Re Somaia


Reference:
[2017] EWHC 2554 (QB]

Date:
17th October 2017

Court:
High Court

Facts:

Ketan Somaia was convicted on 13 June 2014 on several counts of fraud following a private prosecution. On 12 January 2016, HHJ Hone QC made a Confiscation Order in excess of £20 million, confiscating his assets so as to pay compensation to the victim of his fraud (the victim being the Private Prosecutor in this case).

 

On the back of the Confiscation Order, the Private Prosecutor brought a claim against Mr Somaia’s former wife (“A”) seeking declarations that certain substantial payments made into a bank account in A’s sole name were so-called “tainted gifts” to a third party and therefore caught by s. 74 of the Criminal Justice Act 1988 (“CJA 1988”). If the Private Prosecutor had been successful, A would have been required to pay an amount equivalent to the value of the “tainted gifts” to the Private Prosecutor.

 

After a trial the Private Prosecutor’s tainted gift claim against A failed and the claim was dismissed and Restraint Orders against A were discharged.


Judge:
Jefford J.

Comment:

The case turned on the meaning of “gift” at section 74 CJA 1988. The Private Prosecutor argued that it had an autonomous meaning and could therefore encompass any transaction that was not “bona fide”. Nigel Hood and Jon Colclough, appearing for A, argued that “gift” ought to be given its ordinary legal meaning (which includes a requirement that a donee of a gift accepts that gift as such) and that, because it was accepted that A did not know of the individual payments coming into and then leaving her bank account, the payments could not be gifts as she had not accepted them. Jefford J agreed with A. The Judge  found as follows.

 

The meaning of a “gift” at section 74(10) CJA 1988 is to be given its normal legal meaning. Section 74(12) CJA 1988 then expands the normal legal meaning of the word gift to include a transfer at an undervalue.

 

For there to be an effective gift the following elements must be present: (i) an effective transfer of property (that is a transfer of the legal and beneficial interest); (ii) an intention on behalf of the donor that the gift will not be returned to him or her (although in the context of “tainted gifts” he or she may have a hope and expectation that it will be); and (iii) acceptance of the gift by the donee.

 

The payment of various monies into A’s bank account were not gifts. They were not intended by Mr Somaia to be gifts and were not accepted as gifts by A, who regarded herself as either having to provide Mr Somaia with blank cheques when he wanted them, or as obliged to comply with his instructions about getting money from her accounts. Further, it was clear from the pattern of payments in and payments out that Mr Somaia was simply using the bank account as a conduit for payments by him. The proper legal analysis was that the monies were (as A had argued) held on trust for Mr Somaia for  the brief period in which they were in A’s bank account.

 

Even if contrary to the Judge’s findings the payments had been gifts, the court would have declined to exercise its discretion to take them into account as realisable property. Of great weight in this particular case was the fact that the monies themselves were not tainted by illegality. 

 

Please see the attached Judgement below.

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