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OUTER HOUSE, COURT OF SESSION
2008 CSOH5
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P861/05
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OPINION OF LORD PENROSE
in the Petition of
SCOTTISH MINISTERS
For a Recovery
Order in terms of section 266 of the Proceeds of Crime Act 2002
Petitioners;
against
MARIE BUCHANAN AND
OTHERS
Respondents:
________________
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Petitioners: Cullen, Q.C.; Heaney, Civil Recovery Unit
Respondent: Marie Buchanan; Party
George Buchanan (Interested Party)
18 January 2008
Preliminary
[1] In
The
Scottish Ministers v George McGuffie
and Others [2006] CSIH 54 the nature of the proceedings under the Proceeds
of Crime Act 2002 ("the 2002 Act") and in particular the character of the
orders that the court may pronounce, have been authoritatively resolved. At
paragraph [31] of the Opinion of the Court, Lord Osborne quoted the terms
of section 244(1), which authorises proceedings against any person thought by
the recovery authority to hold recoverable property, and said:
"In our opinion,
this provision reinforces the view that we have formed ... that recovery
proceedings are concerned with the
recovery of property unlawfully obtained, not the infliction of a penalty. It
is apparent from section 244 (1) that Parliament contemplated that proceedings
might be brought against 'any person who the authority thinks holds recoverable
property', regardless of whether that person had any responsibility for the
obtaining of the property through unlawful conduct. That view is reinforced by
the provisions of section 305 of the Act which provides for the tracing of
property. That section contemplates, in subsection (3) that: 'the property may
be followed into the hands of the person who obtains it...'. In other words, the
recovery proceedings must be seen as proceedings in rem, the purpose of which is the recovery of property obtained
through unlawful conduct, for the benefit of the public. It is plain from these
provisions that the wrongdoer who may have unlawfully obtained the property in
the first place is treated no differently, and in particular, no more harshly
than any other person into whose hands the property may have come, even if that
person be entirely guiltless."
[2] In
the course of the protracted procedure in this case the respondents and Mr George
Buchanan have on occasion been represented and on other occasions have appeared
without legal representation. At the proof heard in October and
November 2007 they did not have the benefit of representation but were
accompanied by Mr James Macdonald as a friend to whom Mr Buchanan turned for
assistance as required. Mr Macdonald's qualification to give relevant and
competent advice on a case such as the present was not disclosed. It became
clear that Mr Buchanan and Mrs Buchanan lacked the knowledge and
experience required to present their cases properly. It is not surprising in
these circumstances that there was a measure of confusion from time to time as
to the issues properly to be resolved at this stage of the case.
[3] On
10 March 2006, following preliminary proof, it was held that the petitioners
had established on a balance of probabilities that from 1987 at the latest Mr
George Buchanan had been concerned in the supplying of controlled drugs
contrary to section 4(3)(b) of the Misuse of Drugs Act 1971, and that he had
been a significant player in the illicit drugs trade over the whole period on
which the petitioners relied in seeking a recovery order in terms of section
266 of the 2002 Act. That issue is closed so far as the proceedings now before
the court are concerned. The second issue that is closed is the contention that
the application of the material provisions of the 2002 Act breached the
respondents' Convention Rights. On 4
August 2006 I refused to receive a devolution minute in which the
respondents sought to attack the petitioners' actions as prohibited by section
57(2) of the Scotland Act 1998, on the ground that there was no issue to try in
relation to the alleged breach of the respondents'
Convention Rights that required judicial determination in Scotland.
That issue is now resolved by the decision of the Inner House in Scottish Ministers v McGuffie.
[4] The
next issue that can be disposed of in the light of Scottish Ministers v McGuffie
is the concern of Mrs Marie Buchanan, Ms Lisa Marie Buchanan and Mr Liam
Buchanan that their personal integrity was challenged by the allegation that
they held recoverable property. As Lord Osborne's opinion makes clear,
recoverable property may be made the subject of an order in rem against persons who are personally entirely guiltless of any
unlawful conduct. The only unlawful conduct that has been established in this
case is conduct of Mr George Buchanan. Moreover, in cross examination Ms Rivers
stated that in dealing with Mrs Buchanan's assets she made no allegation of
unlawful conduct on Mrs Buchanan's part. Her evidence was based on Mr
Buchanan's unlawful conduct and on tracing transactions with funds obtained
from that conduct. In response to each of Lisa Marie Buchanan and Liam
Buchanan's questions in cross examination, Ms Rivers agreed that she had
neither written to them nor sought to interview them. She explained to Liam
Buchanan that no asset held by him was relevant to her work. Similarly she told
Lisa Marie Buchanan that she had had no reason to question her. These answers
underlined the absence of any allegation of unlawful conduct by either of Mr
Buchanan's children in the proceedings as they have developed before the court.
The issue
[5] The
only live issue at this stage is whether the petitioners have proved on a
balance of probabilities that certain assets are recoverable property in terms
of the 2002 Act in respect of which the court must make a recovery order.
Section 266 is uncompromising in its terms. In particular, it provides:
"(1) If in
proceedings under this Chapter the court is satisfied that any property is
recoverable, the court must make a recovery order".
This
provision is qualified in a limited range of circumstances. In particular sub-section (3) provides:-
"(a) any provision
in respect of any recoverable property if each of the conditions in subsection...
(5) is met and it would not be just and equitable to do so."
Sub-section (3) (a) has not been
relied on at any stage in these proceedings. None of the respondents has contended that any
recoverable property held by him or her should be excluded from recovery in
terms of that sub-section.
[6] On
25 November 2005, I made a
recovery order in respect of a sum of £24,517 of cash seized in March of that
year from 127 Gilberstoun, Edinburgh, Mrs Buchanan's home. The remaining
items of property in respect of which a recovery order is sought in terms of
the petition are:
(a) Heritable
property:
127 Gilberstoun Edinburgh;
33/2 Loaning
Crescent Edinburgh.
(b) Sums in bank
and other accounts held by Mrs Marie Buchanan:
Lloyds TSB
Account 78245553;
Lloyds TSB
Account 06028543;
Lloyds TSB
Account 73532868;
Lloyds TSB
Account 74381653;
Royal Bank of Scotland
Account 00645329;
Royal Bank of Scotland
Account 00655243;
Co-operative
Insurance Society ISA/PEP Account 75236950; and
Dunfermline
Building Society Account 991675672.
(c) Sums in bank
and other accounts held by Liam Buchanan:
Co-operative
Insurance Society policy number 75557959;
Royal Bank of Scotland
Account 00697647;
Royal Bank of Scotland
Account 00636583; and
Bank of Scotland
Account 02120932.
(d) Sums in bank
held by Lisa Marie Buchanan beneficially:
Bank of Scotland
Account 02120932.
(e) Sums in bank
held by Lisa Marie Buchanan as trustee for Lewis Buchanan:
Halifax plc
Account 02006039.
(f) Cash sums
seized from 127 Gilberstoun:
15 October 2003: £2,801;
18 August 2004: £1,880; and
26 August 2004: £1,830.
(g) Four motor
cars and three associated private registration numbers:
Range Rover
registration number DDD 74
Mercedes registration
number SO52 HSV
Ford Focus
registration number M20 LLL
Mini Cooper
registration number L14 YAM.
In addition the petition seeks an
order in respect of a standard security granted by Mrs Buchanan as
associated property in terms of section 245 of the 2002 Act.
The Petitioners' case:
general
[7] The
petitioners rely on two reports prepared by Ms Rivers, the interim
administrator appointed by the court, and her staff and on Ms Rivers' oral
evidence. Mrs Marie Buchanan and Mr George Buchanan gave evidence on behalf of
the respondents. The two reports contain narrative of the investigators'
findings on the evidence recovered by them and discussion of the bases on which
recovery of the assets is sought. Different issues arise in relation to the
different classes of assets involved. But there is a common thread that runs
through the whole exercise, namely that the whole Buchanan family can properly
be treated as a unit in analysing the financial transactions that underlie the
petitioners' claims. This approach, characterised as a "global" approach,
affects the analysis and presentation of data relating to the various
individuals' bank and other deposit accounts in particular, but has a bearing
on the treatment of other classes of asset also.
[8] The
approach of courts to the evidence of officers appointed by the court with
investigative powers has been discussed in a number of cases. I was referred to
The Director of the Recovery Agency and
Olupitan [2007] EWHC 162 (QB) and The
Director of the Recovery Agency v Jackson and Smith [2007] EWHC 2553 (QB) in
particular. For the petitioners, Mr Cullen relied on these cases as providing
support for the global approach adopted by Ms Rivers in the identification of
the property obtained by the kind of unlawful conduct that had been
established. The legislation, in his submission, permitted and indeed provided
for tracing of value in relation to individual items of property, but it did
not require such an approach. Mr Cullen also relied on the cases for the
proposition that the evidence of the interim administrator should be given
particular weight because of her independence as an officer of the court.
[9] The
status and evidential worth of the reports of receivers appointed under the
equivalent English rules were considered by Mr Justice King in The Director of the Recovery Agency v Jackson and Smith. He set out his
approach as follows:
"25. The status
and evidential worth of the Receiver's report and the annexes of material
relied on by her has been a matter of some controversy. It was the submission
of the Claimant that (1) the Receiver's report is intended to enjoy a special
status; (2) it can be inferred that when the court appoints an interim receiver
it expects to derive substantial assistance from her findings and that it can
be anticipated that her report will constitute extremely compelling evidence;
(3) the Receiver's report should operate as the starting point in any
consideration of the facts by the court and it is for both parties to identify
matters in the report which they dispute.
26. In support of these propositions the Claimant
relied upon the Explanatory Note to section 255 of the Act (the section
requiring that the order oblige the Receiver to report her findings to the
court and to any person who may otherwise (be) affected by it), at paragraph
326 of the Notes, explaining that 'the
report may comprise a comprehensive account of the nature and origins of, and
interests in, the property in question. It will be capable of being used as a
basis to establish agreed facts and to identify disputed matters that will fall
to be resolved at the final hearing.'
27. Reliance was also put upon the comment by the
authors of Smith and Owen on Assets
Recovery at paragraph 5.48 to the effect that the wide investigative
functions of the interim receiver, extending beyond any power vested in or duty
placed upon receivers in any other field, amount to a duty to investigate the
circumstances of the case on behalf of the court, independent of the parties,
and are more akin to the function of a reporting judge in civil law
jurisdictions. Smith and Owen
suggests that 'this independent
investigative function, leading to a report which, though not determinative of
the proceedings, is likely to be considered extremely compelling evidence,
gives such proceedings a far more inquisitive character than is traditional in
this jurisdiction'.
28. My attention was also drawn to the approach
of the High Court of Justice in Northern Ireland in ARA v Fleming [2007] NIQB16
at paragraph 19 of its judgment when considering an application for
permission to fund the instruction of a forensic accountant to challenge the
findings of an interim receiver. The court in advocating caution in the
incurring of additional forensic expenditure, emphasised the unique
investigative powers of the receiver under the Act, together with the statutory
framework under which although the receiver is appointed on the application of
the Director of the Assets Recovery Agency, the appointment is by the court,
and it is the court who at all times supervises the receiver and can give
directions as to the exercise of the receiver's functions on application my any
party affected, and once an interim receiving order has been made the
Director is deemed no longer to be carrying on a civil recovery function. (my
emphasis).
29. It is obviously clear from this legislative
framework and these statutory provisions governing the appointment of the
Receiver and her investigative and reporting functions under the supervision of
the court rather than the Director, that the Receiver is not an agent of any of
the parties. In my judgment she is akin to an officer of the court and is
reporting and giving evidence to the court in that capacity independent of the
parties. It is further obviously right that the Receiver's report should be
used in advance of the final hearing as a means by which to establish such
facts as can be agreed between the parties and to identify the matters in
dispute in need of resolution by the court. Further in principle I am prepared
to accept that the Receiver's findings as to recoverable property should be
given considerable persuasive weight by the court and to that extent her report
enjoys special status.
30. However this said, I also agree with the
Respondent's submissions that the Receiver's findings of recoverable property
are not binding on the court, that it is the primary evidential material
underlying her findings and said by her to justify them, which is of crucial
importance together with any additional evidence called before the court, and
that it is the duty of the court in determining any area of dispute between the
parties carefully to scrutinise and weigh that evidence in order to determine
whether the claim to recoverable property is made out. I intend to approach the
dispute in this case in this way. The statutory provisions referred to do not
alter either the burden or standard of proof which is upon the Claimant to
establish the existence of recoverable property on the balance of probabilities
by cogent evidence. The findings of the Receiver do not in themselves reverse
the burden of proof so as to put any onus on the respondent to disprove her
findings, and I did not understand the Claimant to submit to the contrary."
[10] The background of legislative and guidance material referred to
in this passage is different from the provisions applicable in Scotland
and it would be inappropriate to comment on the discussion without a detailed
analysis of the comparative position, on which I was not addressed. However,
making due allowance for the differences in terminology, I agree with Mr
Justice King's own views as set out in paragraph 29 as to the status of the
interim administrator's reports prior to proof, and paragraph 30 as to the
approach to be adopted at the stage of proof in a case such as the present.
However, this is a relatively new area of law and inevitably there will emerge
issues of greater or lesser importance as to the proper approach to the
exercise of the court's jurisdiction and as to the role of the interim
administrator, in Scottish practice, in providing the court with factual and
opinion evidence. The responsibility to resolve issues arising from the interim
administrator's reports and oral evidence must lie with the court and much may
depend on circumstances.
[11] At paragraphs 110 to 114 Mr Justice King discussed the nexus
that had to be established between the unlawful conduct alleged and the
property sought to be recovered, following The
Director of the Recovery Agency v Green
[2005] EWHC 3168 (Admin) and Olupitan.
He rejected the submission that it was sufficient to establish a lifestyle
inconsistent with the identified income of the person, but said that the court
was entitled to look at the totality of the evidence and the whole picture
which emerges. He went on to say:
"116. I equally reject the submission made on
behalf of the Respondent that I am not entitled to take a global approach to
the issue of proof that the property in issue is recoverable within the meaning
of the Act. The question is whether the Respondent obtained the property
through the unlawful conduct alleged or whether the property in the
Respondent's hands is representative of property so obtained. The test is
whether it is more probable than not that such is the case. It is as was said
in Olupitan the whole picture
painted by the totality of the evidence which has to be balanced. I see nothing
wrong in the court ultimately concluding that any significant asset of the
Respondent has been obtained by or represents the proceeds of his criminal
conduct as particularised ........ , if the court is satisfied on the evidence that
this is more probable than not. I do not consider it essential that the court
considers each property transaction on an item by item basis in the sense that
the Claimant has an obligation to show some particular unlawful actions by the
Respondent at some particular time which enabled the particular transaction."
It is in this passage that the
justification for a "global" approach was found. At paragraph 118 Mr Justice
King said that a common sense approach was to be adopted to the respondent's
position.
[12] I agree with these views, as I understand them. However, it is
important to have regard to the formulation of those views, especially in the
last sentence quoted. In the case of an
individual who holds a number of items of potentially recoverable property, and
who has been shown to have engaged in unlawful conduct of a kind likely to have
generated disposable funds, it is highly likely to be sufficient to ask whether
that individual's legitimate resources as a whole were sufficient to explain
his possession of the totality of the targeted property. In many, if not most
cases, the application of funds available from legitimate sources and the
application of funds from unlawful conduct would have been confused: the
application of any particular sum would be a casual matter depending on the
total funds available at any given time and the individual's personal choices
as to distribution of those sums. It would be unnecessary to engage in a
detailed analysis of each transaction as at the date it occurred and to show
that at that time and in the circumstances obtaining it was more likely than
not that the particular item was obtained by or represented property obtained
by particular unlawful conduct. The two cases principally relied on demonstrate
that.
[13] In this case, on the "global" approach adopted by the interim
administrator, the individual characteristics of transactions in motor vehicles
and heritable property have been described. There are issues that arise in
relation to the application of the tracing provisions of the 2002 Act to these
assets. However, in relation to the bank accounts of the respondents, Mrs
Stewart, who is Mrs Buchanan's mother, and Mr Buchanan, the financial analysis
produced in the interim administrator's reports, relying on the view that the
Buchanan family can properly be treated as a single unit, aggregates the
movements on all bank accounts, in whomsoever vested, for purposes of analysis
notwithstanding that assets held by them as individuals are sought to be
recovered. This aspect of the interim administrator's "global" approach raises
a question whether the methodology is fundamentally flawed, either as a matter
of general approach or in the circumstances of this case.
[14] The issue did not arise in these terms in
either of the two cases principally relied on. In Olupitan there were cash credits to bank accounts in name of Mr Olupitan
and in the name of his partner Ms Makinde. Mr Justice Langley dealt with the
sums credited to Mr Olupitan's accounts between paragraphs 41 and 47. At
paragraph 47 he concluded that Mr Olupitan's explanation of the source of the
credits was not acceptable. At paragraphs 53 to 58 he dealt separately with the
source of the credits to Ms Makinde's accounts. The Claimant's position was
that there was no legitimate source of funds for the very significant amounts
of cash lodgements and unexplained credits in the accounts of either of the respondents.
There was nothing to distinguish one respondent from the other.
[15] The conclusion arrived at in paragraph 67 of Mr Justice
Langley's opinion shows the factual basis on which he proceeded:
"Mr Krolick
submitted ... that the Director had failed to put before the court evidence from
which the court could properly conclude that any particular unlawful conduct by
Mr Olupitan at any particular time producing any particular property had
occurred. But, having in mind the gravity of the conclusion, the Director has
fully satisfied me on a balance of probabilities that Mr Olupitan is a
dishonest man who has employed dishonesty to obtain or seek to obtain property
(the mortgage fraud and his conviction for conspiracy) and to seek to secure an
immigration status to which he knew and knows he was not entitled. The Director
has also satisfied me that Mr Olupitan has had no significant legitimate source
of income whilst living in this country and has lied again and again in his
evidence about the sources of the money (in particular cash) which undoubtedly
came into his bank accounts. On that basis and all the evidence, I conclude
that any significant asset of Mr Olupitan was obtained by or was the proceeds
of his dishonest acquisitive criminal conduct and is recoverable property."
The language in that passage was
reflected in paragraph 116 of Mr Justice King's opinion in Jackson and Smith. The decision on the facts was that the whole
assets were recoverable because there was no legitimate source of funds
available for their acquisition. In any case in which the position is absolute
in that sense a global approach is likely to be satisfactory. If there are no
legitimate funds available at all, distinguishing individual assets would be
without point.
[16] In Jackson and Smith
the police recovered cash, jewellery and other valuables from the home of Mr
Jackson and his partner Ms Smith in the course of one search, and later
recovered large amounts of cash and jewellery from other premises connected
with Mr Jackson, including safety deposit boxes at Selfridges. Mr Jackson and
Ms Smith stood trial together on indictment. They were acquitted on the
directions of the trial judge. In the civil recovery proceedings both were
respondents. However, Ms Smith as second respondent took no part in the
proceedings before Mr Justice King, and the whole case proceeded on the
basis that Mr Jackson alone had an interest in the outcome. He claimed that the
targeted assets had been obtained from the proceeds of legitimate business
activities. The decision on the evidence before the court was that "whatever
limited trading there may have been in any particular field, that cannot have
been the source of the means whereby the Respondent was able over the years to
acquire the assets he has which are the subject of this claim.." (paragraph 136)
The "black hole" analysis:
bank accounts
[17] There was no suggestion in Jackson
and Smith that individual differences between the two respondents could be
overcome by aggregating their financial positions. The issue simply did not
arise in the form it arises in this case. The issue in the present case arises
from the so-called "black hole" analysis set out in the reports and spoken to
in evidence by Ms Rivers, and prepared by her and her staff. The position is
best illustrated by reference to the analysis of bank transactions. The
schedule of transactions sets out for each fiscal year within the relevant
period a single figure for bank lodgements. The figures have been derived by
aggregating the bank lodgements in all of the individual accounts listed.
Adjustments have then been made to reflect identified cash and other
transactions, without ascribing them to any individual account or person, and
totals for each year brought out. Against those totals the schedule has set the
funds identified as having accrued to each individual from sources accepted to
have been legitimate, and a balance of unexplained accrual of value has been
brought out for the family as a whole. In
a case involving a single individual, viewed in isolation, that approach may in
my view be unobjectionable in principle, as I have already said. Indeed it may
result in affording a higher value of credit for legitimate income than would
result on full analysis of the lodgements since it gives full credit for the
whole verified income without identifying the lodgement in bank of the income
received. It does not follow that one may aggregate the data referable to a
series of individuals and ignore their separate interests as the petitioners have
done.
[18] Examination of the primary information lying behind the
analysis indicates that the issue is material and that the aggregation of the
transactions of members of the family unit has had the effect of transferring
debits and credits among the individual accounts in a way that distorts the
picture. In the case of Liam Buchanan's bank accounts, Ms Rivers prepared
an analysis from which one can derive the lodgements attributed to him in the
three bank accounts already identified. The black hole statement identifies the
income from legitimate sources that was accepted in his case at the proof.
Applying Ms Rivers' methodology to him as an individual, the result is as
follows:
|
Year
|
Lodgements
|
Income
|
Difference
|
|
1997-98 HBOS
02120932 (excluding opening balance)
|
109.19
|
0
|
[109.19]
|
|
1998-99 HBOS
02120932
|
180.87
|
0
|
[180.87]
|
|
1999-00 HBOS
02120932
|
429.25
|
0
|
[429.25]
|
|
2000-1 HBOS
02120932 RBS
00636583
|
517.74
1,778.47
|
0
|
[2296.21]
|
|
2001-2 HBOS
02120932
RBS 00636583
|
0.70
1,737.51
|
3154.54
|
1416.33
|
|
2002-3 HBOS
02120932
RBS 00636583
RBS 00697647
|
0.50
1,522.70
3,011.08
|
6237.03
|
1702.75
|
|
2003-4 HBOS
02120932
|
1602.06
|
9129.55
|
7527.49
|
|
2004-5 HBOS
02120932
|
1148.11
|
4735.77
|
3587.66
|
There were lodgements in the first
four years that were not covered by identified income. But, applying the
methodology adopted in relation to the family group to Liam Buchanan, the total
lodgements in his bank accounts were more than amply covered by his verified
legitimate income, by a margin of some £11,200. In the final revised black hole
analysis his excess income reduces the family's black hole. But the recovery
order sought by the petitioners would vest his bank balances in the trustee in
circumstances in which, viewed as an individual according to the methodology
adopted, there would not be, in his case, any black hole to justify the
inference on which the petitioners depend, namely, that his bank accounts
represent property obtained by unlawful conduct.
[19] There are other issues raised by the aggregation of Liam
Buchanan's overall transactions with the family as a whole. The exercise
effectively conceals the specific evidence relating to his affairs that is
disclosed otherwise in the interim administrator's reports. The balance on his
RBS bank account 00636583 was reduced to £915.31 on 20 February 2003. In addition to interest that
sum can be ascribed, as a matter of arithmetic, to two lodgements, of £500 and
£113.40, in 2003 and a balance brought forward from a lodgement of £400 on 30
October 2002. By the date of the interim administration order there had been
further interest and an identified lodgement of £209.40 by bank giro pay-in,
and interest raised the balance to £1,024.64 by 18 August 2004. During the material period Liam Buchanan
had ample vouched income to cover such lodgements only two of which have the
round sum characteristics that might in other circumstances have supported the
inference on which the petitioners rely that he might have had to displace. The
aggregation of the family's transactions conceals the reality of these
transactions.
[20] There were other means available to the petitioners to analyse
Liam Buchanan's accounts individually and, if thought appropriate in the
light of that analysis, to invite the court to draw inferences adverse to his
possession of funds. There were other occasional lump sum lodgements that might
have supported an adverse inference in the absence of an explanation, and, as
the interim administrator's main report notes, there was an inter-account
transfer of £3,000 on 20 February 2003
that could be treated as representing funds that had been in another RBS
account. The balance on RBS account 00697647 might have been treated as
representing funds originally held in account 00636583, and a detailed analysis
of the origins of the balance on the latter account might have called for
explanation by Liam Buchanan. But that was not the approach adopted, and it
cannot be for the court to reconstruct the evidence in search for a basis for
treating Liam Buchanan's bank accounts as recoverable property any more than it
would be acceptable for the court to develop defences for the Buchanan family
in circumstances in which the methodology produced a credible and reliable
result. In the case of Liam Buchanan the methodology adopted clearly does not
produce a reliable result, in my opinion. On the methodology adopted, Mr Liam
Buchanan had excess legitimate income over the lodgements to his accounts
during the relevant period. The methodology points to the conclusion that the
bank balances are not recoverable property rather than the opposite.
[21] One bank account of Lisa Marie Buchanan has been targeted. It
had a balance at 18 August 2004
of £76.56. The interim administrator's main report refers to a total of
£2,272.28 of lodgements in cash and cheques for which a source could not be
identified. The total lodgements in the account over that period amounted to
£2,706.56. Lisa Marie Buchanan's verified legitimate income over the relevant
period amounted to £43,848.54. If the interim administrator's methodology were
applied to her as an individual, the result would be the same as in the case of
Liam Buchanan. In her case as in the case of her brother, the ordinary rules of
tracing the source of bank balances might have given rise to a need for
explanation had the interim administrator followed an alternative course. In
particular there were lodgements in 2000-2001, 2002-3 and 2004-5 of round sums
that might have called for explanation. But, on the approach adopted, the
application of the interim administrator's methodology to Lisa Marie
Buchanan's account leads to the conclusion that there is no black hole which
requires explanation.
[22] I have considered whether these conclusions undermine the
interim administrator's methodology as a whole, but I have come to the
conclusion that they do not in themselves lead to that result. On the approach
adopted so far, the circumstances of each account holder would require to be
considered individually. Thus, the criticism of the methodology already made
would leave unaffected the targeting of Lisa Marie Buchanan's account for Lewis
Buchanan. The child had no income relevant to the analysis. Nor would it affect
Liam Buchanan's Insurance Society policy number 75557959. The premiums on that
policy were paid by Mrs Marie Buchanan and were not franked by Liam
Buchanan's own surplus income. Nor would the conclusions provide an answer to
the interim administrator's approach to Mrs Marie Buchanan's bank accounts. As
already indicated, the effect of the interim administrator's approach has been
to credit against total lodgements (now almost entirely Mrs Buchanan's) the
excess income of Liam and Lisa Marie Buchanan over the lodgements in their
accounts. Since even without those credits there would be a large unexplained
sum that required to be accounted for, on the interim administrator's approach,
excluding the accounts of these individuals would merely aggravate the position so far as Mrs
Marie Buchanan was concerned.
[23] In my opinion, there is no sound basis on the facts for
treating the personal bank accounts of Liam Buchanan and Lisa Marie Buchanan as
recoverable property. I should, however, say that in my opinion there are
aspects of the exercise required by the statute that do not lend themselves to
the kind of global approach adopted in this case, as a general rule. Subject to
sections 306 and 307 of the 2002 Act, the classification of the several items
of property as recoverable property depends crucially on proof that they are
themselves property obtained through unlawful conduct, or property so obtained
that is held by a person into whose hands it can be followed (section 304) or
property which represents property so obtained, either in the hands of the
original holder or in the hands of a person into whose hands it can be followed
(section 305). Section 306 encompasses
mixed property derived from a number of sources. Section 307 extends the scope
of recovery to include profit.
[24] The orders sought in this case relate to the assets of a number
of individuals. In the light of Scottish
Ministers v McGuffie these orders
are orders in rem. That the orders
must be so framed reflects the requirement in section 266(2) of the 2002 Act
that the recovery order must vest the recoverable property in the trustee for
civil recovery. It is therefore the bank accounts held by the individual
respondents that are targeted in the petition, along with the individual
vehicles and other items of moveable property, and the individual heritable
rights and interests of the registered proprietors. If a recovery order is to be made against a
specific bank account, it must be demonstrated on a balance of probabilities
that the balance on that account at the relevant date is or represents
recoverable property (whether or not part of that proof relates also to other
assets). In a case involving the banking of proceeds of dealing in controlled
drugs, that exercise will necessarily involve the application of sections 304
to 307 of the 2002 Act. Cash seized in specie may, of course, previously have
been circulated through a bank account as an aspect of a money laundering
operation, but it is unlikely that that will emerge directly from an
examination of bank statements unless the holder of the cash gives evidence to
that effect. There may be situations in which particular lodgements can be
shown to represent the proceeds of unlawful conduct, as where the sum is lodged
and remains intact throughout the period of investigation or can be traced
directly into another asset. However, in
the more likely situation of an active bank account reflecting credits from a
variety of sources, specific identification is unlikely. Section 306 applies in
these circumstances, and regulates the treatment of mixed property where, inter alia, property is used "to
increase funds held in a bank account". Interest on the account would be dealt
with by section 307.
[25] Section 306 envisages the apportionment of a mixed fund, but
provides little guidance on how the exercise of apportionment is to be carried
out. It does not appear necessarily to apply any common law rule of tracing in
bankruptcy or in trust law or banking law, though the adoption of one or other
source might be an approach that would be appropriate. But it appears to me to
be clear that there is no method of following through the scheme of the Act
that would accommodate the aggregation of transactions on different accounts as
a means of identifying individual items of recoverable property. Sections 304 to 310 prescribe a series of
rules that impose limits on the extent to which property may be followed or
traced through successive forms, either alone or commixed with other property,
and through the hands of persons in succession, with provisions for the
protection of persons who come to possess the target property bona fide in certain prescribed
circumstances. It is not consistent with this scheme that a global approach, in
the sense of the analysis in this case, can be adopted either to all of the individuals
alleged to have in their possession items of recoverable property as a
generality, or to all of the accounts of an individual which may have very
different characteristics. If a global approach is appropriate at all, it must
depend on the circumstances of the case, and must differ from account to
account.
[26] Further, the interim administrator has proceeded on the basis
that it is legitimate to take the whole transactions on a group of accounts
over the twelve years permitted, and aggregate the debits and credits without
regard to any actual movements on any of the accounts in the interval. As
applied to an individual account that may be one acceptable methodology in some
circumstances, and I have not heard argument to the effect that it could not
be. However, problems arise in this case if one examines the application of
that methodology. Mrs Buchanan's Lloyds TSB account number 74381653
demonstrates the nature of the problem. The account was stagnant after the end
of 2001-2002, accruing only small sums of interest. The black hole analysis
relied on shows that there was no recoverable property obtained up to and
including 1996-97. There was a balance on the account at the end of that period
of £451.70. After that date there were two transactions closely related in time
that appear clearly to be associated with each other. £540 was withdrawn on 16 August 2000 and the same sum
was lodged on 22 August. £1,000 was withdrawn on 11 October 2000 and again
lodged on 11 October. Ignoring these transactions, which, objectively, appear
to be cross entries, the aggregate of all lodgements from 1997-98 to the end of
the account was £1,215.27 comprising a series of cheque lodgements of
relatively small sums. The notion that the proceeds of dealing in controlled drugs
would be represented by cheques for sums such as £502.21 (which funded the bulk
of two later withdrawals of £300 each), £12.84, £200.55 and so on appears to me
to be unlikely to survive examination on a test of balance of probabilities,
indeed to be highly improbable without reference to any evidence to the
contrary. A further issue arises from the fact that the black hole analysis
seeks to justify recovery of this account balance by reference to transactions
on other accounts that span a far longer period than the active term of the
account in question.
[27] On the other hand, credits to Mrs Buchanan's Lloyds TSB account
number 78245553 were for the most part in large amounts, and in round
figures, from which an adverse inference might be drawn in the absence of
acceptable evidence of an explanation. The details are set out in the appendix.
In the event, the ultimate balance on the account was so small as to be
practically immaterial, and that raises other issues relating to the tracing
provisions of the Act. Section 305 deals with the situation in which original
property comes to be represented by other property. But the provision has
effect only when other property is obtained in place of the original property.
Where a bank account is used simply to circulate cash funds, as it might be in
a money laundering operation linked to dealing in controlled drugs, it is
highly unlikely that there will be evidence of the obtaining of other property
in place of sums withdrawn from the bank. If, in the final result, the
cumulative effect of lodgements and withdrawals is that there is no material
increase in the bank balance, it may be questionable whether the scheme of the
Act is applicable. The same question arises in relation to Mrs Buchanan's
Lloyds TSB account number 73532868, where the ultimate balance was £3.03. Since
I heard no submissions on these issues it would be inappropriate to express any
concluded view on this point.
[28] In respect of the Lloyds TSB Account 78245553, the interim
administrator's main report, to which she spoke in evidence, states that she
had not been able to identify the source of cash lodgements in this account
amounting to £47,694.16. The full account analysis shows that the bulk of the
lodgements occurred in 1998-9 (£10,115.76); 1999-00 (£16,800); 2000-1
(£4,831.66) and 2001-2 (£10,000). Large sums were withdrawn or transferred to
other accounts over the same period. Sums of £21,400 and £3,200 were withdrawn
in cash in 1999-2000 and 2000-2001 respectively, and transfers amounted to
£22,235 over the period 1998-9 to 2002-3. The interim administrator's report
stated that she had no information as to how Mrs Marie Buchanan acquired
the large cash sums deposited, given the vouched legitimate income identified.
Mrs Buchanan in evidence did not offer any explanation that focused on these
sums. Mrs Buchanan's general evidence was that she had never received any money
from Mr Buchanan, and that was corroborated by him. Leaving aside the
credibility and reliability of that evidence, and its relevance to the issue,
there is a basis in the financial analysis to which Ms Rivers spoke to support
the inference drawn by the interim administrator that the small balance on this
account may be recoverable property.
[29] Issues of greater difficulty arise in respect of the balance of
£5,064.02 in Mrs Buchanan's Lloyds TSB Account 06028543. The petitioners
seek recovery of the whole balance. The account was used by Mrs Buchanan for
managing her day to day affairs as well as certain major transactions. The
interim administrator's analysis of the account covers the period 1997-2005
during which Mrs Buchanan lodged a total of £71,130.58 in respect of wages and
£10,381.58 in respect of Department of Works and Pensions payments identified
by the interim administrator. Section 306 of the 2002 Act applies where
recoverable property is mixed with other property. Sub-section (3) provides
that recoverable property is mixed with other property if, for example, it is
used to increase funds held in a bank account. Sub-section (2) provides that
the portion of mixed property which is attributable to the recoverable property
represents the property obtained through unlawful conduct. Since on any view
the account was, at best for the petitioners, built in part by verified legitimate
income and contributions representing property obtained through unlawful
conduct can have contributed no more than a part of the build up of the final
balance, this would appear to be a paradigm case for the application of section
306. The interim administrator has not applied the provision. The reason, once
more, is that she has aggregated the transactions on all of the bank accounts,
including all of Mrs Buchanan's accounts, and blurred the distinctions that
necessarily arise if one seeks to trace the origins of the property the
petitioners seek to recover. In my opinion this approach is not authorised by
statute or authority.
[30] There are two other problems associated with this account. Two
sums amounting to £63,211.15 were lodged in 1998-99. One sum of £45,000 was
lodged on 22 July 1998. It was used in the purchase of 127
Gilberstoun, which the petitioners seek to recover separately. The second
element was a sum of £18,211.15 representing the equity proceeds of sale of 56
Lochend Avenue, Edinburgh. In
terms of section 305, where property obtained through unlawful conduct is
or has been recoverable property, property which represents the original
property is also recoverable property. A typical example of the situation in
which recoverable property comes to be represented by other property is the
purchase of heritage by use of tainted money. But it appears to be abundantly
clear that where this occurs it would be double counting to include the
original property (the money applied in the purchase) in the computation of the
proportion of mixed property, that is the residual bank balance, as well as
tracing it into the heritable property which comes to represent it.
[31] I shall refer to these transactions in heritable property in
detail. In relation to tracing funds,
the treatment of the £45,000 is illustrative.
I am of opinion that, in terms of section 305 of the 2002 Act, the
£45,000 passing through account number 78245553 came to be represented by the
interest in the heritable property purchased. In my view the same sum cannot be taken into
account simultaneously in characterising two assets for the purposes of the
Act. If a sum comes to be represented by an interest in another asset, it must
be analysed out of the source account. This,
in my view is an additional factor that undermines the methodology adopted in
this case to the analysis of the bank accounts as a whole. The interim
administrator's main report does not address this issue in any way. In relation
to Lloyds TSB account 78245553 it states:
"This account is
on the name of (Mrs Buchanan). I have not been able to identify the source of
cash lodgements totalling £47,694.16.
Payments from
this account consist of £25,600 of cash withdrawals, and £22,235.00 of account
transfers.
I have no
information as to how (Mrs Buchanan) acquired such large cash deposits into the
account, as compared to the legitimate income that I have identified. In the
absence of any evidence to the contrary, I conclude that the funds would appear
to arise from unlawful conduct and are therefore recoverable."
There is no evidence of the
application of the tracing provisions to the account, yet on any view the bald
statement in the report requires to be modified. The balance on the account is
small, and in isolation immaterial. But it seems to me that having failed to
give effect to the negative aspects of the tracing rules the petitioners have
failed to provide any analysis of the primary evidence that would show that
this and the other bank accounts are recoverable property. In addition to this, the credits to the
account include £31,250 of money transferred from other accounts that are
sought to be recovered, and £2,595 transferred out to such accounts. In the
course of her evidence the interim administrator accepted that there had been
double counting in respect of these sums and made an adjustment to her report.
[32] While it is clear that an adjustment was required to avoid
double counting, I consider that the approach adopted exposes another aspect of
the flaw in the overall methodology. The
interim administrator's adjustment has the effect of reducing the aggregate of
all lodgements. It therefore avoided
following the scheme of the Act which would have required tracing the property
into the fund credited. This is not
simply a matter of accounting technique.
Where funds are moved from a mixed fund, they carry forward the
character they had in the source account at the material time. If the sum transferred was mixed, an
apportionment would be required and only the tainted portion would enter the
account credited as tainted funds. This
can be illustrated in the case of Mrs Buchanan's Dunfermline Building Society
Account 991734330 on which there was a balance of £3,000. The documentary evidence includes information
about that account. The balance is not
included in the property for which a recovery order is sought. The sum was lodged in June 2004. A cheque was drawn on Mrs Buchanan's Lloyds
TSB account number 73532868 to make the lodgement. It appears that the reason for not including
this sum was the interim administrator's concern to avoid double counting. However, the transaction illustrates the
error of approach. In failing to trace
the sum to the asset which came finally to represent it, the source account has
been treated as continuing to include the sum, and the potentially recoverable
property has not been claimed, a clear demonstration of the consequences of
departing from the statutory scheme.
[33] Applying section 306 to Mrs Buchanan's Lloyds TSB account 06028543,
as in my opinion one must, the result is that a portion only of the balance on
this account could be recoverable property in any event. It seems to me to be
impossible to characterise the small opening balance at 6 April 1997 as recoverable property, and the
interim administrator has, properly, not sought to do so in the analysis in her
main report. On the interim administrator's approach there was no recoverable
property down to the end of 1996-97. The balance brought forward at the end of
that year must therefore be unimpeachable. Looking at matters broadly, there were
lodgements of approximately £76,000 that might be said to have been tainted by
Mr Buchanan's unlawful conduct, and £82,500 of lodgements from unimpeachable
sources. Whatever the evidence of Mr and Mrs Buchanan, the interim
administrator ought to have considered the apportionment of this account, if it
was permissible to aggregate the whole transactions on the account throughout
the period at all.
[34] Mrs Buchanan's Royal Bank of Scotland Account 00655243,
ultimate balance £1,992.80, is in the same position so far as details of
operations on the account are available in evidence. The interim
administrator's partial analysis of the account down to 5 April 2004 was as follows:
|
|
2001-2
|
2002-3
|
2003-4
|
Total
|
|
Opening balance
|
|
|
|
|
|
Cash and cheques
|
2,929.99
|
|
|
2,929.99
|
|
Wages
|
1,800.00
|
9,564.00
|
150.00
|
11,514.00
|
|
Bank Interest
|
53.82
|
18.62
|
0.23
|
72.67
|
|
Other
|
1,002.38
|
0.09
|
0.09
|
1,007.94
|
|
|
5,786.19
|
9,588.09
|
150.32
|
15,524.60
|
|
Payments
|
1,500.31
|
11,968.13
|
500.63
|
13,969.07
|
|
Account transfer
|
|
1000.00
|
|
|
|
|
1,500.31
|
12,968.13
|
500.63
|
14,969.07
|
|
|
|
|
|
|
|
|
4,285.8
|
905.84
|
555.53
|
555.53
|
Transactions after 5 April 2004 appear to have been
reflected in the balance sought to be recovered, but not analysed. The interim
administrator's report on this account states:
"This account is
in the name of (Mrs Buchanan). The main source of income is £150 per month from
(Lisa Marie Buchanan) (£11,514 for the period). It is assumed this is for
housekeeping, but no corresponding account has been identified for (Lisa Marie
Buchanan). The significant payments were made to card 01 on the 29 May 2002 for £4,000 and £7,454.59
on 17 June 2002 but I have
not been able to identify what these funds were used for.
(Mrs Buchanan)
financed the family lifestyle from her various accounts which contained tainted
funds. In this account she received funds from her daughter for a living
allowance but financed these from another account.
I have no
information as to how (Mrs Buchanan) acquired such large cash deposits amounts
into the account, as compared to the legitimate income that I have identified.
In the absence of any evidence to the contrary, I conclude that the funds would
appear to arise from unlawful conduct."
[35] The interim administrator did not revise these observations in
her supplementary report or in her evidence. As already noted, Lisa Marie
Buchanan's vouched legitimate income was considerable. Little of it passed
through the only bank account in her own name for her own benefit. On any view
she had ample cash resources to pay her mother for her "keep". The repetition
of the formulaic last paragraph (which with little variation appears throughout
the report) in respect of this account is not impressive. The report does not
identify the "large cash deposits", and payments by Lisa Marie Buchanan, while
not "legitimate income" in the sense of having been vouched by Inland Revenue
records, were, on any reasonable view, as legitimate a source of funds in the
hands of Mrs Buchanan as one might imagine.
[36] However, as appears from the appendix, the partial analysis
does not reflect the detailed information available. There were five cash
lodgements in 2001-2002 amounting to £3,550, but none thereafter. The sums
lodged thereafter comprised in the main Lisa Buchanan's contributions to the
household, Mrs Buchanan's redundancy payment, and some interest. The inference
on which the petitioners rely is not supported by primary evidence to any
extent.
[37] Mrs Buchanan's Lloyds TSB Account 73532868, balance £3.03, was
the result of transactions, so far as material, over the period 1997-2005. An
examination of this account appears to make it clear that it related to
transactions with Marks & Spencer, and was used to repay an initial loan of
£2,217.27 and other sums due to the retailer. There were cash lodgements and
transfers from other accounts. But in 1999-2000 and subsequent years there were
substantial deposits of sums paid by Mrs Buchanan's sister, Y Young, who
purchased 56 Lochend Avenue. A sum of £4,000 was lodged in 2002-2003, but
transferred in the same period to another account so that, if recoverable, it
was thereafter represented in the other account. On any view the bulk of the
money lodged in this account was legitimate.
[38] The balance of £1,506.26 in Royal Bank of Scotland Account
00645329 was built up of a mixture of cash lodgements and regular payments by
direct debit from third parties that are not said to have been tainted. The
individual circumstances of these various accounts are so different that it is
impossible to envisage any form of "globalisation" that would deal adequately
with the particular issues that necessarily arise from the scheme of the Act.
On the other hand, there would be no difficulty in considering the totality of
Mrs Buchanan's legitimate income against the picture that emerged at the end of
the day from an individual investigation into each asset, provided that the
methodology met the requirements of the scheme of the Act. In my view there are
two separate strands of proof that have to be distinguished, namely whether, on
the evidence tendered by the petitioners, there are assets that may be
recoverable property applying the detailed provisions of the Act, and secondly,
whether applying the test of balance of probabilities to the evidence as a
whole satisfactory evidence has been tendered that characterises the asset
either as the proceeds of unlawful conduct, directly or indirectly, or as mixed
property. If the evidence relied on by
the petitioners cannot support a valid inference that any asset is recoverable
property, on a sound application of the Act, the quality of any contrary
evidence is immaterial. The interim
administrator's reports effectively acknowledge these two separate issues in
relation to the items of heritable and moveable property targeted. But in my
view they do not deal satisfactorily with the issues that arise in relation to
bank accounts.
[39] In connection with those issues, it is necessary to return to
the question of the weight to be given to Ms Rivers' evidence generally. I
consider that the approach adopted by Mr Justice King in Jackson and Smith is correct and should
be followed. It was clear from Ms Rivers' evidence that, strictly, much of it
was hearsay. But that does not affect its admissibility, and no such point was
suggested by the respondents. At paragraphs 110 to 114 Mr Justice King
discussed the nexus that had to be established between the unlawful conduct
alleged and the property sought to be recovered, following The Director of the Recovery Agency v Green [2005] EWHC 3168 (Admin) and Olupitan. I agree with his approach. Dealing with Mr Jackson
as an individual, he concluded at paragraph 116 that he was entitled to take a
global approach to the issue at proof that the property in issue was
recoverable within the meaning of the act. In this case, I consider that it
would not be inappropriate to deal with Mrs Buchanan on a global basis if once
one had identified the balances or parts of balances on her bank accounts that
were potentially recoverable property.
[40] However, I have come to the view that, looking at the
information available as a whole, it is impossible to accept the evidence of
the reports and of Ms Rivers in support of those reports so far the balances on
Mrs Buchanan's bank accounts are concerned. I have set out an analysis of all
of the accounts in the appendix to this opinion so far as detailed statements
of account are available. In summary, my
conclusions are as follows.
Lloyds TSB
Account 78245553
The balance on
this account was reduced to £64.06 in 2002-3 by the transfer of £10,000 to
Lloyds TSB Account 06028543. If the previous balance of £10,046.29 had been
tainted in full or almost in full, as arguably it would have been, the £10,000
would have ceased to be recoverable as part of account 78245553. The interim
administrator might have traced the sources of the remaining £64.06, but has
not done so. There were other transfers out of the account, including £960 in
2001-2002 to Mrs J Stewart's account which is not said to be recoverable
property. The pattern of lodgements and transfers in particular was such that
one could not arrive at a view on apportionment without evidence, and without
the respondents having been given an opportunity to comment. I shall refer
later to evidence from Ms Rivers that acknowledged that this account was
mixed property.
Lloyds TSB
Account 06028543
This account was
for most of the period the principal working bank account operated by Mrs
Buchanan. There were many large cash deposits into the account, which, together
with transfers from other accounts which in turn had been credited with large
cash sums, would have warranted an inference that to some extent at least this
account represented property obtained by unlawful conduct. However, it was also
the account into which Mrs Buchanan deposited her wages, miscellaneous cheque
and other receipts, and Department of Works and Pensions benefits. The
petitioners have not provided any evidence as to the apportionment of this account
into parts representing recoverable property and other property. This would not
have been a matter of simple arithmetic, even once one had decided on an
approach to the ascription of payments within the account. It would have
required expert analysis. Such evidence
was not put to the respondents, nor put before the court.
Lloyds TSB
Account 73532868
I have referred
to the build up of this account above. There has been no evidence that would
entitle the court to apportion the residual balance on this account.
Lloyds TSB
Account 74381653
I have dealt
with the contents of this account above.
Royal Bank of
Scotland
Account 00645329
This account was
opened in 2000-2001 with a cash deposit of £500. In subsequent years there were
further cash deposits which, like the first deposit might have supported an
inference that the balance represented recoverable property at least in part.
However, in 2001-2002 and thereafter there were identified unimpeachable
deposits by direct debit, and frequent deposits of cheques that as a matter of
common sense and one's experience of the drugs scene could not lightly be
attributed to unlawful conduct. Apportionment would be required to reflect the
scheme of the 2002 Act. That has not been done.
Royal Bank of
Scotland
Account 00655243
I have dealt
with the contents of this account above. Credits to this account were again
mixed, and, following the scheme of the Act, apportionment would be required.
That has not been dealt with in evidence.
In the circumstances I shall refuse
to make any order in respect of these bank balances.
[41] It follows from the reasons for that conclusion that there is
no basis for tracing recoverable property into any other target fund. It is
impossible to categorise the sums transferred and therefore to characterise the
resulting balance. The Co-operative Insurance Society ISA/PEP Account 75236950,
balance £1,935.59 is claimed on the narrative:
"This is in the
name of (Mrs Buchanan) for which there is a monthly £100 direct debit from
(her) Lloyds TSB account 06028643.
I have no
information as to how the Respondent acquired such large cash deposits into the
account, as compared to the legitimate income that I have identified. In the
absence of any evidence to the contrary, I conclude that the funds would appear
to arise from unlawful conduct and are therefore recoverable."
On this occasion, the reasoning in
the report is unintelligible. There were no "large cash deposits" into the
account. The source of funding is identified. Since the direct debits were charged
to an account that was itself a mixed fund, only a portion the transferred
property would have been potentially recoverable in any event. In the absence
of any means of identifying the portion, it has not been proved that any part
of this account is recoverable.
[42] The Dunfermline Building Society Account 991675672, balance
£542.83 is claimed on the following basis:
"This account
was opened on 29 April 2004
in the name of (Mrs Buchanan). The balance of £542.83 consists of six
unidentified lodgements.
I have no
information as to how the Respondent acquired such large cash deposits into the
account, as compared to the legitimate income that I have identified. In the
absence of any evidence to the contrary, I conclude that the funds would appear
to arise from unlawful conduct and are therefore recoverable."
The sums deposited were £146.50;
£100; £10; £200; £46.33 and £40. The interim administrator's reasoning in
support of this claim is unjustified on the basis of the primary information
she collected. It is impossible to avoid the impression that this is mere
rehearsal of language inserted at the press of a button from a word processor
without thought. No objective basis has
been made out for the recovery of this asset.
The heritable properties
[43] The
petitioners seek orders for the recovery of two items of heritable property,
127 Gilberstoun Edinburgh; and 33/2
Loaning Crescent Edinburgh.
Different legal and factual issues arise in respect of these items of property.
In her main report of March 2005 the interim administrator stated in relation
to 127 Gilberstoun:
"The property
was originally purchased by (Mrs Buchanan) on 24 July 1998 for £115,000 by way of a £70,000 mortgage
with the balance of £45,000 being financed by a bank draft.
In interview (Mrs
Buchanan) claimed to have financed the £45,000 deposit in part from the equity
released on the sale of 56/6 Lochend Avenue, with the balance coming from
friends and family, primarily over £20,000 in cash which she allegedly found in
her aunt's property. ...I have identified no independent evidence with which to
substantiate this claim of cash from the aunt...
Although, (Mrs
Buchanan) sold her previous home at 56/6 Lochend
Avenue in 1998, sale proceeds of £18,211.15 were
not received until 22 October 1998,
three months after the purchase of 127 Gilberstoun. Therefore, any equity from
the sale of that property could not have been used to finance the acquisition
of 127 Gilberstoun. The sale proceeds were in fact lodged to (Mrs Buchanan's)
bank account and used to finance her lifestyle.
It should be
noted that a cash lodgement of £45,000 was made on 22 July 1998 to (Mrs Buchanan's) bank account. I
can find no evidence of any legitimately derived income of any of the
respondents to enable such a lodgement to be made.
Throughout the
subsequent period, (Mrs Buchanan) has received significant unidentified cash
lodgements to her accounts. Therefore, I would conclude the subsequent mortgage
payments for the property would have been made from tainted funds.
In the absence
of any evidence to the contrary, I can only attribute the funds for the
purchase and subsequent mortgage payments to the proceeds of unlawful conduct
and I therefore conclude that this property is recoverable."
[44] In Part III of the schedule to the petition the mortgage is
treated as "associated property", in the following terms:
"Standard
Security by Marie Buchanan in favour of the Royal Bank of Scotland plc recorded
in the General Register of Sasines for the County
of Midlothian on 27 November 2001 over (127
Gilberstoun), the said Standard Security being associated property in terms of
section 245 of the Act as it is an interest in the said subjects."
[45] The interim administrator's supplemental report of August 2007
did not add to the positive case for recovery of the house or the treatment of
the standard security. In oral evidence, Ms Rivers discussed the treatment of
profits accrued on the house between acquisition and the present time. In her
evidence in chief, she adopted the evidence set out in the main report. The
effect of her evidence, if accepted as credible and reliable in fact and valid
in law, would be that the petitioners would recover the property subject to
paying off the outstanding balance of the mortgage. There was no effective challenge
of Ms Rivers' financial analysis relating to 127 Gilberstoun in cross
examination.
[46] The petitioners' written submissions relating to 127
Gilberstoun repeat Ms River's evidence in summary, counter the
respondents' factual contentions, and contain the following submissions on the
legal position:
"108. It is submitted that the Court should find
that the loan repayments were made with recoverable property and that the
entire value of the subjects less the outstanding loan is recoverable property.
110. Section 305 of the Act deals with tracing
property. ... It provides that if a person enters into a transaction by which he
disposes of recoverable property and he obtains other property in place of it
the other property represents the recoverable property.
111. In this case it is submitted that the
transaction which has been entered into is the part repayment of the loan. In
return for the part repayment Mrs Buchanan has received an increase in the
equity in the house. Her indebtedness has been reduced from £70,000 to £62,443
by the application of recoverable property to the repayment of the loan. This
should be considered to be recoverable property in the hands of Mrs Buchanan.
112. The value of the subjects has not only
increased by virtue of the repayment of the loan but has also increased by
reason of the market rising. In this case the value of the subjects has risen
from £115,000 to £290,000. The increase operates only to the benefit of Mrs
Buchanan. It is a profit on the £45,000 which she used as a deposit and which
came from unlawful conduct. It is not a profit on the £70,000 which she
borrowed. The profit on the borrowed £70,000 is interest which she has paid to
the lender. Profits on recoverable property, in this case the increase in the
value of the property through the movement of the market, are recoverable
property in terms of section 307 of the Act.
113. It is submitted that the foregoing approach
to tracing loan repayments into property is one which the Court should adopt.
The Act sets up a statutory scheme for which there is no direct equivalent at
common law. The concept of property representing other property is one to be
worked out in the context of the purpose of the Act which is, in short, to
prevent crime being a profitable activity. If loan repayments could not be
traced into the property acquired with the loan then the purpose and operation
of the Act would be seriously undermined. It would mean that by buying assets
on credit and repaying the loans with recoverable property the recoverable
property could be effectively laundered and put beyond the reach of the
statutory scheme.
114. It is
submitted that, in the circumstances, the Court should order that the property
at 127 Gilberstoun be vested in the Trustee for Civil Recovery. Section 272 of
the Act makes provision for dealing with associated property. The court should
make an order under section 272 (2) discharging the standard security in favour
of the Royal Bank of Scotland and requiring the Trustee to redeem the
outstanding loan as soon as reasonably practicable after vesting."
The submissions went on the deal
with an alternative approach involving apportionment.
[47] The petitioners' submissions caused some concern, and they were
given the opportunity to review them since that course was necessary in any
event to allow the respondents to expand their written submissions. The
petitioners tendered supplementary submissions which dealt with the
arithmetical implications of a decision that apportionment was required, and
contained the following additional submissions in support of the positive case:
"The
petitioners' position is that the deposit (of £45,000) was paid with funds
obtained through unlawful conduct, and that the whole profit attributable to
the deposit is recoverable....
The petitioners'
position is that the mortgage could not have been obtained were it not for the
£45,000 deposit paid by the respondents, and that the while profit attributable
to the outstanding mortgage is therefore recoverable. Marie Buchanan's
salary would have been clearly insufficient to allow her to obtain a mortgage
of £70,000....
The petitioners'
position is that the capital repayments (of the mortgage) were made from funds
obtained through unlawful conduct, and that the whole profit attributable to the
capital repayments is therefore recoverable....
The petitioners'
position remains that (Mrs Buchanan) has already had substantial benefits from
property and funds obtained through unlawful conduct (many of which are not
recoverable), that she is not entitled to any further benefit from the said
property, and that the whole profit attributable to the capital repayments is
recoverable."
The reference to previous benefits
was to the benefit of having occupied the property as a family home, but the
submission had the character of a moral rather than an economic argument.
[48] There was no evidence tendered to support the proposition that
the mortgage could not have been obtained at the time it was, and in the
circumstances relating to the transaction, and I am of opinion that this
element of the petitioners' revised submissions cannot be taken into account.
The mortgage was obtained, and, so far as the evidence led shows, that was the
result of an unimpeachable transaction. A mortgage application was made initially
to Alliance and Leicester
in 1998 and granted. The application form stated, as was the fact, that Mrs
Buchanan was selling 56 Lochend Avenue
to her sister for £42,000. That transaction was completed on 22 October 1998. The original
mortgage was redeemed and replaced by the standard security in favour of the
Royal Bank of Scotland
on 27 November 2001 which
is now dealt with as associated property.
[49] The Royal Bank of Scotland
were served with the petition as holders of associated property but have not
entered the process. The definition in section 245 includes the following
provision:
"(1) 'Associated property' means property of
any of the following descriptions (including property held by the respondent)
which is not itself the recoverable property - any interest in the recoverable property...."
It was not disputed that a mortgage
is capable of being an interest in heritable property in the hands of the
lender. It also appears to be clear that the bank, as lender, would be an "excepted
joint owner" in terms of section 270(2) and (4), and that section 272(2) and
(3) would apply. In an appropriate case a court might be asked to make a
recovery order in respect of such an interest. Nor is there any difficulty with
the submission that so far as the lender is concerned the contractual interest
received from the borrower is profit that would accrue in respect of the
lender's interest in the property. The petition had to deal with the bank's
interest if the order sought against Mrs Buchanan in respect of the heritable
property as a whole was to have a proper effect. But the important issue
appears to me to be whether the bank's interest is relevant to the order sought
against Mrs Buchanan in any other respect.
[50] Section 307 provides:
"(1) This section applies where a person who has
recoverable property obtains further property consisting of profits accruing in
respect of the recoverable property.
(2) The
further property is to be treated as representing the property obtained through
unlawful conduct."
It is a condition of the
application of the provision that recoverable property has been identified in
the first place. Section 306 provides:
"(1) Subsection
(2) applies if a person's recoverable property is mixed with other property
(whether his property or another's).
(2) The portion
of the mixed property which is attributable to the recoverable property
represents the property obtained through unlawful conduct.
(3) Recoverable property is mixed with
other property if (for example) it is used -
(b) in part payment
for the acquisition of an asset."
[51] The asset that the petitioners seek to recover is described,
properly, in the second schedule to the petition in terms of the heritable
title of the proprietor. If it is recoverable its current value is of interest
only in relation to the price that can be obtained on sale with a clear title.
The value does not describe the asset, nor is it relevant to its description.
That asset was acquired on 24 July
1998 at a price of £115,000 funded by two part-payments of £45,000
and £70,000 respectively. Subject to any acceptable explanation by Mr or Mrs
Buchanan, the petitioners have led evidence that would entitle the court to
hold that the £45,000 was obtained through unlawful conduct and to trace that sum
into an interest in the heritable property. An interest in property purchased
with funds obtained by mortgage fraud may be recoverable property: Olupitan. But as Mr Justice Langley
notes at paragraph 13 of his opinion in relation to sections 306 and 307:
"The effect of these
provisions, so far as material, is that where, for example, a property acquired
is in part 'recoverable property' and in part not, for example where a house is
bought with funds both unlawfully and lawfully provided, only 'the portion'
attributable to the unlawful element is recoverable: section 306.... The Act
gives no guidance about what 'portion' of a mixed property is attributable to
recoverable property beyond the language itself used in section 306 (2)"
I agree with those observations. On
the evidence before me the mortgage obtained by Mrs Buchanan from the bank was
lawfully provided money and the relevant portion of the property is not
recoverable property. That, however, does not solve the problem of
apportionment, and that cannot be addressed without dealing with the mortgage.
[52] The petition seeks discharge of the standard security, on
condition of payment to the bank of the outstanding debt. A recovery order is
not sought. The petitioners do not contend in this case that the standard
security is itself recoverable property. As already mentioned, I found
difficulty with the petitioners' argument. Paragraph 108 contained a statement
of the petitioners' general position: that the Court should find that the loan
repayments were made with recoverable property and that the entire value of the
subjects less the outstanding loan was recoverable property. There is an issue
whether the loan payments were wholly from recoverable property to which I
shall return. Leaving that aside, the next proposition was that if a person
enters into a transaction by which he disposes of recoverable property and he
obtains other property in place of it the other property represents the
recoverable property. As a generality there is no difficulty with that: section
305. The following proposition was:
"111. In this case it is submitted that the
transaction which has been entered into is the part repayment of the loan. In
return for the part repayment Mrs Buchanan has received an increase in the
equity in the house. Her indebtedness has been reduced from £70,000 to £62,443
by the application of recoverable property to the repayment of the loan. This
should be considered to be recoverable property in the hands of Mrs Buchanan."
In my opinion the proposition
involves a degree of confusion of thought. At its core is a contention that the
reduction of a liability may be an addition to what has otherwise been
identified as recoverable property. The reduction of a liability is not
property on any ordinary use of language. Nor was I referred to any provision
of the Act that would entitle one to treat it as such. The reduction of the
debt put nothing into Mrs Buchanan's hands that could be described as property.
Her interest as proprietor was not changed in any respect by the repayment. The
"equity" referred to confuses her interest in the property with its value.
Paragraph 112 further confuses the issue. The assertion that the whole "profit"
attributable to the increase in market value accrued on the £45,000 component
of the price is without merit and is a denial of common sense. The comment that
the profit on the mortgage was the interest paid confuses the situations of the
lender and the owner of the interest in the heritage. It is extremely doubtful
whether an unrealised increase in value of an asset that has not changed over
time is a "profit" in the sense of the Act at all. If an asset is recoverable
property it will be recovered as it exists: in this case a heritable asset with
whatever value the market puts on it at the point of realisation. What that
asset might realise on sale at the instance of the Trustee would be a price. It
would be of no significance for the operation of the Act that the price
realised was greater or less than the price originally paid for the asset. The terms of section 307(1) support the
view that the "profits" in contemplation are separate from the property
generating those profits. It is "further
property" that is targeted.
[53] It may be that the result of this view is that there may be
occasions when loan repayments could not be traced into property acquired with
the benefit of the loan separate from the asset acquired by the application of
the loan. It could mean that by buying
assets on credit and repaying the loans with recoverable property the recoverable
property could be effectively laundered and put beyond the reach of the
statutory scheme. But this is an expropriatory statute, and if that were the
result of a sound construction of its terms, it would be for Parliament to
remedy any deficiency in the framework that was thought to exist. I am not
convinced that the result complained of necessarily follows. In the absence of
a contradictor presenting a full argument it would not be appropriate to
express concluded views on the issue. But in terms of section 272(2) the
petitioners might have sought a recovery order vesting the lender's interest in
the Trustee with a provision in terms of sub-section (3)(b) imposing a
condition on anyone seeking to discharge the standard security to make payment
to the Trustee of a sum representing the value of the reduction in the
liability attributable to property obtained by unlawful conduct, that is the
proportion of the repayments funded from the mixed property comprised in Mrs Buchanan's
Lloyds TSB Account 06028543. But that has not been the petitioners' approach in
this case and the lack of any basis for apportionment of the capital repayments
on the mortgage would make such an exercise impossible in the circumstances.
[54] Returning to the initial purchase, it is appropriate to comment
on the practical implications of the view that a portion only of Mrs Buchanan's
interest in 127 Gilberstoun may be recoverable property. Section 273(2) must be
satisfied. That could be achieved readily by vesting a pro indiviso share of the property in the Trustee for Civil
Recovery. That would give rise to a right to seek division and sale, but allow
Mrs Buchanan the opportunity to acquire the Trustee's interest for value. It
would be for the petitioners to consider in that context whether any order was
required in relation to the mortgage.
[55] The sum applied in purchase of 127 Gilberstoun was withdrawn
from Mrs Buchanan's Lloyds TSB account number 06028543. That account had
an opening balance at 6 April 1998
of £2,505.46. In the previous year there had been cash lodgements of £3,300.00 comprising
six deposits of £500 and one of £300. There were smaller cash deposits in two
other accounts, but, generally, until that date there had been no large or
round sum credits to the account. The significant credits had been identified
and were primarily wages. 1998-99 saw a
material, and significant, change in the pattern of operation of two accounts
in particular, 78245553 and 06028543. The transactions are summarised in the
Appendix to this opinion. A sum of £10,000 was lodged in account number
78245553. In the case of account number 06028543, one deposit, of £6,000,
appears to have been a cheque that was returned "refer to drawer". Deducting
that, the cash lodgements that appear prima
facie to require explanation amounted to £52,042.00, including the deposit
of £45,000. In the absence of an acceptable alternative explanation, the change
in the pattern of lodgements, including very large cash deposits, compared with
verified income lodgements of £11,245.62, would amply justify the petitioners'
contention that the £45,000 applied in the purchase of 127 Gilberstoun was
obtained from George Buchanan's unlawful conduct. In my opinion it is
appropriate to take an overall view of the transactions in this period in
assessing whether on a balance of probabilities the petitioners have made out
their case.
[56] The answers to the petition offer as explanation for the cash
deposit: "Explained and averred £20,000 came from the First Respondent's uncle
and the balance came from the sale of Lochend Avenue."
Mrs Buchanan did not give evidence in support of these averments. In her final
address she said that the whole sum had been provided by her uncle and aunt. No
evidence has been provided by Mr Stewart or by Mrs Jeanette Stewart. Both
were elderly, and the interim administrator explained her unwillingness to
interview either on that account. Mrs Buchanan was critical of Ms Rivers
and cross examined her extensively about her failure to interview these individuals.
However, at this stage in these proceedings it is not material whether or not
Ms Rivers interviewed any potential witness. I have previously drawn attention
to my view that the interim administrator's opinions on credibility and
reliability are irrelevant, and that it is for the court to resolve issues of
fact on the evidence. I have also encouraged the Buchanan family to focus their
attention on the presentation of their own case. The evidence of Mr Stewart
and Mrs Stewart could have been taken on commission. Affidavits or signed
statements could have been prepared and tendered at very least. There would
have been issues of admissibility. But at very least their factual accounts
would have been available to parties and the issues arising on Mrs Buchanan's
account could have been explored. I should observe that at many of the earlier
stages in this case when such work could have been carried out the respondents
were legally represented. In the circumstances, there is no basis on which I
can relieve Mrs Buchanan of the obvious obligation to present cogent evidence
of the transactions she relies on.
[57] The total throughput of cash sums in Mrs Buchanan's accounts at
or about the time of this transaction far exceeds anything that could be
explained by her legitimate income and verified capital receipts. In the
absence of any acceptable evidence to the contrary, the irresistible inference
from the pattern of lodgements, taking account of the change from previous
periods, is that the money was obtained from Mr Buchanan's unlawful
conduct. Looking at the issue more narrowly, the balance on Mrs Buchanan's
account number 06028543 on 22 July
1998 was £305.12. The last previous lodgement had been of a round
sum of cash of £2,000 on 17 July 1998.
On 22 July, £45,000 was lodged and withdrawn to make the contribution to the
purchase of 127 Gilberstoun. Even in isolation this transaction was
extraordinary and required explanation. No acceptable explanation has been
tendered.
[58] Given that the petitioners' position is that the heritable
property represents the proceeds of Mr Buchanan's unlawful conduct, it is
appropriate to follow the movements on Mrs Buchanan's bank accounts
chronologically, inter alia to
identify when property in the form of heritable rights came to represent cash
sums. For this purpose a global approach to the analysis of Mrs Buchanan's
transactions may be appropriate. It is
also necessary to take a common sense approach to the material. Thus, it has to
be borne in mind that what one is concerned with fundamentally, in this case,
is an allegation that Mrs Buchanan benefited from the application of the
proceeds of dealing in controlled drugs. I have heard no evidence that would
suggest that those who may have entered into such transactions with Mr George
Buchanan paid by cheque, much less by cheque in Mrs Buchanan's favour. A
cursory examination of the details of Mr Buchanan's bank accounts
indicates that cheque payments were not the norm in his banking operations. I
can see no basis for a conclusion that cheque lodgements into Mrs Buchanan's
bank accounts could have been obtained by unlawful conduct of the sole kind in
issue in this case.
[59] Applying these views, the analysis which seems to me to be
appropriate is set out in the appendices to this opinion. Cash lodgements and
payments are identified where the pattern or amounts appear to me to be
potentially significant. Lloyds TSB account number 06028543 was a principal
operating account and contains the bulk of Mrs Buchanan's banking transactions including
miscellaneous lodgements that have no identifiable characteristics and in
particular none that point to the probability that they relate to the proceeds
of crime. Indeed the experience of any criminal judge includes the accumulated
weight of evidence from expert Drug Squad officers on the patterns of dealing.
Nothing in this case suggests that payment by cheque in pounds and pence has
superseded the "tenner" and "score" class "A" deals and £5 cannabis deals that
have typified street level dealing for decades, nor indicated that higher up
the chain of supply cash has been superseded in any way as the accepted method
of payment. It offends common sense to treat many of the lodgements in
Mrs Buchanan's accounts as tainted without having regard to the reality
that what this case depends on is proof of the much repeated mantra that Mrs
Buchanan has deposited large cash sums into her accounts that cannot be
explained by her verified legitimate income, justifying the inference that they
represent the proceeds of Mr Buchanan's dealing in controlled drugs. Similarly,
I have identified debits where they appear material, but in other respects have
ignored details.
[60] Making allowance for these factors, the banking position that
existed in 1998-99 when 127 Gilberstoun was purchased has been set out above.
Mrs Buchanan has given varying accounts of the sources of the money lodged on 22 July 1998. However, she did not
give any evidence at the proof in support of any of her previous statements to
others, and offered no explanation of the very large cash movements in the
accounts at the time. To some extent this must reflect her disadvantage in
having to present her case without the benefit of legal representation. But the
result is that I have not been provided with any evidence on which to make
findings contrary to the inference that must otherwise be drawn from the
financial analyses that have been spoken to in evidence. No evidence has been
provided of Mr Joseph Stewart's ability to accumulate and provide large cash
balances, nor of that of Mrs Stewart, his wife. On the face of it, without a
cogent explanation of their possession of very large cash sums, there is
nothing to suggest that they could have disposed of such sums. The interest in
127 Gilberstoun attributable to the deposit of £45,000 is recoverable property.
[61] The second item of heritable property in respect of which a
recovery order is sought is 33/2 Loaning Crescent
Edinburgh. The interim administrator's main
report set out the history of transactions relating to this property. The
property was purchased from Edinburgh Council by the tenant, Mr Joseph Stewart,
who is Mrs Buchanan's uncle, with entry on 12 July 1999. The price was £11,400. That sum was
withdrawn by Mrs Buchanan from her Lloyds TSB account number 78245553 on 2 July
1999 and a standard security secured over 33/2 Loaning Crescent Edinburgh was
granted by Mr Stewart in favour of Mrs Buchanan for the same sum on 7 July
1999. On 14 May 2004, Mr
Stewart conveyed the property to Mrs Buchanan without consideration and the
standard security was discharged. The report states:
"(Mrs
Buchanan's) uncle purchased 33/2 Loaning Crescent
from Edinburgh Council at a cost of £11,400 and gained entry on 12 July 1999. Her uncle was a retired
porter from the Edinburgh Infirmary who (Mrs Buchanan) alleges paid cash for
the property. On 2 July 1999
(Mrs Buchanan) withdrew £11,400 from her Lloyds TSB account. Subsequently she
received a charge against the property on 7 July 1999. Absent evidence to the contrary, the funds
for the purchase of the property would appear to have been provided by Mrs Buchanan
from an account which I suspect contained tainted funds. I therefore conclude that
the property to form a recoverable
asset."
The supplementary report of August 2007
did not add to the primary facts relied on in respect of this asset. In her
oral evidence, Ms Rivers stated that it appeared that Mrs Buchanan had
funded the purchase, subsequently having it transferred to her absolutely
without consideration when it had already appreciated in value.
[62] Mrs Buchanan cross examined Ms Rivers at some length about this
transaction, and later gave evidence on her own behalf. Technically, she did
not give positive evidence in support of the propositions she put to Ms Rivers.
However, I have taken the view that in the interests of fairness I should take
account of her contentions, however placed before the court, rather than adopt
a strict approach to the evidence. Ultimately, Ms Rivers' position did not
alter. Mrs Buchanan pointed to transactions in the year 1998-1999 when her
account number 06028543 had been inflated by the lodgement of the equity
proceeds of the sale of 56 Lochend Avenue
to Mrs Buchanan's sister. Ms Rivers accepted that the equity proceeds of
sale of £18,211.15 lodged in October remained in that account untouched until
£12,000 was withdrawn in cash on 7 December. She accepted that on the same day,
£10,000 was lodged in Mrs Buchanan's Lloyds TSB account 78245553 from which
£11,400 was withdrawn to pay for 33/2 Loaning Crescent.
She did not accept that the transactions demonstrated that the price of the
house was the same money as had been received from the sale of 56
Lochend Avenue. Ms Rivers said that she did not
know what the factual position was and pointed to the fact that the sums of
money were different.
[63] Mrs Buchanan asked whether Ms Rivers accepted that a withdrawal
of £10,000 on 7 December 1998
had come from a legitimate source. Ms Rivers' answer was that it had come
partly from a legitimate source, because what she saw were legitimate receipts,
for which she had given credit, but also tainted money. The money in the bank
account had become mixed and was partly tainted and partly legitimate. Mrs
Buchanan pressed Ms Rivers, but her position remained that the account
contained mixed funds, part of which were tainted. Ms Rivers returned to the
issue in re-examination. She noted that the balance on Lloyds TSB account
78245553 on 17 August 1998
had been £48.00. On 7 December £10,000 had been lodged. On 12 and 18 May 1999 two sums amounting to
£10,000 had been withdrawn, reducing the balance at that date to £1,963.76. On
2 and 16 June two lodgements had been made amounting to £11,500. On 2 July the
sum of £11,400 was withdrawn. Ms Rivers' final position was that the sum
withdrawn from Lloyds TSB account number 06028543, if used to make the deposit
of £10,000, had been withdrawn and that the funds to pay for Mr Stewart's house
were identified with the later lodgements of £11,400.
[64] This
was an area in which Mrs Buchanan's need for competent professional support was
great. On a straightforward arithmetical analysis of the Lloyds TSB account
78245553, the sum that was lodged following the withdrawal from account number
06028543 was exhausted by the withdrawals on 12 and 18 May. What Mrs Buchanan
had to explain, or explore with Ms Rivers in cross examination, were the two
deposits on £9,500 and £2,000 on 2 and 16
June 1999 which were most closely related to the payment of
£11,400. The Answers to the petition simply state that the price of 33/2 Loaning
Crescent was paid by Mr Stewart. In her final
address Mrs Buchanan said that she had been given the £45,000 to pay for 127
Gilberstoun from her uncle and aunt, so that when the proceeds of the sale of Lochend
Avenue came through she had already received money
from her uncle. So she took the profit from Lochend Avenue
to pay for Loaning Crescent.
The idea behind the complex transaction was to ensure that her uncle's wish
that she should get undisputed ownership of the house was effective. After five
years the house was transferred to her because it was feared that her uncle
would go into care and that the house would have to be sold to pay his care
costs. Some aspects of Mrs Buchanan's explanation of the successive
transactions relating to this property are credible, if not laudable, but she
did not provide any explanation of the source of the two particular sums that
lie at the root of the problem. Indeed, the explanation excludes the
possibility that Mr Stewart provided £11,500 in June 1999. If his money
had been used to help fund the payment of £45,000 for 127 Gilberstoun it would
have been exhausted in June 1998.
[65] The issue, however, is whether it has been established that the
purchase price of 33/2 Loaning Crescent was in fact obtained from
unexplained funds supporting the inference that those funds were obtained from
Mr Buchanan's unlawful conduct, or not, having regard to Mrs Buchanan's ultimate
explanation that the funds used were the proceeds of sale of Lochend Avenue
notwithstanding the sequence of entries in her bank accounts. The balance on
Mrs Buchanan's Lloyds TSB account 7824553 had been built up after April 1997
almost entirely by cash lodgements. There had been some interest on the
account, and a small amount of miscellaneous cash and cheque lodgements. But on
any view almost the whole of the balance of £10,163.76 brought forward at the
beginning of 1999-2000 was attributable to large cash lodgements. There were
additional cash lodgements of £16,800 during the year, but, as set out in the
appendix these comprised nine separate and varied sums the largest of which was
£9,500 but most much smaller. The withdrawal of the price of the property on 2
July could be ascribed to any of several lodgements depending on the convention
or rule one chose to apply. The 2002 Act does not prescribe any particular
approach. Ms Rivers' approach was essentially negative: there were cash
movements and in the absence of positive evidence to the contrary she inferred
that the price had come wholly from tainted funds. Mrs Buchanan's account
suffers from the failure to be able to point to any actual inter-account
transfer of funds from her Lloyds TSB account 06028543 to her account 78245553.
However, her position that in fact as events developed she was applying the
proceeds of Lochend Avenue
in the purchase of her uncle's house is not inherently lacking in credibility.
The movements on the accounts do not drive one inexorably to the opposite
conclusion. In my opinion, Mrs Buchanan is entitled to be believed in this
matter. It appears to me to be clear that by this time her accounts were being
used as vehicles for the laundering of Mr Buchanan's money from dealing, and
that the erratic movement of funds can best be understood in that light. In
such circumstances it is appropriate to avoid an over-technical analysis which
is not prescribed by the 2002 Act, where there is a common sense
explanation of a transaction that has some credibility. The application of the equity proceeds of Lochend Avenue
in purchase of Loaning Crescent
for Mrs Buchanan's ultimate personal benefit is understandable as a matter
of ordinary common sense and her evidence to that effect is credible, in my
view. In my opinion it as not been
proved on a balance of probabilities that this property was purchased through
the application of tainted funds. I shall refuse to make an order vesting it in
the trustee.
Vehicles
[66] Vehicles and associated personal number plates comprise the
next class of assets for which the petitioners seek a recovery order. Four
motor cars and three associated private registration numbers are described in
the order sought: (1) a Range Rover with the registration number DDD 74;
(2) a Mercedes with the registration number SO52 HSV which is not treated as a
separate item of property; (3) a Ford Focus with the registration number
M20 LLL; and (4) a Mini Cooper with the registration number L14 YAM. The four
vehicles were purchased between 19 November
2002 and 19 February 2003.
Behind each transaction there is a certain amount of history.
[67] The Range Rover was purchased on 9 December 2002. The purchase price was funded in part by
the trade in of a Mercedes S280 and in part by banker's draft for £26,655 and a
cash payment of £1,000. The total price of the Range Rover was £54,155. The
Mercedes had originally been purchased on 19 February 2002 for £37,905 and the petitioners' position
is that this was paid entirely in cash. The trade in allowance was £26,500. The
purchase of the Range Rover was completed in name of Mrs Buchanan, as the
purchase of the Mercedes had been. In preparing her analysis of bank
transactions, the interim administrator treated £20,000 of the sum applied to
obtain the banker's draft as having been withdrawn from Mrs Buchanan's Lloyds
Bank account number 06028543. Two cheques for £10,000 each were debited to that
account on 29 and 31 October 2002.
Ms Rivers explained that she had not been able to establish that the two
cheques were so applied but had "given Mrs Buchanan the benefit of the doubt".
I found this unsatisfactory. The banker's draft was for a single sum of £26,655
as appears from the relative vehicle order form dated 4 December 2002. The information the interim
administrator had gathered from the supplier, Appleyard Landrover, Edinburgh,
showed that Mr Buchanan had first shown interest in the Land Rover on 3
December, when he wished to pay cash. The company's policy on cash sales made
that impossible and he was told that the balance would have to be paid by banker's
draft. The draft was obtained and handed over on the delivery of the vehicle on
10 December. There were no debits to any of Mrs Buchanan's bank accounts
between 3 and 10 December that could have related to the draft. At very best
for the interim administrator, her approach indicates a lack of rigour in
analysis. If funds were withdrawn from Mrs Buchanan's account for re-investment
in a vehicle, the vehicle would, to that extent, represent the original
property, and the amount lodged in bank that fell to be explained would be
reduced accordingly. The particular treatment operates to the advantage of Mrs
Buchanan, however, by reducing the cash expenditure for which she could be
expected to provide an explanation. The treatment of the transaction is also relevant
to the contention by the respondents that the bank analysis is not or not
wholly reliable.
[68] In the analysis appended to this opinion, I have adopted the
interim administrator's description of the cheques for £10,000 in the absence
of any other explanation. However, if these sums related to the acquisition of
a vehicle it must have been a different vehicle from the Range Rover purchased
some months later. Since it appears to me that the whole pattern of movements
on the bank accounts was of the circulation of large cash sums through one or
other of the active accounts it would be equally consistent with the overall
picture that no asset was purchased, and that the cash simply returned to
circulation in specie. So far as the identification of recoverable property is
concerned, the position is that either the whole cash element of £27,655
requires to be explained as from an unidentified source as at 10 December 2002,
or £1,000 plus £7,655 requires such explanation and £20,000 can be traced into
the vehicle on the basis that, as lodged in the bank, it was the proceeds of Mr Buchanan's
unlawful conduct followed into the hands of Mrs Buchanan. As already set out,
account number 06028543, at best for the petitioners, contained mixed funds.
Only a portion of the £20,000 could properly be treated as recoverable
property, and that on the assumption that a portion of the total flow of cash
through the account was tainted. Since there is no acceptable basis for the
apportionment of Mrs Buchanan's bank balances in any event, treating the
£20,000 as proposed would be destructive of the petitioners' case.
[69] The purchase of the Mercedes is recorded by Western Automobile
Company as having been by Mrs Buchanan. The interim administrator's main report
states that the vehicle was registered in Mr Buchanan's name. But that was not
established. The company's receipt shows that the whole price was paid on 19 February 2002. There was no proof
that the funds had come from any bank account in Mrs Buchanan's name, and there
were no entries in any of her bank records at or about the time of the
transaction that could have related to the payment. Unless countered by
acceptable evidence from Mr and Mrs Buchanan, the irresistible inference would
be that the sum applied in purchase of the Range Rover, were obtained by Mr
Buchanan's unlawful conduct.
[70] The Mercedes registration number SO52 HSV cost £22,295. The
trade in of a TVR Cerbera provided £18,000 of that price, and the balance of
£4,295 was paid in cash. The date on the invoice for the Mercedes was 16 January 2003. There were no
transactions in any of Mrs Buchanan's bank accounts at or about the relevant
time that appear to relate to this transaction. The transaction was again
completed in name of Mrs Buchanan. Mrs Buchanan's evidence was that this
was her car. She said that the car was purchased by Mr Buchanan and given to
her to drive. She had initially said that this had been the case with the
Mercedes S280, but later corrected that evidence.
[71] The TVR was purchased on 30 November 2000 at a total price of £35,995.00. Of that
sum £25,495 was paid in cash and the balance, £10,500 was provided under a
credit agreement with First National Motor Finance. The total of the credit and
credit charges was payable by an initial payment of £375, forty-eight monthly
payments of £280, and a final payment of £320. The transaction was completed in
Mrs Buchanan's name. The monthly payments were met by direct debits to her
Lloyds Bank account number 06028543 until 5 June 2002. Thereafter there were no direct debit
payments from any of her accounts so far as I have been able to see. As already
stated, only a portion of the sums traced to this account could properly have
been treated as recoverable property in any event, and that on the assumption
that a portion of the total flow of cash through the account was tainted. The
respondents' answers state that "The said loan from First National Motor
Finance has not been repaid". There was no evidence relating to this matter.
Neither party suggested that the balance was paid off in or about June 2002. In
this unsatisfactory state of affairs, it appears that the principal sum
borrowed must be taken to have been a legitimate transaction, requiring
apportionment of such part of the car as was derived from legitimate funds. So
far as the cash element of the price is concerned, there were no debits to any
of Mrs Buchanan's bank accounts at or about the time of the original
purchase that could relate to this transaction. Had the car remained in possession of a
member of the family an issue of apportionment of the TVR would have
arisen. Applying the tracing provisions,
part only of the value transferred into the Mercedes would have been
recoverable. It is impossible on the
evidence available to calculate that element of value. It is clear that it would have been at least £(18,000
x 25,495 ÷ 35,995), leaving a relatively small element of value attributable to
the instalments paid on the legitimate loan.
In such circumstances, the appropriate course is, in my opinion, to make
a recovery order for the Mercedes subject to any condition that may be imposed
in terms of section 266(6) requiring payment to the holder of the asset of a
sum representing the legitimate interest in the asset. In this case there is no acceptable basis in
the evidence on which such a condition could be imposed nor is there acceptable
evidence to indicate who might be the legitimate beneficiary of such a
condition. The order will therefore
apply without condition.
[72] The third vehicle for which a recovery order is sought is the
Ford Focus and relative private registration number. The total price of the
purchase was £12,075. £8,700 was attributed to the trade in of a Mitsubishi
Space Wagon that had been purchased on 22
March 2002. The balance of £3375 was paid in cash. It is agreed
between parties that Mr Buchanan purchased the Mitsubishi using cash. The
records of that transaction have not been recovered, and the actual price paid
has not been ascertained. The interim administrator has assumed that the price
shown in Glass's Guide provided an acceptable approximation of the actual
price. No alternative has been suggested, and I consider that the assumption is
reasonable. Since Mr Buchanan had no legitimate income sufficient to explain
such a purchase, the purchase must be treated as an application of the proceeds
of unlawful conduct traced into the Mitsubishi, and from there into the Ford
Focus which would represent the original cash in the absence of an evidence of acceptable
alternative explanation.
[73] The respondents' position in the pleadings is that the Ford Focus
was bought by Mr Buchanan for Lisa Marie Buchanan, and that she has been
repaying the purchase price to Mr Buchanan at £200 per month. Ms Buchanan did
not give evidence. She did not cross examine Ms Rivers about the transaction. I
have already mentioned that the respondents did not rely on section 308 of the
Act. This appears to me to have been an unfortunate consequence of the lack of
consistent and competent legal advice and support available to the respondents
and to Ms Lisa Marie Buchanan in particular. Her evidence that she had an
agreement to pay for the vehicle, coupled with a statement that she had no
knowledge that the cash used by her father was the proceeds of his criminal
conduct would at least have required
answer. As matters stand that would be pure speculation.
[74] However, it is legitimate for the court to examine the basis on
which Ms Buchanan's position is dealt with. In the interim administrator's
supplementary report, the response to the respondents' averments is:
"I have reviewed
Lisa Buchanan's bank accounts and I am unable to identify the withdrawal of
£200 per month ...
I have also seen
no evidence of £200 per month being lodged into George Buchanan's bank accounts
in relation to repayment for the Ford Focus.
Absent evidence
to the contrary, I have not included the above within my assessment of the
financial affairs of the Respondents."
I found this response profoundly
disappointing. A cursory glance at the analysis of Lisa Marie Buchanan's bank
account shows beyond doubt that she did not lodge all of her legitimate income
in bank, and must have operated on a cash basis in her daily life. Mr Buchanan
used bank accounts sparingly. The whole thrust of the case is that he had and
handled large sums of cash. Why it should be thought that he would lodge in
bank sums paid by his daughter for the car escapes me. However, in the result
the court is confronted with a situation in which the tracing rules clearly
apply to the Ford Focus in the absence of a relevant answer based on
section 308 and evidence from Ms Buchanan.
[75] The final vehicle in issue is Liam Buchanan's Mini Cooper. This
vehicle was purchased on 19 February
2003 at a total price of £15,250. The position is a close parallel
to that of the Ford Focus. The interim administrator's supplementary report on
this occasion contains additional material that would bear on the purchase and
call for an explanation from Mrs Buchanan who gave contradictory accounts of
the circumstances surrounding the purchase. But the central issue is the same:
the purchase of the vehicle was funded by Mr Buchanan; Mr Liam Buchanan did not
give evidence; his cross examination of Ms Rivers did not deal with the
purchase of the vehicle; and there is no case pled under section 308.
Mr Buchanan
[76] Mr Buchanan has lodged written submissions in which he has
criticised the interim administrator's approach to the analysis and
presentation of financial information relating to his own position and the
financial positions of his family. He has prepared an alternative analysis,
introducing into a table having generally the same format as the interim
administrator's black hole analysis additional heads of income and other
legitimate receipts. The result of his exercise is a balance of legitimate
income over bank lodgements, showing, on his approach, that the family had more
than enough resources to fund the lodgements and other expenditure relied on by
the petitioners. Mr Buchanan cannot be criticised for adopting this approach to
analysis: he was merely following the format used against him. But it suffers
from the same defects as the interim administrator's analysis, in confusing the
separate interests and positions of the respondents and his own as interested
party.
[77] There is a further difficulty in the way of Mr Buchanan
adopting this approach. His evidence and that of Mrs Buchanan was that he had
never contributed any funds to Mrs Buchanan or his children. The generality of
that contention cannot be accepted. It is clear that he must have been the
source of the cash used to purchase the motor cars used by Mrs Buchanan and the
two children, whether or not there was an agreement for reimbursement in the
case of the children. The positions of the individual respondents cannot be
considered in cumulo, in my opinion,
for the same reasons as I have set out in respect of the interim
administrator's analysis.
[78] So far as Mr Buchanan is concerned, the only assets for which a
recovery order is sought that are of interest in this connection are the cars.
As indicated above the transactions for which there are records were entered
into in name of Mrs Buchanan. I accept her evidence that these
transactions were either concluded in fact by Mr Buchanan in her name without
involving her, or that her participation was to accommodate Mr Buchanan. It is
highly probable, on his own assessment of his character, that he was a bad
father and husband. He was a man whose will would not easily have been resisted
by Mrs Buchanan. It was also his evidence that he had purchased the cars. I
have also set out the basis for the conclusion that there were no cash
withdrawals from bank accounts in name of Mrs Buchanan that could relate to
most of the transactions. In these circumstances, I conclude that the cars,
however registered, were purchased by Mr George Buchanan using cash over which
he had sole control at the material times.
[79] Mr Buchanan's income from legitimate sources, on his own
analysis, was wholly insufficient to finance any but a basic life style. He was
on benefit at all times when not in prison. It is, in my view, highly probable
that he obtained all of the social security and other benefits he has
disclosed, notwithstanding the interim administrator's reservations. However,
these would have made no contribution to the purchase price of the vehicles in
question. And Mr Buchanan did not contend otherwise. His evidence was that the
cars were purchased from money that he "watched" for Mr Gahfour. He said that
he had watched a lot of money for Mr Gahfour, mentioning sums of £72,000,
£34,000 and £100,000.
[80] The only sum for which there is any documentary evidence is a
sum of £72,260 which the interim administrator included in her report. I dealt
with that sum in my opinion of 10
March 2006, on the information then available. On 26 March 1999 Mr Gahfour
recovered the sum from Lothian and Borders Police and signed a receipt for the
sum which Mr Buchanan signed as witness. The money had been seized from 127
Gilberstoun, and it was not disputed by Mr Buchanan that he had had possession
of it there at the time it was seized. In a letter written by a solicitor who
represented Mr Buchanan in criminal proceedings there is a reference to
police confirmation that a sum of £34,000 had been seized from Mr Buchanan
and subsequently returned. However,
neither the solicitor nor the identified police officer was led as a witness,
and the information is too imprecise for use in any meaningful analysis of
Mr Buchanan's cash transactions. Mr
Buchanan has from time to time given accounts of his possession of these and
other sums which at best for him have been confused. At one extreme he held the
money as a safe pair of hands for Mr Gahfour who made frequent trips abroad.
At the other, he treated the money as his own and spent it on the purchase of
motor cars. Mr Buchanan said that he dealt in cars and made a profit. But the
transactions in motor vehicles traced above were anything but profitable: all
of the cars traded in incurred losses.
[81] I have not heard from Mr Gahfour, despite making it clear that
his evidence was of central importance in resolving the issues that arise in
respect of these sums. There is much that remains unexplained. Both the interim
administrator and Mr Buchanan have dealt with the sum of £72,260 as
arising in 1998-99. It was seized by the police on 3 December 1998 and returned within the same fiscal year.
However, that cannot be assumed to have been the year in which it came into Mr
Buchahan's hands. The date of seizure tells one nothing about the period during
which this sum, or sums from which it was derived, were held. On balance,
having regard to the evidence as a whole, I consider that it has been
established that this sum is or represents an amount of cash for which no
acceptable explanation has been tendered, and in respect of which there has
been a complete absence of evidence from the alleged true owner as to its
provenance. The irresistible inference is that the sum was money derived from
Mr Buchanan's dealing in controlled drugs.
[82] The sum does not, of course, exist independently. In my opinion
of 10 March 2006 I dealt with a sum of £22,000 recovered from 127 Gilberstoun,
and rejected the proposition that that sum was part of the £72,260 returned by
the police. Many of the notes were dated after the return of the larger sum,
and 60% of the notes were contaminated by diamorphine. Whether the £72,260 was
used in the purchase of cars or not is immaterial to the disposal of the issue of
the recoverability of the cars. If it was so used, the cars now held represent
the original money. If it was not so used, the cars must have been purchased
using other cash for which no explanation has been tendered. In either event,
the cars are recoverable property.
[83] In his submissions, Mr Cullen tendered a table demonstrating
that the cash applied in successive purchases of cars exceeded £72,260 by a
margin of £57,770. No evidence before me would support a legitimate explanation
for Mr Buchanan's ability to apply that sum from legitimate sources. Mr
Buchanan's explanation can be inferred from his general evidence: all such sums
came from Mr Gahfour. But that explanation can have no more weight in respect
of the £57,770 than it has in respect of the £72,260. In general, I consider
that on the evidence as a whole it is highly probable that Mr Buchanan
purchased high value motor cars to re-cycle or launder the proceeds of his
dealing in controlled drugs. I should note that in evidence at this hearing, Mr Buchanan
expressed surprise that I should have "convicted" him of dealing in controlled
drugs when a jury had acquitted him. I have previously set out my reasons for
arriving at the view that he dealt in controlled drugs on the test appropriate
in proceedings such as these, namely the balance of probabilities, having
regard to the evidence led before me. Nothing in the present proceedings has
persuaded me that I should suggest that conclusion was incorrect. It would not be open to me to reverse it in
any event.
Mrs Buchanan
[84] The position of Mrs Buchanan has been complicated by the
production of numerous financial analyses on differing bases. On 30 October,
2007, following the conclusion of the evidence, the interim administrator
produced two tables. In the first of these, she aggregated the verified income
of Mrs Buchanan, Liam and Lisa Marie Buchanan and set against that sum values
derived from the Family Spending Survey tables to demonstrate that Mrs Buchanan
was living beyond her legitimate means. I shall ignore that table. The material
was not put in evidence before me, and Mrs Buchanan had no opportunity to
question it or to comment on how it might have related to her circumstances. In
any event without supporting evidence it appears to offend against the
fundamental principle that statistical data is not valid at the level of the
individual. The whole exercise is tendentious in the extreme. The second table
purports to be an individual black hole table for Mrs Buchanan. It is periled
on the proposition that the expenditure on all of the vehicles purchased was
from Mrs Buchanan's resources. That is unacceptable on the view I take of
the realities of the situation. And I repeat what I have said already: there is
no acceptable evidence of cash movements on any of Mrs Buchanan's bank accounts
that could relate to these transactions. If there were to be a proposition that
she held large sums of cash that were at her disposal for the purchase of cars
that should have been put to her. I have not found these late statements
helpful.
Cash
[85] The remaining assets for which an order is sought are cash sums
recovered from 127 Gilberstoun: £2,801 on 15 October 2003; £1,880 on 18 August 2004; and £1,830 on 26 August 2004. The detailed information in the interim
administrator's report is that the sum of £1,830 was recovered from Mr
Buchanan's jacket when he was stopped by the police, detained and
searched. At that time he gave an
explanation that the money represented his benefits which he had withdrawn from
the bank. That is not a satisfactory
explanation, however, since it indicates that Mr Buchanan must otherwise
have supported his lifestyle using other funds that have not been disclosed. Otherwise, the position of the respondents is
that these sums belonged to Mrs Buchanan and her children and had nothing to do
with Mr Buchanan. It is clear that Mr Liam Buchanan and Ms Buchanan each had
cash income in both years that was not reflected in the analysis of their bank
accounts. Ms Buchanan in particular must have operated mainly on a cash basis.
Mrs Buchanan's cash position has not been investigated or reported on. In
2003-2004 her bank lodgements included wages of £956.19, Departments of Works
& Pensions benefits of £5,059.85, and round sum cash credits of £7,350 in
addition to credits described in terms of the interim administrator's reports.
These values compare with figures in the interim administrator's black hole
analysis of wages £1,034.30 and benefits £5,794.55. It seems clear that the
whole of Mrs Buchanan's earned income was not lodged in bank, and that the
credits for benefits included benefits of or relating to care of her relatives.
However, even if one allowed credit for the whole of her relatives' benefits,
there was not sufficient vouched income for her to have lodged £7,350 and to
have retained cash of £2,801 or any significant part of that sum. Since neither
of her children gave evidence there is no basis on which one could, on an
analysis of cash transactions only, find that £2,801 was or represented
legitimate funds. It must be concluded on balance that these funds were
tainted.
[86] In 2004-2005, Mrs Buchanan had wages of £3,820.51 and benefits
of £1,774.60. Wages lodged amounted to £3,387.77, and benefits lodged amounted
to £1,918.17. Again it appears that Mrs Buchanan did not lodge the whole of her
wages in bank though the difference is small, and that benefits lodged must
have included sums referable to her relatives' care. In this year she lodged
cash sums amounting to £19,300. On no view could her legitimate income allow
for such a level of lodgements and explain the cash recovered from 127
Gilberstoun. The two children, of course, gave no evidence to indicate that
part or all of the money belonged to them. In the circumstances it must be concluded
on balance that the funds recovered were tainted.
[87] There remains one bank account that has not been dealt with,
Lisa Marie's trust account for her younger brother. The cash lodgements in that
account have not been traced to any other source. The child had no income. No
question of apportionment arises. There has been no evidence of donation by any
third party outside the immediate family. There is no technical failure to
follow the scheme of the Act, and, failing acceptable evidence to weigh in the
balance in favour of a legitimate source, it must be concluded that these funds
are recoverable.
[88] In summary, I shall refuse the prayer of the petition in
respect of:
(a) 33/2 Loaning
Crescent, Edinburgh; and
(b) all of the
bank and other money accounts identified with the exception of the sum held by
Lisa Marie Buchanan as trustee for Lewis Buchanan in Halifax
plc account 02006039.
Otherwise
I shall hear parties by order on the orders required in the light of this
Opinion.
APPENDIX
ANALYSIS OF MRS BUCHANAN'S BANK ACCOUNTS
This table covers movements
on Mrs Marie Buchanan's Bank accounts:
Lloyds
TSB Account 78245553: (TSB 5553);
Lloyds
TSB Account 06028543: (TSB 8543);
Lloyds
TSB Account 73532868: (TSB 2868);
Lloyds
TSB Account 74381653: (TSB 1653);
Royal
Bank of Scotland Account 00645329 (RBS 5329); and
Royal
Bank of Scotland Account 00655243 (RBS 5243).
1997 -98
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
1997-98
|
|
|
|
|
|
|
|
Opening balances
|
1,220.21
|
805.81
|
28.71
|
451.70
|
|
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
7,496.41
|
|
|
|
|
|
Cash
|
3,300.00
|
|
514.00
|
200.00
|
|
|
|
Misc. Cash and cheques
|
443.70
|
1,117.94
|
|
110.56
|
|
|
|
Transfer
|
|
|
185.00
|
|
|
|
|
Interest
|
84.09
|
|
|
|
|
|
|
Loan
|
|
|
2,217.27
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
5,048.00
|
9,420.16
|
2,944.98
|
762.26
|
|
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
865.20
|
|
|
|
|
|
Living expenses
|
|
2,890.09
|
|
|
|
|
|
Direct debits
|
|
1,674.61
|
726.39
|
|
|
|
|
Cash & Cheques
|
|
1,299.80
|
2,179.31
|
|
|
|
|
Transfer
|
|
185.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
0.00
|
6,914.70
|
2,905.70
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
5,048.00
|
2,505.46
|
39.28
|
762.26
|
|
|
1998 -99
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
1998-99
|
|
|
|
|
|
|
|
Opening balances
|
5,048.00
|
2,505.46
|
39.28
|
762.26
|
|
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
11,245.62
|
|
|
|
|
|
Cash
|
10,000.00
|
52,042.00
|
820.00
|
|
|
|
|
Misc. Cash and cheques
|
|
3,279.62
|
|
507.21
|
|
|
|
Transfers
|
|
5,000.00
|
1,160.00
|
|
|
|
|
Interest
|
115.76
|
|
0.40
|
37.59
|
|
|
|
Sale of heritage
|
|
18,211.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
15,163.76
|
92,283.85
|
2,019.68
|
1,307.06
|
|
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
2,681.82
|
|
|
|
|
|
Living expenses
|
|
10,747.03
|
|
|
|
|
|
Direct debits
|
|
4,028.99
|
1,521.96
|
|
|
|
|
Cash
|
|
14,020.00
|
|
|
|
|
|
Cash & Cheques
|
|
7,077.25
|
155.00
|
600.00
|
|
|
|
Transfer
|
5,000.00
|
1,160.00
|
|
|
|
|
|
127 G'stoun
|
|
45,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
5,000.00
|
84,715.09
|
1,676.96
|
600.00
|
|
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
10,163.76
|
7,568.76
|
342.72
|
707.06
|
|
|
2000-2001
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
2000-01
|
|
|
|
|
|
|
|
Opening balances
|
5,619.71
|
1,359.66
|
12.45
|
1,113.24
|
|
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
15,678.17
|
|
|
|
|
|
Dep w&p
|
|
1,318.33
|
|
|
|
|
|
Cash
|
4,200.00
|
7,460.00
|
|
1,000.00
|
500.00
|
|
|
Misc. Cash and cheques
|
631.66
|
728.16
|
280.00
|
|
|
|
|
Transfers
|
|
5,250.00
|
4,200.77
|
540.00
|
|
|
|
Interest
|
22.67
|
0.43
|
0.01
|
11.97
|
0.79
|
|
|
"Y Smith 54"
|
|
|
1,680.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
10,474.04
|
31,734.75
|
6,173.23
|
2,665.21
|
500.79
|
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
4,747.12
|
|
|
|
|
|
Living expenses
|
|
11,632.05
|
|
|
26.05
|
|
|
Direct debits
|
|
3,374.88
|
1,894.59
|
|
|
|
|
Cash
|
3,200.00
|
450.00
|
3,470.00
|
1,540.00
|
|
|
|
Cash & Cheques
|
|
10,761.32
|
416.00
|
|
|
|
|
Transfer
|
5,250.00
|
|
100.00
|
|
|
|
|
Bank charges
|
|
|
|
|
36.00
|
|
|
|
|
|
|
|
|
|
|
Totals
|
8,450.00
|
30,965.37
|
5,880.59
|
1,540.00
|
62.05
|
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
2,024.04
|
769.38
|
292.64
|
1,125.21
|
438.74
|
|
2001-2002
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
2001-02
|
|
|
|
|
|
|
|
Opening balances
|
2,024.04
|
769.38
|
292.64
|
1,125.21
|
438.74
|
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
15,721.21
|
|
|
|
|
|
Dep w&p
|
|
986.74
|
|
|
|
|
|
Cash
|
10.000.00
|
6,827.00
|
|
|
6,473.00
|
3,550.00
|
|
Misc. Cash and cheques
|
|
1,570.39
|
|
|
1,981.00
|
379.99
|
|
Transfer
|
|
1,000.00
|
45.00
|
|
|
|
|
Interest
|
7.25
|
0.50
|
0.44
|
|
2.52
|
55.89
|
|
Y Smith
|
|
|
1,950.00
|
|
|
|
|
"Miss K Connelly"
|
|
|
|
|
600.00
|
|
|
"CHB"
|
|
|
|
|
491.40
|
|
|
Lisa Buchanan
|
|
|
|
|
|
1,800.00
|
|
|
|
|
|
|
|
|
|
Totals
|
12,031.29
|
26,875.22
|
2,288.08
|
1,125.21
|
9,986.66
|
5,785.88
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
2,858.04
|
|
|
827.70
|
|
|
Living expenses
|
|
14,007.33
|
|
|
5,289.32
|
|
|
Direct debits
|
|
5,503.52
|
1,808.29
|
|
|
|
|
Cash
|
|
|
|
|
2,000.00
|
1,500.00
|
|
Cash & Cheques
|
|
2,334.37
|
267.64
|
|
30.80
|
|
|
Transfer
|
960.00
|
120.00
|
|
|
|
|
|
Transfer
|
1,000.00
|
|
|
|
|
|
|
Transfer
|
25.00
|
|
|
|
|
|
|
Bank chgs
|
|
|
|
|
120.00
|
|
|
|
|
|
|
|
|
|
|
Totals
|
1,985.00
|
24,823.26
|
2,075.93
|
1,125.21
|
8,267.82
|
1,500.00
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
10,046.29
|
2,051.96
|
212.15
|
1,125.21
|
1,718.84
|
4,285.88
|
2002-2003
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
2002-03
|
|
|
|
|
|
|
|
Opening balances
|
10,046.29
|
2,051.96
|
212.15
|
1,125.21
|
1,718.84
|
4,285.88
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
4,317.64
|
|
|
|
7,764.00
|
|
Dep w&p
|
|
1,098.82
|
|
|
|
|
|
Cash
|
|
27,545.00
|
4,000.00
|
|
5,060.00
|
|
|
Misc. Cash and cheques
|
|
2,966.53
|
|
|
1,200.73
|
|
|
Transfer
|
|
4,000.00
|
|
|
1,000.00
|
|
|
Transfer
|
|
10,000.00
|
|
|
|
|
|
Transfer
|
|
200.00
|
|
|
|
|
|
Interest
|
17.77
|
1.55
|
0.36
|
4.98
|
4.94
|
24.09
|
|
"Y Smith 54"
|
|
|
2,040.00
|
|
|
|
|
Lisa Buchanan
|
|
|
|
|
|
1,800.00
|
|
"Miss Connelly"
|
|
|
|
|
1,200.00
|
|
|
"CHB"
|
|
|
|
|
912.60
|
|
|
|
|
|
|
|
|
|
|
Totals
|
10,064.06
|
52,181.50
|
6,252.51
|
1,130.19
|
11,097.11
|
13,873.97
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
|
|
|
3,917.06
|
|
|
Living expenses
|
|
14,766.78
|
|
|
1,046.44
|
|
|
Direct debits
|
|
2,360.62
|
1,972.68
|
|
5,040.85
|
|
|
Cash
|
|
|
|
|
|
500.00
|
|
Cheque
|
|
6,000.00
|
|
|
|
11,454.59
|
|
'Range Rover'
|
|
23,719.00
|
|
|
|
|
|
Cash & Cheques
|
|
4,593.35
|
|
|
9.99
|
|
|
Transfer
|
10,000.00
|
|
4,000.00
|
|
|
1,000.00
|
|
Bank Cgs
|
|
|
|
|
120.00
|
|
|
Interest
|
|
|
|
|
|
13.54
|
|
|
|
|
|
|
|
|
|
Totals
|
10,000.00
|
51,439.75
|
5,972.68
|
0.00
|
10,134.34
|
12,968.13
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
64.06
|
741.75
|
279.83
|
1,130.19
|
962.77
|
905.84
|
2003-2004
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
2003-04
|
|
|
|
|
|
|
|
Opening balances
|
64.06
|
741.75
|
279.83
|
1,130.19
|
962.77
|
905.84
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
956.19
|
|
|
|
|
|
Dep w&p
|
|
5,059.85
|
|
|
|
|
|
Cash
|
|
7,350.00
|
|
|
|
|
|
Misc. Cash and cheques
|
|
2,005.88
|
|
|
|
|
|
Transfer
|
|
300.00
|
|
|
|
|
|
Interest
|
|
3.07
|
0.24
|
3.76
|
|
0.32
|
|
Y Smith
|
|
|
680.00
|
|
|
|
|
Lisa Buchanan
|
|
|
|
|
|
150.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
64.06
|
16,416.74
|
960.07
|
1,133.95
|
|
1,056.16
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
|
|
|
|
|
|
Living expenses
|
|
11,412.38
|
|
|
|
|
|
Direct debits
|
|
3,011.14
|
657.56
|
|
|
|
|
Cheque
|
|
|
|
|
|
|
|
'Range Rover'
|
|
|
|
|
|
|
|
Cash & Cheques
|
|
419.10
|
|
|
|
500.00
|
|
Transfer
|
|
200.00
|
300.00
|
|
|
|
|
Transfer
|
|
500.00
|
|
|
|
|
|
Transfer
|
|
100.00
|
|
|
|
|
|
Interest
|
|
|
|
|
|
0.63
|
|
|
|
|
|
|
|
|
|
Totals
|
0.00
|
15,642.62
|
957.56
|
0.00
|
|
500.63
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
64.06
|
774.12
|
2.51
|
1,133.95
|
|
555.53
|
2004-2005
|
Year
|
TSB 5553
|
TSB 8543
|
TSB 2868
|
TSB 1653
|
RBS 5329
|
RBS 5243
|
|
2004-05
|
|
|
|
|
|
|
|
Opening balances
|
64.06
|
774.12
|
2.51
|
1,133.95
|
|
|
|
Lodged:
|
|
|
|
|
|
|
|
Wages
|
|
3,387.77
|
|
|
|
|
|
Dep w&p
|
|
1,918.17
|
|
|
|
|
|
Cash
|
|
4,100.00
|
15,300.00
|
|
|
|
|
Misc. Cash and cheques
|
|
277.28
|
|
|
|
|
|
Transfer
|
|
1,000.00
|
|
|
|
|
|
Transfer
|
|
3,000.00
|
|
|
|
|
|
Transfer
|
|
500.00
|
|
|
|
|
|
Transfer
|
|
1,000.00
|
|
|
|
|
|
Interest
|
|
1.64
|
0.66
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
64.06
|
15,958.98
|
15,303.17
|
1,133.95
|
|
|
|
|
|
|
|
|
|
|
|
Drawn:
|
|
|
|
|
|
|
|
Mortgage
|
|
|
|
|
|
|
|
Living expenses
|
|
9,460.33
|
|
|
|
|
|
Direct debits
|
|
1,162.23
|
|
|
|
|
|
Loans Direct
|
|
|
300.14
|
|
|
|
|
Cheque
|
|
|
7,000.00
|
|
|
|
|
Cash
|
|
222.40
|
3,000.00
|
500.00
|
|
|
|
Transfer
|
|
50.00
|
1,000.00
|
|
|
|
|
Transfer
|
|
|
3,000.00
|
|
|
|
|
Transfer
|
|
|
1,000.00
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
64.06
|
10.894.96
|
15,300.14
|
500.00
|
|
|
|
|
|
|
|
|
|
|
|
Bal fwd
|
64.06
|
5,064.02
|
3.03
|
633.95
|
|
|
