England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		15th November 2007

1. . LORD JUSTICE GAGE: On 18th December 2006 at the Exeter Crown Court, the appellant was convicted of using criminal property (count 1), two counts of transferring criminal property (counts 2 and 3) and possession of criminal property (count 4). On 19th December 2006, before the same judge, he was sentenced to a total of 42 months' imprisonment.
2. . There were two co-accused, one of whom had died before the trial. The second was Michelle Ann O'Brien. She was convicted of facilitating the retention of criminal property (count 5) and acquisition of criminal property (count 6). She was sentenced on 19th December 2006 to 51 weeks' imprisonment on each count concurrent, suspended for 2 years. At the time of the offences alleged against her she was the appellant's girlfriend.
3. . The prosecution case was that over a period covered by the counts in the indictment, the appellant had used quantities of cash, expensive motor vehicles, motorcycles, jet skis and other items, which could not be justified on the wages that he had earned. It was their case that tax and National Insurance records showed that over this period the appellant had not been employed or earning. There was, accordingly, a substantial disparity between the use by him of substantial sums of cash and the fact that his income was declared as nil. The prosecution invited the jury to conclude that there was an overwhelming inference that the appellant's source of funds was derived from criminal activity, most probably, but not necessarily exclusively, from dealing in drugs.
4. . The appellant's case was that for many years, in different employments and working for or with different employers or business partners, he had accumulated substantial funds which he kept in bank accounts and in a nest egg, kept in the home of a former partner and also in the home of his girlfriend, his co-defendant.
5. . During the course of being interviewed by the police, the appellant outlined the nature of his work since the early 1990s. He identified a number of those for whom he had worked, who were business partners of his. In this way he sought to demonstrate how he had managed to save substantial sums of money. He accepted that he had paid no tax or National Insurance. It was not in dispute that his failure to pay tax or National Insurance would not found the basis of any offence of using or possessing criminal property.
6. . In order to rebut the appellant's case that his funds had been earned by legitimate work or trading, the prosecution called as witnesses some of his business partners and employers. Some of them, in the course of their evidence, volunteered evidence of the appellant's criminal conduct, either of taking money from them or by embezzling sums paid to him for work done for his employers.
7. . The prosecution did not attempt to identify the criminal conduct which gave rise to the acquisition by the appellant of his funds or of the motor cars, save to allege that its primary case was that the most likely way in which the appellant had come by these large sums of money was through drug dealing.
8. . In the course of its case the prosecution put forward a schedule which showed that between 30th March 2004 and 6th October 2005 the appellant spent on various purchases of motor vehicles, holidays or other transactions the sum of £123,583, of which £92,303 were cash transactions, and a further £23,790 was a sum of cash recovered from the home where he and his co-accused lived. This was the sum that formed the basis of count 4. Bank statements from the Halifax Bank of Scotland and Barclays Bank demonstrated payments into accounts held by the appellant in the total sums alleged in counts 2 and 3 of the indictment.
9. . In view of the grounds of appeal and the way the case has been presented to this court, it is unnecessary for us to outline in any great detail the evidence adduced by the prosecution. The bank statements were agreed documents. Indeed, all the documentary evidence before the court was agreed.
10. . Of those who had worked with or employed the appellant, the prosecution called four men: Stephen Butcher, who worked with the appellant installing windows; Barry Peach, who worked with the appellant in a company called Sekura; Graham Wilkinson, who was also concerned in Sekura; and Andrew McEwan, who worked with the appellant installing windows in Watford and the London area at weekends. These witnesses gave evidence either to the effect that the appellant had not earned huge sums of money when working with them or, as in the case of Peach and Wilkinson, that he had taken from the business money to which he was not entitled and had embezzled. Other witnesses were asked to rebut the appellant's suggestion at interview that he had sold machinery for large sums in cash.
11. . The prosecution also called an expert witness who gave evidence of mass spectrometry tests on the money taken from Miss O'Brien's house and on various mobile telephones. These revealed that there was a greater amount of contamination with controlled substances than is usually found.
12. . The appellant gave evidence. He did so over four days and he was comprehensively cross-examined. He dealt extensively with his previous employment, including working with Mr Wilkinson and Mr Peach. He denied taking money unlawfully from either of them.
13. . In summary, so far as the relevant time is concerned, he said that after October 2004 he did various jobs for people which included decorating, and various work for the Golden Lion for which he was paid around £5,000 in cash. He said that a further £10,000 came from a woman named Alison Lowe. He said that she gave him the money as it was not earning enough interest in her bank account. He said that he was intending to buy a plot of land with it from an estate agent, Mr Taverner, and there would have been a profit. He said that this piece of land came off the market in June 2005. He said that the purchase price was for the land. He had no idea what the building cost was going to be, so no idea what sort of profit he was going to make.
14. . He said that he had sold a piece of machinery in about June 2003, then another in November 2004 for around £2,800. He sold some machinery to Powerglaze for £7,000. He said that Mr Thompson was the middleman. He said that he took more machinery to Mr Thompson in Scotland and that he received £10,000 in cash. This money went back into his nest egg. He said that he went to Scotland in a van to purchase machinery from Mr Thompson. He said that a number of the payments made into his account were monies paid back for monies that he had taken out to purchase cars.
15. . He said that when he went to Euroframes from Torbay Conservatories and Windows there were still outstanding jobs which Euroframes were able to complete. He said that in March 2000 there was £31,000 payable to him after payment of the mortgage and remortgage of a house that he had sold, namely 4 Harberton Close. He said he had always had flash cars and that he had a nest egg. He had built up around £120,000 in cash. He said that £24,000 of that money was in the safe at Miss O'Brien's house. He said that the other £96,000 was at one time under the stairs at Wendy Lee's house. He said that she did not know this. At another time it was in Miss O'Brien's hall cupboard in a bin liner or a plastic bag, but again this was not to her knowledge. He said he met Miss O'Brien on 17th July 2005 in a public house. He moved in with her shortly afterwards.
16. . He denied ever using class A drugs. He accepted in cross-examination that he did not have any receipts for the machinery, but denied the suggestion that the machinery in his possession did not belong to him. On his behalf some seven witnesses were called.
17. . There are two grounds of appeal for which the appellant has leave. A further ground was suggested by the single judge when giving leave, and it is now put forward before this court by way of amendment.
18. . We deal first with ground 1. It is contended on behalf of the appellant that the judge wrongly ruled and misdirected the jury in relation to matters which it would have to find proved in order to convict the appellant. This has been referred to throughout the appeal before us as the Brown point, because it depends upon the decision of R v Brown (1984) 79 Cr App R 115.
19. . To understand this properly it is necessary to look at the statutory provisions relating to criminal property. "Criminal property" is defined in section 340 of the Proceeds of Crime Act 2002. Subsections (1), (2), (3), (4) and (5) read as follows:

"340-(1) This section applies for the purposes of this Part.

(2) Criminal conduct is conduct which —

(a) constitutes an offence in any part of the United Kingdom, or

(b) would constitute an offence in any part of the United Kingdom if it occurred there.

(3) Property is criminal property if —

(a) it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and

(b) the alleged offender knows or suspects that it constitutes or represents such a benefit.

(4) It is immaterial —

(a) who carried out the conduct;

(b) who benefited from it;

(c) whether the conduct occurred before or after the passing of this Act.

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

20. . It is relevant to return to and note that the mens rea in respect of an such offence is that the alleged offender knows or suspects that the property constitutes or represents such a benefit.
21. . In this case it is contended on behalf of this appellant that there were a number of ways in which the alleged criminal property in the hands of the appellant could be criminal property. It is said that the jury could have concluded that any one of six alternatives could have made the property criminal property, quite apart from it not being criminal property at all. Those six ways are set out by counsel in his skeleton argument at paragraph 8. We shall read them:

"(1) They could have concluded that the disparity between Mr Craig's legitimate sources of wealth and his apparent wealth was such that while they could not necessarily be sure that his wealth was the proceeds of any particular crime, they were sure it was the proceeds of some crime or another.

(2) They could have been sure that the property was the proceeds of theft of machinery from the Wilkinson partnership or

(3) the embezzling of money from the Peach partnership or

(4) the theft of vans from the Peach partnership or

(5) the theft of machinery from the Peach partnership.

(6) Finally they might have concluded that Mr Craig was a drug trafficker."

22. . So it is submitted, by parity of reasoning of this court in Brown, the judge should have directed the jury that they must all be sure as to which of these alternatives were proved. It was, it is submitted, not sufficient for some members of the jury to be sure that one alternative was proved and other members of the jury to be sure that another was proved. They must all be sure that the same route to criminal property was proved.
23. . In support of this submission, counsel has referred this court to a number of other decisions, but the one which he relies on as setting out the test most appropriately is R v Morton [2003] Crim LR 73. He relies upon a passage in the Criminal Law Review report in which Rix LJ said:

"In our judgment a Brown direction may be required in principle in all cases where a single judge or juror could not satisfy himself of guilt without improperly aggregating the factual allegations necessary to guilt. Thus in the context of Brown a single judge could not say to himself: I am not satisfied as to fraudulent dishonesty in the case of any single one of the alleged statements relied on by the prosecution, but there is sufficient suspicion arising from the alleged statements in aggregate to satisfy me of guilt."

24. . The judge ruled against the submission made on behalf of the appellant that this direction should be given to the jury. Indeed, he did not give such a direction to the jury.
25. . Mr Willmott submits that he should have given such a direction. He submits that in the particular circumstances of this case the jury would have to decide which of the strands of criminal conduct it relied on to prove that the property was criminal conduct. For instance, he submits that when the judge, as he did, gave the jury a direction about what constituted theft, that was an invitation for the jury to conclude that some of the property was the proceeds of theft, but they might equally have thought that some of the property came from other offences. Accordingly, this was specifically a case where the judge ought to have given the Brown direction.
26. . We have no doubt that the Brown principle does not apply on the facts of this case. The 2002 Act has been described as draconian in effect. What the jury must be sure of is that the property was criminal property. In our judgment it was designed to overcome defences put forward on precisely the basis that is raised by this ground of appeal. It would place a huge burden on the prosecution if it had to prove only one route by which the property was criminal property and negative all other routes. In this regard, the word in respect of mens rea, namely suspect, is in our judgment relevant and important.
27. . As counsel for the prosecution points out in his skeleton argument, the statutory definition of criminal property is non-specific as to the way in which it became criminal property. Mens rea is, as we have pointed out, described as the offender knowing or suspecting that the property constitutes or represents a person's benefit from criminal conduct. This clearly indicates a general definition of criminal property.
28. . Counsel for the prosecution, Mr Oldland, relies on the decision of Butterfield J in R v Kelly (unreported), in which he said of similar submissions made to him as follows:

"In appropriate cases prosecutions may be brought where it is not possible for the Crown to prove by direct evidence the involvement of the defendant in the commission of specific criminal offences nor the receipt of monies by him arising out of the commission of specific criminal offences. If Mr Lewin's submissions were correct then the law would actually be more restrictive than the previous legislation where the prosecution had to prove either that the money came from drug trafficking or from other criminal conduct. That difficulty has been overcome by the much wider and more general provisions of the new Act. Whilst the prosecution must prove that the property is 'criminal property' within the meaning of the statutory definition, there is nothing in the wording of the section which imports any further requirement that the property emanated from a particular crime or a specific type of criminal conduct."

29. . We accept this as a correct statement of principle, although it was given in a case where the point was not raised in the way in which it has been today. Accordingly, in our judgment this ground fails.
30. . We turn to the second ground of appeal. This ground of appeal in our judgment has more substance. The appellant complains that the summing-up was defective, in that the defence case was not properly put and the appellant's evidence not placed before the jury in such a fashion as to enable the jury to understand it. In his skeleton argument, Mr Willmott has helpfully analysed the summing-up to demonstrate that the appellant's evidence was only summarised in the most partial way. There was no coherent setting out of the defence response to the prosecution allegations. It was rarely referred to by the judge without being accompanied by material which undermined it. In summary, it is submitted that the cardinal line of the defence was never properly reflected in the summing-up.
31. . In the course of his submissions this morning, Mr Willmott has taken us to examples of the evidence relied upon by the defence, which were either not referred to at all or only referred to very briefly by the judge in his summing-up. The establishment of any one of these matters as something which the jury were sure of or might be sure of would, it is submitted, have helped to bolster the credibility of the appellant in what was, after all, quite a strong case against him.
32. . Counsel for the prosecution, Mr Oldland, submits that the issue in the case was really very simple. In evidence, the appellant was quite unable to account for his admitted expenditure between October 2004 and October 2005 in relation to his earnings. It is submitted that by the end of the evidence, the appellant had simply failed to account for the disparity between his expenditure and his receipts. In particular, Mr Oldland relies on the fact that, although the appellant asserted a large nest egg as the source of the funds, his evidence in that respect was unrealistic and unbelievable. Allowing for the fact that he did not have to prove his defence, it is submitted that all the suggestions put forward by him to account for the way in which he had spent the money or accumulated sums were rebutted by the prosecution evidence and in cross-examination. In short, the prosecution submit, through Mr Oldland, that the prosecution case was overwhelming.
33. . In his skeleton argument Mr Willmott has set out the evidence and arguments in respect of what are said to be seven sources from which the appellant derived sufficient money to account for the shortfall between his expenditure and his income. He refers us to the evidence of the appellant in respect of some of these matters, and the way the judge summed them up to the jury. Before us this morning we invited him to take us through one particular matter about which that complaint is made. He did so. It is clear that in that particular case the judge's reference to the defence is, to say the least, cursory.
34. . In our judgment, read as a whole the summing-up demonstrates that the observations of the single judge when granting leave were fully justified. He said this:

"For my part I cannot discern with any clarity what the Crown's case was with respect to each count in turn - there seems to be no attempt made systematically to focus the jury. Should not the jury have been directed to consider Counts 2, 3 & 4 before considering Count 1? Again, I cannot discern the nature of the Defence case whether as a definable whole or with respect to each count. It is arguable that it has not been summed up: the Appellant's own evidence is not recited and what should have been an exposition of the Defence case becomes a recital of hitherto overlooked Prosecution evidence from the witness, Ebejer. [He was the scientific officer giving evidence about contamination of bank notes.]"

35. . In our opinion it is not only arguable that the defence case was not properly summed up in a coherent manner, it is a fact that it was not properly summed up. The summing-up starts with a long recitation of evidence from witnesses who had employed or worked with the appellant interspersed with a summary of other evidence. It follows no very logical or coherent pattern, and is interspersed with some (but not very many) references to the appellant's evidence and some (but not very many) references to evidence called on his behalf.
36. . The appellant's case in all occupies a little over the four of the 56 pages of the summing-up. Throughout the summing-up there are references to five of the appellant's seven witnesses, most of them in a cursory manner. Two others were not referred to at all.
37. . We are bound to say that the effect of the summing-up on the reader is, as the single judge said, to leave one with no clear idea of what was the defence. Of course we recognise that the jury having heard the evidence would have been in a better position to understand the summing-up than this court. There is force in the submission made to us by Mr Oldland that this was a strong case, and that the jury took a short time to find the appellant guilty.
38. . However, it is a cardinal rule of a jury trial that the judge should lay the defence before the jury in a clear and understandable manner. This is particularly necessary, in our view, when dealing with prosecutions under the money laundering provisions of the Proceeds of Crime Act 2002. The offences as here are widely drawn. The statutory provisions are, as we have already said, draconian. In this case the defence had the task of showing that the inference which the prosecution invited the jury to draw from the appellant's admitted possession of large quantities of money was not that of money laundering. The appellant had to deal with a number of detailed, albeit admitted, cash receipts and withdrawals. In his attempt to explain the receipts as honest transactions, albeit not declared for tax purposes, it was necessary to deploy evidence by way of explanation of the sums passing to and from his bank accounts or in his possession as cash. In this respect, his evidence and the evidence of his witnesses was vital to his defence. It required a careful and focused exposition in the summing-up by reference to the facts and by reference to the counts on the indictment. Sadly, in our judgment the defence was not properly and coherently placed before the jury in the summing-up by the judge.
39. . We accept, as we have said, that this was a strong case and we are invited by Mr Oldland to say that, despite such deficiencies as we have found in the summing-up, the verdicts are nevertheless safe. We have concluded that we cannot do so. Where, as here, the defence has not properly been laid before the jury in the way in which we suggest it should have been, in our judgment the appellant cannot be said to have had a fair trial and the result is that the appeal must be allowed.
40. . We deal with one other matter raised by the single judge, the question of whether count 1 was drawn too wide. Counsel adopts this as a ground of appeal and seeks leave to advance it. There is no reason, in view of our decision, to grant leave nor refuse it. Since we have already concluded that the appeal must be allowed, it is strictly unnecessary for us to deal with this ground. However, we would point out that when the prosecution seek to put forward a count as widely drawn as count 1, at the least the prosecution should give particulars of each of the matters relied on as criminal property. If this is not done, there will be a temptation for the trial to involve an inquiry that is much wider in scope than is necessary or appropriate. We are not, in making this observation being critical of the prosecution or of Mr Oldland, because the fact of the matter is that this was never raised by the defence before or at trial. It can therefore hardly be said that the defence were in any way prejudiced by the way in which count 1 was framed.
41. . However, we draw attention to what we would regard as best practice, namely that in cases such as this involving an assertion of use of criminal property and indeed of possession of criminal property, the prosecution would be well advised to give full particulars, either by way of particulars to the indictment or by way of a statement before the case is opened to the jury.
42. . However, for the reasons which we have endeavoured to explain, the appeal is allowed on ground 2 of the grounds of appeal.
43. . MR OLDLAND: My Lord, the respondents seek a retrial in this case --
44. . LORD JUSTICE GAGE: Yes.
45. . MR OLDLAND: -- and ask you to exercise your powers under section 7 of the Criminal Appeal Act and to order a retrial.
46. . LORD JUSTICE GAGE: When you say expedited, I did not know there was such a provision.
47. . MR OLDLAND: Exercise.
48. . LORD JUSTICE GAGE: I am so sorry.
49. . MR OLDLAND: To exercise your powers under section 7. As your Lordship has already remarked, we submitted to this court, and it was accepted at least in part by this court, that this was a strong prosecution case. It is and remains a strong prosecution case. It is also a serious and important case. We would submit the sums of money involved are by no means --
50. . LORD JUSTICE GAGE: Let us see what Mr Willmott has to say about that.
51. . Mr Willmott.
52. . MR WILLMOTT: My Lord, this. The release date for Mr Craig is 4th April next.
53. . LORD JUSTICE GAGE: I am sorry?
54. . MR WILLMOTT: Mr Craig's release date is 4th April next.
55. . LORD JUSTICE GAGE: Yes, but it is not unimportant, even if he were released. Are there any confiscation proceedings?
56. . MR WILLMOTT: My Lord, there has been a confiscation order.
57. . MR OLDLAND: The sum confiscated, which has now been realised by the sale of the various cars, and so on and so forth, is a little over £80,000.
58. . LORD JUSTICE GAGE: Yes.
59. . MR WILLMOTT: My Lord, the only submission can be this, that the bulk of the sentence has been done, that the appellant is presently being assessed for home detention curfew. It may be in the present climate that that, and given the nature of the offence, that that assessment is successful, in which case in terms of the penal aspect of the sentence, it has effectively by and large been served.
60. . The question as to the confiscation in my submission is this. It is clearly a significant sum, but the amount of court time, the initial trial running to more than three weeks, that a retrial would occupy --
61. . LORD JUSTICE GAGE: I cannot think that a retrial is likely to last as long as three weeks. That was, on the issues in the case, an inordinate length of time. I am sure, now that counsel have been over the ground once before, it will be perfectly possible to get the matter disposed of in a far shorter time.
62. . MR WILLMOTT: Well my Lord, time (inaudible). (The Bench conferred)
63. . LORD JUSTICE GAGE: Yes, we think there should be a retrial and we so order.
64. . MR OLDLAND: My Lord, there remains the interesting question of the co-defendant. Her convictions were entirely parasitic upon the conviction of Mr Craig.
65. . LORD JUSTICE GAGE: Well, we are not dealing with her. She has not appealed.
66. . MR OLDLAND: No. I can put it this way. Counsel for her saw me in the robing room in Exeter yesterday and said, "Can you let me know what happens."
67. . LORD JUSTICE GAGE: No doubt you will.
68. . MR OLDLAND: But the proper course must be that he has to apply for leave out of time --
69. . LORD JUSTICE GAGE: Yes.
70. . MR OLDLAND: -- and to come before this court.
71. . LORD JUSTICE GAGE: Yes.
72. . MR OLDLAND: In the circumstances would your Lordship require that the respondents are represented on that occasion?
73. . LORD JUSTICE GAGE: What, when it --
74. . MR OLDLAND: When the O'Brien appeal comes before this court.
75. . LORD JUSTICE GAGE: Oh I think so, yes.
76. . MR OLDLAND: So be it.
77. . LORD JUSTICE GAGE: Different considerations may apply, who knows.
78. . Well, we allow the appeal. We quash the convictions. We specify that the convictions on the counts that we have quashed (that is counts 1 to 4 inclusive) be retried. We direct that a fresh indictment be preferred. We direct that the appellant be re-arraigned on the fresh indictment within two months.
79. . There should be a representation order for a retrial, I assume?
80. . MR WILLMOTT: I would be grateful if there were, my Lord.
81. . LORD JUSTICE GAGE: Anything else you want dealt with? No. Thank you both very much.
82. . Is should have said that the Presiding Judge for the Western Circuit must direct the venue for the retrial.
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