ANDREW MOULDEN v THE CROWN - and - - PAUL WILLIAM DONALD BLANCHARD [2012] EW Misc 17 (CrownC)

IN THE SHEFFIELD CROWN COURT
(Sitting at Leeds)
[2012] EW Misc 17 (CrownC)Case No Case No: 1LS30535Venue The Court House, Oxford Row, Leeds LS1 3BG
Between
ANDREW MOULDENApplicantTHE CROWN - and - - PAUL WILLIAM DONALD BLANCHARDRespondent Interested Party
Before
His Honour Judge BehrensChristopher Marsh Finch (instructed by Creed Lane Law Group) for the ApplicantSam Mainds and Adam Pearson (instructed by Crown Prosecution Service) for the RespondentMatthew Lawson and Joe Hingston (instructed by Rahman Ravelli) for the Interested PartyHearing dates: 10, 11, 12 July 2012Date 20 July 2012

Judge Behrens:

[1]Introduction This is an application by Andrew Moulden under section 42 of the Proceeds of Crime Act 2002 (POCA) to vary a restraint order made by Judge McCallum on 13 th April 2007. In summary he seeks an order removing the name of Inglenook Investments Limited ("Inglenook") and all references to the property known as Whinney Hill Croft Farm, Dudley Street, Tyersal BD4 8LN ("Whinney Hill Croft") from the scope of the order. The effect of the application would be to remove Inglenook and Whinney Hill Croft from confiscation proceedings currently relating to Paul Blanchard, the Interested Party.[2]It will be necessary to look at the facts in more detail below. However, for present purposes it is sufficient to state that Andrew Moulden contends that he is the beneficial owner of the shares in Inglenook and thus of Whinney Hill Croft by reason of a Declaration of Trust in his favour supported by the fact that he paid £250,000 in cash for the purchase of Whinney Hill Croft from his former father in law some time in late 2001 and early 2002.[3]The Crown accepts that if Andrew Moulden did indeed pay the £250,000 he is the beneficial owner of the shares in Inglenook and that this application succeeds. However it does not accept that the £250,000 was ever paid. It relies on the lack of documentary evidence for the payments, inconsistencies between the various accounts that have been given by Andrew Moulden and the evidence for the flow of monies used for the purchase of Whinney Hill Croft which it contends shows that the moneys came from a different source. It contends that the Declaration of Trust is a sham. 2. Witnesses[4]Paul Blanchard's confiscation proceedings are to be determined by Judge Lawler QC in the week commencing 23 rd July 2012. However because of the extra territorial and trust considerations involved Judge Lawler QC directed that Andrew Moulden's application be dealt with by a specialist Chancery Circuit Judge.[5]The principal witnesses to give evidence before me were Andrew Moulden, Paul Blanchard and William Stephenson. However I also heard evidence from a forensic accountant – Elizabeth Coleman, a former Inspector of Taxes, and D Sgt Cockeram. I read witness statements from Fred Elam (who had died) and Janet Rhodes (who was not required to attend).[6]Although Paul Blanchard had provided a witness statement dated 10 th November 2011 I was informed by Mr Lawson that it was not his intention to call Paul Blanchard to give evidence. Mr Lawson informed me that he had been told that if Paul Blanchard gave evidence he would be cross-examined over the whole of his financial dealings. If called he would advise Paul Blanchard not to answer questions. Paul Blanchard's witness statement was supportive of Andrew Moulden's case and, not surprisingly Mr Marsh-Finch wished him to give evidence. Perhaps equally unsurprisingly Mr Mainds wished to cross-examine him.[7]Mr Pearson was good enough to take me through my powers under rules 61.5 – 61.7 of the Criminal Procedure Rules 2010. Paul Blanchard's statement and his exhibits were highly relevant to the matters in issue and it seemed to me plainly desirable that he should give evidence and be cross-examined. In the result I ruled that he should attend and give evidence but that cross-examination would be limited to the matters relevant to the issue I had to determine. I noted that Paul Blanchard would be entitled to refuse to answer individual questions on the grounds of incrimination but that he would not be entitled to a blanket refusal. In the result Paul Blanchard did attend and answered all of the questions that were put to him. 3. The characters involved 3.1 Paul Blanchard[8]Paul Blanchard was a financial advisor, who until at least 2006 lived in York. He had involvement with a number of companies many of which are set out in D Sgt Cockeram's witness statement of 15 th September 2006. In September 2006 Paul Blanchard and Christopher Eyre were arrested and charged with a number of offences including an offence of money laundering. A restraint order was made at that time. The restraint order was varied in April 2007 so as to include Inglenook and Whinney Hill Croft.[9]On 5 th February 2008 Paul Blanchard pleaded guilty to a number of offences including conspiracy to obtain a money transfer by deception and was sentenced to 6½ years imprisonment. The offences were unrelated to the events surrounding the purchase and sale of Whinney Hill Croft in 2001/2002. 3.2 Goldcrest Finance Corporation Hispania SL ("Goldcrest")[10]Goldcrest is a private limited company based in Tenerife with a declared share capital of €3005.06. Paul Blanchard is the Chief Executive Officer. In his response to the restraint order Paul Blanchard stated that he was the holder of shares to the value of €3,000.[11]One of the services Paul Blanchard offered to his clients was the provision of off shore companies to enable them to organise their affairs offshore. There were a number of potential advantages in the use of such vehicles. These included potential savings in income and/or capital gains tax and the fact that it was difficult to discover the ultimate beneficiary where such vehicles were employed.[12]In order to set up the offshore companies Paul Blanchard and/or Goldcrest used the services of Aston International Limited ("Aston"), an Isle of Man Company specialising in creating such companies. Paul Blanchard/Goldcrest charged a fee for this service. In October 2001 the fee for setting up the offshore company was £2,000 followed by annual fees of about £1,000. In evidence Paul Blanchard said that £700 of the £1,000 annual fee represented profit.[13]In the course of his investigations D Sgt Cockeram discovered 73 such companies which had been set up by Goldcrest in this way. According to Paul Blanchard they were set up on behalf of clients and belonged beneficially to clients. One such company was Inglenook. It will be necessary to consider the setting up of Inglenook later in this judgment. 3.3 Christopher Eyre[14]Christopher Eyre was the solicitor instructed by Goldcrest in relation to the purchase of Whinney Hill Croft. He was arrested at the same time as Paul Blanchard and also pleaded guilty to a number of offences of dishonesty. His practice was the subject of an Intervention by the Law Society. 3.4 Andrew Moulden[15]Andrew Moulden is the Applicant in these proceedings. He describes himself as a "settled traveller". He is largely uneducated and cannot read or write though he is able to sign his name.[16]. With other members of his family he earns his living from horse dealing. He told me that he now has about 60 horses at Whinney Hill Croft. Many of his dealings involve cash. He does not normally provide or receive receipts.[17]In 2008 (possibly as a result of the restraint order) Andrew Moulden consulted Grant Thornton in relation to his profits from that business since the death of his father in 2003. Grant Thornton estimated that he earned profits of between £13,500 and £16,350 in the years between 2003 and 2007. Following an investigation HMRC accepted those figures and issued assessments based on them. In the course of the investigation Andrew Moulden asserted that he was the owner of Whinney Hill Croft. However that assertion was not relevant to the investigation.[18]Andrew Moulden has occupied Whinney Hill Croft with other members of his family since February 2002. 3.5 John Moulden[19]Andrew Moulden's father John Moulden was the head of the family. On 23 rd December 1994 John Moulden purchased Owlett Hall Farm, Drighlington for £150,000. Owlett Hall Farm was however registered in the name of his granddaughter Leanne Heeps (a girl of 16). The reason for this was not made clear but I was told it is common amongst traveller families.[20]In any event Owlett Hall Farm had little or no land so that it was not suitable for the family business of horse dealing. According to Andrew Moulden the family rented some land from a neighbour Charles Thackray. He also said that they kept horses at Whinney Hill Croft which was then owned by Fred Elam – the father of his then wife and grandfather of his three children.[21]John Moulden died on 13 th November 2003. 4. Sale of Owlett Hall Farm[22]It is Andrew Moulden's case that £200,000 of the £250,000 used to purchase Whinney Hill Croft was derived from the sale of Owlett Hall Farm. The Land Registry Transfer document (TR1) dated 1 st June 2000 confirms the sale of Owlett Hall Farm (by Leanne Heeps) to William Grant Stephenson but states the price to be £70,000. Stamp duty of £700 appears to have been paid on the basis of 1% of the purchase price.[23]Mr Stephenson was called to give evidence on behalf of Andrew Moulden. Mr Stephenson is an entrepreneur interested in acquiring nursing homes. At one time he had 15 nursing homes with a turnover of £12 million per annum. He knew John Moulden but not Andrew Moulden.[24]He was always on the look-out for land to build nursing homes and was told that this bit of land might be for sale. He said that he negotiated a price of £200,000 with Andrew Moulden. He was prepared to give £70,000 in cash as a non returnable deposit with the balance being paid when planning permission was granted. It was for that reason that £70,000 was included in the Transfer. He said that it took 2½ years for planning permission to be granted and that he duly paid a further £130,000 in cash to Andrew Moulden shortly afterwards.[25]When Andrew Moulden gave evidence he corroborated much of this account. He said that Owlett Hall Farm lacked land. If the family could get planning permission they could get a bigger farm on which they could keep the horses. He had tried to get planning permission twice without success. He said that Mr Stephenson did indeed give him the £70,000 and the £130,000 in cash. However he said that Mr Stephenson was mistaken when he said that it was 2½ years later. It was less than 2 years.[26]In the course of his investigation D Sgt Cockeram made enquiries of Leeds City Council which reveal that planning permission for a new nursing home was granted on 6 th August 2001 – that is to say only 15 months after completion of the sale in June 2000. Thus Mr Stephenson is clearly mistaken when he said that it took 2½ years to get planning permission.[27]There is limited other evidence relating to the sale of Owlett Hall Farm. In the Inland Revenue Investigation in November 2008 Andrew Moulden had asserted that Owlett Hall Farm was sold for £200,000. According to one of the Investigating Officers this assertion was not accepted as it was not consistent with the documents. It was, however, not relevant to the enquiry.[28]Both Mr Stephenson and his wife have been the subject of a money laundering investigation. As I understand it they have not been charged with any offence. However in a statement under caution Mrs Stevenson did in vague terms assert: "…he [Mr Stephenson] actually felt he could get planning on it. He got an initial opinion so he agreed with this man to the best of my knowledge that he would buy the house he would give him so much initially and then so much subject to planning when he got the planning through which I understand he did…" 5. Initial Discussions[29]It is not clear when Paul Blanchard met Andrew Moulden. Paul Blanchard suggested in evidence that it was some 6 to 9 months before the events leading to the acquisition of Whinney Hill Croft. Both agreed that the introduction was made by Sonny Fletcher.[30]Sonny Fletcher was a car dealer and an existing client of Paul Blanchard. He was a settled traveller and illiterate. According to his witness statement Paul Blanchard provided book-keeping services for his company. It is also clear from other documents that moneys passed between Paul Blanchard/Goldcrest and Sonny Fletcher. Paul Blanchard had set up an offshore Belize company – Gemstar Marketing Ltd – for Sonny Fletcher. Sonny Fletcher lived close to Whinney Hill Croft and knew Andrew Moulden well.[31]Andrew Moulden was extremely vague about his discussions with Paul Blanchard. He was asked why he got involved with offshore companies and Paul Blanchard. He said that Paul Blanchard told him that it would safeguard his property and that he just got talked into it by Paul Blanchard. He agreed that he had limited income and no other substantial assets.[32]There was some confusion as to who suggested the creation of an offshore company. In paragraph 28 of his witness statement Paul Blanchard suggested that it was Andrew Moulden. However this has to be read with paragraph 25 which points to discussions between them. In any event Mr Lawson suggested that paragraph 28 might have been the result of an error in drafting. Paul Blanchard however thought that Andrew Moulden might have known about offshore companies from discussions with Sonny Fletcher. 6. Low Moor Farm[33]Andrew Moulden said that he was interested in purchasing properties before he bought Whinney Hill Croft. He said, however, that he did not try to buy one. He agreed that he looked at Low Moor Farm but said it was too much money.[34]The three documents exhibited by Paul Blanchard present a somewhat different picture: 1. On 17 th May 2001 Paul Blanchard wrote a letter on Goldcrest writing paper to Homebuyer Property Services ("Homebuyer") making a formal offer on behalf of Andrew Moulden to purchase Low Moor Farm for £375,000. The letter stated that Andrew Moulden was in a position to exchange contracts by return and that no finance was necessary to complete the purchase. 2. Homebuyer replied in an undated letter to Andrew Moulden. The letter enclosed a printed sheet asking for "best and final offers" 3. On 4 th June 2001 Paul Blanchard submitted a best and final offer in the sum of £375,000. The offer was, however, in the name of Goldcrest and not Andrew Moulden. It asserted that the offer was based on a cash purchase which could be verified by our solicitors.[35]There are no further documents on file. The transaction did not proceed. Plainly Andrew Moulden did not have £375,000 in June 2001. It will be recalled that planning permission for Owlett Hall Farm was not granted until 6 th August 2001 so that the most that Andrew Moulden had from the sale of that property was £70,000. These documents were not specifically put to Andrew Moulden in cross-examination so he did not have a chance to explain them.[36]When he gave evidence Paul Blanchard said that he had not gone into the question of where the money would come from. Andrew Moulden had told him he had cash available. He understood that Andrew Moulden had come into money but did not move on to where it was coming from. In cross examination he said there was a discussion about Andrew Moulden paying in cash. 7. Inglenook[37]The chronology of Paul Blanchard's involvement with Inglenook can be taken largely from documents obtained by D Sgt Cockeram from Aston and from documents exhibited by Paul Blanchard and/or produced by him at the trial. 1. Inglenook was incorporated in Belize under Company number 17,131 on 5 th December 2000. According to the Memorandum and Articles there was one subscriber share held by Aston (Corporate Trustees) Belize Ltd. Premier Management Limited became the Director and premier Secretarial Services Ltd the Secretary. 2. On 14 th September 2001 Paul Blanchard phoned Aston and was supplied with a list of Belize shelf companies including Inglenook. 3. On 19 th September 2001 Aston sent to Paul Blanchard various documents including two bearer shares, two declarations of trust declaring that the share were held on trust for Paul Blanchard, and resignations of the director and secretary. 4. On 2 nd October 2001 Paul Blanchard returned much of the above documentation together with an application for the purchase of Inglenook asking for it to be reissued. The objects were stated to be "Property Investment". The application described the beneficial owner as Goldcrest. 5. On 18 th October 2001 two further share certificates dated certifying Goldcrest as the registered holder of the two shares were issued. These were supported by stock transfer forms signed by Paul Blanchard in relation to the bearer shares, appropriate resolutions appointing Goldcrest as Director and Goldcrest Finance Corporation Secretaries Limited as Secretary 6. A Declaration of Trust dated 19 th October 2001 signed by Paul Blanchard on behalf of Goldcrest acknowledging and declaring that the two shares were held on trust for Andrew Moulden. Somewhat curiously the Declaration of Trust gives Andrew Moulden's address as Whinney Hill Croft even though he did not live there till February 2002. When asked to explain this Paul Blanchard said it must have been wrongly dated and have been made after February 2002. 7. On 30 th October 2001 Andrew Moulden signed two documents both of which were addressed to Goldcrest. The first was an application for the purchase of Inglenook with the Director and Secretary as set out above. The second was a remittance advice acknowledging the fees set out above. (i.e. £2,000 for incorporation and £1,000 p.a annual fee).[38]It is not in dispute that those documents are appropriate documents for the setting up of a Belize Company. Furthermore it is not disputed that if the Declaration of Trust is genuine it would have the effect that the shares in Inglenook were held on trust for Andrew Moulden.[39]It is the Crown's case that the Declaration of Trust is a sham document, that no consideration was provided for it and that the documentation is an elaborate scheme designed to conceal Paul Blanchard's money laundering activities. 8. Payment of £250,000 to Paul Blanchard[40]This is, of course, a central issue in the case. It is Andrew Moulden's case that he handed over £250,000 in cash to Paul Blanchard with the result that the declaration of trust reflects the position that the shares in Inglenook are held on trust for him.[41]In his first statement dated 14 th December 2010 (paragraph 13) he said: I purchased Whinney Hill, as stated for £250,000. My father died and left everything to me including Owlett Hall Farm … which was subsequently sold and developed as a nursing home and this is the provenance of the purchase moneys.[42]The difficulty with this statement is that John Moulden did not die until November 2003 nearly 2 years after the purchase was completed. Furthermore the proceeds of Owlett Hall Farm amounted to, at most, £200,000.[43]In paragraph 22 of his second statement dated 28 April 2011 he said: I can say that my family paid £250,000 for Whinney Hill because I took the cash money to Paul Blanchard with my father and gave it to him myself. This money was perfectly legal and above board, has since been declared to HMRC and has been fully accounted for.[44]This statement suggests that the money was taken on one occasion and handed over in the presence of John Moulden.[45]When examined in chief he repeated that he had given a total of £250,000 to Paul Blanchard. £200,000 came from Mr Stephenson; the other £50,000 came from his dad's savings. He said he paid the money within a short time of receiving it from Mr Stephenson.[46]In cross-examination he acknowledge that his father had not died in 2001 and could not understand why paragraph 13 of his first witness statement was drafted as it was. He was vague about the circumstances in which the money was handed over. He thought he had taken the money in two tranches. He could not remember when. He thought his father had gone on the first occasion. He could not remember how much he had paid on the two occasions. He suggested that the first occasion might have been £120,000 and the second the £130,000 he received when planning permission was granted for the conversion of Owlett Hall Farm.[47]Paul Blanchard corroborated the receipt of the £250,000. He produced and relied on a ledger card which he said was kept in the Inglenook file. The ledger comprises three pages each comprising four columns – a column for the date, the description, the amount of credit or debit and the balance.[48]The first page covers the period from September 19 th 2001 to September 28 th 2001. It shows a receipt of £100,000 on 19 th September 2001 but does not identify the source of the receipt. In evidence Paul Blanchard said the receipt was in cash from Andrew Moulden though he had no recollection of seeing John Moulden. He said that the cash was kept in the ceiling of his house. The ledger shows what Paul Blanchard did with the £100,000. Some of the moneys was paid into client accounts, some was paid to Paul Blanchard, some (such as £4,100 to Sonny for car and 2 x £5000 to Simon) was used for other purposes. During the course of the hearing Mr Lawson produced a spreadsheet in which he attempted to reconcile payments made into bank accounts with other documents disclosed in the confiscation proceedings. He was able to show that all sums allegedly paid into bank accounts (save for a payment to Global where the relevant bank account was not available) were so paid. In total Mr Lawson was able to reconcile 11 out of 21 withdrawals totalling £64,250. The balance of cash still held by Paul Blanchard had reduced to nil by 28 th September 2001. There is no evidence of what happened to the moneys in the client accounts.[49]The second page of the ledger shows the receipt of £100,000 on October 2 nd 2001 but does not show the source of the receipt. In evidence Paul Blanchard said the receipt was in cash from Andrew Moulden. The ledger shows that between October 2 nd and November 2 nd the cash held by Paul Blanchard had reduced to £19,000. Mr Lawson's revised schedule was able to account for 5 of the 13 withdrawals totalling £14,415.[50]The third page shows two receipts of £50,000 and £7,320 on 28 th January 2002. There are no withdrawals. The remainder of the page comprises workings carried out by Paul Blanchard after the institution of the criminal proceedings.[51]Thus the ledger corroborates the receipt of £257,320 in three tranches – on 19 th September 2001, on 2 nd October 2001 and on 28 th January 2002.[52]In cross-examination it was suggested to Paul Blanchard that none of the money was Andrew Moulden's money and that this was just an attempt by him to launder illicit proceeds of crime. He rejected this. He asserted that it certainly was Andrew Moulden's money. He pointed out that he had never met him before these transactions and he certainly was not involved in a conspiracy with him. 9. The purchase of Whinney Hill Croft[53]There is no doubt that Whinney Hill Croft was transferred by Fred Elam to Inglenook on 21 st February 2002 for £250,000. Fred Elam instructed Hamiltons; Paul Blanchard/Goldcrest instructed Eyre & Co. It is plain from the Eyre & Co ledger that £250,000 was duly paid to Hamiltons on 21 st February and that Fred Elam executed a Transfer in favour of Inglenook on that day. Inglenook is now duly registered as proprietor.[54]An attempt has been made by D Sgt Cockeram to identify the source of the £250,000 used to pay for it. Working from the ledger and from bank accounts D Sgt Cockeram has produced in schematic form a document showing the source of the funds. Some £87,500 came in cash from C Fletcher car sales, some £30,000 from Goldcrest, some £62,500 from Blanchard Investments plc and the remaining £30,000 by telegraphic transfer. It is difficult to know whether any of the £250,000 allegedly paid by Andrew Moulden was used for the purchase but this is not a tracing claim. It is equally difficult (though D Sgt Cockeram has attempted it on his diagram) to trace the source of the moneys into the various accounts which provided the moneys. 10. Subsequent events 10.1 The tenancy[55]Amongst the documents disclosed by Paul Blanchard is a notice signed by Paul Blanchard and Andrew Moulden on 1 st April 2002 of an intention to create an assured shorthold tenancy of Whinney Hill Croft and part of such a tenancy suggesting that a rent of £750 per month was agreed. The part does not include the signature page.[56]Paul Blanchard described this document as "common practice" though he accepted that this was the first occasion that a Belize company he had incorporated had owned real property.[57]Andrew Moulden denied that he ever intended to create a tenancy. He has never paid rent. He has had no rent demands and did not regard himself as a tenant. 10.2 Subsequent Invoices[58]Paul Blanchard has exhibited 2 invoices dated October and December 2002 for the annual fee payable to Goldcrest. Andrew Moulden said he paid the fee for a number of years. It appears that at some stage Inglenook was struck off the register for non payment of fees but was subsequently restored in 2005. The present status of Inglenook is unknown. 10.3 Delivery of Title Deeds[59]In November 2002 Andrew Moulden attended the offices of Paul Blanchard and asked for the company documents and title deeds. Paul Blanchard duly handed over the Company documents including the Declaration of Trust and wrote a letter to Christopher Eyre authorising him to hand over all the Title Deeds. Andrew Moulden duly attended Eyre & Co on 25 th November 2002 and was handed all the title deeds to Whinney Hill Croft including the pre-registration documents. At the trial before me Andrew Moulden was able to produce from his own possession the original and pre-registration title deeds and the originals of the share certificates together with the Declaration of Trust. 11. The legal landscape 11.1 Confiscation and burden of proof[60]One of the matters which has to be determined in confiscation proceedings is a calculation of "the available amount". Under section 9 of POCA this is the sum of two calculations – the total value of the free property (as defined in section 82) and the tainted gifts (as defined in section 77). Realisable property is any free property held by the defendant or the recipient of a tainted gift.[61]There is a wide definition of property in section 84. In general it includes any interest in any property.[62]Section 41 of POCA gives the Court power if the relevant conditions are satisfied to make an order restraining any person dealing with any realisable property held by him. Under section 42(3) of POCA any person affected by the order may apply to vary or discharge it. Under section 42(5) the Court has the necessary power to vary the order.[63]It is plain that Andrew Moulden is a person affected by Judge Lawler QC's order and thus there is jurisdiction to make the order sought. Where, as here, there is an issue between a third party and the Crown as to whether property should or should not be subject to a restraint order the Act does not make clear upon which party the burden of proof lies.[64]Mr Pearson on behalf of the Crown submitted that it was for Andrew Moulden to establish, on balance of probabilities, that Inglenook and/or Whinney Hill Croft should not be included within the scope of the restraint order. He referred me to the commentary in Archbold on section 69 of POCA where the following appears: Having regard to subsection (3)(a) a restraint order may be varied in favour of a third party who establishes a proprietary equitable interest in assets which are the subject of the restraint order, but having regard to subsection (2)(c) it may not be varied so as to permit the payment off of an unsecured creditor.[65]He also referred to paragraph 3.031 of Mitchell, Taylor and Talbot on Confiscation and the Proceeds of Crim e , which he described as the leading text book on confiscation proceedings where the following passage occurs: On an application for discharge or variation of a restraint order the High Court will expect cogent evidence before releasing the disputed asset. To the extent that there is any difference in this approach and that set out in SCF v Masri the background of restraint cases will often be of serious criminal activity, often organises and with an element of money laundering or hiding of assets. Further the criminal court will usually have to resolve the question of ownership of the assets when determining "the amount that might be realised" and so it is usually prudent to await the outcome of the criminal proceedings. It is not unknown for the Court to direct a trial to determine the ownership of a disputed asset.[66]Neither of the above passages seems to me to be determinative. This is a case where in effect Judge Lawler QC has in effect directed a trial to determine ownership. Thus the statements about the prudence do not really arise. Lexi Holdings (the case referred to in Archbold) was not a case about the burden of proof. It was concerned with the position of unsecured creditors.[67]I do, however agree with Mr Pearson that as Andrew Moulden asserts he is the beneficial owner of the shares in Inglenook then the burden of establishing ownership rests with him. However prima facie he can satisfy that burden by reliance on the express Declaration of Trust. The Crown seek to avoid the consequences of the Declaration of Trust by asserting it is "a sham". In those circumstances it seems to me that the burden is on the Crown to establish that the Declaration of Trust is a sham. 11.2 Sham[68]A "sham" was defined by Diplock LJ., as he then was, in Snook v London and West Riding Investments Limited [1967] 2 QB 786 as:
"acts done or documents executed by the parties to the "sham" which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create."
(at p.802D).[69]He emphasised, however, that:
"for acts or documents to be a "sham," with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating."
(at p. 802E-F).[70]In considering whether an agreement is a sham and in ascertaining the parties' true intention, it is permissible to examine external evidence including the parties' explanations and circumstantial evidence such as evidence of the subsequent conduct of the parties. (See Stone v Hitch [2001] EWCA Civ 63 , per Arden LJ. at para. 65). 12. Submissions and Conclusions[71]In support of his submission on behalf of the Crown Mr Mainds made a number of points: 1. He submitted that Paul Blanchard and Andrew Moulden had a common interest in establishing that Andrew Moulden is the beneficial interest in Inglenook. Paul Blanchard is facing confiscation proceedings. If Whinney Hill Croft is included as part of the realisable amount it will or may increase the amount he has to pay with a potential term of imprisonment in default of payment. It is self evident that Andrew Moulden stands to gain by the value of Whinney Hill Croft if the application succeeds. 2. He submitted that the Court could not be satisfied that Andrew Moulden had indeed paid £250,000 to Paul Blanchard/Goldcrest as alleged. In so doing he relied on: 1. The inconsistency between the evidence of Andrew Moulden and Mr Stephenson on the one hand and the documents as to the purchase price of Owlett Hall Farm. 2. The inconsistency between Andrew Moulden and Mr Stephenson as to the date when the final £130,000 was paid – if it was paid. If Mr Stephenson is correct the payment was not made until well after February 2002 when the purchase of Whinney Hill Croft was completed. 3. The varying accounts given by Andrew Moulden in his two witness statements as to the circumstances in which the £250,000 was paid to Paul Blanchard. The inconsistency between Andrew Moulden's account and the ledger kept by Paul Blanchard. 4. The £250,000 used to purchase Whinney Hill Croft came from various sources which did not appear to include the moneys provided by Andrew Moulden (in so far as any moneys were so provided) 3. He submitted the evidence relating to the possible acquisition of Low Moor Farm was unsatisfactory. If, as Andrew Moulden asserts, the price of Low Moor Farm was at least £375,000 how could an offer in that sum have been made on behalf of Andrew Moulden in May 2001. On any view Andrew Moulden had only £120,000 (£70,000 from Mr Stephenson and £50,000 from his father) at that time. Yet the offer suggests that no mortgage was necessary and that Andrew Moulden was in a position to exchange. That suggests that the offer was not genuinely made on behalf of Andrew Moulden. 4. He submitted that the tenancy agreement suggested that Andrew Moulden was not the true beneficial owner of Whinney Hill Croft.[72]In summary he submitted that the Declaration of Trust was a front to conceal the true ownership of Inglenook and Whinney Hill Croft which at all times after the completion of the sale remained with Paul Blanchard and/or Goldcrest. It was, he submitted, a money laundering exercise designed to hide money illegally obtained by Paul Blanchard.[73]These are powerful submissions but in the end I cannot accept them. I have come to the conclusion that on the balance of probabilities Andrew Moulden did provide Paul Blanchard with the £250,000 as he alleges. In those circumstances I am not satisfied that the Declaration of Trust intended to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which Paul Blanchard and Andrew Moulden intended to create. I am not therefore satisfied that the Declaration of Trust was or is a sham.[74]This is not a case where I can be sure of anything. However as all sides accept the standard of proof required is the civil standard. The main factors which have led me to my conclusion and to reject the Crown's submissions may be summarised: 1. The delivery of the Title Deeds of and the originals of the documentation relating to Inglenook (including the Declaration of Trust) to Andrew Moulden in November 2002. This seems to me to be a highly significant piece of evidence. If the true intention of the parties had been that Paul Blanchard remained as beneficial owner of Whinney Hill Croft it seems to me most unlikely that he would have handed over the Title Deeds in this way. 2. Andrew Moulden's account of the sale of Owlett Hall Farm is corroborated by Mr Stephenson and, to a limited extent, by the statement Mrs Stephenson gave to the police. It is also consistent with the account Andrew Moulden gave in the Revenue investigation. It is true that Mr Stephenson said that it took 2½ years to get planning permission but it is accepted by the Crown that planning permission was in fact granted in August 2001 and Mr Stephenson said he paid the additional £130,000 shortly after he received planning permission. I conclude that Mr Stephenson was confused over the dates. Furthermore if, as is accepted, John Moulden paid £150,000 for Owlett Hall Farm in 1994 it is somewhat unlikely that it would have been sold for as little as £70,000 in June 2000. 3. The Inglenook ledger kept by Paul Blanchard does provide significant corroboration for the payment of £250,000. It is true that the dates for the receipt of the funds are not consistent with Andrew Moulden's evidence and there are differences between the two witness statements which are not wholly consistent. However the relevant events took place more than 11 years ago so differences in recollection are not wholly surprising. Indeed if the accounts had been wholly consistent the Crown might have suggested that that pointed to Paul Blanchard and Andrew Moulden putting their heads together to concoct the account. Furthermore the industry of Mr Lawson has demonstrated that many of the withdrawals shown on the ledger can be cross referenced to the bank statements. 4. Andrew Moulden is to be treated as a man of good character. He was not known to Paul Blanchard before this transaction; there is no evidence of any subsequent transaction between them. If this was a money laundering exercise by Paul Blanchard Andrew Moulden is not the most likely partner for such an exercise. 5. The criminal offences for which Paul Blanchard has been convicted took place more than a year after this transaction. Thus this is not a transaction that took place during the known course of Paul Blanchard's offending. Furthermore the creation of offshore companies such as Inglenook was very much part of Paul Blanchard's legitimate business activities. There were over 70 such companies and it is not suggested that the others formed part of the offending behaviour. 6. I had the benefit of seeing Andrew Moulden give evidence and saw him cross examined. He did not seek to exaggerate his case and was quite prepared to say when he did not remember. He gave me the impression of being an honest witness though I fully accept that he was not very reliable over the details.[75]I was and am troubled by the evidence over Low Moor Farm as it is quite clear that Andrew Moulden cannot have been in a position to fund a £375,000 purchase in May 2001. It is, however, by no means clear what instructions were given to Paul Blanchard and it is not unknown for agents to exceed or misinterpret their instructions. In any event no contractually binding offer was ever made on behalf of Andrew Moulden.[76]I accept that it is clear that all of the moneys actually used by Paul Blanchard to fund the purchase did not come from the £250,000 provided by Andrew Moulden. It is equally not possible to say that none of the money used came from the £250,000 provided. To my mind the source of the £250,000 does not affect the legal position. Andrew Moulden is entitled to rely on the Declaration of Trust unless the Crown can show it was a sham. Andrew Moulden provided Paul Blanchard with £250,000 for the purchase of Whinney Hill Croft. Paul Blanchard purchased Whinney Hill Croft for £250,000. Even if some of the £250,000 was different from the £250,000 provided by Andrew Moulden the Declaration of Trust is not a sham.[77]I attach little if any weight to the evidence about the tenancy agreement. There is in fact no signed tenancy agreement before the Court. Even if there was such an agreement it is clear that no rent has been paid since 2002 and no-one has sought to rely on it. Even the payment of rent would not have been conclusive. There is no reason in law why a man should not pay rent to a company beneficially owned by him. Thus the existence of a tenancy agreement sheds little light on the beneficial ownership of Inglenook.[78]For all these reasons and despite the powerful arguments from the Crown I find that Andrew Moulden is the beneficial owner of the shares in Inglenook. It follows that this application succeeds with the result that I shall vary the restraint order so as to exclude both Inglenook and Whinney Hill Croft from it.