Assets Recovery Agency v Jackson & Ors [2007] EWHC 2553 (QB)

[2007] EWHC 2553 (QB)Case No CO/6483/2004
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 09/11/2007
Before
THE HONOURABLE MR JUSTICE KING
Between
THE DIRECTOR OF THE ASSETS RECOVERY AGENCYClaimantFABIAN FERNANDO AL KURT JACKSON1 st RespondentCHERYL DAVINA SMITH 2 nd Respondent(also known as Cheryl Davine Smith and Cheryl Devina Smith)
Mr James Maxwell-Scott (instructed by Legal Department, Assets Recovery Agency for ClaimantMr John Meredith-Hardy (instructed by Messrs Edward Hayes) for 1 st& 2 nd RespondentsHearing Hearing dates: 13 th, 14th, 15 th, 16 th, February 2007. 19 th, 20 th, 21 st& 23 rd March 2007
Approved JudgmentI direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic..............................THE HONORABLE MR JUSTICE KING
[1]By this claim commenced on the 17th of December 2004 under the CPR Part 8 procedure, the Director of the Assets Recovery Agency seeks against the First Respondent a Recovery Order pursuant to sections 243 and 266 of the Proceeds of Crime Act 2002 (“the Act”) in respect of property more particularly identified in six schedules originally annexed to the Claimant’s Response dated the 11th of July 2006 to a Part 18 Request.[2]These schedules have since been revised to take account of the settlement of the claim against the Second Respondent now embodied in a consent order signed by the parties on the 8th of February 2007. The Second Respondent has taken no part in the proceedings before me. For convenience I shall hereafter in this judgment refer to the First Respondent as the Respondent save when it is necessary to distinguish him from the Second Respondent.[3]The Respondent was born on the 3rd of June 1976. In the round this case concerns his acquisition of assets between 1995 and 2002 including real properties, jewellery, watches, motor vehicles and accumulated cash involving as will be seen acquisition costs of somewhere in the region of £400,000. As will further be seen the Interim Receiver has been unable to find any documentary evidence to indicate that the Respondent has ever been in receipt of any income from employment of any kind since he left school at 16. There are no tax records.

The Respondent’s antececedents

[4]The Respondent has the following material convictions:(i) 25th of October 1993 (then aged 17): possession of class A controlled drug (cocaine) for which he received a conditional discharge for 12 months imposed by the Islington Juvenile Court. On the 21st of December 1995 this was subsequently varied for breach to 3 months detention in a young offenders institution by the Snaresbrook Crown Court concurrent to the sentences then imposed upon him;(ii) 21st of December 1995 (then aged 19): sentenced by the Crown Court for four offences, namely three offences of possession of class A drugs with intent to supply one of which related to heroin, and one offence of supplying a class A drug. He received a total sentence of three years detention.(iii) On the 4th of December 1998 (then aged 22): sentenced at Isleworth Crown Court to 15 month imprisonment for possession of class B cannabis with intent to supply. The Respondent says this related to his attempting to smuggle into prison cannabis for his friend Marvin Campbell a serving prisoner. The convictions of December 1995 According to the available antecedent and court records the four convictions for which he was sentenced on the 21st of December 1995, arose out of two separate indictments: (i) The first charged two offences of possession with intent to supply a class A drug. The records show he was granted legal aid in relation to these matters on the 23rd of March 1995, committed for trial on bail on the 12 of May 1995, and arraigned in the Crown Court on the 26th of June 1995 when he pleaded not guilty. He was given bail pending trial. On the 22nd of September 1995 he was convicted after a three day trial following which he was remanded in custody to await sentence. That sentence was 30 months on each offence, concurrent to each other and concurrent with the other sentences imposed. (ii) The second indictment charged one offence of supply -supplying a class A controlled drug described as “crack”- and one offence of possession with intent to supply - class A heroin. The records clearly show that both these offences were committed on bail which in my view can only refer to the bail he was granted in respect of the first two offences. He was first granted legal aid for these two later charges in the magistrate’s court on the 9th of August 1995 when he was remanded in custody. On the 25th of September 1995 he was committed to the Crown Court for trial and ultimately pleaded guilty to both matters in either October or November 1995 following which he was remanded for sentence to the date in December. He received 2 years for the supply and 3 years concurrent for the possession with intent[5]Elsewhere there is record that he was in custody at HMP Feltham for a week between the 3rd and 10th of July 1995 and then continuously from the 9th of August 1995 until his release on licence on the 14th of February 1997.[6]I have gone into some detail into the history of the offences for which he was sentenced in December 1995 because it is the Respondent’s case that these related to offences committed a long time before in around 1993 when he would have been still a juvenile, and there is on the papers no clear statement of the date of the offences. These contentions are all in support of the submission made that the December 1995 convictions have no relevance to the material period when the Respondent acquired the property the subject of this claim.[7]However I am quite satisfied that it is a reasonable inference to draw from the history I have set out that at least some of the four offences were committed later, probably in 1995. Some must have been committed during the 12 month period beginning with the conviction of the 12th of October 1993 for otherwise the Respondent could not have been in breach of the conditional discharge then imposed. The latter two were however clearly committed while on bail which I remain of the view can only sensibly refer to the grant of bail in respect of the earlier two, which given the date of grant of legal aid was probably sometime in early 1995.

Periods in custody

[8]Just as significant however in the context of this claim are the actual periods the Respondent has been in custody during the relevant period which would inevitably have had a consequential effect upon his ability to engage in legitimate business trading activities. These are as follows: (i). 3rd of July 1995 to 10th of July 1995 (one week) (ii). 9th August 1995 to 14th February 1997 (18 months) (iii). 5th October 1998 to 24th of June 1999 (9 months) (iv). 13th June 2002 to 25th of June 2003. (12 months)

Background to the Claim

[9]The background to the claim starts on the 12 of June 2002 when the police arrested the First Respondent at his then home at 30A Moray Rd London, a housing association property which he shared with his partner, the Second Respondent, and three children. A large quantity of property including cash totalling £97,865, and items of jewellery and valuable watches then valued at almost £25,000 was found on the premises in addition to a number of boxed electronic, camera and computer items such as DVD recorders, digital cameras and play station games. Subsequently on or about the 27th of June 2002 further searches and seizures were made both at Moray Rd and at other properties connected with the Respondent. These seizures included the contents of three safety deposit boxes located at Selfridges which also contained a large amount of cash and jewellery, again including several valuable Rolex watches. The cash in the three deposit boxes totalled just over £50,000. The jewellery was at that time given a valuation of some £80,000.

Forensic Examination of the Cash

[10]The cash was subsequently sent away for forensic examination to a company called Mass Spec Analytical Ltd (‘MSA’) where samples were forensically examined for drug contamination by one Neil Ronan, a qualified forensic scientist, who reported his findings in a number of statements in 2002. The examination did not involve reporting the precise amount of drug contamination found on a particular banknote rather the exercise was designed, through testing of samples taken from each exhibit, to estimate the proportion of contaminated notes as a percentage of the total notes making up particular exhibit. A like forensic exercise carried out on samples taken from a database of bundles of banknotes collected by MSA over a number of years, a database said to be representative of banknotes in general circulation (a controversial assertion to which I shall have to return), was used to infer the likely proportion of contaminated banknotes in general circulation. A comparison was then made between the two sets of results. The net result according to Mr Ronan back in 2002, in an opinion expressed in language rather than figures, was that “the levels of diamorphine (heroin) found on the (the Respondent’s) banknotes was much greater than that found typically found on banknotes taken from general circulation”.[11]For the purposes of this trial the raw data produced by Mr Ronan has been revisited by experts instructed by both the Claimant and the Respondent and re-assessed against an updated version of the MSA database. The actual findings as to frequency of contamination as between the cash seized from the Respondent and those making up the database are not now in dispute.[12]The precise results in respect of the seized cash are conveniently summarised in the schedule at Appendix 3 to the report of Professor Brereton, an expert called by the Claimant, of the 28th of February 2007. Professor Brereton is a professor of chemometrics and Director of the Centre for Chemometrics based in Bristol, chemometrics being defined by the International Union of Pure and Applied Chemistry as “the application of statistics to the analysis of chemical data (from organic, analytical, or medicinal chemistry) and design of chemical experiments and simulations”. The schedule contains two columns. The column headed ‘MSA %’ lists the results produced by MSA. The column headed ‘Bristol %’ lists the results obtained at the Bristol Centre using the MSA raw data but a different method of assessment. The results are remarkably similar and save for one exhibit (DMM/61, referable to one large bundle of notes totalling £17,490 found in one of the safety deposit boxes which had a frequency rating of between 1% and 2%), they show a frequency of heroin contamination for each of the various bundles of cash seized from the Respondent well above that found in the MSA database. Indeed a better expression would be dramatically above.[13]Apart from that one exhibit DMM/61, the lowest result attributable to the Respondent’s cash is 40%. The average frequency of contamination in respect of his cash is approximately 55%. One exhibit (PF/18), being £5,715 worth of cash found in a plastic bag in Moray Rd, had a frequency of 100%.Another (DMM/4) also from Moray Road comprising bundles of cash in a leather briefcase totalling over £31,000, gave off a result of 70.72%. Yet another from Moray Road, namely DMM/7, £4,000 found in a wash bag, had a frequency rating of 94.81%.[14]In contrast the frequency percentages for the various batches of notes on the MSA database, again conveniently set out in a schedule at Appendix 2 to the Brereton report show an average of only 2.4%. Save for one entry (a sample of 100 notes taken from the Royal Bank of Scotland in April 2006 which had a frequency of 20% - 21.4%) they show a frequency for heroin contamination of between 0.00% and less than 5%.[15]The database schedule referred to, lists 240 batches containing 43,304 notes of different denominations sampled over 9 years and gives the source and date of each sampling. For the most part the source is a UK clearing bank, with preponderance for a branch of Lloyds Bank often, but by no means exclusively, in the Bristol area. There are however a number taken since the end of July 2004 (the date of the Court of Appeal decision in Benn to which much reference was made in this case) from non bank sources such as newsagents, public houses, and a casino, and in the case of the newsagents, from an area of Bristol, namely Knowle, with a reputation for being a run down area frequented by drug users. These too show like results as the rest of the database namely a very low frequency level of heroin contamination compared with that revealed in the Respondent’s cash. The highest frequency recorded on a Knowle sample was 6.5%, although one Knowle recorded 0.0%. The 150 notes in a Chepstow pub showed up a frequency of 4.5% while that of the 150 casino notes from Hill St Birmingham was 3.7%. I should record at once however the point made by the Respondent that these more recent non-bank samplings are very small both in number (12) and as a percentage of the whole database. The Knowle sampling for example (7 out of the12) represented only 3% of the total database, 94.8% of which came from the banks.[16]These are all matters to which I shall return when I consider the issue of the proper inferences to be drawn from what were on any view high findings of frequency of heroin contamination on the cash seized from the Respondent. However I set out now in tabular form the detail of how the different caches of cash found in the Respondent’s home were stored, including as they did a wash bag and several supermarket carrier bags, together with the percentage frequency of contamination applicable to each, since this graphically demonstrates in my judgment part of the essential background which has prompted this application. For convenience this table which I have extracted from an analysis appended to the Claimant’s closing submissions also includes the findings applicable to the cash found in the cash deposit boxes.[17]I say at once I am quite satisfied from the standpoint of common sense that the storage of cash totalling over £97,000 in this way is not the hall mark of the normal law abiding citizen who tends to keep such large sums in a bank rather than in bags at home where they earn no interest and are subject to obvious security risks: 23. EXTENT TO WHICH FJ’s CASH WAS CONTAMINATED WITH HEROIN Exhibit Reference Police Description Ronan Description Level of Contamination according to Professor Brereton [B/9/3357] Amount seized by Police 30A Moray Road 12.6.02 DMM/1 20 x £50 notes [B/1/512] 20 x £50 notes [B/1/46] 50% £1,000 DMM/3 15 x £20 notes 10 x £10 notes [B/1/512 15 x £20 notes 10 x £10 notes [B/1/46] [B/7/2652] 64% £400 DMM/4 1 leather Prada briefcase containing 5 folds of cash tied with elastic bands 1 x £5 3 x £10 757 x £20 329 x £50 [B/1/512 Brown Prada folio case containing a zip lock bag and 5 large bundles of banknotes secured with rubber bands Samples tested: 200 x £20 22 x £50 [B/1/47] 70.72% £31,625 DMM/6 2 bundles of cash tied with elastic bands 7 x £20 99 x £20 188 x £10 60 x £5 [B/1/512 Note: in order for the sum to have been £4,510, 7 of the £20 notes must have been £50 notes. 7 folds of banknotes and a large bundle of banknotes consisting of 3 smaller bundles, two of which were secured by rubber bands. Sample tested: 7 x £50 61 x £20 60 x £10 29 x £5 [B/1/47 – 48] 40.13% £4,510 DMM/7 1 wash bag containing bundles of notes and elastic bands 124 x £20 143 x £10 60 x £5 [B/1/512] Burberry dark blue wash bag containing rubber bands and banknotes. Sample tested: 30 x £20 40 x £10 7 x £5 [B/1/48] 94.81% £4,000 DMM/11 2 Tesco carrier bags containing quantity of cash tied with elastic bands 1 x £50 1115 x £20 1478 x £10 490 x £5 [B/1/512] Note: these add up to £39.580. If there had been 9 not 1 £50 notes the total would have been £39,980 The papers from the Bank of England suggests that there were 9 £50 notes [B/1/503 – 504] 2 Tesco carrier bags containing 4 large bundles of banknotes secured with rubber bands Sample tested: 8 x £50 411 x £20 215 x £10 16 x £5 [B/1/49] 50.46% £39,980 DMM/12 1 bundle of cash in folds 3 x £50 13 x £20 7 x £10 8 x £5 [B/1/512] Note: in order for the total sum to be £470, there must have been 2 rather than 3 £50 notes 1 fold of banknotes comprising 6 wraps of banknotes 2 x £50 13 x £20 7 x £10 8 x £5 [B/1/50] [B/7/2652] 20% £470 DMM/21 Large amount of cash in Selfridges bag 1 x £50 103 x £20 521 x £10 [B/1/512] 3 large bundles of banknotes secured with rubber bands, a Selfridges carrier bag (containing a large bundle of banknotes) and a collection of loose banknotes Sample tested: 1 x £50 36 x £20 150 x £10 12 x £5 [B/1/50 74.77% £8,210 PL/1 Quantity of cash from denim jacket 12 x £20 28 x £10 6 x £5 [B/1/513] 1 fold of banknotes secured with a rubber band 12 x £20 28 x £10 6 x £5 [B/1/51] [B/7/2652 – 2653] 50% £550 PL/3 Quantity of cash 1 x £50 46 x £20 6 x £10 [B/1/513] 3 loose wraps of banknotes 1 x £50 46 x £20 6 x £10 [B/1/51] 60.38% £1,030 30A Moray Road 27.6.02 PF/18 Plastic bag with cash inside [B/2/520] Blue carrier bag containing a large number of wraps of banknotes Sample tested: 1 x £50 46 x £10 4 x £5 [B/7/2610 – 2611] 100% £5,715 Safety Deposit Box B388 DMM/61 Large amount of cash [B/1/516] 1 large bundle of banknotes. Sample tested: 2 x £50 80 x £20 91 x £10 [B/7/2641] 1.06% £17,490 Safety Deposit Box 2869 DMM/39 5 bundles of cash [B/1/515] 5 large bundles of banknotes Samples tested: 74 x £50 150 x £20 79 x £10 22 x £5 [B/7/2641] 50.46% £34,970

The criminal trial

[18]The First and Second Respondents ultimately stood trial in the summer of 1993 at Southwark Crown Court together with others on an indictment containing various counts of money laundering. On the 25th of June 2003 both Respondents were acquitted on the direction of the trial judge. Evidently there was a problem with the indictment which in alleging a conspiracy to launder the proceeds of crime committed by others as opposed to the First Respondent himself did not reflect the evidence as it emerged at trial and the trial judge refused a late application by the Crown to amend. For present purposes it is not necessary to record any more details of the criminal trial. It is a matter of record that certain of the First Respondent’s co-accused pleaded guilty including his mother Debra Brissett and his two brothers, and that confiscation orders were made against them but I make clear that these facts have played no part in my consideration of this claim.

The appointment of the Interim Receiver

[19]Following the acquittal the case was referred by the Metropolitan Police Money Laundering Investigative Team to the Assets Recovery Agency established under Part One of the Act. On the 4th of October 2003 Newman J. made an order under section 246 of the Act providing for the detention of property believed to be recoverable property and for the appointment of Sara Dayman of BDO Stoy Hayward as Interim Receiver[20]The effect of the order in accordance with the material provisions of the Act was to require the Receiver to investigate(a) whether or not the property to which the order applied was recoverable or associated property and(b) whether or not any other property was recoverable property in relation to the same unlawful conduct (see section 247(2)), and to report her findings to the court (section 255), and in the meantime to preserve and maintain the property (section 246).[21]For the purpose of carrying out this investigative function, the Receiver was given by the order (in accordance with the broad discretion conferred on the court by section 247 of the Act and schedule 6 thereof) extensive powers to obtain information and to enter upon premises with further powers of search and seizure. Pursuant to those powers members of the Receiver’s staff on the 2nd of December 2003 conducted a search and seizure operation at the house where the Respondent had been arrested (the address at Moray Road) and at the other real properties connected to the Respondent forming part of this claim .[22]The Receiver submitted her final report setting out her findings of recoverable property to the court on the 14th of September 2004 with an amended report being subsequently produced dated the 19th of October 2004. Thereafter on the 17th of December 2004 the Director began this claim expressly relying upon the contents of those reports and the Receiver’s findings of recoverable property.[23]On any view her final report as amended, together with a supplemental report filed on the 1st of February 2007, comprises a comprehensive account of the nature and origins of, and the interests in, the property in question with extensive “evidence files” annexed, containing many pages of documentary material obtained and collated in the course of her investigation and relied upon by her to support her findings of recoverable property. This material for example contains bank statements, papers from the HM Land Registry, solicitors’ conveyancing files and the results of her investigations with e-Bay. They included papers received from the Metropolitan Police relevant to their investigations into the Respondent and the criminal trial which themselves included copy witness statements prepared for the trial.[24]The Receiver was called by the Claimant to give oral evidence to this court in support of her findings.

The status and evidential worth of the Receiver’s report

[25]The status and evidential worth of the Receiver’s report and the annexes of material relied upon by her has been a matter of some controversy. It was the submission of the Claimant that(1) the Receiver’s report is intended to enjoy a special status;(2) it can be inferred that when the court appoints an interim receiver it expects to derive substantial assistance from her findings and that it can be anticipated that her report will constitute extremely compelling evidence;(3) the Receiver’s report should operate as the starting point in any consideration of the facts by the court and it is for both parties to identify matters in the report which they dispute.[26]In support of these propositions the Claimant relied upon the Explanatory Note to section 255 of the Act (the section requiring that the order oblige the Receiver to report her findings to the court and to any person who may otherwise affected by it), at paragraph 326 of the Notes, explaining that “the report may comprise a comprehensive account of the nature and origins of, and interests in, the property in question. It will be capable of being used as a basis to establish agreed facts and to identify disputed matters that will fall to be resolved at the final hearing”.[27]Reliance was also put upon the comment by the authors of Smith and Owen on Assets Recovery at paragraph 5.48 to the effect that the wide investigative functions of the interim receiver, extending beyond any power vested in or duty placed upon receivers in any other field, amount to a duty to investigate the circumstances of the case on behalf of the court, independent of the parties, and are more akin to the function of a reporting judge in civil law jurisdictions. Smith and Owen suggests that “ thisindependent investigative function, leading to a report which, though not determinative of the proceedings,, is likely to be considered extremely compelling evidence, gives such proceedings a far more inquisitive character than is traditional in this jurisdiction”.[28]My attention was also drawn to the approach of the High Court of Justice in Northern Ireland in ARA v. Fleming [2007] NIQB 16 at paragraph 19 of its judgment when considering an application for permission to fund the instruction of a forensic accountant to challenge the findings of an interim receiver. The court in advocating caution in the incurring of additional forensic expenditure, emphasised the unique investigative powers of the receiver under the Act, together with the statutory framework under which although the receiver is appointed on the application of the Director of the Assets Recovery Agency, the appointment is by the court, and it is the court who at all times supervises the receiver and can give directions as to the exercise of the receiver’s functions on application by any party affected, and once an interim receiving orderhas been made the Director is deemed no longer to be carrying on a civil recovery function. (my emphasis).[29]It is obviously clear from this legislative framework and these statutory provisions governing the appointment of the Receiver and her investigative and reporting functions under the supervision of the court rather than the Director, that the Receiver is not the agent of any of the parties. In my judgment she is akin to an officer of the court and is reporting and giving evidence to the court in that capacity independent of the parties. It is further obviously right that the Receiver’s report should be used in advance of the final hearing as a means by which to establish such facts as can be agreed between the parties and to identify the matters in dispute in need of resolution by the court. Further in principle I am prepared to accept that the Receivers’ findings as to recoverable property should be given considerable persuasive weight by the court and to that extent her report enjoys special status.[30]However this said, I also agree with the Respondent’s submissions that the Receiver’s findings of recoverable property are not binding on the court, that it is the primary evidential material underlying her findings and said by her to justify them, which is of crucial importance together with any additional evidence called before the court, and that it is the duty of the court in determining any area of dispute between the parties carefully to scrutinise and weigh that evidence in order to determine whether the claim to recoverable property is made out. I intend to approach the dispute in this case in this way. The statutory provisions referred to do not alter either the burden or standard of proof which is upon the Claimant to establish the existence of recoverable property on the balance of probabilities by cogent evidence. The findings of the Receiver do not in themselves reverse the burden of proof so as to put any onus on the respondent to disprove her findings, and I did not understand the Claimant to submit to the contrary.[31]In addition to the Receiver, the Claimant in support of her overall claim also relied upon the witness statements of Neil Lindsey, a financial investigator employed by the Director, who was called to give oral evidence.[32]Those statements mirrored the approach of the Receiver in her report in that Mr Lindsey for the most part relied throughout on material supplied to him by others. In paragraphs two and three of his statement of the 22nd of November 2004, he expressly made clear that, save as otherwise stated or indicated, he was relying on material supplied by others. He exhibited as NL/2 a large bundle of the documents referred to. That material was identified as material “supplied to me by officers of the Metropolitan Police Money Laundering Investigation Team” (identities given) and “material supplied by (the Receiver) in herfinal Interim Receivers report (as amended)”. The Claimant in her Claim Form expressly referred to this statement of Mr Lindsey together with the reports of the Receiver, as setting out the “full details of this claim and evidence”.[33]In other words Mr Lindsey’s statement expressly stated that his evidence was in effect for the most part hearsay evidence in the form of the contents of his statement and the exhibits thereto. Those exhibits included the Receiver’s final report as amended. However it is not in dispute that this statement constituted notice of an intention to rely upon hearsay evidence for the purposes of section 2(1)(a) of the Civil Evidence Act 1995 and that there was no requirement to serve a separate hearsay notice ( see CPR Part 33.2 and paragraph 33.2.2. in the Civil Procedure White Book).[34]Hence it is not now in dispute, if it ever was, that the contents of Mr Lindsey’s statement and his exhibits constitute admissible evidence before the court although of course the fact they contain hearsay evidence goes to weight (section 4 of the 1995 Act).I agree with the Claimant that the effect of CPR Part 32.19 is that a party is deemed to admit the authenticity of documents disclosed to him as here under CPR Part 31 unless he serves notice that he wishes the document to be proved at trial No such notice has been served by the Respondent.[35]In the event the fact the bulk of the evidence relied on by both the Receiver to justify her findings and by the Claimant in support of her claim was in hearsay form caused little difficulty in the course of the hearing. Save in respect of one particular set of statements I have felt able to take account of the entirety. The only exception relates to unsigned copy Criminal Justice Act statements purportedly emanating from two police officers who allegedly stopped the Respondent while he was driving a motor car some years ago and to whom the Respondent allegedly made incriminating admissions. I refused leave to the Claimant to call those officers in the absence of service of any properly signed and dated statements. The Claimant did not seek thereafter to put the statements in proper form. I have put those statements out of my mind. They form no part of the evidence before me for the purposes of this judgment.

The Claim

[36]The revised schedules as revised now embrace: four real properties (schedule one): identified as: Flat 3, 285 Higham Hill Rd; (last known market value £80,000 less mortgage of £52,619); 487 High Road Leytonstone (£200, 000) 60 Dukes Avenue, Grays Essex (£50,000); 62 Porter Close West Thurrock (£75,000) cash: £17,490 from safety deposit box B388 £34,970 from safety deposit box D2869 £97,865 from 30A Moray Road £730 from Flat 3 Higham Hill Road Legal and general mortgage ISA policy - £1, 1136 five bank accounts (schedule one) containing respectively £1, 824.08; £440.25; £28.27; £715.55; £243.64 jewellery and watches:(i) the contents of safety deposit Box D43 (schedule 2) – maximum second-hand wholesale value £49,474 (the Respondent would say slightly less at about £ 47,000)(ii) the contents of safety deposit box B388 (schedule 3)-maximum wholesale value £11,251 (Respondent £9,940)(iii) from 30A Moray Rd (schedule 4) - maximum wholesale value £22,500 (Respondent the same) other goods: (i) from 30A Moray Rd (schedule 5) - multiple boxed electronic items, such as DVD recorders, play stations, cameras, computer hardware – market value put at £3,000. (iii) from Flat 3 285 Higham Hill Rd (schedule 6) -, shoes,cameras and camcorders and similar, - market value £540 three motor vehicles: Ford Focus (£5,000): Yamaha M/cycle Y684 NLO (£3,750) Yamaha M/cycle W279 RPC (£3,250)[37]In essence therefore what the Claimant now seeks is a recovery order in respect of four real properties, jewellery and watches, cash, 3 motor vehicles and six bank accounts. The bank accounts self evidently have only modest balances, totalling some £3,251.79, while the motor vehicles’ combined claimed value is only some £12,500. Although the precise nature and value of all the property with which this claim is concerned, including for example the items listed in schedule 5 (“non-jewellery items property recovered from 30A Moray Rd”), has had relevance to the general issue of the Respondent’s sources of income over the years and the truth or otherwise of his asserted history of legitimate trading activities, this case for the most part has centred upon the four real properties (in the round four one bedroom flats with a last known combined market value of just over £400,000 subject to one mortgage of just over £50,000), the jewellery (total last known market value now claimed at approximately £80,000) and the cash (£151,055).

The acquisition costs of the jewellery

[38]The precise valuation of the jewellery was a matter of some dispute as between the Claimant’s expert, Mr Truman, whose report is appended to the Receiver’s report but who was not himself called to give oral evidence, and the Respondent’s expert, Mr Buckie, who was called.[39]In the event as can be seen from the figures set out above, as far as the current market value is concerned, the dispute in respect of second hand wholesale value (the basis of upon which the Claimant has chosen to express “last market value” in her schedule one summary of claim) has proved to be of little consequence.[40]The issue as to what the Respondent must have expended in order to acquire his jewellery and watches is not so straightforward since the Respondent chose to append to his witness statement of 21st of March 2006 his own schedule setting out by reference to police exhibit and description, the price he paid for any given item of jewellery/watch, the person from whom he purchased the same ( which was entirely, bar one item, from Rankin jewellers), the date of purchase (dates between 1997 and 2002) and his intention in all cases to sell on.[41]It is common ground that the jewellery will have been acquired by the Respondent as second hand. The schedule shows a total acquisition cost to the Respondent for the jewellery and watches of £108,820. In oral evidence however the Respondent sought to row back from this figure, saying that his schedule had been derived from his own counsel’s cross -examination of Rankin at the criminal trial based upon instructions from the Respondent which were the product only of his “doing his best”, and that in some instances having regard to his own expert’s (Mr Buckie’s) valuations, be they the second hand wholesale or second hand retail, the schedule must be “clearly wrong” by which he meant too high. The closing submission of the Respondent, taking account of the revised schedules and those items claimed to have been gifts to him or his daughter for which he did not pay, was that the totality of his jewellery purchases must have been somewhere between £60,000 to £108,000.

The acquisition by the Respondent of the four real properties

[42]In summary form the history of the acquisition of the four real properties by the Respondent is as follows: 42.1. 62 Porter Close West Thurrock (“Porter Close”)(i) This was a one bedroom flat purchased by the Respondent on the 30th.of March 1998 at auction albeit through the agency of his mother Debra Brisset, for £22,250; The deposit was made up of a personal cheque of £250 and a cash lump sum of £2000. According to the Land Registry records, the property was transferred to the mother on the 27th of April 1998 and then subsequently transferred into the Respondent’s name, in consideration of natural love and affection, by a document dated the next day, the 28th April 1998. At this time the Respondent was 21 years of age. It is to be recalled that he had been released from an 18 month period in custody the year before in February 1997. (ii). Although there is an unresolved dispute as to when precisely the transfer was properly registered (the Respondent says this was not until November 2001), the Respondent does not dispute that he provided the funds in 1998 for both the deposit and the completion, and provided the same in cash. (iii). The Respondent’s further case is that this property was let out between April and June 1999 to a friend of his brother, one Mark Chandler, and then between July 1999 to May 2002 to his brother, Dwayne Brissett, for about £600 per month. No documentation in support of these assertions has been produced. As regards the arrangement with his brother, the Respondent says simply “there was no formal lease agreement as I trusted him and he trusted me”. 42.2. 487 High Road Leytonstone (“High Road”) (i) This was a ground floor shop and first floor flat, purchased by the Respondent on the 8 June 2000 at auction again using his own funds of £40,000. The Respondent accepts that he paid the £4,000 deposit in cash but as regards the balancing sum of £36,500 this was paid to his solicitor by two bankers’ drafts using some £29,000 from his cashing in of various National Savings bonds and the remainder from a National Savings account.(ii) The Respondent further says his intention was to refurbish the shop and let it out to his mother for the purposes of “her successful cooking business” but for various reasons he had not “got round” to achieving the necessary works. 42.3. 60 Dukes Avenue Grays, Essex. (“Dukes Avenue“) (i) This was another one bedroom flat, purchased by the Respondent at auction on the 12th of March 2001. The total purchase price was some £32,650. (ii) The Respondent did not pay the entirety of the price up front. He paid from his own funds a deposit of £3,200. (ii) The balance of approximately £29,000 was transferred to the vendor through solicitors instructed by the Respondent so as to complete the purchase on the 9th of April 2001. According to the Respondent this balance was raised by a loan to him from Joy Smith, the mother of the Second Respondent, which he subsequently repaid “over a period of time”. The Claimant has not sought to challenge this part of his account.(iii) Again the Respondent says he acquired this property to rent out. He rented it to another of his brothers, Jermain Brissett, from around May 2001 until September 2002, for a monthly rent of £500 in cash. Again the Respondent produced no formal leasing agreement because he says there was none. Again he asserts that the tenant “was my brother, I trusted him and he trusted me”. 42.4. Flat 3,285 Higham Hill Road Walthamstow (“Higham Hill Road”) (i) This was purchased by the Respondent in April 2001 or thereabouts for £65,000 paid partly by a deposit of £14,400 on a cheque out of an Abbey National Bank account using his own funds, and partly by a secured loan from Platinum Funding Limited in the sum of £52,619, arranged through Allerford Financial Services, a business run by one John Lavender. The mortgage application form in respect of this loan is said to have been completed by Mr Lavender’s assistant, Mr Matto, is signed by the Respondent and dated the 3rd of April 2001. The deposit was paid on the 17th of April 2001.Completion using the mortgage monies was on the 10th of May 2001. The Respondent says he had the (ii). The loan was an interest only loan secured not only on the property but also by an ISA life policy provided by Legal and General. The Respondent thereafter made provision for the regular periodic payments due under the loan agreement and the ISA policy by payments out of his Abbey National account. His first interest payment made was on the 11th of June 2001. The first monthly payment (iii). The flat he says was rented out again to the Mark Chandler already referred to, at the monthly rent of £650, although again he did not give any receipt and again there was no formal agreement. (iv). The ISA policy application form signed by the Respondent is dated the 17th of May 2001 as is a Financial Advisor’s “fact find form” completed by Mr Lavender and signed by the Respondent. (v). Copies of all the forms referred to are before the court produced through witness statements from Mr Lavender. As a matter of history however the mortgage application form was not produced by him until the hearing before me had commenced, being exhibited to a witness statement of the 14th of February[2007]The other forms were exhibited to a statement of the 4th of January 2007 which confusingly purported to exhibit the mortgage form which it did not. Mr (vi). These forms have a particular significance in this case being relevant to a specific claim that this particular property was obtained through mortgage fraud. The history of the deposit boxes[43]The history of the Selfridges’ deposit boxes is that the first, D43, was opened by the Respondent in November 1999. He was then some 23 years of age. It will be recalled that this box was ultimately found in June 2002 to contain a substantial collection of jewellery and valuable watches. The second, B388 was opened on the 3rd of May 2000 in the name of the Second Respondent but the First Respondent was a registered user. This was to be found to contain over £17,000 in cash in addition to jewellery. D2869, ultimately to be found with cash of £34,970 was opened by the Respondent in March 2002.

The history of the three motor vehicles

[44]It is not in dispute that the Ford Focus was purchased on the 5th of March 2002 by the Respondent for £9,788.75, although it was registered in the name of the Second Respondent. The Respondent accepts that he bought it by trading in a Ford Puma for which he was allowed some £8,000 and paying the £1,700 balance in cash. On his own case he had had bought the Puma some 3 months earlier from the Second Respondent’s mother for £8,500 again paid by him in cash.[45]The Yamaha motorcycle Y680 NLO was one of two motorcycles, the other being a Suzuki,which according to the Receiver were bought from a motor cycle dealership for cash by the Respondent using a false name in June 2001 in an overall transaction costing £13,400, £7,500 being attributable to this particular cycle. The Respondent accepts he did buy this cycle but claims to have sold it on. This is one of the exceptional cases arising in this claim the detail of which is considered below in paragraph 92 as is the other Yamaha cycle in which the Respondent claims never to have had any interest at all.

The bank accounts

[46]The 5 accounts in the claim relate to two at the National Westminster bank, one at the Nationwide Building Society and two National Savings Accounts. In fact over the years between May 1995 and 2004 the Receiver reports that the Respondent has opened some 11 bank accounts into which he has deposited cash on a regular basis. The Receiver’s analysis at para.4.27 of her final report is revealing since it highlights not only the amount of deposits and withdrawals for each fiscal year between 1995/6 to 2003/4 but the number of days the Respondent was in custody in any particular year with no apparent source of income. For example the Respondent opened his first two accounts at the National savings and the Woolwich Building Society on the 31st of May and the 10th of June 1995 respectively. He was then just 19 with no apparent employment or pay or tax details held by the Inland Revenue. The Woolwich account was opened with a deposit of £1,000 in cash. He was then in custody at a Young Offenders’ Institution for 1 week between the 3rd and 10th of July and then from the 9th of August 1995 to the 14th of February 1997, a period of about 18 months although during the fiscal year 1995/96 there was deposits of £15,655.98.[47]I set out below the table from the Receivers’ Report: Deposits Withdrawals Imprisonment 1995/96 £15,655.98 £250.00 260 days 1996/97 0.00 0.00 302 1997/98 £4,511.00 £367.09 not in prison 1998/99 £2,892.00 £7,300.00 182 1999/00 £26,103.00 £26,121.00 79 days 2000/01 £ 40,928.00 £25,554.75 not in prison 2001/02 £30,241.84 £44,196.35 not in prison 2002/03 £3,010.84 £6, 0207.43 296 days 2003/04 £9,898.51 £22,497.04 80 days

Deposits Withdrawals Imprisonment

[48]During this whole period therefore the total deposits were some £133,341.17 with withdrawals of £132,313.66. I record however alongside this information that which the Respondent urged upon me to bear in mind that the major property purchases were in March/April 1998 (Porter Close £22,500); June 2000 (High Rd-£40,000); March 2001 (Dukes Avenue-£3,200 deposit, balance of £28,000 by loan paid overtime); and April/May 2001 (Higham Hill Rd – deposit £14, 500, balance by £52,000 mortgage.)[49]Although the Respondent asserted in oral evidence that he had a post office savings account much earlier than 1995, the Receiver’s investigations have revealed no bank or savings account prior to May 1995 and no evidence – other than assertions by the Respondent himself- that he received any income from employment.

The Basic Issue in the Proceedings

[50]The basic issue raised in these proceedings is whether the Claimant has discharged the burden which is upon her to prove on the balance of probabilities that the property so identified in the schedules is “recoverable property” within the meaning of the Act.

The Claimant’s general case

[51]The Claimant’s general case, denied by the Respondent, is that this property is, or represents or is profit accrued through and hence represents, property obtained through unlawful conduct of one or more of the following kinds: drug dealing (drug trafficking contrary to various provisions of the Misuse of Drugs Act); money laundering (contrary to the Drug Trafficking Act 1994);[52]The Claimant’s contention is that this unlawful conduct can be inferred from:(i) the Claimant’s criminal convictions,(ii) the evidence of the frequency of heroin contamination found on the banknotes making up the cash seized from the Respondent compared it is said with a much lower degree of frequency of contamination of banknotes in general circulation, and(iii) the lack of any credible explanation from the Respondent as to how he was able legitimately to acquire the assets which make up this claim (“unexplained wealth”).[53]In addition to this general case the Claimant relies on a specific case of mortgage fraud in respect of the property at Higham Hill Road.

The Respondent’s positive case

[54]As will be clear from the histories already outlined, the Respondent does not in principle dispute that the property in the claim has been purchased with his monies and is still owned by him. In general the Respondent does not claim that specific purchases were financed from other sources.[55]The only exceptions relate first to those real properties which were in part financed by a loan, that is to say Dukes Avenue and Higham Hill Road. As regards Dukes Avenue the exception is in reality of no consequence for the present purposes since the Respondent concedes that he has repaid the loan using his own monies. The Higham Hill Road exception falls to be determined as a discrete case by reason of the allegation of mortgage fraud.[56]The only other exceptions concern first, certain limited items of jewellery and other goods said to have been gifts, either to himself or his daughter or the Second Respondent’s son, or which are said to belong to some-one else, and secondly, the two motor cycles in respect of one of which, as I have already indicated, the Respondent claims to have sold on to another person, and in respect of the other the Respondent disclaims ever having had any interest.[57]These exceptions apart however, the Respondent’s positive case which he supported by his own written and oral evidence to this court – although not with any documentary evidence – is that all the property was acquired by him through monies arising through the profits of his legitimate trading in six different businesses in which he has been engaged since finishing full time education at the age of 16 in the Summer of 1992, namely: Car hire: 1998 to 2000 Shoe sales: 1993 to the present Clothing sales: 1993 to the present Jewellery sales: 1994 to 2002 e-Bay trading :1998 to present Property letting: 1998 to present

Car hire: 1998 to 2000

[58]These assertions come from the Respondent’s third witness statement of the 21st of March 2006 which was in effect a consolidation of earlier ones. In his fourth witness statement of 5th of January 2007 he claimed for the first time that he also been involved in selling cars although in oral evidence he accepted this was a minor part of his businesses.[59]The common and significant characteristic of each business on the Respondent’s case is that it was cash based and conducted on an informal basis. The Respondent had no business premises – save he says in respect of the car hire business – and sales would be made through contacts made with friends or in restaurants or from street trading from a car boot. The income of the Respondent was for all intents and purposes always received in cash. The cash recovered by the police from his home and deposit boxes was money saved from past profits built up over a number of years. Money was kept at his home and in safety deposit boxes to allow for ease of access. The items of jewellery and watches found either in the safety deposit boxes or his home were apart from certain gifts, stock for his jewellery and watch businesses. Similarly the items listed in schedules 5 and 6 (non jewellery found at either Moray Rd or and Flat 3 Higham Hill Road) comprising multiple electrical and computer items and the like, such as Sony Play stations in boxes and DVD players, cameras, camcorders, and boxed Prada Kids sports shoes, were, with certain limited exceptions apart, trading stock. A lot of these were in fact the ‘Respondent’ says recovered from the boot of his Ford Focus.[60]The Respondent does not claim to have kept any business records and has produced no documentary evidence of any profitable business activity. In support of his claim that he would buy clothing and shoes for trading purposes he called evidence from the Sethi Brothers who traded as Meteor Sports. In support of his claim that the jewellery recovered was trading stock and that good mark ups of well over 100% -the Respondent himself claiming to have obtained anything between 100% and 500%- were achievable in this trade, he called the expert evidence of the valuer Mr Buckie. This apart however he called no live evidence in support of his positive case although he did rely on the transcripts of the evidence given at his criminal trial by George Rankin, the jeweller from whom he asserted he bought his jewellery.[61]In particular he has been unable to provide any evidence of any customer of his various businesses, that is to say evidence of anyone having purchased goods from him or utilised his services but this is because he says he did not keep records of any transaction, in particular he had no record of whom he sold to or when. He did not issue invoices or receipts. He does not claim to have paid or sought to pay any tax to the Inland Revenue or to have submitted any tax returns in relation to his trading. However his submission is that although these may be undesirable practices they should not in themselves lead to the court rejecting his claim to legitimate trading activities. This (to quote the closing written submission on behalf of the Respondent at paragraph 89) “is just the way (in retrospect inadvisably on account of his current inability to provide a ‘paper trail’) that R1 has conducted himself”[62]Further the Respondent submits that no adverse inferences sufficient to establish unlawful conduct for the purposes of this claim, can or should properly drawn from the general way he conducted his businesses in cash or from the lack of documentary trading records. Receiving and using cash is not illegal. Dealing in cash and the absence of records or evidence of customers cannot it is said be indicative of criminal conduct. Failure to pay tax does not prove that his sources of income for which no account was made to the Revenue were themselves unlawful.

The Respondent’s negative case

[63]Thus quite separate from his positive case, the Respondent raises a negative case in order to seek to defeat this claim, namely that none of the matters relied on by the Claimant – even if for example his positive case as to the sources of his income were rejected by the court so that this is a case of “unexplained wealth” – is capable either separately or taken together of supporting the inferences which the Claimant invites the court to draw. In short the Respondent asserts that the Claimant has failed to discharge the burden of proof which is upon her.[64]In this context the Respondent took specific issue with the contamination evidence relied on by the Claimant. The issue taken relates not to the fact of the contamination as such but to the inferences which can be properly drawn from the same. On this issue which centred upon the extent to which the MSA database of banknotes used for purposes of comparison with the Respondents’ specific notes could properly be regarded as representative of banknotes in general circulation, both parties called expert evidence. The Respondent also took issue with the materiality of his criminal convictions.[65]Further,the Respondent takes the overall point that the Claimant has failed sufficiently to particularise the criminal conduct alleged against the Respondent let alone prove the same. A bare allegation of “drug dealing” or “money laundering” is said not to be enough. It is further submitted that the court is not entitled to take a global approach to the claim but must consider whether the Claimant has proved her case on an item by item basis.

The Overall Acquisition Cost

[66]I am quite satisfied that on a conservative basis the Respondent required at least £400,000 over the years in question in order to acquire the property which is the subject matter of this claim. The Respondent’s own figures at paragraph 11 of his third witness statement suggested a total acquisition cost of £320,587.05 but this self evidently failed to include the £28,000 loan which he had repaid to Joy Smith referable to Dukes Avenue, and further reduced by some £37,000 the amount attributable to his acquisition of jewellery from the £l08,820 claimed in his own exhibited schedule by reason of the claimed error in his previous estimates to which I have already referred, and his claims to gifts. It further took no account of living expenses. Submissions made on behalf of the Respondent suggested a maximum sum for living expenses taking account of time spent in prison of £90,000. Taking all these matters into account I consider that the £400,000 does no injustice to the Respondent (the Claimant would put it higher) as a starting point by which to consider the Respondent’s case that all this expense was funded by the profits of his legitimate trading businesses..[67]I turn now to consider the evidence put forward by the Respondent in support of his positive case in a little more detail.

The Respondent’s case on a yearly basis

[68]The Respondent asserts that his various businesses were more than sufficient to generate this sort of income. In his third statement of March 2006 he estimated (at paragraph 128) that “to date I have received by way of income in excess of £350,000 through the profits made in my various businesses”, an assertion which he sought to support in his fourth statement of January 2007 by the following assertions of note referable to the fiscal years material to this claim: (1). In 1995/96 he earned £35,000 to £45,000, on average £3,700 to £4,500 per month, from daily trading in shoes, clothing, jewellery and the sale of two particular cars. This was in a year in which he was in prison for 260 days and he (2). In 1996/97 he was in custody until the 14th of February 2007 – but even whilst in prison he was able to earn limited monies. It was in February/March of 1997 according to his own schedule that the Respondent paid Rankin the Jewellers £6,000 to £7,000 for a gold Rolex watch. (3). In 1997/98 when he was at liberty throughout he earned (at the age of 20/21) £70,000 to £90,000 from running his car rental business along with his shoe, clothing, and jewellery sales. It was in March 1998 /April 1998 that he was able to find the £22,500 to purchase his first property Porter Close. (4). In 1998/99 when he was in prison for 182 days he was earning £55,000 to £70,000 from all the above plus now property letting (Porter Close). (5). In 1999/00 he was in custody 79 days until 24th June 1999, but he was still able to profit from the car rental business run by others on his behalf (including his mother) and also from his other businesses as above, making annual earnings of between £65,000 to £90,000. This was the year in which a substantial sum (£26,000) was deposited into his bank accounts and in the November he opened his first deposit box, D43. (6). In 2000/01 when at liberty throughout, all his businesses were very profitable (although he closed the car rental business down in November 2000) with estimated annual earnings of £65,000 to £80,000. This was the year when according to the Receiver there were bank deposits of £40,000 (the Respondent would say the deposits were in excess of £50,000) and in the June of 2000 he acquired High Road for £40,000 and in March 2001 Dukes Avenue with a deposit of £3,200. In oral evidence he asserted that he had had access to bank paying in stubs (although not produced) to support his written assertion in his 2007 statement that of the £10,500 deposited into a National Westminster bank account, all were rental payments from either Higham Hill or Dukes Avenue. (7) In the fiscal year 2001/02 again at liberty throughout he claims to have been earning £70,000 to £90,000. This was the year in which in April 2001 Higham Hill Rd was acquired with a deposit of £14,500 and on the 17th of June 2001 according to the Receiver’s documents, “Al Kurt” spent £13,400 in a single cash payment to acquire two motor cycles (although the Respondent asserts only one was referable to an acquisition by him). It was of course in March 2002 that he opened his final deposit box D2869 in which in June 2002 was found nearly £35,000 in cash. (8). In the fiscal year 2002/3 he was in custody from the 13th of June 2002 and not released until the following June - hence he was unable to trade.[69]I should add that the Respondent asserts he was earning good money prior to 1995. In particular not long after he left school in the summer of 1992 he went to America to stay with his grandparents where he realised how cheap items of designer trainers/shoes and clothes were compared within Britain and hence even at that early age he started to make good profits with mark ups in the region of 200%, by selling in this country various trainers and selected designer jeans which he had brought back from the USA. He gave oral evidence that he began importing goods from the USA through his grandparents shortly after returning from that family holiday. Hence his case was in effect that he started up his own business of buying and selling shoes and clothing almost from the moment he left full time education at the age of 16. In oral evidence he confirmed his written case that he had started his jewellery sales as early as 1994. For good measure in his written evidence he referred also to the sum of £25 a day through assisting his uncles in their decorating business both before and after he left school and to a short period undertaking a YTS scheme in computers but in oral evidence did not lay claim to significant income from these sources.

Business and living Expenses

[70]In keeping with the Respondent’s evidence throughout both written and oral, the Respondent when putting forward these figures set out above by way of earnings or “profits” never sought to take account of or give evidence about any business or living expenses. This was very evident when being cross examined generally about his asserted earnings from his various business in all their claimed guises but in particular in relation to the up to £200 a week claimed to have been “made” from car rentals. He on occasion appeared mystified by what counsel for the Claimant was referring to in this regard.

The car rental Business

[71]The Respondent claimed that he was earning £6,000 to £8,000 a month from his car rental business between 1998 and 2000 albeit for part of that time between the 5th of October 1998 and the 24th of June 1999 he was in custody. His evidence was that this income was not put through the books. The researches of the Receiver revealed that the business in question, Car Wise Car Rental Ltd, was incorporated on January 28 1998, but then in November 1999 was dissolved and struck off the Companies Register for failure to file any accounts, that the company’s bank accounts were in the name of one Colin Tapper and not the Respondent, that the Respondent was not a director although appointed company secretary in documents of January 1998, and that the available company bank statements for the 8 month period September 1998 to May 1999 revealed payments-in of £8,454 and withdrawals totalling just over £18,000. The Respondent’s explanation for this documented history was that this business was initially going to be a joint venture with Colin Tapper, his mother’s partner, who lost interest when they were unable to obtain finance to acquire cars, so he the Respondent subsequently ran the company although Tapper assisted with the paperwork which he would sign. He managed to buy cars for the purposes of the business by his own means. The business ceased trading in November 1999 as far as Companies House was concerned because of problems with insuring the vehicles and hirers running up unpaid speeding tickets but he the Respondent was still making profits of “around £200 per week” (earlier stating that he would hire out vehicles for £100 - £200 in cash) per car, through renting them out on a regular basis and he only ceased renting them out in or around November 2000.[72]In keeping with his whole asserted trading history, no documentary records were produced to this court of evidencing hiring agreements. In oral evidence he asserted he had packs of formal agreements but generally did not get his customers to complete them. The Receivers findings were stark in this regard: there was some documentary evidence that the Respondent had signed documents connected with the leasing of an office, but there was no evidence produced to her that the business was profitable and there was not one document demonstrating any money coming to the Respondent personally in connection with this business. The evidence called by the Respondent in support of his case re ( i) clothing and shoes (ii) jewellery[73]In his written evidence the Respondent asserted he made in excess of £80,000 from the sale of trainers and achieved mark ups on the sale of jewellery and watches of anything between 100 to 500 %.[74]I have already indicated that insupport of his claim that he wouldbuy clothing and shoes for trading purposes. The Respondent called evidence from the Sethi Brothers who traded as Meteor Sports and that in support of his claim that the jewellery recovered was trading stock and that good mark ups of well over 100% were achievable in that trade, he called the expert evidence of the valuer Mr Buckie and relied further on the transcripts of the evidence given at his criminal trial byGeorge Rankin, the jeweller from whom he asserted he bought his jewellery.[75]The difficulty with all this evidence however from the Respondent’s standpoint was that although it gave limited support to the proposition that on occasion in more recent years the Respondent was acquiring items of a kind and in a quantity which suggest they may have been for resale, it did not in the result lend any support to the case the Respondent was putting forward that the trading in question had been in place from 1994 in the case of the jewellery from Rankin, or from 1995 in the case of shoes from Meteor Sports, or that he would through the prices he obtained from these sources, be able to sell on at a consistently high level of mark up sufficient to produce the sort of profits asserted above.

The Sethi evidence

[76]Thus the evidence of both Kashif and Mohammed Sethi suggested the Respondent had become a customer only in around 2000 and had initially bought items only for his own personal use.[77]Kashif’s witness statement signed on the day he came to give evidence (21st March 2007) but likely to have been first drafted in 2006 around the same date as that of his brother in March of that year, said that he had known the Respondent for 5 or 6 years and in oral evidence Kashif confirmed that at the beginning the Respondent was buying footwear (trainers) in small quantities for himself paying retail prices and only later progressed into buying other sizes in greater quantities. He agreed that the case put to him at the criminal trial in 2003 (as evidenced by the available transcript) by counsel on behalf of the Respondent was that the Respondent although he had used to come into the shop as long ago as 1997 had only been buying in bulk in large amounts for “may be two or three years” i.e. since 2000 or 2001.[78]Mohammed’s evidence dealt primarily with the sale of Prada shoes and designer clothes to the Respondent. He again painted a picture of the Respondent being initially only the occasional retail purchaser. He too was referred to his evidence at the criminal trial to the effect that the Respondent had moved from being only a retail customer “well over a year or maybe two” before the date of that evidence in June 2003 which he did not dispute, in other words no earlier than 2001. Mohammed under cross examination expressly recalled that from the time that the Respondent became a regular customer he was in the shop “more or less every week” and he could not remember a period of months when he did come in at all.[79]It will be recalled that the Respondent was in custody from the 5th of October 1998 to the 24th of June 1999. I agree with the Claimants submission that the effect of all this evidence is that the Respondent cannot have been a regular customer of Meteor Sports before he was released from prison in June 1999.[80]Some limited but only limited documentation was produced through these witnesses to support the Respondent.[81]Kashif’s evidence was directed to the purchase of trainers and he did refer to 6 pages of documents which he had produced to the police all from 2002 as showing records of orders placed by the Respondent for numerous pairs of such trainers, one for example arguably refers to an order for 56 pairs of design “Air Max 95L”, although none were invoices as such and bore more the hall mark of stocktaking forms. Kashif’s evidence moreover was that he would be reluctant to give any discount and any he did give would be the smallest “he could get away with”, none of which supported the Respondent’s case that he resold the trainers bought from Meteor Sports at mark-ups of between 200-500% (according to his written statement) or between 300-400% (oral evidence ). Moreover, Kashif in cross examination had to agree that common sense would suggest that people are not likely to want to buy off a friend at a price far more than that charged by a proper retailer with ostensible expertise.[82]The high water mark of Mohammed’s evidence (at paragraph 13 of his witness statement) was that over a couple of years the Respondent spent in excess of £10,000 on Prada shoes as well as designer clothing and “this figure may have been more” and (at paragraph 14) that discounts would be offered to the Respondent enabling him to sell on at anything between 200-1000%. In cross-examination however he appeared reluctant to detail the size of the discounts given but eventually agreed they were not likely to have been more than 50% which gave me little confidence in the reliability of his evidence on the mark ups achievable by the Respondent (who himself in evidence claimed only 200-300%).[83]Mohammed agreed that he himself had not witnessed any sale transaction on the part of the Respondent but claimed to have met people who said they had bought from the Respondent. He produced some pages of spreadsheets originally handed to the police to support the sale to the Respondent in 2002 of some 87 pairs of “Prada kids” stock. The records are not entirely convincing as evidence of a sale but even if they be what it is said they are, it is noteworthy these documents and those produced by Kashif are the entirety of the records they are able to produce of trading with the Respondent. When asked why there were so few documents held by their business to do with the Respondent given their collective evidence of at least two or three years of bulk buying, Mohammed’s explanation was that records would be kept on a personal computer which would crash. When Kashif was originally asked in cross examination why these were the only documents he had come across to do with the Respondent, he could give no explanation. It was only in re-examination that he remembered his witness statement account that one or two of his laptops had been stolen and some had had viruses deleting all his records.[84]I did not find either of the Sethis convincing witnesses. As indicated they at the highest give only very limited support to the Respondent’s case.

The Rankin and Buckie evidence re the jewellery

[85]Mr Rankin’s evidence came from the transcript of his testimony before the criminal trial produced as part of the Respondent’s case. It undermined the Respondent’s case before me that he had been buying from Rankin, who was his only claimed source of jewellery stock, and selling on jewellery to members of the public at regular mark-ups of between 100-500% and that he had been doing so since 1994. The thrust of Rankin’s evidence in May 2003 was that business was very cut throat and profit margins were not good and that 65% would be his full mark up to members of the public but good customers would expect a good discount while his annual profit margin after overheads was around 10%; He said had known the Respondent for about 5 or 6 years i.e. since about 1997. Indeed it was the Respondent’s own case at the criminal trial that he had been a customer of Rankin only since 1997. When questioned about a particular transaction in 1997 (transcript p.2168-9) Rankin replied “unfortunately this was early days and Mr Brissett (the name by which he knew the Respondent) was not the established customer he was to become”.[86]Mr Buckie’s expert evidence called on behalf of the Respondent equally did not assist the Respondent’s case on the sort of mark-up (let alone profit) achievable by his claimed jewellery trading. Counsel on behalf of the Respondent in support of his client’s case in this regard understandably in his final written submission (paragraphs101-3) relied on the valuation figures given by the Claimant’s expert (Mr Truman) of the wholesale/retail valuation of the jewellery found in the Respondent’s possession, to demonstrate that the average mark-up between wholesale and retail over all the watches and jewellery was 200% and that single item mark-ups ranged on occasion from 140% to 950%. The problem with this analysis however was twofold. The first lay in the Respondent’s own schedule of the prices he paid for the items to which I have already referred, even allowing for the Respondent’s claimed errors. The second lay in the figures put by Mr Buckie on the wholesale /retail valuations. Mr Buckie’s wholesale figures were not that far from Mr Truman’s. His retail figures tended to be of a lower order. The reason he gave which appears entirely convincing, is that the watches and jewellery were second hand and hence the retail valuations had to be on a like basis and there were occasions when he felt Mr Truman had not been comparing like with like: he had been comparing a second-hand wholesale value with a new retail price and hence arriving at too great a difference. The average mark-up on a second hand basis was no more than 135%. Furthermore an analysis of the prices paid by the Respondent on his own case compared with the Buckie figures shows that the Respondent paid consistently more than the wholesale price although less than the retail. The Claimant in final submission produced a schedule described as Appendix 3 showing that on the Buckie valuations the Respondent paid approximately £93,000 - £94,000 for items with a second-hand wholesale value of between approximately £51,000 -£61,000 and a second-hand retail value of approximately £112,000-£135,000 – an average potential mark up of just under 50%.[87]However, even this analysis did not take account of the defects in what counsel for the Claimant described as the Respondent’s business model which Mr Buckie agreed had basic flaws making it highly unlikely that the Respondent would achieve even that result on a regular basis. This was a reference to: -. his lack of business premises by which to acquire any worthwhile business reputation - his modus operandi - selling informally in restaurants, in the street, or from the boot of a car

reputation

[88]Mr Buckie had no difficulty in agreeing that in order to command a good price, business reputation was important and that whilst a customer may well be prepared to take on the risk that goods might be counterfeit or stolen if buying apparently high value watches/jewellery from an informal street/restaurant trader, or to forgo the opportunity to return the goods or to have a receipt for insurance purposes ,such a customer would expect the price to be paid to be significantly lower than in a retail jewellers. He agreed with the proposition that where, as here, the Respondent was paying significantly above wholesale prices and was seeking to trade informally with all the disadvantages and suspicions attached to such a trader, that he was not going to be able to command anything close to normal retail prices for the goods in question. Furthermore when Mr Rankin’s evidence that margins on second hand watches were very competitive, was put to Mr Buckie, he agreed that prestigious branded watches such as the Rolexes in the Respondent’s possession generally attracted smaller percentage mark-ups in any event.[89]The only comfort Mr Buckie gave to the Respondents case was his opinion that the watches were typical of items found in a dealer’s stock in that there were about 14 Rolex watches which although not identical were often of more or less the same model with subtle differences. His finally expressed opinion was that they belonged to someone who if he did not deal in jewellery, “dabbled in it” as a secondary occupation. He did not think there was anything sinister in the dates of acquisition being as long ago as 1997 since stock turnover in jewellery was only 1.8% of total stock per annum.

eBay

[90]The Respondent asserted he made in the region of £30,000 - £40,000 from eBay trading which he said commenced in 1998 although he re-registered in September 2003 following his release from custody in June 2003. He would not accept the Receiver’s’ findings to the effect that although he was certainly registered to begin eBay trading on the 2nd of September 2003, on her investigations of eBay he had not been registered before that date. The Receiver did find eBay records of purchases and sales by the Respondent after that September 2003 date although again in keeping with the overall history in this case could find no record of any profits made as a result. As a summary of the trading patterns evidenced after that date the Receiver analysed by schedule the eBay records attributable to the Respondent’s account from the 20th of September 2003 to the 28th of November 2003. These for the most part related to the sale by him of electrical goods and Nike products, with a recorded value of just under £11,000. They included brand new digital cameras. One particular record of interest on the overall issue as to when the Respondent commenced eBay trading, was a purported sale by “Mr Sneaker” to the Respondent of a pair of Nike trainers for $1. There was no dispute that “Mr Sneaker” was a reference to Kashif Sethi of Meteor Sports to whom reference has already been made. The evidence of Kashif to the court was that the likelihood was this was not a genuine transaction but a fictional one designed to boost the Respondent’s positive feedback rating.

The Exceptions to the Respondent’s Basic Case

[91]I have already outlined above the exceptional case raised by the Respondent in respect of certain items of jewellery and other goods said to have been gifts for which he did not pay or which belong to other persons, and the two motorcycles. The detail of the exceptional case put forward by the Respondent in respect of both motor cycles is of sufficient significance in the overall consideration of this case to merit recounting in a little detail.

The Yamaha Y684 NLO

[92]On the evidence adduced by the Receiver (in particular the dealer’s documentation), the first Yamaha Y684 NL0 was purchased in June 2001 by the Respondent using the name Al Kurt (two of his middle names) for £7,500 in cash from Motorcycle City at the same time as using the same name he bought for £5,900 a Suzuki motor cycle Y763 NL0 making a total cash expenditure of £13,500. The Suzuki has never been recovered. However, the Yamaha has been and its key and the V5 certificate in the name of Al Kurt was found at Moray Road in the search of the 26th of June 2002, and as at the 23rd of August 2003 it was still registered in the name of Al Kurt. The Respondent does not dispute he purchased this Yamaha (as opposed to the Suzuki which he claims was purchased by Marvin Campbell) but asserted in his third witness statement that he had agreed to sell this cycle to Mark Chandler just before the Respondent’s arrest on the 12th of June 2002 and that the sale was completed while the Respondent was in custody by Chandler paying the Second Respondent. His explanation for the continuing registration of the bike in his (Al Kurt) name was simply that the requisite documentation was still with the police so no change of registration could take place. His explanation for the use of what was in effect a false name for the purchase, was in his written evidence to “avoid speeding or parking tickets” and also in oral evidence because he had no motorcycle licence, admissions to which I shall return when I consider the overall picture which emerges from the evidence in this case.[93]Equally of significance in that overall picture is that in his witness statement the Respondent did not choose to give any detail as to the price he had obtained from Chandler or the form in which it had been paid. However when he came to be cross-examined in the course of his oral evidence, he claimed that the exhibit PF/18 which was the £5,715 cash found in his house on the 27th of June 2002 in a plastic bag (“blue carrier bag containing a large number of wraps of banknotes”) and which was found to have a frequency of heroin contamination of 100%, was the money Chandler had paid for the motorcycle. This all emerged in the context of his being asked for any explanation which he might choose to give, for the frequency of contamination found on his cash. This was in fact the only explanation he personally put forward in oral evidence. As will be seen, a general submission was made by counsel on his behalf that his case was that the cash represented the product of legitimate trading on his part and hence were monies received in good faith from customers whom he had no reason to suspect might have been involved in illegal drug dealing or otherwise been in contact with drugs (if which was not conceded, that be a proper inference to draw from the fact of the contamination).

Yamaha W279 RPC

[94]As regards the second motorcycle, the Yamaha W279 RPC, the Receiver reports that this was retrieved by the Metropolitan Police in June 2002 along with the first Yamaha from a lock up garage said to belong to the Respondent. The cycle was then registered in the name of Marcus Chandler and had been since the 19th of October 2001. The Respondent asserts that he has never had any interest in this vehicle. The Receiver reports however that when the police requested that Chandler provide proof of ownership and a statement to explain why his vehicle was in the Respondent’s lock up garage - a request which followed on a request by solicitors for the Respondent and Chandler that the police release the cycle as it was not the Respondent’s - no further correspondence was received. The Receiver believes the motorcycle was bought by the Respondent with a payment of £2,400 paid by way of a debit on the 7th of November 2003 from the Respondent’s National Westminster bank account credited to Marcus Chandler, although the current keeper details had not been changed.

The Audi Sport 3 door hatchback S603 ENV

[95]I also record the evidence relating to an Audi motor car the keys for which, together with an Audi car book, and speeding ticket issued to “Fabian Brissett” were found at one of the Respondent’s properties during the searches referred to. The Receiver’s investigations uncovered records at the DVLA Swansea showing a curious history whereby this vehicle was transferred into the name of June Campbell of 5, Bowness Close Beechwood Road, London E8 3SY on the 2nd of February 2000, then registered in the name of Fabian Brisset, one of the Respondent’s many names, of the same address, on the 21st of March 2000, (the new keeper’s signature however appearing as J. J. Campbell), before being transferred back into the name of June Campbell in June 2000 (again with the only signature on the material document being that of Campbell). A notice of intended prosecution dated the 21st of February 2000 sent to June Campbell as the registered keeper, was signed by “F.Brissett “as the driver on the 24th of February 2000. Contrary to the Receiver’s report, the Respondent says he never had any interest in this vehicle, its registration history being something for which he was not responsible and knew nothing about at the time, although he concedes he did borrow the car once and received a speeding ticket for which he took responsibility by signing the notice as driver.[96]This motor car is not the subject of the present claim, it having been subsequently transferred on to a third party. The particular truth of the Respondent’s involvement in the registration history may never be known. The significance of the evidence for present purposes is however that it certainly tends to support a picture of a Respondent happily using different names, this time in the year 2000, when it comes to his use of motor vehicles, which of course similarly emerges in the history relating to the first of the two Yamaha motorcycles.

The allegation of mortgage fraud

[97]As already indicated at paragraph 42.4 above, there is a specific allegation of unlawful conduct raised by the Claimant referable to one particular real property, namely the Flat 3, 285 Higham Road, that this was obtained by mortgage fraud. The allegation is that the Respondent knowingly provided false material information, in particular in relation to the source and amount of his available regular income, in support of his mortgage application. The Claimant contends that as a matter of law she is not obliged to particularise the unlawful conduct in any more detail but that if any more details are desirable she relies upon the following sections of the Theft Act 1968, namely section 1 (theft), and/or section 15A (obtaining a money transfer by deception and/or section 17 (false accounting).[98]The Respondent denies he was party to any mortgage fraud. He does not dispute that the mortgage application form signed by him in fact contained untrue particulars as follows: the form in the section headed “Income Details –Self Employed” asserts that the Respondent is a disc jockey self employed in a company named as “Spinning Disc” of 62, Porter Close, Grays, Essex, that he has been so employed for 1 year 2 months, and has an annual income of £30,000. It further gives the name and address of his accountant as that of J. Rumley Associates with an address in Bedfordshire. The Respondent’s signature appears immediately beneath these particulars in a box headed “SelfCertification –Self Employed”alongside a printed statement “I confirm that my personal income is as stated above and is sufficient to meet the repayments on the amount of the loan requested”. The Respondent says these false particulars were inserted without his authority by those acting on his behalf at Allerford Financial Services, i.e. Mr Matto. The Respondent does not claim to have signed a blank form but rather a form with details already filled out which he did not read. At paragraphs 241 and 242 of his third witness statement the Respondent expressly says that “I was advised by the finance company on completion of the form to sign it. They said they had completed the form and the only details I gave them were my name and address……….at the time I was earning money from buying and selling jewellery clothing, shoes and letting properties through cash transactions and they were fully aware of the situation”.

The Statutory Framework

[99]Before proceeding to give my conclusions in this case it is convenient at this stage to set out the statutory framework governing this claim and to identify how I intend to approach the question of proof of recoverable property having regard to the submissions made by both Claimant and Respondent to which I have referred.[100]The relevant legislative provisions are set out in Part 5 of the Proceeds of Crime Act 2002, the purpose of which is to enable the Claimant as the enforcement authority to recover in civil proceedings in the High Court “property which is or represents property obtained through unlawful conduct” (section 240(1) (a)) and whether or not any criminal proceedings have been brought for an offence in connection with the property (section 240 (2)).[101]To this end section 240(3) empowers the Claimant to take proceedings for a recovery order of the kind sought in this case against any person she think holds “recoverable property”. Under section 266 (1) the court must make a recovery order vesting the property in the trustee for civil recovery if satisfied the property is “recoverable” subject only to the provisions of 266 (3) which in effect preclude the court from making an order if the respondent obtained the property in good faith and changed his position to his detriment at a time he had no notice that the property was recoverable, and it would not be just and equitable to make an order (see sections 2663(a) and (4)(5)(6), or if the order would be incompatible with a convention right within the meaning of the Human Rights Act 1998.

Recoverable property

[102]The primary definition of “recoverable property “is that set out in section 304 (1) namely “property obtained through unlawful conduct”.[103]However, this definition is supplemented in ensuing sections so as to encompass for present purposes: - “representative property” i.e. property representing property obtained through unlawful conduct (“the original property”) (section 305 (1). This includes property obtained by the disposal of any original recoverable or representative property (section 305(2) ) -. under section 307(2) profits accruing from recoverable property [ “where a person who has recoverable property obtains further property consisting of profits accruing in respect of the recoverable property” (section 307(1)), “the further property is to be traced as representing the property obtained through unlawful conduct” (section 307(2)] -. the attributable portion of “mixed property” – if a person mixes recoverable property with other property, that portion of the mixed property132. which is attributable to the recoverable property represents “property obtained through unlawful conduct” (section 306(2) ); Examples are given of133. increasing funds held in a bank account, or using the property in part134. payment for the acquisition of an asset (section 306 (3) ). This provision is135. relied upon in the Respondent’s submission that on any view of the evidence at least part of his income used to fund purchases of assets and to make bank136. deposits, has come from legitimate business activities

Tracing

[104]Provision is also made for tracing, i.e. for following recoverable property into the hands of a third party into whom it has passed (section 304(2) ) but not if the third party received it in good faith without notice (section 308(1) ). This latter provision is relied on by the Respondent who says that even if the court were to be satisfied that the drug contaminated cash was property “obtained through unlawful conduct”, such cash would not be recoverable if as the Respondent asserts, he received it innocently in exchange for goods or services supplied by himself in the course of legitimate trading.

Associated property

[105]I have already referred to the provisions of section 266 (3) and section 308 (1) designed to protect the innocent third party who has come into possession of otherwise recoverable property. With like purpose sections 270 to 272 of the Act address the problem of property in which there is more than one interest, not every one of which is within the definition of recoverable property. These sections accordingly deal with what is termed “associated property” as defined in section 245(1). This definition includes property which is not in itself recoverable property but which consists of: - any interest in the recoverable property ( section 245(1)(a); - any other interest in the property in which the recoverable property exists (section 245(1)(b) ); - if the recoverable property is a tenancy in common ,the tenancy of the other tenant (section 245(1)(c)); - if the recoverable property is part of a larger property, but not a separate part, the remainder of that property.(section 245(1)(e)).[106]In the absence of any agreement between the enforcement authority and the holder of the associated property (a situation governed by section 271), section 273 gives the court a range of powers to enable the associated property to be realised and payment made to the holder. This power is of particular use where the purchase of otherwise recoverable property has been in part funded by a loan raised by mortgage and there is no suggestion that the mortgage provider has been party to any unlawful conduct. In the present case such a mortgage provider provided part of the funds whereby the Respondent was able to purchase the property at Higham Hill Road. An order could provide in these circumstances for the sale of the property with the discharge of the mortgage from the proceeds of sale. “Obtained through unlawful conduct”.[107]Two ancillary questions arise out of the definition of recoverable property of some importance. First, what is meant by “unlawful conduct” and secondly what exactly has to be proved by the Claimant in order to establish that property has been obtained through such conduct, it not being disputed that the burden is on the Claimant to establish the same on the balance of probabilities.

Unlawful conduct

[108]“Unlawful conduct “is defined in section 241 (1) as conduct occurring in any part of the United Kingdom which is “unlawful under the criminal law of that part”. What has to be proved 109.1. Under section 241(3) the court must decide on the balance of probabilities whether it has been proved that “any matters alleged to constitute unlawful conduct have occurred”. 109.2. Under section 242 (1) “a person obtains property through unlawful conduct (whether his own or another’s) if he obtains property by or in return for the conduct”. This will accordingly include a person innocent of the conduct in question, subject always to the defence of good faith to which I have already referred (section 266(3)).[109]3.Under section 242(2)(a) in deciding whether any property was obtained through unlawful conduct 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”. The decision of Sullivan J. in Green[the Queen on the application of the Director of Assets Recovery Agency and Others v. Jeffrey David Green and Others [2005] EWHC 3168 (Admin)][110]These provisions were considered by Sullivan J. in Green. In that case the Director sought to argue that there was no obligation on the Claimant to identify any particular unlawful conduct – that the Director could simply allege that property had been obtained through “unlawful conduct” and was under no obligation to establish any kind or kinds of unlawful conduct.[111]Sullivan J. rejected that submission. Although he accepted that the Claimant need not allege or prove the commission of a specific criminal offence he held it was still necessary for the Director to prove that on the balance of probabilities the property was obtained by or in return for a particular kind or one of a number of kinds of unlawful conduct and that the onus was on the Director to set out the matters that were alleged to constitute the particular kind or kinds of unlawful conduct. See part one of the declaration recorded at para 47 of his judgment and paragraph 50 thereof.[112]At paragraph 17 of his judgment however Sullivan J. was clearly of the view that the matters the Director was obliged to specify could be in relatively generalised terms. Thus: “…….but it does not follow that the Director is not under any obligation to describe the conduct which is alleged to have occurred in such terms as will enable the court to reach a conclusion whether that conduct is properly describes as unlawful conduct. For the purposes of sections 240 and 241(1) and (2) a description in relatively general terms should suffice, “importing and supplying controlled drugs”, “trafficking women for the purpose of prostitution” “brothel keeping”, “money laundering” are all examples of conduct which if it occurs in the United kingdom is unlawful under the criminal law”.[113]The Director also submitted that the claimant could 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. This too was rejected by Sullivan J when making the second part of the declaration referred to, in the following terms: “A claim cannot be sustained solely upon the basis that a respondent has no identifiable lawful income to warrant his lifestyle”.[114]I see no reason to depart from the approach adopted by Sullivan J. It was followed by Langley J. in the only reported decision to date on a contested application under Part 5 of the Act in High Court proceedings in The Director of the Assets Recovery Agency v. Olupitan [2007] EWHC 162 (QB). Langley J. summarised the effect of Green at paragraph 22 of his judgment: “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 income. It is for the court to decide “on the balance of probabilities” whether the matters alleged to constitute unlawful conduct have been proved: section 241(3)”.[115]I also echo what Langley J. said on the emphasis to be put on the qualifying adverb “solely” in the context of proof of obtaining property through unlawful conduct, by reference to a comparison between lifestyle and identifiable sources of income. Such a comparison will not in itself be sufficient but as in Olupitan so in the present case the Claimant is entitled to ask the court to look at the totality of the evidence and the whole picture which emerges. As Langley J. said at paragraph 23 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”.[116]I equally reject the submission made on behalf of the Respondent that I am not entitled to take a global approach to the issue of proof that the property in issue is recoverable within the meaning of the Act. The question is whether the Respondent obtained the property through the unlawful conduct alleged or whether the property in the Respondent’s hands is representative of property so obtained. The test is whether it is more probable than not that such is the case. It is as was said in Olupitan the whole picture painted by the totality of the evidence which has to be balanced. I see nothing wrong in the court ultimately concluding that any significant asset of the Respondent has been obtained by or represents the proceeds of his criminal conduct as particularised by the Claimant in the terms set out at paragraph 51 above, if the court is satisfied on the evidence that this is more probable than not. I do not consider it essential that the court considers each property transaction on an item by item basis in the sense that the Claimant has an obligation to show some particular unlawful actions by the Respondent at some particular time which enabled the particular transaction.[117]I note that Langley J. felt able to adopt a similar approach in Olupitan. See in particular his observations at paragraph 67 of his judgment.[118]I also consider that the court is entitled to take a common sense approach to the inferences to be drawn from the manner in which the Respondent chose to store his accumulated cash and from the failure of the Respondent to keep any business records in the context of the evidence as a whole. I have already made a passing comment in this regard when describing the evidence relating to the finding of the contaminated cash. Of course one must not automatically equate the storage of cash in large quantities either in bags in ones house or in a deposit box with proof of criminal origin. Equally one must not draw that conclusion automatically from the absence of any regularly documented source of income or capital. And of course care must be taken not to reverse the burden of proof. However such storage and the absence of documentation may become a much more persuasive element if the court were to reject as false the explanations put forward by the Respondent for his ability to have the necessary ready funds to acquire assets.[119]As Sullivan J. said in Green at paragraph 32 onwards when discussing the forfeiture of cash decisions such as Muneka v. Commissioners of Customs and Excise [2005] EWHC 495(admin), in today’s “cashless society” the ordinary law abiding citizen does not normally need to keep large numbers of banknotes in his possession. It will almost always be safer (bearing in mind the risk of loss through accident or crime) and more profitable (bearing in mind the opportunity to earn interest) and more convenient (bearing in mind the many other ways of paying for unlawful goods and services) not to be in possession of large sums of money in banknotes. In contrast given the other characteristic of cash that it is readily negotiable and unless promptly seized has a tendency to disappear without trace, the criminal will find property in that particular form convenient as an untraceable means of funding crime or as the most sensible way from his standpoint of retaining the proceeds of crime before using it to acquire what he will hope to be untraceable assets.[120]Equally as the Receiver said in evidence one would expect any successful law abiding businessman to keep some sort of record no matter how simple, of what he was he was buying, what he was selling, and the amounts of his overheads – if only to work out the sort of profit he was making and which were his most profitable items. The criminal dealer in for example illicit drugs will of course eschew any record by which his activities might be detectable.

The standard of proof: the need for cogent evidence

[121]I do however accept that the Respondent is entitled to rely on that line of authority which establishes that although no gloss is to be put upon the applicable standard of proof, where as here the allegation is of particular seriousness the court should look for cogent evidence in support. The classic exposition is that of Lord Nicholls in Re H (Minors)[1996]AC 563, at 586D-F :
“the balance of probability standard means that a court is satisfied an event occurred if the court considers on the evidence the occurrence of the event was more likely than not. When assessing probabilities the court will have in mind as a factor …..that the more serious the allegation the less likely it is that the event occurred and hence the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability”
. To similar effect is Collins J. in the context of an application for a recovery order in ARA v. He & Chen [2004] EWHC 3021 (admin) at paragraph 66:
“as a general rule no doubt criminal conduct may be less probable than non criminal…….since it is necessary to establish there has been criminal conduct in the obtaining of property, the court should look for cogent evidence before deciding the balance of probabilities has been made out.”
Section 242 (2) (b)[122]Particular mention should also be made of sub - section 242 (2)(b) which provides that in deciding whether property was obtained through unlawful conduct “it is immaterial whether or not any money, goods, or services were provided in order to put the person in question in a position to carry out the conduct”. The explanatory note states that the purpose of this subsection is to ensure that property counts as having been obtained through unlawful conduct regardless of any investment in that conduct. The example is given of that of the purchase of illicit drugs with honest money in which case the whole of the proceeds of sale will be recoverable.[123]The Claimant relies on this provision for the submission that even if contrary to her primary case, the Respondent profited in part from legitimate business activities which were neither financed by unlawfully acquired capital nor a cover for illegal money laundering, any legitimately acquired cash will have become mixed at some point with cash from drug dealing, and in such circumstances whenever the mixed funds were used to buy drugs for resale, all the proceeds from the sale of those drugs would be deemed recoverable property by virtue of the subsection. Over time it is said it is probable that all the legitimately acquired cash will have become tainted by frequent repetition of this process. This submission is built upon the concessions made by the Respondent in cross-examination that he conducted nearly all his transactions in cash, that he did not keep separate bank accounts for his different business activities and that all his cash was mixed together. CONCLUSIONS The Mortgage Fraud

CONCLUSIONS

[124]It is convenient if I begin by stating my conclusions on the discrete issue of mortgage fraud in relation to the Respondent’s purchase of Higham Rd.[125]I have already referred to the mechanics and history of this purchase and the evidence which was before the court See above at paragraphs 42.4 and 97 - 98. It is not in dispute that in April 2001 the Respondent signed a mortgage application form which was used to apply for and obtain the mortgage advance of just over £50,000, which contained false particulars in relation to his employment and income from that employment. As already set out the material false particulars were that the Respondent was a self employed disc jockey in a company “Spinning Disc” and had been for 1 year 2 months earning £30,000 per annum.[126]I have no hesitation in rejecting the Respondent’s evidence that he himself did not provide this information to Mr Matto of Allerford Financial Services, who it is not disputed filled out the form, and his further evidence that to the contrary he had in fact informed Allerford Services and Mr Matto in particular that he “was earning money from buying and selling jewellery, clothing, shoes and letting properties through cash transactions and they were fully aware of the situation.” I consider the Respondent in giving this evidence was deliberately lying to the court.[127]I reach this conclusion by the following process of reasoning which is not affected in my view by the absence of any evidence from Mr Matto himself: (1). The information in question was either provided to Allerford Services by the Respondent for them to put on the form or was simply made up either by Mr Matto or his boss Mr Lavender. There is no other sensible explanation. Similarly in respect of how the self same information appeared on the other two forms subsequently completed by Mr Lavender and signed by the Respondent in May 2001 i.e. the ISA policy application form and the Financial Advisor’s “Fact Find Form” (2). There is information personal to the Respondent recorded in the Mortgage application form (and identical information in the other two forms referred to which it is not disputed is entirely accurate or (in the case of time at address) broadly accurate. This information, relating to his marital status, length of time at current address, national insurance number and telephone number could not have been accurately guessed at by either Mr Matto or Mr Lavender. The overwhelming probability is that this information at least was provided verbally by the Respondent on one or more of his various visits to the Allerford office of which he spoke in his evidence .The Respondent himself accepted in cross examination that some of the information on the mortgage application form must have been given by him verbally to Mr Matto. Likewise in respect of additional information, conceded by the Respondent likely to be accurate, which appeared in the forms completed by Mr Lavender- such as the name and address of the Respondent’s doctor this must in all probability have been supplied verbally to Mr Lavender by the Respondent, rather than simply made up or guessed at by those at Allerford (3). It must follow in my judgment on the balance of probabilities that there was verbal discussion between the Respondent and Mr Matto leading to the completion of the mortgage application form signed by the Respondent – even on his own case – at the Allerford Offices on the 3rd of April 2001 (4). The overwhelming probability is that in the course of such discussion the Respondent supplied the material false particulars to Mr Matto rather than Mr Matto simply making the information up. I accept the Claimant’s submission that Mr Matto had no reason to represent that the Respondent was a disc jockey rather than a trader in jewellery, shoes or clothes, if the Respondent had truly identified these as his trades. In contrast the Respondent would have every reason to misrepresent the true source of his income if, as the Claimant contends, that source was an unlawful one. (I shall return to the significance of this particular submission when considering below the probabilities of the nature of the Respondent’s sources of income generally at this time). I reach this conclusion even though I accept that the undoubtedly misleading particulars as to the identity and address of the Respondent’s accountant must have been suggested to the Respondent by in all probability Mr Matto, given on the evidence of both the Receiver and Mr Lavender, the accountant named was a genuine person trading from the given address and was known to Allerford Financial Services. These particulars were misleading since on any view the Respondent did not have an accountant at the material time of the filling out of the form although Mr Lavender in evidence sought to put an innocent gloss on the matter by suggesting that his firm through Mr Matto on discovering the Respondent had no accountant would have recommended Mr Rumley to him (5). However none of this in my judgment dilutes the cogency of the Claimant’s submission that Mr Matto would have no reason to make up the fact the Respondent was trading as a disc jockey as opposed to a jeweller and so forth, even if thereafter he felt compelled to assist in the identifying of an accountant. Mr Matto could not have thought the precise source of the Respondent’s income as between a lawful trader in jewellery, clothing, shoes and lettings, and a lawful trader as a disc jockey, would have been a matter of moment to the mortgage provider. In other words the probabilities must be that the Respondent did not tell Mr Matto that he was trading in jewellery and so forth as he now contends to this court he did, since if he had, Mr Matto in my judgment would have put that trading on the form (6). Significantly, as already explained, the Respondent’s signature is directly underneath the false information about his employment on the mortgage application form and alongside a statement of self certification. The Respondent does not claim to have filled out a blank form but rather to have attended the offices to sign the necessary form on being informed everything was now ready for this purpose. It is highly likely in my judgment that the material information was already present on that form when the Respondent signed it and that the Respondent saw it at the time of signing – it would have been staring him in the face. In these circumstances had in truth the position been as he would have this court believe namely that the information as written was totally contrary to what he had told Mr Matto, then I am quite sure the Respondent – assuming him to be a man of honesty – would not have signed and would have made a protest[128]I accordingly have no hesitation in concluding that the Respondent did knowingly supply to the mortgage provider false particulars on material matters in support of his mortgage application and thereby obtained the mortgage loan by deception and thus by fraud. I do not in the context of proceedings under the 2002 Act accept that such a conclusion is not open to me because I have not heard evidence directly from the mortgage provider. The notion that this false declaration of employment and income would not have materially influenced the decision to lend £50,000 on a property being purchased for £65,000 is fanciful. I am fortified in taking this approach by a similar approach taken by Langley J. in Olupitan at paras 29-36. I further infer that had the Respondent answered the questions on the form truthfully he would not have obtained a mortgage. By putting forward false particulars the Respondent was patently seeking to avoid disclosing the truth which he was anxious to conceal from the lender. As will be seen below the overwhelming probabilities are that at this time the Respondent was not conducting any legitimate trade of significance – not least because had he been so doing he would have informed Mr Matto of such trading, which on my findings he did not.[129]I accordingly find that the Claimant has established on the balance of probabilities that this mortgage loan was obtained by fraud on the part of the Respondent and that accordingly not only the mortgage monies but also the whole property was thereby obtained by unlawful conduct within the meaning of the Act, whether that conduct be characterised simply as mortgage fraud or obtaining a money transfer by deception or simple theft. That the whole property has been obtained through this unlawful conduct is self evident using the same process of reasoning rehearsed again in Olupitan at paragraph 35. But for the deception the Respondent would not have obtained the mortgage loan; but for the obtaining of the mortgage funds the Respondent would not have acquired the property.[130]Hence it must follow in my judgment that the whole of the material property Higham Hill Rd is recoverable for the purposes of this claim subject only to the right of the mortgage provider as an innocent party to be repaid its monies pursuant to the provisions relating to associated property to which I have referred.[131]I should make clear that I have reached these conclusions without reliance upon the evidence of Mr Lavender that he in 2007 could recall the contents of conversations between Mr Matto and the Respondent in 2001 which he both witnessed and heard. Mr Lavender was first asked to turn his mind to these matters only very recently at the time of his most recent witness statement. In these circumstances I was not sufficiently convinced of the reliability of Mr Lavender’s powers of recall after so long to allow his evidence on the precise contents of the conversation, to be of any real value. As can be seen I have preferred to reach the conclusions I have by a process of reasoning from the material documents themselves and the evidence of the Respondent himself.

Conclusions on the Respondents Case

[132]I turn next to my conclusions on the Respondent’s own positive case as to how he has been able to acquire the means to obtain the property which is the subject of to this claim.[133]I consider first the general credibility of that case or rather the lack of it.[134]I have no hesitation in concluding that in the round the Respondent’s account of his asserted legitimate trading businesses conducted over the year’s material to this claim was and is wholly lacking in credibility. I refer in particular to the following: - it is not credible that he has been a successful businessman running six profitable businesses without keeping any business records. As the Claimant submits, the Respondent would have required an excellent memory in order to do so and I agree with the Claimant that it was clear from the Respondent’s oral evidence that his powers of recollection were limited. I have already recorded the observation of the Receiver with which I also agree that one would have expected any successful businessman to keep some sort of record, no matter how simple, of what he was buying, of what he was selling and the amounts of his overheads if only to work out the sort of profit he was making and which were his most profitable items - it is not credible that he has been conducting the businesses he asserts over so many years and yet has been unable to trace any customer or produce any other evidence in support of an actual sale made by him (apart from limited e-Bay trading in 2003)or his provision of services - the figures asserted for his yearly profits available to acquire assets, appear to have been plucked out of the air. The notion that he could have maintained the sort of sizable mark-ups (let alone net profits) and number of sales he claims from selling in the informal way described, from his car boot or in the street or restaurants or through contact with friends, beggars belief. I agree with the Claimant’s submission in this regard that the Respondent’s “business model of buying jewellery, trainers, Prada shoes and selling them to members of the public was fundamentally flawed”. I have already referred to the very apparent inability of the Respondent under cross examination to understand the need to take account of business expenses and that sales do not equate with profits. It is noteworthy that in cross examination the Respondent declined to offer any estimate of his living expenses - In the course of developing his case under cross examination the Respondent succeeded only in confirming his general lack of credibility. I refer to the following by way of example, and emphasised to me by the Claimant in closing submission - his evidence that he began importing goods from the USA shortly after he returned to the UK from a family holiday at the age of 16 by his using the agency of his grandparents to supply him – something he had never said before, and for which there was no supporting evidence - his sudden assertion that he had had access to bank paying- in stubs which were never produced, in order to have been able to make his written assertions in January 2007 (see paragraph 68(6) above) that specific deposits were the product of a specific business transaction in property letting - his claim in the context of the car hire business that he had had packs of pro forma agreements although he did not generally get his customers to complete them - his refusal when asked to explain how he had sourced brand new digital cameras that he sold on EBay - I also found particularly incredible the Respondent’s assertion under pressure to explain the high frequency of heroin contamination found on the banknotes discovered in his house, that the cash exhibit with frequency of 100% (PF/18) was the money paid by Chandler for the Yamaha motor cycle Y684 NLO – when not a word of this had appeared in his witness statements. I refer to my observations already made on this at paragraph 93 above The evidence in relation to the individual asserted businesses[135]I turn from this general conclusion on the Respondent’s lack of credibility in the round, to consider the overall effect of such evidence as there is in relation to each asserted head of legitimate business, upon the credibility of Respondent’s assertions as to the amount of profits and years of trading attributable to each.[136]I take each business in turn. However my firm conclusion at this stage is that in light of that evidence whatever limited trading there may have been in any particular field, that cannot have been the source of the means whereby the Respondent was able over the years to acquire the assets he has which are the subject of this claim, bearing in mind my finding that he has required monies for this purpose totalling in the round some £400,000.

Jewellery

[137]I have already summarised the material evidence at paragraph 85 – 89 above.[138]The Respondent only ever claimed to have run this business from selling on jewellery obtained by him at a discount from Rankin the Jewellers. In the light however of the evidence of the Respondent own expert witness Mr Buckie and the transcript of the Rankin evidence from the criminal trial and the Respondent’s own estimate of the prices he paid as set out in his own schedule, the Respondent claim in both his written and oral evidence that he would consistently buy such jewellery and resell the same at regular mark-ups of between 100% and 500% is wholly implausible and I reject it as untrue.[139]Moreover the Respondent’s assertion in the evidence before me that he had been trading in jewellery obtained from Rankin since 1994 (when he would have been some 18 years of age) was wholly inconsistent not only with the Rankin evidence given at the trial but with the way the Respondent’s case was put on his behalf at the criminal trial which was that he had only been a Rankin customer since 1997 – and even then, according to Rankin himself, the Respondent was not immediately a regular one.[140]In my judgment this change of stance since the criminal trial and the claim to jewellery trading from as far back as 1994 was a discrete lie deliberately told to this court by the Respondent in order to meet the difficulties posed to him by this claim and the investigations of the Receiver whose net necessarily by reason of the statutory provisions went back 12 years from the date of her appointment, and the need to avoid any finding that any start up capital used in any future business was itself obtained by unlawful means, with the consequential tainting of any future profits . It will be recalled that as far back as 1995 the Respondent in May and June of that year just before he went into custody for what was to be some 18 months, opened two bank accounts one with a cash deposit of £1,000 and on the evidence of the Receiver, deposits were made in the year 1995/96 totalling over £15,000.

Shoes and clothes (trainers, Prada shoes and designer clothes)

[141]Again I have already rehearsed such evidence as was called in support of this head of business in particular the evidence of the two Sethi brothers from Meteor Sports.[142]I have already explained why I did not find either brother to be a convincing witness but on any view of their evidence in particular on the question of discounts offered, I again find the Respondent’s evidence that he consistently bought trainers from Meteor Sports and resold them at mark ups of 300-400% and simarly Prada shoes with mark ups of 200-300% wholly implausible, bearing in mind as I do my general view of his lack of credibility and that of his so called business model in particular. As with his claim to hugely profitable trade in jewellery, I have no hesitation in rejecting this account as untrue.[143]Moreover although the Sethi evidence gave limited if somewhat dubious support to a claim by the Respondent to the bulk buying of trainers and Prada Kids shoes in 2002 the effect of their evidence as already explained was that the Respondent could not have been a regular customer of Meteor Sports before he was released from prison in 1999 and further that he had become a customer only from 2000, and then initially on a personal basis. Further it will be recalled that the Respondent’s case at the criminal trial was that he had known Kashif Sethi since 1997 and had been buying in bulk only since 2000 or 2001.[144]In all these circumstances I again regard the Respondent’s assertion in this case that he had been buying and reselling goods from Meteor Sports since before August 1995 and embracing every year thereafter not only as a deliberate change of stance since the criminal trial but a discrete and deliberate lie designed to meet the difficulty of explaining his sources of income in the early years relevant to this claim to which I have already referred.[145]I do not forget the Respondent’s claim that he had since in effect the age of 16 in 1993 been selling shoes and clothes imported from the USA at substantial profits through the agency of his grandparents. The vaguest of details were given about this business in his witness statements before trial during which he mentioned for the first time the pivotal role of his grandparents in this venture. I have already made clear my view on the general implausibility of this part of the Respondent’s case which is wholly unsupported by any evidence and I have no hesitation in rejecting it as untrue. It will be recalled that the Receiver ‘s investigations going back to 1991 found no evidence of any bank or savings account opened by the Respondent prior to May 1995.

Car Hire

[146]The Respondent claimed to have been involved in a car hire business from 1998 to 2000 earning between £6, 000 to £8,000 a month, including while he was in prison from the 5th of October 1998 to 24th of June 1999. I have summarised the effect of the material evidence relating to this part of his case at paragraphs 71 - 72 above.[147]This was a head of asserted trade in relation to which I found the Respondent’s case particularly weak and implausible and I reject his account of this business as untrue.[148]I have already referred to features of evidence demonstrating that he had no real understanding of the nature of a car hire business, namely his inability to comprehend the concept of running expenses and the difference between hire charges and profits and his claim to having pro forma agreements which he did not use, to which I should add his evidence that there was no clear agreement with customers about what would happen in the event a car was stolen or if involved in an accident.[149]Furthermore, not only is there no supporting evidence of any kind be it documentary or otherwise in support of the Respondent entering into hiring agreements with anyone, but such evidence as the Receiver could uncover following up the Respondent’s case that he had operated through Car Wise Rental Limited, totally undermined the Respondent’s claim to a substantial income from any such business. There is no evidence that Car Wise was profitable to anyone. It is known that the company had a very short shelf life being incorporated in January 1998 and struck off for failure to file accounts in November 1999. The only available bank accounts for the business - are more consistent with the business having lost money. Crucially, there is not a shred of evidence that the Respondent derived any income from it. According to such documents as there are, the Respondent was company secretary rather than a director and there is no evidence that the Respondent owned a share of the business or received any salary or income. I reject the Respondent’s wholly implausible attempts to explain all these matters in the way he has as disingenuous and false.

eBay trading

[150]The Respondent did not dispute that a person needs to be registered with eBay in order to be able to trade on eBay.[151]In the absence of any documentary evidence – or indeed any other evidence apart from the Respondent’s own assertion – of any registration or trading prior to the 2nd of September 2003, I reject the Respondent’s claim that he had been trading on eBay since 1998 earning thereby some £30,000 - £40,000. I accept that he did become registered on the 2nd of September 2003 following his release from custody as evidenced by the Receiver’s findings and that he thereafter participated in some limited trading as described by the Receiver. However this trading post September 2003 self evidently can have had no bearing on his acquisition of the assets under claim.[152]His claim to have been registered prior to that date is not only undermined by the failure of the Receiver’s investigations with eBay to uncover evidence of such registration but is inconsistent with the evidence (see paragraph 90 above) that after September 2003 the Respondent went to the trouble of engaging in fictional eBay transactions in order to improve his positive feedback. As the Claimant submits, had the Respondent been previously registered as he contends, he could have re-used his previous account and taken advantage of such positive feedback he had already acquired.

Property rental

[153]The Respondent has produced not one piece of evidence, be it documentary or otherwise, to support his various claims to letting out properties and receiving income there from. I have set the detail of individual alleged lettings alleged him in the history of the individual real properties under claim in this case. In every case the Respondent seeks to explain away the absence of any formal letting agreement or proof of receipt of rental. I again reject his explanations as totally implausible. I consider his account under this head to be untruthful.

The finding of mortgage fraud

[154]I should add that one particular finding I have already made in my conclusions on the mortgage fraud provides powerful support for my above findings. This is the finding that the Respondent did not tell Mr Matto in April 2001 that he was trading in jewellery, shoes, designer, clothes, or letting properties.[155]This is powerful evidence that as at April 2001 the Respondent was not legitimately trading in any meaningful or profitable way in any of these goods or services. I am quite sure that if the Respondent had been so trading legitimately and profitably he would have told Mr Matto (as indeed he asserted he did, and I have found he did not).

Overall Conclusion on the Respondent’s case

[156]In the light of all these considerations both as to the Respondent’s lack of credibility in the round and the implausibility of the individual features of the Respondent’s evidence concerning the individual heads of legitimate business trading to which he has laid claim I am quite satisfied that the Claimant has made out one of the essential factors relied in support of the claim to recoverable property, namely the lack of any credible explanation from the Respondent as to how he was able legitimately to acquire the assets which make up this claim. In other words I am quite satisfied on the totality of the evidence that this is a case of “unexplained wealth”.[157]For the avoidance of doubt my primary conclusion is that on the balance of probabilities the Respondent has not during the material period relevant to the acquisition of the alleged recoverable property engaged in any identifiable legitimate profitable business activity of any significance. I say of “significance” since I cannot exclude the possibility arising out of the nature of some of the boxed shoes, electrical, camera, computer and similar goods found in his possession at the time of his arrest in 2002 that he was “dabbling” in such trade and the same may be true of some to a very limited extent in relation to shoes obtained from the Sethis in 2002. However I am quite satisfied that this will not have contributed in any meaningful way to the overall ability of the Respondent to acquire the assets said to be recoverable property[158]I should also make clear at this stage that on the totality of the evidence I do not consider the jewellery found in the Respondent’s possession was his stock in trade referable to any legitimate trading activity. There has to be another explanation which the Respondent has yet to give.

Conclusions on the Claimants case

[159]I turn to give my conclusions on the Claimant’s case.[160]I state at once my overall conclusion that it is more probable than not on the totality of the evidence and the cogent picture which has thereby emerged, that any asset which the Respondent has acquired using his own monies during the period material to this claim, and that of course embraces on the undisputed evidence all the property which is the subject of this claim (subject only to the limited exceptional cases to which I shall have to return), is property which has been obtained by unlawful conduct or is representative of such property, of the kind sufficiently particularised by the Claimant in her claim, namely drug dealing or through money laundering the proceeds of drug dealing. I make clear I have reached this conclusion on a global approach to this case and not – save for the specific finding of mortgage fraud -on an item by item basis.[161]My process of reasoning is as follows.

The positive rejection of the Respondent’s Case

[162]I fully accept that my finding of “unexplained wealth” cannot in accordance with the decision in Green be in itself sufficient for the Claimant to sustain her claim to recoverable property. However as in Olupitan, this is not simply a case of “unexplained wealth”. It is a case in which the Respondent has offered explanations in response to the claim which the court has rejected as untrue. This in itself is a powerful pointer in my judgment that the assets concerned have been acquired through unlawful means of some kind. And indeed there are a number of pointers in the evidence in this case that the Respondent has been quite willing to commit acts likely to constitute unlawful conduct, for example his purchasing of the Yamaha Y684 NLO in a false name in order to avoid speeding or parking tickets or because he had no motorcycle licence (see again the history of this transaction set out at paragraph 92 above) or his self confessed failure to pay income tax on what he asserted was legitimate income. His habit of using different alias’ when it comes to his use of motor vehicles, as further exemplified in his admitted use of the name Fabian Brissett when caught speeding in the Audi hatchback in 2000, is another pointer to his being involved in criminality. The evidence relating to the beginning of the period material to the Claim culminating in the Respondent going into custody for drug offences (August 1995); the evidence at the other end of the period, relating to the seizure of the contaminated banknotes found in the possession of the Respondent[163]I then turn to consider – as invited to do by the Claimant – the picture which emerges as to a specific kind of criminality when one looks to the evidence relating to the two ends of the chronology material to this claim. I take each in turn.

The initial period before August 1995: the Respondent’s acquisition of start- up capital

[164]The court is here reviewing the position of the Respondent in the period before he went into custody in August 1995 for what proved to be some 18 months.[165]It is certain from the Respondent’s known criminal convictions, in particular the four for which he was sentenced in December 1995 that he was engaged in a certain amount of Class A drug dealing prior to that August. I have already at the beginning of this judgment set out the history of these convictions which leads me to conclude that of the four offences they represent, the latter two were committed while on bail for the first two and in all probability were committed sometime in early 1995.[166]I agree with the Claimant however that it is very unlikely that the Respondent was so unlucky that on four isolated occasions that he dabbled in drug dealing he was arrested, charged and successfully prosecuted on each of those four occasions. The obvious inference is that he was involved in more drug dealing than the four convictions show. And of course there is evidence of his possession of a Class A drug in October 1993.[167]This is one side of the picture at this time. The other concerns whether the Respondent was during this period engaged in any form of legitimate business activity.[168]It is known from the Receiver’s investigations that the Respondent prior to August 1995 had by the age of 19 been able to build up a certain amount of capital since he was able in May and June 1995 to open the two bank/savings accounts to which I have already referred, one at least with a deposit of £1,000 in cash and subsequently in the fiscal year 95/96 deposits were made totalling over £15,000 in cash. The Respondent’s case as I have already set out was that at this time he was earning substantial sums (up to £4,500 a month) principally from daily trading in shoes, clothing and jewellery. In his fourth witness statement he claimed for the first time that he had also been involved in selling cars but he accepted this was a minor part of his business. However, I have already rejected his assertion that he was trading in jewellery as far back as 1994 and 1995 as a discrete lie, given he only ever claimed to have done so through his business with Rankin. Similarly I have already found he has deliberately lied in asserting the buying and reselling of goods from Meteor Sports from before 1995. The only other candidate for a legitimate source of income material to this period is the Respondent’s claim to have been running a successful business importing shoes and clothes from the age of 16. However as has been seen this claim is all premised upon his account of having gone to the USA at that age for a family holiday and on his return starting up importing goods from America through his grandparents living there, which I have already rejected as being entirely implausible and supported by no evidence whatsoever - quite apart from the question how the Respondent obtained the initial finance to fund all this activity.[169]The fact is although the Respondent claimed to have had a post office savings account much earlier than 1995, the Receiver in the course of her investigations found no evidence of any bank accounts or savings accounts prior to May 1995 and no evidence of any income from any employment in relation to this initial period beginning in 1991and ending in 1995. Indeed the only source of income by way of salary or wages alleged by the Respondent relevant to this time was the occasional day of working for his uncle at £25 per day and a period of time on the YTS scheme for pay which he agreed was very poor, before taking into living expenses.[170]In all these circumstances I am quite satisfied that the Respondent can have been involved in no legitimate trading prior to his going into custody in August 1995 or if he was it was a tiny proportion of the sources of his income during this time and that it is more likely than not that the sources of income which enabled the Respondent to build up the capital he did came from drug dealing. There is no other sensible conclusion in my judgment.[171]In other words I accept the Claimant’s submission as well made that on the balance of probabilities such capital as the Respondent was able to build up prior to August 1995 which was subsequently used to initiate any business activities initiated after that date was derived from unlawful conduct of the kind identified. This finding inevitably assists the Claimant in her claim to recoverable property in this case on the basis of it being representative property within the meaning of the statutory provisions. The evidence at the end of the chronology: the seizure of the contaminated banknotes.[172]I then turn to the picture emerging at the other end of the material chronology and the question of the proper inferences to be drawn from the discovery of the large amount of banknotes totalling some £150,000 discovered stored in the way described in the Respondent’s house and deposit boxes and subsequently found to have been contaminated with heroin. The significance of the contamination evidence.[173]The significance if any of the contamination evidence was a topic which occupied much of the hearing before me.[174]I have already set out the findings of frequency of heroin contamination found in respect of the Respondent’s cash compared with that found on the batches of notes making up the MSA database. On any view the difference between the two is huge. I repeat that the frequency percentages on the MSA database show an average of 2.4% and save for one sample, the frequency is between 0.00% and less than 5%. The one sample had a frequency of 20%. In contrast the average result attributable to the Respondent’s cash is 55%. The lowest was 40% .The highest was 100%.When one looks at the table set out at the beginning of this judgment it can be seen that the batches of cash totalling over £90,000 found in the Respondent’s home on the 12 of June 2002 in various forms of carrier bags, included examples of frequencies of over 70% with one as high as 94%.[175]When asked in the course of his opening to identify the inferences that the court was being invited to draw from these findings, Mr Maxwell-Scott on behalf of the Claimant replied as follows: “That the First Respondent was in close contact with significant amounts of heroin. That is how they came to be on his bank notes. The inference that can be further drawn is that he was himself involved with drug dealing, specifically not necessarily exclusively dealing in heroin. That is consistent with him having prior criminal convictions for dealing in possession with intent to supply Class A drugs”.[176]These forensic findings in truth go only to the prior issue whether it can be properly inferred that these banknotes were and are contaminated with heroin with a frequency far beyond banknotes in general circulation (“the basic contamination issue”). The legitimacy of further inferences that first the notes have been and then the Respondent has been, in close contact with significant amounts of heroin and that the Respondent himself has involved with drug dealing, must depend on the totality of the other evidence in this case , in particular the court’s findings as to the truthfulness of any explanations put forward by the Respondent for any such basic contamination, and of his explanations for his accumulation and storage of these large amounts of cash and of his assets generally.[177]The Respondent disputes that any adverse inferences can be drawn from the forensic findings.

The basic contamination issue

[178]On this basic contamination issue I received evidence from experts on behalf of both parties. The Claimant relied upon(i) Dr Richard Sleeman, a founding director of MSA, (a qualified chemist and a fellow of the Royal Society of Chemistry who has specialised in the detection of trace quantities of drugs and explosives and made many presentations in criminal proceedings(ii) Professor Brereton, the professor of chemometrics to whom I have already referred. The Respondent relied upon (i) Dr.R.E. Audrey’ a senior lecturer in analytical chemistry at the University of Huddersfield specialising in the analysis of drugs and (ii) Professor Patrick Laycock, Emeritus Professor of Statistics the University of Manchester. I heard live evidence from Dr Sleeman, Professor Brereton and Professor Laycock.[179]In the event although many reports were produced for the purposes of these proceedings the sole issue which emerged between the experts was the extent to which the MSA database can be said to be representative of banknotes in general circulation so as to enable a court to conclude that the frequency of heroin contamination on the Respondent’s cash is so unusually high that his banknotes cannot have originated from general circulation and but are likely to have been in close proximity to heroin.[180]On the one hand Professor Laycock called by the Respondent was (as he had been before the Court of Appeal in Benn) highly critical of the use made of the MSA database which in his view was wholly inadequate for the purposes of determining whether or not any given level of contamination was higher than normal in general circulation. It constituted entirely random samples which could have no more statistical significance than that. “The sampled data is very largely classic convenience or happenstance.” The sample design was fundamentally flawed and no use had been made of sound statistical methods in drawing up a design before sampling was undertaken, such as stratification, clustering, construction of a sample frame and significance testing. Emphasis was put on the very small percentage of samples taken from non bank sources, on the haphazard geographical spread of the areas from which sampling was undertaken and the failure to represent in the database the specific geographic and socio economic area from which the Respondent came.[181]On the other hand there was the evidence of Professor Brereton. He is not a pure statistician but has an interest in statistics. His experience is in the application of statistics to chemical data and part of his expertise has been in determining in advance how sophisticated a model is required which in turn he says depends on the nature of the differences revealed in the data concerned and the purpose for which the comparison is being made. The more subtle the differences the more sophisticated statistical model may be required. The more stark the differences the less the need for sophistication. Heaccordingly asked the court to concentrate on the facts of this particular case. His essential point was that the difference between the contamination found in the quite extensive background database, and the notes from the Respondent was so enormous that there was in this case no need for formal statistical sampling designs. His overall conclusion was that the frequency of contamination in notes seized from the Respondent was “beyond reasonable doubt higher than is found in the background population.” His further opinion was that “in the absence of an alternative explanation presented by the respondent this would suggest the banknotes do not originate from general circulation and are likely to have been in close proximity to heroin”.[182]Dr Sleeman prayed in aid:223. - the improvements made to the MSA database since the decision in Benn was promulgated in on the 30th of July 2004 which I have already summarised at paragraph 15 above, together with the observations of the Respondent disputing the significance of these224. - the results of research, fairly described in my judgment by the Claimant as a carefully constructed study, in which Dr Sleeman participated, published in a peer review journal showing an absence of regional variations in the contamination of banknotes withdrawn from banks and thereby suggesting that the attack on the legitimacy of the database on the grounds of flaws in its geographic or socio-economic base was unfounded[183]There was however no longer any dispute as to the findings themselves. The forensic methodology was not attacked and it is accepted in a Sleeman/Audrey joint report that the batches of notes tested were representative of the material exhibits.[184]Equally both these experts agreed that (paragraph 15) the “results do not indicate a definite connection between the banknotes and illegal drug activity” and (paragraph 17) that “it is not possible to determine whether the heroin originates…from a single source”.[185]Nor is it now in dispute that the MSA database is representative of banknotes taken from banks located in the United Kingdom. In the joint Sleeman/Audrey report both experts agreed that conclusions in the Ronan statements of 2002 that “the levels of diamorphine (heroin) found on the banknotes was much greater than that found on banknotes taken from general circulation” and “ I would regard the possibility of this occurring by chance as remote” should be better expressed as “would regard the possibility of withdrawing a similar quantity of banknotes from a bank in the United Kingdom and finding them to be contaminated to the same extent as slight”. Professor Laycock in his joint report with Dr Sleeman conceded that “the measurements made on the banknotes in the MSA database as used for in comparison in court can be regarded as reasonably representative of all such measurements which might be made on banknotes taken from banks located in the United Kingdom”[186]In these circumstances both parties concentrated their fire upon the question (posed by Dr Sleeman under cross examination) of “the likelihood of money from banks being dissimilar to money in general circulation”. However, no expert before me put himself forward as a banking expert. Hence the Respondent contended in final submission that this court has no evidence upon which it can properly answer this question.[187]The Claimant however in response in effect makes two points, both arising from the same striking feature in this case: the huge size of the frequency of contamination revealed on the Respondents cash compared with that on the database.[188]The Claimant says first that the differences here are so striking that adverse inferences should be drawn and the only reason for not doing so would be if there were grounds for believing based on the characteristics of heroin and/or or the banking system that the process of banknotes entering and exiting the banking system was likely to have a dramatic effect on the extent to which banknotes are contaminated with heroin. The Claimant then points to such evidence as is available to the court from peer reviewed journals as suggesting the opposite .This is a reference to material annexed to Dr Sleeman’s written response to Professor Laycock containing inter alia(i) results of a study suggesting heroin does not transfer easily from one banknote to another, and(ii) references to data from the Association of Payment Clearing Services showing that “weekly cash payments within the UK account for approximately 20% of the total cash in circulation which represents significant mixing over time. In addition, cash entering the banking system and other major organisations such, as supermarkets, is collected on a daily basis and sent to sorting centres”. Reliance is also placed on published research from other countries referred to in peer reviewed papers within the same material showing that “although a significant proportion of banknotes world wide has been found to be contaminated with cocaine, the occurrence of other controlled substances, specifically DAM, has been shown to be comparatively rare.” The paper concerned further states that other researchers have reported frequencies of 1% and 3% for other European currencies.[189]I should record at once the Respondent’s objection to the court paying any attention to the references to banking issues on the ground that they were not accepted, were untested by cross examination and had not been presented in the context of the issues arising in this claim.[190]The Claimant’s second point is in effect to adopt a point made by Professor Laycock himself under cross examination that in truth the differences here are so huge and the frequency of contamination on the Respondent’s notes so high (in some instances over 70%, 90% and 100% respectively) that the issue here has little to do with statistics but much more to do with the court’s assessment of the Respondent’s explanations if any for the high levels of contamination on his notes. I make no apology for setting out the material extracts from cross examination to which the Claimant referred me in closing submissions: “Q. Are you saying that you think there is a 50% chance that the average for banknotes throughout the country is a 55% contaminated with heroin? A. No, no, no. Q. Well that was the question? 233. Q. The point I am making is: it would seem very unlikely that if one analysed all the banknotes in this country you would get a result that made the 95% or the 100% not lookout of the ordinary? A. You may well be right. Q. You would not disagree with that would you? A. My criticism, as I say, all the concentration has been on the data, the MSA database and its uses and the description that has been made of it. It is not of how one might analyse these data. Presumably, the respondent has to give his own justification or none at all for why there is a 100% contamination of a particular set of notes. Most of that, it seems to me, has nothing to do with statistics, that is an entirely different problem for the court to make judgments on “.

My conclusions on the contamination evidence

[191]I have of course considered carefully the submissions made on behalf of the Respondent as to why little or no weight can be put upon the forensic findings in this case. In particular I take on board all that is said about the inadequacy of the MSA database for comparative purposes, and the dangers of relying on peer reviewed journals which have not been tested under cross examination.[192]However ultimately I have no hesitation in preferring the approach advanced on behalf of the Claimant through the evidence of Professor Brereton that on the facts of this particular case where the differences between the two sets of results are so huge and the frequency of heroin contamination on the Respondents cash is so high, the inference can be drawn from a comparison with the MSA data base that the Respondent’s bank notes cannot have originated from general circulation but are likely to have been in close proximity to heroin - subject always to the court carefully considering the explanations put forward by the Respondent.[193]I agree with the Claimant that this approach is consistent with that of the Court of Appeal in R v. Compton [2002] EWCA Crim 2835 and R.v.Benn [2004] EWCA Crim 2100. I of course accept that both these decisions where made in a context different from the present. Each was a set of criminal proceedings on an appeal in which the sole issue was whether a conviction for drug dealing was unsafe in the light of all the evidence. Neither decision is binding on this court in these civil recovery proceedings. Nonetheless each is helpful in emphasising that the significance of contamination evidence such as the present must be viewed in the context of the other evidence pointing to illicit activity on the part of a particular defendant or respondent[194]In Compton, a heroin case where no statistical evidence was called, the Court of Appeal dealt with the attack made on the MSA database in two particular paragraphs 27 and 28, thus: “27. The difficulty we found with these arguments was that if they were seriously to be pursued, they needed to be supported by the evidence of a statistician which Mr Bottomley was plainly not. Dr Sleeman explained that Lloyds was used because it was MSA’s own bank, and notes could therefore be obtained in the ordinary course of business; that it could be assumed that the ordinary process of circulation of notes through the banking system produced notes from a variety of sources. We found these observations convincing. Since the evidence on the part of the appellants amounts to no more than an appeal to common sense, we apply our own common sense to conclude that the range and weight of MSA’s database is sufficient for comparisons safely to be based upon it.[28]There is however a further reason why we do not accept this part of the appellants’ argument. In this case the difference between the levels of contamination found on the appellants’ money and the levels found on the money in ordinary circulation is so striking that even if some attack could be made on the margins of MSA’s database the discrepancy would still cry out for an explanation. For that reason the explanations were properly required of the appellants at the trial, explanations that the jury did not accept”[195]Benn was a cocaine case in which the evidence was that the level of cocaine contamination (not simply frequency of contamination) on the material notes was on average 10 times higher than the database average. In Benn the Court of Appeal did hear oral evidence from both Professor Laycock and Professor Brereton as well as Dr Sleeman. The judgment summarises their evidence. It is clear that Professor Laycock’s was to the same effect as was given to me. Equally so in the case of Professor Brereton whose evidence was summarised as making “the point that the extent to which contamination on the notes found in the Appellants’ possession was such that there was in his view overwhelming evidence that the notes were close to the source of contamination. The question that had to be asked was whether or not the database was sufficient for the purpose of whatever comparison was being made. The comparison that was being made in this case was a very crude comparison for which the databases were sufficient”.[196]The Court of Appeal in Benn in the context of all the evidence in that case had no difficulty in endorsing the Brereton approach. The critical paragraphs are those at paras.44 and 45:
“44. This leaves ……..the issue relating to the databases. We accept entirely the evidence of Professor Laycock that these could not properly provide any statistical basis for a conclusion as to the provenance of the suspect notes. But as he himself accepted in cross examination, the question of the validity of a database depends upon the purpose which is to be served. In the present case the comparison made between the notes in the appellants’ possession and the databases was merely part of the prosecution case showing a connection between the appellants and the cocaine. That was in the context of other evidence which pointed in the absence of any innocent explanation to the fact that the appellants were involved in illicit activity which resulted in substantial financial gain. (my emphasis) We do not consider a jury even confronted with the evidence of Professor Laycock could come to any other conclusion but that the levels of contamination here were significant.”
The court then quoted the paragraphs 27 and 28 from Compton set out above, and continued at para 45:
“ 45.It is true that we have now had the benefit of evidence from statisticians but that evidence does not in our view detract from the common sense views expressed in those paragraphs and in particular paragraph 28.They echo the evidence given to us by Professor Monaghan and Dr. Brereton………..”
The court then went on to emphasise the other evidence in the case pointing to the appellants’ involvement with illicit drugs- in particular contamination in the contents of a vacuum cleaner and contamination in their motor car. The contamination evidence in conjunction with the other evidence: The finding of the cash stored as it was and the Respondent’s explanations[197]So in the present case it is in my judgment essential to consider the context in which the contamination evidence has been adduced, namely the discovery of such contaminated cash totalling some £150.000 in the Respondent’s house and deposit boxes stored in a variety of containers but including wash bag and supermarket carrier bags together with the rejection by the court of the explanations put forward by the Respondent as to the legitimate sources of this money and the reasons for its storage.[198]As a matter of commonsense as well as through my acceptance of the evidence of Professor Brereton, the huge differences between the frequency of heroin contamination on the Respondent’s notes compared with those found on the notes in the MSA database called for an explanation from the Respondent, as does the manner in which this large amount of contaminated cash were kept stored.[199]As the Claimant submits, despite being given every opportunity to do so the Respondent offered no explanation for the contamination other than claiming for the first time in oral evidence that the 100% cache in the plastic /blue carrier bag containing wraps of banknotes totalling £5,715 ,represented money paid by Mark Chandler in respect of the sale of the Yamaha motorcycle and the general submission that the monies were received in good faith through innocent transactions from customers of his legitimate trading activities .[200]However as already stated in my consideration of the Respondent’s general credibility, I have no hesitation in rejecting the Chandler story put forward as it was at the last moment by a Respondent who produces no supporting evidence.[201]Further the general submission must fail alongside my rejection of the Respondent’s case that he has been carrying on legitimate trading activities of any significance.[202]Moreover this submission fails on a more narrow ground by reference to the Respondent’s own case since three of the parcels of cash found to be contaminated at percentages of 50% or more, were very substantial sums, namely: DMM 4 £31,000; DM 11 just under £40,000 DMM 39 just under £35,000 The Respondent’s own case is such that any sum of money in the order of £30,000 or more would have had to have been comprised from quite a number of sales. If it were a smaller sum, the Respondent might have begun to build an argument on his own case that the contamination was a result of one “rogue” customer. With sums of this order the argument cannot begin.[203]One then turns to the way in which the cash was stored. I repeat my observations already made that this is a clear pointer to the cash having been obtained through unlawful activity which becomes the more persuasive once the Respondent’s explanations of legitimate trading activities sufficient to generate such monies have been rejected as incredible. The contamination evidence in these circumstances patently must go to the probabilities of what that unlawful activity was.[204]I should also add that the levels of contamination frequency are so high that I find no substance in the further submission made on the part of the Respondent that the court cannot exclude the possibility of cross contamination of the Respondent’s notes either before or after being seized by the police, and notwithstanding the concession extracted from Dr Sleeman in cross examination that cross contamination was possible, that he could not say what had happened to the notes before they were seized and that the amounts detectable were miniscule, being measured in terms of a nanogram. In this context I refer back to the table set out above showing how the various wads of cash were stored in the Respondent’s house.[205]It has always to be remembered when considering these submissions as to innocent possibilities that this is not a criminal trial but civil proceedings where the court is having to analyse the evidence before it on the balance of probabilities.

Summary in respect of the contaminated cash

[206]In these circumstances in my judgment the inferences which the Claimant invites me to draw can be legitimately drawn and properly represent the likelihoods of the position and I do draw them. That is to say first , that on the facts of this particular case where the differences between the two sets of results are so huge then in the absence of any other credible explanation the inference can be drawn from a comparison with the MSA data base that the frequency of heroin contamination on the Respondent’s cash is so unusually high that his bank notes cannot have originated from general circulation but are likely to have been in close proximity to heroin ; and secondly, the court having rejected as untrue the Respondent’s explanations as to the legitimate sources of this cash and his reasons for it being stored in the way it was , that the Respondent had himself been in close contact with significant amounts of heroin and had himself been involved in illicit drug dealing specifically but not necessarily exclusively dealing in heroin. As the Claimant submits this is consistent also with him having his prior criminal convictions for dealing and being in possession with intent to supply Class A drugs.[207]I therefore conclude on the balance of probabilities that at either end of the chronology in this case that is to say up until the Respondent going into custody in 1995 and then as at the time of his arrest in 2002 the Respondent cannot have been conducting any legitimate trade of any significance but rather he was unlawfully dealing in drugs as claimed by the Claimant and the seized cash is the product of that dealing.

The Intermediate Period

[208]As to the intermediate period there is my judgment really only one credible conclusion: the probabilities must be that the Respondent was engaged in the same kind of lawful conduct as he was at either end of the time span with which this court is concerned. I have already set out and explained my general conclusion that theRespondent has not during the material period relevant to the acquisition of the alleged recoverable property engaged in any identifiable legitimate profitable business activity of any significanceand it must be highly unlikely that the Respondent was in this intermediate period engaged in some quite different kind of unlawful conduct sufficient to generate the necessary funds required to buy the various properties and so forth.

Representative Property: Profits Derived from Recoverable Property

[209]All these conclusions so far, lead inevitably to the finding that all the property which is the subject of this claim which has been acquired with the Respondent’s own monies , is recoverable property as having been obtained through unlawful conduct of the kind specified or as being representative of it, having been obtained with the proceeds of such conduct or on the disposal of original such property (e.g. the Ford Focus which was bought in part for the Respondent’s own cash and in part by the trade in of the Ford Puma which itself had been bought with the Respondent’s own cash).[210]However even if the Respondent has at some stage in the material period generated some profits by engaging in legitimate business activity – and as I have said I cannot exclude the possibility of some sort of trading of a limited kind having regard to the nature of some of the goods found in his possession in 2002 – I am quite satisfied that those profits and any assets represented by them constitute recoverable property on the grounds that the initial capital which enabled the Respondent to engage in those activities was itself derived from the Claimant’s unlawful conduct in the form of drug dealing. I refer back to my findings in relation to the period prior to the Respondent going into custody in August 1995. As already explained, profits derived from recoverable property are deemed recoverable property under section 307 of the Act.

Overall conclusion on the Claimant’s Claim

[211]Thus my overall conclusion is as already stated that on the balance of probabilities on the totality of the evidence and the cogent picture which in my judgment has thereby emerged, any asset which the Respondent has acquired using his own monies during the period material to this claim, and that of course (subject only to the limited exceptional cases to which I shall have to return), embraces on the undisputed evidence all the property which is the subject of this claim (including for example Dukes Avenue, the loan for which the Respondent has repaid out of his own monies) is property which has been obtained by unlawful conduct of the kind sufficiently particularised by the Claimant in her claim, namely drug dealing or through money laundering the proceeds of drug dealing, or is representative of such property.[212]It follows that I am satisfied that all the property under the claim is recoverable property within the meaning of the Act – subject only to my findings in respect of the Exceptions. I again make clear I have reached this conclusion on a global approach to this case and not – save for the specific finding of mortgage fraud - on an item by item basis.

The Exceptions

[213]I turn to the exceptions.[214]In so far the Respondent’s case on his acquisition of Higham Hill Road through the obtaining of the mortgage loan ranks an exception to his general case, my findings on the mortgage fraud is determinative of the issue. As I have already stated, in the light of those findings the whole of the property is recoverable subject only to the sums due to the lender.[215]As regards the other claimed exceptions, I have no hesitation in holding the two motorcycles are recoverable property as property which on the totality of the evidence he must have acquired using monies generated by or which represent the profits of his own unlawful conduct as found by this court and which in my judgment he still owns. I reject as untrue his contrary account which I have already rehearsed in a little detail and which I found implausible.[216]As regards the other claimed exceptions which relate to those items for which the Respondent asserts he did not pay and in respect of which he puts up a variety of explanations concerning either gifts or loans to himself or to others, I find myself in a less certain position. The detail of these exceptions are summarised in one of the appendices to the Claimant’s closing submissions which for convenience I annex to this Judgment. On the one hand the Respondent produced no evidence whether by document or witness to corroborate these various explanations. On the other there has in the course of the hearing been no detailed examination of the circumstances relating to them.[217]In these circumstances, bearing in mind the burden of proof, I have decided the only proper course is to exclude these remaining exceptions from the recovery order which otherwise must follow arising out of my other findings. I make clear these exceptions relate only to those items listed in the appended schedule which the Respondent asserts either do not belong to him or which he acquired as a gift. They do not include items listed for example by the Respondent in closing written submission at paragraph 173 (i) as being items for trading or personal use. These are caught as recoverable property by virtue of my overall finding in respect of any asset acquired through the Respondent’s own monies of which such items are but examples.

Final Conclusion

[218]I therefore propose to make a recovery order in this claim vesting the property covered by the order in the trustee for civil recovery pursuant to section 266 of the Act. The order will cover the totality of the property claimed save for(1) the necessary exception in relation to the monies due to the High Hill Road mortgage provider and(2) the limited exceptions referred to above.

Human Rights

[219]I should add that I have considered the points raised by Mr Meredith- Hardy on behalf of the Respondent under the heading of Human rights. I do not consider that the proposed order is incompatible with the Respondent’s human rights either under Article 1 of the Protocol to the Convention on Human Rights or Article 8 of the Convention or generally.[220]As regards article 1 to the protocol which gives a qualified protection from interference with property rights. Mr Meredith-Hardy referred me to the decision of the European Court in James v. UK (1986) 8 EHRR 123 for the guiding principle that in order for a deprivation to be justified under article 1 of the Protocol, a “fair balance” has to be struck. Under the article “ no one shall be deprived of his possessions except in the public interest” and the public interest requires that(i) that any deprivation of property is for a legitimate purpose and(ii) the achievement of that purpose must strike a “fair balance” between the demands of the community and the needs to protect individual rights. I however see nothing unfair in the balance here being struck given the legitimate public interest in the prevention of crime by ensuring that crime does not pay and my findings against the Respondent that his assets the subject of this claim are all in effect the product of criminal conduct.[221]Similarly article 8 gives only a qualified protection to the right to respect for private and family life and in so far as the proposed order interferes with that right of the Respondent I consider it for like reasons to be justifiable under article 8 (2) as being a necessary proportionate response of the State in pursuit of a legitimate purpose, namely the prevention of crime. I see nothing disproportionate to the legitimate public interest in preventing crime by ensuring that crime does not pay, in making the recovery order in this case given my findings against the Respondent.[223]Mr Meredith-Hardy made a general human rights challenge against the provisions for civil recovery orders under the 2002 Act on the grounds of retrospectivity. This was not an issue which was the subject of any detailed argument before me. I deal with it generally. There is no express prohibition on retrospectivity in the Convention in the context of the present proceedings which are civil in character. The express prohibition in article 7 relates only to punishment for a criminal offence of which someone has been found guilty which is not this case. If it be relevant the conduct said to amount to unlawful conduct in these proceedings was undoubtedly a criminal offence under domestic English law at the material time of it being carried out. I regard this element of retrospectivity as but one of a number of important factors, to be put in the balance when considering the issue of whether a fair balance has been struck under article 1 of the protocol. I do not consider this in anyway changes the conclusion I have reached that a fair balance has been struck. It must have always been reasonably foreseeable to some one in the position of the Respondent, that the State might take steps to deprive him of property obtained through criminal conduct if he chose to embark upon the same.[224]I will hear counsel on the precise terms of the appropriate form of order and any ancillary applications on the handing down of this judgment.

Cited in 8 later judgments