ON APPEAL FROM THE CROWN COURT
Strand, London, WC2A 2LL
B e f o r e :
Mr JUSTICE FOSKETT
Mr JUSTICE HICKINBOTTOM
| Regina (Virgin Media Ltd)
|- and -
|Munaf Ahmed Zinga
David Groome and Ari Alibhai (instructed by Wiggin LLP) for Virgin Media Limited as private prosecutor
Matthew Butt for the Commissioner of Police for the Metropolis
Kennedy Talbot for the Director of Public Prosecutions
Hearing dates: 15 May 2013 and 15 October 2013
Crown Copyright ©
The Lord Chief Justice of England and Wales:
Introduction and factual background
1. The ability of a private prosecutor to bring confiscation proceedings
(a) The power to bring private prosecutions
"Prosecutions instituted and conducted otherwise than by the Service
(1) Subject to subsection (2) below, nothing in this Part shall preclude any person from instituting any criminal proceedings or conducting any criminal proceedings to which the Director's duty to take over the conduct of proceedings does not apply.
(2) Where criminal proceedings are instituted in circumstances in which the Director is not under a duty to take over their conduct, he may nevertheless do so at any stage."
(b) The scope of criminal proceedings within s.6 of the Prosecution of Offences Act 1985
(b) The meaning of prosecutor in POCA
If the first condition is satisfied—
(b) references in this Part to the prosecutor are to the person the court believes is to have conduct of any proceedings for the offence;
i) The history of the legislation was set out by Lord Bingham in R v May  1 AC 1028 at paragraphs 8 and following. He introduced this by stating:
"The series began with the Drug Trafficking Offences Act 1986, and there followed (among the more important statutes) the Criminal Justice Act 1988, the Criminal Justice (International Co-operation) Act 1990, the Criminal Justice Act 1993, the Drug Trafficking Act 1994, the Proceeds of Crime Act 1995 and the Proceeds of Crime Act 2002. In these statutes the original confiscation regime established by the 1986 Act was modified, extended, elaborated and tightened,….. But despite much refinement and differences between the 1986 and 1994 Acts on the one hand and the 1988, 1993 and 1995 Acts on the other, the essential structure of the 1986 regime has been retained."
ii) The role of the prosecutor in confiscation proceedings was set out in s.3 of the Drug Trafficking (Offences) Act 1986. The term prosecutor was defined in s.7(3)(b) of that Act only for specific purposes. S.72 of the Criminal Justice Act, which made provision for confiscation in non-drugs cases, set out the role of the prosecutor in slightly different terms, but contained in s.76(3) a similar definition of prosecutor for the same specific purposes.
iii) The language of the provision in s.6 of POCA was introduced by the Drug Trafficking Act 1994 (in language closely following the amendment to the Drug Trafficking (Offences) Act 1986 effected by the Criminal Justice Act 1993):
"2(1) Subject to subsection (7) below, where a defendant appears before the Crown Court to be sentenced in respect of one or more drug trafficking offences …, then—
(a) if the prosecutor asks the court to proceed under this section, or
(b) if the court considers that, even though the prosecutor has not asked it to do so, it is appropriate for it to proceed under this section,
it shall act as follows"
iv) The language of the scheme for non-drugs offences established by the Criminal Justice Act 1988 was similarly amended by s.1 of the Proceeds of Crime Act 1995.
v) From that time onwards, the legislative scheme ensured that the prosecutor played a central role – it either initiated confiscation proceedings or acted on the direction of the court.
(c) Compensation for an improper investigation
(d) The powers to investigate etc
(e) The draconian nature of the confiscation regime and the need for proportionality
"The Crown's power, under s. 6(3)(a) of POCA, to ask the court to make a confiscation order is one with far-reaching consequences and care should be taken to exercise it on sound principles. S. 6 of HRA imposes on prosecutors the duty not to act in a manner incompatible with Convention rights, so that the Crown has an important preliminary function in ensuring that a disproportionate order is not sought. But the safeguard of the defendant's Convention right under A1P1 not to be the object of a disproportionate order does not, and must not, depend on prosecutorial discretion, nor on the very limited jurisdiction of the High Court to review the exercise of such discretion by way of judicial review. The latter would moreover lead to undesirable satellite litigation. Mr Perry and Lord Pannick were correct to identify the repository of the control in the person of the Crown Court judge, subject to the reviewing jurisdiction of the Court of Appeal, Criminal Division, on appeal by either party."
(f) Conclusion on construction
(g) Parliamentary material
The noble and learned Lord spoke about the prosecutor as though it would always be the Crown Prosecution Service which would ask for an order. It may be unlikely in relation to the offences to which we are referring but there is always the possibility of a private prosecution and a private prosecutor may be singularly unreasonable in what he may ask for in relation to a victim. I do not ask for an answer now, but will the noble and learned Lord consider before the next stage whether it might be appropriate to give the court a residual discretion, limited to exceptional circumstances, to decide not to proceed even if the prosecutor or the director has asked it to do so?
… the Director of Public Prosecutions has the ability to take over proceedings started by a private prosecutor. So where a private prosecutor is thought to be abusing whatever power he may have, whether bringing a prosecution or taking a particular step in the process, there is always the remedy that the director (and therefore the Crown Prosecution Service) can step in and exercise his judgment in relation to the case..."
2. The propriety of the agreement with the Metropolitan Police Authority
(a) The facts
"We do not understand why it was felt acceptable, during an ex parte application with its duty of full disclosure, to keep from the Bench that a private prosecution was expected. We would wish to emphasise that the obligation on an applicant for a warrant is the same as that imposed on any person making a "without notice" application to a court, namely one of "full and frank disclosure". That is what Hughes LJ was saying in R v Stanford. The obligation is not necessarily fulfilled merely by an information demonstrating that the bare statutory minima for the grant of the warrant are met. The disclosure must be as "full and frank" as the circumstances of each case requires.
The Bench, once informed, might have probed the reason for the CPS not bringing the case. It might have taken an interest in why the [Metropolitan Police Service] thought it appropriate to lend assistance to a large commercial entity in this fashion at this stage. There was, after all, oral evidence before it from a senior representative of [Virgin], the company which would bring the prosecution, and yet he stopped short of explaining an uncomplicated and we suggest an uncontroversial fact. We struggle to see what was the advantage – to anyone – of silence. If nothing else it would seem a natural progression from explanation of [Virgin]'s legitimate sense of grievance to explanation that [Virgin] would have conduct of the case. What harm would it have done? None, so far as we can tell. It would not have been surprising had the warrants in any event been granted after full and frank disclosure, especially as we agree with the Respondent that mala fides is not made out."
"the unconditional offer of cash donations of 25% of any money returned to Virgin under a Compensation Order following successful asset recovery work…"
"The prosecution now accept that the police were acting ultra vires their powers when they accepted financial contributions towards the expense of the investigation from three insurance companies. In our judgment, soliciting by the police of funds from potential victims of fraud, or any other crime, quite apart from being ultra vires police powers, is a practice which is fraught with danger. It may compromise the essential independence and objectivity of the police when carrying out a criminal investigation. It might lead to police officers being selective as to which crimes to investigate and which not to investigate. It might lead to victims persuading a police investigating team to act partially. It might also lead to investigating officers carrying out a more thorough preparation of the evidence in a case of a "paying" victim; or a less careful preparation of the evidence in the case of a non-contributing victim. In short, it is a practice which, in our judgment, would soon lead to a loss of confidence in a police force's ability to investigate crime objectively and impartially.
It has been unnecessary, in this case, to consider whether the police authority could sanction such activities pursuant to its powers under section 93 of the 1996 Act (the power to accept gifts and loans). Even assuming it does have such powers, we find it difficult to conceive of a situation where it would be sensible to exercise those powers in connection with criminal investigations."
(b) The submissions of the appellant
(c) The justification advanced by Virgin and the Commissioner
i) In 2004, the Home Office introduced a scheme known as ARIS, the purpose of which, as the Parliamentary Under Secretary of State explained:
"is to encourage an increase in the volume and value of asset recovery activity, in particular by supporting innovation in tackling criminality and by enabling partners to fund an expansion of financial investigation."
ii) In R v Innospec ( Crim LR 665,  EW Misc 7 (EWCC),  Lloyd's Rep FC 462 the scheme as it operated in relation to proceedings where the prosecutor was the Serious Fraud Office was described in the following terms:
"Under what is somewhat surprisingly called an "incentive scheme", the proceeds obtained from a confiscation order are, once collected by the Ministry of Justice, distributed to the Home Office in accordance with an agreed protocol with HM Treasury. That confiscation income is then distributed by the Home Office who retain 50% passing 18.75% to the prosecuting authority and 18.75% to the investigating authority and 12.5% to Her Majesty's Court Service. As the Serious Fraud Office is both the investigating and prosecuting authority, 37.5% of the confiscation amount in this case would go to the SFO, it would form part of the income of the Office. In those circumstances, although in general this would not affect the duty of a prosecutor to initiate confiscation proceedings, there would be a clear conflict of interest, if a prosecutor were to give notice requiring a court to proceed to confiscation rather than a fine, as fines are paid to and retained by HM Treasury. No independent prosecutor, exercising the quasi-judicial function in determining whether to issue a notice, could properly issue one in such circumstances. The position of the court administration is quite different; for example, no benefit to the court administration is in fact provided by this scheme, as the income of Her Majesty's Court Service is guaranteed by the Ministry of Justice, irrespective of the amounts paid to it under the so called "incentive scheme"".
iii) The agreement was made as Virgin wanted to put the Metropolitan Police in a position similar to that in which they would have been placed if a confiscation order alone had been made. Under a confiscation order the police would receive the share under the Home Office's incentive scheme. The agreement of 28 November 2008 would have had the same effect if a compensation order had been made. It was therefore justifiable.
iv) The agreement avoided the dangers pointed out by Gage LJ in Hounsham as it neither compromised the independence of the police nor led to the police conducting a more thorough investigation than it would in any other case where it did not receive a similar donation. It was not sought by the police. The investigation was not funded by Virgin. If Virgin had not offered the donation, the investigation would have been made in exactly the same way. There would be no loss of confidence in the police in consequence.
(d) Our conclusion on police funding
3. The safeguards required by the court in confiscation proceedings
(a) The growth in private prosecutions
"A successful private prosecution can result in a criminal conviction and custodial sentence for the offender, and compensation being awarded to the victim. It can also send a powerful deterrent message to those considering engaging in criminal activity against the victim"
(b) The cost to the state
(c) Conflicts of interest
"Traditionally Crown counsel owes a duty to the public and to the Court to ensure that the proceeding is fair and in the overall public interest. The duty transcends the duty owed to the person or body that has instituted the proceedings and which prosecutes the indictment."
There is no place in such a prosecution for what some have claimed as "end to end" case management on behalf of the client who has initiated a private prosecution.