Stannard, Re In the Matter of the Criminal Justice Act 1988 [2015] EWHC 1199 (Admin)

Case No CJA No: 91 of 1999[2015] EWHC 1199 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 5/05/2015
Before
MRS JUSTICE ANDREWS DBE
Between
IN THE MATTER OF MICHAEL RICHARD STANNARDDefendant
Mr Mark Hardy (a McKenzie friend, with the permission of the Court) for DefendantMr Oliver Powell (instructed by the Crown Prosecution Service) for RespondentMr Andrew Bird (instructed by PCB Litigation) for Enforcement ReceiverHearing Hearing date: 22 April 2015
Judgment
[1]In 2001 the Defendant, Mr Stannard, who I regret to say is a former barrister, was convicted of two counts of cheating the public revenue. He was sentenced to 4½ years imprisonment on each count (to run concurrently) and disqualified from acting as a director for 9 years. He appealed against his conviction, sentence and disqualification as a director. All those appeals were dismissed.[2]After serving his sentence, Mr Stannard left the jurisdiction. He now lives in a flat that he owns in Verbier, Switzerland. It is said to be his only remaining asset of value. A letter from Mr Stannard dated 27 March 2012 estimated the value of that property to be £1,456,000 at the then prevailing exchange rates. The current value, some three years later, is likely to be even higher.

The Confiscation Order

[3]Prior to his conviction, Mr Stannard was made the subject of a Restraint Order pursuant to s.77 of the Criminal Justice Act 1988 (“CJA 1988”). On 17 October 2003 HH Judge Fingret at Southwark Crown Court made a confiscation order against him (“the CO”). Mr Stannard’s benefit from the fraud was assessed at £3,099,030. His realisable assets were assessed at £1,678,954. The assets which were taken into account in reaching that figure included a freehold property in Godalming, Surrey which was then valued at £395,000 (“the Godalming property”).[4]A confiscation order is an order requiring a defendant to pay a sum of money to the court. It is not made against specified assets. The power to make a confiscation order under the applicable version of s.71 CJA 1988 was a discretionary power to make an order “in such sum as the court thinks fit” but that sum could not exceed the assessed benefit or “the amount appearing to the court to be the amount that might be realised at the time the order is made.” On the premise that the benefit figure exceeded the amount that might be realised at that time, the CO was made in the sum of £1,678,954, to be paid by 17 October 2004. A sentence of 4 years’ imprisonment was set in default of payment.[5]As the offences were committed (in part) before 1 November 1995, the amendments to the CJA 1988 brought about by the Proceeds of Crime Act 1995 did not apply to Mr Stannard’s case. This means that the Court has no power to increase the quantum of the CO. There is no means by which the shortfall of around £1.4 million could be recovered – even if it came to light after the CO was made that Mr Stannard owned other assets of value, or if the known assets appreciated in value before they were realised in satisfaction of the CO. Moreover, interest does not accrue on the amount outstanding, and the entire debt would be expunged by service of the default term of imprisonment.[6]On the other hand, if further assets were acquired or came to light after the CO was made, there would be nothing to stop a receiver appointed under the CJA 1988 over all the defendant’s assets (“Enforcement Receiver”) from realising those assets and applying the proceeds towards the amount assessed to be due under the CO. An Enforcement Receiver may realise any realisable property for the purposes of satisfying a confiscation order (unless the Court directs otherwise) and is not constrained by the property identified at the time of the making of that order.[7]The powers of the Enforcement Receiver are generally to be exercised with a view to making available for satisfying the confiscation order the value for the time being of realisable property held by any person, by the realisation of such property. The High Court has the discretion to exclude property from the Receivership, which must be exercised in accordance with the general principles and guidance set out in s.82 of the CJA 1988. The discretion may be exercised, for example, in cases where the court has made a finding or the CPS has conceded that the property in question is not an asset of the defendant even though it may be in his name, or appears to have been purchased by him or with his money, or it was given by him to a third party.[8]If the value of all available realisable assets is insufficient to satisfy the amount remaining due, a defendant can apply to the Court for a “certificate of inadequacy” under s.83 of the CJA 1988. The onus is on the defendant to satisfy the court that his realisable property will not satisfy the confiscation order. “Realisable property” in this context means his total realisable assets at the time that he applies for the certificate of inadequacy (not at the time when the CO was made).[9]Mr Stannard appealed against the CO, but on 1 November 2005 the Court of Appeal dismissed the appeal on all grounds R v Stannard [2005] EWCA (Crim) 2717. Once an appeal against conviction or sentence has been dismissed in a criminal case, the only basis on which the defendant can appeal again is if the matter is referred to the Court of Appeal (Criminal Division) by the Criminal Cases Review Commission (“CCRC”). The question whether to refer a case to the Court of Appeal is entirely within the discretion of the CCRC. If it refuses to make a reference, the remedy is to seek permission to bring judicial review, but such applications are rarely granted.

The Receivership Order

[10]Mr Stannard had the opportunity to pay the CO before an Enforcement Receiver was appointed, but he failed to take any steps voluntarily. On 5 July 2006, Wilkie J appointed Mr David Ingram, a partner in Grant Thornton UK LLP, as the Receiver of all Mr Stannard’s assets for the purposes of enforcing the CO.[11]By section 81 of the CJA 1988, the sums in the hands of an Enforcement Receiver shall first be applied in payment of the costs of realisation and then:
“shall, after such payments (if any) as the High Court may direct have been made out of those sums, be applied on the defendant’s behalf towards the satisfaction of the confiscation order.”
[12]The Receivership Order contained the following provision in paragraph 5:
“The costs of the Receivership shall be paid out of the assets received by the Receiver and in priority to any other payment required or provided for by this Order other than the costs of realisation, the recoverable costs shall be reasonable costs and in the event of a dispute about the reasonableness the matter shall be referred to a Costs Judge in accordance with Part 69 Rule 3….”
[13]Although it might appear obvious that paragraph 5 was intended to be a direction made under s.81 of the CJA 1988 that payment of the Enforcement Receiver’s fees, disbursements and expenses should be taken out of the sums recovered by him before the balance was paid to the Magistrates’ Court and applied towards satisfaction of the CO, Mr Ingram very properly sought clarification of the position from the Court on a later occasion, in 2011, by which time, despite Mr Stannard’s best endeavours, he had managed to recover a sum of just under £900,000.[14]One of the reasons for Mr Ingram’s concern was that there was a potential conflict between elements of Wilkie J’s order, including paragraph 5, and the terms of a letter of agreement made between Mr Ingram and the Revenue and Customs Prosecution Office (“RCPO”), whose role is now undertaken by the CPS, concerning his remuneration. There was also some concern over the ambit of the expression “the costs of the Receivership” and whether, for example, it included the Enforcement Receiver’s fees (his rates having been agreed with the RCPO).[15]The application was heard by Silber J. I have had the advantage of seeing the skeleton arguments filed for the purposes of that hearing by Mr Bird, who then appeared (as he did before me) on behalf of Mr Ingram, and by Mr Stannard (representing himself from afar). Mr Ingram sought an express direction from the court under s.81(1) of the CJA 1988 that he should take his remuneration, expenses and legal costs from the assets realised, but prior to making any payment to the Magistrates’ Court in satisfaction of the confiscation order. It was contended that such a direction would serve the salutary purpose of providing Mr Stannard with an incentive to co-operate with the Enforcement Receiver in the realisation of his assets. Mr Stannard, who by that stage had already been held to be in contempt of court by reason of his singular lack of co-operation, (more of which below) strongly objected.[16]The evidence before Silber J was that the fees, costs and expenses Mr Ingram had incurred were in the region of £615,000 as at the end of January 2011. It was known to the Court and to all parties that Mr Ingram had not yet paid the sum of around £900,000 he had realised into Court in part-satisfaction of the CO. His failure to do so was something that Mr Stannard complained about at that time, and continues to complain about. One of the points he took in his skeleton argument for the hearing before Silber J. was that Mr Ingram was obliged to pay all the money recovered over to the Magistrates’ Court and then claim his remuneration back out of what would then have become public funds.[17]Mr Stannard did not appear at the hearing, presumably because there was a warrant for his arrest for contempt outstanding (as remains the case). However, his written submissions were taken into account by Silber J, as is recorded on the face of his order of 7 July 2011. In consequence of that order, Paragraph 5 of Wilkie J’s order remains in force but it has been supplemented by a new Paragraph 5A which provides that:
“Paragraph 5 shall operate as a direction under section 81(1) of the Criminal Justice Act 1988 by which the Receiver shall draw his remuneration, costs and expenses from the assets received by him in priority to any payment to the Magistrates’ Court on the defendant’s behalf towards the satisfaction of the confiscation order.”
[18]Mr Ingram gave an undertaking to the Court, recorded in the order, that before taking any money which he is holding, he would give 21 days’ notice to Mr Stannard of the sum that he proposes to take. That would give Mr Stannard an opportunity to raise any grounds of challenge to the proposed payment before the Enforcement Receiver deducted his remuneration in accordance with the directions made by the Court. Mr Ingram has complied with that undertaking. No application was made within the notice period to challenge the amount of any payment.[19]The directions made by Silber J plainly applied to the money that Mr Ingram was holding at that time. Any further costs, fees and expenses incurred by the Enforcement Receiver thereafter would not be reimbursed under Paragraphs 5 and 5A of the Receivership Order unless and until he realised further assets. The only additional recoveries since the Order of Silber J were a payment of £450,000 pursuant to a settlement of litigation which is described in more detail later in this judgment, and a sum of £22,594.88 recovered from Wishaw Ltd (which is irrelevant to anything that I have to decide).[20]Over the years the Receivership Order has been varied in other respects. Most pertinently for the purposes of this judgment, on 5 March 2007 Sullivan J heard evidence pertaining to a claim by Mr Stannard’s former girlfriend, the mother of his child, to ownership of the Godalming property. He delivered judgment in her favour confirming that “her legal and beneficial ownership in the property is 100 per cent”. In consequence, the Godalming property was removed from the schedule of assets annexed to the Receivership order.

The contempt proceedings

[21]On 25 June 2008 the CPS made an application for the committal of Mr Stannard for contempt of court. That application was heard by Sullivan J on 28 October 2008 and an order was made for committal to prison for 12 months. One of the preambles to that order certifies that the Court was satisfied that:
“the Respondent, Michael Richard Stannard, has been guilty of contempt (as set out in the affidavits of David Ingram and Bathsheba Cassel) in that he has failed to cooperate with the receiver and that contempt being persistent and far reaching and it is difficult to find a case of a more persistent refusal.”
In the light of the history of Mr Ingram’s dealings with Mr Stannard, which is conveniently set out at paragraphs 12-26 of Mr Ingram’s Third Witness Statement dated 2 November 2011, that seems to me to be fair comment.[22]The order for committal was suspended by Sullivan J upon terms that Mr Stannard should have a further opportunity to co-operate with the Enforcement Receiver (inter alia by disclosure of documents and information) and to execute a power of attorney in Mr Ingram’s favour to enable him to deal with Mr Stannard’s assets held abroad. Unfortunately this failed to provide Mr Stannard with the necessary incentive. On 11 May 2009 McCombe J removed the terms of suspension and activated the committal warrant. However it has not been executed because, as I have said, Mr Stannard left the jurisdiction. On 19 May 2011 he failed to attend an enforcement hearing at City of Westminster Magistrates’ Court and a warrant for his arrest was issued. That, too, remains outstanding. That was the history behind, and provided much of the justification for, Silber J’s order.[23]Mr Stannard has not appeared before the Court in respect of any proceedings since he moved to Switzerland. He remains in contempt of court and has taken no steps to purge his contempt.

Enter Mr Hardy

[24]It is against that background that an application notice was issued on 10 December 2014 on Mr Stannard’s behalf by Mr Mark Gregory Hardy, who describes himself in that document (inaccurately) as a “litigation friend”. Mr Stannard has given a Power of Attorney dated 4 December 2014 to Mr Hardy, which purports to give him power to conduct legal proceedings in Mr Stannard’s name against Mr Ingram and the CPS, and to appoint him as his “McKenzie Friend”. It is, however, established in the case of Gregory v Turner [2003] 1 WLR 1149 that a party may not by power of attorney confer on another person the right to appear in court as his lay advocate.[25]Mr Hardy has no legal qualifications, but he does have considerable experience of appearing before the courts as a litigant in person. He told the Court that he had first met Mr Stannard some 35 years ago when Mr Stannard gave advice to a company of which Mr Hardy was an employee. He had only become re-acquainted with Mr Stannard when the latter contacted him in 2013 with regard to the possibility of their combining forces to bring proceedings against a Mr Binstock for the recovery of certain money. In March 2014 Mr Hardy, Mr Stannard and a Mr Wilson formed a partnership named “JEB Recoveries LLP” which is now involved in litigation in the Chancery Division against Mr Binstock. This is a cause for some concern, given that there is a receivership order still in place and as Mr Bird pointed out, any debt or other payment that Mr Stannard might expect to recover in consequence of his arrangements with Mr Hardy and Mr Wilson appears on the face of it to be caught by that order. Those matters may need to be explored on another occasion.[26]I was shown, by way of background information, a copy of a judgment handed down in the Chancery Division on 21 April 2015 by HH Judge Simon Barker QC sitting as a judge of the High Court, in which he refused to strike out the claim brought by JEB as champertous (although he indicated that he would be receptive to an application for permission to appeal). Judge Barker permitted Mr Hardy (whom he described as “no novice in the courtroom”) to represent JEB and address the Court on its behalf. However, his application for permission was unopposed, and the basis on which it was granted was that it would be inappropriate to deny a principal in a limited liability partnership the right to represent that entity which employees as well as directors of a limited liability company would have. That is a very different scenario from the one with which I have been presented.[27]There was no formal application before the Court in this case from Mr Hardy seeking a direction that he allowed to conduct litigation or be afforded rights of audience on Mr Stannard’s behalf. Mr Powell, on behalf of the CPS, pointed out that there is no Court order appointing Mr Hardy as a “litigation friend” pursuant to CPR 21.6 nor has he complied with the requirements to become a “litigation friend” without a court order pursuant to CPR 21.5. However Mr Hardy rightly submitted that the provisions of CPR 21 relating to litigation friends are directed at those seeking to represent the interests of children or protected parties, and Mr Stannard falls into neither of these categories. He is a litigant in person.[28]Essentially it seemed to me that Mr Hardy was seeking an order for special rights of audience under paragraph 1(2) of Schedule 3 to the Legal Services Act 2007. The notes in the White Book suggest that the appropriate time and venue for making such an application is at the hearing itself, and that is what Mr Hardy has done. The CPS and the Enforcement Receiver were aware in advance that Mr Hardy wished to address the Court and were not prejudiced in any way by the timing of his application.[29]The role of a so-called “McKenzie friend” is normally limited to quietly advising the litigant in person, but he may be granted special rights of audience in a given case. However the person for whom the special right of audience is sought should generally be present when such an application is made, in order that the Court is fully informed, and can properly assess whether there would be an advantage to hearing from the McKenzie friend instead of the litigant in person. In the present case, the reasons why Mr Stannard has absented himself are obvious. There is the further complication that where a person is in contempt of court, the Court may refuse to hear any application made by or on behalf of such a person until such time as the contempt is purged: Hadkinson v Hadkinson [1952] 2 All ER 567 and X Ltd v Morgan Grampian [1990] 2 All ER 1. That is not a promising foundation for seeking an indulgence of this nature from the Court.[30]On the other hand, Mr Stannard cannot pay for lawyers to represent him, not because he cannot afford to do so, but because of the terms of the CO and the receivership; and although he only has himself to blame for it, he cannot appear before the Court himself and argue his case orally without risking his own liberty. He can, of course, make submissions in writing, which he has done, but that is not the same as appearing before the Court and answering oral submissions from the opposing party or parties.[31]Mr Hardy was at pains to assure the Court that he was not an apologist for Mr Stannard and that he would not be seeking to defend Mr Stannard’s behaviour in any way. On the contrary, he said he had told Mr Stannard in no uncertain terms that he should mend his ways and pay off the balance of the CO (sadly, that advice did not prompt Mr Stannard to offer any apology to the Court for his behaviour to date). Mr Hardy satisfied me that he understood and was willing to abide by the duties owed by an advocate to the Court. He told the Court that he had no financial interest in the outcome of the application, and that he had financed it to the extent that he had paid the issue fee and his own travel costs for attending court. He said that his only interest was that it would be of benefit to JEB in the Chancery litigation if Mr Stannard could clear the sums outstanding under the CO and thereby cease to be in contempt of court and that this was what the application was directed towards achieving. Mr Hardy was expressly put on notice by Mr Bird that he was at risk of an application being made against him personally for costs should the application fail. Thus he has sought special rights of audience and pursued the underlying application with a full understanding of all that entailed.[32]Both Mr Bird and Mr Powell took a neutral stance on the question whether I should make an order granting special rights of audience to Mr Hardy, although the formal position of the Enforcement Receiver was that I should not entertain an application made by (or on behalf of) Mr Stannard until he purged his contempt. It seemed to me that the fairest approach for the Court to take in these somewhat unusual circumstances would be to hear the application de bene esse and to hear what Mr Hardy had to say on Mr Stannard’s behalf. In that way, Mr Stannard could not legitimately complain that he had not been afforded access to justice, and if there turned out to be anything of merit in the application, the Court would have the benefit of hearing both sides of the argument developed orally.[33]However, I wish to make it clear that this pragmatic approach is not to be regarded by anyone in future, particularly by someone who is unrepentantly in contempt of court, as setting a precedent for getting round the prohibition against unqualified advocates providing advocacy services or getting around the problems posed by an outstanding order for committal and arrest warrant. I take the fact that Mr Stannard remains in contempt of court very seriously indeed. Moreover, for reasons that will appear, I am satisfied that although Mr Hardy believes otherwise, this application is not in truth motivated by any wish on Mr Stannard’s part to mend his ways, and to comply with the orders of the court that he has hitherto flouted, but is a continued demonstration of his defiance.[34]For the avoidance of doubt I should make it clear that I have neither been asked to make, nor have I made, any order conferring upon Mr Hardy any entitlement to conduct litigation on behalf of Mr Stannard. I have merely allowed him to address the Court on Mr Stannard’s behalf, and only for the purposes of the present application.

Mr Stannard’s Application

[35]I therefore turn to consider the merits of the substantive application by Mr Stannard. The application notice, dated 10 December 2014, seeks “an order that states how much, if any, remains outstanding under the Confiscation Order made against the Defendant in the amount of £1,678,954 on 17 October 2003, and such other and ancillary orders as the Court shall deem fit”. The application appears to have been made under CPR 23. It is supported by witness statements made by Mr Hardy and Mr Stannard. The latter also filed written submissions.[36]In principle, a person who is the subject of a confiscation order must be entitled to know the balance outstanding in order that, if he so chooses, he can pay it off voluntarily. However, that is not what this application is really about, because that information has already been supplied by Mr Ingram. In his Fourth Witness Statement, made in answer to this application, Mr Ingram deposes to the payments he has made into court in relation to the Confiscation Order, which total £515,899.73, and states that the current balance outstanding is £1,163,054.27. He exhibits an up to date Receivership Receipts and Payments Account that reflects all the receipts and any fees and costs that have been paid from the Receivership bank account. There are no apparent mathematical errors in the calculations.[37]Mr Stannard therefore knows what the current balance is; of course, in the light of the fact that the Enforcement Receiver’s accruing and unpaid fees, costs and expenses will be taken first out of any further recoveries, the amount required to discharge his liability will be more than that figure. The precise amount will depend on the amount of any further fees, costs and expenses of the Enforcement Receiver that have accrued at the time of recovery.[38]The application is, in reality, an attempt to challenge the figure of £1,163,054.27 and to argue about the Enforcement Receiver’s remuneration. Mr Stannard’s position is that he should be treated as having paid off the CO already and that the Receiver should be discharged from his duties. Mr Hardy addressed me on four separate matters. Three concerned criticisms of the way in which the Receivership account has been drawn up to date; the fourth related to the assessment of Mr Ingram’s reasonable remuneration. I shall deal with each of them in turn.[1]The impact of taking the Godalming property out of the Receivership[39]As I have already indicated, Mr Stannard is not obliged to pay anything more than the amount of the CO towards the benefit figure, despite the increase in value of his assets since the initial assessment made by the Crown Court. There will always be a shortfall of £1.4 million even if the CO is satisfied in full. Nevertheless, Mr Stannard now seeks to bring about a situation in which the gap between the amount he is required to disgorge and the amount of the benefit he actually received is increased still further on the basis that, at the time of the CO, the amount available to him to pay back that benefit was over-estimated.[40]To that end, Mr Hardy first sought to persuade me that because the Godalming property had been found by Sullivan J to belong to someone other than Mr Stannard, it was wrong in principle that the CO should have taken its value into account. He contended that this was an “injustice” which this Court had the power to cure by “deeming” the value attributed at the time to the Godalming property to have been paid, and crediting that amount against the balance outstanding under the CO.[41]In support of that proposition, Mr Hardy relied upon the case of R v Hackett[2013] EWCA Crim 1273. That was a “lifestyle” case in which the Recorder in the Crown Court made the finding that the benefit derived from the defendant’s criminal activity was the same as the value of his assets, and thus the confiscation order was made in the full amount of the benefit. Mr Hackett unsuccessfully appealed against the confiscation order. Subsequently an application was made to the High Court to appoint a receiver to enforce the sale of a property that had been purchased by Mr Hackett’s mother in 1998 with funds from her building society account. At the time of the confiscation order there was no evidence as to the source of those funds. Subsequent to the commencement of the criminal proceedings, the property had been transferred by the mother into the defendant’s ownership for no apparent consideration. There was therefore sufficient evidence for the inference to be drawn by the Recorder that the property belonged to Mr Hackett. Its value was taken into account in assessing the benefit.[42]Mr Hackett’s mother was given permission to intervene in the subsequent application to appoint a receiver in respect of that property. The High Court judge found at the hearing, on the evidence that was then before him, that the source of the money for the purchase was legitimate; that the mother was unable to hear or speak; and that the transfer to Mr Hackett, ostensibly to save inheritance tax, was vitiated by undue influence. The upshot of those findings was that Mr Hackett had not benefited from his criminal activity to the extent of the value of that property.[43]Mr Hackett, with the consent of the CPS, then sought and obtained a certificate of inadequacy. His realisable property was re-certified at the lower figure that would have been the adjusted sum of the benefit if the proceeds of sale of the mother’s property had been removed from the Recorder’s finding of benefit. However, by that time, Mr Hackett had paid more than the adjusted figure in satisfaction of the confiscation order. The only way that he could recover the overpayment was to persuade the Court of Appeal to re-open the original confiscation order and adjust the benefit figure. The CCRC referred the matter to the Court of Appeal.[44]As Pitchford LJ said in delivering the judgment of the Court, at [30]-[31]: “the underlying foundation for this reference is that information is now available to the court which was not available to the Recorder or to this court during the first appeal…. The situation now is that there is a judgment of the High Court reached after full consideration of the evidence which conflicts with the decision made by the Recorder sitting in the Crown Court during the confiscation hearing. That situation cannot be allowed to persist. And it is conceded by the respondent that the proper course for the court is to allow the appeal in respect of the benefit which the Recorder found emanated from [the mother’s property]. That is the course which we propose to take.”[my emphasis].[45]Mr Hardy submitted that the current situation was on all fours with Hackett. The Crown Court had taken the value of the Godalming property into account in assessing the amount that was available to satisfy any confiscation order; but it was not in fact an asset of Mr Stannard and therefore the amount available should have been assessed at a lower figure, resulting in a CO of £1,283,954 (£1,678,954 less £395,000). Therefore, although he has made no application for a certificate of inadequacy, the Court should make an order restoring Mr Stannard to the position in which he would have been if the CO had been made in the figure of £1,283,954 in the first place by “crediting” the £395,000 against the balance due (and granting a declaration that the balance due is lower than it actually is).[46]This argument is fundamentally misconceived. The underlying purpose of the CJA 1988 and subsequent statutory regimes for the recovery of proceeds of crime is to show that crime does not pay by forcing the criminal to disgorge the benefit derived from his criminal activities, if and to the extent that he can afford to do so. In principle he cannot be required to pay any more than the amount by which he benefited from crime. If a situation arises in which that occurs, because it is established that the benefit is wrongly calculated at too high a figure, the benefit must be adjusted downwards to the correct figure and any overpayment returned to the defendant. That was what happened in Hackett, where (unlike the present case) the value of the benefit was inextricably linked to the value of the defendant’s property, and thus the amount of the confiscation order depended on it.[47]In a “lifestyle” case like Hackett in which the value of the benefit is derived from the value of the defendant’s assets, there will be no difference between the value of the benefit and the value of the confiscation order. In other types of case, such as the present, the value of the benefit is not based on the value of the defendant’s assets. In such a case, the amount of the confiscation order is set at the figure that the Crown Court fairly considers, on the evidence before it, is the most that is likely to be recoverable from the defendant, and that may well be less than the benefit. Once the order has been made, as I have already said, recovery of anything up to that figure can be made by an Enforcement Receiver from any assets that turn out to belong to the defendant, whether or not they were known to the CPS or the court at the time.[48]If it later transpires that some of the assets believed to belong to the defendant at the time when the confiscation order was made are not and were never available because they belonged to someone else, then two possible situations arise. The first is that when those assets are taken out of the Receivership, the defendant has insufficient assets to meet his liability under the confiscation order. In that case he can apply for a certificate of inadequacy which, if granted, will mean he does not have to pay the difference, because the amount of his realisable assets will be re-certified in the correct amount. In principle that is obviously right, because no-one should be ordered to pay a sum that it is demonstrated he cannot afford to pay.[49]The second scenario is that taking those assets out of the equation would make no difference to the defendant’s ability to pay the amount he has been ordered to pay under the confiscation order. If he has enough other assets to meet the amount of the confiscation order, for example because all his other assets have appreciated in value, or because he has since won a prize on the National Lottery, or assets that he concealed from the court (or in which he falsely claimed to have had no beneficial interest) have since come to light, then there is no prospect of a downward re-certification of his realisable assets, and no injustice in his being required to pay the assessed amount in full. On any view he is not disgorging the entirety of the benefit he received from his criminal activities, but only the amount that the Court decided he was able to afford to pay. He is not being ordered to pay more than he can actually afford to pay, nor is he being ordered to pay more than the benefit he gained.[50]Thus in a non-lifestyle case, where the amount of the benefit and the confiscation order are not interdependent, the fact that the confiscation order would have been made for a smaller sum if the Crown Court had known at the time that the asset belonged to a third party, and not the defendant, does not give rise to an entitlement on the defendant’s part to require that the amount of the confiscation order be reduced to that smaller sum. Still less does it entitle the defendant to bypass the difficulties of mounting a challenge to the confiscation order itself by asking this Court to put him in the same position as if the confiscation order had been made for a smaller amount.[51]This case is not at all like Hackett. The finding that the property was owned by Mr Hackett’s mother meant that Mr Hackett’s realisable assets were self-evidently insufficient to meet the assessed benefit. That is why the CPS agreed to the application for a certificate of inadequacy. Mr Hackett then took the correct route to obtain a downwards adjustment of the benefit, namely, appealing against his sentence to the Court of Appeal on a reference by the CCRC. The CPS did not oppose that appeal for the wholly understandable reason that as the benefit equated to the realisable assets, it necessarily followed that if Mr Hackett’s realisable assets were in fact less than the figure calculated, the amount of the benefit should be reduced to reflect this and enable him to recover the overpayment. The only justification for the Court of Appeal to interfere was that in consequence of fresh evidence it transpired that the benefit figure was wrong in principle. That much is clear from the words I have underlined in the quotation from the judgment in paragraph 44 above; the appeal was allowed in respect of the finding made as to the amount of the benefit. The adjustment to the benefit automatically led to the downward adjustment to the confiscation order, as the two were inextricably interlinked.[52]In the present case, by contrast, the assessed benefit was far greater than the amount available to meet it from Mr Stannard’s realisable assets, and therefore the CO was set at a figure that was substantially lower than what Mr Stannard actually gained from cheating the Revenue. There is no reason to suppose that there is anything wrong with the benefit figure or that it would be reduced on appeal.[53]If a defendant believes he is entitled to an adjustment to the amount he has to pay once a receivership order has been made, the correct route is to make an application for a certificate of inadequacy. Mr Stannard has made no such application, for the very good reason that the value of the property in Verbier would almost certainly preclude him from obtaining one. He cannot get round that problem by coming to the High Court for declaratory relief, particularly if he knows perfectly well (as Mr Stannard does) that if he used the correct procedure he would get nowhere.[54]So far as the possibility of a challenge to the CO itself is concerned, this Court has no power to review the sentence imposed by the Crown Court; that is a matter for the Court of Appeal. The only route available to Mr Stannard to seek an adjustment to his sentence in the light of fresh evidence is via a reference by the CCRC. Mr Stannard has tried and (not surprisingly) failed to persuade them to refer the matter to the Court of Appeal. Although neither counsel nor I was shown a copy of the letter from the CCRC, Mr Stannard has quoted its response at some length in his written submissions. The quotation makes it clear that the CCRC is aware that Mr Stannard is alive to the fact that the removal of the Godalming property as a realisable asset will not reduce the amount of the CO by the amount of that property’s valuation at the point at which the CO was made, because he can afford to pay regardless.[55]The CCRC made the point that it could see no unfairness in that situation, given that the benefit far exceeded the amount of what were believed to be Mr Stannard’s realisable assets at the time when the CO was made. I share those sentiments; I can see no arguable injustice in requiring a defendant who can afford to pay the CO in full to do so. Indeed it seems to me that it would fly in the face of the intentions of Parliament for such a defendant to be entitled to any form of order that resulted in his having to pay less of the proceeds of crime back than the Crown Court directed that he should, especially if the CO remains in full force and effect.[56]The CCRC also said that it considered there was no real possibility that, on a reference from the CCRC, the Court of Appeal would reduce Mr Stannard’s sentence when it was open to him to apply for a certificate of inadequacy and achieve the same result. Mr Hardy criticized that reasoning on the basis that this is a case in which a certificate of inadequacy would not be granted and the CCRC is missing the point. However, on my reading of the extract from the CCRC’s letter, that is a misunderstanding of the point that the CCRC is trying to make, which is that if, contrary to their initial view, there were a real prospect that a certificate of inadequacy would be granted, then Mr Stannard should apply for one instead of seeking to appeal, because the Court of Appeal will not interfere if he has another remedy, and that is what the Court of Appeal would tell him if he appealed. However, if a certificate of inadequacy would not be granted, as appears to be the case, then there is no injustice in making him pay the full amount, and therefore no grounds for an appeal.[57]In my judgment it is unarguable that the CCRC’s refusal to refer the case to the Court of Appeal on that basis was irrational or Wednesbury unreasonable, so there is no realistic prospect of permission being granted for judicial review. Moreover, the CCRC’s analysis appears to me to be correct.[58]Mr Stannard cannot appeal to the Court of Appeal and he will not apply for a certificate of inadequacy. Insofar as the present application seeks to short-circuit the proper routes for challenging the sentence imposed on Mr Stannard or adjusting the figure attributed to his realisable assets for the purposes of the CO it is an abuse of process. Mr Hardy submitted that the CO can stand, but that an order “deeming” the Godalming property to be excluded from the realisable assets and “deeming” the value attributed to it to have been paid would restore the position, from an accounting perspective, to what it should have been if the CO had been made in the “correct” amount.[59]I have no jurisdiction to grant the relief sought, and even if I did, it would be wrong in principle for me to make an order “deeming” that the value of the Godalming property is treated as having been paid in reduction of the sums outstanding under the order. The £395,000 attributed to the value of that property in calculation of the amount of the CO has never been paid. That asset was excluded from the Receivership; it has not been utilised to reduce the sums outstanding. It would be wrong for this Court to pretend that it has. The CO remains in full force and effect unless and until the Court of Appeal otherwise directs, and it is the responsibility of this Court to supervise its enforcement in accordance with its terms.[60]In any event, even if I had a discretion to deem that money had been paid towards discharge of the CO from the sale of an asset belonging to a third party when it had not, I would refuse to exercise it in favour of Mr Stannard, not only because he is still in contempt of court (though that in and of itself is a sufficient reason), but because there is no unfairness to him in requiring him to pay the full amount of the CO in these circumstances for the reasons I have already explained. There is no unwarranted interference with his right to enjoy his property under Article 1 of Protocol 1 (“A1P1”) of the European Convention on Human Rights, as Mr Stannard alleges in his written submissions; the statutory confiscation scheme is fully compliant with the Convention. In principle, requiring a defendant to repay the benefit gained from his criminal behaviour, to the extent he can afford to do so, is not a disproportionate interference with his rights under A1P1.[2]The challenge to deduction of the Enforcement Receiver’s remuneration and expenses and legal costs from the recovered funds in priority to payment into court.[61]The second point taken by Mr Hardy can be disposed of more swiftly. He submitted that Silber J’s order was not “retrospective” and that Mr Ingram should have paid the £900,000 into court without deducting his fees costs and expenses long before that order was made. He submitted that the Receiver held the money on a “Quistclose” Trust. Since “equity regards that as done which ought to be done” the Court should adjust the accounts so as to treat the full £900,000 as a credit against the CO balance, leaving the Enforcement Receiver to apply to the Magistrates’ Court to draw his remuneration from what would then be public funds paid in part-satisfaction of the CO. Mr Hardy relied on the case of Hansford v Southampton MC [2008] EWHC 67 (Admin).[62]As Mr Bird and Mr Powell submitted, these submissions are tantamount to seeking to challenge the order of Silber J by the back door. Mr Stannard made representations as to why that order should not be made; they were taken into account; the judge ruled against him; he has not appealed. As I have already said, that order was intended to apply, and does apply, to the sum of around £900,000 collected by Mr Ingram before it was made, which had not yet been paid into court. It does not operate only in respect of future asset realisations, as Mr Hardy contended. It would make no sense to construe it in that way. Silber J did not accept the criticisms of Mr Ingram’s failure to pay the money into court which were fully aired before him before he made his order.[63]Silber J’s order clarifies the meaning of paragraph 5 of Wilkie J’s order, which was to the same effect and intent. The Enforcement Receiver acted entirely properly in seeking the directions of the court before he did anything with the money, though as it happens if he had paid his remuneration and expenses out of the funds before paying the balance into court he would have acted legitimately and in accordance with the directions of Wilkie J. in his Receivership Order, which was in force at all material times. Having obtained clarification of paragraph 5 of the Receivership Order, and further explicit directions from Silber J, he acted properly by obeying them.[64]The decision in Hansford (which post-dated the making of the Receivership Order) was expressly drawn to Silber J’s attention and distinguished in Mr Bird’s skeleton argument for that hearing. It concerned a different situation, in that, among other matters(a) the receiver in that case had failed to act in accordance with the terms of his letter of appointment which obliged him to obtain the approval of the High Court before drawing any fees, and(b) the defendant was prejudiced by the receiver’s failure to make immediate payment into court, because, unlike the present case, interest was running on the sums due under the confiscation order. Hansford lays down no immutable rule; it merely establishes that in order for the receiver to pay himself first, there must be a clear direction under s.81(1). Having considered Mr Stannard’s objections, including his reliance on that case, Silber J decided to direct Mr Ingram to pay himself first. It was clearly intended to send out the message to Mr Stannard that if he continued to be obstructive it was going to continue to cost him more to discharge the CO, because the more trouble and expense he caused the Enforcement Receiver, the less money recovered by the Receiver would be applied towards reduction of his liability. That message was hardly going to strike home if the Receiver still had to pay the whole £900,000 into court and the order only applied to assets which the Receiver might or might not recover in the future.[65]The Court was satisfied that Mr Stannard had sufficient assets to satisfy both the full amount of the CO and Mr Ingram’s outstanding costs and expenses. There is nothing wrong with the Receiver’s accounting treatment of the £900,000, which obeyed the directions of the Court. It would be quite wrong for me to make any kind of order that suggested the contrary. It would fly in the face of the orders of Wilkie J and Silber J and subvert their intention if I were to treat the position, for accounting or any other purposes, as if the whole of the £900,000 had been paid into court without deduction of the Enforcement Receiver’s fees, costs and expenses. I cannot, and will not do so.[3]The fruits of settlement[66]In October 2013 Mr Stannard’s second wife, Dr Elspeth Dunlop (now deceased) made a payment to Mr Ingram of £450,000 in full and final settlement of proceedings he had commenced against her and Mr Stannard relating to a property that had not been treated as an asset of Mr Stannard for the purposes of fixing the amount of the CO. That property (“the Farm”) had been sold to Dr Dunlop in 2007 at what Mr Ingram contended was a massive undervalue by Mr Stannard’s first wife (or, rather, by a trust of which she was said to be the sole beneficiary) giving rise to the strong inference that the difference between the market value and the purchase price (in the order of 50%) represented Mr Stannard’s hitherto undisclosed beneficial interest in the Farm.[67]The settlement was reached around two weeks before the claim by the Receiver was due for trial; it was an arms’ length commercial agreement reached between parties who were legally represented. Mr Stannard raised no objection to the settlement at the time.[68]Pursuant to Silber J’s order Mr Ingram deducted his fees, costs and expenses from the settlement money and paid the balance of £343,894.82 towards satisfaction of the CO after first giving Mr Stannard the requisite 21 days’ notice of his intentions. This happened as long ago as January 2014. Mr Hardy contended that the Farm was not an asset of Mr Stannard and that there was “no admission in the proceedings” that it was. He submitted that the Receiver was not entitled to bring the claim in the first place, by reference to the case of CPS v Cruddas [1997] EWCA Civ 842; that Dr Dunlop was pressurised into settling a dubious claim by reason of fear of further exposure to costs, knowing that the Receiver had no such concerns; that in the absence of a court finding or an admission that Mr Stannard had an interest in the Farm, it was not “realisable property”, and that Silber J’s order did not apply to sums recovered from a third party.[69]There is no merit in any of these points. I cannot see what CPS v Cruddas has to do with this case. Mr and Mrs Cruddas, by then estranged and living separately, had each been convicted of different offences and made subject to confiscation orders. The CPS had made an express concession that Mr Cruddas had no realisable interest in the former matrimonial home, and the judge had therefore left it out of account when making the confiscation order against him. The Court of Appeal held that the CPS should not be permitted to reopen the matter in the specific circumstances of that case: it was likely that if the concession had not been made, Mrs Cruddas would have made submissions that the property in question should be excluded from consideration as a matter of discretion because it was her home and that of her children, and she had been acquitted of fraudulently obtaining the mortgage on it. However Pill LJ said that:
“there may well be circumstances when it is appropriate for the prosecution to exercise their powers under s.80 and s. 82 to attempt to bring assets within the category of realisable property which had not been brought into that category in the hearing of the Crown Court.”
[70]One such circumstance is where it emerges in consequence of events taking place subsequent to the confiscation order that the defendant has a concealed interest in an asset, which is what Mr Ingram was saying had happened in the present case. In any event, and regardless of whether or not it was open to the Enforcement Receiver to seek to claim the Farm or a share of it, there is (and can be) no challenge to the validity of the settlement and it cannot be re-opened. It is futile to debate whether the Enforcement Receiver would or would not have won the litigation that was settled, and the reason why Dr Dunlop settled is immaterial (I make it clear that I am making no finding that there is any substance in any of the allegations made by Mr Stannard in that regard). The fact is that the litigation was settled on the basis that the Receiver was to be paid £450,000.[71]The money can only have been received by Mr Ingram in his capacity as an Enforcement Receiver and therefore it had to be dealt with by him as a recovery of realisable property. Silber J’s order is therefore applicable and Mr Ingram dealt with the sum received as he was directed to by that order. There is no arguable basis for the contention that the whole of the £450,000 should have been paid into Court and deducted from the balance.[4]Assessment of the Enforcement Receiver’s fees, costs and expenses[72]In principle an Enforcement Receiver is entitled to be remunerated from the assets realised in the receivership (see Capewell v HMRC [2007] 1 WLR 386, at [21]). However he is only entitled to an amount that is reasonable. Whilst it is true that the sums deducted by Mr Ingram from the sums he has recovered to date are substantial – and indeed almost double the £515,899.73 he has paid into court towards discharge of the Confiscation Order – it is also true that Mr Ingram had been put to a very great deal of trouble and expense over a period of some nine years prior to making those payments, and has had to engage in complex and hard-fought litigation both here and abroad in order to recover what he has managed to recover thus far. Of course, the Court has the power to refer the determination of an Enforcement Receiver’s remuneration to a costs judge, and if the paying party is dissatisfied, as Mr Stannard says he is, he can ask the Court to make an order for a detailed assessment. That would normally be done once the Receiver had completed his duties. Otherwise there would have to be more than one detailed assessment, which generates further costs and duplicates court time unnecessarily. Silber J’s order did leave open the possibility of Mr Stannard raising objection within the 21 day notice period before further fees were deducted, but that did not happen.[73]Mr Hardy submitted that an initial review of the information provided by Mr Ingram indicated that there was some scope for reduction of his fees, and that there was an argument that in principle VAT should not have been charged on the Receiver’s fees because Mr Stannard is domiciled outside the jurisdiction. Mr Bird took issue with the VAT point, on the basis that the end user of the Receiver’s services is the Court, to whom he must account, and thus he is providing those services within the UK; therefore VAT remains properly chargeable. The Court cannot possibly determine the merits of that argument at this juncture. However, even if one were to assume, as I shall for present purposes, that Mr Stannard has arguable grounds for challenge to the Receiver’s fees, including the VAT element, on a detailed assessment, it does not follow that I should direct such an assessment to take place now.[74]Matters might have been different if Mr Stannard had applied for a detailed assessment within the 21 day notice period, as Silber J plainly had it in mind to afford him the opportunity to challenge quantum before the fees were deducted. That course would have had the advantage of creating certainty and avoiding the prospect of the Receiver having to pay anything back into the receivership account. However, Mr Stannard has waited until long after the money was deducted to take any steps to challenge the Receiver’s remuneration.[75]Mr Powell made the telling point that even if Mr Stannard were to succeed in reducing the bill on detailed assessment by as much as a third, and that sum were to be re-credited to the receivership account and applied in further reduction of the balance under the CO, there would still be a sum outstanding that was likely to be in the order of £750,000. Since Mr Hardy was clearly asserting that the Verbier property was the only source of future payment, Mr Powell submitted that it would have to be sold come what may, and therefore a detailed assessment at this juncture was unlikely to create any advantage for Mr Stannard.[76]In response, Mr Hardy floated the suggestion that assessment and adjustment at this juncture might make the difference between Mr Stannard raising the balance by mortgaging the Verbier property and his having to sell it, but I did not regard that as a particularly realistic suggestion, especially as there was no evidence from Mr Stannard that he had approached any banks to lend him the money on the security of the property (which would require the Receiver’s, and probably the Court’s, assent in any event).[77]Indeed there is no evidence that Mr Stannard is likely to suffer any prejudice if the fees that have been deducted to date are assessed when Mr Ingram has completed his duties, in the normal way, and if there has been an overpayment it will be repaid to the receivership account. If ultimately a sum is found to be repayable to Mr Stannard, it will then be repaid to him. I also bear in mind that the Enforcement Receiver is currently financing himself and bearing the risk of doing so, in the sense that he cannot deduct his ongoing fees and expenses from anything, because he has not yet recovered any more money. If he does not recover any further money, his only avenue of recourse will be to the money already paid into court; the indemnity from the CPS has now elapsed. He would therefore have to finance the legal costs of a detailed assessment, at least in the first instance.[78]Whilst I agree that it is likely to be appropriate for the Court to make an order in due course that the proper remuneration of the Enforcement Receiver be assessed by a costs judge pursuant to CPR 69.7, this application is premature and I decline to exercise my discretion in favour of making such an order now. There is no good reason why there should be more than one detailed assessment, especially as that would add to the costs. I consider that having to deal with such an assessment now would provide an unnecessary distraction from the pursuit of the Receiver’s duties; it makes far more sense to look at the figures once Mr Ingram has done as much as he can to recover the balance and the costs judge is able to consider his final bill. Indeed, if Mr Stannard is really concerned about the level of Mr Ingram’s remuneration, the sooner that he takes steps to realise the value of the Verbier property and pay off the balance, the sooner he will have the opportunity to challenge the Receiver’s fees. I am by no means optimistic that this further incentive to Mr Stannard to mend his ways and co-operate will have the desired effect, but it does no harm to try.

CONCLUSION

[79]There is no question of Mr Stannard being unable to afford to pay the balance of the CO which currently stands at £1,163,054.27. On his own admission he is living in a property which is worth more than that. There is no need for the Court to grant declaratory relief, especially to someone who is in contempt of court, so as to confirm what he already knows but is patently unwilling to accept. In any event there is no justification for making declaration that the balance is anything less than that, let alone that the CO has been satisfied. Far from this being a case of a defendant seeking to recover an overpayment, as in Hackett, Mr Stannard is trying to justify making a significant underpayment, even though he will never have to pay back the whole of the gains he made unlawfully at the expense of the Revenue. He has fought tooth and nail to avoid paying anything, and made life as difficult as possible for the Enforcement Receiver, with the result that there is still such a substantial amount outstanding ten and a half years after the generous deadline set for payment.[80]Contrary to what Mr Hardy assures me is the motivation behind this application, namely, to clear the outstanding balance and purge his contempt, I have formed the clear impression (from the nature of the specious arguments he was seeking to put forward with a view to reducing or eliminating the balance) that Mr Stannard is wholly unrepentant. In reality he is still doing his level best to avoid making any further payment, to go behind decisions unfavourable to him that have already been made by the Court and which he has not appealed, to re-run arguments he has already lost, and to put the CPS and the Enforcement Receiver to as much further trouble and expense as possible, presumably in the hope that they will give up and go away. He has coupled this behaviour with unfounded criticisms of the Enforcement Receiver, who on the evidence before me has simply done what the Court has directed him to do.[81]I do not extend this criticism to Mr Hardy, who seemed to me to be motivated solely by a desire to put to an end any further dispute by Mr Stannard about how much remains due and owing under the CO, and to flush out any legitimate grounds that might exist for his further prevarication in making payment. Mr Hardy’s interests are plainly best served by Mr Stannard ceasing to be obstructive, and as he is not a lawyer, he would not necessarily appreciate the difference between an argument that is likely to fail, and an argument that cannot properly be advanced. That is why it suited Mr Stannard’s interests to make use of Mr Hardy as his mouthpiece.[82]Mr Powell made a cross-application on behalf of the CPS pursuant to CPR 81.30(3) for an order enabling the warrant of committal to be enforced, since more than two years have elapsed since the date on which it was issued. It is not the fault of the CPS that the warrant of committal has not been enforced; it seems to me that this is a paradigm case for making such an order so that an unrepentant defendant who is flagrantly in contempt and is persisting in his contempt may be forced to face the consequences if circumstances enable him to be arrested. I therefore accede to that application.[83]Save to the extent that it is an application for a detailed assessment of the Enforcement Receiver’s remuneration, expenses and costs, Mr Stannard’s application is a clear abuse of process. To the extent that it is an application for a detailed assessment it is a legitimate application, but premature. For the avoidance of doubt, nothing I have said in this judgment shall prejudice Mr Stannard’s ability to make an application within the 21 day notice period for the Receiver’s further costs to be assessed prior to their deduction from any moneys received from the realisation of the flat in Verbier. Indeed, apart from the continuing obstacle of Mr Stannard’s contempt, the Court may well be more favourably disposed to making an order for the detailed assessment of all the costs at that stage, especially if the Receiver will have realised all the realisable property by then and is nearing the end of his duties.[84]At present, however, the Receiver still has a job to do. There is a valuable asset which could be used to satisfy the balance of the order, and since Mr Stannard is plainly not minded to do so voluntarily, however much Mr Hardy might wish him to, the Receivership is the most likely route by which it can be satisfied. There is no reason for the Court to accede to the application to discharge the Receiver.[85]Having heard the argument on the application de bene esse, I have concluded that there is no substance in it. There is therefore no compelling reason for the Court to exercise its discretion to allow Mr Stannard to make the application whilst he remains in contempt of court. However, it seems to me that rather than refusing to entertain the application, the better course is to exercise my discretion to permit Mr Stannard to make the application notwithstanding the absence of any contrition for his continuing contempt, and then to dismiss the application on all grounds. That is therefore the course I shall take.

Cited in 1 later judgment