England and Wales Court of Appeal (Criminal Division) Decisions

IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM MANCHESTER CROWN COURT
HIS HONOUR JUDGE STEIGER QC
T20030662

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/01/2010

Lord Justice Aikens :

1. This case concerns a confiscation order made under the Proceeds of Crime Act 2002 ("POCA"). For reasons which we will explain, there was an issue at the hearing before us on whether the matter was properly called an appeal or an application for leave to appeal out of time. At the conclusion of the argument on 17 December 2009, we ruled that it was an appeal and that the appeal was dismissed for reasons which would be handed down later.
2. These are our reasons for dismissing the appeal.

The underlying facts

3. On 22 March 2004, the appellant pleaded guilty to being knowingly concerned in the fraudulent evasion of the prohibition on the importation of a class B controlled drug, namely cannabis resin. The appellant's co-accuseds Robertson, McKie, Clarke, Hassiakos and Sevastos were charged with the same offence. They were also charged with other offences. Each of the co-accused pleaded guilty on re-arraignment.
4. On 7 May 2204, the appellant was sentenced to nine years imprisonment. Hassiakos was sentenced also to nine years imprisonment. Other co-accuseds received lesser sentences.
5. On 16 July 2005 this court (Laws LJ, Nelson and Goldring JJ) allowed the appellant's appeal against sentence and reduced it to 4 years 6 months.
6. At a separate appeal, which had been heard on 21 January 2005, Hassiakos' appeal on sentence was dismissed, so it remained at nine years. However, Robertson's, Clarke's and Sevastos' appeals on sentence were allowed.
7. Nelson J gave the judgment of the court in the appellant's appeal on sentence. He set out the facts relating to the importation offence. The following summary will be sufficient for present purposes. On 23 May 2003 an articulated heavy goods vehicle, driven by Sevastos, arrived at Harwich by ferry from the Netherlands. The vehicle's movements were thereafter monitored by customs officers. The vehicle was ostensibly carrying a consignment of flowers. At St Helens the vehicle was met by Robertson with a white box van, Clarke who was in a similar van with a red cab and Hassiakos, who was in a Ford Focus. The articulated heavy goods vehicle was directed to farm premises. Rooney there directed the vehicle where to park. Rooney assisted others to move pallets of boxes from the articulated vehicle to the white box van. Rooney also loaded boxes into the red cab van. The two vans together contained a total of 4 metric tonnes of cannabis resin with a "retail value" of £3.6 million and a "street value" at some £9 million. Telephone records showed that Rooney and Hassiakos had been in communication on both 22 and 23 May 2003 and had made calls to Spain.
8. In paragraph 12 of his judgment Nelson J records the appellant's basis of plea. This was that the appellant had agreed to unload and move an illegal cargo for £200. (The appellant had previously said that he was to receive a larger sum). The prosecution had not accepted that basis of plea and no evidence was given by Rooney in support of that basis. However, it was accepted in the Court of Appeal that the appellant was neither an organiser nor a financier of the enterprise.
9. At paragraph 33 of his judgment Nelson J set out the conclusions of the court with regard to the appeal of the appellant. He said:

"[the appellant] was clearly playing an active role. He recruited Clarke. He was in phone contact with Hassiakos over 22 and 23 May and was seen to be directing the articulated vehicle on its arrival. But none of these matters leads one to the conclusion that he was as high in the chain as Hassiakos who was accepted as the leading player by the Crown and was in possession of keys to the premises where substantial drugs were found. In these circumstances it seems to this court that the role of Rooney was less than that of Hassiakos. Accordingly his appeal should be allowed."

10. The court then concluded that the appellant's position and overall culpability was the same as the co-accused Robertson. Therefore the sentence on the appellant was reduced to 4 years 6 months.

The confiscation proceedings

11. HMRC (or HMC&E as it was at the time), requested the court to proceed to confiscation under section 6 of POCA. The prosecutor's statement submitted that the appellant had a criminal lifestyle. Paragraph 4 of the statement said that the estimated "street value" of the cannabis resin was £9,856,000 and the estimated "retail price" (ie. either the price that the conspirators paid for the drugs or the price that they could have obtained for them in the illegal "wholesale" market) was £3,600,000. Paragraph 9 of the statement asserted that the "benefit" obtained by the appellant from his criminal conduct in the case was the value of the property obtained, which was said to be equal to the "retail value" ie. £3,600,000.
12. The confiscation hearing took place before HHJ Steiger QC on 16 July 2004. Each of the six co-accused was separately represented. The judge noted (page 19E – G of the transcript) that two alternative approaches to the issue of each accused's "benefit" had been canvassed at the Bar during argument. The first suggested approach was that the judge should allocate the "benefit" equally between the "retail value" of the cannabis resin, i.e. he should find that each defendant benefited to the extent of £600,000. The second suggested approach was that the "benefit" should be set in proportion to the sentences passed. The judge concluded that he should, in the circumstances of that case, use the first of these two methods.
13. In arriving at that conclusion, Judge Steiger considered the decision of this court of R v Porter [1991] WLR 1260. In that case (dealt with under the Drug Trafficking Offences Act 1986), the judge had found that the total benefit from the drug trafficking by the two defendants had been £9600. He made an order "jointly and severally" against each defendant to pay that sum. They appealed. Garland J, giving the judgment of the court, said that when a court was assessing benefit for the purposes of the relevant statute, (then section 1 of the Drug Trafficking Offences Act 1986), the court must, as between co-defendants, determine the shares of any joint benefit that they may have received as a result of drug trafficking. Garland J stated that, in the absence of any evidence, the court was entitled to assume that the co-defendants had shared the benefit equally. The court held that it was wrong to make a "joint and several" order and so substituted orders that each appellant pay £4800.
14. Judge Steiger noted (transcript page 21H to 22A) that no one had sought to give evidence for the purposes of the confiscation proceedings on the issue of benefits obtained. There was therefore no evidence before him as to the particular benefits obtained by each co-defendant. He concluded (transcript page 22C):

"In my judgement, the guidance given in the case of Porter and the somewhat difficult circumstances here justify the conclusion, as regards count 1, that all the defendants had benefited equally and there will be a certificate that they have equally benefited to the tune of some £600,000."

15. On 19 July 2004, Judge Steiger made a confiscation order in the sum of £50,000 against the appellant. In doing so he took into account various other small items of benefit and concluded that the overall benefit from the appellant's criminal conduct was £627,975. Having heard submissions on the evidence as to available assets, the judge assessed the recoverable amount as £50,000 and made the confiscation order accordingly.
16. Subsequently, as a result of orders made by Judge Steiger and by this court, it was declared in the order of the Court of Appeal of 26 January 2007 that the Confiscation Order had been discharged to the extent of £49,100. The court noted that it was open to HM Customs to launch an application under section 22 of POCA. That section applies when a court has made a Confiscation Order and an application is made by the prosecutor or a receiver who has been appointed to make a new calculation of the "available amount", i.e. the amount available to an offender from which to meet a confiscation order. Under section 22 (4)(b) the new calculation must not exceed the amount found as the offender benefit from the conduct concerned. Under section 22(4)(a) the court may vary the Confiscation Order by such amount as it believes is just.
17. HMRC did make such an application under section 22 of POCA and there was therefore a hearing before HHJ Hammond on 18 July 2008, where the appellant was represented by Mr Keogh of counsel and the Crown was represented by Mr Dennison. Mr Dennison explained the application and said that it was accepted that the court could and should make an order taking the Confiscation Order "up to the full amount" i.e. the full amount of the benefit that HHJ Steiger had ruled (on 19 July 2004) that the appellant had obtained. The transcript records Mr Keogh as stating that this proposed order was not opposed and so the judge made that order.
18. The present application for leave to appeal out of time and the ground of appeal, together with an Advice, were settled as a combined document by Mr Stuart on 25 February 2009. The ground of appeal set out at paragraph 15 of the combined document is stated in the following terms:

"The learned judge erred in law in finding that the applicant had benefited from the offences in the sum of £627,975 and thereafter making a confiscation order against the applicant."

19. The Advice gives detail of the history of the confiscation proceedings. It refers to the decision of the House of Lords in R v May [2008] 1 AC 1028; Jennings v CPS [2008] 1 AC 1046 and R v Green [2008] 1 AC 1053. It then refers to a Court of Appeal authority subsequent to those decisions. Paragraph 30 of the Advice states:

"In all the circumstances the determination of benefit to the applicant from the crime was wrong and the confiscation order should be quashed."

20. Leave to appeal was apparently granted by the single judge. He gave the following reasons:

"Jennings [2008] UKHL 29 (handed down 14^th May 2008) does not appear to have been referred to or taken into account in the ruling in relation to benefit on 18 July 2008. It is at least arguable that that ruling was erroneous as a result. I have read the reasons for the delay in bringing this appeal and in the circumstances grant an extension such that the application is brought in time. "

21. With respect to the Single Judge, this reasoning creates some difficulty. We are quite satisfied that, on a proper reading of the ground of appeal set out at paragraph 15 of the combined Advice etc document, the point of aim of the application was the original finding of HHJ Steiger QC in July 2004 that the value of the benefit obtained by the appellant was £627,975. The order of HHJ Hammond on 18 July 2008, which had been made by consent, was not concerned with the "benefit" figure at all. It was only concerned with the issue of whether or not the amount available to the appellant was greater than the sum of £50,000 which HHJ Steiger QC had originally fixed on 19 July 2004. HHJ Hammond was not concerned to reconsider the "benefit" figure. Indeed there was no jurisdiction for Judge Hammond to have done so under section 22 of POCA, as Mr Stuart accepted before us.
22. However, we have come to the conclusion, with extreme reluctance, that the Single Judge definitely, albeit inadvertently, gave leave to appeal the original order of HHJ Steiger QC made on 16 July 2004 and granted an extension of time of 4½ years to do so. We have reached this conclusion because we are satisfied that the application was indeed aimed at appealing the "benefit" figure fixed by Judge Steiger and because the Single Judge refers to the "benefit" figure in giving leave to appeal.

The issues that arise on this appeal

23. In the circumstances, two issues arise on this appeal. The first is: Did HHJ Steiger QC mis-apply the law in arriving at his conclusion that the "benefit" figure for this appellant was £627,975? The second question which only arises if the answer to the first is "yes he did", is what should this court do about it in the current circumstances?
24. In order to consider the first question it is necessary to set out the relevant provisions of POCA and to summarise briefly the effect of the trio of House of Lords cases to which we have referred, viz: R v May, Jennings v CPS and R v Green.

The relevant provisions of the Proceeds of Crime Act 2002

25. Sections 6, 8, 76(3)(4)(5)(6) and (7) and 84(1) of the POCA 2002 provide:

"6 Making of order

(1) The Crown Court must proceed under this section if the following two conditions are satisfied.

(2) The first condition is that a defendant falls within any of the following paragraphs—

(a) he is convicted of an offence or offences in proceedings before the Crown Court;

(b) he is committed to the Crown Court for sentence in respect of an offence or offences under section 3, 4 or 6 of the Sentencing Act;

(c) he is committed to the Crown Court in respect of an offence or offences under section 70 below (committal with a view to a confiscation order being considered).

(3) The second condition is that—

(a) the prosecutor or the Director asks the court to proceed under this section, or

(b) the court believes it is appropriate for it to do so.

(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.

………..

8. Defendant's benefit

(1) If the court is proceeding under section 6 this section applies for the purpose of—

(a) deciding whether the defendant has benefited from conduct, and

(b) deciding his benefit from the conduct.

(2) The court must—

(a) take account of conduct occurring up to the time it makes its decision;

(b) take account of property obtained up to that time.

………..

76. 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;

(b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned;

(c) conduct which constitutes offences which the court will be taking into consideration n deciding his sentence for the offence or offences concerned.

(4) A person benefits from 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.

…….

(6) References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained both in that connection and some other.

(7) If a person benefits from conduct his benefit is the value of the property obtained

……..

84. Property: general provisions

(1) Property is all property wherever situated and includes—

(a) money;

(b) all forms of real or personal property;

(c) things in action and other intangible or incorporeal property..."

The three House of Lords decisions

26. The first in the trio of cases is R v May [2008] 1 AC 1028. That case concerned a confiscation order under the Criminal Justice Act 1988 ("CJA 1988") as amended. The appellant had been convicted of conspiracy to cheat HM Customs and Excise (as it then was) of VAT, which resulted in a loss of about £11 million in VAT. The judge had assessed the extent of the appellant's benefit at a net figure of £3,264,277.
27. Lord Bingham of Cornhill gave the considered opinion of the committee. He traced the history of the confiscation legislation. In paragraphs 20 – 34 he considered the question of how the "value of the benefit" should be assessed in the light of the statutory wording of the various Acts, but in particular (for present purposes) section 76(7) of POCA. Lord Bingham reviewed a number of cases, including R v Porter. He stated that the order made by the Court of Appeal in that case:

"might, as later authorities show, have been a proper disposal had there in fact been no evidence of the parties' shares in the proceeds. But the judge's finding, not challenged on appeal, was that the proceeds had been received jointly. That being so each had received a payment or other reward in the full sum of £9,600 and orders in that sum should have been made against each of them severally."

28. In paragraph 32 of the opinion, Lord Bingham commented on the case of R v Gibbons [2003] 2 Cr App R (S) 34. In that case the defendant was one of four conspirators who had, between them, obtained £220,000 by fraud. Lord Bingham continued:

"But there was no evidence before the trial judge to enable him to determine how the proceeds had been divided between the conspirators or, it seems, to decide that they had been obtained jointly. He therefore divided the sum between the four, although failing (para 66) to specify the sum of benefit which he attributed to the defendant. This equal division was criticised in argument in the Court of Appeal, but was rightly upheld. The case was one which clearly called for a confiscation order. It would have defeated the purpose of the legislation to allow lack of information, which only the defendant and her co-conspirators could provide, to preclude the making of an order. An equal division was the fairest solution available in the circumstances."

29. At paragraph 43, Lord Bingham referred again to R v Porter. He said it was not authority for the proposition that the confiscation legislation warranted an apportionment of liability to pay amongst those who had benefited jointly. At paragraph 46 Lord Bingham said:

"R v Porter is not authority that the court has power to apportion liability between parties jointly liable, a procedure which would be contrary to principle and unauthorised by statute….".

30. In an "Endnote" in paragraph 48 of the opinion, Lord Bingham made remarks concerning the correct approach to confiscation orders. Two of Lord Bingham's points are relevant to the present appeal. First, he emphasised that the benefit gained by a defendant is the total value of the property or advantage obtained, not the defendant's net profit after deduction of expenses or any amount paid to co-conspirators. Secondly, when deciding whether a defendant has obtained property, the court must apply ordinary common law rules. Thus a defendant ordinarily obtains property in law if he owns it, whether alone or jointly. But, he continued:

"…mere couriers or custodians or other very minor contributors to any offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property."

31. Mr Stuart relied heavily on this last statement of Lord Bingham.
32. In his opinion in May, Lord Bingham also referred to the case of R v Olubitan [2004] 2 Cr App R (S) 14, on which Mr Stuart relied. That case involved a conspiracy to defraud companies in Europe by sending them dummy consignments of mobile phones and computer equipment. The appellant only joined the conspiracy in time to be involved in an unsuccessful dummy consignment, which was intercepted. In the confiscation proceedings, under the amended CJA 1988, the judge accepted that the conspirators as a whole had benefited to the amount of £246,021, but that benefit related to the two successful dummy consignments. He decided that the "benefit" obtained by the appellant was half that sum.
33. The issue on appeal was whether the appellant had obtained any "benefit" at all under section 71(4) of the CJA 1988. In giving the judgment of this court, May LJ said, at paragraph 14, that "…on the special facts of this case, there was no evidence on which the judge could properly have been satisfied on a balance of probabilities that the appellant had benefited at all from his relevant criminal conduct". At paragraph 25, May LJ added: "…[section 71] is not to be construed so that a person may be held to have obtained property or derived a pecuniary advantage when a proper view of the evidence demonstrates that he has not in fact done so".
34. At paragraph 19 of his opinion in May, Lord Bingham stated that the Court of Appeal in Olubitan had rightly held that the appellant in that case had obtained nothing from his participation in the conspiracy. He also approved the statement of May LJ at paragraph 25 of Olubitan which we have quoted above.
35. We should note that in paragraph 25 of Olubitan, May LJ also commented on the inferences that a court may be entitled to make in confiscation hearings using the proper standard of proof. He said:

"…the court may often be entitled to make robust inferences if convicted defendants remain unhelpful as to which of them obtained what benefit as defined by the Act. In many cases, an equal division of the benefit which the conspirators as a whole obtained between the defendants before the court may constitute a fair and reasonable inference".

36. That statement has to be read subject to the remarks of Lord Bingham in R v May, particularly those at paragraphs 27, 32 and 46, which we have referred to above. In short, the position is, as we understand it: (a) if a benefit is shown to be obtained jointly by conspirators, then all are liable for the whole of the benefit jointly obtained. (b) If, however, it is not established that the total benefit was jointly received, but it is established that there was a certain sum by way of benefit which was divided between conspirators, yet there is no evidence on how it was divided, then the court making the confiscation order is entitled to make an equal division as to benefit obtained between all conspirators. (c) However, if the court is satisfied on the evidence that a particular conspirator did not benefit at all or only to a specific amount, then it should find that is the benefit that he has obtained.
37. Jennings v Crown Prosecution Service [2008] 1 AC 1046 also concerned the CJA 1988. The central issue between Mr Jennings and the CPS concerned the proper interpretation of the words "..a person benefits from an offence if he obtains property as a result of or in connection with its commission" in section 71(4) of the CJA. Lord Bingham of Cornhill again gave the considered opinion of the committee. At paragraph 13 he stated that the rationale of the confiscation regime was to deprive the defendant of what he had gained from his crime or its equivalent. So a defendant could not and should not be deprived of what he had never obtained, because that would be a fine.
38. In paragraph 14 Lord Bingham noted that a "…person's acts may contribute significantly to property (as defined in the Act) being obtained without [that person] obtaining it". He stated that the correct construction of section 71(4) was that:

"…a person benefits from an offence if he obtains property as a result of or in connection with its commission, and his benefit is the value of the property so obtained, which must be read as meaning "obtained by him"".

39. Mr Stuart also relied on those passages.
40. The principal issue in R v Green [2008] 1 AC 1053, was whether, for the purposes of calculating (under section 4(1) of the Drugs Trafficking Act 1994), the aggregate of the value of the payments or other rewards received by a person at any time in connection with drug trafficking carried on by him, there should be deducted from the total sums received by all the conspirators by the sale of the drugs, any sums retained by co – conspirators in the conspiracy to supply the drugs. Lord Bingham of Cornhill again gave the considered opinion of the committee. He held that there should be no such deduction. He said, at paragraph 15, that where two or more defendants obtain control or property jointly, each of them has obtained the whole of it, for the purposes of the drug trafficking and proceeds of crime legislation. If one defendant receives property jointly for himself and others and then distributes part of it to co – conspirators, the distribution is irrelevant for the purposes of calculating the "benefit" received by the particular defendant being considered.

The argument of the appellant and reasons for dismissing the appeal.

41. On behalf of the appellant, Mr Stuart submits that, in the light of the three House of Lords decisions, the conclusion of Judge Steiger on the "benefit" that the appellant obtained from the offence cannot be sustained as a matter of law. Under section 76(4) of POCA, the appellant only "…benefits from conduct if he obtains property as a result of or in connection with the conduct". As Lord Bingham made clear in R v May at paragraph 48 and Jennings at paragraph 14, that means that it must be shown (to the civil standard) that the offender concerned did, himself, receive property. He submitted that in this case it was clear on the facts that the appellant had a limited role, which was not even that of courier, let alone custodian, of the cannabis resin. The only evidence of his "benefit" was the appellant's own statement (not given in evidence) that he had received £200 for the work that he had undertaken. Therefore, given the principles established in the House of Lords cases, that must be the figure that the judge should have found as being the "benefit" that resulted from the appellant's conduct in taking part in the conspiracy.
42. We cannot accept those submissions. We note the following facts: first, there was no argument before Judge Steiger that the appellant had not benefited from his criminal conduct in being a conspirator involved in the importation of the cannabis resin, within section 6(4) of POCA. Secondly, before Judge Steiger, none of the conspirators challenged the Crown's "retail value" of the drugs at £3.6 million. Thirdly, there was no challenge to that figure being used as the basis for the total "benefit" obtained by all the conspirators. Fourthly, there was no argument before Judge Steiger on whether the conspirators either had, or had not, jointly, obtained entitlement to and ownership of the cannabis resin. The prosecutor's statement did not state a positive case that all the conspirators had, jointly, obtained ownership of the drugs. Fifthly, there was no evidence from the appellant that the only "benefit" that he would ever have obtained from his part in the conspiracy was the sum of £200 he was paid for the work he did. He did not give evidence at all, as the judge noted in giving judgment.
43. If the appellant had wished to put forward an argument before Judge Steiger that the sole "benefit" that he had obtained from his part in the conspiracy had been the payment of £200, on the law as it was understood at the time of the hearing before Judge Steiger, he could have done so, on the basis of the recent Court of Appeal authority of R v Olubitan [2004] 2 Cr App R (S) 14. That case had been decided by the Court of Appeal on 7 November 2003. Counsel did not argue the point, doubtless for good reason. The appellant could have given evidence that the only benefit he had obtained, on the facts, was the £200 he had obtained for his part in the conspiracy. He did not do so. There was no other information before the judge as to how the benefit of the conspiracy had been split.
44. The position before Judge Steiger was thus: (i) either he did not have the necessary evidence or he declined to find that the cannabis resin had been obtained jointly by all the conspirators. (ii) He was entitled, as a matter of law (see Porter, Gibbons and Olubitan as explained in May) and on the evidence before him, to draw the inference that all conspirators had obtained a benefit from their criminal conduct, ie. the conspiracy to import the cannabis resin. (iii) In the absence of any specific evidence to the contrary before him, he was entitled to make an equal division of the benefit obtained by the conspirators. It was the fairest solution available in the circumstances. It would have defeated the object of the confiscation legislation if, for want of information from the conspirators, he had been precluded from making an order as to the benefit obtained by each.
45. The conclusion of Judge Steiger as to the benefit obtained by the appellant was therefore in accordance with the terms of section 76(4) of POCA and the case law. Nothing that has since been said in the three House of Lords decisions impugns the basis for the judge's decision.
46. Therefore this appeal must be dismissed.