IN THE MATTER OF HOUSSAM ALI v IN THE MATTER OF THE DRUG TRAFFICKING ACT 1994 [2002] EWCA Civ 1450

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
ADMINISTRATIVE COURT LIST
(MR JUSTICE PITCHFORD)
[2002] EWCA Civ 1450Case No C/2002/1544Venue Royal Courts of Justice, Strand, London, WC2, Friday, 4 October 2002
Between
IN THE MATTER OF HOUSSAM ALIApplicantIN THE MATTER OF THE DRUG TRAFFICKING ACT 1994Defendant
Before
Lord Justice SchiemannLord Justice DysonMR S CHEETHAM (instructed by Messrs Hughmans, London EC1M 5UU) appeared on behalf of the Applicant.The Defendant did not appear and was not represented.Date 4 October 2002
[1]Friday, 4 October 2002 LORD JUSTICE SCHIEMANN: Lord Justice Dyson will deliver the first judgment.

LORD JUSTICE DYSON: This is a renewed application for permission to appeal a decision of Pitchford J of 9th July whereby he refused the applicant's application for a certificate of inadequacy under section 17 of the Drug Trafficking Act 1994.

[3]The relevant facts can be shortly stated. In August 1998 the applicant was arrested and charged with attempted unlawful importation of Class A and Class B drugs. Following a plea of guilty, on 14 February 2000 he was sentenced to seven years and nine months imprisonment. The drug trafficking inquiries that followed led to a certification on 2 March 2001 that the benefit derived by the applicant from his drug dealing was £28,000-odd. His realisable assets were found to be £7,968.96, and a confiscation order was made in that sum. Of that sum £968.96 was standing to the applicant's credit with the Customs & Excise and has been paid. The balance of £7,000 represented a debt owed to the applicant by a Mr Grimwood as a result of a loan made by the applicant to him for the purposes of purchasing a property. The applicant was given six months to pay the amount of the confiscation order and ordered to serve four months' imprisonment in default.[4]In May 2001 the solicitors acting for the applicant learnt from a firm of Australian lawyers, Laurie Levy, who were acting for Mr Grimwood, that he had been arrested in Australia in connection with an allegation of importation of a quantity of narcotics. This was a charge which carried a maximum penalty of life imprisonment. The applicant's solicitors were notified by Laurie Levy that Mr Grimwood had entered a preliminary plea of guilt and was in remand.[5]On 23 May the applicant's solicitors wrote to HM Customs & Excise drawing attention to the situation which had arisen, namely, that the £7,000 had not been received from Mr Grimwood and Mr Grimwood was now in custody in Australia. Customs & Excise were requested to consent to a certificate of inadequacy. They refused. Correspondence ensued. The applicant's solicitors then sought further information about Mr Grimwood on the question of whether he could pay the £7,000. On 29th May 2002 they wrote to Laurie Levy a letter which included the following:
"You wrote to Peter Hughman last year to confirm that your client had been charged with a Drug Trafficking offence and was intending to plead guilty. I understand he has now been convicted and is serving a substantial prison sentence. In the circumstances we anticipate that the debt from Mr Grimwood is worthless as he is impecunious. Indeed we expect that the Australian authorities will have investigated Mr Grimwood's financial position if not pursued confiscation proceedings against him, and therefore it may be easily demonstrable that he is incapable of paying back this loan. If we can demonstrate to the Court that this is the case then we may be in a position to have the confiscation order varied accordingly. Alternatively, if your client is capable of paying back the loan then we call on him to do so now. We should be grateful therefore if you would update us on the position of the proceedings against Mr Grimwood and provide as much information as possible about his financial affairs."
[6]The response was a letter from Laurie Levy, dated 6 June, which simply said this:
"We acknowledge receipt of your facsimile letter dated May 2002. We have spoken with Mr Grimwood who has instructed us that he is indeed impecunious."
[7]Section 17 of the 1994 Act, so far as material, provides:
"3. If, on an application made in respect of a confiscation order by - (a) the defendant or... the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under the confiscation order, the court shall issue a certificate to that effect, giving the court's reasons."
[8]"Realisable property" is defined by section 6(2) as:
"(a) any property held by the defendant and... (b) any property held by a person to whom the defendant is directly or indirectly made a gift caught by this act."
[9]Section 62(1) provides:
"In this Act 'property' includes money and all other property, real or personal, heritable or movable, including things in action and other intangible or incorporeal property."
[10]The judge rightly identified the issue as being whether the property, that is to say the chose in action comprising the right to recover the £7,000 loan, was inadequate for the purposes of section 17.[11]The approach to be adopted to this issue was considered by the Divisional Court in R v Liverpool Magistrates' Court ex parte Ansen [1998] 1 All ER 692. That was a decision under the legislation that preceded the 1994 Act but whose terms were the same for present purposes. May J held that a debt was realisable property irrespective of any difficulty in its actual recovery. I do not read May J's judgment as authority for the proposition that a debt is realisable property if the applicant proves on the balance of probabilities that it is impossible to recover it. Such a proposition would at least arguably be wrong on the grounds that it would infringe the principle that imprisonment in default of payment is not a form of punishment, but a means of securing payment of a sum that can be paid. The judge decided the present application on the narrow ground, which he expressed as follows, at paragraph 17:
"I am asked by the applicant to issue a Certificate of Inadequacy upon the factual basis that the debt owed by Mr Grimwood is irrecoverable. In my judgment the applicant has come nowhere near establishing, on a balance of probability, that this debt is irrecoverable. He has demonstrated that it is likely to be difficult to recover. Although invited to distinguish the facts in Ansen, I cannot, in view of that state of affairs, accede to the submission and agree with Mr Bird, who appears on behalf of Customs and Excise, that the situation in which I find myself is distinguishable from that in Ansen."
[12]In my judgment the judge was entirely right. The burden of proving irrecoverability is on the applicant. The letter of 29 May 2002 by his solicitors was carefully drafted. It asked a number of specific questions to which the reply given was also very carefully drafted. It is notable that the reply said nothing about any investigations by the Australian authorities, a point specifically raised by Hughmans in their letter; and nothing about any investigations by the Australian authorities into the applicant's financial position. If there had been such an investigation then, as the writer said, it might have been easily demonstrable that the applicant was incapable of repaying the loan. Moreover, the letter of 29 May asked in terms for as much information as possible about the applicant's financial affairs. The reply was merely an oral assertion by the applicant that he was impecunious. It has been said time and again that the drug trafficking legislation is draconian for obvious policy reasons. The burden of proving irrecoverability rests fairly and squarely on the applicant, and in my judgment the judge was entirely justified in concluding that that burden had not been discharged. Mr Cheetham rightly asked the rhetorical question: what more could the applicant do? It may well be that there is nothing more that on the facts of this case the applicant could do to discharge the burden. The fact remains, however, that the burden rests upon him; since he has failed to discharge it, he cannot succeed with his application for a certificate of inadequacy.[13]I would therefore dismiss this application.

LORD JUSTICE SCHIEMANN: I agree. (Application dismissed; no order for costs).

Cited in 4 later judgments