England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2A 2LL
		21 November 2008

LORD JUSTICE THOMAS: I shall ask Mr Justice Jack to give the judgment of the court.

MR JUSTICE JACK:

1. This renewed application for leave to appeal concerns the exercise of the jurisdiction of Crown Courts under section 23 of the Proceeds of Crime Act 2002 to vary a confiscation order made under section 6 of the Act.
2. On 10 March 2005 the applicant, Shaed Younis, pleaded guilty in the Crown Court at Peterborough to two counts of conspiracy to supply class A drugs. On 22 April 2005 he was sentenced to concurrent terms of imprisonment of 12 years. On 5 December 2006 His Honour Judge Coleman found in confiscation proceedings pursuant to the 2002 Act that the applicant had benefited from criminal conduct in the sum of £306,670 and he found the realisable assets to be £248,069. He made an order in that sum with 2 years 10 months to be served in default of payment. On 18 March 2008 His Honour Judge Coleman heard an application under section 23 for a variation of that order. He made a reduction in the realisable amount to reflect assets transferred to Shubina Akhtar against whom a subsequent confiscation order had been made. That reduction was not opposed by the prosecution. He refused to make any further order for a reduction.
3. The main issue in the original confiscation proceedings in 2006 was whether the applicant had hidden assets, that is unidentified assets, which were the fruits of his drug dealing. The judge heard evidence and concluded that he had such assets in the sum of £236,281. In the variation proceedings it was submitted for the applicant that he had no assets apart from his prison income and money given by his family. He was permitted to give evidence to that effect. The judge held however that it was not open to the applicant to use an application under section 23 to challenge the finding made against him in 2006 as to his hidden assets.
4. Section 23 provides in so far as material:

"23(1) This section applies if –-

(a) a court has made a confiscation order, and

(b) the defendant, or a receiver appointed under section 50 or 52, applies to the Crown Court to vary the order under this section.

(2) In such a case the court must calculate the available amount, and in doing so it must apply section 9 as if references to the time the confiscation order is made were to the time of the calculation and as if references to the date of the confiscation order were to the date of the calculation.

(3) If the court finds that the available amount (as so calculated) is inadequate for the payment of any amount remaining to be paid under the confiscation order it may vary the order by substituting for the amount required to be paid such smaller amount as the court believes is just.

(4) If a person has been adjudged bankrupt or his estate has been sequestrated, or if an order for the winding up of a company has been made, the court must take into account the extent to which realisable property held by that person or that company may be distributed among creditors.

(5) The court may disregard any inadequacy which it believes is attributable (wholly or partly) to anything done by the defendant for the purpose of preserving property held by the recipient of a tainted gift from any risk or realisation under this Part."

Section 9(1) provides:

"For the purposes of deciding the recoverable amount, the available amount is the aggregate of --

(a) the total of the values (at the time the confiscation order is made) of all the free property then held by the defendant minus the total amount payable in pursuance of obligations which then have priority, and

(b) the total of the values (at that time) of all tainted gifts."

So under section 23 the available amount is to be assessed as under section 9 but at the time of the calculation under section 23.

5. Prior to section 23 legislative provisions for subsequent applications by defendants in respect of confiscation orders were contained in section 17 of the Drug Trafficking Act 1994 and section 83 of the Criminal Justice Act 1988, each as amended by the Proceeds of Crime Act 1995 and by the Powers of Criminal Courts (Sentencing) Act 2000. They were in the same terms, save for provisions in the latter referring to magistrates' courts. The sections provided for an application to the High Court for a certificate of the inadequacy of the defendant's realisable property to pay the amount previously ordered. Where a certificate was issued by the High Court the defendant could apply to the Crown Court to have substituted for the amount originally ordered such lesser amount as the Crown Court thought just in all the circumstances. Thus section 83 of the Criminal Justice Act 1988 provided:

"83(1) If, on an application made in respect of a confiscation order –-

(a) by the defendant, or

(b) by a receiver appointed under section 77 or 80 above, or in pursuance of a charging order,

the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under the order the court shall issue a certificate to that effect, giving the court's reasons.

(2) For the purposes of subsection (1) above --

(a) in the case of a realisable property held by a person who has been adjudged bankrupt or whose estate has been sequestrated the court shall take into account the extent to which any property held by him may be distributed among creditors; and

(b) the court may disregard any inadequacy in the realisable property which appears to the court to be attributable wholly or partly to anything done by the defendant for the purpose of preserving any property held by a person to whom the defendant had directly or indirectly made a gift by this Part of this Act from any risk of realisation under this Part of this Act.

(3) Where a certificate has been issued under subsection (1) above, the person who applied for it may apply --

(a) where the confiscation order was made by the Crown Court, to that court; and

(b) where the confiscation order was made by a magistrates' court, to a magistrates' court for the same area,

for the amount to be recovered under the order to be reduced.

(4) The Crown Court shall, on an application under subsection (3) above --

(a) substitute for the amount to be recovered under the order such lesser amount as the court thinks just in all the circumstances of the case; and

(b) substitute for the term of imprisonment or of detention fixed under subsection (2) of section 139 of the Powers of Criminal Courts (Sentencing) Act 2000 in respect of the amount to be recovered under the order a shorter term determined in accordance with that section in respect of the lesser amount.

(5) A magistrates' court shall, on an application under subsection (3) above, substitute for the amount to be recovered under the order such lesser amount as the court thinks just in all circumstances of the case.

(6) Rules of court may make provision --

(a) for the giving of notice of any application under this section; and

(b) for any person appearing to the court to be likely to be affected by any exercise of its powers under this section to be given an opportunity to make representations to the court."

6. The earlier sections thus provided a wholly different procedure to enable a defendant to come back to the Crown Court to ask for a reduction in the amount originally ordered. It was formerly the High Court which had to consider the adequacy of realisable property: it is now the Crown Court which has to consider whether the available amount is inadequate for the payment of the outstanding balance.
7. The earlier legislation has been considered in a number of cases. We refer first to Gokal v Serious Fraud Office [2001] EWCA Civ 368. The Court of Appeal was here concerned with section 83. A confiscation order had been made in the sum of £2,943,115. The defendant had not satisfied the Crown Court that he did not have hidden assets to meet an order in that amount which was the amount of the benefit. An appeal against the making of the order had failed. The defendant subsequently applied to the High Court for a certificate of inadequacy on the basis that he had no realisable property. The application was struck out as an abuse of process. The striking out was upheld by the Court of Appeal. In the course of giving the leading judgment Keene LJ stated:

"16. The evidence in support of the recent application for a Certificate took the form of a witness statement by Adam George William Cowell, a partner in the firm of solicitors acting for Mr Gokal. In the witness statement it is said that the appellant 'seeks to prove that he has no realisable property to be applied in satisfaction of the Confiscation Order'. Apparently an attempt was going to be made to produce evidence at this stage to show that the money which went into the appellant's personal bank accounts had been dissipated. This would take the form of schedules produced by accountants and available at the time of the appeal to the Court of Appeal (Criminal Division) but not produced to that court.

17. That is not a proper basis on which to seek a Certificate. It amounts to an attempt to go behind the original confiscation order finding as to the amount of the defendant's realisable assets. Such a finding can only be challenged by way of an appeal against the confiscation order. The trial judge clearly rejected the argument that the money in the personal bank accounts had gone back to the companies or had been otherwise dissipated. An application for a Certificate does not provide an opportunity to try to make good deficiencies in the case presented at the time of the confiscation order or at the appeal against it. This is a principle to which it will be necessary to return in due course.

....

24. Consequently there does remain the question: what has happened since the making of the confiscation order to the £2.94 million of realisable property found by the judge to be held by the appellant? Evidence as to that is crucial to the grant of a Certificate of Inadequacy. As has been said many times in the authorities, it is not enough for a defendant to come to court and say that his assets are inadequate to meet the confiscation order, unless at the same time he condescends to demonstrate what has happened since the making of the order to the realisable property found by the trial judge to have existed when the order was made: see R v C, unreported, 18 November 1997 and R v W, unreported, 29 January 1998. Any other approach would amount to an attempt to go behind the finding embodied in the confiscation order, and such an attempt would be an abuse of process. In the present case the appellant does not seek to demonstrate where the realisable property of over £2 million was in May 1997 nor to show how it has decreased in value or otherwise diminished since then."

8. Gokal has been applied in a number of subsequent cases, notably in Re McKinsley [2006] 1 WLR 3420. The head note of the report reads:

"On an application by a defendant who had been convicted of a drug trafficking offence for a certificate, pursuant to section 17 of the Drug Trafficking Act 1994, to the effect that his realisable property was inadequate for the payment of any amount remaining to be recovered under the confiscation order made against him, it was not open to the defendant to challenge the Crown Court judge's findings as to his realisable assets and any attempt to do so was in abuse of the process of the court.

Where, therefore, a defendant applied for a certificate of inadequacy on the ground that he did not have, and had not had when the confiscation order was made, the hidden assets identified by the Crown Court judge, and, as a preliminary issue, the judge held that it was not open to the defendant to seek to challenge the Crown Court judge's findings as to his realisable assets and the defendant appealed –-

Held, dismissing the appeal, that the judge's ruling was correct."

9. In paragraphs 42 and 43 of his judgment Scott Baker LJ stated:

"42. It is true that under the 2002 Act an application for a certificate of inadequacy is no longer to be made to the Administrative Court; in future the Crown Court is seized of the whole procedure. We do not, however, regard this as a point in favour of Mr Owen's submission. In passing the 2002 Act in the terms that it has Parliament must be taken to have affirmed the hard edged rule laid down in Gokal's case.

43. We agree with the judge that he was bound by the hard edged rule. In our view this court too is likewise bound. But absent authority we should have reached the same conclusion. Having listened to detailed argument on the construction of the statute we are persuaded that it points clearly to the hard edged rule. Further, this accords with the general principle that it is not ordinarily open to a party to relitigate an issue that has already been decided against him in the Crown Court."

10. The question for us is whether it is indeed right as stated by Scott Baker LJ that the position under section 23 is no different to that under the earlier sections in relation to the ability of a defendant to raise issues previously determined against him. We are satisfied that it is indeed so. In McKinsley Scott Baker LJ considered the structure of the relevant provisions of the 1994 Act, but we do not find anything there which distinguishes them for this purpose from those of the 2002 Act. In paragraphs 23 and 24 of his judgment he stated:

"23. It is true that section 17 nowhere expressly states the court can only take into consideration changes that have occurred to the defendant's financial position since the order was made. But nor does it say that the court can look at the defendant's realisable property regardless of what the Crown Court has previously decided. Mr Owen, who has appeared for the defendant on this appeal argues that subsection (1) is expressed in wide terms. As Toulson J pointed out there are three potentially different factual situations where a defendant seeks to argue that he currently does not have assets and never did: (i) he wishes to reargue the identical case to that presented to the Crown Court; (ii) he wishes to present a case directly contra-dictory to that presented to the Crown Court; (iii) he wishes to adduce material that was not previously considered. Mr Owen's arguments are only directed towards the third of these situations because the other two are obviously impermissible. The third situation is not, so he submits, truly to be regarded as relitigation of the same issue.

24. We can see no justification for construing section 17 in this way. Not only the defendant but also a receiver is entitled to apply for a certificate of inadequacy. If a defendant is entitled to go behind the confiscation order the same must be the case for a receiver but we cannot envisage circumstances in which that could possibly be appropriate."

Although the procedure is now different, the substance of the jurisdiction is not changed by the wording of section 23. The logic of the remarks of Scott Baker LJ remains applicable.

11. We are satisfied that it cannot have been the intention of Parliament in section 23 of the 2002 Act that a defendant should be entitled to relitigate matters which were determined against him in the original confiscation proceedings.
12. We conclude that His Honour Judge Coleman was correct to hold that the applicant was not entitled under section 23 to raise again the issue as to his hidden assets. We believe that the point has not previously been raised in this court in relation to section 23 and so we grant leave. But the appeal must be dismissed.
13. MR McKINNON: My Lord, your Lordships granted leave because the point had not been argued before. Might I apply for a representation order today for myself because your Lordships granted leave?
14. MR JUSTICE JACK: Yes, we will make that order.
15. MR McKINNON: I am very grateful. Thank you.

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