England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM PETERBOROUGH CROWN COURT
HIS HONOUR JUDGE ENRIGHT
T20120266

		Royal Courts of Justice Strand, London, WC2A 2LL
		25 May 2017

Lord Justice Lindblom:

Introduction

1. This appeal requires us to decide whether we should quash a confiscation order made under section 6 of the Proceeds of Crime Act 2002 after the prosecution and the defence had agreed, and presented to the judge, figures for the "value of the benefit" and the "available amount", which he approved.
2. On 29 January 2014 in the Crown Court at Peterborough, before H.H.J. Enright, the appellant, John Morfitt, was convicted after trial of possessing a Class A drug, cocaine, with intent to supply (count 1 on the indictment). On an earlier occasion, he had pleaded guilty to three counts of simple possession of controlled drugs: MDMA – a drug of Class A (count 2), methylmethcathinone – a drug of Class B (count 3), and trifluoromethylphenyl-piperaizine – a drug of Class C (count 4). For the offence of possessing a Class A drug with intent to supply, in count 1, he was sentenced to seven years' imprisonment. For each of the other three offences he received a sentence of one month's imprisonment, to be served concurrently to each other and to the sentence of seven years on count 1. Forfeiture and destruction of the drugs, packaging, weighing scales and benzocaine was ordered under section 27 of the Misuse of Drugs Act 1971. A victim surcharge order was imposed in the sum of £120.
3. On 27 October 2014 the judge made a confiscation order in the sum of £49,663.19, ordering the appellant to pay that sum by 1 September 2015, or in default to serve 12 months' imprisonment. The confiscation order stated that the "benefit" was "the result of general criminal conduct, the Court having decided that the defendant has a criminal lifestyle". The "value of the benefit" was stated to be "£250,000". The "available amount (amount that may be realised)" was stated to be "£49,663.19". Those figures were not in dispute before the judge. The defence had by then agreed the benefit figure with the prosecution, and the figure for the available amount was not controversial at the hearing.
4. The appellant now appeals against the confiscation order by leave of the full court (Simon L.J., Blake J. and H.H.J. Leonard Q.C.), after a hearing on 20 January 2017. The full court also granted the necessary extension of time – of some 14 months. When granting leave, it accepted that the appeal was arguable on the basis that the approach adopted by the prosecution to the calculation of the benefit figure had been wrong in law. It acknowledged the reasons given by the single judge in refusing leave, which included the observation that it was clear that the benefit figure had been bound to be in excess of £49,663.19 and that a confiscation order in that amount would have been made upon the realizable assets which the appellant had accepted. The full court observed, however, that "there may be potentially serious consequences in having a benefit figure which does not reflect the true position" (paragraph 12 of the judgment of the court).
5. The appellant, who has waived privilege, was represented before us by Mr Richard Furlong, who did not appear below. The prosecution, as in the court below, was represented by Mr Duncan O'Donnell.

The facts

6. On 17 February 2012 the police executed a search warrant at the appellant's home, at 21 Cootes Meadow, New Road, St Ives. The appellant ran from the back of the house, chased by the police. He threw away a plastic tub as he went. The tub was found to contain 123 grams of 91% pure cocaine hydrochloride. The drug was valued at between £12,300 and £61,500, depending on how it was mixed and cut. The police also found in the appellant's house two tablets containing trifluoromethylphenylpiperaizine, five tablets containing methylmethcathinone, 95 milligrams of MDMA and 202 grams of benzocaine. The appellant was later arrested. When interviewed by the police, he answered "No comment" to the questions he was asked. He had one previous conviction for a drug-related offence, in 1995 – an offence of permitting premises to be used for supplying a controlled drug of Class A.

The confiscation proceedings

7. The prosecution's statement of relevant information, prepared by a financial investigator, Mr Malcolm Ewles, under section 16(3) of the Proceeds of Crime Act and dated 12 May 2012, stated that the appellant was believed to have a "criminal lifestyle" because he had been convicted of a Schedule 2 offence, as defined in section 75(2)(a) (paragraph 1.2). His occupation was stated to be "motor trade mechanic" (paragraph 5.1), and he was said to have been, between 1 March 2007 and 18 July 2013, "a director of Milestone Motor Company involved in motor repair and servicing" (paragraph 6.2). He had twice been ordered to provide an affidavit under section 18, which he had failed to do, and the court was asked to "draw inferences" from this (paragraph 6.4). In section 9, "Extent of Benefit from Criminal Conduct", it was stated that the appellant had "had in his possession 123 grams of cocaine with a purity of 91% and 202 grams of benzocaine together with a small amount of controlled drugs" (paragraph 9.2), and that "if the 123 grams of 91% cocaine was cut with the equal amount of benzocaine it would produce 246 grams of cocaine with a 45% purity which is near the figure provided by LGC Forensics with a street value of £12,300.00" (paragraph 9.4). The "[benefit] derived as a result of the offences as charged" was therefore said to amount to "£12,300.00" (paragraph 9.5).
8. Paragraph 9.6 of the section 16(3) statement set out the assumptions as to expenditure:

"9.6 Assumptions.

Expenditure.

i. The Crown accepts that the defendant does have a criminal lifestyle and therefore the assumptions will be applied.

ii. The defendant was in possession of 123 grams of cocaine with a purity of 91% which is very close to importation level and therefore can assume [sic] he played a leading role in the supply of controlled drugs.

iii. To receive cocaine with such a high purity suggests that he has been supplying cocaine for a considerable time and had an extensive supply network which would have taken many years to build the business.

iv. The defendant made "no comment" to all questions put to him during interview under caution and has not indicated the extent of his dealing.

v. If the defendant was supplying cocaine to the value of £12,300.00 per month then the yearly amount would be £147,600.00.

vi. The assumptions under the Proceeds of Crime Act 2002 allow the proceedings to cover the period of six years from the relevant date being the date of charge in this case the 28^th August 2012.

vii. Over the six year period the defendant would have benefited to the amount of £885,600.00.

viii. To be fair to the defendant allowing time to build up the supply business I will cover a period of three years therefore the benefit received during this period would be £442,800.00."

9. The "Summary of Benefit" in section 10 stated a figure of "£455,100.00" for "Total Benefit", comprising the figure of "£12,300.00" for "Benefit from conviction" and the figure of £442,800.00 for "Expenditure". The "Summary of Realisable Assets" in section 12 identified total of known assets "In excess of £96,591.00", comprising (1) "Equity in the property at 21 Cootes Meadow …", with a value of "£85,398.00"; (2) "Ownership and shares in … Milestone Motor Company Ltd", whose value was "Unknown"; (3) "Ownership and shares in The WMH Pub Company Ltd", whose value was "Unknown"; (4) "Ownership and shares in Riverboat Solutions Ltd", whose value was "Unknown"; (5) "Two BMW motor vehicles …", with a value of "£6,000.00"; (6) "Monies held in Barclays Bank account numbered […] …", in the amount of "£193.00"; and (7) a "Breitling Watch", with a value of "£5,000.00".
10. The appellant's section 17 response, signed by him on 20 October 2014, provided information about the three companies referred to in the section 16(3) statement (paragraphs 6.2 and 6.5). It said he accepted that "the benefit derived from the charges is £12,300.00" (paragraph 9.5).
11. As to the assumptions set out in paragraph 9.6 of the section 16(3) statement, the section 17 response said this (in paragraph 9.6):

"9.6 Assumptions

Expenditure

i) The defendant disputes that he had a criminal lifestyle.

ii) The defendant accepts that he was found guilty of such activity.

iii) The defendant does not accept this assumption and would ask that the Crown points to evidence from the substantive proceedings to support such an assumption.

iv) The defendant accepts that he answered no comment to questions put to him as is his right.

v) The defendant disputes this assumption and would again ask that the Crown points to evidence from the substantive proceedings to support such an assumption.

vi) The defendant accepts that the Proceeds of Crime Act allows the proceedings to cover the period of six years predating charge. However, the defendant maintains that at no point either during the substantive proceedings nor these subsequent confiscation proceedings have the Crown provided evidence to support an assumption that he was involved in such activities for a period of six years.

vii) The defendant disputes this calculation.

viii) The defendant disputes this calculation."

12. The "Summary of Benefit" in section 10 stated a figure for "Total Benefit" of £12,300.00", comprising a figure of "12,300.00" for "Benefit from Conviction" and "£0" for "Expenditure". In section 11, "Available Amount", it was asserted that "[the] defendant sold both of [the BMW motor cars] some time ago" and that "[this] is no longer an asset in the defendant's possession and can not form part of his available assets" (paragraph 11.7), and "[the Breitling] watch is held by the police thus the defendant is unable to obtain a current valuation" (paragraph 11.9). The "Summary of Realisable Assets" in section 12 said the appellant's "Total Known Assets" were "TBC", stating the value of the "Equity in the property at 21 Cootes Meadow …" as "£54,534.00", the value of the "… shares in … Milestone Motor Company Ltd" as "TBC", the value of the "… shares in The WMH Pub Company Ltd" as "£0.00", the value of the "… shares in Riverboat Solutions Ltd" as "£0.00"; (5) the value of the "Two BMW motor [vehicles] …" as "£0.00", the "Monies held in Barclays Bank account numbered […] … " as "£193.00", and the value of the "Breitling Watch" as "TBC".
13. The Proceeds of Crime Act application was fixed to be heard by the judge on 27 October 2014, with a time estimate of half a day. Before the hearing, discussions took place between prosecution and defence. When the judge came into court, he was told that the parties had reached agreement. He was invited to find that the benefit figure was £250,000. He was also told that the prosecution was prepared to agree to a total realizable asset figure of £57,727, and that it was going to invite him to make a confiscation order in that sum. Counsel for the appellant asked the judge to deduct from the figure for the available amount a sum to reflect an outstanding contribution to the Legal Aid Agency. The judge did that. The sum deducted was £8,063.81 – with the result that, in the confiscation order made by the judge, the appellant was ordered to pay £49,663.19.

The grounds of appeal

14. In the appellant's grounds of appeal, settled by Mr Furlong, it was asserted that "the benefit calculation was fundamentally wrong in law" and that the appellant had been "erroneously advised on the law by counsel then acting" for him. The exercise of the assumptions made under section 10 of the Proceeds of Crime Act does not permit the prosecution simply to assume a history of drug trafficking and that the defendant has received a certain amount of money when there is no evidence of that having happened. But that, it is said, is what was done in this case. The approach adopted by the prosecution, and accepted on behalf of the appellant by counsel then acting for him, manifested the kind of error identified in R. v Errol Williams [2001] 2 Cr App R (S) 44 – the error of using the section 10 assumptions to create impermissible hypotheses outside the statutory scheme. Thus the value of the benefit was calculated on a false basis. When the benefit figure was agreed before the confiscation hearing, the appellant was advised by counsel then acting for him that "evidentially he would find it impossible to challenge the assumptions" put forward by the prosecution. Where both counsel and the judge have proceeded on an "incorrect understanding of the law", a confiscation order cannot be permitted to stand. A defendant's consent is no bar to an appeal where that consent has been given on a "wrong legal basis" (see the decision of the Supreme Court in R. v Mackle (Nos. 1, 2 and 3) and R. v McLaughlin [2014] UKSC 5). Both the figure for the value of the benefit and the figure for the available amount ought to be reduced to £12,300.

The respondent's notice

15. In the respondent's notice the prosecution refuted the suggestion that the section 10 assumptions were improperly applied in the section 16(3) statement. The benefit figure of £442,800 arrived at in paragraph 9.6 of the section 16(3) statement was "a reasonable figure for the [appellant's] criminal expenditure" for the purposes of the third assumption, in section 10(4). If this had been challenged at the confiscation hearing, the prosecution would have been entitled to add to the benefit figure "the value of the [appellant's] house", and also the "value of other property", namely the two BMW motor cars and the watch. This would have been a proper approach in accordance with the second assumption, in section 10(3). The financial investigator's "finding of expenditure" was "by inference". But if agreement had not been reached between the parties and the matter had had to be argued, the judge would have been entitled to find that the appellant had benefited to the extent alleged. No evidence had to be called, because, after a negotiation robustly conducted on the appellant's side by his counsel, the parties had agreed the benefit figure of £250,000. Counsel had acted on his behalf as reasonably competent counsel could have been expected to act (see R. v Doherty and McGregor [1997] 2 Cr App R 218). And his acceptance of the benefit figure presented to the judge as agreed was "akin to a plea of guilty".

Trial counsel's letters to the court

16. In view of the criticisms made by the appellant of counsel who had acted for him both at his trial and in the confiscation proceedings, he was invited to waive privilege, and, as we have said, he did so. We have taken into account the letters that counsel previously acting for him has sent to the court – dated 24 January 2016 and 17 February 2016 – and also the appellant's letter dated 21 March 2016 to the solicitor now acting for him, which was received by the court on 30 March 2016. In his letter of 17 February 2016 counsel confirms that half a day had been set aside for the hearing of the confiscation proceedings. This would have given the appellant the opportunity to challenge any of the prosecution's assumptions by his own evidence and by any supporting evidence he was able to place before the court. The appellant "was aware that he could be cross-examined about the scale and frequency of the offending that could be inferred from [all the] circumstances of the case …", that "it would be a [judge] and not a [jury] who would be making all the findings of fact on a fair and rational basis", and that he "may be asked questions about any hidden assets in England, Ireland or indeed elsewhere". He was not prevented from giving evidence at the hearing. Counsel also rejects the assertion that either he or his instructing solicitor advised the appellant that he would find it "impossible" to challenge the prosecution's assumptions. His instructing solicitor had never suggested to him after the confiscation proceedings that the appellant had said he did not give evidence because he had received such advice. He states finally:

"[The appellant] consented to everything that was agreed and placed before the Judge. One area in which there was no agreement was between the crown and the defence concerned the issue of the reduction of the realisable assets by the [£8,000] which was the outstanding amount of capital contribution to the legal aid order. The Learned Judge accepted the submissions made on Mr Morfitt's behalf and the realisable amount was reduced further by this sum. So where there was no agreement, the matter was aired before the Judge."

17. In his letter of 21 March 2016 the appellant says that on the day of the confiscation hearing he asked counsel "about giving evidence, but was advised against", that counsel had "advised [him] to accept the deal offered", and that it appeared that counsel was not "well versed in [the Proceeds of Crime Act]". He does not deny, however, that he consented to the figures put before the judge, including the benefit figure of £250,000.

The issues before us

18. In an agreed outline of the issues in the appeal, prepared by counsel after leave was granted, the prosecution's position was that the judge "was entitled to find a historic expenditure figure on drugs of £442,800 as asserted (or £250,000 as agreed)", and that "the fact that the appellant's counsel agreed the figures should prevent the appellant from challenging them now" (paragraph 1). But if the confiscation order were quashed, it would now wish to bring into account other items of benefit not originally included in the benefit figure. The appellant did "not agree that this is appropriate in principle" (paragraph 2).
19. In his skeleton argument, and in his oral submissions, Mr Furlong developed the argument in the grounds of appeal. He divided his submissions between three main issues: first, whether the assumptions made by the prosecution under section 10 of the Proceeds of Crime Act, and in particular the assumption as to the appellant's previous drug dealing, betrayed an approach that was wrong in law; second, whether in these circumstances the appellant's consent to the making of the confiscation order precludes an attack upon it in an appeal to this court; and third, the question of what should now be done if the appeal were to succeed.
20. We turn then to those three issues.

The first issue – the prosecution's approach

21. In a case where the court determines that the defendant has a "criminal lifestyle" – which is not now in dispute in this case – the assumptions in section 10 are mandatory. If the court decides that the defendant has a criminal lifestyle it "must make" the assumptions for the purpose of deciding whether he has benefited from his general criminal conduct and deciding his benefit from that conduct (section 10(1)). The first and second assumptions relate to "property", the third to "expenditure". The first assumption, in subsection (2), is that "any property transferred to the defendant at any time after the relevant day" was obtained by him as a result of his general criminal conduct, and at the earliest time he appears to have held it. The second assumption, in subsection (3), is that "any property held by [him] at any time after the date of the conviction" was obtained by him as a result of his general criminal conduct, and at the earliest time he appears to have held it. The third assumption, in subsection (4), is that "any expenditure incurred by [him]" at any time after the relevant day was met from property obtained by him as a result of his general criminal conduct. The "relevant day" is defined in subsection (8) as the first day of the period of six years ending with "(a) the day when proceedings for the offence concerned were started against the defendant, …". Section 10(6) provides that the court "must not make" a required assumption in respect of particular property or expenditure if "(a) the assumption is shown to be incorrect" or "(b) there would be a serious risk of injustice if the assumption were made".
22. The assumptions are triggered only if the prosecution succeeds in proving that the defendant has obtained the property – or incurred the expenditure – which, it contends, goes towards the valuation of the defendant's benefit. It is for the prosecution to prove that the defendant has obtained the property in question. This will either be known property still in his possession, or property that he has in the past possessed. The proof of the existence of such property is not to be confused with proof of its source. Subject to one exception, the prosecution must prove the existence of that property to the civil standard of proof (section 6(7)). It is only when the prosecution has established, on the balance of probabilities, that the defendant has obtained property in one of the ways indicated in the first three assumptions in section 10 that any question of the source of the property will arise. The prosecution may establish the defendant's possession of property or expenditure by him by whatever means it can, according to the civil standard. However, if it can only establish that he had obtained property in the past by proof of criminal offences other than those charged on the indictment, it must prove those offences to the criminal standard (see the House of Lords' decision in R. v Briggs-Price [2009] 1 AC 1026 – in particular, the speech of Lord Brown at paragraph 96, the speech of Lord Mance at paragraph 104, and the speech of Lord Neuberger at paragraph 152; and the judgment of this court in R. v Whittington [2010] 1 Cr App R (S) 83, at paragraphs 13 to 18, 24 and 25).
23. Mr Furlong submitted that the approach adopted in paragraph 9.6 of the prosecution's section 16(3) statement was "arbitrary and wrong". He did not challenge the proposition, in paragraph 9.6 i, that the appellant had a "criminal lifestyle". Nor did he take issue with the matters of fact referred to in paragraph 9.6 ii – the quantity of cocaine found in the appellant's possession and its purity – or with the assumption that, in view of those matters, the appellant had "played a leading role in the supply of controlled drugs". He did, however, criticize the assumptions set out in paragraph 9.6 iii, v, vi, vii and viii. He submitted that the judge was not entitled, on the basis of those assumptions, to find an historic expenditure on drugs of £442,800 – or £250,000 as the parties had ultimately agreed. The approach adopted by the prosecution was impermissible under section 10.
24. Relying on the decision of this court in Williams, Mr Furlong submitted that in this case the necessary two-stage exercise had not been properly undertaken. The prosecution had not, in the first place, identified the particular property in question, and, secondly, based its assumptions on the specific items of property concerned. Mr Furlong was prepared to concede that the prosecution was, or might have been, entitled to infer that the appellant had been dealing in drugs for six years. But, he submitted, there was nothing for the assumptions to "bite" upon. There needed to be a proper evidential basis for them. Some particular asset or assets had to be attributed to the relevant criminal activity. And that had simply not been done. The financial investigator had not sufficiently established the property acquired or the expenditure made. The assertion in paragraph 9.6 v – that if the appellant had been "supplying cocaine to the value of £12,300.00 per month then the yearly amount would be £147,600.00" – was plainly not enough. The error here was similar to that in Williams.
25. Mr O'Donnell submitted that the prosecution's assumptions were sufficiently stated in paragraph 9.6 of the section 16(3) statement, and were, on their face, perfectly proper assumptions. The relevant property was identified in paragraph 9.6 v, which specified the value of the cocaine the appellant had been supplying each month and in the course of a year. And the evidential basis was indicated in paragraph 9.6 iii, which identified the duration and scale of that business – on the basis of the amount and purity of the drugs found in the appellant's possession and the leading role he had been playing in the supply of controlled drugs, referred to in paragraph 9.6 ii. The inference here was logical and reasonable. If the confiscation hearing had gone ahead, evidence to support it would have been given on behalf of the prosecution, and that evidence could have been tested by cross-examination. Mr Ewles, the financial investigator, was at court, ready to give evidence. There was no reason to think that the prosecution would have been unable to prove what it had to prove, to the relevant standard. But the parties had, in the end, agreed the benefit figure. So the judge did not have to decide, under section 10(6), whether any of the required assumptions as to particular property or expenditure should not be made.
26. In the circumstances, Mr O'Donnell submitted, it cannot be said that the prosecution's "evidence" was inadequate. This case is quite different from Williams. There the confiscation proceedings were contested. Evidence was given to the court. The judge fell into error by embarking on hypothetical calculations for which there was no evidential basis on the material before him. That is not what happened here.
27. We would accept that if the confiscation proceedings in this case had been contested at the hearing, the content of the prosecution's section 16(3) statement might not have proved an adequate basis for a finding that the value of the appellant's benefit was £442,800, as was asserted in paragraph 9.6 iii of the section 16(3) statement, or even £250,000, as the appellant was prepared to agree. The evidence given at the hearing might not have substantiated even the lower of those two figures. We acknowledge that possibility. This is far from saying, however, that the judge lacked jurisdiction to make a confiscation order on the appellant's consent, or that he could not properly make an order in the terms agreed by the parties. That is a quite separate and different question.
28. Mr Furlong's real complaint here is that, in the light of its section 16(3) statement, the prosecution would not have succeeded, or fully succeeded, in discharging the requirements of the statutory scheme, as amplified in the authorities. This may or may not be so. But it is not our task to resolve that question. The confiscation proceedings were not fought out before the judge. Evidence was not given and tested. And this was because the appellant, with the benefit of the legal advice available to him from his counsel and solicitors, was prepared to consent to the confiscation order being made in the terms in which it was. Specifically, he was prepared to consent to the value of the benefit being stated in the order as £250,000 – rather than the figure of £442,800 contended for in paragraph 9.6 viii of the section 16(3) statement, or some other figure. Implicit in that consent was his acceptance that the prosecution would have been able to prove – or might well have been able to prove – to that extent and to the requisite standard, the matters it would have needed to prove under the statutory scheme. He had the opportunity, at the confiscation hearing, to oblige the prosecution to prove what it would have needed to, including the existence of the property in question. He chose not to do so.
29. In the circumstances the criticism now made of the prosecution's approach is, in our view, academic. This being so, we do not need to decide whether that criticism is in any respect well founded, and we should not be taken to have concluded that it is.
30. We do not accept that the assumptions stated in paragraph 9.6 of the prosecution's section 16(3) statement were, in themselves, impermissible assumptions, or that they were necessarily unrealistic. Indeed, it would seem hard to dispute the assumption that, because the appellant had been found in possession of 123 grams of cocaine at a very high level of purity – so high, in fact, as to be very close to the level of purity to be expected at importation – he had been playing a leading role in the supply of controlled drugs (paragraph 9.6 ii). And it would seem no less difficult to challenge the assumption that his being in possession of cocaine at such a high level of purity indicated that he had been supplying cocaine for a considerable period, had an extensive supply network, and a business which would have taken a number of years to build up (paragraph 9.6 iii). Whether the financial investigator was entitled to come to the figures he gave for the monthly and annual value of the cocaine supplied by the appellant (in paragraph 9.6 v), and for the total figure of benefit received, allowing time for him to build up his business (in paragraph 9.6 viii), may have been questionable, perhaps seriously so. We see that. But these were all matters that could have been the subject of evidence, cross-examination and submissions at the confiscation hearing.
31. The same may also be said of Mr Furlong's submission that the prosecution's approach here betrays a fatal error of the kind that vitiated the judge's approach in Williams. In that case, which concerned proceedings under section 4 of the Drug Trafficking Act 1994, the judge had calculated the defendant's expenditure on drugs at a figure close to £500,000. Having done that, however, he had treated that figure as profit from a notional earlier transaction, and then embarked on a hypothetical exercise to calculate the gross amount of that earlier transaction. He assumed that there was a profit margin of one quarter and therefore multiplied the net benefit by four to calculate the cost of the drugs which had originally been purchased. This produced a figure of nearly £2,000,000, to which the judge added the net benefit, making a total of nearly £2,500,000. In quashing the confiscation order, the Court of Appeal accepted the argument that there was no evidential basis for the hypothesis applied by the judge to the figure for the defendant's proceeds. Poole J., giving the judgment of the court, said (in paragraph 16) that the judge's mistake had been "to take the figure produced by the application of the proper approach, £484,437, and then to subject it to a series of further hypotheses for which there was no evidential basis" – namely, first, "that it was the product of a particular form of drug trafficking, i.e. wholesale supply", secondly, "that it represented net profits of such activity", and thirdly, "that a hypothetical quantity and value of drugs must have been required to be purchased during the preceding six years to enable such a net profit to be realised". Mr Furlong submitted that one can discern a speculative exercise of that kind in the prosecution's section 16(3) statement in this case. Again, however, if such an argument had commended itself to the appellant and those advising him, he could have raised it at the confiscation hearing. The judge would then have had to grapple with it. But no such argument was raised. The appellant agreed to the figure of £250,000 for his benefit, presumably on the basis that it was not merely hypothetical but sufficiently grounded in fact to be acceptable to him.
32. We would add this. We think there is some force in the observations made by the single judge when refusing leave on paper. As he recognized, regardless of the assumptions made by the prosecution in arriving at the benefit figure for which they were contending in the section 16(3) statement, it can hardly be said that the sum the appellant was required to pay in the confiscation order – £49,663.19 – was excessive. Leaving aside the parties' agreement as to the value of the benefit, if the section 10 assumptions had been applied only to the assets identified in section 12 of the section 16(3) statement, the benefit figure would still have been more than £49,663.19, and a confiscation order in that amount would have been made on the basis of realizable assets which, even in his section 17 response, the appellant had clearly accepted.

The second issue – the consequences of the appellant's consent

33. Mr Furlong accepted that if his argument on that first issue was wrong, his argument on the second would not arise. But if he was right on the first issue, he submitted, the fact that the appellant had consented to the confiscation order made by the judge, and specifically to the figure for his benefit, would not prevent us from setting the order aside. Whether the appellant's former counsel had ever considered the lawfulness of the approach adopted by the prosecution was not clear from his letters to the court. But what is clear, said Mr Furlong, is that neither counsel nor the judge had appreciated that the prosecution's approach was unsustainable. Nor can the appellant be taken to have accepted that the prosecution's approach was correct, or that there was a solid factual basis for it. Where a defendant's consent was on a false legal and factual basis, Mr Furlong submitted, the Supreme Court's decision in Mackle and McLaughlin supports the argument that such consent is no bar to an appeal (see, in particular, the judgment of Lord Kerr, at paragraph 50). In confiscation proceedings the court must establish whether the defendant has, in fact, benefited from his criminal conduct. That was not done here. The appeal is not based on criticism of counsel previously instructed, as in Doherty and McGregor, but on the contention that the law was wrongly applied. That the appellant did not give evidence before the judge was irrelevant. There was no need for him to do so.
34. Mr O'Donnell submitted that, in principle, a confiscation order made on the basis of an agreed figure for the value of the benefit ought not to be set aside where the essential complaint is that, in an effort to achieve the best possible outcome for the defendant, erroneous advice was given to him – unless it can be shown that the process as a whole was unfair (see the decision of this court in R. v Hirani [2008] EWCA Crim 1463). Whilst an exception to that principle might conceivably arise where the defendant has been advised by counsel that a challenge to the assumptions made by the prosecution was "impossible", this would not be so where the advice had merely been that such challenges are, or can be, difficult. This case, said Mr O'Donnell, is not an exceptional case of that kind. There is no basis for concluding that counsel then representing the appellant acted in a way that reasonably competent counsel would not have acted in the circumstances, or that the appellant was given wrong advice before the value of the benefit and the available amount were agreed with the prosecution. The appellant could have given evidence at the confiscation hearing if he had chosen to do so. The simple fact is that, on the day of the hearing, he was prepared to accept that he had benefited to the extent of £250,000 from dealing in Class A drugs, and the prosecution, for its part, was prepared to agree that figure as the value of his benefit.
35. In our view, this is not the kind of case in which it might be appropriate to set aside a confiscation order based on a defendant's consent. On the contrary, that course would in this case be wholly inappropriate.
36. We have in mind here the decision of the Court of Appeal in Hirani – on which Mr O'Donnell relied – and decisions of this court in subsequent appeals where it has had to consider the circumstances in which a confiscation order made by consent can properly be set aside.
37. In Hirani the appellant had originally asserted that he had no realizable assets, but had then agreed to a figure of £110,000 when the prosecution were suggesting a figure of £160,000. He asserted that this was because of advice he had received that he could later discharge any liability by obtaining a certificate of inadequacy under the provisions of section 83 of the Criminal Justice Act 1988. Giving the judgment of the court, Burnett J., as he then was, noted (in paragraph 33) that "[the] judge … made the confiscation order on the basis on which he was invited to by the appellant", and that the judge "did not proceed on a wrong factual basis, as, for example, may happen if a judge sentences on a factual basis not available on the material that was before him". Then, in a passage of the judgment that has, we think, some resonance here, Burnett J. said this (in paragraph 34):

"34. Additionally, the appellant was not representing that he had assets of £110,000. He was prepared to agree that figure as a matter of compromise to avoid additional potential liability. Similarly, the prosecution were not representing by this agreement that the appellant had no more than £110,000. This was in effect a consent order in which the appellant had bought off risk, both as to the amount of the confiscation order and the period he would be allowed to meet it. … ."

He went to say (in paragraphs 35 and 36):

"35. In other jurisdictions, those who have entered into consent orders may set them aside on very narrow grounds. We do not exclude the possibility in the arena of confiscation orders that such circumstances might conceivably arise. But we do not consider that they arise where the essence of the complaint is that, in seeking to secure the best deal available, erroneous advice was given to one of those who was party to the agreement, save in the most exceptional circumstances. We would not wish to identify exhaustively what those circumstances might be but, in our judgment, there would need to be a well-founded submission that the whole process was unfair. We do not consider that the circumstances of this case come close to that.

36. We see no warrant for reading over generally the approach that has developed in appeals against conviction based upon erroneous advice into confiscation proceedings. There is a fundamental difference between sentence and conviction. On an appeal against conviction, where it is suggested that erroneous legal advice resulted in a guilty plea, the court may allow the appeal and then a trial will take place. The defendant will be either acquitted or convicted and, if convicted, he will be given an appropriate sentence. On a successful appeal against sentence, the matter is not sent back to the court with the issue, as it were, at large. This court can vary a sentence but it cannot increase it. So if [counsel for the appellant] were correct, an appellant in Mr Hirani's position could appeal to this court, having agreed the confiscation order on a false basis, and seek to set it aside, but in doing so he would deny the prosecution the possibility of contending for a higher figure. In other words, the prosecution would in effect be bound by the agreement from which the appellant, on this hypothesis, had been released. That would, in our judgment, be an undesirable – not to say extremely odd – result."

38. Those principles were again applied in R. v Perkes [2010] EWCA Crim 101, another case in which an attempt was made on appeal to set aside a confiscation order made by consent, in reliance, it was said, on "incorrect legal advice". There too the court stressed that when a confiscation order was said to have been made in those circumstances, it "should only be set aside 'in the most exceptional circumstances' and 'there would need to be a well founded submission that the whole process was unfair'" (see paragraph 7 of the judgment of the court).
39. The same principles were again underscored by a constitution of this court presided over by Lord Judge C.J. in R. v Kirman [2010] EWCA Crim 614 (in paragraph 15 of the judgment of the court, given by Collins J.):

"15. We entirely agree with and endorse what was said in [Hirani]. … There may be good reasons from his view for a defendant to enter into a consent order even if he may for the purposes of sentencing have put forward an inconsistent basis of plea. Thus the court will not save in exceptional circumstances go behind the consent even if it is subsequently asserted that it was based on erroneous advice. There may be other remedies available to the defendant if he can show that there was negligence."

In that case, however, the prosecution had accepted that critical facts were not known to the defence, and that, if they had been, those representing the appellant might have argued that he should not be regarded as having benefited from the full value of the cannabis resin he had been minding. Thus the Court of Appeal could not be satisfied that the same order would otherwise have been either agreed or made.

40. Finally, in R. v Ayankoya [2011] EWCA Crim 1488, this court said (in paragraph 20 of the judgment, given by Sweeney J.) that it "[could] not emphasise too strongly that where an agreement is reached as to the amount of a confiscation order, that agreement will be binding on the defendant unless there are the sort of exceptional circumstances referred to in [Hirani]". There the court was satisfied that the case before it was "one of those wholly exceptional cases" where it was appropriate to intervene – because, as the parties had agreed, the appellant had been, or might have been, misled about what had happened before the judge in his absence when the hearing of the confiscation proceedings began (paragraph 21).
41. In our view there is no possible basis in this case for the submission that the whole confiscation process was unfair. As in Hirani, the circumstances here do not come close to satisfying that very exacting test. There are, in truth, no relevant exceptional features at all. The proceedings were fairly conducted throughout. The appellant was not denied the opportunity of challenging the prosecution's case. He could have given evidence at the confiscation hearing. He did not have to consent to the confiscation order being made in the terms which were agreed. He did not have to accept that the value of his benefit was £250,000. But he did accept that. He was, it seems, advised that it was in his best interests overall to negotiate the benefit figure to as low a level as could sensibly be achieved – which is evidently what happened. And in the light of the correspondence before the court, we are not persuaded that the advice he received was unsound.
42. Mr Furlong's reliance on the decision of the Supreme Court in Mackle and McLaughlin is, we think, misplaced.
43. In that case the Court of Appeal in Northern Ireland, having considered authorities on the effect of consent orders in confiscation proceedings – including the decisions of this court in R. v Bailey [2007] EWCA Crim 2873 and Hirani – had concluded that, even if the appellants had been incorrectly advised to consent to the confiscation orders, they were bound by the orders made on their consent. However, in the subsequent appeal to the Supreme Court, Lord Kerr (with whom Lord Neuberger, Lord Mance, Lord Hughes and Lord Toulson agreed) observed that none of the categories of person liable to pay excise duty under regulation 13 of the Tobacco Products Regulations 2001 fitted the circumstances of the appellants (paragraph 32 of his judgment), that "the only basis on which the appellants were said to have obtained a benefit was that they had evaded the duty and VAT payable", that "[an] acceptance that they had obtained a benefit on that account inevitably involved a mistake of law", and that "[no] evidence was needed to establish that proposition" (paragraph 45). It was "clear", he said, "that the basis on which both judges accepted that the appellants had benefited by their criminal conduct was that they had evaded duty on the cigarettes", and, as was now apparent, "because their liability to pay duty could not be established, this was not a correct legal basis on which to find that the appellants had obtained a benefit" (paragraph 47).
44. It was in that context that Lord Kerr went on to say this (in paragraph 50):

"50. It is to be remembered that under POCA the court must itself decide whether the convicted person has benefited from his particular criminal conduct. The power to make a confiscation order arises only where the court has made that determination. A defendant's consent cannot confer jurisdiction to make a confiscation order. This is particularly so where the facts on which such a consent is based cannot as a matter of law support the conclusion that the defendant has benefited. On the other hand, if it is clear from the terms on which a defendant consents to a confiscation order, that he has accepted facts which would justify the making of an order, a judge, provided he is satisfied that there has been an unambiguous acceptance of those facts from which the defendant should not be permitted to resile, will be entitled to rely on the consent. This is so not because the defendant has consented to the order. It is because his acceptance of facts itself constitutes evidence on which the judge is entitled to rely. Provided the acceptance of the facts is unequivocal, and particularly where it is given after legal advice which proves to be sound, the judge need not mount a further investigation. It should be emphasised, however, that this is because the judge can in those circumstances himself be satisfied on the evidence that the basis for making a confiscation order has been made out."

After referring (in paragraphs 51 and 52) to the decisions of this court in Revenue and Customs Prosecutions Office v Mitchell [2009] 2 Cr. App. R. (S.) 463 and R. v Bell [2011] EWCA Crim 6 – Lord Kerr said (in paragraph 53):

"53. On the same basis it would be manifestly unfair to require the appellants in this case to be bound by their consent to the confiscation orders when, as points out in para 45 above, the only possible explanation for the consent was that it was given under a mistake of law. …".

45. This case is not, in our view, analogous to Mackle and McLaughlin, or to the other cases mentioned by Lord Kerr in the passages of his judgment to which we have referred. It is axiomatic that a defendant's consent does not confer jurisdiction on the court to make a confiscation order. But in this case, by contrast with Mackle and McLaughlin, the court did not lack jurisdiction to make such an order, and to do so in the terms to which the appellant had, on advice, given his consent – including, specifically, the benefit figure of £250,000. That consent was entirely clear and unambiguous. And it cannot be said that it was given as a result of incorrect legal advice, let alone that the only possible explanation for it was that it was given under a mistake of law. In Mackle and McLaughlin there was a fundamental mistake of law. It went to jurisdiction. As a matter of law, the defendants in that case could not be liable to pay the excise duty the evasion of which was said to constitute the benefit. In law, they were never at risk. A confiscation order should not have been made. No such error has occurred here. The court did not lack jurisdiction to make a confiscation order, and the appellant was therefore exposed to the risk that, if the confiscation proceedings were contested, the benefit figure would be higher than he was prepared to agree. As we have said, there were other assets to which the prosecution could have pointed if the appellant had chosen, at the confiscation hearing, to challenge the benefit figure contended for in the section 16(3) statement. So the appellant may have been well advised to consent on the basis he did.
46. In the circumstances the judge was clearly entitled to permit the parties to agree the terms of the confiscation order, if they could, and to approve the agreement they reached. It was not incumbent upon him to go behind the appellant's consent. Whether a confiscation order would have been made in the same terms if the proceedings had been contested, and evidence as to the appellant's benefit had been given at the hearing, is not a question we have to deal with.
47. We therefore reject Mr Furlong's argument on this issue.

The third issue – what should be done now, if the appeal succeeds?

48. It follows from our conclusions on the previous two issues that we do not need to express any concluded view on this.
49. Mr Furlong contended that the prosecution should not be permitted at this stage to put its case for confiscation on a wholly different basis from its case below, including assets on which it had not previously relied. This, he said, would be inconsistent with section 11(3C) of the Criminal Appeal Act 1968 – because the appellant would thus be exposed to the risk of being dealt with more severely than by the confiscation order which had been quashed under subsection 3(a). The prosecution was, he said, seeking to reconsider its position on benefit, even though it had had all the relevant evidence available to it when the matter came before the judge – which is not what is contemplated in section 21 of the Proceeds of Crime Act. In the course of argument, however, Mr Furlong accepted that there could be no objection to the prosecution being permitted to "re-litigate … evidentially" the value of the appellant's house, his cars and his watch.
50. Mr O'Donnell submitted that there was ample material in the prosecution's section 16(3) statement to justify a benefit figure comfortably in excess of the amount of the confiscation order. It would not be necessary to send the matter back to the Crown Court. All that would need to be done would be to substitute a lower benefit figure in the confiscation order. This is what was done in Williams.
51. As we have explained, we think Mr O'Donnell's argument on the previous two issues –including the submission he made here as to the level of the benefit figure – is essentially correct. However, had we allowed the appeal and quashed the confiscation order, we would have been inclined not to make an order of our own in place of that made by the judge, but to take the course provided in section 11(3A) of the Criminal Appeal Act, directing the Crown Court to proceed afresh, and, as section 11(3C) requires, exercising this court's power to give directions under section 11(3B) "so as to ensure that any confiscation order made in respect of the appellant by the Crown Court does not deal more severely with [him] than the order quashed under subsection (3)(a)". Subject to such a direction, the Crown Court could then have proceeded to re-make the confiscation order on the basis of the evidence before it.

Conclusion

52. For the reasons we have given, this appeal must be dismissed.