England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM The Crown Court at Guildford
His Honour Judge Addison

		Royal Courts of Justice Strand, London, WC2A 2LL
		26 August 2005

LORD JUSTICE THOMAS:

1. The appellants are a brother and sister who pleaded guilty to assisting in laundering the proceeds of thefts made by their brother. They were sentenced to terms of imprisonment against which no appeals are brought. They appeal, by leave of the single judge, solely in respect of the confiscation orders made on the basis that the judge should have taken into account the repayments made by their other brother to which they had contributed.

The circumstances of the theft

2. It is first necessary to describe briefly the circumstances of the theft and the history of the proceedings against the brother.
3. Khalique Shahin, the brother of the two appellants, worked at the Guilford Mail Centre. During 2002 he used his position to steal foreign currency from postal packets which were sent to the High Value Sorting Unit at the Guildford Mail Centre by a travel agency based in Guildford for distribution to its local branches. He was caught red-handed in October 2002 and charged with theft by the Royal Mail, as a prosecuting authority on behalf of the Crown.
4. It was the prosecution case against Khalique that he had stolen in excess of £348,000. In February 2003 he put forward a basis of plea that he had stolen £233,000. On 10 July 2003 that basis of plea was accepted on the understanding that the Crown did not accept that that was the sum stolen by him, but contended that was sufficient for the purposes of sentencing. Sentence was adjourned. On 10 December 2003 he repaid, in circumstances we shall hereafter describe £233,000. On 12 December 2003, he was sentenced to 2½ years imprisonment.

The role of the appellants in laundering the proceeds of the theft

5. The appellants became involved in this matter as they were used to launder the proceeds of the theft. The circumstances can be briefly described:

i) The appellant Shahin, was an accountant at HSBC's offices at Canary Wharf. He enjoyed advantageous terms for exchanging currency and used those terms to exchange some of the foreign currency stolen by his brother. The sterling proceeds were deposited in accounts at HSBC and at the Halifax Building Society. It was agreed that he had made deposits originating from the stolen sums of £96,000.

ii) Khalique Shahin, had himself exchanged some of the stolen currency; he had deposited the sterling proceeds of approximately £6,000 into these accounts and paid about £70,000 into other accounts.

iii) The second appellant, Mahmood, then an Assistant Bank Manager at the National Westminster Bank at Woking also became involved, probably with other members of the family, in the laundering of the proceeds. Through her approximately £60,000 derived from the thefts was paid into bank accounts.

6. Prior to Khalique Shahin's arrest in October 2002, Khalique Shahin and the appellant Shahin proposed to buy the house of their sister, the appellant Mahmood and her husband, at 8 Fircroft Road, Woking. A mortgage was to be arranged.
7. In the event, when Khalique was arrested, the house was purchased in the sole name of the appellant Shahin; £182,000 from the accounts to which we have referred was used to pay for it. Completion took place on 23 October 2002, shortly after the arrest of Khalique.
8. The appellant Mahmood and her husband bought a more expensive house at 47 Brewery Road, Woking for £315,000. They paid for that by using the proceeds of the sale of 8 Fircroft Road and a mortgage for the balance.
9. After the discovery of the thefts, the Royal Mail placed a caution on 8 Fircroft Road.

The proceedings brought against the appellants

10. In July 2003 both of the appellants were charged with money laundering. Those proceedings were brought by the Crown Prosecution Service as a prosecuting authority on behalf of the Crown whereas the proceedings against Khalique Shahin had been brought, as we have stated, by the Royal Mail as a prosecuting authority.

The repayment made by Khalique Shahin

11. It is clear from the materials that were put before us that between about April 2003 and December 2003, the Royal Mail and Khalique Shahin were in discussions about the repayment of the sums stolen. It seems clear that the Royal Mail, on behalf of the Crown, were anxious to make a significant recovery; it was thought on behalf of Khalique Shahin that the more he repaid, the greater the credit he would receive in his sentence.
12. Two matters of importance to the future of the proceedings against the appellants were clear on the evidence:

i) No confiscation or forfeiture proceedings were begun by the Royal Mail on behalf of the Crown against Khalique Shahin.

ii) The Royal Mail knew that Khalique did not have in his own name sufficient resources to repay the sum of £233,000 which he accepted he had stolen. We consider at paragraph 34 in more detail what was known to the Royal Mail, on behalf of the Crown, but it is sufficient to say at this stage that it is clear that the Royal Mail knew that the house was owned by the appellant Shahin and that some other monies were being contributed by other members of the family.

13. The appellant Shahin instructed solicitors, Tilbrook, Turner and Foster to act on his behalf solely to deal with the sale of Fircroft Road so that monies could be realised to repay the Royal Mail; it is right to observe that their practice did not cover criminal law.
14. It is clear from the limited materials placed before this court that:

i) 8 Fircroft Road was sold for £200,000. The purchaser was the husband of Appellant, Mahmood and her husband. There was no suggestion put before us that the sale was anything other than at an arm's length price.

ii) From the sum of £200,000, £78,300 was needed to discharge the mortgage. After allowing for various small fees, disbursements and expenses, this meant that approximately £120,000 was available towards the sum that was to be paid to the Royal Mail.

iii) Thus a balance of £113,000 was needed to make up the sum of £233,000 to be paid to the Royal Mail. It was provided by a mortgage of just over £79,000 on property at 75 York Road (which had been transferred into the name of the appellant's mother and the appellant Shahin) and £33,000 was provided in cash by the appellant Shahin; we were told that the appellant Mahmood Provided £48,000 to the co-appellant Shahin.

15. It was by reason of these arrangements that the Royal Mail received on 10 December 2003 £233,000.

The sentences passed on the appellants and the confiscation proceedings

16. On 19 April 2004 the appellants pleaded guilty to conspiracy to assist others in retention of a benefit in criminal conduct contrary to s. 1(1) of the Criminal Law Act 1977. It was agreed that the Crown would offer no evidence against other members of the family on that basis. The matter was then adjourned for sentence to 11 May 2004.
17. On 11 May 2004 the Crown gave notice of confiscation under s.71 of the Criminal Justice Act 1988. Thereupon the appellants sought to change their pleas. That application was adjourned to HH Judge Addison who refused that application on 14 May 2004.
18. On 27 May 2004, the matter was before HH Judge Addison. The Crown invited the court to postpone the determination of the confiscation proceedings to a later date. The judge then proceeded to sentence the appellants; Shahin was sentenced to two years imprisonment and Mahmood was sentenced to five months imprisonment. No appeal was brought against that part of the sentence.

The confiscation hearing

19. The confiscation hearing took place on 13 October 2004. The legislative provisions under which the proceedings were determined were those in force at the time the offence was committed - s.71 of the Criminal Justice Act 1988:

"(1) Where an offender is convicted, in any proceedings before the Crown Court of 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.

(1C) If, in a case falling within subsection (1B) above, the court is satisfied that a victim of any relevant criminal conduct has instituted, or intends to institute, civil proceedings against the defendant in respect of loss, injury or 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;

(b) subsection (6) below shall not apply for determining the amount to be recovered in that case by virtue of this section, and

(c) where the court makes an order in exercise of that power, the sum required to be paid under that order be of such amount, not exceeding the amount which (but for paragraph (b) above) would apply by virtue of subsection (6) below, as the court thinks fit.

(1D) In this Part of this Act "relevant criminal conduct", in relation to a person convicted of an offence in any p[proceedings before a court, means (subject to section 72AA(6) below) 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 his sentence for the offence in question.

(1E) For the purposes of this part of the Act an offence is an offence of a relevant description –

(a) in the case of an offence of which a person is convicted in any proceedings before the Crown Court or which he is or will be taken into consideration by the Crown Court in determining any sentence, if it is an offence to which this Part of this Act applies; and

(b) in the case of an offence of which a person is convicted in any proceedings before a magistrates' court in determining any sentence, if it is an offence listed in Schedule 4 to this Act.

(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 the 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) Subject to subsection (1C) above the sum which an order made by a court under this section requires an offender to pay shall be equal to –

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

(b) the mount appearing to the court to be the amount that might be realised at the time the order is made, whichever is the less.

(7) [Repealed by PCA1995, s.1]

(7A) The standard of proof required to determine any question arising under this Part of this Act as to –

(a) whether a person has benefited from any offence; or

(b) [repealed by PCA1995,s.1(5)];

(c) the amount to be recovered in his case …;

shall be that applicable in civil proceedings."

20. After discussion between counsel for the Crown and the appellants the following were agreed:

i) The benefit that the appellant Shahin had received was agreed at £130,734 and his realisable assets agreed at £98,800.

ii) The benefit in respect of the appellant Mahmood was agreed at £77,500 and her realisable assets were agreed in the same amount.

21. It was then contended on behalf of the appellants that the judge should take into account the payment already made by the thief, Khalique Shahin. The argument advanced to him was made on two bases:

i) If the amounts assessed as realisable from these appellants was added to the amount that had been paid on behalf of Khalique, the Crown would recover more than the Post Office had lost.

ii) It would be unfair, in all the circumstances, not to take into account the contribution made by the appellants to the payment made by Khalique.

22. The judge ruled against these submissions. He held:

"The problem that arises is because it is clear that a substantial part of the £233,000 was in practice provided by these two defendants. It is not necessary for me to decide precisely how much of that sum each paid, or in reality repaid, and it is probably not possible. The fact is that these offences, that is Khalique's theft and the subsequent laundering, were a family affair. Some of the money was sent out, it would seem to Pakistan, but almost certainly the major part of it was used to buy a house in Woking, which belonged to Farhat Mahmood and her husband, that house being 8 Fircroft Road"

After setting out what had then happened, he continued:

"The proceeds of sale of 8 Fircroft Road made up the greater part of the £233,00 repaid to the Post Office.

I repeat, this was clearly a family venture involving six members of the family to make money out of the proceeds of crime. But the fact is that both of the defendants that I am now concerned with have now, effectively, provided a substantial repayment to the Post Office of their ill-gotten gains.

The problem is whether I have any discretion to take that into account when making a confiscation order. The extent of the problem is clearly shown by the figures. If I can make the orders in the sum requested, £176,000 will go, I suppose it is, to the consolidated fund, but, in any event, to central government in some way. Added to the £233,000 already paid to the Post Office that will make £409,000 – in other words, £61,000 more than the Post Office say was stolen.

In my view where a defendant has made a voluntary repayment to the loser, not only should that be encouraged and taken into account in sentencing, but it should be taken into account in making a confiscation order and if I could do so I would. The difficulty is that section 71 of the Justice Act 1988, as amended, does not allow the court to do that. It appears to be mandatory to make the order as required by the Act. Both I and counsel have tried to discover how the Act may give the judge a discretion to take into account repayments already made, but we have been unable to do so".

23. The Judge was also invited by counsel on behalf of the appellant Mahmood to consider staying the proceedings as an abuse of process. The learned judge concluded as to the suggestion that he had such a power:

"Well, the long and short of it is that I do not think I do. The Act is mandatory. The application has been made by the prosecution. I have never heard of proceedings being stayed in these circumstances and I do not think that I am able to do it."

No discretion under s.71

24. It was rightly accepted in argument before us on behalf of both appellants that once the benefit and the realisable assess were agreed as they had been, s.71 provided no discretion to the learned judge to certify other than in accordance with its terms; the Judge correctly held that there were no circumstances on the facts of the case which fell within s. 71(1C).
25. The judge therefore had correctly decided that s.71 provided him with no discretion.

The discretion to stay for abuse of process

26. It was accepted, on behalf of the Crown, that a judge had in principle a discretion to stay proceedings if what the Crown was proceeding to do amounted to an abuse of process. We consider that that concession was rightly made by the Crown. As Lord Lowry observed in Hui Chi-ming v R [1992] AC 34 at 54:

"The doctrine of abuse of process and the remedy of refusal to allow a trial to proceed are well established. As Lord Reid said in Connelly v DPP [1964] AC 1254, 1296, there must always be a residual discretion to prevent anything that savours of an abuse of process."

A hypothetical example illustrates the point. If, prior to the institution of confiscation proceedings, a defendant and the Crown had agreed, after full disclosure, that restitution would be made in a particular way and, pursuant to that agreement, restitution had been made, a judge would in the event of confiscation proceedings have power to stay proceedings that unjustly or without proper cause sought to go behind such an agreement.

27. Thus the issue before us was whether on the facts of this case the judge should have exercised his discretion to stay.
28. First, it is clear to us that the simple fact that the Crown might recover more than the Post Office had lost was no ground for alleging an abuse of process. The policy of the legislation is to deprive criminals of the benefits they may have obtained from the proceeds of their participation in criminal activity: see R v Roy Williams [2001] 1 Cr App (S) 140. The Crown should properly obtain that benefit. For example, if a bank employee had stolen £1000 from a bank, but used that money in such a way that the money had been used to advantage and a sum of £10,000 been obtained through its use, the criminal could not advance a contention that it was wrong for the Crown to recover more than had been lost. In such circumstances, the Crown would merely be recovering the benefit of the proceeds of the criminal activity. It would be wholly irrelevant that the criminal had used the proceeds to his advantage.
29. On the facts of this particular case, bearing in mind the course of the hearing before the judge, there was no evidence as to the way in which the proceeds of the theft were used other than that part of it which were used to buy 8 Fircroft Road. It is clear that some sums must have been obtained by way of rent from that property but, the fact that no enquiry was made is not relevant; the mere fact that the Crown may recover more than the wronged party has lost is irrelevant. Thus the argument made to the judge that it was somehow an abuse of process simply because there would be a recovery of more than what had been stolen was bound to fail.
30. In the circumstances of this case, the only ground on which an argument could have been advanced was that that when the Crown, through the Post Office, entered into an arrangement with Khalique Shihin, this was done on either an agreed basis or a common understanding or a representation by the Crown that the contributions made by the appellants would either be the limit of their contributions or brought into account. We accept that it would, in principle, have been open to the judge to conclude that there would be an abuse of process if

i) the members of the family, including the appellants, had agreed with the Crown (or there was a common understanding or they had been told by the Crown) that either no confiscation proceedings would be brought or their contribution would be brought into account and

ii) the Crown was seeking to go against what had been agreed, understood or said, by bringing the confiscation proceedings or claiming the amounts they did in the proceedings.

31. We consider it is important in the overall interests of justice that those engaged in criminal enterprise should make as quickly as possible full restitution, including any benefits derived from their criminal activities such as the profitable results or fruits of any investments made. Restitution is often made without a formal agreement. It is in the general interests of justice to encourage the making of full restitution of the benefits without the need for confiscation proceedings and therefore to protect the person making full restitution, if ever the Crown were unjustly or without proper cause to seek to go behind an agreement reached with full and proper disclosure or an understanding reached or representation made in similar circumstances.
32. Thus the appellants sought before us to develop an argument that they had reached an agreement or had an understanding with the Crown to the effect that, having contributed to the repayment by Khalique Shahin, no confiscation proceedings would be brought against them or that in any such proceedings their contribution would be brought into account.
33. For the purposes of this submission, we accept first of all that it matters not that at the time £233,000 was paid that the Crown was acting through the Royal Mail and at the time of the confiscation proceedings in respect of the two appellants the Crown was acting through the Crown Prosecution Service. If there was agreement or understanding at the time the Crown was acting through the Royal Mail, that must be binding on the Crown for all purposes thereafter.
34. The difficulty, however, facing the appellants in this court is the fact that no enquiry had been made in the proceedings before the learned judge as to what, if anything, had been understood or agreed at the time £233,000 was paid. Quite simply there was no detailed enquiry before the judge; it appears that some enquires were made before the hearing by solicitors acting for the appellants, but none of the facts were enquired into before the judge. No findings were made by the learned judge. Even if it had been permissible for this court to undertake such an enquiry, the materials simply were not available to this court; we were provided during the course of the hearing with some letters, but nothing like the complete file and nothing by way of statement or correspondence from the Royal Mail:

i) We have set out at paragraph 14 above the facts we were able to discern from the letter written by Tilbrook Turner Foster in relation to the principal source of the payments as known to those solicitors. However even that letter did not deal, save by inference, with any payments made by the appellant Farhat Mahmood.

ii) It was clear from a letter written by the Royal Mail on 22 October 2003 that they were aware that funds of £33,000 were coming from Khalique Shahin's family and £200,000 from the sale of 8 Fircroft Road and the re-mortgage of 75 York Road. However, there was nothing in that letter or in the other letters put before us which showed how much was known or understood by the Royal Mail as specifically being provided by the two appellants.

iii) Nor was there any statement before us which showed that the Royal Mail, on behalf of the Crown, were receiving these monies on the understanding that these were being contributed by the family as part of the family settlement of their engagement in this criminal enterprise, in contra-distinction to their participation in providing finance, by arrangements unknown to the Royal Mail, for the settlement of Khalique's participation. There is nothing to suggest there was an agreement, let alone an understanding or representation, that the monies were being contributed represented the family's restitution in respect of the proceeds.

iv) It seems to us that it would have been highly unlikely that the Royal Mail would have agreed to accept the sum of £233,000 bearing in mind their loss was greater, without a much clearer understanding of the way in which the sums had been used, disclosure of the assets of the family and a much fuller understanding of exactly what had happened.

35. Thus, although in principle it seems to us clear that the judge had a jurisdiction to stay the confiscation proceedings (which he could have exercised), we cannot on the materials before this court conclude that the appellants have come anywhere near discharging the burden on them of establishing circumstances in which it would have been right for the judge to order a stay of the confiscation proceedings either in whole or part.
36. We considered whether it might be possible for us to send the matter back to the trial judge, but, as this is an appeal against sentence, our power under s.10 (3) of the Criminal Appeal Act 1968 is, on the basis of the materials before us, either to quash, vary or uphold that part of the sentence relating to confiscation. On the materials before us it plainly cannot be shown that the way in which the Crown proceeded was an abuse of process; for the reasons we have given, the fact that the Crown may be recovering more than the capital sum originally lost by the Post Office is irrelevant. Although we have some sympathy for the appellants, there is nothing before us which would enable us to make any variation of the order on the basis there was some form of agreement or common understanding in respect of the payment of £233,000 made.
37. We therefore dismiss the appeal.