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					Neutral Citation Number: [2005] EWHC 2325 (Admin)

IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION ADMINISTRATIVE COURT Royal Courts of Justice Strand, London, WC2A 2LL Date: 28/10/2005 Before : MR JUSTICE WALKER --------------------Between : HM Customs & Excise - and Gary Lingham - andMartina Way ----------------------------------------Claimant Defendant Intervener

Mr Oliver Sells QC & Ms Linda Saunt (instructed by HM Customs) for the Claimant Mr Mark Tomassi & Mr Alexander dos Santos (instructed by Paul Martin & Co) for the Defendant Mr Timothy Higginson & Mr Niran de Silva (instructed by Saunders Solicitors LLP) for the Intervener Hearing dates: 22 and 23 June 2005 ---------------------

Judgment Approved by the court for handing down (subject to editorial corrections)
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Judgment Approved by the court for handing down (subject to editorial corrections)

HM Customs & Excise v Gary Lingham

Table of contents: Introduction .................................................................................................................... 2 History of proceedings ................................................................................................... 3 The evidence in support of HM Custom‟s claim ........................................................... 7 The Evidence for the Intervener .................................................................................. 14 The submissions of the parties ..................................................................................... 40 Analysis of the parties‟ submissions .......................................................................... 45 Conclusion ................................................................................................................... 49

Mr Justice Walker

Introduction
This application primarily concerns a house in Chislehurst, Kent, known as “Kevington.” The legal owner is Ms Martina Way, the intervener in this application. She bought the house in March 1995 for £280,000, of which half was provided on mortgage by the Woolwich Building Society. I shall refer to the claimants as “HM Customs”. Their case is that money used to provide the remaining half of the purchase price was supplied by her „common law‟ husband, Gary Lingham, the defendant in the application, and was the proceeds of crime. HM Customs assert that the defendant has a beneficial interest in the house, and that this beneficial interest can be quantified. Ms Way says that the remaining half of the purchase price came from her own funds and from a contribution of £130,000 provided by the defendant‟s mother Mrs Frances Lingham. Her case before me has been that by the time Kevington was purchased she and the defendant were estranged, that the house was for her and her children, that Mrs Lingham‟s motive for contributing £130,000 was to ensure that she and her children remained in England and in the hope that having such a house would enable a reconciliation between her and the defendant and that apart from £5,000 provided in payment of legal fees the defendant played no part in the purchase. I must decide which of these

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two versions of events is correct.

History of proceedings
On 19 January 1998 Mr Justice Kay, sitting in chambers, made a restraint order prohibiting the defendant from disposing of his assets. Among the defendant‟s assets listed in the order was his “interest in the property known as [Kevington]”. The order was addressed to Ms Way as well as to the defendant, and required that Ms Way must not in any way dispose of or deal with or diminish the value of those assets. The defendant was convicted of drug trafficking offences on 5 June 1998. On 7 July 1998 he was sentenced to imprisonment for 18 years. Over a year later, on 5 August 1999, a confiscation order was made by His Honour Judge Charles at Snaresbrook Crown Court. He was told that HM Customs, as prosecutor, and the defence had reached an agreement that the value of the defendant‟s proceeds of drug trafficking was £500,000, and that the amount of his realisable assets was £200,000. Documentary and oral information supplied by the parties at the hearing on 5 August 1999 can be summarised as including the following: the Crown had asserted that the defendant had £288,550.24 of realisable assets; the major part of these alleged assets was the defendant‟s beneficial interest in “Kevington” which was valued at £210,000; the defendant had denied that he had any interest in Kevington or in other substantial items asserted to be his; it had been the contention of HM Customs that the defendant must have undisclosed assets, which would have made it appropriate for the confiscation order to be in the full amount of the value of the defendant‟s proceeds of drug trafficking; the court was told, however, that it need not resolve those issues, and HM Customs did not invite the court to make specific findings of fact about specific assets. Indeed, it was explained that at that time the defence did not know how they proposed to satisfy the order. However, both parties were agreed that the confiscation order

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should be in the amount of the agreed realisable assets, namely £200,000, and that the defendant should have two years in which to pay that sum.

On that basis His Honour Judge Charles on 5 August 1999 made a confiscation order in the sum of £200,000 to be paid within two years, with 30 months imprisonment in default, consecutive to the sentence being served by the defendant. An appeal raising points of jurisdiction was dismissed by the Court of Appeal on 27 May 2000. Correspondence took place between HM Customs and solicitors for the defendant and Ms Way with a view to Kevington being sold and the proceeds of sale being used to satisfy the confiscation order. However, by late 2001 this had not come about, and HM Customs considered that Kevington was worth considerably more than had been the case in 1999. By letters dated 6 and 8 March 2002 HM Customs informed solicitors for the defendant and for Ms Way that an application would be made under Section 16 of the Drug Trafficking Act 1994. These letters said that at the time of the confiscation order the defendant‟s assets excluding any interest in Kevington amounted to £78,550.24, and accordingly the defendant must have agreed that he had an interest in Kevington amounting to at least £131, 449.76. On this basis, as the equity in the property at that time was worth £210,000, he could be said to have agreed that he had a 62% interest in Kevington. The property had now increased in value to a gross figure of approximately £650,000 and the defendant‟s interest would accordingly now amount to a higher figure than at the time of the confiscation order. I shall examine later in this judgment whether the assumptions which underlie this exercise are justified. Adopting those assumptions for the time being, it seems to me that if the defendant did indeed have assets amounting to £200,000, and non-Kevington assets were £78,550, then his interest in Kevington was £121,450, which would constitute 58% of an equity of £210,000. However, for reasons which I give below, on the view that I have reached the arithmetic does not matter. On 12 April 2002 the application was lodged with the court. Part A of the application was in these terms:
We, HM Customs and Excise Intend to apply for the following … :

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a certificate pursuant to section 16 of the Drug Trafficking Act 1994 that the defendant‟s realisable property is greater than the amount originally ordered to be confiscated; a declaration as to the defendant‟s interest in the property known as „Kevington‟, Orpington Road, Chislehurst, Kent, BR7 6RA an order for the appointment of a receiver to enforce the confiscation order made against the defendant on 30th June 2000 under the Drug Trafficking Act Because 1 the value of the property known as „Kevington‟ has increased since the time the confiscation order was made; 2a third party claims an interest in the property. 3the defendant has not paid the outstanding balance due on the confiscation order nor has he put forward any reasonable proposals to pay the outstanding balance and therefore a receiver is the only practicable way to enforce the order.

The hearing of the application was scheduled for 24 May 2002, but on that date Mr Justice Jackson by consent ordered that Ms Way be joined in these proceedings as intervener, and that a question should be determined as a preliminary issue. This question was as follows: “whether the claimant is entitled to make any claim under Section 16 of The Drug Trafficking Act 1994 in respect of any alleged increase in value of [Kevington], or whether the claimant is shut out from making such a claim because there was no finding (express or implied) on 5 August 1999 that [Kevington] was an asset of the defendant.” On 14 March 2003 Mr Justice Gage answered that preliminary issue by finding that “his [the defendant‟s] interest in Kevington was a realisable asset which was taken into account by the Crown Court when it made the order [dated 5th August 1999].” I have been told that a formal order to this effect is yet to be drawn up. By consent, a further order was made setting out a timetable by which the intervener and the defendant were to serve any evidence upon which they relied by 2 May 2003, and HM Customs were to serve evidence in response by 30 May 2003, with the matter listed on the first available date thereafter. At paragraphs 32 to 34 of his judgment Mr Justice Gage said this: [32] My conclusions are as follows. As I have already indicated the total of the defendant‟s realisable assets traced and set out in the prosecution‟s financial statement was said to be £288,550.24. Of that sum Kevington was valued in the sum of £210,000 after deduction of the mortgage in the sum of £120,000. Again, as I stated, the total of

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the other items comes to £78,550. In my judgment, it must follow that when the defendant agreed that his realisable assets were £200,000 he must be taken to have accepted that, despite the fact that Kevington was purchased in his wife‟s name, he had an interest in it. No other assets were declared by him which could account for the difference between £78,550 and £200,000. It is perfectly true to say that the observations of counsel for the prosecution at those proceedings did not specifically refer to that as an identifiable asset. But I do read into his observation, when he states, “quite frankly, they simply do not at the moment know how it is that they propose to satisfy the order”, any indication that he was submitting that Kevington was not an asset which the Crown were saying was an identifiable realisable asset. [33] It seems to me that the conclusion, that this matter was before the Crown Court and taken into account by the Crown Court, is supported also, first of all, by what is contained in the body of the financial statement in the paragraph to which I have already referred, namely paragraph 4, but also in the prosecution. It does not seem to me likely that a lady who was separated from her partner, who was serving a term of 18 years, would have had any real interest in allowing her property to be sold to satisfy the confiscation order, unless she, at any rate believed that he had a interest in it, and that was the basis upon which the order for £200,000 was made. Accordingly, in my judgment, and I so find, his interest in Kevington was a realisable asset which was taken into account by the Crown Court when it made the order under section 5(3), namely that he should pay £200,000. As I understand it that is a sufficient finding to dispose of this particular preliminary issue.

[35]

Despite the direction for listing on the “first available date”, the next court hearing was not until 6 April 2005, when the case came before Beatson J. It emerged that although the matter was said by HM Customs to have been listed by the court for determination of the application, counsel for Ms Way had understood that the hearing was to be for directions only. In these circumstances Beatson J adjourned the determination of the application, and it came before me for hearing on 22 and 23 June 2005. I find it deeply disturbing that an application begun in April 2002 should be still unresolved in April 2005, 3 years later. This is highly unsatisfactory. I urge HM Customs to inquire into how this has come about, and what can be done in future to reduce delays of the kind that have occurred in this case. It is not my task in this

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judgment to apportion blame, and I do not seek to do so. It is a matter of personal regret that commitments in July prevented me from commencing work on this judgment until the vacation.

The evidence in support of HM Custom‟s claim
Mr Oliver Sells QC appeared with Ms Linda Saunt for HM Customs. In their skeleton argument they described the relief sought by HM Customs as follows:

a declaration that the defendant has a 62% interest in the real property known as “Kevington”; a certificate pursuant to section 16 because the value of “Kevington” has increased since the time the confiscation order was made; the appointment of an enforcement receiver to realise the defendant‟s assets to satisfy the confiscation order. In oral argument Mr Sells accepted that it was open to Ms Way, despite the decision of Mr Justice Gage, to contend before me that the defendant had no interest in Kevington. No oral evidence was relied on by Mr Sells. Instead he took me to passages in the bundles prepared for the hearing, explaining each passage‟s relevance as he did so. This was a helpful approach. Below I summarise the material he took me to, and what he said about it. Mr Sells relied upon the prosecutor‟s statement prepared by Mr S.J Thompson, an officer of HM Customs, on 17 July 1998. Mr Thompson was not called to give oral evidence before me. His statement had set out reasons for thinking, among other things, that the defendant was the beneficial owner of Kevington. The market value was said to be £350,000. After deduction of £140,000 odd outstanding mortgage balance, the defendant was said to have an equity of £210,000. To this Mr Thompson added other identified assets worth £78,550.24, giving a total value of traced realisable assets in the amount of £288,550.24. As to the effect of what happened in the Crown Court, Mr Sells confirmed that his

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analysis involved an approach similar to that taken in HM Customs‟ letters of 6 and 8 March 2002. The funding for Kevington was said by Mr Sells to be the proceeds of the defendant‟s criminal conduct, routed in a complex and devious way to disguise its true origin. Mr Thompson in his statement had not limited the defendant‟s suggested beneficial ownership of Kevington in any way. I observed to Mr Sells that if the court drew the inferences he sought then the defendant‟s interest would be more than the 62% identified by HM Customs. Mr Sells replied that this was a matter for the court, which was not bound to limit the defendant‟s interest to 62%. At annex N to the financial statement was a copy of Ms Way‟s mortgage application in respect of Kevington. This was said to be false in that it stated that she had a substantial source of income – a business described as “M.Way Promotions” was said to have given Ms Way a net profit of more than £46,000 in each of the years ending July 1992, July 1993, and July 1994. I interpose here to say that in part, at least, this was accepted, for Ms Way admits that the business described in the mortgage application was fictitious. She says however that as administrator of her sister‟s escort agency business she earned substantial sums, enough to enable her to meet the mortgage repayments. The application form sought information about credit and charge cards, against which was written, “NIL”. This was said to be another respect in which the application was false, as was a statement that the balance of the purchase money was to come “from G Lingham‟s mother settlement.” At annex Q was a statement of Elizabeth Edith Mitchell, an executive officer employed by HM Inspector of Taxes. Ms Mitchell produced, among other things, copies of a statement by Miss Way to the Inland Revenue in February 1995 to the effect that she had “last worked 7 years ago”, and accounts submitted by Ms Way to the Revenue for the year ended August 1995 which indicated that “M. A Way Promotions” had income for the year ended 31 August 1995 of £4,900 expenses of £1,249 (including telephone of £62) leading to a net profit of £3,651.

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Annex P to Mr Thompson‟s statement contained a copy of a witness statement made by Brian Charles Downs. Mr Downs explained that he was a certified accountant who had run his own business called Downs and Co. for the last 34 years. Ms Way had been a client of the firm. He had never met her, as he had dealt with her only over the telephone. She had asked him in December 1994 to prepare some sets of accounts “as she needed to raise some money.” He prepared accounts for the years 1992, 1993 and 1994 on figures given him by Ms Way. He was not made aware that these accounts were being used to obtain a mortgage. This occurred in February 1995, which in fact was a month before Kevington was purchased. He was then in correspondence with the Inland Revenue, as a result of which he saw tax papers which indicated that her income was vastly different from those set out in the accounts prepared. When he raised this with Ms Way there was no reply. He then returned her bank statements to her. Annex O to Mr Thompson‟s statement contained a copy of a “matter cash card report” held on the files of Messrs Leigh Williams, the solicitors who acted for Ms Way on the purchase of Kevington. This recorded receipt of £28,000 on 3 February 1995 from “Miss M.A.M. Way.” That sum was then used to pay the deposit on 22 February 1995. Mr Sells said this was suspicious, as Ms Way did not have that sort of money. On 1st March 1995 a sum of £5,000 was recorded against the description “V.EL-KURD ON A/C”. A further sum of £110,929.75 was received on the same day and recorded under the description “N WAY/V. EL-KURD ON ACCT”. Mr El-Kurd was a convicted money launderer on a massive scale. Mr Sells invited the conclusion that the sums of £5,000 and £110,929.75 respectively constituted the proceeds of crime. Mr Sells acknowledged that also at annex O was a copy of a cheque drawn by Ms Way on Robert Fleming (Isle of Man) Limited at a branch in Douglas, Isle of Man, payable to Leigh Williams for the sum of £110,129.75. Thus it seemed that this sum had come from her account rather than an account of Mr El-Kurd. If, however, there had been a mistake by the solicitors in describing this as involving “V. El-Kurd”, Mr Sells said that in the past he had invited the solicitors to produce evidence of any such

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mistake, and that he now repeated that invitation. Mr Sells noted that Ms Way accepted that the sum of £5,000 had come from a cheque in that amount drawn on Barclays Westminster branch by “U EL-KURD T/AS NOTTING HILL EXCHANGE” dated 27 February 1995 in favour of Leigh Williams. She said this had been supplied by the defendant to pay legal fees. As to the cheque that Ms Way herself had drawn for the sum of £110,929.75, Ms Way said that the funds for this, and for the £28,000 used to pay the deposit, came from a combination of £130,000 contributed by Mrs Frances Lingham and her own funds. Mr Sells said that the bank account evidence contradicted these assertions and submitted that both Ms Way and the defendant‟s parents were used as conduits for the money which ultimately funded the purchase of the property. In this regard Mr Sells relied upon a statement of Brendan James Mooney, an officer of HM Customs, dated 3rd October 2003. I shall call this “Mooney 1.” This statement noted that in four witness statements in September and November in 1998 Ms Way contended that she had substantial earnings from an escort agency enabling the supply of funds at the time Kevington was purchased. By contrast, however, Mr Mooney identified that the defendant had been made bankrupt in February 1995, and accordingly had a motive to disguise the true ownership of Kevington. Mr Sells said that Kevington was just a part of the picture, and drew attention to annex S to Mr Thompson‟s statement. This contained a copy of a witness statement made by Gerald Havelock Sones. Mr Sones said he was a financial advisor and had run his own business called Havelock & Sones since April 1991. Prior to that he worked for Barclays Bank Plc as a financial advisor. He acted for the defendant in 1992/93. He was asked by the defendant to act for him again in 1994. It was clear to Mr Sones that cash was funding the defendant‟s business and he was unable to obtain a satisfactory explanation of the source thereof. A few months later he was contacted again by the defendant who asked whether “it would be possible to purchase a property in Tina Way‟s name”. They had a meeting, the defendant showed Mr Sones details of the property and asked if he, Mr Sones, could obtain a mortgage with Ms Way being the applicant. The defendant indicated that the deposit

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was not a problem but that Ms Way was a “full time housewife” who had not worked for a number of years. Mr Sones indicated that he was not willing to make a false mortgage application. This, said Mr Sells, was the birth of Kevington. Mr Sones had heard no more until after the purchase of the property, when the defendant explained that Ms Way had “been set up in a business” and that accounts had been prepared for her. Mr Sells turned to Mooney 1, para 3.14, which was said to show that on another occasion the defendant had attempted to purchase land in the name of Ms Way. Mr Mooney there explained that a financial consultant named Anthony Burkey in August 1997, with Ms Way, was named as one of the proposed purchasers of a sports ground in Eltham. The property cost £210,000 and a cheque for £51,000 was made out to Mr Burkey. The defendant stated in evidence at his trial that this property was to be purchased in the name of Ms Way and Mr Burkey as he was himself a bankrupt and therefore unable to purchase the property in his own name. Mr Mooney relied upon annex U and annex AI to Mr Thompson‟s statement. He added at para 3.15 that the prosecution said that the same reasoning was applicable to the purchase of Kevington and this was why it was purchased in the name of Ms Way. Annex W to Mr Thompson‟s statement was said by Mr Sells to show that in April 1995 the defendant purchased a BMW motorcar for £19,338.58, using a cheque drawn by Mr El Kurd in the sum of £19,575.93. A further purchase of a car was described at annex AA to Mr Thompson‟s statement. This comprised a witness statement of Charles Philip Gray Wardle. This explained that Mr Wardle had advertised his E-Type Jaguar. Three men had come to inspect it on 13 June 1996, introducing themselves as “Mr Gary Lingham,” his son and Mr Reynolds. They agreed a price of £22,000. Mr Wardle said that “Mr Lingham” took a carrier bag out of the boot which he said had £20,000 cash in it, and that he would have to change some Canadian dollars to make up the difference. They went to the bank, had the cash verified, and it was immediately paid into Mr Wardle‟s account. I interpose to say that the reference to Mr Wardle‟s visitors as including “Mr Gary Lingham” and “his son” suggests that Mr Wardle may have been confused about names. I have not seen any suggestion elsewhere that the defendant had a son.

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At annex AE to Mr Thompson‟s statement was an accountant‟s report on the financial affairs of Ms Way, prepared by Elizabeth Nichols ACMA. This showed that Ms Way had a modest legitimate income between 1991 to 1997 of approximately £8,500. Her offshore account with Robert Fleming was opened in February 1994 and was active until 1997. Mr Sells said that these were the years when the defendant was actively engaged in drug dealing. The defendant had been arrested in 1998, and all the money of any reasonable substance had flowed in during the 4 years prior to his arrest. This was not merely to the Robert Fleming account; the TSB had virtually £50,000. In fact the figures given by Ms Nichols were that the Robert Fleming account received deposits totalling £203,492 between 1994 and 1997, and that Ms Way‟s TSB account received deposits of £48,504 between 1991 and 1997. Mr Sells said that there was no way that the money in those accounts was Ms Way‟s money. She was simply used as a front for the laundering of proceeds of crime. The defendant wanted these proceeds put to a number of accounts so that their source would be disguised. The only person who had access to big sums at this time was the defendant. Mr Sells also added by reference to Miss Nichols‟s report that each of Ms Way‟s three children had a TSB savings account, and the total deposited to these accounts during 1997 was £13,562.41. The children apparently attended private school and the fees were paid by Mrs Frances Lingham. Mr Sells said that the total receipts thus identified were £274,413, of which Ms Ways legitimate income was a very small percentage. For the most part the source was cash. In this family, said Mr Sells, money was routed around various members of the family in order to disguise its origins, for both the defendant and his brother were convicted of drug dealing. Turning to what the defendant had put before the Crown Court, Mr Sells noted that in a draft reply to Mr Thompson‟s statement the defendant had asserted that both the Fleming and the TSB accounts were Ms Way‟s. He could not say whether he was responsible for any of the deposits shown in the Fleming account since he had not had management of it, but he could confirm that a deposit of £12,000 on 27 August 1997 and £6,000 on 29 August 1997 came as suggested by HM Customs from the sale of an E-type Jaguar and a Rolls Royce. At paragraph 5.14 he said he had no recollection

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of making any further deposit into the Fleming account, adding, “I cannot comment whether my wife made any payments to that account from the housekeeping monies I have given her over the years.” At paragraph 8.1 he denied that Kevington or his wife‟s insurance policies or the BMW were owned by him. He said he had no beneficial interest in Kevington whatever. As to gifts, the money HM Customs identified as gifts was provided to purchase the sports ground and originally came from the sale of the Jaguar and Rolls Royce. Those funds were in due course returned to him and were subsequently spent on living expenses following his arrest. Mr Sells noted that material put in by Ms Way in the Crown Court related to the escort agency business, and that this would be for Ms Way to deal with when she gave evidence. Mr Sells then referred to further statements of Mr Mooney: “Mooney 2” dated 7 April 2004 and “Mooney 3” dated 13 April 2005. Mooney 3 noted that the value of Kevington was estimated at £700,000 to include the interior and exterior of the property. It also referred to trading and profit and loss accounts for Frederic Lingham prepared by Downs and Co. Mr Mooney noted that Mr Frederic Lingham had said in a signed witness statement of 15 August 1998 that on 5 October 1994 he gave his wife £100,000 in repayment of a loan and on 5th December 1994 gave her a further £10,000. Mr Mooney said that the accounts produced by Downs and Company indicated that Mr Frederic Lingham could not possibly have earned enough money to pay such a large amount to Mrs Frances Lingham, £100,000 being almost double his net profit for the relevant year. Mr Sells noted that Mooney 2 produced the accounts for M.Way Promotions (which Ms Way had provided to the Woolwich Building Society in order to obtain the mortgage). For the year-ended 31.7.92 these showed a profit of £46,904. The Fleming account statements were produced by Mooney 1. That for the quarter ended 31 December 1994 showed receipt of a transfer from F.A Lingham on 23 December 1994 of £130,000. Funds going out included £28,000 on 3 February 1995 and £110,929.75 on 3 March 1995.

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Overall, Mr Sells said that the defendant had over many years failed to comply with the order of the Crown Court. He had no good reason. No doubt he is only moderately deterred by the order of 30 months imprisonment imposed as an alternative. Maybe he had hoped that the matter would go away, but the reverse had occurred. HM Customs had pursued the matter for a number of years and seeks a much larger order against the defendant as a result of increase in value of the property. It would be unjust for him to benefit in the rise in value of the property. A mere requirement to pay £200,000 in those circumstances would be no penalty. The court should not be persuaded by arguments that it was unfair to penalise a „common law‟ wife. The evidence was that they together contrived to purchase this property in her name to avoid it being in his name. He invited the court to conclude that the source for the balance of the purchase price was unlawfully obtained money routed through various people to disguise its origins.

The Evidence for the Intervener
Mr Timothy Higginson, who appeared with Mr Niran de Silva for Ms Way, called four witnesses. The first witness was Joe Scicluna. His witness statement, which stood as his evidence in chief, explained that he had always treated Ms Way as a cousin. Ms Way‟s stepfather was the brother of Mr Scicluna‟s mother. Mr Scicluna had known Ms Way since she was three years old. He said he had helped her with mortgage repayments since 1998, and identified by reference to a schedule specific payments that he had made. He added that he had helped Ms Way and her young family financially prior to the defendant going to jail, and that he continued to do so. These payments were cash payments and he kept no record of them. He could not say how much he had given over the years. He continued to contribute to Ms Ways mortgage repayments, and he had helped, and continued to help, Ms Way and her family financially because he wanted to, and importantly because she was family. Under cross-examination by Mr Sells, Mr Scicluna said he had lived at his current address for about seven years, having bought the property for £60,000 odd. He had used a mortgage, and he had later re-mortgaged, so that the total debt was £100,000.

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His monthly repayments were £1100. He was now 61. His business, now and in 2000, was the export of lorries and spares. He had been in that business for a long time. Finances had been good in 2000, but were not so good now. He had an overdraft with the bank, but exceeded it, and for that reason re-mortgaged the house. He was nevertheless able to give cash to Ms Way and her children - whenever he saw them he gave them money. If he had £200 in his pocket he gave it to them. Since the time when the defendant went to prison he would give them about a hundred pounds a week. This was given in cash, because it was in his pocket. He did not keep records of his personal money. Before the defendant went to prison, Mr Scicluna said that whenever he saw them he treated the kids. He did not give any other real financial support at that stage, and did not know if the defendant was flush with money before he went to prison. Ms Way had a husband and she did not need Mr Scicluna. As far as Mr Scicluna was concerned, the defendant had his own business, Ms Way was not working and Mr Scicluna was not living there. He supposed that the defendant had no money problems. His bank statement at page 174 [4/53] showed a payment of £296 by cheque on 3rd October 2000. This was him supporting Ms Way, every month paying part of her mortgage. At that time his overdraft limit was £5000 and he was overdrawn to the extent of £9401.13. Mr Scicluna accepted that it looked as though he was short of money. He did not have the actual cheque for £296. He was referred to a spreadsheet annexed to his statement setting out payments into the mortgage account at Woolwich Building Society [4/66]. As to the evidence for that, he had produced his bank statements, and he had been through his cheque stubs. He did not have the cheque stubs in court. He had made the cheque out to the Woolwich Building Society. He had no record of payments shown as cash on the same schedule, it was just his memory. There was no supporting documentation for any of those payments. A cash payment of £250 for 23 November 1999 on the schedule referred to a paying in slip as a supporting document, but he did not know what that was. A reference for a cheque payment of £308 on 22.06.01 stated “J/S P/I/S”, but he did not know what that meant.

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Mr Scicluna said he did not do business with the defendant. The relationship with him was through Ms Way and the children. They lived in Kevington. When the defendant went to prison they were youngish children. She was a housewife and a mother. He had re-mortgaged his house in 2002 because the business was not so good. He had not supported the family before the defendant went to prison, but had supported them after the defendant was in prison. In the last two to three years his own finances had been “pretty rocky”. The second witness called by Mr Higginson was Ernestine Farrugia, Ms Way‟s mother. Her witness statement, which stood as her evidence in chief, explained that she was married to Vincent Farrugia who died in 1998. While her husband was alive they lived in the east end of London and also in Malta where they owned a house. Since the time when the defendant went to jail her husband had looked after Ms Way and her children financially. After his death she herself had done so. She could not ascertain how much her husband gave to Ms Way to support her but it was many thousands of pounds over a number of years in cash and sometimes by cheque which he paid in to Ms Way‟s Robert Fleming Bank account. She had no record to support these cheque payments, but knew as a fact that he had done so. Normally they did not keep a record of cash they gave to Ms Way, there was no reason why they should and in any event it was not a loan to her. Before the defendant went to prison her husband had also given cash to Tina to support her since the defendant appeared not to be helping his young family financially and appeared to be engaged in motor racing which took him away from the family. The witness statement explained that before 1998 Mrs Farrugia had discussed with Ms Way the possibility of leaving the defendant and bringing the children to Malta to live. Ms Way had been experiencing a lack of stability in her life and she wanted a stable home in which to bring up the children. Mrs Farrugia‟s statement identified three payments which she had made into Ms Way‟s Woolwich Building Society mortgage account. The extent of her financial help included re-mortgaging her own home to pay arrears of school fees which had built up over a period. The school had obtained a judgment against her and were threatening to sell her property, and as Ms Way‟s solicitors were dealing with the matter a cheque

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for £14,000 had been made payable to them to settle these school fees. Mrs Farrugia gave further oral evidence in chief. She said that they had always worked very hard and Ms Way had worked with her “dad” [that is, her stepfather Mr Farrugia] since she was eleven. He had helped Ms Way especially when the defendant went bankrupt. He mostly gave her cash. He was Maltese. They were up at 5 a.m. each day for their builders‟ merchant business. They had houses which they sold, so they had money. He bought some things in Malta but most of it went on the children. Any time Ms Way needed some money all she had to do was to ask “her dad.” He died on 3 October 1998, when his nephew Mr Scicluna took over. Under cross examination by Mr Sells, Mrs Farrugia clarified that her husband had been looking after the children both before and after the defendant went into prison in 1997. What she had said in her statement about Ms Way needing money to support her before the defendant went to prison was correct. The need arose because they were not always together. Neither she nor her husband saw the defendant awash with money. There was quite a lot of time when he was away. All along Ms Way got money from “her dad,” having worked with him since the age of eleven in the builder‟s merchants. Mrs Farrugia thought Ms Way needed money for the mortgage. Mrs Farrugia then said that before the defendant went to prison her husband gave at least three hundred pounds a month for the children, to be saved for the children to be sent to university, and also money for Ms Way. As to where in her statement the £300 was mentioned, she replied that nobody asked her how much the children got. She did not know how many thousands of pounds her husband had given Ms Way. She had been there when he gave it to her most of the times, but, “you don‟t look at what you give your child.” Mrs Farrugia never saw that there was lots of money. While the house was a big detached house which had cost £280,000 in 1995, they were not “doing all right.” She and her husband had property in Malta, the children and Ms Way were coming to Malta, and so the defendant‟s mother gave Ms Way money for this house. She had heard this from both Ms Way and the defendant‟s mother. Before the defendant had been to prison there had been cheques written to the school,

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and since the defendant went to prison she had made payments, sometimes in cash. She confirmed that the three payments to the Woolwich account were in November 2001, February 2002 and April 2002. She had re-mortgaged her home in May 2003 raising £30,000. This was to pay the school fees of £14,000 and the remaining £16,000 she had spent. As to financing the mortgage payments, her daughter, Colina, lived in her home, which she had bought in 1999. Another daughter, Maria Tiffany, had been there for a short time. It had been bought from the council, and she had been there four or five years before buying it. Mrs Farrugia then said that she had been there since before 1991. She did not know how much she paid for it. It was a small flat on the ground floor. She had not been helping the defendant, she had helped her daughter and grandchildren.

As to the sources of the money to help out, they had had a builders‟ merchant business which they sold, and when her husband died there was money from that. She added, “Your children are separated from their spouses, they need help.” The defendant was not with her daughter when Kevington was bought. Otherwise it would not have been bought – Ms Way had been due to come to Malta with Mr and Mrs Farrugia. In reply to me, Mrs Farrugia explained that her husband had lived with her in the ground floor flat when they were in England. The builders‟ merchant business had been sold around 1988 or 1989. After that they were “off and on” between Malta and England. When her husband died she had inherited. She then provided money to their four daughters and their four sons. As to the Fleming bank account, she did not know the name “Fleming.” She was not sure if it was in the Isle of Man. This led to further cross-examination by Mr Sells. Mrs Farrugia explained that she gave roughly £4,000 or £5,000 to each child. The builders‟ merchant business in England had been sold to a builders‟ yard. In re-examination, Mrs Farrugia said that at the time the house was bought there was no relationship between the defendant and Ms Way. She added, “We talked about putting the children into international school in Malta, they were on and off separated

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for quite some time before the house was bought – I don‟t think the defendant was ever permanently there, he did not have clothes there, they were estranged.” In answer to me, Mrs Farrugia explained that Maria Tiffany had an escort business. She was aware that Ms Way was working there, doing office things - administration, running the office and paying telephones. That was in 1993 to 1995. Maria had shut down the agency, but Mrs Farrugia was not sure when. In further re-examination, Mrs Farrugia said that Mr Scicluna handled her late husband‟s estate after his death. For any advice they went to him. It might have been £12,000 distributed to each child. At this point Mr Scicluna was recalled. He stated that he distributed £12,000 to each child. This was not pursuant to the will, it was what Mrs Farrugia wished. He had not been an executor. After Mr Farrugia died, they had had a meeting and all agreed that Mr Scicluna would handle the matter. Mr Farrugia left the entire estate to his widow. It was Mrs Farrugia‟s decision that each child would get £12,000. It took about six months – it would have been 1999. It was not given all at once, it was £2,000 here, £3,000 there. It was given in cash. All the children were paid in the same way. There had been no record of payments to the children. The amount was nearly £100,000 – his uncle had a row of houses which he sold. The money all came from Malta. People came over and brought it. They had sold some garages in Malta. He, Mr Scicluna, was always dealing in cash. His uncle‟s assets in this country were finished. The will was proved in Malta. Mr Scicluna personally handed the money over to each child, not in brown envelopes. The third witness called by Mr Higginson was Ms Way herself. Her witness statement stood as her evidence in chief. She explained that she had been born in Vienna, Austria in 1960 and had moved to England with her mother at the age of three. Since that age she had treated Mr Farrugia as her father although he was in fact her stepfather. He died approximately six years ago in Malta, his country of birth. He supported Ms Way and her family both emotionally and in material terms, giving the children generous gifts whenever he saw them - which was quite frequently. He split his time between Malta and England, and he and her mother were always together

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until his death. They were a close-knit family, which extended to other family members, who treated her as a blood member of the family - in particular Mr Scicluna, who was much older than Ms Way and took his younger cousins to the beach and so forth. The defendant was two and a half years older than her. She had met him when she was seventeen and living with her parents. They knew each other for several years before starting living together, and subsequently moving to a property the defendant had purchased. This was a butcher‟s shop with residential flat above it. While they lived there two children were born, Tiffany on 4 September 1988 and Storm on 10 November 1990. They moved from there to a property owned by the Lingham family on Christmas Eve 1990. This was stressful as Ms Way had two infant children and had had no time to make proper preparation for Christmas day. She was told the rent of the new property would be equivalent to the monthly mortgage repayments of £1,000. Ms Way‟s witness statement then turned to deal with the purchase of Kevington. She said that her relationship with the defendant began to deteriorate for a number of personal reasons, and she felt insecure in her living arrangements for herself and her children. A third child, Phina, was born on 10 August 1993. Ms Way said in this regard, “I constantly felt that we needed our own property because circumstances could change at anytime and we would be asked to leave the property we were renting.” From late 1993 onwards Ms Way had been working for her sister‟s escort agency, and had loaned her £2,000 to assist with initial advertising. It occurred to her that as she was now working, “rather than pay rent of £1,000 a month it would be better to purchase a property for us to live in.” Ms Way continued that in 1994 she was at a low point in her personal relationship with the defendant. That relationship was not improving, particularly as he was unhappy with the hours she was working at the agency. There was the constant worry of not having proper security or independence, and she simply told the defendant she could not take it any more and thought the best thing for the children and herself was

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to move to Malta. She had a close relationship with the defendant‟s mother, Frances Lingham, and felt she could always speak to her on a „woman to woman‟ basis. She told Mrs Lingham that she had had enough of her personal circumstances with the defendant and had decided to move to Malta with her children to live with her family. She had, of course, discussed this possibility with both her mother and father who supported and encouraged her decision. Mrs Lingham was upset at the thought of losing the grandchildren and also that the defendant might not see them. Ms Way‟s statement added; “Mrs Lingham was upset at the thought of losing her grandchildren and also that Gary might not see them. She was keen to have us all together as a family unit but nonetheless understood my own concerns. She made a very generous offer to assist me in purchasing my own property which would enable me and the children to remain in England. She was hopeful that Gary and I would get back together again.” Ms Way explained that she started looking for properties and discussed Kevington with Mrs Lingham, who was very happy with it. An offer of £280,000 was accepted, and Mrs Lingham contributed £130,000 which was paid into Ms Way‟s Fleming account. Mrs Lingham‟s main purpose in making this contribution to the purchase of the property was to ensure the children remained in England and to hope that Ms Way and the defendant would get back together again. The next section of Ms Way‟s statement dealt with finances. She worked for her sister until either 1996 or 1997, and was paid in cash, it being largely a cash business. She worked as and when she could - this was approximately four times a week. Part of the cash wages were paid into Ms Way‟s TSB account and part were kept at home as savings. Ms Way said that she applied to the Woolwich Building Society, knowing she could afford a mortgage of £140,000 from her work for her sister. The mortgage broker guided her as to financial material that was required. Her application was inaccurate only in so far as she was asked to produce accounts as a self-employed person. It had not been inaccurate as far as her ability to pay the mortgage was concerned irrespective of what the account actually showed. Her sister‟s escort agency business was a lucrative cash business. From her point of view it really did not matter a jot

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what the accountant who prepared her account said as to what he did or did not see or what material he had to prepare the accounts. Her primary objective was to obtain a mortgage to assist in buying Kevington and she achieved that objective. The mortgage was a fixed rate interest only mortgage for three years, and provided £140,000 to purchase Kevington. In addition, she had the gift of £130,000 from Mr Lingham, and her own resources, money paid into her Robert Fleming account, “which included money I earned from my promotional work.” The defendant gave her a loan of £5,000 to assist with legal expenses, as she did not have enough money in the Robert Fleming account as at 3 March 1995 to cover this aspect. She did not know where he got the money from. He gave her a cheque payable to her solicitors. The purchase was completed in March 1995. The defendant was made bankrupt in 1994, and Kevington did not form part of his assets in his bankruptcy proceedings. Ms Way said that in February 1994 she transferred £6,000 from her TSB savings account to her Robert Fleming bank account. She had been advised to open this account by Mr Sones, the defendant‟s financial advisor, on the basis that Robert Fleming accounts were the only current accounts paying interest. It was a cheque only account, meaning she could only pay money in by cheque, and she did so in April 1994 when a further £6,000 of her money was paid in. She earned money from doing promotional work for various companies, at the same time or shortly after her part time work with her sister‟s escort agency. She had done this work after Kevington was purchased, and the income she made was paid into the Robert Fleming account and used towards mortgage repayments. Ms Way said she began to receive income support and family allowance in the summer of 1998, and continued to do so. In 1998 she received vouchers for income support, which she cashed at the post office. She did not bank that money. She also received housing benefits at about the same time which went towards paying part of the interest arising on the mortgage. The mortgage started at £671.86 per month, but by the time she received housing benefits it had reverted to a variable rate, and by November 2000 her monthly payment was £928.67. The benefits were paid straight into the Woolwich account, and she continues to receive this assistance.

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The balance due on interest payments was met by Mr Scicluna, who continues to do so. In this regard Ms Way referred to the analysis which had been annexed to Mr Scicluna‟s statement. In relation to the Robert Fleming account, Ms Way said that her solicitors “matter cash card report” (which I shall refer to as “the solicitors‟ ledger”) had given a wrong description of a payment of £110,929.75 logged on 1 March 1995. The description given by the solicitors was “N WAY/V.EL – KURD ON ACCT.” Ms Way said this was in fact part of the £130,000 received from Mrs Lingham. Ms Way had written a cheque in favour of her conveyancing solicitors for the £110,929.75 on her Robert Fleming bank account. She had not received this amount from anyone known as El–Kurd. As to a further entry for £5,000 logged on the same day with the description “V.L–KURD ON A/C”, this was the loan from the defendant. He gave her a cheque payable to her conveyancing solicitor. She had never met Mr El-Kurd or had any dealings with him. It was a straightforward loan to help her meet her legal expenses in relation to her purchase of the property. She did not know where the defendant got the money from because she never asked him. In 1997, when the defendant was still bankrupt, she had given him banking facilities. For example, payments credited to the Robert Fleming account on 27 August 1997 of £12,000, £1,000 and £6,000 respectively represented cheques given to her by the defendant as proceeds from his motor car sales. On 5 November 1997 he asked her for a £15,000 cheque in partial repayment of the total of £19,000, with the name of the payee blank. She signed such a cheque, completing the amount in figures, and gave it to him. Ms Way produced an analysis of the Robert Fleming bank account based on recollection. She could not produce vouchers as HM Customs had taken all documents away when they raided her property in 1997. Where she was unsure about the source of the payment it was likely that some of those amounts were paid in by her father. She could not obtain papers to support this because he had died six years ago in Malta. The credit of £9,800 on 3 January 1997 was a deposit from the defendant, repaid on 24 February 1997 as £10,000 payable to Cornhill Insurance. There was a premium on this insurance policy of £10,000 debited once a year. In fact, said Ms Way, a sum of £10,000 debited to the account on 19 March 1996 was

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accounted for by £5,000 which the defendant put into her account on 29 February 1996 and a £5,000 repayment of the defendant‟s loan to her. It was probable that the defendant‟s £5,000 deposit on 29 February 1996 represented the proceeds of on of his car sales. A discrepancy in total reached by HM Customs and herself was £6000 shown on 10 February 1994, which was money from her TSB account. Ms Way also produced an analysis of payments made into her TSB bank accounts. These consisted of shared dividends, revenue from the escort agency, payments from her parents, and other payments where she was unsure of the origin of the money, in part at least as a result of the passage of time. Turning to other sums paid by the defendant, Ms Way said that from time to time he gave the children pocket money which at times was used for minor items such as groceries. He did not contribute towards even the general maintenance of Kevington. He bought a BMW car for her, but never explained any of the circumstances relating to the purchase of that car. She still has the car which is now over 10 years old and in her view has very little value. Generally, Ms Way said she failed to understand how the defendant could be said to have an interest in Kevington. She had been present, but un-represented, when the confiscation order was made in the Crown Court. The only part she took in those proceedings was as follows: To the best of her recollection, Kevington was not spoken of as forming part of the defendant‟s assets. The defendant‟s barrister told her that HM Customs wanted the defendant to agree to a confiscation order of £200,000. She knew that his brother had reached agreements with HM Customs about the level of his confiscation order. She asked the barrister how the defendant would pay any sum. She recalled enormous pressure on the defendant to agree the amount £200,000 because his brother had settled and it was said the judge would take a dim view if the defendant could not agree a figure as well. Because the defendant accepted he had no interest in Kevington it was never mentioned in these discussions. She was the one who insisted on knowing how the

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defendant would meet his confiscation order when he had no assets. There was no proper basis for the defendant to agree to the £200,000, which he did, given that his assets were not equivalent to that sum. She added, “I believe that it was hope his own family [not me] would find the money for him.” Ms Way said the defendant‟s imprisonment was affecting his children and her relationship with them, and she therefore decided to ask the defendant whether he would accept her offer to sell her house and pay off his confiscation order. He had eventually agreed to this, and she instructed solicitors to begin negotiations with HM Customs. At this time Kevington was still subject to the freezing order. She insisted that the £200,000 must be in full and final settlement, as she did not want HM Customs to interfere with any new property she bought for herself and her children. She said she was shocked to discover that the defendant was said to have an interest in the property. Under cross-examination by Mr Sells, Ms Way explained that in 1994 she was living at “The Homestead”, owned by the defendant‟s brother, Dene. Having moved in on Christmas Eve 1990, she and the defendant lived there for nearly 5 years, paying rent of £1,000 per month. They were a family unit, but at The Homestead it was not all the time with the defendant. Mr Sells showed Ms Way a statement (2/8/15) which she had signed on 20th September 1998. Among other things, this said, “Prior to 1995 when I moved into “Kevington” I was living with Gary Lingham at “Homestead”…” Ms Way said she could not remember this statement. She agreed that this sentence did not suggest that she and the defendant had split up. However, she said it was true that she and the children alone were going to move into Kevington. When asked about her mortgage application Ms Way replied that a lot of people lie on their mortgage applications. She was not happy about it but it was the only way for her to get a house on her own. She bought a £250,000 house because the market was at the rock bottom and it would be a good investment. She had always been brought up in big houses and Homestead was a big house. Kevington was a four bedroom

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house, but it was not a mansion. In order to make the mortgage application she spoke to Mr Burkey. He dealt with it. He did not know what she earned, but he arranged for the accounts to be done, arranged for solicitors, filled in the form, and she just signed it. She always had credit cards and had told him this. He said, “This is what you do”, and she had signed it. She did not care about it, she knew she could repay it. He said that so long as the repayments were made that was OK. In 1995 the repayments were £670 per month. Mr Sells referred Ms Way to a profit and loss account entitled, “ MS M WAY T/A “M A WAY PROMOTIONS”, which had been submitted by Downs and Co, to HM Inspector of Taxes under cover of a letter dated 26 November 1996 (1/4/135). This recorded for the year ended 31 August 1995 that Ms Way had achieved a profit of £3,651. Ms Way said that Mr Downs had produced this, and it was not right. She remembered that she had a tax demand. She referred to an item of expenses, showing telephone expenses at £62, and said that this was not right. As to the income figure of £4,900 for work done, Ms Way could not remember saying to Mr Downs that she had had such an income. The only time that she met him was at a charity ball. She had had a tax demand, and Mr Burkey dealt with it. When shown a copy of an Inland Revenue document referring to herself as the taxpayer and showing a profit for the year ending 5 April 1995 of £2,130 Ms Way said she presumed that she had been declaring a modest income for that year. She maintained that nonetheless she could afford the mortgage because she had income from the escort agency. The defendant had his own businesses. He had gaming machines, he had chauffeured limousines. She had nothing to do with his businesses, but knew of them. She did not know if they dealt in cash. He had a business buying horses with Mr Sones from Ireland. Mr Sells referred to a passage from the witness statement of Mr Sones in which he said that the defendant contacted him by telephone and asked whether it would be possible to purchase a property in Ms Way‟s name (1/4/148). Ms Way said she found it strange that the defendant should say he wanted to do this. It was Mr Sones who had suggested that the defendant go bankrupt. She could not disagree with this passage as she was not present. As to her being a housewife, when she first went motor racing with the defendant

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when she was 20, Mr Sones was selling tyres out of the back of a van. She knew him from working at the race meeting. She did not want him to know about her working in an escort business. Mr Sells referred her to an Inland Revenue document asking questions about her self-employment. This stated that she last worked 7 years ago, and Ms Way accepted that she signed this document on 22 February 1995 (1/4/124). Turning to the money used to buy Kevington, Ms Way said that this had three sources – herself, Mrs Lingham and the building society. She herself put around £12,000 in £6,000 from the TSB account and £6,000 from the Fleming account. The opening statement from the Fleming account (3/14) showed an initial cheque deposit of £6,000. Ms Way said she had £6,000 in cash from the escort agency. She saw Mr Sones, probably in December 1993, perhaps before. She had heard about accounts with interest and he suggested this one. She did not understand the significance of it being in the Isle of Man, apart from it giving high interest. At that time ordinary banks did not pay high interest - current accounts did not pay interest at all. A further cheque deposit of £6,000 on 28 April 1994 came from the TSB account. Ms Way said she moved it for the interest. The statement showed interest of £92 for three months which was good interest. At that time she was earning quite a lot of money. She was not declaring it to the authorities. It was all cash under the counter with no records. Ms Way was taken to a passage in an accountant‟s report prepared by Elizabeth Nicholls ACMA referring to funds deposited by Ms Way (1/4/198). As to funds deposited in 1994, Ms Way said that the money came from the escort agency, Mrs Lingham, and interest. In 1995 the money came from the agency, and they were cheque payments. Mr Sells took Ms Way to an invoice from “M.A.WAY PROMOTIONS” addressed to “ Sportswide PR & Marketing” dated 1st April 1995, referring to an agreed fee of £2,000 for PR and promotional work from 1st March to 1st April 1995 inclusive [annex AF, 1/4/207]. Ms Way accepted that she typed that invoice. It did not show that it had been paid.

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Mr Sells showed Ms Way an analysis prepared by Ms Nicholls (annex AE, 1/4/204). This showed a deposit to the Fleming account on 29 February 1996 of £555 and a further deposit of £5,000. The deposit of £5,000, said Ms Way, concerned cars that the defendant sold. He did not have banking facilities and he was paid by cheque. In reply to Mr Sells, Ms Way said she presumed that he had to declare earnings to his trustee and bankruptcy. She was not intentionally using the account to hide money from his creditors. She did not think of it in that way. She was probably providing him with banking facilities. In hindsight it looked as though he was hiding money from creditors. She did not understand about bankruptcy. At the time she did not know this was hiding. In reply to a suggestion that effectively the Fleming account was the defendant‟s account, Ms Way disagreed. She had let money go through her account because he did not have a bank account, and this had happened two times. She accepted that although she was shown as the account holder, he had used the account for banking cheques and for taking the money out. Mr Sells said that in 1996 the schedule showed £25,095 was paid in. Ms Way replied that the £5,000 on 29 February 1996 was the defendant‟s. She had no documentation for that or other deposits. Mr Sells suggested that in 1997 £33,000 was paid in. In reply Ms Way said a payment in relation to a car was for the defendant. Exhibit “MAW8” to Ms Way‟s statement was an analysis of funds deposited into the Fleming Bank account, taken from HM Customs‟ own analysis. According to “MAW8” between 10 February 1994 and 29 August 1997 a total of £34,936.48 of such funds had come from Ms Way herself. She said these were her own earnings, but she had no documentation to support this. As to a total of £33,800 which according to “MAW8” had come from the defendant, she had no documentation for that. Sums of a total of £10,755 appeared in a column headed “unsure”, and for those sums Ms Way thought documentation might be in Malta. As to the lack of documentation, HM Customs had raided her house and she had asked for documents through her solicitors. She had not had back everything that HM Customs had taken and she never received a list of what was taken. Mr Sells then took Ms Way to the solicitor‟s ledger (1/4/96). The first payment

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received by the solicitors was logged on 6 January 1995 under the description “M WAY ON ACCT.” Ms Way did not know whether that had come from the Isle of Man. She said that a payment of £28,000 logged on 3 February 1995 had come from the Isle of Man. As to the cheque for £5,000 drawn by Mr El-Kurd and logged on 1 March 1995, she received it from the defendant and gave it to her solicitors. She presumed that she had told the defendant the name of the solicitors as payee. Mr Sells said he did not suggest that Ms Way knew that Mr El-Kurd was a money launderer. What he suggested to Ms Way was that the defendant knew this. Ms Way replied that she did not know. She said that she had talked to the defendant since these events, adding “I have gone to town on him and we have had arguments, I think the whole thing is bloody ridiculous, him being involved at all.” She accepted that she now knew what he was doing, involved in a very serious criminal enterprise. As to the determination at the confiscation hearing that the defendant benefited from £500,000, as far as Ms Way was concerned it was a fine. The defendant had agreed this figure because he was under pressure from his barrister. Mr Sells, accepting that Ms Way did not know about the origin of the £5,000 at the time, suggested that the £110,929.75, logged by the solicitors on 1 March 1995 as “ON A/C N WAY/V.L-KURD” was following the £5000 payment. Ms Way replied that she did not say “following”. She said the £110,925.75 had nothing to do with Mr El-Kurd. There was no “N WAY.” As to the entry “/V. EL-KURD”, Ms Way did not know, she did not speak to the solicitor except when Mr Burkey introduced her to him. Mr Burkey was not a close friend of the defendant. He was a friend of a friend who later became a friend of the family. He was an older gentleman, and was their financial advisor. She explained that he was a friend of the defendant‟s family, not her own family. He had put the whole sports field deal together. Ms Way said that what happened in relation to the £130,000 was that she was going to leave for Malta with the children as she had had problems with the defendant. Mrs Lingham said, “If I help you, will you stay in England?” Ms Way added, “It was gift, on the basis that if I went to Malta or married someone else then I would give her the money back. If I was to sell the house, in other words, I wouldn‟t take the money to Malta, and I wouldn‟t move someone else into the house.”

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Ms Way said that the gift was written down in the sense that she asked to come to the Woolwich Building Society in Bromley to sign a declaration that Mrs Lingham was giving her a gift. This declaration was not in the court bundle. Mrs Lingham said it was her money. She did not say how she had it. Ms Way said she probably asked Mrs Lingham, but then said that she did not question where Mrs Lingham got money from. When Mr Sells asked if others knew, Ms Way replied that he would have to ask Mrs Lingham that. She said she was close to Mrs Lingham, but not to others. She presumed that the defendant knew but she did not talk to him about it. She wanted to move out on her own. Ms Way said that the defendant came to Kevington spasmodically, he came to see his children. He loved his children. She did not know if she told the defendant about the money from Mrs Lingham. At the time she did not. She asked rhetorically, “Why should I? He was not going to be moving into my house. He was there a couple of days a week or whenever. He did not live there permanently, he did not pay my bills, he did not decorate my house. He did not mow the grass. He wasn‟t a husband as such.” When Mr Sells suggested that Ms Way was seeking to distance herself from the defendant, Ms Way replied, “We are distant now, we were pretty distant then. How troubled a relationship is, even if you hate each other, you always have your children in common. He did not use the house as his place.” Mr Sells suggested that when the house was searched relevant papers were found. Ms Way replied that she was not there when the house was searched. Mr Sells then referred Ms Way to a statement of Sarah White [1/4/32]. In this statement, which was dated 18 November 1997, Ms White said that for the past four years she had been employed by Sue Lingham as a care assistant at The White House, Ordington. For approximately the last year she had been acting as a go-between delivering mail to a Gary Lingham. This mail arrived at The White House once or twice a month in the name of Kelly O‟Gorman. The letters normally took the form of mobile phone bills. At the request of Mrs Sue Lingham she delivered these letters to the home of Tina Way in Orpington. Three times a week Ms White went to that address as a cleaner. The last such delivery took place on Monday 18 November 1997. Asked to comment

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on this, Ms Way said she recalled Sarah White, but had never received the defendant‟s mail. Mr Sells then referred to the prosecutor‟s statement made by S J Thompson on 17 July 1998 for the purposes of the confiscation hearing. This statement, under the heading “Personal Background” said (1/4/6) that the defendant lived in a substantial five bedroom semi-detached property in Chislehurst Kent. In so far as that was saying that the defendant lived at Kevington, Ms Way said that it was wrong. The defendant did not have his things at Kevington when it was searched. He lived with his mother. Mr Sells said he would come back to what was found on the search. He took Ms Way to the statement which had been made by the defendant in response to Mr Thompson‟s statement, and referred to a passage in paragraph 4 stating, “The defendant makes no specific comment in relation to assertions made in this statement by Mr Thompson in relation firstly to “Kevington”…” [2/8/7]. Mr Sells said that this did not sound like a ringing rejection of Mr Thompson. Ms Way replied that she did not understand. Mr Sells then referred Ms Way to her statement of 24 September 1998, in which she estimated that her earnings from the escort agency from late 1993 to the end of 1995 were in the region of £45,000 to £50,000 (2/8/19). He asked Ms Way where she got that figure. Ms Way replied, “Out of the hat. I should have said more because then it would have covered everything.” I asked Ms Way what she meant by that. She replied, “The next question is going to be, the bank statements don‟t show it. Assessing how much I earn was difficult, so I said £45,000 to £50,000, it could have been more, it could have been less.” In reply to Mr Sells, Ms Way accepted that nothing in subsequent pages of the court bundle showed how much she earned. There were no tax figures. She added, “We did try to go legal and again got advice from Mr Sones. His answer was that this was predominantly a cash business, and he said all you are going to do is give yourself a bigger headache. He advised Maria Tiffany - I did not want him to know I was involved. I was not principally answering the telephone, I arranged the advertising.” As to the suggestion that it was a lot of money for secretarial work, Ms Way replied that it was her sister‟s business and she was helping.

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Mr Sells then took Ms Way to a letter written by Mr Patrick Roche, a solicitor acting on her behalf, to HM Customs on 16 November 2000. The letter read as follows: “ Re: Gary Lingham/M A M Lingham also known as M A M Way ‘Kevington’ Orpington Road, Chislehurst, Kent I refer to our telephone conversation this afternoon, and confirm that we are instructed by Mrs Way in this matter. Mrs Way contemplates the sale of the above property, and which we understand is subject to a Order/Charge in favour of the Customs & Excise Office. We would be most grateful if you could please let us have a copy of the Order/Charge to be removed. Thank you for your co-operation.” (3/40)

Ms Way agreed that she was willing at that time to sell Kevington and pay off the £200,000. Mr Sells pointed out that on her case the defendant had put nothing into the house, and so she was giving away her own money, and he asked Ms Way what she was getting in return. Ms Way replied that it was done for the sanity of herself and her children. She explained, “My six year old woke up from nightmares, saying, “I hate you mummy, why don‟t you pay daddy‟s fine and let him come home?” It was affecting my relationship with my children and still is.” Mr Sells suggested another reason, namely, that the defendant had put a lot of money into the purchase and he wanted to get at it in order to settle his debt. Ms Way replied, “No. I wanted the children to have their dad.” At this point she broke down and the hearing was adjourned for a short period. When the hearing resumed Mr Sells referred to what Ms Way had said in her witness statement about affording the defendant banking facilities through the Isle of Man. She had not sought to disguise what the defendant was doing with his money, but she accepted that the defendant was disguising it.

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Mr Sells then referred to exhibit “MAW6” to Ms Ways statement, the spreadsheet of payments into the mortgage account at Woolwich Building Society (3/17). This showed (3/20) that Ms Way had £28,158.71 housing benefit. Mr Sells asked if Ms Way had told the housing benefit people of other payments. Ms Way replied, “No, that would have to be paid back after I sold the house. I would like to pay it back, move on, work and bring my kids up. For the last seven years this has been going on and it has destroyed me and my children. I‟ve been going to solicitors about the Restraint Order to be lifted from my house from the beginning.” Ms Way said that if one put aside the £130,000 from Mrs Lingham, about half the remainder of the money that went through the Fleming account was from Ms Way herself. She did not accept that the defendant put money into the house. The money that he put into the Fleming account went out again. The £130,000 was the defendant‟s mother‟s cheque, and was not his money, it came from her bank account, Ms Way had not put it in there. She refused to agree that the Fleming account was as much his as hers. As to the suggestion that the defendant had a lot of cash, Ms Way replied that there were only cheques in the Fleming account. In reply to questions from me, Ms Way said that a lady at the Woolwich Building Society had asked her to bring Mrs Lingham, because she wanted to know that the £140,000 which was to come from Ms Way was not in fact a loan. She and Mrs Lingham had seen this lady, she thought it was just the three of them. The interview had been directed at Mrs Lingham. The lady explained that this point needed to be clarified before the mortgage was approved, and “you could not have all the money coming as a loan”. Mrs Lingham explained how much she was contributing, Ms Way could not remember if she was specifying the figure. The main purpose was that she, Ms Way, was not going to have another loan on the house. Mrs Lingham said she was not lending the money but giving it to Ms Way. Ms Way thought Mrs Lingham signed a document which said that. This document would still be at the building society. In re-examination, Ms Way said that the building society wanted to be sure that Mrs Lingham was not wanting her money to be charged against the house.

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The fourth and final witness called by Mr Higginson was Frances Ann Lingham, the defendant‟s mother. Her witness statement, which stood as her evidence in chief, said at paragraph 5 that she loaned Ms Way £130,000 which was used as a deposit on Kevington. At paragraphs 6 to 8 Mrs Lingham explained that she separated from her husband in 1987/1988. The marital home was sold for £335,000, of which she received £175,000. She then received a further sum of £50,000 in settlement of the separation and from the disposal of the business and joint assets of herself and her husband. From the proceeds she brought a property in Eltham. This was not subject to a mortgage. Her husband bought a freehold shop and flat, and moved into the flat above the shop. Approximately three years ago, she sold the property in Eltham and she now lives at The Homestead. At paragraphs 9 to 12, Mrs Lingham explained how her husband approached her late in 1991 with a business proposition involving speculation on the then – collapsed property market. The plan was that the two of them should mortgage their properties with the view to raising £250,000. With this cash her husband would have an edge over other potential purchases at repossession auctions. She had complete faith in him and decided to participate. She applied to the Cheltenham & Gloucester Building Society for a loan of £100,000 in late 1991. Relevant documents exhibited to her statement were her Mortgage Application to the Cheltenham & Gloucester Building Society as “FAL1”, the Mortgage Loan Agreement as “FAL2”, a letter dated 9th October 1991 from Sheldon Monk & Co Ltd Insurance Brokers confirming arrangement of the Mortgage as “FAL3”, a letter dated 23rd October 1991 from Sheldon Monk & Co Ltd Insurance Brokers confirming her return of the Mortgage Loan Agreement as “FAL4”, and a letter dated 6th December 1991 from Nevill Moreton Phillips Solicitors confirming their receipt of funds from Cheltenham & Gloucester as “FAL5”. Subsequent events in relation to this business venture were described at paragraph 12 to 16 of the witness statement. The funds that he received from the Cheltenham & Gloucester amounted to £99,307.67, and were paid into a premium reserve account in her name at the National Westminster Bank. They stayed in that account whilst her

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husband attempted to re-mortgage his property. He had difficulties in this regard, and so was left with access to her funds only. Sums totalling £83,000 were taken out by her in cash to give to him, and she produced statements from her National Westminster Bank accounts identifying the sums in question as “FAL6”. In May 1993, she consulted solicitors with a view to securing her loan to her husband, and as exhibit “FAL7” she produced letters from the solicitors dated 24th June 1993 confirming their advice that this should be done. Following that advice she took a charge on her husband‟s property. The following year she and her husband agreed that the loan should be repaid to her and on 5th October 1994 he gave her £100,000 in settlement of the loan. This was then paid into the premium reserve account. He later gave her £20,000 in repayment of a loan she had made him on 8th November 1990. A proportion of the money he paid to her represented interest that she would have earned on the money had it remained in her bank account. When she received payment from her husband she released the charge on his property, and she referred to letters of 23rd September 1994 and 11 October 1994 from her solicitors at “FAL8”. At paragraph 17 to 19 Mrs Lingham‟s statement said that the main reason for asking her husband to repay the loan was that the defendant and Ms Way were having problems with their relationship. They were living in rented accommodation and Ms Way was not at all happy. Ms Way had discussed taking her children to live in Malta with her family. She discussed the matter with Ms Way, and it was clear that Ms Way wanted to have the security of owning her home in order not to be as reliant on the defendant. At paragraph 18 Mrs Lingham said this: “I decided that to keep the children in the United Kingdom so that I could see them regularly I would make a loan to Martina in order that she could buy her own house. I offered Martina all the money I had at my disposal, i.e. £130,000.00. Martina accepted my offer.” At paragraph 19 Mrs Lingham said this: “My agreement with Martina was that she would not have to repay the loan until she was able to do so. We agreed that, if Martina were to sell the house, I

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would be repaid the money I had loaned her. Martina started to look for properties and eventually found Kevington, Orpington Road, Chislehurst, Kent BL7 6RA which, for her, was a dream home. I knew that this would keep her and the children in the United Kingdom and hoped that, with the pressure off Martina, her relationship with Gary would improve.” At paragraphs 20 to 21 Mrs Lingham said that on 22nd December 1994 she arranged a transfer from her National Westminster Bank account to Ms Way‟s bank account with Fleming. Subsequently, her husband was responsible for mortgage payment to the Cheltenham & Gloucester. Mrs Lingham produced as “FLA9” statements from the building society. She said that at no time had she received any money from either the defendant or Ms Way in repayment of the loan that she made to Ms Way. At no time had she received any benefit in lieu of payments from either the defendant or from Ms Way. The loan she made to Ms Way remained outstanding. This witness statement by Mrs Lingham was apparently signed on 28th May 2002. The first question asked by Mr Sells in cross-examination was as to the date upon which the statement was signed. Mrs Lingham affirmed that it had been signed on 28th May 2002, and said that she was sure that it was not 2003. Mr Sells then asked whether the transfer of money to Ms Way described in paragraph 20 of the statement was a gift. Mrs Lingham replied, “Yes. We had a verbal agreement. It was a gift.” It was pointed out to her that one does not expect a gift back, and she replied that she did not expect it back. It was once for all and forever. A gift was different from a loan. This was never a loan. She was absolutely clear. She had only suggested otherwise between Ms Way and herself. After she made the deposit for Ms Way, when she was first going to give Ms Way money, she said, “I will give you this.” After it was all arranged, Ms Way said, “I will pay you back the money if I sell the house, or get married or bring anyone else into the house.” This had taken place a couple of months after. Mrs Lingham added, “I suppose Tina was thinking it was an awful lot of money and how could I make it a gift.”

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Mrs Lingham accepted that she had used the words “gift” and “loan”, but that was private, it was just between Ms Way and herself. Ms Way was her daughter in law, and had her three grandchildren. She was a good woman and thought about things, so it was private just between themselves. It had never been paid back, and she had never asked for it back. Mrs Lingham maintained that it was her money. She was sure of that. She had a mortgage on her account. All of it was legitimate and honest. She had taken out the mortgage because her husband wanted to get into the housing property market, her husband thought he could get a cheap house, and the market was right. She was not working then. She explained that she had now been retired for quite a few years. Mrs Lingham accepted that there were untrue statements in the mortgage application as to her receipt of a salary of £35,000 per annum plus a £5,000 bonus, and as to her employer being “Lingham Meat Contractors.” The reason for making a false mortgage application was to get the loan. When asked who was behind it, Mrs Lingham replied that it was an agreement with her husband. He could cover it, so she would not get into trouble paying the loan. She did not know if he saw these figures. She had not dreamt them up. She did not know who did, but presumed it was the agent. Mr Burkey was not involved. Turning to what she had said at paragraph 6 of her statement about the monies she received following separation from her husband, the documents were not in the bundle. The £175,000 was handed to her by her husband; she could not remember whether that was cash or cheque. As to the £50,000, she could not remember whether that was cash or cheque. He always dealt with cash, in big sums. His family did, and her father always dealt in cash. As for the property she bought, she had paid £170,000. There was no mortgage. She had some other money, cash that she had saved up over the years, £20,000. Mr Sells asked her where she kept it. This met with an immediate and very firm reply: where she kept it was her secret. She was willing, however, to tell Mr Sells that she kept it at home.

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Cross-examination then turned to the £83,000 given to Mrs Lingham‟s husband in the early part of 1992. As to this, Mrs Lingham said: “I gave it to him in cash because he asked for that amount and it looked as if I was in charge. He was dealing in cars. The property market went wrong, so he decided against investing in property, unless he could mortgage his business.” She said she did not know what had made her nervous about getting her money. She and her husband were not getting on too well, and she just wanted to make sure that she would get that money back. He agreed to there being a charge on his flat. He had paid the money back in 1994 because she asked for it. The £20,000 was separate from the £100,000. She had received £100,000 for the £83,000 that she had supplied to her husband. Mrs Lingham then described how, at a stage when Ms Way was living at The Homestead, she had gone around to Ms Way‟s house. Ms Way did not like the area they were living in, it was rough area for three children. Ms Way was going to take them to Malta. Mrs Lingham added, “Tina is a lovely girl, and I said if I can find a place for you would you stay? My husband was a little bit upset about that. He saw the reason afterwards.” Mr Sells reminded Mrs Lingham that in her statement she described the £130,000 supplied to Ms Way as a loan, and not as a gift. Mrs Lingham replied that she signed a statement at the Woolwich Building Society to say it was a gift. That statement is not untrue. What was agreed between herself and Ms Way, if it did not come about, did not matter. The Building Society said, “What is this money?” She had replied that it was a gift to Ms Way and she signed the document. What was said in the document was the truth. As to whether the Building Society was interested in whose money it was, Mrs Lingham did not recall. She did not mention the word “settlement”. Mr Sells showed Mrs Lingham section G of The Woolwich Building Society “ Property details and borrowing requirements” document (1/4/90). This said that the balance of the purchase monies was coming from “G Lingham‟s mother settlement”. Mrs Lingham said that she did not recall saying that the money

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came from some sort of settlement. Mrs Lingham said that she did not exactly know her husband‟s situation when he gave her the £100,000. He had always had money, had been very careful, and had worked hard. He did not tell her where he had got the money in order to pay her back. She recalled learning that the defendant was arrested. She had not been present, and did not recall that somebody else had been present. She learnt about Dene‟s arrest a week later. At that time she was nursing her mother who was very ill: “they did not want to phone me to tell me, they knew I could not leave my mum.” Mrs Lingham added that she was told that Dene was arrested at the house. As to whether Dene, Gary and Fred were very close as a family, she replied, “Dene maybe because he was younger. They all got their own way.” Mrs Lingham said that she did not ask her husband where he got the money from to give to her, adding: “he makes his money work for him. He has always got cash. He has a big safe. He kept ready money; if kids got into trouble he could help. I and my dad were the same.” Mrs Lingham continued that her husband had always worked very very hard. The boys worked for their dad, and he ruled them with a rod of iron. She said it was definitely not the case that drugs money had been siphoned to enable her to be paid the £130,000. In reply to questions from me, Mrs Lingham said she remembered visiting the building society with Ms Way. Ms Way did not know that Mrs Lingham had had a loan on her house. As to what happened at the building society, Mrs Lingham told the lady there that she was contributing £130,000 to the purchase price. She did not recall questions about why she was doing so. The concept of her “settling” £130,000 on Ms Way did not mean anything to her. Turning to the mortgage from the Cheltenham and Gloucester Building Society, in late 1991 the paying of interest on the mortgage was down to her husband. She could not recall how he paid it. It was an „interest only‟ mortgage.

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In 1994, when her husband gave her the money, Mrs Lingham sold the house. £100,000 went back to Cheltenham and Gloucester. She thought the sale price was £180,000, and she thought she had £99,000 for herself. She took over Dene‟s house, he had two dogs there and she had been running backwards and forwards. This completed the witness evidence.

The submissions of the parties
In submissions on Ms Way‟s behalf, Mr Higginson dealt first with the decision of Gage J. The ratio of his decision, said Mr Higginson, was to be found from the wording used in the preliminary issue. Accordingly the ratio clearly was that it was open to HM Customs to argue that the defendant had an equitable interest in Kevington. The ratio was not that the defendant had such an interest which was then to be measured. The observations at paragraphs 32 and 33 must be obiter. The ratio was at paragraph 34. This judgment opened the door, but did not allow HM Customs to walk through it. The result, said Mr Higginson, was that it was open to Ms Way to argue either (a) that the defendant has no interest in Kevington at all or (b) any interest should be assessed at 0%. Mr Higginson then turned to the onus of proof. He drew attention to the wording in section 16 (2), “if the High Court is satisfied”. By section 16 (3) an application was to be made by the prosecutor. The general principle would be that he who asserts must prove. Even without section 16 the burden of proof would have been on HM Customs: see Re Norris [2001] 1 WLR 1388 at page 1401, paragraph 25. The next matter dealt with by Mr Higginson was an analysis of the case for HM Customs. The extremity of that case could, he said, be seen by comparison with a conventional disputed equitable interest case. What generally comes before the court is a dispute characterised by two alleged beneficial owners making rival contentions. The absurdity of HM Customs‟ case was that it relied upon assumptions which were too far fetched. The fundamental flaw was the assumption that there was an agreement in the Crown Court as to two figures. HM Customs in argument assumed

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that both counsel in the Crown Court operated on the basis of the prosecution statement which was said to record the defendants assets. However, said Mr Higginson, it was possible - indeed likely - that counsel for the defendant was being instructed by the defendant on his case as to assets owned by him. More generally, Mr Higginson said the case for HM Customs was entirely based on material which had been collected together under the prosecutor‟s statement. No agreement as to the evidential status of that material had ever been sought, still less given. In the absence of an agreement, the making of an application, or a Civil Evidence Act notice, the status of this material was extremely limited. Turning to the oral evidence, Mr Higginson said that much of the cross- examination on behalf of HM Customs had been directed to the wrong period of time. The house was purchased in April 1995. Reference to things done thereafter was irrelevant. Completion appeared to have taken place on 13 March 1995, and ultimately HM Customs had disavowed any suggestion that movements of money after that date were relevant. I commented that I did not think HM Customs had gone that far. Mr Higginson replied that the key area was what took place prior to completion. In argument it had been said by HM Customs that the defendant‟s drug activity occurred between 1994 and 1997. It was difficult, said Mr Higginson, to see how this could be sustained. The defendant had been prosecuted for an offence which occurred in 1997. There was no evidence direct or indirect of drug activity prior to 1997. Accepting that the realisable assets need have nothing to do with the crime, Mr Higginson said that nevertheless there was no evidence of the defendant contributing money to Ms Way‟s bank account. Two features of HM Customs‟ case were highlighted by Mr Higginson. First, there had been an assertion that criminal material was found at the house, something which Mr Sells said he would return to - but he never did. Second, Mr Sones had been lionised. Quite apart from his status, the oral evidence showed his role had not been that which was advanced by HM Customs in opening. The oral evidence had not been and could not be gainsaid. Even on its face, the role of Mr Sones was eyebrow-raising: he was happy to act as a financial advisor for the defendant and his

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brother, and to assist them in their enterprises. He may have been facing potential criminal charges and would therefore be more eager to help. Concluding his submissions on HM Customs‟ case, Mr Higginson said that the valuation of £700,000 was not agreed. What was said by Ms Carol Butler at 1/6-73 was a guide price to encourage offers. It was possible that the price achieved could be considerably less. The final section of Mr Higginson‟s submissions analysed Ms Way‟s case. The purchase transaction had plainly taken place, and Ms Way was the legal owner. While HM Customs complained that the transactions were in cash and were not supported by documentation, the overarching submission for Ms Way was that in order to do justice the court was required to enter the cash world, the cash culture. While there may well be questions that are raised and unanswered in relation to such transaction, that is the way of the cash world. There is nothing reprehensible or illegal in cash transactions in themselves. The only difficulty put up by HM Customs was the proximity of the cash transactions involved in the house purchase to the defendant. Ms Way was his former wife. In several instances she permitted him to use her account. That, said Mr Higginson, was the only nexus. Once the court entered the cash culture, the only question was the credibility of the witnesses. They were commended by Mr Higginson as witnesses of truth. I asked Mr Higginson to help me about Mr Scicluna‟s evidence that Ms Way did not work. Mr Higginson replied that the explanation was that Ms Way did not want others to know about her working for an escort agency, and he may well not have known about that work; or he may have been anxious not to raise that in court. Mr Higginson submitted that the overwhelming impression created by the witnesses was one of affection for each other, a close knit and extremely intimate family environment. All were at pains to help the family out. Mr Higginson drew attention to six features: The solicitors‟ correspondence had been explained by Ms Way, and was anodyne. Their language simply referred to satisfaction of the order. The reasons were graphically and emotionally presented to the court - they were family reasons which

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involved no acknowledgment of any interest in the house on the part of the defendant. As to the solicitors‟ ledger, Mr Higginson commented that he had never seen an accurate one. Here there were three ways of describing Ms Way. The figure work was entirely consistent with a normal conveyancing transaction. The figure for Ms Way‟s cheque was the figure computed to be necessary to achieve a nil balance. As to the reference to El-Kurd, it was an error. There was no evidence to justify any other conclusion. The description column had been kept in a slapdash way. It looks as though the typed name of the drawer on the Flemings cheque is “MS M A M WAY”. The third feature was the eyebrow-raising role of Mr Sones, which Mr Higginson had dealt with earlier. As to Mrs Lingham‟s husband, his income was irrelevant, for the sums paid by him constituted the repayment of money loaned to him which was kept in a safe. It was not suggested that it was all repaid out of his net profit. As to Mr El-Kurd, what had been said by Ms Way in her witness statement had not been subject to any extensive cross-examination. Mr Higginson acknowledged that there had been untruths on the part of Ms Way in what she said to the building society and the Inland Revenue. Her answers to questions about those untruths were given candidly. It was a leap to go from that position to a case that this was elaborate money laundering exercise - an impossible leap. The explanations given were understandable. Ms Way knew the mortgage could be serviced. What she said about the attitude of the building society to what appears on application forms is entirely accurate. On the evidence, submitted Mr Higginson, one did not get anywhere near to the case that was being made against Ms Way by HM Customs. Overall, said Mr Higginson, the credibility of the case made by Ms Way was overwhelming: the defendant never had an interest in Kevington. On behalf of the defendant Mr Tomassi, who appeared with Mr dos Santos, said that the reason the defendant had been convicted on three counts was that separate counts were needed for different classes of drug involved in the same transaction. Mr

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Tomassi said that what happened in the Crown Court was an exemplar of how not to do things. The reluctance of the prosecutor to go into detail had led to what has now happened. If the defendant were to attempt to do what the Crown is now doing, the defendant would be stopped. In the present case the prosecution had the opportunity to comment but chose not to take it, and cannot attempt subsequently to alter what was ordered. The prosecution could not rely upon section 16 to put right what was not done in the confiscation hearing: see R v Gokal [2001] EWCA Civ 368. The defendant did not say that he can stop proper enforcement of the confiscation order in the absence of a certificate of inadequacy. The doorway has been opened by Gage J. There is, however, a fundamental difference between saying that there is standing to assert a certain interest, and the defendant‟s contentions. For the defendant, the consequences of the present hearing are penal - if the certificate is issued the Crown Court can increase the confiscation order, and this entails an additional period of imprisonment. Mr Tomassi said he was not acting at the time when the preliminary issue was identified and he could not say why this point was not raised then. He adopted, as to the construction of the judgment of Gage J, what had been said on behalf of Ms Way. The court should tread carefully in the light of possible penal consequences. Identifying the problems by reference to the flow chart, Mr Tomassi said that they were problems of the prosecution‟s own making. Those who declined to answer legitimate questions of the Crown Court Judge do so at their peril. It had always been the defendant‟s case that he had no interest in Kevington. In reply, Mr Sells on behalf of HM Customs drew attention to paragraphs 16-19 of R v Gokal [2001] EWCA Civ 368. In that case it was sought to go behind the Crown Court ruling, but that was not the position in the present case. There was nothing wrong with the compromise of £500,000 and £200,000. The suggestion that the defendant was under pressure was now made for the first time and was unsustainable. HM Customs did not think an analysis of the judgment of Gage J was helpful. Ms Way was at liberty to assert that the defendant had no interest. Mr Sells accepted that if the Judge at the Crown Court had found that the defendant‟s interest was, say, 62%,

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it would be impossible for HM Customs to come back and say in this court that it should be held to be 100% under section 16. What had happened in the Crown Court was that the defendant denied any assets at all. Thus the Judge‟s finding of £200,000 was a substantial rejection of the defence case. The burden of proof in this regard lay on the defendant. There would, said Mr Sells, have been nothing to stop HM Customs from coming to the High Court the following day and saying under section 16 that the assets were £288,550.24 however, the defendant could make representations. He submitted that it was clear to all that Kevington was part of the realisable assets of the defendant. On the burden of proof, Mr Sells accepted what was said in Re Norris about the burden as regards the intervener. I set out the remainder of Mr Sells‟ closing submissions on the substance of the case in my analysis of the parties‟ submissions below.

Analysis of the parties‟ submissions
The first proposed order identified in HM Customs‟ skeleton argument was a declaration that the defendant has a 62% interest in Kevington. In analysing this and other points that arise I shall work by reference to the closing submissions of Mr Sells QC. These put the case rather differently from the way in which it had been put in opening. Mr Sells said that HM Customs did not ask the court to make assumptions. Instead, they invited reasonable and proper inferences from the evidence. In that regard, I begin with the assertion that the defendant had effectively agreed at the confiscation hearing that he had an interest in Kevington amounting to at least £131,449.76 and thus 62% of the equity. Nothing of the kind was said by or on behalf of the defendant at the confiscation hearing. This claim seems to me to be almost entirely based on assumptions, none of which are justified. It assumes that the defendant accepted that he had assets excluding any interest in Kevington amounting to £78,550.00. There is no warrant for any such assumption. It assumes that HM Customs‟ own contention that the defendant had undisclosed assets going beyond

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Kevington was unfounded. I see no reason why I should make any such assumption. It assumes that because the defendant consented to an order assessing his realisable assets at £200,000 he was in fact admitting to such assets. Ordinarily, of course, someone who consented to such an order would be making such an admission not only in law but in fact. In this case, however, the court was told the defence did not know how the proposed order would be satisfied. For the purposes of the confiscation hearing, there was an admission as a matter of law that the defendant had assets of £200,000, but the Crown did not invite the court to make specific findings about specific assets. In those circumstances, the admission does not enable me to determine that the defendant had any interest in Kevington, less still that the interest amounted to 62%. Mr Sells said that he did not dispute the payments shown from the Fleming account, nor the payment of £130,000 by Mrs Lingham to Ms Way. However, the evidence showed a pattern of effective control of the Fleming account by the defendant, and his use of Ms Way as a conduit coloured one‟s view of whether he was doing the same thing prior to the opening of the Fleming account. As to this, the use of Ms Way as a conduit amounted to a handful of transactions at a stage when the defendant had been made bankrupt. Mr Sells did not particularise what the defendant was said to have done prior to the opening of the Fleming account. Whatever HM Customs may have in mind in this regard, the evidence that I heard about events after the defendant became bankrupt does not enable me to make any inference as to any nefarious financial transactions between him and Ms Way prior to the bankruptcy. As to the payment of £130,000 by Mrs Lingham to Ms Way, none of the parties addressed me on the law as to when such a payment would give rise to an equitable interest in favour of the defendant. However, all assumed that the first pre-requisite is that the money in truth came from the defendant. Mr Sells submitted that the money had indeed come from the defendant, who had operated cash businesses and who as a bankrupt had a motive to distance himself from his assets. The first difficulty with this submission is that, despite years of investigation, HM Customs has produced nothing to show that, in 1995, the defendant had £130,000 of available cash. The drug-dealing which led to the confiscation order occurred in 1997. Mr Sells disclaimed in his

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closing speech any suggestion that the £130,000 paid in 1995 was the product of drug dealing. This first difficulty might be overcome if there were no plausible evidence of any other source for the money, or if there were no plausible motive for the purchase of Kevington other than to salt away assets of the defendant. In this regard Mr Sells invited me not to believe the evidence of Ms Way and Mrs Lingham as to the motive for buying the house, ability to service the mortgage, and origin of the £130,000. All of this, said Mr Sells, was simply not credible. An obvious reason for calling into doubt the credibility of Ms Way and to a lesser extent Mrs Lingham was their willingness to sign documents which on their own evidence did not set out a true picture. Mr Sells said rightly that there was a distinction between entering the world of cash and entering the world of undeclared income. It would be naïve to deny that there is a world of undeclared income. Ms Way herself accepted that she had failed to declare income when she should have done. It does not follow from this that Ms Way is to be treated as a liar for all purposes. The courts have sufficient experience of the real world to acknowledge that there are those who have little compunction in hiding matters from the Inland Revenue or Social Security but are nevertheless honest in their other dealings. My overall impression of both Ms Way and Mrs Lingham is that they are capable and determined women and anxious to do their best for their families. They come from a world where it is seen as run-of –the- mill to under-declare income to the Inland Revenue or Social Security and where no great care is taken with what is said in a mortgage application if one is confident that the mortgage can be serviced. It is quite another matter to conclude that they would deliberately deceive the court – even to assist their families. Both Ms Way and Mrs Lingham were subjected to rigorous cross-examination. They frankly admitted those occasions when they had signed something which was untrue. At no stage in their evidence was there any obvious fabrication of the kind which so often emerges when witnesses seek to deceive. My assessment of the evidence as to the motive for buying Kevington is that Ms Way‟s account is perfectly plausible. It was supported by other witnesses called on her behalf. Her account of a deteriorating relationship with the defendant and

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concerns for her children‟s and her own financial security has the ring of truth. As to ability to service the mortgage, HM Customs challenged this by reference to the declared income of Ms Way. Once it is acknowledged that the declared income bore no relation to reality, I see no reason to doubt that, in 1995, Ms Way thought that she would be able to service the mortgage. Turning to Mrs Lingham‟s evidence as to the origin of the money, her account was said by Mr Sells to be extraordinary. It does not seem to me, however, to be implausible. Money was raised for a business venture which did not come about, and then was used to purchase a house in order to ensure that Mrs Lingham‟s grandchildren and their mother stayed in this country and did not re-settle in Malta. Mr Sells asked whether it was coincidence that all this involved cash which left no trace. It seems to me that Mrs Lingham inhabits a cash culture and has done all her life. A telling moment came when Mr Sells asked Mrs Lingham where she kept her cash. The reply, “That‟s my secret” was given in a spontaneous manner without pausing for thought. There are some further matters which call for mention. First, why should Ms Way have been willing after the confiscation hearing to sell Kevington in order to enable the confiscation order to be satisfied? Here I was satisfied by Ms Way‟s answer, which was in effect that her children put her under enormous emotional pressure to help their father. Second, how did the reference to Mr El-Kurd come to appear twice on the solicitor‟s ledger? All the evidence pointed to the second entry being a simple mistake. Ms Way admitted that the first entry for £5,000 was money which had come from the defendant, but Mr Sells did not argue that this assistance with legal fees gave rise to an interest in Kevington. There was nothing about the payment of £110,929.75 to suggest to the solicitors that Mr El-Kurd had anything to do with it – and indeed, as mentioned above, Mr Sells in his closing speech disclaimed any suggestion that the £130,000, from which the £110,929.75 was sourced, came from drug-dealing. Third, Mr Sells maintained reliance upon the witness statement of Mr Sones, which had been exhibited as part of HM Customs‟ evidence on this application. There was in my view substantial reason to treat Mr Sones‟s witness statement with caution. He may well have been anxious to exculpate himself from potential criminal charges. His statement

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claimed that in relation to a suggested purchase of a house in Ms Way‟s name the Defendant said she was a “full time housewife” who had not worked for a number of years. This was plainly not the case. If HM Customs wished the court to place any substantial reliance on what Mr Sones said it was in my view necessary for them to call him as a witness, not simply exhibit his statement to material produced by others. In those circumstances I find that the first pre-requisite for HM Customs‟ claim is not met: the defendant did not provide any of the money used to pay the purchase price of Kevington. It follows that Mr Tomassi‟s argument as to a bar on HM Customs‟ claim does not arise and I say nothing more about it. Nor do I say anything about the burden of proof: even if that burden rests on Ms Way, by her evidence and that of her witnesses she has satisfied me of her case on the balance of probabilities.

Conclusion
I conclude that the defendant has no interest in Kevington. This may mean that there is little point in appointing a receiver over such assets of the defendant as may be identifiable. However, if any party considers that, in the light of my conclusion, any particular order should be made I will review any draft order which the parties can agree. If agreement cannot be reached, I will hear argument in that regard.

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