ANDREWS v. THE UNITED KINGDOM
Inadmissible
Georg Ress;Nicolas Bratza
The applicant, Mr Thomas Charles Andrews, is a British national, who was born in 1936 and lives in London, England. He is represented before the Court by Mr Geoffrey Goldkorn, a lawyer practising in London with Goldkorn & Mathias, Solicitors. The respondent Government are represented by their Agent, Ms R. Mandal, Foreign and Commonwealth Office, London. The facts of the case, as submitted by the parties, may be summarised as follows. On 17 March 1994 H.M. Customs & Excise (“C&E”) arrested the applicant and his son D, searched the applicant’s home and seized GBP 42,305. The applicant was charged with an offence of so conducting himself that his conduct must have involved the commission of one or more VAT offences in connection with the affairs of J&A Transport Ltd, a company of which he was director and secretary. D was also charged with similar offences in relation to the same company as well as two other companies, Avonmarsh Ltd and A.J. Kingsland & Sons Ltd. As to J&A Transport Ltd, the applicant was registered as the owner of one of the two issued shares, his daughter-in-law (D’s wife) being the registered owner of the remaining share. According to the Government, the applicant represented the company in all dealings with C&E in regard to VAT-related matters. J&A Transport Ltd took over the business of Avonmarsh Ltd. D was declared bankrupt in September 1991. On 27 May 1994 the applicant and D were further charged with, inter alia, failure to operate the PAYE (Pay as You Earn) tax system correctly. On 7 July 1994 on the ex parte application of C&E under sections 77 and 78 of the Criminal Justice Act 1988 (“the CJA”), Mr Justice Schiemann in the Queen’s Bench Division made an order against the applicant (“the Restraint Order”) under the CJA. The general effect of the Restraint Order was to prevent the applicant from disposing of his assets as identified in the Order. Furthermore, the applicant’s home was made subject to a charge in order to secure payment to the Crown of an amount equal to the value of the property. By a further order under the CJA, Mr Justice Schiemann appointed a Receiver and manager of the applicant’s realisable property. Under this order, the Receiver was given power to pay all fees, commission and other costs from the proceeds of sale or realisation of the assets subject to the order, and was allowed remuneration in an amount to be agreed by C&E or, in default of agreement, to be determined by the court. The property listed in the schedule to the receivership order included not only the sum of GBP 42,305 seized from the applicant’s home, but also the bank accounts of the applicant and of J&A Transport Ltd and vehicles used by the latter company. Similar orders were also made on the same day by Mr Justice Schiemann against D. To comply with the Restraint Order, the applicant swore an affidavit on 20 July 1994 in which he identified his assets. He stated inter alia that his assets included a 50% share in J&A Transport Ltd, and that he had therefore “an interest in all the assets and liabilities of J&A Transport Ltd ....” He further specified that he had an interest in the money in a bank account of J&A Transport Ltd, and that he was owed dividends of GBP 36,000 by the company. The applicant also stated in the affidavit that some of the money seized from his home (GBP 42,305) was partly his and partly his wife’s or belonged to other members of his family. C&E were authorised to pay over to the Receiver the sum of GBP 42,305 which it had seized from the applicant’s home. Pursuant to the terms of the Restraint Order, the Receiver took possession of this amount. C&E were not required to give any cross-undertaking in damages in respect of any of the orders obtained from Mr Justice Schiemann. The Restraint Order was varied by consent on 3 August 1994, 20 September 1994, 13 October 1994 and 10 April 1995 to enable sums to be paid to the applicant’s former solicitors for legal costs in connection with his defence in the pending criminal proceedings. In all, sums totalling GBP 32,924 were released by the Receiver to the applicant’s solicitors for these purposes, leaving a balance of GBP 10,011 in the Receiver’s hands. Prior to the applicant’s trial, the Receiver used this balance in payment of her costs and remuneration. The majority of the costs were attributable to the monitoring of J&A Transport Ltd including its bank accounts “and to discussing various vehicle sales and purchases with the applicant in order to maintain the quality of the fleet.” D maintained at his trial that the applicant had played no active role within J&A Transport Ltd and that he had asked the applicant to be the director and secretary of the company because of his [D’s] impending bankruptcy. He stated that the applicant only signed documents as director of the company on his request, including blank cheques. On 11 December 1995 D was convicted of cheating the public revenue by failing to declare the Income Tax and National Insurance contributions on the full value of wage payments made to the employees of J&A Transport Ltd. On 12 December 1995 D was convicted of the fraudulent evasion of VAT with respect to the affairs of J&A Transport Ltd. On 11 December 1995 the applicant was acquitted of all charges against him. The applicant was awarded his costs from central funds. However, these did not include the costs incurred by, or the remuneration of, the Receiver. According to the applicant, the trial judge found that D was the beneficial owner of J&A Transport Ltd and that the applicant had no interest in its assets. Furthermore, it was at no time asserted by the prosecution during the trial that the GBP 42,305 or any part of it belonged to D. In separate proceedings a confiscation and compensation order was made against D under the CJA. On 9 January 1996 the applicant applied to the High Court for the discharge of the orders against him. In an affidavit sworn on 8 January 1996 the applicant indicated that he wished the receivership to be discharged in order to enable J&A to continue trading. On 19 January 1996 the Restraint and Receivership Orders were discharged by order of Mr Justice Keene with liberty to the applicant to apply for his costs. The applicant’s home was released from the charging order and the applicant and his daughter-in-law were permitted to deal in property relating to J&A Transport Ltd to enable it to continue trading. The conduct of the business of the company remained under the supervision of the Receiver. The remaining GBP 10,011 was not returned to the applicant after the discharge of the Restraint Order. By letter to the Receiver dated 18 February 1997 the applicant’s solicitors sought repayment of the balance of the GBP 42,305 after deduction of the amounts already released to cover his legal costs. However, by letter dated 3 March 1997 the Receiver stated that no funds remained to be returned because all balances had been used to defray the “prior costs of the receivership”. From the Receiver’s affidavit sworn on 1 August 1996, it appears that the Receiver utilised the balance of the applicant’s funds prior to his acquittal, largely for the purpose of monitoring the business of J&A Transport Ltd (see above). On 19 January 1996 (the date of discharge of the Restraint Order) the Receiver held a balance of GBP 11,428.32 arising from the sale of certain of J&A Transport Ltd’s vehicles, which funds “were utilised to settle costs arising subsequent to the applicant’s acquittal.” On 5 June 1997 the applicant applied for an order that C&E pay his costs arising out of the civil proceedings in which the Restraint Order had been made including the Receiver’s costs, expenses and remuneration. On 3 October 1997 the applicant’s application was heard by Mr Justice Owen. It was made clear that the application was limited to seeking an order for payment of the balance of GBP 10,011. Mr Justice Owen dismissed the applicant’s application and refused leave to appeal. In relation to the applicant’s claim to be repaid the sum of GBP 10,011, Mr Justice Owen stated: “Now the applicant says, “it is unfair that I should not have that money.” One can well see his point of view. The result is unfair. However, we live in a society where sometimes unfairness will and must occur. It was necessary to appoint the Receiver to act as was the case. There was no way at the time to separate the GBP 42,305 from the other assets.” Mr Justice Owen further observed : “In my judgment, it would not be at all proper to order [C&E] to repay the £10,000 as to which, as I have already explained, the applicant may feel that he has been hard done by. The social explanation for that is, as a result of his son’s criminal behaviour, the order had to be made and if he has lost this money, as he has, then he should put it down to his son’s criminal behaviour. There was nothing improper in the action of the [C&E], or in the order which was made by the court.” Mr Justice Owen further considered that negligence could not be imputed to the Receiver such as to bring section 88 of the CJA into play; nor were the C&E guilty of any serious default in its investigation or prosecution of the offences at issue which could have allowed the applicant to invoke the compensation provisions of section 89 of the CJA. On 23 April 1998 leave to appeal against the decision of Mr Justice Owen was granted by Lord Justices Auld and Buxton. Leave was restricted to the question of whether the applicant could recover the sum of GBP 10,011 by way of an order that C&E pay his costs of the civil proceedings including the Receiver’s costs, expenses and remuneration. On 13 January 1999 the applicant’s appeal was heard by the Court of Appeal (Lord Justices Hirst, Aldous and Ward). Lord Justice Ward summarised the issue before the court as follows: “... if a receiver is appointed under the [Criminal Justice Act 1988] to receive and manage a defendant’s property and incurs costs and expenses in so doing, who bears that cost and expenses if the defendant is subsequently acquitted by the Crown Court and awarded his costs of defence out of public funds?” Lord Justice Ward summarised the law relating to the payment of receivers’ costs as follows: “The ordinary rule is that receivers should not accept their appointment unless satisfied that the receivable assets will be sufficient to meet their claim for costs and for remuneration or that they would be otherwise indemnified, by contract or by order of the court, by the party responsible for their appointment. In this case there was an agreement between the receiver and [C&E] that [C&E] would indemnify the receiver if she were unable to bring in sufficient assets to meet her costs. That did no more than replicate the statutory position ...” The Court of Appeal considered that the remuneration of the Receiver was not costs incidental to the receivership proceedings. In the court’s opinion the charges incurred by the Receiver in supervising the running of the company during the relevant period were expenses of the receivership and were not therefore recoverable by the applicant even if he had ultimately been successful in the receivership proceedings. Lord Justice Ward, although sympathetic to the applicant’s situation, stated: “The true position, as it now appears to me, is that the investigation of whether or not the defendant has suffered loss by reason of the receivership is an investigation which should be and ordinarily would be conducted in deciding whether or not damages should be awarded against the plaintiff for the breach of the usual undertakings as to damages a plaintiff would normally be required to give. Such an investigation would enable justice to be done. Here no undertaking was given and none ordinarily is.” Lord Justice Ward then observed that section 89 of the CJA only provided the applicant with the possibility to obtain compensation from the C&E on proof that the latter authority had been guilty of serious default in the investigation and prosecution of the offences with which the applicant was charged. In the words of Lord Justice Ward, section 89 “simply does not provide an adequate remedy.” With reluctance he concluded that: “... even if the expenses of the receivership are within the definition of costs, they are not costs of and incidental to the proceedings.” Lord Justice Aldous observed that: “... on the facts ... the [applicant] may seem to have been treated unfairly by the conclusion that I have reached, as his GBP 10,000 was used up as an expense of the receivership and therefore cannot be recovered. That in my view is the result of the type of proceedings and the conditions for recovery laid down in the Act. Parliament in section 88 of the Act specifically limited the right to recover from a receiver to cases where negligence is established. It is accepted for the purposes of these proceedings that there was no negligence. I would add that in my judgment [counsel for C&E] was right in his submission that this really was a claim for compensation dressed up as an application for an award of costs, and it is therefore most significant that by section 89 Parliament laid down a carefully regulated code for such a claim. Consequently, in my judgment, section 89 is the proper avenue for a compensation claim of this kind, provided of course the claimant can bring himself within the rather strict requirements of that section.” In its judgment on 25 February 1999, the Court of Appeal dismissed the appeal. It refused leave to appeal to the House of Lords. The applicant did not petition for leave to appeal to the House of Lords, having being advised by counsel that this course of action offered no prospects of success. (1) The High Court may by order (referred to in this Part of this Act as a “restraint order”) prohibit any person from dealing with any realisable property, subject to such conditions and exceptions as may be specified in the order. (2) Without prejudice to the generality of subsection (1) above, a restraint order may make such provision as the court thinks fit for living expenses and legal expenses. (3) A restraint order may apply– (a) to all realisable property held by a specified person, whether the property is described in the order or not; and (b) to realisable property held by a specified person, being property transferred to him after the making of the order. (4) This section shall not have effect in relation to any property for the time being subject to a charge under section 78 below: (5) A restraint order– (a) may be made only on an application by the prosecutor; (b) may be made on an ex parte application to a judge in chambers; and (c) shall provide for notice to be given to persons affected by the order. (6) A restraint order– (a) may be discharged or varied in relation to any property; and [(b) shall be discharged on the conclusion of the proceedings or application in question.] (7) An application for the discharge or variation of a restraint order may be made by any person affected by it. (8) Where the High Court has made a restraint order, the court may at any time appoint a receiver– (a) to take possession of any realisable property, and (b) in accordance with the court’s directions, to manage or otherwise deal with any property in respect of which he is appointed, subject to such exceptions and conditions as may be specified by the court; and may require any person having possession of property in respect of which a receiver is appointed under this section to give possession of it to the receiver. (...)” “(1) The High Court may make a charging order on realisable property for securing the payment to the Crown– (a) where a confiscation order has not been made, of an amount equal to the value from time to time of the property charged; and (b) in any other case, of an amount not exceeding the amount payable under the confiscation order. (2) For the purposes of this Part of this Act, a charging order is an order made under this section imposing on any such realisable property as may be specified in the order a charge for securing the payment of money to the Crown. (3) A charging order– (a) may be made only on an application by the prosecutor; (b) may be made on an ex parte application to a judge in chambers; (c) shall provide for notice to be given to persons affected by the order; and (d) may be made subject to such conditions as the court thinks fit and, without prejudice to the generality of this paragraph, such conditions as it thinks fit as to the time when the charge is to become effective. (...) (8) An application for the discharge or variation of a charging order may be made by any person affected by it.” “(1) Where a receiver appointed under this Part of this Act or in pursuance of a charging order takes any action– (a) in relation to property which is not realisable property, being action which he would be entitled to take if it were such property; (b) believing, and having reasonable grounds for believing, that he is entitled to take that action in relation to that property, he shall not be liable to any person in respect of any loss or damage resulting from his action except in so far as the loss or damage is caused by his negligence. (2) Any amount due in respect of the remuneration and expenses of a receiver so appointed shall, if no sum is available to be supplied in payment of it under section 81(5) above, be paid by the prosecutor or, in a case where proceedings for an offence to which this Part of this Act applies are not instituted, by the person on whose application the receiver was appointed.” “(1) If proceedings are instituted against a person for an offence or offences to which this Part of this Act applies and either– (a) the proceedings do not result in his conviction for any such offence, or (b) where he is convicted of one or more such offences– (i) the conviction or convictions concerned are quashed, or (ii) he is pardoned by Her Majesty in respect of the conviction or convictions concerned, the High Court may, on an application by a person who held property which was realisable property, order compensation to be paid to the applicant if, having regard to all the circumstances, it considers it appropriate to make such an order. (2) The High Court shall not order compensation to be paid in any case unless the court is satisfied– (a) that there has been some serious default on the part of a person concerned in the investigation or prosecution of the offence concerned, being a person mentioned in subsection (5) below; and (b) that the applicant has suffered loss in consequence of anything done in relation to the property by or in pursuance of[– (i) an order under this Part of this Act; or [(ii) an order of the Court of Session under section 32, 33, 34 or 35 of the Proceeds of Crime (Scotland) Act 1995.]] (3) The Court shall not order compensation to be paid in any case where it appears to the Court that the proceedings would have been instituted or continued even if the serious default had not occurred. (5) Compensation payable under this section shall be paid– (a) where the person in default was or was acting as a member of a police force, out of the police fund out of which the expenses of that police force are met; (b) where the person in default was a member of the Crown Prosecution Service or acting on behalf of the service, by the Director of Public Prosecutions; (c) where the person in default was a member of the Serious Fraud Office, by the Director of that Office; (...)”