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||Neutral Citation Number:  EWHC 149 (QB)
||Case No: TLQ/07/1089
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
||Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE TUGENDHAT
Miss Dobbin for the Assets Recovery Agency
Mr Virtosu in person.
Mrs Virtosu did not appear and was not represented
Hearing dates: 14, 15, 17th January 2008
HTML VERSION OF JUDGMENT
Crown Copyright ©
Mr Justice Tugendhat :
- This is a claim for a Civil Recovery Order, a form of civil forfeiture, brought by the Director of the Assets Recovery Agency ("the Director") against two Respondents, Mr and Mrs Virtosu under Part V of the Proceeds of Crime Act 2002 ("the 2002 Act").
- Mr Virtosu came to this country from Moldova in the early 1990s, and has acquired British Nationality in 2003. In 1999 he married his wife, who is also from Moldova. Mr Virtosu earned a total of about £10,000 during his residence in England between 1992 and his arrest and subsequent imprisonment in France in March 2004. Mrs Virtosu has earned nothing in England.
- Nevertheless, between February 2002 and January 2004, Mr Virtosu acquired a BMW car for over £35,000, and a number of properties. He bought 61 Briar Avenue and 25 Crescent Way, London SW16, both in 2002 at a cost of £248,000 and £290,00 respectively, a house in South Africa for £106,000 in 2003, a flat in Courbevoie, near Paris, in 2003 for €116,000 and a house in Thornton Heath in January 2004 for £252,000. He paid for extensive improvements to 35 Crescent Way, where his wife has resided. She now resides there with him, since his release in December 2007 from prison in France, together with their son now aged about 8. Mr Virtosu was in France for the purpose of buying another flat there when he was arrested.
- The first London property was sold on 2nd June 2005, and all three English properties were brought with the aid of mortgages from the Bank of Scotland. Mr Virtosu holds a bank account with Nat West. Mrs Virtosu is the holder of two bank accounts, one with HSBC and one with Halifax. Full details of these properties and assets are set out in the Claim Form and the Order of this Court.
- The Director claims that all these assets are, or represent, property obtained through unlawful conduct within s.240 (all reference to sections are to the 2002 Act unless otherwise stated), that they are accordingly recoverable property (s.304), and so that this court must make a recovery order vesting the property in the trustee for civil recovery (s.266). In the evidence put before this Court for the Director Mr Evans states (para 6 of his witness statement of 26 February 2007):
"This case concerns property derived from unlawful conduct, namely; (i) people trafficking; (ii) money-laundering; and (ii) mortgage fraud".
- Mr Virtosu denies that the property was obtained through unlawful conduct. He says that he was wrongly convicted in France, and that the source of the funds used to buy the properties, and the funds in the bank accounts, are gifts from his parents and parents-in-law in Moldova, and receipts from business activities he was engaged in with his father-in-law. He appeared in person. Mrs Virtosu did not appear, although she was aware of the proceedings.
THE UNLAWFUL CONDUCT AND THE FORM OF EVIDENCE IN SUPPORT
- Unlawful conduct must be criminal conduct. Where it is conduct that has occurred abroad, it must satisfy a test of dual criminality, that is, it must have been criminal in the country where it occurred and it must be such that, if it occurred in England, it would be unlawful under the criminal law of England.
- That is the effect of s.241 which provides:
"241 "Unlawful conduct"
(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.
(2) Conduct which—
(a) occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country, and
(b) if it occurred in a part of the United Kingdom, would be unlawful under the criminal law of that part,
is also unlawful conduct.
(3) The court … must decide on a balance of probabilities whether it is proved—
(a) that any matters alleged to constitute unlawful conduct have occurred ..."
- The people trafficking is by far the most important part of the Director's case and, if he succeeds on that, the other two forms of criminal conduct (mortgage fraud and money-laundering) are no more than ancillary or consequential. However, Miss Dobbin made clear that she wished to advance the Director's case on money-laundering and mortgage fraud separately, in the event that the case on people trafficking might have a defect.
- The people trafficking is alleged to have been conduct occurring in both England and France. The money-laundering and mortgage fraud are alleged to be conduct occurring only in England.
- In paras 13 to 25 Mr Evans sets out under the heading "Unlawful conduct" the conduct relied on. He refers to a joint investigation by English and French investigators. The results of the English investigation are set out in the form of a four page statement from Mr Griffiths, formerly of the National Crime Squad, and now a Principal Officer with the Serious Organised Agency. This statement is exhibited to the statement of Mr Evans is summarised in this judgment at paras 68 and following. It concludes with a summary of the offences of conspiracy of which he states Gavril Dulghieru and his wife Tamara were convicted in England in October 2005.
- In paras 14 and 17 to 23 of his statement Mr Evans set out that Mr Virtosu was arrested in France and remanded in custody on 4th March 2004, and he summarises the findings, verdicts and sentences of the French judgment of 24 February 2005 ("the French judgment"), not only in relation to Mr Virtosu, but also in relation to his nine co-accused (Radj Pintea, Viorel Onofreiciuc, Ruslan Abulkhanov, Guenadie Palamarciuc, Petru Oanta, Alexandru Bejenaru, Alina Bratec, Ozana Grigoruta, Gavril Dulghieru). Gavril Dulghieru was tried in France in his absence.
- The Director sets out the criminal law of France only in the form in which it is set out in the French judgment, that is, by references which contain information similar to that which is normally found in the Statement of Offence and the Particulars of Offence on an English indictment. The provisions of the French criminal law creating the offences are not set out. The exhibits to Mr Evans's witness statement include only an English translation of the French judgment. At my request a copy of the French original was obtained and put before me during the trial. The layout of a translation can differ from that of the original, which may give rise to misunderstanding, and where, as happened in one instance, a part of the translation is disputed, it can be important to have a copy of the original.
- The material put before this Court by the Director, including both evidence and written submissions, did not, at the start of the trial, include a separate statement of the conduct involving people trafficking which it was alleged was unlawful under the criminal law of England, nor did it identify the provisions of English criminal law alleged to make such conduct unlawful (s.241(2)(b)). The only provision of English law initially identified was s.15A of the Theft Act 1968 (obtaining a money transfer by deception), which is the offence under which mortgage fraud would have been prosecuted at the time of the frauds alleged in this case.
- During her closing submissions I asked Miss Dobbin to identify the English offences of people trafficking and money-laundering relied on, and the day after her closing submissions she submitted a document headed Schedule of Offences.
- Legislation embodying a requirement of dual criminality is not uncommon in English law, much of it being in the field of extradition. Miss Dobbin mentioned (while not taking me to) the Extradition Act 2003. The requirement of dual criminality is also to be found of in much of the recent legislation extending the jurisdiction of the English courts, such as the Criminal Law Act 1977 s.1A. The extradition cases are in one respect obviously different, in that there cannot be reliance in those cases on a foreign judgment or conviction to prove that conduct has occurred in that country which is unlawful under the criminal law of that country. The purpose of the extradition is for that question to be tried in the foreign country. But the cases do show that questions can arise as to what satisfies the requirement of dual criminality, as that is laid down in any given statute (the requirement may differ from one statute do another according to the words of each statute). The court must examine the conduct alleged to have occurred in the foreign country and consider what offences that conduct would give rise to in England. For example, if the conduct said to have occurred, and to be unlawful, in a foreign country, consists of ingredients A+B+C+D, and if similar conduct involving only ingredients A+B+C may suffice to make such conduct unlawful under the criminal law of England, the requirements of s.241(2) would be satisfied. Satisfying the requirements of s.241 might be more difficult for the Director if the foreign judgment proves only ingredients A+B+C, but similar conduct in England is unlawful here only if it also involves the extra constituent D. Assuming he were able to prove the unlawful conduct in the foreign country by a conviction in that country, he would have to prove the extra ingredient required by English criminal law in some other way (if at all).
- It follows that if the court is to be able properly to decide that the requirement of dual criminality under s.241 is satisfied, the Director must provide the court with evidence and submissions which are directed to demonstrating that. This is, in my judgment, required in order to comply with CPR Part 8.2 (the claimant must state the legal basis for the claim to the remedy he is seeking): I respectfully agree with the judgment of Sullivan J at paras 17 and 25 cited in para 182 below. He should do so separately in relation to each of the categories of unlawful conduct relied on. Moreover, this should be done, at least so far as practicable, in the material put before the judge who is asked to make an interim receiving order (s.246). If the Director does not do that, then the court may not be in a position to decide whether there is the good arguable case required by s.246(4)-(5). I return to this point at para 182 below.
- Although the statutory burden of proof is the balance of probabilities (s.241(3)), it is important that the Director should be able to satisfy the court of these requirements to a standard that is commensurate with the gravity of the case: see Re H (Minors)(Sexual Abuse: Standard of Proof)  AC 563, 586. Although civil recovery proceedings under Part V of the 2002 Act are civil, not criminal, the gravity of them is very great indeed. The alleged crime is extremely serious: international trafficking of women to become prostitutes in circumstances where they have no real choice whether to consent or not to consent to engaging in the sexual acts involved. The consequences of a finding in favour of the Director are also very serious indeed. In the present case, which is probably not untypical in this respect, the Order that the Director seeks would have the effect of depriving the Respondents of property which is not only very valuable in money terms (in excess of £1m), but which also, and much more importantly, includes the family home, and effectively all that they possess, other than the flat in South Africa. They will be left penniless in this country. These consequence do not include deprivation of liberty, but they are (and were intended by the legislature to be) more serious than the consequences of the severe prison sentences which were imposed on Mr Virtosu in France and on the Dulghierus in England. Mr Virtosu complained that he had been punished in France and did not expect that he would be required to pay twice over.
- The legislative purpose of the 2002 Act is discussed and set out in the "Recovering the Proceeds of Crime: A Performance and Innovation Unit Report June 2000 issued by the Cabinet Office ("the Report"). The report is referred to by Latham LJ in Singh v Claimant of the Assets Recovery Agency  EWCA Civ 580 para 9. It is available at http://www.cabinetoffice.gov.uk/upload/assets/www.cabinetoffice.gov.uk/strategy/crime.pdf. It is a long document which is also summarised by Janet Ulph LLM LLM in "Commercial Fraud" (OUP 2006) para 4.45, to whom I am in indebted. The Report states that the civil forfeiture route is not to be adopted as a "soft option" in place of criminal proceedings (para5.24). The rationale for civil forfeiture is stated as follows:
"5.12 The proposed civil forfeiture regime is intended to provide:
• a reparative measure – taking away from individuals that which was never legitimately owned by them; and
• a preventative measure – taking assets which are intended for use in committing crime.
5.13 Although civil forfeiture is not intended as a punitive measure, it can be expected to be keenly felt and strongly resisted by individuals who have grown accustomed to having possession of their unlawful assets. … the large body of anecdotal evidence from UK and other overseas law enforcement [shows] that individuals associated with criminal activities are as concerned about losing their assets as they are about losing their liberty, in some cases more so.
5.14 Like other forms of asset recovery, civil forfeiture is a disincentive to crime – more effective recovery of unlawful assets will act to reduce the anticipated reward in the risk/reward trade-offs that some criminals make (as explained in Chapter 3). And it reinforces the rule of law – by demonstrating that the justice system will work effectively to remove illegal gains (also explained in Chapter 3). In addition, it:
• opens up a new route to tackling assets that are currently beyond the reach of the law. Civil forfeiture should be used in particular to disrupt the activities of organised crime heads who are remote from crimes committed to their order, yet enjoy the benefits; and
• should allow the recovery of unlawful assets held in the UK, but derived from crime committed overseas."
- In order to discharge the burden of proving what is required by s.241(3)(a), namely that the matters alleged to constitute unlawful conduct in France have in fact occurred, the Director relies solely on the French judgment, that is the convictions of Mr Virtosu and his co-accused. Whether or not the Director can discharge the burden of proof upon him in relation to unlawful conduct in France therefore depends wholly on the effect of the French judgment as it was adduced in evidence.
THE EFECT OF THE FRENCH JUDGMENT
- The main form of unlawful conduct which the Director alleges in this case is one which Mr Evans refers to as people trafficking. This is the offence under the French criminal law identified in the judgment of the French Court dated 24 February 2005 as facilitating or attempting to facilitate the illegal entry, movement or residence in France of foreign nationals, with the circumstance that the acts were committed in an organised gang. The relevant provisions of French criminal law are identified as: ART.21 ORD 45-2658 OF 02/11/1945; ART. 132-71 CRIMINAL CODE; ART 21 II ORD 45-2658 OF 02/11/1945.
- The French judgment states that all the offences were committed in France during the period 2003 and 2004 "and for a period not barred by limitation", namely a period prior to 2003. Conduct of which Mr Virtosu was convicted is more precisely dated in the French judgment in so far as it refers to specific conversations and other events. Accordingly it is necessary to consider the question of dual criminality by reference to English criminal law as it was in the period 2003 and up to Mr Virtosu's arrest in March 2004.
- Miss Dobbin submits that this conduct would have been unlawful if it had occurred in England under English criminal law. If the conduct had occurred in England it would have been a conspiracy to assist unlawful immigration to a member state contrary to the Immigration Act 1971 s.25, by provision of false documents to facilitate entry. That section was amended by the Nationality, Immigration and Asylum Act 2002, s143 as from 10 February 2003 (Archbold 2008 para 25-229). That section, as amended, applies to anything done either in the UK, or outside the UK by a British citizen. Mr Virtosu was a British citizen by 2003. It reads:
"25. Assisting unlawful immigration to member State
(1) A person commits an offence if he—
(a) Does an act which facilitates the commission of a breach of immigration law by an individual who is not a citizen of the European Union,
(b) knows or has reasonable cause for believing that the act facilitates the commission of a breach of immigration law by the individual, and
(c) knows or has reasonable cause for believing that the individual is not a citizen of the European Union".
- Miss Dobbin submitted in the Schedule of Offences that the conduct of which Mr Virtosu was convicted in France would, if it had occurred in England, have constituted further offences. Since the conduct occurred before the Sexual Offences Act 2003 came into force in May 2004, what is referred to as trafficking would not have been an offence under ss.57-60 of the 2003 (as it would in May 2004 and thereafter) but would give rise to a number of separate offences under the Sexual Offences Act 1956 and other provisions of the criminal law.
- The provisions additional to s.25 of the Immigration Act relied on are:
i) Conspiracy to make a false document contrary to s.1 of the Forgery and Counterfeiting Act 1981 (the making of false passports and administrative documents);
ii) Conspiracy to use a false instrument contrary to s.3 of the Forgery and Counterfeiting Act 1981 (the provision of false documentation to be used to gain entry and to leave France);
iii) Conspiracy to procure a woman to leave the UK to become a prostitute in the world contrary to s.22(b) of the Sexual Offences Act 1956 (transposing the acts in France of sending the women to other jurisdictions for the purposes of prostitution). This section provides
"22 (1) It is an offence for a person— …(b) to procure a woman to leave the United Kingdom, intending her to become an inmate of or frequent a brothel elsewhere; …;"
iv) Conspiracy to procure a woman to become a prostitute in any part of the world contrary to s. 22(a) of the Sexual Offences Act 1956 (a wider offence to that under s.22(b). This section provides:
"22 (1) It is an offence for a person— (a) to procure a woman to become, in any part of the world, a common prostitute;…";
v) Conspiracy to detain a woman against her will in a brothel contrary to s. 24(1) of the Sexual Offences Act 1956 (even if Mr Virtosu had been in France at all times, the fact that the women were ultimately detained in England would be caught by a conspiracy count). This section provides
"24(1) It is an offence for a person to detain a woman against her will on any premises with the intention that she shall have unlawful sexual intercourse with men or with a particular man, or to detain a woman against her will in a brothel…;"
vi) Conspiracy to live on the proceeds of prostitution contrary to s.30 of the Sexual Offences Act 1956 (this would reflect the overall purpose of the scheme). This section provides:
"30(1) It is an offence for a man knowingly to live wholly or in part on the earnings of prostitution.
(2) For the purposes of this section a man who lives with or is habitually in the company of a prostitute, or who exercises control, direction or influence over a prostitute's movements in a way which shows he is aiding, abetting or compelling her prostitution with others, shall be presumed to be knowingly living on the earnings of prostitution, unless he proves the contrary";
vii) Conspiracy to steal contrary to s.1(1) of the Theft Act 1968 (bank card fraud);
viii) Conspiracy to defraud (bank card fraud).
- The procedure for proving foreign judgments is provided by the Evidence Act 1851 s.7, although other means are possible (Phipson on Evidence 16th ed para 41-42). In the circumstances of the present case the conviction did not have to be formally proved at the trial in accordance with that Act because it was by admitted by Mr Virtosu in his witness statement of 4 August 2007. Mr Virtosu had little choice but to admit it in this case, since, from the commencement of these English proceedings until a month before the trial, he was imprisoned in France, serving the eight year sentence imposed following that conviction.
- The Director did not adduce in this court any of the evidence (such as transcripts of intercepted phone calls) that was before the French court.
- However, Mr Virtosu has given evidence that he was wrongly convicted. He does not attempt to challenge the French conviction with any evidence other than his simple denial.
- At the start of the proceedings I drew to the attention of Miss Dobbin that the Director would, in these circumstances, need to make submissions to the court as to what the (admitted) French conviction proved in this court, if anything. She did make submissions, in summary, that the French judgment was evidence (which she accepted was rebuttable) of what conduct had occurred in France and that that conduct was unlawful under French criminal law.
- The 2002 Act says nothing about how the Director might prove that conduct outside England had occurred which was unlawful under the criminal law of the country where it occurred. No doubt the Director might, in such a case as this, seek the co-operation of the French authorities and bring to England all the evidence adduced at the French trial, together with evidence of French law, and, in effect, retry the French criminal proceedings in the English court. In the present case the evidence appears from the French judgment to have been substantially (though not exclusively) in the form of intercepted telephone communications attributed to Mr Virtosu. That would be a costly and very inconvenient procedure, and it is understandable that the Director should prefer not to have to adopt it, if he can avoid doing so. Moreover, French criminal procedural law is well known to be very different from English procedure. The evidence collected in France will have been assembled with a view to meeting French law requirements. There could well be complications in seeking to follow this course.
- The 2002 Act does not require that a defendant to civil recovery proceedings should have been convicted (s.240(2)). So it may be that there will be cases where the Director will seek to prove that conduct has occurred abroad that is unlawful under the criminal law of the country where it occurred, and to do so by adducing witnesses of fact and expert evidence of the foreign law in question. But it does not follow that he should have to do that where there has been a conviction in a foreign court.
- The question: what can a conviction in an English criminal court be adduced to prove in an English civil court, such as this court? was considered by the Court of Appeal in Hollington v F Hewthorn & Co Ltd  1 KB 587. In that case the Court held that a conviction for careless driving was not relevant (nor, therefore, admissible) evidence to prove that the person convicted had been driving in breach of his duty of care in civil proceedings brought in respect of damage suffered in the same incident. This is commonly referred to as the rule in Hollington v Hewthorn. That case is also authority for the proposition that
"a judgment ... is conclusive as against all persons of the existence of the state of things which it actually affects, when the existence of that state is a fact in issue" (p596-7).
- The rule has long been overruled in English civil proceedings in so far as it concerns convictions (and findings of adultery and paternity) before any court in the United Kingdom: Civil Evidence Act 1968 s.11. It has also been overruled in so far as it governs proof in English criminal proceedings of convictions before any court in the UK: Police and Criminal Evidence Act 1984 s.73. Accordingly, if the rule ever applied to convictions before a court outside the UK, the rule survived after 1984 only in relation to such convictions.
- The scope of the rule became a matter of importance when the bad character provisions of the Criminal Justice Act 2003 came into force, since prosecutors wished to adduce evidence of convictions outside the UK under those provisions. In that context, it has been held that the rule has been overruled. In R v Kordasinski  EWCA Crim 2984;  1 Cr App R 17 CA May LJ giving the judgment of the Court noted that Hollington v Hewthorn was not concerned with a criminal case (para 63) and said:
"72 In our judgment, this subject has become overcomplicated, and complication tends to obfuscation. It is, as we have said, necessary to distinguish between admissibility and how admissible evidence may be proved. In our judgment, the Polish convictions were admissible pursuant to and subject to s.101(1)(d) and (g), and s.103 of the 2003 Act. The rule in Hollington v Hewthorn was abolished for criminal cases, in so far as it may ever have applied or have survived, by s.99(1) of the 2003 Act.
73 The convictions were provable, as opposed to admissible, under s.7 of the 1851 Act, whose formalities were complied with in this case. That meant that the whole Polish record, including all the record of evidence, was provable by s.7. It was also in a form such as that referred to in Humphris."
- At para 57 May LJ had already cited from Humphris  EWCA Crim 2030 para 21as follows:
'Before we leave this case we point out that it has a moral for other cases of this sort. First, it emphasises the importance of the Crown determining whether they need any more evidence than the actual previous conviction to achieve the purpose for which they want the evidence to be admitted. Second, it emphasises the importance of the Crown deciding that if they want more than the evidence of the conviction and the matters that can be formally established ... they must ensure that they have available the necessary evidence to support what they require. That will normally require the availability of either a statement by the complainant relating to the previous convictions in a sexual case or the complainant to be available to give first-hand evidence of what happened."
- As to the form of the Polish judgments, May LJ at para 35:
"They were far more extensive than a certificate or memorandum of conviction that might be produced from this jurisdiction under s.73 of the Police and Criminal Evidence Act 1984, as admissible evidence that the person named in the certificate, if it is proved that this is the defendant, was convicted of the offence recorded. The details of the offences were described in the same terms as the part of the document put before the jury to which we have referred [as described at para 31]."
- The form of the Polish judgments contained details of the facts found proved, the subject of the conviction, which are similar in scope to the details of the facts found proved by the French court the subject of Mr Virtosu's conviction, as set out in the French judgment.
- While she accepts, of course, that Kordasinksi is not authority relating to civil proceedings such as the present, Miss Dobbin submits that this court should adopt an approach to the 2002 Act analogous to that adopted by the Court of Appeal to the Criminal Justice Act 2003. She submits that it cannot have been the intention of Parliament, in enacting s.241(2)(a) and (3)(a), that the Director should be required to prove afresh in the English court the matters already proved in the foreign court. She submits that what the foreign court, in this case by the French conviction, determined is identical to what s.241 requires to be proved in the English proceedings. She submits that Hollington v Hewthorn does not apply at all to s.241, as a matter of statutory interpretation, alternatively that it is in any event distinguishable.
- In Hollington v Hewthorn the Court said this at p594-5:
"Even were it proved that it was the accident that led to the prosecution, the conviction proves no more than what has just been stated. The court which has to try the claim for damages knows nothing of the evidence that was before the criminal court. It cannot know what arguments were addressed to it, or what influenced the court in arriving at its decision. Moreover, the issue in the criminal proceedings is not identical with that raised in the claim for damages. Assume that evidence is called to prove that the defendant did collide with the plaintiff, that has only an evidential value on the issue whether the defendant, by driving carelessly, caused damage to the plaintiff. To link up or identify the careless driving with the accident, it would be necessary in most cases, probably in all, to call substantially the same evidence before the court trying the claim for personal injuries, and so proof of the conviction by itself would amount to no more than proof that the criminal court came to the conclusion that the defendant was guilty. It is admitted that the conviction is in no sense an estoppel, but only evidence to which the court or a jury can attach such weight as they think proper, but it is obvious that once the defendant challenges the propriety of the conviction the court, on the subsequent trial, would have to retry the criminal case to find out what weight ought to be attached to the result."
- The position in the present case is distinguishable. The form of the French judgment (unlike the English certificate contemplated by the Court in Hollington v Hewthorn) enables the English court in the present case to link up the conduct the subject of the conviction with the conduct to be proved by the Director in this case. And the issue is identical in both the French case and the present one.
- Further, in Re a Solicitor  QB 69, at p78-9 Lord Lane CJ giving the judgment of the Court of Appeal said:
"Mr. Robertson also placed reliance on Hollington v. F. Hewthorn & Co. Ltd.  K.B. 587. That decision, he submits, precludes the tribunal from placing any reliance upon the opinion of the board as to the truth of the matters which it was the tribunal's duty to inquire into and determine. This submission, in our judgment, falls to the ground once it becomes clear that the tribunal is not bound by the strict rules of evidence, save for the effect of rule 41 already referred to. The effect of Hollington v. F. Hewthorn & Co. Ltd. was removed by sections 11 and 13 of the Civil Evidence Act 1968 in cases to which those sections apply.
It is perhaps of interest to note that in Hunter v. Chief Constable of the West Midlands Police  AC 529, 543 Lord Diplock, with whose speech the other members of the House of Lords agreed, said this of the decision of the Court of Appeal in Hollington's case:
"Despite the eminence of those who constituted the members of the Court of Appeal that decided it (Lord Greene M.R., Goddard and du Parcq L.JJ.) that case is generally considered to have been wrongly decided, even in the context of running-down cases brought before the Law Reform (Contributory Negligence) Act 1945 was passed and contributory negligence ceased to be a complete defence; for that is what Hollington v. F. Hewthorn & Co. Ltd. was about. The judgment of the court delivered by Goddard L.J. concentrates on the great variety of additional issues that would arise in a civil action for damages for negligent driving but which it would not have been necessary to decide in a prosecution for a traffic offence based on the same incident, and on the consequence that it would still be necessary to call in the civil action all the witnesses whose evidence had previously been given in a successful prosecution of the defendant, or a driver for whose tortious acts he was vicariously liable, for careless or dangerous driving, even if evidence of that conviction were admitted. So no question arose in Hollington v. F. Hewthorn & Co. Ltd. of raising in a civil action the identical question that had already been decided in a criminal court of competent jurisdiction, and the case does not purport to be an authority on that matter."
We point out that in this case the tribunal was charged with determining the identical questions which had already been decided in Western Australia by the board which was a tribunal of competent jurisdiction."
- Further it is to be noted that at the time Hollington v Hewthorn was decided the law of evidence was very different from what it is today: see Cross and Tapper on Evidence 10th ed p118 note 118 and the Civil Evidence Act 1995. The rules of evidence are less strict in civil cases than in criminal cases, and it would be surprising if evidence admissible in a criminal trial were to be inadmissible in a civil claim arising out of the same facts. Moreover, the credit which this court gives to the judgments of foreign courts has changed greatly over the years, in particular in relation to the courts of countries which are members of the Council of Europe, and who are thus subject to the European Convention on Human Rights, as is the case with France.
- In my judgment, in a case where a defendant to civil recovery proceedings has been convicted, Parliament cannot have intended that a conviction in a court outside the United Kingdom should be treated as irrelevant to prove the mattes required to by s.241. Such a convictions would have established the identical matter required to be established by s.241(2)(a) and (3)(a). And where, as here, the foreign judgment is not simply a certificate in the form that would be adduced under the Civil Evidence Act 1968 s.11, but contains a summary of the matters found proved by the foreign court, then that is evidence of the truth of those facts, and of such conduct being unlawful under the criminal law of the country where the conviction was entered.
- In support of this conclusion, Miss Dobbin also referred to the developing climate of mutual respect for the administration of justice in states in respect of which the European Arrest Warrant is available. Moreover, although the conclusion I have reached does not depend upon anything stated in the Report, it is consistent with the following passage:
"11.52 In an EU of free movement of capital and persons, there is little justification for treating requests for restraint and confiscation of assets from other EU jurisdictions in the same way as requests from other parts of the world. This unnecessary impediment acts to increase the ease with which criminals can frustrate law enforcement efforts to recover assets. The UK has therefore promoted the mutual recognition of judicial decisions at EU level. And it has pressed for the mutual recognition of restraint orders to be the first area subject to any new mutual recognition agreement. At a special meeting of the European Council in October 1999 during the Finnish Presidency at Tampere, the Council decided to enhance mutual recognition of member states' judicial decisions."
- In my judgment the French conviction is evidence capable of proving the matters required by s.241. But, as Miss Dobbin also submitted, it does not give rise to any estoppel, nor, in principle, prevent Mr Virtosu rebutting the evidence, and persuading me (if he can) that the Director has not satisfied the burden of proof upon him.
- In Hunter at p545 Lord Diplock considered the test that would have to be satisfied in civil proceedings by a person seeking to challenge a conviction. There are also tests as to the evidence which must be adduced if the CACD is to set aside a conviction on the basis of fresh evidence. I do not, in the event, have to consider the test applicable in the present case, since I have been able to make clear finding. In these proceedings, s.241 makes clear that the burden is upon the Director prove on the balance of probabilities that any matters alleged to constitute unlawful conduct have occurred. That must remain the test throughout. Nevertheless, where the Director is in a position to rely upon is a conviction by a foreign court which is subject to the European Convention on Human Rights, such as is the case with the French courts, it may not be easy for the person convicted to persuade this court that the burden of proof has not been satisfied by the Director.
THE CONTENT OF THE FRENCH JUDGMENT
- On 24th February 2005 the first Respondent was convicted and sentenced for a number of offences by the Tribunal Correctionel at Nice in France. The nine co-accused were also convicted and sentenced on the same occasion to various terms of immediate imprisonment, including Mr Palmarciuc to 7 years and Mr Dulghieru in his absence to 10 years.
- The court was constituted by three judges and the judgment, as it appears in the original, covers 57 closely typed pages. Mr Virtosu was present in person and represented by counsel. The charges against him were listed under ten headings:
"1) Aiding the illegal entrance or residence of a foreign national in a state party to the Schengen Convention in an organised gang;
2) Fraudulent possession of several false administrative documents;
3) Forgery in an administrative document establishing a right, identity or authority;
4) Use of forgery in an administrative document establishing a right, identity or authority;
5) Receiving stolen goods;
6) Receiving a false administrative document;
7) Aggravated crime of living on the proceeds of prostitution: multiple victims;
8) Counterfeiting or forgery of a payment or withdrawal card;
9) Use of a counterfeited or forged payment or withdrawal card;
10) Receiving the proceeds from a crime punished by a sentence not exceeding five years imprisonment."
- All the co-accused were born in Moldova or Ukraine. Mr Griffiths in his statement says that on 18th October 2005 Gavril Dulghieru pleaded guilty in this country in the Isleworth Crown Court to three counts, first conspiracy to traffic in prostitution, second conspiracy to traffic into the UK for sexual exploitation and third for conspiracy to facilitate unlawful immigration. Three further counts were ordered to remain on the file, namely conspiracies to defraud, to commit forgery and to commit money laundering. On 21st October 2005 he was sentenced at the same Crown Court to nine years imprisonment. These convictions have not been proved in accordance with the Civil Evidence Act 1968.
- The particulars of the offences of which Mr Virtosu was convicted in France all identified the criminal activities as having taken place in Paris, Nice and Courbevoie (in the Paris region) during the period 2003 and 2004 "and for a period not barred by limitation". By direct or indirect aid he facilitated or attempted to facilitate the illegal entry movement or residence in France of several foreign nationals, with the circumstances that the matters were committed in an organised gang. He fraudulently possessed several administrative documents (passports, driving licences, identity cards of different nationalities, Schengen visas) documents issued by a public authority to establish a right, an identity or an authority, which he knew to be forged. He forged such documents, knowingly made use of one or more such documents, knowingly received several such documents that he knew to be the proceeds of theft, knowingly received several false administrative documents. He helped, assisted and protected the prostitution of several young women, profited from or shared income from prostitution or received funds from prostitutes, hired led or enticed several young women with a view to prostitution or exerted pressure on them to engage in prostitution, with the circumstance that the matters were committed against several people. He counterfeited or forged payment cards, that he made use of payment cards that he knew to be counterfeited or forged. He knowingly received several forged bank cards.
- There was only one co-accused whom Mr Virtosu admitted before me that he knew, and that was Mr Palamarciuc. Much of the evidence against the accused which is referred to in the judgment was in the form of intercepted phone communications. The judgment records that phone taps revealed that Mr Palamarcuic was constantly in contact with Mr Virtosu and other co-accused. There was evidence from the manager of a hotel whom Mr Virtosu knew and who said that he had regularly seen Mr Virtosu accompanied by small groups of people whom he came to drop off. The judgment records that the phone taps show that from the beginning of December 2003 Mr Palamarciuc began producing false bank cards. Mr Virtosu asked him on the 2nd December if he thought he would be able to learn how to do so and gave him four days to learn. When a search was carried out at the home of Mr Palamarcuic at 107-109 Rue De Normandie at Courbevoie (the flat owned by Mr Virtosu and let to Mr Palamarcuic) and in the lock up adjoining his home, there were found: €18,400 in cash, a large number of identity documents, some forged or in the process of being forged, 1,288 administrative documents (876 of which were forged or in the process of being forged), thousands of bank cards (7,000 cards with blank or counterfeit magnetic strips) together with equipment and associated computers.
- In relation to Mr Virtosu the judgment records that while he lived in England, where he managed a construction company, he was arrested when he came to France to buy a studio flat for €126,000. He personally took part in accompanying illegal immigrants and was stopped on 15th February 2002 at the airport when he was being followed by two young women, who were Scandinavian but were speaking Russian, and whose tickets had been purchased at the same time as his. Although the text in translation uses the word "arrested", Mr Virtosu in evidence stated that he was not in fact arrested, but was simply stopped and allowed to continue on his way after a brief interval. Miss Dobbins accepts she cannot prove he was arrested rather than just stopped.
- The French court concluded that Mr Virtosu's role as leader during 2003 and 2004 was absolutely clear from several telephone conversations during which he reaffirmed his position, asked for accounts, gave instructions or advice on equipment to be purchased, on people to be received and to be sent, lectured people, took decisions concerning the team both regarding the people to work with Mr Palamarcuic and their accommodation, reminded them that he paid their salaries and other matters. Accounts were requested by a man known as Stelea from Mr Palamarcuic at the request of the First Defendant.
- The court held that Mr Virtosu's participation in the activities of living on the proceeds of prostitution was shown by a number of phone taps. These included one in which he expressed his anger to Mr Palamarcuic because a girl had not arrived. On this occasion he talked about his business, about how much it cost him when a girl did not arrive. On another occasion he spoke with another person about problems experienced with other procurers concerning apartments used by prostitutes, and gave instructions to threaten them as well as their families and not to allow them to ruin their business. This was identified as a conversation numbered 52 on 2nd December 2003. The court referred to other phone taps demonstrating Mr Virtosu's activity of forging bank cards. The court found that Mr Virtosu acted mainly as an instigator or supplier of resources both in the forgery of documents and bank cards and in living on the proceeds of prostitution. The court concluded that given his central role in the organisation of the network, both on a financial and a personal level, he should be given the sentence provided for by the law, and an order should be made for his apartment in Courbevoie to be confiscated and sealed, as it was used as a work base in Paris.
- In relation to Mr Dulghieru, the court noted that he was responsible for the financial aspect of the network, giving instructions about the amount to ask for from candidates for illegal immigration, negotiating prices for the passports to be purchased from a person named Omar, and found that Mr Virtosu set the final price.
- The court in the event acquitted Mr Virtosu of the offences of receiving false administrative documents and fraudulent possession of several false administrative documents, but the court convicted him of the offence of aiding and abetting the counterfeiting or forgery of a payment or withdrawal card and administrative documents in substitution for the offence of counterfeiting or forgery of a payment or withdrawal card and administrative documents. The court convicted Mr Virtosu of aiding and abetting living on the proceeds of prostitution by supplying resources and enticement in substitution for the offence of aggravated crime of living on the proceeds of prostitution: multiple victims.
- For all of these offences the first respondent was sentenced to immediate imprisonment for eight years and to a fine of €500,000. Mr Virtosu remained in prison in France until 17th December 2007, some four weeks before the hearing in this court.
- At the hearing in this court, Mr Virtosu did not dispute the fact that he had been convicted as the judgment of the French court records. But he stated that the only one of the co-accused whom he knew was Mr Palamarcuic, that Mr Palamarcuic was the only one to whom he had spoken, and the conversations were entirely innocent, being about people who were to do building works and the like. He claimed that he had not seen the evidence against him in France. He said he was wholly innocent of the serious offences of which he was convicted. Apart from this denial in his oral evidence, he did not attempt to put before this court any material to justify his contention that the convictions were wrong, or to suggest how the French court fell into error.
- The French court found that on 13 August 2003, Radj Pintea was arrested in a hotel in Nice, in the company of five Romanian and Moldovan illegal immigrants, in possession of false passports. The use of telephone numbers found in Pintea's address book, and those of the other protagonists identified, led to the establishment of the existence of a network bringing candidates for immigration from Eastern countries mainly to England. The members of the network received the illegal immigrants, provided them with identification documents (passports that had been stolen and forged by replacing the photographs), put them up in the hotel while they were preparing the documents and supplied them with train and air tickets booked on the Internet, with the costs incurred for travel and sometimes the hotels being paid using counterfeited bank cards. The illegal immigrants who had been moved in this way paid their smugglers once they arrived, through deductions from their salaries or through earnings from prostitution. Forgery and dealing in forged bank cards was also discovered.
- The French court found that Pintea was arrested when he had just collected five Romanian and Moldovan illegal immigrants from Nice station, who at the time that they were arrested were holding false Danish, Norwegian or Dutch passports, and had been invited by Pintea to learn their new identities by heart. Three of them were to be taken to Nice airport the same day by Pintea to take a flight to Great Britain under their false identities. They said that they had to reimburse the organisation for the costs incurred from the salaries they would earn in Great Britain. Amongst Pintea's belongings a mobile phone was found containing, as well as Palamarciuc's number, the numbers of Palamarciuc, Marcel (Gavril Dulghieru) and Max. The numbers showed that he was in contact with several people in the network, in France and in Great Britain. In a telephone conversation Mr Virtosu criticised Palamarciuc for having sent money for Pintea, reminding him that Pintea was receiving half of his salary as agreed (phone tap of 20 February 2004).
- The French court found that two of the co-accused, Grogoruta and Bratec, went to be prostitutes in England through the network, being issued with false papers by Palamarcuic. The went in September 2003 and returned to France in December 2003, they were protected by Stéléa, and did not keep a share of their earnings, but received a lump sum of €4,000 when they wished to return to France. The existence of a prostitution network controlled on the ground by Stelea was proved, as was Palamarcuic's aid to it. Bratec and Grogoruta were each convicted of immigration and other offences of possessing false documents, and sentenced to a suspended term of six month's imprisonment and banned from French territory for three years.
- Mr Griffiths states that he is a Principle Officer with the Serious Organised Crime Agency (SOCA) based in London. In July 2004 he was the Senior Investigating Officer on Operation Jaundiced, which was a National Crime Squad investigation. This investigation was run in parallel with the investigation being conducted by the French Agency known as Office Central Pour la Repression de L'Immigration Irregulière et de L'Emploi de Etrangers sans Titre (OCRIEST). He too provides evidence that the investigation was into the trafficking of females from Moldova and Romania into the United Kingdom for the purposes of sexual exploitation.
FINDINGS OF FACT ON THE CONDUCT IN FRANCE
- I accept the French judgment, as I have held I am entitled to, as evidence of the facts set out above, which the French court found, on the basis of which it convicted them. I have considered Mr Virtosu's statement that he did not have the conversations alleged, did not know any of his co-accused other than his tenant Mr Palmarciuc, and that he was wrongly convicted. I find Mr Virtosu's bare denial of guilt entirely unconvincing. I shall set out below the numerous inconsistencies and defects in his evidence on other matters. I find that he did engage in the conduct in France in all respects as described in the judgment of the French court, and that that conduct was unlawful under the criminal law of France, as held by that court.
- I accept that the conduct described in para 50 would have been unlawful under English criminal law if it had occurred in England as submitted by Miss Dobbin in paras 23 and 24 (in so far as that refers to the Sexual Offences Act 1956). It follows that it satisfies the dual criminality test in s.241. It is not necessary for me to consider whether it would also have been unlawful under any of the other provisions of English law referred to by Miss Dobbin.
- In reaching this conclusion in relation to the Immigration Act 1971 s.25, I have taken into account the additional information provided by Mr Griffiths as to where the victims came from. The English legislation relates to an individual who is not a citizen of the European Union, whereas it is not clear from the French judgment whether or not that was an ingredient of the French offences of which Mr Virtosu was convicted. Moldova and Romania were not members of the European Union in 2003-4.
EVIDENCE OF BENEFIT AND OF CONDUCT IN ENGLAND
- In his statement of 4th August 2007, that is some five months before this trial, and at a time when he was still in prison in France, Mr Virtosu noted that the French court made no finding of financial benefit by him and that there was no evidence showing there was any financial benefit. Nor, he said, was there any evidence that he had any involvement in any activities in the United Kingdom. Therefore, he states, details of the living conditions of the prostitutes in the UK are not only highly prejudicial in this court but also of no relevance to the present claim. That is a reference to the statement of Mr Terence Griffiths dated 13th February 2007 which is included in the material in the first exhibit to the witness statement of Mr Ross Evans dated 26th February 2007, and which thus formed part of the evidence in these proceedings.
- Since it is the Director's case that part of the unlawful conduct from which the property sought to be made the subject of Recovery Orders derived is the people trafficking of which Mr Virtosu was convicted in France, I cannot accept that the evidence as to the conditions of the prostitutes in the UK is irrelevant. The French court itself referred to those conditions. Whether or not this court is satisfied that any property has been obtained through unlawful conduct must in part depend upon the evidence before this court at to what the unlawful conduct is, and in particular whether it is of a kind that is likely to have produced the profits which would be necessary if the property was to have been obtained through it. Further the evidence is relied on as conduct occurring in England, which the Director relies on independently of his case based on conduct which occurred in France.
- Mr Griffiths describes the criminal enterprise as follows, in terms that I accept as true. He states that the conspirators were recruiting young females from Moldova and Romania and arranging for them to be transported or trafficked across mainland Europe to Paris, using their genuine passports that contain fraudulently obtained Schengen visas. Whilst being held against their will in Paris, the female victims were forced to take possession of counterfeit and/or forged passports, which were later used to gain illegal entry into the UK. The criminal enterprise arranged for their female victims to travel across mainland Europe by making use of Low Cost Airlines flying into regional airports across the UK and/or by utilising the Eurostar, usually commencing their journey at Disneyland, Paris.
- Through his liaison with the French investigators, Mr Griffiths identified the principle members of the criminal enterprise operating in the UK were Gavril Dulghieru, of Moldovan nationality born on 3rd March 1969, and his wife Tamara, also of Moldovan nationality born 4th November 1973. They were arrested on 29th September 2005 and mobile telephone handsets attributed to two numbers significant to the investigation seized from their home address on that occasion.
- The French investigators had identified Mr Virtosu as the head of the criminal enterprise. They had at first identified his close associate only by the name Marcel, but later identified him as Gavril Dulghieru. He appeared throughout the French enquiry regularly receiving orders by telephone from Mr Virtosu in respect of illegal immigrants to be received and provided with false papers in order to be sent on to their respective destinations. Reservations for the transportation of the victims were taken in France by Mr Palamarciuc who was identified as the third in command. After the arrest of Mr Virtosu by the French investigators, Gavril Dulghieru continued to operate the criminal network using a new team to replace those who had been arrested and doing the technical aspect of forging identity documents in the UK and then sending them to France. He replaced Mr Virtosu after Mr Virtosu was arrested. Once the victims were in the UK they were met by a further associate, known only as Stelica who has not yet been identified.
FINDINGS OF FACT ON PEOPLE TRAFFICKING IN ENGLAND
- The French court did not make any finding that Mr Virtosu was engaged in any conduct in England. Nor does Mr Griffiths identify any conduct of Mr Virtosu which occurred in England. What the French court and Mr Griffiths together do prove, as I find, is conduct of Mr Virtosu occurring in France (that is the ingredients of the French offences), that this conduct had an impact in England (in so far as the female victims were sent on their way to England, as the French court and Mr Griffiths state) and that this was part of a conspiracy involving individuals (including Mr Dulghieru) who did engage in conduct in England which was unlawful under the criminal law of England (including the facilitation of the unlawful immigration into England and the exploitation of the women in England).
- I accept the evidence in Mr Griffiths' statement that the victims were forced to take possession of counterfeit or forged passports in France, which were later used to gain illegal entry into the UK. But the UK was not the only destination. Mr Griffiths states that they were also sent into France, Italy and Spain and he refers to witness statements from victims in the UK which were not adduced as evidence before me. He also states that the conspirator known only as Stelica, and Mr Dulghieru, each met the victims when they arrived in the UK and took care of them here.
- Apart from that, the evidence of the French judgment and of Mr Griffiths does not prove any conduct of Mr Virtosu occurring in England. There are strong grounds to suspect that Mr Virtosu engaged in England in conduct of the kind that he engaged in in France. I have in mind his acquittal for some similar offences in England in 1998 (see para 110 below). But there is no evidence that he did. The court can only make findings based on evidence. It is well known that intercept evidence, such as was used to convict him in France, is not admissible in English criminal proceedings, and none has been adduced in this case before me.
- The main focus of the Director's case was on the unlawful conduct of Mr Virtosu occurring in France, and his case on unlawful conduct by people trafficking in England was advanced very much on a subsidiary basis.
- Miss Dobbin, in her Schedule of Offences, submitted that if Mr Virtosu had been indicted in England at the same time as he was in France, he would have been indicted for the same offences as she refers to elsewhere in her Schedule of Offences (and set out in para 24 above), except conspiracy to procure a woman to leave the UK for the purposes of prostitution. She accepts that that, of itself, would not bring the Director's case within s.241. That section has no separate category for offences arising out of conduct occurring abroad which could be indicted in England. Her case, as I understand it, is that that assists in establishing that conduct did occur in England which was unlawful in England, as I have held in para 72 above. If the property that is sought to be recovered in this action is or represents property obtained through unlawful conduct which occurred in England, then it would be recoverable property even if that conduct was by others and not by Mr Virtosu himself. As s.242(1) provides:
"A person obtains property through unlawful conduct (whether his own conduct of another's) if he obtains property by or in return for the conduct".
FINDINGS OF FACT ON BENEFIT
- There is no direct evidence that Mr Virtosu received any benefit from the conduct he engaged in in France. Mr Virtosu denied in evidence that he had received a benefit, and re-affirmed this in a short document he sent to the court on 20 January 2008.
- But the court is not confined to direct evidence and may make proper inferences from primary facts.
- The living conditions of the victims, and the means by which, and the amounts in which, money was generated were described by Mr Griffiths as follows. The female victims were taken to a basement flat in Earls Court where they were locked in and deprived of basic human needs, like food and free access to the toilet facilities. The flat was purpose built so that it had bars on the windows and the front door and their bedroom door was constantly locked. After several days they were visited by a female who had control of several brothels in central London and were required to prostitute themselves in order to pay off a debt bond said to be £20,000 for each of them. This was a figure said by the criminal enterprise to represent their travel, accommodation and counterfeit documents and facilitation of entry into the UK.
- They were then forced to work in brothels in the Shepherds Market area of London. They were required to work for 24 hours a day, only sleeping when there were no clients visiting the brothel. There were up to five females sharing a double bed. It was placed in the living room area of the flat, with the bedrooms being used for clients. The female victims were charged £300 per day each for their rent. They were charged £15 a day for food and water and the use of plates, cutlery and cups. They were provided with one meal a day and were charged £150 for 50 condoms and 20 tubes of lubricant jelly. They were not permitted to leave the brothel unless escorted. They were not allowed to look out of the window. The bedrooms where the clients were taken had listening devices installed, in order to ensure that the victims did not make any attempts to tell their clients of their plight.
- The criminal enterprise determined the charges for the services they were to provide. Normal sex was charged at £50; anal sex at £100, oral sex at £60, and sex in different positions was charged at £75. These charges were for 15 minutes service. Half an hours service cost £80, 1 hours service cost £160 and 2 hours service was charged at £240. The victims were fined £5 if they refused a client or a service that was requested by a client. They were also fined £5 for being rejected by a client. For example, if a client walked into the brothel and did not like the look of any of the victims, each victim would be fined £5 for this. The victims were also fined any amount the criminal enterprise determined if they were deemed to misbehave, for example attempting to escape. Such fines could be up to £2000.
- I find that the conduct of Mr Virtosu occurring in France was part of the conspiracy which also involved the exploitation of the victims in the manner described by Mr Griffiths.
- I have no hesitation in inferring that Mr Virtosu did obtain very substantial property from engaging in the conduct in which I have found he did engage in France in trafficking people. There could be no other motive for engaging in such crimes. He also obtained property from the unlawful conduct of other people which occurred in England, as I have found in para 71 above. I am unable to quantify the benefits. But I take account of s.242(2)(a) which provides that a person obtains property through unlawful conduct if he obtains property by or in return for the conduct, and it is immaterial whether, in effect, he incurred any costs in doing so. The costs of the criminal enterprise are not taken into account by the court.
- As already noted Mr Griffiths stated Gavril Dulghieru pleaded guilty to three counts. His wife Tamara pleaded not guilty and was convicted on four counts. Count 3 on conspiracy to facilitate unlawful immigration, Count 4 conspiracy to defraud, Count 5 conspiracy to commit forgery and Count 6 to commit money laundering. She was convicted on 1st November 2005 and sentenced on the same day to 5 years imprisonment. But these convictions have not been proved in accordance with the Civil Evidence Act 1968 s.11, and on these convictions the Director does not have the benefit of any admission by Mr Virtosu. Accordingly, I make no findings in relation to, or based upon, these convictions.
- So I turn to consider whether Mr and Mrs Virtosu obtained any property, in particular the property in respect of which the Director seeks a recovery order, by or in return for the conduct unlawful conduct relied on by the Director and which I find occurred. The unlawful conduct does not have to be their own – see ss. 242(1) and 304. It is on this basis that the case is put against Mrs Virtosu: she is not alleged to have obtained property through unlawful conduct of her own, but to have obtained it on a disposal of it to her by her husband.
- In summary, the effect of ss. 242(1) and 304 is that if the property which either of them obtained was obtained by him or her on a disposal by the person who had engaged in the unlawful conduct, then the property may be followed into the hands of him or her (as the case may be), and an order must be made, subject to the defence of good faith and change of position afforded by s.266(3)(a) and (4), or to a Human Rights Act defence afforded by s.266(3)(b). No good faith defence under s.266(3)(a) arises in this case (Mrs Virtosu has not raised one). I shall return to the Human Rights Act at a later stage.
THE GIFTS Mr VIRTOSU CLAIMS TO HAVE RECEIVED - DOCUMENTS
- Mr Virtosu accepts that he did not purchase the assets the subject of this claim from income earned by him in the UK. In his witness statement dated 4th August 2007 Mr Virtosu identifies two sources of funds. First he states that his mother gave him the sum of £300,000. Second he states that he received the sum of £150,000 as a commission in a sugar trading deal. He also refers to numerous other projects and legal business activities, but does not suggest that they yielded funds from which the assets the subject of these proceedings were acquired. In the course of his oral evidence in cross-examination Mr Virtosu identified two other sources of funds. The first additional source is an additional sum received from his parents of £200,000, so that the total was not £300,000 but £500,000. The second additional source of funds he identified for the first time in his oral evidence was a gift or gifts from his parents in law.
- He claims that the source of the gifts from his parents and parents-in-law was moneys they had in Moldova, which he and others brought to England in cash. There is no document, such as a bank statement, showing that any such sums were ever owned by any relevant person in Moldova. But Mr Virtosu states that that is how things are done in that country. Money is kept in cash in foreign currency where possible.
- In the document Mr Virtosu submitted on 20 January 2008 he set out his case in writing as follows:
"In my case the donations well documented from Moldova explain where the money comes from. The Assets Recovery Agency has not produced evidences to disprove it. They could easily write a letter of request to the Moldovian authorities seeking assistance on the authenticity of the documents".
- The issue of authenticity of a document may involve more than one point. A document can be either authentic or a forgery in the sense that it is, or is not, signed by the individuals whose signatures it purports to bear. A document may, alternatively, be authentic or a sham in the sense that (even if the signatures are genuine) it does not in fact evidence a genuine transaction of the kind that it purports to evidence. The parties may not have intended the document to have the effect that it purports to have, but may have signed it with some other intention, such as to deceive a third party, or the court.
- It is correct that the Director has not produced any evidence from anyone in Moldova relating to the documents Mr Virtosu refers to. The thrust of the Director's case is that the documents are shams. The Director invites me to disbelieve the whole story about the money allegedly donated in cash as to £500,000 by Mr Virtosu's parents, and as to $60,000 and £70,000 by his parents in law. Miss Dobbin points out that it is possible to draw up a document, or any number of documents, purporting to be contracts, donations or powers of attorney without the sums of money referred to in such documents actually existing. She submits that the most probable explanation for the variety of documents, the substantial similarities between sets of them and the differences between them, are best explained as an attempt, after the event, to provide some documentary support for the false explanation which has in fact been put forward, with a view to deceiving the court.
- To reach a conclusion on the case of each party, the documents cannot be taken completely in isolation. I must consider the explanations put forward by Mr Virtosu for the documents, consider also exactly what they purport to say, and the circumstances in which the individuals who signed them were living at the time. I shall consider the documents themselves at the chronological point when they are dated.
THE CIRCUMSTANCE OF MR VIRTOSU AND HIS FAMILY
- I accept that if individuals in Moldova had the good fortune to accumulate money in foreign currency in the period up to about 2000 they may well have kept it in cash. But that of itself does not lead me to accept that the parents or parents-in-law of Mr Virtosu in fact did that. It is necessary consider all the evidence relating to his family and their alleged gifts before reaching a finding on that. I also accept that, as Mr Virtosu put it, there are rich people living in poor countries. I accept that some people in Moldova may have become rich and accumulated large sums in foreign currency by trading in icons or other antiquities. But none of that proves that any member of the family of Mr or Mrs Virtosu fell into such categories. And if anyone in Moldova did accumulate large amounts of foreign currency by trading in icons, which is the suggested source of the wealth of Mr Virtosu's own family, that would raise the question whether they did so lawfully.
- In criminal proceedings a defendant is entitled to be acquitted if he leaves the court believing that he was, or may have been, engaged in some criminal activity other than the one he stands indicted for in the trial in question. These proceedings are not like that. It would not be enough for Mr Virtosu to leave me persuaded that the source of his funds was probably not the criminal conduct for which he was convicted in France, if, in doing that, I was persuaded me that it was probably some other specified unlawful conduct of his. The Director only has to prove that the property was obtained by unlawful activity: he could do that just as well if the Respondent admitted that that was the case by pointing to criminal conduct different from that which the Director first relied on.
- In her statement of 14 February 2006 Mrs Virtosu states that her husband's conviction in France came as an enormous shock. She states that she did not know the source of his funds used to buy the properties, as he did not discuss his business with her. She states that since his arrest he has told her that the initial source of funds for property purchases was his business in Moldova. She said she was hopeful that her husband would be able to procure the relevant documentation and evidence to defend these proceedings. She did not mention any gift by his or her own parents. And she retained a solicitor to assist in the defence of these proceedings.
- On 1st August 2006 Mrs Virtosu was interviewed by Mr Ross Evans in the presence of her then solicitor. She said that her parents live in Moldova. She met Mr Virtosu's parents in Moldova. His father has subsequently died. She stated that his father used to collect icons. According to her, her father-in-law sold icons to foreigners who would come to Moldova. She lived in Moldova with her parents in Chisinau. Her mother is a civil servant. Her father has also worked for the state and managed supermarkets. He has set up in business on his own.
- Speaking of her own parents, Mrs Virtosu said in her interview that they were of medium wealth. They owned a flat and a not very expensive car. She agreed with published statistics which show that the average national income per head in Moldova was US$370 in 2000 and US$880 in 2005. She thought her parents were earning something over US$3,000 a year in Moldova in 2005. They were also given a flat by the state for having worked for it as they had.
- Mr Virtosu was born on 14th April 1968 and is therefore nearly 40 years old. He was born in Moldova, which at that time was part of the Soviet Union. At trial he stated that he attended school until the age of 18. After that he was conscripted into the army and then worked for four years as a corporal in the secret services of the Soviet Union.
- Mrs Virtosu, in her interviews and in her statement dated 14th February 2006, states that Mr Virtosu is well known in Moldova as a television entertainer who made guest appearances around the former Soviet Union, Romania and Turkey, working as part of specialty act performing circus type feats.
- Mr Virtosu entered the UK as an illegal immigrant in 1992 at the age of 24. So if he was engaged in Moldova in either or both of these activities, it must have been before that age. Nothing was produced by either Mr or Mrs Virtosu to support their evidence as to what Mr Virtosu did before he came to England. Asked about his wife's evidence, Mr Virtosu said he did many types of work, and did not talk to his wife about what he did.
- I find myself unable to make any findings at all as to what Mr Virtosu did for a living before he came to England.
- Mr Virtosu claimed political asylum, which was granted in about 1998 or 1999, following which he obtained British nationality. In evidence he said that the basis for his claim for asylum was that his work for the secret services of the Soviet Union gave him grounds to fear that his life would be in danger if he were to return to Moldova, at least between 1992 and 1996, by which time Moldova had become independent. Neither party has produced any documents as to the basis upon which he was permitted to stay in the UK. Mr Virtosu states that hostilities between Moldova and the former Soviet Union ended in 1992, shortly after he left Moldova. But there remain matters in dispute between Moldova and Russia, and he said, at the beginning of his evidence, that he was still afraid to return to Moldova. Subsequently he gave evidence that he had re-visited Moldova frequently.
- Mr Virtosu explained how he was able to visit Moldova as follows. He said he travelled by truck to Budapest, where he went to the Moldovan consulate. There he had a friend to whom he explained that he had lost his travel documents. In four hours he was given a travel document showing he was a citizen of Moldova permitting him to travel there. He travelled from Budapest via Ukraine. From Ukraine he entered Moldova illegally through Transistria, which was territory disputed between Russia and Moldova. Once in Moldova, he was issued with a passport on 17th July 1977 and another identity document five days later. He stayed for two weeks sorting out property matters with his parents. Friends of his who had been colleagues when he worked for the secret services helped him with his application for the passport and helped him to leave without being checked.
- Mr Virtosu produced his Moldovan passport in court. It contains a number of stamps apparently showing occasions when he did go in and out, and was checked. There were four occasions in 1997 and two in 1998. He used the document to obtain a visa to visit Ireland where his son was born in 2000. On other occasions he states that he entered Moldova in 2000 and 2001 using a blue British passport issued for refugees. In addition to the occasions when he entered using these travel documents, there were other occasions when friends of his working in the Moldovan customs would take him in or out without passing formalities. His former colleagues in the secret service assured him that he would be able to travel safely.
- In 1998 Mr Virtosu set up a company in Moldova with Mr Bacioi, his future father in law. Mr Bacioi was responsible for the management of the company but Mr Virtosu had a 30% interest in it. There is a document dated 12th February 1998 bearing the official stamp of the Moldovan Ministry of Justice certifying the incorporation of the company under the name of Gheveando with limited liability. The promoters are identified as Andrei Bacioi, Mr Virtosu and two others. The particulars of Mr Virtosu are given by reference to the identity document issued on 22nd July 1997, which gives a residential address for him in a Moldovan village.
- There is another document in relation to this company faxed in both the original Romanian and English translation to England on 29th June 2007. It is a certificate signed by Mr Andrei Bacioi and another person to the effect that the
"annual benefit of ……. Gheveando (the main founder Mr Virtosu…..) in the amount of 2,730,000 Lei (US$ 210,000)".
- Finally in relation to the company there is a document signed on behalf of a branch of the Moldova Agroindbank, by its branch in Miron Costin in Chisinau. The branch manager and an accountant certify that Gheveando Ltd opened a current account in Moldovan Lei on 13th February 1998 and a current account in US dollars. They continue:
"By default of account operations not performed for more than two years the accounts were closed on 12th December 2002".
- That document is dated 23rd May 2006. Mr Virtosu said he was unable to explain this document. He claimed that this was the first time he had seen it and his father in law was responsible for everything.
- Mr Virtosu stated that following his arrival in the UK, between 1993 and 1995 he was employed doing manual agricultural work, picking lettuces and other vegetables. This is consistent with the records obtained from HMRC and I so find. He also received state benefits. Between 1995 and 2001 he was not employed. He set up a construction company.
- According to the records of HMRC, he had net earnings in 1993/4 of £1722 and in 1994/5 £2343. HMRC have no records of his having earned anything in the years 1995/6 through to 2001/2, he did not claim to have had any earnings in that period, and I find that he had none. In 2002/3 HMRC record his gross earnings as £400 and in 2003/4 as £5500, and I find that that is what they were. According to the records of the Department for Work and Pensions, which I accept as accurate, between October 1992 and 24th August 1928 he was in receipt of income support.
- In 1998 Mr Virtosu was in custody in England on remand facing charges which were set out in a three count indictment. The first count was conspiracy to make false instruments, it being alleged that he conspired to make false passports, identity cards and driving licences. Secondly, it was alleged that he conspired to handle stolen goods, namely credit cards. Thirdly, it was alleged that he conspired to handle stolen goods namely passports. His trial took place between 20th and 30th July 1998 and he was acquitted on all charges.
- When asked in cross-examination how he managed to live in England Mr Virtosu gave the following explanation. He said he received assistance from relatives in England and Ireland. He had two sisters as well as friends who gave this assistance. Between 1997 and 2001 he existed in this way. He said he had one sister who lived in Ireland who owns a restaurant. He has another sister in Moldova who owns and farms 500 hectares of land. He also has a third sister and a brother who died last year. He stated that the brother was supporting him from his earnings in agriculture in Moldova. He stated that his sisters and brother were willing to support him in this way, while they also had families of their own to support, because he had been able to help them out of his earnings during the four years he was in the secret services. In that employment he had earned 5000 roubles per month, which he said was to be compared with the monthly earnings of a doctor in Moldova at that time, which were 250 roubles. To indicate the value of what he was earning he stated that from his salary he could have bought a house every month in Moldova. He helped all his relatives at that time. When he fled from Moldova most of the money he had earned was left behind and he said that his family sent it on to him in England.
- Mr Virtosu said that the money was brought to him in England in cash because he did not wish the authorities in Moldova to know where he was, as they would if the money was sent through the banking system. From 2001 onwards he said that he lived on the money given to him by his parents.
- Mrs Virtosu was born in 1976, and made a brief visit to London in 1998, where she met Mr Virtosu. On 21st September 1999 Mr and Mrs Virtosu married in London. On 9th January 2000 their son was born. The marriage subsequently underwent difficulties, and the couple divorced in Moldova in May 2001. However, they were reconciled in 2002 and remarried in August 2003 in Moldova.
- Meanwhile, Mr Virtosu established three companies. The first, Razanta Ltd, was incorporated on 13th July 1999 and dissolved on 15th May 2001. The second Virtosu Ltd was incorporated on 18th October 2000 and dissolved on 6th August 2002. The third is G.Virtosu Ltd incorporated on 27th February 2002 and dissolved on 31st October 2006. No accounts were ever filed by either of the first two companies with Companies House. Accounts were prepared for G. Virtosu Ltd for the period from its incorporation on 27th September 2002 when it commenced trade, until 31st March 2003. The report of the director was signed by Mr Virtosu dated 18th September 2003. It records that the principle activity was that of general builders. The turnover is shown as £8,900 with cost of sales being £6,928 and administrative expenses £17,684, producing a deficit for the period of £15,712. Creditors (other than for tax and social security) are shown at £40,612, including £38,449 due to Mr Virtosu.
- Mr Virtosu explained the sum of £38,449 advanced by him to his company as being derived from the £200,000 which he received in 2001 from his mother.
- On 12th June 2001 Mr Virtosu received into an account he held with HSBC a credit from his mother, Eugenia Virtosu in the sum of £9,985.
- On 30th July 2001 there was credited to an account with HSBC held by Virtosu Ltd the sum of £35,000 in cash. This is three months before November 2001 which is the date when, according to his witness statement, Mr Virtosu commenced bringing money from Moldova in cash. Mr Virtosu said in evidence that the source of the cash was nevertheless one of the gifts from his family, but he could not remember which.
- On 2 November 2001 Mr Virtosu ordered a BMW XS car for a price of over £37,000. HSBC issued a draft for £30,000 in March 2002 to pay for BMW car. The £7592.60 balance of the price of the BMW was paid in cash and a receipt issued by the dealer on 27th March 2002.
- On 5th November 2001 there were credited by Mr Virtosu to his solicitor's bank account two payments of £10,000 and one of £20,000, making a total of £40,000. The next day, 6th November 2001, Mr Virtosu paid £15,000 into the account of his solicitors. On 6th February 2002 Mr Virtosu's solicitors received £198,785, representing the mortgage advance that Mr Virtosu received from the Bank of Scotland. The following day the solicitors paid out £242,650 to Peters & Garret, solicitors, for the purchase of 61 Briar Avenue, for which the purchase price recorded in HM Land Registry was £248,500. The difference is between the purchase price and the loan is £49,700. How the remaining £5,850 (the difference between the purchase price and the £242,650) was paid has not been accounted for.
- Among the documents relied on by Mr Virtosu is a statement from his mother dated 28th June 2007, the original in Romanian, bearing a shaky signature (such as might be expected of an elderly person), and the translation into English. According to the header it was faxed to England on 29th June 2007. Mr Virtosu explained that he asked for it when he was in France and his solicitor brought it to him. Mrs Eugenia Virtosu states that she was born in 1928 and is thus 80. She states that on 29th March 2002 she made a donation to Mr Virtosu, in cash in the sum of £300,000. Mr Virtosu explained that may be she had made a mistake. She states that it was a present from herself and her husband. Before making the gift they kept the money at home in cash. Her husband collected icons and antique objects. In order to protect the value of the profits he had earned he always transmitted money in dollars or in pound sterling. He did not keep money in the bank because in the communist times the commercial operations were not permitted.
- It is therefore surprising that at trial Mr Virtosu should say that the gift was not £300,000 but £500,000. But if he had not said that, he would not have had an explanation for the existence of two documents purporting to evidence gifts from his mother to him, one of £300,000 and one of £200.000.
- Mr Virtosu stated in his witness statement that from November 2001 he started to bring his money to the UK. He stated that he would bring up to £10,000 with him every time he came from Moldova. Occasionally his wife would bring £5,000 with her after a trip to Moldova. On other occasions he would ask friends to bring the money to the United Kingdom.
- There are six sets of documents written in Romanian and translated into English which relate to donations said to be made to Mr Virtosu. They were found at his home, 35 Crescent Way, when search warrants were executed there on 26th February 2006, some weeks after the grant and service for the freezing order on 12th January 2006.
- There is a document headed Power of Attorney dated 2nd February 2001. By this document his mother-in-law, Alexandra Ananie Bacioi, entrusts Mr Virtosu (identified by the identity document issued on 22nd July 1997) with the "right to buy on my behalf a motor car manufactured in the year 2000 at the price of £35,000 and to transport it on the itinerary Great Britain - Moldova, being my representative at the customs and Road Police". The document bears a number of official stamps, including one of the Moldovan Ministry of Justice. Mr Virtosu does not suggest that he ever transported a car to Moldova.
- There is a document headed Contract of Money Donation also dated 2nd February 2001 and also referring to the sum of £35,000, in this instance it is expressed to be a gift from Alexandra Bacioi to Mr Virtosu. The gift is stated to be "because of affection I feel for the donee who is my son in law". The document states "the sum of money mentioned … has been transferred to the donee today, …"
- In view of the importance attached to these documents by Mr Virtosu, who claims they are evidence of the source of his funds, it is necessary to see what the notary says about them. What the notary says on each of the six documents is that he or she confirms that the individuals named as donor and donee respectively, read and understood the document and signed it. In other words, all that the notary purports to do is to identify the parties by reference to their identity documents, and to certify that they signed the documents.
- In some transactions a notary may receive funds from, say, a buyer and then disburse a similar sum from his own account to the seller. In such a case the notarised act may purport to verify the existence of the moneys that are the subject of the transaction. There is no such certification by the notary in relation to any of the documents here in question, to the effect that the money referred to in fact existed.
- There are two similar documents in which the giver of the power or the gift is stated to be Andre Alexei Bacioi, each again dated 2nd February 2001. The two documents further differ as to the sum referred to. In each case it is $30,000 US instead of £35,000.
- The next set of documents purports to be dated 27th October 2001 and is headed Contract. By it Mr Virtosu's mother states that she makes to him a donation in the amount of £200,000 because of the affection that she feels for him, who is her son, and that the money was transferred to Mr Virtosu on that date. The document in its original Romanian also bears a shaky signature and appears to be notarised and bear an official government stamp. There is also a letter dated 29th June 2007 from the Moldovan Ministry of Justice addressed to Mr Virtosu explaining the provisions of Moldovan law making such a written document necessary for a gift.
- On 15th February 2002 Mr Virtosu was stopped accompanying illegal immigrants as found by the French court.
- There is a further set of documents, dated 29th March 2002, in all respects similar to the documents dated 27th October 2001 save that the donation is said to be £300,000.
- In his oral evidence Mr Virtosu stated these were genuine documents. He said he received £300,000 on 29th March 2002 but left the money with his mother before starting to bring it back to the UK little by little. He said the same in respect of the £200,000 given he said on 27th October 2001. Although initially he said he brought the money back in sums of up to £10,000, he later said that he brought some sums of money in lots of £30,000 to £50,000. He said that he received $30,000 US from his father in law and that he bought the BMW car and a vehicle for his building work, a Mercedes van. He kept the vehicles although he used the money from his father in law. He said the £35,000 from his mother in law was a separate sum given for the benefit of the family. By that time, he said that he and his wife had had problems and the money was to help them get together. His mother in law, he said, gave two sums of money a total of £70,000, £35,000 for the car and £35,000 to help with the marital problems. Mr Virtosu could not remember the dates or what the state of his relationship was with his wife at the time.
- Mr Virtosu said that his parents in law were rich in Moldova. He referred to the document mentioned above which states that the company managed by his father in law had a turnover of $210,000. He said the company dealt in oil, wine and other products and that initially he left his share of the profit from the company in Moldova. He did not take the £70,000 given by his mother in law and the $60,000 given by his father in law all at once. That was too large an amount he said which it would be dangerous to take out all at once. He was afraid of being robbed. But when he did bring the money to the UK he used it to buy the flats and make deposits for the houses. All the money he brought over was put together. When he was asked to explain how it came to be that all the documents appeared to have been lodged with the Moldovan Ministry of Justice, he said that his friends who worked for the secret services guaranteed to him that no one would arrest him while he was in Moldova.
- What Mr Virtosu said in evidence about the purchase of the car was not consistent with what he had said in his written statement. In his written statement he had said that in relation to the purchase of the BMW in March 2002 and the Mercedes in September 2002, he required approximately £60,000 and he used money from the donation, which is a reference to the donation of £300,000 from his mother. He said that he did not refer in his witness statement to the £70,000 and $60,000 he received from his parents in law because he did not think that was important when he wrote the witness statement.
- In his witness statement he identified two friends who had brought cash for him from Moldova as Mr Anton and Mr Ruud. He also identified a third friend a Mr Dospinescu who he said he intended to do business with in London, and who raised £20,000 which Mr Virtosu returned with money he had brought to the UK. He explained these large transactions in cash by saying that although the money was from the donation it seemed pointless to attract unnecessary attention by paying in large amounts of cash into his bank account. He stated that he had no alternative but to bring the money into this country in cash, because if he had paid it into a Moldovan bank then it is quite possible that the authorities of the bank would arbitrarily confiscate or steal it.
- Mr Virtosu referred to the same three friends again, in a subsequent paragraph of his witness statement. He said that in relation to the purchase of 35 Crescent Way he required £45,000 on 7th – 14th October 2002 and "with the assistance of some friends (Mr Anton, Mr Dospinescu and Mr Ruud) I utilised money from the donation".
- The difference between £300,000 and £500,000 was not the only apparent inconsistency in the evidence of Mr Virtosu in relation to the donation. He stated that he continued in 2001 to fear for his life if he were to return to Moldova, but nevertheless he did regularly return to Moldova and travel backwards and forwards to collect the cash from his mother. He said this was less risky than making a bank transfer. As noted above, a bank transfer had in fact been made on 12th January 2001 when the sum of £9,985 was credited to his account with HSBC naming his mother as the source of the funds.
- There is an important inconsistency between Mr Virtosu's written statement and his oral evidence in relation to Mr Anton. As already noted, he has referred to Mr Anton twice in the written statement made less than six months before this trial, on 4th August 2007. In cross-examination Mr Virtosu stated boldly that he did not know who Mr Anton was.
- Mr Vasile Anton has not been traced, but documents relating to him are before the court. He opened a bank account with Lloyds TSB at a branch in Ilford on 22nd April 2002 between then and 10th July a total of some £3,500 was paid in, in amounts never exceeding £500. The account shows a similar pattern of payments in and out until 11th October 2002, the maximum balance in the period being just over £2000. On 11th October 2002 £6,400 was paid into the account and on 14th October £4,000 was paid into the account. On 17th October £10,000 was paid out to Mr Virtosu. The paying in slips show that the £4,000 was paid in in cash and the £6,400 was paid in in cash in £20 notes.
- Mr Evans has found on the Police National Computer a record of criminal convictions of Mr Anton on four occasions for ten offences, all subsequent to his dealings with Mr Virtosu. He was born on 20th October 1997 according to the PNC records. He has three aliases and six alias dates of birth. In October 2002 he was aged 16. His convictions include going equipped for theft and attempted theft in 2004 for which he was sentenced to 8 months in a young offenders institute and conspiracy to defraud to which he was sentenced in February 2005 to three years in a young offenders institute.
- I do not believe that Mr Virtosu did not know who this 16 year old was from whom, in October 2002, he had received £10,000 through the banking system having, a few days before given him the same amount of money in cash. I find that it was Mr Virtosu who had given Mr Anton the cash, because as Mr Virtosu says in his witness statement, it was with the assistance of Mr Anton that he utilised the money from what he claims was the donation from his mother.
- On 30th September 2002 Mr Virtosu bought a Mercedes van for nearly £20,000 in the name of Virtosu Ltd.
- Mr Virtosu had an account with NatWest on 19th September 2003. There was credited to the account £30,629, the bank identifying as the payer Hyperscale Inc. Similar payments each approximately £31,000 were made into that account on 30th September, 5th November, 19th November and 4th December, each attributed to the same payer. The total is thus in excess of £150,000. This is the money which he refers to in paragraph 3 of his witness statement as "commission in a sugar trading deal". However, in his oral evidence he described it in his share of the profits from the company Gheveando in Moldova, which he had accumulated over three years. As noted above, that company's bankers state that its account was closed on 12th December 2002.
- In his witness statement Mr Virtosu said he was unable to produce his file of papers in relation to this business, because the offices in Moldova were closed following his arrest. But he refers to a statement from a Mr Beguneco dated 9th July 2007. This document is in English and according to the header was faxed from Moldova on 29th July 2007. It is dated 9th July 2007.
- Mr Beguneco writes on behalf of a company called "G B & Co." SRL. He states that this company existed from 1994, specialising in wine making and commercial activities. He states that it produces seven million bottles of wine a year with 167 employees. He states that in 2003 that company made a contract with Gheveando
"for sugar deliverance, on the sum of $400,000 US that according to the contract was paid to [Mr Virtosu] manager "Gheveando" SRL, directly on the bank account [and he gives the number of the Nat West account]. Because on this moment it was more advantageous for us that the transfer was made by our partner from Latvia Company "Hiperscale Inc" the sum was paid [and he identifies five payments in US dollars about $50,000 with dates corresponding to those on the Nat West account]. At the end of the year 2003, after whole payment, other transactions were not performed, because Ghevando SRL stopped its activity by unknown reasons for us".
- The statement is difficult to follow. The letter raises the question why, if the sale was by Gheveando, the payment of the £150,000 was by Hiperscale Inc [sic] (instead of G B & Co), and to Mr Virtosu (and not to Gheveando SRL). Further, $250,000 (or £150,000) is a high sum to be described as commission on a sale of sugar for the price of $400,000.
- In his oral evidence Mr Virtosu insisted that the £150,000 was his share of profit and he regarded the fact that the payment was made by a party other than the buyer to himself who was not the seller, as normal. He claimed inconsistently with the statement, that the sale had been to Hyperscale. He said there was no relationship between the cessation of trading of Gheveando in Moldova at the time of his arrest and the fact of his arrest. He said there was an argument between himself and the others involved the nature of which he did not explain.
- In respect of two of the Hyperscale credits in the NatWest account the bank statement adds the further detail "PMNT for Consult", apparently suggesting that the payer described the credit as a payment for consultancy. Mr Virtosu was unable to explain why the credit was so described.
FINDINGS OF FACT ON MR VIRTOSU'S EVIDENCE
- I find that the account given by Mr Virtosu of the donations of money from his parents and parents-in-law, and from dealings in sugar, is wholly incredible and inconsistent and I reject it. While I accept that small donations might well have been made, such as the £9,985 credited to his account on 21 January 2001, I find that any such donation had no relevance to any question I have to decide.
- Miss Dobbin did not make any submissions to me on the footing that the explanation put forward by the first respondent might be true at least in part. There was no reason why she should have done. But I have considered what the position might have been if I had believed the explanation put forward by Mr Virtosu, either wholly or in part. As to whether it might be true in part, (although I have rejected this explanation) I do not find implausible the suggestion that the parents of Mr Virtosu's wife, who is their only daughter, might have made a generous gift in cash, either on the occasion of their wedding, or when it appeared the marriage was in difficulty. Nor do I find it implausible that a man in Moldova might, in the period between the early 1990s and 2002, have traded in icons for hard currency and accumulated very substantial sums of hard currency in the process.
- If I had been minded to accept that that was the true explanation for the very large sums of money Mr Virtosu was dealing in 2002, I would then have had to consider whether those sums were the proceeds of lawful activity. The question of the lawfulness of such trading is raised by Mr Virtosu's mother in her witness statement when she says that "my husband did not keep money in bank because in the communist times the commerce operations were not permitted". She is referring to his profits from trading in icons and antique objects. Mr Virtosu said himself in oral evidence that trade was banned. He said that under the communist regime there was no business as such, and officially there was no trade. Everything was state owned, so when people bought and sold they did not tell the state. He said the entire collection of antiquities was sold in 1998 for something like £500,000. So if I had been persuaded that Mr Virtosu's accounts of the family gifts were true, I would have considered whether that account assisted him in any way in these proceedings.
- The position is similar in relation to the £150,000 from Hyperscale. Lawyers do from time to time come upon transactions in which a payment is made by someone other than the buyer, or to someone other than the seller, or in an amount which appears excessive for the transaction said to be in question, or which is described simply as "commission", or for "consultancy services", without any further explanation. In cases where it is possible to ascertain what is the true explanation for these unusual features of such transactions, it may appear that it is some form of unlawful activity, whether tax evasion, exchange control evasion, dealing in contraband goods, or bribery.
- None of these possibilities were raised or explored in this case, and I make no findings about them at all. There might have been difficulties in considering whether the dual criminality test was satisfied.
- I have found that the source of the funds was the criminal activity for which Mr Virtosu was convicted in France. But if I had believed that the funds originated in Moldova, it would have been necessary to consider the implications of the unusual features of the transactions. It is not to be assumed that, if I had believed Mr Virtosu, the outcome of the case would have been different than it is. It might have been different, or it might not.
THE PROPERTY ACQUIRED BY THE RESPONDENTS
- In addition to the BMW and the Mercedes van, five properties were acquired in a period of less than two years between February 2002 and January 2004. The first was 61 Briar Avenue, London SW16. This was purchased on 6th February 2002 at a price of £248,500 with the benefit of a mortgage form the Bank of Scotland in the sum of £198,800. It was subsequently sold for £370,000. On 13th December 2002 the respondents acquired 35 Crescent Way, also in London SW16. The purchase price was £290,000 and the purchase was with the benefit of a mortgage from the Bank of Scotland in the sum of £230,000. Major building works have been done to the property. It is a substantial semi-detached house which the respondents were seeking to sell for nearly £800,000 at the time the freezing order was made. The third property is in South Africa which they purchased in 2003 for £106,500 there is no other evidence about it. The fourth property acquired in December 2003 for €116,000 was the flat in Courbevoie which has been confiscated by the French court. The fifth property is at 42, Redford Avenue, in Thornton Heath which was acquired on 5th January 2004 for £252,000 with the benefit of a mortgage from the Bank of Scotland of £160.000. At the time of his arrest in March 2004 Mr Virtosu was in France for the purpose of purchasing a further apartment for the sum of €126,000. This purchase was never completed.
- Assuming there were no loans taken to assist in the purchases of the properties in France and South Africa, the funds that Mr Virtosu would have required to make these purchases would have been about £400,000. In addition, the sums he paid for the two vehicles were over £50,000. Thus the total sum spent on these purchases was in the region of £450,000.
- In addition Mr Virtosu required funds to purchase the flat he was in France to buy when arrested in March 2004, to carry out the building works on 35 Crescent Avenue, and to live and support his family in London, and to invest in his construction company.
61 Briar Avenue
- This property was registered in the sole name of Mr Virtosu. There is a small plot of land at the back of the garden which was not sold at the same time as the main property, and is referred to separately in the Order.
- In order to obtain the mortgage from the Bank of Scotland a form had to be completed setting out information about Mr Virtosu and the property. It was in fact completed by a Mr Hudson on behalf of the agents engaged by Mr Virtosu on the basis of information given by him. One section of the document required information about the business in which Mr Virtosu was engaged which he answered with the word "construction". The form then invites information as to the net profit from the business for the previous three years. Next to the words "last year" there is inserted the figure of £50,000. Nil entries are given for the two previous years.
- This information was false. Mr Virtosu explains it, saying that what he had in fact told his agent was that that was the sum that he was expecting to earn by the way of profit in the next 12 months. I do not find that explanation credible. I note that there was in any event no basis whatever for such a belief.
- This is the first instance of mortgage fraud relied on by the Director as unlawful conduct independently of the conduct in France involving people trafficking.
35 Crescent Way
- I have referred above to the evidence that part of the money required for the deposit for this purchase came from Mr Anton. Further sums required for the deposit came by a similar route on 9th and 11th October 2002. Identical sums of £6,400 and £4,000 were paid into Mr Dospinescu's account with Lloyds TSB and £10,000 paid out, on 17th October 2002 (the same date as the payment out from Mr Anton's account) to Mr Virtosu. On the same days namely 9th and 11th October, similar sums (£6,200 and £4,000) were paid into Mr Dospinescu's account with HSBC, and on 18th October £10,000 was paid out of that account to Mr Virtosu. Finally on each 7th and 9th October £5,000 was paid into the account with Lloyds TSB in the name of Mr Ruud, and the exact same sum £10,000, paid out to Mr Virtosu on 22nd October 2002.
- Mr Dospinescu opened his account with Lloyds TSB Paddington Branch on 26th June 2002, with an opening balance of £50. The monies paid in in October were the only sums credited to that account, and there were no payments out, other than the £10,000, and a bank charge of £20 on the same date, 17th October 2002. The monies were paid in in £20 notes.
- Unlike Mr Anton and Mr Ruud, who have not been traced, Mr Dospinescu gave a statement to the Director on 31st January 2007. It was taken by Mr Evans who exhibits it to his statement. Mr Dospinescu did not give oral evidence. He recounts that he met Mr Virtosu casually at a restaurant in Victoria. He said that Mr Virtosu told him that if he would give Mr Virtosu money, Mr Virtosu would help him set up in business. He wanted a business selling Romanian food. Mr Dospinescu said that he obtained money in cash from relatives in Romania which he brought to the UK. He said that he paid the money into a bank account and transferred it to Mr Virtosu, and Mr Virtosu subsequently gave him back the money in £50 notes.
- Mr Ruud opened an account with Lloyds TSB on 2nd October 2002 with an initial payment in of £30. The two credits of £5,000 on 8th and 9th October represent the next two sums credited. There were further payments in of £800 on 14th October and £400 on 22nd October and a number of small sums paid out to various retailers.
- There is a Mortgage Application Form completed for this property, which contains information about Mr Virtosu. Under the heading "Income Details" the figure against the words "Total Personal Income" is given as £82,000. Under the heading "Self Employed Details" it is stated that Mr Virtosu is in business as a sole trader in construction. He signed the document on 22nd October 2002.
- In evidence Mr Virtosu accepted that the £82,000 figure was untrue. He explained that he relied upon the fact that he would pay the mortgage from the monies that he had received from his parents and from the company in Moldova. He said that if he told the truth that his application for a mortgage would not have been accepted.
- This is the second instance of unlawful conduct by way of mortgage fraud relied on by the Director.
- Mr Virtosu agreed with Mr Dospinescu's account to the extent that he agreed that the money came from Mr Dospinescu's relations in Romania. But he said that Mr Dospinescu was to be an investor in his own construction business.
- An arrangement whereby £20,000 was paid by Mr Dospinescu in cash into a bank account in his own name, paid out through the banking system into an account in the name of Mr Virtosu, and reimbursed in cash in £50 notes by Mr Virtosu to Mr Dospinescu appears to have no commercial purpose other than to disguise the origin of the money paid into the bank account of Mr Virtosu – in other words money-laundering. When asked whether this was the explanation for this arrangements with Mr Dospinescu and similar arrangements with Mr Anton and Mr Ruud Mr Virtosu claimed not to understand. I did not believe him. Later Mr Virtosu claimed he had been borrowing money from these people, and that paragraph 4 of his witness statement (in which he said with their assistance he used the money from his own family) was a mistake.
- In June 2003 Mr Virtosu obtained planning permission for the erection of a two storey first floor extension to 35 Crescent Way, and for alterations of the garage to make it habitable together with other work. He obtained further planning permission for a rear extension in October 2003. The works were carried out. This in part explains the difference between price paid for the property in December 2002 £290,000, and the price at which it was sought to sell it in January 2005 namely £795,000.
42 Redford Avenue
- On 5th January 2004 which was two months before his arrest Mr Virtosu purchased this property in his sole name. The sum of £91,205.40 was paid by him from his Nat West account. He made two payments to his solicitors one of £25,000 on 24th October 2003 and one of £66,205.40 on 17th December 2003.
- Immediately before the first payment from Hyperscale, credited on 19th September 2003, the balance standing to this account was a credit sum of £5,803.91. Between that date, and the payment of the £66,228.40 on 14th December 2003, there were six withdrawals by direct debit in favour of the Bank of Scotland which serviced the mortgages on 61 Briar Avenue and 35 Crescent Way. Apart from these there are four withdrawals. The other two making up the sum of £91,205.40. On 28th October 2003 there is a withdrawal of £8,105.52 in favour of a notary in the Paris region. On 28th November 2003 there is a withdrawal of £32,289.97 in favour of another notary in the Paris region by way of urgent transfer. The payment of 28th November 2003 is related to the purchase of the flat in Courbevoie.
- In his witness statement at paragraph 15 Mr Virtosu states that the building works carried out on Crescent Way cost some £40,000 which was paid for in cash after his arrest by withdrawal by his wife from cash machines. He states these funds derived in part from the proceeds of sale of 61 Briar Avenue, and I accept this.
- In his witness statement at paragraph 16 Mr Virtosu states that the £91,205.40 deposit required for 42 Redford Avenue was derived from the £150,000 transferred from Hyperscale in Latvia. He states that the surplus of this money was used to buy the flat in Courbevoie. In the judgment of the French court it is recorded that in a telephone conversation intercepted on December 2003 Mr Virtosu stated that the following day they would have an apartment because the contract had been signed that day with a notary.
- On 28th July 2006 42 Redford Avenue was sold for the sum of £247,000, the net proceeds of sale £69,991.31 being held by Mrs Virtosu's solicitors pending the outcome of these proceedings.
- I find that the source of all the funds used to purchase the BMW car and all the other properties which Mr Virtosu bought, and the balance standing to his NatWest account, are or represent the benefits he received from his unlawful conduct which occurred in France, in substance the people trafficking.
- The loans by way of mortgage by Bank of Scotland, and so the properties purchased with the aid of those mortgages, namely 61 Briar Avenue and 35 Crescent Way, were, or represent, property obtained by unlawful conduct, as I have found above.
- Mr Virtosu dishonestly misrepresented his income on two occasions. As he explained, if he had not done so, then he would not have got the mortgages. It is no defence to a charge of obtaining a money transfer by deception, contrary to s.15A of the Theft Act 1968, that the deceiver did not intend or expect the victim to suffer any harm, or that the victim has not in fact suffered any harm. At most that goes to mitigation of the sentence.
- If the French judgment is evidence upon the basis of which I am entitled to reach the findings that I have reached, (namely that the properties were all obtained by the benefits of the unlawful conduct of which Mr Virtosu was convicted in France), then the Director's case on the mortgage frauds (and money-laundering) adds little if anything.
- If, on the other hand, there is no admissible evidence of unlawful conduct occurring in France, the position may be different. That would not mean that I believe Mr Virtosu's evidence that the funds came from his parents and parents in law in Moldova and from a lawful sugar deal. I would still disbelieve that account of the source of the money, for the reasons I have given. It is not that I have to believe either the Director's case or Mr Virtosu's. I can reject both. So, if I were to be bound in law to reject the Director's case for lack of evidence, the position would be that, with the exception of the mortgage frauds (and such case as he may have on money-laundering) the Director would not have made out a case that the properties were obtained by unlawful conduct of a kind that he could identify. Mortgage fraud (and money-laundering) occurred only in relation to a part of the properties claimed by the Director to be, or to represent, property obtained through unlawful conduct. Mortgage fraud has been established only in relation to 61 Briar Avenue (including any property acquired with, or representing, the proceeds of sale of Briar Avenue) and to 35 Crescent Way.
- In The Queen on the Application of the Claimant of Assets Recovery Agency and Others v Green  EWHC 3168 paras 16, Sullivan J, having referred to the Report and other explanatory material, set out the law in a passage endorsed by the Court of Appeal in Assets Recovery Agency Director v Szepietowski & Ors  EWCA Civ 766. He said:
"… how does one know if the conduct which is said to have occurred in the United Kingdom (or abroad) was unlawful conduct under United Kingdom criminal law (or the criminal law of both the foreign country and the United Kingdom) unless one is given some information as to what the conduct is said to have been?
17. I readily accept Mr Crow's submission that sections 240 and 241 are framed so as to make it clear that the Director need not allege the commission of a specific criminal offence or offences. I further accept that Part 5 proceedings are not limited, as were the earlier forfeiture proceedings, to any particular kind or kinds of criminal offence, for example, drug trafficking, money laundering, et cetera, 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 as to whether that conduct so described is properly described as unlawful conduct. For the purposes of sections 240 and 241(1) and (2) a description of the conduct 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. It is possible that more detail might be required if conduct outside the United Kingdom was being relied upon, but that is an inevitable consequence of the Director having to establish that the conduct in question was unlawful in both the foreign country and the United Kingdom….
25. … The requirement that fraud or illegality should be specifically pleaded is not simply a procedural nicety. Rather, it reflects the requirements of elementary fairness. In my judgment, the Act deliberately steered a careful middle course between, at the one extreme, requiring the Director to prove (on the balance of probabilities) the commission of a specific criminal offence or offences by a particular individual or individuals and, at the other, being able to make a wholly unparticularised allegation of "unlawful conduct" and in effect require a respondent to justify his lifestyle. I say "in effect" because, although Mr Crow emphasised that the burden of proof to the civil standard would rest throughout any proceedings under Part 5 on the Director, he placed considerable reliance upon those cases which demonstrate that facts may be proved by inference, and that the absence of (or an untrue) explanation, where one is called for, may be sufficient to discharge that burden."
- At para 47 Sullivan J declared:
"1. In civil proceedings for recovery under Part 5 of the Act the Claimant need not allege the commission of any specific criminal offence but must set out the matters that are alleged to constitute the particular kind or kinds of unlawful conduct by or in return for which the property was obtained.
2. A claim for civil recovery cannot be sustained solely on the basis that a respondent has no identifiable lawful income to warrant his lifestyle."
- Langley J commented on this in Claimant of Assets Recovery v Olupitan  EWHC 162 (QB) at para 23 saying:
"… 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".
- I have rejected Mr Virtosu's explanation of the source of his funds as untruthful. But where the Crown has to prove guilt in a criminal court the evidential effect of the accused's lies was established in R v Lucas  QB 720, 724C-H. It is stated as follows in Strudwick and Merry (1994) 99 Cr App R 326, 331:
"Lies, if they are proved to have been told through consciousness of guilt, may support a prosecution case, but on their own they do not make a positive case of … any … crime".
- The guilt in question must, of course, be guilt of the offence of which the accused is charged, not of some other offence, still less of misconduct which is not a criminal offence. The evidential effect of lies must logically be the same whether the Crown is seeking to prove guilt in a criminal court or the Director is seeking to prove it in a civil court.
- In discussing the civil rights issues arising from the proposed legislation, the Report recognized the concern that civil forfeiture powers had to be drawn up in a way that gives expression to the European Convention on Human Rights, as implemented by the Human Rights Act: see para 5.22. One of the safeguards in the proposed legislation to which the Report referred was "the burden of proof remaining with the State": para 5.24. If the Director has no admissible evidence that certain property of a Respondent has been obtained by any unlawful conduct that the Director can specify, the mere fact that the Respondent is found to have lied about how he did obtain it, cannot be evidence that it was obtained by unlawful conduct.
- I therefore turn to consider what evidence there is in relation to property not acquired by mortgage fraud. I bear in mind that Mr Virtosu has lived in England since 1992, effectively with no earnings, and in November 2001 felt confident enough to order a very expensive BMW for which he paid partly in cash, and partly with a bank transfer funded by cash, totalling over £37,000. I do not believe that this and the subsequent expenditure can be explained in any way by such gifts (if any) as he may have received from his siblings. And I bear in mind that there are a number of instances, for example in relation to the Mr Anton, where he took steps to conceal that other sums of money originated in cash.
- Taking all this into consideration, and ignoring altogether the French judgment, I would readily suspect that Mr Virtosu's funds were, or represent, property obtained through some form of criminal conduct. But bearing in mind that the standard of proof must be proportionate to the gravity of the allegation that he has committed a crime, I would not be able to reach any finding that that was so. There is, on this hypothesis, no evidence as to the nature of the conduct, nor whether that conduct occurred, or probably occurred, in England or elsewhere. There is evidence (other than the French judgment) of Mr Virtosu travelling abroad. Mr Evans has produced a table listing in date order each of the payments received from Hyperscale, and showing that within a few days of each payment travel documents demonstrate that Mr Virtosu was in Paris, Rome, Toronto, Paris and Paris respectively. By no means all conduct that is criminal in some foreign is criminal in England. A possible example is trading in a particular type of goods, which is prohibited in some countries, but not in England.
- I can make no finding that Mr Virtosu was guilty of the offences of which Mr and Mrs Dulghieru are said to have been convicted in England, because their convictions have not been proved.
- In my judgment, if the French judgment is not admissible evidence, then the Director has not discharged the burden of proving that 42 Redford Avenue, or the BMW are, or represent, property obtained through unlawful conduct which occurred in England, or which satisfies the dual criminality test set out in s.241.
- If this were the position, then I would invite further submissions as to the form of the Order that should be made.
- In her Schedule of Offences Miss Dobbin submits that the acts that the Director submits demonstrate money-laundering took place in October 2002, that is to say the dealings with the £40,000 used to purchase 35 Crescent Way which was channelled throught the accounts of Mr Anton, Mr Dospinescu and Mr Ruud.
- Miss Dobbin cites the following passage from ARA v Olupitan  EWHC QB 162 under the heading "Money Laundering":
65. A substantive offence of money laundering can be proved by inference from the way in which cash is dealt with and it is not necessary to prove the underlying offence which generated the cash: R v El Kurd  Crim. L.R. 234; and R v L,G,Q and M  EWCA Crim 1579. As Mr Eadie submitted, if money is handled in a manner consistent only with money laundering, "the inference is that it must be criminal property because no one launders clean money". Mr Krolick submitted that it was a condition precedent to any allegation of money laundering that the property should be the proceeds of a criminal offence. He referred to the decision of the House of Lords in R v Montila [ UKHL 50]  1 Cr App R 26. But what is required in law to establish money laundering and how that may be proved raise different issues. El Kurd was cited in Montila and referred to in the Opinion of the Committee with apparent approval and certainly without adverse comment on the question material to this case.
66. In this case, the evidence is, as the Director alleges, that around £195,000 cash (and £24,000 in unidentified credits) were credited to the accounts of Olupitan and Makinde in a period of some five and a half years. They remain unexplained and without any supporting documentation. Such explanations as have been offered have been rejected as untruthful. I accept Mr Eadie's submission that in the circumstances of this case as I find them to be it is a proper inference that money laundering has occurred.
- The offence of money-laundering, referred to in Montila and Olupitan, and upon which the Director relies in this case, was created by the Criminal Justice Act 1993. It inserted the following section in the Criminal Justice Act 1988:
"93C (1) A person is guilty of an offence if he -
(a) conceals or disguises any property which is, or in whole or in part directly or indirectly represents, his proceeds of criminal conducts; or
(b) converts or transfers that property or removes it from the jurisdiction,
for the purpose of avoiding prosecution for an offence to which this Part of this Act applies or the making or enforcement in his case of a confiscation order".
- These provisions were replaced by the Proceeds of Crime Act Part 7, s327ff; The 2002 Act was not yet in force in October 2002, which is the date of the unexplained credits to the accounts of Mr Anton, Mr Dospinescu and Mr Ruud.
- I do not believe the explanation given by Mr Virtosu for the dealings with the money in October 2002 referred to. His explanations have not been consistent, as set out above. I cannot infer from all the circumstances that he was engaged in money-laundering that is an offence under s.93C (1) of the Criminal Justice Act 1988 as amended. That section requires proof of criminal conduct. The reasons are those that led me to the conclusion given at para 189 above. The point is of limited scope in this case. The property at 35 Crescent Way is the only one alleged to have been obtained through this unlawful conduct, as set out above. It is not submitted that any other property was, or represents, property obtained through money-laundering.
THE CASE AGAINST MRS VIRTOSU
- The case against Mrs Virtosu relates to the balances in two bank accounts, one with Halifax plc and one with HSBC, identified in the Order I shall make. In her witness statement of 14th February 2006 Mrs Virtosu states that on 3 June 2005 £170,741.66, being the proceeds of sale of 61 Briar Avenue, were remitted into a third account in her name by solicitors acting on the sale. She subsequently transferred £43,585.47 into her Halifax account, £50,000 into her HSBC account. She states that the depletion of these accounts that has occurred has been solely due to her family's living expenses, mortgage payment and legal fees.
- There is no dispute that if 61 Briar Avenue was recoverable property, then the proceeds of sale of it are also recoverable property and that they can be followed into the hands of Mrs Virtosu, pursuant to s.304 and 305.
- On a number of occasions during the trial Mr Virtosu complained that he had only been released from prison in France a month before this trial, and that he received the trial bundles only on his release from prison. He also complained that he had not had time to sell his house in South Africa in time to obtain funds to pay for legal representation.
- It is not for me to decide whether or not the trial has in fact been fair. But I have considered what to do to ensure as best I can that it has been fair.
- The trial bundles consist of two lever arch filed containing 1127 pages, all of them in English, except the documents from Moldova on which Mr Virtosu relies to establish the source of his funds and which are headed Contract or Power of Attorney.
- The Freezing Order and Mr Evans's witness statement in support dated 11th January 2006 were served on Mr Virtosu. Mr Virtosu made a handwritten statement dated 3 June 2007 in which he said he had seen these documents. The evidence for the Director at the trial was mainly in form of the witness statement of Mr Evans sworn on 27 February 2007 and this, together with exhibits, makes up the bulk of the documents, 876 pages. In his statement of 4 August 2007 Mr Virtosu addresses this witness statement of Mr Evans paragraph by paragraph. It is therefore not the case that he has only seen the main documents in the case shortly before the trial.
- The other documents in the bundles include statements of himself and his wife, his mother and Mr Begunenco. These were obtained by him or on his behalf. The only material document that Mr Virtosu received shortly before the trial is the statement of Mr Evans dated 21 December 2007. This is in rebuttal of Mr Virtosu's own statement and adds little that is new. Moreover, of the main bulk of the documents exhibited to Mr Evans's first and second witness statements, all but a few are documents relating to the affairs of the Respondents, the most numerous being bank statements and documents relating to the properties that Mr Virtosu had acquired, and the Contracts and Powers of Attorney. I cannot accept that Mr Virtosu has had insufficient time to familiarise himself with the case against him.
- In order further to assist Mr Virtosu I adjourned the trial until 2pm on Monday, the first day in order for an interpreter to be available. On Wednesday, which would have been the third day of the trial, the court could not sit, and Mr Virtosu had that day in which to consider the course the proceedings had taken so far. His cross-examination resumed on the morning of Thursday. When he had concluded his cross-examination, I offered him an opportunity to ask questions of Mr Evans in the light of the questions that Miss Dobbin had asked him. He had not cross-examined Mr Evans at the end of Mr Evans' evidence in chief on Monday, and he did not do so in response to my invitation on Thursday. I have had regard to the document that Mr Virtosu submitted on 20th January 2008.
- Mrs Virtosu did instruct a solicitor and he attended each of the lengthy interviews which she gave. Mr Virtosu was in prison in France and left the instructions to be given to the solicitor to his wife. The solicitors were on the record for a substantial period and incurred substantial fees (I am told by Miss Dobbin that the figure was £47,076.61 was billed on 26th September 2006 and £16,899.35 claimed on 5th January 2007). They signed a number of Consent Orders (extending the Freezing Order) on behalf of both Mr and Mrs Virtosu on and between 14 August 2006 and 29 May 2007. This is not a case where there has been no legal advice given to the Respondents.
- However, the fact is that Mr and Mrs Virtosu have not been represented. Where a respondent is not represented, an increased burden is placed on the judge to scrutinise the applicant's case, to consider whether there are points of law that might assist the respondent. The fact that there was no legal argument for the Respondents means that the views on the law that I have expressed may not carry the weight that they would if they had been the result of full argument in the normal way. In this case I have had to reach conclusions on at least one point of law of general importance, that is on whether the French judgment is admissible evidence. Given that the point is also of major significance to the outcome of the case, I gave the parties an opportunity to make further representations on points of law only, if so advised, before the judgment was handed down. Miss Dobbin submitted a short note clarifying two of her submissions. No further submissions were made on behalf of Mr and Mrs Virtosu.
- On 23 January 2008, the Court of Appeal (Criminal Division) handed down its judgment in R v NW, SW, RC and CC  EWCA Crim 2. I have considered whether that contains any material that might arguably lead me to alter any of the conclusions I have reached, and I have found none. It appears to me to support the conclusions I have already reached.
- The Director's case succeeds in its entirety and I shall make the Order he asks.
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