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Cite as: [2001] EWCA Crim 2761, [2002] 2 Cr App R (S) 74

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Brown & Ors, R v. [2001] EWCA Crim 2761 (7th December, 2001)

		Neutral Citation Number: [2001] EWCA Crim 2761
		Case No: 99/5235/S3, 99/5761/S3,99/6797/S3, 00/0282/S3, 00/0333/S3, 00/0974/S3 & 00/2222S3

Royal Courts of Justice
Strand, London, WC2A 2LL

7 December 2001

B e f o r e :

LORD JUSTICE MANTELL
MR JUSTICE GRIGSON
and
HIS HONOUR JUDGE ZUCKER QC
____________________

REGINA

- v -

PETER JOHN BROWN
BRIAN JOHN WALTON
GRAHAM JOHN MORGAN WENT
ELLIS ANTHONY MARTIN
ALASTAIR MACLEOD
MAURICE AARONS
JOHN PHILLIP GARDNER

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

MR J BLAIR-GOULD appeared on behalf of the appellant Brown
The Appellant WALTON appeared in person
MR D LEDERMAN QC and MR S HARVEY appeared on behalf of the appellant Went
MR K SINGH QC and MISS A DHIR appeared on behalf of the appellant Martin
MR J JONES appeared on behalf of the appellant MacLeod
MR P LODDER QC appeared on behalf of the appellant Aarons
MR P D CURRAN QC appeared on behalf of the appellant Gardner
MR A MITCHELL QC and MR M EVANS appeared on behalf of the Crown
____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

LORD JUSTICE MANTELL:

Introduction.

Between November 1993 and June 1994 Ellis Anthony Martin operated a diversion fraud which resulted in the large-scale evasion of duty on beer sold in this country. Martin was arrested as were a number of persons said to be his accomplices, namely James White, Julie White, Sukvinder Singh, and Julie Court. All five were charged with conspiracy to cheat Customs and Excise and stood their trial at Southwark Crown Court in January 1996. Only Martin and White were convicted. Martin was sentenced to a term of imprisonment of 6 years 10 months which was later reduced on appeal to 5˝ years.

Once in prison Martin had the consummate cheek to resurrect the fraud on an even larger scale including what have been called the inward and outward diversions of dutiable goods this time including beer, wine, spirits and cigarettes with the result that over the period 1st October 1994 to 31st January 1997 approximately Ł18,000,000 was lost to the revenue. He was enabled to do this by reason of help received from his solicitor, Louis Glatt, who himself accepted and carried Martin’s instructions to accomplices on the outside and arranged for others posing as clerks in his practice to do the same. These included Jason Wainwright, Jon Hutchinson, Maurice Aarons, Walter Alfrey, Graham John Morgan Went and Brian Walton. It also seems that Martin had almost unrestricted access to the telephone as a result of Wainwright bribing a prison officer to supply him with prison phone cards.

The Fraud.

i) Inward diversion. Beers wines and spirits were obtained in the United Kingdom and then exported to the continent either to Calais or to Belgium. The documents showed sales to various companies based on the continent which included CDK Catering, L’Entrepot and Antwerp Ship Supplies. As the goods were being exported they did not attract duty in this country. Once the goods had been landed they were swiftly returned to the United Kingdom accompanied by documents which were designed to show that the goods had been purchased by some customer or other and sent to a bonded warehouse in London. In fact the customers were all bogus. The goods were then diverted to what was termed a “cooling off warehouse” before being sold on the United Kingdom market. The fraud was termed an “inward diversion” because the goods were diverted on the inward journey.

ii) Outward diversion. Wines, spirits and cigarettes were obtained either in this country or from abroad and held in a bonded warehouse in the United Kingdom in a duty suspended state. Documents were then raised which purported to show the sale of the goods to an Irish company, G H Lett and Co. In truth the goods never left this country. They were taken from the bonded warehouse and delivered to an un-bonded warehouse from where they were diverted to a cash and carry outlet. The term “outward diversion” simply indicates that the diversion occurred during the purported outward journey.

As can be seen there was in fact very little difference between the two methods of carrying out the fraud.

The conspirators.

i) Ellis Anthony Martin was the organiser and mastermind of the conspiracy. With the help of Louis Glatt together with Gardner and Hutchinson, he was responsible for laundering the proceeds which involved buying properties in the United Kingdom and abroad, setting up off shore companies and bank accounts and investing overseas.

ii) Jason Wainwright had been working for Martin prior to Martin’s arrest in 1994. After Martin had been sent to prison in April 1996 Wainwright acted as his go-between attending prison perhaps two or three times a week usually pretending to be a clerk in the firm of Louis Glatt and Co. By that means he was able to take messages from Martin to the other conspirators and vice versa. He was also a director of Fairbrook and Parker Trading which was one of the “front” companies employed in the fraud.

iii) Jon Hutchinson was Martin’s bookkeeper from 1994 onwards. He was a director of L’Entrepot and played an active part in running the operation from the other side of the English channel. He helped in the laundering of money by buying properties in France and had dealings with French lawyers whenever necessary. He too visited Martin in prison posing as one of Louis Glatt’s clerks.

iv) Walter Alfrey had been a witness for the defence at Martin’s trial in 1996. In fact he had been trading with Martin since the early 1990s and it was he who obtained cigarettes ostensibly destined for Ireland but in fact diverted and sold by him and others on the United Kingdom market.

v) Alastair Macleod also gave evidence for Martin in 1996. He opened up offices in Dublin and helped produce the false documents purporting to show that the diverted goods had been sent to bond.

vi) Graham Went set up GW Export Sales, a company which supplied Martin with dutiable goods throughout the period of the fraud. He was also involved in the setting up and ownership of a warehouse in Calais. He was one of the main suppliers of goods sent out to CDK in Belgium and one of the main suppliers of loads shown as going out to GH Lett in Ireland. He was one of those to attend the first meeting with Martin in prison when discussion took place as to how the fraud was to continue with Martin behind bars.

vii) Peter John Brown supplied beer to the Martin organisation through companies controlled by him, namely Tower Health Products, and later Westminster Trading. As he had been a witness at Martin’s trial in 1996 he was well aware of what had been going on and that Martin was in prison. The total value of goods supplied during the period was Ł10.5 M.

viii) Brian Walton played a vital role as it was his company, Goldseal Logistics, which was used to transport the loads from the bonded warehouse shown on the documents to an un-bonded warehouse. Or, if not being observed, to take the dutiable goods straight to un-bonded premises.

ix) Sukvinder Singh was Martin’s principal salesman. He arranged for the dutiable goods to be sold to cash and carries after they had been diverted. He was responsible for the sham documents purporting to show sales to what have been called “front” companies or “buffers”.

x) Maurice Aarons acted as Martin’s eyes and ears in the outside world keeping him abreast of what was going on in relation to the activities of co-conspirators and Customs and Excise. He made use of a warehouse run by his brother to receive diverted loads of dutiable goods and was responsible for giving instructions to Walton’s drivers as to where loads should be taken.

xi) Terrance Amschwand was responsible for receiving goods at a warehouse known as AR & T. That role came to end in September 1996 when AR & T was raided by Customs but Amschwand continued to play a part in the creation of false documents showing the purchase of diverted goods from front companies and sales on to cash and carries.

xii) John Gardner was mainly involved in laundering the proceeds of the fraud by purchasing properties for Martin and managing them once they had been acquired. This he did very largely through off shore companies. He also acted as Martin’s agent in receiving cash and distributing it as required to others involved in the conspiracy. Some of the cash was paid into off shore bank accounts and some into Louis Glatt’s client account.

That is no more than an overview of the fraud but probably is sufficient for present purposes. A more detailed account may be found in the judgment of this court handed down on 27th July 2001.

Previous proceedings.

In due course all those mentioned were indicted on a charge of conspiring together and with others between 1st October 1994 and 31st January 1997 to cheat Her Majesty The Queen and The Public Revenue by the evasion of duty payable in respect of dutiable goods, namely beers, wines, spirits and cigarettes. There was another named conspirator, one Richard Hercules. The indictment contained two further counts. Count 2 charged Martin alone with a substantive count of cheating the revenue and count 3 charged Martin, Glatt, Gardner and Hutchinson with conspiring together and others to contravene the provisions of section 93A of the Criminal Justice Act 1988 or in other words to the launder the proceeds of the conspiracy. In due course, and the dates are not unimportant, Martin, Aarons, Alfrey, Macleod, Hutchinson, and Wainwright pleaded guilty to the charge of conspiracy. Martin and Hutchinson also pleaded guilty to the charge of money laundering. Gardner’s plea of not guilty to the charge of conspiracy was accepted, he having pleaded guilty to count 3. In his case the conspiracy charge was ordered to lie on the file on the usual terms.

The trial of the others took place in the summer of 1999 at Southwark Crown Court before His Honour Judge Elfer QC and a jury. It lasted forty four days. On 5th August 1999 Brown, Went, Walton, and Singh were convicted of the conspiracy. Hercules was acquitted. In the later trial of Glatt the jury failed to agree. We understand that he has since been re-tried and convicted.

Unhappily His Honour Judge Elfer QC fell ill following conviction and has since been obliged to retire. Accordingly the burden of sentencing and dealing with several applications for confiscation was passed to His Honour Judge Elwen.

Martin was sentenced to 9 years imprisonment to be served consecutively to the term of 5˝ years which had been imposed in 1996. In Martin’s case he made a confiscation order in the sum of Ł10,000,342 to be paid within two years, in default of which Martin was to serve a further term of 5 years imprisonment.

Wainwright was sentenced to 4 years imprisonment. We have not been told what, if any, confiscation order was made in his case.

Gardner was sentenced to a term of 3 years 3 months and a confiscation order in the sum of Ł285,02.18 with 14 days imprisonment in default.

Hutchinson received a 2 year suspended sentence with a confiscation order of Ł1,000.

Aarons was sentenced to 5 year’s imprisonment with a confiscation order of Ł644, 880 in default of which he was to serve a further two years.

Went was sentenced to 4 years imprisonment and ordered to pay Ł358,608 with 12 months imprisonment in default.

Brown received a sentence of 5 years imprisonment and was ordered to pay Ł688,050 by way of confiscation order with 18 months imprisonment in default .

Alfrey was sentenced to 5 years imprisonment. Again we are not told in his case what, if any, confiscation order was made.

Walton was sentenced to 6 years imprisonment and ordered to pay Ł1,048,000 with a three year term in default.

Macleod was sentenced to 3 years imprisonment and ordered to pay Ł100,000 by way of confiscation order. His default term was 18 months.

Singh received a sentence of 5 years imprisonment. In his case we are not aware of any confiscation order having been made.

Amschwand was sentenced to 2 years imprisonment.

Brown, Walton and Went obtained leave to appeal against their convictions. Those appeals were heard in July of this year and dismissed.

The Attorney General sought and obtained leave to refer Hutchinson’s sentence to this court as being unduly lenient. The hearing was on 7th February this year before a constitution presided over by the Vice President. The court indicated that on a plea an appropriate sentence would have been within the bracket 3˝ - 4 years. Having regard to the principle of double jeopardy an immediate term of 18 months was substituted.

On the same day the same constitution of this court considered appeals against sentence by Wainwright, Singh, Aarons, Alfrey and Gardner. In the event Singh’s appeal was dismissed and the others allowed to the extent that Wainwright’s sentence was reduced to 3˝ years, Aarons to 4 years, and Alfrey’s also to 4 years. Gardner, who had given evidence against Glatt, had his sentence reduced to 2˝ years.

We have already mentioned that the appeals against conviction of Brown, Walton, and Went were dismissed on 27th July. That left outstanding appeals for which leave has been given; by Martin against sentence and the confiscation order made in his case; by Gardner against the confiscation order made against him; by Aarons against the confiscation order made in his case; by Went against sentence and the confiscation order made in his case, by Brown; against sentence and confiscation and; by Macleod against the confiscation order. There is also outstanding an application by Walton for an extension of time and for leave to appeal against sentence and confiscation.

These appeals came on for hearing before the present constitution during the week of 5th November 2001.

The Appeals.

We find it convenient to deal first with the sentence appeals.

Martin.

We have already allowed the appeal against the sentence of 9 years and substituted a sentence of 8 years imprisonment in its place, such sentence to be served consecutively to that which Martin was previously undergoing as a result of his earlier conviction. We reserved our reasons. The main ground of appeal had been that Martin ought to have been given a greater discount for his plea of guilty than the three years allowed by the sentencing judge. On our reading of the judge’s remarks it may well have been that he had misunderstood the effect of Lord Taylor CJs observations in R v. Buffrey (1995) 14 CAR(S) 511, where he said of cases such as this that whilst there could be no absolute rule a one third discount would very often be appropriate. Here Martin received a discount of one quarter. Bearing in mind the general guidance offered in Buffrey and having regard to the totality of the sentence imposed in this case we thought it right to reduce Martin’s term of imprisonment by one year. It remains the case that the sentence of 8 years will be served consecutively to the 5˝ years which Martin was serving when these later offences were committed. In reaching our decision we have accepted the sentencing judge’s starting point of 12 years no doubt selected on the basis that any sentence imposed would have to take account of the principle of totality and the fact that the resulting sentence would be 14˝ years. For that reason, if no other, Martin’s sentence following appeal will provide an unreliable benchmark against which to measure the sentences of other appellants.

Brown.

Whereas Martin’s sentence may be an unreliable guide the same cannot be said of the view taken by this court in the case of Hutchinson. There it will be remembered the court was of the opinion that but for the principle of double jeopardy an appropriate sentence for Hutchinson on his plea of guilty would have been in the bracket 3˝ - 4 years. In the Crown’s estimation, accepted by the Court in the appeals of Wainwright and others, Hutchinson was involved in the conspiracy at a lower level than Brown. Brown did not plead guilty. On that basis it could be said that he was fortunate to receive a sentence of only 5 years. However, Mr Blair-Gould points out that Brown’s involvement was simply an extension of his legitimate business in supplying beer. He says that otherwise he played no part in the conspiracy and his role was not vital in the sense that beer might have been obtained from an alternative source. That said he or his companies did supply over Ł10M worth of beer which produced a substantial profit for Brown. Moreover he knew what there was to know about Martin from a very early stage; after all he had given evidence in the first trial. Having regard to all those matters we find ourselves quite unable to hold that a sentence of 5 years was inappropriate let alone manifestly excessive. But Mr Blair-Gould protests that Went, to whom the prosecution ascribed a similar role, only received a sentence of 4 years imprisonment. In the light of all the information available to this Court we do not consider that the disparity, if such it be, would justify interfering with what was in itself a perfectly proper sentence for Brown. Accordingly his appeal against sentence is dismissed.

Went.

The submission to this court as below is that the sentence should reflect the most favourable basis of fact which could have led to Went’s conviction. Mr Lederman QC has invited our attention to a section in the summing up of His Honour Judge Elfer QC in which he referred to a passage in Went’s evidence, later withdrawn, in which Went admitted having been party to the conspiracy for a very short period. The judge told the jury that that admission if accepted was sufficient to support a guilty verdict.

Mr Lederman’s submission may hold good on a plea of guilty unless there has been a Newton hearing but following a trial it is, generally speaking, open to the sentencing judge to form a view as to the degree of involvement of a particular defendant having regard to what he has seen and heard. That generally accepted approach has recently been affirmed by this court in R v. Wang Lin Hai & Others unreported 8th November 2000. In that case the appellants placed reliance upon the case of Efionayi (1995) 16 CAR (S) 380 in which a husband and wife were convicted of the wilful neglect of one of their children. The indictment covered a period of a fortnight. It was open to the jury to convict in relation to a single incident which occurred at the end of that period. The sentencing judge chose to sentence on the basis of conduct continuing over the fortnight. It had been open to the Crown to include a charge relating to the single incident. On those facts it was held that the judge ought to have sentenced on a basis more favourable to the defendants namely that each had been guilty of wilful neglect not in relation to the fortnight but the single incident or assault which occurred at the end of that period. In Wang Lin Hai & Others the court observed that Efionayi depended upon its own particular facts and with regard to the case under appeal said this:

“Here the prosecution were alleging a conspiracy which extended over some 22 months…the jury convicted of conspiracy. Having sat through the many weeks of evidence this most experienced judge was entitled to form a view as to the degree of involvement of those individuals whom the jury convicted.”

In so stating the court did no more than to follow and reinforce earlier decisions of this court namely R v. Soloman & Triumph (1984) 6 CAR (S) 120 and R v. McGlade (1990) 12 CAR (S) 105. In the former, Beldam J (as he then was) giving the judgment of the court said this:

“Many of the decisions which a court has to take in sentencing, such as who was the ringleader of an enterprise, are quite unsuitable to be referred to a jury. This court has frequently held that the judge is entitled to make up his own mind on disputed questions of fact which are relevant to the sentence and is not bound to accept the factual basis advanced for the defendant or even to accept evidence tendered in mitigation where that evidence is unchallenged; see Taggert (1979) 1 CAR (S) 144; Depledge (1979) 1 CAR (S) 184.

In McGlade at p.109 Lord Justice Taylor (as he then was) said “there is clear authority that if the verdict of the jury leads inexorably to one version of the facts being found and only one version, the learned judge is bound to sentence upon that basis. But if the verdict of the jury leaves open some important issue which may affect sentence, then the learned judge having heard all the evidence himself in the course of the trial is free, indeed it is his duty, to come to a conclusion, if he can, upon where the fault lies. Of course, if the learned judge in unable on the evidence to be sure…he would have to deal with the matter on the basis of consent.”

Consent in that case was the most favourable basis for the defendant.

In the present case the position is complicated by reason of the sentencing judge not being the judge of trial. His Honour Judge Elwen had not listened to the evidence. On the other hand the judge went to considerable pains to acquaint himself with the evidence even to the extent of reading the transcripts. In the first instance he ruled on 21st December 1999 as follow:

“Having been taken to all the evidence assembled by the Crown against Mr Went I am sure that I infer from the totality of that evidence, from the documents which have been drawn specifically to my attention, that his involvement in the conspiracy was as follow: that he played a significant part in the EBW L’Entrepot end of it, not only as a supplier but also in the setting up and ownership of the warehouse in Calais; that he was one of the main suppliers of loads to CDK in Belgium; one of the main suppliers of loads shown as going out to GH Lett in Ireland and in my view the evidence leads me to the sure conclusion that Mr Went was involved in this conspiracy from the very beginning as charged in the indictment. ”

The following day His Honour Judge Elwin added to his reasons in these terms:

“With regard to my ruling as to when Mr Went became involved in this conspiracy, I wish to add that among the pieces of evidence I had in mind when reaching the conclusion that I did, were the prison visits to Mr Martin. The first visit in company with Messrs Walton and Alfrey is particularly significant and the suggestion that what Martin wanted to talk to these people about was his appeal is wholly unbelievable.

His, Mr Went, receiving a copy of the seating instructions, the re-print of the fraud, gives in my judgment the lie to that explanation and wholly supports his involvement from the outset.”

In our judgment His Honour Judge Elwen’s reasoning and conclusion are unimpeachable. On the factual basis as found by the judge a sentence of 4 years imprisonment was entirely appropriate following a trial and by some might well be considered lenient. Accordingly Went’s appeal against sentence is also dismissed.

Confiscation.

On 9th November we quashed the confiscation orders made against Martin and Aarons. We reserved our reasons.

In the cases of Brown and Gardner we quashed the original confiscation orders and substituted the following with the consent of the appellants and Customs and Excise:

i) Brown to pay Ł350,000 within nine months of 9th November 2001. In default of payment Brown to serve 18 months imprisonment consecutive to his present term of imprisonment.

ii) Gardner to pay the sum of Ł19,332.58 such sum to be satisfied from funds seized upon his arrest and presently held by HM Commissioners of Custom & Excise.

The reason for agreement being reached in those cases will become apparent.

We reserved our decisions in respect of Macleod and Went.

We begin by explaining our reasons for quashing the confiscation orders made against Martin and Aarons. We may say that we reached those decisions after considerable hesitation and with much regret. It will mean that any attempt to recover their ill-gotten gains will have to be by another, probably less effective, method of proceeding. One further matter; although we are differing from His Honour Judge Elwen we would wish to pay tribute to the careful manner in which he approached this difficult task unaided, as we have been, by subsequent guidance from this court.

Because of the manner in which the legislation has been introduced this has proved a troublesome area of law to apply and productive of many appeals. Matters were not made any easier for His Honour Judge Elwen in this case by reason of the proceedings having reached an advanced stage before he took over. That has meant that he was, as we are, confronted not only with the task of applying piecemeal legislation but also with a complicated factual background. We have been greatly assisted in our understanding of the issues by Mr Andrew Mitchell QC who appears for the Crown and is an acknowledged expert in the field. As is so often the case in confiscation proceedings it is important to determine which regime was applicable in any particular case. To that end it is necessary to set out the relevant statutory provisions beginning with section 71 of the Criminal Justice Act 1988 which first conferred the power to make a confiscation order with regard to crimes other than drug trafficking. We set out the relevant provisions shorn of any later amendments.

(l) The Crown Court and a magistrates' court shall each have power, in addition to dealing with an offender in any other way, to make an order under this section requiring him to pay such sum as the court thinks fit.

(2) The Crown Court may make such an order against an offender where-

(a) he is found guilty of any offence to which this Part of this Act applies; and

(b) it is satisfied-

(i) that he has benefited from that offence or from that offence taken together with some other offence of which he is convicted in the same proceedings, or which the court takes into consideration in determining his sentence, and which is not a drug trafficking offence; and

(ii) that his benefit is at least the minimum amount.

(3) A magistrates' court may make such an order against an offender where-

( a) he is convicted of an offence listed in Schedule 4 to this Act; and

(b) it is satisfied-

(i) that he has benefited from that offence or from that offence taken together with some other offence listed. in that Schedule of which he is convicted in the same proceedings, or which the court takes into consideration in determining his sentence; and

(ii) that his benefit is at least the minimum amount.

(4) For the purposes of this Part of this Act a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained.

(5) Where a person derives a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated for the purposes of this Part of this Act as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage.

( 6) The sum which an order made by a court under this section requires an offender to pay must be at least the minimum amount, but must not exceed-

(a) the benefit in respect of which it is made; or

(b) the amount appearing to the court to be the amount that might be realized at the time the order is made,

whichever is the less.

(7) For the purposes of this Part of this Act the minimum amount is Ł10,000 or such other amount as the Secretary of State may specify by order made by statutory instrument.

(8) A statutory instrument containing an order made by the Secretary of State under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(9) In this part of this Act-

(a) an order made by a court under this section is referred to as a “confiscation order" ;

(b) “drug trafficking offence" has the same meaning as in the Drug Trafficking Offences Act 1986;

(c) references to an offence to which this Part of this Act references to any offence which-

(i) is listed in Schedule 4 to this Act; or

(ii) is not so listed, is an indictable offence, other than a drug trafficking offence; and

(d) a person against whom proceedings have been instituted for an offence to which this Part of this Act applies is referred to (whether or not he has been convicted) as “the defendant" .

(1) A court shall not make a confiscation order unless the prosecutor has given written notice to the court to the effect that it appears to him that, were the court to consider that it ought to make such an order, it would be able to make an order requiring the offender to pay at least the minimum amount.

(2) If the prosecutor gives the court such a notice, the court shall determine whether it ought to make a confiscation order.

(3) When considering whether to make a confiscation order the court may take into account any information that has been placed before it showing that a victim of an offence to which the proceedings relate has instituted, or intends to institute, civil proceedings against the defendant in respect of loss, injury or damage sustained in connection with the offence.

(4) If the court determines that it ought to make such an order, the court shall, before sentencing or otherwise dealing with the offender in respect of the offence or, as the case may be, any of the offences concerned, determine the amount to be recovered in his case by virtue of this section and make a confiscation order for that amount specifying the offence or offences.

(5) Where a Court makes a confiscation order against a defendant in any proceedings, it shall be its duty, in respect of any offence of which he is convicted in those proceedings, to take account of the order before-

( a) imposing any fine on him;

(b) making any order involving any payment by him, other than an order under section 35 of the Powers of Criminal Courts Act 1973 (compensation orders); or

(c) making any order under-

(i) section 27 of the Misuse of Drugs Act 1971 (forfeiture orders); or

(ii) section 43 of the Powers of Criminal Courts Act 1973 (deprivation orders),

but subject to that shall leave the order out of account in determining the appropriate the sentence or other manner of dealing with him.

(6) No enactment restricting the power of a court dealing with an offender in a particular way from dealing with him also in any other way shall by reason only of the making of a confiscation order restrict the court from dealing with an offender in any way it considers appropriate in respect of an offence to which this Part of this Act applies.

(7) Where-

(a) a court makes both a confiscation order and an order for the payment of compensation under section 35 of the Powers of Criminal Courts Act 1973 against the same person in the same proceedings; and

(b) it appears to the court that he will not have sufficient means to satisfy both the orders in full,

it shall direct that so much of the compensation as will not in its opinion be recoverable because of the insufficiency of his means shall be paid out of any sums recovered under the confiscation order.

It should be noted that as originally enacted section 71 conferred a discretion upon either the Crown Court or the Magistrates Court to make an order for not less than Ł10,000 and by section 72 (1) an order could only be made following written notice by the prosecutor. Further by section 72 (4) the court was required to make the confiscation order “before sentencing or otherwise dealing with the offender in respect of the offence”.

In its original form the procedure was found to be unworkable. Because of the requirement that any order could only be made prior to sentencing it was frequently the case that convicted offenders were kept waiting to know their fate for far too long. Accordingly a new section 72 (A) was inserted by section 28 of the Criminal Justice Act 1993 to take effect on and after 3rd February 1995. In its original unamended form section 72A was as follows:

(1) Where a court is acting under section 71 above but considers that it requires further information before –

(a) determining whether the defendant has benefited as mentioned in section 71 (2) (b)(i) above;

(b) determining whether his benefit is at least the minimum amount; or

(c) determining the amount to be recovered in his case by virtue of section 72 above,

it may , for the purpose of enabling that information to be obtained, postpone making that determination for such period as it may specify.

(2) More than one postponement may be made under subsection (1) above in relation to the same case.

(3) Unless it is satisfied that there are exceptional circumstances, the court shall not specify a period under subsection (1) above which-

(a) by itself; or

(b) where there have been one or more previous postponements under subsection (1) above or (4) below, when taken together with the earlier specified period or periods, exceeds six months beginning with the date of conviction.

(4) Where the defendant appeals against his conviction, the court may, on that account –

(a) postpone making any of the determinations mentioned in subsection (1) above for such period as it may specify; or

(b) where it has already exercised its powers under this section to postpone, extend the specified period.

(5) A postponement or extension under subsection (1) or {4) above may be made –

(a) on application by the defendant or the prosecutor; or

(b) by the court of its own motion.

(6) Unless the court is satisfied that there are exceptional circumstances, any postponement or extension under subsection (4) above shall not exceed the period ending three months after the date on which the appeal is determined or otherwise disposed of..

(7) Where the court exercises its power under subsection (1) or (4) above, it may nevertheless proceed to sentence, or otherwise deal with, the defendant in respect of the offence or any of the offences concerned.

(8) Where the court has so proceeded, section 72 above shall have effect as if-

(a) in subsection (4), the words from “before sentencing” to “offences concerned” were omitted; and

(b) in subsection (5), after “determining” there were inserted “in relation to any offence in respect of which he has not been sentenced or otherwise dealt with”.

(9) In sentencing, or otherwise dealing with, the defendant in respect of the offence, or any of the offences, concerned at any time during the specified period, the court shall not –

(a) impose any fine on him; or,

(b) make any such order as is mentioned in section 72(5)(b) or {c) above.

(10) In this section, references to an appeal include references to an application under section 111 of the Magistrates' Courts Act 1980 (statement of case by magistrates’ court).

(11) In this section "the date of conviction" means-

(a) the date on which the defendant was convicted of the offence -concerned, or

(b) where he was convicted in the same proceedings, but on different dates, of two or more offences which may be taken together for the purposes of subsection (2) or, as the case may be, (3) of section 71 above, the date of the latest of those convictions.”.

It will be seen that the inserted section allows a court acting under section 71 to postpone determination of the amount of benefit and realisable assets in order to obtain further information. In the ordinary case postponement may not exceed in total six months from the date of conviction but the period allowed for may be longer where there are exceptional circumstances. But in either case the court is permitted to proceed to sentence notwithstanding the fact that the confiscation proceedings are incomplete. The amendments made by the 1993 Act do not touch upon the discretionary nature of the power to make a confiscation order or the manner in which the procedure might be initiated. However further changes were introduced by the Proceeds of Crime Act 1995. Subsections 1 – 4 of the original section 71 were repealed and so far as it is relevant to the present case the following was substituted:

(1) Where an offender is convicted, in any proceedings before the Crown Court or a magistrates' court, of an offence of a relevant description, it shall be the duty of the court-

(a) if the prosecutor has given written notice to the court that he considers that it would be appropriate for the court to proceed under this section, or

(b) if the court considers, even though it has not been given such notice, that it would be appropriate for it so to proceed,

to act as follows before sentencing or otherwise dealing with the offender in respect of that offence or any other relevant criminal conduct.

(1A) The court shall first determine whether the offender has benefited from any relevant criminal conduct.

(1B) Subject to subsection (1C) below, if the court determines that the offender has benefited from any relevant criminal conduct, it shall then-

(a) determine in accordance with subsection (6) below the amount to be recovered in his case by virtue of this section, and

(b) make an order under this section ordering the offender to pay that amount.

Those changes introduced by the 1995 Act came into force on 1st November 1995. Importantly in the present case they permitted the court to proceed either as before on written notice given by the prosecutor or of its own motion. In either case it became the duty of the court to make an order in accordance with the criteria set out elsewhere in the Act. Effectively that means that the court is bound to make an order in the amount of the offender’s benefit or realisable assets which ever is the lesser.

Martin.

A crucial question in this case has been; was the court entitled to proceed on the basis that the 1993 and 1995 amendments were in place? Mr Singh for Martin has submitted that the court was bound to apply the 1988 Act unaffected by any subsequent legislation. If he is right about that he argues that the court was without jurisdiction in that the order was made after sentence and further in that there had been no valid written notice pursuant to the unamended 1988 Act.

Martin pleaded guilty on 27th November 1998. On 9th December 1998 Customs & Excise (the prosecutor) sent a letter to the Chief Clerk at Southwark Crown Court. It was as follows.

“CRIMINAL JUSTICE ACT 1988

Dear Sirs,

RE: WALTER ALFREY, JASON WAINWRIGHT & OTHERS OPERATION METHUSELAH

I write to you with regard to the above matter and in particular with regard to the defendants whose trial for offences contrary to S170(2) CEMA & Conspiracy to Evade Duty the trial is due to commence on 11th January 1999 the Crown Court.

I write to give you formal notice in accordance with Section 72 of the Criminal Justice Act 1988 as amended by the Proceeds of Crime Act 1995, that it appears to the prosecution that were the Court to consider that it ought to make a Confiscation Order against the defendants pursuant to Part 1V of the Criminal Justice Act 1088, as amended by the Proceeds of Crime Act 1995, it would be able to do so.

1 should be most grateful if you acknowledge safe receipt of this letter.”

On 11th January 1999 Martin applied to His Honour Judge Elfer QC for pre-sentence medical reports. During the hearing Martin’s counsel referred to the fact that the confiscation proceedings might be delayed for a considerable time. On 1st December 1999 Martin was sentenced to a term of 9 years imprisonment consecutive to the sentence then being served. On 9th December 1999 His Honour Judge Elwen held that the letter of 9th December 1998 was not a good notice in Martin’s case and failed to trigger the procedure. However he accepted the Crown’s submission that the 1995 amendments were in place and consequently that it was open to His Honour Judge Elfer to initiate the procedure which he had done at the same hearing. Moreover he regarded what had happened on that occasion as being a postponement within the Act for “exceptional reasons” so far as Martin was concerned. On 15th December 1999 His Honour Judge Elwen made a confiscation order against Martin in the terms already set out.

The conspiracy charges of which Martin was convicted were laid between 1st October 1994 and 31st January 1997. The 1993 Act came into force on 3rd February 1995. The transitional provision of the 1993 Act is section 78 (6) as amended by section 53 of the Criminal Justice Act 1994. In its amended form the provision reads:

“Where a person is charged with a relevant offence which was committed before the coming into force of a provision of Part II, Part III or (as the case may be) Part IV, that provision shall not affect the question whether or not that person is guilty of the offence and where it confers a power upon the court, shall not apply in proceedings instituted before the coming into force of that provision.”

As the proceedings in Martin’s case were instituted after 3rd February 1995 the power to postpone for up to six months from the date of conviction and to proceed to sentence in the meantime was available as at 11th January 1999.

A separate question arises as to whether or not those powers were in fact exercised by His Honour Judge Elfer upon that occasion. At the hearing on 9th December 1999 His Honour Judge Elwen found as follows:

“the Crown and Mr Martin knew there was to be a confiscation hearing. That hearing would take place after Mr Martin had been given an opportunity to prepare himself for that hearing, including any relevant evidence. Sentence and confiscation were to take place much later in 1999. The court concluded that this was necessary to await the conclusion of other trials, particularly the Glatt trial on money laundering counts; that in itself was an exceptional circumstance and was taken in the best interests of justice.

Those decisions relate however only to Mr Martin. I find there was a proper postponement within the terms of the Act for exceptional reasons so far as he is concerned.”

He expressly found that there was no other occasion which was capable of being treated as an exercise by the court of its power to postpone.

Was His Honour Judge Elwen right to treat the hearing of 11th January as an occasion on which the court exercised its power to postpone. We have each read the transcript. It is perfectly true that at various points reference was made to exceptional circumstances and the necessity of postponing the confiscation hearing for some considerable time. Those passages taken out of context might well support the conclusion reached by Judge Elwen. The difficulty is that neither Martin nor his counsel appear to have been present. And at the conclusion of the discussion Judge Elfer said addressing Mr Sells QC for the Crown – “I thought that the whole of the Martin problem and confiscation could best be dealt with on the first day of the trial when his counsel comes along” and then “in other words I am not making any orders now…to an empty court room …over which they could say “how could we know?”” So leaving aside whether or not the confiscation procedure had been initiated which is the pre-condition for making an order postponing consideration of the confiscation question we find ourselves unable to accept His Honour Judge Elwen’s conclusion that there had been a valid postponement for exceptional circumstances to a date beyond the date of sentence. For that reason alone we would hold that the court was without jurisdiction to make the order it did.

But the matter does not end there. The 1995 Act came into force on 1st November 1995. By section 16(5)

“Section (1) above shall not apply in the case of any proceedings against any person where that person is convicted in those proceedings of an offence which was committed before the commencement of that section.”

Mr Singh has submitted that given the dates of the conspiracy the offences were complete on 1st October 1994 when the unlawful agreement was made. He relies on the well-known proposition that the essence of conspiracy is the agreement and the offence is complete as soon as an unlawful agreement has been reached. Mr Mitchell, however, invites our attention to DPP v. Doot (1973) AC 807 and R v. Boyle & Mears (1994) CAR 158 for the equally well-known proposition that a conspiracy is a continuing offence and does not end with the making of the agreement; it will continue as long as there are two or more parties to it intending to carry out the design. In this case, he submits, the offence straddled the coming into force of the 1995 provisions which should therefore apply at least in so far as Martin’s involvement continued beyond 1st November 1995, and probably to the whole period of the conspiracy. The point is of considerable importance because His Honour Judge Elwen found as a fact that the letter of 9th December 1998 did not trigger the proceedings in the case of Martin. Although the heading includes a reference to “Operation Methuselah” (the codename given to the overall investigation,) the letter nowhere mentions Martin by name who could not be considered to be a defendant “whose trial for offences contrary to section 170 (2) … is due to commence on 11th January 1999 the Crown Court.” In His Honour Judge Elwen’s view that letter was at best ambiguous and insufficient for the purpose. With that conclusion we agree. However His Honour Judge Elwen accepted Mr Mitchell’s submission that the 1995 amendments applied and accordingly was able to justify the course of proceedings from 11th January onwards by his holding that the court had initiated the procedure of its own motion.

R v. Kurshid Ahmed was decided by this court on 8th February 2000. In that case the appellant had been charged with three offences of conspiracy. The first was laid between 1st January 1995 and 31st October 1996; the second between 1st January 1995 and 30th June 1997 and the third between 1st January 1997 and 30th November 1997. A confiscation order in the sum of Ł40,000 was made under section 71 of the 1988 Act. The point arose as to whether the power to make an order was discretionary as it would be under the unamended 1988 Act, or whether the court was bound to make an order as would be the case if the 1995 Act was in force. Sir Charles McCullough giving the judgment of the court noted that in both the first two conspiracies there were overt acts committed in pursuance of the relevant conspiracy both before and after 1st November 1995. At paragraph 23 of the judgment he said:

“Counsel’s submission is that as the conspiracies in counts 1 and 2 ran from 1st January 1995, the offences in counts 1 and 2 were being committed both before and after 1st November 1995. That being so in these proceedings the appellant was “convicted…of an offence which was committed before (1st November 1995)”.

We agree. It follows that the judge had the discretion to make an order in the full agreed sum of Ł40,000 or a lesser sum or none at all.”

It was the court’s decision, therefore, that even where a conspiracy straddled the date of the 1995 amendments coming into force the Act did not apply even, as was the case, if overt acts were carried out after that date. The decision is exactly in point and, without more, binding on us. However Mr Mitchell has boldly sought to argue that Ahmed was wrongly decided. He has invited our attention to In re C (application no. 2268/93) a decision of the European Commission on Human Rights made on 6th April 1994. He submits that had In re C been cited to the court in Ahmed the conclusion might well have been different. We do not find it necessary to examine the case in detail save to note that it was a decision of the Commission and not the Court and related to admissibility. We consider that we are bound to follow Ahmed with the consequence that the 1995 amendments did not apply and the Court was not invested with the power to initiate the confiscation procedure.

For that additional reason it seemed to us that in making the order the court acted without jurisdiction.

We, therefore, allowed Martin’s appeal and quashed the order.

For the sake of completeness we ought to refer to an argument raised and relied upon by Mr Mitchell for the first time during the hearing. He asked us to consider whether or not a statement served pursuant to section 73 (1A) might serve as the prosecutor’s written notice. It is quite clear to us that a statement under section 73 (1A) is an entirely different animal from the written notice required under section 71. For one thing the written notice requires the prosecutor to state that he "“considers that it would be appropriate to proceed under this section”. The statement under section 73 (1A) did not comply with that requirement accordingly we rejected that submission which, in fairness to Mr Mitchell, was advanced without enthusiasm.

Aaron.

It is convenient to deal next with Aaron’s appeal in respect of the confiscation order. He had pleaded guilty to the conspiracy (count 1) on 16 April 1999. On 1 December 1999 he was sentenced to five years imprisonment. On 9 December 1999 His Honour Judge Elwen rescinded the sentence pursuant to section 47 (2) of The Supreme Court Act 1981. On 16 December 1999 he made the confiscation order already referred to and re-imposed the sentence of five years imprisonment.

Mr. Lodder for Aaron makes two points. First of all he adopts the arguments advanced on behalf of Martin with regard to the scope of the written notice of 9 December 1998. It appears that the Crown had determined to split up the defendants so as to produce three separate and, presumably, more manageable trials. Aaron was due to be tried in May. He was not one of those whose “trial is due to commence on 11 January 1999”. He is not mentioned by name elsewhere in the letter. Accordingly, we can find no valid distinction between his case and that of Martin so far as the notice is concerned. Moreover, having regard to our holding as to the applicability of the 1995 amendments, it was not open to the judge to initiate the proceedings himself. Quite separately, it does not appear to us that there ever had been any order of the court postponing consideration of the confiscation issue, let along any finding that there were exceptional circumstances justifying a postponement for more than six months. There was indeed discussion on 16 April 1999 between the judge and counsel for the Crown, but in the absence of the defendants and their lawyers and with the judge finally saying that he was not prepared to make any order to an empty courtroom.

For those reasons we quash the confiscation order made against Aaron.

Macleod.

Macleod was one of those whose trial was due to begin on 11 January 1999. Therefore it seems to us that the notice of 9 December 1998 could be said to apply to him. As much was accepted on his behalf. The submission has been that in the absence of any order postponing consideration of the issue, the confiscation order had to be made within six months of the date of conviction. That follows, it is said, from a fair reading of section 72A (3). Here it is not claimed that there ever was an application or order for postponement.

Mr. Mitchell responds that section 72A did not apply in Macleod’s case and consequently there was no need to seek postponement of the determination to make a confiscation order. He points to the wording of section 72 (2) – “if the prosecutor gives the court such a notice, the court shall determine whether it ought to make a confiscation order.” And secondly to section 72A (1) – “Where a court is acting under section 71 above but considers that it requires further information before (making the relevant determinations as to the defendant’s benefit and the amount to be recovered) …… it may, for the purpose of enabling that information to be obtained, postpone making that determination for such period as it may specify.” The submission is, therefore, that the power to postpone only comes into play if further information is required. That being the case there was no constraints as to time.

It is quite true that it is difficult to reconcile the language of section 72A with that of section 72 (1) but we have no doubt that Mr. Mitchell’s contentions are unsound for the following reasons –

i) Once a notice has been given under section 72(1) the court is seized of the matter and by section 72 (2) it has then to determine whether or not it ought to make a confiscation order. No further step is required before the provisions of section 72A begin to bite.

ii) If Mr. Mitchell’s submission is correct a failure by the prosecution to take any further step until after six months from the date of conviction has elapsed would allow the whole regime imposed by section 72A to be side-stepped. In our judgment that cannot have been the intention of Parliament.

iii) It would leave in place the original regime under the 1998 Act so that sentence might have to be postponed for an unacceptable period of time and thus defeat the very purpose for which the provisions of section 72A were introduced.

We have said that there was no application for postponement in this case but that is to ignore an alternative submission presented by Mr. Mitchell to the effect that there had been such a postponement order made on the day when Macleod pleaded guilty, namely 11 January 1999. We can find no evidence of such an order in the judgment and accordingly reject that argument.

It follows that the confiscation order made against MacCleod must also be quashed.

Went.

No point is taken upon the procedure save that in view of this court’s decision with regard to others the judge retained discretion as to the quantum of any confiscation order made. In those circumstances Mr. Lederman QC submits that it would have been open to the judge and fairer to Went to base any order on a view of the facts most favourable to Went. This is the same argument advanced and rejected in relation to sentence. The judge was entitled, as we have held, to reach the view which he did and it follows that the order made cannot be impugned. We dismiss Went’s appeal against the order for confiscation.

Gardner and Brown.

It is only necessary to say that, having noted the court’s decision that the amount of any confiscation order remained within the discretion of the court and having regard to the remarks made by His Honour Judge Elwyn at the time of fixing the amount of the orders made, the parties have agreed that it would be just to alter the terms of the order to those already set out in this judgment. The court has approved that course in each case with the result already noted.

Walton.

As stated at an earlier juncture in this, by now, overlong judgment, Walton has applied for an extension of time in which to apply for leave to appeal his sentence and the confiscation order. The delay has been considerable but, if we take into account that Walton has from time to time, foolishly no doubt, dispensed with the services of his legal advisors and had obtained leave to appeal against conviction, it may very well be that in his own mind he thought that such leave would cover an appeal against sentence. Consequently and notwithstanding the very considerable delay, we are prepared to extend time in which to apply for leave to appeal against sentence and the confiscation order.

* * * * * * * * * *

The Court was asked to certify the following questions as of general public importance:PRIVATE

Does the phrase committed before in section 16(5) of the Proceeds of Crime Act 1995 mean that the court cannot deal with confiscation hearings under the confiscation scheme as varied by that Act where the offence (which permitted the confiscation hearing) was being committed and continued to be committed after the commencement date of the Act? If the Proceeds of Crime Act 1995 does apply in these circumstances, would there be any difference if the offence that was continuing to be committed was a conspiracy to commit a continuing offence?

Is it necessary in order for the court to be able to make a confiscation order under section 71 Criminal Justice Act 1988 as amended for the prosecution to ensure that the court makes such an order within six months of the conviction (unless the court finds exceptional circumstances to postpone (within six months of the conviction) for a longer period) provided in all cases an indication as to confiscation is given before sentence or provided the court is not acting under section 71 at any stage (thereby triggering the provisions of section 72A Criminal Justice Act 1988 (as amended)) can the court make a confiscation order before sentence in accordance with either the provisions of section 72(4) Criminal Justice Act 1988 or section 71(1) Criminal Justice Act 1988 as amended whenever that sentence is passed?

The Court refused to certify.