Jersey Unreported Judgments

[2004]JRC192

royal court

(Samedi Division)

 

2^nd November 2004

 

 

 

 

Reasons for a confiscation Order, made on 12^th October, 2004, following a contested hearing.

 

Advocate M. St. J. O'Connell for the Attorney General

Advocate D F Le Quesne for the defendant

 

judgment

Deputy bailiff:

1.        On 12^th October, following a contested hearing, the Court made a confiscation order in the sum of £3,053.35 against the defendant Harris.  We now give our reasons for that decision.  On the same occasion the Court made a confiscation order against one of the co-accused, Jason Hepburn, but that was not contested and we therefore make no further reference to it in this judgment. 

The factual background

2.        The defendant Harris lived in Glasgow at the material time.  On 3^rd September 2003 Hepburn made a cash deposit of £1,300 into Harris' account with Lloyds TSB Bank in Jersey.

3.        On 5^th September a postal packet, posted in Glasgow, was intercepted by customs officers at Postal Headquarters in Jersey.  When examined, the package was found, amongst other items, to include a tub of Nivea cream.  Hidden beneath the cream was heroin weighing 49.69 grams.  The package was reconstituted with substitute items and put back into the postal system. 

4.        On 6^th September one of the co-defendants, Cindy Le Marinel, collected the package from the main post office.  She was kept under surveillance and she was found by the Inferior Number to have transferred the Nivea tub to Hepburn.  Le Marinel pleaded guilty to being knowingly concerned in the fraudulent evasion of the prohibition on the importation of controlled drugs.  Hepburn denied being concerned in the importation but was found guilty by the Inferior Number. 

5.        Forensic analysis showed that the original Nivea tub in the postal packet had Harris' fingerprints on it.  He was arrested in Glasgow and brought to Jersey.  He denied having sent the package containing the heroin to Jersey, although he could not offer any explanation as to how his fingerprints came to be on the tub.  Shortly before the date when he and Hepburn were to face trial together, he changed his plea to guilty of being knowingly concerned in the importation. 

6.        It was accepted by Harris at the time of sentencing that, at Hepburn's request, he had purchased the heroin in Glasgow, placed it in the Nivea tub and assembled and despatched the postal packet to Jersey. 

Confiscation proceedings

7.        The Attorney General served an Attorney General's statement on 8^th June 2004 in accordance with Article 5(1) of the Drug Trafficking Offences (Jersey) Law 1988 ("the Law").  The statement showed that in June 2003 the sum of approximately £131,000 was received by Harris into his account with Lloyds TSB in Jersey and that this came from an inheritance and was therefore a bona fide payment.  Since then numerous payments had been made out and the balance at the time of the statement was £23,557.  The statement also disclosed that, when interviewed when he was first brought back to Jersey (at which time he was still denying any involvement) Harris stated that he would be able to obtain heroin in Glasgow for £1,000 per ounce. 

8.        The Attorney General's statement also referred to expert evidence obtained from the Glasgow police confirming that heroin could be acquired at the wholesale price of £1,000 per ounce in their area.  On this basis, the amount required to purchase 49.69 grams would have been £1,753.35. 

9.        For the purposes of the confiscation hearing, Mr Le Quesne accepted that this sum could be taken as the market price of 49.69 grams of heroin in Glasgow.

10.      The Attorney General's statement went on to assert that Harris' proceeds of drugs trafficking were as follows:-

(i)        Cost of 49,69 grams of heroin at a price of £1,000 per ounce                      £1,753.35

(ii)       Cash received from Hepburn on 3^rd September 2003                                     £1,300.00

Total                                                                                                        £3,053.35

Given that Harris' realisable property exceeded that sum, the Attorney General asked for a confiscation order in the sum of £3,053.35.

The Law

11.      Where a person has been convicted of a drug trafficking offence, the Court may determine whether he has benefitted from drug trafficking.  If it determines that he has, it may make a confiscation order (Article 3 of the Law).

12.      Pursuant to Article 6(3), the amount to be recovered under a confiscation order is the amount which the Court assesses to be the value of the defendant's proceeds of drug trafficking unless the defendant's realisable property is less than that sum, in which event the confiscation order is made for the amount of the realisable property. 

13.      Article 4 deals with how the Court is to assess the defendant's proceeds of drug trafficking.  The relevant provisions are as follows:-

"Article 4

Assessing the proceeds of drug trafficking

For the purposes of this Law -

any payments or other rewards received by a person at any time (whether before or after the commencement of Article 3) in connexion with drug trafficking carried on by him or another are his proceeds of drug trafficking; and

the value of his proceeds of drug trafficking is the aggregate of the values of the payments or other rewards.

The Court may, for the purpose of determining whether the defendant has benefitted from drug trafficking and, if he has, of assessing the value of his proceeds of drug trafficking, make the following assumptions, except to the extent that any of the assumptions are shown to be incorrect in the defendant's case.

Those assumptions are -

that any property appearing to the Court -

to have been held by him at any time since his conviction; or

to have been transferred to him at any time since the beginning of the period of six years ending when the proceedings were instituted against him;

           was received by him, at the earliest time at which he appears to the Court to have held it, as a payment or reward in connexion with drug trafficking carried on by him;

that any expenditure of his since the beginning of that period was met out of payments received by him in connexion with drug trafficking carried on by him; and

..........................................

(4)       ..................................................

(5)       For the purpose of assessing the value of the defendant's proceeds of drug trafficking in a case where a confiscation order has previously been made against him the Court shall leave out of account any of his proceeds of drug trafficking that are shown to the Court to have been taken into account in determining the amount to be recovered under that order."

14.      Article 3(7) provides that, when determining whether a person has benefitted from drug trafficking and, if so, the amount to be recovered under a confiscation order, the standard of proof is the civil standard i.e. the balance of probabilities. 

The rival submissions

15.      The Attorney General's submission is simple.  He says that Article 4(3)(a)(ii) allows the Court to assume that the sum of £1,300 paid by Hepburn (a convicted drug dealer) to Harris two days before the packet arrived in Jersey was a payment or receipt in connection with drug trafficking carried on by Harris.  He says further that the Court is entitled to find that Harris expended £1,753.35 on purchasing the heroin because that is the market price of heroin in Glasgow.  That was expenditure incurred in the six years prior to the charge in this case being brought, so that the Court may therefore assume, pursuant to Article 4(3)(b), that it was met out of payments received by him in connection with drug trafficking.  Applying both these assumptions, the aggregate benefit was therefore £3,053.35.  There was no reason for the Court to conclude that the assumptions had been shown to be incorrect because no evidence had been produced by the defendant to rebut the assumptions.

16.      Mr Le Quesne, on the other hand, advanced two main submissions.  First, he accepted that the £1,300 paid by Hepburn could be treated as a payment or reward in connection with drug trafficking carried on by Harris.  It had been received by him from a drug dealer and then used to purchase the heroin.  However, he said, that there was no evidence of any other payments by Hepburn to Harris and therefore this had to be taken as the extent of Harris' proceeds.  Accordingly an order should be made in the sum of £1,300.  Secondly, he submitted that, even if he was wrong on this and the Court were to conclude that Harris had spent £1,753.35 on the heroin and that therefore, applying the expenditure assumption in Article 4(3)(b), the Court should treat that sum as having been met out of payments received in connection with the drug trafficking, it was not possible also to count the £1,300.  It was the same money.  It was the Crown's case that the £1,300 was a payment by Hepburn towards the purchase of the heroin.  If the £1,300 was used towards the heroin, it could not be counted again.  This would be to double count.  He gave as an example (in a non-drug trafficking context but the point was the same) a crooked art dealer who is given £10 million with which to buy a stolen Van Gogh.  He uses the £10 million to buy the stolen painting for £10 million.  He has therefore received an income of £10 million and has expended £10 million.  On the Attorney General's argument, one could count them both and say that the proceeds of the art dealer's crime was £20 million.  But that would be nonsensical and could be shown to be incorrect, so that the assumption should not be drawn.  In that case the proceeds would be £10 million i.e. simply the gross receipt.  He submitted therefore that the Court should make a confiscation order in the sum of £1,300, failing which £1,753.35; but it should certainly not make an order in the combined amount as submitted by the Attorney General. 

The effect of the Law

17.      The provisions of the Law are based upon provisions contained in the original English legislation on drug trafficking.  These have been the subject of many judicial decisions and it is perhaps worth summarising the effect of the confiscation provisions in certain respects:-

(i)        When determining whether a person has benefitted from drug trafficking, the Court is not concerned with profit.  It does not allow for the costs incurred in carrying on the drug trafficking trade.  It is concerned only with the gross proceeds (see R -v- Smith (1989) 89 Cr App R. 235).  So, to take a simple example, if a drug trafficker buys drugs for £1,000 and sells them for £2,000, his profit is £1,000.  But his proceeds of drug trafficking for the purposes of the Law are to be taken as £2,000 and that is the amount which can be made the subject of a confiscation order.  Thus, although a layman might say that he had only benefitted to the extent of £1,000, a confiscation order lies for the greater sum.

(ii)       The Court is not concerned only with the proceeds of the drug trafficking offence of which the defendant has been convicted on that occasion.  The Law is concerned with the proceeds of any drug trafficking carried on by the defendant.  Thus again, to take a simple example, the defendant may be convicted of one count of selling drugs for a gross sale price of £20,000.  That is therefore the proceeds of the particular drug trafficking of which he has been convicted and a confiscation order can certainly be made in respect of that sum.  Let us assume, however, that, as well as the £20,000, the defendant has received income over the last six years amounting to £5 million.  If the Court is satisfied to the civil standard that the £5 million is the proceeds of drug trafficking (even though no charges have been brought in respect of such activities) the Court can make a confiscation order in the sum of £5,020,000. 

(iii)      Because of the difficulties of the Crown proving that money has come from drug trafficking, the Law allows the Court, where a person has been convicted of at least one drug traffic offence, to make assumptions about that person's income and expenditure in the last six years, except to the extent that those assumptions are shown to be incorrect.  Thus, as set out above, the Court is entitled to assume that property held by him at the time of his conviction or paid to him at any time in the previous six years was received as a payment or reward in connection with drug trafficking.  So, in the example at sub-para (ii), the Court may assume that the income of £5 million is the proceeds of drug trafficking.  Similarly, because it is sometimes difficult to prove the existence of income (e.g. where it is received in cash), the Court can treat expenditure in the last six years as being met out of the proceeds of drug trafficking (Article 4(3)(b)).  Thus, to revert to the example given above, if there were no evidence of income of £5 million but there was evidence of expenditure of £5 million (e.g. money paid to restaurants, casinos etc), the Court could assume that that expenditure had been funded out of payments received in connection with drug trafficking.  The Court may apply the assumptions except to the extent that any of them are shown to be incorrect.  In effect therefore, although the burden rests upon the Attorney General to prove his case to the civil standard (with the assistance of the assumptions if appropriate), these provisions place an onus on a defendant to show that the assumptions are incorrect.  So, in the earlier example, the defendant would no doubt seek to show that the £5 million came from legitimate activities.  If satisfied of that, the Court would not make any adverse assumption about the £5 million because it would have been shown to be incorrect.

(iv)      Because the assumptions can be applied both in respect of receipts and expenditure, the Court must be careful to ensure there is no double counting.  A simple example is contained in Fortson: Misuse of Drugs and Drug Trafficking Offences (4th Ed'n) at para 13-231 as follows:-

"It will be apparent from the above that great care must be exercised in the computation of items alleged to represent the benefits of drug trafficking.  Double counting is a familiar error and very easily made.  Suppose the prosecutor's schedule of D's bank account reveals that between 1991 and 1992 D deposited £15,000.  He withdrew £1,250 by cheque on eight occasions during 1993.  In 1994 D registered a car in his sole name and which was then worth £7,000.  D has regularly supplied drugs commercially since 1986.  The Court could assume that the deposits totalling £15,000 between 1991 and 1992 were the proceeds of drug trafficking (S.4(3)(a)(ii).  It could be inferred that the car was acquired by D at some time within the six-year period and that the value when he did so was approximately £7,000.  His benefits at that points amounted to £15,000 and £7,000 = £22,000.  However, further enquiries revealed that D paid £10,000 for the car in 1993 by way of the eight sums withdrawn from the account during 1993.  Accordingly, the car did not represent a separate source of income after all and thus the sum of £7,000 should be ignored.  This is a simple and no doubt obvious example, but the room for error is much greater in cases involving a large number of bank accounts, assets and transactions."

Application to the facts

18.      With that introduction in mind, we turn to the facts of the case.  We deal first with Mr Le Quesne's submission that, on the evidence, the Court should find that Harris only spent £1,300 on purchasing the heroin, being the sum of £1,300 paid to him by Hepburn; and that accordingly that is the sum which should be confiscated. 

19.      We do not accept that submission.  We find that, on the balance of probabilities, Harris spent £1,753.35 on buying the heroin.  Our reasons are as follows:-

(i)        There is no dispute that the wholesale price in Glasgow for this amount of heroin is £1,000 per ounce and therefore the sum of £1,753.35 would be its cost. 

(ii)       The defendant himself, when interviewed, said that he could buy heroin in Glasgow for £1,000 per ounce.  He did not suggest that he could buy it more cheaply.  Thus, his own statement was consistent with the prosecution evidence as to the wholesale price.

(iii)      The defendant has not given evidence to suggest that he could in fact buy heroin for less than £1,000 per ounce.  Mr Le Quesne relied on the fact that the payment of £1,300 had been made by Hepburn immediately before the heroin was posted to Jersey and that the prosecution had not produced evidence of any other payment from Hepburn to Harris.  But it is unreasonable to expect the prosecution to be aware of all payments from Hepburn to Harris.  These could easily have been in cash; the drug trafficking industry is largely a cash industry.  In the absence of any evidence from the defendant to assert that he in fact purchased the heroin for only £1,300 and any explanation as to how he might have achieved this in view of the agreed wholesale price in Glasgow, we find that Harris had to pay the normal wholesale price for this heroin i.e. £1,753.35. 

20.      Mr Le Quesne accepted that the Court would be entitled to find that the £1,300 (as he submitted) or the £1,753.35 (if the Court preferred that sum) was the proceeds of drug trafficking and that a confiscation order could be made in either of these sums.  But, he asserted, assuming, as it has, that the Court found that £1,753.35 was the relevant sum, the Court could not aggregate the income of £1,300 and the expenditure of £1,753.35 as this would be to double count. 

21.      We certainly remind ourselves of the danger of double counting.  If the defendant had given evidence in the confiscation proceedings to the effect that the £1,300 had been used towards the purchase of the heroin and if we had accepted that evidence, this would have satisfied us that the assumptions had been shown to be incorrect and should not therefore be made.  In those circumstances the Court would have assessed the proceeds of drug trafficking simply at £1,753.35, on the basis that the receipt of £1,300 was subsumed in this amount.

22.      However the defendant chose not to give or call any evidence at the confiscation hearing.  There is therefore nothing to rebut the assumptions and nothing to show that the £1,300 was used towards the purchase of the heroin and that it should therefore not be counted as well as the £1,753.35.  Mr Le Quesne relied upon the prosecution's assertion in its summary, for sentencing purposes, that the £1,300 was a payment towards the purchase of the heroin.  However the prosecution has no knowledge of whether this was so.  It was clearly entitled to point to the fact that the £1,300 was paid over immediately before the heroin was purchased in seeking to prove the guilt of the various defendants, but it has no greater knowledge than the Court as to whether the £1,300 was in fact a payment towards the heroin in this case or whether it was a payment in settlement of a running account between Hepburn and Harris in respect of drug trafficking activities. 

23.      The fact remains that the Court is entitled to assume under Article 4 that both income and expenditure over the previous six years have come from drug trafficking.  Clearly if there is evidence to show that expenditure has been met out of income which has already been taken into account, the assumptions will be shown to have been incorrect and must be dis-applied in order to avoid double counting.   But, as we have said earlier, the onus lies on a defendant to show that it would be incorrect to rely on the assumptions.  In this case the defendant has called no evidence and there is therefore nothing before the Court to rebut the assumptions.  Accordingly the Court does not find that the assumptions in relation to the income of £1,300 or the expenditure of £1,753.35 have been shown to be incorrect and it therefore makes those assumptions.  It follows that it finds, on the balance of probabilities that, in relation to the £1,300, this was a payment or reward in connection with drug trafficking carried on by the defendant; in relation to the £1,753.35, this was met out of payments received by him in connection with drug trafficking carried on by him; and that there has not been any double-counting.

24.      The Court therefore made a confiscation order in the aggregate sum of £3,053.35.

Authorities.

Drug Trafficking Offences (Jersey) Law 1988. 

R -v- Smith (1989) 89 Cr App R. 235.

Fortson: Misuse of Drugs and Drug Trafficking Offences (4th Ed'n): para 13-231