England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		12 March 2009

1. THE VICE PRESIDENT: These three cases are the first to reach this court following the discovery in R v Chambers [2008] EWCA Crim 2467 that in a number of instances a change in the regulations which apply to tobacco smuggling cases has been overlooked at the time of making confiscation orders consequent upon the convictions. There is and can be no challenge to the conviction of any of these three defendants, nor does the misunderstanding about the regulations affect the safety of any conviction. The problem is confined to confiscation orders made following conviction.
2. The error which arose in this case, and it may well be also in others, came about in this way:

1. One of the ways in which a defendant may obtain a benefit for the purposes of leading to a confiscation order is when he has obtained a pecuniary advantage as a result of or in connection with his offence or criminal conduct, see sections 76(4) and (5) of the Proceeds of Crime Act 2002 and in relation to cases prior to 24th March 2003, sections 71(4) and (5) of the Criminal Justice Act 1988.

2. In smuggling cases a person obtains a pecuniary advantage inter alia if he is personally liable to pay the duty which has not been paid, and the pecuniary advantage is equal to the duty evaded.

3. Until 1st June 2001 the relevant regulations which applied to all smuggling cases and which established who had personal liability for the duty were The Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992, SI 1992 No 3135. Those regulations contained, in particular in regulation 5, wide provisions which attached joint and several personal liability for the payment of excise duty to, amongst others (and using the numeration of the regulations) (1) the importer of the excise goods; (3)(b) any other person acting on behalf of the importer in respect of the importation; (3)(e) any consignee of the excise goods which have been imported; and (3)(f) any other person who causes or has caused the imported goods to reach an excise duty point.

4. However, in relation to tobacco only the categories of person liable to pay duty were changed and narrowed with effect from 1st June 2001 by regulation 13 of The Tobacco Products Regulations 2001, SI 2001 No 1712. Now, under those regulations, leaving aside various registered persons who are relatively unlikely to be relevant to the ordinary run of criminal smuggling case, the persons liable for the duty are (1) the person holding the tobacco products at the excise duty point and (3)(e) any person who caused the tobacco products to reach an excise duty point. The excise duty point is usually the point of entry into the United Kingdom. The new regulations do not use the expression "importer" and they exclude the consignee who previously was made liable.

5. This change in the regulations was in a number of cases overlooked by everybody and in particular by the prosecuting Revenue and Customs authorities. The old unamended regulations were in a number of cases relied upon instead.

6. The error came to light during the course of R v Chambers in this court. It ought in fairness to be reported that it was somebody in the office of the Revenue and Customs Prosecution Office who spotted that the error had been made.

3. It follows that in some cases confiscation orders may have been made on the basis of a finding that a defendant was personally liable for the unpaid duty applying the old regulations, either as an importer or as a consignee, and that he had as a result obtained a pecuniary advantage, when in fact he was not liable for the duty under the new amended regulations. The present case of three applicants is such a case. These defendants were found some way from the sea, somewhere in Essex, in possession of several hundred thousand smuggled cigarettes. They were dealt with on the basis that they were not responsible for the importation but had a modest organisational role in the collection and distribution of the smuggled goods. The Recorder was invited by the Crown to make confiscation orders on the basis of the wide definition of personal liability for the duty contained in the old out of date regulations. He did so, having found on that basis that the defendants had obtained a pecuniary advantage. The Crown now concedes that the Recorder was unwittingly led into error and that the findings of fact made in this case do not justify a confiscation order on any other basis.
4. Accordingly, we extend time to appeal, we give leave and we quash the confiscation orders in the case of each appellant.
5. We draw attention to the possible extent of the error made in this case in relation to other cases but also to the limited circumstances in which the error may have been made.
6. It may be that the wrong regulations have been cited to other courts. One case in which it is known that they certainly were is the reported case of R v Rowbotham [2006] EWCA Crim 747 which is a decision of this court in which the wrong regulations were cited.
7. The Revenue and Customs Prosecution Office is, as a result of the discovery of the error, now undertaking, as we understand it, a review of every case in which a confiscation order was made in a tobacco smuggling case after 1st June 2001. The object is to identify any case in which either the old and wrong regulations were relied upon or, indirectly, they may have been relied upon owing to the citation of R v Rowbotham. In cases thus identified we understand that the intention of the Revenue and Customs is to write to the defendant concerned and to his solicitors (if known) to give notice of the possible (our emphasis) error. We will deal in a moment with the management of such cases if an appeal then follows.
8. Not every case in which the wrong regulations were cited will have produced a confiscation order which ought not to have been made. Some defendants will clearly have been personally liable for the duty under the new regulations also - because, for example, alone or jointly they brought the goods in or caused them to reach the excise duty point. Other defendants may well have obtained a benefit on the clear facts of their case, not by way of evasion of a personal liability for the duty and thus a pecuniary advantage, but because they had obtained the goods themselves.
9. We make it clear that the form of the indictment will not necessarily be a reliable indication of whether the error which we are now dealing with has occurred or not. The defendants in the present case were charged under section 170(1)(b) of the Customs and Excise Management Act 1979 with being knowingly concerned in carrying, removing etc the goods. They were not charged under section 172(2) with being knowingly concerned in the evasion of the duty. It is the fact that it seems to have been assumed on all sides in the court below that they had been accused of the latter offence when they had not been. But that is mere history. A person might be guilty under section 170(2) without himself being personally liable for the duty and conversely might be guilty under 170(1) yet still personally liable.
10. As to the management of future cases, as we understand it the letter of notification to be written to relevant defendants by the Revenue and Customs will, wherever it is at that stage possible, indicate from the outset what the Crown's stance will be in relation to the confiscation order; it will not always be possible at that stage but where it is it should be done. No doubt it will be in effect one of three possible stances. In some cases the prosecuting authority will be able to agree that the confiscation order must be quashed. In other cases it may be that the confiscation order was fully justified in any event on the evidence and findings of fact in the court below. A third possibility may arise in which it is accepted that the confiscation order may be flawed but there may follow an invitation to this court to substitute an order on a different basis with or without the receipt of further evidence. In such a case this court would have to deal with it on its merits.
11. For defendants potentially affected by this matter, at least initially we would suggest the best course is probably to await the notification from the Revenue. With that notification will come a note of guidance which has been prepared in the Criminal Appeal Office as to how to deal with the matter if the confiscation order is to be challenged in this court. We summarise only. Attention must be paid to the detail of the guidance note. Ordinarily the route of challenge will be by lodging a notice of application in the ordinary way for leave to appeal against sentence and for an extension of time (where appropriate), as it probably normally will be. That is to be done on the usual form NG. In cases of this type (only) the form NG may be lodged directly with the Criminal Appeal Office and need not be lodged with the Crown Court. In the Court of Appeal Office these cases will be allocated to staff familiar with the situation. The Office will then require the prosecuting Revenue and Customs Office and the applicant's representatives to cooperate in the preparation of a joint document of which the first draft will ordinarily come from the Revenue. That document must contain as a minimum:

(1) an account of the proceedings in the Crown Court, the orders made, the relevant facts, a summary of the applicant's grounds and the Revenue and Customs Prosecution Office reply to those grounds. It must indicate whether or not the application will be opposed;

(2) an agreed, indexed and paginated bundle of supporting documents including any transcripts of proceedings required. It will be for the Revenue and Customs Prosecution Office to prepare the bundles for the court and the applicant and it will be responsible for obtaining and paying for such transcripts as are needed;

(3) an agreed time estimate for the hearing and estimate of reading time.

Those are the minimum essentials of the agreed document which will be required.

12. If there has already been an appeal against sentence to this court and it has been disposed of without reference to the point now under discussion, then this court has no power to entertain a second appeal or to reopen the hearing. There will be no point in lodging an application to this court that it should do either of those things. The only route in such cases is to invite the Criminal Cases Review Commission to consider the case. It has the power to refer a case to this court if satisfied that it has the necessary merit. The same applies if a previous application for leave or an appeal was launched but then abandoned. It will practically never be possible to show the condition for treating the abandonment as a nullity since that involves demonstrating that the applicant's or appellant's mind did not go with his action. Mistake or ignorance of the law are not enough. Once again the available route in such a case is via the CCRC.
13. Lastly, we return to R v Rowbotham. That case is not before us. We do not know whether it ever will be. Accordingly, we express no view whatever as to whether the ultimate order made in that case was justified or not; we simply do not know. But in the future, whatever the status of the order made in that case, citation of the decision ought to be avoided because it carries the risk of perpetuating the error about which regulations apply.