England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT LIVERPOOL
Indictment No:T20060110/1 and T20067067/68

		Royal Courts of Justice Strand, London, WC2A 2LL
		12/05/2011

Mr Justice Roderick Evans:

1. On 15^th March 2011 we heard the appeal of Noel Young against a confiscation order made against him on 18^th April 2008 at the Crown Court at Liverpool. The confiscation order, made under the Proceeds of Crime Act 2002 (the 2002 Act), was in the sum of £6,946,747.62. The appellant was given 6 months to pay this sum with 10 years imprisonment to be served in default of payment, that period to run consecutively to a substantive term which the appellant was already serving.
2. At the end of the hearing we dismissed the appeal. We now give our reasons for doing so.
3. The confiscation came to be made in the following circumstances.
4. The appellant and five others, who included the appellant's wife, Nazim, and his sister, Marina, faced an indictment which alleged a conspiracy to defraud and money laundering offences arising out of the importation into the United Kingdom of high value motor vehicles. On the first day of the trial, 20^th April 2006, the appellant pleaded guilty to Count 1, a conspiracy to defraud Her Majesty's Customs and Excise by evading the liability to pay VAT on imported vehicles between 1^st April 2003 and 2^nd February 2005 and to Count 2, concealing criminal property during the same period. The following day, two associates of the appellant, Colin MacKinlay and Kevin Simpson, pleaded guilty to the conspiracy alleged in Count 1 and MacKinlay, Nazim Young and Marina Young pleaded guilty to money laundering offences.
5. On 9^th June 2006 the appellant was sentenced to 28 months imprisonment on each count, concurrent with each other but consecutive to a sentence of 7 ½ years imprisonment imposed on 22^nd July 2005 for an offence of causing death by dangerous driving.
6. It is not necessary for the purposes of this judgment to recite the sentences imposed on the other defendants whom we have mentioned.

The Facts

7. For present purposes, the essence of the appellant's offending can be shortly stated. The appellant was the organiser of, and driving force behind, a scheme to import from EU countries high value motor vehicles. It was the prosecution's case that the others involved in this offending were directed and/or used by the appellant for his own purposes. On first registration in the United Kingdom, those vehicles became subject to VAT which was paid by the purchasers of the vehicles to the appellant but the vehicles were registered using false or fraudulently obtained documentation and these means were used to achieve registration. By this means the payment of VAT to HMCE was evaded and bank accounts were opened through which the proceeds of the conspiracy were channelled. The appellant, when seeking to register vehicles, would himself use false names. The vehicles, once registered, would be sold on and the conspirators would profit from the sale and the uncollected VAT.
8. An enquiry was commenced into the registration of these vehicles and the appellant was identified, not only from his fingerprints which were found on numerous documents relating to the vehicles, but also identified by officers who recognised him as one of the people who regularly attended DVLA offices to make the registration applications.
9. The appellant was arrested on 1^st February 2005 at his home at Eskdale Cottage, Metal Bridge, Carlisle, which had been purchased in the name of Neil Moore. The property was searched. In addition to paperwork relating to the various motor vehicles involved in this case, there were also found numerous items which demonstrated that the appellant lived an opulent lifestyle.
10. It was the prosecution's case that the conspiracy covered a large number of motor vehicles but for the purposes of the Crown Court prosecution they limited the number of vehicles upon which they would rely to prove their case. When the appellant entered his guilty pleas he did so on the basis that he was party to a conspiracy to evade the liability for the payment of VAT on the importation and registration of 15 motor vehicles which were particularised in the basis of plea. It was his case as set out in the written basis of plea that in pursuit of the conspiracy he passed money through his own and other people's bank accounts and that he had taken advantage of his wife and sister by using their bank accounts to pass monies related to the sale and purchase of specific vehicles. That basis of plea was accepted by the court and the prosecution for the purposes of sentencing but was not accepted by the prosecution for the purpose of the intended confiscation proceedings.
11. At the end of the sentencing hearing a timetable was set for the confiscation proceedings and for the service of statements. The appellant was ordered to serve, by 3^rd August 2006, a statement pursuant to Section 18 of the 2002 Act detailing all assets held by him; the prosecutor's statement under Section 16 of the Act was to be served by 28^th September 2006 and the appellant's Section 17 statement in reply by 22^nd October 2006. The appellant's then solicitors filed an affidavit on 23^rd October 2006 and on the same day the prosecution served their Section 16 statement. The appellant did not file a Section 17 statement despite the granting of extensions of time within which to do so.

The Confiscation Proceedings

12. The confiscation proceedings commenced on 4^th March 2008 and the judge heard evidence over a period of some eight days. The prosecution relied on a schedule which set out the value of and VAT payable on motor vehicles dealt with by the appellant in pursuance of the conspiracy, details of which had been obtained from documentation recovered from various locations connected with the appellant. In addition, some vehicles were still in the appellant's possession. A further schedule set out details of lodgements into six bank accounts which were either in the name of the appellant or were known to have been used by him in furtherance of the conspiracy.
13. The appellant gave evidence at the confiscation hearing over a period of two days. The judge was, therefore, well placed to be able to form a view of the appellant's truthfulness and the extent to which he had been frank with the court. The judge did form a view of the appellant and expressed that view in trenchant terms in his ruling which he gave on 18^th April 2008. He noted that the appellant admitted that all the vehicles referred to by the prosecution had "passed through his hands" when he was engaged in the buying and selling of them but that the appellant maintained that he received only a commission of between £500 and £100 per vehicle from others on whose behalf he acted as a commission agent. The appellant said that he had not acted dishonestly in relation to the motor vehicles despite his guilty pleas and the fact that prior to sentence he had written a letter to the judge stating that he had taken a leading role in the conspiracy and expressing his regret for committing the offences.
14. The judge rejected the appellant's account and concluded that "he was the driving force, organiser, architect and brain behind this conspiracy … that he run it for the purposes of making vast profit". He also found that the appellant was "a manipulative, deceitful person who cannot distinguish fact from fiction and will lie to anyone at any time if he perceives that it is to his advantage and that it will suit his own ends". The judge rejected the appellant's evidence which amounted "to a bare denial that he has any realisable assets" and found that he had not produced any credible evidence to show that he no longer retained any proceeds of his criminal activities and that the appellant refused "to disclose the extent of his assets or their whereabouts and that his possession of designer labelled items and his ownership of high value fast motor cars … simply serves to illustrate his opulent lifestyle and the wealth that he exudes but failed to disclose".
15. In his ruling the judge set out a number of examples of the appellant's dishonesty. It is not necessary to refer to them at length in this judgment; examples will suffice. In May 2004 and June 2005 the appellant had lied to probation officers tasked with preparing pre-sentence reports upon him when he told them that he was the father of a young child. On 9^th June 2006 when the appellant was sentenced for the instant offences he sought to deceive the judge when he caused his counsel to tell the court that he was the father of a child. In truth, the appellant had no children and the purpose of the lie was to mislead the court into taking the appellant's separation from the child into account in mitigation. Moreover, the appellant had acquired assets in false names. This was true of the appellant's home, Eskdale Cottage, and the judge also found that the false name used on that occasion was one of a number of aliases used by the appellant. He rejected the appellant's evidence that he was a mere tenant of that property and that he paid rent for his occupation of it to Neil Moore.
16. The judge summarised his assessment of the appellant's truthfulness as follows:

"Further, I regret to say that in my judgment the defendant is the sort of man who cannot lie straight in bed at night. Indeed, in my judgment, he would not recognise the truth if it stood up and bit him."

17. The judge found, in accordance with Section 75(2) of the Act, that the appellant had a criminal lifestyle and accordingly the assumptions in Section 10 of the Act applied subject to the proviso in Section 10(6) that the court should not make a required assumption in relation to particular property or expenditure if either the assumption is shown to be incorrect or there would be a serious risk of injustice if the assumption were made. The judge went on accurately to set out the law which he had to apply when determining the appellant's benefit from his general criminal conduct and the recoverable amount.
18. The main elements of benefit identified by the judge were as follows:

Value of motor vehicles subject of the indictment and the VAT evaded - £2,873,658.61p

Value of other motor vehicles transferred to the appellant and the VAT evaded - £5,186,396.21p

Credits into known bank accounts - £1,968,845

Other vehicles seized - £299,147.78p

Eskdale Cottage - £175,000

Jewellery seized - £12,700

Watch seized - £36,000

Three further vehicles seized - £150,000

19. In deciding upon the recoverable amount the judge firstly identified realisable assets in the appellant's possession worth £446,747.62p. Those assets included motor vehicles, his half share in Eskdale Cottage, jewellery, a watch and other items recovered from Eskdale Cottage. The judge, having found that the appellant had not provided any credible evidence as to what his realisable assets were, stated that it was for the appellant to show why the confiscation order should not be made in the sum of the determined benefit. The judge declared himself satisfied that the appellant had appreciable and significant hidden assets and that he had provided the court no assistance whatsoever in identifying them. However, the judge said that he would stand back and take a broad view to try to assess justly the value of the property which the appellant had failed to disclose. He put that value at £6.5 mil and made the confiscation order to which we have already referred.

The Grant of Leave to Appeal

20. Following refusal by the single judge, the appellant successfully renewed his application for leave to appeal against the confiscation order to the full court. On 29^th November 2010, Kenneth Parker J giving the judgment of the court said:

"4. On this application a number of grounds are put forward. The principle ground, however, is that the judge adopted the wrong approach in principle by evaluating the benefit from the criminal conduct on the basis of the gross value of the vehicles imported instead of the VAT that was lost. Counsel for the applicant has referred to authorities where it is plain that the benefit has, contrary to this case, been calculated on the amount of tax, whether that is direct or indirect tax, that has been lost to the Revenue rather than the value upon which the tax has been calculated or in respect of direct taxation the amount, say, of the trade as turnover.

5. It seems to us that in the light of those authorities the point is at least arguable. We do draw, however, specific attention to the language of the Proceeds of Crime Act which is broad in that it refers to property obtained by a relevant person in connection with the commission of the offence. Plainly on a broad view it could certainly be argued that the property obtained is indeed the property in the vehicles and therefore the correct valuation would be the value of the vehicle rather than the tax loss. However, it does seem to us particularly in the light of other cases and the policy adopted by prosecuting authorities in other cases, that the point that has been identified as the principle point is an arguable one."

The Competing Submissions

21. Mr Marsh-Finch who appeared on behalf of the appellant before us as he did before the full court on the renewed application for leave (but not at the Crown Court hearing) conceded that the applicant has a criminal lifestyle and that the court must make the assumptions set out in Section 10 of the 2002 Act subject to the proviso contained in Section 10(6). Further, he does not take issue with the prosecution's assertion that the relevant period for the purposes of the court's inquiry commenced on 29^th January 1999.
22. In a document entitled "Revised Skeleton Argument" dated 13^th January 2011 (i.e. revised following the granting of leave to appeal by the full court) Mr Marsh-Finch sought to argue that the judge's assessment of benefit in this case was flawed and unfair; flawed because the judge, prosecuting counsel and defence counsel gave the phrase "any property transferred to the defendant" in Section 10(2) of the Act, too wide a meaning and included in the calculation of benefit property which "passed through the defendant's hands or his business in any capacity whatsoever"; and unfair because some of the judge's comments during the hearing would "indicate to a reasonable onlooker that the appellant was not receiving a fair hearing because of the court's annoyance at having been misled in relation to the appellant's personal circumstances at the time of sentencing. It is not suggested that the judge was actually intentionally biased but subconsciously he may not have given the appellant a sufficiently fair hearing to accord with the standards applicable in English criminal law…" At one point in the written submissions it appeared that the appellant wished this court to reconsider the basis of the appellant's involvement in this offending as determined by the judge and upon which the judge made clear findings of fact.
23. In support of the submission that the approach to the determination of benefit taken by all involved in the Crown Court confiscation hearing was flawed, the transcript of that hearing has been trawled and a number of comments made by counsel and the judge highlighted. We are far from satisfied that the full court gave leave to argue this proposed ground of appeal and although Mr Marsh-Finch referred to these matters in his oral submissions before us, he did so only in general terms. In any event, having read the judge's long and careful ruling we are satisfied that there was no error of law in the approach taken by the judge and counsel to the identification of property transferred to the appellant, that there is no evidence of unfairness in the way the judge dealt with these matters or in his assessment of the appellant's truthfulness and that the judge's conclusion as to the role played by the appellant in this offending was entirely justified on the evidence before him and is unassailable in this court.
24. Mr Marsh-Finch's main submission in argument before us was put somewhat differently from the ground upon which leave was granted. In essence, it is a double accounting argument. The argument runs, by way of example, that if a car is purchased for £40,000, an application of the Section 10 assumptions would result in the £40,000 payment and the car itself, where it is transferred to the appellant, being treated as benefit and when the car is sold on, the sale price of the car (£40,000 plus any profit achieved on sale) together with the VAT payable on registration of that vehicle would also form part of the benefit. This approach would unjustly inflate the benefit obtained from each transaction. Moreover, it is argued that the figure of £1.9 million benefit identified as payments into the bank accounts in the name of or used by the appellant does not support the level of activity or number of transactions relied upon by the Crown. Furthermore, it is submitted that the £1.9 million should not be considered to be an additional element of benefit as money has been counted in and out of the accounts and the sums are already part of the purchase and sale of the vehicles referred to above.
25. Mr Marsh-Finch's final submission relates to what were referred to during submissions as "hidden assets". It is not a submission previously made in the documents submitted to the court and is, therefore, not a ground on which leave was sought or given. In short, it is argued that the judge arrived at a recoverable amount which is wrong and unfair. The investigation of the appellant's affairs, it is said, was very thorough. Assets to the value of only a little under £½ million were identified and to make a finding that "hidden assets" exist based on a comparison between benefit and identified assets is unjust.
26. Mr Evans, for the respondents, submits that those responsible for the prosecution of this appellant and the investigation into his affairs were very aware of the dangers of double accounting when assessing benefit arising from transactions relating to the motor vehicles. Initially the benefit figure arrived at by a strict application of the Section 10 assumptions was in the region of £64 million. This was recognised as unjust and the figures ultimately relied upon by the prosecution and accepted by the judge included only the value of the vehicle transferred to the appellant and the VAT relating to it. As to the bank accounts, in order to avoid complexity and to adopt a pragmatic approach given the potential scale of the benefit figure in this case, the prosecution ignored all transactions under £5,000. Moreover, the prosecution relied only upon lodgements into known bank accounts of the appellant. There was evidence of false names being used by the appellant to acquire assets and of bank accounts held abroad. For example, there was evidence of a bank account held in the Isle of Man out of which £¼ million had been transferred. As to the recoverable amount Mr Evans reminded the court that the judge had heard evidence on these matters, rejected the evidence given by the appellant and found that there was significant evidence of the appellant dealing with assets in different names. At the Crown Court the prosecution had invited the judge not to treat the final benefit figure as the recoverable amount but to take a pragmatic approach based on an assessment of the evidence and the justice of the case. In the event, the judge took a figure for the recoverable amount of approximately two thirds of the benefit figure. The judge's approach, he submitted, was not unjust.

Conclusion

27. Having considered the submissions of Mr Marsh-Finch, we were satisfied that neither the approach of the judge nor the conclusion he reached was susceptible to proper criticism and we dismissed this appeal.