England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)

		Royal Courts of Justice Strand, London, WC2A 2LL
		3rd November 2004

Lord Justice Kennedy :
1. On 24^th January 2003 in the Crown Court at Chelmsford these two appellants were convicted of conspiracy to assist another to retain the benefit of criminal conduct, and they were subsequently sentenced to substantial terms of imprisonment. They now appeal against conviction by leave of the Full Court.

Background Facts.

2. In substance what was alleged was that a bank account operated by Reichwald was used to deal with the cash proceeds of cigarettes smuggled by Sakavickas and his associates out of Eastern Europe into the United Kingdom. For present purposes the details of the tobacco smuggling operations do not matter. Sakavickas was a fur trader from Lithuania, and a co-accused Radzeviciute was his girl friend. Reichwald was a fur broker and he met Sakavickas in 1995.
3. It was the prosecution case that illegal importations of tobacco began in about October 1998, and two other co-accused, Eddishaw and Roden, were both involved at the United Kingdom end from about August 2000 onwards.
4. What attracted the attention of the authorities seems to have been the large cash deposits being paid into the Reichwald Brothers Ltd bank account. Between October 1998 and January 2001 it was alleged that £5.8 million was laundered in that way. The money was paid in as sterling, converted to dollars, and sent on its way.
5. Between 4^th August 2000 and late January 2001 the police observed what was going on. Again the detail does not matter, but, for example – on 4^th August 2000 Sakavickas paid £180,000 into the Chancery Lane branch of HSBC. On 4^th September 2000 Reichwald paid £193,125 into the same branch. On 22^nd September 2000 Reichwald paid in another £186,950. On 6^th October 2000 Sakavickas paid £45,000 into the Baker Street branch of the same bank and went off in a car registered to Reichwald. Other contacts were observed and other deposits made, 160 in all in the period from October 1998 to January 2001.
6. When Sakavickas was arrested at the Hilton Hotel in Park Lane in London on 26^th January 2001 he had £330,000 in a suit case, and Reichwald also had cash at his home. He surrendered to the police on 8^th February 2001.
7. Enquiries were made as to where the money had gone to out of Reichwald's account. Some of it clearly went to cigarette traders.
8. When the matter got to court Eddishaw and Roden offered acceptable pleas of guilty so it was only the two appellants and Radzeviciute who stood trial on count 2, alleging conspiracy. Reichwald's defence was that he did not know and had no reason to suspect that Sakavickas or his associates were engaged in criminal conduct or had benefited from crime. Sakavickas also contended that the money was legally obtained. He accepted that he was involved in the movement of money from a tobacco business which he had set up with Eddishaw, but he claimed to be unaware that duty on the goods had not been paid. Both appellants were convicted, but the jury could not agree in relation to Radzeviciute. The prosecution elected to offer no further evidence in her case, and she was discharged.

The Offence.

9. The conspiracy alleged in count 2 was an agreement to commit an offence contrary to section 93A of the Criminal Justice Act 1988 which, so far as relevant, reads –

"If a person enters into or is otherwise concerned in an arrangement whereby –

(a) the retention or control by or on behalf of another (A) of A's proceeds of criminal conduct is facilitated …..

knowing or suspecting that A is a person who is or has been engaged in criminal conduct, or who has benefited from criminal conduct, he is guilty of an offence."

The prosecution must prove that the property involved is the proceeds of crime, and once that is established, there is a rebuttable presumption that the defendant knows or suspects that fact. It is a defence if the defendant is able to establish on the balance of probabilities that he did not know or suspect that the proceeds involved were illegally obtained: see section 93A(4). The appellants in this case did not seek to rebut the presumption by relying on that subsection because, as Mr Jeremy for the Crown explained, they did not have to. The Crown accepted the burden of showing (1) that the property involved was the proceeds of crime committed by Sakavickas and others, and (2) that each defendant knew or suspected that fact.

A conspiracy to commit the offence set out in section 93A is an offence contrary to section 1(1) of the Criminal Law Act 1977, which reads –

"Subject to the provisions of this Part of this Act, if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either –

(a) will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement, or

(b) would do so but for the existence of facts which render the commission of the offence or any of the offences impossible,

he is guilty of conspiracy to commit the offence or offences in question."

That subsection is subject to section 1(2) of the Act which provides –

"Where liability for any offence may be incurred without knowledge on the part of the person committing it of any particular fact or circumstance necessary for the commission of an offence, a person shall nevertheless not be guilty of conspiracy to commit that offence by virtue of subsection (1) unless he and at least one other party to the agreement intend or know that that fact or circumstance shall or will exist at the time when the conduct constituting the offence is to take place."

The Directions.

10. At the end of the two and a half month trial the judge sensibly discussed with counsel the directions of law which he proposed to give to the jury, and the directions which he later gave were in accordance with what had earlier been agreed. Those directions were given first at the beginning of the summing-up, and then as a reminder just before the jury retired on 21^st January 2003, when the judge said –

"Have the Crown made you sure that the money, or part of it, was the proceeds of crime which involved Sakavickas and others? The Crown have nailed their colours to that mast. The money that they say you are concerned with is money coming from crime which involves Sakavickas and others. If they do not convince you of that it is not guilty all round. That is the first hurdle they have to cross. Secondly, have the prosecution made you sure that the defendants knew or suspected that Sakavickas and others were engaged in criminal conduct or were benefiting from such conduct? Thirdly, have they proved to you that the defendant agreed with others to help retain control of and the benefit of those criminal proceeds, knowing or suspecting that they were indeed criminal proceeds? "

On 23^rd January 2003 the jury sent a note seeking an explanation of the charge in layman's terms, and the judge repeated his analysis of the three elements, saying in relation to the third element –

"You cannot convict unless you are sure that when doing his or her part to exercise control over the money or retain its benefit the defendant whose case you are then considering knew or suspected that Sakavickas and others had been engaged in criminal conduct or had benefited from crime"

That was repeated to the jury at dictation speed.

The appellants' submissions.

11. It is not suggested that the judge was at any stage inconsistent in the directions which he gave, but it is submitted that his direction as to the third element of the offence was mistaken because as conspiracy was alleged it was not enough to show that the alleged offender suspected that Sakavickas and others had obtained the money under consideration by means of crime. It had to be shown that the alleged offender knew that to be the case. That is said to be the effect of section 1(2) of the Criminal Law Act 1977 in the circumstances of this case, and it was on that point only that the Full Court gave leave to appeal.
12. Similarly there are passages in the summing up where the judge directed the jury that the defendants had to know or suspect that the moneys involved were the proceeds of crime. That was, we think, an error induced by the prosecution's approach (see paragraph 9 above), but it was favourable to the defence. It put the onus on the prosecution to establish knowledge or suspicion whereas, as we have said, section 93A only requires that the burden is on the prosecution to show that the defendant knew or suspected that Sakavickas was a person who was or had been involved in criminal conduct. Thereafter the burden lay on the defence to show that he did not know or suspect that the property was from a tainted source: see R v Butt [1999] Crim L R 414 .However, based on this wrong direction, Mr Gareth Rees QC for Reichwald also says that the judge should have required knowledge and not merely suspicion of the illegal source. The argument is made on the premise that the judge's direction was correct, whereas we do not consider that it was, unless the words of the statute where it places the onus on the defence have to be reconsidered in the light of the European Convention on Human Rights, as to which we heard no argument. But in any event it is essentially the same argument as that advanced with respect to the criminal character of Savickas. At best it stands or falls with that submission, and we shall not deal with it separately.
13. To support that basic submission Mr Rees drew our attention to some legal commentaries, mainly emanating from the late Professor Sir John Smith QC, and to some decisions of this Court. He started with the legal commentaries. In an article in the Criminal Law Review on Conspiracy under the Criminal Law Act 1977 – [1977] CLR 598 – Professor Smith examined the wording of section 1(2) and said at 603 that the provision is intended to ensure that strict liability and recklessness have no place in conspiracy. The subsection, he said, is intended to codify the principles of the mens rea of conspiracy as stated in Churchill v Walton [1967] 2 AC 224. In that case their Lordships held that a defendant could not be liable for a conspiracy to commit a strict liability offence unless he had knowledge of the facts which rendered the implementation of the agreement unlawful. Before us it seems to be common ground that this was the purpose of the subsection, but, whatever may have been the original intention, it was Professor Smith's contention that section 1(2) as enacted became applicable to conspiracy to commit any crime, a view not shared by all other academic commentators. It seems to us relevant to observe that Prof Smith took this view principally because he thought that, unless the subsection were given this broad construction, defendants could be liable for a statutory conspiracy without appreciating all the elements of the offence which rendered the envisaged course of conduct unlawful, provided one of the conspirators had the appropriate mens rea. As we point out below, the House of Lords has held in Anderson [1986] 1AC27 that this premise is incorrect.
14. The wording of subsection 2 is not easy. It applies–

"Where liability for any offence may be incurred without knowledge on the part of the person committing it of any particular fact or circumstance necessary for the commission of the offence."

Mr Rees points out that liability under section 93A of the 1988 Act can be incurred without knowledge on the part of the alleged offender that the money which he is said to be helping to launder is in fact the proceeds of criminal conduct by someone else. It is enough if he suspects that to be the position. Mr Rees goes on to submit that in the words of section 1(2) the illegal provenance of the money is a "fact or circumstance necessary for the commission of the offence". Section 1(2) is therefore applicable to an offence contrary to section 93A, and the subsection states that where it is applicable a person shall not be guilty of conspiracy to commit (the section 93A offence) –

"Unless he and at least one other party to the agreement (i.e. the conspiracy) intend or know that that fact or circumstance (i.e. that the money to be laundered is or will be the proceeds of someone else's crime) shall or will exist at the time when the conduct constituting the offence (i.e. the section 93A Act offence) is to take place."

That conduct is the entering into or otherwise being concerned in an arrangement to launder.

Our initial response.

15. The starting point for the analysis is the opinion of Lord Bridge, with which the rest of their Lordships concurred, in Anderson [1986] 1 AC 27. His Lordship considered the effect of section 1(1) of the 1977 Act. He observed that "an essential ingredient in the crime of conspiring to commit a specific offence or offences under section 1(1) of the Act of 1977 is that the accused should agree that a course of conduct be pursued which he knows must involve the commission by one or more of the parties to the agreement of that offence or those offences."(p.39E) It is not sufficient that another conspirator appreciates that the course of conduct will involve acts infringing the criminal law; the defendant himself must do so. On this analysis, therefore, there is no question of a defendant being held liable if, on implementation of the agreement, he could not be liable for the substantive offence. It is not necessary, therefore, for subsection (2) to be invoked to achieve that particular objective.
16. In our view the judge summed up in accordance with this principle. He required the jury to be sure that the agreed course of conduct, if implemented, would involve commission by the appellants of the substantive offence. They therefore had to have the necessary mens rea for that offence. Mr Rees accepts, as we understand it, that the judge's direction required that his client did, on the assumption that the agreement was implemented, have the mens rea necessary to satisfy the substantive offence. He contends, however, that for a statutory conspiracy the effect of section 1(2) is to alter the required state of mind so that knowledge and not merely suspicion of in this case ( to put it shortly) the criminal character of Sakavcikas is required. The premise of the argument, as we have said, is that his criminal character is a relevant "fact or circumstance" within the meaning of subsection 2.
17. We reject that argument. The fundamental weakness, as it seems to us, is that it fails to recognise that for the purposes of section 93A the existence of suspicion on the part of the alleged offender (as an alternative to actual knowledge) of the criminal character of Sakavickas is a fact to be proved by the prosecution. It is the suspicion, as opposed to the fact, that Sakavickas was engaged in criminal conduct which is, for the purposes of section 1(2) of the 1977 Act, a "fact or circumstance necessary for the commission of the offence". True it is that the defendant must have knowledge of the suspicion, but he will of course inevitably have knowledge of his own state of mind. (The position would be otherwise if the statute required reasonable grounds for suspicion, for then the defendant would have to have knowledge of the reasonable grounds. An illustration of this is the Rizvi and Chisti case, discussed below.)
18. Accordingly, an offence contrary to section 93A is not an offence where liability can be incurred without knowledge on the part of the alleged offender of any fact or circumstance necessary for the commission of the offence. The prosecution must prove the suspicion of the defendant and in so doing they inevitably prove knowledge of that suspicion. It is not therefore an offence to which section 1(2) of the 1977 Act applies. We would add that in any event, even if subsection 2 were applicable, in our judgment the directions of the judge were consistent with it precisely because establishing suspicion also establishes knowledge of that suspicion.

The Authorities.

19. We turn therefore to the authorities which we asked to consider to see whether they assist as to the conclusion which we have tentatively expressed.
20. In Mir and Beg 22^nd April 1994 the offence under consideration was conspiracy to commit aggravated arson. Section 1(2) of the 1977 Act was found to be relevant to that offence, and the court held that in those circumstances it was necessary to establish against each defendant subjectively the element of recklessness. In Browning and Dixon 6^th November 1998 the same approach was adopted in relation to a conspiracy to commit criminal damage, being reckless as to whether life would be endangered.
21. In Rizvi and Chisti [2003] EWCA Crim 3575 the conspiracy alleged was in the form approved in Hussain, Bhatti and Bhatti [2002] CLR 407. Under the relevant statutory provisions in play in that case it was necessary for the prosecution to show that the defendant knew or had reasonable grounds to suspect that certain property had an illegal provenance. It was submitted that because of the provisions of section 1(2) of the 1977 Act the judge was wrong to direct the jury that each defendant had to know or have "reasonable grounds for suspicion that the money was hot". The point taken by counsel for the appellant was that a person may have reasonable grounds for suspicion without ever in fact becoming suspicious. As to that Tuckey LJ said at paragraph 12 –

"There is no question of liability without knowledge of any particular fact or circumstance. In other words the liability is not absolute. It depends upon the defendant's knowledge of the facts or circumstances which ought to give rise to the suspicion. On this analysis there is no lack of knowledge of 'any particular fact or circumstance' for the purposes of section 1(2)."

Although relating to different statutory provisions, that, as it seems to us, is entirely in accordance with the view which we have tentatively expressed, and Mr Rees recognised that the decision in Rizvi does make it very difficult for him to succeed in the present case.

22. Finally our attention was invited to the decision of this Court in Gulbir Rana Singh [2003] EWCA Crim 3712. Once again the charge followed the form approved in Hussain but included the assertion that the defence knew or had reasonable grounds to suspect that the money was from an illicit source. The Court at paragraph 34 held that to be an immaterial averment, but Rizvi, which had been decided about 3 weeks earlier, does not appear to have been cited, and before us Mr Jeremy for the Crown did not attempt to place any particular reliance upon the decision in Singh.

Conclusion.

23. It is therefore clear that the authorities, and in particular Rizvi, afford some support for the conclusion which we set out tentatively earlier in this judgment, and which we now adopt. As section 1(2) of the 1977 Act did not apply to the offence alleged in this case the appeal of each appellant must fail. Mr Kivdeh for Sakavickas could only have any hope of success if the appeal of Reichwald were to succeed and even then he had to face the almost insurmountable problem that the only conceivable inference from the verdict of the jury is that Sakavickas did know of his own criminal character and of the tainted source of the money, as, it seems, did the other conspirators, as indicated by their pleas of guilty. It follows that the appeals fail.