there is not anything coming from Mr Warren. It could be listed for perhaps one hour and no more. But if it turns out that there is information, and if we find there is information we will at once let the Administrative Court Office know and then we would ask it to be listed in the next term.

MR BARRACLOUGH: We have to travel from the north, but that is not a great problem. We have to see Mr Warren. I do also -- and I was going to enquire with my Lord whether I am debarred from providing a statement from Mr Warren once he has the information as to what happened today as to protection.

MR JUSTICE COLLINS: If I am adjourning it, I cannot prevent him from putting in a statement.

MR BARRACLOUGH: I also still hold out the hope that Mr Halley will be contacted by his Dutch lawyer. In all the circumstances I would invite My Lord to keep the date in October. I have heard Customs in the past say two weeks and it never works.

MR JUSTICE COLLINS: I take that point.

MR BARRACLOUGH: Customs could communicate that there is nothing, but we think -- my instructing solicitor thinks -- and he can point to certain things: for example, the Tony account in the paper work.

MR JUSTICE COLLINS: Yes, I am sympathetic, Mr Barnard, but I think once I have made the decision, which you very fairly did not oppose, to adjourn the matter, it probably is more sensible to say the beginning of next term because I see that there are things that could be raised. There are difficulties in communication between Mr Barraclough and his client.

MR BARNARD: Would your Lordship consider giving these directions: that Mr Warren must by (and then a date) serve a witness statement -- when I say Mr Warren, I mean his solicitors -- serve a witness statement identifying any documents which they contend are held by Her Majesty's Customs and which show --

MR JUSTICE COLLINS: Any specific documents.

MR BARNARD: Yes. In other words, if there is going to be a suggestion.

MR JUSTICE COLLINS: I agree. That is not unreasonable, Mr Barraclough, that you should within a relatively short time identify anything --

MR BARRACLOUGH: It would not be in the form of a witness statement, more a schedule.

MR JUSTICE COLLINS: No, it would be a letter requesting --

MR BARRACLOUGH: My learned friend said a witness statement and that was concerning my instructing solicitor.

MR JUSTICE COLLINS: I would assume, as would anyone, that anything put in the letter would be on instructions, and in those circumstances I do not think a witness statement as such at that stage is necessary.

MR BARRACLOUGH: There are two stages. We can identify, I think, from my instructing solicitors' knowledge, that would be one schedule, but there would a further schedule which would require us to go and see on certain --

MR JUSTICE COLLINS: I think you ought to do that by the end of this month -- both of you -- because otherwise we are going to run into real problems. In the meantime they can be making their own investigations.

MR BARRACLOUGH: Does my Lord say the end of July?

MR JUSTICE COLLINS: Yes, by the end of July you must do that, and if you are going to submit a statement -- if you are going to go over and see him -- then you should obviously decide whether he is going to make a statement. I think that should come as quickly as possible too, if you are going to advise him, and whatever the statement, ideally again by the end of July, but I will not order it until --

MR BARNARD: 1 September.

MR JUSTICE COLLINS: 1 September, that is very reasonable.

MR BARRACLOUGH: I am very grateful.

MR JUSTICE COLLINS: But obviously the sooner the better.

MR BARNARD: And My Lord, the other part of the order, what I propose to do, if your Lordship agrees, is draft something up.

MR JUSTICE COLLINS: Yes, and agree it.

MR BARNARD: The other part of the order would be that the claimant must by (then a date) disclose any information held by Her Majesty's Customs which might show etc.

MR JUSTICE COLLINS: I thought you had already dealt with that. That is by the end of July.

MR BARNARD: By the end of July, the claimant as well?

MR JUSTICE COLLINS: Oh the claimant, I am so sorry.

MR BARNARD: I was thinking that we really ought to wait until we have been told.

MR JUSTICE COLLINS: I think that is reasonable.

MR BARRACLOUGH: Middle of August.

MR JUSTICE COLLINS: If you find nothing, you can say so as soon as possible. But you have to wait until you are asked for specific matters to know whether you can find them. But do that as soon as possible afterwards.

MR BARNARD: I would be happy to say by 20 August.

MR JUSTICE COLLINS: That is fine.

MR BARNARD: My Lord, as far as the costs are concerned, I would ask for an order for costs against Mr Charrington, not to be enforced without order of the court. One never knows, he may win the football pools in some way.

MR JUSTICE COLLINS: I do not think he needs to win the football pools, but there we are. Mr Wolkind, I do not think you can resist that order, can you?

MR WOLKIND: No, I cannot. I suppose there is an acknowledgment that he is publicly funded (inaudible) representation now.

MR JUSTICE COLLINS: Yes, you better have the usual order.

MR BARNARD: My Lord, those costs against Mr Charrington to include the costs reserved -- we have reserved the costs against him to date.

MR JUSTICE COLLINS: Whatever was reserved, yes.

MR BARNARD: Thank you very much.