England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice,
		11 April 1990.

1. THE LORD CHIEF JUSTICE: On 2 August 1988 in the Crown Court at Maidstone before Judge Lownie and a jury, the appellant was convicted of conspiring to import cannabis. He was at a later date sentenced to four years' imprisonment, a confiscation order having first been made in the sum of £129,300 under the provisions of the Drug Trafficking Offences Act 1986 (hereinafter called "the Act")
2. This court dismissed his appeal against conviction on 29 March last. He now applies for leave to appeal against that part of the sentence relating to the confiscation order. His application has been referred to this court by the single judge. We grant the application and, with the consent of counsel, treat this hearing as the appeal.
3. The facts of the case, so far as they are material, are these. The appellant conspired with a man called Richard Brown and others to smuggle cannabis resin from the continent of Europe to this country. The man Brown travelled from Zeebrugge to Dover on the ferry. The car he was driving was searched on arrival and, inter alia, 27.4 kilograms of cannabis resin were found concealed in the vehicle.
4. The jury were satisfied that the appellant had been partly responsible for the organisation of this importation. It was a case which clearly raised the possibility that a confiscation order might be appropriate.
5. By s.1(4) and (5) of the Act the judge in these circumstances is required before sentencing to determine the amount by which the defendant has benefited from drug trafficking and the amount which, in accordance with the terms of the Act, is to be recovered, and to order the defendant to pay that amount.
6. The case was accordingly adjourned to 31 October 1988 for the necessary investigations to be made and for statements and papers to be prepared. Between then and the adjourned date the judge had considered not only the evidence adduced at the trial but also the statements obtained and submitted by the parties under s.3 of the Act.
7. At the adjourned hearing on 31 October, before any evidence was called by either side but after hearing submissions by counsel, the judge announced:"I now formally record that I have determined that the defendant . . . has benefited from drug trafficking . . .," although the judge qualified that announcement later, saying that he had merely made the assumption that the defendant had benefited and that the matter would be considered fully on the next occasion.
8. A discussion then took place as to whether the prosecution were obliged to call evidence to support the statement which they had filed. The judge indicated that on a provisional view he was prepared to act on the prosecution's s.3 statements without the necessity of the prosecution adducing any evidence in support, despite the fact that the defendant contested those statements, subject however to any evidence which the defendant might choose to tender.
9. The matter finally came before the court on 14 November 1988. The prosecution did in fact call evidence in support of their statements and evidence was also called to support the defendant's case. After two days' hearing the judge gave his ruling on 16 November. He found that various items to a value of £303,432 were the proceeds of drug trafficking, but he also found that the amount to be included in the confiscation order as the amount that might be realised at the time of the confiscation order was £129,300. Accordingly he made an order that the defendant should pay the sum of £129,300 within six months, with a term of two years' imprisonment to run consecutively to the four years in default of such payment. It is against that order that this appeal is launched.
10. The grounds of appeal advanced by Mr. Riordan raise a number of points under the Act which we understand have caused trouble to courts up and down the country and it may be of assistance if we try to deal with the structure and import of the Act in general before turning to the specific points which arise in this appeal.
11. It is plain that the object of the Act is to ensure, so far as is possible, that the convicted drug trafficker is parted from the proceeds of any drug trafficking which he has carried out. The provisions are intentionally Draconian. Since the amount of those proceeds and the size of his realisable assets at the time of conviction are likely to be peculiarly within the defendant's knowledge, it is not surprising perhaps if evidential burdens are cast upon him of a kind which are, to say the least, unusual in the area of the criminal law and this, despite the fact that the confiscation order and the penalties for failing to comply with it may be rigorous.
12. The sequence of events as appears from the Act is as follows.

(1) The defendant appears before the Crown Court for sentence having been convicted in respect of a drug trafficking offence. By virtue of s.1(4) to which reference has already been made, the judge must then decide whether or not to pass sentence immediately in the usual way. If it is a case where the defendant may have benefited from drug trafficking, sentence must be postponed until after the necessary inquiries and determinations have been made. These are threefold:

(a) whether he has benefited from drug trafficking (s.1(2));

(b) the extent to which he has benefited (s.1(4)); and

(c) the amount the defendant shall be ordered to pay under s.1(5)(a).

(2) The court determines in accordance with s.2 the amount which represents the benefit he has received from drug trafficking.

(3) The court determines the amount that the defendant shall be ordered to pay in accordance with s.4 of the Act.

13. Thus the judge has to make a preliminary assessment as to whether it is, or is likely to be, a "benefit" case or not. No doubt the evidence from the trial, if there has been one, or from a recital of the facts if there has been a plea, will be enough for him to form such a preliminary assessment.
14. If he decides that it is such a case, then comes the task of deciding the three questions which have just been set out. The investigation is not confined to proceeds accruing from the particular offences on which he stands convicted, again an unusual feature of the Act. Section 1(3) provides:

"For the purposes of this Act, a person who has at any time (whether before or after the commencement of this section) received any payment or other reward in connection with drug trafficking carried on by him or another has benefited from drug trafficking."

15. Section 2(1) provides:

"For the purposes of this Act -

(a) any payments or other rewards received by a person at any time (whether before or after the commencement of s.1 of this Act) in connection with drug trafficking carried on by him or another are his proceeds of drug trafficking, and

(b) the value of his proceeds of drug trafficking is the aggregate of the values of the payments or other rewards."

16. The prosecution have the task of proving both the fact that the defendant has benefited from drug trafficking and the amount of such benefit. In our judgment the context of the Act and the nature of the penalties which are likely to be imposed, make it clear that the standard of proof required is the criminal standard, namely proof so that the judge feels sure or proof beyond reasonable doubt. The evidence upon which that judgment is based will come in part from the trial, if there has been one, in part from the statements tendered by the parties to the court under s.3 of the Act (with which we shall deal later in this judgment) and in part from evidence adduced before the court.
17. What may thus seem at first sight to be a heavy burden on the prosecution is considerably lightened by the provisions of s.2(2). That section reads:

"(2) The court may, for the purpose of determining whether the defendant has benefited from drug trafficking and, if he has, of assessing the value of his proceeds of drug trafficking, make the following assumptions, except to the extent that any of the assumptions are shown to be incorrect in the defendant's case. (3) Those assumptions are -

(a) that any property appearing to the court - (i) to have been held by him at any time since his conviction, or (ii) to have been transferred to him at any time since the beginning of the period of six years ending when the proceedings were instituted against him, was received by him, at the earliest time which he appears to the court to have held it, as a payment or reward in connection with drug trafficking carried on by him,

(b) that any expenditure of his since the beginning of that period was met out of payments received by him in connection with drug trafficking carried on by him, and

(c) that, for the purpose of valuing any property received or assumed to have been received by him at any time as such a reward, he received the property free of any other interests in it."

18. The words "appearing to the court" in our judgment mean that if there is prima facie evidence that any property has been held by the defendant since his conviction or was transferred to him since the beginning of the relevant period, the judge may make the assumption that it was a payment or reward in connection with his drug trafficking.
19. Likewise with expenditure, once there is prima facie evidence of expenditure by the defendant since the beginning of the relevant period, the judge can assume that it was met out of payments received by him from drug trafficking.
20. Those assumptions can be displaced if they are "shown to be incorrect in the defendant's case." In other words, if after the matter has been fully heard the defendant shows on the balance of probabilities that in respect of each item of property and expenditure the assumptions are in his case incorrect, they can no longer be relied upon as evidence that that item of property or expenditure was part of the defendant's proceeds of drug trafficking.
21. In so far as any of them survive they will, together with any evidence which the judge may accept, assist the judge to decide whether he is satisfied so as to feel sure that the prosecution have made out their case. Thus the initial heavy burden on the prosecution is greatly lightened by the potential assumptions.
22. We turn now to the hearing. This in a complicated case is likely to be protracted and difficult. However, s.3 of the Act goes a little way towards simplifying proceedings and crystallising the issues. It provides that the prosecution may tender a statement dealing with any matter relevant to either of the first two issues, and also provides, no doubt by way of clarification, that if the defendant accepts any of those facts, that acceptance may be treated as conclusive. By s.3(4) a similar provision is made with regard to any statement tendered by the defendant relating to the amount which might be realised at the time the confiscation order is made.
23. Section 3(2) imposes restrictions on the defendant when he has been served with a copy of the prosecution's s.3(1) notice, because the court may then require him to indicate to what extent he accepts the prosecution allegation and if he does not, to indicate any matter he proposes to rely on. That will have the effect, one hopes, of containing the ambit of the inquiry. Section 3(3) imposes sanctions upon him if he fails to comply with a requirement under s.3(2).
24. It is clear from these provisions that where the prosecution statement is not accepted by the defendant, the prosecution, if they wish to rely on any of its contents, must adduce evidence to establish them.
25. The judge then hears the evidence on either side and reaches his conclusion (1) as to whether the defendant has successfully rebutted any provisional assumptions under s.2; (2) as to the existence of any benefit from drug trafficking; and (3) as to the value of such benefit.
26. That is however not the end of the matter. Section 4 provides:

"(1) Subject to ss.(3) below, the amount to be recovered in the defendant's case under the confiscation order shall be the amount the Crown Court assesses to be the value of the defendant's proceeds of drug trafficking.

. . .

(3) If the court is satisfied that the amount that might be realised at the time the confiscation order is made is less than the amount the court assesses to be the value of his proceeds of drug trafficking, the amount to be recovered in the defendant's case under the confiscation order shall be the amount appearing to the court to be the amount that might be so realised."

27. Thus, although the two exercises may overlap, where the court is satisfied that the amount that might be realised is less than the value of the proceeds of drug trafficking, the court has then to carry out a further exercise to determine what the "amount appearing to the court to be the amount that might be so realised" is. If that amount is less than the proceeds of drug trafficking as found, the confiscation order will be for such lower sum.
28. As will appear when we turn to deal with the grounds of appeal in the instant case, it is by no means always simple to determine what the "amount that might be so realised" is.
29. The grounds of appeal advanced by Mr. Riordan in his helpful submissions are as follows.

(1) That the judge should not have determined at the preliminary hearing on 31 October that the appellant had benefited from drug trafficking, when it was clear from the statements tendered by the appellant that the matter was contested. In fact the judge later made it clear that the ruling was in fact only provisional and, as is now conceded, no harm was done. That ruling was amply justified by the evidence adduced on 14 and 15 November 1988.

(2) That the judge wrongly rejected a defence submission that the burden of proving that property had been transferred to or was held by the appellant rested with the prosecution to the usual standard in criminal cases. This is a reference to the terms of s.2(2) of the Act, and in particular the words "any property appearing to the court . . . ." As we have already set out, those words in our judgment mean that if there is prima facie evidence before the court to the effect that property has been held etc., that is sufficient to enable the court to make the assumption in that ss.(3) of s.2.

(3) The judge was wrong in pre-determining at the hearing on 31 October that it was not incumbent upon the prosecution to call any evidence whatsoever (and thus by inference that there was no burden upon them to prove any fact in dispute). We agree for the reasons set out earlier in this judgment that the prosecution were not entitled to rely upon their s.3 statements in so far as those statements were challenged by the defence. In the upshot evidence was in fact called at the hearing on 14 and 15 November and consequently this mistake had no effect in practice.

(4) That the judge when calculating the amount of the confiscation order wrongly included property which, by the time the order was made, was not held by the appellant.

30. In order to test the validity of this ground of appeal, it is necessary to refer briefly to some of the facts upon which the judge was being asked to assess the amount that might be realised so far as the assets of the appellant were concerned at the time that the confiscation order was to be made, bearing in mind the obligations of the court set out in s.4(3) of the Act.
31. The prosecution called evidence from the officer of the Customs and Excise who had been responsible for the investigation into the appellant's drug trafficking activities and also into the amount that might be realised. There were 13 items on the schedule of the assets alleged to be held by the appellant. Only nine were found by the judge to be benefits from drug trafficking and only three of those were the subject of complaint by Mr. Riordan on the basis that they did not represent realisable assets.
32. Items 10 and 11 were boats said to be worth £43,000 and £25,000 respectively. A Mr. Carson was called by the prosecution to prove that the appellant had told him that he, the appellant, owned these two vessels which were lying in a port in southern Spain and had shown photographs of them to him. The appellant denied that he had any interest in any such boats.
33. If we understand Mr. Riordan's submissions correctly, he was suggesting that the prosecution should have made further inquiries as to the existence or non-existence of these boats and that in the absence of such inquiries the burden of disproving the alleged connection no longer rested on the defendant. We do not accept that suggestion. There was evidence on which the judge could come to the conclusion, as he did, namely that the evidence he had heard satisfied him that these boats were held by the appellant at the material times and consequently their values must be included both in the proceeds of drug trafficking and in the amount that might be realised at the time of the confiscation order.
34. The other item which is challenged was a Range Rover motor vehicle. It is submitted that the judge was wrong to include the value of that vehicle in the amount that might be realised at the material time. There is no doubt that the Range Rover was bought by the appellant since the beginning of the relevant period. However it seems that it was given by the appellant to his wife who sold it on, and that the vehicle is now owned by a solicitor in Liverpool who may have bought it in good faith and for value. The contention of the appellant and his wife, rejected by the judge, was that the Range Rover belonged to someone else entirely, a man called McClellan, and had not been bought by the appellant nor given to his wife. There was evidence that the receipt for the purchase price of the Range Rover was found in Mrs. Dickens's handbag and that she had insured the vehicle and dealt with it as her property. The judge said that he had no hesitation in holding that this item fell within the Act.
35. The Range Rover was part of "the defendant's proceeds of drug trafficking" by virtue of s.2(3)(b) of the Act, that is to say "any expenditure of his since the beginning of that period" is assumed to be met out of payments received by him in connection with drug trafficking carried on by him, except to the extent that the assumption is shown to be incorrect: s.2(2). The judge rejected the evidence of the appellant and his wife on this aspect of the matter, and consequently the appellant failed to show that the assumption made by the judge was incorrect. Thus the sum paid for the vehicle by the appellant was part of his proceeds from drug trafficking.
36. The next question is whether the value of the vehicle should have been included in the confiscation order. The court has, under s.1(5), a duty to order a defendant to pay the amount that the court has determined in accordance with s.4 of the Act. As already set out, s.4(3) provides that where the amount that might be realised at the time of the confiscation order is less than the amount a court has assessed to be the value of the proceeds of drug trafficking, the amount to be recovered in the appellant's case under the confiscation order "shall be the amount appearing to the court to be the amount that might be so realised."
37. The amount that might be realised is defined in s.5(3) in the following terms:

"For the purposes of sections 3 and 4 of this Act the amount that might be realised at the time a confiscation order is made against the defendant is -

(a) the total of the values at that time of all the realisable property held by the defendant, less

(b) where there are obligations having priority at that time, the total amounts payable in pursuance of such obligations, together with the total of the values at that time of all gifts caught by this Act."

Thus it is the value of the gifts, and not the gifts themselves, to which s.5(3) applies. Section 5(4) provides, as far as is relevant:

"Subject to the following provisions of this section, for the purposes of this Act the value of property (other than cash) in relation to any person holding the property - . . . (b) . . . is its market value."

Section 5(9) provides:

"A gift (including a gift made before the commencement of s.1 of this Act) is caught by this Act if -

(a) it was made by the defendant at any time since the beginning of the period of six years ending when the proceedings were instituted against him, or

(b) it was made by the defendant at any time and was a gift of property -

(i) received by the defendant in connection with drug trafficking carried on by him or another, or

(ii) which in whole or in part directly or indirectly represented in the defendant's hands property received by him in that connection."

38. The gift of the Range Rover by the appellant to his wife was caught by ss.(9)(a) and also probably by ss.(9)(b)(i).
39. The Range Rover was thus a gift caught by the Act. Under s.5(3), its value at the time the confiscation order was made was to be part of the amount that might be realised in a confiscation order made against the appellant. Its market value at that time on the evidence before the trial judge was £15,000, which is the sum the trial judge included in the confiscation order.
40. Section 5(1) of the Act defines "realisable property." Section 38(2) of the Act provides that the expression "realisable property" falls to be construed in accordance with s.5(1). The Range Rover does not come within the definition of "realisable property" if the solicitor who now apparently owns it had paid a proper consideration for it. However the phrase "realisable property" does not appear in s.4 of the Act and in particular does not appear in s.4(3). If Parliament had wished the confiscation order to be confined to the defendant's "realisable property" as defined by s.5(1), then it would undoubtedly have said so in s.4(3), which it did not. We have no doubt that that was deliberate and was designed to ensure that drug traffickers could not protect the assets they had acquired through drug trafficking by "giving" those assets to others.
41. The subsections in which the phrase "realisable property" appear only do so in later sections of the Act. Thus, s.8 dealing with the power to make restraint orders refers to "realisable property," as does s.9 which gives the court power to make a charging order on "realisable property." Section 11, which deals with the court's power to appoint a receiver to recover "realisable property" and s.13 which enables the court itself to exercise the powers of a receiver.
42. For these reasons, in our judgment, the judge came to the right conclusion with regard to the value of the Range Rover, namely, that its market value at the material time being £15,000, that sum was part of the amount that might be realised at the time of the confiscation order.
43. In our judgment, for the reasons we have endeavoured to explain, the judge came to the right decision on the evidence before him as to the proper amount of the confiscation order and this appeal against sentence is accordingly dismissed.