BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

Scottish Court of Session Decisions


You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> The Scottish Ministers v Stirton & Anor [2013] ScotCS CSIH_81 (11 October 2013)
URL: http://www.bailii.org/scot/cases/ScotCS/2013/2013CSIH81.html
Cite as: 2013 SLT 1141, [2013] ScotCS CSIH_81, [2013] CSIH 81, 2014 SC 218, [2014] Lloyd's Rep FC 18, 2013 GWD 34-666

[New search] [Context] [Printable version] [Help]


SECOND DIVISION, INNER HOUSE, COURT OF SESSION

Lord Justice Clerk

Lord Menzies

Lord Brodie


[2013] CSIH 81

P1801/05

OPINION OF THE COURT

delivered by LORD CARLOWAY, the LORD JUSTICE CLERK

in the reclaiming motion

in the petition of

THE SCOTTISH MINISTERS

Petitioners and Respondents;

against

RUSSELL STIRTON

First Respondent and Reclaimer;

and

ALEXANDER ANDERSON'S EXECUTOR

Third Respondent and Reclaimer:

for a Recovery Order in terms of Section 266 of the Proceeds of Crime Act 2002

_______________

Petitioners and Respondents: Crawford QC, Heaney; Civil Recovery Unit

First Respondent and Reclaimer: Weir QC, CC Wilson; The Glasgow Law Practice

Third Respondent and Reclaimer: CHS MacNeill QC, SM McCall; Ian Moir & Co, Glasgow

11 October 2013


Introduction


[1] These are petition proceedings for civil recovery under section 266 of the Proceeds of Crime Act 2002 ("POCA"). The proceedings have been substantial. They began in 2005. A 130 day proof was heard over a period of approximately two years between 2009 and 2011, albeit discontinuously. Ultimately, the recovery order now reclaimed against was granted on 14 February 2012. The Opinion of the Lord Ordinary extended to some 300 pages ([2012] CSOH 15).


[2] Part 5 of the POCA enables the respondents, inter alia, to recover any property which is, or represents, property obtained through unlawful conduct, whether or not any criminal proceedings have been brought for an offence in connection with the property (s 240). Civil recovery is thus not dependent upon criminal conviction and none had been secured against the reclaimers. "Unlawful conduct" is established on a balance of probabilities (s 241). It is sufficient for the grant of an order that a person obtains property by, or in return for, his own unlawful conduct or that of another person (s 242). It is not necessary to show that the conduct was of a particular kind. It is enough to show that the property was obtained through one of a number of kinds of unlawful conduct (ibid). Subject to certain exceptions, if the court is satisfied that any property is recoverable, it must make a recovery order (s 266). However, the court may not make in a recovery order any provision that is incompatible with any of the Convention rights within the meaning of the Human Rights Act 1998 (s 266(3)(b)).


[3] Prior "interim administration" proceedings (Scottish Ministers v Stirton 2006 SLT 306), founded upon averment that certain property would be recoverable (s 256), had been instituted against the reclaimers. An interim administrator ("the administrator") was appointed in these proceedings, whose task it was to establish the extent of any recoverable property and the identity of any persons holding it (s 257). Some of the grounds of appeal (infra) relate to the administrator's subsequent involvement in the recovery proceedings. In order to illustrate the circumstances into which the Lord Ordinary was placed, when making certain procedural decisions now complained of (infra), a number of aspects of the administrator's appointment require to be noted at the outset.


[4] By interlocutor dated 3 February 2005, "Louise Rivers" of "Mallard Associates", with an accommodation address in London, was appointed as the administrator. It was not until some time later, however, that the court was informed that both her name and that of her firm were pseudonymous. Although it was decided that the oversight in failing to inform the court of the administrator's assumed identity did not render her appointment fundamentally invalid, Lord Macfadyen, who was asked to recall the appointment, observed that:

"There seem ... to be grounds for concern in connection with the appointment of an interim administrator under an assumed name. For example, it might be thought that the respondents had an interest in knowing who it was that had acquired the extensive powers of the interim administrator to take possession of property and to require them to answer questions. The enforceability of a claim for damages under section 257(3) might be thought to require knowledge of the true identity of the interim administrator. ... [T]hese are matters to be taken into account by the court in deciding whether to make the appointment. But problems would only arise if there were reason to doubt the good faith of the nominee and her willingness to be held to account, if the need arose, in this court. In the context of a nomination made by a responsible public authority, ... the court would be entitled to rely on the good faith of the petitioners. The concern does not ... go to the validity of the appointment.

Where, as the petitioners say is usual, the matter is disclosed to the court at the time of appointment, ... the court is entitled to make an appointment under an assumed name if satisfied that there is good ground for doing so. The concerns for the safety of the interim administrator and her staff...seem ... to be capable of being accepted by the court as constituting good ground. [Counsel] did not impugn the good faith ... in putting forward that reason for making an appointment under an assumed name, or that there was good reason for concern about the safety of the interim administrator. [T]herefore ... the Lord Ordinary would have been entitled, if the matter had been explained to him, to make the appointment of Louise Rivers under that name" (Scottish Ministers v Stirton 2006 SLT 306, at 316).


[5] The interlocutor appointing the administrator was pronounced in separate proceedings and is outwith the scope of review in this reclaiming motion. However, the administrator was called as a witness for the respondents in the proof in the present proceedings. In that context, the Lord Ordinary's protection of the administrator's anonymity is the subject of criticism. Whereas her use of a pseudonym was not known to the court upon appointment, it was explained to the court at the outset of her testimony in these proceedings that she continued to use the assumed name. Throughout each process the court remained ignorant of her true identity. During the proof, the respondents provided the Lord Ordinary with a sealed envelope, with a request that it not be opened. This was said to contain the administrator's true name and designation. This was not done until the stage at which the reclaimers were about to cross-examine the administrator about her qualifications (see infra). The sealed envelope remains unopened even yet.


[6] It is not unknown for a witness to give evidence under an assumed name, particularly in criminal proceedings, where the revelation of a witness's identity would endanger his safety (see now Criminal Procedure (Scotland) Act 1995, s 271N). However, it is a matter of some not inconsiderable concern that the court has heard the testimony from a witness without knowledge of her true identity. This matter will be reverted to in addressing the grounds of appeal because of the importance of ensuring that the anonymity of witnesses, including administrators, is dealt with appropriately by the court in the future.

The Lord Ordinary's Findings in Fact

[7] The reclaimers had been investigated by the police between 2003 and 2005. The allegations against them concerned money laundering and extortion. The police had observed the first reclaimer on a ferry going from Calais to Dover in 1997, when controlled drugs and a firearm were imported into the United Kingdom. Evidence from the police at the proof was to the effect that this reclaimer had been associated with the importation of these drugs. Both reclaimers had, in addition, been stopped by the police on the M74 in 2000 in possession of a large sum of money. The amount was not established. Shortly before that, one of them had been seen in the course of a drugs deal in Liverpool. The Lord Ordinary concluded that money had been obtained by the reclaimers from unlawful conduct, notably drugs supply.


[8] Both reclaimers had appeared on petition, but no indictment had ever been served upon them. It was the reclaimers' position that they were legitimate businessmen and had not committed any crime. In that connection, it is an interesting feature of the case that, despite the terms of the record, it does not appear to have been argued by the respondents after proof that any money had been "laundered", in the sense of being put into a legitimate business surreptitiously and then taken out in an apparently legitimate manner (eg in terms of contractual obligations (see infra)). It was argued, that substantial sums of money were taken out of a legitimate business by way of extortion rather than as part of a process of laundering, and converted into assets, notably a filling station.


[9] As the Lord Ordinary noted, despite the length of the proof, many of the facts were not in dispute. In particular, and central to the respondents' case, it was agreed that there was a relationship between the reclaimers and a taxi company called Spring Radio Cars Limited ("Spring"), which was owned and operated by a Mr Gibson and a Mr McLeod. There were three aspects to this relationship. The first was a loan agreement whereby RS Construction, a company operated by the reclaimers, was recorded as having lent Spring £265,000 on extremely onerous terms. Secondly there was an open-ended contract between RS Construction and Spring for the provision of services at a cost of £2,500 per week. Thirdly, there was a contract between A & S Leasing, another business run by the reclaimers, and Spring for the sale to Spring of 15 Skoda cars, and in which Spring agreed to pay A & S Leasing £4,000 every week for a prolonged period. The respondents' contention, which was ultimately upheld by the Lord Ordinary, was that Spring had been intimidated into entering these contracts.


[10] The relationship between the reclaimers and Spring had an interesting history. In or about 1996 or 1997, a campaign of intimidation had taken place. Mr Gibson's office had been attacked by masked men. His family car had been set on fire shortly after his wife and children had left it. His wife had been the subject of an attempt to run her car off the road. There had been silent phone calls to Mr Gibson's house. The Lord Ordinary states (Opinion, para [27]):

"I have made no finding that any of these actions were carried out by either [reclaimer] personally, nor that they were aware of them in detail at the time of their commission."

However, she noted that, shortly after these events, Mr Gibson had been approached by a Mr McGovern and another with a view to the sale of Spring. It had not been advertised or otherwise offered for sale prior to this visit. Mr Gibson somehow felt obliged to commence payments of £2,800 per month to a business called SRS, who sent invoices accordingly. These invoices stopped shortly after Mr McGovern was murdered in September 2000.


[11] Less than two months after Mr McGovern's death, the third reclaimer went to see Mr Gibson and suggested that he (the reclaimer) might be able to advise him about certain business matters. He told Mr Gibson that he was in partnership with the first reclaimer, who was Mr McGovern's brother-in-law, and that they operated a firm called RS Construction and a company called A & S Leasing. He told Mr Gibson that the reclaimers were establishing a new filling station in Springburn, which his taxis might care to use. Thereafter, Mr Gibson commenced making payments of invoices for management services to RS Construction; this time for £2,500 every week. No services were ever rendered, but there was a contract stating that they were to be provided by the first reclaimer personally. The Lord Ordinary concluded that the reclaimers knew about the payments to SRS. The approach to Mr Gibson had been to ensure the continued payment of "protection money".


[12] Although Mr Gibson and Mr McLeod denied any criminality on the part of the reclaimers when they came to testify at the proof, statements which they had made to others were adduced in which they claimed that they had indeed been subject to what they called "extortion". First, two officers from HM Revenue & Customs deponed to meeting Mr Gibson and Mr McLeod in relation to the payments made by Spring to RS Construction. Mr Gibson had told them that the payments were "in order that they got no hassle" (Opinion, para [29]). Mr Gibson and Mr McLeod had agreed to pay to HMRC £75,000 on the basis that the sums paid, which had been shown in their accounts as a legitimate expense, could not form a valid deduction from profits in any calculation of tax liability (ie they admitted that they were not legitimate business expenses). Secondly, in 2003 and 2004, both Mr Gibson and Mr McLeod had told police officers that they had been the subject of "extortion" in the sense of paying protection money.


[13] In relation to the loan of £265,000, the Lord Ordinary accepted the existence of a loan document, which required repayments of £1.08M. Although this document had been registered in the Books of Council and Session, there was no proof of it ever having been implemented and, in particular, of any repayments having being made. However, a significant feature of the loan was a provision for Spring to be transferred to RS Construction in the event of default.


[14] The purchase of the Skodas also had a colourful history. In early 2002 a boxing promoter had arrived at a car dealership and, despite having no ostensible link to the taxi firm, negotiated the purchase of 15 new Skodas for delivery to Spring. The price of £148,000 was to be payable to the dealership in cash instalments and that is what occurred. On one such occasion the promoter arrived at the dealership with £15,000 in cash stored in an empty Sugar Puffs container. Although the dealership would have sold the cars directly to Spring with no deposit, the complex arrangement arrived at was for the cars to be sold to A & S Leasing and re-sold by them to Spring at twice the price. This price, which was payable over 78 weeks, totalled £312,000.


[15] The Lord Ordinary came to the conclusion, as she was almost bound to do, that these contracts did not make commercial sense. She did not believe the denials of extortion from the owners of Spring or the reclaimers. The Lord Ordinary accepted that the owners had made statements complaining of extortion. In the Lord Ordinary's opinion:

"[4] ... the whole picture of the contracts, the statements made to HMRC and to police officers, the tax agreement and the accountant's analysis showed that the contracts had been entered into as a result of intimidation and that money had been extorted. It was paid in order that Spring Radio Cars might be allowed to go about its business, that is, as protection money".


[16] In 2001, the reclaimers had purchased a filling station, and in 2003 ground adjacent to it, in Springburn upon which they developed a large modern facility, including a shop. They had been in the process of selling this facility when the police operation had commenced. The cost of purchasing and developing the filling station had, according to the Lord Ordinary, come from the money paid by Spring ostensibly in terms of the contracts. In due course, the Lord Ordinary was to hold that, accordingly, the filling station in its completed form had been created from funds generated by unlawful conduct. It was not disputed that some of the money had also come from a secured loan obtained by the reclaimers from a bank. This loan, the Lord Ordinary found, had been obtained by fraud and thus the funds drawn down had also been derived from unlawful conduct.


[17] The final aspect of the proof involved various houses, which the reclaimers had purchased with secured loans and cash deposits, and certain other investments. One property development was at Balgrayhill Road, which had been bought with the assistance of £48,000 from the third reclaimer. The source of this money was not adequately explained. The property, which appears to have been built on by the reclaimers, was sold for £420,000. The source of the funds used to develop the property was not explained. Another house was "The Limes", which was bought for occupation by the first reclaimer and his wife. The Lord Ordinary held that the funds to do so, in part in the form of a loan from a building society, had been obtained unlawfully (ie fraudulently) as had the balance which had come from the sale of an earlier home. Only £20,000 of a £27,000 cash deposit had a legitimate source in the form of loans from friends. The source of the remaining £7,000 was not identifiable. A further property was at an address in Cowan Wynd, which had been owned by the third reclaimer but had been bought from him, upon his sequestration, by his cohabitee, namely Miss L. She had obtained a loan to carry out the purchase (other than a deposit of £800) by unlawful conduct (ie fraud).


[18] The Lord Ordinary held (para [36]) that various insurance policies and investments held by the reclaimers had been paid for by money acquired from unlawful conduct. She rejected evidence from the reclaimers concerning the source of funding being from businesses operated by the reclaimers, notably through construction and an enterprise known as the Loveboat. There was no satisfactory evidence that these activities had generated any profit.


[19] On 14 February 2012, the Lord Ordinary made a recovery order in respect of three houses, the sums at credit on eight bank accounts, a Personal Equity Plan, certain insurance policies and sundry other items. The funds recovered include the proceeds of the sale of the Springburn filling station in 2004.

Procedural Aspects
Adjournment


[20] The Lord Ordinary describes (para [41]) the progress of the proof as involving an initial seven week diet commencing 19 May 2009, which the court had been assured would be sufficient. This diet appears to have been bedevilled with lengthy argument upon ancillary applications which required determination. By the end of the diet, even the respondents' proof had not been completed. Further diets of proof took place from November 2009 to February 2010, when the third reclaimer became ill. When the court reconvened on 9 March 2010, the first reclaimer, who, unlike the third reclaimer, had been represented by counsel and agents at the proof, appeared without counsel and sought an adjournment of the proof to enable him to seek a judicial review of a decision to refuse him legal aid. He had originally defended the petition privately and for a short period he had had emergency legal aid. The diet was adjourned until September. In due course legal aid was forthcoming and the first reclaimer continued with his former counsel and agents back in harness. For a variety of reasons, the court did not reconvene for the purposes of proof until 8 October 2010, when further evidence was heard over a number of days extending into May 2011.


[21] Meantime, on 22 February 2011, the third reclaimer had also requested an adjournment of the proof to enable him to apply for legal aid. He had been representing himself as a party litigant over many days of proof and for several years of protracted procedure, with which he had become somewhat familiar. The Lord Ordinary refused the motion on the basis (para [44]) that she did not consider that he was unable to complete the case and that it would be unfair to both the first reclaimer and the respondents to delay matters. It was a factor for consideration that money was being paid to the reclaimers out of the funds subject to the interim administration order. The third reclaimer had then asked the Lord Ordinary to "recuse" herself (decline jurisdiction) as biased. This motion too was refused.

Administrator


[22] As already noted, the proof had commenced on 19 May 2009. The administrator was called as a witness to speak to the content of her reports; to provide, as the respondents were to put it, a "road map" for the primary evidential material. On 21 May, the administrator is recorded in an interlocutor as being "indisposed", but this related to a bereavement which she had suffered. Mr Gibson was interposed. The administrator resumed her testimony on 4 June. At various times during the proof, the issue of the administrator's true identity had been raised. The Lord Ordinary took the view (para [52]) that:

"the court having allowed the interim administrator to use a pseudonym, [she] required to take care that no questions were asked or reports made that might tend to disclose her identity unless parties persuaded [her] that there was reason to do so".

At no point was the Lord Ordinary so persuaded. The issue of the administrator's identity was raised again by the first reclaimer on or about 11 June 2009 in advance of cross-examination on the basis that he wanted to know her qualifications. The first reclaimer protested that the administrator had said in her evidence that she was not an accountant, although the colleague who ultimately replaced her as administrator (Mr Ramsay) had, during an interview, suggested that she and he were both accountants.


[23] It was at this point that the respondents produced a Public Interest Immunity ("PII") certificate from the Lord Advocate in relation to the administrator's identity and qualifications. The certificate bears to have been prepared in advance of the proof. It was signed by the Lord Advocate on 14 May 2009. It contains a narrative of the procedure and states (para 4) that the administrator "will be an important witness". After certain passages about the need for anonymity for administrators generally, the certificate continues:

"11 e ... The [reclaimers] ... are well known to Strathclyde Police and the Serious Organised Crime Agency. They are believed by Strathclyde Police and the Serious Organised Crime Agency to operate at the highest level of organised criminality. The civil recovery petition alleges inter alia a course of conduct amounting to extortion on the part of the [reclaimers]. They are held in fear by those with whom they have business dealings."


[24] On the following day, for the first time, the respondents also produced the sealed envelope in which it was said the true identity of the administrator was disclosed. Matters became even more complicated, however, when, the next day, counsel instructed on behalf of the administrator was allowed to appear and be heard, although this is not made clear in the relative interlocutor (cf earlier appearances on 23 March, 11 July 2007 and 7 and 12 March 2008). Counsel stated that the administrator, who had attended court that day, was unwell. He was allowed to address the court on the competing interests and submitted that it was necessary to protect the administrator's anonymity. As was stated in the PII certificate, there had been occasions when administrators had been tracked down and threatened. The first reclaimer moved for a discharge of the diet of proof on the basis that, if the Lord Ordinary upheld the terms of the certificate, apparent bias would be established. Alternatively, he moved to cross-examine the administrator on her qualifications and experience over the 30 years since she had left university. These motions were supported by the third reclaimer. He stated that he had 400 questions to ask the administrator and, if he were not permitted to ask her about her qualifications and experience, he could not present his case.


[25] The Lord Ordinary states (para [68]) that she decided to "uphold" the PII certificate on the basis that the public interest, in maintaining the system of administrators under the POCA with due regard for their personal safety, outweighed any detriment to the reclaimers in not being able to ask questions about the administrator's experience and qualifications. The interlocutor dated 16 June 2009 records that the Lord Ordinary: "Refuses the motion ... to overrule" the PII certificate.


[26] Cross-examination of the administrator commenced on 18 June 2009. On the following day, it was reported that she had taken ill again. She had collapsed and been taken to hospital. After another adjournment of several days, the first reclaimer opposed an application by the respondents to interpose another witness on the basis that he understood that the administrator would not be fit to give evidence during the diet of proof upon which the parties were then engaged. The court, it was submitted, should not hear any further evidence until the position was clarified. The third reclaimer requested the Lord Ordinary "to enforce immediately the citation" of the administrator (ie to grant a warrant for her arrest) in the absence of a medical certificate justifying her non-appearance. However, the Lord Ordinary explains (para [77]) that she had "excused" the administrator's attendance, although there is no interlocutor to that effect at around this time.


[27] On 24 June 2009, a medical certificate in relation to the administrator's health was at last forthcoming. This emanated from a general medical practitioner and stated, on soul and conscience, that the administrator was suffering from, amongst other ailments, stress. It certifies that she:

"is not fit and able to attend at court to give evidence now and will not be fit and able to give evidence for at least the next 4 weeks".

On 3 July 2009 the case was adjourned over the Summer vacation without the administrator having returned to court.


[28] At a By-Order hearing in October 2009 a soul and conscience certificate from a consultant psychiatrist dated 15 October 2009 was produced. The psychiatrist had seen the administrator on several recent occasions. The certificate stated:

"[She] remains unfit to attend Court to finish off her evidence as a result of her ongoing generalised anxiety disorder/ panic disorder. I anticipate that she will remain unfit to attend Court for the foreseeable future. The prognosis remains poor. This is due to the fact that her anxiety/panic disorder has arisen as a direct consequence of her previous experience of giving expert evidence in this matter. Any re-exposure to this situation is likely to result in a marked deterioration of her condition, as I have recently seen in response to this current request.

[She] is unable to give evidence by live video link or at a 'commission' or in writing as it is the process of giving evidence and her reaction to memories of the process which is causing her psychological condition."

In response to certain written questions posed by the Lord Ordinary, a further soul and conscience certificate dated 19 October was obtained, in which the psychiatrist confirmed that the administrator was fit to carry out other work. He reported that the administrator continued to receive treatment but that:

"The nature of [her] mental disorders and their relationship to the stress of completing her evidence in this case are such that I do not foresee her ever being able to complete her evidence in this case."


[29] The respondents stated that they were content to proceed without the administrator's evidence and moved that she be excused from giving further evidence. The reclaimers wished time to consider their position. At a By Order hearing on 4 November 2009, a diet of 17 November was fixed at which the court expected be addressed on the availability of the administrator. On 17 November, (a different) counsel for the administrator again appeared and stated that the administrator remained unfit to give evidence. The Lord Ordinary, in terms of the interlocutor, "excused" the administrator "from further attendance at the proof". However, it was stated in court, although not repeated in the interlocutor, that, were she to become fit, a motion could be enrolled "to have her return to complete her evidence" (Opinion, para [82]).


[30] The third reclaimer sought dismissal of the case due to the absence of the administrator. He maintained that his defence would be prejudiced if he could not cross-examine her. On being asked what it was that the third reclaimer wished to ask, he stated that it was that the conclusions in her reports were wrong. He had no positive case about which to ask her. The respondents intimated that they would not seek to rely on the administrator's testimony. The motion to dismiss was refused as was a subsequent one based on the third reclaimer stating that he had ascertained the true identity of the administrator and, again, that he was aware that, contrary to what she had said, she was an accountant.


[31] In January 2011, the first reclaimer again raised the issue of the administrator's health and argued that her reports may have been affected by her mental disorder. He moved to have her medically examined. It was being contended that the administrator may not have been ill at all because she had been attending conferences. The Lord Ordinary declined to revisit her earlier order. The next procedural step was a motion from the reclaimers to "obtain authority to cite" the person, whom they thought was the administrator, with a view to that person commenting on the work of the administrator. This application was refused on the basis that the proposed line of evidence was irrelevant. There was a subsequent effort to lead evidence from a retired solicitor, who had known the administrator, about the administrator's health when she had met her in May 2009. An objection to this line was sustained on the basis that it was an attempt to undermine the medical certificates already accepted by the court and to reveal the administrator's true identity.


[32] Ultimately, the Lord Ordinary (para [94]) did not rely upon the evidence of the administrator in reaching any decisions on the merits of the case. In that regard, she considered that she did not regard the content of the administrator's reports as binding upon her. Following Scottish Ministers v Buchanan [2008] CSOH 5 (Lord Penrose at para [9] citing Director of the Assets Recovery Agency v Jackson [2007] EWHC 2553 (QB), King J at paras 29 and 30), she considered that, where there was a dispute, it was the primary evidential material that was important and not the views of the administrator upon that material.

Extortion
[33] The reclaimers had submitted at the proof that it was necessary, for extortion to be made out, that it was proved that the reclaimers had threatened Mr Gibson and Mr McLeod with a view to them paying the reclaimers money in order to prevent injury. The Lord Ordinary (para [102]) rejected that submission in favour of one from the respondents that extortion consisted of "obtaining payment not lawfully due, in return for refraining from exercising influence to the detriment of the victim. There is no need for threats of violence to be uttered". It was sufficient that the reclaimers had exploited the impression that they had control over any violence directed towards Spring and its directors (Silverstein v HM Advocate 1949 JC 160; Carmichael v Black 1992 SCCR 709).

Standard of Proof

[34] The Lord Ordinary accepted (para [102]) a submission, made by the respondents, that the appropriate standard of proof was the balance of probabilities (POCA s 241(3); In re S-B (Children) (Care Proceedings: Standard of Proof) [2010] 1 AC 678). She rejected a submission to the contrary and determined that there was no heightened standard of proof. The question which she required to ask herself was whether, on the evidence, it was more probable than not that the crucial facts had been established (Toremar v CGU Bonus [2009] CSOH 78). In that regard, whether any alternative explanation had been presented by the reclaimers was a factor which could be taken into account (Scottish Ministers v Buchanan (supra) and Scottish Ministers v Smith [2009] CSOH 167).

Grounds of appeal


[35] Of the sixteen grounds of appeal lodged by the first reclaimer, only six were argued at the Summar Roll hearing. This was on the basis that a restricted submission might be sufficient to dispose of the reclaiming motion. This approach was endorsed by the procedural judge on 31 October 2012, whereby the Summar Roll hearing was restricted to the first reclaimer's grounds 1 to 5, 6(v) and 14. The third reclaimer's grounds, albeit not identical, were similarly restricted to grounds 1 to 6. The remaining grounds may yet be insisted upon. They were said to remain "in the wings". The effect of the procedural decision was, of course, that, if the court were to find against the reclaimers on the grounds advanced at the hearing, it could not finally dispose of the reclaiming motion.


[36] The first reclaimer's grounds collectively fall under four broad themes, viz. that: (i) the proceedings were vitiated by the apparent bias of the Lord Ordinary demonstrated by sundry procedural decisions taken in the course of the proof, notably those surrounding the protection of the administrator's identity and health (grounds 1-3); (ii) the Lord Ordinary had erred in her definition of extortion (grounds 5 and 6v); (iii) the Lord Ordinary had erred in her application of the standard of proof (ground 4); and (iv) ultimately, the recovery order was disproportionate and thereby breached the reclaimers' rights under Article 1, Protocol 1 of the European Convention (ground 14).


[37] The third reclaimer's grounds can also be divided into categories. The first of these is again apparent bias. Here, under frequent reference to the fictional fair-minded and informed observer, the third reclaimer focuses upon (i) the refusal to adjourn for legal aid (ground 2); (ii) the treatment of the PII certificate (ground 3); (iii) the failure to ascertain the identity of the administrator (ground 4); (iv) the failure to investigate the administrator's ill health; and (v) the decision to disregard the administrator's evidence after making avizandum (ground 6). The third reclaimer also complains of the Lord Ordinary's definition of extortion (ground 1) and criticises the finding of unlawful conduct on the evidence adduced.

Submissions
First reclaimer
Apparent bias

[38] The first reclaimer argued that the Lord Ordinary had presented an appearance of bias (Helow v Secretary of State for the Home Department 2009 SC (HL) 1, Lord Rodger at para [14], citing Porter v Magill [2002] 2 AC 357, Lord Hope at para 103 and Johnson v Johnson (2000) 201 CLR 488, Kirby J at 509) in respect of a number of procedural decisions taken in the course of the proof. The appearance of bias may be seen to have arisen from one of those decisions or from the cumulative effect of a number of decisions. No allegation of actual bias was made, but the status of the Lord Ordinary as a professional judge was only one factor to be taken into account in considering whether there was a real possibility of bias (Helow (supra), Lord Mance at para [57], Lord Walker at para [27]). There were three indicators of apparent bias.

PII CERTIFICATE
[39] First, the Lord Ordinary had given effect to the PII certificate. It was not disputed that it may be in the public interest to conceal the identity of an administrator. It was not now argued that the Lord Ordinary had been compromised merely by reading the PII certificate (cf Opinion, para [60]). No objection was taken to the content of the certificate, other than the statements contained in the final paragraph 11e (supra). The Lord Ordinary ought not to have "upheld" the certificate in its entirety; that is inclusive of the statements contained in paragraph 11e. By doing so, she had accepted the truth of those statements or at least associated herself with them. These statements concerned matters particular to the reclaimers and central to the subject matter of the proof. The Lord Ordinary had thus appeared to prejudge the reclaimers' allegations of unlawful conduct, principally extortion, before hearing the totality of the evidence. That she had done so at an early stage of the proof, and appeared to find support for her decision in the unproven pleadings of the respondents, had given the impression that she had reached a decision on matters not yet the subject of evidence. As a consequence, the Lord Ordinary ought to have "recused" herself and discharged the proof when moved to do so.

IDENTITY AND HEALTH
[40] Secondly, the Lord Ordinary had failed to accede to the first reclaimer's request that she ascertain the identity of the administrator. After the administrator had been excused from giving further evidence on the grounds of ill-health, a concern had arisen in the minds of the reclaimers that she was carrying out other duties and therefore may have been fit to complete her evidence. The Lord Ordinary was requested to open up the sealed envelope, but she had refused to do so. As a result, the first reclaimer's allegation that the administrator was in fact "Miss A", who may have been fit to attend court, could not be investigated. A medical certificate was not conclusive of a witness's ability to give evidence (Scottish Ministers v Smith 2010 SLT 1100). The Lord Ordinary ought to have investigated whether the first reclaimer's allegations were well-founded. It was not an adequate explanation that the motion was an attempt to "go behind" the PII certificate. No-one but the Lord Ordinary need have learned of her identity.


[41] In any event, other interests required the PII certificate to be 'overruled' in favour of disclosure of the administrator's identity. If the administrator was "Miss A", the first reclaimer had been denied the opportunity of completing his cross-examination. This was a violation of his right to a fair trial under Article 6 of the European Convention. The public interest in the anonymity of administrators, as asserted in the PII certificate, was outweighed by the public interest in ascertaining whether her medical condition justified preventing the completion of cross-examination. In refusing to ascertain the administrator's identity, the Lord Ordinary had given the impression of bias. This was in the context of the Lord Ordinary's prior refusal to 'overrule' the respondents' PII certificate. Separately, the Lord Ordinary had created an impression of bias by allowing the administrator to be represented by counsel; a privilege which was not afforded to other witnesses.

DISREGARDING TESTIMONY
[42] Thirdly, the Lord Ordinary had disregarded the evidence of the administrator in reaching her final decision. It was not impossible to disregard uncompleted testimony, but it was extremely difficult not to be influenced by the testimony of a crucial witness given over a number of days and untested by completed cross-examination. To that extent, the fair-minded and informed observer would have concluded that there was a real possibility of bias, particularly in the context of the earlier treatment of the PII certificate.


[43] It was conceded, given the focus of the defence on the absence of unlawful conduct, that the scope for cross-examination, beyond the testing of certain assumptions underpinning the administrator's opinion on recovery, was limited. However, it was a matter of perception that the administrator's evidence had been left uncompleted and the Lord Ordinary did not confirm that her testimony was to be disregarded until her Opinion was issued.


Extortion


[44] The Lord Ordinary had erred in her definition of extortion (para [102]). This had formed the basis of her finding of unlawful conduct (POCA, s 241). The making of a threat was necessary for the crime to be established (Hume, Commentaries I.439; Alison, Principles 1, 576; Silverstein v HM Advocate 1949 JC 160, LJC (Thomson) at 163, Lord Mackay at 164; Carmichael v Black 1992 SCCR 709, LJG (Hope) at 719 approving HM Advocate v Crawford (1850) J Shaw 309, LJC (Hope) at 322-324), albeit that the threat need not be one of violence (Silverstein (supra)). There must be two sides to the "transaction" (ibid). There had to be a threat of something adverse happening unless payment were made. Here, the "unless" was missing. The Lord Ordinary had made no findings of threats having been made by the reclaimers, nor did the respondents offer to prove that any specific threats were uttered by the reclaimers or their agents. It was not necessary for the respondents to anchor the alleged unlawful conduct to a specific place and time, but, at the very least, there had to be a basis upon which the court could infer that threats had been made. The Lord Ordinary had made no findings from which the inference of any threat, or any suggestion of dire consequences to follow from non-payment, could be derived.


[45] In any event, the evidence did not allow the Lord Ordinary to make any such findings or to reach the conclusion that there had been any threat. Specifically, the evidence of the HMRC officers had concerned only the fact and nature of payments and not anything of the nature of extortion. It was not sufficient that a witness had used the word "extorted", which the Lord Ordinary had understood to mean "paid under duress". Only the conduct found to have occurred was relevant and duress was not the same as payment under threat. There was no basis upon which to ascribe the intimidation of Mr Gibson and Mr McLeod in 1996 or 1997 to the reclaimers. Indeed, the Lord Ordinary had found that the reclaimers had not been aware of any intimidation or violence visited upon these persons.


[46] It did not matter whether Mr Gibson and Mr McLeod had perceived it to have been appropriate to pay money in order to avoid getting "hassle": that could be payment for entirely legitimate protection. Even if that were true, any threats would be made to third parties rather than to the persons making the payments. The Lord Ordinary had frequently used the word "protection" in her Opinion, but she had erred insofar as she conflated the concepts of "protection", or payment of "protection money", with extortion. These concepts were not necessarily synonymous. Any "protection money" had been paid to SRS and not to the reclaimers. The finding that the third reclaimer had approached Mr Gibson with a view to him continuing payment of the "protection money" to RS Construction was not a finding of a demand under threat nor did it connote extortion.


[47] For there to be a finding of extortion, there had to be a threat that the payee would cause something to be done, if he did not do it himself, when the payment stopped. There was no basis for going beyond the suggestion that Spring had entered into a bad bargain or an expensive arrangement that they did not wish to maintain. It was not known what threat was to be inferred, what harm was to be visited on Spring, or that the reclaimers could organise certain adverse consequences. Even on the Lord Ordinary's findings, unlawful conduct could not be established and this was the necessary starting point for the respondents' case (Scottish Ministers v Buchanan [2006] CSOH 121). The property sought to be recovered could not be linked to any such conduct (POCA, s 304).

Standard of proof

[48] There was no evidence before the Lord Ordinary of sufficient quality to support a finding of unlawful conduct. The Lord Ordinary had erred in rejecting the first reclaimer's submission that proof of extortion to the civil standard on the balance of probabilities (POCA, s 241(3)) nevertheless required evidence of good quality. Mullan v Anderson 1993 SLT 835 continued to represent the law and it had not been altered by the disapproval of an intermediate standard of proof in England and Wales (cf In re S-B (Children) (Care Proceedings: Standard of Proof) [2010] 1 AC 678). Having regard to the gravity of the respondents' allegations (1st Indian Cavalry Club v HM Commissioners for Customs and Excise 1998 SC 126, Lord Hamilton at 138), the Lord Ordinary ought to have held that there was insufficient evidence to warrant a finding that the reclaimers had committed extortion or mortgage fraud.


[49] The applicable standard was the balance of probabilities, but, in the context of serious allegations of criminal or unlawful conduct, a higher than usual quality of evidence was required in order to satisfy that standard (Mullan v Anderson (supra), Lord Morison at 842, Lord Prosser at 846, Lord Penrose at 851). Due to the gravity of the allegations, they were less likely to be true and the inherent unlikelihood of the events having occurred had to be overcome in assessing the probabilities (B v Scottish Ministers, 2010 SC 472, Lord Eassie at paras [41]-[42]; In re S-B (Children) (Care Proceedings: Standard of Proof) (supra)). The Lord Ordinary had failed to have proper regard to the grave nature of the allegations and had thereby failed to have regard to the cogency of evidence that was necessary to establish the conduct alleged.


[50] The Lord Ordinary's finding of extortion had informed her finding of mortgage fraud. The Lord Ordinary had failed to require the respondents to produce cogent evidence of the first reclaimer's level of income and to prove that it was not as specified on his mortgage application form. It was not open to the Lord Ordinary to conclude that £7,000 of the purchase price for the first reclaimer's house had been derived from unlawful conduct. There was insufficient evidence from which the Lord Ordinary could calculate the extent of any benefit derived by the first reclaimer from mortgage fraud (R v Waya [2013] 1 AC 294).

Article 1, Protocol 1 ECHR

[51] The making of a recovery order in respect of the first reclaimer's family home constituted a deprivation of property contrary to Article 1, Protocol 1 of the European Convention. Although no argument on this had been presented to the Lord Ordinary, nonetheless, Article 1, Protocol 1 applied to, and had to be taken into account in, the granting of orders under the POCA (R v Waya (supra)). The deprivation of property, such as by civil recovery, constituted a radical interference with property rights (James v United Kingdom (1986) 8 EHRR 123). There was a distinction to be drawn between civil recovery orders and confiscation orders (HM Advocate v McSalley 2000 JC 485); the former having the effect of appropriating or transferring ownership in property, and the latter being "value-based" and made in sums of money (R v Waya (supra)). It was relevant to ask whether any order amounted to an interference with the right of the family to enjoy peaceful possession of a family home (HM Advocate v McSalley (supra)). A further distinction was that confiscation orders proceeded upon an existing criminal conviction, whereas in recovery proceedings the Crown have considered that the matter did not warrant the bringing of criminal proceedings.


[52] Any order granted under the POCA had to satisfy three requirements: that the interference met the test of legal certainty; that it was justified in the general or public interest; and that there was a reasonable degree of proportionality between the interference and the aim of the statute (Reed & Murdoch, Human Rights Law in Scotland, (3rd ed) p 1009; AXA General Insurance Co v Lord Advocate 2012 SC (UKSC) 122, Lord Reed at para [108]; Sporrong and Lönnroth v Sweden (1983) 5 EHRR 35).


[53] The recovery order granted by the Lord Ordinary contravened the principle of legal certainty due to the arbitrariness in the calculation of the property to be expropriated. That calculation was based on the inconclusive finding that "at least 94% of the purchase price of The Limes derived from unlawful conduct, if [the respondents'] averments are proved" (para [283]) and the finding that £7,000 was derived from unlawful conduct in the absence of any evidence to that effect. It went beyond the state's margin of appreciation to deprive an individual of his family home on the grounds of a misrepresentation on a mortgage application form, particularly if the mortgage was repaid in full (Olupitan v Director of the Assets Recovery Agency [2008] Lloyd's Rep FC 253, Carnwath LJ at paras 36 and 41 (diss.) cf Judge LJ at para 65). It cannot have been intended that the statute would compel recovery of property in such circumstances. Rather, the legislation was aimed at offences such as drug trafficking, money laundering and child trafficking (Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Council of Europe, Strasbourg, 1990) Cm 2337)). In the circumstances, the recovery order was disproportionate, unreasonable and therefore incompatible with Article 1, Protocol 1.

Third reclaimer
Apparent bias

LEGAL AID
[54] The third reclaimer commenced by submitting that the Lord Ordinary had erred in refusing to adjourn the proof in order to allow the third reclaimer to apply for legal aid. She had reasoned that the third reclaimer was familiar with court procedure and was therefore capable of representing himself. Such reasoning did not stand up to scrutiny, however, standing the Lord Ordinary's various criticisms of the third reclaimer's understanding of the POCA and the nature of the proceedings together with her similarly robust criticisms of the third reclaimer's conduct when finding him liable in expenses on an agent and client scale ([2012] CSOH 166).


[55] The Lord Ordinary had taken account of the inevitable delay that would result from an adjournment for legal aid, but had made no enquiry into the anticipated length of the delay and whether any special steps could have been taken to progress any legal aid application. Such enquiries would have been essential to enable the Lord Ordinary to balance any delay with the opportunity to obtain legal representation. The Lord Ordinary had failed to exercise her discretion properly. She had essentially determined that any delay would be unacceptable and reached a decision that no reasonable Lord Ordinary could have reached. The Lord Ordinary's refusal had resulted in unfairness to the third reclaimer, who had thereby been denied a fair trial. Furthermore, her failure to investigate the likely delay would cause the fair-minded and informed observer to form the view that the Lord Ordinary was not impartial (Porter v Magill (supra)).


[56] The Lord Ordinary's reasoning that the motion had come too late, where the third reclaimer had belatedly decided that he required legal assistance, was insufficient of itself to justify the refusal to adjourn (Apollo Engineering v James Scott [2013] UKSC 37, Lord Hope at para 1). The third reclaimer had been able to raise funds secured over heritable property known as Thomson's Bar upon its release from the interim administration order in April 2008. It was decided that the first reclaimer ought to have the benefit of such legal representation as could be afforded. When funds ran out, the first reclaimer had obtained legal aid, but the third reclaimer was advised that he would not qualify because of his ownership of the bar. On that basis, no legal aid application had been made. Notwithstanding his continued ownership of the bar at the time he moved for the adjournment, it was suggested that the third reclaimer felt that he may have qualified for legal aid on financial grounds as the bar had become a loss-making exercise.

PII certificate

[57] Public interest immunity was competently asserted by the respondents in response to the first reclaimer's request to question the administrator about her identity and qualifications (Whitehall v Whitehall 1957 SC 30, LP (Clyde) at 38-39; Air Canada v Secretary of State for Trade (No 2) [1983] 2 AC 394). The Lord Ordinary had been entitled to uphold the PII certificate. However, she ought to have made it clear that she was not doing so on the basis of the final sentence of paragraph 11e. When the Lord Ordinary "upheld" the PII certificate in its entirety, the fair minded and informed observer would question how she could then assess the evidence about the reclaimers and, in particular, whether they were "held in fear" by the alleged victims. By failing to disregard expressly the final sentence of paragraph 11e, the Lord Ordinary had appeared to accept or associate herself with that statement prior to hearing the evidence. The fair minded and informed observer would conclude that the content of paragraph 11e had formed part of the Lord Ordinary's reasoning in upholding the PII certificate. The Lord Ordinary had associated herself with the view that the reclaimers were involved in intimidation and extortion prior to hearing evidence (Hogg v Normand 1992 SCCR 26).


[58] The PII certificate was not conclusive and the Lord Ordinary should have rejected it (Glasgow Corporation v Central Land Board 1956 SC (HL) 1). The Lord Ordinary had to carry out a balancing exercise between the public interest in the non-disclosure of information about the administrator, as asserted by the Lord Advocate, and the competing public interest in the proper administration of justice (ibid). The Lord Ordinary had erred by hearing submissions from counsel on behalf of the administrator. The administrator could not assert any public interest merely because her private interests may have coincided with it (R v Lewes Justices, ex parte Secretary of State for the Home Department [1973] AC 388, Lord Morris at 400; Conway v Rimmer [1968] AC 910, Lord Reid at 953). By hearing the administrator's counsel, the fair-minded and informed observer would conclude that the Lord Ordinary had taken account of the administrator's private interests and thereby skewed the balancing exercise in favour of the respondents.

Identity AND HEALTH

[59] Having upheld the PII certificate, the Lord Ordinary had been obliged to keep her decision under review in order to ensure that it did not jeopardise the fairness of proceedings at a later stage (R v H [2004] 2 AC 134; R (on the application of the Metropolitan Police Service) v The Chairman of the Inquiry into the Death of Azelle Rodney [2012] EWHC 2783 (Admin), Pitchford LJ at para 42). The information sought to be withheld under the PII certificate was apparently contained in a sealed envelope provided by the respondents to the Lord Ordinary. The reclaimers became suspicious that the administrator was not ill. In order to assess the merits of the various motions, the Lord Ordinary ought to have made herself aware of the identity of the administrator. In failing to do so, the Lord Ordinary had failed to keep the PII certificate under review. The Lord Ordinary had also so failed on the question of the administrator's health and whether it remained in the public interest that her identity and qualifications should be a secret. The Lord Ordinary had refused to grant authority to cite "Miss A", as that would have led to the administrator's identity being revealed, despite the court's earlier order that she should be allowed to use a pseudonym. In fact, there was no such order, albeit that the administrator's use of a pseudonym had perhaps been legitimised in the earlier proceedings (Scottish Ministers v Stirton 2006 SLT 306).


[60] The Lord Ordinary had made a decision that the administrator was not fit to give evidence, that the PII certificate should be upheld, and that those decisions could not be revisited. In adopting that approach, the fair-minded and informed observer would conclude that the Lord Ordinary had failed to take the necessary steps to ensure a fair hearing (Somerville v Scottish Ministers 2008 SC (HL) 45). As a further consequence of her treatment of the identity and health of the administrator, the Lord Ordinary had erred in failing to allow the third reclaimer the opportunity to cross-examine her when it may have been possible for him to do so.

Disregarding TESTIMONY

[61] The Lord Ordinary had erred in failing to disregard the evidence of the administrator until after she had made avizandum. When it had become clear that the administrator was not going to return to complete her evidence, the Lord Ordinary ought to have decided and stated that she could not place reliance on her evidence. The fair-minded and informed observer would know that the administrator's evidence would be of some materiality in the determination of what was recoverable property. It would be entirely unfair to rely on untested and part-heard controversial evidence. It should have been at the point of excusal on 17 November 2009 that the Lord Ordinary announced her intention to disregard the administrator's testimony. At the latest, it would have been clear at the close of the proof that nothing further was to be heard from the administrator. The Lord Ordinary ought to have invited submissions on what she was to do with her testimony. The Lord Ordinary's failure to make a ruling before making avizandum caused the third reclaimer to prepare his written submissions without knowing whether or not the Lord Ordinary would pay attention to the testimony of the administrator. Whilst it was recorded that the respondents did not intend to rely on the administrator's evidence, they did not invite the court to disregard her evidence and had stated in submissions only that it should carry limited weight.

Extortion

[62] The third reclaimer adopted the first reclaimer's submissions in respect of the proper definition of extortion. The definition adopted by the Lord Ordinary had been erroneous and that was sufficient to vitiate her decision. In non-technical language, extortion was known as "blackmail" (Gordon, Criminal Law (3rd ed), para 21.02). The criminality lay in the method of extracting money by using threats (HM Advocate v Crawford (1850) J Shaw 309; Macdonald, Criminal Law (5th ed), p 128). Money lawfully due could be extorted (Silverstein v HM Advocate (supra)). A person could not take the law into his own hands and "concuss" another into payment (ibid). The crime required a threat of violence or other disadvantage. The threat may not need to be "uttered", but it had to be communicated by some means. The perpetrator must have created the "impression" that the threat would be carried out. There need not be a precise description of the consequences to follow "unless" payment was made. However, there had to have been at least a mutual understanding of the potential adverse consequences. The Lord Ordinary had made no findings of express or implied threats or shared understanding.


[63] The Lord Ordinary had adopted an unduly wide description of the consequences of non-payment in her definition. This was apt to include a number of legitimate commercial arrangements. A distinction lay between security or legitimate "protection" and "protection money" as extortion. The hearsay evidence of "protection" or "protection money" relied upon by the Lord Ordinary was insufficient to satisfy the definition. Extortion was paying for protection from the extorter. The Lord Ordinary had not established that "protection", as it was used in the witnesses' testimony, was the equivalent of extortion. She had concluded that "protection" meant that "a person's name became associated with a business and the business then did not get any hassle" (para [148]). Such circumstances did not constitute extortion without something more to describe how it was that the business would avoid the "hassle"; that is the threat of events that would otherwise impede its peaceful operation.


[64] There had been insufficient evidence that Spring or its directors were the victims of extortion by the reclaimers. There was no basis for the finding that the reclaimers were not aware of previous alleged instances of intimidation "in detail" (para [27]), given that the Lord Ordinary had made no finding that the reclaimers had had any awareness of the alleged offences at all. There was no basis for the Lord Ordinary's finding (para [262]) that the reclaimers had a dominant influence over Spring "because of unspoken threats".

Standard of proof

[65] The nature of the evidence available to the Lord Ordinary had been so weak that she had erred in finding extortion established on the balance of probabilities. There was a single standard of proof, but it was flexible in its application (R (on the application of N) v Mental Health Review Tribunal (Northern Region) [2005] EWCA Civ 1605) in recognition not of a requirement for a higher degree of probability but for a higher quality of evidence. A finding of extortion should not be made lightly (Mullan v Anderson (supra)) and it was an error of law to piece together very poor quality evidence in order to conclude that serious criminality had occurred. Given the nature of the Lord Ordinary's findings, there ought to have been "cogent" or "good quality" evidence to support any finding of extortion (Scottish Ministers v Stirton & Anderson [2008] CSOH 20, Lord Glennie at para 15; Scottish Ministers v Buchanan (supra), Lord Penrose at para [71]; Toremar v CGU Bonus (supra), Lord Brodie at para [8]). The evidence presented could not be described as either cogent or of good quality. Such evidence as there was required stretched inferences in respect of any threats and the bearing of any such threats on the contracts.

Respondents
Apparent bias

[66] The respondents countered by maintaining that the submissions advanced by the reclaimers did not disclose circumstances that would cause the fair-minded and informed observer, who was not unduly sensitive or suspicious, to form the view that there was a real possibility of bias on the part of the Lord Ordinary (Porter v Magill (supra); Helow v Secretary of State for the Home Department (supra)). The Lord Ordinary had applied (para [67]) the correct test for apparent bias upon being requested to "recuse" herself in the course of the proceedings.


LEGAL AID
[67] The court ought not to interfere with the discretionary decisions of the Lord Ordinary unless it could be shown that she had misdirected herself in law, taken into account an irrelevant factor, failed to take into account a relevant factor or made a decision that was unreasonable or unjudicial. The Lord Ordinary's refusal to adjourn the proof to enable the third reclaimer to apply for legal aid was a fair and justifiable exercise of her discretion.


[68] The Lord Ordinary had to balance the factors in play. The proof had all but ended. The third reclaimer had given evidence and the first reclaimer's case had closed a week or so before. The case had been adjourned when the third reclaimer had fallen ill and he could have applied for legal aid at that stage. A further delay would have been prejudicial not only to the Scottish Ministers but also to the first reclaimer and the general administration of justice (Anderson v United Kingdom [2010] 7 EG 100 (CS)). The Lord Ordinary had been aware of previous delays in the proceedings and it was reasonable for her to take those into account.


[69] The Lord Ordinary had to make case management decisions that might result in a party being disappointed, but that did not give rise to a real possibility of bias. Each of the Lord Ordinary's incidental decisions was objectively justifiable in the context in which it was made. There was no language or conduct on the part of the Lord Ordinary that suggested that she was biased against the reclaimers. Esto there was a real possibility of bias, proceedings could be rendered fair by a rehearing of the printed evidence on appeal (Edwards v United Kingdom (1993) 15 EHRR 417).


PII certificate

[70] The purpose of the PII certificate had been to bring the public interest as asserted by the Lord Advocate to the court's attention. It was intended to be an appropriate and convenient way to convey to the court what the Lord Advocate, as a Scottish Minister, asserted as the public interest. Such a certificate could be used to withhold information, whether contained in documents or otherwise (D v NSPCC [1978] AC 171, Lord Diplock at 218; Conway v Rimmer (supra) Lord Reid at 943 and 950; Re Pan American's Application [1992] 3 All ER 197, Lord Donaldson MR at 200). Equally, there was nothing to prevent its use to exclude oral evidence in the course of a proof (Re Ministry of Defence's Application [1994] NI 279).


[71] The Lord Advocate had a duty to bring the public interest to the court's attention (Air Canada v Secretary of State for Trade (No 2) [1983] 2 AC 394). It was not for the court to assess the public interest. The Lord Advocate's assertions had to be taken pro veritate. Specifically, with regard to the last sentence of paragraph 11e of the PII certificate, the Lord Ordinary required to accept as correct the view of the Lord Advocate on that matter for the purpose, important but limited, of determining the objection. That being so, there could be no suggestion that the Lord Ordinary had herself formed a view on whether the Lord Advocate's assertions were correct. Despite the Lord Advocate's assertion that the administrator's evidence was important, the Lord Ordinary could disagree. The administrator had simply been providing a "road map" through the very many documents and the complicated case history.


[72] Having come to a view on the balancing exercise in respect of the PII certificate, the Lord Ordinary had to decide separately whether to "recuse" herself and to discharge the proof on the basis that she was contaminated in some way by having read the PII certificate. The Lord Ordinary had looked at the averments on record to reach a decision on that matter. She had considered that she was not contaminated because, broadly and in any event, the content of the PII certificate simply mirrored what was averred by the respondents on record.


[73] The Lord Ordinary had not accepted the content of the PII certificate as truth or upheld it as a statement of fact. She had not reached a view or made any finding or determination in respect of the contents of paragraph 11e. This test had for apparent bias not been met. The fair-minded and informed observer knew the function to be performed by the Lord Ordinary in weighing the public interest (Glasgow Corporation v Central Land Board (supra), Lord Normand at 12; Lord Radcliffe at 18; Conway v Rimmer (supra), Lord Reid at 943).

identity and health

[74] The Lord Ordinary did not create an appearance of bias by allowing the administrator to be represented in the proceedings. A witness had the right to be represented, albeit that it was an unusual occurrence. The administrator's interests were not the same as those of the respondents. It was not the administrator who was asserting public interest immunity; she had a different but related interest, notably in her privacy and personal protection in terms of Article 8 of the European Convention. The submissions made on behalf of the administrator had not added anything to the balancing exercise to be carried out by the Lord Ordinary in relation to the public interest. The concerns anent the administrator's identity being disclosed had already been asserted in the PII certificate itself.


[75] Fairness did not require disclosure of the administrator's identity or further investigation into her health, nor did it require the administrator to complete her evidence, even if that had been possible.


[76] The administrator had an investigative function (POCA, Part 5), distinct from the adjudicative function of the court. Her evidence was not conclusive (Scottish Ministers v Buchanan (supra)). The administrator's reports proceeded on the assumption that there had been unlawful conduct and their sole function was to state whether property was recoverable. The administrator had reported on documents such as bank records, conveyancing files and building society records; the contents of which were not disputed. The documents were the subject of evidence and could therefore have been examined and referred to by the reclaimers. The administrator had been called as a witness to fact rather than opinion. Even if this were not the case, the Lord Ordinary would have attached little or no weight to her evidence, insofar as it constituted opinion, without being aware of her qualifications and experience. Accordingly, it was the respondents who had suffered as a consequence of the PII certificate being upheld.


[77] The fair-minded and informed observer would understand all of these features, and particularly the Lord Ordinary's judicial function, in forming a view on the administrator's testimony and in deciding at what stage to do so. The Lord Ordinary was given no indication of any material issues to be raised by the reclaimers, had the administrator returned to the witness box, or of any potential injustice, if she did not. The reclaimers were unable to articulate any relevant questions that they wished to put to the administrator in cross-examination. They had had very few admissible questions to put to her sometime assistant and successor, Mr Ramsay, in cross-examination. There was nothing said in the first reclaimer's submissions at proof to the effect that he was unable to present his defence due to the absence of the administrator or his inability to complete cross-examination.

Disregarding TESTIMONY

[78] The third reclaimer's submissions at proof had invited the Lord Ordinary to disregard the administrator's evidence, otherwise it was said that he would be prejudiced. The Lord Ordinary had agreed. It would have been unusual for the Lord Ordinary to decide, before taking the case to avizandum, how she was going to treat the evidence. There was no basis for speculating that the Lord Ordinary was not to be believed when she said that she had ignored the administrator's testimony.

Extortion

[79] The Lord Ordinary had to find, first, that there had been unlawful conduct in the form of extortion and, secondly, that the property had been obtained through that unlawful conduct. The Lord Ordinary found that the unlawful conduct was in the nature of extortion. Extortion was a threat that "unless" payment was made, something adverse would happen. The detriment had to emanate from the reclaimers, in the sense that it was implicitly them or their agents who would be responsible for the harm. There was no misdirection on the part of the Lord Ordinary in defining extortion. The conduct satisfied the "unless" test. In that context, to refrain from doing something was a threat. It was sufficient that the reclaimers exploited an impression that they controlled violence in return for payment. It amounted to a "threat to use one's own position and influence as a lever to alter the position of another to his detriment" (Silverstein v HM Advocate (supra)).


[80] The respondents did not need to prove that the reclaimers had threatened the directors of Spring. It so happened that the authors of the criminal conduct were the reclaimers, but it could have been that the reclaimers had obtained the property through the unlawful conduct of others (POCA, s 242(1)). The respondents had merely offered to prove unlawful conduct to the civil standard. The commencement of payments for no commercial reason or purpose permitted the inference to be drawn that a threat, express or implied, had been made. It would not suffice if the threat were known to be idle, but, if the person to whom the threat was made thought that the threat would be executed, that was sufficient. The facts found by the Lord Ordinary demonstrated a mutual understanding or "nudge and wink" situation. There was nothing wrong with the quality of evidence that yielded the inference.


[81] The Lord Ordinary's Opinion had to be read as a whole and not subjected to a fine textual analysis (Piglowska v Piglowski [1999] 1 WLR 1360). She had required to look at the totality of evidence, including the absence of any explanation for payments being made to RS Construction and A & S Leasing (Grunwick Processing Lab v Perera [2012] EWCA Civ 1250). The Lord Ordinary had explained sufficiently what she had found and had outlined her process of reasoning adequately. The Lord Ordinary had found intimidation proved as an inference from other factors. She had found facts from which she was entitled to conclude that unlawful conduct of the kind known as extortion had taken place.


[82] The reclaimers' defence had been, first, to put the respondents to their proof and, secondly, to persuade the court that the payments were for a commercial purpose or legitimate business reason and represented value for money. The defence position had been that there had been no threats of violence made to the directors of Spring. The "value for money" defence had been rejected by the Lord Ordinary.
It had been no part of the defence that Spring had simply entered into a bad bargain.


[83] The expressions "protection" and "protection money" had been explained by the witnesses who had adopted them in the course of the proof. In any event, "protection money" may be defined as "money extorted from shopkeepers, businessmen etc as a bribe for leaving their property, business etc unharmed" (Chambers Dictionary, 12th ed, 2011). Similarly, a "protection racket" was merely an example of the wider crime of extortion (Stoddart: "Extortion, Corruption and Related Offences": Stair Memorial Encyclopaedia, Criminal Law Reissue 5, para 391).

Standard of proof

[84] The Lord Ordinary had been correct to direct herself that there was no heightened or intermediate standard of proof (Mullan v Anderson (supra)). There were difficulties with trying to put a gloss on what is meant by the "balance of probabilities" (POCA, s 241(3)). In deciding whether a fact is more probable than not, a judge has to look at the totality of evidence, direct or indirect, in the round, in order to determine where the balance of probabilities lies (Toremar v CGU Bonus Limited [2009] CSOH 78, Lord Brodie at paras [7] and [85]). There was no connection between the standard of proof and the seriousness of the allegations or the fact that the allegations were of criminal conduct (In re S-B (Children) (supra), Lady Hale at para 11; B v Scottish Ministers 2010 SC 472). The court had to apply the same standard; that was whether something was more likely to have happened than not. It had been perfectly proper for the Lord Ordinary to concentrate on the provenance of the property which was averred to have been obtained by means of extortion. The respondents had offered to prove this by circumstantial evidence, including the reclaimers' inability to provide a coherent explanation of that provenance. In any event, the Lord Ordinary had not been entitled to make any findings that the reclaimers were guilty of a criminal offence (Serious Organised Crime Agency v Gale [2011] 1 WLR 2760).

Article 1, Protocol 1 ECHR

[85] It was accepted that Article 1, Protocol 1 was engaged, but there had been no violation of it. Deprivation of property had to be lawful, pursue a legitimate aim, and be reasonably proportionate to achieve that aim (AXA General Insurance Co v Lord Advocate (supra)). The POCA was sufficiently certain and predictable in its terms so as to be compatible with the rule of law. It pursued the legitimate aims of removing property from those who had obtained it by unlawful conduct and of disrupting the activities of those engaged in such conduct, all in the public interest. The state was allowed a wide margin of appreciation with regard to the tools for combatting crime. The POCA protected those who had acquired property in good faith and for value (POCA, ss 266(3) and 308). The first reclaimer had not sought to rely on such an exception.


[86] The first reclaimer had failed to found upon Article 1, Protocol 1 in the course of the proof. The Lord Ordinary had found that certain property had been obtained through unlawful conduct in the form of mortgage fraud, under exception of £20,000 traced to legitimate funds. This had been reflected in the recovery order. There was no evidence of mortgage payments emanating from a legitimate source. There was no evidence that the first reclaimer had a legitimate business or employment (Olupitan v Director of the Assets Recovery Agency (supra)). If Parliament had intended to exclude money defrauded from commercial lenders from the statutory scheme, it could have done so, but such exclusion would have undermined the entire scheme (ibid)). By recovering property obtained by fraud, the recovery order merely restored the status quo ante.

Decision
Apparent bias

[87] One interesting feature of the reclaimers' grounds of appeal was the concentration upon points which, the reclaimers maintained, would demonstrate apparent bias on the part of the Lord Ordinary. The contention, which they had apparently intended to make in framing the grounds of appeal, was that, if apparent bias were to be demonstrated, that would be the end of the case and the prayer of the petition would be refused. However, as was accepted by all parties at the Summar Roll hearing, in civil proceedings that result is unlikely to follow. In a reclaiming motion, if it is demonstrated that a Lord Ordinary hearing a proof has erred in some fundamental manner, which vitiates the findings in fact, the case does not come to an end with the victor in the Outer House becoming the automatic vanquished in the Inner House. Rather, in that situation, it will normally be necessary for the Inner House to carry out its own review of the evidence (and if necessary to hear additional evidence) and to reach its own decisions of fact based upon that evidence. That may be a lengthy process, but it is one that would require to be embarked upon. In that regard, it is not normally competent, as it may be in certain statutory appeals, for the court in a reclaiming motion to avoid this exercise by remitting the cause to the Outer House for a rehearing of the proof by a different Lord Ordinary (cf T v T 2001 SC 337, LP (Rodger) at para [68]). The reclaiming motion, for review of the Lord Ordinary's interlocutor, encompasses a rehearing, where appropriate, of the evidence which was, or ought to have been, adduced.


[88] The settled test for determining whether there is apparent bias is set out in Porter v Magill [2002] 2 AC 357, where Lord Hope said (at para 103; as adopted in Helow v Secretary of State for the Home Department 2009 SC (HL) 1, Lord Hope at para [5], Lord Mance at para [39]):

"The question is whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased."

The conduct of the Lord Ordinary must be looked at as a whole and in the context of the circumstances of the case (Porter v Magill (supra), Lord Hope at paras 91 and 102 - 103). It is not necessary for there to be substantive grounds upon which to criticise the Lord Ordinary's reasoning. The outcome of the proceedings, as determined by the Lord Ordinary, will be vitiated in the event of apparent bias (Helow (supra), Lord Rodger at para [12]), which, by implication, calls into question the true reasoning underlying that outcome.


[89] The fair-minded and informed observer will have in mind the status of the Lord Ordinary as a professional judge, who has taken a judicial oath to decide cases impartially (Helow (supra), Lord Rodger at para [23]) even if that is not a panacea or guarantee of impartiality (Helow (supra), Lord Walker at para [27], Lord Mance at para [57]).

LEGAL AID
[90] Although, at times, the focus of the attack in relation to the refusal by the Lord Ordinary to adjourn was that it displayed apparent bias, at others it appeared to be being suggested that that refusal amounted to a wrongful exercise of discretion. There is no substantial merit in the argument that the Lord Ordinary exercised her discretion wrongly in refusing to adjourn the proof. The Lord Ordinary's decision was entirely reasonable. The case had been in progress for over 5 years before the motion was made. The diet of proof had begun on 19 May 2009. It was not until 22 February 2011 that the third reclaimer sought an adjournment to apply for legal aid. A litigant, including a party litigant, must take responsibility for the conduct of his own case (see Party Litigants in the Court of Session: Statement of Service Standards (March 2011) para 5.5). That includes consideration of his eligibility for legal aid and whether or not legal representation ought to be engaged. Such matters should be resolved at the earliest practicable opportunity.


[91] If a litigant fails to obtain legal aid, he is not denied a fair trial if the court insists that the case against him should proceed as scheduled. The Lord Ordinary was entitled to refuse the motion for an adjournment by reason of its lateness alone; there having been no adequate explanation as to why any adjournment was necessary or otherwise justified at such a late stage. It may be correct to assert, as a generality, that it might have been of some benefit had the third reclaimer engaged legal representation for the closing stages of the proof, but even that is highly doubtful given that counsel would have had to attempt to pick up the threads of evidence which had already run through what had become a very lengthy proof.


[92] It is not a requirement of a fair trial that a party is legally represented. The court cannot force a litigant to engage a lawyer. The third reclaimer was not denied the opportunity to obtain legal representation. He had had ample opportunity to do so and he chose not to. The grant of an adjournment would necessarily have disrupted proceedings to a significant extent.


[93] The Lord Ordinary had recognised the commonality of interests between the reclaimers. The first reclaimer had remained represented by agents and both junior and senior counsel. It is, of course, generally to be expected that a party litigant will have less of an understanding of the law attaching to proceedings than any legal representatives. However, he is not entitled to found upon his lack of understanding in order to gain the opportunity to engage representation, or funding for that purpose, at a stage of the proceedings of his own choosing. The Lord Ordinary has sufficiently justified the manner in which she exercised her discretion. There is nothing in her reasoning to suggest that she misdirected herself in law, took any irrelevant factor into account or disregarded a relevant factor. The decision reached was one which was reasonably open to her. Indeed any different decision would have been highly unusual in the circumstances.


[94] There is no real possibility of bias being perceived as a result of the Lord Ordinary's decision. The fair-minded and informed observer would have been aware that the Lord Ordinary had granted an adjournment at an earlier stage of the proceedings and this had allowed the first reclaimer to secure a full legal aid certificate. On this later occasion, she had reached a different conclusion. The Lord Ordinary's decision was made according to the circumstances prevailing at the time and not as a result of any apparent bias against the third reclaimer's interests.

PII CERTIFICATE
[95] The reclaimers allege apparent bias on the part of the Lord Ordinary arising from her treatment of the PII certificate; specifically her approach to paragraph 11e. Again, however, there is also a suggestion that her decision on the certificate amounted to an error of law.


[96] Throughout her Opinion, the Lord Ordinary refers to "upholding" the PII certificate (paras [68], [72], [92] and [409]). However, the relative interlocutor dated 16 June 2009 records, with more technical accuracy, that the Lord Ordinary "refuses... to overrule" the PII certificate. This is a better reflection of what the Lord Ordinary actually did, and ought to have done, in relation to the certificate when sustaining what was an objection taken to a proposed line of questioning. However, specific reference to the document itself may be rather misleading.


[97] The certificate is only the means by which the Lord Advocate choses to make his view of the public interest known. It is a competent, if relatively unusual, mode of objecting to oral testimony (see eg Re Ministry of Defence's Application [1994] NI 279). The lodging of such a certificate is a standard method whereby the respondents or the United Kingdom government can enter a process and present their position to the court in a formal manner. Where, as here, the respondents are actually a party to the particular action, however, this can equally well be achieved by way of an appropriate submission in support of an objection to particular questions, such as those designed to reveal an administrator's identity in the face of the court's earlier rulings in the appointment process. Had that simpler, and perhaps less aggressive, procedure been adopted, the Lord Ordinary would not have "upheld" or "overruled" any certificate, as none would have existed. She would simply have decided whether the interests of justice required preservation of the witness's anonymity in all the circumstances. She would accordingly have determined whether evidence of the administrator's identity was relevant and whether, in any event, the objection should be sustained on the basis of public interest and/or, indeed, private safety. With regard to the latter, it was a matter for the Lord Ordinary to determine whether to hear counsel appearing for the administrator.


[98] The function of the Lord Ordinary was, therefore, to adjudicate on what was an objection to a line of evidence. It was not to reach a view on the status or content of the certificate. The Lord Ordinary states that she came to a view on the PII certificate on the "basis that the public interest in maintaining the system of interim administrators ... with due regard for their personal safety outweighed any detriment that may be suffered by the [reclaimers] ..." (para [68]). The Lord Ordinary states in the same paragraph that "she came to the view that the balance lay in upholding the certificate". This meant simply that she had decided that the balance lay in upholding the public interest objection, as asserted by the respondents and certified by the Lord Advocate. In that context, she was exercising what is ultimately a discretionary power (Glasgow Corporation v Central Land Board 1956 SC (HL) 1, Lord Keith at 26). The court is unable to find any fault in her exercise of this discretion. None of the standard bases for the successful review of a discretionary decision (supra) have been made out.


[99] The reclaimers take issue with the wording of paragraph 11e of the certificate. However, these words were simply contentions put forward by the Lord Advocate relative to the potential risk to the administrator. In determining the issue of whether to preserve the administrator's anonymity, the Lord Ordinary was bound to have regard to those contentions as, at least possibly, accurate and to the assertion of the public interest unless it was patently wrong (Glasgow Corporation v Central Land Board (supra); AB v Glasgow etc. Blood Transfusion Service 1993 SLT 36, Lord Morison at 37). However, she could not, and did not, adjudicate upon that accuracy. The fair-minded and informed observer would not perceive her decision as prejudging the issues in the case. Rather, he would understand, correctly, that she had taken into account the Lord Advocate's as yet unproved concerns and his assertion of the public interest in reaching that decision.


[100] There is no substance in the separate but related contention that the reclaimers ought not to have been prevented from cross-examining the administrator regarding her experience and qualifications. It was accepted that this line of questioning was intended to "undermine" the effect of the PII certificate in order to reveal the true identity of the administrator. It was entirely proper for the Lord Ordinary to prohibit such a line of enquiry in circumstances in which she had already ruled upon that matter and no material change in circumstances was being advanced. In any event, ultimately the discovery of the identity and qualifications of the administrator would have had no bearing on the outcome of the case.

IDENTITY AND HEALTH
[101] The court cannot competently make an appointment of an interim administrator, or indeed any other officer, in an assumed name. If the name is assumed, the person with that false name does not exist in the form described by the moniker. He or she only exists, and is properly identified and described, using his or her true identity. Any order of the court appointing him or her must do so using that true identity. It follows that the true identity of any potential officer of the court must be revealed to the court prior to appointment and that identity must be properly recorded in the court process. The court may, of course, authorise that person to use an assumed name. It may do so by giving that person additional authority permitting him or her to proceed to execute his or her duties under that assumed name. That is a different matter. The original appointment must be of a real person. In so far as it may be thought that any dictum in Stirton v Scottish Ministers 2006 SLT 306 is to a different effect, it is disapproved.


[102] Similar considerations apply to a person giving evidence at a proof or trial. That person must be properly identified and his or her name and address recorded in the court process. If a party wishes the court to grant permission to have that person give his or her testimony under an assumed name, or to introduce any other measures to secure the anonymity of that person, a formal application to the court to do so must be made. This should preferably be done well in advance of the relevant hearing. The need for such an application presupposes that the true identity of the witness will be provided to the court. This may be done by giving the judge a written note. If that is the method chosen, the judge ought to look at the note to ensure that it does indeed contain the name and address of an actual person, so that the court can continue to see that, so far as practicable and desirable, candour and fairness prevail. The provisions of sections 271N to U of the Criminal Procedure (Scotland) Act 1995 are not applicable to civil proceedings. Nevertheless, they do contain useful guidance on what types of order may be made, the appropriate method of applying for such an order, and the circumstances in which an order might be made and thereafter varied or revoked.


[103] In respect of the anonymity of both appointed officers and witnesses, the court will, in many cases, wish to keep the true identity of the officer or witness confidential. It can take appropriate steps to do so by keeping the relevant order or permission and the note of the person's true identity in a secure place. But the fact that such procedure has been carried out must be properly recorded and thus open to scrutiny, where appropriate, by, for example, an appellate court in normal course.


[104] Nothing now turns upon the appointment of the administrator in an assumed name. That was done in a different process and the appointment stood until the administrator was replaced. The complaint made is that the Lord Ordinary ought to have made herself aware of the identity of the administrator in order to investigate whether the reclaimers' suspicions, that she was able to complete her evidence, were well founded. However, whilst the court is concerned about the anonymity of the administrator, her identity was not directly relevant to the issue of whether or not she could complete her testimony and whether the reclaimers had the opportunity to cross-examine her.


[105] The Lord Ordinary states that she had excused the administrator from attending the proof when the issue of her illness was first canvassed in June 2009. It is regrettable that there is no interlocutor to that effect. However, that is of little moment as the matter was fully revisited later. In particular, on 17 November 2009, the Lord Ordinary "allowed the administrator to be excused from giving evidence at that time", being satisfied by the medical certificate that she was unfit to do so (para [82]). The Lord Ordinary states that she "agreed with counsel that should [the administrator] become fit, a motion could be enrolled to have her return to complete her evidence" (ibid). The interlocutor of that date reflects the Lord Ordinary's decision, in that it "excused" the administrator "from further attendance at the proof", albeit that it made no mention of the possibility of revisiting that decision.


[106] The Lord Ordinary had taken steps to investigate the state of the administrator's health in order to inform herself sufficiently before taking a decision. It was not disputed that, despite her health problems, the administrator was undertaking other duties in the area of civil recovery (para [73]) and, to that extent, the reclaimers' assertions in that regard were well founded, but of no moment in the circumstances. The Lord Ordinary had been satisfied that the administrator was unable to fulfil her duties to the court by giving further evidence in relation to this particular case. It was certified on soul and conscience by a consultant psychiatrist, who had recently examined her, that the administrator was suffering from recognised mental disorders as a direct consequence of giving evidence. These would not be alleviated, according to the psychiatrist, by the alternatives of giving evidence by video link, commission or in writing. It was predicted that she would never be able to complete her evidence.


[107] It is a significant step to excuse a witness, who is physically capable of testifying, from giving evidence, especially when the witness is actually in the process of testifying. The excusal of a witness on the grounds of ill health should be permitted only in exceptional circumstances and for obvious reasons. It remains, however, a discretionary matter for the judge to assess whether a witness is unfit to give evidence in light of the available medical evidence and any other relevant and material circumstances (Scottish Ministers v Smith 2010 SLT 1100, LJC (Gill) at para 7). The court is unable to see any basis for concluding that the Lord Ordinary here exercised her discretion to excuse the witness on such grounds wrongly, where she did so in good faith to avoid endangering the health of the witness (British Broadcasting Corporation, Applicants 2013 SLT 749, LP (Gill) at para [37]). Once more, none of the standard bases for review of the use of discretion have been made out. Ultimately, the reclaimers' complaint is that the administrator may have been found well enough to complete her evidence, had the matter been investigated sufficiently. The Lord Ordinary, on the basis of the medical evidence before her, considered that this was not the case.


[108] Whilst a medical certificate is not conclusive or binding on the Court, nonetheless a Lord Ordinary is entitled to accept and rely on such a certificate in the absence of cogent reasons not to do so. The Lord Ordinary was entitled to accept the psychiatric diagnosis, set out in clear terms by a consultant, who had recent detailed knowledge of the administrator's condition, as sufficient to merit excusal. She did not require to probe the matter in greater depth merely because the reclaimers questioned the veracity of the psychiatrist's findings. It is understandable that the Lord Ordinary would not have anticipated revisiting the matter, given that the administrator's ill health was linked specifically to giving evidence in this case. In the circumstances, the Lord Ordinary cannot be faulted for declining to investigate the administrator's fitness to complete her evidence in greater depth.


[109] It would undoubtedly have been competent, and in the normal case advisable, for the court to seek an independent medical opinion from a doctor other than the witness's own treating physician or psychiatrist. Such an independent view would be less likely to be influenced by the doctor's understandable concern to put his patient's interests first. It might also tend to alleviate any concerns which the opposing party may have. However, it was essentially a matter for the Lord Ordinary to decide whether the material available to her was sufficient. In any event, once more, the court does not consider that, even if the administrator had been forced to complete her testimony, this would have had any material bearing on the outcome of the case. Ultimately, the administrator's views could have had no relevance to the Lord Ordinary's findings in fact based upon the primary sources of evidence adduced at the proof.

DISREGARDING TESTIMONY
[110] The reclaimers' related ground of appeal, that there was a perception of bias because the Lord Ordinary had not advised parties that she intended to disregard the administrator's part-heard evidence prior to making avizandum, is without substantial merit. The court is unable to see any grounds for complaint in respect of such a routine procedure. It is commonplace, for example, for evidence to be heard subject to reservation on questions of relevancy and competency. Parties are entitled to address the competency, relevancy and weight of any evidence in their closing submissions, if so advised, in the usual way. The Lord Ordinary was under no duty ex proprio motu to select certain aspects of the evidence on which to hear submissions and to advise on them at any earlier stage. The Lord Ordinary was entitled to take the entire case to avizandum, in order to reach a proper, considered determination of the case.


[111] The Lord Ordinary disregarded the administrator's evidence in its entirety in light of the respondents' concession that they no longer wished to rely upon it. It cannot be said in these circumstances that there has been any unfairness to, or appearance of bias against, the reclaimers in the absence of a contention that her testimony, as it was or might have been in cross-examination, was or would have assisted the reclaimers. The nature of the Lord Ordinary's judicial function in reaching a final determination on the facts and law would be known to the fair-minded and informed observer (Helow v Secretary of State for the Home Department (supra), Lord Hope at para 8). Specifically, he would know that the Lord Ordinary was capable of putting, and routinely called upon to put, evidence out of her mind, as she did when she decided that the administrator's evidence would carry no weight. Once that determination became known, it would be evident that to disregard the administrator's evidence could only have favoured the reclaimers. In effect, the reclaimers' submissions in this area were sustained.


[112] There is no force either in the reclaimers' allegation of apparent bias arising from the administrator having been represented by counsel in respect of both the issue of concealment of her identity and her excusal from giving further evidence. It was both competent and, in the circumstances, prudent for the administrator's interests to be represented separately from those of the respondents. In relation to her identity, the administrator was in effect stating an objection based upon her private need for her identity to remain confidential. In relation to her ill health, it was necessary for the administrator's position to be fully put before the court, given that her non-attendance, during the course of her testimony, could, without explanation, have been treated as a contempt of court and led to a warrant for her arrest. It was a matter for the Lord Ordinary to decide whether to hear the administrator personally or through counsel. Where the respondents had called upon the administrator to give evidence, it was reasonable to anticipate that her interests in not giving further evidence, because of her emergent unfitness, would be conveyed separately. Whilst the respondents represented the public interest in maintaining the anonymity of administrators in general, the administrator had different, if to some extent overlapping, interests in terms of her personal safety, health and privacy. That would also be the view of the fair-minded and informed observer, who would understand that the administrator's position required to be advanced separately from the public interest elements ultimately accepted by the Lord Ordinary.

Extortion

[113] The Lord Ordinary was properly concerned only with whether the property identified by the Scottish Ministers was "recoverable property"; that is property obtained through unlawful conduct. It was the crime of extortion which was ultimately alleged by the respondents to form the major element of the unlawful conduct. The High Court of Justiciary examined the definition of extortion from first principles, in connection with wheel clamping, in Black v Carmichael 1992 SCCR 709. The Lord Justice General (Hope) offered a modern interpretation (at 716) as follows:

"What then is the essence of the crime of extortion? ... [T]his was explained with sufficient clarity by Lord Justice-Clerk Hope in Crawford [(1850) J Shaw 309] at p. 322 in these terms: ... 'The crime consists in using the threat to concuss a person into paying a demand which he intends to resist; and the crime, the use of threat for that purpose, is the same, whether the party using the threat thinks his demand good or bad.'"

The High Court in Black v Carmichael (supra) generally endorsed Silverstein v HM Advocate 1949 JC 160, in which the Lord Justice Clerk (Thomson) had approached matters thus (at 163):

"The extraction of money from people by certain means is criminal ... In the case of threats the inducement is some form of pressure. Where the pressure consists in creating in the victim fear that, unless he yields, his position will be altered for the worse, it is criminal unless the pressure sought to be exerted is recognised by the law as legitimate ... I am quite satisfied that the threat to use one's own position and influence as a lever to alter the position of another to his detriment, unless that other buys immunity, is a relevant ground of charge."

A threat is merely a form of pressure which may, in turn, create fear in the victim that his position will be worsened unless he submits to the relative demand. The court has no difficulty in accepting that the reclaimers' conduct could properly be viewed as part of the species of crime envisaged by the Lord Justice Clerk (Thomson).


[114] The Lord Ordinary found that the owners of Spring were in fear of the reclaimers and had made payments under their direction. In the absence of a legitimate explanation for those payments being made, where the underlying contracts made no commercial sense and were held essentially to be fictitious, the Lord Ordinary was entitled to infer that Spring were paying "protection money". Despite the reclaimers' attempts to attack the Lord Ordinary's characterisation of "protection" or "protection money", the court is in no doubt that the Lord Ordinary had in the forefront of her mind that illegitimate type of activity which is synonymous with the expression "protection money". The court does not accept that the Lord Ordinary's findings in this regard were improperly dependent on certain witnesses' use of the words "extortion" or "protection money". The Lord Ordinary was, however, entitled to take account of this testimony and to draw inferences from it as a factor in determining whether the legal definition of the unlawful conduct had been met.


[115] The reclaimers complain that the circumstances of the present case do not satisfy the "unless" test put forward by Lord Mackay in Silverstein (supra), where he said (at 165):

"The simplest case is extortion of money by fear induced by a threat that some disaster will be brought on the victim unless the sum is paid. ... [T]he simplest way to put the matter is that that conjunction 'unless' is what couples up the two sides of the criminal transaction, and is enough to infer an illegality ... In other words the illegality of the whole thing consists in a threat that 'unless' a payment is made by the unwilling party something adverse to his interests will be done by the other. The important word is 'unless'."

However, Lord Mackay's formulation echoes the point made by the Lord Justice Clerk (Thomson) that a threat may just be the application of force or fear. Of course, "the simplest case" is extortion of money by an express and specific threat, but that does not exclude a less straightforward set of circumstances.


[116] The Lord Ordinary, in accepting the submission of the respondents, applied a definition thus:

"... extortion is obtaining payment not lawfully due, in return for refraining from exercising influence to the detriment of the victim. There is no need for threats of violence to be uttered ... even if the respondents did not have control over violence towards Spring Radio Cars' directors and its business, so long as they exploited the impression that they did, funds paid in respect of that have been extorted" (para [102]).

Given the inherent nature of the crime, and the obvious effect of the element of fear, it will often be the case that extortion must be proved by inference from the surrounding circumstances. This was demonstrated in the present case where the owners of Spring were found to be unwilling to admit in open court that extortion had taken place, but the contrary was proved from circumstances spoken to by other witnesses, notably admissions from Spring's owners to the opposite effect. The common law definition of the crime does not inhibit the conviction of persons, who are sufficiently seasoned as to refrain from spelling out the adverse consequences in the event of their victims' failure to comply with their sometimes subtly phrased demands. A victim may be justifiably fearful that his position will be altered for the worse without knowing exactly how this will prove to be. That money was paid to the reclaimers, or to third parties under their control, to avoid the dreaded unknown was sufficient for the Lord Ordinary to draw the appropriate adverse inference. The Lord Ordinary applied the correct test for extortion in considering whether the reclaimers had engaged in unlawful conduct and was fully entitled to draw the inferences which she did.

Standard of proof

[117] It was conceded, as it had to be, that the applicable standard of proof is the balance of probabilities (POCA, s 241(3); Serious Organised Crime Agency v Gale [2011] 1 WLR 2760). There is no intermediate or "heightened civil standard" (Mullan v Anderson 1993 SLT 835; B v Scottish Ministers 2010 SC 472). That much is clear. However, the reclaimers seek to qualify the position with reference to the quality of evidence required to meet the civil standard in the circumstances of this case. The quality of evidence necessary to meet the standard of proof, whether that is the civil or criminal standard, will depend on the circumstances of the case. Where the alleged facts are inherently improbable, it may be more difficult to prove that those facts are more probable than not. It does not follow, however, that proof of unlawful conduct will necessarily fall into the category of inherent improbability.


[118] Despite the somewhat opaque obiter dictum of Lord Morison on the inherent unlikelihood that "a normal person" will commit a serious crime (Mullan v Anderson (supra), at 842), proof of unlawful or criminal conduct in civil proceedings does not fall into any special category. There is no presumption that serious criminality is inherently improbable and there is no necessary connection between the seriousness of an allegation and its probability (In re S-B (Children) [2010] 1 AC 678 at 686, citing In re B (Children) (Care Proceedings: Standard of Proof) [2009] AC 11, Lord Hoffman at para 15, Lady Hale at para 73). Thus,

"It would be absurd to suggest that the tribunal must in all cases assume that serious conduct is unlikely to have occurred. In many cases, the other evidence will show that it was all too likely. If, for example, it is clear that a child was assaulted by one or other of two people, it would make no sense to start one's reasoning by saying that assaulting children is a serious matter and therefore neither of them is likely to have done so" (ibid).

In all cases, the probability of the alleged conduct will depend on the whole circumstances of the case. Where the principal question is whether property was obtained through unlawful conduct, rather than whether the reclaimers themselves have committed any particular unlawful act on any particular occasion (POCA, s 242(1)), there is even less force in the argument that a higher degree of cogency, quality or quantity of evidence is required according to the gravity of the allegations (Olupitan v Director of the Assets Recovery Agency [2008] Lloyd's Rep FC 253, Carnwath, LJ at paras 22 - 24).


[119] The court has no difficulty with the Lord Ordinary's application (para [102]) of the appropriate standard of proof. In particular, a requirement that "there must be stronger evidence when the allegation is a serious one" (ibid, emphasis added) does not form part of the law for the reasons given. Such a ratio cannot be derived from the dicta of the Full Bench in Mullan v Anderson (supra). That being so, it is sufficient to record that the judgment of the United Kingdom Supreme Court in In re S-B (Children) (Care Proceedings: Standard of Proof) (supra) reflects the existing position in Scotland and, insofar as it addresses the application of the civil standard of proof, ought to be followed.

Article 1, Protocol 1

[120] The authorities cited in respect of the calculation of quantum in confiscation cases (eg R v Waya [2013] 1 AC 294) are of little assistance in assessing the proportionality of recovery orders. In the former, the proportionality is measured in terms of the benefit derived from proven criminal conduct. In the latter, a wholly distinct legislative regime operates in which the concept of benefit is irrelevant (see eg Olupitan v Director of the Assets Recovery Agency (supra)). The only question for the Lord Ordinary was whether the property of the reclaimers had been obtained by unlawful conduct. That question is answered irrespective of whether the property can be said to represent any kind of benefit or profit from criminal enterprise (cf R v Waya (supra), Lord Walker at para 26) or whether the means of seizing the property is justified by the public policy objectives underlying the legislative regime (see eg HMA v McSalley 2000 JC 485, Lady Cosgrove at 495; AXA General Insurance Co v Lord Advocate (supra), Lord Reed at para 126). The State's interference with the reclaimers' estate is restricted to the recovery only of such property as has been obtained by unlawful conduct. That is sufficient to ensure proportionality for the purposes of the European Convention. Recoverable property, by definition, is property that has not been obtained legitimately and so is not legitimately held. Its recovery in civil proceedings is, therefore, entirely legitimate (Scottish Ministers v Buchanan [2006] CSOH 121, Lord Penrose at para [6]) even if it chances to encompass a family home. The court is satisfied that the Lord Ordinary's conclusions that the houses and other assets were derived from unlawful conduct were entirely justified on the evidence; notably including the absence of any legitimate sources for almost all of the funding of the purchases, developments and accumulations of more liquid amounts in the accounts. Where the source was derived not from extortion or the proceeds of drug dealing but from institutional lending, the court is equally content that the Lord Ordinary's findings that the loans were fraudulently obtained were also merited given the lack of legitimate income to support the approval of these loans. In this respect, the court endorses the approach of the Court of Appeal in Olupitan v Director of the Assets Recovery Agency (supra). Similar considerations apply to any repayments. Where funds were found to have come from legitimate sources the Lord Ordinary properly excluded the relevant amounts from the recovery order.


[121] For all of these reasons, the reclaiming motion is refused in so far as relating to the first respondent and reclaimer's grounds of appeal 1 to 5, 6(v) and 14 and the third respondent and reclaimer's grounds 1 to 6.


BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/scot/cases/ScotCS/2013/2013CSIH81.html