Scottish High Court of Justiciary Decisons

HER MAJESTY'S ADVOCATE v. HARRY McSALLEY [2000] ScotHC 49 (10th April, 2000)

The accused pled guilty at the High Court in Glasgow on 28 October 1998 to a charge of being concerned in the supplying of cannabis resin to another or others on an occasion on 9 October 1997, contrary to section 4(3)(b) of the Misuse of Drugs Act 1971. Immediately after his 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. The accused lodged answers to the prosecutor's statement; his wife entered the proceedings by Minute. They were both represented at the hearing before me.

The Statutory Framework

Section 1(1) of the Proceeds of Crime (Scotland) Act 1995 confers a discretion on the court to make a confiscation order following upon conviction of certain offences, including drug trafficking offences, requiring the accused to pay such sum as the court thinks fit. The discretion thereby conferred is limited by the provisions of section 1(5) which is in the following terms:

Section 3 of the Act provides a mechanism whereby the proceeds of drug trafficking may be assessed. In terms of section 3(2) the court may, without prejudice to section 9, in making an assessment as regards a person under section 1(5), make certain assumptions as to his property and expenditure except in so far as any of these may be shown to be incorrect in that person's case. Section 9 enables the prosecutor who has applied for the making of a confiscation order to lodge a statement as to any matters relevant to the assessment of the value of the accused's proceeds of drug trafficking. The statement which has been lodged by the prosecutor in this case sets out, in schedule 1, the total known expenditure of the accused for the five year period ending on 9 October 1997 calculated by adding together the increase in the value of his net assets and the total of his other known expenditure. The schedule also sets out the total of the accused's ascertainable income from known sources for that period. The excess of total expenditure over total income (£56,318) constitutes expenditure which cannot be explained by known legitimate transactions and, applying the assumption contained in section 3(2), is deemed to be the proceeds of drug trafficking. In terms of the joint minute which has been lodged it is agreed that the individual figures which are included in the prosecutor's statement are correct and that the methodology adopted by the Crown in the preparation of the statement is correct. Further, it is also agreed in terms of the joint minute that the total value of the accused's realisable assets is £26,499.46. As already noted, the court may make the assumptions except in so far as shown to be incorrect and in the present case the contention on behalf of the accused was that the money in question was received from legitimate sources. Put shortly, the defence position was that the figure in schedule 1 representing the accused's known income ought to be increased to take account of additional earnings which were not disclosed to the Inland Revenue.

Mr Allan, counsel for the accused, argued that since it could be demonstrated that there had been an understatement as to income it followed that the assumptions made by the Crown were incorrect. He submitted that the terms of the statute being penal in nature must be construed strictly and in favour of the defence and therefore the prosecutor's figures having been demonstrated to be incorrect, the assumptions "flew off" and it was not open to the court in that situation to substitute any alternative figures.

I consider that that submission is misconceived. The assumption upon which the Crown relies is that the sum which represents expenditure which cannot be explained by legitimate means is the proceeds of drug trafficking. The challenge on behalf of the accused is not to the methodology adopted by the Crown but to the detail of the calculation. I consider that the particular figures are capable of being adjusted where the evidence led on behalf of the accused demonstrates that they are inaccurate and that the substitution of different figures does not in any way interfere with the making of the assumption provided for by the statute.

The two sources of income in respect of which it is alleged there has been an understatement in the prosecutor's statement are (a) the digs money received by the accused and his wife from three of their children and (b) weigh-in payments received from the hire by the accused of his taxi to other drivers. I now turn to consider the evidence in respect of these matters.

(a) Children's Contributions

In terms of the answers lodged on behalf of the accused there falls to be added to the ascertainable income, as detailed in schedule 6 of the prosecutor's statement, contributions which were derived from the three adult children of the family namely, Grant, Alexander and Janet, who lived in the parental home during the relevant period. Each child is said to have contributed £40 per week throughout the said period in respect of board and lodgings; the additional income thereby received is said to amount in cumulo to £31,200.

The Crown's position in this regard was not to dispute that some money was in fact received from this source but to assert that the total is overstated. It was accepted by both the Crown and the defence that the issue in this regard was essentially one of credibility and that the burden of proof, on the balance of probabilities, lay on the defence. Evidence was led from the accused, his wife and each of the three children. In summary, that evidence was to the following effect. According to both Mr and Mrs McSalley each of the children paid £40 per week every week from October 1992 until shortly before Mr McSalley's arrest in October 1997 which triggered these proceedings. At about that time, the two boys left the family home and ceased making payments. Grant's evidence was to the effect that he was more or less in continuous employment for the whole of the period in question and supporting documentary evidence was produced except for the last five month period. Grant said that he paid £160 per month for five years until one month before his father's arrest. His mother, however, claimed that he moved out to live with his girlfriend two months before October 1997. It was accepted by the defence that the effect of this was to bring out a maximum total in respect of payments made by Grant of £9,280. It was suggested on behalf of the Crown that since no reason had been advanced for the failure to provide documentary evidence to demonstrate that Grant was indeed in employment for the last five months of the period in question, the figure should be further reduced accordingly. I find that notwithstanding the absence of any explanation for the failure in respect of vouching, I am prepared to accept that it has been proved, on the balance of probabilities, that Grant continued to contribute £160 per month until August 1997. I find, however, that I am not prepared to accept the evidence to the effect that these payments, which were for board and lodgings, were made by Grant even during those periods when he was away from home on holiday. It follows, in my view, that the figure of £9,280 to which reference has been made should be further reduced by £400 to reflect the fact that, on his own evidence, Grant was abroad on holiday for two weeks during each of the five years. I find therefore that a total contribution assessed at £8,880 was made by Grant during the relevant period.

Mrs McSalley's evidence in respect of contributions made by Janet was that she paid £35 per week by way of board and lodgings when she was in full-time employment, £15 per week during those periods when she was on a Youth Training Scheme and £10 per week when she was unemployed. Janet's own evidence was that when she was either unemployed or on a Youth Training Scheme she paid only £10 per week and that it was only when she was in full employment that she paid £35 per week. I find that I prefer Janet's evidence in this respect and applying these figures to the various periods of employment, YTS and unemployment as spoken to by her, I find that a total of £7,050 was paid by her during the period in question.

The evidence of both Mr and Mrs McSalley was to the effect that their son Alexander lived at home and contributed £40 per week to the family budget throughout the period in question until only a few weeks before the date in October 1997 when Mr McSalley was arrested. Alexander himself said in evidence that he left home only in September or October 1997 to join his girlfriend who was by then in an advanced state of pregnancy. He also said that he was in full-time employment between 1993 and 1997 except for a few weeks after being made redundant and that he gave £40 in cash to his mother each week even when on holiday or unemployed. I did not find this witness's evidence in relation to when he left the family home convincing: he was not able to provide any explanation as to why he did not go to live with his partner until the very last weeks of her pregnancy, even although she had a home of her own, but chose instead to continue sharing a bedroom with his brother at his parents' home. He gave the impression of being somewhat ill at ease when questioned about this matter and I formed the view that this evidence was tailored to suit his father's purposes.

That impression was confirmed by the evidence given by his sister Janet on this matter. According to Janet, Alexander purchased a flat with his girlfriend in the Springburn area of Glasgow about two years prior to October 1997 and was living there with her even before she became pregnant. She said that Alexander moved out of the family home in about 1995 and never returned to live there.

After the lunch adjournment, Janet was asked whether, having had time to reflect on her evidence, it remained the same. Her response was to explain that between 1995 and 1997 she herself was staying at her boyfriend's home on three or four nights of the week; she knew that her brother had bought a house of his own with his girlfriend and she had assumed that he had moved out of the family home and into that house at the time of purchasing it but could not say for definite that he did. I formed the impression that the evidence initially given by Janet was frank and truthful. That evidence was of course inconsistent with the position adopted by her brother and by both of her parents. I also formed the impression that the witness became aware of this and consider it of significance that, despite her obvious discomfort, she was nevertheless not prepared to state that her brother had remained at their parents' home until the autumn of 1997. In these circumstances I have little hesitation in preferring the clear evidence initially given in this respect by Janet and in rejecting that of her parents and brother. It follows that the calculation of the contribution by Alexander to the family finances falls to be reduced by deducting from the figure suggested by the defence the sum of £4,160 as representing two years contributions of digs money. In addition, I consider that a further deduction of £240 falls to be made in respect of those two week periods when Alexander was away from home on holiday notwithstanding his assertion that he maintained his £40 a week contributions throughout. I find it impossible to be precise as to the appropriate figures but, taking a broad approach, I consider that Alexander's total contribution to the household can reasonably be estimated at a figure of £5,840. It follows from what has been said that I find that it has been established, on the balance of probabilities, that a total figure of £21,770 was contributed to the family income by the three children during the relevant period.

(b) Taxi weigh-in income

The defence position was that the prosecutor's statement under-estimated the accused's income by omitting to take account of the fact that £150 per week was received by the accused during each of the three years 1994, 1995 and 1996 by way of taxi weigh-in income. Mr McSalley's evidence was that throughout the relevant period his vehicle was utilised by being driven by another driver during those hours of each day when he himself was not working. The total figure which would have been earned in this way if the vehicle was worked six days per week was £22,500. One difficulty for the accused in this respect was that there was evidence led of a meeting which took place during 1994 at which the accused told an inspector of taxes that he had received no weigh-in income during 1994. Following the lodging of the prosecutor's statement a submission was made on behalf of the accused to the effect that he had received £1,300 by way of weigh-in income which was not disclosed in his business accounts and the prosecutor's statement was amended to take account of that. The assertion now being made is of a further £21,200 having been earned and not disclosed in the accused's accounts.

There was evidence led in this connection from two witness, Mrs Lewis and Mr Bradley. Mrs Lewis said that her husband, who is now dead, drove Mr McSalley's taxi in about 1992 and 1993 and that, so far as she could recall, he paid between £130 and £150 per week for a period of about eighteen months. Mr Bradley spoke to having used the vehicle for perhaps about two years and having made payments of £150 per week. He could not state with any degree of certainty when the weigh-in period began but considered that his dealings with the accused ended in about May 1996. The tax inspector who spoke to the meeting with Mr McSalley in 1994, to which reference has already been made, spoke to having been told that the rate of weigh-in income during 1993 had been £100 per week.

The Crown did not adopt the position that there had been no weigh-in income for any of the three years involved and it was accepted that Mr McSalley may well not have made full disclosure to the Inland Revenue. It was suggested that a figure of about £10,000 would be appropriate in this respect.

The accused admitted in evidence that he has repeatedly made false declarations in respect of his income in order to reduce his tax liability. Bearing in mind the adverse view I formed of his credibility as to Alexander's contributions and in the absence of any independent evidence beyond that to which reference has been made, I find I am not prepared to accept pro veritate his assessment of the amount of weigh-in income which should now be taken into account. In any event, he conceded in evidence that there would have been about five weeks in the three year period during which there was no weigh-in income because the taxi was off the road for repairs. Further, I consider that it is unlikely that the rate of £150 would have been payable throughout the period in question. In this connection, I attach significance to the evidence of Mrs Lewis who said that weigh-in fees rose each year and, bearing in mind Mr McSalley's own statement to the tax inspector as to the rate he was receiving in 1993, I consider the approach suggested by the Crown of applying a sliding scale of fees of £115 in 1994, £125 in 1995 and £135 in 1996 to be reasonable in the circumstances. Applying these figures to a period of 51 weeks in each year and deducting the £1,300 already taken into account, the highest possible total amount of weigh-in income would be about £17,825. It was clear, however, from the evidence that the full weekly rate was payable on the basis of the car being available for six shifts. Mr McSalley's evidence was that there were weeks when he let it out for either four or five days only and I consider that a further deduction requires to be made to reflect that situation. A further imponderable is that in the absence of any accounts showing a breakdown of the accused's gross income it is impossible to check whether any weigh-in income has already been included, in particular in the figure of £16,565 brought out in Schedule 6 as the total income not declared for tax purposes.

Adopting a broad general approach to the matter which I consider to be the only course available in the circumstances, I find that a figure of £15,000 earned by Mr McSalley by way of weigh-in income has not been reflected in the prosecutor's statement. It follows from the findings I have made that the estimated total income of the accused falls to be increased by the sum of £36,770 (£21,770 plus £15,000). The consequent effect of that finding is that the figure of £56,318 appearing in the prosecutor's statement as the estimated proceeds of drug trafficking by the accused is reduced to £19,548 and that being the lower of the two relevant figures which require to be taken into account in terms of section 1(3) of the Act is therefore the maximum level at which I may exercise my discretion in the making of a confiscation order.

The court's discretion

On behalf of the accused it was submitted that although the statute confers a discretion on the court that was, by inference from the fact that any order made was appealable as a sentence, limited to a figure which could not be described as excessive. The court was required therefore to take into account the circumstances in which the matter was resolved at the trial and, in particular, the degree of culpability of the offender and also his means. In the present case the Crown accepted a plea of guilty restricted to reflect the accused's involvement on one day only in the limited role of temporary custodian of the drugs on behalf of another person for which he was paid the sum of £100. Since the figures suggest at most a small surplus of expenditure over income it followed that it had not been demonstrated that the proceeds of crime had financed this family's existence. Further, the implementation of an order in the sum suggested by the Crown would have a devastating effect on the family, and especially upon the accused's wife, in that the family home would require to be sold. In these circumstances either no order or an order for a nominal sum only was appropriate.

I do not consider that the submission that the nature and circumstances of the conviction should be taken into account in deciding what assumptions should be made or how the court's discretion should be exercised is well founded. Section 1 of the statutory provision confers power on the court to make a confiscation order against a person who had 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. The statutory wording demonstrates that proof of actual benefit is not a necessary precondition to the exercise of the discretion to make a confiscation order in the case of a drugs offence (Donnelly v H M Advocate 1999 S.C.C.R. 508). 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 the assumptions and the structure of the legislation suggests the contrary. The only preconditions for the making of the statutory assumptions are that the court must be satisfied that the accused has received payments or incurred expenditure, or both. It follows that the question of whether or not the accused has benefited from drug dealing or the extent of any benefit is not a consideration to which the court requires to have regard.

The devolution issue

Section 57(2) of the Scotland Act 1998 provides inter alia that no member of the Scottish Executive (including the Lord Advocate: section 44) has power to do any act so far as it is incompatible with certain Convention rights, which by section 126(1) are those specified in the Human Rights Act 1998. That Act gives effect to the European Convention on Human Rights. It was common ground that the application by the prosecutor for a confiscation order was an "act" within the meaning of section 57(2).

Article 6 of the Convention is headed "Right to a fair trial" and Article 6(2) provides:

It was submitted on behalf of the accused that the making of an application for a confiscation order which was based on the statutory assumptions was incompatible with the presumption of innocence. Further, the application was incompatible with the principle of proportionality: there must be a reasonable relationship of proportionality between the means employed and the aim pursued (Air Canada v United Kingdom (1995) 20 EHRR, p 150). It was conceded that there was a clear public interest in pursuing the proceeds of drug trafficking but a fair balance could not be achieved without taking into account the effect of the loss of the family home and in this connection regard had to be had to the legitimate property rights of Mrs McSalley, a person who had not been convicted of any crime.

Mr Beardmore, who appeared on behalf of Mrs McSalley, adopted Mr Allan's submissions and contended, in particular, that the court should take a cautious approach in this case to any confiscation order for a sum in excess of £10,000 since that would involve the sale of the family home; the loss of the family home was not necessary to satisfy the public interest and was disproportionate to the aim sought. The court required to determine whether a fair balance was being struck between the demands of the general interest and those of the individual concerned. It was conceded that only limited guidance could be obtained in this respect from the jurisprudence of the European Court.

The essence of the defence submission in this respect was that the making by the court of the statutory assumptions in the case of an accused in respect of whom there has been no evidence of involvement in any prior drug dealing was incompatible with the presumption of his innocence of any offence beyond that of which he was convicted.

For the Crown, the advocate depute submitted that there was nothing in the statutory provisions which falls foul of Article 6(2). The making of the assumptions did not raise any question of the accused being presumed guilty of any offence beyond that of which he has already been convicted. It was submitted that it was significant in this respect that the assumptions set out in section 3(2) are as to property and assets acquired through "drug trafficking" and not through the commission of a "drug trafficking offence". Section 49(5) of the Act defines "drug trafficking offence" by reference to a list of statutory and common law criminal offences. It is clear, however, from the terms of section 49(2), (3) and (4) that "drug trafficking" is a concept which includes both criminal offences and conduct which need not be a criminal offence. What Parliament was saying was that the assumptions could be made irrespective of whether or not an offence had been committed and there was accordingly no question of a presumption of guilt being made in the sense contended for by the defence.

In my view, the statutory provisions can be read in a relatively straightforward manner. As I have already indicated, it is clear from the absence in relation to drugs offences of the restriction in section 1(4) which 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, that proof of actual benefit is not a necessary precondition to the exercise of the discretion to make a confiscation order in the case of a drugs offence (Donnelly, supra). Once the court is satisfied that the accused has received payments or incurred expenditure or both, it can proceed to make the statutory assumptions, unless they are shown to be incorrect. It follows, in my view, that while a criminal conviction is the trigger for the operation of the statutory provisions, once the triggering event has occurred there is no further link with the commission of any offence. The effect of the statutory provisions may well be somewhat draconian but the European Court, in the full knowledge of the equivalent English provisions, approved the system of assumptions and stressed that the Human Rights Act does not call into question in any respect the powers of confiscation conferred on the courts as a weapon in the fight against the scourge of drug trafficking. (Welch v United Kingdom supra at para.36).

It follows from what has been said that I do not consider that the submission that the making of the statutory assumptions involves any infringement of the accused's right under Article 6(2) is well founded. In any event, it is clear from the decision of the European Court in the case of Salabiaku v France (1988) 13 EHRR, p 379 at para.28 that presumptions may be applied provided they are confined within reasonable limits:

In my view, the reasonable limits test is satisfied in respect of these provisions in that the matter which is at stake is one of the utmost significance, being the protection of society from the evils of drug trafficking. Further, the court is not required to make an order but 'may' do so and a limit is set to the court's discretion in that the amount of the confiscation order may not exceed the lower of the two relevant figures. Further, the Crown has to satisfy the court beyond reasonable doubt of the existence of the assets and expenditure in question whereas the burden of proof on the accused to show that the prosecutor's statement is incorrect is on the balance of probabilities only.

Proportionality

Article 1 of Protocol No.1 of the Convention provides:

The submission on behalf of the accused was that although the order sought by the Crown was for the payment of money, the effect was to deprive Mr and Mrs McSalley of their property. It was submitted that the Crown's application was in fact predicated upon the likely need for the family home or other assets to be disposed of to satisfy the order. The making of an order for payment of a sum of money was merely the mechanism by which that result could be achieved. There was no proportionality between the effect of the order sought and the public interest. The order was not necessary to achieve a fair balance as between the interests of the State and those of the accused.

In terms of the joint minute entered into between the parties it is clear that the accused's realisable assets, excluding the value of his one-half share in the family home, amount to about £10,000. The house in question has an estimated value of £34,500. There is no outstanding mortgage. Mr McSalley has been unemployed since September 1999 when he was released from an eighteen month prison sentence imposed in respect of the offence which triggered these proceedings. It was inherent in the defence submissions that the making of an order for any sum in excess of £10,000 would involve the sale of the family home. There was, however, no evidence led to suggest that it would not be possible to raise money on the security of that property. Although Mrs McSalley is currently unemployed it was not suggested that she could not in future resume employment to enable repayments to be made on a mortgage over the property. I find therefore that I am not satisfied that, as a matter of fact, any order for payment of a sum in excess of £10,000 would necessarily involve rendering the family homeless. It follows that I consider that the order sought has not been demonstrated to be an act which amounts to an interference with the right of the McSalley family to enjoy peaceful possession of the family home.

Further, and in any event, I do not consider that in its purported implementation of the provisions of the 1995 Act the Crown has infringed the principle of proportionality. The principle of proportionality is one which permeates the Convention. The European Court's approach to the rights conferred by Article 1 of Protocol No.1 is set out in the case of Sporrong and Lonnroth v Sweden at para.61 (1982) 5 EHRR, p 35:

The three rules are not unconnected in that the second and third are concerned with particular instances of interference with the right to peaceful enjoyment of property and therefore require to be construed in the light of the general principle set out in the first rule (Agosi v United Kingdom at para 48 (1986) EHRR, p 1).

While section 1 of the 1995 Act empowers the court, on the application of the prosecutor, to impose a "confiscation order", what such an order in fact requires an accused person to do is to pay a sum of money. It is not an order which has the effect of appropriating or transferring ownership of any property away from an accused or his family. In any event, it is clear that a provision will be compatible with the general principle enunciated in the opening sentence of Article 1 if a fair balance has been struck between the demands of the general interest of the community and the requirements of the protection of the individual's fundamental rights. In determining whether such a fair balance exists, the State enjoys a wider margin of appreciation with respect to whether the consequences of enforcement are justified. I do not consider that the making of a confiscation order such as is sought in this case contravenes the reasonable relationship of proportionality between the means employed and the aim pursued. It is necessary, in my view, to keep in mind the important underlying purposes of the provisions of the Proceeds of Crime (Scotland) Act 1995 which are the combating of drug trafficking and the protection of the public from the evils and dangers of illegal drugs whose effects are pervasive and which cause untold human misery. It is of vital significance in this connection to ensure that those involved in the network of drug dealing in which substantial profits can be made are prevented, so far as is possible, from benefiting from their crimes even after their release from any sentence of imprisonment. I consider that the defence submission in this respect is flawed in that it fails to take proper account of the fact that the effectiveness of such a measure requires that the drug trafficker be deprived of net profits notwithstanding the apparent harsh effect of any order.

It is clear that the discretion conferred by the statute to make the assumptions is closely linked to the question whether the assumptions have been shown to be correct. That, in turn, is a matter about which the court has to make a judgment on the evidence before it. The accused in the present case has gone some way towards proving that the money in question was received from legitimate sources but I have found that there remains a sum to which the exception in section 3(2) does not apply and in respect of which I can therefore make the statutory assumptions. In the whole circumstances I consider that it is appropriate that I should exercise my discretion to make a confiscation order requiring the accused to pay the said sum of £19,548.