England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM LEEDS CROWN COURT
HIS HONOUR JUDGE BENSON

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/01/2006

This is the judgment of the court :

1. This appeal arises out of a confiscation order made by HHJ Benson on 12 April 2005 at the Crown Court at Leeds under section 6(2) of the Proceeds of Crime Act 2002 ("POCA"). He then made an order against the respondent to this appeal, Mr Russell Bakewell, in the sum of £10,000 with six months imprisonment in default of payment. The appellants are Her Majesty's Revenue and Customs on behalf of the Queen ("HMRC") who, subject to leave, have a right of appeal under sections 31(1) and 89(1) of that Act. HMRC submit that the judge erred in making an order limited to the sum of £10,000. They say that he should have made an order in the sum of over £400,000 representing the total tax (customs duty, excise duty and VAT, the "duties") evaded by Mr Bakewell on the smuggling into this country from abroad of a consignment of 2.3 million cigarettes. On 12 October 2005 we heard HMRC's application for leave to appeal, granted that application, heard their appeal and allowed it to the extent of substituting a confiscation order against Mr Bakewell in the sum of £403,959.67, with two years imprisonment in default of payment. We reserved our reasons, which are now contained in this judgment.
2. On 18 October 2004 Mr Bakewell had pleaded guilty, on re-arraignment, together with his co-defendants Steven Cullen and Kenneth Wall, at the Crown Court at Bradford before Judge Benson, to the charge of being knowingly concerned in the fraudulent evasion of the duty chargeable on goods contrary to section 170(2) of the Customs and Excise Act 1979. On 29 November 2004 he was sentenced by Judge Benson to a term of six months imprisonment. His co-defendants received community punishment orders of 120 and 80 hours respectively.
3. Mr Bakewell had pleaded guilty on a basis of plea. To understand it, it is necessary first to set out the facts of the offence.
4. The cigarettes entered the United Kingdom at Felixstowe on 31 December 2003. They were shipped in a container from Dubai hidden behind large tyres used for commercial vehicles. The contents of the container were consigned to Mr Bakewell trading as RB Contracting. The shipping documents referred to "32 used earth moving tyres". On 23 December 2003 Mr Bakewell had contacted a haulage company, Rutland Worldwide Freight, concerning their reception and onward transportation. On 31 December, on the container's arrival, it was covertly inspected by HMRC and the cigarettes were found hidden behind the tyres. On 2 January 2004 Mr Bakewell gave instructions to Rutland to deliver the container to a demolition site in Huddersfield.
5. The container was delivered to the site on 8 January 2004. Mr Bakewell was not there, but his two co-defendants were. Kenneth Wall was working at the site under his instructions. Mr Bakewell had instructed Mr Wall to unload the container into a van driven to the site by Steven Cullen. The judge was not satisfied that Mr Wall's instructions extended to dealing with the cigarettes as distinct from the tyres. This was, as it seems to us, an odd distinction to make, but HMRC accept that on this appeal they are bound by the judge's finding. Mr Cullen was acting on behalf of the originator of the consignment and the owner of the cigarettes, known only as "John".
6. During the transfer of the cigarettes into the van, customs officials who had been covertly observing the operation made themselves known. The prosecutions followed.
7. Mr Bakewell's basis of plea was as follows:

"1. I was approached by a male I know as John at a plant auction at Ferrybridge.

2. John and I agreed to import a container from Dubai. My understanding was that the container would be used to import a quantity of tyres and cigarettes.

3. I agreed to allow my details to be used by John. My name and address appears on the shipping documentation. I made arrangements with Rutland Worldwide Freight in the United Kingdom. I had no input into events in Dubai.

4. For allowing my details to be used and facilitating the importation of cigarettes I was to receive the tyres free of charge. [This was the extent of my benefit.]

5. The cigarettes remained John's property throughout. I was not involved in the distribution of the cigarettes. I was not going to receive any profit from the sale of the cigarettes."

8. The sentence in square brackets in italics was in the original version of Mr Bakewell's basis of plea. It was objected to by HMRC and was deleted from the final version which went before the court.
9. In the confiscation proceedings Mr Bakewell relied on his basis of plea to submit that the only benefit he received for the purposes of POCA were the tyres, whose value was agreed at £10,000. HMRC on the other hand argued that his benefit was either the resale value of the cigarettes as a whole or alternatively the pecuniary advantage of evading the duties for which he was liable on the cigarettes' entry into the United Kingdom.
10. In his ruling of 12 April 2004 the judge preferred Mr Bakewell's submission. In doing so he distinguished two authorities with which he was pressed by HMRC and to which we will refer in greater detail below. One was R v. Cadnam Smith [2001] UKHL 68, [2002] 2 Cr App R(S) 37, [2002] 1 WLR 54 where the defendant had also evaded duty on the importation of cigarettes. As here, the cigarettes were seized and forfeited. The House of Lords agreed with the sentencing judge that the defendant had obtained a pecuniary advantage in the form and amount of the evaded duty and was therefore subject to a confiscation order up to the amount of his realisable assets accordingly. Judge Benson, however, distinguished this authority on the ground that there the defendant was to have some role in the sale and some benefit from the proceeds of sale of the cigarettes. The second authority was R v. Ellingham [2004] EWCA Crim 3446 (2 December 2004). That also involved the smuggling of cigarettes. The defendant there had entered a basis of plea to the effect that he was neither the organiser of the importation, nor the financier, nor the end user. His only reward was the promise of a payment of £10,000, of which he had received half. His only involvement was that, like Mr Bakewell, he had facilitated the importation and freight arrangements. It was, however, common ground there that the importation had given rise to a pecuniary advantage in the sum of over £1.1 million reflecting the evaded duty. It was held that the defendant had obtained a benefit to that extent. Judge Benson, however, distinguished this case on the ground that on the facts Mr Bakewell had less control over the transport operations than Ellingham.
11. Thus Judge Benson cited the submission on behalf of Mr Bakewell that it would be incompatible with the basis of his plea to adopt the line taken by HMRC and continued:

"Of course there was in the case of Ellingham a basis of plea and so I have had to look and see whether the facts of this case can be distinguished from those in Ellingham. I have decided on balance that they can…Mr Ellingham took a much more controlling part in the importation, in my judgment, than did Mr Bakewell, because like Mr Bakewell he arranged with the freight forwarders to have the consignment delivered to a particular address, but that address was his own premises of which he had complete physical control. Not only that, he employed specifically for the purpose two young men to unload the consignment that contained the contraband cigarettes. That is distinguishable in some measure, and in my judgment a significant measure, from the role played by Mr Bakewell in this case…[E]ach case turns particularly on its own facts and here it seems to me that I cannot say in reality that the benefit to Mr Bakewell could be calculated either at the value of the cigarettes as part of the consignment or at the pecuniary advantage derived from the evasion of duty. It seems to me that his role was one step back from that of Mr Ellingham in that case, and so it seems to me that justice demands that the measurement of the benefit should be the estimate of the value of the tyres, which was £10,000."

POCA

12. Other than a passing reference at the start of his ruling to section 6(4)(c) Judge Benson did not cite any of POCA's provisions. Perhaps that was unnecessary, for those and the very similar provisions of earlier statutes dealing with confiscation orders are no doubt very familiar to the judges of the Crown Court. However, it would perhaps be prudent to have before us at any rate a minimum of the provisions to which the court is obliged to give effect.
13. Section 6 is headed "Making of order". Section 6(1), (2) and (3) sets out the conditions under it which it is mandatory for the Crown Court to proceed to consider the making of a confiscation order. There is no dispute in this case that those conditions applied.
14. Section 6 then continues as follows:

"(4) The court must proceed as follows –

(a) it must decide whether the defendant has a criminal lifestyle;

(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;

(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct.

(5) If the court decides under subsection (4)(b) or (c) that the defendant has benefited from the conduct referred to it must –

(a) decide the recoverable amount, and

(b) make an order (a confiscation order) requiring him to pay that amount.

(6) But the court must treat the duty in subsection (5) as a power if it believes that any victim of the conduct has at any time started or intends to start proceedings against the defendant in respect of loss, injury or damage sustained in connection with the conduct."

15. In the present case, HMRC did not allege a criminal lifestyle, but put its case on the particular criminal conduct to which Mr Bakewell had pleaded guilty. Therefore the judge was obliged to make a confiscation order in the amount (subject to the "available amount", see section 7(2) and section 9) in which he found the defendant to have benefited from his conduct.
16. Thus section 7, headed "Recoverable amount" provides:

"(1) The recoverable amount for the purposes of section 6 is an amount equal to the defendant's benefit from the conduct concerned.

(2) But if the defendant shows that the available amount is less than the benefit the recoverable amount is –

(a) the available amount, or

(b) a nominal amount, if the available amount is nil.

(3) But if section 6(6) applies the recoverable amount is such amount as –

(a) the court believes is just, but

(b) does not exceed the amount found under subsection (1) or (2) (as the case may be).

17. Section 76 also contains relevant provisions regarding "Conduct and benefit":

"(3) Particular criminal conduct of the defendant is all his criminal conduct which falls within the following paragraphs –

(a) conduct which constitutes the offence or offences concerned…

(4) A person benefits from the conduct if he obtains property as a result of or in connection with the conduct.

(5) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage."

18. There was no dispute on this appeal (a) that Mr Bakewell had become liable as the importer of the cigarettes to pay the duties payable on their import; and (b) subject only to the submission that his basis of plea made it impermissible to take account of this fact, that he had obtained a pecuniary advantage on the importation of the cigarettes in the value of the duties payable but evaded (see section 76(5) above).
19. There was some discussion during the appeal as to whether, if Mr Bakewell were to be rendered liable to a confiscation order in the amount of the pecuniary advantage so obtained he would be doubly penalised in that he would also remain liable to pay the duties evaded. However, we were informed by Mr Andrew Mitchell QC, counsel for HMRC, that where a confiscation order was obtained reflecting the duties payable but evaded, it was the policy of HMRC to seek no other recovery. In this connection, no reliance was placed on behalf of Mr Bakewell, either here or in the Crown Court, on sections 6(6) and 7(3). If those provisions apply to the possible recovery of evaded duty by HMRC, then in theory they are a means by which the possible unfairness of a double liability can be avoided. As it is, HMRC eschew any intention of seeking to enforce such a double liability.

The submissions

20. On behalf of HMRC Mr Mitchell submitted that the judge had erred in law in seeking out minor factual distinctions between this and previous authorities. Such distinctions were irrelevant once it was clear that Mr Bakewell had obtained a pecuniary advantage in the amount of the evaded duties, had thus obtained property, viz a sum of money equal to the value of the pecuniary advantage, and had therefore benefited from his criminal conduct in a like amount: see sections 6(4)(c), 6(5), 7(1) and 76(1) to (5). It was therefore irrelevant that on his basis of plea Mr Bakewell had denied any other benefit than receiving the tyres. He could not, and did not, deny his liability for and evasion of the duties: that was the essence of the criminal conduct for which he had pleaded guilty. This case therefore fell within Cadnam Smith and Ellingham.
21. On behalf of Mr Bakewell, Mr Alistair MacDonald QC did not deny the liability for and evasion of the duties but nevertheless submitted that the basis of plea was the absolute solution to the case and had to be wholly respected by the court. On that basis of plea Mr Bakewell had made clear the limits of his benefit, namely the tyres. He relied on R v. Lunnon [2004] EWCA Crim 1125, [2004] 1 Cr App R(S) 24 as a pertinent illustration of that principle. Subject to the basis of plea, however, he agreed that there was no escape from the principles laid down in the authorities relied on by HMRC.
22. It followed from Mr MacDonald's submissions that he took his stand on different ground from that which the judge had taken. Judge Benson had acknowledged that Ellingham was itself a basis of plea case, but nevertheless distinguished it on the underlying facts relating to the degree of control which the defendant had there exercised over the operations. Mr MacDonald, on the other hand, had in logic to say that what distinguished Ellingham from this case was that the bases of plea in them respectively differed. Likewise he set aside all other cases relied on by HMRC, for instance Cadnam Smith itself, on the simple ground that they were not basis of plea cases.

HMRC's case at the Crown Court

23. There was some uncertainty as to whether HMRC had put their case below on the basis of the obtaining of a pecuniary advantage in the form of the duty evaded, or solely on the basis of the obtaining of property in the cigarettes themselves. On consideration it appears, however, that their case was put in the alternative – as the citation from Judge Benson's judgment above itself demonstrates. It was for this reason that HMRC's submissions were complicated by their attempt to quantify both of their approaches. The documents demonstrate some of the difficulties involved in their calculations. Even the calculation of the duties (itself divided into customs duty, excise duty and VAT, but by far the greater part of this is the excise duty) depends on establishing a base value for the cigarettes. Since the brand in question was unknown in the UK a notional figure of £0.65 per packet of 20 was adopted. HMRC at various times put forward differing rates for the customs duty involved, leading to different total figures. On appeal HMRC restricted their claim to the lower total, amounting to £393,959.67.
24. The alternative claim depended on valuing the disposal value of the cigarettes and presented far greater difficulties: HMRC's estimate for this was £422,036.73, based on the cheapest cigarettes on sale at an ASDA supermarket. The judge was sceptical, pointing out that the reality was that the cigarettes would have been sold into the market at a discounted price.
25. The various figures put forward at different times by HMRC may have led to some justifiable confusion on the part of the judge. Indeed, the fact that one, perhaps even the first, of their alternatives for the benefit obtained was the cigarettes themselves may perhaps explain the judge's apparent gut feeling that Mr Bakewell had obtained no benefit other than the tyres. As he said: "all this is speculative and it does indicate the difficulties of this sort of application".
26. So much so that following the ruling of 12 April 2004 HMRC returned to the judge on 6 May 2004 with an application that he vary his decision under "the slip rule" (a reference to section 155 of the Powers of the Criminal Courts (Sentencing) Act 2000) so as to make an amended confiscation order in the amount of the duties evaded. That application was successfully resisted by Mr Bakewell. The judge said –

"it seems to me that it would be wholly inappropriate to accede to the Crown's submissions that because the matter wasn't put fully before me on the previous occasion I should now revisit it and take an action which would increase the confiscation order of £10,000 by a sum in excess of £400,000. It seems to me that that would never be an appropriate basis for operating the power that I have under section 155, and that to do so would be oppressive…"

27. We do not doubt that the judge was fully entitled to refuse that application and leave the dispute to HMRC's right of appeal. We are, however, satisfied that the two alternatives were always before the judge and that we are entitled on this appeal to consider the sole way in which HMRC now wish to put their case, which is that, despite the basis of Mr Bakewell's plea, he has benefited in the form of a pecuniary advantage which he obtained at the time of importation in the value of the duties evaded.

The authorities

28. The leading authority, although a basis of plea was not in issue in that case, is Cadnam Smith, the essential details of which we have already set out above. The defendant there imported the cigarettes in a boat which had been bought for him by the organiser of the smuggling operation. The House of Lords restored the confiscation order of the sentencing judge, who had found that the defendant had benefited both from the pecuniary advantage of the duty evaded and from the purchase of the boat in his name. This was even though both cigarettes and boat had been forfeited. The relevant provisions of the Criminal Justice Act 1988 (as amended) were in substantially the same terms as section 76(4) and (5) of POCA. The court of appeal had overturned the confiscation order on the ground that the defendant had received no benefit from the cigarettes and remained liable for the duty. The position would have been different if the cigarettes had been sold on, for then the duty evaded would have been part of the profit on that sale.
29. Lord Rodger of Earlsferry, however, with whose speech their other Lordships agreed, pointed out that the fate of the cigarettes was irrelevant to the advantage gained by evading duty: the cigarettes may have been lost after importation but before sale (for instance in the sinking of the boat) but that would not have affected the fact that the importer was better off by evading duty than if he had paid it. Lord Rodger went on to refer by way of analogy to the position in the case of the proceeds of drug trafficking, citing R v. Banks [1997] 2 Cr App R(S) 110: such proceeds were not confined only to profits but covered all sums which were the product of drug trafficking whether profits or not. Lord Rodger continued:

"26. If, then, the value of property obtained as a result of or in connection with the commission of an offence is simply the value of the property to the offender when he obtained it, even if it is subsequently destroyed, damaged or forfeited, one would expect the same general approach to apply in the case of a pecuniary advantage. And indeed subsections (4) and (5) of section 71 of the 1988 Act produce that result…

27. That being so, the fact that the respondent and his co-accused were unable to realise the value of the contraband cigarettes is irrelevant to the question whether they derived a pecuniary advantage from fraudulently evading the excise duty on them. If the cigarettes had not been seized and the respondent and his co-accused had been able to sell them, then the money which they received from selling them would have been "property" in terms of section 71(4). In that situation they would not only have derived a pecuniary advantage in terms of section 71(5) from evading the duty but would also have obtained property in terms of section 71(4) in the form of the sale receipts. Their benefit from the commission of the offence would have been made up of these two elements.

28. Mr Emmerson sought to support the approach of the Court of Appeal to the application of section 71(5) by arguing that the question of whether an offender had derived a pecuniary advantage from his offence was a question of fact, to be determined in the particular circumstances of each case. In some cases – for example, where the contraband goods were sold – the position would be clear. The same might apply where someone smuggled in a Cartier watch and subsequently wore it for some months. In this case, however, where the customs officers had forfeited the cigarettes as soon as the boat reached Goole, it was impossible to say that the respondent had derived any pecuniary advantage whatever from evading the duty. Apart from all the other difficulties, this approach introduces a degree of uncertainty that is out of place in the application of a penal provision of this kind. This was highlighted by counsel's understandable reluctance to indicate how long the respondent would have had to have the cigarettes after evading payment of the duty before he could be said to have derived a pecuniary advantage from his offence. Would a day have been enough? Or a week? The test to be applied in answering such a question is altogether too obscure. For this reason alone, the approach advocated by Mr Emmerson would be unworkable and must be rejected.

29. I am accordingly satisfied that the decision of the Court of Appeal on this point was wrong. It is worth adding that, if adopted, their interpretation would go a long way to making the confiscation provisions ineffective against smugglers. After all, there will be few, if any, cases where the customs officers will fail to seize contraband goods which they find in the hands of smugglers. The decision of the Court of Appeal would mean that in any such case, for the purposes of section 71(5), the smugglers would derive no pecuniary benefit from evading the excise duty and so no confiscation order could be made against them. Fortunately, the terms of the legislation do not lead to that result."

30. Finally, Lord Rodger considered the case of the boat. Since the defendant's realisable assets did not even stretch to meeting the duty evaded, the question of whether he was liable for the value of the boat as well was academic. There was no separate question on appeal to the House of Lords to deal with that issue. Nevertheless, Lord Rodger said that it was not clear on the available evidence what the value of the boat would have been to the defendant at the time when he obtained it. Therefore Lord Rodger would have left that question, if it had arisen, open.
31. A consideration of Lord Rodger's speech in our judgment demonstrates that the liability of a smuggler who evades duty which he becomes liable to pay on importation is a pecuniary advantage obtained rendering him liable to a confiscation order in the amount of the duty evaded irrespective of whatever the fate of the contraband may be and indeed whatever the smuggler's role would have been in dealing with or profiting from that contraband. If the importation had gone undetected and the contraband sold, it may be that the defendant, if he had obtained any share of the proceeds, would have been liable in that amount too: although the question of double counting might arise, which did not have to be considered in Cadnam Smith. Nor is it clear to us what might be the position if the defendant smuggler in question was the owner of the contraband (not our present case, nor even perhaps the case in Cadnam Smith) and thus might be said to have obtained the property of the cigarettes themselves (for the purposes now of section 76(4) of POCA). However, HMRC no longer relied in this appeal on that aspect of the matter. We can well understand that their former reliance on the cigarettes themselves as property and thus a benefit obtained by Mr Bakewell, when he was only a facilitator and was never going to have any interest in them or their disposal, may well have been a confusion which precipitated the judge's decision. However, if consideration is confined to section 76(5) and the matter of pecuniary advantage obtained by the evasion of duty, it is clear that the House of Lords' solution is a matter of principle and does not depend, as Mr Emmerson sought there to submit, on the particular circumstances of each case. Therefore, we think that Judge Benson was to this extent in error in seeking to find that the principle of Cadnam Smith could be avoided by distinguishing Mr Bakewell's position, either with respect to his interest in the disposal of the cigarettes or with respect to his control over the precise details of the operation of the transport of the cigarettes, from those of any other defendant.
32. The question remains whether Mr Bakewell's basis of plea makes all the difference, as Mr MacDonald submits. For these purposes the linchpin of Mr MacDonald's submission is Lunnon. That was a case of drug trafficking not involving the evasion of duty. The defendant there pleaded guilty to conspiring to supply cannabis on the basis that he had derived no financial benefit from his involvement in the conspiracy, although he had been promised £200 for his role in transporting a sum of money for the purchase of the drugs. He had also driven a van in which the drugs were concealed without any discussion regarding additional payment. It was also conceded by the Crown that it accepted that he had had no prior involvement in drug trafficking. He was ordered to pay £12,371 under a confiscation order on the basis, apparently, that a Golf car he was assumed to own was a benefit which he had derived from drug trafficking. In coming to this conclusion the sentencing judge had applied the statutory assumptions contained in section 4(3) of the Drug Trafficking Act 1994, holding that there was nothing to displace them in the light of the defendant's lies and a paucity of documentation in respect of his business. (Those assumptions, the equivalent of which are found in section 10 of POCA, require a court considering a confiscation order to assume that any property in the defendant's hands at any time during the period of six years before the commencement of the proceedings represented the proceeds of drug trafficking or crime as the case may be. In the case of section 10 of POCA, however, those assumptions only apply if the court decides under section 6(4)(a) and (b) that the defendant has a criminal lifestyle.) Eady J, giving the judgment of this court, observed (at para 9):

"It is thus apparent that the learned judge put to one side in this context the agreed basis of plea and, in particular, the acknowledgment of the Crown that the appellant had no previous involvement in drug trafficking."

33. The Crown sought to meet this difficulty head-on by submitting that "a defendant may properly be sentenced on the basis that he has not previously been involved in drug trafficking, yet have a confiscation order made against him relating to previous drug trafficking" (at para 15). No authority is referred to as supporting this paradoxical submission. Eady J observed (at para 17):

"No doubt one could envisage circumstances where the Crown has discovered prior to the conclusion of a confiscation hearing that such a concession has been wrongly made. Further information may have come to light which demonstrates this to have been the case. In such circumstances, the appropriate course would be for the Crown to notify the defendant that the concession has been withdrawn and that, accordingly, he will have the choice of proving on the balance of probabilities that he was, after all, a first-time offender, or of inviting the court to be satisfied that there would be a serious risk of injustice, for some other reason, if the statutory assumption were to be applied. What is plainly unacceptable is for the concession to be made part of the sentencing process, without qualification, but for reliance to be placed, tacitly, on the assumptions when it comes to the confiscation hearing."

34. The confiscation order was therefore quashed.
35. Mr MacDonald also relied on R v. Lazarus [2004] EWCA Crim 2297, [2005] 1 Cr App R(S) 98, a case of drug trafficking dealt with under POCA, where Lunnon was considered but distinguished. Lazarus pleaded guilty to one count of supplying cocaine and six further counts of possession. As a result of two searches of his home, police found packages of drugs and £13,880 cash on one occasion and £600 on another. His basis of plea, however, was that he had allowed his home to be used for the six month period charged in the indictment as a safe house for the storage of money for someone else; and that the drugs found were for his own use. The issue on the confiscation proceedings was whether the substantial sums of money passing through the defendant's bank account in the previous six years were the proceeds of drug trafficking. The sentencing judge applied the statutory assumptions in section 10 of POCA, disbelieved the defendant, who gave evidence, and found that the relevant sums amounted to £51,345. It was submitted on appeal that because Lazarus's basis of plea was accepted, there must be a serious risk of injustice if the statutory assumption was made in relation to any money passing through his hands other than during the six-month period when he admitted that he was involved in the supply of cocaine by storing money for the dealer. However, this court held that the basis of plea was not inconsistent with prior drug trafficking, the Crown had never been invited to agree, as they had in Lunnon, that there had been no previous trafficking, the defendant had known perfectly well from shortly after the acceptance of his plea that the Crown were seeking to rely on the statutory assumptions and had had ample opportunity to rebut them. This court therefore upheld the making of a confiscation order in the amount found by the judge, but more correctly substituted an order under the 1988 Act for the order incorrectly made under POCA.
36. In our judgment these authorities do not assist Mr Bakewell. They are not concerned with a liability to pay duty evaded through smuggling of contraband or with the concept of a pecuniary advantage. They merely demonstrate both the principle and the limits of the principle that a confiscation order cannot be made in the teeth of an inconsistent basis of plea accepted by the Crown. Indeed Lunnon turned not so much on a basis of plea, as a concession by the Crown that simply flew in the face, as their submission on appeal demonstrated, with a confiscation order premised on previous drug trafficking.
37. Of much greater relevance is Ellingham, which is both a basis of plea and a pecuniary advantage case. The facts were very similar to those of the present case. Ellingham was involved through his company of which he was the sole director in the freight forwarding aspects of the importation of contraband cigarettes. That was his only involvement, and his sole reward was to be £10,000 of which he had received half. He pleaded guilty on that basis. It was accepted at the confiscation proceedings, however, that the importation had given rise to a pecuniary advantage in the sum of the duty evaded. Lunnon was not referred to in the judgment of this court given by Pill LJ (and may not have been cited) although a basis of plea point was taken (at para 18) in order to seek to distinguish that case from Cadnam Smith: but the submission failed. Pill LJ said (at para 20):

"It was the appellant who was responsible for the importation and storage of the goods, whatever reward he might eventually have been expecting, and, in our judgment he derived a pecuniary advantage within the meaning of the subsection upon the importation. We follow the reasoning of Lord Rodger, in Smith."

38. In our judgment those words apply to this case. We would go further. Mr Bakewell's basis of plea simply did not address the question of the pecuniary advantage he had obtained by importing the cigarettes and evading the payment of duty on them. His basis of plea was intended to emphasise that his involvement in the smuggling operation was a limited one, and that his reward was also limited to the value of the tyres which were given to him as his payment. It is entirely consistent with that basis of plea that he also obtained the pecuniary advantage of evading the duty he was liable to pay on importation. Indeed, that was in effect accepted by his plea of guilty. In any event the Crown successfully objected to the (arguably merely conclusary) sentence "This was the extent of my benefit". This case is an a fortiori example of the situation in Lazarus.
39. Mr MacDonald has suggested that this result is unfair. It seems to us that it is not. Until the duties are paid, Mr Bakewell continues to maintain the pecuniary advantage which he obtained on importation. The ultimate fate of the cigarettes is irrelevant, as Lord Rodger's speech demonstrates. The potential for unfairness lies only in the possibility for a defendant to be liable both for a confiscation order in the amount of the duty evaded and for the payment of that duty on top. However, Mr Mitchell has made it clear that HMRC rest content with the confiscation order. No reliance has been placed by Mr Bakewell on sections 6(6) and 7(3).

Conclusion

40. In the event, to obviate the need for any remission to the Crown Court (see section 31(2)), it has been agreed that the relevant sum of the pecuniary advantage is £393,959.67. To this must be added the sum of £10,000 representing the value of the tyres which were in any event property which, as Mr Bakewell concedes, he obtained as a result of or in connection with his criminal conduct. The total sum of the confiscation order must therefore be £403,959.67. There is no problem in this case about available assets. For these reasons this appeal was allowed and the confiscation order varied so as to stand in the amount of £403,959.67. A period of two years imprisonment (in place of the six months ordered by the judge) was ordered to be served in default of payment.