Developments in the Law: 2011
Useful Cases and Materials
NOTE: The Criminal Procedure Rules 2011 will come into force on the 3rd October 2011: see 2011 No. 1709 [link]
NOTE:The Violent Crime Reduction Act 2006 (Specification for Imitation Firearms) Regulations 2011 (SI 2011 No. 1754) will come into force on the 11th August 2011: see [link]. Specifications are set out for ‘blank-firing imitation firearms’ (reg.4) and ‘blank firing imitation revolvers’ (reg.6). By reg.7, the offence enacted in s. 39(2)(d) of the 2006 Act “shall not apply to persons whose conduct in bringing into Great Britain an imitation firearm, or causing an imitation firearm to be brought into Great Britain, was for the purpose only of making the imitation firearm in question available for one or more of the purposes set out in section 37(2) of the 2006 Act.”
- R v James and Blackburn  EWCA Crim 2991 . [transcript]
This is yet another confiscation case involving the evasion of duty on tobacco. It is a case of importance and, it is a case of considerable interest on more than one level. We learn from the judgment that “In Waya, UKSC 2010/0088, which will be re-argued before nine Justices of the Supreme Court next year, the parties have been sent a note which, amongst other things, asks the question: ‘Did Parliament intend that confiscation proceedings should be brought in respect of property that has been restored by or recovered from the defendant.’ The note also states that ‘it may be that the Court should reconsider” whether Smith  UKHL 68 was correctly decided'” [per Hooper LJ, 18]. In James and Blackburn, officials seized 3.027 tonnes of raw leaf tbacco from a commercial unit (rented by X) and a total of 521.9 kilograms of processed hand rolling tobacco either from the unit or a van that had been used in connection with the offence. 43,000 empty counterfeit pouches were also seized. The Court reminds us that “Only the person or persons who are personally liable to pay the duty will have obtained a pecuniary advantage by evading its payment. Absent that liability, they will not have obtained a benefit in accordance with section 76 of the Proceeds of Crime Act, 2002 and its predecessors” [per Hooper LJ, 19]. The Court added, “However, it does not follow from the fact that a person evades the duty which he personally owes, that he has necessarily obtained a benefit by evading it” . The confiscation order against J was quashed. He had been sentenced on the basis that he had allowed his premises to be used as a base for the distribution of the processed tobacco. He had not financed the purchase of the tobacco. As for B, the judge was entitled to find that he caused the tobacco to arrive at the duty point. Nevertheless, B had not benefited to the extent of the unpaid excise duty. Interestingly, the Court remarked that B “had made no money at all, given that HMRC had intervened before any distribution had effectively taken place” . One’s mind immediately turns to the aforementioned decision in Smith. However, it is submitted that the outcome of B’s appeal turned on the fact that he was “in effect the local ‘salaried’ manager of the factory with no proprietary interest in the tobacco” . The court considered Sivaraman  EWCA 1736. James and Blackburn also sheds some much needed light on the meaning of the expression “or in connection with”, for the purposes of s.76(4), POCA 2002 [i.e. the defintion of “benefit”: – “A person benefits from conduct if he obtains property as a result of or in connection with the conduct”]: see paras, 40-71, Edwards-Stuart J. See also Raca  EWCA Crim 2880, and Strange  EWCA Crim 1726.[See, R. Fortson, ‘Misuse of Drugs and Drug Trafficking Offences‘, paras.13-081 to 13-102, 6th ed., Sweet & Maxwell, 2011].
- Gale v SOCA  UKSC 49 . [transcript]
It is tentatively submitted that following the decision of the Supreme Court in Gale v SOCA  UKSC 49, the standard of proof to be applied in confiscation proceedings, in respect of any issue, is the civil standard of proof. As stated in Briggs-Price, Article 6(2) does not specify the standard of proof that has to be applied in discharging the burden of proving that a defendant is guilty of a criminal offence. In English law, a distinction is made between the criminal standard of proof, and the civil standard of proof. However, in Gale v SOCA, Lord Phillips (with whom Lord Mance, Lord Judge and Lord Reed agreed) concluded that the views expressed by their Lordships in Briggs-Price concerning the standard of proof were obiter [para.54]. Lord Clarke said: “As to the standard of proof, I agree with Lord Phillips that the Strasbourg jurisprudence does not support the proposition (i.e. the second proposition [para 43]) that in no case can confiscation be ordered unless it is proved to the criminal standard that the defendant committed the offences from which the property is said to have been derived. I agree with his conclusion and reasons summarised in para 54 to the effect that the commission of criminal conduct from which the property the appellants held was derived had to be established according to the civil and not the criminal standard of proof.” It is further tentatively submitted that the decision of Whittington  EWCA Crim 1641 is not to be followed insofar as it suggests that the Crown shoulders the criminal standard of proof where the defendant had obtained property by the commission of criminal offences other than those charged on the indictment.
- R v Hindley  EWCA Crim 2100 . A fact-specific example of a case where the CA(CD) was prepared to receive new evidence with the result that H met the burden of reversing the assumptions which otherwise had to be made against him pursuant to POCA 2002, and the value of the confiscation order was reduced.
- R v McIntosh and anoth  EWCA Crim 1501 . [transcript] In an important decision relating to confiscation proceedings, the Court of Appeal clarified the proper approach that the court should take where a defendant is found not to have told the truth about the existence or extent of his/her realisable assets and, in particular, the proper interpretation of dicta in Telli v RCPO  2 Cr App R (S.) 48 , in the light of R v May  1 AC 1028 and Glaves v CPS  EWCA Civ 69. The CA(CD) said that the court “must strive to achieve justice and proportionality within the confines of the statutory scheme. The court can and should exercise those judicial virtues at the time when it answers the statutory question posed by s.71(6) [CJA 1988], namely, whether it appears to the court that the realisable amount is less than the amount of the benefit” . Crucially, the Court said, “In the light of Glaves and May there is no principle that a court is bound to reject a defendant’s case that his current realisable assets are less than the full amount of the benefit, merely because it concludes that the defendant has not revealed their true extent or value, or has not participated in any revelation at all. The court must answer the statutory question in [s.71(6) CJA (s.7, POCA)] in a just and proportionate way. The court may conclude that a defendant’s realisable assets are less than the full value of the benefit on the basis of the facts as a whole. A defendant who is found not to have told the truth or who has declined to give truthful disclosure will inevitably find it difficult to discharge the burden imposed upon him. But it may not be impossible for him to do so. Other sources of evidence, apart from the defendant himself, and a view of the case as a whole, may persuade a court that the assets available to the defendant are less than the full value of the benefit.” 
- Re: Jalil (unreported, Ouseley J, 18th July 2011). Applications made by the CPS for the appointment of an enforcement receiver in respect of two properties (held by X and Y) were refused. X and Y were interested parties who could not be heard when the confiscation orders were made. The decisions underlying the confiscation orders could not be determinative of the properties’ ownership, Norris, Re  UKHL 34, and RCPO v May  EWCA Civ 521, applied. Although the CPS were right to be suspicious, there was insufficient evidence to decide on the balance of probabilities that the respondents had retained a beneficial interest in the property when it was transferred to X and Y.
- R v Ford-Sagers (unreported, HHJ Jarman QC, Case No: CJA/15/2011). Property was transferred to F’s son (T) in 1996 when he was then aged six. In 2004, F pleaded guilty to dishonesty offences and a confiscation was made against F that included the aforementioned property. In 2006, the CA(CD) upheld the finding of the trial judge that the property was caught by the gift provisions under Part VI of the CJA 1988, and that it had been transferred in an attempt to ‘put it beyond the reach of the authorities’ (see  EWCA Crim 2255). T was not bound by that decision. However, the Administrative Court was asked to consider whether (i) the transfer of the property to T constituted a gift under s.74, CJA 1988 and, whether (ii) the court should exercise its discretion under s.82 to appoint a receiver. The application was granted on the grounds that the transaction was a gift within the meaning of s.74 of the Act and, on the facts, it was appropriate to exercise the discretion to make a receivership order under s.82.
- R v Wright  EWCA Crim 1180 . [transcript]. The Court of Appeal quashed a conviction for possessing cannabis intending to supply it, contrary to s.5(3) of the MDA 1971. Crucially, there was no useable or saleable cannabis present in the young plants being cultivated by W. The time span for growth to maturity was a matter of months. W was in possession of cannabis as defined in the statute. But to come within s.5(3) of the 1971 Act the intention to supply must be an intention to supply the thing of which the defendant is in possession. There was no suggestion that W intended to supply the immature plants of which he was in possession at the material time. It is submitted that the decision is correct. The Crown had added this charge because it did not accept W’s claim that he was cultivating the drug for his own use. As the Court observed, the core offence was the production of cannabis, and the question of whether cannabis was being grown for W’s for his own or another’s use was capable of being resolved by a Newton hearing if necessary. It is submitted that the decision is unlikely to cause difficulties in other cases. The Court did not hold that a drug that exists in one form (e.g. cocaine, as a salt), cannot be the subject of a charge under s.5(3) MDA, if the defendant intended to supply it in another form (e.g. crack). The crucial feature in Wright was the fact that the drug seized was not then useable. The Court was right to contrast that situation with the case, for example, of a gardener who propagates cannabis plants with the intention of supplying those very plants to another.
- R v Clipston  EWCA Crim 446 , [transcript]. This is a landmark confiscation case that revisits but qualifies, Silcock and Levin  2 Cr. App R (S) 61. In Clipston, and based on what a co-defendant (M) had said during interviews with investigators, especially as to the quantity of drugs involved, the Crown wished to rely upon his evidence as part of its case in confiscation proceedings. The Court held that “the appropriate analysis of confiscation proceedings under POCA is that (as in the predecessor legislation) they are an extension of the sentencing hearing and, therefore, criminal in nature: Silcock (supra), at ; see too, McIntosh v Lord Advocate  UKPC D1;  1 AC 1078, esp., at . As they do not involve the determination of a criminal charge but are to be regarded as part of the sentencing procedure following conviction, it has long been accepted that Art. 6(2), ECHR is inapplicable: Phillips v UK (2001) 11 BHRC 280; R v Briggs-Price  UKHL 19;  1 AC 1026, esp. at  – . It does not in any way follow from the inapplicability of Art. 6(2) that these are any the less in the nature of criminal proceedings.”.
Furthermore, in confiscation proceedings, i) The CEA 1995 hearsay regime has no application, and ii) the CJA 2003 hearsay regime, while potentially more suitable, cannot apply strictly and directly, but iii) the Court’s conclusion does not entail that hearsay evidence is inadmissible. iv) Hearsay evidence is admissible in accordance with the approach outlined by the Court, rather than via the CEA 1995 or, at least directly, via the CJA 2003. The procedure must be flexible and fair.
The Court could not be “unduly prescriptive” and ventured “the following broad considerations” : i) frequently there should be no realistic issue as to the admissibility of the evidence, because POCA focuses on “information”. ii) On the occasions where a hearsay statement is of importance and seriously in dispute, the CJA 2003 regime, applied by analogy, will furnish the most appropriate framework for adjudicating on such issues. The Judge will need to understand the potential for unfairness and to “borrow”, as appropriate, from the available guidance in s.114(2) CJA (and the matters contained in s.116 CJA). When applying this regime, especially the ‘interests of justice’ test in s.114(1)(d), “it will be of the first importance to keep the post-conviction context in mind. There may well be room for more flexibility than in the trial context.” iii) In cases where the real issue is the weight rather than the admissibility of the evidence or information, the ‘checklist’ in s.114(2) CJA (and s.116), “suitably adapted to address weight rather than admissibility, will provide a valuable (if not exhaustive) framework of reference”. A Judge must proceed judicially, having regard to the limitations of the evidence or information under consideration (including, by way of examples, the reliability of the maker, the circumstances in which it came to be made, the reason why oral evidence cannot be given and the absence of cross-examination). Care must be taken to ensure that the defendant has a proper opportunity to be heard. iv) The Judge will need to exercise judgment, “exercised consistently with both the legislative intent underpinning POCA and (it goes without saying) the need for fairness to all concerned.” 
- Glaves v CPS  EWCA Civ 69 , [transcript]. the Court of Appeal rejected the argument that, in the absence of full disclosure by the defendant of the whereabouts of hidden assets, he was debarred as a matter of law from pursing a downward variation in the “available amount” under a confiscation order. In an important judgment, the Court said , “At the stage of an application for a certificate of inadequacy, the burden of proof is again on the defendant. He is unlikely to succeed unless the court is satisfied that he is being candid, and an application for a certificate of inadequacy is not intended to be a means of the defendant having a second bite at the same cherry. Those principles are clearly established. However, a rule of law which said that the court could not be persuaded that the defendant was unable to pay the outstanding amount by reason of a worsening of his financial circumstances unless he gave full disclosure of what had happened in the meantime to all his assets, including previously unidentified assets, would trammel the width of s83 [CJA 1988] by imposing a restriction which is not in the statute. It would also be capable of causing not merely hardship but hardship amounting to injustice.”
- R v Steed  EWCA Crim 75 , [transcript]. S was unable to show the source of property and expenditure to in respect of which the statutory assumptions applied. Since he was unable to prove what proportion was legitimate the consequence was that, in relation to any given asset or item of expenditure, he could not prove that the property was not held by him as a result of his general criminal conduct. He was therefore unable to discharge the burden on him for the purposes of POCA 2002, s.10(3) or (4); David Lee Jones  EWCA Crim 933, considered, at paras19-20.
- R v W  EWCA Crim 103, provides a further illustration of the law under POCA 2002, relating to trust funds. W’s life interest in possession in the trust fund constituted “free property” within of POCA ss. 82 and 84, and hence it was “realisable property” within s. 83 of that Act. The value of W’s interest was a discrete issue when determining “the available amount” under s. 9, and hence “the recoverable amount” under ss. 6 and 7 of POCA.
- Windsor and others v CPS  EWCA Crim 143 , [transcript]. Important observations of law and practice were made by the Court of Appeal concerning applications for a restraint order, especially in complex cases. The court must sharply focus on the statutory test: is the judge satisfied that there is a reasonable cause to believe that the alleged offender has benefited from his criminal conduct? The presence of uncertainties does not prevent there being reasonable cause to believe, but the judge must still be satisfied that there is reasonable cause to believe . A complex application should be listed before a judge with sufficient time to read and absorb the papers and with sufficient time to conduct a proper hearing. It would be preferable to list such applications before a High Court Judge sitting in the Crown Court with experience of complex frauds or a Circuit Judge with similar experience . The hearing should be listed some days before the day on which any arrests were to occur . In the interests of the absent alleged offenders, the hearing must be as fair as is possible in the circumstances, “Giving those affected an early opportunity to apply to set aside or vary the restraint orders and receivership orders (whilst important) is not a substitute for a fair ex parte hearing” . Without being too prescriptive, it is vital that the judge is given the material on which he can reach the conclusion himself or herself that there is “reasonable cause”. He cannot find it just because he is told that an investigation has confirmed the suspicions of the relevant authorities . In the instant case, the judge did not seek to identify the nature and extent of those assets of the company in which the alleged offenders might have a beneficial interest, or which might represent their benefit from criminal conduct; he did not make any attempt to separate the proceeds of crime from the proceeds of legitimate trading; he did not advert to the consequences of the orders upon the companies or their minority shareholders, or indeed to the other creditors of the companies .
- R v Williams and McCollin  EWCA Crim 232, the Court held, as a correct statement of the law that the addition of adulterants or bulking agents to powder containing caffeine and paracetamol, to a powder containing cocaine or heroin can amount to the production of a controlled drug. Presumably, users of heroin who mix the drug with water, or cannabis users who mix the drug with tobacco (or those who bake a cannabis cake?) will have to rely on the discretion of prosecutors not to charge inappropriately.
- R v Auton and Others  EWCA Crim 76 [transcript]. The Court of Appeal gave sentencing guidance regarding the production of cannabis, including sinsemilla (popularly known as “skunk”). The Court said, “For cultivation short of the industrial such as contemplated by Xu“, but carried out on the kind of scale which the court described in paras 2 and 3 of the judgment, “i) where the cultivation will genuinely involve no element of supply of any kind, the sentence after trial is likely to be in the range 9 to 18 months, depending on the size of the operation, and the personal history of the defendant; ii) where the cultivation is for the defendant’s own use and is not a frankly commercial operation for profit, but will involve supply to others, the sentence after trial is likely to be in the range 18 months to 3 years; where any individual case will come within this range will depend on, inter alia, the scale of cultivation, the investment made, the number of parties involved, the nature of the likely supply and, in the upper reaches of the range, the level of any profit element; a previous history of directly relevant similar offending may take the case above this range. iii) where the cultivation is a frankly commercial one designed with a view to sale for profit, and whether or not the defendant may use a limited quantity of the drug himself, the sentence will usually be somewhat below the Xu range because of the smaller size of operation, but is likely to be in the general range after trial of 3 to 6 years. The circumstances, character and any criminal history of the defendant will as always be relevant. Where cultivation is accompanied by unlawful abstraction of electricity, often on a substantial scale, that will ordinarily be an aggravating factor. Adjustment should be made for a plea of guilty in the usual way according to the stage at which it was tendered.” [para.14]
- Clark and Severn  EWCA Crim 15. [transcript]
C and S assisted in the shipment of stolen cars to East Africa through their limited company which provided storage and shipping facilities. The cars were stowed in containers at the company’s premises. C was the organiser and facilitator of the container operation, and S arranged for the haulage of the containers to the port. C submitted that the judge misapplied the decision of the House of Lords in May  1 AC 1028, and failed to take account of subsequent decisions of the Court of Appeal such as Sivaraman  1 Cr App R (S) 80, Allpress  2 Cr App R (S) 58, and Anderson  EWCA Crim 615. C contended that the judge was wrong to fix C with the burden of the full value of the cars when his role, significant as it may have been for the purpose of the conspiracy, was only to facilitate the export of the cars. The confiscation order was quashed and the case remitted to the Crown Court for a redetermination. C was not a courier or custodian of money or drugs, but he was, through his company, a bailee of the cars for the purpose of containerising and transporting them in preparation for their shipment to East Africa. He was an “integral facilitator”, but there was nothing to link him either with the original thefts or with the onward sales in Africa or the proceeds of such sales, “His role was no doubt an important part of the overall handling conspiracy, but there was nothing apart from the importance of that role to suggest that the cars were jointly owned by him (or Severn) with other principal conspirators.”  The Court added, “As pointed out in Jennings…and again in Allpress,…a defendant may play an important role in a conspiracy without obtaining property for the purpose of the test of benefit.” .
- Bell and others  EWCA Crim 6. [transcript]
This case is a reminder to read the judgment in White and others  EWCA Crim 978 (which, given its importance, is included on this page). In all of the five appeals in R v Bell, confiscation orders were made in respect of what was alleged to be evaded duty on tobacco products smuggled into this country for resale. In the appeal of Middlecote the judge rejected an argument that he had not benefited from the evasion of duty. In the other four cases the confiscation orders were made by consent.
- White and others  EWCA Crim 978. [transcript]
The case is essential reading in connection with the making of confiscation orders that involve the smuggling of tobacco and the evasion of duty and/or VAT payable thereon. The first step is to determine whether the 1992 Regs [SI 1992/3135] or the 2001 Regs [SI 2001/1712] apply. Under the 1992 Regs, the person who is principally liable to pay duty is the “importer” (see Reg.5(9)). Under the 2001 regs, that person is the one who is “holding” the “tobacco products” at the “excise duty point” (reg.13). But, other persons are “jointly and severally liable to pay duty”. Under the 1992 regs, these are persons specified in reg.5(3)(a)-(f). Under the 2001 regs, the persons are those specified in reg 13(3). In each instance, the persons specified include the person “who causes or has caused the imported goods” (1992, reg.5(3)(f)), or “who caused the tobacco products” (2001, reg.13(3)(e)), “to reach the excise duty point“.
In the interests of clarity, and in an attempt to avoid incompatibility between the Regs and the EC Directive 92/12/EC [one may query the degree of harmonisation actually required], the Court held that the duty is payable (per Art.7(3)) from: (a) the person making the delivery in the UK for commercial purposes in the UK; or (b) the person holding the products in the UK with the intention of delivering them there for commercial purposes in the UK; or (c) the person in the UK receiving the products for use for commercial purposes in the UK by a trader; or (d) the trader who in the UK is using the goods for commercial purposes there [see paras 76 and 93 of the judgment]. Thus, the “importer” (1992), or the person “holding” the tobacco (2001) must come within (b), but note that the excise goods “are held for commercial purposes in the UK at the point of ‘importation’ in the UK” [judgment, para.74]. Those person who “cause“/”caused” the products to reach the excise duty point should fall within (a)-(d): but note the observations of Toulson LJ in Mitchell  EWCA Crim 214, cited at para.113 in White and oths. The “consignee” of the excise goods (1992) will fall within (c).
NOTE 1: the “excise duty point” on imported goods is the moment that the tobacco enters the limits of a port of the UK [judgment, para.57]. NOTE 2: Excise duty is not the same as VAT payable by “taxable persons”: see s.3(1) VAT Act 1994. NOTE 3: The value of the tobacco itself might be a ‘benefit’ under POCA 2002. NOTE 4: in relation to vehicle drivers, see paras.188-190 in the judgment. NOTE 5: the case does not decide whether the Directive would permit recovery of more than the excise duty due in respect of the goods [see para.82].