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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> The National Crime Agency v Robb [2014] EWHC 4384 (Ch) (23 December 2014) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2014/4384.html Cite as: [2015] 1 CH 520, [2015] WLR(D) 1, [2015] Ch 520, [2015] 3 WLR 23, [2014] EWHC 4384 (Ch), [2015] Lloyd's Rep FC 161, [2015] 1 Ch 520 |
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2014] EWHC 4384 ( Ch) | ||
CHANCERY
DIVISION
(on transfer from the Queens Bench Division)
Strand, London, WC2A 2LL |
||
2014 |
B e f o r e :
CHANCELLOR
OF THE HIGH COURT
(SIR TERENCE ETHERTON)
____________________
THE NATIONAL CRIME AGENCY | Claimant |
|
| -and- |
||
GARY JOHN ROBB | Defendant |
|
| -and- |
||
| (I) PATRICIA ANNE CLARKE (II) SUSAN AND JOHN LATCHFORD (III) SANDRA AND GRZEGORZ KOCINSKI (IV) BRUCE AND PATRICIA NEIL-GOURLAY ( V) PETER BROOKS( VI) BETHAN BRYN JONES( VII) STUART SCOTT( VIII) PHYLLIS AND JAMES BOYDAND OTHERS |
Additional Claimants |
____________________
Robert Morris (instructed by Ison Harrison) for the Lead Additional Claimants
Hearing dates: 2nd, 3rd and 4th December
2014
____________________
VERSION
OF JUDGMENT
Crown Copyright ©
The
Chancellor
(Sir Terence Etherton) :
Introduction
Crime
Act 2002 ("POCA"). They began as a CPR Part 8 claim in the Queen's Bench Division by the Serious Organised
Crime
Agency
("SOCA") against Gary John
Robb
to recover the funds standing to the credit of a specified NatWest Bank account ("the Fund") as recoverable property within the meaning of section 304 of POCA. Recoverable property, that is to say property obtained through unlawful conduct as defined by section 241 of POCA, is, practically speaking, forfeited to the State: POCA sections 266, 280 and 460(2).
Robb
the Fund represents recoverable property obtained by Mr
Robb
through unlawful conduct within the meaning of Part 5 of POCA.
Chancery
Division, the
National
Crime
Agency
("the NCA") has been substituted for SOCA, which has ceased to exist and whose functions in relation to POCA have been assumed by the NCA, and 71 people have been reconstituted (having originally been third parties) or added as additional claimants. They are all people who seek declarations under section 281 of POCA ("section 281") that part of the Fund belongs them. As at 18 November
2014
the Fund stood at £1,499,487.09.
Background
challenged
by any of the parties represented before me.
Robb
was born in South Shields on 6 September 1962. His previous convictions include obtaining services by deception in January 1994 when he was fined, and in the following September for two counts of handling he received concurrent terms of six months' imprisonment.
Valley
which was intended to consist of 250 properties initially, with the potential to grow even larger. Marketing of these began in the spring/early summer of 2004 through Unwins, an English run firm based in the TRNC, acting as agents for AGA.
Robb
and AGA's performance of its contractual obligations. Only one house has ever been completed at Amaranta, and that was achieved by an investor who took over the task of construction himself.
Robb/AGA's
Account 2"). £1.384 million was from Amaranta investors and the balance mainly from Hz Omer investors.
Robb
opened a personal account (Mr
Robb's
Account 1"), and £1.8m was transferred into it from Mr
Robb/AGA's
Account 2. On 24 May 2005 a further £125,000 was paid in from Mr
Robb/AGA's
Account 2, probably representing the remaining sums from investors that had been paid to Unwins.
Robb
went to Thailand for the first time. It is unclear how long he spent there or how many times he went. He made substantial capital investments there in development land and in a company.
agency
was determined and collection of deposits and stage payments was taken over by Mr Talat Kursat, Mr
Robb's
lawyer.
Robb's
Account 1, of which over £1 million came from Mr Kursat's accounts and the balance from another source which must as a matter of reasonable and probable inference also represent investor money.
Robb
procured the transfer of a total of £1,119,757 to Thailand, either by Mr Kursat from Mr Kurst's Account 10 or by a Mr Alan Gowland, an associate of Mr
Robb,
or from Mr
Robb's
Account 1.
Robb.
On 25 May 2005 a European Arrest Warrant was issued for Mr
Robb
by the Republic of Cyprus.
Robb
gave written instructions from Thailand to transfer £1.495 million from Mr
Robb's
Account 1 to his personal account in Thailand. On 25 July those funds were restrained by Collins J when in the accounts of the Thailand Bank's corresponding bank in London.
Robb's
return to the country. This was lifted on 22 February 2006.
Robb
says he was effectively deported to the TRNC on terms that he collaborate with the efforts of others to achieve the completion of the Amaranta development. He claims he was prevented from doing so.
Robb
as to steps to be taken to complete the project. It failed to achieve significant results.
Robb
to England for "firearms offences". Mr
Robb
claims that was an illegal act as he was a citizen of the TRNC and no deportation treaty existed with the UK. On 8 July 2010 he pleaded guilty to two counts relating to offences under the Misuse of Drugs Act 1971 and was sentenced to five years' imprisonment. Having served that term he was then extradited to the Republic of Cyprus where he was
charged
with and pleaded guilty to
charges
relating to the illegal use of what the Greek part of the island considers to be stolen land; he was sentenced to 10 months' imprisonment.
The judgment of Mackay J
Robb's
instruction of 22 July 2005 to transfer a further £1.495 million from Mr
Robb's
Account 1 to Thailand, had the restraining order not been obtained, would have resulted in his removing a total of £2,693,757 of investor money (excluding the Gowland payments) from where it could be applied for the purposes for which it had been paid to AGA, and to a place where he could treat it as his own. Mackay J concluded in paragraph [57] that:
"this was plainly a course of action which [MrRobb]
set in train dishonestly and in order to defraud his customers, having abandoned such intention as he had to give them what they had contracted to receive."
Robb's
actions in relation to the proposed development were always intended to be a
vehicle
by which he could deprive investors of their money by promising to complete properties he knew would never be completed. He held that the business was not one which was fraudulent from the outset.
change
in paragraph [68] as follows:
"By the beginning of the year 2005 the picture isvery
different. The turning point, I consider, was [Mr
Robb's]
first
visit
to Thailand at the end of 2004, when I am satisfied he probably formed the idea of starting fresh business enterprises and property developments in Thailand with money abstracted from AGA. By the beginning of February, the month in which Unwins retainer was cancelled, a significant event in this affair as I find, the scheme was in place, albeit some work on the ground continued on a diminishing and cosmetic basis over the next few months. By the beginning of February, I am satisfied on balance of probabilities, [Mr
Robb]
had formed the intention to extract with the help of Talat Kursat and others as much cash from the business as he could, and that the incentive schemes, often the hallmark of fraud in such circumstances were introduced to that end. It became his intention to remove himself and as much customer money as he could to make a fresh start in the east. For the whole of the period from 1 February 2005 until the attempted transfer of the 22 July 2005 he was acting dishonestly and fraudulently, and was conspiring with others principally Kursat to achieve that end."
Robb
from February 2005 could compendiously be described as fraudulent and more particularly, in terms of the law of England and Wales, offences of obtaining property/money transfers by deception under sections 15 and 15A of the Theft Act 1968, the common law offence of conspiracy to defraud, and fraudulent trading under section 458 of the Companies Act 1985, then in force but since repealed.
"All credits in [MrRobb's]
[A]ccount 1 were held by the defendant personally and had the common feature that they represented money investors had paid, as they believed, to AGA in expectation that it would be spent solely and exclusively on completion of their contracts. It therefore follows, as I find, that the attempt to remove £1.495m on 22 July 2005 was itself unlawful conduct in that it was a fraudulent step in the conspiracy to defraud investors by appropriating the credit in that account, representing as it did their aggregated payments, and putting it to a use which as the defendant knew was inconsistent with the purpose for which the payments were made. This was achieved by [Mr
Robb]
acting in a conspiracy to defraud investors with Talat Kursat and probably other employees at AGA in the TRNC."
Section 281
victims
of
crime
who can satisfy the statutory condition set out in that section to obtain a declaration in civil proceedings that property alleged by the NCA to be "recoverable property" as defined in POCA belongs to them.
"281Victims
of theft, etc.
(1) In proceedings for a recovery order, a person who claims that any property alleged to be recoverable property, or any part of the property, belongs to him may apply for a declaration under this section.
(2) If the applicant appears to the court to meet the following condition, the court may make a declaration to that effect.
(3) The condition is that—
(a) the person was deprived of the property he claims, or of property which it represents, by unlawful conduct,
(b) the property he was deprived of was not recoverable property immediately before he was deprived of it, and
(c) the property he claims belongs to him.
(4) Property to which a declaration under this section applies is not recoverable property."
"(4) Property is all property wherever situated and includes—
(a) money,
(b) all forms of property, real or personal, heritable or moveable,
(c) things in action and other intangible or incorporeal property.
(5) Any reference to a person's property (whether expressed as a reference to the property he holds or otherwise) is to be read as follows.
(6) In relation to land, it is a reference to any interest which he holds in the land.
(7) In relation to property other than land, it is a reference—
(a) to the property (if it belongs to him), or
(b) to any other interest which he holds in the property.
Issues
Chief
Master Marsh gave directions in the section 281 applications by an order made on 14 May
2014.
2014.
He directed that any existing third parties who wished to continue to pursue a claim under section 281 should notify the court of their wish by no later than the same date and time. All such persons, whether existing third parties or new applicants, were designated "additional claimants". As I have said there are 71 additional claimants. The total number of investors is not known but there were not less than 178 of them.
Chief
Master Marsh also ordered that the applications of the lead claimants be listed for trial and that, without prejudice to any further issues which might later be identified or agreed, the "preliminary issues" set out in schedule 2 to his order be considered at that trial. Those issues are set out in the appendix to this judgment.
My findings
Robb
and AGA conspired to defraud by ceasing to honour their obligations to the investors and to transfer all investors' payments to Mr
Robb
for his personal use and enjoyment, Mr
Robb
and AGA held the payments by the lead claimants or their traceable proceeds on constructive trust for the lead claimants ("the fraud constructive trust"). The second is that, from the time when the lead claimants claimed the return of their payments, that is to say, at the latest, when they joined the present proceedings, their transactions were rescinded and their payments or their traceable proceeds were held on trust for them ("the rescission trust").
"I agree that [the] stolen moneys are traceable in equity. But the proprietary interest which equity is enforcing in such circumstances arises under a constructive, not a resulting, trust. Although it is difficult to find clear authority for the proposition, when property is obtained by fraud equity imposes a constructive trust on the fraudulent recipient: the property is recoverable and traceable in equity. Thus, an infant who has obtained property by fraud is bound in equity to restore it: Stocksv.
Wilson [1913] 2 KB 235, 244; R. Leslie Ltd.
v.
Sheill [1914] 3 KB 607. Moneys stolen from a bank account can be traced in equity: Bankers Trust Co.
v.
Shapira [1980] 1 W.L.R. 1274, 1282C-E: see also McCormick
v.
Grogan (1869) L.R. 4 H.L. 82, 97".
view
expressed there by Lord Browne-Wilkinson has been subject to intense scrutiny and much criticism by scholars and also some judges, most notably Rimer J in Shalson
v
Russo [2003]
EWHC
1637 (
Ch),
[2005]
Ch
281, esp. paras. [108] to [119]. Some of the criticism has focused on the conceptual difficulty of finding a constructive trust in the case of theft where the stolen goods are still identifiable and the
victim
has not lost legal title:
Virgo,
The Principles of Equity & Trusts (2012) at pp. 298-299. That particular issue does not arise in present case or the usual case of fraud where title has passed to the criminal.
victim
arises immediately upon the commission of the fraud has focused on the difference between a
void
and a
voidable
transaction. The overall consensus, both judicial and academic, is that where a transaction is not
void
but is
voidable
for fraud, the fraudster acquires legal and beneficial title to the
victim's
property and when the transaction is rescinded or set aside, but not before then, the equitable title to that property revests in the
victim:
see Russo
v
Shalson at [120] to [127] and the cases cited there; cf the analysis of Ben McFarlane in The Structure of Property Law" (2008) at p. 302 of a distinction between a trust immediately imposed on the fraudster and rescission necessary for the
victim
to assert his power, as beneficiary of the trust, to impose a duty on the fraudster to transfer the right held on trust to the
victim.
v
Hambrouck [1921] 1 KB 321 at 332 and 325, Rimer LJ in Russo
v
Shalson, and Millett J in El Ajou
v
Dollar Land Holdings plc [1993] 3 All ER 717, 734, that in the case of a
voidable
transaction a property interest only revests in the
victim
of fraud when the transaction is rescinded. Prior to that event, the
victim's
power to rescind constitutes a "mere equity".
Robb
to another investor in 2005, but who rescinded by seeking repayment of their money in 2006.
v
Caldwell [1965] 1 QB 525; Shalson
v
Russo at paragraph [120]; and generally O'Sullivan, "Rescission as a self-help remedy: a critical analysis" [2000] 59 CLJ 509. The additional claimants plainly gave that indication when they joined these proceedings in order to claim a declaration under section 281 that part of the Fund belongs to each of them.
voidable
for fraud even where the transaction, as here, was not induced by fraud but is affected by supervening fraud at a later time: cf
Virgo,
The Principles of Equity & Law (2012) at pp. 299-300. There are some who would say that a proprietary restitutionary remedy for unjust enrichment cannot lie where the transaction was legitimate at the outset and title was intended to pass. On one
view
that may be seen as linked to the question whether the trust which arises on rescission for fraud is a resulting trust or a constructive trust.
view
in El Ajou
v
Dollar Land Holdings plc at 734 that the trust which arises on rescission for fraud is a resulting trust. Lord Browne-Wilkinson in Westdeutsche thought it was a constructive trust. Both
views
have academic support. I prefer that of Lord Browne-Wilkinson for the reasons given by Professor Graham
Virgo
in The Principles of Equity & Trusts at p. 300. I should add, for completeness, that William Swadling is the leading academic proponent of the
view
that no trust of any kind arises on rescission: William Swadling, "Rescission, property and the common law" (2005) 121 LQR 123; William Swadling, "The Fiction of the Constructive Trust" (2011) 64 Current Legal Problems 399. That, however, is not the present state of the jurisprudence binding on me.
various
writings of Professor Robert
Chambers),
I also consider that the fact that fraud only subsequently arises in a transaction which began as a legitimate transaction is not, of itself, a bar to rescission or to a constructive trust then arising. There is no binding authority on that point one way or the other: see generally the discussion in Goff & Jones, The Law of Unjust Enrichment (8th ed) paras. 37-07 to 37-24 on the limits of proprietary relief for unjust enrichment. Whatever may be the position in other cases, fraud is special. As Lord Bingham said in HIH Casualty & General Insurance Ltd
v
Chase
Manhattan Bank [2003] UKHL 6 at paragraph [15]:
"… fraud is a thing apart. This is not a mere slogan. It reflects an old legal rule that fraud unravels all: fraus omnia corrumpit. It also reflects the practical basis of commercial intercourse. Once fraud is proved, 'itvitiates
judgments, contracts and all transactions whatsoever': Lazarus Estates Ltd
v
Beasley [1956] 1 All ER 341 at 345, [1956] 1 QB 702 at 712 per Denning LJ."
victim
of fraud, which supervenes in a transaction, to set aside the transaction so as to pursue a proprietary claim even though that will have priority over other unsecured creditors of the fraudster or of any other person who has received traceable proceeds. On ordinary principles, however, rescission is not possible where it would prejudice the interests of innocent third parties, or substantial restitution by both parties is not possible, or the innocent party has affirmed the transaction; and a constructive trust is no longer possible when it has ceased to be possible to identify the transferred property or its traceable proceeds in the hands of the wrongdoer. All of those bars are more likely to arise in the case of supervening fraud than where the transaction has been induced by fraud. In the case of the lead claimants, none of those bars are present in relation to their respective interests in the Fund. There has been no suggestion in the case of any of the lead claimants that rescission was precluded by prejudice to third parties or by affirmation of their contracts.
version
of a coloured plan handed to the Court during the trial ("Diagram 1"). As that diagram indicates, the Fund (shown on the right hand side of the diagram) was paid from Mr
Robb's
Turkish HSBC account ("Mr
Robb's
Account 1"). That account received total net credits (
viz
net of credits and debits attributable to temporary dated deposit investments and interest) of £3,350,951.75. Those net credits came from 5 different sources, which are identified in 5 different boxes on Diagram 1. Those different sources were (1) Mr
Robb/AGA's
Account 2 (which is Box 1); (2) Mr Kursat's Turkish Account 10 (which is Box 3); (3) Unwin's LTC north Cyprus account (Unwins' Account 3") (which is Box 4); (4) an unidentified account ("the unidentified account") (which is Box 2); and (5) unidentified sources ("the unknown sources") (which is Box 5).
channelled.
It is not necessary to explain them in detail here. Mr Templeman states that the majority of investors purchased through Unwins. NCA concedes that, apart from the money from two investors, Mr Hawkins and Mr Priest, which was paid into Mr
Robb's
Account 1 directly from Unwins' Account 3, all the investors' net payments (
viz.
less fees and commission) made through Unwins eventually found their way into Mr
Robb/AGA's
Account 2. Some investors paid directly into that account. NCA also concedes that investors' payments made to Mr Kursat directly or indirectly found their way into Mr Kursat's Turkish Account 10. It follows that, provided investors can show that they made payments through Unwins or Mr Kursat (payment routes1,2,3,4,6) or directly into Mr
Robb/AGA's
Account 2 (payment route 7), NCA will accept that the net payments made by them found their way into one of the three accounts – Mr
Robb/AGA's
Account 2, Mr Kursat's Turkish Account 10 and Unwins' Account 3 (Boxes 1, 3 and 4 on Diagram 1) - that can be identified as feeding Mr
Robb's
Account 1, from which the Fund was itself paid. It is common ground that, on the present state of the evidence, any investor money
channelled
through the other three payment routes identified by Mr Templeman (payment routes 5,8,9) cannot be traced through to the Fund.
Robb/AGA's
Account 2, Mr Kursat's Turkish Account 10 and Unwins' Account 3 into Mr
Robb's
Account 1 and from there into the Fund. Sections 304 to 307 and 308(1) of POCA lay down statutory rules for following and tracing recoverable property, which broadly mirror ordinary principles of law and equity. There are no similar statutory provisions applicable to a
victim
who seeks to show that property belongs to him or her for the purposes of an application for a declaration under section 281. I consider that the investors generally, and lead claimants in particular, can, to the following extent and in the following way, show that part of the Fund belongs to each of them applying ordinary principles of law. Both Mr
Robb/AGA's
Account 2 and Mr Kursat's Turkish Account 10 were accounts in which investors' money and non-investors' money was mixed and from which there were debits from time to time.
Robb/AGA's
Account 2 was in credit to the amount of £303,703.44, and that a total of £6,394,452.78 was credited to that Account between 9 February 2004 and 21 October 2004, of which £1.675 million was attributable to investors' payments through Unwins or direct and a further £561,110 was attributable to money transferred from Mr Kursat's Turkish Account 10. The balance standing to the credit of that account on 21 October 2004 was £2,122,394.76 before the debit of £1.8 million paid to Mr
Robb's
account 1. After the payment of that sum the balance on Mr
Robb/AGA's
Account 2 was £322,394. A further payment of £125,000 was paid out of that account to Mr
Robb/AGA's
Account 1 on 25 May 2005, making an aggregate of £1,925 million paid from Mr
Robb/AGA's
Account 2 to Mr
Robb's
Account 1.
Robb/AGA's
Account 2 between 9 February 2004 and 21 October 2004 through Unwins or direct. It is not possible to attribute to particular investors the £561,110 transferred to that account from Mr Kursat's Turkish Account 10 during that period. It is not disputed by NCA, however, that the £561,110 is attributable generally to investors both as a matter of evidence and principle. As regards principle, insofar as investors' money was mixed with non-investor money the assumption must be that the non-investor money was dissipated before investor money: cf Re Hallett's Estate, Knatchbull
v
Hallett (1880) 13
Ch
D 696 and Snell's Equity (32nd ed) para. 30-057.
Robb/AGA's
Account 2 is that a total of £2,236,110 investors' money was paid in between 9 February 2004 and 21 October 2004 and there was a credit balance at that date of £2,122,394.76 immediately before the debit of £1.8 million. Again, adopting the assumption that non-investor money was dissipated first, the entirety of that credit balance is to be treated as investors' money. The balance of £113,715.24 of investors' money (
viz.
the difference between the total of £2,236,110 of investors' money and the credit balance of £2,122,394.76 on 21 October 2004) must also have been dissipated. The credit balance of £2,122,394.76 as at 21 October 2004 was more than the aggregate of £1.925 million transferred to Mr
Robb's
Account 1 in part on that day (£1.8 million) and in part on 25 May 2005 (£125,000), and so the entirety of that £1.925 million is to be treated as investors' money.
Robb/AGA's
Account 2 is best resolved by treating both accounts as one for tracing purposes since payments from all investors, other than Mr Hawkins and Mr Priest, were
channelled
into one or other or both of those accounts. It has been established that a total of £2,956,187 investors' money was credited to Mr Kursat's Turkish Account 10 between 1 April 2005 and 11 July 2005 (the date the Fund was paid out of Mr
Robb's
Account 1). A total of £775,000 was paid out of that account into Mr
Robb's
Account 1 during that period, in four tranches. On the footing that non-investor money was dissipated first, the whole of the £775,000 is attributable to investor money. I was not told whether it is possible to establish whether any investor money other than the £775,000 paid into Mr
Robb's
Account 1 had been dissipated by the time the final one of the four payments making up the £775,000 had been paid.
Robb/AGA's
Account 2 and Mr Kursat's Account 10 for tracing purposes means that, on the information currently before the court, there was a total of £5,192,297 total investor payments into those accounts during the relevant periods (being the aggregate of £2,236,110 paid into Mr
Robb/AGA's
Account 2 between 9 February 2004 and 21 October 2004 and £2,956,187 paid into Mr Kursat's Turkish Account 10 between 1 April 2005 and 11 July 2005). Out of those investor payments, a total of £2.7 million was paid into Mr
Robb's
Account 1 (being the aggregate of £1.925 million from Mr
Robb/AGA's
Account 2 and £775,000 from Mr Kursat's Turkish Account 10).
Robb/AGA's
Account 2 and Mr Kursat's Turkish Account 10 is represented by the respective payments made by each investor into those accounts.
Robb's
Account 1 as at the date of the payment of the Fund on 22 July 2005 represented by each of the sources from which the £3,350,951.75 was derived. Those proportions are 80.57 per cent from Mr
Robb/AGA's
Account 2 and Mr Kursat's Turkish Account 10 taken together (£2.7 million); 4.58 per cent from Unwin's account 3 (£153,414), of which 1.44 per cent represents the proportion attributable to the investors Mr Hawkins and Mr Priest (£48,314) and 3.14 per cent represents the proportion attributable to non-investors (£105,100); 10.07 per cent from the unidentified account (£337,436); and 4.78 per cent from the unknown sources (£160,101.75).
v
Noble (1816) 1 Mer 572, namely that the sum first paid in is first paid out: debits are allocated to credits in the order in which they take place. That principle is, however, one of convenience and will be displaced if, for example, another approach is more practical or more consistent with the intention of those contributing to the fund: Barlow Clowes International Ltd
v
Vaughan
[1992] 4 All ER 22.
Robb's
Account 1 and making up the £3,350,951.75 credited to that account, and in what amount from each such source, the Fund paid out of that account on 22 July 2005 was derived. Furthermore, it was a critical finding of Mackay J (in paragraph [71] of his judgment) that all the investors believed that the money they paid would be spent solely and exclusively on the completion of their contracts. It is fair and reasonable to infer, therefore, that it is in accordance with the intention of the investors that, in the event of the impracticality of allocating credit and debits in accordance with Clayton's Case, the Fund should be treated as derived from the five sources making up the £3,350,951.75 in Mr
Robb's
Account 1 in the same proportions as they made up that amount in that account. That would be similar to the pro rata approach applied in Barlow Clowes.
Robb/AGA's
Account 2 and Mr Kursat's Turkish Account 10 into Mr
Robb's
Account 1. In establishing what part of the £2.7 million transferred from those accounts into Mr
Robb's
Account 1 is attributable to each of the lead claimants, it is again practically necessary and consistent with the inference to be drawn as to the investors' intentions to adopt a Barlow Clowes pro rata approach rather a traditional Clayton's Case analysis. In accordance with that approach, and making no distinction between the position of the additional claimants and the other investors, each additional claimant's share of the £2.7 million is to be calculated in the following way: (1) establish the percentage of the total investors' payments of £5,192,297 represented by the total payments of that additional claimant into Mr
Robb/AGA's
Account 2 and Mr Kursat's Turkish Account 10; (2) that same percentage is applied to the £2.7 million to establish that additional claimant's share in that sum. Each lead claimant's share of the Fund would then be that same percentage of the 80.57 per cent of the £3,350,951.75 in Mr
Robb's
Account 1.
Robb/AGA's
Account 2 and partly through Mr Kursat's Turkish Account 10. That is 1.51 per cent of the £5,192,297 investors' money credited to those accounts during the relevant periods. He therefore had a 1.51 per cent share of the £2.7 million paid from Mr
Robb/AGA's
Account 2 and Mr Kursat's Turkish Account 10 into Mr
Robb's
Account 1. The payment of £2.7 million made from Mr
Robb/AGA's
Account 2 and Mr Kursat's Account 10 amounts to 80.57 per cent of the £3,350,951.75 which was credited to Mr
Robb/AGA's
Account 1. Mr Neill-Gourlay's interest in Mr
Robb's
Account 1 was, therefore, 1.51 per cent of the 80.57 per cent, that is to say 1.22 per cent. He has a proprietary claim to the same percentage of the Fund since the Fund is to be treated as derived pro rata from the same sources as Mr
Robb's
Account 1 from which the Fund was paid.
value
of the Fund because section 281 should be interpreted to assist
victims
and to protect them to the greatest possible extent; consistently with that, the words "deprive" and "belong" should have the same wide meaning as in the Theft Act 1968; only the 71 claimants have come forward to claim an interest in the Fund and no more can come forward now in
view
of the time limit for such claims imposed by
Chief
Master Marsh; the NCA will be entitled to any part of the Fund which the court does not acknowledge "belongs" to the claimants for the purposes of section 281, and to that extent the
victims
will be out of pocket and only the State (through the NCA), which has suffered no loss, will benefit. Mr Morris supported his argument with references to the Theft Act, the United Kingdom's obligations under the UN Convention Against Transnational Organised
Crime
of 2000 ("The Palermo Convention") and statements in Parliament by Lord Falconer of Thoroton, the promoter of the Proceeds of
Crime
Bill in the House of Lords.
Robb/AGA's
Account 2, Mr Kurat's Account 10 and Mr
Robb's
Account 1 into the Fund and so their proportionate interest in each of those funds "belonged" or "belongs" to them and represented or represents (as the case may be) their property.
Robb's
Account 1, or are now entitled to any part of the Fund, which was never in fact derived directly or indirectly from money paid by them as not seriously arguable. I can see nothing whatever in POCA, the Theft Act, the Palermo Convention or Lord Falconer's statements in the House of Lords which would support such an extravagant result. It amounts in substance to no more than an argument that POCA should be interpreted in such a way that the State should never be able to recover under Part 5 of POCA any part of a fund of money which was obtained by a fraud, and in part of which
victims
of the fraud can establish a proprietary interest under section 281, if the claimants would be left out of pocket, irrespective of whether the balance of the fund was in fact derived from their payments or not. That would turn section 281 into a provision for the payment of compensation rather than a provision which recognises and enforces some kind of right, however wide, in respect of specific property of which the claimant was deprived by the fraud: cf section 283, which does not permit an application for compensation in respect of property if the court has made a declaration in respect of the property under section 281.
Robb
or AGA or Mr Kursat. He said there was no evidence that anyone, other than the additional claimants, had rescinded their respective transactions. He further contended that some or all of the other investors may well have been associates of Mr
Robb
and implicated in his fraud. It followed, he submitted, that, in accordance with the principles to which I have referred above, the assumption should be made that the money of those investors who are not additional claimants in these proceedings was dissipated, like the other funds of Mr
Robb,
AGA and Mr Kursat in the relevant accounts, before the traceable money of the additional claimants. On that footing, the entirety of the £2.7 million transferred from Mr
Robb/AGA's
Account 2 and Mr Kursat's Account 10 to Mr
Robb's
Account 1 should be treated as belonging only to the additional claimants and not any other investors.
Robb
and AGA. I was not referred to any evidence capable of supporting such an assumption or inference.
2014
Chief
Master Marsh directed that any person seeking to make an application in these proceedings under section 281, and who was not one of the 41 persons already third parties to the proceedings, had to apply to the court no later than 4pm on 30 June
2014.
He also ordered that Ison Harrison, the solicitors for the lead claimants, should take all reasonable steps to publicise the order on or through its website, other relevant websites or social media and that the NCA should also make available a copy of the order on or through its website. In the light of those matters, I consider it probable that any investor who had rescinded or wished to rescind his or her purchase contract would have applied to join these proceedings.
Robb
and AGA and to have been dissipated before the traceable money of those additional claimants who can establish a property interest in part of the Fund. Mr Morris did not illustrate or give any examples as to how this would affect the calculation of the property interest of the lead claimants in the Fund.
Robb/Aga's
Account 1 and Mr Kursat's Turkish Account 10 to Mr
Robb/AGA's
Account 1 and, for that reason, increases the interest of each lead claimant in the Fund. The extent of the increase depends upon whether the aggregate payments of the additional claimants are greater or less than the £2.7 million. That has not yet been established and, indeed, may be affected by whether or not other investors seek and obtain the permission of the court to apply to join the proceedings out of time but before the proceedings are concluded.
Robb/Aga's
Account 2 and Mr Kursat's Turkish Account 10 exceed £2.7 million. It assumes, purely for illustrative purposes, that the aggregate payments made by the additional claimants traceable into those accounts is £3,921,400. The total of £78,428 paid by Mr Neill-Gourlay is 2 per cent of that sum. That was also his percentage share of the £2.7 million. Mr Neill-Gourlay's share of the Fund is, therefore, 2 per cent of the 80.57 per cent of Mr
Robb's
Account 1 constituted by the £2.7 million, namely 1.61 per cent.
Robb/Aga's
Account 1 and Mr Kursat's Turkish Account 10 is less than £2.7 million. It assumes, again for purely illustrative purposes, that the aggregate payments made by the additional claimants traceable into those accounts is £2 million, which is 59.68 per cent of £2.7 million. The total of £78,428 paid by Mr Neill-Gourlay is 3.29 per cent of that sum. Mr Neill-Gourley's share of the Fund is, therefore, 3.29 per cent of the 59.68 per cent of Mr
Robb's
Account 1 constituted by that £2 million, namely 2.34 per cent.
Robb/AGA
of the lead claimant's money pursuant to a criminal conspiracy from February 2005 as described by Mackay J in paragraphs [57] to [64] of his judgment.
v
JB Developments (Godalming) Ltd [1982]
Ch
183; Latec Investments Ltd
v
Hotel Terrigal Pty Ltd [1965] HCA 17. The rescission, when it was effected, operated to
vest
in the lead claimants a property interest in their traceable money retrospectively to the date that the equity arose. In any event, giving section 281 a purposive interpretation, the continued retention of the Fund pursuant to the property freezing order is to be treated, for the purposes of section 281(3)(a), as a continuing deprivation of the claimants of their property by, that is to say in consequence of, Mr
Robb's
fraud and criminal conspiracy.
vest
in the lead claimants retrospectively to February 2005 their property interest. On ordinary legal principles, they are entitled to interest which has accrued on their property. Mr Morris referred to section 307 of POCA but that only deals with interest on recoverable property whereas the lead claimants are concerned to claim interest accrued on their non-recoverable property.
Chief
Master Marsh's order was whether any claim for relief under section 281 by any of the additional parties is precluded by expiry of any limitation period. Mr Cox confirmed that no limitation argument is advanced by the NCA.
various
policy considerations as to the undesirability of any such jurisdiction but the wording of section 245C is clear and unambiguous. Mr Cox also submitted that the additional claimants do not fall within the ambit of those provisions because they are not parties to the proceedings. Again, with respect to Mr Cox, that is plainly wrong. They are all parties to these proceedings for the purpose of making their respective applications under section 281. Some were originally joined as third parties. All are now constituted as "additional claimants" pursuant to the order of
Chief
Master Marsh. The existence of the jurisdiction is reflected in the provisions of PD – Civil Recovery Proceedings, paragraph 7A.1 of which provides that the court, when it makes an order or gives directions in civil recovery proceedings, will at the same time consider whether it is appropriate to make or
vary
an exclusion for the purpose of enabling any person affected by the order or directions to meet his reasonable legal costs.
vary
a freezing order, the court must give the parties to the proceedings and any other person who may be affected by its decision an opportunity to be heard. Paragraph 7.2 of the Practice Direction requires the application for the
variation
to be served on all such persons. My understanding is that those provisions have not been satisfied at the present time. Furthermore, paragraphs 7.3 and 7A of the Practice Directions specify the evidence to be given in support of any such application. Those provisions have also not been satisfied at the present time.
Robb,
as the respondent whose conduct was unlawful, and not to the additional claimants who seek to exclude their property from what is recoverable by the NCA. The Practice Direction does not in terms make that distinction, and I cannot see any reason to imply such a distinction. Whether the Practice Direction has any relevance in relation to the appropriate order for costs as between the additional claimants once all the section 281 applications have been determined is a different matter and one which cannot be determined without permitting the other additional claimants to make submissions.
Crime
Act 2002 (Legal Expenses in Civil Recovery Proceedings) Regulations 2005 made pursuant to section 286A of POCA.
variation
of the property freezing order already made in these proceedings in its favour, the NCA has withdrawn part of the Fund to meet its costs and part of the Fund has been paid to Mr
Robb
to meet his legal costs. No order has been made as to whether those costs should be borne by the entire Fund or only that part comprising recoverable property (i.e. not any part in respect of which the additional claimants obtain declarations under section 281). Mr Cox did not object to an order that the NCA's costs paid out of the Fund be borne by that part of the Fund which is recoverable property. He submitted that the part paid out to meet Mr
Robb's
costs should, however, be deducted from the Fund as a whole on the footing that all the additional claimants as well as the NCA will have benefited from the NCA bringing the proceedings.
victim's
property from the proceeds of unlawful conduct confiscated by the State, that both NCA's costs and those of Mr
Robb
should be payable out of recoverable property if that is sufficient to bear them. So far as concerns the part of the Fund paid out to Mr
Robb
for his costs, that is also consistent with the general principle that the fraudster is assumed to have dissipated his money before that of his
victims.