England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		1 August 2005

1. LORD JUSTICE KEENE: This appeal raises an issue about the meaning of "benefited" under section 71 of the Criminal Justice Act 1988 ("the 1988 Act") for the purpose of determining whether a confiscation order should be made. It is enough for present purposes simply to recite the terms of section 71(4) and 71(5). They provide:

"(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."

2. Section 71(7A) provides that the standard of proof required is that applicable in civil proceedings.
3. The appellant pleaded guilty at Worcester Crown Court on 23rd March 2004 on rearraignment to being knowingly concerned in the fraudulent evasion of duty chargeable on goods, contrary to section 170(2)(a) of the Customs and Excise Management Act 1979 ("the 1979 Act"). He was sentenced to two years' imprisonment, a term reduced by this court on appeal to one of eighteen months.
4. On 13th October 2004, at the Crown Court at Birmingham, a confiscation order was made by His Honour Judge Matthews in the sum of £50,826, to be paid within six months, with eighteen months' imprisonment in default. He now appeals against that confiscation order by leave of the single judge.
5. Two other men, John Nuttall and Craig Attwell, also pleaded guilty to the same offence.
6. The charges concerned the evasion of Customs' duty on cigarettes. On 17th July 2001 John Nuttall, a lorry driver, arrived in his vehicle at an industrial estate in northern France. Once there, two million cigarettes were loaded on to his lorry and concealed in his legitimate cargo of goods. He then drove to Calais and got on to a ferry for Dover. Having arrived in this country, Nuttall drove to a property in Worcestershire owned by Craig Attwell and Dean Attwell. The premises were called Oaklands Farm, but it was a business to provide storage rather than farming. It was the appellant who had arranged for these premises to be made available for storing the cigarettes. They were duly unloaded there, with Craig Attwell making a number of phone calls to various people, including the appellant. At about 6.15 am Customs officers arrived at the farm. By that time all the cigarettes had been unloaded and were stored in the warehouse, with the legitimate goods remaining on the lorry. The amount of duty evaded, as a result of this fraudulent importation, came to £276,240.
7. His Honour Judge Matthews, in his ruling in the confiscation proceedings, described the appellant's role as follows:

"Mr Houareau admits that he was an organiser in relation to the importation of the cigarettes, and he accepted the basis upon which the Crown put their case against him. The Crown say that he was not responsible for the financing of the cigarettes, or at least they did not contend that he was. He was an intermediary. He was a contact point between the lorry in which the cigarettes were smuggled and the farm at which they were subsequently unloaded. He maintained contact by means of mobile telephone, and by his contact he helped the smugglers to find the location in which the cigarettes could be unloaded."

8. There was, in addition, evidence that the appellant was about to fly down from Aberdeen, near his home, to Birmingham in the early morning of the day of the lorry's arrival, but in fact he left the plane shortly before take off on receiving a call on his mobile phone some fifteen minutes after the Customs officers had raided Oaklands Farm. The judge saw the appellant as being more greatly involved than the other two defendants, albeit that none of them were the principal organisers. But, said the judge, the appellant had an organisational role.
9. In his ruling in the confiscation proceedings the judge referred to a number of authorities on the meaning of "benefit" under section 71 and in particular on the application of section 71(5). He held, relying in particular on the House of Lords' decision in Smith [2002] 1 WLR 54, that the appellant had derived a pecuniary advantage as a result of or in connection with the smuggling operation. He quantified that as being the amount of duty evaded plus VAT, which came to £335,957, saying that it was, on the authorities, "immaterial that the respective profits which the smugglers sought to make were never realised." The judge then apportioned that amount, as indeed the defence contended that he should, between the three defendants, attributing one-third therefore to the appellant - a sum of £111,986. The judge had already determined that the appellant's realisable assets were only £50,826, and so he made a confiscation order in that amount.
10. The appellant before this court challenges the judge's finding that he derived a pecuniary advantage from the importation of these cigarettes. Mr Pearce, who appears on the appellant's behalf, accepts that an importer of goods secures a pecuniary advantage because such a person is liable to the Revenue for the payment of the duty due. That evasion of duty amounts, on the authority of Smith, to the deriving of a financial advantage. But, submits Mr Pearce, that was not the position of the appellant. He was merely an intermediary, a communications link between the lorry and the farm. He was not, it is argued, the importer.
11. The court has been taken in the written skeleton arguments of the parties to the provisions of the 1979 Act dealing with liability for duty. Section 43(1) makes "the importer" liable for duty chargeable on imported goods. The appellant then relies upon the definition of "importer" in section 1(1) of that Act, namely:

"In relation to any goods at any time between their importation and the time when they are delivered out of charge, includes any owner or other person for the time being possessed of or beneficially interested in the goods, and, in relation to goods imported by means of a pipe-line, includes the owner of a pipe-line."

12. It was then contended that the appellant was not the owner of the goods and that there was no evidence that he was beneficially interested in the smuggled cigarettes.
13. Mr Pearce relies on the case of Olubitan [2003] EWCA Crim 2940, where the appellant had been convicted of conspiracy to defraud. This court held that, since as a matter of fact he had obtained no benefit, he could not be the subject of a confiscation order. It rejected an argument that any party to conspiracy automatically became liable for his proportion of the total amount by which the conspirators as a whole may have benefited. In referring to section 71, the court said this at paragraph 25:

"Subsections (1A) and (5) require findings of fact. The statutory standard of proof is that applicable in civil proceedings. In applying that standard, McKechnie illustrates that the court may often be entitled to make robust inferences if convicted defendants remain unhelpful as to which of them obtained what benefit as defined by the Act. In many cases an equal division of the benefit which the conspirators as a whole obtained between the defendants before the court may constitute a fair and reasonable inference. But in our judgment, the section is not to be construed so that a person may be held to have obtained property or derived a pecuniary advantage when a proper view of the evidence demonstrates that he has not in fact done so."

14. Mr Pearce argues that the present case comes into the came category as Olubitan. Moreover, he illustrates his argument by postulating the case of a defendant whose only involvement in the importation is very minor, such as the supplying of a gallon of diesel to the vehicle transporting the goods. Is he, asks Mr Pearce rhetorically, to be treated as someone with an interest in those goods?
15. On behalf of the Crown, Mr Weitzman argues that the appellant was an 'importer' within the meaning of section 43(1) of the 1979 Act and so derived a pecuniary advantage from the importation. He also submits that the judge was correct to find as a matter of fact that the appellant had an interest in the cigarettes. That finding of fact was not unreasonable and not outside the ambit of a proper exercise of his discretion. It is submitted on behalf of the Crown that where a defendant has been involved in a criminal enterprise to obtain property, a proper inference can be drawn that he is so involved because he will obtain an interest in that property. Mr Weitzman points out that the appellant did not give evidence to the contrary even though this opportunity was open to him. It is further pointed out that this court will often have no information as to how the proceeds of a conspiracy or joint enterprise are to be divided up between those involved and that this court in McKechnie [2002] EWCA Crim 3161; [2003] 2 Cr App R (S) 34, rejected the argument that a confiscation order cannot be made unless the Crown can prove either receipt of the proceeds of crime by a particular defendant or how those proceeds have been divided up between those involved: see paragraphs 56-59 of that judgment.
16. It is further said on behalf of the Crown that, irrespective of whether the defendant in this case can be seen as an importer, he nonetheless derived a pecuniary advantage once it was established that he had an interest in the goods which had been obtained because those goods have been obtained at a value lower than it should be had duty been paid. The evasion of duty means, in that sense, that a pecuniary advantage has been obtained by anyone with an interest in the goods, even if they do not amount to an 'importer' within the meaning of section 1(1) of the 1979 Act.
17. We note that in Olubitan, in the passage which we have quoted, May LJ acknowledged that the court may often be entitled to make robust inferences if convicted defendants "remain unhelpful as to which of them obtained what benefit". It seems to this court that the judge in the present case was making an inference when he found, as the Crown submitted, that the appellant had an interest in these goods. The appellant gave no evidence to rebut such an inference. Yet he had pleaded guilty to being knowingly concerned in the importation; he had played, as the judge found, an organisational part in that importation, and indeed he had been about to fly down to the West Midlands on the very day when the cigarettes arrived. It would be extremely remarkable if the appellant had been doing all of this gratuitously. One could therefore properly conclude that he was to have a share in the property and the proceeds of sale.
18. It seems to us that, where someone has knowingly played his part in assisting in the importation, it is open to the judge to infer that that person had a beneficial interest in the goods in question, unless there is some evidence demonstrating the contrary. That was the position here. In our judgment the judge below was entitled to make that inference. If so, the appellant was an importer of the goods and was thus one of those liable to the Revenue for the unpaid duty. It then follows that, on the authority of Smith, he derived a 'pecuniary advantage' within the meaning of section 71(5) of the 1988 Act.
19. It seems to us that the way in which the Crown as an alternative seek to put the argument today is also a sound one. It is an alternative way of putting the same point that the pecuniary advantage is derived, once there is a finding that a defendant has an interest in goods which have been obtained at a value lower than they should have been if duty had properly been paid. That is, it seems to this court, simply another way in which pecuniary advantage is derived once that finding of fact has been arrived at.
20. We agree with what was said in Olubitan, that it is a question of fact whether a defendant has derived a pecuniary advantage. It may not be enough that a defendant has been knowingly concerned in the importation, though that is clearly relevant. But in determining that question of fact, a judge is entitled to make robust inferences when those are properly open to him. Otherwise defendants, by remaining silent about the financial arrangements made between them, could frustrate the intentions of Parliament as clearly embodied in the 1988 Act.
21. The instance suggested by Mr Pearce of a defendant who merely supplied a gallon of diesel does not, in our view, give rise to difficulties. If such a defendant gives evidence that he was to be paid, say, £300 as a specific reward for his involvement, and that evidence is accepted by the court, it would not normally be open to the court to infer that he had an interest in the goods: it would be a distinct transaction. But that is not this case. The appellant gave no evidence and the judge could properly make the inference which he did.
22. It follows that, in our judgment, he was right to find that a pecuniary advantage was derived here by this appellant in the terms of section 71(5). In those circumstances this appeal against the confiscation order must be dismissed.