Bankruptcy


Self-employed bankrupt's retirement annuity contract forming part of estate on bankruptcy - application to prevent trustee using pension benefits to pay creditors refused - former bankrupt not entitled to rely on convention rights



Malcolm v Mackenzie and others, Secretary of State for Trade and Industry and another intervening: CA (Lords Justice Mummery, Chadwick and Tuckey): 21 December 2004



The applicant entered into a retirement annuity contract while he was self-employed. He was made bankrupt in December 1996 and under the law then in force the pension contract formed part of his estate vesting in his trustee in bankruptcy.


On his automatic discharge from bankruptcy, those assets remained vested in the trustee for the purpose of paying the outstanding bankruptcy debts.


In July 2002, the trustee sought to obtain the benefit of the pension contract for distribution among the remaining creditors. The applicant applied in the bankruptcy proceedings for an injunction to restrain the trustee on the ground that the trustee's proposed use of his pension contract unlawfully discriminated against him in the peaceful enjoyment of his possessions, since it disadvantaged him on retirement as compared with an employee member of an occupational pension scheme with a forfeiture clause, who lost no pension benefit on bankruptcy. The judge dismissed the application. The applicant appealed.


Mark Hubbard (who did not appear below) (instructed by the Bar Pro Bono Unit) for the applicant; Mark Cooper (instructed by James B Bennett & Co, Crawley) for the firm; Sarah Moore (instructed by the Treasury Solicitor) for the interveners.


Held, dismissing the appeal, that using the provisions of the European Convention on Human Rights as an interpretative tool, the court was not persuaded that to construe provisions in the Insolvency Act 1986, namely section 283(1), defining 'the bankrupt's estate', and section 436, defining 'property', so as to include within the bankrupt's estate contractual pension rights vested in the bankrupt at the commencement of the bankruptcy would be inconsistent with the obligations imposed on the UK by article 14 of the convention; that on a true analysis, the differential treatment in bankruptcy of the contractual pension rights of the self-employed and the pension rights of those employees who were members of an occupational pension scheme set up by way of trust which (under the trust provisions) provided for forfeiture of rights on bankruptcy was not a difference of treatment based on discrimination on the grounds of status; that, accordingly, the appeal would be dismissed.



Criminal



Proceeds of crime or drug trafficking - assisting another by money laundering - necessary for Crown to prove property concerned in fact proceeds of crime or drug trafficking



Regina v Montila and others: HL (Lord Bingham of Cornhill, Lord Steyn, Lord Hope of Craighead, Baroness Hale of Richmond and Lord Carswell): 25 November 2004


The defendants were charged with having concealed, disguised, converted or transferred property knowing, or having reason to suspect, that the property represented another person's proceeds of either criminal conduct, contrary to section 93C(2) of the Criminal Justice Act 1988 (as inserted by the Criminal Justice Act 1993), or drug trafficking, contrary to section 49(2) of the Drug Trafficking Act 1994. At a preparatory hearing, the judge ruled that it was necessary for the Crown to prove that the property being converted was in fact the proceeds of crime in the case of the 1988 Act and of drug trafficking in the case of the 1994 Act. The Court of Appeal reversed that decision and the defendants appealed.


Gibson Grenfell QC and David Whittaker (instructed by Hughmans, London) for the defendants; David Perry and Andrew Bird (instructed by the Solicitor, Customs & Excise) for the Crown.


Held, allowing the appeal, that it was possible that a person might have 'reasonable grounds to suspect' that property was one thing when in fact it was something different but he could not 'know' it was one thing when in fact it was another; that the words of the subsections thus provided a strong indication that they were directed to activities in relation to property which was in fact 'another person's proceeds of' drug trafficking or criminal conduct; that a further indication was to be found in the absence of any defence if the property which the defendant was alleged to have had reasonable grounds to suspect was another person's proceeds turned out to be something different; that, even if subsequent events showed that the property had nothing whatever to do with any criminal activity at all, on the Crown's argument it was enough for it to be proved that the defendant had the mens rea at the time when he was dealing with the property; and that, consequently, the fact that the property in question had its origin in drug trafficking or criminal conduct was an essential part of the actus reus of the offences. (WLR)



Human Rights



Iraqi civilians dying as a result of action taken by British soldiers in occupied Iraq - death of civilian in British military prison falling within scope of Human Rights Convention and Human Rights Act 1998 - deaths of civilians killed during military field operations not within scope of convention or Act



R (Al-Skeini and others) v Secretary of State for Defence: DC (Lord Justice Rix and Mr Justice Forbes): 14 December 2004


The first five claimants were relatives of Iraqi civilians who had been killed in separate armed incidents involving British troops in occupied Iraq. The son of the sixth claimant had died in custody at a British military base in Iraq, allegedly after being tortured. The claimants sought judicial review of the Secretary of State for Defence's alleged failure and/or refusal to conduct independent inquiries into the deaths. The Divisional Court determined preliminary issues as to the applicability of the European Convention on Human Rights and the Human Rights Act 1998, and as to whether there had been a breach of articles 2 and 3 of the convention.


Rabinder Singh QC, Michael Fordham, Shaheed Fatima and Christine Chinkin (instructed by Public Interest Lawyers, Birmingham) for the claimants; Christopher Greenwood QC, Philip Sales and Cecilia Ivimy (instructed by the Treasury Solicitor) for the secretary of state.


Held, that the convention's jurisdiction was essentially territorial but with exceptions; that the exception which applied where a state party had effective control of an area was confined to the sphere of territories which lay in any event within the jurisdiction of the convention's state parties, and so did not apply in Iraq; that while a death in a British military prison operating in Iraq came within the exception relating to the extraterritorial activity of state agents, deaths resulting from military operations in the field did not; that, given the presumption that the Human Rights Act 1998 was compatible with the international treaty obligations which it enacted, the case of the sixth claimant's son fell within the scope of both the convention and the Act; and that since the investigation which had been carried out into his death had been neither timely, open nor effective, there had been a breach of the state's procedural investigative obligation under articles 2 and 3 of the convention.