May & Ors, R. v [2005] EWCA Crim 97

Case No 200105722 D1; 200204929 D1; 200200277 D1; 200204833 D1; 200205107 D1; 200205121 D1[2005] EWCA Crim 97
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Friday 28 January 2005
Before
LORD JUSTICE KEENEMR JUSTICE HODGEHIS HONOUR JUDGE JONES QC,Honorary Recorder of Leeds(sitting as a judge in the Court of Appeal Criminal Division)
Between
REGINACrownRAYMOND GEORGE MAYDefendantSTEVEN LAWRENCEDefendantHERBERT FOWLESDefendantJACQUES BRAVARDDefendantVINCENT JOHN STAPLETONDefendant
(Transcript of the Handed Down Judgment ofSmith Bernal Reporting Limited, 190 Fleet StreetLondon EC4A 2AGTel No: 020 7421 4040, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
MR A CAMPBELL-TIECH QC appeared on behalf of MAYMR K A MITCHELL appeared on behalf of LAWRENCEMR P J MARTIN appeared on behalf of BRAVARDMR T OWEN QC & MR A BODNAR appeared on behalf of STAPLETONMR A BODNAR appeared on behalf of FOWLESMR O SELLS QC & MR I PEARCE appeared for CROWN
Judgment

INTRODUCTION

[1]On 24 September 2001 the appellants Raymond May, Vincent Stapleton and Jacques Bravard pleaded guilty at the Central Criminal Court before His Honour Judge Samuels, Q.C., to one count of conspiracy to cheat. On 3 October 2001 they were each sentenced to five years imprisonment.[2]On 11 December 2001 the appellant Steven Lawrence was convicted after a trial of the same offence in the same court and before the same judge. He was sentenced to four and half years imprisonment. The appellant Fowles pleaded guilty on 24 April 2002 to the same offence and was given a two and half year prison sentence.[3]On 2 August 2002, confiscation orders under the Criminal Justice Act 1988 were made in the following sums: against May, £3,264,277 with six years imprisonment in default; against Stapleton, £2,365,789 with five years imprisonment in default; against Bravard, £1,386,383 with four years in default; and against Fowles, £66,000 with eighteen months imprisonment in default. All now appeal against those orders with the leave of the single judge. May and Lawrence appeal against their sentences of imprisonment, with the leave of the full court. There was an agreed confiscation order made in the case of Lawrence, against which there is no appeal.[4]Two others pleaded guilty to the same offence, and another pleaded guilty at separate proceedings in Scotland. A number of other co-conspirators were named on the indictment but were not before the court, and others unknown or at least unidentified were alleged to have been part of the conspiracy.

THE FACTS

[5]The conspiracy involved the wrongful withholding and reclaiming of VAT from Her Majesty’s Customs and Excise, resulting in a loss to public funds of around £12 million. The conspirators created limited companies solely for the purpose of dishonestly retaining and reclaiming the VAT element of sales of computer processing units and other computer components. Over a period from February 1999 to September 2000, four companies in sequence imported such goods from the European Union, with VAT not being payable thereon. The goods were then sold on to a trader based in this country, thereby attracting a liability to VAT at the standard rate of 17.5%. The UK-based trader paid the purchase price plus VAT for the goods, but the importing company, instead of accounting for the VAT received as required by law, retained that money and then disappeared as a trading entity before any enforcement action could be taken against it. This “missing trader” fraud involved the following importing companies during the period of the conspiracy: 1. Lomond Services Limited, which traded from February 1999 to July 1999 and which was responsible for around £5.2 million in unpaid VAT; 2. Lyndon Global Limited, which traded from 31 August 1999 to November 1999, with £1.4 million VAT unpaid; 3. Beachshand Limited, trading from February to July 2000, with some £1. 7 million of VAT unpaid; and 4. Elysee Consulting Limited, trading from July to 5 September 2000, with unpaid VAT of about £2.7 million. The different periods during which each of these four companies operated were referred to during the proceedings as the four phases of the conspiracy.[6]In the scheme as it developed, the same goods would be exported by the UK purchaser, which was also part of the fraud and known as a “buffer company”, back to the dishonest foreign supplier. The buffer company would claim back the VAT it had paid from the Customs and Excise, and the process of importation and re-exportation would begin again with the same goods, a process known as a “carousel fraud”.[7]The prime movers behind the initial phases of the conspiracy were Stapleton and Bravard, who were involved in all four phases of the conspiracy. May became involved during the Beachshand and Elysee periods but was regarded by the judge as the moving spirit in those latter periods and as a joint principal during that time. In his ruling on the confiscation orders, the judge found that Fowles was in control of Lyndon Global Limited and Beachshand Limited as the “minder” for Stapleton. That finding is challenged in these proceedings and we return to it in due course. Lawrence was described by the judge in his sentencing remarks as having been actively involved during the last ten and a half months of the conspiracy and as a “key participant” though not a principal.

THE PROCEEDINGS BELOW

[8]In the period before the date fixed for trial, there were a number of hearings before the judge. Much of the prosecution’s evidence against Stapleton, May and Bravard was in the form of taped conversations which had taken place within the offices of Lomond Services Limited and in motor vehicles used by Stapleton and May. This evidence had been obtained through the use of intrusive surveillance devices applied for and authorised under the provisions of Part III of the Police Act 1997. An application was made by the defendants to exclude such evidence under section 78 of the Police and Criminal Evidence Act 1984, it being argued that the evidence had been obtained in breach of Article 8 of the European Convention on Human Rights. On 5 April 2001 the judge declined to exclude such evidence, and his decision was upheld by this court in a judgment dated 3 August 2001 ((2001) EWCA Crim 1829).[9]It had also been contended before the judge that there should be further disclosure by the prosecution, first in respect of surveillance and other material prior to April 1999, the start date of the surveillance material disclosed by the prosecution, and secondly of material which had been deleted from the disclosed material. The judge had by this stage already heard an application ex parte by the Crown for an order for non-disclosure of the deleted passages, this taking place on 19 February 2001. He ruled that those passages were, in accordance with the authorities, covered by public interest immunity (“P.I.I.”) and again on this aspect also he was upheld by this court in its judgment of 3 August 2001[10]There were other P.I.I. hearings held on an ex parte basis on 4 June 2001 and on 11 September 2001. After the pleas of guilty and the conviction of Lawrence, confiscation proceedings began on 4 March 2002. The judge gave a ruling on certain issues, including the ascertainment of benefit under the Criminal Justice Act, 1988, on 22 March 2002, and after further hearings he gave his final decision on the confiscation proceedings on 2 August 2002. In the meantime there had been both inter-partes hearings and three further short ex parte hearings on 9 July, 17 July and 18 July 2002, those three again being concerned with disclosure and P.I.I. issues.[11]We propose to deal with the four appeals against the confiscation orders before turning to the appeals against the sentences of imprisonment by May and Lawrence. We do this principally because the bulk of the argument before us concerned the confiscation orders and they give rise to a number of issues of principle affecting more than one appellant. In considering the confiscation order appeals, we shall deal with those more general issues first before turning to those grounds which raise points peculiar to the individual appellant. We shall then seek to summarise the effect of our decision on each of the individual confiscation orders. The issues affecting more than one appellant can be conveniently divided into three groups: first, those concerning P.I.I. and the use of Special Counsel; secondly, those which relate to the approach to be adopted to the assessment of benefit under the Criminal Justice Act 1988, Part VI; thirdly, those concerning the effect of statements made by the judge, before pleas of guilty were entered, on the way in which realisable assets should have been calculated. We shall take those issues in that order.

P.I.I. AND THE USE OF SPECIAL COUNSEL

[12]As already indicated, the judge held a number of ex parte hearings both before and after the pleas of guilty by the main conspirators. His decisions not to order disclosure of certain material were challenged before us and, in accordance with the decisions of this court in McDonald, Rafferty and O’Farrell [2004] EWCA Crim 2614, we reviewed the material put before him by the prosecution. We were satisfied that nothing in that material might have weakened the prosecution case or strengthened that of the defence, either on the issue of guilt of the offences charged or on the issues arising under the confiscation order proceedings. In so deciding, we were applying the well-established test for disclosure, now reflected in the Criminal Procedure and Investigations Act 1996 sections 3(1)(a) and 7(2)(a), and endorsed in the recent House of Lords decision in R v. H and others [2004] UKHL 3; [2004] 2 AC 134. It is a test of relevance or materiality, which has to be met before any question arises of the judge having to consider the extent to which disclosure would damage the public interest.[13]However, it was submitted on behalf of the appellants that, both in this court and in the court below, such an approach was not sufficient in the present case. It was emphasised that in dealing with the confiscation order proceedings the judge was acting as a judge of issues of fact, which creates a different situation from that which normally exists in a criminal trial where such issues of fact are for the jury. Yet in the course of the ex parte P.I.I. hearings he may have been provided with evidence relevant to the confiscation proceedings, in the sense that it may have influenced the judge against the defendants on a number of issues arising in those proceedings. Mr Campbell-Tiech, QC, who appeared both below and in this court for May, contended before us that the judge may have seen material, not disclosed to the defence, which could have affected his view of May’s credibility. Since May gave evidence during the confiscation proceedings and was found by the judge to be an unreliable witness, credibility was clearly a vital issue, relevant both to May’s identifiable assets and to his so-called “hidden assets”.[14]It was argued that the judge may have been provided with evidence or allegations on an ex parte basis that May had been a highly successful professional criminal for many years before April 1999, and that this could well have coloured the judge’s view both as to May’s credibility and as to the amount of hidden assets he had been able to accumulate. This line of argument was supported by counsel on behalf of Stapleton, although necessarily limited to the issue of hidden assts, since Stapleton chose not to give evidence during the confiscation proceedings, and also by counsel on behalf of Bravard.[15]The appellants rely upon the decision of the Fourth Section of the European Court of Human Rights, subsequently endorsed by the Grand Chamber, in Edwards and Lewis v. United Kingdom (applications nos. 39647/98 and 40461/98) 22 July 2003, [2003] Crim. L. R. 891; 27 October 2004. There the trial judge (in Edwards case) ruled in favour of non-disclosure on P.I.I. grounds of material indicating that the defendant had been involved in the supply of heroin before the start of a police undercover operation. He also rejected a section 78 application by the defence to exclude certain evidence on the ground that the defendant had been entrapped into committing the offence by an undercover officer. Lewis also alleged entrapment and again certain material was withheld from the defence on P.I.I. grounds. The European Court of Human Rights distinguished its own earlier decision in Jasper v. United Kingdom [2000] 30 E.H.R.R. 441 on the basis that there the jury had been the tribunal of fact and had not seen the undisclosed material, which the judge had dealt with on the established legal principles. In contrast, the present cases were ones where the undisclosed evidence related or may have related to an issue of fact decided by the trial judge, namely the issue of entrapment. The defence were denied the opportunity to counter the allegation contained in the undisclosed material about prior involvement in drug dealing. As a result the European Court found a violation of Article 6(1) of the European Convention on Human Rights.[16]Before us it has been submitted by the appellants that the material seen by the judge below is likely to have been damaging to their interests and in that sense relevant to the confiscation proceedings. However much the judge may have tried to put it out of his mind, it may nonetheless have influenced him. Mr Campbell-Tiech argued that Edwards and Lewis “abolishes compartmentalism of the judicial mind”. Therefore the trial judge should have recused himself or at least appointed special counsel to explore before him the weaknesses in the undisclosed material so as to protect the interests of the defendants.[17]In addition, it was submitted that this court should itself appoint special counsel for the same reasons. It was accepted that in H and others the House of Lords indicated that the appointment of special counsel should be a course of last resort (paragraph 22) but nonetheless it was recognised in that decision that cases would sometimes arise where such a course is the only way of meeting the interests of justice.[18]During the course of the appeal hearing and inevitably at an early stage, this court ruled that it was not persuaded that it was necessary for special counsel to be appointed to assist in these appeals. We said that we would give our full reasons in this judgment and we do so. But it is convenient to deal first with the situation in which the judge below found himself.[19]The context is that a great deal of material adverse to the appellants or some of them and derived from the surveillance operation, sometimes referred to as the “probe material” or the “background intelligence material”, was disclosed to the defence, albeit in a redacted form. For example, the disclosed material contained allegations that May had been behind a massive importation of cocaine in the mid 1990’s, had rebuilt a criminal empire and had been involved in a range of criminal activities including armed robbery, money-laundering and other drug importations. He was suspected of involvement in a number of murders. He also enjoyed a lavish lifestyle, owning a house valued at one and a half million pounds. Whatever weight might be attached to such allegations, those to which we have just referred, and more besides, were disclosed to the defence. When the judge came to deal with the issue of whether or not the conspirators had withheld some of their realisable assets from view, he stated that he could not properly ignore the probe material, and he referred in particular to recorded conversations between various of the conspirators in which they referred to various sums of money being obtained by them,. He ruled that he was entitled to have regard to the information disclosed by the Crown and obtained by the surveillance operation.[20]But he went on to say at paragraph 8.5 of his decision of 2 August 2002:
“I emphasise that I ignore anything revealed to me which attracts public interest immunity.”
It is this statement by the judge which has forced the appellants to argue that Edwards and Lewis no longer allows “judicial compartmentalisation,” in other words that neither the judge below nor this court can be relied upon to put such material out of their minds when making a decision. We do not accept that. Edwards and Lewis was not a case where the judge had made any statement comparable to the one quoted above from paragraph 8.5 of this judge’s decision. Indeed, it is implicit in the European Court’s statement (paragraph 58) that the defence had been denied “the opportunity to counter this allegation” that the Strasbourg court was proceeding on the basis that the trial judge had taken the allegation into account. Thus the Strasbourg court was not pronouncing upon the situation where the judge has expressly stated that he has ignored the undisclosed material for the purpose of a subsequent ruling.[21]This construction of the Edwards and Lewis decision accords with that adopted by another constitution of this court in H and others at the Court of Appeal stage and not criticised by the House of Lords. At paragraph 35 of the Court of Appeal (Criminal Division) decision, [2003] EWCA Crim 2847, the Vice-President, Rose L.J., referred to the Edwards and Lewis situation as being one “where a determinative ruling on an issue of fact - - has to be decided by the trial judge by reference to the undisclosed material.” (our emphasis) In such a situation we would entirely accept that consideration should be given to the appointment of special counsel. Indeed, if the trial judge forms the view that, despite his best efforts, he is unlikely to be able to ignore the undisclosed material he has seen, to the detriment of the defendant, then such consideration may have to be given. As so often, the test will be one of fairness. But there will be many cases where the judge is confident that he can put such material out of his mind for the purposes of a later decision. That is a familiar process in judicial decision-making in this country. It is, to take only one example, a process which has to be gone through whenever this court has to consider an appeal both against conviction and against sentence: the court in preparing for the hearing may have seen material relevant to the sentence appeal which it must ignore for the purpose of the conviction appeal. It does so conscientiously.[22]We note that an appellant does have the advantage of a safeguard in practice. If the disclosed material provides no proper basis for a judge’s ruling, in circumstances where he has seen undisclosed material, this court may be the more ready to infer that the judge was influenced by the latter, perhaps unconsciously. In reality there will be little need for such an inference, because the absence of any proper evidential foundation for the judge’s ruling will itself be enough to indicate that something has gone wrong.[23]In the present case this court can see no reason not to accept the judge’s statement that, for the purposes of the confiscation proceedings, he ignored the undisclosed material. So do we, and we are satisfied that we can successfully put that material out of our minds when dealing with the substantive issues arising in the confiscation appeals. In those circumstances we conclude that the judge below did not require the assistance of special counsel nor was he obliged to recuse himself, and as we indicated during argument these appeals do not require special counsel to be involved.

THE ASSESSMENT OF BENEFIT

[24]These appeals are concerned with the law as it stood after the Criminal Justice Act 1988 had been amended by the Criminal Justice Act 1993 and the Proceeds of Crime Act 1995 but before the coming into force of the Proceeds of Crime Act 2002. The relevant statutory provisions dealing with confiscation orders provide for what is in essence a three stage process: determining whether the offender has benefited from any relevant criminal conduct; determining the amount of that benefit; and determining the amount “appearing to the court” to be the amount of his realisable assets. The order is then to be made in the amount of the benefit or the amount of the realisable assets, whichever is the less. There is provision in section 72AA for the court to take into account, in certain circumstances, benefit obtained by the offender from criminal conduct other than the offence for which he has been convicted in the current proceedings, a process sometimes described as “extended benefit”. That process was not relied upon by the Crown in the present case. These appeals concern what is, in contrast, often called “simple benefit”, a term which as will soon be appreciated is in cases like this something of a misnomer.[25]The relevant statutory provisions in the 1988 Act as amended are as follows:
“71. (1A) The court shall first determine whether the offender has benefited from any relevant criminal conduct. (1B) Subject to subsection (1C) below, if the court determines that the offender has benefited from any relevant criminal conduct, it shall then – (a) determine in accordance with subsection (6) below the amount to be recovered in his case by virtue of this section, and (b) make an order under this section ordering the offender to pay that amount. … (1D) In this Part of this Act “relevant criminal conduct”, in relation to a person convicted of an offence in any proceedings before a court means (subject to section 72AA(6) below) that offence taken together with any other offences of a relevant description which are either – (a) offences of which he is convicted in the same proceedings, or … (4) For the purpose of this Part of this Act a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained. (5) Where a person derives a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated for the purposes of this Part of this Act as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage. (6) Subject to subsection (1C) above the sum which an order made by a court under this section requires an offender to pay shall be equal to – (a) the benefit in respect of which it is made; or (b) the amount appearing to the court to be the amount that might be realised at the time the order is made, whichever is the less. (7A) The standard of proof required to determine any question arising under this Part of this Act as to – (a) whether a person has benefited from any offence; or (b) [repealed by PCA 1995, s 1(5)]; (c) the amount to be recovered in his case …; shall be that applicable in civil proceedings.”
Section 74 contains the definition of “realisable property” which subject to certain exceptions means any property held by the defendant, together with certain gifts made by the defendant after the commission of the offence. … … (a) the benefit in respect of which it is made; or (b) the amount appearing to the court to be the amount that might be realised at the time the order is made, (a) whether a person has benefited from any offence; or (b) [repealed by PCA 1995, s 1(5)]; (c) the amount to be recovered in his case …; shall be that applicable in civil proceedings.”[26]In the present case, when dealing with the benefit obtained by the appellants, the judge rejected an argument by the Crown that the benefit should be calculated by reference to the turnover of the corporate entities incorporated for the purpose of the fraud. He accepted a defence submission that the starting point was the amount of VAT of which the Revenue had been cheated by the companies, which was in the region of £12 million. The issue which then arose was whether, having thus pierced the corporate veil, each conspirator who had controlled a company or companies (albeit jointly with another conspirator or conspirators) was to be seen as having obtained the whole of the amount obtained by that company or those companies, or alternatively whether the VAT which each company had fraudulently obtained was to be apportioned between the relevant defendants or the relevant conspirators. The judge considered a number of authorities and ruled that for the purposes of section 71(4) the amount of benefit which a particular defendant would be treated as having obtained from his commission of the offence was the value of the VAT of which the Revenue had been cheated by any corporate entity in respect of which that defendant was at the material time in a controlling position. That, he said, would be the starting point for the assessment of benefit, whether or not other defendants were similarly assessed in whole or in part by reference to a similar starting point. In essence, his conclusion on the law was that where several defendants were jointly responsible for a fraud, and the property thus obtained was jointly held by them, each benefited in the amount jointly held and there was no requirement to apportion that amount between them.[27]The proposition was vigorously challenged before us. Mr Owen, Q.C., on behalf of Stapleton advanced contentions which the other appellants were largely content to adopt. He relied on the decision in Porter [1990] 12 Cr. App. R. (S) 377, a decision under the Drug Trafficking Offences Act 1986, where this court quashed joint and several confiscation orders made against two defendants and substituted several orders, each being for half the total amount of the joint benefit. Reliance was also placed on Olubitan [2003] EWCA Crim 2940 and on McKechnie and others [2002] EWCA Crim 3161, a conspiracy case where confiscation orders had been made under the Criminal Justice Act 1988. There this court indicated that, where there was no evidence as to how the benefit of the conspiracy has been divided between individuals, “dividing the total amount between those identified is as good a starting point as any”. (paragraph 62).[28]Mr Owen accepted that, where a corporate entity was used for the purposes of the fraudulent conspiracy, it was right for the court to pierce the corporate veil when determining benefit under the Criminal Justice Act 1988. But he submitted that the court should then go on to seek to ascertain the benefit obtained by each individual defendant or conspirator by determining their respective shares of the total benefit obtained by the company. In the absence of evidence as to the amount each received, the court should apportion on an equal footing. Olubitan (ante) shows that the court is concerned with the benefit actually obtained by the individual.[29]It was also argued in support of these contentions that the approach adopted by the judge could lead to multiple recovery by the Revenue where the defendants each had substantial assets which did not limit the amount of the eventual confiscation order. While Mr Owen recognised that that can happen, according to a number of authorities, where property passes through a succession of hands, the position (he argued) is different where one has a group obtaining jointly rather than a “chain” situation. Moreover, multiple recovery could lead to injustice and to a breach of the European Convention on Human Rights because the penalty would be disproportionate.[30]This court recognises that there are a number of decisions under both the drug trafficking legislation and under the Criminal Justice Act 1988 which are not always easy to reconcile. The drugs cases need to be treated with some caution for present purposes, because the statutory wording is not identical to that in the Criminal Justice Act when it comes to ascertaining benefit. Nonetheless the drugs cases may provide some assistance, and we begin with those.[31]Porter was a case where this court was first and foremost concerned to rule out the making of joint confiscation orders, for the reason that “there must be certainty in sentencing. A convicted person is entitled to know the extent of his monetary liability, a fortiori when he is liable to lose his liberty if he fails to discharge a monetary penalty.” The court could not countenance a defendant’s liability fluctuating, depending upon how much a co- defendant paid towards the joint order. So the outcome was the substitution of several orders. It is right that the court then apportioned the joint benefit between the two defendants, Garland J stating: “It appears to us that in assessing benefit in accordance with the provisions of section 1 of the (1986) Act, the Court must, as between co-accused, determine their respective shares of any joint benefit that they may have received as a result of drug trafficking.” (page 379) However, it would appear from an earlier passage in the judgment on the same page that the court was not asked to apply its mind to the propriety of several orders being made in the full joint benefit. Nor is there any analysis in the judgment of why apportionment was more appropriate than such orders.[32]In contrast, in Chrastny [1991] 93 Crim. App. R. 406 it seems to have been the view of the court that someone with joint control of the property representing the benefit can be made liable for the total, if he is the only person before the court. At page 413 – 414, Glidewell LJ said that:
“where only one defendant has been convicted and has sufficient control to realise the property, we see no reason why an order in the total sum should not be made against him or her.”
Although that makes the order dependent on the defendant’s assets, it is clearly implicit in that passage that the one defendant’s benefit has already been determined as extending to the total sum, for otherwise an order in the total sum could not be made against him. The other drug trafficking case of relevance is Simpson [1998] 2 Crim. App. R. (S) 111, where this court held that the aggregate of the money or property passing through the hands of a defendant amounted to his benefit and not the profit he made out of the transactions. The possibility that that might lead to multiple recovery of the same sums passing through several hands did not persuade the court to take a contrary view, Dyson LJ saying at page 117:
“Thus in construing the Act the Court is not required to strain to find an interpretation which is favourable to defendants, or to start from the presumption that Parliament did not intend to deprive defendants of their property. In the line of cases concerning drug dealers of which Banks is the latest, the phrase “any payments or other rewards received in connection with drug trafficking” has been interpreted literally, notwithstanding that such an interpretation means that there can be multiple recovery of the same sum which passes through the hands of successive dealers, regardless of the amount of profit made by the dealer or dealers or of whether any profit was made at all.”
[33]Turning to the authorities on the Criminal Justice Act, there are several which make it clear that a conspirator who acts as the collector or banker for the other conspirators will be regarded as having obtained a benefit in the total sum passing through his hands. In one of the earlier cases to this effect, Currey [1995] 16 Cr. App. R (S) 421, Lord Taylor CJ emphasised that benefit “does not mean that he has retained property, simply that he has obtained it.” (page 424) In Patel [2000] 2 Cr. App. R. (S) 10, a sub-postmaster guilty of conspiracy was held to have benefited in the full amount obtained by using stolen benefit books, even though he had paid half the proceeds to an accomplice. Likewise in Metcalfe [2001] EWCA Crim 1343 this court expressly applied the decision in the drug trafficking case of Simpson (ante) so as to hold that benefit was what passed into the defendant’s possession, whether or not he then retained it: paragraphs 12 and 13[34]It is right that in McKechnie (ante) the court upheld an apportionment exercise carried out by the judge below in confiscation proceedings. But it is important to note what was the issue before the court in that case. The Crown had asked the judge to apportion the total loss caused by a credit card fraud between those responsible. The appellant sought to argue that, if the Crown could not show how much each defendant individually received or how the proceeds were divided up, then the benefit to a defendant was nil. This court, perhaps unsurprisingly, rejected that contention and said, in the words of Hallett J, that dividing the total was as good a starting point as any. But it is to be observed that the court was not being asked to decide whether a defendant in that conspiracy might be liable for the total amount of the fraud. That, as Mr Owen concedes, was never an issue in the case.[35]Finally, there is the decision in Olubitan (ante), where the defendant in question had joined a conspiracy to defraud at its very end and where the evidence showed that he had obtained nothing. In those circumstances it was held that he was not liable even for a proportion of the sum involved in the fraud.[36]None of these decisions grapple with precisely the point raised in the present appeals. They do, however, provide some guidance. As Olubitan shows, the property which the defendant “obtains … as a result of or in connection with the commission of the offence” (section 71(4)) will involve questions of fact as well as ones of law. If he obtains property within the meaning of section 71(4), it matters not that he does so merely as a collector or distributor for others involved in the offence: it is the obtaining, not the retention, which matters. Thus a number of defendants may be liable to pay under a confiscation order the same or virtually the same sum in respect of the same property if it has passed through several hands. Mr Owen accepted that in this “chain” type of case, there is always the potential for multiple recovery under the Criminal Justice Act, just as there is in drug trafficking cases.[37]It seems to this court to be important that there was a finding here that the companies retaining the VAT fraudulently were jointly controlled by various of the appellants. Once the corporate veil is pierced, as the appellants accepted it can be (a step endorsed by this court in Dimsey and Allen [2000] 1 Cr. App. R (S) 497 at 502), the property held by the company in question is to be regarded as the joint property of those controlling that company. It is analogous to the situation where conspirators have put the proceeds of the fraud straight into their joint bank account. In such a situation each is entitled to the full amount in the account. If one concentrates on the words of the statute, as one must, it seems to us that each individual “obtains” the property jointly held.[38]The position is succinctly put in Mitchell, Taylor and Talbot: Confiscation and the Proceeds of Crime (3rd edition), paragraph 5.026 (3), where a particular situation is described as follows:
“The evidence demonstrates that the proceeds obtained by and passed into the joint control of the defendants. On a strict interpretation of the Act each defendant has received the whole amount. Where, for example, the proceeds are paid into a bank account held jointly by the defendants, they each benefit by the whole amount deposited. Each of the defendants would then be liable to have a confiscation order made against him in that amount. It follows that even in a joint pool case the whole of the benefit is attributable to each of the defendants. The liability to pay that amount will be determined by the defendant’s ability to pay.”
[39]In our judgment, someone who has joint control of property has “obtained” that property within the meaning of section 71(4). None of the authorities cited in argument require such an approach to be rejected and it seems to us to be the natural meaning of the words in the statute. In the same way it matters not that an individual who holds a joint account has not drawn out a specific sum of money from that account: he has still obtained the whole of the money in the account. As the House of Lords’ decision in Smith (David) [2002] 1 Crim. App. R. 466 emphasises, section 71(4) bites the moment that the property is obtained or the pecuniary advantage derived.[40]It is not necessarily any more unjust for the whole of that property jointly controlled to be treated as the individual defendant’s benefit than for money which has passed through a defendant’s hands to be treated as his benefit, even though that money is a much greater amount than his personal profit. Yet the applicants accepted that the latter situation is well- established by the authorities. It was contended that there may be circumstances in which making an order in the full amount against several defendants would be disproportionate and contrary to Article 1 of the First Protocol to the European Convention on Human Rights. Mr Owen accepted that the confiscation regime pursues a legitimate public interest as required by that Article, namely to punish offenders and to remove criminal assets from circulation. But he argued that proportionality requires that the interference with property rights should be no greater than is necessary to achieve those aims.[41]We see force in that point as a general proposition, and in some circumstances it may lead the court to adopt an apportionment approach. For example, there may be cases where the defendants have substantial assets, with the result that making orders for the full benefit in each case would lead to the Revenue recovering far more than the conspiracy or joint enterprise had obtained. In such a case the court may be prepared to apportion the benefit. But that situation does not apply here. In particular, the total of the confiscation orders made by the judge was well below the £12 million of which the Revenue had been cheated by these conspirators.[42]We conclude that he was entitled to hold that Stapleton, Bravard and May had benefited in the whole of the amounts by which the companies they had jointly controlled had benefited. Stapleton and Bravard had been joint principals throughout all four phases of the conspiracy and May had been a joint principal in the last two phases. Their levels of benefit were correctly determined by the judge.

HIDDEN ASSETS AND LEGITIMATE EXPECTATION

[43]When the judge came to the stage of determining the realisable assets of the appellants, he began by quantifying the identifiable assets of each of them. In the case of May, the judge found his identifiable assets to exceed the benefit he had obtained from the fraud, though the judge commented that he was in no doubt that May did have very substantial undisclosed assets. Thus in May’s case the confiscation order ultimately made reflected the benefit obtained rather than being reduced by the figure for realisable assets.[44]But the assets which could be identified in the cases of Stapleton, Bravard and Fowles fell below the figure which in each case had been determined as the benefit obtained by that appellant. The judge considered whether those three had assets which they had not disclosed. After applying his mind to the amounts which he inferred had been drawn out by them during the different phases of the conspiracy, he found that both Stapleton and Bravard had some £750,000 of undisclosed realisable assets to be added to the sum of those assets which had been identified. The resulting figure in each of their cases determined the amount of the confiscation order under section 71(6), since it was less than the benefit obtained. The position of Fowles requires separate treatment and we shall deal with his position later in this judgment.[45]The exercise just described is contained in the judge’s decision dated 2 August 2002. During the course of the hearing preceding that decision, it was submitted on behalf of the appellants that, because of guidance given by the judge before the pleas of guilty were entered, the appellants had a legitimate expectation that in the anticipated confiscation proceedings he would take account only of identifiable assets and that it would now be unfair for him to proceed on any other basis. The judge rejected that submission, but it now forms the central plank in the appellants’ appeal on the topic of realisable assets.[46]What had happened is perhaps a vivid reminder of the need for judges, if commenting at all on likely sentence, to express themselves clearly and unambiguously. After pleas of not guilty had initially been entered, there was a lengthy discussion in chambers on Thursday 20 September 2001 between counsel and the judge. It began with leading counsel for Stapleton, Mr Arlidge QC, acting as spokesman for all the appellants and making it clear that they were hoping for some indication from the judge as to sentence which might enable counsel to advise their clients to change their pleas. Mr Arlidge indicated that one of the “sticking points” in discussions which had taken place with prosecution counsel had been in respect of confiscation orders.[47]The judge, while apparently willing to assist, reminded counsel that at that stage he had no idea what amount the Crown would be seeking by way of confiscation orders. However, he described what he had done in the past in a case involving money laundering where the benefit had been £50 million but the prosecution had failed to apply for a confiscation order. So instead he had fined the defendant in addition to imposing a custodial sentence. The fine imposed was £1 million which, said the judge, was in his view proportionate to the assets as well as to the criminality of the defendant. This, he thought, might be of assistance in the discussions between counsel for the defendants and the Crown, and he emphasised the huge saving in public resources were a trial to be avoided.[48]These discussions in chambers continued into the afternoon. They ranged over discounts on custodial sentences for pleas of guilty as well as other matters but they returned to the topic of confiscation orders There was mention of the issue of benefit and then Mr Arlidge indicated that they might not reach agreement about his client’s assets. He went on to say to the judge:
“I take it that in general the message that your Lordship is giving me is that you are prepared to take a sensible and realistic look at the situation.”
The judge’s response was as follows, with one correction to the transcript which we are persuaded on the evidence is appropriate:
“I would not dignify [it] in those terms, Mr Arlidge. What I am prepared to say is that I will look in terms of prospective confiscation at provable assets.”
[49]Mr Arlidge expressed his appreciation. No objection had been taken so far by the Crown to the process which had been taking place in chambers. At a later point in the discussions, Mr Sells QC on behalf of the prosecution did raise an objection. The judge apologised for any discomfort he had caused but went on to say that confiscation was part of the package of sentence and that (in response to counsel for May) he could not do more “than to say that what I said to Mr Arlidge, which was said without adverse comment from the Crown, is my likely approach.” The judge subsequently made some comments about sentence in open court without mentioning confiscation. May, Stapleton and Bravard changed their pleas to ones of guilty on re-arraignment on the following Monday, 24 September.[50]When in the following July submissions were made about the approach to be adopted to realisable assets as part of the confiscation proceedings, it was put to the judge that defence counsel and their clients had understood him to mean identifiable as opposed to hidden assets when he had used the phrase “provable assets”. A statement by Mr Arlidge, who was no longer acting as counsel, was put before the judge, in which reference was made to the phrase “provable assets” and it was stated that Mr Stapleton had subsequently been advised that the judge’s likely approach to the confiscation order was favourable to him. The judge’s response both in July and in the course of his judgment of 2 August 2002 was that “provable” included what could be proved by inference and could include unidentifiable assets.[51]In that judgment the judge acknowledged that he had in the 20 September discussion been seeking to give some guidance to those representing the defendants, and he was prepared to assume that his words had been conveyed to the lay clients. But he said that he had not intended by those words to restrict himself to identifiable assets, and he emphasised that the drawing of appropriate inferences is part of the process of proof. Consequently he went on to infer from the amounts of VAT retained by the various companies that Stapleton and Bravard, and indeed May, had substantial undisclosed assets.[52]It was submitted before us that the interpretation of the words “provable assets” as meaning identifiable assets was a reasonable one, given the context in which some form of assurance was being sought from the judge. Moreover, a legitimate expectation had been created both by that phrase and by the reference to the money-laundering case, with the result that it was unfair subsequently for the judge to rely on unidentified assets when making the confiscation orders. Mr Owen sought leave to call evidence from Mr Peter Rowlands, who had been junior counsel, led by Mr Arlidge, for Mr Stapleton in September 2001. This was on the basis that Mr Rowlands could testify not only to his and Mr Arlidge’s understanding of the judge’s words but also and in particular to the advice then given to Mr Stapleton and his reaction to it.[53]We were not enthusiastic about trial counsel being called as a witness to give evidence about advice tendered in privileged circumstances to the lay client in criminal proceedings. Nonetheless, we recognised that the unusual circumstances of this case meant that Mr Rowlands might be able to give evidence helpful to this court. Having heard his evidence, we are satisfied that it met the criteria in section 23 of the Criminal Appeal Act, 1968 and we have therefore received it and taken it into account.[54]Mr Rowlands’ evidence was that he and Mr Arlidge had seen their client in the cells after the judge’s guidance and had said that the words meant “identifiable assets”. He did not have any written note to that effect but he was firm in his recollection and unshaken in cross-examination. He said that because of the circumstances he had taken the phrase “provable assets” as having only that one meaning. While Mr Rowlands recognised that proof can be by inference as well as by direct evidence, such a meaning would not have been giving the defence any helpful assistance. He told us that there was no doubt in his mind or in Mr Arlidge’s about what the words had meant. Mr Stapleton was influenced by what the judge had said and the interpretation counsel placed on it and he thereupon had indicated that he wished to change his plea to guilty.[55]There was no challenge by the Crown to the honesty of Mr Rowlands but it was suggested that he may not be reliable in his recollection. We do not have any doubts as to his reliability. His evidence was clear, confident and consistent. We accept it as accurate. In respect of the appeal by Bravard, we also had before us a statement by Mr David Spens, QC, who had appeared on behalf of Bravard at the time of the discussion in chambers on 20 September 2001 and the change of plea by his client. The Crown on Bravard’s appeal did not seek to draw any factual distinction between the situation existing in his case and that in Stapleton’s case. We therefore formally received Mr Spens’ statement in evidence without requiring him to be called as a witness. His appeal is, on this aspect of the case, to be treated as being on all fours with that of Stapleton.[56]What is the effect of all that? Mr Owen directed our attention to the decision of this court in R. v. Smith (Terence) [1990] 1 WLR 1311. There a discussion had taken place, unrecorded, between counsel and the judge in the latter’s room, as a result of which defence counsel told his client that the judge had indicated that a suspended sentence would be the outcome if there was a change of plea to guilty. The defendant then changed his plea, but was subsequently sentenced to immediate custody. There was a dispute between defence and the judge as to what the judge had in fact said, but this court did not seek to resolve that dispute. It accepted that the defendant had been misled by his own counsel into believing that the judge had given some sort of undertaking that he would pass a suspended sentence when, according to the judge, no such undertaking had been given. The court quashed the sentences and substituted suspended ones.[57]Reliance is also placed on R. v. Janghir Khan [2004] EWCA Crim 1982, where once again there had been a discussion in the judge’s room between counsel and the judge. A subsequent note agreed between both prosecution and defence counsel stated that the judge said that a guilty plea would attract a long term sentence “but only just”. Both counsel understood this to mean a sentence of four years imprisonment. After the position had been explained to the defendant he changed his plea to one of guilty. In the event a sentence of five years imprisonment was passed, the judge saying that he had no recollection of stating that the sentence would only just be long term.[58]This court reduced the sentence to one of four years imprisonment, saying that it had “no hesitation” in doing so. It emphasised that there had to be a causative link between the judge’s words and the plea of guilty but it was prepared to infer such a link in that case. It also commented that not every throwaway line will give rise to a judicial promise or a legitimate expectation on the defendant’s part.[59]In the present appeals Mr Sells for the Crown relied on that last point, stressing that the judge’s words here were said ex tempore and not as part of any considered judgment. It was submitted that a judge must have given a clear indication for any legitimate expectation to be created, but Mr Sells accepted that the interpretation relied upon by the defence need not be the only reasonable interpretation of the words used before such an expectation can arise. He acknowledged that the judge’s words were not happily chosen. Nonetheless the Crown noted that Mr Stapleton’s section 73 statement, responding in February 2002 to the prosecutor’s confiscation statement, made no mention of any such legitimate expectation and Mr Sells queried whether the causal link between the judge’s words and the pleas of guilty had been shown.[60]There is no doubt in our minds that the subjective intention of the judge when he gives some indication about his approach to sentencing if there is a plea of guilty is not relevant. The test must be one which focuses objectively upon the words used and the meaning to be attributed to them. In the present case this court can see that the meaning intended by the judge is a tenable one: it is trite law that a fact may be proved by inference as well as by direct evidence, and it may be that by using the expression “provable assets” he was trying to indicate that he would not rely on any failure of the defence to discharge the burden of proof resting on it to show that realisable assets were less than the benefit: see Barwick [2001] 1 Crim. App. Rep. (S) 129.[61]But we have concluded that the meaning attached to his words by defence counsel was, in the context in which they were used, a reasonable one, especially given the earlier reference to the money laundering case. This was not an unimportant topic. It was made clear by Mr Arlidge at the outset of the discussion that the issue of confiscation was very significant, a sticking point. The defence were clearly seeking some assistance from the judge which would enable them to indicate to their clients that he was intending to set some limit to the scale of confiscation. Given the absence of any express discretion in the statutory provisions, his approach to the topic of assets was clearly important, since the judge has to exercise a degree of judgment in applying the words in section 71(6), “the amount appearing to the court to be the amount that might be realised at the time the order is made”. Moreover, it is evident that the judge was seeking to encourage a change of plea if possible, so as to avoid the expense of a lengthy trial.[62]His words about “provable assets” cannot be treated as a mere throwaway line. He returned later in the discussion to what he had said, describing it as his likely approach. It was clearly intended to be relied upon. As for the causal link between his words and the changes of plea, that was testified to by Mr Rowlands and was unchallenged in cross-examination before us. The fact that this understanding of the judge’s words was not referred to in Stapleton’s section 73 response cannot be seen as significant: that response was seeking to deal with the factual allegations made in the prosecutor’s section 73 statement, rather than setting out the whole of the legal case for Stapleton in the confiscation proceedings.[63]We do not have to deal in this judgment with the situation where counsel conveys to his client a wholly unreasonable meaning of a statement by a judge. The present appeals are ones where it was reasonably open to defence counsel to understand the words used in the way which we accept they did, namely that the judge would confine himself to those assets which the Crown could identify. If such an understanding is then conveyed to the lay client, who pleads guilty in reliance thereon, then even if there is another possible interpretation of the judge’s words, it will normally be unfair for the court to sentence on a more severe basis. Fairness is, as so often, the key. In the present case, we are satisfied that the conditions we have set out are met in respect of Stapleton and Bravard. It follows that the amount of the confiscation orders in their cases must be reduced to the total of their identifiable assets. As we have indicated earlier, the order in May’s case was no more than his identifiable assets. Fowles has not sought to rely on legitimate expectation in this appeal.[64]We cannot, however, leave this topic without stressing once again the extreme care which must be used by judges in seeking to give any indication in chambers about sentence. The Practice Direction (Criminal Proceedings: Consolidation) [2002] 1 WLR 2870 points out the danger of any such indication, a matter which has been emphasised time and again since the classic case of Turner [1970] 2 QB 321. But if, in exceptional circumstances, the judge does choose to give an indication, it is imperative that he does so unambiguously, leaving no room for misunderstanding. The conclusion which we have arrived at in the present appeals on this matter is one which we have reached with considerable regret. ISSUES PECULIAR TO INDIVIDUAL APPELLANTS Stapleton[65]It was submitted that the judge was wrong to include amongst Stapleton’s realisable assets his one-third share in the bank balances of Elysee Consulting Limited, Flostap (a French overseas supplier) and JVJ Limited, one of the buffer companies. Mr Owen pointed out that, when dealing with the determination of benefit, the judge had reduced the benefit figure on the basis that those balances, the subject of a restraint order obtained by the Customs and Excise, were available to make up part of the deficit in VAT owed. This, it was contended, was inconsistent with then including those balances in this appellant’s realisable assets.[66]We do not accept that the judge was wrong to include them in the realisable assets. In his Response Statement under section 73, Stapleton had accepted that one third of the assets of Elysee Consulting Limited and of Flostap should be regarded as part of his realisable assets and the judge clearly accepted that the same position obtained in respect of JVJ Limited. As for inconsistency, the judge was perhaps being generous in reducing the benefits figure in the way that he did, but it does not follow that this appellant’s realisable assets had to be reduced in the same way. Bravard[67]Bravard and his wife own a property in Corsica in joint names. The judge treated that property as worth £20,000. He treated the whole of the value as a realisable asset of Bravard on the basis that “it was acquired entirely from his own resources and that, following the English law of resulting trust which applies to these proceedings, he is to be treated as the sole beneficial owner.” But the judge also pointed out that “French law does not recognise equitable principles of propriety ownership.” That is not in dispute.[68]Given the position under French law we regard the judge as mistaken to have regarded the whole of the value of the Corsican property as realisable in the hands of Bravard. French law is clear. Under that law Bravard’s wife is entitled to one half of the value of the Corsican property and we do not regard the doctrine of resulting trust as applicable to this aspect of the case. Accordingly the realisable assets of Bravard should be reduced by his wife’s half share in the Corsican property, namely £10,000 on the basis of the value for the Corsican property adopted by the judge. May[69]Among the realisable assets of the appellant May taken into account by the judge was a house called The Robins, valued for the purposes of the hearing at £1.8 million. The house was in the joint names of May and his wife and was unencumbered by any charge. The judge seems to have proceeded on the basis that the whole of the beneficial interest was vested in the appellant, because although he refers at paragraph 10.6.3 of his decision of 2 August 2002 to Mrs May being “a beneficial joint owner” he goes on to say immediately thereafter:
“there is no reason to suppose that she made any or any significant contribution to its acquisition.”
The judge then went on to consider whether as a matter of discretion he should treat the matrimonial home as an available realisable asset, referring to such cases as Lee [1996] 1 Cr. App. R. (S) 135 and Taigel [1998] 1 Cr. App. R. (S) 328. For various reasons which he set out, he declined to exclude any part of the equity in The Robins from May’s realisable assets.[70]The reasoning for that exercise of discretion was criticised before us on behalf of May, it being said that those reasons were not supported by the evidence. In particular, it was emphasised that the property was purchased before the offences to which he pleaded guilty and so could not have been bought with the proceeds of those offences. Thus it was said that only half of the equity in the house should be included within his realisable assets.[71]In the view of this court, it is important to distinguish between two questions. The first is whether there was evidence on which the judge could properly conclude that the whole of the beneficial interest was vested in May. This is fundamental, because section 74(4) of the 1988 Act defines the value of property for confiscation purposes, where some other person holds an interest in the property, as being the market value of the defendant’s beneficial interest. The second question is whether the court has a discretion in respect of a matrimonial home in which a defendant holds the whole of the beneficial interest.[72]On the first of those issues, this court is satisfied that the judge could properly conclude that Mrs May made no significant contribution towards the acquisition of The Robins. He had evidence before him that Mrs May’s annual salary at the relevant times did not exceed four figures, and there was no evidence to show that she had made any contribution towards the purchase price. In those circumstances he could proceed on the footing that the whole of the beneficial interest was held by the appellant May.[73]Once that position has been reached, the Act does not seem to us to give the court any discretion. The case of Lee, on which reliance was placed, was concerned with the 1988 Act in its form before the amendments made by the Proceeds of Crime Act 1995. In its original form the 1988 Act gave the court a discretion both as to whether to make an order at all and as to the amount. Section 71(1) as it was simply gave the court the power to make an order and it also provided that the order would require the offender “to pay such sum as the court thinks fit”. Section 71(6) as unamended provided that the confiscation order “must not exceed” the lesser of the two amounts, the benefit and the amount that might be realised. The Proceeds of Crime Act 1995 changed that. It put the court under a duty to make such an order when certain conditions were met (new section 71(1)) and it amended section 71(6) so as to remove the words “must not exceed” and to replace them with the words “shall be equal to”. The discretion as to the amount in section 71(1) was swept away.[74]Likewise the case of Taigel was dealing with the situation where the court retained its original discretion: see page 330, final paragraph. We therefore agree with the decision of this court in Ahmed [2004] EWCA Crim 2599; [2005] 1 All E R 128 that under the 1988 Act in its amended form the court had no statutory discretion in assessing the value of realisable property. We emphasise the word “statutory”, though the case of Ahmed also made it clear that any discretion based on the Article 8 rights of innocent members of the family to occupy the matrimonial home applied only at the enforcement stage of the confiscation process and not at the stage of the making of the[75]Consequently the judge in the present case was wrong to proceed on the basis that he had any discretion as to the matrimonial home, once he found that it had been paid for by the appellant May. The judge had no such discretion and the criticisms of the way in which he purported to exercise such a discretion are beyond the point. It follows that his conclusion that the matrimonial home should be included amongst May’s realisable assets cannot be successfully challenged. Fowles[76]The appellant Fowles relies upon two original grounds which may be summarised thus: 1. That the net benefit figure in his case should be limited to £40,000 (his wages) rather than £3,129,929 as found by the judge. 2. That a sum of £16,000 given to Stapleton should not have been included in Fowles’ realisable assets by the judge. We take these two issues in turn. Benefit:[77]Fowles pleaded guilty to the conspiracy upon a detailed basis of plea agreed with the prosecution and reduced to writing. We shall summarise the relevant parts to illustrate the agreed role of the appellant in relation to each missing trader company.[78]Lomond: Fowles was not responsible for setting the company up and played no executive role. He entered the conspiracy toward the latter stages and was educated in its mechanics.[79]Lyndon Global: Stapleton suggested that items be taken to Fowles; keeping an eye for Stapleton on his son in law; encouraging others to “set up again”; chaperoning Pullen between fraudulent companies; helping unload goods and knowledge that Beachshand was to be set up.[80]Beachshand: Giving physical assistance to Pullen and on eight occasions accompanying Pullen in transferring goods between fraudulent companies. He had no organisational role.[81]He had no executive or organisational role in any company and was relied on as a box carrier and minder by Stapleton. He had knowledge of and entered into the early stages, and encouraged and gave physical assistance in the later stages. It was the Prosecution’s case that he received a cash wage commensurate with his involvement. He played no part in Elysee.[82]The judge had his attention drawn to the basis of plea on an earlier date when he had indicated a provisional assessment of £3,129,929 as the appellant’s benefit from the conspiracy. He later returned to the issue in his judgment on 2 August 2002.[83]There he considered whether the prosecution had agreed each element of the basis of plea and then went on to say:
“I have already drawn attention to the decision of the Court of Appeal in R v Atkinson in paragraph 3.2. It follows in my judgment that, whatever may have been agreed between Miss Moor and Mr Kirby, which would properly bind me when imposing sentence on Fowles, the court cannot avoid the performance of its statutory investigation under s. 71(1A) and (1B). Accordingly my considered reasons for concluding the benefit figure in the case of Fowles is indeed £3,129,929 are as follows. That figure is the aggregate of the VAT of which Customs was cheated in respect of the Lyndon Global and Beachshand phases of the conspiracy. Fowles is a long-time criminal associate of Stapleton Senior; so much is clear from the disclosed applications to maintain intrusive surveillance, as well as the unchallenged evidence as to his questionable involvement with Stapleton Senior in the use of motor vehicles and the jewellery trade, I am in no doubt that Fowles introduced Hope, then hitherto of good character, and his stepson, to an opportunity to make easy and dishonest money. One of the links to those transactions was John Hurley, a man with previous convictions for dishonesty, who established both Lyndon Global and Beachshand. … In my considered judgment the role adopted in the two phases of the conspiracy with which I am concerned by Fowles was very similar to that adopted in phases 3 and 4 by Lawrence. … I am satisfied that de facto Fowles was as much in control of these companies, in his role as ‘minder’ for Stapleton Senior, as those who were in formal position as directors of the companies, namely Hope and Pullen.”
[84]It is clear that the judge, in deciding he was not bound by the terms of the basis of plea, relied on the decision of this court, differently constituted, in Atkinson [1993] 14 Cr. App. R (S) 182. That was a drugs case. The appellant had been convicted of possessing amphetamine with intent to supply and had had further similar cases taken into consideration. In confiscation proceedings the prosecution had invited the court to make a confiscation order in the sum of £17,000. The sentencing judge expressed doubt as to whether the prosecution had the power to limit the court to such a sum. He went on, having found certain facts, to order the appellant to pay confiscation in the sum of £27,267. The appellant appealed inter alia on the ground that “the sentencing judge was in error in declining to accept the prosecution’s invitation to proceed under the statute only in respect of a contended for confiscation order totalling some £17,000.”[85]That submission was rejected by this court. Simon Brown J as he was then said:
“The statute appears to us to be perfectly clear and imperative in its terms. Once a court has determined that a defendant has benefited from drug trafficking, and that here was not in issue, then the court is required to determine in accordance with section 4 the amount to be recovered under the provisions of the Act. Section 4(1) is similarly enacted in mandatory terms and provides that the amount to be recovered under the confiscation order shall be the amount the court assess to be the value of the defendant’s proceeds of drug trafficking. The court, accordingly, was not only entitled to reject prosecuting counsel’s suggestion that the scope of the enquiry should be restricted, but indeed bound so to do.”
[86]Before us it was submitted by Mr Bodnar, on behalf of this appellant, that the judge was not entitled to attribute to the appellant a role different from that agreed with the Crown. He submitted that in Atkinson the prosecution were inviting the court to make a compromised order in the sum of £17,000, which invitation did not relate particularly to the specific facts of the case. It was to be distinguished from the present case where benefit fell to be determined by the degree of factual involvement of the appellant in the conspiracy. He submitted that that degree of involvement was delineated by the contents of the agreed basis of plea and that it was not for the sentencing judge to go behind it and determine the appellant’s position based on factual findings inconsistent with that basis of plea. He submitted that confiscation is part of the sentencing process and that a judge is as bound by an agreed basis of plea in making a confiscation order as at any other part of the sentencing process.[87]We have been referred to and have considered Lunnon [2004] EWCA Crim 1125 and Lazarus [2004] EWCA Crim 2297, but do not find them helpful.[88]We consider that there is force in the appellant’s submissions. We are satisfied that the making of a confiscation order is part of the sentencing procedure. Consequently a judge is bound at that stage by facts agreed between the parties in the same way as when he is passing a punitive sentence. It is upon that basis that the prosecution advance their case and the defendant submits to conviction and sentence. It is to be remarked that prosecutors will from time to time agree a factual basis for plea with the defence in the knowledge of facts which have not been made available to the sentencing judge. The position is different where there is no agreed factual basis of plea. Then a judge will be required to hear the evidence placed before him and reach his own conclusion as to the part played by a defendant. Atkinson is to be distinguished since in that case there was no agreed basis of plea. The judge was merely invited to make a confiscation order based on a compromised figure for the defendant’s liability which invitation this court concluded the judge was not obliged to accept.[89]Accordingly we are satisfied that, whilst the learned judge was correct when he said that “the court could not avoid the performance of its statutory investigation under section 71(1A) and (1B)”, nevertheless we are of the opinion that he misdirected himself in determining that he was required to investigate the factual degree of involvement of the appellant further than that prescribed by the agreed basis of plea.[90]We turn next to consider the appropriate amount of benefit to be attributed. It is only upon the basis that the appellant was a controller of the fraudulent companies that an order in the terms contended for by the prosecution could be made. We consider that the basis of plea falls far short of placing the appellant in that position.[91]We have already summarised the appellant’s involvement as set out in the basis of plea. It therefore appears to us that there was no factual basis for finding, as did the judge, that he was “the lieutenant of Stapleton Senior” or that “de facto Fowles was as much in control of these two companies (Lyndon Global and Beachshand) in his role as ‘minder’ for Stapleton Senior, as those who were in a formal position as directors of the companies, namely Hope and Pullen”.[92]As a worker for wages it appears to us that his benefit is to be assessed in accordance with the wages he received. The only matter not agreed with the prosecution in the basis of plea was the level of those wages. They fell to be determined by the judge. The appellant did not give evidence in the confiscation proceedings and has thus provided no assistance to the court on this matter. The judge found that Fowles had benefited to an extent of not less than £20,000 in each of the Beachshand and Lyndon Global phases, a total of £40,000.[93]Therefore this represents the wages received by the appellant from the conspiracy on the agreed facts. It follows for the purpose of section 71(1A) and (4) that must be the amount of his benefit.[94]Before us Mr Bodnar has conceded that the appellant has realisable assets (excluding the £16,000 below) sufficient to satisfy an order that he be required to pay the full benefit amount. Although we have also heard argument about apportionment on behalf of this appellant, we consider that the alternative ground relating to apportionment does not now fall for determination in his case. £16,000 paid to Stapleton:[95]This turns upon whether the judge included a particular sum of £16,000 paid to Stapleton by the appellant, and which fell to be considered as “a gift” for the purposes of the Act, as a realisable asset both of this appellant and of Stapleton. If he did, it is argued that this appellant would be unable to recover that asset to satisfy his own order since it is already subject to the order concerning Stapleton. Therefore it should not be considered a realisable asset in the hands of the appellant.[96]Determination of this issue will not effect the practical outcome of this appeal. We therefore deal with it briefly.[97]This appellant accepted that the payment of £16,000 to Stapleton in or about January 2001 was prima facie “a gift” caught by the Act. Mr Bodnar has argued that the judge specifically considered the entirety of Stapleton’s apparent assets as being attributable to “realisable assets”. It followed that in doing so he must have embraced the £16,000 “gift” as part of Stapleton’s realisable assets. Since Stapleton’s entire realisable assets were subject to the judge’s confiscation order, it would not be possible for the appellant to recover the gift to satisfy the order made against him on the basis that the £16,000 formed part of his realisable assets.[98]In considering those submissions we have been particularly impressed by the careful way in which the judge approached the identification of particular assets. He considered them against the background of the Prosecutor’s Statements and on an itemised footing. We conclude that if he had in mind the £16,000 “gift” as realisable in the hands of Stapleton it is inevitable that he would have included it as a specified item in his judgment. We are confirmed in that view by his specific inclusion of the “gift” as part of this appellant’s realisable assets.[99]We are satisfied that the judge took this item into account only when assessing this appellant’s realisable assets and no element of double accounting is involved. Consequently the judge was correct to consider this sum as a realisable asset in the hands of this appellant and we dismiss the second ground of the appeal. Conclusion as to Fowles:[100]It follows that Fowles’ appeal succeeds upon the first ground to the extent that the confiscation order will be amended to require the appellant to pay £40,000 rather than £66,000 as ordered in the court below. CONCLUSION ON THE INDIVIDUAL CONFISCATION ORDERS[101]The result of our decisions on the various issues arising on the confiscation orders can now be set out, appellant by appellant. The appeal by May against the confiscation order made against him is dismissed. In the case of Stapleton, the amount of the order must be reduced to the total of his identifiable assets, namely £1,615,789, and we shall reduce the period of imprisonment in default of payment to four years. The order against Bravard must again be reduced to the total of his identifiable assets, £636,383, and then a further reduction of £10,000 is required to reflect our decision about the Corsican property. This gives a figure for the confiscation order against Bravard of £ 626,383, and the period of imprisonment in default is reduced to a term of three years. The order against Fowles is reduced to £40,000, to reflect the decision set out in paragraphs 92 to 94 above. We reduce the default term in his case to one of twelve months. THE SENTENCE APPEAL[102]We turn finally to the appeals against sentence by May and Lawrence. So far as May’s appeal is concerned, the point is a short one. In his sentencing remarks the judge had proceeded on the basis that May had been actively involved after the disappearance of Lomond Services Limited in July 1999 – in other words, that he had been a principal in the last three phases of the conspiracy. However, when the judge came to analyse at the confiscation stage the involvement of the various defendants, which he did in some detail, he concluded that May had only participated in the last two phases of the fraud: see judgment dated 2 August 2002, paragraph 9.2.[103]Mr Campbell-Tiech submitted that, in the light of that subsequent finding, the judge passed the custodial sentence on an erroneous basis and that the five year term of imprisonment should be reduced. We agree. We quash the sentence of five years imprisonment and substitute for it one of four years imprisonment.[104]On behalf of Lawrence, Mr Mitchell argued that the judge was wrong to regard him as having been involved as May’s “lieutenant” during the last two phases of the conspiracy. It was submitted that Lawrence’s role only began in July 2000 and that he was brought in to start up Elysee Consulting Limited, the company used in the fourth and final phase. In short, he was only involved for about two months.[105]The judge in his sentencing remarks commented that Lawrence had been actively involved since November 1999, and we note that there was evidence of this from the probe conversations. Moreover, the judge reached his conclusion about the length of Lawrence’s involvement after conducting a thirty seven day trial. No-one could have been in a better position than this judge to assess the role played by Lawrence in this conspiracy. We recognise that his sentence of four and a half years imprisonment is now somewhat longer than the sentence of four years which we have substituted in the case of May, whose lieutenant Lawrence was, but this difference simply reflects the fact that May pleaded guilty and thereby obtained a discount on his sentence, whereas Lawrence did not.[106]The appeal against the sentence of imprisonment is allowed in May’s case to the limited extent indicated. Lawrence’s appeal is dismissed. OVERALL RESULT OF THE APPEALS[107]We summarise the result of the various appeals by each appellant.[108]The appeal by May against the confiscation order made in his case is dismissed. His appeal against sentence is allowed, to the extent that we quash the original sentence and substitute one of four years imprisonment.[109]The appeal by Stapleton against his confiscation order is allowed. We quash the original order and in its place make one in the sum of £1,615,789, to be paid within two years, with four years imprisonment in default.[110]The appeal by Bravard against his confiscation order is allowed. We quash the original order and substitute one in the sum of £626,383, to be paid within eighteen months, with three years imprisonment in default.[111]The appeal by Fowles against his confiscation order is allowed. We quash the original order and substitute one in the sum of £40,000, to be paid within twelve months, with twelve months imprisonment in default.[112]Any period of disqualification from acting as a company director, imposed by the court below, will remain. The appeal against sentence by Lawrence is dismissed.113. LORD JUSTICE KEENE: For the reasons set out in the judgment, which we now hand down, the result of these various appeals is as follows. The appeal by the appellant May against the confiscation order made in his case is dismissed. His appeal against sentence is allowed to the extent that we quash the original sentence and substitute one of four years' imprisonment.114. The appeal by Stapleton against his confiscation order is allowed. We quash the original order and in its place we make one in the sum of £1,615,789 to be paid within two years. I shall deal with the time to pay in due course. There would be four years' imprisonment in default of payment.115. The appeal by Bravard against his confiscation order is also allowed. We quash the original order and substitute one in the sum of £626,383 to be paid within 18 months with three years' imprisonment in default.116. The appeal by Fowles against his confiscation order is allowed. We quash the original order and substitute one in the sum of £40,000 to be paid within 12 months with 12 months' imprisonment in default. Any period of disqualification from acting as a company director imposed by the Court below will remain.117. The appeal against sentence by Lawrence is dismissed.118. In the course of that series of orders we have dealt with the time to pay in these various cases. However, further representations have been received on behalf of the parties. Mr Sells, I know that we have had some from you.119. MR SELLS: Yes.120. LORD JUSTICE KEENE: We had some on behalf of the other parties as well, and they, I think, are not represented here this morning.121. MR SELLS: No, I thought that Mr May was going to be represented by Mr Campbell-Tiech.122. LORD JUSTICE KEENE: He clearly is not here.123. MR SELLS: He is not here.124. LORD JUSTICE KEENE: We have had some representations, which you may have, from Mr Campbell-Tiech --125. MR SELLS: Yes, I have.126. LORD JUSTICE KEENE: -- on behalf of the May. It seems to me that they raise an issue which has to be determined upon which I have not been able to consult the other two members of the Court. Therefore, what I propose at the moment is that the final order shall not be drawn up yet, because clearly the order will have to specify time to pay in each case, save in relation, of course, to Lawrence who was not appealing against his confiscation order. In that situation what at the moment I am minded to do, subject to anything you want to say, is to give all parties a further seven days to put in any representations they wish to make in writing. Seven days from today. The Court will then consider those and deal with the time to pay aspect of those orders.127. MR SELLS: My Lord, I am very happy with that and I will communicate that to the other parties.128. LORD JUSTICE KEENE: Would you? I would be most grateful if you would. I hope very much we can deal with this without troubling counsel to appear in front of us, so as long as the parties are content with that. Clearly if the parties do want to have a chance to make oral representations we will consider any such a request.129. MR SELLS: I respectfully agree. I thought quite close to that last night, but it hasn't in fact materialised 100 per cent.130. LORD JUSTICE KEENE: Well, in particular the point is raised, as you know, by Mr Campbell-Tiech about when the period of time would run from in any event, which in his client's case is material, because his appeal against the confiscation order has simply been dismissed. He also raises a point about, whether, if we were to allow a further six months from today, that would amount to imposing a more severe sentence than that which was imposed by the court below.131. MR SELLS: Yes.132. LORD JUSTICE KEENE: I take that to be a reference to section 11(3) of the Criminal Appeal Act and the Court is going to be assisted by representations from the Crown as well as from the appellants on that issue.133. MR SELLS: Yes. We shall do so.134. LORD JUSTICE KEENE: Anything further you want to deal with today?135. MR SELLS: No, my Lord.136. LORD JUSTICE KEENE: I am much obliged.

order

paragraphs 11 and 12.

Cited in 19 later judgments

and 10 more of the most senior