European Court of Human Rights

 

 

Communicated on 6 May 2014

 

FOURTH SECTION

Application no. 54241/12
Darren John BAGNALL
against the United Kingdom
lodged on 8 August 2012

STATEMENT OF FACTS

1.  The applicant, Mr Darren John Bagnall, is a British national who was born in 1966 and lives in Barnsley. He was represented before the Court by Mr S. Ali, a lawyer practising in Manchester with Judge and Partners Solicitors, who is assisted by Mr J. Pickup QC and Mr S. Gurney, counsel.

A.  The circumstances of the case

2.  The facts of the case, as submitted by the applicant, may be summarised as follows.

1.  The applicant’s arrest, trial and conviction

3.  On 21 November 2005 the applicant was arrested by officers of Her Majesty’s Revenue and Customs (HMRC) at a Manchester hotel on suspicion of money laundering. Minutes before his arrest, the applicant had taken possession of a bag containing GBP 99,200 in used banknotes.

4.  Upon his arrest HMRC seized a number of documents from his hotel room. One of these documents - later to be known as CL/02 - detailed fifty-two deal chains for the period September - November 2005 that the applicant had put together through various companies he owned and through which he had traded in mobile phones and computer processing units. CL/02 contained references to persons or companies and figures relating to the purchase price of goods and, in some cases, currency exchange rates.

5.  On the basis of CL/02 HMRC suspected that that the applicant had engaged in VAT fraud through his companies. However, a decision was taken on 14 July 2006 not to prosecute him for this offence due to the cost, lack of resources and insufficient evidence. The applicant was instead charged with possession of criminal property under section 327 of the Proceeds of Crime Act.

6.  Between 24 January and 6 February 2007 he was tried before a judge and jury in the Crown Court and convicted of the money laundering offence of entering into an arrangement which he knew facilitated the acquisition, retention, use or control of criminal property contrary to section 328 of the Proceeds of Crime Act 2002. On 2 March 2007 he was sentenced to fifteen months’ imprisonment.

7.  CL/02 was not served in evidence at the trial nor did it form part of the prosecution’s case. It was identified as unused material and reports prepared by HMRC, which had analysed its content, were not disclosed by the prosecution.

2.  The confiscation proceedings

8.  Following conviction, confiscation proceedings were commenced. On 12 July 2007 the prosecution served a section 16 statement detailing the matters it considered relevant to determining the benefit from criminal conduct (see paragraph 43 below). It estimated that during the six years prior to conviction the applicant’s benefit from his general criminal conduct had been in excess of GBP 50.9 million. This calculation was based on the money which had passed through the applicant’s personal bank accounts, which the prosecution suspected related in whole or in part to his criminal conduct, particularly VAT fraud and drug trafficking.

9.  On 11 October 2007 HMRC decided not to prosecute the applicant for VAT fraud but instead to continue the confiscation proceedings. This decision was taken on the grounds that: (i) the proceeds of the suspected VAT fraud could be recovered in the confiscation proceedings; (ii) in the judgment of at least some HMRC officers there was not a sufficient prospect of a conviction to justify the resources it would require; and (iii) this would avoid any potential abuse of process arguments being raised by the applicant.

10.  A second prosecution statement was served on 17 December 2007. This lowered the applicant’s alleged benefit to in excess of GBP 43.3 million. Once again, this figure was based on the transfers into the accounts of the applicant and his wife and transfers which could be traced to the applicant’s companies. In this regard, HMRC alleged that the applicant had used the companies as vehicles for substantial and persistent orchestrated fraud.

11.  The applicant served three defence statements responding to the prosecution’s statements.

12.  On 4 February 2008 the prosecution served a “position statement” which stated:

“In order to avoid any risk of ‘double jeopardy’ or any valid assertion thereof... a policy decision has been taken that this applicant will not face any prosecution for criminal conduct in respect of the apparent [VAT] frauds to which these proceedings now refer. However, this undertaking will not preclude the Crown from naming the applicant as a potential co-conspirator or accomplice in the event of criminal proceedings being instituted against those who are or may be identified as participating with him in the conduct that is asserted to amount to the fraudulent conduct that is now identified in these proceedings.”

13.  At the confiscation hearing, which began on 16 July 2008, the applicant argued that the application of the various statutory assumptions set out in section 10 of the Proceeds of Crime Act 2002 would violate his rights under Article 6 §§ 1 and 2 of the Convention. In particular, he argued that Article 6 § 2 applied because the prosecution’s section 16 statement constituted a “charge” with the offence of VAT fraud in the autonomous meaning given to that term in the Convention. It was also argued that the confiscation proceedings were an abuse of process.

14.  Those arguments were rejected by the trial judge on 30 July 2008. In particular, he observed that the section 16 statement was designed to assist the court in assessing the extent to which a defendant had benefited from criminal conduct. As such, the scope of the confiscation proceedings would be severely restricted in many cases if a prosecutor who had information which strongly undermined a defendant’s contention that he had acquired property honestly could not disclose it to the court without making a new charge. The judge further considered the definition of “charge”. Although he accepted that the terms of the statement made it clear that the prosecution believed the defendant had been involved in an MTIC fraud, he did not consider this to be “an official notification”. It was clearly set out in the context of confiscation proceedings and there was nothing to suggest that he would be prosecuted. He therefore rejected the contention that it amounted to a new “charge” which attracted the protection of Article 6(2).

15.  Having rejected the argument that the section 16 statement constituted a new charge the judge found that it would not be in breach of the Convention to apply the statutory assumptions.

16.  In a further ruling the judge rejected the applicant’s submission that if the prosecution made an allegation of criminal behaviour against a defendant there should be a burden upon them to prove to the criminal standard that the defendant had committed a criminal offence before any consequences could flow against him. The judge noted that where there was an allegation of criminal behaviour the standard of proof was the criminal one of beyond reasonable doubt. However, in confiscation proceedings the court was not dealing with such an allegation but instead was investigating the provenance of property. If that involved by implication such allegations, the approach in R. v. Benjafield [2002] UKHL 2 and Phillips v. the United Kingdom, no. 41087/98, ECHR 2001 VII was correct and the lower, civil standard of proof of the balance of probabilities applied.

17.  A substantive confiscation hearing followed and the trial judge’s full written ruling was handed down on 14 August 2009. In that ruling he considered each of the applicant’s companies in turn. In relation to two of the companies he found that the applicant had rebutted the assumptions contained in the 2002 Act and had disproved the prosecution’s allegation of VAT fraud. However, in respect of two further companies the judge found that the applicant’s account had to be rejected.

18.  On 2 September 2009 the applicant served documents and evidence as to his realisable assets.

19.  On 15 September 2009 the prosecution served their fourth statement, with a revised alleged benefit figure of approximately GBP 2.8 million.

20.  The trial judge handed down his final ruling on the confiscation order on 23 February 2010.

21.  The ruling first went through all of the items (over one hundred) the applicant did not accept should be included in the benefit figure. The judge agreed that approximately half of these items should not be included because it would result in double accounting, because they were related to legitimate business, or because there would be a serious risk of injustice pursuant to section 10(6)(b) of the Act (see paragraph 39 below). He concluded that the benefit figure was in excess of GBP 1.8 million.

22.  In determining the recoverable amount the judge had regard both to the fact that he had found certain parts of the applicant’s evidence not to be credible and to the lifestyle he had enjoyed before his conviction. He found that the applicant would have taken steps to put aside assets should his improper business dealings lead to trouble. Therefore, on the balance of probabilities he was not satisfied that the applicant had made a full and honest statement of his present assets.

23.  The judge accordingly made the confiscation order for the full benefit figure. A period of six years’ imprisonment was fixed in default of payment.

24.  At the end of his ruling the judge observed that the time the case had taken was partly due to logistical problems and partly due to its extremely complex nature. As it was a truly exceptional and arguably a unique case he made no apology for the delay.

3.  The financial reporting order

25.  Pursuant to section 76 of the Serious Organised Crime and Police Act 2005 the judge imposed a financial reporting order on the applicant which required him to produce reports on the particulars of his financial affairs over a period of four years (see paragraphs 65-67 below).

26.  The judge observed that such an order should not be made lightly or routinely; it was not a tool to be used to assist in the enforcement of a confiscation order, but rather a means of assessing the risk posed by the defendant. In making the order the court was entitled to have regard to matters which arose within the context of the confiscation proceedings. In those proceedings the judge had made negative findings in respect of the applicant’s truthfulness and integrity and considered that he would wish to return as soon as possible to his previous luxurious lifestyle. The risk the applicant presented of committing another offence was therefore sufficiently high to justify the making of the order.

4.  The appeal proceedings

27.   The applicant was granted leave to appeal on 21 September 2010 on the ground that the issue of whether the confiscation order and the financial reporting order were made against him on the basis of a finding of criminal offending with which he had not been charged, which had not been proved to the criminal standard, and in relation to which the evidence adduced for the first time at the confiscation stage had “nothing to do with the issues or evidence at trial” merited consideration by the full court.

28.  In January 2011 the applicant’s appeal was linked to R v. Nirmal Sharma, a case which raised similar issues. On 18 May 2011 the appeal hearing was postponed until the Supreme Court had handed down its judgment in Gale v. the Serious Organised Crime Agency. Judgment in that case was handed down on 26 October 2011.

29.  The applicant’s appeal was heard on 13 and 14 March 2012. On 18 April 2012 the appeal was allowed in part, with the confiscation order being reduced to approximately GBP 1.6 million.

30.  However, the Court of Appeal rejected the applicant’s grounds of appeal based on Article 6 §§ 1 and 2, including the submission that the accusations made in the course of the confiscation proceedings were of such a nature and degree as to amount to the bringing of a new charge. On the basis of Engel and Others v. the Netherlands, 8 June 1976, § 90, Series A no. 22, and Phillips, cited above § 35, the mere fact that the prosecution had accused the applicant of specific offences and adduced evidence to make that accusation good did not amount to the bringing of a new charge. The applicant had not been at risk of any further conviction, there was no finding of guilty and the finding reached by the trial judge, on the basis of the statutory assumptions in section 10 of the 2002 Act, merely went to the amount of the order that the court was obliged to make.

31.  The court further observed that the prosecution had been obliged to set out the information in its possession which was relevant to the VAT fraud it alleged the applicant had been involved in. As the applicant had contended that the statutory assumptions should not apply because the source of his assets was lawful trading in computer processing units, the prosecution had been entitled to produce information and evidence in rebuttal of those assertions. The burden was on the applicant to establish on the balance of probabilities that the source of the assets was lawful and it would be perverse if the prosecution were compelled to prove beyond a reasonable doubt (i.e. to the higher criminal standard of proof) that the source of the assets was in fact criminal.

32.  The decision of the House of Lords in R. v. Briggs-Price (see paragraphs 50 - 64 below) was “nothing to the point” as the issue in that case was the logically prior question of whether the defendant had been in possession of property in the past. In the instant case it was not in dispute that the applicant had held the assets in question; the only question was their source. It was not correct that, if the prosecution held information to that effect, and disclosed it in the proceedings, there was a new charge for the purposes of Article 6 of the Convention.

33.  The court then considered whether it was unfair and contrary to Article 6 § 1 for the prosecution to use the confiscation proceedings as a means of imposing the burden on the applicant of having to disprove his involvement in VAT fraud. The court rejected this ground, finding that, as the Court had observed in Phillips, the statutory assumption was applied not to facilitate a finding of guilt, but rather to assess the amount of the confiscation order. The appellant was entitled to rebut the assumption that the source of the assets was criminal, on the balance of probabilities, and in Phillips the Court had described this as a “principal safeguard”. There could therefore be nothing unfair in requiring the applicant to demonstrate that two of the companies through which he was trading were carrying out lawful business.

34.  The court also rejected the submission that it was an abuse of process to decline to prosecute the applicant for VAT fraud but rather to pursue him through confiscation proceedings. The application by the prosecution (subject to control by the court and subject to a full right of appeal) to apply primary legislation could not amount to such an abuse, particularly when, under section 10(6)(b) of the 2002 Act, the court could not make any of the statutory assumptions if there would be a serious risk of injustice.

35.  Finally, in respect of the financial reporting order, the Court of Appeal dismissed the applicant’s appeal, finding that the judge had been entitled to have regard to the whole picture of the applicant’s lifestyle, including his very high standard of living and luxury and his evasive and dishonest evidence in relation to confiscation (see, e.g., R v Webb [2011] EWCA Crim 882 paragraph 24 and its citation of Hancox v The Queen [2010] EWCA Crim 102 and R v Bell [2011] EWCA Crim 2728). Moreover, such an order could only be made if there was a sufficiently high risk of the applicant committing another of the specified offences, such as cheating the Revenue, and in the present case there was sufficient risk to justify the making of an order.

36.  Leave to appeal to the Supreme Court was refused by the Court of Appeal on 18 April 2012.

B.  Relevant domestic law and practice

1.  The Proceeds of Crime Act 2002

37.  Confiscation proceedings are governed by the Proceeds of Crime Act 2002 (“the 2002 Act”). Section 6(4) sets out the approach to be followed by the court:

“(a) it must decide whether the defendant has a criminal lifestyle;

(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;

(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct.”

38.  Under section 76(4), a person benefits from conduct if he obtains property as a result of or in connection with the conduct. Section 76(7) provides that if a person benefits from conduct, his benefit is the value of the property obtained.

39.  Section 10 provides for the making of four assumptions for the purpose of deciding whether or not a defendant has benefited from his general criminal conduct and calculating his benefit from that conduct. Where relevant, it provides:

“(1) If the court decides under section 6 that the defendant has a criminal lifestyle it must make the following four assumptions for the purpose of -

(a) deciding whether he has benefited from his general criminal conduct, and

(b) deciding his benefit from the conduct.

(2) The first assumption is that any property transferred to the defendant at any time after the relevant day was obtained by him -

(a) as a result of his general criminal conduct, and

(b) at the earliest time he appears to have held it.

(3) The second assumption is that any property held by the defendant at any time after the date of conviction was obtained by him -

(a) as a result of his general criminal conduct, and

(b) at the earliest time he appears to have held it.

(4) The third assumption is that any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him as a result of his general criminal conduct.

(5) The fourth assumption is that, for the purpose of valuing any property obtained (or assumed to have been obtained) by the defendant, he obtained it free of any other interests in it.

(6) But the court must not make a required assumption in relation to particular property or expenditure if -

(a) the assumption is shown to be incorrect, or

(b) there would be a serious risk of injustice if the assumption were made.

40.  The “relevant day” referred to in subsections (2) and (4) is normally the day six years before proceedings were started against the defendant (section 10(8)). Thus, any property transferred to the defendant at any time in the six years before his conviction will be assumed to have been obtained by him as a result of his general criminal conduct.

41.  Pursuant to section 6(5), where the court decides that the defendant has benefited from the conduct referred to it must calculate the recoverable amount and make a confiscation order requiring him to pay that amount. Section 6(7) requires any question arising under subsections (4) or (5) to be decided on a balance of probabilities.

42.  Section 7 provides guidance on fixing the recoverable amount:

“(1) The recoverable amount for the purposes of section 6 is an amount equal to the defendant’s benefit from the conduct concerned.

(2) But if the defendant shows that the available amount is less than that benefit the recoverable amount is-

(a) the available amount, or

(b) a nominal amount, if the available amount is nil.”

43.  As regards the conduct of confiscation hearings, section 16 of the Act provides that the court may order the prosecution to give it a statement of information. Section 16(3)-(5) defines the statement of information in these terms:

“(3) If the prosecutor ... believes the defendant has a criminal lifestyle the statement of information is a statement of matters the prosecutor ... believes are relevant in connection with deciding these issues-

(a) whether the defendant has a criminal lifestyle;

(b) whether he has benefited from his general criminal conduct;

(c) his benefit from the conduct.

(4) A statement under subsection (3) must include information the prosecutor ... believes is relevant-

(a) in connection with the making by the court of a required assumption under section 10;

(b) for the purpose of enabling the court to decide if the circumstances are such that it must not make such an assumption.

(5) If the prosecutor ... does not believe the defendant has a criminal lifestyle the statement of information is a statement of matters the prosecutor ... believes are relevant in connection with deciding these issues-

(a) whether the defendant has benefited from his particular criminal conduct;

(b) his benefit from the conduct.”

44.  The court may order that a defendant respond to a section 16 statement of information. Section 17 governs the response and, where relevant, provides:

“(1) If the prosecutor ... gives the court a statement of information and a copy is served on the defendant, the court may order the defendant-

(a) to indicate (within the period it orders) the extent to which he accepts each allegation in the statement, and

(b) so far as he does not accept such an allegation, to give particulars of any matters he proposes to rely on.

(2) If the defendant accepts to any extent an allegation in a statement of information the court may treat his acceptance as conclusive of the matters to which it relates for the purpose of deciding the issues referred to in section 16(3) or (5) (as the case may be). ”

45.  Section 18 provides for the court to order a defendant to provide information in terms which mirror those set out in section 17.

2.  Case-law in respect of confiscation

a.  HM Advocate v. McIntosh

46.  In this case the Scottish High Court of Justiciary sitting as a court of criminal appeal (“the Appeal Court”) held, by a majority of two to one, that a confiscation procedure similar to that applied in the present case was incompatible with Article 6 § 2 of the Convention. In particular, it found that in asking the court to make a confiscation order the prosecutor was in fact asking it to conclude that the defendant had committed a criminal offence, even though there had been no indictment or complaint, and no conviction. Moreover, as the allegation against him was unspecific and based on no evidence, his need for the presumption of innocence was all the greater. In such a case the statutory assumptions offended against the presumption of innocence.

47.  However, on 5 February 2001 the Judicial Committee of the Privy Council held unanimously that Article 6 § 2 did not apply, since during the confiscation proceedings the accused was not “charged with a criminal offence” but was instead faced with a sentencing procedure in respect of the offence of which he had been convicted ([2003] 1 AC 1078). Moreover, the Privy Council held that even if Article 6 § 2 could be said to apply, the assumption involved in the making of the confiscation order was not unreasonable or oppressive.

b.  R v. Rezvi and R v. Benjafield and Others

48.  In R. v. Rezvi [2002] UKHL 1 the House of Lords unanimously held that the confiscation scheme under the Criminal Justice Act 1988 was compatible with Article 6 § 1 of the Convention. Lord Steyn, with whom the other Law Lords agreed, observed:

“It is a notorious fact that professional and habitual criminals frequently take steps to conceal their profits from crime. Effective but fair powers of confiscating the proceeds of crime are therefore essential. The provisions of the 1988 Act are aimed at depriving such offenders of the proceeds of their criminal conduct. Its purposes are to punish convicted offenders, to deter the commission of further offences and to reduce the profits available to fund further criminal enterprises.

... ... ...

It is clear that the 1988 Act was passed in furtherance of a legitimate aim and that the measures are rationally connected with that aim ... The only question is whether the statutory means adopted are wider than is necessary to accomplish the objective. Counsel for the appellant submitted that the means adopted are disproportionate to the objective inasmuch as a persuasive burden is placed on the defendant. The Court of Appeal [2001] 3 WLR 75, 103 carefully considered this argument and ruled:

‘The onus which is placed upon the defendant is not an evidential one but a persuasive one, so that the defendant will be required to discharge the burden of proof: see Lord Hope’s third category of provisions in R v Director of Public Prosecutions, Ex Kebilene, [2000] 2 AC 326, 379. This is therefore a situation where it is necessary carefully to consider whether the public interest in being able to confiscate the ill-gotten gains of criminals justifies the interference with the normal presumption of innocence. While the extent of the interference is substantial, Parliament has clearly made efforts to balance the interest of the defendant against that of the public in the following respects:

(a) It is only after the necessary convictions that any question of confiscation arises. This is of significance, because the trial which results in the conviction or convictions will be one where the usual burden and standard of proof rests upon the prosecution. In addition, a defendant who is convicted of the necessary offence or offences can be taken to be aware that if he committed the offences of which he has been convicted, he would not only be liable to imprisonment or another sentence, but he would also be liable to confiscation proceedings.

(b) The prosecution has the responsibility for initiating the confiscation proceedings unless the court regards them as inappropriate...

(c) There is also the responsibility placed upon the court not to make a confiscation order when there is a serious risk of injustice. As already indicated, this will involve the court, before it makes a confiscation order, standing back and deciding whether there is a risk of injustice. If the court decides there is, then the confiscation order will not be made.

(d) There is the role of this court on appeal to ensure there is no unfairness.

... [I]n our judgment, if the discretions which are given to the prosecution and the court are properly exercised, the solution which Parliament has adopted is a reasonable and proportionate response to a substantial public interest, and therefore justifiable.’ (Emphasis supplied)

For my part I think that this reasoning is correct, notably in explaining the role of the court in standing back and deciding whether there is or might be a risk of serious or real injustice and, if there is, or might be, in emphasising that a confiscation order ought not be made.

... ... ...

In agreement with the unanimous views of the Court of Human Rights in Phillips v United Kingdom (Application No 41087/98) 5 July 2001 I would hold that Part VI of the 1988 Act is a proportionate response to the problem which it addresses.”

49.  In R. v. Benjafield [2002] UKHL 2 the House of Lords unanimously held that the confiscation scheme under the 1994 Act was also compatible with Article 6 § 1 of the Convention.

c.  R v. Briggs-Price

50.  The case of Briggs-Price concerned a defendant who was convicted of conspiracy to import heroin. In the course of that trial evidence had been led of the applicant’s involvement in trafficking in cannabis (to support the heroin trafficking charges), although he was not charged with that offence. In the confiscation proceedings which followed it was agreed by all parties that no heroin was ever imported and that there were no proceeds of that offence. Although the applicant owned properties (which he claimed had been funded from a legitimate source), the prosecution did not allege hidden assets. Consequently, the parties agreed not to apply the statutory assumption that the applicant’s property and expenditure during the relevant period were the proceeds of crime. However, based on the evidence he had heard at trial the judge was satisfied that the applicant had been involved in cannabis trafficking. He therefore made an order for around GBP 2.5 million based on an estimate of the applicant’s proceeds from that offence. That approach was upheld by the Court of Appeal and, on the defendant’s further appeal, by the House of Lords ([2009] UKHL 19). Their Lordships unanimously dismissed the defendant’s appeal but for different reasons.

51.  Lord Phillips of Worth Matravers found that the allegations made in relation to the cannabis offences did not constitute criminal charges because they were not so treated under domestic law; they could not and did not lead to criminal convictions; and, most significantly, their consequence, the confiscation of the property of a convicted drug dealer, was precisely the same as that in Phillips and Grayson & Barnham [nos. 19955/05 and 15085/06, 23 September 2008], in which this Court accepted that the safeguards of Article 6 § 2 did not apply.

52.  Lord Phillips noted, however, that the guarantees of Article 6 § 1 nonetheless applied to the confiscation proceedings. That being said, he found that the prosecution, as part of their case on the conspiracy to import heroin, had given the defence particulars of evidence that they intended to adduce of other drug offences. The appellant had challenged these at his trial and could have challenged them again in the confiscation proceedings. The judge had been sure on the evidence that the relevant offences were proved and he had deduced the benefit from the proved offending. Moreover, the Court of Appeal had held that the procedure adopted was compatible with Article 6 § 1. There was therefore no basis for suggesting that the fair trial requirements of Article 6 § 1 were not satisfied.

53.  Lord Mance adopted a broadly similar position to that of Lord Phillips. He agreed that Article 6 § 2 did not apply to the confiscation proceedings in the appellant’s case. He also agreed that the standard of proof required from the prosecution in proving any relevant drug trafficking was the civil standard. He concluded that no breach of Article 6 § 1 was made out in the present case.

54.  Lord Rodger of Earlsferry also agreed that Article 6 § 2 did not apply to the confiscation proceedings, as nothing said or done by the prosecution or the court in the course of those proceedings was designed to convict or acquit the appellant of any other drug-related offence.

55.  He accepted that the presumption of innocence nonetheless applied as part of the guarantees inherent in Article 6 § 1 of the Convention, but considered that the Article was satisfied, noting:

“74. Although the appellant was not ‘charged’ with the cannabis network offence, evidence of his involvement in the network was led by the prosecution at his trial for the conspiracy count. The appellant was represented by counsel. Before trial, he would have been supplied with police statements and other material from which it would have been clear that the prosecution was intending to lead evidence about his involvement in the cannabis distribution network at his trial. The appellant has never suggested otherwise. The trial judge held that that evidence was admissible and the Court of Appeal held that there was no arguable appeal against that ruling. Counsel for the appellant had every opportunity to cross-examine the relevant witnesses and to lead evidence to counter the prosecution evidence relating to the cannabis distribution network. At the trial, accordingly, any requirements of Article 6(1) and (3) were surely satisfied in respect of the allegations relating to his involvement in that network.

75. In the context of the confiscation proceedings the judge had regard to this evidence which had been led at the trial and, on that basis, had ‘no doubt’ that the appellant had indeed been involved in running the network. So, in this case, there is no question of the judge proceeding on a presumption that the appellant had been involved in the cannabis network - indeed, the judge plainly thought that the appellant’s involvement had been proved to the criminal standard, beyond a reasonable doubt. On any view, therefore, the presumption of innocence in article 6(1) was fully respected in the confiscation proceedings.”

56.  However, unlike Lords Phillips and Mance, Lord Rodger considered that the relevant standard of proof was “beyond reasonable doubt” because otherwise the Crown could ask the court to make a confiscation order on the basis of an alleged benefit from a specific offence of which the defendant would have been acquitted if he had been prosecuted for it. He accepted that that standard had been satisfied in the present case because the court’s conclusions as to the benefit derived by the appellant from drug trafficking were based on evidence - rather than a presumption - of guilt.”

57.  Lord Neuberger of Abbotsbury agreed fully with Lord Rodger as regards the Convention issues arising in the appeal.

58.  Lord Brown of Eaton-under-Heywood alone found that Article 6 § 2 did apply in the circumstances of the case. He considered the position of this Court to be that the prosecution must either demonstrate that the defendant holds or has held assets the provenance of which he cannot satisfactorily explain, or must establish beyond reasonable doubt that the defendant has committed some other offence (or offences) from which it can be presumed that he obtained advantage. In the latter case, he considered, Article 6 § 2 applied but was satisfied.

59.  In the appellant’s case, the fact that the cannabis offence was not treated under domestic law as a criminal charge and did not lead to a criminal conviction was not a sufficient basis for holding it not to be a charge within the autonomous Convention meaning. Lord Brown observed that, unlike in Geerings v. the Netherlands, no. 30810/03, 1 March 2007, so far from having been acquitted of the cannabis offence, the appellant was found by the judge beyond reasonable doubt to have committed it. On this basis and on this basis alone he regarded Geerings as distinguishable and Article 6 § 2, albeit engaged, to be satisfied.

60.  Lord Brown concluded with the following remark:

“97.  At one stage in the preparation of this opinion I wondered whether, assuming for Convention purposes the appellant was indeed to be regarded as charged with a criminal offence, he can properly be said to have been ‘proved guilty according to law’, not least having regard to the terms of section 2(8). Given, however, the obvious overall fairness of the confiscation proceedings here ... I cannot think that Strasbourg would regard the procedure in fact adopted as unlawful. Having swallowed the camel of accepting that our confiscation proceedings generally are compliant with article 6, the European Court of Human Rights is in my opinion unlikely to strain at this gnat.”

61.  Both Lord Rodger and Lord Mance expressed a critical view of the prosecution’s decision not to prosecute the appellant for cannabis trafficking but nonetheless to lead extensive evidence relating to such trafficking at his trial. Lord Rodger observed that the approach adopted by the Crown meant that the jury was not given the opportunity, if so advised, to declare the appellant’s innocence of any involvement in a cannabis network by acquitting him of a count relating to it.

62.  Lord Mance agreed that it was undesirable that a defendant should be charged only with an offence of conspiring to import heroin, but that the Crown should in order to prove that offence adduce extensive evidence of his having a pre-existing distribution network for the transportation and distribution of cannabis, and that the judge should then be invited to make a confiscation order on the basis of the benefit made and proceeds received from the cannabis dealings proved to his satisfaction by such evidence.

63.  Lord Rodger further criticised the judge’s decision not to apply the statutory assumptions in the appellant’s case as the requirement in section 4(2) to apply the assumptions bound the court. However, he concluded that the failure to observe the provisions of section 4(2) and (4) was probably one of form rather than of substance.

64.  After the dismissal of his appeal by the House of Lords, Briggs-Price lodged an application with this Court on 21 October 2009 under Article 34 of the Convention, no. 59494/09. Notice was given of that application to the respondent Government on 21 October 2011. Further questions were put to the parties on 9 July 2013. The case is still pending before the Court.

3.  Financial reporting orders

65.  Financial reporting orders are governed by the Serious Organised Crime and Police Act 2007.

66.  Section 76 governs the making of such orders. It provides, where relevant:

“(1) A court sentencing or otherwise dealing with a person convicted of an offence mentioned in subsection (3) may also make a financial reporting order in respect of him.

(2) But it may do so only if it is satisfied that the risk of the person’s committing another offence mentioned in subsection (3) is sufficiently high to justify the making of a financial reporting order.

(3) The offences are-

...

(c) any offence specified in Schedule 2 to the Proceeds of Crime Act 2002 (c. 29) (‘lifestyle offences’).

...

(6) If the order is made by a magistrates’ court, the period referred to in subsection (5)(b) must not exceed 5 years.

(7) Otherwise, that period must not exceed-

(a) if the person is sentenced to imprisonment for life, 20 years,

(b) otherwise, 15 years.”

67.  Section 79 addresses the effect of such orders. It provides, where relevant:

“(1) A person in relation to whom a financial reporting order has effect must do the following.

(2) He must make a report, in respect of-

(a) the period of a specified length beginning with the date on which the order comes into force, and

(b) subsequent periods of specified lengths, each period beginning immediately after the end of the previous one.

(3) He must set out in each report, in the specified manner, such particulars of his financial affairs relating to the period in question as may be specified.

(4) He must include any specified documents with each report.

(5) He must make each report within the specified number of days after the end of the period in question.

(6) He must make each report to the specified person.

(7) Rules of court may provide for the maximum length of the periods which may be specified under subsection (2).

(8) In this section, “specified” means specified by the court in the order.

...

(10) A person who without reasonable excuse includes false or misleading information in a report, or otherwise fails to comply with any requirement of this section, is guilty of an offence and is liable on summary conviction to-

(a) imprisonment for a term not exceeding-

(i) in England and Wales, 51 weeks,

...

(b) a fine not exceeding level 5 on the standard scale,

or to both.”

COMPLAINTS

68.  First, the applicant complains that the confiscation proceedings violated Article 6 §§ 1 and 2 of the Convention because:

(i)  the accusations of serious criminal offending in respect of VAT fraud made by the prosecution in the course of the confiscation proceedings amounted to the bringing of a new “criminal charge” within the autonomous Convention meaning of that term; Article 6 § 2 was therefore engaged and the application of the statutory assumptions contained in section 10 of the 2002 Act violated it;

(ii)  the confiscation proceedings were used by the prosecution and HMRC to deprive him of the protections enshrined in Article 6 § 2, having taken the decision not to prosecute him for VAT fraud on the grounds, inter alia, of insufficient evidence; and

(iii)  he was not afforded a fair trial under Article 6 § 1 because: (a) the statutory assumptions went beyond reasonable limits having regard to the importance of what was at stake; and (b) the theoretical protection afforded by section 10(6) of the 2002 Act was not properly used by the domestic courts.

69.  Secondly, the applicant complains that the imposition of a financial reporting order was also in breach of Article 6 §§ 1 and 2 as this was based on the assumption that he had committed a serious criminal offence, which had never been proven according to law. In the absence of that assumed conduct, the court would never have considered the test for the imposition of the financial reporting order to have been met.

70.  Third, the applicant complains that the confiscation proceedings breached the “reasonable time” requirement contained in Article 6 § 1.

 




 

QUESTIONS TO THE PARTIES

A.  The confiscation proceedings

1.  Did Article 6 § 2 apply to the confiscation proceedings (see Phillips v. the United Kingdom, no. 41087/98, §§ 31-36, ECHR 2001-VII; Van Offeren v. the Netherlands (dec.), no. 19581/04, 5 July 2005; and Geerings v. the Netherlands, no. 30810/03, §§ 41-50, 1 March 2007)?

 

2.  Are the assumptions set out in section 10 of the Proceeds of Crime Act 2002 compatible with Article 6 §§ 1 and 2 of the Convention insofar as the references to a “criminal lifestyle” and “general criminal conduct” would allow confiscation to take place on the basis of benefit derived from conduct possibly constituting criminal offences for which a defendant had not been charged or convicted?

 

3.  Further to questions 1 and 2 above, has there been a violation of Article 6 §§ 1 or 2 of the Convention on account of the fact that the confiscation order imposed on the applicant was not based on an estimate of the proceeds derived from the offence for which he was actually convicted but on an assessment of the likely proceeds of VAT fraud offences, when he had never been charged with or convicted of such other offences (see Phillips, cited above, §§ 44-45; Van Offeren, cited above; and Geerings, cited above, §§ 44-47; Grayson and Barnham v. the United Kingdom, nos. 19955/05 and 15085/06, §§ 41 and 46, 23 September 2008 and, mutatis mutandis, Allen v. the United Kingdom [GC], no. 25424/09 [GC], 12 July 2013)?

B.  The financial reporting order

4.  Did Article 6 § 2 apply to making of the financial reporting order?

 

5.  If so, has there been a violation of Article 6 §§ 1 or 2 of the Convention on account of the fact that the financial reporting order was imposed on the applicant after an assessment of risk which was made with reference, not to the offence for which he was actually convicted, but with reference to the VAT fraud offences, when he had never been charged with or convicted of these offences?

C.  The length of the confiscation proceedings

6.  Was the length of the confiscation proceedings in the present case in breach of the “reasonable time” requirement of Article 6 § 1 of the Convention?