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	England and Wales High Court (Queen's Bench Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Coghlan v Bailey [2017] EWHC EWHC 570 (QB) (24 March 2017) URL: http://www.bailii.org/ew/cases/EWHC/QB/2017/570.html Cite as: [2017] EWHC EWHC 570 (QB)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/03/2017

The Honourable Mr Justice Langstaff:

1. The Applicant, Arran Coghlan, applies to commit Daniel Bailey, a financial investigator with what was the Serious Organised Crime Agency ("SOCA") for contempt of court, with the leave of Mr Justice Mitting.
2. The application is made in relation to what is said to be Mr Bailey making or causing to be made a false statement in a document verified by a statement of truth without having an honest belief in its truth.

Background

3. In 2009, SOCA applied for a recovery order under part 5 of the Proceeds of Crime Act 2002 against the Applicant. Following a contested hearing, Simon J found that property known as Brook Lane Chapel, Brook Lane, Alderley Edge, Cheshire SK9 7RU, and freehold land at the south side of Brook Lane adjoining the Chapel, both registered in the names of the Applicant and his partner Clare Burgoyne were recoverable property.
4. The proceedings were brought under Part 8. They were not, as they might have been, converted into a hearing to which Part 7 applied. As a consequence, Daniel Bailey who described himself as "financial investigator and member of staff" of SOCA gave evidence by means of a witness statement in support of the application upon which he was not cross-examined. Nonetheless, SOCA and he both owed a duty of full and frank disclosure, and had first done so when earlier SOCA had successfully applied for a freezing order on the same evidence, pending a decision on the case heard by Simon J.
5. In this witness statement Mr Bailey said that the property "that had been identified for investigation" was the home address of the Applicant: and he recorded, uncontroversially, that it was a former chapel which had been converted into a 5 bedroom residence with a substantial garden to the rear. Since first moving into the Chapel in 2000, the Applicant had undertaken an extensive amount of security, interior building and renovation work to the property. Since just before he moved in, and shortly before September 2007 when he and Ms Burgoyne became registered proprietors of the Chapel, its ownership passed through the hands of a number of owners, all of whom were known to, and on friendly terms with, the Applicant.
6. Between 1997 and 2004, the Applicant made no declaration of any income to HM Revenue and Customs. He had no known legitimate source of income. Nonetheless, in August – September 1999 he pursued an intended purchase of Blackshaw Farm, in the same general location as Brook Lane Chapel. An initial inquiry and offer to buy it in the sum of £380,000 came from solicitors instructed by him: a subsequent offer to buy then came from the same solicitors, now purporting to act on behalf of a "Mr Kay", which Simon J for good reason took to be a Mr Kayes, a millionaire friend of the Applicant, of good character. The vendor withdrew from the transaction.
7. Shortly afterwards (14^th February 2000) Brick Lane Chapel was valued at £290,000. Mr. Harrington, one of the vendors, was known to and friendly with the Applicant. On 24^th March 2000, Mr Kayes bought it. On 27^th April, the Applicant moved in. The property was dilapidated, and needed substantial work to improve it. In contemporaneous conversations, which were in evidence before Simon J, the Applicant talked of how he intended to fit out the house extravagantly and in accordance with his own taste. He described his plans for the house as if he had a proprietary interest in it, rather than one in respect of which he was merely both a short-term tenant and project manager in a development of it for others. Simon J. found that the renovations were paid for in cash by the Applicant or on his behalf, a fact which he thought reinforced the view that the Applicant regarded the Chapel as his. Though a tenancy agreement was created, this did not, in his view, reflect the true relationship between the parties and was not intended to be relied on except to create a false impression as to the true interest of the Applicant.
8. The purchase by Kayes was at a substantial undervalue: the total sale price was £180,000. £162,000 of this was provided by a mortgage in the name of Mr Kayes. The 10% deposit was £18,000. It was paid by an instrument drawn by the Halifax on its own (suspense) account – in effect a draft. It is in respect of the provenance of this deposit payment that the contempt application arises, as I shall describe below after completing the history of transactions in respect of the property.
9. By June 2004 the property, which by now had been substantially though not completely refurbished by the Applicant, was valued at £450,000. On 9^th July that year, Mr Kayes sold it to Blue Moon Holdings. Blue Moon Holdings had as its principal a Mr Tomlinson, who, in common with the vendor of Brook Lane Chapel to Kayes and Kayes himself was known to and friendly with the Applicant. Indeed, on 12^th July 2004 Blue Moon Holdings entered into a form of short-term tenancy agreement with the Applicant who was said to be employed by it. Further, before he became an employee, the Applicant negotiated a further sale and purchase: the sale of land to the south of Brook Lane, adjoining Brook Lane Chapel, which was also sold to Blue Moon Holdings, this time for £23,500.
10. On 21^st September 2007, the Applicant (who by now had been in uninterrupted occupation of Brook Lane Chapel since 22^nd April 2000) bought the Chapel and the land for £450,000. This again was a substantial undervalue: on 9^th August 2006, the value had been assessed at £750,000, and on 12^th June 2007 at £900,000. If the Applicant had been a tenant under a short-term tenancy agreement as suggested by some of the documents, this would not equate to him being a sitting tenant so as to enjoy a substantial discount on purchase, since such tenancy agreements are freely terminable at short notice. For this reason and a further finding as well that rent arrears, the presence of which alone would give grounds for almost immediate possession, had accumulated Simon J (para. 107(12)) concluded that selling at an undervalue made no commercial sense.

The Alleged Contempt

11. In his witness statement, verified by a statement of truth, of 15^th July 2009, Daniel Bailey when describing these transactions, and in particular the initial sale to Kayes, said at paragraph 7.12:

"analysis of the conveyancing files obtained under Disclosure Order show that KAYES purchased The Chapel for £180,000 from Simon Harrington and Alexandra Wilkinson. Inquiries with the mortgage provider have shown KAYES to have obtained a mortgage with the Natwest for £162,000 with a 10% deposit of £18,000 being paid by bankers draft from an unknown source. During interview on 26^th November 2008, KAYES was asked how he purchased the property to which he replied that he couldn't remember. When asked whether it was a cash transaction he again stated that he couldn't remember but that he thinks their (sic) might have been a mortgage."

12. The Applicant's case is that this statement was false, and made without an honest belief in the truth of the statement, thus rendering the statement of truth itself false.
13. The Applicant's central case (paragraph 16, Grounds) was that Mr Bailey lied in his witness statement as to the exact figure and source of the Deposit funds stating that this was "£18,000 being paid by bankers draft to an unknown source" when in fact it was a cheque for £18,030 from an instant saver account of Mr Kerry Kayes. The statement purported to have been made (paragraph 17) after Mr Bailey had conducted an "analysis of the conveyancing file obtained under the Disclosure Order". From this a reader was intended to infer that he had conducted a complete review of the file, and was expressing himself with candour in relation to all relevant entries.
14. The conveyancing file (paragraph 18) had never been disclosed to the Applicant by SOCA, although a request for this had been made by him. When the Applicant through his own efforts obtained the file he discovered it to have contained a cheque "signed on behalf of the Halifax". He asserted (paragraph 19):

"that cheque refers to the Instant access account of Mr Kayes (an account examined by the Defendant). It is drawn on the Denton Branch where Kayes banked and not the Wilmslow one at which the Applicant banked. It refers to the solicitor of Kayes. The amount was 18,030 rather than the cash round sum of 18,000."

15. The conveyancing file (paragraph 20) also contained a note from Kayes' conveyancing solicitor dated 8^th March 2000 in which was said "Kerry said he would obtain a deposit cheque for £18,030 and he would bob it in in due course on the next couple of days". Despite this, Mr Bailey had wrongly asserted that the deposit was £18,000, paid by draft, and from an unknown source.
16. This evidence was reflected in para. 21 of the judgment of Simon J. He said:-

"On 4^th February 2000, Natwest Bank valued the Chapel at £290,000. On 24^th March 2000, it was sold to Mr Kayes by its owners Adrian Harrington and Alexandra Wilkinson, for £180,000. First of all, though £162,000 of the purchase was raised by mortage from the Natwest Bank, it is unclear where the deposit of £18,000 came from. It was paid by bankers draft but the SOCA's evidence was that it did not come from any identifiable account of Mr Kayes and when asked about this, Mr Kayes had no recollection of it."

17. In his findings at paragraph 107(4) of his judgment, Simon J said:

"The purchase of the Chapel using a mortgage was an unusual transaction for Mr Kayes and, although £162,000 was advanced on the mortgage, Mr Kayes was unable to explain where the £18,000 deposit came from. Its source is still unexplained but is likely to have come from Mr Coghlan."

18. For the purpose of this application, Mr Coghlan has exhibited a copy of the cheque or draft, and the solicitor's note to which I have referred.
19. In granting permission on 6^th December 2016 for this application to be made, Mitting J said at paragraph 6:-

"Contrary to what Mr Bailey said in paragraph 7.1.2 (sic) of his witness statement, although the deposit was paid by bankers draft, the source was not, on true analysis, unknown. It was, or was almost certainly, Mr Kayes' instant access savings account. In the absence of any explanation from Mr Bailey, it is difficult to understand how he could have come to say that, having analysed the conveyancing files the bankers draft represented funds from an unknown source. Mr Talbot accepts that the paragraph is, at least in that significant respect inaccurate. For the purpose of these proceedings, Mr Bailey has not had an opportunity of explaining what he meant. However in… proceedings brought by the Applicant to set aside the judgment of Simon J, [which failed] he did produce a witness statement in which he addressed this issue but not explain how it was that he came to give the erroneous impression to which I have referred in paragraph 7.1.2 of his witness statement. The position therefore is that at the moment, there is no explanation of that error or worse in paragraphs 7.1.2 of his witness statement."

20. Mitting J went on to say that the test set out in paragraph 16 of the judgment of Moore-Bick LJ in KJM Superbikes Ltd v Hinton [2009] 1WLR 2406 for granting permission to apply for committal proceedings was met. He commented (paragraph 8):

"Mr Bailey was a public officer appearing in coercive proceedings against an individual. As Mr Talbot accepts, there was a duty of candour upon him. He has had the opportunity to explain why it was that paragraph 7.1.2 was erroneous in the respect that I have identified and has not taken it. In my judgment, there is a high public interest in ensuring that public officials making statements in these kind of proceedings do so with, as far as is humanly possible, complete accuracy and certainly with no intention to mislead. Although there may well be a complete answer in due course to be provided by Mr Bailey, it is not, on the material that I have reviewed, evident at the moment. Accordingly, in relation to this ground, I conclude that permission should be given."

The Evidence

21. Mr Bailey filed an affidavit on 2^nd February 2017, and supported it by oral testimony. After consideration of what he had said, the Applicant chose to call Costas Elias, a former financial investigator of the Assets Recovery Agency ("ARA") and SOCA. Mr Elias had been the investigator responsible for identifying whether the Applicant held property in respect of which recovery proceedings should be brought. He had that role from 2005 until he was promoted in May 2008 to the post of principal officer.
22. Mr Bailey told me that he had had some three years' experience of financial investigation prior to joining ARA in March 2007, where he then began as a trainee financial investigator. He was still a trainee when on 1^st May 2008 he was given conduct of the civil recovery investigation into the Applicant. Some 19 days later he was promoted to the role of accredited financial investigator (he had earlier been formally accredited - in March 2008 - by the National Police Improvement Agency). In his Affidavit he described his task as being to "review" the material obtained by Mr Elias before making a decision as to whether to progress the investigation to formal court proceedings. He emphasised this in his oral evidence.
23. In many respects the evidence of Mr Bailey was less than impressive. Though he was an investigator, assigned to an investigation, his emphasis upon the fact he reviewed the material on the files of SOCA was such that he accepted he had done no investigation of his own. When it was pointed out to him that he had used the words 'my investigation' in his witness statement of 24 April 2013 when making an application to strike out proceedings brought by the Applicant, he described the word "my" as a typographical error. The evidence he was now giving was that despite calling it "my investigation" it had never been an investigation conducted by him, since he had merely acted to review the results of an investigation conducted by others, pulling the material together in order to assess whether there was a viable case to commence recovery proceedings.
24. In a witness statement of 21 July 2011, he described that it was a failure of his not 'to make sufficient inquiries with HM Land Registry…' When it was put to him by Mr Keeling that he had said that he was making no inquiries of his own, yet here he appeared implicitly to recognise that he had made some (and, it might have been added, felt he had an obligation to do so given his description of it as a failure on his part) he gave the answer that he was not making an inquiry of the Land Registry, because he would not be looking for an answer to a question.
25. Next though, in his witness statement of 15 July 2009, he appeared to be saying (at paragraphs 6.30 and 6.34) that he had taken something of an investigative role. His explanation became not that he had never occupied such a role in respect of this particular inquiry (though that was the thrust of his earlier evidence): he had, but had not done so before interviewing the Applicant, and Mr Kayes, in 2008.
26. Nor do I regard it as satisfactory that his witness statement of 15 July 2009 did not indicate that though describing himself as 'financial investigator' in fact he had investigated nothing of his own prior to November 2008 and had personally been involved in the ongoing enquiries only since 2007: his witness statement would have left the court with the impression that he had personally been involved throughout, and had personally investigated matters, and this would not have been accurate. He should have realised this.
27. He accepted fully that it was open to him to make enquiries. No-one had told him merely to review and collate evidence collected by others. Plainly, he knew that the deposit had been paid by a document which came from the Halifax. He accepted that it was an obvious enquiry to ask the Halifax what the source of the funds was. In all the other investigations he had conducted it is a question he would have asked. It should have been obvious to him that those who had been involved in the inquiry prior to him would almost certainly have asked that question, and that the answer should be somewhere in the documentation. Yet though describing the work he did as 'a good analysis' of the conveyancing file, he said he did not see this, nor make any enquiry (if he was to be believed) of Mr Elias, who remained his line manager, and whom in one passage he described to me as sitting next to him in the office.
28. By saying that the bankers draft was from an unknown source he implied that enquiries had been made into the source of the funds, as one would expect if there had been a careful investigation by an organisation with the powers of SOCA or, before it, the powers of the ARA, into the provenance of the funds. He accepted that, in the Conveyancing file, to which he had access, there was a file note with the initials of Mr Kayes' solicitor dated 8 March 2000 – the only file note of an attendance on the clients (the Kayes) in the file – in which the source of the deposit cheque was indicated to be 'Kerry' (ie Mr Kayes) since he had promised to "obtain" it. He accepted that a notice had been sent to the Halifax seeking details of the origins of the funds. He told me that request however was not in the paperwork which he reviewed. He would, he said, look for the response in any event, rather than the request. There was no written response, somewhat unusually, but there was a telephone call recorded on the electronic systems operating within SOCA at the time. That shows that on the 14 April 2007 Trish Miller of the Halifax had called to tell "me" (that is Mr Elias, whose record it was) that the funds were drawn on an account in the name of Kerry Kayes. She had said that the account was live but not active, with a balance of £246. Only six entries later in the same computerised record were four entries made by Mr Bailey, noting that interviews of Mr Coghlan, Tomlinson, Kayes and Sharon Hall (who had been involved in the abortive conveyance of Blackshaw Farm) were due to take place, giving the place and time. This showed that he had had at least part of the very computer file on which the entry was recorded, if not the entry itself, in front of him on the screen. Mr Bailey could not say whether the response from the Halifax was or was not on the screen when he entered those appointments, but if it had been he said he did not notice it.
29. A separate file note was also made, by Mr Elias, of the call from Trish Millar This was held on files accessed by entering them through his name. Mr Bailey did not see that either. He said that he had simply seen the draft as being a 'banker's draft in a conveyancing file'
30. The absence of any enquiry made by Mr Bailey into the provenance of the funds, and his failure to pick up the references on file which might have alerted him (the draft itself, the attendance note from the solicitors, the entries on the screen, and the file note) were compounded by the fact that Mr Kayes was asked at interview in November 2008 about the deposit, but was not shown a copy of the draft to jog his memory.
31. Despite Mr Bailey's acceptance that it was a standard inquiry to ask a bank for the source of funds in circumstances such as these, and that he had made such an inquiry on every case he had investigated (save, it follows, this), he said to Mr Talbot QC in re-examination that it had not occurred to him that there were thunderingly obvious inquiries to be made, nor had it occurred to him that there were avenues to be explored in relation to the Halifax draft.
32. Further, the evidence of Mr Elias was that Mr Bailey had taken over as the investigator, such that the investigation became his. Mr Elias would have expected Mr Bailey to follow investigative leads and not simply to collate the information that had already been collected. He would expect Mr Bailey to look into any area which had been overlooked.
33. Given all this material Mr Keeling QC, for the Applicant, argued that it could not be said that it was not Mr Bailey's role to make what were obvious checks. Therefore, either Mr Bailey knew that the investigations had been made and there was no comfortable answer which would advance an application for a recovery order, or he deliberately did not wish to ask because to do so would be to risk an answer unfavourable to the course which it was plain that SOCA was set on. His failure to pick up the evidence from the file, the computer screen, or from Mr Elias himself by simple enquiry pointed towards more than a mere mistake.

The Approach to Establishing Contempt

34. There is no issue between the parties as to the necessary elements of the proper approach. Making a false statement in a witness statement without an honest belief in its truth amounts to a contempt of court. The elements of liability are that :-

1. The statement was false.

2. It interfered with the course of justice in a material respect.

3. At the time it was made, the maker (a) had no honest belief in its truth and (b) knew of its likelihood to interfere with justice.

35. These matters are not to be established on the balance of probability, but beyond reasonable doubt.
36. In evaluating whether the Applicant has, on the basis of the evidence I have summarised, proved that Mr Bailey was in contempt of court I acknowledge that I am concerned with Mr Bailey personally, and not with whether or not SOCA fell short of its duties as an organisation.

Discussion

37. I have no doubt that the statement was false, and tended to mislead. However as to its falsity I do not accept the Applicant's case (at least as put in the application) in its entirety. Though initially it was suggested by the Applicant on paper that it was a factual error to describe a cheque drawn by the Halifax on its own account as a 'draft' I do not accept that this was materially false: a cheque drawn on a branch suspense account by a building society is to be treated in every respect in a similar way to a cheque drawn by a bank upon its own funds. The latter describes a 'bankers draft'. That description was entirely appropriate for a cheque (or draft) such as that exhibited in the present case.
38. It is also entirely true that the 10% deposit of £18,000 (not £18,030) was paid by a banker's draft. The Applicant drew attention to the difference between this sum and that which was on the face of the draft: £18,030. However, the sale price was £180,000; a 10% deposit is £18,000; that sum undoubtedly was paid by the draft. No more than that was paid as deposit. As it happens, the £30 was an administration fee charged by Natwest: it was not, in itself, part of the deposit even though paid by the same instrument. The fact that £30 more was also paid was not disclosed in paragraph 7.12. I think it should have been (and if need be the explanation for the additional £30 volunteered). However, in the context of this case, the failure to record the face value of the instrument was immaterial.
39. The Applicant argued in his witness statement that the figure of £18,000 was deliberately chosen to provide a spurious round sum, indicating a greater probability of fraud. There was a faint attempt to suggest that in cross-examination which was, sensibly, not persisted in by Mr Keeling. I reject this argument. It simply does not follow where the purchase price of property is £180,000 that to refer to a deposit of £18,000 is more likely to lead to an inference of fraud than a figure which is not a round figure sum – it is so obviously 10%, which is the percentage deposit conventionally sought in the purchase of residential property, that it would, rather, be surprising if it was anything else. Indeed, if Mr Bailey had been keen to arouse suspicion as to the Applicant and the transactions, and thoughtful as to his material, there would have been more reason for him to state £18,030 than £18,000, since this would immediately suggest that there was something unexplained about the transaction. I do not place any real weight on this latter point – it is too weak a basis to do so - but as I record below I have drawn a rather different conclusion from the failure to be accurate as to the face value of the draft.
40. The evidence was that the deposit came from 'an unknown source'. It is accepted between the parties that that is inaccurate. The immediate source was an account of Mr Kerry Kayes at the Halifax. The draft bore on it, amongst other numbers: "(2/50933143 - 9)" the eight central numbers of which (50933143) are the account number of an account held in the name of Kerry Kayes. Accordingly, the court should have been told that the immediate source of the deposit was Mr Kayes. The natural inference from the words actually used, taken in context, was that the source of the deposit represented the proceeds of criminal activity in which the Applicant was central.
41. Although it is right that in the context of this particular case it was not critical to the success or failure of the application of recovery (given the extent of other evidence) that the Applicant had title in Brook Lane Chapel and the surrounding land by funding his acquisition of it by payment in part of the deposit funds, and that to answer the question of whether the money came from an account of Mr Kayes was not necessarily to answer the question as to the ultimate source of the funds, the strong hint in paragraph 7.12 is that the draft was funded more directly by the Applicant than was the case.
42. There were rival submissions as to whether such a statement would interfere with the course of justice in a material respect. Mr Talbot pointed to the fact that the Applicant had tried to overturn the decision of Simon J in the light of the falsity of what was stated in paragraph 7.12, but had failed in his attempts to do so. Having had an initial application for permission to appeal against Simon J's order refused by Hallet LJ as being totally without merit, the Applicant began proceedings to set aside Simon J's judgment on the grounds that it had been procured by fraud. Those proceedings were struck out by Master Yoxall, whose judgment was upheld by Tugendhat J, whose judgment in turn was upheld by the Court of Appeal when it refused a renewed application for permission. These three tribunals did not conclude as they did on the basis that there was no evidence of fraud, but rather that the allegations of fraud if established could have made no difference to the outcome. In short, there was quite sufficient in the matters to which Simon J drew attention elsewhere in his judgment to justify his conclusion. Mr. Talbot thus argued that the mis-statement in paragraph 7.12 had not interfered with the course of justice.
43. Though initially Mr Talbot submitted that the untruth in the present case did not interfere with the course of justice at all given those decisions, I cannot read the "course of justice" in this sense as referring narrowly to the outcome of proceedings. Indeed, Mr Talbot QC drew back somewhat from his initial submission, recognising that there may be circumstances in which witnesses give completely false evidence to a court, in a deliberate attempt to mislead it, in cases in which the court on final analysis draws a balance in favour of the other party. He could not contend properly that if the party on whose behalf the false evidence had been given had succeeded there would be a contempt, but if that party did not there would not be, and that in this latter case no such proceedings could be taken against the dishonest witness.
44. It is, in my view, to interfere with the course of justice to give evidence which potentially can, and is likely to, influence the court when that information is untrue, irrespective of whether in the eventual outcome the court reaches the same decision as it would do if no such attempt were made.
45. Since I consider that the purpose of paragraph 7.12, viewed broadly, was to persuade the judge to the view that Brook Lane Chapel was recoverable property, and was potentially material in doing so, I would have been satisfied of Mr Bailey's knowing of its likelihood to do so if I were satisfied to the requisite standard that he had had no honest belief in its truth. That is the critical issue in the case to which I now turn.

Honest Belief: discussion and conclusions

46. To asses whether Mr Bailey had an honest belief that what he was saying was true is not simply a question of responding to the impression that Mr Bailey gave me from the witness box. It is to be assessed against the probabilities – including (against him) the unlikelihood not only that an obvious inquiry would not be made, but also that a number of signs that it had been made and answered in a way which was unhelpful to success in an application to recover property would all be missed. This has, however, to be put in context.
47. The evidence which I accept from the testimony of Mr Bailey and Mr Elias is this:-

(a) Mr Bailey does not know why he did not make any further enquiry as to the immediate source of the funds which paid for the deposit;

(b) he saw his role when he took over from Mr Elias as being one where the necessary investigations had already been completed by others, with the exception of any further inquiries arising from answers given in interviews to be conducted with the prime witnesses involved in November 2008;

(c) he had between 20 and 30 ring file binders of material (A4, full depth) with which he had to become familiar, along with online material;

(d) there was no proper handover between Mr Elias and him: Mr Elias's evidence was that it was about a 15 minute chat. No note was made. No formal instruction was given to Mr Bailey as to what he was to do. Though it was as a result completely open to him (as he accepted) to make enquiries, it was not unreasonable for him to think that his role was essentially to review work which had already been done, to draw the most relevant strands together, and present them to the court, modified as might be after considering the material obtained on interview;

(e) Mr Elias, who I considered to be transparently reliable as a witness, thought that Mr Bailey might well not have seen the file note he made of his conversation with Trish Miller of the Halifax. The computer system was difficult and unwieldy; it was difficult to negotiate. Information such as that was not on the face of it easy to spot: one would need to go through it;

(f) Mr. Elias did not recall having himself told Mr Bailey of the response from the Halifax: and indeed, if he had been asked about it by Mr Bailey after he took over, he would most likely have said he did not know. He drew this conclusion because when he had reviewed the witness statement of Mr Bailey before it was presented to the court the terms of paragraph 7.12 had not struck him as untoward;

(g) There was a significant amount of information which Mr Bailey had to assimilate. The fact that it took him three months or so to draft the witness statement was held out by Mr. Keeling as an indication that he took great care. It suggests to me, rather, that he was fitting in drafting the statement whilst attending to other tasks, a process which is quite likely to lead to some inaccuracies, or the overlooking of some points.

48. I did not form the impression that Mr Bailey was the most careful of persons. The fact that he described the sum payable by way of deposit as £18,000 is easily explicable by his taking 10% of the known purchase price, and omitting to cross-check this against the actual sum on the face of the draft, simply not referring to the draft at all but assuming that it is what it said. I take from this small error, immaterial as it is to the question whether the property was recoverable, that Mr Bailey was not someone who checked very carefully what information he had.
49. This supposition is confirmed to an extent by the fact that in his briefing note for the person conducting questioning of Kerry Kayes and others in November 2008, he used the same form of words as was later to appear in paragraph 7.12 of his witness statement. This suggests to me that when preparing the latter he simply copied his earlier work, on the assumption that nothing really had changed. Though this might be criticised as somewhat casual, it is not dishonest: and even a conclusion that it is casual would have to be balanced carefully against the amount of other work which Mr Bailey was doing at the time and in recognition of the fact that he was not at the time a very experienced investigator. I accept the point made by Mr Talbot that when preparing the briefing note he would not have been intending to influence the court: it was far too early for that to have been a motive, and I acquit him of it.
50. His evidence to me that he had not investigated anything, and then, in effect, conceding that he had investigated matters later on in the investigation than the time about which he must have assumed he was being asked, indicated to me a broad brush rather than point precise approach to stating facts. This seems to me to be more consistent with the evidence as to the deposit being given as it was because Mr Bailey was willing to make an assumption as to its source being unknown, without careful checking of his sources, rather than it being a case of his knowing very well what was to be said, and suppressing what he knew to be the truth because it did not suit the case to be made by SOCA. In short, he did not impress me as particularly careful and meticulous.
51. At the time that the interviews were conducted, the issue of the provenance of the deposit monies was fairly and squarely raised with Mr Kayes. Mr Bailey was entitled to draw some support for the view he expressed in paragraph 7.12 from the failure of Mr Kayes to explain how the deposit was paid and where it came from. Though this might be capable of explanation, so far as Mr Kayes is concerned, by reference to the fact that he was a very wealthy man for whom a small transaction such as this would not be particularly memorable when set amongst others, nonetheless it was clear to me from Mr Bailey's evidence that he felt that even if he had stated that the immediate source of the deposit funds was from an account in the name of Mr Kayes, the likelihood (as he still saw it) was that that account derived in part, or that the funds were covered somehow, by the proceeds of the Applicant's unlawful activities. It cannot be said that to draw such a conclusion is unreasonable, since it is essentially a conclusion which Simon J, Master Yoxall, Hallett LJ, Tugendhat J and the Court of Appeal have all since separately drawn.
52. As I have already noted, Mr Elias told me, and I accept, that the system which SOCA operated was difficult and unwieldy to access. He thought it was possible that Mr Bailey may not have seen the material which was there to be seen which would have shown that the Halifax draft had its immediate source in a fund in the name of Kerry Kayes. SOCA as such was not separately represented before me. Nonetheless, on this and other evidence I heard it appears that the systems of SOCA as operated in 2009 and before that were far from impressive. Not only was there was no reliable handover – a 15 minute chat, without any obvious direction left Mr Bailey, a comparative novice, to his own devices – but there was no proper system by which a mass of data could properly be searched quickly. It seems that there was little in the way of support for Mr Bailey; and it is regrettable that SOCA did not make it clear to the judge that Mr Bailey had had the limited involvement which he had in carrying out actual investigations.
53. That said, I am conscious that the focus of this application is very narrow, upon one small, though significant, piece of data. The fact that it was not difficult to lose sight of it was demonstrated to me by the fact – which again I accept – that Mr Elias himself did not remember that he had had the response he did from Trish Miller of the Halifax when he reviewed the witness statement of Daniel Bailey prior to its being submitted to Court. To read the draft as showing on the face of it that its source was Kerry Kayes is impossible without further information: his name does not appear, and the number of the relevant account is not set out as such. I accept, too, that Mr Bailey had investigated the accounts which Mr Kayes had, and had not discovered that he held any at the Halifax – though he knew the Applicant did, even if not at the Denton branch. There is no evidence that Mr Bailey himself approached the Halifax.
54. As an organisation, SOCA was responsible for providing the Court with complete information. It failed to do so. The court should have been told that the immediate source of the funds was an account in the name of Kerry Kayes. That however still leaves room for argument what the provenance of the money in that account was, or as to cross-accounting between receipts elsewhere into the hands of Kerry Kayes: as to which, it was clear to me during the course of his evidence that Mr Bailey was reluctant to depart from his view that the source was the Applicant. As I have said, this was not an unreasonable view to have: I have, ultimately, concluded that it is probably the view which Mr Bailey had.
55. I think this view was probably based more upon what Mr Bailey expected to be the case than that which was proved to be so. The information should not have been give to the Court in the form it was in paragraph 7.12. However, I cannot conclude beyond reasonable doubt that Mr Bailey was dishonest (or, if it be different, that he had no honest belief in the truth of his personal belief in the Applicant's involvement to which he was attesting in his statement). His other behaviour was consistent with this. He prepared the briefing note he did prior to the interviews in November 2008. Nothing that was said in the course of those interviews was likely to shake the view he had expressed that the source of the draft funds was unknown. Kerry Kayes, who might have done so, was noticeably vague. His line manager, Costas Elias, who had investigated the source of the Halifax draft, was given his witness statement to review. He did not suggest to Mr Bailey that he had missed the point. Any suggestion of a conspiracy between Mr Bailey and Mr Elias was expressly disavowed by Mr Keeling. There is no evidence of it.
56. Mr Keeling ultimately posed three possibilities: that Mr Bailey was honest, or careless, or dishonest. Though Mr Bailey did not say in his witness statement of 2009, as he might have done, that "the source is unchecked" the likeliest of those three possibilities seems to me to be the second.
57. For these reasons I am not satisfied to the requisite standard that Daniel Bailey had no honest belief in the truth of what he was saying at paragraph 7.21. It follows that this application must be dismissed.