Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION
	[2014] CSOH 10
P880/09	OPINION OF LORD BURNS in the cause THE SCOTTISH MINISTERS For a Recovery Order in terms of Section 266 of the Proceeds of Crime Act 2002 Pursuer; against BRIAN ELLIS Defender: ________________

Pursuer: MacGregor, advocate; Civil Recovery Unit, Crown Office, Edinburgh

Defender: Party

24 January 2014

Introduction

[1] The petitioners are the enforcement agency for the purposes of the Proceeds of Crime Act 2002 ("the 2002 Act"). They seek a recovery order in terms of chapter 2 of Part 5 of the 2002 Act. The petitioners were represented by Mr MacGregor, advocate. The respondent is Brian Ellis who represented himself. No other parties appeared. The petition called before me for proof on 15 October 2013 and successive days. The petitioners seek recovery of the sum at credit in the Neilson's client account ledger in the name of the respondent which represents the proceeds of sale of the heritable property known as "SL" formerly owned by the respondent. They do not seek recovery of the Audi A4 or Nissan Primastar cars.

The statutory provisions

[2] Part 5 of the 2002 Act is headed "Civil Recovery of the Proceeds etc. of Unlawful Conduct". These provisions form part of an initiative to tackle serious crime across the United Kingdom (Assets Recovery Agency v T [2004] EWHC 3340 (Admin) at paragraph 22). They are civil proceedings. It is not part of the scheme to establish that some particular offence had been committed by any particular person. Section 240 (so far as material) provides:

"(1) This Part has effect for the purposes of:

(a) enabling the enforcement authority to recover, in civil proceedings before the...Court of Session, property which is, or represents, property obtained through unlawful conduct,

(2) The powers conferred by this Part are exercisable in relation to any property (including cash) whether or not any proceedings have been brought for an offence in connection with the property".

[3] The civil nature of the proceedings has been authoritatively recognised in Scottish Ministers v McGuffie 2006 SLT 1166 and Scottish Ministers v Doig [2009] SLT 1106.

[4] If the court is satisfied that any property is recoverable, the court must make a recovery order: section 266(1) provides:

"(1) If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order."

Section 266(3) provides for circumstances in which the court may not make a recovery order. The first of these relates to persons who have acquired property in good faith and does not arise in this case. Section 266(3)(b) provides that the court may not make in a recovery order any provision which is incompatible with any of the Convention rights (within the meaning of the Human Rights Act 1998). No issue arose in respect of this matter. Since the respondent was not represented, I have myself considered whether any question of incompatibility with the Convention does arise but I have concluded that it does not. I have had regard in particular to the sort of Convention rights issues which required to be examined in the cases of the Scottish Ministers v Doig 2009 SLT 1106 and in Scottish Ministers v Smith 2009 CSOH 167. The petitioners do not seek in this petition to lead evidence about alleged unlawful conduct which has formed the basis of an unsuccessful prosecution. These proceedings cannot be said to be the consequence of or to any extent the concomitant of any criminal proceedings.

[5] "Recoverable property" is defined in section 304 in the following terms:

"(1) Property obtained through unlawful conduct is recoverable property."

Section 241 defines "unlawful conduct". Sub section (1) provides:

"(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful conduct under the criminal law of that part".

The petitioners contend that the property at SL was obtained through unlawful conduct and that the proceeds of sale which are the subject of this petition were also obtained through unlawful conduct.

[6] Section 245 provided for associated property. Sub section (1) is in the following terms:

"(1) 'Associated property' means property of any of the following descriptions (including property held by the respondent) which is not itself the recoverable property -

(a) any interest in the recoverable property,

..."

Section 310 is in the following terms:

"(1) If a person grants an interest in his recoverable property, the question of whether the interest is also recoverable is to be determined in the same manner as it is on any other disposal of recoverable property.

(2) Accordingly, on his granting an interest in property ('the property in question') -

(a) where the property in question is property obtained through unlawful conduct, the interest is also to be treated as obtained through that conduct,

(b) where the property in question represents in his hands property obtained through unlawful conduct, the interest is also to be treated as representing in his hands the property so obtained."

[7] Section 305 provides for tracing property. So far as material it is in the following terms:

"(1) Where property obtained through unlawful conduct ("the original property") is or has been recoverable, property which represents the original property is also recoverable property.

(2) If a person enters into a transaction by which -

(a) he disposes of recoverable property, whether the original property or property which (by virtue of this Chapter) represents the original property, and

(b) he obtains other property in place of it,

the other property represents the original property."

The contention of the petitioners is that the sum at credit in the bank client account of Neilsons constitutes recoverable property in terms of this section.

Section 307 provides for accruing profits. It is in the following terms:

"(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".

The evidence

[8] The proof in this matter proceeded in two main chapters. The first was evidence relating to the unlawful conduct on the part of the respondent and his partner SG over a period from about 1999 to 2007 when the property at SL was sold. That unlawful conduct was said to comprise of conduct which would amount to theft and fraud under the criminal law of Scotland. Evidence was led which was designed to show that the respondent and SG had been involved in such conduct in the years leading up to the purchase of SL in 2002 and thereafter in order to demonstrate that the deposit paid by the respondent to purchase it was derived from unlawful conduct and that, thereafter, the mortgage was paid with the proceeds of such conduct.

[9] The second main chapter related to the obtaining of the mortgage over the property. Evidence was led to demonstrate that the mortgage was obtained as a result of fraudulent misrepresentations by the respondent as to his income as a result of which the mortgage was granted over the property.

Evidence in relation to Unlawful Conduct on the part of the respondent and SG

[10] Mr MacGregor presented evidence with a view to establishing that the respondent and SG had been involved in unlawful conduct over a long period of time. He did so in a number of different chapters.

[11] First there was an agreed list of previous convictions relating to the respondent (paras 35 to 40 of the joint minute). These are detailed below

[12] Secondly, there was direct evidence from a number of sources (both from police officers and from members of the public) of the respondent's involvement in acquisitive crime, mostly in the form of being a party, with SG, to the theft and subsequent use of credit and debit cards and of cheques.

[13] Thirdly, there was evidence of his being investigated by the police in respect of a number of different crimes of a similarly acquisitive nature and subsequently reported by the police to the Procurator Fiscal. The evidence was in the form of Standard Prosecution Reports (SPRs) contained as appendices 1 to 18 of the Report of Detective Inspector Gilchrist (6/59 of process) and spoken to by him. No proceedings had been taken by the Crown against the respondent as a result of these reports. DI Gilchrist gave evidence about the content of these reports, his own knowledge about the respondent's activities and from other sources which led him to form an opinion about the respondent's involvement in criminal activities.

[14] I will deal with these chapters of evidence in order.

1.    Previous convictions. In November 1977 he was convicted of theft by housebreaking and housebreaking with intent to steal. In March 1980 he was convicted of theft. In February 1984 he was convicted of theft by opening lockfast places. In December 1985 he was convicted of theft. In May 1988 he was convicted of theft by opening a lockfast place, opening a lockfast place with intent and breach of the peace. In addition, 6/67 of process contains a further 3 previous convictions relating to the respondent. In March 1993 he was convicted of fraud in relation to the Road Traffic Act 1988, in December 2004 he was convicted of credit and debit card fraud and in October 2006 was convicted of a contravention of section 35(1)(B) of the Legal Aid (Scotland) Act 1986. The details thereof are agreed by para 43 of the joint minute to be contained in 6/52 of process. The respondent falsely declared to the Scottish Legal Aid Board for the purposes of his applications for legal aid on 6 August 2004 and 10 February 2005 that he had no capital whereas on those dates he had £10624.10 and £9606.26 respectively.

2. Direct evidence of the respondent's involvement in acquisitive crime came from a number of sources and which the petitioners contended amounted to proof of a course of unlawful conduct involving the respondent and SG. Both had been the subject of investigation and reports to the Procurator Fiscal, some of which had not resulted in any prosecution. Intelligence reports had indicated that the respondent and SG were acting together in a criminal course of conduct involving in the main breaking into motors cars and stealing bank cards which were immediately used to buy goods in shops around Edinburgh. It was thought that the respondent and SG were in a relationship and lived together. There was evidence from a number of police officers who had been involved in various investigations into theft from motor cars in Edinburgh and surrounding areas in which the respondent and SG had been the suspects.

[15] PC Jonathan Gibb gave evidence in relation to a break in of a motor car at Gullane Bents on 4 November 2000. There had been a spate of such thefts in both East Lothian and Midlothian around this time and the Bents was often the locus of such incidents. An operation called "Essex" was instigated into these crimes. The respondent was identified by the officer as acting with SG on this occasion. A handbag was stolen from the car and was later recovered from a rubbish bin where SG was seen to dispose of it. Later, PC Adam Brunton searched the motor car being driven by the respondent later that day which was found to contain two security tag removing devices (not available to the general public), a "slim jim" which was a piece of wire fashioned so that it could unlock motors cars, two types of gift vouchers amounting to about £150 in value (suspected to have been acquired as a result of returning goods which had been shoplifted) and a bottle of brake fluid (which was said to be used to remove signatures from credit cards so that they could be replaced by those of the thief). The possession of a combination of these items was said by DI Gilchrist to be indicative of someone involved in car theft and shoplifting. The respondent and SG were detained. Both officers said that after this incident there was a marked, if temporary, reduction in such car theft in the area. This matter was spoken to by DI Gilchrist on page14 of his report 6/59 of process. Tab 10 of that report contains the SPR about this incident.

[16] In 2001 DC Simon Berwick was investigating the theft of credit and debit cards in Edinburgh. On 20 June 2001 a female reported the theft of credit cards from her purse. The Bank concerned informed him that these cards had been used the same day at the Braid Hills Golf Club, Marks and Spencer and Safeway at the Gyle, Tesco in Meadow Place Road, Edinburgh to purchase items. The officer attended the premises concerned, viewed CCTV footage of the transactions and identified SG as the user of the stolen cards. She was wearing a distinctive Burberry baseball cap. Tab 12 of 6/59 of process is the SPR about this incident.

[17] As part of the same operation, DC Rutherford was investigating a series of thefts from motor cars in car parks in the Cramond area of Edinburgh. On 24 June 2001 a car was broken into and bank cards stolen. Those cards were used on that date at Tesco, Meadowbank, Bar Roma restaurant, Edinburgh and on 25 June at JD Sports, Jenners and Sainburys in Edinburgh. The officer viewed CCTV footage in several of those locations and identified SG as using the stolen cards to purchase items. At Tesco, Meadowbank, Jenners and JD Sports the respondent was seen in CCTV footage in the company of SG. His opinion was that they were working as a team. On 9 July 2001 a search of 151 Crewe Road West, Edinburgh was conducted. This was the home of the respondent. A baseball cap similar to that seen worn by SG in the CCTV footage was recovered in the kitchen.

[18] On 7 July 2001 Sharon Cameron was in the car park of the Kinross Service Station before attending T in the Park. She saw a silver Astra arrive and a male and a female alight from it and go into the restaurant there. She remembered the registration number of the car as Y228 CGE. She was able to identify the driver as the respondent. Thereafter, when sitting in her car she saw the Astra again and the female from it go into the back seat of a white car. The female returned to the Astra which then left. Later that day she returned to the same car park and saw the owner of the white car in a distressed condition who appeared to have lost her keys. Her car had been broken into and a purse was stolen from it. PC Rutherford was tasked with tracing the Astra which he discovered had been hired by SG on 7 July 2001. When questioned about this matter, both the respondent and SG refused to name the driver of this car at the material time. The SPR on this incident is at tab 13 of 6/59 of process.

[19] In 2004 PC Brian Forbes was stationed at Gayfield Square Edinburgh. He was involved in a credit card theft investigation. There had been a spate of thefts from cars parked in Holyrood Park. It was established that stolen cards were being used in particular shops and a male had been identified as being responsible for the thefts. One vehicle used by the respondent was of particular interest. Stolen credit cards were being used and this car was seen in the vicinity. On occasions SG had been sighted in the vicinity also. A search warrant was obtained for SL in January or February 2005. PC Brunton attended. A computer was found there which had been obtained by use of a stolen credit card.

[20] In cross-examination PC Brunton accepted that the computer could have been returned.

[21] PC John Tait was working with the Financial Unit at Torphichen Street Police Station on bank and credit card thefts in 2005. Credit and other bank cards were being taken from purses when left in cars and Holyrood Park was the location of many such incidents. The respondent and SG were the two main suspects. They had been identified through CCTV where they were seen using stolen cards in various shops. They were seen in shops such as Harvey Nichols in Edinburgh. PC Tait saw CCTV footage from that shop and could identify both the respondent and SG in the shop at the till points. Stolen credit cards were used. There were a large number of instances where they used stolen cards. He conducted a search of SL in 2005. It was not clear from the evidence whether this was the same search as spoken to by PC Brunton. However, both the respondent and SG were detained. Credit vouchers were found which had been obtained by the use of stolen cards. The house was lavishly furnished with good quality furniture. There was a television in every room. There were a number of cars outside such as a BMW X5 or X3.

[22] In cross examination he accepted that none of the CCTV footage had been produced in this process.

[23] Patrick McCormack was the store manager of Argos in Kinnaird Park, Edinburgh in 2005. He was aware that a number of stolen credit cards were being used in that store. On one occasion his attention was drawn to a particular female who had been seen by a member of staff a few days previously using a card and who had returned using a different card under a different name. She was buying a valuable stereo player. That member of staff came to him and told him that the same female had returned. They approached her and tried to delay her departure and called the police. At the same time a male had been at the door of the store. He approached the female and they both left in a hurry. They were followed to the car park and went to a silver Astra. The female was shown in a series of stills from CCTV footage number 6/77 of process who he identified as SG. The male was shown also in the photographs who the witness identified as the respondent.

[24] In cross-examination, he remembered that the female was on her own at the till and the male approached and asked her to leave. On checking the CCTV they saw that the two had been together prior to that and the photographs had been taken before the female went to the collection point to try and collect the goods bought with the stolen credit card.

[25] Sergeant Ferguson was stationed at Falkirk in June 2011. On 12 June 2011 he was called to a serious incident in the High Street there. CCTV operators in the centre called to report a car being driven with someone clinging onto the bonnet at about 4.30pm. He attended and saw a silver Ford Focus with its wind screen smashed. A man was injured and the female driver was on the footpath crying. From viewing the CCTV footage 6/61 of process, which was also played to me in court, and from speaking to the security officers in the town centre he explained the events shown in that footage. SG had entered Boots in the Howgate Shopping Centre. The respondent was waiting outside the entrance. SG came out of Boots followed by a security officer. The respondent tried to get in the way and to distract him. Both the respondent and SG proceed to where the Ford was parked. The respondent got into the driving seat. The security officer approached and took the ignition keys out. The respondent got out, threw the keys back in and SG got into the driving seat. She drove off, collided with a pedestrian and drove with the pedestrian on the bonnet until she stopped at traffic lights. The respondent followed on foot to where the car was stopped.

[26] In cross-examination the respondent suggested that he was not distracting the security officers who were trying to apprehend SG outside Boots but telling her to hand items to the security officer. Sergeant Ferguson did not know. The respondent also suggested that he did not throw the keys back but only the plastic part of the key since the metallic key was still in the ignition. The witness denied this and said it was the whole key.

[27] In re-examination he said that it was reported to him by the security officer at Boots that the respondent had come in and asked what time the store closed and this was a common technique to distract the security guard while his accomplice carried out shoplifting. Sergeant Ferguson had searched the Ford and found two bottles of aftershave from Boots, ten items of new clothing and a security tag remover. It was agreed in the joint minute, para 41, that as a result of this incident, SG was convicted of assault to injury and the danger of life and sentenced to 4 years 3 months imprisonment.

[28] DI James Gilchrist spoke to his report, 6/59 of process. He had completed 29 years police service, predominantly in CID roles including serious crime and economic crime for most of his career. He is presently the head of East Scotland Economic Crime Unit. He previously headed up the Specialist Fraud Unit and Financial Crime Unit of Lothian and Borders Police. He is chairman of the Scottish Working Group on Fraud and sits on three groups dealing with financial crime at the Scottish Business Crime Centre. He was previously a member of the National Proceeds of Crime Act Working Group and sits on the Scottish Multiagency Asset Recovery Team.

[29] He spoke to the standard prosecution reports (SPRs) submitted by the police to the Procurator Fiscal in relation to the respondent and SG. He also spoke to the police intelligence system, the sources of which are graded according to their reliability. He had checked police intelligence held on both the respondent and SG of which there was a large quantity. It was in the form of logs kept on the Scottish Intelligence Database. He was aware from his own knowledge when working in the CID in both Gayfield Square and Drylaw police offices, from briefings, from information received from other officers and from the intelligence, which was in the main of a high grade, that the respondent was a well-known individual to the police and was considered to be a career criminal involved in major credit card theft and fraud mainly by the breaking into motor cars. He was a prolific offender. He was closely associated with SG. DI Gilchrist spoke to the previous convictions relating to the respondent which are agreed in the joint minute at paragraphs 35 to 40 set out above.

[30] He also spoke to various incidents of "unproven unlawful conduct" said to have been committed by the respondent and SG. These are set out in paras 7.1 to 7.149 of his report and the SPRs are in the schedule to his report at tabs 5 to 19. SPRs are prepared by the police for the Procurator Fiscal and are prepared so that the Fiscal can consider whether or not to prosecute the named individual in respect of the charges set out therein. The evidence on which the charge is based is narrated. It is then a matter for the Fiscal to decide whether or not a prosecution should proceed. In summary, these SPRs showed that between March 1995 and June 2011 (the date of the Falkirk incident narrated above), SG and the respondent had been the subject of 17 police reports to the procurator fiscal in connection, with one exception, with charges of theft and use or attempted use of stolen bank cards. The exception was a SPR relating to an incident in November 2000 when the respondent was found in possession of a radio scanner which was tuned to 11 channels licensed for use by Lothian and Borders Police.

[31] DI Gilchrist examined the life style of the respondent as disclosed in the SPRs. For example, that dated 2 May 2007 (tab 17 of the schedule) refers to the motor cars the respondent owned and the lavish furnishings of his home despite him stating in another SPR dated 2 May 2007 (tab 14) that he was a shopkeeper but refusing to say where and SG stating that the respondent was unemployed. That SPR also narrates that the respondent was not claiming state benefits and inquiries with the Inland Revenue disclosed that he was unknown to them.

[32] From the various sources of information about the respondent and SG, DI Gilchrist was able to form an opinion that the respondent was a prolific offender, well known to the police who had been involved in major credit card theft and fraud with SG over a substantial period. He appeared to have access to undeclared income which DI Gilchrist concluded was derived from criminality and enabled both the respondent and SG to enjoy a lifestyle beyond that which any legitimate income they had would allow.

[33] Finally under this head of the petition, Mr MacGregor led the evidence of Mr Neil Thomson.

[34] Neil Thomson has been a Fellow of the Association of Chartered Certified Accountants since 2010 and graduated with a BSc in mathematics in 1990. He practiced as a Forensic Accountant in private practice from 2004 to 2009 before joining the Civil Recovery Unit in Edinburgh. He prepared a report 6/51 of process to which he spoke in evidence.

[35] He conducted a comparison of (a) the known legitimate income of the respondent and SG against (b) the known bank lodgements from, first, agreed bank accounts of those persons and, second, expenditure from non-bank sources (representing additional income to that disclosed in the bank accounts). If the value of (a) is less than the sum of (b), a shortfall of income is demonstrated (which he termed a "financial black hole") which cannot be explained from the known documentation or verifiable sources.

[36] He looked at all known sources of legitimate income for both the respondent and SG up to the date of the Prohibitory Property Order (PPO) which was granted on 9 May 2007. This was on the basis that they lived together and on the assumption that they pooled their resources. This was a view favourable to the respondent as it meant that any income of SG could have contributed to bank lodgements and expenditure. He examined evidence of employed and self‑employed income from various sources including income from the purchase and sale of second hand cars, the operation of a café (the Tea junction) and the respondent's work as a courier. It was agreed in para 18 of the joint minute that the respondent kept no paperwork in respect of any employment or self-employment and in para 24 that there are no employment or self-employment records relating to the respondent held by HMRC from 6 April 1999 to 5 April 2006.

[37] He deals with these matters at paras 3.7 to 3.57 of his report. The evidence supporting the respondent's involvement in dealing in motor cars related to a business which traded under the name of Ferry Cars the address of which is shown in invoices of British Car Auctions (BCA) as SL, South Queensferry (see 6/16 of process). The invoices of BCA were spoken to by Roger Garbett, Assistant Company Secretary of BCA and those of Scottish Motor Auctions (see 6/13 of process) were spoken to by Nicola Buckle, the office manager. A search for PAYE, Corporation Tax and VAT registrations was carried out by HMRC for Ferry Cars. Nothing was found (see 6/42 and para33 of the joint minute). The invoices are analysed in appendix 3.1 of Mr Thomson's report and cover the period from April 2005 to March 2007. Although there is a suggestion in the pleadings that the respondent carried on such a business and one of car valeting before April 2005, Mr Thomson did not attribute any income from such activity for the period prior to April 2005 on the basis that there was no reliable documentary, HMRC or accountancy evidence supporting it. No evidence in respect of any such activity emerged during the proof.

[38] He also examined income from the café business Tea Junction which was said to have been operated at 306 West Granton Road. The existence of an informal lease with the respondent and SG as tenants was spoken to by Mrs Flannigan who was a director of the owner of the property, G&L D'Inverno Ltd. 306 West Granton Road was let to them from 1999 to 2005. Rent of £165 and latterly of £185 per month was paid. None of the bank accounts available to Mr Thomson in the name of the respondent or SG showed any such payments. Again, no paperwork was retained for the respondent's employment in this business (para 18 of joint minute). A search for PAYE, Corporation Tax and VAT registrations was carried out by HMRC for the business of T junction and the Tea Junction. Nothing was found (see 6/41 and para32 of the joint minute). Although averments were made in the pleadings to the effect that the respondent was informed by HMRC during a visit to the premises that he was not earning enough income to require the payment of tax and in answer 6.4 that the café business generated about £350 per week (whether that was turnover or profit is not specified), there was no evidence before me to support these averments. Nonetheless, Mr Thomson attributed income to the respondent from this business equal to the personal tax allowance for each of the tax years 1999/2000 to 2003/2004 in his overall assessment of the respondent's legitimate income.

[39] There was evidence that the respondent worked as a courier from November 2006 to April 2007. The relevant records held by the courier companies are agreed in paras 16 and 17 of the joint minute and are summarised in para 3.50 of Mr Thomson's report.

[40] Mr Thomson notes at para 3.77 that the Department of Work and Pensions held no benefit records on behalf of the respondent. This is agreed in para 34 of the joint minute. He therefore proceeded on the basis that the respondent received nothing by way of state benefits during the relevant period.

[41] Mr Thomson also examined the employment and other income of SG at paras 3.58 to 3.77 and alleged gifts to her which are referred to in the answer 6.9 to the petition. There was, of course, no evidence about any gifts but on the basis that a sum of £5000 is seen to have been deposited in one of her bank accounts in June 2002 which roughly coincides with the date of one of the gifts alleged in the answers, he attributed that sum as a gift. There was no documentary evidence supporting any other such gift. He examined records of Compass Services UK Ltd since HMRC had reported that SG was employed by that company from 2005 to 2007. Those records disclosed the earnings set out in para 3.60. He also took account of the tax credits, child benefits, income support and another unspecified benefit shown at para 3.76.

[42] Putting all this information together, Mr Thomson concluded that the combined legitimate income of the respondent and SG from all identifiable sources for the tax years ended 5 April 1999 to 5 April 2007 was £101,422. The respondent's income amounted to a total of £39,789 while that of SG amounted to £61,663.

[43] It should be noted that in a number of respects this analysis is a favourable one to the respondent. It assumes that he did derive income to the limit of tax free allowances in the form of drawings from the Tea Junction café for the tax years ended 2000 to 2004 despite there being no records or evidence before me of any such payments. It also assumes what are termed "notional drawings" from Ferry Cars in 2006 and 2007, despite there being no records or evidence before me to demonstrate any such drawings were taken. In addition, as stated, Mr Thomson pooled all of the known income which both the respondent and SG could be said to have received on the basis that it was thought that they lived together and thus her income would have been available to meet expenditure.

[44] Mr Thomson then carried out an analysis of the known bank accounts of both the respondent and SG. This exercise is contained in paras 3.98 to 3.119 of his report. The bank account and the bank statements relating to them were agreed as having been operated by them in paras 1 and 8 to 12 of the joint minute. 6 deposits into accounts held in the name of the respondent between 6 October 2000 and 25 March 2002 are agreed in paras 2 to 7. His findings in relation to the three accounts in the name of the respondent are set out in appendix 3.3 and a consolidated summary of all transactions in those accounts between 5 January 1999 and 9 May 2007 at appendix 3.4. During that period £263,487 was received into the accounts (excluding transfers between the accounts and contra entries) being money from external funding sources. This can be compared to his legitimate income of £39,789 (para 3.96 of the report). In addition, 73% (£192,165) of all receipts into those accounts were analysed as "round sum" receipts from unknown sources. Round sum receipts or deposits refer to deposits in denominations of £5 or £10 are indicative of persons accumulating monies prior to depositing them at the bank which is typical behaviour of anyone involved in a cash business, legitimate or otherwise. Those deposits are analysed in appendix 3.6. A break down on a year by year basis of those deposits is shown at para 3.104.

[45] At paras 3.108 to 3.110 Mr Thomson deals with two significant payments which are shown in one of the respondent's accounts. On 29 April 2002, £18,496.75 was paid as the deposit for SL. This was funded almost entirely by round sum amounts from unknown sources. On 10 April 2003, £17,292.50 was paid to Eastern BMW to purchase a vehicle. This payment was funded by an accumulation of funds, including round sum deposits between 3 March and 9 April 2003. The purchase of a new BMW 325ci in April 2003 was spoken to in evidence by Ross Mackenzie of the Eastern Motor Group. It was vouched by the documentation in 6/89 of process. The respondent traded-in a car for £11,000, put down a deposit of £1,000 on 31 March and paid the balance of £17,292.50 on 9 April. He also paid for certain extras amounting to £1,292.

[46] Mr Thomson considered that the funding for both these transactions suggested that the respondent retained funds outside the banking system.

[47] In relation to SG, her known accounts are analysed and his findings are contained in appendix 3.7, with a consolidated summary at appendix 3.2. In summary, the receipts into her accounts are in line with her known legitimate income for the relevant period. The round sum deposits were all under £1000 with the exception of one of £5000 which Mr Thomson attributed to a gift as averred by the respondent in answer 6.9.

[48] The above analyses are then brought forward into a "black hole" calculation in paras 3.123 to 3.128. This shows that in respect of the respondent, for the tax years ended 1999 to 2007 and from 5 April to 9 May 2007, there was an annual shortfall of income compared to non-business lodgements into his personal accounts and additional known expenditure not funded from the bank (see appendix 3.5). A summary is set out in para 3.123. Over the whole period there was a cumulative shortfall of £215,557. In respect of SG and over the same period, there was a surplus of £11,385. This brings out a combined "black hole" calculation of £204,274. Mr Thomson had seen no documented explanation for this shortfall in earnings. No evidence explaining this shortfall was adduced before me.

The purchase and sale of SL

[49] Mr Macgregor also led evidence about the circumstances surrounding the purchase and sale of the property at SL. It was contended at the end of the day that this purchase was funded from the proceeds of unlawful conduct, both in respect of the deposit, which was said to be derived from the proceeds of both credit card theft and fraud described above, and in respect of the fraudulent obtaining of a mortgage over the property by the making by the respondent of false declarations as to his income. Therefore, it was argued, the net proceeds of the sale of this property were, or represented, property obtained through unlawful conduct.

The deposit

[50] A sum of £18,496.75 was paid by the respondent in respect of the purchase of SL which included a deposit of £17,000 and a further £1496.75 which covered fees and recording dues. This sum was paid in April 2002 and spoken to by Kenneth Macrae who at that time was a solicitor with the firm of McLeish Carswell in Glasgow. He was referred to the conveyancing file for SL, 6/8 of process, agreed as a true and accurate record of the transaction (para 22 of joint minute). The client ledger, 6/9 of process, was also agreed to be true and accurate (para 23). The respondent was his client. An offer of £77,000 was made on the respondent's behalf on 4 April 2002 and the bargain was concluded on 24 April. The transaction completed on 21 May 2002.

[51] A mortgage of £60,000 was obtained from the Halifax PLC. 6/3 of process is the Borrower's Account Report in relation to that mortgage and was agreed as a true and accurate record of the information provided by the respondent at the time it was taken out (para 19 of the joint minute). It was spoken to by John Ellson a financial investigation officer of the Lloyds banking Group.

[52] So far as the source of the deposit is concerned, Mr Thomson gave evidence about this and it is dealt with at paras 4.17 to 4.24 of his report. The sum of £18,496.75 was transferred from one of his Royal Bank of Scotland accounts on 24 April 2002 to his solicitors McLeish Carswell (spoken to by Mr Macrae). Mr Thomson examined the bank accounts of the respondent in order to trace the original source funding of that sum. To do that he used the "first in first out" (FIFO) method as approved by the courts in past cases (see, for example, The Scottish Ministers v Stirton and Anderson 2012 CSOH 15 para 271). In FIFO it is assumed that money withdrawn from an account comes from the money first deposited in that account. Thus funds used to pay for a particular item can be traced to ascertain where they came from by checking the provenance of the funds deemed to be used for the item. However, where it can be inferred that funds were lodged for the specific purpose of funding a particular withdrawal, irrespective of the existing balance in the account, then the FIFO method is not deployed.

[53] In the case of the account from which the £18,496.75 was withdrawn on 29 April 2002, (account number .....466 in the name of the respondent "the first account"), it can be seen that £18,000 was deposited into that account on 24 April from account number.....072, also in the name of the respondent ("the second account)" and it could be inferred that this transfer was made to fund the major part of that withdrawal. The balance could be traced using the FIFO method to earlier deposits into the first account in November and December 2011, one of which was a round sum of £885 from an unknown source (see appendix 3.3 pages 5 and 6 where they are marked with an "A").

[54] The source of the £18,000 was also examined by reference to the second account from which it had come. Again, by use of the FIFO method, two deposits into that account on 18 December 2001 and 25 March 2002 were identified. The former was a transfer of £15,000 from the first account and the latter was a round sum receipt into the second account from an unknown source of £6,350 (see appendix 3.3 pages 5 and 6 where they are marked with a "B"). It was then necessary to examine the source of the £15,000 which was transferred from the first account to the second account on 18 December 2001. Using the FIFO method, various receipts were identified as coming into that account between 6 October 2000 and 13 August 2001 all of which (excluding bank interest payments) were round sum receipts from unknown sources (see appendix 3.3 pages 3, 4 and 5 where they are marked with a "C").

The mortgage fraud

[55] Evidence was led about various representations made by the respondent as to his income in order to support his application for the mortgage of £60,000 over SL.

[56] Brian Ogunyemi was the principal of the Sterling Finance Group who conducted a confidential financial review of the respondent in April 2002 in order to assist him in his mortgage application. The review is dated 8 April 2002 (6/4 of process) and is signed by the respondent on the final page. It is agreed as a true and accurate record of information provided by the respondent (para 20 of joint minute). Page 2 contains the personal details of the respondent and gives his address as 151 Crewe Road North, Edinburgh. His occupation is shown as "Sales Manager", his employment status as "Employed" and the length of time in employment as "6 years". The business name is "Tea junction" of 306 West Granton Road, Edinburgh. On page 6 his income is stated as £21,000 per annum with "bonus/commission" of £3000 per annum. A salary review date was given as 05/04/2003. On page 7 under Value of Assets the sum of £21,500 is entered in the box marked "Building Society and Deposits".

[57] John Ellson is a finance investigation manager for Lloyds banking Group who took over Halifax PLC. 6/3 of process is agreed to be the Borrower's Account Report in relation to the respondent's mortgage with the Halifax and accurately records the information provided by him at the time the mortgage was taken out (para 19 of the joint minute). On page 4 the respondent's income is stated as £28,000 from his occupation of "sales". On the basis of that information, he was offered a mortgage of £60,000 by letter dated 16 April 2002 (6/6 of process agreed as accurate in para 21 of the joint minute). A letter crediting McLeish Carswell's client account with the sum of £60,000 is dated 14 May 2002 (6/7 of process). Mr Ellson gave evidence to the effect that if it had been known that the respondent had no legitimate source of income or if his earnings were less that as stated, that offer would not have been made. Similarly, had it been known that false information had been given, that offer would not have been made.

The sale of SL

[58] David Sangster was a solicitor with the firm of Neilsons. He spoke to the sale of SL on behalf of the respondent which completed on 4 May 2007. The free proceeds thereof were placed in a client account in the name of the respondent held with the Royal Bank of Scotland. On 9 May 2007 a prohibitory property order (PPO) was served on Neilsons which prohibited the respondent from dealing with that money which then amounted to about £98,000. He did not accept in cross-examination that an inhibition over the property in May 2007 had prevented the free proceeds being released. There had been an inhibition but that was discharged in 2006.

As stated above, no evidence was led on behalf of the respondent.

The petitioners' submissions

[59] Mr Macgregor moved for orders in terms of paragraphs (iii) to (vii) of the prayer of the petition (see page 58 of the Record). Those comprise a recovery order under section 266 of the 2002 Act in respect of the sum at credit of Neilson's client account in the name of the respondent which represents the proceeds of sale of SL (the property), the appointment of a trustee, an order vesting the property in the trustee, that he have the powers mentioned in schedule 7 of the 2002 Act and for the expenses.

[60] He referred to the relevant statutory provisions in the 2002 Act which are summarised above. He pointed out that these proceedings do not seek a finding of guilt in respect of any criminal offence but a finding that the respondent has been concerned in unlawful conduct, namely fraud and theft and that as a result he obtained property. It is not necessary to link the acquisition of property to any particular criminal act or acts (see ARA v Szepietowski 2007 EWCA Civ 755 and the opinion of LJ Moore-Bick at para 106-107). It is, however, necessary to prove that specific property was obtained by or in return for criminal offences of an identifiable kind such as fraud or theft (see section 242 of the 2002 Act). He referred to section 305 which allows for the tracing of the original proceeds of unlawful conduct. The petitioners shoulder the burden of proof which is to the balance of probabilities (section 241(3) and Scottish Ministers v Strirton 2013 CSIH 81).

[61] In respect of the approach to the evidence led, he submitted that the petitioners relied on both direct evidence of unlawful conduct and upon circumstantial evidence and asked the court to draw inferences from that evidence. Since no evidence had been led from the respondent, the court was entitled to draw the most favourable inferences possible from the available evidence (see, for example, Ross v Associated Portland Cement Manufacturers Ltd 1964 1 WLR 768 at 775). In line with what Lord Penrose said in Scottish Ministers v Buchanan CSOH 10 March 2006 (unreported), this court should "consider what inferences may properly and reasonably be drawn from the primary material, having regard to the opportunity to present evidence in rebuttal and the absence of such evidence" (see also Scottish Ministers v Smith 2009 CSOH 167). Where no explanation for the acquisition of funds is provided, the court can infer that it was acquired through unlawful conduct which it finds to have been proved (Gale v SOCA 2010 1 WLR 2881 at para 8; ARA v Oluptian 2008 EWCA Civ 104 at para 22 and Olden v SOCA 2010 EWCA Civ 143 at paras 54-57).

[62] In relation to the source of funds for the deposit on SL, it was submitted that the respondent's unlawful conduct was the source thereof. The evidence to support that contention came from the admitted convictions for acquisitive crime, the direct evidence of his being so involved from the police officers and lay witnesses who gave evidence and from the SPRs concerning the involvement in such crime by both the respondent and SG which were spoken to by DI Gilchrist. DI Gilchrist's opinion, having reviewed all the material available to him and based on his expertise, was the respondent was a "recidivist thief". The use of round sum deposits also indicated a criminal lifestyle as did the evidence of his lavish lifestyle. The financial black hole spoken to by Mr Thomson was not legitimately explained by the respondent.

[63] Mr MacGregor submitted that the respondent had obtained the mortgage on SL by fraud. He had falsely declared that his income was £22,800 in sales in order to obtain that mortgage. That was not true. The fact that he did not pay National Insurance contributions in the relevant period demonstrated that he was not legitimately earning such a sum. Paragraph 27 of the joint minute agrees the contributions made by the respondent from 1990 to 2004. He was not paying any contributions in 2002. Although there are averments in the answers to the petition as to the income generated by the Tea Junction café, there was no evidence supporting those figures nor was it apparent whether that figure was turnover or profit. Even if it were net profit to which the respondent had been solely entitled (thus ignoring SG's entitlement), it would not amount to the level of income claimed. The respondent declared no income from the café (or from any other source) to HMRC thus it could be inferred that he was earning below the personal tax allowances for the relevant period. Bank statements do not vouch any such earnings.

[64] Mr MacGregor referred to ARA v Jackson 2007 EWHC 2552 at para 128 for the proposition that in the absence of direct evidence from the mortgage provider the court could nevertheless hold that a mortgage loan had been obtained by fraud.

The respondent's submissions

[65] The respondent made brief submissions in response to those of Mr MacGregor who had provided him with a copy of written outline submissions at my request. He again pointed out that although police officers had viewed CCTV footage of incidents which were alleged to constitute unlawful conduct of his part, none had been produced to the court and thus I did not have the benefit of this evidence to assist me in determining whether the respondent was involved in the incidents upon which the petitioners were founding.

[66] He also pointed out that DI Gilchrist had referred to many SPRs which had not been the subject of any criminal prosecution and, if the evidence described therein was so convincing, why was it, he asked, that the Procurator Fiscal had not proceeded with the case? As to the evidence of his bank accounts, there was he said no direct link between the so-called round sum deposits and any unlawful conduct. He did not accept that his previous convictions related to acquisitive crime but were mainly for road traffic offences, breach of the peace or assault.

Discussion and decision

[67] In approaching this matter, I consider that there are two principal issues.

1.    Have the petitioners proved on the balance of probabilities that the sum used as the deposit for SL was obtained through unlawful conduct?

2.    Have the petitioners proved that the mortgage over SL was obtained through unlawful conduct?

[68] In respect of the first matter, I accept the undisputed evidence led by the petitioners that the respondent has a number of previous convictions in the period from 1977 to 2006 for crimes of an acquisitive nature and for fraud. Although the respondent submitted that his convictions were mainly for road traffic offences, assault and breach of the peace, it can be seen that he has a number for what can be properly termed crimes of an acquisitive nature.

[69] I was also able to accept the direct evidence from the various police officers and members of the public that the respondent was involved in unlawful conduct in the form of theft and credit card fraud over a long period of time. The incidents about which police officers spoke from their own knowledge showed that the respondent and SG had been involved in a long running course of conduct in Edinburgh and the Lothians which followed a very similar pattern. Cards were stolen from motor cars parked in areas which were frequently targeted and very shortly thereafter those cards were used in Edinburgh shops to purchase goods of a variety of descriptions. The respondent and SG were identified by police officers who knew them as being present in some of the stores through CCTV footage and sometimes filmed at the check-out area. DC Gibb and DC Brunton spoke to a series of incidents in 2000 in Gullane involving theft of cards from motor cars and of one in particular which he attended involving the respondent and SG. After the respondent and SG were detained, there was a dramatic drop in such incidents. DC Berwick and DC Rutherford spoke to incidents of a very similar nature in 2001 but in the Edinburgh area. Sharon Cameron also spoke to an incident in Kinross in the same year. PC Forbes spoke to thefts of credit cards in Edinburgh City centre in 2004 and to their subsequent use in local stores. The respondent and SG were connected to such activity. The searches of the respondent's house in 2005 indicated that goods connected with such conduct were recovered as well as demonstrating the lavish nature of the furnishings within the house.

[70] The respondent attempted to undermine the force of this evidence in cross-examination and in his submissions by pointing out that none of the CCTV footage was produced to this court so that it could come to a view of what had occurred in the various stores from which such material had been obtained and who it showed. While none had been provided to me, there were still images from some of the footage produced and which were spoken to by the police officers. They were able to say that the footage had been recovered and had been examined by them. On doing so, they were able to identify the respondent and SG on the footage. That is competent and admissible evidence which I was able to accept. I do not consider that the failure to produce the CCTV footage itself undermines the cogency of the evidence given about the incidents in the various stores.

[71] Accordingly, there is a substantial body of evidence showing the involvement of the respondent and SG in a course of unlawful conduct which could amount to the crimes of theft and credit card theft from 2000 to 2004.

[72] I also accept the evidence of DI Gilchrist, informed as it was by his own knowledge of the respondent, the admitted convictions, the SPRs and by his expertise in the area of financial crime that the respondent has engaged over a long period in conduct which would be unlawful in Scotland under our criminal law over and above that demonstrated by his convictions. The SPRs seem to me to be in the same, if not a stronger, position than intelligence reports which were accepted as forming part of the background material supporting and informing expert evidence by Lord Bracadale in Scottish Ministers v Smith. DI Gilchrist used the SPRs, which were not followed by prosecution, as support for his opinions expressed in his report. Those reports are more specific than intelligence reports since they focus on particular incidents relating to the individuals named therein and explain in detail the observations made at the time which are said to constitute the unlawful conduct in question. They are compiled by known police officers and backed up by sightings and evidence of recoveries of property. The fact that the reports did not result in criminal prosecution does not detract from their evidential value in these civil proceedings. The crown may have had a variety of reasons for the decision not to prosecute these incidents and I cannot speculate as to what those might have been. For the reasons I have outlined above, the material contained in the SPRs is admissible in these civil proceedings as informing DI Gilchrist's evidence contained in the opinion sections of his report. Some of them were, in any event, spoken to by the officers who were named therein. Those SPRs cover the period from January 1999 to July 2001 and are set out in paras 7.11 to 7.79 of his report.

[73] That evidence and the evidence of the police officers who were directly concerned in the inquiries relating to the theft of bank cards and their subsequent use by SG and the respondent satisfies me on the balance of probabilities that the respondent was engaged over a protracted period from at least 1999 to 2007 in unlawful conduct in the form of theft and credit card fraud.

[74] In addition, there is evidence that the respondent had no legitimate source of income up to the time of payment of the deposit which could account for the accumulation of the sum required to pay it. He did not pay national insurance contributions. There are no records held by HMRC of any employment or self- employment by him up to and beyond 2002. He made no declarations for income tax purposes. I accept the evidence of Mr Thomson about the provenance of the funds by which the deposit was paid and the preponderance of round sums which made it up. The identification of round sum deposits into a bank account would not, of itself, demonstrate that those sums were derived from unlawful conduct. However, looking to the totality of the evidence in this chapter and having regard to the lack of any legitimate source of those funds, I can draw the inference that they were derived from the unlawful conduct in which I hold the respondent was engaging. It is of significance that the volume of round sum deposits increases significantly in the tax year to 5 April 2003 from the previous year. The volume then decreases until 2006. This happens to coincide with the criminal investigations into retail theft by stolen bank cards about which the police officers spoke. There is therefore a link between those deposits and the unlawful conduct which I hold to have been carried out by the respondent. As Mr Thomson points out, such a pattern is not explained by any business records demonstrating an improvement in trading in any business conducted by the respondent in the year ended April 2003 (see paras 3.104 to 3.106). No legitimate explanation for this was offered to me by the respondent. I accept also the evidence of the existence of the financial black hole as demonstrated by Mr Thomson for the period from 1999 to 2007.

[75] No legitimate explanation for the sums which entered the various accounts which Mr Thomson considered made up the deposit or for the financial black hole generally has been provided by the respondent. Although in the answers to the petition he avers that the deposit was obtained from income derived from his car business and from money gifted to him by SG, no evidence to support those averments was given.

[76] In those circumstances the evidence points only one way. There is a consistent and convincing pattern of unlawful conduct in the form of theft of bank cards and their fraudulent use with which the respondent is linked which explains the acquisition of funds with which to pay the deposit. There is evidence of the deposit being made up from round sums made into his accounts which, in the circumstances, I infer is redolent of a dishonest provenance. There is evidence of an otherwise wholly unexplained and substantial surplus of expenditure over legitimate income during the relevant period up to the deposit being paid and beyond. From these strands of evidence, I am able to infer, in the absence of any legitimate explanation, that it is proved that the sum advanced as the deposit on SL was probably derived from unlawful conduct by the respondent.

[77] The second issue is whether the petitioners proved that the mortgage over SL was obtained through unlawful conduct. There was clear and undisputed evidence that in order to obtain the mortgage, the respondent had declared to the Halifax that his income was £22,800 from "sales". There were no records held by HMRC vouching any employment or self-employment by him in respect of the Tea Junction café or any other employment, he had made no income tax returns up to 2002 (and beyond) and the bank records do not show any pattern of payments which might support that level of income. In the circumstances, I have little difficulty in finding that his claim to the mortgage provider that he earned that amount from sales was false. Such a finding can be made all the more readily since there was no direct evidence from any source to indicate that he did earn such a sum from any legitimate source in 2002 or at any other time.

[78] The respondent's only possible source of income up to and including 2002 appears to be that from the Tea Junction café. However, while that matter is canvassed in the pleadings, no evidence about it was adduced before me. In any event, it is said in answer 6.4 that it generated "approximately £350 per week" but there is, as Mr Thomson pointed out, no indication of whether that represents turnover or profit or whether, if the latter, how that would be shared between the respondent and SG, who was a co-tenant of the premises. That source would not in any event account for an income at the level claimed. Further, it is stated in the pleadings that the respondent was informed by HMRC in December 2003 that he was not earning enough from the café "to require the payment of tax" and that the respondent was "unused to running a business and did not keep accounts" (page 36C-D of the Record).

[79] The declaration to the Halifax made by the respondent in about April 2002 has to be set alongside the information he gave to his financial advisor Mr Ogunyemi shown in 6/3 of process. It is signed by the respondent and dated 8 April 2002 and shows that he claimed an income as an employed sales manager at the Tea Junction of £21,000 per annum together with a Bonus/Commission of £3000. This does not square with the information given to the Halifax.

[80] Mr Ellson of Lloyds Banking Group spoke to the records of the Halifax which are in any event agreed as accurate in para 19 of the joint minute. Following the same reasoning as adopted by Mr Justice King in ARA v Jackson at para 128-129, I am able to conclude, in the absence of evidence from the actual provider of the mortgage, that the respondent provided false information to the Halifax in 2002 about his income which led to the mortgage being granted and that, without that false information, the mortgage would not have been granted. That was the evidence of Mr Ellson, whose evidence I accept, who was an experienced finance investigation manager and accords with common sense.

[81] From this evidence, I conclude that the respondent falsely declared to the Halifax that his income was £22,800 per annum from an occupation of sales. There is no evidence before me to support such an income from any legitimate source and the evidence of Mr Thomson, drawn from various sources, demonstrates that he had no such income. Further I accept the evidence of Mr Ellson that the mortgage would not have been granted to the respondent had he not stated that his income was at this level. Had that mortgage not been granted to him, he would not have acquired title to SL. Accordingly, his interest in SL was acquired through his fraudulent misrepresentation and it follows that, upon the sale of the property, the free proceeds thereof, now frozen in the client account of Neilsons, derives directly from that misrepresentation.

[82] I should add, for the avoidance of doubt, that I am also satisfied that the petitioners have proved that the payments of the mortgage from 2002 to 2007 were made by funds obtained through unlawful conduct. For the same reasons as I find that the deposit was derived from the proceeds of unlawful conduct, I also find that the mortgage interest payments made by the respondent from the time the mortgage was granted until the sale of SL were funded through the same type of unlawful conduct. The evidence of his involvement in theft and credit card theft of a very similar nature to that which occurred before 2002 covered the period after that year. PC Forbes spoke to involvement in an investigation of retail theft by use of stolen credit cards in 2004 and 2005. Some were used in Argos in Kinnaird Park. The respondent was identified by the manager there as being with SG at a time when a stolen card was used. PC Tait was also involved in a similar inquiry in 2005 when a number of cars were broken into when parked at Holyrood car park. CCTV footage from various stores at which stolen cards were used showed the respondent and SG being present in those stores sometimes with the respondent at the till points at the time those cards were being used. DS Ferguson spoke to the incident in Falkirk High Street in June 2011 when the respondent and SG were seen in Boots and thereafter in the High Street acting together to try to avoid the attentions of security officers. It was clear to me from his evidence that the respondent was attempting to assist SG in driving away and that he followed on foot and re-joined her when she eventually stopped the car she was driving and was apprehended.

[83] DI Gilchrist spoke to the numerous SPRs which indicated that the respondent involved in many instances of the theft of bank cards and their subsequent use in 2004 and 2005 (see paras 7.80 to 7.136 of his report).

[84] For the period between the purchase of SL and its sale, the respondent was engaged in a number of enterprises which are analysed by Mr Thomson in his report. However, even taking account of income which was or may have been derived from those enterprises, Mr Thomson's analysis of the financial black hole in respect of the respondent, which I accept, shows that for the tax years 2003 to 2007 there was a shortfall between income from legitimate business activity and all non-business lodgements into personal accounts (plus additional expenditure not funded from the bank accounts) of £47,598, £41,290, £27,841, £1201 and £49,882 respectively. This calculation gives the respondent the benefit of the doubt in a number of significant respects. It assumes that he did obtain drawings from the café although no records exist supporting that and it assumes that he did receive money from dealing in motor cars although there are no business records for those businesses either and the respondent made no tax returns declaring any such income and HMRC hold no records whatsoever in respect of those businesses. Even when SG's legitimate income is factored in (which again is favourable to the respondent), there remains a very substantial and unexplained shortfall in the black hole calculation.

[85] Looking to the whole evidence which impacts on the period during which the respondent was paying the mortgage on the property, I am able to conclude that, in the balance of probabilities, he was engaged in unlawful conduct in the form of theft and fraud during the period from 2002 to 2007 when the property was sold and that he was able to fund the payment of the mortgage from that activity.

[86] In the light of these conclusions, I will grant paragraphs (iii), (iv), (v) and (vi) of the prayer of the petition. I will grant a recovery order in terms of section 266 of the 2002 Act in respect of the sum at credit of the Neilsons client account ledger in the name of Brian Ellis, held in the Royal Bank of Scotland account number .....244, sort code ...904, representing the proceeds of sale of the heritable property known as SL, formerly owned by the respondent. I will appoint Ruaraidh Macniven, Head of the Civil Recovery Unit, c/o 25 Chambers Street, Edinburgh EH1 1LA to be the Trustee (the Trustee) for civil recovery in respect of the said property, I will vest the said property in the Trustee and declare that the Trustee shall have to the powers mentioned in Schedule 7 to the Act.

[87] Having regard to the fact that the respondent is unrepresented, I will reserve meantime the question of the expenses so that he can address me on that matter in due course.