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Richard Nelson
Our Ref: CEK/DL/2008-6168CF :
Your Ref:
Date: 12 August 2010
Urgent - For the Attention of Jarnail Singh
Senior Lawyer
Criminal Law Division
Legal Services
3 Floor, 6a Eccleston Street
Victoria
LONDON
SW1W 9LT
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Dear Mr Singh
Re: Rv Susan Jane Rudkin - Outstanding Confiscation Order — £29,894.15
Deadline for payment Wednesday 18” August 2010
I write to address the above case and to provide you with a full update in respect of
the sustained efforts by Susan Rudkin to realise the monies to settle the outstanding
Confiscation Order which currently stands at £29,894.15 as confirmed in your e-mail
dated 12" July 2010.
As you are aware, the attempts have centred around the realisation either by way of
sale or refinancing of the asset 118-120 High Street, Ibstock, LE67 6LJ — a retail and
Post Office business combined with a domestic property.
This is a substantial asset given that the current market valuation of the freehold
property and ‘going concern’ to include the Post Office appointment is in the region of
£595,000 plus stock at valuation. Mr & Mrs Rudkin currently have liabilities in the
total sum of approximately £305,000 which include the above outstanding
Confiscation Order, mortgage liabilities to the Lloyds TSB and credit card liabilities.
The current valuation of the asset without the Post Office as part of the ‘going
concern’ is £400,000 plus stock at valuation. I refer you to the enclosed update from
Humberstones, National Specialist Agents & Valuers dated 13" July 2010. They are
currently marketing this property and business. They are a specialist company
dealing with this type of business.
I have enclosed a copy of the application that we served in February 2010 in support
of an extension to the deadline for payment as this details the efforts made by Susan
Rudkin following the making of the Confiscation Order and through to February 2010.
I now write to address the efforts sustained since February 2010 and to put you in the
picture as regards the current circumstances of Mr & Mrs Rudkin and to seek your
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view as to the way forward in this matter. Susan Rudkin has stayed in contact with ®
us throughout the last 12 months and continues to provide us with updates. Susan
Rudkin remains extremely anxious about the impending deadline, the amount
outstanding and the enforcement procedures that could follow.
You will be aware from our extension application that an audit was carried out at the
Ibstock Post Office on 27" January 2010. Following this, Michael Rudkin’s contract
for services as Sub Post Master of the Post Office, Ilbstock Branch was suspended in
relation to misappropriation of Post Office monies and failing to keep the branch
account in the prescribed manor.
This matter was only resolved in June 2010 following interview, investigation and an
appeal process. I refer to the enclosed e-mail from Mark Baker, Executive Officer
with the National Federation of Sub Post Masters to Peter Pycock, HNG Senior
Manager who determined the outcome of the procedure. Mark Baker assisted Mr
Rudkin in respect of these matters and his e-mail dated 3 June 2010 details the
basis of the appeal. You will note the representations made in respect of small
discrepancies and misinterpretation of the contract for services.
The outcome was that the contract for services was terminated and this was
communicated to Mr Rudkin in June 2010. I enclose a copy of the letter from the
Post Office to Michael Rudkin dated 1/6/10. The result is a significant financial impact
upon Susan and Michael Rudkin. I understand that as a result, the retail side of their
business has suffered as Mr & Mrs Rudkin have been unable to meet their supplier's
credit requirements and therefore, can only retail on a limited basis. I understand
that the position is that there is no further recourse with the Post Office in relation to
the termination of the contract and any further action would be by way of a breach of
contract claim which Michael Rudkin is not in a position to fund due to his financial
constraints.
However, despite adverse circumstances, efforts have been maintained to realise the
sale of the property at Ibstock Post Office.
I refer you to the updates received from Humberstones National Specialist Agents &
Valuers dated the 13" July 2010 and 6" August 2010. These updates should be
considered alongside the letter and e-mail from Peter Wilkinson at Lloyds TSB.
You will note from the Humberstones’ update dated 13" July that the business was
marketed as a lock up lease and on 3 February 2010 an offer was accepted by Mr &
Mrs Rudkin at an agreed price of £165,000 with an initial rent of £15,000 per year.
The purchasers were in a position to proceed and were anxious to do so but
unfortunately this could not go ahead as the bank would not agree with this way
forward at that time.
I refer you to the letter from Peter J Wilkinson, Customer Support Manager at Lloyds
TSB. In the second paragraph, Mr Wilkinson comments that his input was to assess
whether Mr & Mrs Rudkin needed the bank's permission to agree to lease part of the
premises and to assess what the resulting transaction would have meant in terms of
debt reduction and ongoing security. Mr Wilkinson goes on to state that the issue
regarding the letting of part of the property was discussed with a colleague of his on
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annum would not have been sufficient to cover the remaining indebtedness ongoing.
You will note that the financial circumstances of Mr & Mrs Rudkin were addressed by
Lloyds TSB on 25" February and at that stage Mr Wilkinson proposed to submit an
application to increase the bank's funding to support the repayment to the Post Office
(repayment of the Confiscation Order).
I refer you to the update received from Roger Harris at Humberstones dated 6”
August 2010 which confirms that the person who agreed to purchase Ibstock Post
Office in February 2010 on a lease basis has now completed the purchase of a
different Post Office in Rothley and is now “happily ensconced as a Sub Post
Master”. This therefore demonstrates that this was a genuine offer in February.
Unfortunately, the bank was not prepared to consider this at the time.
Therefore, efforts continued to market the property on a freehold basis. As a result,
the property was marketed as a freehold at a price of £595,000 plus stock at
valuation. The update from Humberstones dated 13" July 2010 details the interest
in the property since this time and their efforts to secure a purchaser. The update
dated 6" August 2010 confirms that there is a current interested party who is seeking
to obtain finance for the purchase. I have been instructed that the prospective
purchaser is a Mr Amrik Dhesi and he has requested a meeting to further sale
negotiations with the Rudkin’s. This has been arranged to take place tomorrow,
Friday 13" August 2010. I await further news in this regard.
You will note that Lloyds TSB became aware of Michael Rudkin’s suspension by the
Post Office in April 2010 and as a result Mr & Mrs Rudkin were advised that the
chances of raising the funds via the bank were now very remote and that an
alternative source of funding would be advisable.
Recommendations were made by Peter Wilkinson of Lloyds TSB and as a result
Michael Rudkin contacted Stuart Almond at ISIS mortgages. I refer you to the e-mail
from Stuart Almond dated 7" July 2010. He confirms that given the outstanding
liability of approximately £240,000 to Lloyds TSB and given that in today’s financial
climate, the maximum any lender will go to on a 2! charge against the property will
be 60% loan to value which would equal £240,000, it is unlikely that Mr & Mrs Rudkin
would be able to raise any additional funds against property at this current time.
Therefore, this avenue was closed off to Mr & Mrs Rudkin.
A further meeting took place between Mr & Mrs Rudkin and Peter Wilkinson of Lloyds
TSB in July 2010 and on that date, it was suggested that the Rudkin’s look to offer a
lock up lease option again. This took Mr & Mrs Rudkin by surprise given the view of
the bank in February 2010. You will note that as a result, Humberstones are now
also offering the business on the basis of a lock up lease as well as on a freehold
basis. Please see their update dated 6" August 2010. Mr Harris of Humberstones
confirms that as a result, on 5th August 2010, they re-matched the business to their
mailing list and sent out 173 sets of details. Therefore, Humberstones continue to
aggressively market the business for sale.
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24" February and the consensus was that the rental income of circa £15,000 per .
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I also refer you to the further e-mail from Peter Wilkinson dated 5" August 2010
which confirms that Lloyds TSB are open to consider any proposal dependant upon
the capital reduction achieved and the income available to service the remaining debt
on a Capital and interest basis. Therefore, it appears that any offer to purchase a
lock up lease received by Mr & Mrs Rudkin would need to be again considered by
Lloyds TSB and meet their approval as regards security for the outstanding liabilities
and servicing of the same.
Obviously, we are aware of the enforcement procedures and would take this
opportunity to remind the Prosecution of the sustained efforts since the making of the
Confiscation Order to realise the funds. The original plan of Mr & Mrs Rudkin was to
restructure their finances at the end of 2009 and remortgage in order to release
monies from the equity in the property/business in order to settle the outstanding
Confiscation Order. Unfortunately, given that the Post Office were deducting £1,000
at source at this time from the salary of Michael Rudkin, in order to recoup the
shortfall which formed the basis of the criminal proceedings, the bank were not
prepared to offer this facility due to Mr Rudkin’s limited disposable income.
Thereafter, Mr Rudkin faced an audit and subsequent investigation which ultimately
led to the termination of his contract for services. At the conclusion of the audit, the
auditors declared a loss of only £232.17 against Ibstock Post Office. I have enclosed
a copy of the official receipt. You will see in the e-mail from Mark Baker to Peter
Pycock on 3" June 2010 that very strong representations were made regarding the
conduct of the audit, unsubstantiated claims, minor discrepancies and
misinterpretation of the contract for services.
Mr & Mrs Rudkin find themselves in a situation whereby they can only realise monies
from either the freehold sale of a complex asset which includes the Post Office
business, a retail business, a domestic property and also a detached coach house in
the grounds or the sale of the business on a lock up lease basis which involves
negotiating a sale price for the goodwill, fixtures and fittings plus stock at valuation
plus a yearly rent. The bank would have to review any offer in order to assess the
capital reduction achieved (sale price) and the income available (agreed yearly rent)
to service the remaining liability to Lloyds TSB.
In addition to this they face an extremely difficult property market and economic
climate. In almost a year of marketing the asset there have only been 2 prospective
purchasers — the purchaser in February 2010 who has since purchased a different
Post Office and Mr Dhesi who is due to see Mr & Mrs Rudkin tomorrow to further
sales negotiations.
Mrs Rudkin has made continued and sustained efforts despite these adverse
circumstances and we would ask that this is taken into consideration by the
Prosecution in reviewing their position and addressing the way forward.
I also refer to your e-mail dated 12" July 2010. You confirmed that in the case of
Ibstock Post Office, the modelling exercise identifies that the branch should remain
as a conventional Sub Post Office and that you understand that Royal Mail has also
confirmed that they wish to retain a sorting facility at Ibstock and in view of this the
branch vacancy was to be advertised with the mail work i.e. sorting office element
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included. I have enclosed a copy of the letter from the Post Office to Michael Rudkin
dated 26" June 2010.
You have also confirmed that the vacancy is also being advertised on an ‘at or near’
basis which would mean that the business would accept applications from anyone
wishing to offer the existing premises or suitable alternative premises. You have
advised that any alternative premises would firstly have to be visited by members of
the Agency Network Change Team to determine their suitability. If the Post Office
moves into new premises, then the new Sub Post Master would be expected to pay
an introductory payment to Post Office Ltd equating to 25% of the current warranted
remuneration.
You have also confirmed that with regards to Ibstock, the business will welcome
applications from anyone able to offer the existing or suitable or alternative premises.
You also confirmed that Post Office Ltd were not progressing any application at that
stage.
Therefore, if a purchaser is found then they have to be assessed as suitable and if
the business was taken to suitable alternative premises then I understand that this
would seriously affect the valuation of Ibstock as a ‘going concern’ as confirmed by
the update from Humberstones dated 13" July. This would mean a reduction in value
from £595,000 to £400,000. Therefore, the Rudkins will be potentially further
constrained by Post Office Ltd and their procedures and therefore, any sale is nota
Straight forward process and is also likely to be a lengthy process.
Confiscation proceedings and ancillary matters are always complicated in our
experience but in relation to Post Office prosecutions, are further complicated by the
continued link to Post Office Ltd in order to sell the business as a going concern for
its full value. Therefore, it appears that sales are much more difficult to achieve with
this type of business and the going concern valuation is seriously affected if the Post
Office facilities are reinstalled in a nearby facility rather than maintained at the
original site.
In all the circumstances, I would ask you to consider the position taking account of Mr
& Mrs Rudkin’s constrained financial circumstances and sustained significant efforts
to realise monies to settle the order. Mr Rudkin does not believe that his contract
should have been terminated but finds himself in a position where he cannot fund any
further action in this matter.
Can you please confirm your view in respect of the way forward and whether you
consider that a variation on the basis of inadequacy would be a suitable way to
resolve matters.
Given the imminent deadline of 18" August 2010, I would be obliged if you would
kindly liaise with the Financial Investigator, Graham Ward at the very earliest
opportunity. I spoke to Mr Ward in July 2010 and he suggested that a variation of the
outstanding Confiscation Order on the basis of inadequacy could be a suitable way
forward if a sensible approach was taken, in light of their circumstances.
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I look forward to hearing from you and take this opportunity to thank you for your
consideration of this detailed application.
oni! GRO _ jorby e-mail, charlotteknight q
Should you require any clarification then please_do not hesitate to. contact ing directly
I have forwarded a copy of this letter to Sarah Warrington at the Confiscation Unit.
Kind regards
You sincerely __
_GRO-
Solicitor
Richard Nelson Solicitors
Encs: