the times | Monday December 6 2021 49
Register
The statutory regime for obtain-
ing confiscation orders against
those convicted of criminal offen-
ces protected the property rights
of third parties regardless of how
those rights arose.
When secret personal profits
obtained by two company direct-
ors, who breached their fiduciary
duty by using the company to
commit a fraud, resulted in those
profits being held on a construct-
ive trust for the company, the
assignees of the company’s
proprietary rights were entitled
to preserve those rights in priori-
ty to the Crown’s claim under
confiscation orders obtained
against the directors.
The Supreme Court so held,
dismissing an appeal by the
Crown Prosecution Service
(CPS) from a decision of the
Court of Appeal (Lord Justice
Patten, Lord Justice Hamblen
and Lord Justice Holroyde)
([2019] EWCA Civ 588) uphold-
ing a decision of Mr Justice Mann
([2018] EWHC 565 (Ch)) that the
claimant, Aquila Advisory Ltd,
which had acquired the rights of
a company, Vantis Tax Ltd,
was entitled to the proceeds of a
fraud by two directors of the
company in priority to a confisca-
tion order obtained by the CPS
against the two directors.
Andrew Sutcliffe QC, Julian
Christopher QC and Anne Jeav-
ons for the CPS; Stuart Ritchie
QC, Martin Evans QC and Sam
Neaman for the claimant.
Lord Stephens, with whom the
other members of the court
agreed, said that Robert Faichney
and David Perrin exploited their
position as directors of Vantis Tax
Ltd (Vantis) to make a secret
profit of £4.55 million in breach
of fiduciary duty owed to that
company.
The claimant company, which
had acquired the proprietary
rights of Vantis, including choses
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Constructive trust in favour of company
overrode confiscation order against directors
in action, asserted that the two
directors were to be treated as
having acquired the benefit of
that secret profit on behalf of
their principal, Vantis, with the
result that the secret profit was
beneficially owned by Vantis
under a constructive trust and
had now passed to the claimant.
The amount of £4.55 million
was also the benefit obtained by
Faichney and Perrin from the
crime of cheating the public reve-
nue by dishonestly facilitating
and inducing others to submit
false claims for tax relief. Those
crimes were committed by Faich-
ney and Perrin in relation to four
tax avoidance schemes. Follow-
ing their convictions the CPS
sought confiscation orders
against them under the Proceeds
of Crime Act 2002.
The judge found that the bene-
fit from the offence was £4.55 mil-
lion, but that the available
amount to Perrin was £809,692
and the available amount to
Faichney was £648,000. Confis-
cation orders were made requir-
ing them to pay those amounts.
The claimant asserted that it
had a proprietary claim to the
secret profit of £4.55 million,
from which secret profit all the
property assets for Perrin and
Faichney had been obtained, and
that it had priority over the con-
fiscation orders as those orders
did not give the CPS any form of
proprietary interest in the assets
of either Perrin or Faichney.
The judge granted a declara-
tion to the effect that the moneys
totalling £4.55 million had been
held by Faichney and Perrin from
the time of their receipt on con-
structive trust for Vantis, whose
rights had been assigned to the
claimant.
Section 6 of the 2002 Act re-
quired the Crown Court to make
a confiscation order in certain
circumstances, with the amount
of the order being calculated by
reference to the recoverable
amount and the available
amount. The recoverable
amount for the purposes of sec-
tion 6 was an amount equal to the
benefit obtained by a defendant
from the conduct concerned. Aperson “benefits from conduct” if
he obtains property as a result of
or in connection with the con-
duct. In such a case the benefit
was the value of the property
obtained.
The overarching principle of
the Act was that neither a confis-
cation order nor a civil recovery
order nor the money laundering
provisions in the Act interfered
with existing third-party proper-
ty rights. Recognition of the
property rights of third parties
could also lead to the confisca-
tion order being reduced.
If it was determined that all the
assets of Perrin and Faichney
were subject to constructive
trusts in favour of Vantis, section
23 of the Act enabled the confis-
cation order to be reduced based
on the inadequacy of the avail-
able amount.
The CPS argued that the Court
of Appeal was wrong to hold that,
for the purposes of a proprietary
claim by a company against its
directors to recover the proceeds
of crime received in breach of
fiduciary duty, the directors’
illegality was not attributed to
the company, notwithstanding
that the company itself had suf-
fered no loss and stood to profit
from the illegal acts.
That argument had to be re-
jected. The CPS was an unse-
cured creditor of the former
directors under the confiscation
order. The CPS’s ability to recov-
er under the confiscation order
depended upon defeating the
proprietary claim which the
claimant asserted against the
former directors of Vantis. The
CPS could have no better defence
to the claim than the former
directors would have had.
The decision of the Supreme
Court in Bilta (UK) Ltd v Nazir (No
2) (The Times, May 6, 2015; [2016]
AC 1) was authority for the prop-
osition that the unlawful acts or
dishonest state of mind of a di-
rector could not be attributed to
the company so as to afford the
director an illegality defence to
the company’s claim against him
for breach of fiduciary duty.
The CPS also argued that the
2002 Act was intended to permitinnocent third-party victims who
had paid market value for crimi-
nal property to keep it, and
innocent third-party victims who
had suffered loss as a result of
criminal behaviour to be
compensated, in each case in
priority to the state, but not to
permit third parties otherwise to
benefit from the actions of crimi-
nals any more than those crimi-
nals themselves.
That argument had also to be
rejected. The scheme of the 2002
Act was not to interfere with any
property rights (except tainted
gifts). The Act protected the
property rights of others regard-
less of how those rights arose.
Furthermore there were specific
provisions in the Act which per-
mitted the state to override prop-
erty rights, but those provisions
had not been used by the CPS.
As the Court of Appeal said, a
remedy available to the CPS
would have been to add the com-
pany to the indictment, and then,
if it was convicted, to seek a con-
fiscation order against the com-
pany. The operation of the 2002
Act had not frustrated the propri-
etary claim as the CPS had the
right to seek to recover the pro-
ceeds of crime from Vantis in
several ways but had not sought
to invoke those rights.
The CPS contended that, even
if the unlawful conduct of the di-
rectors could not be attributed to
Vantis, the judge in the proper
exercise of his discretion ought
not to have granted any declara-
tory relief.
However, the judge had exer-
cised his discretion appropriately.
Constructive trusts were not
remedial but institutional. In
other words, in the present con-
text, the constructive trust (and
the principal’s beneficial owner-
ship of the property) arose auto-
matically at the moment that, in
breach of their fiduciary duty, the
directors received the secret
profits. There was never a mo-
ment at which the former direct-
ors, as fiduciaries, owned the
profits in equity.
Solicitors: Crown Prosecution
Service National Proceeds of
Crime Unit; Kingsley Napley
LLP.Supreme Court
Published December 6, 2021
Crown Prosecution Service v
Aquila Advisory Ltd
Before Lord Lloyd-Jones, Lord Sales, Lord
Burrows, Lord Stephens and Lady Rose.
[2021] UKSC 49
Judgment November 3, 2021
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MARGARET MACLEHOSE,WHO
DIED AGED 99, WAS FEATURED
IN THE TIMES ON APRIL 4, 202050%
discount for
subscribersLegal Notices
IN THE HIGH COURT OF JUSTICE
No. CR-2021-001832
BUSINESS AND PROPERTY
COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES
LIST (ChD)
IN THE MATTER OF
SUPERMARKET INCOME REIT PLC
- and -
IN THE MATTER OF THE
COMPANIES ACT 2006
NOTICE IS HEREBY GIVEN that a Claim
Form was on 26 November 2021 issued
to Her Majesty’s High Court of Justice
for the confirmation of the cancellation
of the sum of £778,858,607 standing to
the credit of the share premium
account of the above-named Company.
AND NOTICE IS FURTHER GIVEN that
the said Claim Form is directed to be
heard before an ICC Judge at the
Companies Court at the Rolls Building,
7 Rolls Building, Fetter Lane, London,
EC4A INL at 10.30 am on 14 December
2021.
ANY Creditor or Shareholder of the
Company wishing to oppose the making
of an Order for confirmation of the
above cancellation of share premium
account should appear at the time of
hearing in person or by Counsel for that
purpose. Any such Creditor or
Shareholder is requested to give at
least 24 hours’ advance notice to the
Company’s solicitors in order that
arrangements may be made for such
Creditor or Shareholder to attend the
hearing via video-link or other remote
means if required.
A copy of the Claim Form will be
furnished to any such person requiring
the same by the undermentioned
Solicitors on payment of the regulated
charge.
Date: 6 December 2021
Macfarlanes LLP
20 Cursitor Street
London EC4A 1LT
Tel: 020 7831 9222
(Ref: MNS/RSB/ 677366)
Solicitors for the above CompanyIN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY
COURTS OF ENGLAND AND WALES
COMPANIES COURT (ChD)
CR-2021-001956
IN THE MATTER OF JKX OIL & GAS
PLC
AND
IN THE MATTER OF THE
COMPANIES ACT 2006
NOTICE IS HEREBY GIVEN that a Claim
Form was on 24 November 2021 issued
before Her Majesty's High Court of
Justice for the confirmation of the
cancellation of the share premium
account of the above mentioned
company.
AND NOTICE IS FURTHER GIVEN that
the Claim Form is directed to be heard
before the Insolvency and Companies
Court Judge at The Rolls Building, 7
Rolls Buildings, 110 Fetter Lane,
London EC4A 1NL on 14 December
2021.
ANY creditor or shareholder of the said
company desiring to oppose the making
of an Order for confirmation of the
cancellation of the share premium
account should appear at the time of
the hearing in person or by legal
representative for that purpose.
A COPY of the said Claim Form will be
furnished to any such person requiring
the same by the undermentioned
solicitors on payment of the regulated
charge for the same.
Dated the 6 December 2021
BAKER & McKENZIE LLP
100 New Bridge Street
London EC4V 6JA
(Ref: NSXB/CXXB)
Solicitors for the CompanyFORM G3
Rule 5.6(1)(a)
Form of Advertisement
NOTICE TO: ANNETTE RAFFERTY
Court Ref. No:KKD-A154-21
An action has been raised in Kirkcaldy
Sheriff Court by KATHLEEN SCOTT
HIGGINS Pursuer, calling as a Defender
ANNETTE RAFFERTY, who formerly
lived in Spain, is believed to have
moved to the Bradford area of England
a few years ago, but whose address is
and always has been unknown to the
Pursuer. If ANNETTE RAFFERTY
wishes to defend the action she should
contact the Sheriff Clerk at Sheriff
Courthouse, Whytescauseway,
Kirkcaldy, Fife, KY1 1XG from whom
the Service Copy Initial Writ may be
obtained. If she fails to do so decree
may be granted against her.
Signed David Ritchie
DAVID M RITCHIE,
Forth House,
Forth Street,
LEVEN,
Fife
SOLICITOR FOR THE PURSUERLegal NoticesLegal Notices