England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		24 April 2007

1. LORD JUSTICE TUCKEY: On 31st October 2005 in the Liverpool Crown Court before Judge MacMillan, the respondents to this application, Joseph William Brack, who is now aged 63, and his son, Joseph James Brack, now aged 41, both pleaded guilty upon rearraignment to separate offences of concealing criminal property, contrary to section 327(1)(a) of the Proceeds of Crime Act 2002. On 12th May they were sentenced respectively as follows: Father, nine months' imprisonment suspended for two years; son, community punishment order for 200 hours. Other counts on the indictment against father for possessing goods with a false trademark for sale or hire contrary to the Trademarks Act 1994 were left on the file on the usual terms.
2. Following the conviction the Crown applied for a confiscation order and the hearing of this application came before Judge MacMillan on 18th August 2006. He dismissed the application. The Crown appeals with the leave of the single judge against this decision.
3. Before coming to the proceedings under the 2002 Act, the facts giving rise to the conviction were shortly as follows. On 3rd September 2004 Merseyside Police executed a search warrant at a cash and carry warehouse operated by the father at which the son was employed. At the warehouse £93,185 was found wrapped in three shopping bags in a safe and a further £10,470 was recovered from a drawer in an office.
4. The father pleaded guilty to the offence to which we have referred on the basis that he had evaded the tax due on legitimate business earnings and had placed the money out of reach of the Revenue. The money which he had stashed away in that way was not from any previous unlawful trading or the sale of counterfeit goods, but rather from the undisclosed profits of legitimate trading.
5. The son was found to have cash of about £9,000 concealed in a hollow under the floorboards of his house. He pleaded guilty on the basis that he had received the cash from his father as a loan to enable him to finance his intended wedding and honeymoon. When he had received and concealed the cash he did not know that it represented criminal property but suspected that it might represent the proceeds of his father's tax evasion. As well as the money concealed under the floorboards of his house, the son was found to be in possession of over £4,000 in cash when he was arrested. The total amount of the cash recovered from father and son in this way was about £117,000. The cash seized was forfeited by magistrates and did not in the event feature in the proceeds of crime proceedings.
6. In those proceedings, the prosecution case was supported by statements of information prepared in accordance with section 16 of the 2002 Act by DC Simpson, an officer with the Merseyside Financial Investigation Unit. These statements made it clear that the application was made on the basis that the father was alleged to have benefited by £800,000, of which about £625,000 was available. In the son's case the amounts were £195,000 and £188,000 respectively. Statements of response were served on behalf of the Bracks. The father claimed that the benefits identified by the prosecution came from his genuine business as a wholesale market trader. He also produced psychiatric reports which indicated that he was suffering from dementia with secondary depressive and anxiety symptoms, which meant that he could not give a clear account of his present situation and history and would be unable to remember details of his income and business dealings. His son said that he had always worked as his father's employee, mainly running market stalls for which he was paid £100 a week.
7. That is a brief overview of how things stood when the 2002 Act application came before the judge. His task was prescribed by the Act. Section 6(4) required him to decide whether the defendant had a criminal lifestyle (a) as defined by section 75 of the Act, and, if so, whether he had benefited from his general criminal conduct (b). For the latter purpose the court was required to assume that any property transferred to or expenditure incurred by the defendant in question after the relevant day (that is to say six years before proceedings were started) or any property held by him at any time after conviction was the result of his general criminal conduct unless this assumption was shown to be incorrect or there would be a serious injustice if the assumption was made - see section 10(1) to (6). If the court decides that a defendant has benefited, it must go on to decide the recoverable amount and make a confiscation order in that amount -section 6(5) - subject to the other provisions of sections 6 to 9.
8. So that was the judge's task. We turn to see what happened when the judge heard the application. The hearing started with Mr Barraclough, counsel for father, explaining to the judge the difficulty he had in obtaining instructions from his client and saying:

"He is not able to remember details, etc. We are going to have to establish, amongst other things, how he purchased two properties together worth some £½m."

The judge said "Yes". Counsel then said:

"We say it is simple enough if you go to the first assumption you see that it is property transferred to him many years ago. The Crown, of course, say you ignore that because it was still held by him after the conviction. I say that is not a logical approach to take."

To which the judge said: "I agree with you." This refers to two houses, one in which the father was then living, which were said to be worth £475,000. One was purchased in November 1995 and the other (the father says) about 20 years ago. On the face of it that was not property acquired after the relevant date but was property held by the father after his conviction - see section 10(3)(a) - and so on the face of it fell to be considered as a benefit from general criminal conduct.

9. Following this exchange with the judge in which it appears that Mr Barraclough, for reasons which are not fully or satisfactorily explained, had succeeded in knocking out about £475,000 of the claim, the judge went on to say that discretion should be used as to when the draconian powers contained in this Act were to be deployed. It should, he said, be used for "BMWs and yachts, what have you, of class A drug dealers". Counsel for the prosecution, Mr Watson, said that these were lifestyle offences and the judge said:

"Yes, but both men were in employment as market traders. I do not wish to cast slur over something but one does know from one's experience of life and on the Bar [we think he meant at the Bar] and the Bench that market traders have a somewhat free and easy view so far as VAT, Inland Revenue and so forth is concerned, as father Brack concedes. The assets that these two men have accumulated over the years in my view is probably attributable to their earnings as legitimate market traders."

To which counsel for the prosecution replied:

"I can see that that finding would probably rebut the presumption so far as they are concerned. But, of course, the Crown bring this application in part on the basis that although, as your Honour knows, there was no conviction in relation to these offences, there were two large caches of counterfeit goods from different sources found on the premises."

Counsel went on to point out that as well as the houses to which we have referred, father had substantial sums in bank accounts. The investigation had revealed that £180,000 had been paid into his bank accounts at various times of which £120,000 remained at the time of this hearing. The judge did not respond to that but simply adjourned the hearing and when later that morning he was told that no settlement of the case had been possible he simply dismissed the application without further argument. In the course of the discussion about what the judge's order would be, Mr Watson did say:

"In other words, your Honour is saying that you think it unjust to apply the assumptions in this case."

To which the judge said:

"No, I think I will dismiss the application."

There were further exchanges which suggest that the judge was simply saying "no" to whether his ruling was that he was declining to deal with the application or whether he was dismissing it. But when invited to indicate whether the application had been dismissed on the basis that it was unjust, the judge did not say in terms that this is what his decision had been.

10. One has every sympathy with busy Crown Court judges faced with having to deal with applications of this kind. They are often complex, as this one was, and sometimes lead nowhere. The legislation requires the court to perform mental gymnastics. But the judge must embark on the task which the statute requires him to perform and spell out the basis for any decision which he makes. Here the respondents admittedly did have a criminal lifestyle for the purposes of the Act because they had been convicted of money laundering - see paragraph 2A of Schedule 2 to the Act. But it is not clear from the extracts of the transcript which we have quoted or elsewhere whether the judge dismissed the application because the assumption that the respondents had benefited from general criminal conduct was incorrect, or, if the assumption was made, there would be a serious risk of injustice or, if either of those grounds were his reasons for dismissing this application, what were his reasons for doing so?
11. In his spirited submissions to us this morning, Mr Barraclough has sought to defend the judge's approach. He says that the judge was obviously following section 6. He was not declining to follow the statutory route which was prescribed for him and that he was entitled to reach the decision on the papers that the assumption that these respondents had received benefit was incorrect and that this is the decision he made. Alternatively, if he did not make that decision and/or if he made that decision, he decided that the making of a confiscation order in this case would result in a serious risk of injustice to the respondents on the ground that they had paid what was due from them by having the £117,000 forfeited and it would be wrong for the court to go further than that.
12. Skilfully though those submissions were put, we do not accept them. It does not seem to us that one can spell out of the exchanges which took place in what must have been a very short space of time - they occupy no more than five pages of transcript - the judge went through the steps which the Act required him to follow.
13. Before reaching any conclusion in this case, some consideration and/or reference to the evidence was necessary. We do not say that in every case it is necessary for the judge to hear oral evidence, but if he is to reach a decision some reference to the evidence upon which the decision is based must be made. It was not enough for the judge simply to say that the prosecution should not have made the application, as he appears to have done at one stage. There was nothing to suggest that the application was an abuse of process and section 6 gave the prosecution an unqualified right to ask the court to proceed, which the court must do - see section 6(1) - if the two conditions set out in subsections (2) and (3) were satisfied, which they were in this case.
14. It follows that we think the judge's decision was flawed and we must allow this appeal and quash that decision. We have jurisdiction to determine the matter ourselves (section 32(2)(a)) but have already indicated that we would not do that today. The most appropriate course is for us to direct that the Crown Court should proceed afresh under section 6 and so we make an order to that effect under section 32(2)(b) of the Act.