Assets Recovery Agency v Olupitan & Anor [2007] EWHC 162 (QB)

[2007] EWHC 162 (QB)Case No TLQ/06/0872
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 08/02/2007
Before
THE HONORABLE MR JUSTICE LANGLEY
Between
THE DIRECTOR OF THE ASSETS RECOVERY AGENCYClaimant(1) AYODELE OLUSEGUN OLUPITANRespondents(2) OMATAYO ABIDEMI MAKINDERespondent
Mr J. Eadie (instructed by Assets Recovery Agency) for ClaimantMr I. Krolick (instructed by Stephen Fiddler & Co) for RespondentsHearing Hearing dates: 15-19 January 2007
Judgment
[1]The Claimant seeks a Recovery Order pursuant to Part 5 of the Proceeds of Crime Act 2002. The Claimant is the enforcement authority under Part 5 of the Act.[2]It is the Claimant’s case that the First (but not the Second) Respondent, Mr Olupitan, has undertaken “unlawful conduct” as defined in section 241(1) of the Act. The unlawful conduct is alleged to be mortgage fraud, conspiracies to defraud and money laundering. That conduct is alleged to have led directly to the purchase of real property (in the case of the mortgage fraud) or to have created the funds from which real property was purchased in Mr Olupitan’s name and the name of his partner, the Second Respondent (Ms Makinde), and their joint names. The conduct is also alleged to have realised the funds found in two bank accounts in Mr Olupitan’s name. A chronology of the more significant events is attached to this judgment.

The Property sought to be recovered

[3]In the order of their purchase, three addresses are involved. They are 157, Wellington Drive, Dagenham; 23, Hazelmere Road, Northolt; and 30, Wellstead Road, London E6 6DD. The bank accounts are two Abbey National Accounts, nos. 30147981 and X142 85406, in the name of Mr Olupitan. 157 Wellington Drive[4]157 Wellington Drive was bought in the name of Mr Olupitan at auction in December 1998 for £25,500. The purchase price was paid in part by way of a deposit of £2550 by cheque debited to Mr Olupitan’s Abbey National Account 30147981 on 15 December 1998. The balance was paid by a Halifax counter cheque dated 21 December 1998 funded from a Halifax account in Mr Olupitan’s name.[5]157 Wellington Drive is estimated to have a current value of about £100,000 and is let at a rental of £550 per month. 23, Hazelmere Road[6]23, Hazelmere Road was bought on 26 October 2000. Title is registered in the names of Mr Olupitan and Ms Makinde and they live there with their two children. The purchase price of £155,000 was paid by a cash deposit of £31,000 and a mortgage from Bristol & West of £124,000. The deposit was paid as to 50% (£15,500) from Mr Olupitan’s Abbey National Account 30147981 and as to the balance plus fees from an Abbey National Account 34312974 in the name of Ms Makinde.[7]23, Hazelmere Road is estimated to have a current value of about £280,000. The mortgage interest payments have substantially been kept up to date. It is this mortgage which the Claimant contends was fraudulently obtained by Mr Olupitan. 30, Wellstead Road[8]30, Wellstead Road was purchased in December 2000 in the name of Ms Makinde who is the registered owner. Ms Makinde was the tenant of the property and bought it under the local council’s “right to buy” scheme. The price was £23,240. Ms Makinde says the funds for the purchase came from the sale of a plot of land in Nigeria which she owned.[9]The current value of 30, Wellstead Road is estimated to be about £100,000 and it is let for £760 per month.

The Proceeds of Crime Act 2002 (“POCA 2002”)

[10]The relevant provisions in Part 5 of POCA 2002 are: “240 General purpose of this Part(1) This Part has effect for the purposes of- (a) enabling the enforcement authority to recover, in civil proceedings before the High Court … property which is, or represents, property obtained through unlawful conduct, ….(2) The powers conferred by this Part are exercisable in relation to any property (including cash) whether or not any proceedings have been brought for an offence in connection with the property. 241 “Unlawful conduct”. (1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part. (2) ….(3) The court … must decide on a balance of probabilities whether it is proved – (a) that any matters alleged to constitute unlawful conduct have occurred, …. 242 Property obtained through unlawful conduct. (1) A person obtains property through unlawful conduct (whether his own conduct or another’s) if he obtains property by … the conduct. (2) (a) …. (b) it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct. 243 (1) Proceedings for a recovery order may be taken by the enforcement authority in the High Court against any person who the authority thinks holds recoverable property.” …. (a) that any matters alleged to constitute unlawful conduct have occurred, …. (1) A person obtains property through unlawful conduct (whether his own conduct or another’s) if he obtains property by … the conduct. (2) (a) …. (b) it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct.[11]Pausing here, the effect of these provisions in Sections 240 and 241 is that the Claimant can recover property which is, or represents, property obtained through conduct which is unlawful under the criminal law of England and Wales. To succeed in such a claim for recovery the Claimant must prove, “on a balance of probabilities”, that the matters alleged to constitute unlawful conduct occurred. Section 242 applies to an innocent party, but one who has obtained property by the unlawful conduct of another.[12]Property obtained through unlawful conduct (Section 242) is “recoverable property”: section 304(1). Where property is or has been recoverable property, property which “represents” it is also recoverable property: section 305. Sections 306, 307 and 308 (so far as material) provide:
“306 Mixing Property. (1) Subsection (2) applies if a person’s recoverable property is mixed with other property (either his property or another’s). (2) The portion of the mixed property which is attributable to the recoverable property represents the property obtained through unlawful conduct. (3) Recoverable property is mixed with other property if (for example) it is used – (a) to increase funds held in a bank account, (b) in part payment for the acquisition of an asset, (c) … (d) …. 307 Recoverable property: accruing profits (1) This section applies where a person who has recoverable property obtains further property consisting of profits accruing in respect of the recoverable property. (2) The further property is to be treated as representing the property obtained through unlawful conduct. 308 General exceptions (1) If- (a) a person disposes of recoverable property, and (b) the person who obtains it on the disposal does so in good faith, for value and without notice that it was recoverable property, the property may not be followed into that person’s hands and, accordingly, it ceases to be recoverable. ….” (a) to increase funds held in a bank account, (b) in part payment for the acquisition of an asset, (c) … (d) …. (1) This section applies where a person who has recoverable property obtains further property consisting of profits accruing in respect of the recoverable property. (2) The further property is to be treated as representing the property obtained through unlawful conduct. (1) If- (a) a person disposes of recoverable property, and (b) the person who obtains it on the disposal does so in good faith, for value and without notice that it was recoverable property, the property may not be followed into that person’s hands and, accordingly, it ceases to be recoverable. ….”
[13]The effect of these provisions, so far as material, is that where, for example, a property acquired is in part “recoverable property” and in part not, for example where a house is bought with funds both unlawfully and lawfully provided, only “the portion” attributable to the unlawful element is recoverable: section 306. An example of the effect of section 307 would be income by way of rent received from a house which was recoverable property; the rent would itself be recoverable. The Act gives no guidance about what “portion” of a mixed property is attributable to recoverable property beyond the language itself used in section 306(2).[14]Section 266 deals with the vesting and realisation of recoverable property. It provides that “if … the court is satisfied that property is recoverable the court must make a recovery order”: 266(1). Such an order vests the relevant property in “the trustee for civil recovery”.[15]The obligation to make an order is, however, qualified by the provisions of sub-sections 266(3) to (9) which, so far as material, provide: “(3) But the court may not make in a recovery order-(a) any provision in respect of any recoverable property if each of the conditions in subsection (4) … is met and it would not be just and equitable to do so, or(b) any provision which is incompatible with any of the Convention rights (within the meaning of the Human Rights Act 1998 …). (4) In relation to a court in England and Wales … the conditions referred to in subsection (3)(a) are that- (a) the respondent obtained the recoverable property in good faith, (b) he took steps after obtaining the property which he would not have taken if he had not obtained it or he took steps before obtaining the property which he would not have taken if he had not believed he was going to obtain it,(c) when he took the steps he had no notice that the property was recoverable,(d) if a recovery order were made in respect of the property, it would, by reason of the steps, be detrimental to him. … (6) In deciding whether it would be just and equitable to make the provision in the recovery order where the conditions in subsection (4) … are met, the court must have regard to – (a) the degree of detriment that would be suffered by the respondent if the provision were made, (b) the enforcement authority’s interests in receiving the realised proceeds of the recoverable property. …. (9) This section is subject to sections 270 to 278.” … ….[16]By an amendment to her defence, granted during the course of the hearing, Ms Makinde relies on subsections 266(3) and (4) in respect of the payment from her account towards the purchase of 23, Hazelmere Road and subsequent contributions to the mortgage. She also relies on her right to respect for her home under Article 8 and Article 1 of the First Protocol of the European Convention on Human Rights and thus the Human Rights Act 1998. She further seeks to rely by the same amendment on the “good faith” provision in section 308(1) of the Act which I have quoted above.[17]Finally, sections 270 to 272 of the Act (to which section 266 is subject) address what is called “associated property” which is defined in section 245(1) to mean:
“… property of any of the following descriptions (including property held by the respondent) which is not itself the recoverable property- (a) any interest in the recoverable property, (b) … (c) if the recoverable property is a tenancy in common, the tenancy of the other tenant … (d) if the recoverable property is part of a larger property, but not a separate part, the remainder of that property.”
[18]Section 272 contains a range of powers, on the making of a Recovery Order, to enable “the associated property” to be realised and payment to be made to the person who holds it. For example, an Order could provide for the sale of 23, Hazelmere Road and the discharge from the sale proceeds of the HSBC mortgage on the property. The provisions are a further safeguard for the “innocent” caught up with the “guilty”.

Previous Decisions

[19]The court was told that, to date, no final decisions on a contested application under the Act have been reported. But there is one important decision of Sullivan J on a preliminary issue addressed substantially to sections 240 to 242 of the Act (The Queen on the Application of the Director of Assets Recovery Agency and Others v Green [2005] EWHC 3168) and a decision of Dobbs J, [2006] EWHC 1906, on an application by the Respondents to strike out the claim in this case on grounds including that it disclosed no reasonable grounds for bringing the claim and was an abuse of process. The underlying submissions for the Respondents before Dobbs J have been repeated in this court. Dobbs J rejected them, and I shall refer to her decision when addressing the same issues. But it is appropriate to consider the Green case at this point.[20]Sullivan J was asked to decide:
“Whether a claim for civil recovery can be determined on the basis of conduct in relation to property without the identification of any particular unlawful conduct, this first question to include whether the claimant can sustain a case for civil recovery in circumstances where a respondent has no identifiable lawful income to warrant the lifestyle and purchases of that respondent.”
[21]Sullivan J answered this question, contrary to the submissions made by the Director, “No” and declared:
“1. In civil proceedings for recovery under Part 5 of the Act the Director need not allege the commission of any specific criminal offence but must set out the matters that are alleged to constitute the particular kind or kinds of unlawful conduct by or in return for which the property was obtained . 2. A claim for civil recovery cannot be sustained solely on the basis that a respondent has no identifiable lawful income to warrant his lifestyle.”
[22]There was no appeal from the decision in Green. I was not asked to depart from it, albeit the Director does “reserve the right” in the Particulars of Claim to contend on any appeal in this case that Green was wrongly decided. Thus, as Section 242(2)(b) provides, the Director does not have to prove the commission of a specific criminal offence or offences but must identify and prove the matters alleged to constitute the kind or kinds of unlawful conduct by which the property was obtained, and it is not sufficient “solely” (my emphasis) to establish a lifestyle inconsistent with any identified lawful income. It is for the court to decide “on a balance of probabilities” whether the matters alleged to constitute unlawful conduct have been proved: section 241(3).[23]I would make one comment. I think there is a danger in seeking to identify absolutes where questions of proof are in issue. The question in this case is whether Mr Olupitan obtained the property in issue through the unlawful conduct alleged. The test is whether it is more probable than not that such is the case. The evidence has, as one would expect, covered a number of matters, some more compelling than others, and including oral and documentary evidence from both Respondents. It is the whole picture which has to be balanced. For example, it is one thing to point to an unexplained lifestyle, it may be another if an explanation is offered but rejected as untruthful; and taken with other evidence either might be more or less persuasive.

The case for the Director

[24]In summary, as stated in Mr Eadie’s opening skeleton argument, the case for the Director is that: i) Mr Olupitan has committed a series of offences including immigration offences, mortgage fraud, conspiracy to defraud, and money laundering: ii) Mr Olupitan has demonstrated “a clear propensity to lie when he perceives it as suiting his purpose”; iii) Mr Olupitan’s criminal conduct has led to substantial amounts of cash being received and deposited into his and Ms Makinde’s bank accounts; iv) The property purchases and other receipts cannot be explained by any legitimate source of income; v) The explanations which have been put forward, including those given in evidence in these proceedings, are unsubstantiated, inconsistent and not credible”.[25]I propose to address the evidence which is said to support this case under a number of separate headings, albeit chronologically the relevant events overlap.

Immigration

[26]Ms Makinde’s immigration status is not in question. Mr Olupitan is Nigerian. He was born on 19 December 1970. He came to the UK in October 1989 as a holiday maker. He was given leave to remain until June 1992. Thereafter he was an illegal overstayer. He never had leave to undertake employment in the UK. In his defence he claimed he was entitled to stay indefinitely and that his passport contained a stamp to that effect. The stamp (dated May 1994) and an earlier stamp (dated May 1992) have both been conclusively proved (as is accepted) to be counterfeit. Mr Olupitan said, nonetheless, that he believed he was entitled to stay indefinitely. He said a solicitor he had instructed obtained the 1994 stamp for him and told him it was valid. I am quite satisfied that Mr Olupitan was lying about this and that at all times he was well aware of his unlawful status. He was refused leave to remain on a number of occasions, an appeal was rejected, his attempted explanations for how the stamps came to be in his passport and for the various applications made in his name were close to absurd and certainly incoherent and incredible. He even denied leaving the UK since 1995 when genuine stamps in his passport showed otherwise in both 1996 and 1997.

Tax

[27]Mr Olupitan never declared any income to the Revenue. He has given a number of explanations. First, that his immigration status was uncertain until 2002. But there was no change in or after 2002. Second, he said he was not sure if profits on transactions in Nigeria were taxable in the UK. But he had nothing to show what the profits were. Third, he said a company (“Octibes”) through which the profits were made paid tax in Nigeria so he did not need to pay any UK tax. But he recognised that did not mean he was not liable to tax on monies said to have been paid to him out of the profits. Fourth, in cross-examination, he said he had paid tax in Nigeria. But there were no documents to support that. He also said he had not realised that tax had to be paid (or at least declared) on UK rental income and that he had been assured by a lady at Companies House and someone at the Revenue that he did not need to do so. These were, I am sure, a series of lies. The evidence he gave, and his manner of giving it, did however on this subject in particular (but by no means exclusively) demonstrate that Mr Olupitan is not, as Mr Eadie submitted he was not, an unintelligent or unsophisticated man. But the burden of seeking to explain his own inconsistent evidence as it emerged over the course of these proceedings proved well beyond his invention and ingenuity.

Previous Spent Convictions

[28]Mr Olupitan pleaded guilty in 1992 to an offence of going equipped for theft. He was in possession of a stolen credit card. He received a Conditional Discharge. In June 1993, Mr Olupitan pleaded guilty to dishonestly using a licensed telecoms system. He was sentenced to a 200 hour Community Service Order. Whilst neither of these offences are serious and both are spent, Mr Olupitan, in paragraph 14 of his first affidavit in these proceedings sworn on 30 June 2005, by reference to his subsequent conviction for conspiracy to defraud (see below) said that conviction “was the only time I have been convicted of any offence, or even charged with any crime, and I have never acted unlawfully ….” In a particularly unedifying passage of his evidence, Mr Olupitan sought to place the blame for this statement on his solicitor.

Mortgage Fraud

[29]In about August 2000, Mr Olupitan applied to Bristol & West for a mortgage to purchase 23 Hazelmere Road. He sought a mortgage of £124,000 against a price of £155,000. He used the services of a mortgage broker, a Mr Lartey (who gave evidence). Mr Lartey had not acted for Mr Olupitan before and when it was suggested that he had acted for a brother of Mr Olupitan, Mr Lartey’s surprise was patently genuine. I am sure he had not.[30]The application form (in Mr Lartey’s handwriting and signed by Mr Olupitan) contained numerous errors. It was signed by Mr Olupitan in two places on 22 August 2000. Mr Olupitan acknowledged that he was aware of the importance of its contents being complete and accurate. It was a self-certification form in which Mr Olupitan certified that “my/our annual gross income” was as stated in the form. Originally the form sought an endowment mortgage but that was later changed.[31]It was stated (wrongly) in the form that: i) Mr Olupitan was “British”. ii) Mr Olupitan owned 30, Wellstead Road. In fact it was purchased in the sole name of Ms Makinde only on 4 December 2000. iii) Mr Olupitan was employed on a permanent basis by “IT Consultants Ltd”, with a contact name of Jerome Macdonald, as a “Senior IT Consultant Computers” and that he had worked there for 3 years 2 months and participated in a company pension or superannuation scheme. The separate box for “self-employed details” was left blank. 3 years of figures were required for a self-employed person. All the details of his employment were completely false. He had only been employed on a casual and very limited (once a month) basis by a company run by Mr Macdonald (IT Competitor). Mr Mcdonald said he probably paid him no more than around £1,200 in total. iv) Mr Olupitan’s gross basic annual income was £43,000. In fact he had an income of no more than £6000 from letting 157 Wellington Drive. Beyond that sum, and despite the specific nature of the figure stated, the evidence of any income is so opaque as to be meaningless. v) A National Insurance Number was given. Mr Olupitan did not have and was not entitled to one.[32]The explanation Mr Olupitan gave for the contents of the form was that he had not read it, Mr Lartey had filled it out inaccurately, and he had signed it in blank leaving Mr Lartey to complete it. Mr Lartey said he had, as was his practice, filled out the form in Mr Olupitan’s presence recording what Mr Olupitan had said. They had met at 30, Wellstead Road where Mr Olupitan and Ms Makinde were then living. Again, I have no doubt at all that Mr Lartey was telling the truth and that Mr Olupitan lied on the form and in his written and oral evidence. Quite apart from accepting Mr Lartey’s evidence that he would not jeopardise his career by such conduct, it is fanciful to suppose that he would or could have made up the erroneous information. Mr Olupitan suggested the National Insurance Number was his brother’s number and Mr Lartey might have muddled them up. Moreover, in subsequent exchanges with the lender, when the application was converted to a repayment mortgage in the joint names of Mr Olupitan and Ms Makinde, Mr Olupitan confirmed the accuracy of the information on the form.[33]It was also suggested that none of the information would have influenced or been relevant to Bristol & West. To support that suggestion it was the case for the Respondents that the lending was “non-status” meaning that Bristol & West were unconcerned about the personal financial information provided. A Mr Webb, a Senior Fraud Investigator employed by the parent company of Bristol & West, and Mr Lartey, established that was not and could not have been the case where the advance was 80% of the valuation and that, as the form itself and commercial sense dictate, the information and its truth would have been vital to the decision to lend. Nor do I think, in the context of proceedings under the 2002 Act, it is sustainable to submit, as Mr Krolick did, that evidence must be adduced from the actual decision-maker at Bristol & West. Nor is it relevant that the mortgage has not been called in. It is up to date; Mr Webb understandably said no decision had been taken pending the outcome of this case, and the relevant fraud was obtaining the mortgage.[34]The probabilities are not balanced. The weight is all on one side of the scale. The mortgage was obtained by Mr Olupitan by fraud. In ordinary language, therefore, so, too, was 23, Hazelmere Road when its purchase was completed in October 2000.

Was Recoverable Property obtained by the Mortgage Fraud?

[35]Mr Krolick submitted nonetheless that on a close analysis of a mortgage fraud no property was obtained by the fraudster at all. Relying on Preddy [1996] AC 815, and the amendment to the Theft Act 1978 following that decision, the submission is (and was before Mrs Justice Dobbs) that whilst services or a money transfer to the vendor might have been obtained, the property had not. The mortgage remained repayable charged on the property, and the funds were paid to the vendor via solicitors. Dobbs J had no difficulty in rejecting this submission. Nor do I, for the reasons she gave in paragraph 56 of her judgment:
“This ground is totally without merit. The proposition can be tested in this way – had [Mr Olupitan] not obtained the mortgage and consequently the mortgage funds, he would not have obtained the property. The evidence that the mortgage and funds were obtained by deception is overwhelming. Were it not for the deception, [Mr Olupitan] would not have acquired the property. The acquisition of the property was as a result of unlawful conduct.”
[36]Mr Krolick was concerned to submit that if the court reached this conclusion, the result could be exorbitant so that in a case in which a mortgage had been redeemed nonetheless the entire property would still be “recoverable”. But POCA 2002 contains (as I have sought to illustrate) a number of provisions to protect “the innocent”. In this case Bristol & West is entitled to be repaid. So, too, would someone acting in good faith using lawful funds to redeem a mortgage.

Criminal Conspiracy

[37]In about November 2000, as pleaded by the Director, the Metropolitan Police Fraud Squad commenced an investigation into a conspiracy to defraud computer and mobile telephones companies shortly described as Sellingpoint and Milcom. The fraud involved the use of a company called Silverbrook Ltd which placed orders for equipment for which forged Barclays Bank documents were used to make “payment”. In October and November goods to a value approaching £250,000 were obtained and not recovered. Mr Olupitan was arrested on 7 December 2000 when he was (in effect) caught red-handed with a number of others taking delivery of a “dummy” consignment from Milcom. Mr Olupitan, when arrested, gave his name as Segun Olubitan and an address at which he had lived in the past but not for some time.[38]On 25 February 2002, Mr Olupitan, and others, were convicted of conspiracy to defraud Sellingpoint and Milcom, contrary to common law. Mr Olupitan was sentenced to 18 months imprisonment. The prosecution conceded at the time of sentence that Mr Olupitan had only joined the conspiracy on the day of his arrest and so on the day it ended. Relying on that concession by the prosecution, the Court of Appeal, Criminal Division, found that there was no evidence that Mr Olupitan had obtained any benefit from the conspiracy for which he was convicted and so no confiscation or compensation order should be made against him. The Director, in these proceedings, alleges that in fact Mr Olupitan joined the conspiracy some time before his arrest. The basis of that allegation is set out in paragraph 25 of the Amended Particulars of Claim.[39]Mr Krolick submitted (as he had also submitted to Mrs Justice Dobbs) that it was not open to the Director to seek to advance a case inconsistent with the prosecution concession. Dobbs J rejected the submission (judgment paragraphs 43 to 45) and so do I, again for the same reasons. The Director is not to be equated with the Crown as prosecutor. The Director is independent with a different role and powers. That role and those powers exist regardless of criminal proceedings: section 240(2) of POCA 2002. The issue for the Court of Appeal was whether or not Mr Olupitan had benefited from the offence of which he was convicted. That offence was limited to the dummy run following the concession. That is not the issue which arises under POCA 2002.[40]I am satisfied that the evidence is sufficient to establish, on a balance of probabilities, that Mr Olupitan was for longer and more deeply party to the conspiracy than the prosecution conceded. He had known the principal conspirator (Mr Osaldor) for some years. Mobile phones linked him to Mr Osaldor by some 240 calls in the period between 11 October and 7 December 2000. A mobile phone also linked Mr Olupitan to the forged Barclays bank numbers and the transporters of the dummy consignment. His attempts to explain how the phones were not his or came to be in his possession were not credible. The Director also relies on the fact that substantial cash receipts were paid into Mr Olupitan’s account number 30147981 totalling nearly £40,000 between April and October 2000 including over £11,000 in October alone. In the same period cash receipts in Ms Makinde’s accounts totalled some £17,000 of which £4500 was credited in October. The dates and figures are set out in the Schedule to the Amended Particulars of Claim.

The Bank Accounts

[41]The cash credits to Mr Olupitan’s accounts between August 1996 and January 2005 total over £147,000. Between April 1999 and his arrest in December 2000 over £80,000 of this sum was credited. Between April 1999 and December 2000 over £20,000 cash was also credited to Ms Makinde’s accounts.[42]Mr Olupitan has, as these proceedings have progressed, given different and inconsistent explanations for the source of these monies. The explanations have differed as the original ones have been shown to be insupportable. There is, and was, no sensible explanation for why the final explanation was not the first explanation. At all stages, he acknowledged, as was in any event obvious, that he had known that the sources of his income were a central issue.[43]The thrust of the explanations has been various trading activities with Nigeria. Both the nature of the supposed trading and the people and companies said to be involved in it have changed and changed again. Documentation produced (much of it just before the hearing) raised more questions than it answered. There are no relevant accounts of any of the supposed businesses referred to. I accept Mr Eadie’s submission that as the cross-examination of Mr Olupitan on these explanations, and such documents (and statements) as were produced to support them, proceeded, Mr Olupitan was reduced to silence and then to making it up as he went along and finally to incoherence.[44]In my judgment, the court is left not just with no truthful explanation of the source of the funds shown to have been available to Mr Olupitan but a succession of untruthful attempts to establish that the sources were lawful.[45]Mr Olupitan also sought to explain the receipts on the basis of what came to be called “banking” arrangements which he said he had carried out for friends. He would provide Naira to someone who needed it in Nigeria and they would reimburse him in sterling cash in this country. So, too, he might provide sterling in the UK for someone who had credited him or his business with Naira in Nigeria.[46]Whilst I can accept that, as Mr Olupitan put it, Nigeria is a cash society and it is problematic and causes delay for money transfers to be made via banks or the like in Nigeria, the “banking” transactions to which Mr Olupitan referred were wholly undocumented and no more than unverifiable assertions. Moreover, there was no credible explanation for why Mr Olupitan would need Naira in Nigeria nor why he should be in a position to supply Naira in Nigeria to others. Witness statements produced on behalf of Mr Olupitan did not assist or exposed inconsistencies in Mr Olupitan’s evidence. Thus Mr Olupitan said a sum of £6500 credited to his account number 30147981 came from a Mr Adeyeye to whom he had provided the Naira equivalent in Nigeria. But Mr Adeyeye’s statement and evidence was that the maximum sum he had ever paid Mr Olupitan was £6000 and the Naira he collected had been paid in Lagos by Mr Olupitan’s mother. Other witnesses spoke to transactions in and after 2003 which cannot explain the material sums in the bank accounts nor the source of the funds used to buy the three properties.[47]I am also satisfied that the so-called banking transactions do not provide a credible explanation for the credits in Mr Olupitan’s accounts. It was Mr Olupitan’s evidence, and follows from the nature of the “banking”, that he made no profit from these transactions so they cannot in any event explain the source of any income to enable him to purchase the properties. The monies used to buy the properties. 157 Wellington Drive[48]Mr Olupitan paid £25,500 for this property in December 1998. His evidence is that the money was “provided by my family in Nigeria”. Mr Olupitan could not say when or how the money was provided nor were there any relevant documents. There is an Affidavit from his mother, sworn in Nigeria on 15 September 2005. She deposes that she is a trader, trading in wholesale foodstuffs from a shop in Isolo, in the State of Lagos. She says in respect of Mr Olupitan that:
“I have been supporting and financing his studies and living via people travelling abroad which I purchased from Bureau de Change open Market or sometimes pay people here locally in pounds sterling in London.”
[49]In the context of these proceedings and Mr Olupitan’s concern and recognition of the need for him to explain the source of his funds this statement in my judgment is more damaging than helpful to the explanation he offers. It would, I think, have been a matter of some moment that a sum of or equivalent to £25,500 was provided to complete a property purchase itself the subject of an auction and payment all in December 1998. But far from supporting provision of such a sum the most Mrs Olupitan has said is that she supported and financed her son’s “studies and living”. Mr Olupitan sought to explain this by saying the money from his family had “built up” to this amount as he saved and it had not been provided in a single sum.[50]In a context in which I am quite satisfied that Mr Olupitan is both capable of criminal dishonesty and is readily prepared to lie when he thinks it suits him, I have no hesitation in rejecting his evidence that the monies to purchase Wellington Drive came from his family. I am therefore left with no evidence of a lawful source of those funds and an attempt to give one which is a lie. 23 Hazelmere Road[51]The purchase of 23, Hazelmere Road in October 2000 was the subject of the mortgage of £124,000 obtained, as I have held, by Mr Olupitan by fraud from Bristol & West. The deposit of £31,000 was provided from accounts of Mr Olupitan and Ms Makinde.[52]Mr Olupitan said in his second affidavit, sworn on 4 November 2005, that he paid for half of the deposit (£15.500) with his own money derived from business he conducted with a Mr Gbadamosi and he exhibited various documents (none of which refer to him) said to support this, including some bureau de change receipts. But all but one of the documents related to transactions after the payment of the deposit and so could not in any event account for it. The only exception was a bureau de change receipt for the Naira equivalent of £16,000 dated in mid-May 2000 and so some 5 months before the purchase. Mr Olupitan sought but failed to show even this sum credited to his accounts either as a single amount (as one would expect if his evidence was true) or even in separate amounts. I have already held that I cannot accept Mr Olupitan’s evidence about his business dealings, and this is a further example of an untruthful attempt to give a lawful explanation for funds available to him.[53]Ms Makinde’s explanation of the source of her contribution towards the deposit which came from one of her bank accounts has also been subject to a number of changes. She is now a staff nurse in full-time employment. At the time she was a student nurse.[54]In her second affidavit, sworn on 4 November 2005, she said she had contributed £17,859.63 to the cost (deposit and fees) and this money had come from two sources, christening gifts following the birth of her daughter in July 2000 and money from a pyramid savings scheme known as “Righteous Pause” later corrected to “Righteous Purse”. The scheme works (or worked) by taking regular contributions from members and paying out to one member in turn provided certain criteria were met.[55]There is a statement from a Mrs Durotolu who was one of the founder members of Righteous Purse. Mrs Durotolu says that “over the next couple of years” from 1999 Ms Makinde would have received between about £3000 and £5000 on two occasions when her turn to collect had come. She also says that in February 2002, long after the purchase, Ms Makinde was paid £11,450, but the group got into difficulties, including litigation, and Ms Makinde paid back £3,950.[56]Ms Makinde’s evidence when she was cross-examined about the source of the deposit monies was thoroughly unsatisfactory. She said she thought about £11,000 had come from Righteous Purse, but that is not consistent with the evidence of Mrs Durotolu. She could not give a satisfactory explanation for the source of the contributions she said she had made to Righteous Purse rising to some £500 a month. Her two current bank accounts show a maximum income at this time of about £1000 a month, made up of payments to her as a student nurse and a regular Giro income of around £250. They also show those credits being expended on living expenses and no regular payments or withdrawals which could be contributions to Righteous Purse of anything like the magnitude stated. It was unclear during her evidence whether christening presents were now said to provide any and if so what part of the funds, but she did conclude by claiming a further £5000 had come from this source. In the Defence, dated 22 September 2006, Ms Makinde pleaded, as a “correction” to her affidavit, that £4500 towards the deposit had come from the sale of land in Nigeria, the same source as she relied upon for the payment of the purchase price of 30, Wellstead Road. That plea was to address a plea made in the claim that three cash deposits made between 5 April and 20 June 2000 “before her daughter was born” had provided funds in the account from which the deposit was paid.[57]There was no plausible explanation why the proceeds of the sale of land in Nigeria should have come to Ms Makinde in three separate cash amounts on 5 April (£2000), 18 May (£1500) and 20 June (£1000). She said she had lent the money to her brother and the credits reflected the dates when and the amounts he had paid back to her. The timing of the payments is also curious. The 5 April payment ante-dated the sale of the land in Nigeria. There is a marked contrast with the payment for Wellstead Road (see below).[58]In my judgment, the Director has proved that it is more probable than not that the source of the funds provided by Ms Makinde was Mr Olupitan. If any monies or any significant monies came from Righteous Purse they would derive from contributions sourced from him. I reject Ms Makinde’s evidence that any monies came from the sale of land in Nigeria. The explanation was first offered to draw the sting of a point made by the Director. If true, it could have been expected to have been made before. The payments in their timing and nature called for an explanation which Ms Makinde could not offer. The christening gifts are wholly unsubstantiated. Whilst it remains possible that some small contribution to the £17,859 did come from lawfully obtained monies provided by Ms Makinde, as a matter of probability I do not think they did. If, as I find, the probability is that Mr Olupitan funded the greater part of the contributions I think it improbable that he did not fund it all.[59]It was Ms Makinde’s evidence (which I have rejected) that the funds came from her own lawful sources not that if they were provided by Mr Olupitan she believed he had legitimate sources of income to enable him to do so. Substantially for the same reasons as have led me to reject her case I am also satisfied that she was not acting in good faith and has not taken any relevant steps within section 266 of POCA 2002. Nor did she act in good faith or give value within section 308 of the Act. I am also satisfied that it is “just and equitable” to make a recovery order in the circumstances as I have found them to be that Mr Olupitan and to any extent she did, Ms Makinde, only obtained the property through a mortgage fraud and the use of funds dishonestly obtained.[60]I see nothing in the material provisions of POCA 2002, providing as they do protection for those who have become innocently mixed up in the unlawful conduct of others, which in the circumstances of this case, can sensibly be said to make a recovery order in relation to Hazelmere Road a disproportionate interference with Ms Makinde’s rights to respect for her home provided for by Article 8 of the Convention on Human Rights. 30 Wellstead Road[61]Ms Makinde’s evidence is that the purchase of this property for £23,240 in December 2000 was funded from the sale of the land in Nigeria. The original intention was that it should be bought by her and Mr Olupitan jointly but it was found that was not possible as only Ms Makinde, as the tenant, had and could exercise the right to buy the property from the local council. A letter from Mr Lartey sent on 24 September 2000 to Bristol & West, at the time of the mortgage on Hazelmere Road, said in terms, and it is to be inferred on information provided, that Welstead Road had been paid for by both Ms Makinde and Mr Olupitan. Moreover, in her first affidavit, sworn on 30 June 2005, Ms Makinde said only that Wellstead Road “was purchased with the money provided by my parents”, and in her second affidavit (4 November 2005) she expressly confirmed this, adding that “unfortunately I have no documentation to this effect”. In paragraph 38 of the Defence (22 September 2006) however it was alleged that:
“The purchase price and legal fees … was transferred to [solicitors] on 24 November 2000 by Chief Sylva B Ugwoegbu, on behalf of Chief Henry Onyike, as the balance of the purchase price owed by Chief Henry Onyike to [Ms Makinde] in respect of the Nigerian land [given to her by her mother]. The transfer was effected by CHAPS by the Beckton Branch of National Westminster Bank, from the account of Chief Ugwoegbu, account No: 51-70-57 13946323.”
[62]The sale price of the Nigerian land was pleaded to be 6.2 million Naira or £37,000. The transfer of funds is supported by a statement from Chief Ugwoegbu and a Chaps Payment Instruction. The Chief says he was asked to make the payment, and provided with the funds to do so by Henry Oyeike, because Henry Oyeike owed the money to Ms Makinde for purchasing a property in Nigeria. The Chief said he had got the details of the solicitors and their account from Ms Makinde when he was in the UK.[63]It was only in her third affidavit (12 January 2007), produced on the Friday before the Monday when the hearing started, that Ms Makinde exhibited documents relating to her title to the land in Nigeria acquired on 19 March 1992 by gift from her mother and a Deed of Assignment made on 8 May 2000 relating to an assignment by Ms Makinde of the property to Chief Henry Onyike for 6.2 million Naira. Mr Eadie rightly submitted that the unexplained late production of these documents made it difficult for the Director to reach conclusions about them. Fairly, he acknowledged that (apart from an unfilled blank and a missing schedule) even though the documents were copies there were no obvious signs that they were not genuine.[64]I am left in a mind of real uncertainty about Wellstead Road. The history of Ms Makinde’s explanations does not give any confidence in what she says. But there is now documentary evidence that the monies which undoubtedly were used for the purchase were sent direct to the solicitors by Chief Ugwoegbu and a statement from him (but not Chief Onyike) that Chief Onyike was the originator of those funds. There is also documentary evidence that Chief Onyike did acquire land in Nigeria from Ms Makinde for a price sufficient to cover the sums paid. On that basis, and on a fine balance, I do not think the Director has established on a balance of probabilities that Wellstead Road was obtained by Ms Makinde through unlawful conduct.

Money Laundering

[65]A substantive offence of money laundering can be proved by inference from the way in which cash is dealt with and it is not necessary to prove the underlying offence which generated the cash: R v El Kurd [2001] Crim. L.R. 234; and R v L,G,Q and M [2004] EWCA Crim 1579. As Mr Eadie submitted, if money is handled in a manner consistent only with money laundering, “the inference is that it must be criminal property because no one launders clean money”. Mr Krolick submitted that it was a condition precedent to any allegation of money laundering that the property should be the proceeds of a criminal offence. He referred to the decision of the House of Lords in R v Montila [2005] 1 Cr. App. R 26. But what is required in law to establish money laundering and how that may be proved raise different issues. El Kurd was cited in Montila and referred to in the Opinion of the Committee with apparent approval and certainly without adverse comment on the question material to this case.[66]In this case, the evidence is, as the Director alleges, that around £195,000 cash (and £24,000 in unidentified credits) were credited to the accounts of Olupitan and Makinde in a period of some five and a half years. They remain unexplained and without any supporting documentation. Such explanations as have been offered have been rejected as untruthful. I accept Mr Eadie’s submission that in the circumstances of this case as I find them to be it is a proper inference that money laundering has occurred.

Conclusions

[67]Mr Krolick submitted (with particular reference to Wellington Drive) that the Director had failed to put before the court evidence from which the court could properly conclude that any particular unlawful conduct by Mr Olupitan at any particular time producing any particular property had occurred. But, and having in mind the gravity of the conclusion, the Director has fully satisfied me on a balance of probabilities that Mr Olupitan is a dishonest man who has employed dishonesty to obtain or seek to obtain property (the mortgage fraud and his conviction for conspiracy) and to seek to secure an immigration status to which he knew and knows he was not entitled. The Director has also satisfied me that Mr Olupitan has had no significant legitimate source of income whilst living in this country and has lied again and again in his evidence about the sources of the money (in particular cash) which undoubtedly came into his bank accounts. On that basis and all the evidence, I conclude that any significant asset of Mr Olupitan was obtained by or was the proceeds of his dishonest acquisitive criminal conduct and is recoverable property. In the case of Hazelmere Road, the property was also obtained by the specific fraud on Bristol & West which I have found occurred. I do not think the Director is required by law or the burden of proof to establish more than that. As stated, in my judgment the Director has also made out her case of money laundering.

The form of order

[68]The Director is entitled to a recovery order in respect of the two bank accounts (subject to any further submissions in the light of this judgment), 157 Wellington Drive and 23, Hazelmere Road. On a sale of 23 Hazelmere Road Bristol & West is to be repaid outstanding amounts on the mortgage and the balance of the sale proceeds is recoverable. No order is to be made in respect of 30, Wellstead Road.

Handing Down

[69]This judgment was provided to the parties in draft on 2 February 2007. I will hear the parties on the precise terms of the appropriate order and any ancillary matters which cannot be agreed when it is handed down in final form. 70. CHRONOLOGY Date Event 20 July 1989 Passport number A474140 issued in the name of Ayodele Olusegun Olupitan 3 October 1989 Olupitan arrived in UK as a visitor 4 June 1990 Olupitan applied to extend leave as a working holidaymaker 20 December 1991 Olupitan convicted of Going Equipped for Theft 10 April 1992 Olupitan applied for leave to remain on the basis of marriage to Adeyinka Olabisi Adebanjo 5 May 1992 “Counterfeit” extension stamp in passport number A474140 to 5 May 1994 4 June 1992 Olupitan’s working holidaymaker visa expired 18 February 1993 Olupitan’s application for leave to remain on the basis of his marriage refused 18 June 1993 Olupitan convicted of Dishonestly Using Licensed Telecommunications System 16 March 1994 Appeal against refusal of leave to remain on the basis of his marriage dismissed 25 May 1994 IND wrote to Olupitan stating that he had no basis of stay and must leave UK 30 May 1994 Counterfeit “No time limit” stamp in passport number A474140 23 August 1994 Nathan & Chelva Solicitors confirmed to IND by telephone that Olupitan was aware of their letter of 25/05/94 14 Sept 1994 Notice of Refusal to Vary Leave issued 21 December 1994 Embarkation stamp in passport number A474140 6 January 1996 Arrival in Nigeria – stamp in passport number A474140 26 August 1997 Arrival in Nigeria – stamp in passport number A474140 14 December 1998 Olupitan letter to his solicitors re. purchase of 157 Wellington Drive – referring to his being in London until 24 January 1999 8 January 1999 Purchase 157 Wellington Drive for £25,500 18 August 1999 Refusal of Entry Clearance to UK for Olupitan in Lagos 17 Nov 1999 Octibes Investments Incorporated (Nigeria) 22 Nov 1999 Olupitan and Makinde named as Directors of Netring Ltd 12 April 2000 Passport number A0509170 issued in the name Ayodele Olusegun Olupitan – previous passport number given as A474140 April and June 2000 Cash payments totalling £4,500 made to Makinde by Chief Henry Onyike 1 July 2000 Start of conspiracy on indictment 3 July 2000 Birth of Makinde’s daughter 3 August 2000 Application made by Olupitan for Entry Clearance to UK from Lagos 22 August 2000 Olupitan signed mortgage application Bristol & West re 23 Hazelmere Road 21 Sept 2000 Makinde signed mortgage application Bristol & West re 23 Hazelmere Road 26 October 2000 Purchase 23 Hazelmere Road 26 October 2000 Formal mortgage offer signed by Olupitan and Makinde 24 Nov 2000 CHAPS transfer by Chief Ugowebgu to Makinde’s solicitors’ account of £23,763.03 for purchase of 30 Wellstead Road 28 Nov 2000 Milcom despatched 1400 Alcatel Telephones to Silverbrook 1 December 2000 Blutel contacted by Silverbrook ordering 2000 Nokia telephones 4 December 2000 Purchase 30 Wellstead Road 5 December 2000 Sales invoice shows sale of van registration VN 48 TR from Car Sales BV Apeldoorn – Holland (sterling equivalent £1,752.03) 7 December 2000 Date of arrest/end of conspiracy on indictment 8 December 2000 Police Interview Olupitan 19 December 2000 Workfame invoice shows sale to Olupitan of van registration VN 48 TR £3,000 3 January 2001 First dealings of ALG Trucks with Assetwell Ltd 5 January 2001 Securicom Eagle order £4,138.75 goods from Proline UK 5 February 2001 Securicom Eagle order £134,495.25 goods form Proline UK 24 March 2001 Police Interview Olupitan 3 April 2001 Passport number A0175609 issued in the name Ayodele Olusegun Olapitan – linked to A474140 27 June 2001 Proline UK into creditor’s voluntary liquidation 25 February 2002 Olupitan convicted of Conspiracy to Defraud 10 June 2002 Witness statement Jerome Macdonald (IT Competitor Ltd) 13 August 2002 Interview Olupitan – Immigration and Nationality Directorate 7 Nov 2003 Olupitan’s confiscation order quashed 11 January 2005 Kortay Cargo Services dissolved 19 May 2005 Witness statement in support of claim 19 May 2005 Affidavit in support of Freezing Order 24 May 2005 Civil Recovery Claim Form 24 May 2005 Freezing Order 7 June 2005 Second affidavit in support of varied Freezing Order 30 June 2005 First Affidavit Ayodele Olusegun Olupitan 30 June 2005 First Affidavit Omotayo Abidemi Makinde 15 September 2005 Affidavit of First Respondent’s mother 26 Sept 2005 Second witness statement Tania Croft 27 Sept 2005 Affidavit of Lukman Gbadamosi 4 Nov 2005 Second Affidavit Ayodele Olusegun Olupitan 4 Nov 2005 Second Affidavit Omotayo Abidemi Makinde 23 Nov 2005 Third witness statement Tania Croft 28 Nov 2005 Fourth witness statement Tania Croft 25 July 2006 Judgment Mrs Justice Dobbs 31 July 2006 Amended Particulars of Claim 2 August 2006 Witness statement Maurice Webb (Bristol & West) 4 August 2006 Witness statement Janet Fasan 4 August 2006 Witness statement Adebisi Durotolu 4 August 2006 Witness Statement of Mr Agoro 4 August 2006 Witness Statement of Chief Ugwoegbu 21 Sept 2006 Letter from Kortay Cargo Services stating Olupitan has been using their services from 2003 to date 22 Sept 2006 Defence of both Respondents 17 October 2006 Letter purporting to be from Lukman Gbadamosi of ALG Groups Ltd 24 October 2006 Witness statement Daniel Lartey (Mortgage advisor) 31 October 2006 Witness statement Kelly Rogers (Assetwell Ltd) 1 Nov 2006 Witness statement Alistair Albosh (IND) 13 Nov 2006 Unsigned witness statement Adedamola Adeyeye 15 Nov 2006 Further Information of the Amended Particulars of Claim 15 Nov 2006 Reply to Defence 18 December 2006 Fifth Witness Statement of Tania Croft 12 January 2007 Third Affidavits of Mr Olupitan and Ms Makinde

Cited in 12 later judgments

and 3 more of the most senior