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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Grainger & Anor v McLean [1999] ScotCS 47 (12 February 1999) URL: http://www.bailii.org/scot/cases/ScotCS/1999/47.html Cite as: [1999] ScotCS 47

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Ian McLean was convicted in the High Court in Airdrie on 6 August 1992 of a contravention of section 4(3)(b) of the Misuse of Drugs Act 1971. The accused was sentenced to eight years imprisonment. A motion before sentence was made on behalf of the Crown for confiscation under the terms of Part I of the Criminal Justice (Scotland) Act 1987. In due course after a hearing a confiscation order was made by Lord Sutherland on 4 May 1993 in the sum of £98, 966. Prior thereto, on 19 February 1992 a restraint order had been pronounced against the said Ian McLean under and by virtue of section 8(1)(a) of the said Act, interdicting him from dealing with his realisable property.

Although the provisions of Part I of the Criminal Justice (Scotland) Act 1987 ("the 1987 Act") applied, and continue to apply, to confiscation proceedings in respect of Ian McLean, it is to be noted that its provisions were significantly amended (and a parallel jurisdiction created for confiscation or forfeiture in respect of crimes other than drug trafficking) by the Criminal Justice (Scotland) Act 1995 and that these provisions were all subsequently consolidated in the Proceeds of Crime (Scotland) Act 1995, which has since 1 April 1996 provided the current code in respect of confiscation or forfeiture.

This Note for Directions comes before me at the instance of the Joint Administrators who were appointed by the court at the instance of the Crown under section 13 of the 1987 Act on 20 February 1996 to realise properties subject to the confiscation order made in respect of Ian McLean, in particular

The interlocutor further required the said Ian McLean, Mary McLean, Alliance and Leicester Building Society and Bank of Scotland, upon intimation by the clerk of court in terms of section 13(3)(a) of the Criminal Justice (Scotland) Act 1987, to give possession of the property referred to in this interlocutor to the Administrators appointed by it. No other specific directions were made by the court at that time. Section 14(1)(n) of the 1987 Act provides "that an Administrator may at any time apply to the Court of Session for directions as regards the discharge of his functions". The present application is made in terms of these powers.

Counsel appearing on behalf of the Noters explained, and it is averred in the Note, that the Noters have duly entered upon their duties and realised property in accordance with the court's confiscation order. They have realised the net sum of £85,217.40. This sum, it is said, is less than the amount which it was anticipated would be achieved by realisation of the assets. The Noters aver that they are in a position to remit the said sum (less administration and legal fees) to the Sheriff Clerk at Paisley in accordance with the court's confiscation order of 4 May 1993 and with section 16 of the 1987 Act. The Noters are desirous of obtaining the court's guidance in respect that it appears to them that the wife of I McLean, Mrs Mary McLean, has a claim over part of the sums realised by them. The Note was served on that said Ian McLean, Mrs Mary McLean, the Accountant of Court and the Lord Advocate, but answers were lodged by Mrs McLean alone, and before me only the Noters and she were represented by counsel.

To understand the circumstances which give rise to the Noters' concerns it is necessary to look at some more detail at the background. Section 1(1) of the 1987 Act provides that in an appropriate case the court may make an order

Section 5(4) of the Act provides:

Section 6(1) provides:

Section 5(1) of the Act provides, as far as relevant, that:

Section 5(2) provides: "In sub-section (1) above "the whole estate of a person" means

Lord Sutherland's decision of 4 May 1993 to make a confiscation order is reported in 1993 S.C.C.R. 917. For reasons given in detail the court assessed the value of the proceeds of Mr McLean's drug trafficking in accordance with the detailed provisions of the 1987 Act at £146,064. Under section 5(4) for the purposes of section 1(1)(b) the court assessed the value of the property that might be realised at the time the confiscation order was made at £98,966. For reasons given a confiscation order was pronounced in respect of the latter sum which, in the circumstances, was the maximum sum in respect of which an order could have been made having regard to the provisions of section 1(1)(a) and (b).

In the course of assessing the value of the proceeds of drug trafficking the court found that prior to the date which was the relevant starting point for the purposes of section 6(1)(a), apparently 11 February 1986, Ian McLean and his wife jointly owned heritable property at Drumoyne Drive, Glasgow. No question of implicative gift therefore arose in respect of Mrs McLean's share. When that property was sold in 1991 the proceeds were used by Mr and Mrs McLean to purchase, jointly and for £144,584, property at 37 Berryhill Drive, Giffnock, Glasgow. The court indicated (at p.921)

The court's assessment of the value of realisable property is set out at p.927 of the report as follows:

Schedule 13 of the Crown's statement to which the court referred showed (it was agreed before me), before the adjustments referred to by the court, the total net value for 37 Berryhill Drive of £111,525 and of the joint Alliance & Leicester Building Society and Bank of Scotland accounts of £7,000 and £1,159 respectively. It was further agreed before me that the appropriate sum for the latter account, which had been frozen, was in fact £914. In addition there were other assets shown as realisable property, namely a Bank of Scotland account in the name of Mr McLean alone (Alyth Arbor account), the redemption value of a Scottish Amicable policy and payments due in respect of pension from Glasgow District Council.

Following the making of the confiscation order the Crown petitioned for the appointment of the Noters on the basis of averments that the said Ian McLean had no intention of paying the sum due under the confiscation order and no intention of realising any of his realisable property. As indicated above, the interlocutor appointing the Noters appointed them to realise inter alia the heritable property jointly owned at 37 Berryhill Drive, Giffnock, Glasgow and the sums at credit in the two joint accounts (in addition to the sum held by Ian McLean trading as Alyth Arbor at the Bank of Scotland). All of the joint property was realisable property in terms of section 5(1). Section 23, however, regulates the exercise of powers by inter alios any administrator. Sub-section (3) provides that

The Noters were not authorised to realise the other items which had appeared on Schedule 13 as realisable property, and were not in a position to explain what in relation to those items of property the present position was. I was informed, and a schedule was produced indicating, that the Noters had realised £5,205.86 from Ian McLean's Bank of Scotland account, £914.00 from the Bank of Scotland account in joint names £7,000 from the Alliance and Leicester Building Society account in joint names and a net sum, after repayment of the mortgage, of £96,943.44 from the sale of 37 Berryhill Drive, Glasgow. After deduction of remuneration, VAT and outlays, a net sum of £85,217.40 was now held on deposit.

Section 16 of the Act deals with the application of proceeds of realisation and other sums. It is provided in sub-section (1):

Against that background the concerns of the Noters arise from the fact that although the court at the time of making the confiscation order had, for the purposes of section 1 of the 1987 Act, excluded sums found to be the value of Mrs McLean's property not caught by any implicative gift from his assessment of the property that might be realised at the time the order was made, the Noters were, as authorised by the interlocutor appointing them, and in accordance with section 5(1), entitled to realise the whole joint property, and despite section 23(3) had in the circumstances found it necessary to do so. In the absence of any express provision within the Act as to what was to happen to the proceeds of Mrs McLean's property beyond the current value of any implicative gift, the question arose as to whether such sums were to be applied towards the satisfaction of the confiscation order, or whether the court should direct that appropriate sums be paid to Mrs McLean first, and if so what sums should be the subject of any such direction. Both counsel before me were essentially agreed that that was the issue for resolution. It was, in particular, it seemed to me, agreed that although the court's findings in respect of Mrs McLean's property would be highly relevant to the resolution of the question, these findings could not be said to constitute directions to the Noters - the findings being made for the purposes of the making of the confiscation order alone and not purporting to be directions to any administrators who might be appointed at some future date, at a time or times when the values of the property might well have changed.

Both counsel essentially submitted that the court should make directions that an appropriate sum from the proceeds of realisation be paid to Mrs McLean; that, in particular, it would not be consistent with the policy of the Act to require the proceeds of the realisation of property which was essentially hers, of a value higher than the current value of any implicative gift made to her, to be applied towards the making of a confiscation order imposed on Ian McLean.

I have come to the view that it would indeed be appropriate to make such a direction. Although it seems that section 5 contemplates that the whole property belonging to someone to whom an implicative gift had been made could be realised, consideration of Part I of the Act as a whole suggests that it cannot have been Parliament's intention that the whole proceeds from such realisation, in circumstances where an amount greater than the value of any implicative gifts is realised, should nevertheless all be available to satisfy the confiscation order. In the first place, it is plain from section 1(1)(b) and section 5(4) that the amount of any confiscation order is essentially measured only by the value at that time of all realisable property owned by the convicted person and of all implicative gifts which have been made by him - in the sense that no confiscation order may be made of a sum higher than the total produced thereby. This total is described as "the property that might be realised in terms of this part of this Act at the time the confiscation order is made" (section 1(1)(a)). This would seem to be consistent with an intention that whatever proceeds in fact might be realised only an amount referable to any implicative gift would be used to satisfy the order. Secondly, and perhaps more significantly, section 23(3) specifically directs that the powers of realisation shall "so far as is reasonably attainable, be exercised so as to realise... property of a value no greater than the value for the time being of" any implicative gift made to that person. Although the annotations to the Current Law Statutes apparently go further where it is suggested that the sub-section "provides that the powers mentioned in sub-section (1) shall be exercised only in respect of property of a value no greater than the value for the time being of that gift", and although the sub-section appears to envisage that there may be circumstances in which it would be necessary (perhaps most obviously in the case of joint property) to realise more of a third party's property than the value of any implicative gift, it is difficult to believe that Parliament can have intended that in certain circumstances such a third party could lose the whole value of his or her estate simply because the way that property is held makes it necessary for administrators to realise the whole property to obtain relevant proceeds. In the circumstances it seems to me that there would require to be very clear indications indeed before section 16 could reasonably be construed in its context as requiring that all the proceeds realised should, notwithstanding the powers of direction given to the court, be made available in satisfaction of the confiscation order. I do not find such clear indications.

It is true that it is perhaps odd that there is no express provision, but it may be that this is because, in any case, the question of the current value of any implicative gift would require to be assessed. Equally, although section 16(2) provides:

that provision was no doubt necessary to cover a situation where, for example, the proceeds of realisation of the convicted person's whole estate and the estate of a third party up to, but not beyond, the value of an implicative gift produced a surplus (no doubt because of a rise in value since the date of any confiscation order).

As regards what specific total sum should be directed to be paid to Mrs McLean, her counsel initially argued that it should be the total of the sums apparently previously isolated by the court as representing the value of her property untainted by any implicative gifts - namely the total of £22,081, £5,450 and £97, being £27,628. It was however in the course of the debate recognised that whereas the sums of £5,450 and £97 respectively might reasonably be sought in circumstances where the total value of the relevant bank accounts, which had been the subject of restraint orders, had not changed, the net value of the heritable estate had apparently fallen from £111,525 to £96,943.44. Counsel, as I understood it, ultimately accepted (rightly in my view) that just as, had there been an increase, Mrs McLean would have been entitled to claim a proportionate increase on her originally assessed £22,081 entitlement, so the sum should be reduced proportionately to reflect her share of the loss in value of the property. The appropriate figure in respect of the proceeds of the sale by the Noters of the heritable property would therefore fall, applying the 13.23% reduction in net value, to £19,195.02. It was agreed before me that the expense of realising the property (to obtain the proceeds of Mr McLean's share and the value of any implicative gift to his wife) should not reduce the value of Mrs McLean's untainted share). The total sum which would fall therefore to be paid to Mrs McLean would be £24,742.02.

Turning to the specific questions posed in the Note, these are as follows:

In light of the views expressed above I deal with these as follows:

I should perhaps add that it is not clear to me what is meant by the comment in question (c) that the total sum realised is less than the sum which it was anticipated would be realised, given that the sum realised prior to the deduction of remuneration etc, was £110,063.30. In fixing the sum of £98,966 as the figure for the confiscation order, account was not taken by the court of any expenses of realisation or administrators' remuneration which would always fall to be deducted. Further, in this case, it appears that there may still be realisable estate, not the subject of the Noters' appointment, which could be made available towards further satisfaction of the confiscation order, but as to that, as indicated above, I have no clear information.