England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		16 July 2010

1. MR JUSTICE SWEENEY: On 17th May 2007 in the Crown Court at Wolverhampton, this now 52-year-old appellant pleaded guilty to one offence of assisting illegal entry (Count 1) and to seven offences of assisting unlawful immigration to a Member State (Counts 4 to 10). He was sentenced to 54 months' imprisonment on each count concurrent, and ordered to pay £65,000 towards the costs of the prosecution. Confiscation proceedings followed, and on 16th April 2008 Mr Recorder Sanghera made a confiscation order in the sum of £148,550 to be paid within six months or in default to serve three years' imprisonment. The appellant now appeals against sentence, confined to aspects of the confiscation order, with leave of the Full Court, differently constituted.
2. In short, the appellant submits that the order should be reduced to £52,598 and that the period in default should also be reduced accordingly. The respondent concedes that the order should be reduced, but argues that the reduction should be to a figure of £92,177, again with an appropriate adjustment to the default period.
3. In order to understand the rival contentions, it is necessary to set out some, at least, of the background.
4. The appellant's offences can be dealt with shortly. Between 2002 and 2004 he ran a business called Griskia Management Services which provided immigration advice. The eight offences to which he pleaded guilty involved his organising false applications for work permits for individuals to work in jobs that did not, in fact, exist and for which service he charged each applicant. The first offence (Count 1) took place on 23rd December 2002 and the last offence (Count 10) in March 2004. Thereafter the appellant was eventually arrested and prosecuted.
5. Because the first offence was committed before the coming into force of the Proceeds of Crime Act 2002 in March 2003, the confiscation proceedings were required to be conducted under the provisions of the Criminal Justice Act 1988 ("the 1988 Act") as amended by the Criminal Justice Act 1993 and the Proceeds of Crime Act 1995. To that end, the prosecution gave written notice under section 71(1)(a) of the 1988 Act that it was appropriate for the court to proceed under section 71 of that Act, and to make the assumptions provided under section 72AA in determining the appellant's benefit.
6. Section 72AA(3) to (6) provide as follows:

"(3) When proceeding under section 71 above in pursuance of the notice mentioned in subsection (1)(a) above, the court may, if it thinks fit, determine that (subject to subsection (5) below) the assumptions specified in subsection (4) below are to be made for the purpose-

(a) of determining whether the defendant has benefited from relevant criminal conduct; and

(b) if he has, of assessing the value of the defendant's benefit from such conduct.

(4) Those assumptions are-

(a) that any property appearing to the court-

(i) to be held by the defendant at the date of conviction or at any time in the period between that date and the determination in question, or

(ii) to have been transferred to him at any time since the beginning of the relevant period,

Was received by him, at the earliest time when he appears to the court to have held it, as a result of or in connection with the commission of offences to which this Part of this Act applies;

(b) that any expenditure of his since the beginning of the relevant period was met out of payments received by him as a result of or in connection with the commission of offences to which this Part of this Act applies; and

(c) that, for the purposes of valuing any benefit which he had or which he is assumed to have had at any time, he received the benefit free of any other interests in it.

(5) Where the court has determined that the assumptions specified in subsection (4) above are to be made in any case it shall not in that case make any such assumption in relation to any particular property or expenditure if-

(a) that assumption, so far as it relates to that property or expenditure, is shown to be incorrect in the defendant's case;

(b) that assumption, so far as it relates, is shown to be correct in relation to an offence the defendant's benefit from which has been the subject of a previous confiscation order; or

(c) the court is satisfied that there would (for any other reason) be a serious risk of injustice in the defendant's case if the assumption were to be made in relation to that property or expenditure.

(6) Where the assumptions specified in subsection (4) above are made in any case the offences from which, in accordance with these assumptions, the defendant is assumed to have benefited shall be treated as if they comprised, for the purposes of this Part of this Act, in the conduct which is to be treated, in that case, as relevant criminal conduct in relation to the defendant."

7. In the prosecutor's statements served in advance of the confiscation hearing the court was asked to consider the benefit derived from the offences themselves and to make an appropriate retail price index calculation in relation to that benefit. The court was asked to apply the statutory assumptions to the following:

1. Money transfers during the period of six years prior to the commencement of the proceedings.

2. Property held by the appellant at the date of his conviction or other relevant time, namely a Toyota motorcar, £9,800 in cash, and a house at 22 Ledstone Way in Stoke.

8. The house was purchased by the appellant in January 1992 for £67,000 and was registered in his sole name. He paid £17,000 towards the purchase price, with the remainder being funded by a mortgage from the Nationwide Building Society in the sum of £50,000. It is the learned Recorder's findings in relation to this house which lie at the heart of the appeal.
9. At the confiscation hearing the respondent invited the learned Recorder to find that the appellant had benefited in the total sum of £222,798, that his realisable assets exceeded that sum, and that thus the confiscation order should be in that total sum.
10. The appellant disputed the respondent's case. He gave evidence. Although there is some dispute before us as to precisely what he said as to the way in which he had funded the £17,000 deposit to which we have made reference, it seems clear that the appellant did refer to the receipt of a loan from his father-in-law, who had later died in the mid-1990s, as being the major part of the deposit monies, with the remaining £2,000 or so coming from his own funds.
11. It is clear from the learned Recorder's 17 page judgment that overall, and for good reason, he found the appellant largely to be an incredible witness. In the result the learned Recorder found that the appellant had benefited from criminal conduct in the total sum of £208,598 made up as follows:

1. Benefit from relevant criminal conduct, £28,000.

2. RPI calculation £4,200.

3. Money transfer fees £10,000.

4. A car, £500.

5. Cash seized on arrest, £9,898.

6. 22 Ledstone Way, £156,000.

12. In relation to the house, at page 8A to E of the transcript of his judgment, the learned Recorder said:

"The defendant purchased 22 Ledstone Way in his sole name in 1992. His wife maintains that she has an interest because she paid all the bills, and she paid for a lot of the renovation and extension work carried out to the property. Whilst family and friends carried out the physical work, she made payments of all the necessary costs. These payments were made from benefits because, of course, she was not receiving any earned income. The value of the property is not agreed, but I broadly accept the valuation put forward by the defendant, which is a professionally obtained valuation. The lower figure of £145,000 is insufficiently explained, in the light of the paragraph that precedes it. So, for the purposes of this hearing, I accept the valuation of £160,000. Allowing for the notional costs of sale - estate agent's fees, legal fees - which, as I have already said, are a necessary consequence of realising that asset, I place a value on this property in the sum of £156,000."

13. At pages 13G to 15C, the learned Recorder continued as follows:

"Having assessed the defendant's credibility, having considered the evidence that he gave and the manner in which he gave it, I make the following findings of fact: these proceedings relate to a course of criminal conduct and, accordingly, section 72AA of the Criminal Justice Act 1988 applies. These are also proceedings within section 71 of that Act, and the assumption specified in subsection (4) of section 72AA are required to be made. I am satisfied that those assumptions have not been shown to be incorrect. I am further satisfied that there is not a serious risk of injustice in the defendant's case of making the assumptions in relation to his property and expenditure - and I will deal with that point with regard to Ledstone Way in a bit more detail later...

The valuation of Ledstone Way, I have already said, is £156,000. The property is in the defendant's sole name, and whilst the wife claims a share, I do not accept, given the assumption, given her disclosed income and apparent interest in another commercial property, that she has that claim. The Act requires, if I am satisfied as to the correctness and a serious risk of injustice, for me to make the assumption that the property that the defendant owns is free of any other interest within it. I have closely considered, having heard counsel's submissions, whether there would be a serious risk of injustice in the defendant's case if I make the assumption particularly with regard to this property. I have been asked to consider the position of the defendant's wife and his children, who are resident in that property and have been for some years. I remind myself that the wife has at least a share in a commercial property. On the basis of her stated ability to purchase that property, but also to fund household expenditure, I am confident that alternative accommodation arrangements are entirely possible for this household. Whilst in a situation such as this there is always the risk of injustice to innocent members of the family, that family has also clearly benefited, indirectly, from the defendant's criminal conduct, by virtue of the income that he thereby enjoyed. I am satisfied that whilst there is a risk of injustice, it is not a serious risk of injustice, and certainly not so serious that the assumptions should not be made."

14. The learned Recorder went on to find that the appellant had the following realisable assets:

1. The Toyota motorcar, £500.

2. The cash, £9,898.

3. Monies in various bank accounts totalling £95,153.

4. 22 Ledstone Way - the net figure of £156,000, less the outstanding mortgage (then a figure of £51,000), giving a final net figure which the Recorder totalled at £109,000. The correct figure was, in fact, £105,000.

15. That gave an overall figure (on the learned Recorder's calculation) of £214,551 worth of realisable assets, from which he deducted, as required by section 74(3) of the 1988 Act, the £65,000 in costs awarded at the earlier hearing, to which we have already made reference. This gave a net total, again using the learned Recorder's figures, of £148,751, which he rounded down to the sum to which we have already made reference of £148,550, and hence made the confiscation order in that sum. Doing the maths correctly it should have been £144,550.
16. The grounds of appeal are put in this way:

1. The Recorder erred in calculating the benefit figure in the sum that he did. There was no basis for including the total value of the house at Ledstone Way, or the mortgage of £50,000. Thus the benefit figure ought to have been £52,598 - i.e. it should have excluded anything in relation to the house altogether.

2. The Recorder erred in exercising his discretion to apply the statutory assumptions to the house as there was no basis upon which so to do. There was a risk of injustice and/or the assumptions were misplaced, because the property was subject to the mortgage of £50,000, and had been so since its purchase in 1992 and it had increased in value since then.

3. The Recorder erred in his ruling that there was a risk of injustice but that it was not serious.

4. The Recorder erred in setting the default term at three years, which is the maximum for a confiscation order in sums between £100,000 and £250,000.

17. At the outset of the hearing Mr Farrell QC, appearing on the appellant's behalf, indicated to us that the issues between the appellant and the respondent had narrowed from those which appeared on the papers before us. It was now common ground that the mortgage sum should not have been included within the benefit figure by the learned Recorder, and that thus the area of dispute was now confined to the consequences of the evidence and the assumptions in relation to the original deposit of £17,000.
18. Mr Farrell's submissions in that regard can be shortly summarised. He submits that when one examines the learned Recorder's judgment, the principal passages of which we have already quoted, it is clear that he never specifically engaged with the relevant issues in so far as the £17,000 deposit was concerned, and that that omission is the more concerning given his agreed error as to the inclusion of the mortgage. In those circumstances, Mr Farrell submits that the proper position here is either that the court should take the view that it was unjust for the assumptions to apply in so far as the £17,000 is concerned, or to take the pragmatic view that a case which would otherwise require a re-hearing to resolve the issue should not be sent back to the Crown Court, given the passage of time since the relevant offence, and the death of the appellant's father-in-law in the interim. Either way, it remains Mr Farrell's submission that no account at all should be taken in the benefit figure of anything in relation to the house.
19. On behalf of the respondent, Mr Arnold points out that it was made clear by the prosecution, from the outset, that the assumptions applied to the house and thus to it being acquired in 1992. Whilst he, Mr Arnold, accepts responsibility for not assisting the learned Recorder as to the inappropriateness of including the mortgage within the benefit figure, he submits that the position is different in so far as the £17,000 deposit is concerned. The onus was firmly on the appellant, he submits, to produce credible evidence to rebut the assumption which applied to the £17,000. And, he further submits, such evidence as the appellant did give, even if it did amount to that to which we have already made reference, was plainly wholly insufficient on the authorities to rebut the assumption.
20. In so far as the delay in time is concerned, Mr Arnold draws our attention to the case of Roach [2008] EWCA Crim 2649 (albeit a case decided under the Proceeds of Crime Act 2002) and to the passage at paragraphs 11 to 13 of the judgment in that case:

"11. It was submitted, firstly, by Mr Redpath that it was unjust to apply that assumption in the present case because so many years had elapsed since the appellant had acquired the property.

12. The appellant's case was that the deposit for the purchase of the property had come from the sale of a previous house, or other legitimate resources, and that the balance had been borrowed on mortgage. There was no dispute as to the mortgage, but the question was whether the appellant had shown that it would be unjust to apply the assumption in relation to the acquisition of the property, bearing in mind the lapse of time and her evidence about the source of the deposit.

13. The judge dealt with this point briefly in his judgment, saying that the figures in evidence did not demonstrate that money from the sale of a previous house or other legitimate resources went towards the purchase of 8 Park Lane in addition to the mortgage. He made plain that in view of the time which had elapsed he would not have expected what he termed full financial records, but he would have expected some more evidence from her. Although she asserted that the deposit came from the sale of another property, she offered no information about the other property, or how it had been acquired, or for how much it was sold. It could reasonably have been expected that she would have been able to remember the previous house in which she had lived and to provide at least some information about its acquisition. In our judgment, no legitimate criticism can be made of the judge's decision as a matter of fact that on the evidence before him it was not unjust to apply the statutory assumption in relation to that property."

The property in that case, we would add, had been purchased some 20 years before.

21. Mr Arnold submits that it is appropriate to proceed upon the basis therefore that, in accordance with the assumption the £17,000 should be regarded as benefit. It represented about one quarter of the original purchase price, and so should now be reflected as benefit by about one quarter of the total current net equity of £105,000 once the mortgage has been deducted. That is not an approach which is, in our view, correct in law. Indeed, paragraphs 15 and 16 of the judgment in Roach itself (which it is unnecessary to quote) make clear that it is perfectly proper to regard the whole of the net equity as benefit in circumstances such as applied in this case.
22. Drawing the strings together, it seems to us that in so far as the house at 22 Ledstone Way is concerned, the way in which the confiscation proceedings were conducted before the learned Recorder was misconceived. Not only was he not helped as to the true light in which to see the £50,000 mortgage, he was also not helped in relation to the need to make a specific finding in so far as the £17,000 was concerned, and then to go on from there to make a finding in so far as the net equity was concerned, whatever those findings would have been. Whilst it is the position, as we have already indicated, that it seems that the learned Recorder found much if not all of the appellant's evidence to be incredible, the fact of it is that on this topic at least it was in part credible because it is common ground, as the appellant claimed, that there was all along a mortgage in the sum of £50,000.
23. Accordingly, it seems to us that it would not be right for us to reach any conclusions on the facts in so far as the house at Ledstone Way is concerned. Equally in our view it would not be right, even though the purchase was in 1992, to regard that as a bar to sending the matter back for a rehearing. The more so because, if the court was to take the view that the whole of the net equity falls within the benefit figure, then a sum in the order of £105,000 is involved.
24. Accordingly, given that it is not appropriate to send the matter back for a partial rehearing, it inevitably follows that we must send it back under the provisions of S.11(3A) of the Criminal Appeals Act 1968 for a full rehearing of all the confiscation issues. In those circumstances, we quash the confiscation order and order that it is sent back for a full rehearing before another tribunal. Any sum already paid under the terms of the original confiscation order is not to be repaid until such time as the Crown Court makes a confiscation order, or decides not to make such an order.
25. MR FARRELL: Thank you, my Lord. May I mention a couple of matters? The issue of costs. Prior to the granting of a representation order Mr Shabbir was paying privately. Could I please ask for a defendant's costs order under section 16 of the Prosecution of Offences Act to cover those costs, of course to be assessed?
26. LORD JUSTICE MAURICE KAY: Yes.
27. MR FARRELL: Hopefully the parties can agree the issues to be determined in the lower court and confine them.
28. LORD JUSTICE MAURICE KAY: Yes. My Lord is just raising the question about the need to give directions to the Crown Court.
29. MR FARRELL: Yes, the Act says so. It is section 3A of the Criminal Appeal Act, I think.
30. LORD JUSTICE MAURICE KAY: If we simply direct that the matter be listed within 28 days in the Crown Court for directions.
31. MR FARRELL: Stoke.
32. LORD JUSTICE MAURICE KAY: Then it can take its course from there.
33. MR FARRELL: I am not sure what the funding position is, but I am sure we have to deal with that with the Legal Services Commission.
34. LORD JUSTICE MAURICE KAY: Yes. You do not need any more directions?
35. MR FARRELL: I do not think we do, no.