Designated Officer for Sunderland Magistrates' Court v George Knowles Krager

This judgment resolves a preliminary issue as to locus standi and jurisdiction arising in proceedings to enforce a county court charging order by an application for sale of real property consisting of a dwelling house known as 63 Acklam Avenue, Grangetown, Sunderland, SR2 9SQ ("the Property"). The claim arises from a confiscation order made on 22 July 2009 in the Newcastle upon Tyne Crown Court against one George Krager upon his conviction for possession of goods with a false trade mark for sale or hire contrary to S. 92(l)(c) of the Trade Marks Act 1994. He is the first defendant in these proceedings, but has taken no part in them.

The claimant, Ms Sheila Proudlock suing in her capacity as the Designated Officer for Sunderland Magistrates Court, claimed to have the benefit of a final charging order from the Leeds County Court on 16^th July 2010 by way of enforcement of the confiscation order against Mr Krager's alleged beneficial interest in the Property. Its sole registered proprietor is Ms Lorraine Mason, the second defendant in these proceedings. She denies that Mr Krager has any beneficial interest in the Property, and the claimant therefore seeks declaratory relief under the Trusts of Land and Appointment of Trustees Act 1996 ("TOLATA") as to the defendants' respective beneficial interests therein.

The claimant brought these proceedings under the misnomer "Her Majesty's Court Service North East Confiscation Unit", until corrected pursuant to the order of DJ Atherton on 20 July 2011. The charging order was sought by and granted to "HMCS (Leeds Magistrates Court)" but the claimant does not say that this was yet another misnomer for herself. Rather, however, the evidence in support of that application disclosed that it was a misnomer for Mr Saieed Kazi, an authorised assistant to the Justices' Clerk for Leeds, who made the application in the mistaken belief that the Leeds Magistrates Court was the court responsible for the enforcement of the confiscation order. He was its designated officer. Mr Kazi also described himself as Principal Legal Advisor to the HMCS north east regional confiscation unit ("The Unit"). He has in fact had the day to day conduct of this application on the claimant's behalf.

The preliminary issues arise from Ms Mason's case that (1) the claimant (however named) has no locus to bring these proceedings, not having the benefit of the charging order, or any other interest in the Property and (2) that in any event the confiscation order is not enforceable in either the county courts or the High Court, whether by charging order or otherwise, exclusive jurisdiction for enforcement in relation to the Property lying in the Crown Court. The underlying question whether Mr Krager has a beneficial interest in the Property is not for resolution on this application.

Section 50 of the Proceeds of Crime Act 2002 ("POCA"), which applies if a confiscation order has been made, but neither satisfied nor appealed, provides that on the application of the prosecutor the Crown Court may by order appoint a receiver in respect of realisable property. The definitions in Sections 82, 83 and 84(l)(b) and (2)(b) provide that realisable property includes real property in which the defendant subject to the confiscation order has an interest. Section 51(2) gives the Crown Court jurisdiction to confer specific powers on the receiver in relation to the realisable property, including power to take possession of it, to manage or otherwise deal with it, to realise it and to start, carry on or defend legal proceedings in relation to it. By section 51(8) the Crown Court must not confer on the receiver powers of management, dealing or realisation in respect of property unless it gives persons holding interests in the property a reasonable opportunity to make representations to it.

Section 35, headed "Enforcement as fines" provides that if a court makes a confiscation order:

Section 140 of the Powers of Criminal Courts (Sentencing) Act 2000 ("the Sentencing Act") provides, so far as is relevant:

Section 87 of the Magistrates' Courts Act 1980, provides, so far as is relevant, that:

Mr Jonathan Hall for the claimant submitted that the statutory provisions which I have summarised enabled the designated officer to use any of the civil enforcement measures available to a high court or county court judgment creditor including, therefore, the obtaining and enforcement of a charging order over any interest of Mr Krager in the Property. He said that the statutory provisions operate by way of a triple deeming structure. First, the confiscation order is deemed by section 35 of POCA to be a fine imposed (in the present case) by the Crown Court. Secondly, the Sentencing Act deems a crown court fine as having been imposed on conviction by the magistrates' court which committed the defendant to the Crown Court for trial. Thirdly, the Magistrates' Courts Act deems a fine to be the equivalent of a High Court or county court judgment debt obtained by the designated officer of the relevant magistrates' court.

Mr Stephen Fletcher for Ms Mason challenged that analysis on two grounds. His narrower ground was that the deeming provision in section 87(1) of the Magistrates' Court Act 1980 was expressed to apply only to payment of a sum "adjudicated to be paid" by a conviction of a magistrates' court, whereas section 140(1) of the Sentencing Act deemed a Crown Court fine to have "been imposed" on conviction, rather than adjudicated to be paid. Accordingly, he submitted that section 87 of the Magistrates' Court Act had no application to fines imposed in the Crown Court.

In my judgment the linguistic difference between the phrase "adjudicated to be paid by a conviction" in Section 87(1) and "imposed on conviction" in section 140(1) plainly does not have the consequence for which Mr Fletcher contends. Section 87 of the Magistrates' Courts Act is part of a compendium of sections in Part III of the Act dealing generally with enforcement which were, subject to express exceptions, intended to be made generally applicable for the purposes of collection, enforcement and remission of crown court fines. Furthermore, it is plain, for example from section 140(3)(b) of the Sentencing Act, which makes express reference to section 79(2) of the Magistrates' Courts Act, that this importation of the Magistrates' Courts Act regime for enforcement was intended to apply to crown court fines notwithstanding the use in the Magistrates' Courts Act of the slightly different phrase "adjudicated to be paid".

The matter is put beyond any doubt in my judgment by section 35(3)(c) of POCA, which expressly dis-applies sub-section (3) of section 87 of the Magistrates' Courts Act, thereby plainly leaving section 87(1) in effect as converting the deemed magistrates' court fine arising from a crown court confiscation order into a High Court or county court judgment debt for the purposes of civil enforcement.

Mr Fletcher's broader submission was that, even if I were to reject his textual submission, so that confiscation orders were generally enforceable as civil judgment debts, there should nonetheless be recognised an exception where enforcement was sought either against property shared between the defendant and a third party, or against property in which the legal title was vested in a third party, but upon the basis of an alleged beneficial interest therein of the defendant. Enforcement of that kind should, he submitted, be treated as limited to the receivership route created by sections 50 ff of POCA.

Mr Fletcher's two main grounds for this submission were, first, that only by such a construction of POCA could the rights and interests of third parties holding or sharing the relevant property be properly addressed. Secondly, he submitted that it had already been decided that the sole jurisdiction for the enforcement of confiscation orders lay with the Crown Court, rather than with the High Court.

Again, I reject Mr Fletcher's second submission, for the reasons which follow. First, nothing in the language of sections 50 and following of POCA begin to suggest that the receivership route was intended to be the exclusive means of the enforcement of a confiscation order, either generally, or in relation to any specific type of property. Secondly, third parties with interests in property resorted to (as in the present case) by the civil enforcement route of the obtaining and enforcement of a charging order are by no means disabled from asserting their own rights and interests. First, the procedure for the making final of an interim charging order contemplates notification to third parties, as indeed incurred in favour of Ms Mason in the present case. Although notified, she did not choose to intervene in the charging order application so as to assert that Mr Krager had no interest in the Property, or that, on discretionary grounds, the interim order should nonetheless not be made final. Secondly and in any event, the final charging order affected only Mr Krager's unspecified interest in the Property, leaving it for the beneficiary of the charging order to establish in any proceedings to enforce it by way of sale, that there was a sufficient beneficial interest thereby charged to justify the sale of the Property. That is indeed a major issue in the present proceedings, in which the onus would lie on the claimant (if a beneficiary of the charging order) to establish as against Ms Mason that Mr Krager had any beneficial interest in the Property at all.

Finally, the supposed authority for the proposition that the Crown Court has exclusive jurisdiction in relation to all aspects of the enforcement of confiscation orders, namely Webber v Webber (Crown Prosecution Service intervening) [2007] 1 WLR 1052 turns out on analysis to decide nothing at all in relation to civil enforcement of a confiscation order as a deemed judgment debt pursuant to section 35 of POCA and the provisions of the Sentencing Act and the Magistrates' Courts Act thereby engaged. It is true that, in his conclusion at paragraph 49 Sir Mark Potter said:

It follows therefore that Mr Hall's analysis of the statutory structure as affording an enforcement route by the obtaining of charging orders on a defendant's property which treats the confiscation order as a quasi civil judgment debt is correct, so that Ms Mason's challenge based on jurisdiction fails.

In written particulars prior to the hearing of this preliminary issue, the claimant's case was that the claimant could invoke section 14 of TOLATA (pursuant to which this application is made) as a person who has an interest in the Property because she was the beneficiary of the charging order made in the Leeds County Court. For the reasons set out in the introduction to this judgment, it emerged at an early stage in the trial of the preliminary issue that the claimant had neither applied for nor been granted the charging order. On the contrary, it had been applied for and granted to a different person, due to a misconception within the Unit as to the identity of the magistrates' court responsible for the enforcement of the confiscation order.

Mr Hall attempted various ingenious methods for resolving this difficulty without further delay. They were mainly based on the submission that I should transfer the county court charging order proceedings to the High Court and then make appropriate orders under CPR 3. 1(7) for the varying or rectification of the charging order together, if necessary, with the substitution of Ms Proudlock for Mr Kazi as the claimant in those proceedings.

Section 41(1) of the County Courts Act 1984 provides that:

In my judgment section 41 affords no assistance to the claimant, since the county court proceedings which led to the making of the charging order have concluded. There is therefore no stage of those proceedings at which it is possible for the High Court to order a transfer up. The position might perhaps have been otherwise if, before today, an application had been made to the Leeds County Court to re-open the proceedings for the purpose of varying the charging order, but it was not. Mr Hall could not suggest any convincing way out of this conundrum, exacerbated as it is by the fact that I am not, at present, authorised to sit as a judge of the Leeds County Court.

I am in any event by no means persuaded that it would have been right to vary or rectify the charging order in the manner suggested. It is one thing to vary an order under what used to be called the slip rule so as to bring it into accordance with the intention of the judge making it. But in the present case, the evidence in support of the application in the Leeds County Court identified Mr Kazi, not Ms Proudlock, as the applicant and intended recipient of the order. A variation under the slip rule would therefore be inappropriate.

Furthermore, the effect of the variation or rectification sought would have been to constitute Ms Proudlock as beneficiary of the charging order retrospectively from the date upon which it was made. Although the entry of a Restriction on the registered title to the Property probably has prevented any subsequent dealings in favour of unidentified third parties, it seems to me that there is no good reason why the court should take that risk in favour of Ms Proudlock. Nor should the court rush to a judgment on a fresh application for a charging order without at least considering the question whether Ms Mason's case that Mr Krager had no interest in the Property was a reason for refusing to make, at least, a final charging order. The fact that she failed to intervene to that effect in the application by Mr Kazi is not of itself a good reason why she should be prevented from doing so in relation to Ms Proudlock.

For those reasons the locus standi objection to these proceedings succeeds. The claimant has no present interest in the Property sufficient to justify proceedings under section 14 of TOLATA. Accordingly, these proceedings must be dismissed.