England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		11 April 2014

1. MR JUSTICE COOKE: This is an application for an extension of time for leave to appeal, if necessary, and an application for permission to appeal against an order made by His Honour Judge Baker QC as long ago as 9th December 2011. It is the latest in a series of applications made by David Jones (the defendant) and his partner, Mandy Heron, (the third party) who pursues this application. All these applications have been made with the object of impeding the due enforcement of a confiscation order made by the same judge on 11th May 2007. In this judgment we refer only to the applications which have reference to that which we have to decide, noting that the number of other applications made beggars belief.
2. In his ruling of 11th May 2007, following a four day hearing at which the defendant was represented by leading and junior counsel, but at which the third party was not represented nor heard, whether as a witness or in any other way, the judge made a series of findings which were upheld by the Court of Appeal in a decision on 29th January 2009. The learned judge found that the premises at St Augustine Court which are the subject of the present application, although registered in the third party's name, had been bought with money provided by the defendant in one way or another. The price was, he found, £328,000 and the defendant provided funds for that purchase largely from a Swiss bank account, some £303,000. This was a form of bridging finance pending the completion of the sale of an earlier property bought by him for £205,000 also in the name of the third party, namely 21 Old Bellgate Wharf in Docklands. When completion occurred on that sale, the proceeds of sale, namely £240,000, were credited to the defendant's Swiss bank account. Effectively the purchase of St. Augustine Court was ultimately funded by those proceeds and the further sum of £88,000 directly supplied by the defendant and remaining from the sum produced by him.
3. The judge expressly found at paragraphs 39 to 63 of his judgment that he could properly assume, given the finding of a criminal lifestyle that he had made against the defendant, that the funds from which the expenditure was made for the purchase of St. Augustine Court (within the statutory six year period for assumptions to operate) were obtained as a result of the defendant's general criminal conduct because the defendant had admitted that all his wealth was the product of the Datacom businesses which had at their heart, as the judge found, the criminal design which led to their profitability. It did not matter that the £328,000 sum advanced by the defendant was partially repaid to the tune of £240,000 from the proceeds of Old Bellgate Wharf, since that house itself was bought entirely with funds which were the product of the defendant's business. All the money which went into the purchase of the St. Augustine property could therefore be seen as expenditure incurred by the defendant after the relevant day and met from property obtained by him as a result of his general criminal conduct.
4. Although the judge went on to find as a fact that not more than 15 per cent of the profits made from the Datacom businesses run by the defendant from 1987 onwards was legitimate, rather than the result of criminal activity, it was not in his judgment wrong to apply the assumption of section 10(4) of the Proceeds of Crime Act and there was no injustice in doing so. The burden was on the defendant to establish that any statutory assumption was incorrect and the only evidence called by the defendant consisted of his own testimony. That, said the judge consisted of bald unsupported assertions and the judge found him generally not to be a reliable or honest witness.
5. Since Old Bellgate Wharf was purchased in May 1998, albeit outside the six year statutory period, that was 11 years after the business began at the heart and core of which was the defendant's criminal activity. The finding that the proceeds of Bellgate Wharf was derived from his criminal activity, was therefore entirely justified in the context of applying the statutory assumptions to the purchase of St. Augustine.
6. The judge said this in relation to the 15 per cent finding:

"Should that finding lead me to disapply the statutory assumptions? I will consider them first in relation to Augustine Court. I am not persuaded that the assumption that the expenditure incurred by the defendant on the bridging loan was met from funds obtained by him as a result of his general criminal conduct has been shown to be incorrect. If at least 85 per cent of his business measured in terms of its financial yield was run criminally, and if the source of the bridging loan was, as I find it was, the fund which was created from the monies made by the business, then the loan was made from property obtained as a result of general criminal conduct. The fact that 15 per cent of the monies made by the business was legitimate is not sufficient to displace that assumption.

Nor would there be a serious risk of injustice in assuming that Augustine Court was purchased as a result of general criminal conduct. It cannot fairly be said that all that the defendant provided was a bridging loan and that the true source of the bulk of the funds used to buy Augustine court was the proceeds of sale of old Bellgate Wharf, and that the bridging loan was largely repaid when Old Bellgate was sold. After all, the funds used to buy Old Bellgate also came entirely from the profits of the defendant's business, and therefore the bulk of them too were obtained as a result of general criminal conduct. Again the fact that 15 per cent of the monies made by the business was legitimate does not displace that."

7. Moreover, even if the assumptions were not applied, the property obtained by the defendant as a result of his general criminal conduct during the period which started in 1987 and ended when the business closed in April 2006, would at the very least be 85 per cent of the £6 million plus benefit claimed by the assets recovery agency, as that agency only took into account deposits into business accounts from 2002 onwards. Deposits before that would have been used directly or indirectly in the purchase of Old Bellgate Wharf and other assets which were reflected in the overall benefit figure of £6.3 million (approximately). Earlier deposits deriving from criminal conduct and not otherwise accounted for would easily wipe out the 15 per cent or £950,000 in issue. In consequence, whether by applying the statutory assumptions or otherwise, the benefit figure was some £6.3 million approximately.
8. This ruling of His Honour Judge Baker of 11th May 2007 was upheld by the Court of Appeal on 29th January 2009, but without dealing expressly with the argument raised that the Judge's finding that 15 per cent of business profits were legitimate should have resulted in a discount in relation to the benefit obtained. This was because it was of no consequence in the context of the appeal as the available amount and the confiscation order made were in a figure of about £3.3 million less than the amount of the benefit determined. What the court did say expressly however at paragraphs 49 to 51 was that the judge had not determined the question of beneficial interest in Augustine Court because he did not seek to apply the assumption in section 10(3) relating to property held by a defendant, but instead dealt with the acquisition of St. Augustine Court on the basis that it involved expenditure by the defendant covered by the statutory assumption in section 10(4) as he clearly had.
9. At paragraph 51 of that Court of Appeal judgment, Keene LJ said this:

"We accept that the judge did make no finding as to who held the beneficial interest in this particular property but that was for good reason. The judge was not seeking to apply the assumption in section 10(3), which concerns property held by a defendant when one is coming to calculate the benefit obtained. As several paragraphs in the judgment show, the judge dealt with this on the basis that the acquisition of St. Augustine's Court involved expenditure by the appellant. That was the same basis upon which the [agency] had proceeded. That involves the assumption to be found in section 10(4), not section 10(3). The judge held that the expenditure of the loan made by the appellant in order that this property could be purchased derived from the appellant's business and as such the expenditure amounted to benefit. We can see nothing wrong in that particular finding."

On 13th March 2009 the defendant's application for leave to appeal from that decision to the House of Lords was refused. After a further renewal it was again refused on 24th June 2009. It seems that he then sought to apply to the European Court of Human Rights.

10. The third party, who applies today, was not bound by any of these findings which were made at the confiscation stage. With the benefit of witness statements dated 3rd December 2009 and 10th December 2009, however, she through counsel, along with the defendant, represented by a different counsel, made representations against the appointment of a receiver at the stage when the court was considering enforcing the confiscation order. The judge heard evidence from the third party at the hearing on 14th and 15th December. He issued his ruling on 17th December 2009 in which he made reference to paragraph 39 of his earlier confiscation ruling and referred to both the evidence of the defendant and the third party which he found to some extent were in conflict. He found the third party's evidence very vague and unsupported by any documents. He found that the reality was that the funds for Old Bellgate Wharf were produced entirely by the defendant and that the same applied to St. Augustine's Court with the Old Bellgate Wharf proceeds used to re-credit the defendant's account with the Swiss bank, which had been used to bridge between the completion of the purchase and the completion of the sale of the two respective properties.
11. Contrary to SOCA's submission (SOCA having taken over from the agency by this stage), the judge found at paragraph 7 that the transactions were as they appeared to be and were not simply sham transactions. There was, he found, a genuine gift by the defendant to the third party of the money used to purchase the two properties. He noted at paragraph 7 that any suggestion that there was consideration given by Miss Heron was not substantiated nor even pursued when she came to give evidence. The provision of the funds was, as he expressly found, a gift by the defendant. The judge went on to find that the gifts were tainted gifts within the meaning of section 77 of the Proceeds of Crime Act, being gifts of property obtained by the defendant "as a result of or in connection with his criminal conduct" or which "in whole or in part represented in the defendant's hands property obtained by him as a result of or in connection with his general criminal conduct."
12. No arguments about this had been addressed at the earlier hearing as such, which had only considered the section 10(4) assumption concerning expenditure, because it was unnecessary to go any further. The argument had not however, as has been subsequently found by the courts, been disclaimed whether then or at any other stage.
13. The judge made clear findings at paragraphs 9 through to 13 of his judgment of 17th December 2009. They were as follows:

"9) The third question is whether the transactions fall foul of the tainted gift provisions of POCA. As well as applying assumptions against the defendant I made specific findings relevant to this issue in the course of the confiscation hearing. Those that matter are 1) that all the defendant's wealth had as its ultimate source the profits of his business enterprise; 2) that it was more likely than not that he had run an essentially fraudulent business from the start in 1987 and 3) that the legitimate element of his business was unlikely to have exceeded 15 per cent. No evidence has been put forward by or on behalf of Miss Heron to displace those findings in any way. It follows that the bulk of the funds used to purchase both Old Bellgate and Augustine Court had as their ultimate source the dishonestly run business of the defendant.

10) Section 77(2) of POCA provides: 'A gift is tainted if it was made by the defendant at any time after the relevant day.' The Augustine Court purchase was made after the relevant day. The gift element of that transaction was the balance of the purchase price after the bridging loan was partially repaid, i.e. £328,000 less £240,000 which is £88,000. That gift was therefore tainted. Section 77(3) provides: 'A gift is also tainted if it was made by the defendant at any time and was of property a) which was obtained by the defendant as a result of or in connection with his general criminal conduct or b) which in whole or in part and whether directly or indirectly represented in a defendant's hands property obtained by him as a result of or in connection with his general criminal conduct'. This provision catches the purchase of Old Bellgate which took place before the relevant date. Old Bellgate was purchased with funds which derived from the defendant's unlawfully run business. It was both 'obtained by him as a result of his general criminal conduct' and more particularly it 'in part indirectly represented property obtained by him as a result of his general criminal conduct.'

My conclusion, therefore, is that Old Bellgate was a tainted gift represented by the purchase price derived from the defendant's unlawfully run business and that the balance of the purchase price of Augustine Court was similarly a tainted gift.

12) The value of the tainted gift. I am not in a position to rule on the current valuation of the gifts which I have identified. I observe that section 83 provides that realisable property includes 'any free property held by the recipient of a tainted gift', so that Augustine Court will in principle be available to meet the defendant's obligations if the third party is obliged to assist.

13) There remains, however, one other matter which has caused me some concern. If, as I have found, 15 per cent of the defendant's business was legitimate and the entirety of the purchase price of Old Bellgate House and a proportion of the purchase price of Augustine Court came from the profits of the defendant's business, does it not follow logically that 15 per cent of the funds provided by the defendant were not tainted by his illegal activity? While it may be fair for an offender whose criminal conduct contaminates the profits of his business to forfeit all the profits, even though some small part of them are legitimate, it is less obviously fair to inflict the same draconian justice on one who has not participated in the offending but who has benefited to some extent from it.

POCA makes provision under section 78 to ensure that a transaction which is part gift and part contract, i.e. a contract for a consideration less than the true value is dealt with on a proportionate basis. That, however, does not apply in this case. Nothing is stated expressly in the Act to cater for a true gift which is only partially tainted, but this is no doubt because the purpose of the Act is to ensure that the Proceeds of Crime are as fully accounted for by the offender as is practicable. An offender's realisable property may be derived from legitimate transactions as much as from illegitimate ones. His gifts come from property which would be realisable. Until the full amount of his benefit from criminal conduct is paid all his wealth is at risk, including his gifts if they are tainted. That, it seems, is why even gifts which are only in part representative of property which has been unlawfully obtained by him, are counted. In these circumstances there does not seem to me to be any room for any discount to permit Miss Heron to retain 15 per cent of the gifts."

That reasoning is compelling.

14. The judge also appointed a receiver on 17th December 2009, pursuant to section 52 of the Proceeds of Crime Act or its successor provisions and on 26th February 2010 granted power to the receiver to collect the defendant's identifiable assets and realise them by sale to satisfy the confiscation order.
15. On 23rd June 2010 the Court of Appeal upheld those two specific decisions of His Honour Judge Baker and denied the defendant's application for leave to appeal against them. However, on 18th December 2009, immediately following the appointment of the receiver, the third party applicant had filed judicial review proceedings with an application for interim relief in the form of an injunction prohibiting enforcement. She had been granted an ex parte restraining order which partially prevented enforcement, namely by doing so on a temporary basis so far as the St. Augustine property was concerned. The application on an inter partes basis failed and leave to appeal was refused, as was the renewed application. The appeal was thus finally dismissed on 22nd July 2013.
16. Whilst those judicial review proceedings were still in progress, on 23rd February 2011 His Honour Judge Baker varied the receivership order to allow the receiver to seize half the required property in the defendant's bank account and two cars. At that stage it appears there was still some £1.7 million outstanding so far as enforcement was concerned.
17. On 9th December 2011 His Honour Judge Baker made a further variation order which is relevant to the current application for an extension of time and to the argument that no such extension of time is required. That order contained the following provisions:

"THE ORDER GRANTING THE RECEIVER THE POWERS UNDER SECTION 53 POCA

An application was made today by the Serious Organised Crime Agency ('SOCA') to the Crown Court for a further variation of the Order of the 26th February 2010 which conferred on the Receiver the powers contained in Section 53 POCA over the assets of the Defendant. This further variation specifically related to the property known as 5 St. Augustine Court, Beaulieu Drive, Waltham Abbey, Essex EN9 1JJ, which asset was previously subject to an injunction issued by the High Court on the 18th December 2009 preventing SOCA from dealing with the property pending the outcome of a claim for Judicial Review by Mandy Heron. However this Order was discharged on the 7th October 2010 following the refusal on the papers by Burnett J of Mandy Heron's application for permission for Judicial Review. The application for permission was renewed and was heard before Collins J on the 27th October 2011 when it was again refused. An appeal against this refusal was filed with the Court of Appeal (Civil Division) on 3rd November 2011 with the reference 2011/2846. SOCA relies on the settled facts of the earlier refusals for permission for Judicial Review in support of this application for a further variation.

This application is so as to enable the Receiver to continue to enforce the Confiscation Order made by the Crown Court at St. Albans on 11/05/2007 in the sum of £3,042,671.91.

SOCA was resented by Counsel. The application to vary was made on notice to Mandy Heron and her legal representatives and to the defendant David Jones and his legal representatives.

5. As a result of the application THE COURT ORDERS:

(a) That the Order made on the 26th February 2010 which conferred the powers contained in section 53 POCA upon the Receiver and as varied on the 23rd February 2011 be further varied in the terms set out below so that he may take possession of or otherwise deal with the asset of the Defendant namely the property situated at 5 St Augustine Court, Beaulieu Drive, Waltham Abbey, Essex, EN9 1JJ.

(b) HOWEVER, notwithstanding the terms of the Order set out in (a) above no action be taken by the receiver or SOCA or its agents to seek to recover the property at 5 St. Augustine Court, Beaulieu Drive, Waltham Abbey, Essex, EN9 1JJ until such time as the determination by the Court of Appeal (Civil Division) of the appeal filed by Mandy Heron on the third November 2011 against the decision of the Honourable Mr Justice Collins of 27th October 2011.

AND THE COURT DECLARES THAT:

SOCA having nominated William Baxter, a member of staff of SOCA, to act as Receiver over the realisable assets of the Defendant, and he having been appointed Receiver on the 17th December 2009, with the powers of Receiver having been granted to him on the 26th February 2010, the further variation sought to that Order conferring on him the powers under Section 53 POCA shall take effect from today, but in accordance with Paragraph 5(b) shall not be exercised until the determination of Mandy Heron's appeal to the Court of Appeal."

The order specifically provided that the powers conferred on the receiver under section 53 of the Proceeds of Crime Act should take effect from 9th December 2011, whilst providing that they should not be exercised before the determination of the third party's appeal to the Court of Appeal.

18. The application for leave to appeal with which we are concerned was lodged on 5th August 2013, which is within 14 days of the 22nd July 2013 dismissal by the Court of Appeal of the third party's appeal in judicial review proceedings, but long after 9th December 2011.
19. We have no hesitation in deciding that this application is out of time. The applicant argues that the order of 9th December 2011 granting enforcement powers under section 53 excluded powers over St Augustine Court until the judicial review proceedings had been concluded. This however is plainly a false reading of the order made, which expressly granted powers over the property but merely prevented their exercise until the judicial review proceedings were concluded. Any appeal should have been brought within 14 days of 9th December 2011 in respect of that order, so that an extension of time is required of one year and eight months approximately.
20. In reality however this appeal is ultimately made against the findings of His Honour Judge Baker on 17th December 2009 or indeed, because that tallied with his earlier findings in 2007, against his findings on that date. In December 2009, as we have already set out, he decided against the third party that the funding for the purchase of St. Augustine Court represented tainted gifts. It is said that no appeal was possible against that decision because it was merely a decision under section 52 of the Proceeds of Crime Act. In the circumstances where time ran from 9th December 2011, however, we can see no possible basis for extending time to determine the grounds advanced, given the long history of this matter and the repeated efforts of the defendant and the third party to prevent enforcement of the confiscation order made on 11th May 2007, nearly seven years ago. It is worth pointing out that leave to appeal against the order of 26th February 2010 was refused by the single judge and on renewal by the full court in this division on 23rd June 2010. Furthermore, leave to appeal against a further decision of His Honour Judge Baker on 18th July 2011, refusing to vary the 17th December 2009 order, was again refused by the single judge and again on renewal by the full court in their decision of 26th April 2012.
21. Despite all of this we turn to the merits of the grounds advanced. We do not see how the judge's findings of fact in his ruling of 17th December 2009 that the purchase of Old Bellgate Wharf was made with tainted monies can be challenged. As the judge held, section 77(3) provides that the gift is tainted if it was made "at any time" and consisted of property falling within the description given in subsection (a) or subsection (b) of that section. Questions of statutory assumption do not arise and therefore there is no particular relevance in the six year period. This later ruling is the relevant ruling at the hearing of which the applicant appeared and where the judge determined the issue of tainted gifts - not 11th May 2007 ruling where she was not present - and the judge had proceeded on the basis of expenditure incurred by the defendant under the section 10(4) assumption. The defendant's evidence was that he gave the third party the money to purchase Old Bellgate in order to avoid inheritance tax - evidence which the judge accepted. Old Bellgate represented the fruits of the poisoned tree, as then did its proceeds of sale. There is likewise no basis for challenging the learned judge's finding that the balance of £88,000 provided by the defendant for the purchase of St. Augustine over and above the proceeds of Old Bellgate Wharf was equally not a tainted gift. This, as with his earlier finding, was a finding of fact.
22. He also concluded that there was nothing to support the suggestion of any consideration given by the third party for the gifts in whatever form. The fact that she had a beneficial interest in the property of course followed from the fact that it was in her name and that the property had been gifted to her by giving her monies necessary for the purchase. That is nothing to the point because the issue is whether the gifts were tainted which the judge found as a matter of fact they were. It is equally hopeless for the third party to contend, as was done in written if not oral submissions today, that the £88,000 was a loan, and not a gift in the face of the judge's express findings of fact.
23. In this connection we should finally draw attention to the terms of paragraphs 36 to 40 of the judgment of the Court of Appeal dated 22nd July 2013 in the judicial review appeal. This is reported as Heron v SOCA [2013] EWCA Civ 1106. There, Arden LJ giving the judgment of the court in reference to the 2007 decision of His Honour Judge Baker, held that the judge was entitled in the 2009 decision to reach the conclusions that he did on tainted gifts, even though he had not expressly held this to be the case in his 2007 decision. As appears very clearly from that judgment, she held in terms that the judge had made all the necessary findings of fact in the 2007 judgment to reach the conclusion as to tainted gifts that was subsequently expressed in the 2009 decision. She said this:

"40. As I see it, in those particular circumstances, all the facts having been found which are necessary to find a tainted gift, and that the only thing that was missing was that the judge should actually say, in the alternative, this transaction was a tainted gift for the purposes of the 2002 Act, in my judgment the jurisdiction to hold that there was a tainted gift at stage 2 was established by the judge's judgment in 2007."

24. We also refer in passing to paragraph 38 of that judgment in relation to the argument put forward today that the third party provided consideration. The learned judge there expressed the position of the court that the third party was able to argue everything she wanted to argue at stage two (December 2009) and that she was not prejudiced by the fact that all facts had been found in relation to the tainted gifts at stage one (May 2007), in the context of the argument that she was entitled to say that she had provided consideration as a home maker.
25. In consequence, none of the points which have been advanced before us in writing, nor orally today by Mr Gregory, who made such submissions as were possible in the light of all the previous findings of the various courts, have any merit in them at all and none can be accepted. These applications therefore for an extension of time and for leave to appeal are both refused as being wholly without merit.
26. MR GREGORY: My Lord, I am instructed to make a submission that this is a point of law of general public importance and ask whether you would give consideration to granting leave.
27. LORD JUSTICE AIKENS: What is the point of general public importance?
28. MR JUSTICE COOKE: What is the point of law?
29. LORD JUSTICE AIKENS: Of law, indeed. It is all fact, as my Lord has said, is it not? There is no point of law anywhere that I can see, but perhaps you can enlighten us.
30. MR GREGORY: In my submission it is an expansion on Norris and Gibson in respect of the receipt of somebody's home and receipt of proceeds in order to purchase their home and whether they are entitled to retain their property.
31. LORD JUSTICE AIKENS: No, we do not certify a point.
32. MR GREGORY: Thank you, my Lord.