England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM Birmingham Crown Court
Recorder Bright
Insert Lower Court NC Number Here

		Royal Courts of Justice Strand, London, WC2A 2LL
		22/03/2013

Mr Justice Cranston:

Introduction

1. The appellant, Shaukat Mahmood, pleaded guilty on 20 September 2010 in the Crown Court at Birmingham to an offence of conspiring fraudulently to evade the prohibition on the importation of heroin. That was on the first day of the trial. On the same day Mr Recorder Bright sentenced him to 11 years 6 months imprisonment with 278 days spent on remand to count towards that sentence. Then on 5 July 2011 Mr Recorder Bright imposed a Confiscation Order for £240,917.61, to be paid by 5 August 2011 or, in default, to serve 2 years imprisonment. This appeal is against that confiscation order. The hearing of the appeal was adjourned until today so that further submissions could be made on the implications for the appellant's case of R v Waya [2012] UKSC 51; [2012] 3 WLR 1188.

Background

2. The background is this. There was a conspiracy to import heroin. The drugs were smuggled in a consignment of rugs sent from Kabul to a Mr Cullen, care of Cobden House in Leicester. Mr Cullen knew nothing about the importation. The consignment arrived at Birmingham Airport on 23rd January 2008 and was held there by the carriers, FedEx. From 24th January FedEx received a series of telephone calls, purporting to be from Mr Cullen but in fact from Asif Khan, a long time friend of the appellant. The calls were about the progress of the consignment and the payment of import duties and tax. The appellant's brother, Mohammed Fraisal Dad, another conspirator, arranged for payment of the taxes and duty to be made by another man, Mohammed Ibrar. From the 25th January 2008 there were over one hundred telephone calls from a mobile telephone, with its number ending with 252, used by appellant, to other members of the conspiracy such as Dad, Khan and the appellant's brother-in-law, Ismail Makda. Dad and Khan were based in Birmingham, Makda and the appellant in Leicester.
3. Customs officers discovered 16.7 kilograms of heroin at 75 per cent purity, secreted within the weave of the rugs. The officers arranged for a controlled delivery to take place, using an undercover officer posing as a FedEx driver. The drugs were removed and dummy packages inserted, along with a probe. On 30th January an undercover officer made the controlled delivery to Cobden House. Just prior to the delivery, Makda had been at Cobden House. Present in Cobden House at the time of the delivery were Khan, the appellant, and another member of the conspiracy, Soyab Hansdot. The dummy consignment was then loaded into the back of a Toyota, which Khan drove away. The appellant followed the Toyota in a black taxi for a while and then turned back. When the Toyota reached Croft Drive Khan abandoned it, believing he was under surveillance. The Toyota was left there for several hours before it was picked up on a low loader and transported to a road in Birmingham. The car was abandoned in Birmingham when the conspirators realised that their plot had been discovered. The 252 number was very active during this period.
4. The appellant went to ground for some 2 years. During that period other members of the conspiracy were apprehended and proceedings taken against them. On 25 June 2009 HH Judge Carr sentenced 5 of them for conspiracy to import heroin. At the time the current Sentencing Council Guidelines for drugs offences were not in force. Dad pleaded guilty early and was sentenced to 10 years and 8 months imprisonment. Khan pleaded guilty to the same charge and was sentenced to 11 years imprisonment. Makda' guilty plea to the conspiracy charge was late, and he had previous drug offending. His sentence was 14 years and 5 months imprisonment. Hansdot's guilty plea to the charge resulted in sentence of 11 years. For each of these defendants - Dad, Khan, Makda and Hansdot – the judge took a 16 year starting point. Ibrar pleaded guilty to transferring criminal property and was given 8 month's imprisonment.
5. Khan and Hansdot both appealed to this court in March 2010, which reduced Khan's sentence to 10 years and 8 months imprisonment by giving him greater credit for his plea. Hansdot's appeal was dismissed: [2010] EWCA Crim 1008. In the course of the judgment this court approved the judge's characterization of the role of the conspirators before him: Dad was at the top, next came Khan and Makda, below them was Hansdot, and there then followed Ibrar. This court approved 16 years as the stating point across the board.

The appellant's sentencing

6. Ultimately this appellant was apprehended. He gave no comment interviews. As we have said, he was sentenced in September 2012 . He entered a basis of plea which stated that he supervised a premises manager at Cobden House in ensuring that the drugs were loaded into Asif Khan's vehicle but that he was not involved with arrangements for the onward delivery of the drugs. The prosecution relied on the appellant's use of mobile telephones, including the 252 phone, to show the appellant was involved in the attempt to recover the drugs after the vehicle was abandoned at Croft Drive. The appellant initially disputed that the 252 phone was used by him but he later conceded this.
7. The judge conducted a lengthy hearing to seek to characterise the appellant's role in the conspiracy without the need to conduct a Newton hearing. The prosecution's case was that on the facts the appellant played an organisational or supervisory role in the conspiracy. Suffice to say that eventually it was accepted by Mr Bartfeld, on the appellant's behalf, that the appellant was at the same level as Asif Khan in the conspiracy, although in a different role, a supervisory and significant role, in the collection of the drugs. However, Mr Bartfeld rejected the prosecution case that the appellant was in a leading role.
8. After an extensive discussion with both Mr Bartfeld and Mr Lucas QC for the prosecution, the judge sentenced the appellant on the basis that, although not an initiator of the conspiracy, he played a vital role in supervising others to ensure the successful delivery of the drugs. It was no coincidence in viewing the conspiracy, said the judge, that the appellant's brother, Dad, was "the central co-ordinator", and that his brother-in-law, Makda was another central figure. The appellant's role fell in between the leading role suggested by the prosecution and the limited but "important and significant" role submitted by Mr Bartfeld. The judge used two comparators and placed the appellant just above Asif Khan and below Makda. The judge then imposed the sentence we have described. In doing so he must have taken a starting point for sentence of some 12 years 9 months, given the discount for plea.
9. Prior to sentence the judge and counsel also had a discussion regarding whether the appellant had legal ownership of the drugs relevant to the confiscation proceedings which would follow. On the appellant's behalf Mr Bartfeld conceded that the appellant had custody and, in a limited sense, control of the drugs, although did not accept that he had legal ownership. However, in response to submissions by Mr Lucas QC for the prosecution the judge concluded that the appellant had legal ownership of them as being a co-conspirator. .
10. Early in 2011 the appellant applied for leave to appeal against sentence to this court. Its basis was that the judge had mischaracterised his role. The sentence, the grounds read, "overstates my minor role in the conspiracy and put me on a par with other conspirators tried separately who were far more involved, particularly Ismail Makda and Asif Khan". That application was refused by the single judge and has since lapsed.

The confiscation order

11. Confiscation proceedings were opened. The prosecution advanced its case on the basis that the appellant was an organiser of, and a principal in, the conspiracy, albeit that there were others with a more significant role than his. As to the issue of benefit the prosecution case was that the appellant had joint and several liability. It was a case in which the assumptions under section 10 of the Proceeds of Crime Act 2002 ("the 2002 Act") were applicable since it was a "criminal lifestyle" offence: see Schedule 2, paras 1(2)(c), 10(1). The court had therefore to apply the assumptions in the section unless any assumption could be shown to be incorrect or there would be a serious risk of injustice in making it.
12. The appellant's solicitor submitted a short response to the prosecution's case. "I accept the Crown's valuation of the drugs. I asset that all other assumptions are incorrect and ill founded. I assert that the benefit figure should reflect the valuation of the drugs only and that the valuation should be apportioned between defendants to reflect their respective roles. I did not have ownership of the drugs and therefore the benefit figure should be based on the sum I would have been paid for my limited role."
13. At the hearing the judge rejected a submission by Mr Bartfeld on the appellant's behalf that the appellant had only been acting as a custodian or courier of the drugs given Mr Bartfeld's earlier concession, before sentencing, that the appellant's role had been supervisory and significant. The judge heard evidence from the appellant. He concluded that he was neither reliable nor credible. In particular the judge rejected the appellant's evidence that he had been doing causal jobs, when the appellant could not explain when and with whom he did them, apart from vague references to family members. The judge said that the appellant must have had hidden assets.
14. The judge then ruled that the appellant's benefit was £240,917.61. That was made up of the value of the heroin seized (£217,100), the expenditure incurred during the course of the conspiracy (£3,756.01) and the subsistence over the six years that the appellant conceded he had been living a criminal lifestyle (£20,061.60). The expenditure figure included the cost of the rugs, import duty (there was evidence that Dad paid that) and vehicle hire. There was no evidence as to source of these moneys. The judge said that the appellant played a leading role in the conspiracy. Those who joined an illegal conspiracy and played a leading role could not be heard to complain when they were held to account for moneys expended with the intention of promoting and giving effect to it. The judge referred to the assumption in section 10(4) of the 2002 Act. He continued that the appellant had failed to reveal any assets. His evidence was disbelieved. He had produced nothing in the way of hard facts or documentation to support any legitimate earnings and no witnesses. It was fair to assume that the appellant had been supporting himself and his family on the proceeds of crime and thus, as we have described, calculated expenditure at a subsistence level for the previous 6 years.
15. As to the recoverable amount the judge held that it was the same sum as the benefit, the appellant having failed to discharge the burden of proving that the value of his assets was less then the benefit figure. The court had no idea of the appellant's true worth "because he has not been and is not being forthcoming". The judge cited R v Whittington [2009] EWCA Crim 1641.

The appeal

16. The appellant applied for leave to appeal the confiscation order. The first ground was that the judge erred in law and principle in applying (i) the value of the heroin seized and (ii) the expenses incurred by the co-conspirators in calculating the appellant's benefit. The single judge gave leave in relation to this ground. There is some ambiguity as to whether he granted leave in respect of all of this ground or whether leave was limited to the expenditure point only. In fairness to the appellant we will assume that leave was given generally. The second ground was that the judge erred in ruling that he had no choice but to make a confiscation order for the sum of the benefit, having rejected the appellant's account of his current assets. The single judge refused leave on this ground but the application is renewed before us.

(i) Judge erred in applying value of drugs seized and expenses incurred by co-conspirators in calculating appellant's benefit

17. As to this first ground, Mr Bartfeld made a number of points. First, he submitted, the judge had been wrong to assume that for the purposes of the assessment of benefit the appellant had ownership of the full value of the heroin seized. That did not follow simply because the appellant had played an "important and significant role" in the conspiracy. In his submission one can have an important role within a conspiracy without obtaining the property for the purposes of assessing benefit and having attributed to one the costs incurred by the conspirators in effecting it. As Mr Bartfield put it, the appellant could not be said to have had the power to control or materially affect the disposition of the drugs, nor was he in a position where he could expect a substantial return from its proceeds. His role, while important and significant, was not a leading one. To hold otherwise would be to sanction a confiscation order which was wholly disproportionate under the principles discussed in Waya. While a person who has power over the distribution of the proceeds may legitimately be taken to have the benefit of the whole amount, that cannot be said for those lower in the conspiracy, who cannot expect a benefit greater than what those in charge of the conspiracy will reward them. Those like the appellant who simply supervise the reception of drugs being imported into the country do not have a leading role.
18. In advancing this submission Mr Bartfeld referred to the appellant's sentence, a starting point of 12 years 9 month, clearly less than the other co-conspirators, with their starting points each of 16 years. Accordingly the judge erred in taking the value of the heroin as part of the benefit figure. As for the expenditure figure, none of these items were incurred by the appellant, each being attributable to a co-conspirator.
19. In our view it is clear law that with a conspiracy each member can be regarded as jointly obtaining the whole benefit of the property the subject matter of the conspiracy. Thus each can be required to pay its full value: Waya, [26]. However, that does not follow automatically by any means. There is the oft cited passage in R v May [2008] UKHL 28; [2008] 1 AC 1028, where the House of Lords recognised that mere couriers or custodians, and other minor contributors to a conspiracy, rewarded by specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained the property: [48]. Indeed, the authorities establish that a person may play a more important role in a conspiracy than those identified in that passage in May without obtaining property for the purposes of the calculation of benefit: e. g., R v Sivaraman [2008] EWCA Crim 1736; [2009] 1 Cr App R(S) 80; R v Allpress [2009] EWCA; [2009] 2 Cr App R(S) 58, [31]; R v Clark and Severn [2011] EWCA Crim 15, [30].
20. Conversely, a person does not have to be at the top of a conspiracy for the benefit figure to reflect the full value of the property the subject matter of the conspiracy. As the court held in Allpress, what matters is the capacity in which a member of a conspiracy receives the property, whether for his own personal benefit or on behalf of others, or jointly on behalf of himself and others: [30]-[31]. What is necessary is a careful examination of the evidence. The issue is not resolved by attaching a label to the person's position in the conspiracy, although the role a person plays may assist in evaluating such evidence as is available.
21. On the evidence available to him, we have no doubt that the judge was entitled to make his finding about the appellant's role and that he had ownership of the drugs, jointly with Dad, Makda and Khan. It was neither unjust nor disproportionate to draw that conclusion and nothing in Waya suggests otherwise. (We note that in their response to the prosecution case the appellant's solicitors conceded that the benefit figure should reflect the valuation of the drugs, apportioned between the co-conspirators.) In sentencing the appellant, as will be recalled, the judge placed him just below Makda, his brother in law and above his close friend, Asif Khan. Dad, his brother, was at the top of the conspiracy and Makda just below that. The judge concluded that the appellant's role fell in between the leading role suggested by the prosecution and the important role submitted by Mr Bartfeld. The appellant was sentenced on that basis, and the judge's approach in the confiscation proceedings was consistent with it.
22. In our view, the judge was entitled to take into account the realities of the familial and social relationships between the different players in the conspiracy, to which we have just referred, and that the appellant was at the hub. The judge could also take into account the realities of the operation: the drugs were to arrive in Leicester, where the appellant and Makda were located, and were then to be forwarded to Birmingham, where Dad was located. The appellant was to perform a vital role in supervising the first part of the operation, the arrival and onward transmission of the drugs to Birmingham.
23. The point about the appellant's sentence goes nowhere. The judge made clear the basis on which the appellant was to be treated prior to his plea of guilty, then at his subsequent sentencing and again at the confiscation hearing. That the judge might have adopted a different starting point for the appellant compared with what HH Judge Carr had adopted for the other leading conspirators cannot detract from this judge's express finding about the appellant's role. As we have said, because the appellant went on the run he was not sentenced at the same time or by the same judge as the other conspirators.
24. As to the issue of the expenditure incurred during the conspiracy, the judge had to be satisfied at the outset of his inquiry that the appellant had incurred it. As we have said he invoked the joint and several liability of the appellant with the other conspirators, as well as the assumption in section 10(4) of the Act. That assumption is that, with lifestyle offending such as this, any of the appellant's expenditure after the relevant date was met from property obtained by him as a result of his general criminal conduct. Before us, Ms Bewsey QC supported that approach.
25. In our respectful view, the judge fell into error on this issue. In theory, subject to any issue of illegality and to any internal agreement to the contrary, a contract entered by one member of a conspiracy would bind all members if made within that member's authority, and all members could sue on it or be sued. If a third party successfully sued one member, he could claim a contribution from the others. So in this conspiracy the member incurring expenses in effecting it (purchasing the carpets, paying the import duty, hiring the vehicles) could seek reimbursement from the other conspirators.
26. But that joint liability of members of a conspiracy does not assist in identifying which member of it may have incurred expenditure in the course of its operation. Nor does the statutory assumption in section 10(4) help. It is an assumption about the source of expenditure, once it has been established that a defendant incurred it. What is required is evidence about the identity of the particular member of the conspiracy who actually incurred the expenditure. The section 10(4) assumption does not mean that, unless he can prove otherwise, each conspirator is treated as having incurred all of the expenditure. It may be that in the circumstances of a particular case the court can draw inferences that a particular member of the conspiracy met an expense of its operation. In other, and perhaps many cases, the natural inference will be that the conspirators will have contributed equally to such expenses. But without a finding that the defendant in question spent something, the section 10(4) assumption is not triggered . In this case, there was no finding about the appellant's expenditure on the carpet, import duty or vehicle hire. Without a conclusion on that point it was wrong to attribute these expenses to the appellant.
27. We note in passing that the benefit obtained by the appellant is not in any way undone by the subsequent seizure of the drugs. There is no issue of double recovery since once the drugs were seized by the police they were destined for destruction and thus of no value: see Waya at [33].

(ii) Judge erred in ruling that he had no choice to make a confiscation order in sum of the benefit, having rejected appellant's account of his current assets

28. In relation to the second ground Mr Bartfeld submits that the judge wrong in principle. He invokes R v McIntosh & Marsden [2011] EWCA Crim 1501; [2012] 1 Cr App R (S) 60 (endorsed in R v Ahmad [2012] EWCA Crim 391; [2012] 1 WLR 2335), which establishes that there is no principle that a court is bound to reject a defendant's case, that his current realisable assets are less than the full amount of the benefit, merely because it concludes that he has not revealed their true extent or value or has not participated in any revelation at all: [15], [27]. In Mr Bartfeld's submission, the effect of this is that, where a court has rejected a defendant's account of the extent of his assets, it must go on to make an assessment of the extent of those assets from the evidence available before its sets the recoverable amount.
29. Mr Bartfeld submitted that the appellant had, albeit contrary to his account of his employment history, given a consistent account in the confiscation documentation and in evidence of having no assets. Further, there was material outside his evidence to suggest that he did not have funds in any way close to the extent of the £240,917.61 ordered to be paid. No significant sums of money or items of value were found upon him at the time of his arrest. At that point he was living in a rented council flat with his wife and child. Extensive enquiries by the confiscation unit of the Serious Organized Crime Agency had not revealed any assets. Moreover, on 15 June 2007 the appellant had been made the subject of a confiscation order for a money laundering offence relating to his dealings with a motor car valued at £7000, and the court at that time assess his means as nil and made a nominal order in the sum of £1. Finally, during the course of the proceedings, his wife was prosecuted for shoplifting, which was indicative of the family's lack of means.
30. In Mr Bartfeld's submission the judge's findings were inconsistent. He rejected the appellant's evidence of having held down casual jobs over the previous 6 years, and made a finding for the purposes of calculating benefit that he had an illegitimate income of £3343.60 per year (basic subsistence) over the statutory 6 year period. That finding was plainly inconsistent with the assumption that appellant had the funds to pay a confiscation order of this magnitude. Mr Bartfeld submitted that it is plain that the appellant did not have the means to pay the order made. The proportionate approach was for the judge to make an order in a nominal amount. If later investigations proved this to be an under-value, the prosecution could have made an application under section 22 of the 2003 Act. A dishonest defendant always faced the prospect of a prosecution for perjury or perverting the course of justice.
31. The burden of showing the available amount is less than the benefit figure rests on the defendant and he discharges the burden on him on a balance of probabilities. Shifting the burden onto a defendant means that he is at risk if he fails to give an account: R v Whittington, [2007] EWCA Civ 1641; [2010] 1 Cr App R(S) 83, [40]. In this case the appellant steadfastly refused to engage in the confiscation process. There was the bare assertion in his solicitor's response that he had no assets. When the prosecution indicated that the response was wholly inadequate, the appellant took no steps to correct the position. He gave evidence at the confiscation hearing. As we have said, the judge rejected his evidence, indeed rejected it in robust terms. It is clear that the judge found that the appellant failed to discharge the burden placed on him by section 7(2) the Act. That result is neither unjust nor disproportionate. We accept that in principle the court may conclude that a defendant's realisable assets are less than the full value of the benefit on the basis of other evidence or the facts of the case as a whole. But as Moses LJ pointed out in R v McIntosh & Marsden, a defendant "who is found not to have told the truth or who has declined to give truthful disclosure will inevitably find it difficult to discharge the burden imposed upon him": [15]. That is precisely what happened here.

Conclusion

32. We allow the appeal to the extent of reducing the appellant's benefit, and hence the recoverable amount, by the £3756.01 figure for expenses. In all other respects the judge's order for this appellant remains.