Bewick, R. v [2007] EWCA Crim 3297

[2007] EWCA Crim 3297Case No 2007/02525/A2
IN THE COURT OF APPEAL
CRIMINAL DIVISION
Venue Royal Courts of JusticeDate Thursday 29 November 2007
Between
R E G I N ACrown
The Strand
London
WC2A 2LL
B e f o r e:
LORD JUSTICE LAWS
MR JUSTICE LLOYD JONES
and
SIR MICHAEL ASTILL
__________________
- v -
Between
ERNEST ARTHUR BEWICK__________________Computer Aided Transcription byWordwave International Ltd (a Merrill Communications Company)190 Fleet Street, London EC4Telephone 020-7421 4040(Official Shorthand Writers to the Court)__________________Mr A Bodnar appeared for AppellantMr R Woodcock appeared for Crown____________________J U D G M E N T
[1]On 3 March 2006, at the Crown Court at Newcastle upon Tyne, the appellant pleaded guilty to cheating the revenue. On 20 April 2007, he was fined £25,000 and ordered to pay compensation of £257,295.98. Leave to appeal against the compensation element of that sentence was granted by the full court.[2]It is unnecessary to go into the full facts of the offence because this appeal concerns the lawfulness of the compensation order. It is sufficient to say that a search of the appellant's home by police officers produced £315,580 in cash, representing earnings from the appellant's business. However, the tax returns for the previous eight years declared a considerably less level of earning. He admitted earnings of £1,000 to £2,000 per week.[3]In his ruling concerning compensation, the learned judge pointed to and particularised various benefits in kind which were therefore taxable. He accepted the Crown's claim concerning annual sums due, which represented the appellant's default together with the appropriate level of interest.[4]Confiscation proceedings, which would normally be appropriate, were not available to the court because the six month period in which they are required to be brought had expired. Mr Woodcock for the respondent this morning has told us that the prosecution argued that confiscation proceedings were still open to the court, but the judge ruled against him.[5]There is one principal ground of appeal: that once the court could not carry out its duty to consider confiscation (here because it was time-barred), questions of compensation should be considered only by the civil court, particularly where the evidence before the court was complex and contested, as it was here.[6]There is no dispute here that the conditions to be satisfied before the court could proceed to hold a confiscation hearing were met: see section 71 of the Criminal Justice Act 1988 (as amended by the Criminal Justice Act 1993) and the Proceeds of Crime Act 1995. Nor was there any dispute that the six months' time limit from conviction (see section 72 of the 1998 Act) had apparently passed although, as we have already commented, Mr Woodcock argued that confiscation was still open.[7]The Powers of Criminal Courts (Sentencing) Act 2000, so far as relevant states:
"130(1) A court by or before which a person is convicted of an offence, instead of or in addition to dealing with him in any other way, may, on application or otherwise, make an order (in this Act referred to as a 'compensation order') requiring him -- (a) to pay compensation for any personal injury, loss or damage resulting from the offence or any other offence which is taken into consideration by the court in determining sentence; ...." (3) A court shall give reasons, on passing sentence, if it does not make a compensation order in a case where this section empowers it to do so. (4) Compensation under subsection (1) above shall be of such amount as the court considers appropriate, having regard to any evidence and to any representations that are made by or on behalf of the accused or the prosecution."
Subsection (11) enjoins the court to have regard to means in determining the amount to be paid.[8]Mr Bodnar for the appellant has put before the court detailed and carefully argued written submissions. It has not been necessary to invite him to add to those submissions orally today. The written submissions can be distilled to the following:(1) Compensation proceedings lie only between the Crown and defence in a criminal court.(2) The court has no jurisdiction to make final determinations concerning the rights and obligations of non-parties to the proceedings. Here the proceedings were between the Crown Prosecution Service calling a member of the Regional Asset Recovery Team, and so not between HM Revenue and Customs, and the appellant. HM Revenue and Customs were therefore non-parties to the compensation proceedings. However, the purpose of compensation proceedings is to make reparation to victims, whereas the focus of confiscation proceedings (not available here, as we have explained) is to punish the offender. Compensation proceedings are lawfully conducted in the Crown Court (see section 130(1) of the Powers of Criminal Courts (Sentencing) Act 2000) as a matter of policy. But since the Crown Court can only have regard to submissions made by the prosecution and defendant, third or non-parties (including victims) are expressly excluded and their interests are not necessarily represented. Policy considerations demand that complex compensation proceedings should not be dealt with by the Crown Court. There should be no cheap and convenient short cut where there are difficult issues of fact and/or law to be decided.[9]Mr Bodnar has drawn our attention to a number of decisions in this court which assist. In R v Miller (1979) 68 Cr App R 56, the court said "a compensation order is not an alternative to a sentence .... a compensation order in terms of money should be made only where the legal position is quite clear". In R v Kneeshaw (1974) 58 Cr App R 439, the court said:
"It has been stressed in this court more than once recently that the machinery of a compensation order .... is intended for clear and simple cases. .... In a great majority of cases the appropriate court to deal with the issues raised by matters of this kind is in the appropriate civil proceedings. A compensation order made by the court can be extremely beneficial as long as it is confined to simple, straightforward cases and generally cases where no great amount is at stake."
In Hyde v Emery (1984) 6 Cr App R(S) 206, Watkins LJ said: 10. ".... the process of making compensation orders should be a very simple one. Courts should not be invited, and if invited, should decline the invitation, to endeavour to proceed to make compensation orders upon evidence out of which arise questions difficult to resolve of either fact or law or both."[10]Mr Bodnar submits that there is a clear line of authority therefore stating the principle that complex compensation proceedings are to be avoided. They cannot determine third party rights because those third party rights have no voice. He points out that the victims of crime are expressly excluded by statute from making representations as to the appropriate level of any order.[11]We have had the benefit of oral submissions from Mr Woodcock on behalf of the respondent. He submits that the judge had to be satisfied about the seriousness of the offence. A sentence had to be passed, so some hearing was inevitable. It was anticipated that there would be a Newton hearing where the standard of proof would be to the criminal standard. In fact, the Crown had argued before the sentencing judge that confiscation proceedings were still open, but the judge had ruled against that submission. It was in those circumstances that compensation proceedings followed. Mr Woodcock realistically agreed that that is when the problems arose. Indeed, Mr Woodcock expressed concern that the proceedings that followed were properly held in a Crown Court. There were additional difficulties about the standard of proof that was applied.[12]We have considered all of those matters, both on behalf of the appellant and on behalf of the Crown. We agree with the submissions placed before us by Mr Bodnar. We consider that there were here detailed and complex issues which fell to be decided. There was headlong conflict between the two competing witnesses. There was of necessity the need to make arbitrary judgments, albeit that they were based on some evidence. The order does not determine the appellant's tax liabilities to Her Majesty's Revenue and Customs because they were not, as we have said, a party to the proceedings.[13]We have come to the conclusion that in this case compensation proceedings should not have been before the court for the reasons given. The compensation order is accordingly quashed and the appeal allowed. _______________________

Cited in 2 later judgments