England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2
		14th January 2002

Monday 14th January 2002

1. MR JUSTICE GOLDRING: Earlier today we allowed this appeal. The following are our reasons.
2. The appellant is 48. On 2nd October 2000 at Leeds Crown Court he appeared before His Honour Judge Charlesworth. There were four defendants. One was his son. He pleaded guilty to counts 17 to 26 on the indictment. Each was a count of supplying goods to which a false trade description had been applied contrary to section 1(1) of the Trades Description Act 1968. The counts were specimens. He asked for 109 similar offences to be taken into consideration. On 23rd November he was sentenced to eighteen months' imprisonment. Leave to appeal against that sentence was refused. It has not been renewed.
3. An application for confiscation was made under section 71 of the Criminal Justice Act 1988. That was adjourned on 23rd November.
4. On 30th March 2001, at a further hearing, the judge ruled upon submissions regarding the meaning of "benefit" under section 72(4) of the Act. On 2nd April the judge ruled upon the amount of benefit that might be realised. The sum he decided upon was £200,000. That was the order he made. The sum was to be paid by 22nd August 2001. There was a term of eighteen months' imprisonment consecutive in default of payment. There was also a costs order in the sum of £205,000. It is against the confiscation order that the appellant appeals by leave of the single judge.
5. For present purposes the facts can be taken shortly. In about December 1996 the appellant and his son set up a business selling cars. It was called ABS. The cars were to be sold on the basis of offering guaranteed finance. ABS had an agreement with a finance company called Credit Acceptance Corporation ("CAC"). ABS was fraudulent from the outset. Cars were bought from auction. Their odometers were wound back. They were sold to customers using finance from CAC. The false mileage was represented both to the customer and CAC as true. The customer agreed to pay more for the car than he should have done. CAC provided finance in a greater sum in respect of each car than it would have done had it known the true evaluation.
6. A substantial number of cars were involved. In opening, it was said that something in the order of £975,000 was the amount of money for which the cars were sold. The profit on them was said to have been about £280,000. The loss to CAC was considerable. First, they advanced too much to the customer on the basis that the car was worth more than in fact it was. Second, when and if the customer failed to keep up his payments, the car was worth less when they took possession.
7. In 1997, the truth having come to light, CAC began proceedings to recover what they had lost. They finally settled the case for £63,000.
8. On 24th October 2000 the High Court made a restraint order against the appellant.
9. On 24th February 2001 Detective Constable Fairhurst made a statement dealing with the appellant's apparent financial position and the benefit allegedly received.

The Law

The relevant provisions of the Criminal Justice Act 1988.

10. Section 71(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 [our emphasis] or otherwise dealing with the offender in respect of that offence or any other relevant criminal conduct."

11. Section 71(1A):

"The court shall first determine whether the offender has benefited from any relevant criminal conduct."

12. Section 71(1B):

"Subject to subsection 1C below, if the court determines that the offender has benefited from any relevant 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."

13. By section 71(1C):

"If, in any case ..., the court is satisfied that a victim of any relevant criminal conduct has instituted ... proceedings against the defendant in respect of ... damage sustained in connection with that conduct---

(a) the court shall have a power, instead of a duty, to make an order under this section."

14. By section 72A(1) the court has a power to postpone the determination under the previous section:

"Where a court is acting under section 71 above but considers that it requires further information before---

(a) determining whether the defendant has benefited from any relevant criminal conduct; or

(c) determining the amount to be recovered in his case...,

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

15. By subsection (7):

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

16. By section 73A(2) there is provision for the defendant to provide information. Subsection (2) reads:

"For the purposes of obtaining information to assist in carrying out its functions under this Part of this Act, the court may at any time order the defendant to give it such information as may be specified in the order."

The issue in this appeal

17. It is agreed that the procedure under the Act is mandatory. It is agreed that when deciding whether to sentence before the confiscation proceedings and postpone the confiscation proceedings under section 72A, a judge is exercising a judicial discretion. He is similarly doing so when ordering the production by the defendant of information under section 73A(2) (see Ross, a decision of this Court, case reference number 2000/02702/W1).
18. It is agreed that if in this case the judge did not exercise a discretion he had no jurisdiction to make the order or orders he made. Mr Duffy, on behalf of the appellant, submits it is plain from reading the relevant transcript that he did not exercise any discretion. He therefore had no jurisdiction. Mr Thompson QC, who did not appear below, on behalf of the respondent submits he did. We should add that the order under section 72A(2) which the judge made was subsequently set aside.
19. The relevant transcript is that in respect of 23rd November. We quote from the relevant passages. This was the hearing at which the appellant and the other defendants were sentenced. At the outset Mr Smith, who was appearing on behalf of the prosecution, said this (page 1F):

"MR SMITH: Your Honour, before I detail the facts in respect of Justin and Christopher Woodhead, the Crown propose to conduct an enquiry into section 71 of the Criminal Justice Act 1988, that is a confiscation order, and the relevant notices have been prepared, which I can hand in to the court and to the defence."

20. They were handed out:

"Could I say in respect of those the Crown would invite the court to adjourn the matter as to any financial orders under that Act.

JUDGE CHARLESWORTH: Yes.

MR SMITH: It is the equivalent of the drug trafficking legislation. Perhaps at the end a timetable could be either agreed or arranged as to when the relevant statement should be served.

JUDGE CHARLESWORTH: Yes."

21. At page 39 of the same transcript this interchange is recorded. The judge had passed sentence. An order for costs having been made Mr Barnett, who was representing the son, asked to take instructions. The judge said:

"JUDGE CHARLESWORTH: He seems to be doing reasonably well from the report I have read.

MR BARNETT: Yes.

JUDGE CHARLESWORTH: So far as other matters of costs or compensation are concerned, Mr Smith, there is going to be a further hearing.

MR SMITH: Yes.

JUDGE CHARLESWORTH: And I think, in those circumstances, although the Woodheads are prospering - and I am impressed in fact by what I have read as to how they have prospered since, although that does not enable me to overlook this, as I have, I hope, clearly said - I think I am going to adjourn the question of costs to the hearing which you anticipate there might be, which sounds as if it will be fought, as to what they should pay by way of any compensation or compensation.

MR SMITH: Confiscation.

JUDGE CHARLESWORTH: Confiscation, sorry; we will confiscate the costs if we [need] to, at that time, I think. I mean, on the face of it they are doing so well I could simply order they pay ... [and he sets out a figure], but I do not think that would be right if there is going to be a hearing as to financial matters.

MR SMITH: Yes.

JUDGE CHARLESWORTH: And you anticipate there will be such a hearing?

MR SMITH: Yes.

JUDGE CHARLESWORTH: All right, I adjourn the question of costs to that hearing.

MR SMITH: Your Honour, on the confiscation matter, can I put forward this timetable?"

22. A little later (page 40A):

"JUDGE CHARLESWORTH: Mr Smith, the timetable.

MR SMITH: A list of questions is with the application under section 73 of the Act.

JUDGE CHARLESWORTH: Yes.

MR SMITH: I would ask for 28 days in which to respond and ask for 56 days for the prosecution to respond to that."

23. Mr Harrison QC, representing the appellant, asked for some time. At page 40B, this interchange is recorded:

"MR HARRISON: I just wonder if the prosecution would think it right to take stock and see whether they want to embark on this exercise or not.

JUDGE CHARLESWORTH: Yes, especially in the light of the sentence as well."

24. Judge Charlesworth asked Mr Smith whether he was being given instructions:

"MR SMITH: I am to this extent, that the Crown do propose to proceed to a confiscation hearing, given information that is in the possession of the prosecution."

25. Mr Duffy submits on behalf of the appellant that it is plain on the face of it that the judge never exercised any judicial discretion at all. He did not consider the provisions of the Act. He did not consider whether or not to make the orders sought by the Crown. He believed, submits Mr Duffy, that he had to make the orders the prosecution asked him to. What was done was therefore done without jurisdiction.
26. Mr Thompson submits that it was implicit that at the outset of the proceedings, in the interchange at page 1 of the transcript to which we have referred, the judge, in replying to Mr Smith's suggestion that he would invite the court to adjourn the confiscation proceedings, was agreeing to it. He was, in effect, exercising a discretion at that stage. What happened thereafter was on the basis of that agreement. When asking the Crown whether it still wished to proceed he was doing so having regard to section 71(1)(c).
27. Mr Thompson drew our attention to the case of Miranda [2000] 2 Cr App R (S) 347. That was a case concerned with the issue of confiscation, although the issues it raised were different to those in the present case. There the application for confiscation was postponed. There was no reference in the proceedings to the exercise of any discretion by the judge. The relevant section of the Act was not referred to. In giving the judgment of the Court, Nelson J said this at page 357:

"We are satisfied therefore that the court in acting as it did on July 6, 1998 must have considered that it required further information before it could make its determinations."

28. Mr Thompson relies upon the words "must have considered". He also referred us to the passage:

"We are therefore satisfied that a postponement under section 72A was made here, even though neither the court nor the parties may have focused on that section when dealing with the matter on July 6, 1998."

29. Mr Thompson submits it is not, therefore, necessary to refer to the section itself.
30. We cannot accept Mr Thompson's submissions. It seems to us that each case must depend upon its own facts; what happened before the judge in that particular case. We cannot accept Mr Thompson's submission that at the outset in the passage to which we have referred, the judge was exercising a discretion. It seems to us, having regard to the whole of the transcript, he was not. He at no stage indicated he had considered what he should do, or that he was not obliged to follow what Mr Smith was suggesting should happen. That was so in respect of both orders which he made. Therefore, in the circumstances we have concluded that he did not have the jurisdiction to make them. They (in particular, as is relevant to this appeal, the first) cannot stand.
31. We would add this.
32. First, no particular form of words is required in the exercise of the judge's discretion. It must, however, be plain that when he is considering whether to exercise a discretion or is exercising it, that what he is doing.
33. Second, the judge in this case did not receive the help he should have had, particularly from the Crown. No one ever suggested to him that he had a discretion; no one suggested to him that it was necessary for him to consider the applications being made to him.
34. In the circumstances, as we have indicated, this appeal is allowed.
35. MR DUFFY: My Lords, given the judgment, could I apply that the defendant's costs be made accordingly out of central funds? There is a power in the Prosecution of Offences Act 1985 either to order taxation, or I can give a sum, which is an estimate, of the costs to date.
36. THE VICE PRESIDENT: Have you indicated that sum to the Crown?
37. MR DUFFY: No, I have not.
38. THE VICE PRESIDENT: And you certainly have not indicated it to us.
39. MR DUFFY: The total sum is £50,000 or an order for taxation.

(The Bench conferred.)

40. THE VICE PRESIDENT: Having regard to the fact that the matter was not pursued as it could and should have been below, we take the view that this is not a case in which costs should be ordered out of central funds.
41. MR DUFFY: Thank you.
42. One final matter, my Lords: in the past there have been administrative difficulties in communicating with Switzerland, where the monies are kept. There was a surplus of funds which took an awful long time to recover. I understand the Crown are willing to write to the Swiss authorities indicating this decision and asking them to release the monies held in their account. A potential problem is that we are not entirely sure where the monies are because they have been requested to be released to magistrates' courts. Would the Crown formally agree to translate the letter to the Swiss authorities and to send it within the course of the next seven days so that that money can be released and it avoids unnecessary litigation abroad?
43. MR THOMPSON: I can see no objection in principle to the Crown undertaking to use their best endeavours to ensure the money is released. I only hesitate because there may be proceedings about which I know nothing which may have some impact on whether or not that course can be taken. So I would prefer not to give the undertaking in the form that it was sought.
44. THE VICE PRESIDENT: Yes.
45. MR DUFFY: May I say I entirely accept if there are other restraint proceedings which are instigated and that will override any issue and any undertaking. What I am simply seeking is that if no further proceedings for restraint are contemplated that the monies are released to us and not simply left in abeyance.
46. THE VICE PRESIDENT: Yes.

(The Bench conferred.)

47. THE VICE PRESIDENT: We take the view that the Crown's best endeavours, as indicated by Mr Thompson, are as much as you can reasonably expect. We do not require of them an undertaking.
48. MR DUFFY: No. Thank you.