CPS v JENNINGS

(See also Times law report: Making confiscation orders)

Last Updated: 11:26AM BST 22/05/2008
House of Lords

Lord Bingham of Cornhill, Lord Phillips of Worth Matravers, Baroness Hale of Richmond, Lord Carswell, Lord Brown of Eaton-under-Heywood

May 14, 2008 (Filed: May 22, 2008)

Benefit from criminal conduct – Conspiracy to defraud – Control – Restraint orders – Statutory interpretation – Meaning of “obtain” in s. 71(4) Criminal Justice Act 1988

FACTS

The appellant (J) appealed against the dismissal ([2005] EWCA Civ 746, [2006] 1 WLR 182) of his appeal against a refusal to discharge a restraint order made against him without notice under the Criminal Justice Act 1988 s. 77(1). The restraint order had been made while J was awaiting trial with three others on a charge of conspiracy to defraud. It prohibited him from removing any of his assets from England and Wales and disposing of or diminishing the value of any of his assets. The particulars of conspiracy related to a company that had received administration fees from potential borrowers for loans which had never been made. The prosecution case was that J had been at the centre of the conspiracy, although he appeared to be no more than an employee, and that he had benefited by more than £584,000 for the purposes of s. 71(4) of the Act, since that was the amount of money obtained by the conspiracy. J’s appeal against the restraint order had been argued while the criminal trial was in progress, and the judgment of the Court of Appeal had been handed down after J had been convicted and sentenced. The Court of Appeal had concluded that the word “obtain” in s. 71(4) of the Act did not mean “retain” or “keep”, but contemplated that the defendant in question should have been instrumental in getting the property out of the crime and that his acts must have been a cause of that being done. It had found that there was no separate requirement that the defendant must be shown to have “control” over the property. J submitted that he had “obtained” his salary and a few minor payments, the total of which amounted to a maximum of £50,000. He maintained that the application for a restraint order had illegitimately sought to pierce the corporate veil of the company through which J and his co-accused had operated. The CPS contended that J had “obtained” property amounting to over £584,000 before adjustment for inflation.

ISSUE

Whether on the facts, there was sufficient material to support the making of the restraint order.

HELD (appeal dismissed)

(1) The meaning of s. 71(4) was, in substance, the same as the equivalent provisions of the drug trafficking legislation. It was to be remembered that the object of the legislation was to deprive a defendant of the product of his crime or equivalent, not to operate by way of fine. The rationale of the confiscation regime was that a defendant was deprived of what he had gained. If he was deprived of what he had never obtained, that was a fine. That must ordinarily mean that in order to be so deprived, a defendant would have to have obtained property so as to own it, whether alone or jointly, which would ordinarily connote a power of disposition or control. The finding of the court below was not entirely accurate because a person’s acts might contribute significantly to property being obtained without his obtaining it. The words “a person benefits from an offence if he obtains property as a result of or in connection with its commission” was to be read as meaning “obtained by him”. The broad thrust of J’s criticism of the Court of Appeal’s construction of s. 71(4) was accepted, but nevertheless, there was clearly sufficient material to support the making of the restraint order.

(2) Ordinarily, acts done in the name of and on behalf of a limited company were treated in law as acts of the company and not of the individuals who performed them. In the instant case, where the acts done by J and his associate had led to the conviction of one and a guilty plea by the other, the veil of incorporation had been not so much pierced as rudely torn away. As the crux of J’s case was that he was not the prime mover in the company, it was a case that could only be explored by examining the internal management of the company.

Anthony Elleray QC and Scott Redpath (instructed by David Hanman Associates, Greater Manchester) for the appellants. Andrew Mitchell QC and Stephen Hellman (instructed by in-house solicitor) for the respondent.

R v GREEN

(See also Times law report: International obligations)

Last Updated: 11:27AM BST 22/05/2008
House of Lords

Lord Bingham of Cornhill, Lord Phillips of Worth Matravers, Baroness Hale of Richmond, Lord Carswell, Lord Brown of Eaton-under-Heywood

May 14, 2008 (Filed: May 22, 2008)

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Benefit from criminal conduct – Confiscation orders – Conspiracy – Drug trafficking Money Laundering – Proceeds of crime – Conspiracy to traffic drugs – Proceeds received by several co-conspirators – Value of each conspirator’s proceeds – s. 1(3) Drug Trafficking Act 1994 – s. 4(1)(b) Drug Trafficking Act 1994 – s. 2(2) Drug Trafficking Act 1994

FACTS

The appellant (G) appealed against a decision of the Court of Appeal ([2007] EWCA Crim 1248, [2007] 3 All ER 751) upholding the making of a confiscation order against him under the Drug Trafficking Act 1994 s. 2. G had been the principal directing mind behind a sophisticated conspiracy to obtain and distribute drugs and to launder the proceeds. Along with a number of fellow conspirators, he had pleaded guilty to three offences of conspiracy in connection with the scheme. Whilst the Crown calculated his benefit from the conspiracy to amount to some £10.5 million, G claimed that the figure was actually in the region of £4.8 million. In computing that sum he sought to deduct from the benefit received by him a proportion of the profits retained by two of his co-defendants. The judge made a confiscation order and in calculating the amount of the order he held that money retained by the two co-defendants was held by all three jointly as proceeds in which they were all fully interested. The Court of Appeal decided not to disturb the judge’s decision to give credit to G for the amounts received by his co-conspirators and for the value of the proceeds they received. It did, however, certify a point of law of general public importance in the following terms: where any payment or other reward in connection with drug trafficking was received jointly by two or more persons acting as principals to a drug trafficking offence as defined in s. 1(3) of the Act, whether the value of each person’s proceeds of drug trafficking within the meaning of s. 4(1)(b) of the Act included the whole of the value of such payment or reward. G submitted that the appropriate measure of benefit was the total value of the property actually received by him and that the sums received by his co-defendants should have been deducted from the amount specified in the confiscation order.

ISSUE

Whether the appropriate measure of benefit was the total value of the property actually received by G and that the sums received by his co-defendants should have been deducted from the amount specified in the confiscation order.

HELD (appeal dismissed)

G’s appeal could not succeed. For the reasons given by the Appellate Committee in R v May (Raymond George) [2008] UKHL 28, the decision of the Court of Appeal in that case, that where money or property was received by one defendant on behalf of several defendants jointly, each defendant was to be regarded as having received the whole of it for the purposes of s. 2(2) of the Act, was correct.

Tim Owens QC and Andrew Bodnar (instructed by Stokoe Partnership) for the appellant. David Perry QC and Duncan Penny (instructed by Crown Prosecution Service) for the respondent.

R v MAY

(see also Times law report: Guidance on making confiscation orders )

Last Updated: 11:27AM BST 22/05/2008
House of Lords

Lord Bingham of Cornhill, Lord Phillips of Worth Matravers, Baroness Hale of Richmond, Lord Carswell, Lord Brown of Eaton-under-Heywood

May 14, 2008 (Filed: May 22, 2008)

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Apportionment – Benefit from criminal conduct – Confiscation orders – Principles to be followed by judges – s. 1(1) Criminal Law Act 1977

FACTS

The appellant (M) appealed against a decision ([2005] EWCA Crim 97, [2005] 1 WLR 2902) upholding a confiscation order made against him in the sum of £3,264,277. M had pleaded guilty to conspiracy to cheat contrary to the Criminal Law Act 1977 s. 1(1) after taking part in a “missing trader” or “carousel” fraud involving the sale of high-value computer processing units. The VAT unaccounted for during the period of M’s involvement totalled £4,439,533. In determining the extent of M’s benefit, however, the judge subtracted from that figure sums amounting to £1,175,256 in respect of money recovered from the missing traders’ bank accounts and the proceeds of sale of a number of computer processing units, leaving a net figure of £3,264,277. It was now common ground that the judge had erred in reducing the benefit figure in that way: he had confused benefit with realisable assets. The judge valued M’s realisable assets at £3,887,198, an amount exceeding the benefit figure. He accordingly made the confiscation order in the full sum of £3,264,277. M argued that Parliament had intended to establish a confiscation regime which was effective but fair. It intended to strip wrongdoers of their ill-gotten gains but not to deprive them of that which they had never had, to permit recovery of the same sum against different defendants or to permit recovery of a sum exceeding what the victim had lost. Such results were oppressive and disproportionate. Sixteen conspirators had been named in the indictment. Had each been found to have shared jointly in the proceeds of the fraud and made liable (assuming they had realisable assets of the required value) for the full sum ordered against M, the same sum would have been recovered 16 times over and the state would have gained more than HM Customs and Excise had lost. The solution in such a case was to apportion the overall loss among those held to be jointly liable.

ISSUE

Whether the confiscation order made was entirely consistent with the legitimate objects of the legislation.

HELD (appeal dismissed)

The sum which M, jointly with others, was found to have fraudulently obtained from HM Customs and Excise was, in law, as much his as if he had acted alone. That conclusion led ineluctably to the further conclusions that he benefited from his offending, and benefited to an extent substantially greater than the confiscation order made against him (because of the deduction wrongly made by the judge). The order made was less than his realisable assets. It was entirely consistent with the legitimate objects of the legislation, and it required that he be ordered to pay such sum, which involved no injustice or lack of proportionality. The legislation was, as Lord Steyn described it in R v Rezvi (Syed) [2002] UKHL 1, [2003] 1 AC 1099, “a precise, fair and proportionate response to the important need to protect the public”. R v Porter (Jeremy) [1990] 1 WLR 1260 CA (Crim Div) was not authority for the proposition that the court had the power to apportion liability between parties jointly liable, a procedure which would be contrary to principle and unauthorised by statute. The Appellate Committee reviewed the legislation and authorities relating to confiscation orders and emphasised the broad principles to be followed by those called upon to exercise the jurisdiction to make such orders.

Andrew Campbell-Tiech QC and Gavin Irwin (instructed by Pattichi Hill & Croques, Ilford) for the appellant. Oliver Sells QC and Ivan Pearce (instructed by in-house solicitor) for the Crown.

International obligations

(See also Westlaw report: R v Green)

From The TimesMay 19, 2008

International obligations
House of Lords

Published May 19, 2008

Regina v Green

Before Lord Bingham of Cornhill, Lord Phillips of Worth Matravers, Baroness Hale of Richmond, Lord Carswell and Lord Brown of Eaton-under-Heywood

Speeches May 14, 2008

The Drug Trafficking Act 1994, in giving effect to the United Kingdom’s obligations under the Vienna Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds of Crime 1993, fell to be construed without regard to legislation in other countries which had chosen to give effect to those obligations in a different way.

The House of Lords so held in dismissing an appeal by Mark Green from the order of the Court of Appeal (Lord Justice Moore-Bick, Mr Justice David Clarke and Mrs Justice Swift) (The Times June 15, 2007) upholding a confiscation order made against him under the 1994 Act by Judge Steiger, QC.

Mr Tim Owen, QC and Mr Andrew Bodnar for Green; Mr David Perry, QC and Mr Duncan Penny for the Crown.

LORD BINGHAM, giving the opinion of the committee, said that Mr Owen had argued that sums retained by the appellant’s codefendants should have been deducted from his confiscation order, pointing out that the confiscation regimes of Australia, New Zealand, the United States and Canada did not sanction recovery of the same sum from different offenders.

However, for the reasons given in R v May (The Times May 15, 2008) where two or more defendants obtained control of property jointly, each of them had obtained the whole of it within the meaning of the 1994 Act.

In construing a United Kingdom statute the meaning of which it judged to be clear, the committee could not be influenced by the legislation of other countries, even if those countries had chosen to give effect to common international obligations in a different way.

Solicitors: Stokoe Partnership, Leytonstone; Crown Prosecution Service, Special Crime Division.

Making confiscation orders

(See also Westlaw report: CPS v Jennings)

From The TimesMay 19, 2008

Making confiscation orders
House of Lords

Published May 19, 2008

Jennings v Crown Prosecution Service

Before Lord Bingham of Cornhill, Lord Phillips of Worth Matravers, Baroness Hale of Richmond, Lord Carswell and Lord Brown of Eaton-under-Heywood

Speeches May 14, 2008

Confiscation orders, or restraint of property orders pending the making of such orders, were to be made in respect of property which the person had actually obtained, not that he had merely helped others to obtain.

The House of Lords so held in dismissing an appeal by Paul Ian Jennings, from the order of the Court of Appeal (Lord Justice Laws, Lord Justice Longmore and Lord Justice Lloyd) (The Times July 12, 2005; [2006] 1 WLR 182) upholding the refusal by Mr Justice Leveson ([2004] EWHC 3028 (Admin)) to set aside a restraint order made against him under section 77(1) of the Criminal Justice Act 1988.

Mr Anthony Elleray, QC and Mr Scott Redpath for Jennings; Mr Andrew Mitchell, QC and Mr Stephen Hellman for the Crown.

LORD BINGHAM, delivering the opinion of the committee, said that Lord Justice Laws had said (paragraph 38), that “obtains” in section 71(4) of the 1988 Act meant that the defendant “should have contributed, to a nontrivial … extent, to the getting of the property.”

However, as explained in R v May (The Times May 15, 2008), the object of the legislation was to deprive the defendant of the product of his crime, not to operate by way of fine. He was not to be deprived of what he had never obtained.

The formulation of Lord Justice Laws was not entirely accurate. Section 71(4) had to be read as meaning “obtained by him”. However, there had clearly been sufficient material to support the making of a restraint order against the defendant.

Solicitors: Hanman Associates, Manchester; Crown Prosecution Service, Special Crime Division.

Guidance on making confiscation orders

(See also Westlaw report: R v May)

From The TimesMay 15, 2008

Guidance on making confiscation orders
House of Lords

Published May 15, 2008

Regina v May

Before Lord Bingham of Cornhill, Lord Phillips of Worth Matravers, Baroness Hale of Richmond, Lord Carswell and Lord Brown of Eaton-under-Heywood

Speeches May 14, 2008

Where codefendants had jointly received property as a result of criminal activity, each was liable to receive a confiscation order representing the entire value, as if he had acted alone, provided he had sufficient assets to meet the order.

The House of Lords so held when giving guidance as to the making of confiscation orders under the Drug Trafficking Act 1994, the Criminal Justice Act 1988, as amended by the Criminal Justice Act 1993 and the Proceeds of Crime Act 1995, or the Proceeds of Crime Act 2002, which brought together the regimes established by the two earlier Acts for post2003 offences.

The committee dismissed an appeal by Raymond George May against the decision of the Court of Appeal, Criminal Division (Lord Justice Keene, Mr Justice Hodge and Judge Jones, QC) (The Times February 15, 2005; [2005] 1 WLR 3902) upholding the decision of Judge Samuels, QC, to make a confiscation order against him.

Mr Andrew Campbell Tiech, QC and Mr Gavin Irwin for May; Mr Oliver Sells, QC and Mr Ivan Pearce for the Crown.

LORD BINGHAM, giving the opinion of the committee, said that the defendant had argued that the intention of the legislation was to strip wrongdoers of their ill-gotten gains but not to deprive them of that which they had never had or to permit recovery of the same sum against different defendants. The overall loss should have been apportioned among those held jointly liable.

However, the sum which the appellant, jointly with others, was found to have fraudulently obtained being, in law, as much his as if he had acted alone and less than his realisable assets, the legislation had required that he be ordered to pay such sum.

For future cases the committee emphasised the following principles: The legislation was intended to deprive defendants of the benefit they had gained from relevant criminal conduct, whether or not they had retained such benefit, within their available means.

It did not provide for confiscation in the sense understood by schoolchildren and others, but nor did it operate by way of fine. The benefit gained was the total value of the property or advantage obtained, not the net profit after deduction of expenses or any amounts payable to co-conspirators.

The court was to ask three questions: 1 Had the defendant, D, benefited from relevant criminal conduct? 2 If so, what was the value of the benefit D had so obtained? 3 What sum was recoverable from D?

Those were separate questions calling for separate answers.

In addressing them the court had first to establish the facts as best it could on the material available, relying, as appropriate, on the assumptions required to be made by the Acts. In many cases the factual findings made would be decisive.

In addressing the questions, the court was to focus on the language of the statutory provision in question. Any judicial gloss or exegesis was to be viewed with caution.

The exercise of the confiscation jurisdiction involved no departure from familiar rules governing entitlement and ownership. D ordinarily obtained property if in law he owned it, whether alone or jointly, which would ordinarily connote a power of disposition or control, as where a person directed a payment or conveyance of property to someone else.

Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, were unlikely to be found to have obtained that property. It might be otherwise with money launderers.

Solicitors: Pattichi Hill & Croques, Ilford; Solicitor, Revenue & Customs.