APPEAL COURT, HIGH COURT OF JUSTICIARY
Lord Justice General
Appeal Nos: C511/97
HIGH COURT OF JUSTICIARY
OPINION OF THE COURT
delivered by LORD COULSFIELD
ALEXANDER BAIN DONNELLY and ALISON DONNELLY
HER MAJESTY'S ADVOCATE
Act: Burns, Q.C., Smith, Shead; O'Donnell Vaughan, Aitken Nairn
Alt: Bell, Q.C., A.D.; Crown Agent
5 May 1999
The appellant Alexander Bain Donnelly was tried, along with a co-accused Linda Powell, at the High Court in Glasgow on an indictment which contained a total of 12 charges, 10 of which related to drugs. Eventually, Miss Powell pled guilty to one charge of being concerned in the supply of cannabis resin and Mr. Donnelly was convicted of one charge of being concerned in the supply of diamorphine in Glasgow on 25 April 1995. According to the trial judge's report, Mr. Donnelly was apprehended on 25 April 1995 while he had in his pocket a bag containing 200 grms. of diamorphine. The diamorphine was of a low level of purity and the value was perhaps, according to the trial judge, in the region of £6,000. The trial judge draws attention to certain of the circumstances of the case and observes that in his view it would not be proper to draw inferences from the bare facts described. He also mentions that five of the charges brought against Mr. Donnelly related to a very large quantity of drugs which had been found in the boot of a car which belonged to him and which was in the garage at a private house occupied by others. He observes that the police evidence in relation to this matter was in certain respects very unsatisfactory. All these charges were found by the jury to be not proven.
Immediately after the conviction, the Advocate depute applied under section 1 of the Proceeds of Crime (Scotland) Act 1995 for a confiscation order and presented a prosecutor's statement to the court. A restraint order had earlier been made preventing Mrs. Donnelly from dealing with certain property, including implicative gifts received from Mr. Donnelly. Both Mr. and Mrs. Donnelly lodged answers to the prosecutor's statement and there was eventually a proof, after which the judge made a confiscation order requiring Mr. Donnelly to pay £270,000. Both Mr. and Mrs. Donnelly have appealed, and the principal issue raised in both appeals relates to the circumstances in which a court should exercise the discretion under the statute to make a confiscation order and, in particular, as to what assumptions should be made in exercising that discretion and as to whether there is any onus on any party to the proceedings. A number of other issues, affecting particular items of property which were taken into account by the judge at the proof, were also raised but it is convenient to postpone these until the main question has been considered.
In approaching the principal issue, it is necessary to have regard to the whole of the relevant provisions of the statute. The 1995 Act deals both with confiscation orders following upon convictions of drug-related offences and confiscation orders following upon conviction for other offences. There are marked differences in the manner in which these two types of offences are dealt with. So far as concerns drug-related offences, the material provisions are as follows:
"1(1) Subject to the provisions of this part, where in respect of any offence to which this part applies -
(a) the accused is convicted, whether in solemn or summary proceedings;
The court, on the application of the prosecutor, may make an order (a 'confiscation order') requiring the accused to pay such sum as the court thinks fit.
(2) This part applies to any offence which has been prosecuted -
(a) on indictment;
(4) Except where the offence is a drug trafficking offence, the court may make a confiscation order against an accused only if it is satisfied that he has benefited from the commission of the offence concerned.
(5) The sum which a confiscation order requires an accused to pay in the case of a drug trafficking offence shall be an amount not exceeding -
(a) subject to paragraph (b) below, what the court assesses to be the value of
the proceeds of the person's drug trafficking; or
(b) if the court is satisfied that the amount that might be realised in terms of
this Act at the time the confiscation order is made has a value less than that of the proceeds of the person's drug trafficking, what it assesses to be that amount.
(8) for the purposes of any appeal or review, a confiscation order is a
Section 2 of the Act applies only to cases which are not drug-related and sets out the manner in which it is to be determined whether an accused person has benefited from the commission of an offence. Section 3 concerns assessment of the proceeds of drug trafficking and provides:
"3(1) For the purposes of this Act -
(a) any payments or other rewards received by a person at any time (whether
before or after the commencement of this Act) in connection with drug trafficking carried on by him or another are his proceeds of drug trafficking, and
(b) the value of his proceeds of drug trafficking is the aggregate of the values
of the payments or other rewards.
(2) Without prejudice to section 9 of this Act the court may, in making an assessment as regards a person under section 1(5) of the Act, make the following assumptions, except in so far as any of them may be shown to be incorrect in that person's case -
(a) that any property appearing to the court -
(i) to have been held by him at any time since his conviction; or, as
the case may be,
(ii) to have been transferred to him at any time since a date six years
before his being indicted, or being served with the complaint, 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 connection with drug trafficking carried on by him;
(b) that any expenditure of his since the date mentioned in paragraph (a)(ii)
above was met out of payments received by him in connection with drug trafficking carried on by him, and
(c) that, for the purpose of valuing any property received or assumed to have
been received by him at any time as such a reward, he received the property free of any other interests in it".
Subsection (3) excludes certain offences from the ambit of subsection (2) and subsection (4) provides that assets are to be left out of account if they have been taken into account in a confiscation order being made by other courts.
Sections 5 and 6 deal with gifts. Section 5 sets out a scheme for the attachment of gifts made by a convicted person and section 6, which is headed "implicative gifts", applies the scheme to drug trafficking offences. Section 6 provides:
"6(1) In this Act references to an 'implicative gift' are references to a gift (whether made before or after the commencement of this Act) -
(a) made not more than six years before the date on which, in respect
of a person suspected of, or charged with, a drug trafficking offence, the proceedings were commenced or a restraint order was made (whichever first occurs); or
(b) made at any time if the gift was of property -
(i) received by the giver in connection with drug trafficking carried
on by him or another, or
(ii) which, in whole or in part, directly or indirectly represented in
the giver's hands property received by him in that connection.
(2) The value of an implicative gift shall be assessed in accordance with section 7 of this Act.
(3) Where the court is satisfied, on the application of a person in receipt of an implicative gift made before or after compensation order has been made -
(a) that the person received the gift not knowing, not suspecting and not
having reasonable grounds to suspect that the giver was in any way concerned in drug trafficking; and
(b) that he is not, and has never been, associated with the giver in drug
(c) that he would suffer hardship if the application were not granted,
it may make an order declaring that the gift or a part of the gift shall not be an implicative gift and that the property or part of the property of the recipient of the gift shall not be, or shall cease to be, realisable for the purposes of this part of this Act, and, if a confiscation order has already been made, varying that order accordingly, where necessary".
It should be added that, under section 4 of the 1995 Act, the property realisable in satisfaction of a confiscation order includes the whole estate of a person against whom proceedings have been instituted for an offence to which the Act applies and also the whole estate of any person to whom such a person has made an implicative gift, as well as any other property in the possession or under the control either of the person against whom proceedings have been instituted or of the recipient of an implicative gift, subject to certain exceptions not material for the present purpose.
At the proof, the appellants submitted, in reliance on a number of English authorities, that the assumptions set out in section 3(2)(a)(b) and (c) only came into play if there was evidence to show, at least on a prima facie basis, that the person against whom the order was sought had received some payment or reward for drug trafficking. Parties were agreed, before the judge, on two matters; firstly, that the Crown required to establish beyond reasonable doubt that the accused had been convicted and that certain property had been held and expenditure incurred by him; and, secondly, that, in so far as it was incumbent upon the accused to "show the contrary" for the purposes of section 3(2), the standard of proof was that of the balance of probabilities. The judge rejected the appellants' argument and held that it was not necessary that there should be evidence to establish that an accused had benefited from drug trafficking before the assumptions could be relied on. The judge records in his opinion that the Crown made no attempt to demonstrate that Mr. Donnelly received proceeds from any drug trafficking transaction. The Crown approach was to rely on a considerable build-up in Mr. Donnelly's assets and a very substantial expenditure on his part over the five year period as demonstrating, in the absence of any satisfactory explanation, that he had received proceeds from drug trafficking, which the Crown maintained amounted to £626,123. Mr. Donnelly gave evidence in which he maintained that he had not been involved in drug trafficking and sought to explain some of the transactions which emerged from the statements which had been lodged. Mrs. Donnelly also gave evidence and there was also other evidence led. Essentially, the judge rejected the evidence of the appellants and the other evidence led on their behalf and proceeded, in reliance on the assumptions, to make the assessment. He did hold that, for various reasons, certain assets should not be included in the calculation.
Counsel for the appellant Alexander Donnelly referred to the 1995 Act and pointed out that the regime in that Act was similar to the regime which operated in England under the Drug Trafficking Offences Act 1986, although the rules in England had been amended in 1994 and the scheme operating there was now a mandatory one. The earlier English cases, the effect of which was summarised in R. v. Khan  C.L.R. 508, were helpful in interpreting the Scottish legislation. The judge in the present case had followed the decision in H.M.A. v. MacLean 1993 S.C.C.R. 917 in regard to the question of suspicion. The question was whether there was an onus on the accused to prove that the assumptions were incorrect. The test could not be one of suspicion only, as that was much too vague. Before any assumption could be made, there must be acceptable evidence which connected, in time or in circumstances, the accused with drug trafficking activity, so that the court could conclude that the accused had obtained proceeds from drug trafficking. There should therefore be evidence that the accused was actually engaged in trafficking during the periods in which he acquired the property under consideration before the assumptions could be made. Here the Crown had made no attempt to prove that the appellant was engaged in drug trafficking and the approach had been entirely to rely on the build-up of assets. The accused had been accused of involvement in trafficking, in terms of charges 1 to 5 of the indictment, which covered the period from 1993 to 1994 but he had only been convicted in regard to one occasion. The nature and circumstances of the conviction should be taken into account in deciding whether the assumptions should be made. So far as concerned the question of onus, the words in section 3(2) "except in so far as any of them may be shown to be incorrect" had, in England, been held to impose an onus on the accused. The wording in relation to non-drugs offences was different and in that connection it was expressly provided that the accused must prove that the assumption was incorrect. The difference of phrasing supported the proposition that there must be a different meaning and the question then was what it should be held to be. It was submitted that the phrasing indicated that the court might, or must, exercise a more investigative function and not just leave it to the accused to show that the assumptions were not justified. If there were direct evidence that the accused had benefited from drug trafficking, the court did not require to make any assumptions, but that situation posed no problem for the accused's construction of the statute. If the court had evidence, it could proceed on it. If it did not, it could proceed on the assumptions, but there were certain matters which had to be proved first. If the construction of the scheme were that the word "may" was only there because an assumption might not be needed, it was hard to see that there had been any need to introduce a mandatory scheme in England. The arguments for Mr. Donnelly were adopted by counsel for Mrs. Donnelly, who also pointed out that she had given evidence at the proof, that she had never been involved in drug trafficking and that there was no evidence that she ever had been involved in the receipt of any proceeds of drug trafficking.
For the Crown, the advocate depute submitted that there was a clear difference between the scheme applicable to non-drugs cases and that applicable to drugs cases. In non-drugs cases, the scheme only came into operation where there was proof of benefit from the offence. As had been held in MacLean, in drugs cases the starting point was the conviction, which opened the door to the Crown application. There might be direct evidence of benefit but it was more likely that there would be no such direct evidence, in a drugs case, and in that case the Crown had to rely on the assumptions. If the Crown showed that there was a conviction, it also required to prove certain facts from which the assumptions could be made, and the Crown had done so. The accused Donnelly had considerable assets and the onus was on him to show that these assets were legitimately acquired. The judge had rejected all the explanations put forward and he was then entitled to make the order. It was not necessary for the Crown to show, by direct evidence, that there had been any benefit from the offence and it was not necessary to have evidence, or a suspicion, or a prima facie case that the accused had benefited from trafficking. If there were apparently large figures for assets and expenditure, there was suspicion and that was enough.
H.M. Advocate v. MacLean supra was a decision of Lord Sutherland under section 1 of the Criminal Justice (Scotland) Act 1987. Lord Sutherland was referred to one of the decisions under the English Act of 1986, R. v. Dickens  Q.B. 102. Lord Sutherland observed that in that case the Lord Chief Justice had set out the English approach in dealing with confiscation orders but that because of the difference in legislation, the Scottish approach might be slightly different. He continued:
"In the first place, what I am required to do is to consider the value, if any, of the proceeds of the accused's drug trafficking and then to consider the value of his realisable property. The amount to be confiscated cannot exceed the lesser of these values, but, having arrived at figures, it is still within my discretion as to whether any order should be made and if so, as to the amount which is appropriate. For the purposes of the first assessment I turn to section 3.
Under section 3(2) it is open to me to make certain assumptions and I was invited by the Crown to do so. For the accused, Mr. Wylie argued that I should not make these assumptions and should accept the accused's evidence that he had no concern with drug trafficking at any time. As indicated, I am satisfied that he was so concerned on 11 February 1992, and there is other evidence, to which I shall return in more detail about substantial sums of cash being transferred to and from the accused in circumstances which are, to say the least, unusual. The overall effect of the accused's financial position during the five years prior to February 1992 also, again for reasons to which I shall return, gives rise to suspicion. Accordingly I consider that this is a case in which it would be appropriate to make the assumptions contained in section 3(2). As that subsection states, these assumptions may only be made 'except in so far as any of them may be shown to be incorrect in that person's case'. In my opinion this means that the onus is on the accused to establish that the assumptions should not be made in respect of any particular item, and I further consider that the standard of proof is that of the balance of probabilities. This is consistent with the approach of the Lord Chief Justice in Dickens when considering legislation which is very similar as far as this aspect is concerned".
In our view, the Scottish statutory provisions can be read in a relatively simple and straightforward way. Section 1 confers power on the court to make a confiscation order against a person who has been convicted, both where the conviction relates to drug trafficking offences and where it relates to non-drugs offences. Section 1(1) provides that the court "may" make the order, and therefore confers a discretion on the court, in relation to both drugs offences and non-drugs offences. However, section 1(4) specifically provides that in the case of a non-drugs offence the court may make the order only if it is satisfied that the accused has benefited from the commission of the offence. There is no such restriction in relation to drugs offences. That demonstrates, in our view, that proof of actual benefit is not a necessary pre-condition to the exercise of the discretion to make a confiscation order in the case of a drugs offence. Further, while there may be many circumstances which may be taken into account in deciding whether or not to exercise the power to make a confiscation order, there is, in our view, nothing in the legislation to suggest that it is necessary that the court should have some evidence, or ground of suspicion, that the accused has profited from drug-dealing before it can make the order. There is nothing in the wording of section 1 to suggest such a requirement. Section 3(2) similarly provides that the court "may" make the assumptions there set out, but there is nothing in the wording of section 3 which suggests that the court must have evidence or some ground of suspicion that the accused has profited from drug-dealing before it can make those assumptions, and the structure of the legislation suggests the contrary. The only pre-conditions for the making of the assumptions which can be found in the statute are that the court must be satisfied that the accused has received payments or incurred expenditure, or both. It was agreed by the Crown and the defence in this case that the prosecution must prove these matters beyond reasonable doubt and we see no reason to disagree with that view. Once that has been done, the court can, on the terms of the statute, proceed directly to make the assumptions, unless they are shown to be incorrect. In that context, we see no reason to read in any such qualification as that for which the appellants contended. It may be added that in view of section 1(4), it might have been expected that if it were the intention of Parliament that there should be any such qualification on the making of the assumptions, express provision would have been made.
It may then be asked what the content of the discretion conferred in the statute is, and, in particular what circumstances are relevant to the decision whether or not to make the assumptions. It would not, in our view, be desirable to attempt to define the relevant circumstances exhaustively. One thing which can be said, however, is that it is clear that the discretion to make the assumptions is closely linked, in the statute, to the question whether the assumptions have been shown to be incorrect.
That is a matter about which the court has to make a judgment, on the evidence before it, and the wording of the provision clearly shows that what is required is evidence that the assumptions should not be made rather than evidence that they should. The accused person is required to show that the money in question was not received as a result of drugs trafficking. There may be situations in which the accused can go some way towards proving that the money in question was received from legitimate sources but
may be unable to prove the amounts legitimately received to the last penny. In that situation there will remain a certain sum to which the exception in section 3(2) does not apply and in respect of which the court could therefore make the statutory assumptions. Considering the position as a whole, the court might, in the exercise of its discretion, decide that it should not make the assumptions in respect of any of the money. That is one example, at least, of a situation in which discretion can be exercised. Accordingly, it cannot be said that the view which we have taken leaves the discretion without content.
In all the circumstances, in our opinion, it is not necessary that there should be either evidence that the accused has benefited from drug dealing or grounds for suspicion that he has so profited before the court can make the assumptions set out in section 3(2), and we therefore reject the main argument in principle advanced on behalf of the appellants.
It appears that in some cases the English courts have, in certain respects, taken a different approach. There are some differences in the legislation which may account for some difference of approach. We do not, however, think it necessary to go into such differences or into the reasoning in the English cases in any detail. So far as we can see, the approach of the Lord Chief Justice in R. v. Dickens supra is consistent with what we have said in this opinion. In R. v. Redbourne  1 W.L.R. 1182 it was suggested that there was a requirement that there should be some ground for suspicion, at least, the argument being that it could not be accepted that a judge was entitled to make the assumptions for no reason or on capricious grounds. The difficulty about that suggestion seems to us to be that, as we read it, the statute provides that the court may make certain assumptions once certain facts are proved. If so, no question of the judge making assumptions capriciously or without reason seems to us to arise. We therefore find difficulty in seeing the justification for introducing an additional requirement which, in the judgment of Staughton L.J., is simply stated without any further reasoning or comment. The approach taken in R. v. Redbourne was carried forward in R. v. Rose  2 All E.R. 761 and commented on in R. v. Khan supra, although we think it evident that the court in the latter case had some difficulty with the additional requirement which had been introduced. The matter was further commented on in R. v. Clarke  4 All E.R. 803 but in that case it was not necessary to resolve any difficulty created by the earlier cases. In the whole circumstances, it does not seem to us that there is anything in the English cases which requires us to modify the approach which, for the reasons set out above, is appropriate to the Scottish legislation.
A submission was put forward on behalf of the second appellant that the proof in relation to the confiscation order should have been heard by the same judge as heard the evidence at the trial. It was pointed out that, as can be seen from the terms of his report, the trial judge had criticised the evidence in relation to charges on which the first appellant had been acquitted and the submission was that that remained relevant, even though those charges did not come into the picture in regard to the confiscation order. The judge who heard the proof had no personal knowledge of the circumstances while the trial judge might have had reservations about making the order. In fact only a short postponement would have been necessary to enable the trial judge to hear the proof and the interests of justice required that he should have done so. Counsel accepted that section 9(7) of the Act implied that the judge who heard the proof need not be the judge who heard the trial but submitted that the interests of justice did require that wherever possible it should be the same judge. In our view there is no substance in this ground of appeal. If the judge who is to hear the proof is not the trial judge and is asked to adjourn the proof in order to enable the trial judge to take it, a question will arise which will be one for the discretion of the judge. In the present case, the point was put to the proof judge and he rejected it. There is, in our view, nothing to indicate that that was a wrong exercise of his discretion.
The remaining points raised in the appeal concern individual items of property which the proof judge included in his assessment for the purposes of the confiscation order. The first of these was a heritable property at 30 Watson Avenue, Rutherglen, the title to which was in the name of Mr. Donnelly's brother. The judge says that the combined effect of oral and documentary evidence was that Mr. Donnelly purchased the property as an investment for £60,000 in March 1990 and then entered into missives to sell it to his brother with a date of entry of 17 May 1991 and a nominal price of £75,000 although, as he comments, there had been no significant improvement work done. The judge narrates that Mr. Donnelly maintained that he received a cheque for the free proceeds of the £75,000 from his solicitor once the mortgage was cleared but the records showed that only an amount roughly equal to the brother's mortgage was paid to the accused's solicitor. There were other notes and records which cast doubt on the true position about payments passing. The judge also draws attention to the fact that the price was paid long after the date of entry but without interest and that the brother's fees were paid by the accused. The accused lived in the property and handled rental payments for a period and also paid the mortgage on occasions. The brother had gone to Ireland and his whereabouts were unknown at the time of the proof. There were other circumstances which the judge took into account. The conclusion which the judge reached was that there was no acceptable evidence that the brother made any payment in respect of the purchase or the mortgage, that the accused alone paid the mortgage, that the title was put into the name of the brother to suit the accused's own purposes and enable him to increase his borrowing on the security thereof, and that it was therefore an implicative gift. It was submitted to the judge that he could not be satisfied that the transaction was not genuine since there was a disposition for £75,000 and that a solicitor would not draft such a disposition without being satisfied that the price was paid in full. However no attempt was made to lead the solicitor to explain the position or produce his files and the judge says that he was not persuaded by the argument and considered the whole transaction a sham. Before us, it was submitted on behalf of the first appellant that there was no evidence to warrant the conclusion that there was a gift at all in the circumstances. Reference was made to Walkers Evidence (at page 182) in regard to the probative effect of a disposition and it was submitted that since the disposition was a probative document which bore to record the receipt of the purchase price of £75,000 the court was not entitled to go behind that. In our view that argument is misconceived. It has never been the case that the fact that there is a probative document which bears to record a transaction prevents a party from leading evidence to show that there was no genuine transaction or that any transaction was fraudulent. The evidence before the judge showed that the title to the property had been transferred to the first appellant's brother. The judge rejected the evidence put forward in an attempt to show that the brother had given value in return, and he was entitled to conclude that there had been a gift and, particularly having regard to section 6(1)(b)(ii), that it was an implicative gift. On the evidence before the judge, therefore, there was ample material to entitle him to reach the conclusion which he did and the appeal on this point fails.
Essentially the same argument was submitted in regard to the judge's findings in regard to other heritable properties at Kirkintilloch Road, Bishopbriggs, Bilsland Drive, Glasgow and Shaw Street, Glasgow. These were properties which had been put in Mrs. Donnelly's name and in each case the judge held that the transactions amounted to gifts. We do not think it necessary to go through all the evidence in relation to these transactions, as it is reported by the judge. Essentially, the position is that he considered that the explanations of the transactions put before him on behalf of the appellants were false and in our view he had ample material on which to reach that conclusion. It was submitted that the mere fact that he disbelieved evidence did not entitle him to conclude the contrary. We do not think that is what the judge did. In every case there was evidence before him to justify the conclusion that the property in question was a gift.
A final submission was made in regard to the matrimonial home at 7 Golf Course Road, Balmore, but it is not necessary to deal with it because the Crown accepted that the second appellant was entitled to a half share of that property and that it would not be appropriate for it to be included in the property chargeable under the confiscation order.
In the whole circumstances these appeals fall to be refused.