England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		7 March 2003

MR JUSTICE GROSS:

1. On 15 September 2000 at the Crown Court at Luton before HHJ Wilkie QC, the appellant, Gary John Wilkes (now 49), was convicted on an indictment -- which we shall call "indictment 1" -- and pleaded guilty to other charges of an indictment which we shall call "indictment 2", on re-arraignment, and was sentenced as follows: on indictment 1 he was sentenced to 7 years' imprisonment on count one: aggravated burglary, count two: assault with intent to resist arrest -- 2 years' imprisonment concurrent, count 4: attempted aggravated burglary -- 7 years' imprisonment concurrent, count 5: wounding with intent to resist arrest -- 2 years' imprisonment concurrent. A not guilty verdict was entered on a different count. There were further sentences of imprisonment, also concurrent, handed down on indictment 2, but for reasons which will become apparent, that does not impact on today's proceedings and we say no more of it.
2. Subsequently, on 20 April 2001 at the Crown Court at Luton before HHJ Greenwood, a confiscation order was made on indictment 1 in the following terms:

"Confiscation order in the sum of £41,380 under section 71 of the Criminal Justice Act 1988 [to which we shall refer as 'the Act'] to be paid within 9 months -- in default, 18 months' imprisonment consecutive."

3. The appellant now appeals with leave against the confiscation order only. As this appeal is accordingly concerned solely with that, the facts which are not in dispute may be very shortly summarised. As will be seen, the relevant offences are:

1. The aggravated burglary contained in indictment 1 and already referred to, committed on 9 December 1998 (to which we shall refer as "the Luton offence").

2. The appellant's previous conviction at Peterborough Crown Court for handling stolen goods, committed on 31 August 1997 (to which we shall refer as "the Peterborough offence").

4. For the Luton offence, the police had interrupted the burglary of a newsagent in Welham Green. The offenders had taken items from inside, principally cigarettes and batteries and dropped them at the back of the premises during the course of their escape. It was accepted that all of the items taken were recovered. The total value attributed to the goods was approximately £7,000. As to the Peterborough offence, this concerned handling stolen goods from a recent burglary. The burglary took place on August 31 1997 at a vacant public house. All of the goods the subject of the handling charge were recovered by police from a van driven by the defendant's wife at 1pm on the same day about an hour and a half after the commission of the offence. These items were listed in the relevant indictment as 19 framed pictures, a nut dispenser, a solaria, a quantity of picture hooks and a wall clock. The value of these items was ultimately agreed to be £1,270.
5. As already noted, the confiscation matters came before HHJ Greenwood. On 1 December 2000, he held the fact that the property stolen in the burglary was recovered shortly afterwards was irrelevant. The point was that the property was obtained as a result of, or in connection with, the offence of burglary. Likewise the offence of handling stolen goods came squarely within the meaning of the Act. Accordingly, the benefit was the value of the property obtained in both offences. With regard to the 1 December hearing, it is fair to say that the argument before HHJ Greenwood and His Honour's judgment of 1 December 2000, understandably had regard to the decision of this court in R v Smith (David Cadman) transcript, 16 June 2000. That decision was much relied on before Judge Greenwood by the appellant and was distinguished by the learned judge. In the event, that decision was overturned in the House of Lords. The reference to the House of Lords decision is [2001] UK HL 68 [2002] 1 WLR 54. In the circumstances it is unnecessary to take time with an analysis of the arguments based on the decision of this court in Smith (David Cadman). We shall however return to the House of Lords decision in due course.
6. As to the hearing on 12 April 2001, the learned judge held that the appellant had benefited in the sum of £60,300 and had realisable assets in the sum of £41,380. Accordingly, a confiscation order was made in that sum. HHJ Greenwood approached the matter as follows. First, dealing with the amount of the appellant's benefit, he concluded that the appellant's lifestyle was not such as could have been funded by state benefit monies alone. Next he found that £40,000 was the right figure in this regard, to which figure he added £7,920 in respect of cash in a bank account, plus £12,380 cash found apparently buried in the garden and later returned to the appellant. Accordingly, the judge found the benefit figure proved at £60,300. Secondly, as to realisable assets, the judge found the equity of the family house to be £55,000. He found 50 per cent of that to be realisable; namely, £27,500. To that figure he added the value of the car at £1,500, and also the cash returned to the defendant which we have already mentioned -- £12,380. The total figure for realisable assets was accordingly £41,380.
7. The grounds of appeal are these:

1. The qualifying offences relied upon by the prosecution were not offences from which the appellant had benefited for the purposes of section 71 of the Act as amended by section 1 of the Proceeds of Crime Act 1995.

2. The sentencing judge had a discretion whether to apply the statutory assumptions by virtue of section 72AA(3). In a case where the defendant had only obtained property momentarily for one of the triggering offences, and all of the property was recovered, that discretion should have been exercised in the defendant's favour.

3. Alternatively, if the sentencing judge was right to apply the statutory assumptions under section 72AA(3), those assumptions should have been rebutted under section 72AA(5)(c). The sentencing judge should have found that there was a serious risk of injustice if the assumptions were to be made about the property the subject of the two triggering offences because it had been recovered. It was then unfair not to rebut the statutory assumptions in relation to the untainted property and expenditure when the appellant had not committed any offence of actual benefit during the relevant six-year period.

8. Before turning to the rival arguments it is convenient to outline the statutory provisions so far as here relevant.
9. 1. Following the appellant's conviction in September 2000, the Crown gave notice under the Act as amended by the Proceeds of Crime Act 1995 -- to which we shall refer as "the PCA 1995" -- that a confiscation order was sought under section 72AA of the Act. It was that application which came before Judge Greenwood in December 2000.
10. 2. Section 72AA contains the confiscation regime currently in force in respect of "a course of criminal conduct." Under section 72AA, as summarised in Archbold at paragraph 5-494:

"A confiscation order may relate to the benefit of criminal conduct in respect of which there has been no conviction and which has never been formally taken into consideration before the proceedings."

11. 3. The section 72AA regime was triggered by the offender in effect committing two "qualifying offences" after the commencement of section 2 of the PCA 1995, namely, 1 November 1995. "Qualifying offences" are defined in section 72AA(2) which provides as follows:

"In this section, qualifying offence in relation to proceedings within the Crown Court or a Magistrates' Court means any offence in relation to which all the following conditions are satisfied -- that is to say -

(a) it is an offence to which this Part of the Act applies.

(b) it is an offence which was committed after the commencement of section 2 of the Proceeds of Crime Act 1995, and

(c) that court is satisfied that it is an offence which the defendant has benefited."

12. As to those requirements: (a) is satisfied by virtue of section 71 subsection 9(c)(ii); (b) is satisfied in that it is common ground that the Luton offence and the Peterborough offence were committed during the relevant period, ie after 1 November 1995; (c) goes to the first ground of appeal to which we shall come presently. When interpreting (c) it is necessary to have regard to section 71(4) and (5) of the Act which read as follows.

"(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."

13. 4. Once the threshold requirements for the application of the section 72AA regime are met, then section 72AA(3) provides that --

"The court may, if it thinks fit . . . determine that the assumptions specified in section 72AA(4) are to be made for the purpose --

(a) of determining whether the defendant has benefited from relevant criminal conduct; and

(b) if he has, of assessing the value of the defendant's benefit from such conduct."

14. Accordingly, the court has a discretion which the statute does not fetter as to whether to make the assumptions. The assumptions contained in section 72AA(4) are these:

"(a) that any property appearing to the court --

(i) to be held by the defendant at the date of conviction or at any time in the period between that date and the determination in question, or

(ii) to have been transferred to him at any time since the beginning of the relevant period, was received by him, at the earliest time when he appears to the court to have held it, as a result of or in connection with the commission of offences to which this Part of the Act applies;

(b) that any expenditure of his since the beginning of the relevant period was met out by payments received by him as a result of or in connection with the commission of offences to which this Part of this Act applies;

(c) that, for the purposes of valuing any benefit which he had or which he is assumed to have had at any time, he received the benefit free of any other interests in it."

15. 5. Section 72AA(5) provides a safeguard for the offender. It reads as follows:

"Where the court has determined that the assumptions specified in subsection (4) above are to be made in any case, it shall not in that case make any such assumption in relation to any particular property or expenditure if --

(a) that assumption, so far as it relates to that property or expenditure, is shown to be incorrect in the defendant's case;

(b) that assumption, so far as it relates, is shown to be correct in relation to an offence the defendant's benefit from which has been the subject of a previous confiscation order; or

(c) the court is satisfied that there would (for any other reason) be a serious risk of injustice in the defendant's case if the assumption were to be made in relation to that property or expenditure."

16. 6. Section 72AA(6) must be read with section 71(10). These sections provide as follows:

"Where the assumptions specified in subsection (4) above are made in any case, the offences from which in accordance with those assumptions the defendant is assumed to have benefited shall be treated as if they were compliant for the purposes of this Part of the Act in the conduct which is to be treated in that case as relevant criminal conduct in relation to the defendant."

17. Section 71(10) provides as follows:

"In this Part of the Act relevant criminal conduct in relation to a person convicted of an offence in any proceedings before a court means  . . . that offence taken together with any other offences of a relevant description which are either --

(a) offences of which he is convicted in the same proceedings; or

(b) offences which the court will be taking into consideration in determining the sentence for the offence in question."

18. Archbold explains the impact of section 72AA(6) as follows:

"Where, however, section 72AA applies, offences from which the offender is assumed to have benefited are included within the relevant criminal conduct." (see paragraph 5-498).

19. 7. Once the court has determined that the offender has benefited from the relevant criminal conduct then it shall determine the amount to be recovered and order the offender to pay that amount. The amount to be paid shall be equal to (a) the benefit; or (b) the amount appearing to the court that might be realised at the time the order is made, which ever is the less (see section 71(1B) read with section 71(6)). Section 74 contains detailed provisions dealing with realisable property which it is unnecessary to set out here.
20. It is clear that while the prosecution must establish that the offender has benefited from the offence and the value of his benefit, it is for the offender to show that the amount that might be realised is less than the value of his benefit (Archbold, paragraph 5-523). The standard of proof is that applicable in civil proceedings (section 71(7A)(c)).
21. We turn to the rival arguments. Put very shortly and as foreshadowed by the grounds of appeal, Mr Kirk's argument for the appellant is that there was no more than momentary benefit from the qualifying offences, therefore he had not benefited from them. If that was wrong then for essentially the same reason, the discretion under section 72AA(3) should not have been exercised to make the assumption under section 72AA(4). Alternatively, those assumptions should have been displaced under section 72AA(5)(c). In a nutshell, as the appellant has expressed it in his written submissions:

"The property and the expenditure the sentencing judge included within his benefit calculation was entirely 'untainted' in that it could not be linked directly to a criminal offence. No amount was included for the tainted property (the subject of the triggering offences) because that had been recovered."

22. Insofar as these are discretionary matters, the judge had not given any reasons for the exercise of his discretion so that this court should exercise its own discretion. In doing so the "fundamental argument" advanced by Mr Kirk is:

"That the prosecution could not prove (without the assumptions) that the appellant actually benefited from any criminal offence during the relevant period."

23. Mr Kirk, in developing his argument, relied on the suggestion of illogicality of leaving out the proceeds of the trigger offences in calculating the benefit while nonetheless having regard to the trigger offences for the application of the section 72AA regime. Furthermore, he posed various examples, in particular, of the case of the first time offender of hitherto good character who finds that he has taken an extremely valuable item of property which he then returns in remorse a moment later. There is only a single offence. The Section 71 regime without discretion applies; Mr Kirk says that if one applies too strict a test to obtaining property under section 71(4) it could produce hardship in the case of a single offence under section 71. Mr Kirk acknowledged in his skeleton argument with, if we may say so, some understatement that Smith (David Cadman)in the House of Lords did not now assist him, but he submitted that it was a decision purely on section 71(5) of the Act and not decisive on section 71(4).
24. We did not, in the event, need to call on Mr Donnellan for the Crown, but it is worth recording the arguments advanced in his skeleton argument. The Crown's argument is that section 71(4) means what it says: a person benefits from an offence if he obtains property and no gloss is permitted or required. What he does with the property thereafter is irrelevant. Smith (David Cadman) in the House of Lords is decisive, applicable to section 71(4) and not confined to section 71(5). Additional support for these arguments is derived from the unreported decision of Auld J, as he then was, in Rees (unreported -- 14 February 1996). This legislation is not concerned with operating profit or net gain. Turning to the making of the assumptions, and the fact that they were not disapplied, the judge had ample justification for the course which he followed and it could not be said that he acted unreasonably.
25. In the context of the appellant's admitted convictions, the trial judge had correctly concluded that the appellant was a career criminal committing burglaries regularly in a sophisticated way. Judge Greenwood was entitled to take this into account, together with the unexplained cash found in the appellant's garden and cash deposited in his bank account. From all this material the judge was entitled to make the statutory assumptions.
26. The matter is then neatly developed in the Crown's skeleton at paragraphs 17 to 20 which we shall read as it shortens the discussion subsequently.

"17. The purpose of the assumptions that the offender's source of income is the proceeds of crime is to shift the burden to the appellant to show (on balance) that it was not from criminal conduct. The Prosecutor does not have to point to a single criminal offence during the relevant period where the appellant has acquired or secured property; the trigger to enable the court to make the assumption is whether the offences are qualifying offences within the statutory definition . . .

"18. There is no requirement that any item of income should be referrable to any particular piece of criminality, to require such an exercise would defeat the purpose of the statutory assumption in section 72AA(4)(b). The safeguard for the appellant is that the assumption can be displaced by him on a balance of probabilities by showing that his expenditure was supported by income from legitimate sources. He can and did give evidence: the judge therefore had the material before him upon which he was entitled to make the assumptions  . . .

"19. In so far as subsections 72AA(5)(a) and 5(c) are concerned, they are there to prevent an assumption being made that is incorrect, or to prevent injustice occurring to the appellant, not to the broader question of whether it is appropriate to apply the assumptions at all. Indeed they do not apply unless the court has determined that assumptions are to be made. There is therefore no illogicality in determining that it would be unjust to include the sum of £4,720 (1/2 of proceeds of burglary apportioned with co-accused plus whole proceeds of handling offences) in the assessment of benefit.

"20. As the appellant is given the opportunity of displacing the assumptions they are not unfair under Article 6(2)  . . .  [read as Article 6(2) of the European Convention on Human Rights]."

The judge had heard the evidence, he had adopted a fair and careful approach, allowing some items the Crown had claimed and disallowing others. This court should not interfere with the exercise of the discretion.

27. We come to our decision. We are in no doubt that the Crown's argument is to be preferred and that this appeal must be dismissed. Our reasons are these: we begin with the statutory framework.

1. Section 72AA of the Act can be draconian in accordance, we think, with the intention of Parliament. As Lord Rodger observed in paragraph 23 of his speech in Smith (David Cadman) in the House of Lords:

"That may not be out of place in a scheme for stripping criminals of the benefits of their crimes."

2. The applicability of section 72AA of the Act is triggered by the commission of the qualifying offences; their "success" or otherwise is irrelevant.

3. Once section 72AA is triggered, and if the assumptions are made, the property to be confiscated need not be, as counsel for the Crown had put in his skeleton argument, "Referable to any particular piece of criminality", let alone a "successful" outcome of the triggered offences; where if otherwise the purpose of the statutory scheme could readily be defeated.

4. The provisions are compatible with Convention rights because any serious or real risk of injustice can be avoided either by not making the assumptions or by disapplying them.

28. We turn to the interpretation of section 71(4). Viewed in this context we have no doubt that section 71(4) is to be interpreted as meaning what it says without any gloss. When the appellant had completed committing the trigger offences he obtained property -- that he was unable to realise that property because of police intervention is irrelevant, as it would have been if the property had been destroyed by fire or in some other accident. In argument, Latham LJ put to Mr Kirk the need to freeze the picture at the moment before the police intervention. In our judgment, once that test is applied, it is plain that at that point property had been obtained. In any event, in our judgment, this matter is put beyond argument by Smith (David Cadman) in the House of Lords which additionally makes plain the close relationship between subsection 71(4) and (5) of the Act. We view Mr Kirk's attempts to distinguish section 71(5) on the basis of the underlying tax statute involved in Smith (David Cadman) as ingenious, but with respect, unsustainable. We shall not lengthen this judgment by reading out verbatim, passages from Smith (David Cadman) which support the conclusions to which he have come, but we draw particular attention to paragraphs 21, 23, 26 and 29 in the speech of Lord Rodger.
29. It follows, inevitably for different reasons, in the light of developments in the Smith (David Cadman) litigation, that we uphold the judge's decision that the appellant benefited from the offences in question, that they are, therefore, qualifying offences and that accordingly section 72AA is triggered. We add only this: so far as the suggested illogicality is concerned, as Mr Kirk put it, of the judge taking the trigger offences into account for the purposes of invoking the section 72AA regime, but not then adding the sums into the benefit, firstly for the reasons suggested by Mr Donnellan in his skeleton argument, it may be that there was no illogicality. Secondly, in any event, the point is wholly academic because the sums would have fallen out of the equation at the stage of assessing the realisable assets. Thirdly, even were Mr Kirk right that there is an illogicality, with respect, it goes nowhere.
30. Finally we add on this part of the case, that although it is of course possible to postulate hard luck examples, as Mr Kirk sought to do under section 71 with regard to the case of the offender of good character committing the single offence, first, there is no need for us to decide any such case today and secondly, it may very well be (though we do not express a concluded opinion on the point) that that ground has already been covered and decided by Smith (David Cadman).
31. We turn to the question of the making of the assumptions and the refusal to displace them. We can take this very shortly indeed in the light of the background summarised in the Crown's skeleton. It is not in dispute that the appellant has a bad record for offences of dishonesty. There appears to have been ample material for the trial judge to describe him, as he did, as a career criminal. Additionally, as the judge found and was entitled to find, the appellant's lifestyle went beyond that sustainable on State benefits -- his only overt source of income. Still further, there was the bank deposit and the cash in the garden. The statute of course did not confine the judge's discretion. He had, in our judgment, ample material to make the assumptions. In so far as that was an exercise of discretion, there is no conceivable basis for us to interfere. Insofar as it is necessary for us to exercise a discretion, because Mr Kirk says the judge did not give reasons for its exercise, we add that we would have exercised it in precisely the same way.
32. As to not disapplying the assumptions, the judge heard the evidence and dealt with the matter, it would appear, on an item-by-item basis. That his judgment is succinct is no criticism. Again there is no basis for interfering and again we would ourselves have reached the same conclusion.
33. Putting the threads together, on the facts of the present case there was no injustice whatsoever in making the assumptions, and the appellant, who we understand gave evidence, failed to displace them. Upon analysis, the appellant has only one argument at this stage of the case, namely, that the assumption should not be made given that the trigger offences were unsuccessful. Not only would that argument, if accepted, be far-reaching and drive a coach and horse through the legislative scheme, it is also, certainly on the facts of this case, unfounded. The appeal is dismissed.
34. LORD JUSTICE LATHAM: Yes, Mr Kirk?
35. MR KIRK: There was one matter and it concerned whether or not this is a case that is fit for appeal to the House of Lords, but I would rather digest the judgment first of all. I know I have 14 days statutorily, but I thought it better to raise that issue now for administrative purposes.
36. LORD JUSTICE LATHAM: We have noted what you have said, Mr Kirk.