Developments in the Law: 2008
Useful Cases and Materials
- Note: The Criminal Justice and Immigration Act 2008 (Commencement No. 3 and Transitional Provisions) Order 2008 – effective from the 3rd November 2008 SI 2008 No. 2712). This instrument brings into force provisions of the CJIA2008 that include matters relating to bail and the contents of an accused’s defence statement: Link
- Note: The Serious Crime Act 2007 (Commencement No. 3) Order 2008 — (SI 2008/2504). This brought into force, from the 1st October 2008, a number of provisions including Part 2 of the SCA2007 which enacts complex rules relating to three new offences of encouraing and assisting the commission of a criminal offence. The offences are often described as “inchoate” but they may be committed even if the anticipated offence is actually committed by the perpetrator: see Fortson, Blackstone’s Guide, “The Serious Crime Act 2007”, chapter 6 (OUP, 2008).: Link
- Note: The Serious Crime Act 2007 (Appeals under Section 24) Order 2008 came into force on the 18th August 2008; SI 2008/1863). This is a lengthy instrument which makes provision relating to appeals in connection with Serious Crime Prevention Orders: Link
- Note that much of the Serious Crime Act 2007 is now in force and, as of the 1st October 2008, this includes Part 2 of the Act (encouraging and assisting the commission of an offence: inchoate liability). See The Serious Crime Act 2007 (Blackstone’s Guide; Fortson, OUP, 2008).
- Smith and Christian  EWCA Crim 2373 [transcript]. For the purposes of the third (expenditure) assumption, if two or more persons enter into a joint criminal venture, and each person contributes to the purchase price of the property that constitutes the subject matter of the offence or the ‘criminal conduct’ in question (e.g. controlled drugs, or tobacco), the court must focus on the expenditure that each defendant had incurred. As a matter of common sense, each person cannot have expended (and therefore cannot be assumed to have expended) the actual purchase price of that property.
- R v Ward  EWCA Crim 2955 [transcript]. This is another case concerning the value of a defendant’s benefit under POCA2002 in respect of monies obtained by way of a re-mortgage on property, in circumstances where the defendant fails to displace an assumption (made under s.10 POCA2002) that he obtained the money as a result of his general criminal conduct. R v Walls distinguished [transcript], and see Nadarajah  EWCA Crim 2688 [transcript].
- R v Sangha  EWCA Crim 2955 [transcript]. For the purpose of making determinations under the applicable confiscation regime, “the court is not limited to the facts on the basis of which the jury reached their verdict. If other misconduct is relevant to the statutory questions that the court has to determine, the principle does not preclude the court from considering evidence of that other misconduct even where it amounts to a criminal offence” [para.34].
- R v Leeming  EWCA Crim 2753 [transcript]. A confiscation order was made against L who had failed to serve a full response to a Statement of Information under POCA2002. The order was made at a mention hearing in L’s absence. The court observed that s.17(3) POCA 2002 gives the judge a discretion, namely, that a defendant who fails to serve a response in accordance with an order of the court may be treated as accepting every allegation in the prosecutor’s statement, apart from “any allegation that he has benefited from his general or particular criminal conduct”. On the facts of L’s case, the court thought that the judge “was wrong to proceed to make an order of this draconian nature on an application made without notice to the appellant and in the appellant’s absence”.
- CPS v Moulden  EWCA Crim 2561 [transcript]. An important case in which the Court of Appeal held that (a) for the purposes of s.6(2) POCA 2002, the expression “proceedings before the Crown Court” means proceedings under a single indictment and, (b) that the prosecution had no right of appeal under the CJA 1988 against the making of a confiscation order under that Act (but consider Att-Gen Refs No. 114-116 of 2002, Flowers and oths.  EWCA Crim 3374 [transcript]).
- R v Roach  EWCA Crim 2562: This case usefully illustrates the application of rules under POCA2002 for determining, in confiscation proceedings, the value of a person’s benefit in respect of property that had been acquired on mortgage, or financed by way of an unsecured loan, and (more generally) where funds for the property came partly from tainted and partly from untainted money. See “Confiscation proceedings: Adieu Layode and R. v K.?”, R. Fortson, Archbold News, Issue 8, September 11, 2007.
- R v Chambers:  EWCA Crim 2467 [transcript]. This case is an object lesson in ensuring that a count/charge has a proper legal base, and that the legislation relied upon is up-to-date. It was only by chance that the Court discovered (thanks to a lawyer in the Asset Forfeiture Division of the RCPO) that the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 no longer applies to tobacco products. See now the Tobacco Products Regulations 2001 (as amended). However, the Court also made observations that are relevant to the determination of the ‘benefit’ figure in respect of confiscation proceedings in such cases, “On the hearing of the appeal [prosecuting counsel] accepted, in our judgment correctly, that the appellant would only have obtained a benefit by way of a pecuniary advantage in the form of the evasion of excise duty if he was himself under a liability for the payment of that duty which he dishonestly evaded. To help somebody else to evade the payment of duty payable by that other person, within intent to defraud, is no less criminal, but in confiscation proceedings the focus is on the benefit obtained by the relevant offender. An offender may derive other benefits from helping a person who is under a liability for the payment of duty to avoid that liability, e.g. by way of payment for the accessory’s services, but that is another matter. In order to decide whether the offender has obtained a benefit in the form of the evasion of a liability, it is necessary to determine whether the offender had a liability which he avoided. In the present case that turns on whether the appellant was liable for the payment of excise duty on the relevant goods under the relevant Regulations” [para.12].
Note that para.13(3)(e) of the 2001 regulations states that duty is payable by “any person who caused the tobacco products to reach an excise duty point”. Consider, among other cases, Bakewell  EWCA Crim 2, Rowbotham  EWCA Crim 747, and Edwards  EWCA Crim 2923 (in that case the parties clearly were aware of the 2001 Regulations). In Edwards it had been submitted that importation was a continuing process which was not complete until E had left the area of the Port of Hull, which was to be regarded as the place of importation. It is respectfully submitted that ‘importation’ is not a continuing process but represents a single moment in time: it is the evasion of a prohibition/restriction/payment of duty which is the continuing component.
- R v Grainger:  EWCA Crim 2506 [transcript]. Grainger illustrates the care that needs to be exercised when (a) payments are received by a company that is controlled by the defendant or (b) payments are caused to be made to a company by the defendant who was then one of its officers. Payments (the proceeds of fraudulent trading) were made to companies controlled by P. The Court observed that although the appellant was instrumental with others in causing those payments to be made, it did not follow that he obtained a direct benefit in the amount of those payments. On the facts of that case, the confiscation order was quashed. The Court said, “it is essential, first, for the prosecution and then for the judge to look to see what real benefit the offender has obtained and to examine the evidence relating to it in order to arrive at a fair valuation” [para.14]. But the Court added that if an offender chooses to use a company as a shield to hide his benefits from crime, it is open to the court to look behind the corporate veil in order to ascertain the true position [para.15].
- Grayson and Barnham v UK: judgment, 23rd September 2008: an important case regarding confiscation proceedings following conviction, in which the ECrtHR said, “The Court agrees with the judgments of the Court of Appeal in the instant cases….that it was not incompatible with the notion of a fair hearing in criminal proceedings to place the onus on each applicant to give a credible account of his current financial situation.” [transcript]
- R v Waller  EWCA Crim 2037: The issue before the Crown Court and on appeal was whether a confiscation order should have included, as the value of D’s benefit from his criminal conduct, the value of the tobacco ‘smuggled’ as well as the evaded duty. The court answered that question in the affirmative, noting that neither in R v Bakewell  2 Cr App R(S) 42 nor R v Homer  EWCA Crim 1559 (where the duty evaded was identified as the benefit that had accrued in those cases) “was there any discussion about claims based on the value of the goods supplied as well as the duty evaded”. It is not clear whether cases such as Moran  EWCA Crim 1770 and R v IK  EWCA Crim 491 had been cited to the court and considered. It is arguable that the decision, in Waller, pays insufficient regard to the distinction in the Customs and Excise Management Act 1979 between (a) goods which may lawfully be imported but which are subject to the payment of duty and taxes, and (b) goods prohibited from importation. If X evades the payment of income tax, on his lawfully obtained income, is X’s benefit the tax evaded plus his taxable income? It is submitted that the answer is, or ought to be, “no” – but the position might be different if D obtained employment by deception and thus the income was indeed the “proceeds” of that criminal conduct.
- R v F & B  EWCA Crim 1868: an ‘Anwoir’ type case – prosecution appeal under s.58 CJA2003 allowed (following a submission of ‘no case’ to answer): “We have considered that submission in the light of the views expressed by this court in R v Anwoir but conclude that the statement of principle which we set out in paragraph 21 is one upon which the prosecution is entitled to rely in this case. We can see no procedural unfairness arising out of the fact that the prosecution at this stage is unable to point to any particular criminality. The fact is that…the answers [X] gave to the Customs Officers suggest (one says no more than this at this stage because obviously he may well wish to give a full explanation) that he knew full well that criminality of some sort was involved in the production of that money”. [transcript]
- R v Shabir  EWCA Crim 1809: a case that illustrates the meaning of “benefit” but which is particularly interesting in terms of the duty of the prosecution not to use confiscation proceedings oppressively [transcript]
- R v Sivaraman  EWCA Crim 1736: this is a useful illustration of the application of the trilogy of House of Lords decisions in May, Jennings, and Green, relating to the valuation of benefit in connection with a defendant who performed a subordinate role in the illegal venture. [transcript]
- R v Islam  EWCA Crim 1740: In this case, the CACD applied (correctly it is submitted) the decision of the Court in Hussain  EWCA Crim 621, that the value of an illicitly obtained controlled drug is nil. To hold otherwise would, in many cases, lead to absurdly high “benefit” valuations for the purposes of the DTA1994 and POCA2002 that would be out of all proportion to what D had in fact “received” (DTA) or “obtained” (POCA). Consider, for example, the lorry driver who is paid £5000 to import 30 kgs of a Class A drug into the UK. The solution (attributed to Lord Bingham in Dore) is an imperfect one because some controlled drugs that are not illicitly manufactured or subject to a total ban on distribution, could be legitimately sold. However, if there is evidence that D contributed to the purchase price of the drug then the sum expended will be assumed to have been obtained from the proceeds of criminal conduct (under POCA) unless that assumption is shown to be incorrect. What still tends to be overlooked is that it is the history/origin of the money expended that is relevant for the purposes of the ‘expenditure assumption’. Money, legitimately obtained by D, does not constitute a ‘benefit’ to him at the moment that he parted with it to buy illicit drugs. The money is a ‘benefit’ in the hands of the supplier because, at the moment that he obtained it, he did so in connection with criminal conduct. For the purposes of the ‘benefit’ determination, the court must always focus on the moment that D “obtained” (POCA) or “received” (DTA) the property when deciding whether D did so in connection with criminal conduct, or not. [transcript]
- Irwin Mitchell v HMRC  EWCA Crim 1741: an important case, and in Irwin Mitchell’s favour, but which usefully illustrates the care that needs to be taken when dealing with property that might be the subject of a restraint order. [transcript]
- Ilyas v Aylesbury DC  EWCA crim 1303: in which it was held that, for the purposes of the statutory assumption under s.72AA(4)(a) of Part VI of the Criminal Justice Act 1988 (i.e. that property “was received by him, at the earliest time when he appears to the court to have held it, as a result of or in connection with the commission of offences to which this Part of this Act applies”) the assumption was not confined to offences committed by the defendant. The Court stated that if Parliament had intended to confine the application of the assumption to offences committed by the defendant, it would have been easy for them to do so by express words, and they did not. The Court held that s.72AA contained two ‘safety valves’, “First, 72AA(3) gave the court a discretion as to whether to apply the statutory assumptions at all; and second, section 72AA(5)(c) provided that the court is not to make any particular assumption if satisfied that there would be a serious risk of injustice in the defendant’s case if that assumption were to be made”. It is respectfully submitted that for the purposes of confiscation legislation other than the 1988 Act , the relevant ‘criminal conduct’ is that of the defendant and not the criminal conduct of a third party (note, for example, the use of the expression “his general criminal conduct” as it appears in s.10 POCA 2002). [transcript]
Note 4 further important confiscation cases decided recently: Gibson v HMRC  EWCA Civ 645 [transcript]; and R v Morgan and Bygrave  EWCA crim 1323 [transcript]. Note Anwoir  EWCA crim 1345 – money laundering [transcript]. See also SFO v Lexi Holdings  EWCA Crim 1443 – restraint orders under POCA2002 [transcript]
- Carter and others  EWCA Crim 416: an important case dealing with the meaning of “benefit” under the CJA 1988 (and generally). This case has implications for cases under POCA 2002.
- Glatt  EWCA Crim 605: a comprehensive review of confiscation case law re determination of “benefit” under CJA 1988; ECHR compatability; discretion.
- R v Ajibade  EWCA Crim 368: value of the benefit of drugs seized in the hands e.g. of a courier is nil – no market value; see also Hussain  EWCA Crim 621 on the same point.
- R v Saik  UKHL 18; important decision of the House of Lords concerning the mens rea of conspiracy – particularly in the context of money laundering offences pre POCA 2002.
- R v Gabriel  EWCA 229: the element of suspicion requires the jury to be carefully directed. The case also refers to “Louizou” but the reference is  EWCA 1579 and not as printed in the judgment: the name is actually ‘Loizou’.
Please note that at chapter 13-280 of the 5th edition, I say with reference to Loizou “In the view the court, the natural meaning of s.327(1) of POCA, is that the property that is concealed (etc), must be criminal property at the time that the relevant acts were done, and not before.” The words “and not before” should be disregarded.
- R v Byatt  EWCA Crim 904: B withdrew from the conspiracy before the robbery was performed by other parties to the agreement. Accordingly, B did not “obtain” the proceeds of the robbery for the purposes of POCA 2002.
- R v IK  EWCA Crim 491, the proceeds of cheating the Revenue can amount to “criminal property” within the meaning of section 340(5) of the Proceeds of Crime Act 2002 (“POCA”), where the trade whose profits are liable to income tax or whose turnover is subject to VAT is a legitimate trade: Gabriel considered: link to the judgment.