England and Wales Court of Appeal (Criminal Division) Decisions

Royal Courts of Justice

The Strand

London WC2

Monday 27th April 1998

B E F O R E :

THE VICE PRESIDENT

(LORD JUSTICE ROSE)

MR JUSTICE BUTTERFIELD

and

MR JUSTICE RICHARDS

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R E G I N A

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MICHAEL TIVNAN

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Computer Aided Transcript of the Stenograph Notes of

Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Tel No: 0171 421 4040 Fax No: 0171 831 8838

(Official Shorthand Writers to the Court)

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MR I FRANK appeared on behalf of the Applicant

MR A MITCHELL appeared on behalf of the Crown

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JUDGMENT

( As Approved by the Court )

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Crown Copyright

Monday 27th April 1998

THE VICE PRESIDENT: In order to deal with this matter the Court has sat as, initially, a Divisional Court of the Queen's Bench Division and, subsequently, as a division of the Court of Appeal Criminal Division. We now give judgment in relation to both matters.

We deal first with the renewed application for leave to apply for judicial review.

Mr Frank, who appears for Michael Tivnan, did not feel able, before this Court, to advance arguments in support of the renewed application. The circumstances are these. What was sought to be challenged is a refusal to disclose to Mr Tivnan an internal report in relation to him as to which public interest immunity was claimed.

He was arrested in September 1990 on suspicion of participating in the importation of cannabis. Shortly thereafter a report was prepared by a Miss Outhwaite, an officer of HM Customs and Excise.

The applicant was subsequently convicted at the Crown Court, of being knowingly concerned in the importation of cannabis resin, and sentenced to 5 years' imprisonment, and a confiscation order was made to which in the latter part of this judgment it will be necessary to refer in further detail.

Having been released on parole licence in November 1993, Mr Tivnan sought to obtain a sight of the Outhwaite report. Parts were disclosed, parts were not. In 1994 he issued proceedings for defamation against the Commissioners based, it was said, on lies in the Outhwaite report. Those proceedings appear to be unresolved.

There were also, subsequently, proceedings by the commissioners for an increase in the amount to be recovered under the confiscation order. To that, as we have indicated, we shall in the latter part of this judgment return.

In relation to those proceedings, Mr Tivnan contends that the Outhwaite report in its entirety should be disclosed to him. There has been served, in support of the Form 86, the usual affidavit, and in refusing leave, Laws J said this:

"The applicant's complaint of the Commissioners' apparent claim of public interest immunity in relation to the 'Outhwaite report' appears to arise in the context of defamation proceedings brought by him. Any question as to the proper use of the Report in those proceedings is therefore a matter for the private law court dealing with the suit; it is not a matter for judicial review."

With those observations we agree. We add, as is implicit in what we have already said, that it has not been advanced on Mr Tivnan's behalf before us today, that anything in the Outhwaite report could materially assist the appeal to which in a moment we shall return. Agreeing as we do with the observation of Laws J, the renewed application for leave to move for judicial review in relation to the report is refused.

Turning, as Court of Appeal Criminal Division, to the appeal which Mr Frank advances before us, it is necessary to rehearse the relevant history. We have referred to the matter as an appeal. It is in fact an application for leave to appeal against sentence, which has been referred to the Full Court by the Registrar. But, in order sensibly to deal with the matter, we grant leave.

The history is this. On 18th October 1991 at Chelmsford Crown Court, before His Honour Judge Watling QC, the appellant, as he now is, was convicted by the jury of being knowingly concerned in the fraudulent evasion of the prohibition on the importation of cannabis, and on 8th January 1992, at the same court, he was sentenced to 5 years' imprisonment.

The benefit to him under the Drug Trafficking Offences Act 1986, which was then the relevant legislation, was assessed at £479,376, and a confiscation order was made under that Act in the sum of £72,841, with 2 years' imprisonment in default.

On 7th June 1996, on the application of the Crown, a certificate of increased value of realisable property was granted by Latham J, under section 16(2) of the Criminal Justice (International Co-operation) Act 1990. The appellant was on that occasion represented by counsel. Thereafter, on 10th July 1997 application was made by the Crown to the Crown Court at Chelmsford that application was that the confiscation order, previously made in the comparatively modest sum to which we have referred, should be increased in accordance with the certificate granted by the High Court judge, namely to the sum of £479,376. That, it will be recalled, was the amount of benefit initially assessed in 1992 to the appellant by reason of drug trafficking. Judge Watling ordered that that sum be paid within 12 months, with 4 years' imprisonment in default.

In so far as it is material for present purposes, it is to be noted that the appellant sought to appeal against his conviction and sentence. The application in relation to conviction was abandoned before it had been considered by the Single Judge. The application for leave to appeal against sentence was refused by the Single Judge, but granted by the Full Court who, on 12th March 1993, dismissed the appeal. In March 1994, the Full Court also refused an application for a notice of abandonment, in relation to the conviction application, to be treated as a nullity.

For present purposes, the facts of the offence of which the appellant was convicted are immaterial. Essentially, the appeal turns on a point of statutory construction. The grounds of appeal, as amended with the leave of this Court today, are three in number, and we quote:

"1. That the certificate of the increased amount that might be realised issued by Latham J on the 7th day of June 1996 was issued in error."

Mr Frank identifies the error as that which is particularised in ground 2, as amended, which is in these terms:

"That the learned judge at the Crown Court sitting at Chelmsford on the 10th day of July 1997 erred in applying section 16 to assets acquired after the original confiscation order which assets were not shown to be the proceeds of criminality or turpitude.

3. The learned judge erred in limiting his discretion so as to exclude matter placed before Latham J and so as to exclude matters raised at the making of the original confiscation order."

So far as ground 1 is concerned, the first question is whether or not this Court has jurisdiction, in the light of the terms of section 50 of the Criminal Appeal Act 1968, to entertain an appeal against the issue of the certificate by Latham J. Section 50 is in these terms, omitting the immaterial provisions:

"(1) In this Act 'sentence', in relation to an offence, includes any order made by a court when dealing with an offender including, in particular...

(d) a confiscation order under the Drug Trafficking Act 1994 other than one made by the High Court;

(e) a confiscation order under Part VI of the Criminal Justice Act 1988;

(f) an order varying a confiscation order of a kind which is included by virtue of paragraph (d) or (e) above..."

Mr Frank accepts that the appeal sought to be made against Latham J's confiscation order does not lie within (d), (e) or (f). But he submits that the words "includes any order made by a court when dealing with an offender" are apt to cover such an appeal as is presently contemplated. We are unable to accept that submission. The jurisdiction of this Court is entirely statutory. We are unable to read the words upon which Mr Frank relies as embracing the issue of such a certificate as is here sought to be challenged. Any appeal against the order of Latham J which, as we have indicated was made getting on for 2 years ago, ought, in our judgment, properly to have been directed, if there were grounds for so appealing, to the Court of Appeal Civil Division.

We turn to the substantial point of this appeal, that in ground 2. Mr Frank submits that section 16 of the 1990 Act which is reflected in s 16 of the Drug Trafficking Act 1994, does not apply in circumstances where a defendant has come into some money or other assets, after a confiscation order has initially been made. The legislation, he submits, is intended to deprive a defendant of the benefits of drug dealing, but is not intended to prevent him from engaging in commerce until, it may be, many years later, when he has satisfied the order.

In support of that submission he relies on a judgment of Schiemann J, in the case of R v Barretto , the revised version of which, as approved by the judge, is contained in a transcript dated 30th November 1992. The relevant passage appears at page 5D of the transcript, when Schiemann J was considering the terms of section 16. He said this:

"It seems clear that, provided that it is in play, the effect of section 16 is to enable a prosecutor, or receiver, to apply to the court to vary a confiscation order where:

(a) the defendant had concealed assets from the court which made the order; or

(b) the assets taken into account by the court had unexpected increased in value; or

(c) the defendant had, after the making of the confiscation order, come into some money or other assets.

The first of these circumstances involves some turpitude vis a vis the original court on behalf of the defendant. The third involves no such turpitude."

Pausing there, that is the form which the judgment took in the unrevised version of it which was delivered on an earlier date.

Somewhat curiously, an article appeared in the New Law Journal, on 14th May 1993, by a law student, Phillip Taylor, the draft of which Schiemann J saw before he revised and approved the judgment. In the light of that article, the final version of the judgment adds these words, as appears at page 6A:

"Since delivering this judgment I have been shown in draft an article by Phillip Taylor written for the New Law Journal in which he argues that section 16 has no application for the third of those situations. I am persuaded that there is force in the points which he makes."

In reliance on that revised judgment, Mr Frank submits that, in the absence of clear words in section 16, that section should not be construed as referring to assets which were subsequently acquired honestly. He accepts that a different view was expressed by Turner J in Re: C (Crown Office list transcript dated 3rd February 1995). But he says, correctly, Barretto was not cited to Turner J, and Mr Frank invites us to prefer Barretto.

Furthermore, in support of his third ground, Mr Frank submits that the judge, in the ruling which he gave, improperly fettered the discretion which he had in relation to the making of a confiscation order.

Mr Frank referred to this passage in the ruling at page 49E of the transcript (page 92, Tab 7 of the bundle):

"I am asked, in effect, to exercise my discretion in this matter not to make this order or part of this order. Even if it became a question for my discretion -- and on this point, as I have already said, I accept the submissions of Mr Mitchell and reject those of Mr Wood -- I would not be minded, in any event, to exercise my discretion in favour of Mr Tivnan."

Mr Frank submits to us that that passage indicates doubt in the judge's mind as to whether he had any discretion at all. Mr Mitchell, on the other hand, invites the Court's attention to the phrase "on this point" in that passage. He stresses that the learned judge in that passage expressly accepted Mr Mitchell's submissions to him on that occasion which, as is apparent from page 36G of the transcript (page 79 of the bundle), included acceptance of the existence of a discretion on the judge's part, and gave an example of the way in which it might be exercised if a defendant's mother was living in a small cottage.

In the light of that further passage in the transcript, Mr Mitchell submits that the passage on which Mr Frank relies can only properly be understood as referring back to an earlier stage in the argument, as to whether or not it was open to the Crown Court judge to go behind the certificate of the High Court judge. In our judgment, Mr Mitchell's submission on this aspect is well-founded. We do not accept that, in the passage which Mr Frank relied on, the learned judge misapprehended the question of whether or not he had any discretion. Furthermore, it is apparent that he indicated, in that passage, that he did not propose to exercise his discretion on the facts of this case in favour of the appellant.

It is convenient at this point to refer to the nature of the assets to which the dispute before us has been directed. These are set out in the order of Latham J (Tab 6, page 41 of the bundle), namely an unincumbered freehold interest in real property in Sway, valued at £350,000, a BMW motorcar, valued at £20,000, and a bank account in the appellant's name, at the Allied Irish Bank, Holloway Road, London, into which a credit of some £70,000 had been paid on 6th March 1996, part of which had been subsequently withdrawn.

Mr Mitchell submits that the words of section 16 are apt to embrace that property whether or not it accrued to the appellant by honest means. It is undoubtedly, as is common ground, property which accrued to the appellant after the initial confiscation order was made and it is common ground that the prosecution could not prove that it resulted from either drug dealing or any other form of dishonesty.

Mr Mitchell points out that until section 16 of the 1990 Act was enacted conferring power on a prosecutor, it was open only to a defendant to apply for variation of a confiscation order. He accepts, as Mr Frank submits, that the s 16 provisions were enacted in order to meet the requirements of Articles 5.1 and 6(c), of the Vienna Convention, which required governments to ensure that the maximum amount possible of proceeds of drug trafficking and income derived from them is confiscated. We comment, in passing, that Mr Frank sought to gain sustenance for his submissions from passages in the speech of Earl Ferrers in moving the relevant amendment in the House of Lords, on 22nd January 1990, as appears from columns 888 and 889 of Hansard.

In our judgment, even assuming, which we very much doubt, that there is, in what Earl Ferrers said, so clear a statement of principle that it would be proper to rely upon it in accordance with the principle of Pepper and Hart , we find nothing in what Earl Ferrers said which supports Mr Frank's contention.

In our judgment, in relation to the question of statutory construction, the confiscation legislation relating to drug dealing, as it is now principally enshrined in the Drug Trafficking Act 1994, is, as has been repeatedly said previously by the courts, Draconian. It is intended to strip those who deal in drugs of any possible profit from so going, by depriving them of their realisable assets, whether or not these are the proceeds of drug trafficking, up to the amount by which they have benefited from drug dealing. The stripping process must involve three stages, and may involve a fourth. First, the court decides if the defendant has benefited from drug trafficking (section 2(2)). Secondly, the court assesses the value of the proceeds of drug trafficking (section 4). Thirdly, the court decides on the amount of a confiscation order (section 5). This, apart from gifts, which are not presently material, will not exceed the total value of the defendant's realisable property at the time the confiscation order is made (section 6). If this value is, at that time, less than the defendant's benefit, the Crown Court must so certify (section 5(3)).

The fourth stage, which is presently relevant, will arise if, subsequent to such certification and the making of a confiscation order, there is an application under section 16 of the 1994 Act. This, omitting immaterial words, is in the following terms:

"(1) This section applies where ... the amount which a person is ordered to pay by way of a confiscation order is less than the amount assessed to be the value of his proceeds of drug trafficking.

(2) If, on an application made in accordance with subsection (3) below, the High Court is satisfied that the amount that might be realised in the case of the person in question is greater than the amount taken into account in making the confiscation order (whether it was greater than was thought when the order was made or has subsequently increased) the court shall issue a certificate to that effect, giving the court's reasons.

...

(4) Where a certificate has been issued under subsection (2) above the prosecutor may apply to the Crown Court for an increase in the amount to be recovered under the confiscation order; and on that application the court may---

(a) substitute for that amount such amount (not exceeding the amount assessed as the value referred to in subsection (1) above) as appears to the court to be appropriate having regard to the amount now shown to be realisable; and

(b) increase the term of imprisonment or detention fixed in respect of the confiscation order..."

It is to be noted, first, that the section contains no words of limitation as to time. Secondly, it is expressed throughout in the present tense, by reference to the time of application for the further certificate and increased confiscation order. Thirdly, the marginal note refers to increase in realisable property. Fourthly, there is in the section no reference to the reason, (whether culpable concealment, subsequent acquisition, or otherwise), why, "the amount that might be realised... is greater than the amount taken into account in making the confiscation order."

Furthermore, section 9(5) of the 1994 Act is in these terms:

"Where the defendant serves a term of imprisonment or detention in default of paying any amount due under a confiscation order, his serving that term does not prevent the confiscation order from continuing to have effect so far as any other method of enforcement is concerned."

In our judgment it is apparent, therefore, that when enacting s 16, Parliament contemplated a continuing state of affairs as envisaged by section 9(5).

Indeed, as it seems to us, section 16(4)(b) dovetails with the provisions of section 9(5). Accordingly, for our part, we prefer Schiemann J's first thoughts in Barretto, rather than his second thoughts, and we prefer the views expressed by Turner J in Re: C . We bear in mind that, as a penal statute, the 1994 Act must, in the case of ambiguity, be construed favourably to the defendant. But we see no ambiguity. The plain words of the statute, in our judgment, provide for the making of an application for a further certificate and for an increase in the amount to be recovered under the confiscation order at any time after the original confiscation order was made. By this means drug dealers can be deprived of their assets until they have disgorged an amount equivalent to all the benefit which has accrued to them from drug dealing.

In those circumstances, this appeal is dismissed.

MR FRANK: I might invite your Lordships to consider an application to certify the point.

THE VICE PRESIDENT: What is the point you would like us to certify?

MR FRANK: I have it in draft, I wonder if I could hand it up (Same Handed). I invite your Lordships' attention to the second point.

THE VICE PRESIDENT: You mean we can forget the first. I will read it out because my brothers do not have a copy of it: "Whether in considering an application under section 16(4) of the 1990 Act, for an increase in the amount to be recovered under the confiscation order, the Crown Court may and should exclude any asset not proved to have been in existence at the time of the making of the confiscation order, and not shown to be the proceeds of criminality or turpitude?"

MR FRANK: I invite your Lordships to certify my point for appeal.

MR MITCHELL: My Lord, I submit the statute is so plain that the....

THE VICE PRESIDENT: Whether we give leave is a different matter, at the moment we are being asked to certify a question.

MR MITCHELL: That summarises the issues as my learned friend would like to argue it, yes.

THE VICE PRESIDENT: No, Mr Frank, we decline to certify that question.

MR MITCHELL: There are other matters both relating to costs. The Commissioners are here on the JR, because the court invited them to be here and accordingly although an ex parte application, the Commissioners seek their costs in the application. Secondly, my Lord, bearing in mind that the assets of the defendant are currently held by the Receiver, and relate in part to real property which must have increased in value since the Receiver, the department (inaudible), there may be an excess over and above the confiscation order. I wonder whether the Court think it appropriate for the defendant to pay the costs of the Commissioners incurred in this appeal.

MR FRANK: My Lord, I do resist the application, on this basis, that the confiscation order was made many years ago, the first one was. The Crown have waited until - July 1997 before applying for a certificate.

THE VICE PRESIDENT: In June 1996 they got the certificate. However, a number of years after this defendant had served his sentence.

MR JUSTICE BUTTERFIELD: But they only came to light months before he made the application.

MR FRANK: They were in a position to apply for and, indeed, they did apply for and obtain a Receivership order before then, in effect Stoy Hayward were appointed as Receivers. They were in the position to - appellant's position, was, from the moment, that they were appointed as Receiver. That occurred in 1992. My Lord, as I read behind tab 4 on page 25.

THE VICE PRESIDENT: The assets to support the application were not apparent in 1992.

MR FRANK: It would be the Receivers responsibility to monitor the assets being acquired by the appellant, and, if they did not do so, in our submission, that is their responsibility. Two-and-a-half to 3 years elapsed between the granting and the application for a certificate in the High Court. I resist the application on that basis. I submit that the costs of each part of the Crown should be borne by the Crown. I do not think I can put it higher.

THE VICE PRESIDENT: We make no order in relation to costs of the renewed application for judicial review; the appellant will pay the Crown's costs in relation to the appeal.

MR MITCHELL: I make it because the defendant's time to pay his confiscation order will expire very soon and one knows how active the magistrates are in issuing warrants of commitment. To avoid any judicial review arising out of a threat to do that, I know your Lordship knows, I wonder whether it might be sensible to extend time to pay, albeit by a short period, to take account of the fact the Receivers' power be varied to permit the sale of the property. I think, His Honour Judge Watling gave the appellant a year from July 1997.

THE VICE PRESIDENT: Yes, he did. I do not suppose, Mr Frank, you object to the period being increased, would you?

MR FRANK: I invite your Lordships to do that, I invite your Lordships to extend time a year from the day. Plainly Judge Watling thought it might be a sensible period of time to allow for the making of his order. I would invite you to say that to reflect the reality behind the marketing of a property of this kind and value, may take some time to release that value by a sale.

MR MITCHELL: I submit that is too long, one is now in a fairly buoyant property market.

THE VICE PRESIDENT: We shall extend time by 6 months, that is to say, until 6th January 1999.