The Criminal Law Solicitors Association also hit out at the £240 the society is proposing to charge for reaccreditation.

Any solicitor who entered the scheme before 31 December 2007 will be required to reaccredit by the end of this year.

In a letter to Law Society president John Wotton, the association’s chairman, Mike Jones, said criminal lawyers are already heavily regulated by the Legal Services Commission and the Solicitors Regulation Authority. He said CLAS has “no value” to clients, the commission – which has never made it a requirement – or professional colleagues.

“The existing contractual and CLAS requirements already oblige duty solicitors to undertake 10 hours of ‘crime specific’ CPD annually without any requirement to pay a fee to the Law Society,” he noted.

“You will gather that the idea of reaccreditation is very unpopular amongst the profession. They have suffered massive fee cuts as well as a reduction in work volumes through a reduced number of arrests and prosecutions as other government departments and agencies save money. Pressure on them is immense.

“It is unfortunate that they should see their own professional representative body setting further hurdles for them to jump and, perhaps equally significantly, attempting to raise money for the society’s purposes from them.”

In a consultation on reaccreditation issued last week, the society said: “We do not consider that a scheme that is meant to be an indicator of quality can be credible in the modern world if those who are accredited are not re-assessed regularly to ensure that they remain competent and up to date.

“We wish, however, to ensure that the means of achieving re-accreditation are proportionate and do not place unnecessary burdens on practitioners.”

Solicitors will have to fill in an application form and include details of six hours of relevant criminal litigation CPD, undertaken in the year prior to the date of the application for re-accreditation. The fee of £200 + VAT covers a further five years of accreditation. “It represents the costs of administering your membership for that time.”

Source – Legal Futures – 27 April 2012

The court heard that the total value of Mark Peacock’s assets at the time of his sentence in 1997 was only £823. A confiscation order was made for that amount but the High Court later issued a certificate increasing it to £273,717, the amount he was held to have benefited from his drug trafficking.

Peacock challenged the lawfulness of the certificate, but his arguments were rejected by the Court of Appeal.

Giving the leading judgment in In the Matter of Peacock [2012] UKSC 5, Lord Brown said that if Peacock’s offences were committed after 24 March 2003, the Proceeds of Crime Act 2002 (POCA) would apply and there would be no doubt that a further court order could increase the amount.

Since Peacock’s offences were committed before this date, Lord Brown said they had to be dealt with under section 16(2) of the Drug Trafficking Act 1994.

Following his release from prison in November 2000, Peacock “went into the property business with his father and acquired very substantial further assets”.

Lord Brown said: “The main argument in support of the appellant’s case is that it is unfair and counter-productive to increase the amount of a confiscation order by reference to after-acquired assets.

“This, it is said, would militate against his reform and rehabilitation and be likely to discourage him (once he has satisfied any initial confiscation order and been released from any sentence of imprisonment) from engaging in lawful and openly profitable employment.

“And, of course, the longer after conviction it is sought to confiscate after-acquired assets, the more unfair it may appear.”

Lord Brown said he recognised that parliament could have chosen a different policy with regard to after-acquired assets.

“But it seems to me perfectly understandable that in fact parliament decided (as indisputably it did when later enacting POCA) to leave it open to the courts as a matter of discretion to mulct a defendant of his criminal gains on an ongoing basis irrespective of precisely how and when he came by any increased wealth.”

Lord Brown held that the section 16(2) certificate was lawfully issued by the High Court and that the section required that after-acquired assets are “properly to taken into account”.

He dismissed the appeal. Lords Wilson and Walker agreed. However, Lord Hope and Lady Hale dissented.

Are forensic accountants becoming a more common feature of the litigation landscape?

Peter Clough, head of litigation, Osborne Clarke: They are, but it’s important to recognise that this is due in part to the greatly increased ­requirement to process and review electronic documents. Most sizeable firms of accountants have document extraction and review offerings, which I’d distinguish from the ’accounting’ part of forensic accounting.

Tom Ellis, head of corporate ­investigations, Wragge & Co: Yes, because the areas they’re becoming involved with seem to be expanding. In addition to the more traditional areas such as quantum or as experts, there’s an increase in fraud work and corporate investigations, and you also have their relationships with ­internal audit.

We’ve had a number of fraud-­related matters in the past 12 months where they’re the first contact point on the client side. Around issues on bribery and corruption forensic ­accountants have a higher profile as a result of compliance, in particular arising from the Bribery Act 2010 and the US Foreign Corrupt Practices Act.

Richard Bunce, financial markets litigation partner, Simmons & Simmons: Forensic accountants have been in the background of ­litigation processes for a long time, but they’ve had greater visibility ­recently. It’s a truism that more frauds come to light in recessionary than in boom times. Given the prevailing economic climate, and some high-profile fraud explosions, it’s ­inevitable that the need for forensic accounting services is on the up.

In what situations are forensic accountants normally needed? Should they ever be instructed as a risk prevention measure?

Clough: Traditionally forensic accountants have been needed at the stage in the litigation process leading up to providing accounting evidence on quantum. They can, however, also be a useful part of a claimant or defendant team at a much earlier stage, as both clients and their lawyers are keen to know what claims are ’worth’ and to develop their strategies on heads of claim accordingly.

Defendants to claims also often need to know at an earlier stage what their likely exposure might be so that appropriate reporting and reserve setting can be carried out.

Ellis: It’s the usual range of issues on quantum. I do a fair amount of professional negligence work involving the financial services industry and accountants – particularly where it’s expert-led – have an important role to play in terms of helping understand the financials in fraud and asset recovery work.

They’re already instructed as risk prevention. It seems to me they’re often instructed through chief ­financial officers, finance directors, internal audits or audit committees.

We also get interesting cases arising from audits where forensic teams are brought in to look at specific issues that are uncovered or revealed in the course of an audit.

Bunce: Most commonly cases where it’s necessary to track payment flows. But they can also help with testing the functional integrity or otherwise of sophisticated financial models.

However, it’s not usual to instruct them for risk prevention reasons ­unless there’s a specific business threat or suspected systems gap.

How do you think forensic accountants can best assist on an issue?

Clough: It really depends on the issue. We find that obtaining an early, quick view on quantum issues without a full forensic investigation is often what our clients value most.

One key question to ask when ­instructing firms of forensic accountants, and in particular those operating large teams, is: who’s going to be the person giving evidence if the matter goes to trial?

Ellis: They should be involved early and there should be effective teamwork. As with all areas of professional services, it helps to know who’s who and where individuals’ and teams’ strengths lie.

Bunce: Raw data can sometimes be a bit dry and impenetrable. The better forensic experts interpret the data in a way that gives it meaning – brings it to life, if you like – and helps the lawyers in their development of a ­coherent case theory.

Should forensic accounting be regulated more closely?

Clough: No. The existing methods of regulation work well from our point of view.

Ellis: It’s not an issue I’m aware of.

Bunce: No. We’re overregulated as a society. Purchasing forensic services is caveat emptor, but if you select someone reputable – and there are plenty of reputable people who have current or former associations with large firms of chartered accountants – you should be okay.

Two of the most important things from the buyer’s perspective are defining the brief precisely and ­keeping a close eye on the budget.

Source: The Lawyer – 16 April 2012

In the early-1990s MMI ran into financial difficulties and, in 1993, it entered into an agreement with Zurich Insurance Company following which many local authorities moved their EL and PL cover to Zurich.

In 2006, the Court of Appeal gave its judgment in Bolton MBC v Municipal Mutual Insurance to the effect that, in public liability mesothelioma cases, the ‘injury occurring’ wording was triggered by the date of deemed injury as at the point of sub-clinical malignancy. MMI then changed its approach to EL mesothelioma cases.

In 2007, MMI commenced proceedings against 10 local authorities and Zurich, for a declaration that it was not obliged to indemnify claims against the local authorities where, at the time of asbestos exposure, its wordings were only triggered by injury occurring during the policy period.

The practical effect of successful test litigation would have been for MMI to avoid significant mesothelioma liabilities if its policy coverage was limited to injury occurring before 1993.

The local authorities were selected by MMI as representative parties covering a range of factual scenarios and had not sought to become involved in the proceedings.

To mitigate the financial burden of the litigation, the local authorities therefore banded together in a collective, appointing a coordinating solicitor for procedural matters and sharing the same counsel team.

These local authorities, along with Akzo Nobel UK and Amec, represented the position of solvent employers still in existence at the present day and forced to self-fund historic mesothelioma liabilities – that it was previously assumed were covered by insurance – pending the outcome of the test litigation.

Zurich represented the position of the ‘live’ insurance market and argued against the contention of the run-off insurers that, in effect, the EL policy trigger should be switched from historic exposure to present-day injury.

The underlying mesothelioma claims against the local authorities raised indemnity issues in relation to two MMI wordings. The second wording (1958-1974) contained a ‘sustained’ policy trigger, whereas the third wording (1974-1992) contained a ‘sustained or contracted’ policy trigger.

In the High Court, all of the 10 local authorities were winners because the judge decided that both the ‘sustained’ and ‘contracted’ wordings meant ’caused’ and were consequently triggered by the date of asbestos exposure and not injury.

In the Court of Appeal, there was a mixed result because the judgment provided that ‘sustained’ was triggered by injury whereas ‘contracted’ was triggered by exposure.

Only the seven local authorities claiming under the third wording – which used the ‘contracted’ formulation – were therefore winners. The remaining three claiming under the second wording were losers because at the time of asbestos exposure the ‘sustained’ wording was only triggered by injury.

The Supreme Court judgment restores the High Court position and all of the 10 local authorities are therefore entitled to policy indemnity from MMI.

The wider local authority community – of which approximately 86% was provided with EL and PL cover by MMI at some time – will be relieved to learn that it will not face the prospect of self-funding future mesothelioma liabilities.

The test litigation came at a time of economic downturn and budget pressures when the consequences of an adverse judgment might have included diverting resources from local services.

Source: Post Online – 28 March 2012

Over 2000 people die from mesothelioma each year and Unite the Union estimates that about one in eight of those have the disputed insurance wordings, which means that they could benefit from this landmark ruling.

The Court of Appeal’s divergent judgment had placed the families into uncertain waters, but the Supreme Court had little trouble in construing an EL insurance policy in accordance with its commercial purpose to provide employers with protection against the liabilities arising out of the employment of its workers.

The Supreme Court held that injuries or diseases are “sustained” or “contracted” when the process leading to mesothelioma and death is initiated by the wrongful exposure of the employee to asbestos which causes or contributes to the disease.

This construction was consistent with the underlying purpose of employers’ liability insurances both before and after the Employers’ Liability (Compulsory Insurance) Act 1969.

Since mesothelioma symptoms are hidden until months or years before death, this decision is particularly important for victims seeking compensation from an employer which may now be insolvent.

Maureen Edwards doggedly pursued justice for her late father Charles O’Farrell, who was exposed to asbestos in the 1960s by an employer insured by Excess Insurance Company.

She claimed under the 1930 Act, but Excess (in common with a number of insurers in run-off or insolvency) argued that her father had not “sustained” an injury during the policy period. It said that he sustained injury shortly before his death in 2003 when there was no insurance.

Lord Mance eschewed “over-concentration on the meaning of single words or phrases viewed in isolation” and construed the insurance contracts “more broadly”.

He referred to the commercial purpose of insurance and the Rainy Sky decision that contractual meaning should accord with business common sense.

Backing the interpretation preferred by the majority of the London market, he held that the word ‘contracted’ could mean the causation or initiation of a disease, rather than its development or manifestation.

He found that, although the word ‘sustained’ may initially appear to refer to the manifestation of an injury, the construction consistent with the nature and underlying purpose of the insurance was one which looks to the causation of the disease which injured the employee. If not, the commercial purpose of employers’ liability insurance would be undermined.

The Court revisited complex decisions on causation in asbestos cases, in particular Fairchild and Barker, concluding that the cause of action exists because:

• the defendant has previously exposed the victim to asbestos

• that exposure may have led to the mesothelioma

• that mesothelioma has been suffered by the victim.

This was a sufficiently broad causal link to justify finding that the disease can be regarded as having being caused within the insurance period, since exposure may have played a role in the actual occurrence of the disease.

The other Justices agreed, but Lord Phillips, dissenting on this point, held that it is the exposure to the risk of mesothelioma which is the correct analysis of the Fairchild principle.

Such exposure cannot satisfy neither the concept of injury nor the concept of causation for the purposes of insurance policies and so mesothelioma could almost never be covered by insurance.

Fortunately for the victims and their families, he was alone in this view. This is a decision which can be welcomed by insured and insurers alike as it reinforces that English law will give a commonsense and businesslike interpretation to insurance contracts and not be a slave to semantics or dictionary definitions.

Source: Post Online – 28 March 2012

They were imposed by Northampton Crown Court on two men, Shakeel Ahmad and Syed Ahmed, for their part in what Lord Justice Hooper described as a “massive carousel fraud”.

Delivering judgment in Ahmad and Ahmed v R [2012] EWCA Crim 391, Hooper LJ said: “None of the money has been paid and any sum eventually realised is likely to be far less than the £184,667,334 owed.

“The unpaid sum is presumably represented in the reported £1.26bn of unpaid confiscation orders shown as an asset in the accounts of the Ministry of Justice and for which the minister has received public blame.”

Hooper LJ said both men claimed they had “no realisable assets”, a claim which was “unsurprisingly rejected” by Mr Justice Flaux in the High Court.

“He described the appellants as unscrupulous and deeply mendacious, particularly about their assets. The evidence that the appellants gave to the effect that they were penniless was described by the judge as ‘frankly ludicrous’.

“In so far as revealing their assets the appellants were ‘complete liars’. Both appellants were very uncooperative throughout the confiscation proceedings. The judge comprehensively rejected submissions that the confiscation proceedings were an abuse of process. He was fully entitled to reach all of these conclusions.”

Ahmed and Ahmad were convicted of conspiracy to cheat the public revenue in 2007 and sentenced to seven years’ imprisonment.

The court heard that the fraud involved five companies in Ireland purporting to export large quantities of computer parts to five ‘missing traders’ in the UK. The amount of VAT fraudulently reclaimed by the exporter was £12.6m.

“In the past many judges would have stopped at this point and have treated the VAT which HMRC has paid out as a result of the fraud, as the only benefit,” Lord Justice Hooper said.

He said that Flaux J “took a different view” and held that the benefit was the total amount of money which had passed through the bank accounts of Ahmed and Ahmad’s company in furtherance of the fraud, concluding that it was obtained “in connection with the commission of the offence”, under section 71(4) of the Criminal Justice Act 1988.

“It cannot realistically be suggested that the appellants have the means each to pay £92m, a figure that, if unpaid, is also subject to interest at the rate of eight per cent.

“The mere fact that a loss to the revenue of £12.6m leads to two confiscation orders in the sum of twice £72m (before uplift) shows, we believe, that something has gone wrong.”

Hooper LJ said that a confiscation order which exceeded “by far” the likely assets of the defendant may operate as a “disincentive to cooperate”.

He quashed the two confiscation orders of £92m and substituted for them confiscation orders for each appellant in the sum of £12.6m, uplifted to £16.1m to reflect changes in the value of the money since the date of the original confiscation orders. Other aspects of the appeal were dismissed.

Sir Christopher Holland and the Recorder of Nottingham, sitting as a judge of the Court of Appeal, agreed.

Source – The Solicitors Journal - 19 March 2012

A businessman has been jailed for masterminding and running what is believed to be Britain’s largest Ponzi scheme, which duped up to 700 victims out of £115m.

Kautilya Nandan Pruthi, 41, pleaded guilty to seven charges at Southwark Crown Court and was sentenced to 14 years and six months in jail by Judge Michael Gledhill QC, who said the investment scam “may well be the largest and longest running Ponzi fund to come before the courts of this country”.

Between 585 and 700 investors paid into Mr Pruthi’s so-called investment scheme, including celebrities such as former cricketer Darren Gough and actor-turned-singer Jerome Flynn.

The “vast majority” lost all their capital and much of the interest and about £28m was used to keep the fraud going by paying monthly interest payments. The scam operated between 2005 and 2008 after which the Financial Services Authority intervened by securing High Court freezing orders.

Mr Pruthi, who was born in India and came to the UK aged 15, was described by the judge as an “extremely intelligent, articulate, sophisticated and persuasive liar – in short a professional fraudster”.

The judge said Mr Pruthi had lived in an expensive flat in central London as well as renting a house in Surrey for £20,000 a month. He also had a fleet of top-of-the-range cars and a collection of expensive watches and fine art.

Mr Pruthi bought a private jet, used helicopters to ferry him to meetings with investors and hired a chauffeur, the court was told. The private jet crashed in Biggin Hill in March 2008, killing all five passengers.

Mr Pruthi pleaded guilty to four counts of obtaining money transfers by deception, one of participating in a fraudulent business, one of unauthorised regulatory activity and one count of converting and removing criminal property.

Two associates, John Anderson, 46, and Kenneth Peacock, 43, were cleared by a jury this week of one count of fraud and were also cleared of recklessly making a misleading, false or deceptive promise.

The jury found the two men guilty of unauthorised regulated activity and Judge Gledhill sentenced them each to 18 months in prison. Mr Anderson had invested £340,000 in the scheme and Mr Peacock persuaded his retired father to invest.

The judge noted that Mr Pruthi was so persuasive that some investors only realised they had been conned when he pleaded guilty. In fact, some investors had criticised the police and the FSA when they began to investigate the scam, with one investor even trying to bring a class action against the financial regulator when it froze the firm’s accounts and some making formal complaints.

Judge Gledhill said many victims of the Ponzi scheme believed they had been “ruined” and they had lost their pensions, homes and life savings.

He noted that one victim of the scheme had broken down in the witness box as she told how her husband had been bankrupted and they had lost everything. Another woman had lost her money and her job and could not find another one, so was forced to return to South Africa.

Det Supt Bob Wishart, of the City of London Police, said: “Pruthi used fast cars, helicopters and luxury houses to create an illusion of success and legitimacy. In reality he was a cold-hearted criminal driven by greed, with an unquenchable desire to steal and spend leading to the construction and collapse of the UK’s biggest Ponzi scheme.”

In mitigation Nigel Lithman QC acting for Mr Pruthi said his client should be given credit for entering a guilty plea. He said comparing Mr Pruthi to US fraudster Bernie Madoff “would be like comparing a sardine with a shark”, adding that Mr Pruthi’s scheme was a mere “speck” compared to Mr Madoff’s $65bn Ponzi scheme.

The judge also noted that after the FSA froze the accounts, Mr Pruthi had lied in High Court civil proceedings when he said investors’ money was safe as it was controlled by a business associate named Charles Brugger in a £100m investment fund in Asia.

Mr Pruthi repeated the lies to his solicitor who was persuaded to fly to Hong Kong to meet Mr Brugger.

When Mr Brugger did not turn up, the solicitor was then persuaded to fly to Bangkok where he met a man calling himself Mr Brugger.

The judge noted that the man “must have been an actor of some note” as he persuaded the solicitor that he controlled a multimillion pound investment fund.

A police investigation later tracked down Carlos Braga, a Brazilian man, who testified that he had been asked by Mr Pruthi to meet the solicitor in Bangkok and pretend he controlled a £100m investment fund.

Source: Financial Times – 8 March 2012

On 7 March 2012 the Judicial Committee of the Privy Council (comprising Supreme Court Justices Lord Hope, Lady Hale, Lord Brown, Lord Clarke & Lord Dyson) handed down judgment in the case of Simon v Helmot [2012] UKPC 5, unanimously dismissing the appeal from the Guernsey Court of Appeal of the Defendant to the original Royal Court of Guernsey proceedings, Dylan Simon.

The effect of the decision is to uphold the Guernsey Court of Appeal’s award of almost £4.5m in addition to the £9.3m already awarded at first instance making a combined total of almost £14m and confirms the highest lump sum award ever made in the United Kingdom and Crown Dependencies.

Manny Helmot is a former Commonwealth Games cyclist who suffered severe head injuries after being knocked from his bike by a car driven by Mr Simon on a training ride in Guernsey in 1998.

Mourant Ozannes acted for Mr Helmot throughout.  Advocate Gordon Dawes appeared on behalf of Manny Helmot in the Royal Court Guernsey, the Guernsey Court of Appeal and with James Dingemans QC in the Privy Council.

The Privy Council’s judgment is of considerable interest and importance in the many common law jurisdictions without statutory mechanisms for dealing with such matters.  The case will be looked at closely all around the common law world.  In addition it is likely to have a considerable impact in the UK itself.  The Lord Chancellor is in the process of reviewing the discount rate to be used in England and Wales, having last set the figure back in 2001 at 2.5%.  He is likely to come under even greater pressure to make a substantial downwards adjustment which itself will be reflected in much higher lump sum awards of damages in England and Wales also, Scotland is likely to follow.

The Privy Council agreed that the first and foremost consideration was that a claimant was entitled to full compensation for his or her injuries.  In the absence of a statutory regime dealing with such matters the starting point was the House of Lords case of Wells v Wells and the use of rates of return derived from Index Linked Government Stocks.  Those rates of return had fallen substantially in recent years.  The effect of wage inflation had also been recognised.  The expert evidence called by the claimant had been given by experts whose credentials had been as impressive as they could possibly have been and was essentially unchallenged.  In the circumstances it was not open to the Guernsey Court to find that the claimant’s case as to future losses had not been proved.  The discount rates argued for by the claimant had been proved, including the negative discount rate of -1.5% and therefore the (very high) multipliers resulting from those rates and the appeal failed.

Advocate Dawes commented:  “This is a wonderful result for Manny Helmot and his family.  The judgment assures Manny’s future care and gives him and his family peace of mind.  It is also a wonderful result from a legal point of view which is likely to have an effect in many jurisdictions around the world.  The principles established in this case will mean substantially higher lump sum awards of damages for seriously injured claimants in those jurisdictions affected and enable them to fund their care arrangements in a way that was not possible with the law as it was understood to be.  It is very exciting also for Guernsey to produce such an important case which has truly made waves around the common law world.”

Source: Guernsey News – 9 March 2012

The Sentencing Council’s guideline brings sentencing guidance together for the first time to help ensure consistent and proportionate sentencing and provide effective guidance for sentencers and clear information for victims, witnesses and the public on how drug offenders are sentenced.

The guideline can be downloaded here.

The Sentencing Council has also produced several sentencing scenarios to familiarise sentencers with the guideline’s approach and process. They can be accessed here”

Links:

http://sentencingcouncil.judiciary.gov.uk/docs/Drug_Offences_Definitive_Guideline_final_(web).pdf

http://sentencingcouncil.judiciary.gov.uk/docs/Drug_offences_scenarios.pdf