Shabir v R. [2008] EWCA Crim 1809

[2008] EWCA Crim 1809Case No 2006/04466/ D1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
Venue ON APPEAL FROM LEEDS CROWN COURT
HIS HONOUR JUDGE HUNT
T20041146
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 31/07/2008
Before
LORD JUSTICE HUGHESMRS JUSTICE DOBBS DBEHIS HONOUR JUDGE PERT QC
Between
Mohammed ShabirAppellantThe QueenRespondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company190 Fleet Street, London EC4A 2AGTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr M Evans (not below) (instructed by Clarion) for AppellantMr H K Crowson (instructed by Department of Work and Pensions) for CrownHearing Hearing date : 28 th July 2008
Judgment
[1]This is an appeal against a confiscation order. The Crown’s case was that the defendant had inflated a money claim by a few hundred pounds. The confiscation order was in the sum of £212,464.17. Two issues arise for our decision. The first is what can properly be said to be the defendant’s benefit from his criminal conduct. The second is whether the confiscation order was oppressive or a breach of Article 1 of Protocol 1 to the European Convention on Human Rights.[2]The agreed facts on which the case falls to be decided are as follows. The defendant was a pharmacist. He had to make a monthly claim to the appropriate Health Service payment body for the cost of prescriptions dispensed. He dishonestly inflated several of his monthly claims. He was convicted of 6 counts relating to the claims for the months of May, July, September, October, November and December 2003. Those were not sample counts. He was acquitted of identical counts relating to June and August 2003. Although the amount by which he inflated the six claims of which he was convicted was not established exactly at his trial, the calculation of his own lawyers was accepted by the Judge for the purposes of sentencing and was £464. The Crown, whilst not formally admitting that that was the precise figure, agree that the defendant was entitled to the vast majority of each monthly payment received, and, critically, that the amount of the inflation involved in those six counts, taken together, cannot have got close to, let alone have exceeded, £5000. A confiscation order was sought by the Crown in a sum over £400,000. The order made by the Judge was £212,464.17. On any view the confiscation order was for a sum some hundreds of times the amount by which the defendant had inflated all his monthly claims taken together.[3]This came about because the total sums paid in these six months added up to £179,731.97. Although, as we have said, the defendant was entitled to the vast majority of these amounts, the Crown asked the court to undertake confiscation proceedings and contended that this was his benefit for the purposes of the confiscation legislation. Moreover, if this was the correct figure for benefit, the defendant’s case became, by statutory definition, one of a criminal lifestyle, so that the various assumptions about his property which are prescribed by section 10 of the Proceeds of Crime Act 2002 fell to be made. The defendant accepted that he could not displace one of the assumptions. The result was the confiscation order in the sum of £212,464.17.[4]The relevant statutory rules in the Proceeds of Crime Act 2002 (‘POCA 2002’) which were said to lead to this rather remarkable result were these:(i) If asked by the Crown to proceed according to the confiscation regime, the court has no discretion and must do so. It once did have a discretion, but such was removed by Parliament by the Proceeds of Crime Act 1995, and does not exist in the legislation relevant to this case, which is POCA 2002: see sections 6(1) and 6(3)(a).(ii) Once the Crown asks the court to embark upon the confiscation process, the first question is whether or not the defendant has a criminal lifestyle according to the provisions of the Act; that rule is to be found in section 6(4)(a).(iii) By section 75(2)(b) the defendant has a criminal lifestyle, inter alia, if the offence of which he was convicted forms part of a course of criminal conduct. A course of criminal conduct arises, by section 75(3)(a) if there are three or more offences from which he has benefited, but this rule is subject to section 75(4) which provides:
“But an offence does not satisfy the test in subsection 2(b)…unless the defendant obtains relevant benefit of not less than £5000.” ‘Relevant benefit’ is defined by section 75(5)(b) in terms which make it clear that this threshold is passed if the benefit from all the offences forming the course of conduct, and of which the defendant has been convicted, adds up to £5000. This defendant had been convicted of six offences. That meant that each offence was part of a course of criminal conduct. So what mattered was whether he had obtained from his six offences benefit of £5000 or more in all. (iv) By section 76(4): “A person benefits from conduct if he obtains property as a result of or in connection with the conduct.”
And, by section 76(5):
“If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.” (v) By section 76(7): “If a person benefits from conduct his benefit is the value of the property obtained.”
If what is obtained is a pecuniary advantage, section 76(5), already quoted, stipulates that the amount of benefit is the value in money of the pecuniary advantage.[5]The charges of which the defendant was convicted were in each case of obtaining a money transfer by deception. The payments were made by bank transfer between the account of the paying authority and the account of the defendant. A typical count (count 3) read as follows:
“Statement of Offence Obtaining a money transfer by deception contrary to section 15A of the Theft Act 1968. Particulars of Offence Mohammed Shabir on or about 1st day of August 2003 dishonestly obtained for himself a money transfer in the sum of £28,333.34 by deception, namely by falsely representing that the details on Form FP34 for the period May 2003 were an accurate record of the drugs and appliances supplied from the Cardigan Road Pharmacy.”
[6]It is revealing that the charges originally laid were of theft of £6.30 in each of a larger number of counts, that being the amount payable per prescription. The change of indictment was not made, we accept, in order to form the basis for a large confiscation claim. If the theft counts had remained, there might well have been doubt whether the defendant had appropriated any property belonging to another, since the way payment was made involved the creation of new (incorporeal) property in the form of a credit to his bank account. But the form of the original charges stated much more realistically what sums were involved in the crimes of the defendant. His criminal behaviour might have been charged in a number of different ways, some of which at least would have made clear the limited nature of the case against him. For example, individual counts of false accounting based upon specifically falsified prescriptions would have been one method.[7]The defendant’s crimes were serious, even though they involved relatively small sums of money. He was in a professional position of considerable trust, he acted from pure greed, and what he did might have exposed individual patients to accusation of dishonesty. He was rightly sent to prison by the Judge, and there has been no attempt to challenge that sentence. But was the confiscation order correct ?[8]The Crown’s contention is that the defendant obtained benefit of £179,731.77 from the six offences, because that was the sum which was paid to him on the strength of his dishonestly inflated claims. They say that in each case the total sum paid was paid as a consequence of the submission of a dishonestly inflated claim. They point to the evidence in the case, which was to the effect that if the paying authority had known that there was a dishonest inflation in the claim, it would not have made any payment at all until the amount correctly due had been established. It is accepted that then the paying authority would have paid the amount to which the defendant was entitled. But, it is said, the particular payment charged would not have been made by the payers and thus not obtained by the defendant. Say the Crown, the very charge of which the defendant was convicted demonstrates its own answer to the question what he had obtained: he was convicted of obtaining the total monthly payment by deception, that is to say by pretending that the claim was wholly honest, when in fact it was not.[9]The defendant contends that the confiscation order was wrong for one or both of two reasons.(1) Because he was legally entitled to all but a tiny proportion of the sum paid, what he obtained as a result of, or in connection with, his deception was the excess to which he had no right, rather than the whole payment. That was the extent of his crime, and thus, he contends, the extent of his benefit. The Judge was, he contends, wrong to rule otherwise.(2) The decision of the Crown to seek confiscation in the sum of something amounting to several hundred times the amount of the defendant’s fraud was oppressive and/or a breach of Article 1 of Protocol 1 to the European Convention on Human Rights.

What benefit was obtained ?

[10]It seems to us that the money transfers obtained by the defendant each month were intangible, or incorporeal, property. They were not, no doubt, property belonging to the paying authority, for the reasons explained some time ago in R v Preddy [1996] AC 815, because the paying authority never owned the precise chose in action created when the defendant’s bank account was credited. Rather, a new piece of property, in the form of a new chose in action, was created, but this is still property obtained by the defendant. For this, see particularly the speech of Lord Goff at 834. In the end, however, it does not matter for present purposes whether what the defendant obtained is properly described as ‘property’ or as ‘a pecuniary advantage’. Whichever it is, the question which matters is what its value is.[11]As we have shown at paragraph 4(v) above, section 76(7) provides that if property is obtained, the benefit is its value, whilst if a pecuniary advantage is obtained, the benefit is, by section 76(5), a sum of money equal to the value of the pecuniary advantage.[12]Since powers of confiscation were first introduced, the consistent decision of the courts has been that the statutory language does not allow the expression ‘benefit’ to be limited to the net profit or gain, or the retained profit or gain, of the defendant. The jurisdiction to make confiscation orders is not restitutionary. Once the defendant has obtained property, or a pecuniary advantage, it matters not for the purposes of confiscation that he no longer has it, for example because he has spent some of it on the criminal enterprise or otherwise, or because he has shared it with criminal associates, or even because any gain has been cancelled out by intervention of the authorities. It is unnecessary to cite authority for this established proposition, which has not been in doubt in argument before us, beyond R v David Cadman Smith [2001] UKHL 68; [2002] 2 Cr App Rep (S) 37 at 144.[13]It also follows from this clear line of authority that not infrequently, and perhaps even ordinarily, the amount of money confiscated will exceed the profit made by the criminal from his offence. That too has not been questioned in argument before us.[14]Mr Evans nevertheless submits that the case is different where, as here, what was obtained was in part something to which the defendant was entitled as a matter of law to receive from the person from whom he obtained it. In such a case, he submits, as a matter of causation it is only the excess, to which the defendant was not entitled, that has been obtained “as a result of or in connection with” the conduct forming the offence(s). Hence, he says, section 76(4) or (5) apply only to the excess, and not to the money which the defendant was entitled as a matter of law to have paid by the payer.[15]Mr Evans contends that the cases thus far decided are all cases where there was no entitlement in the defendant to have paid to him, by the payer, part of what he has been paid. Thus the point is, he submits, a new one. However, some support for his argument is, he submits, to be found in R v Moran [2001] EWCA Crim 1770; [2002] 1 WLR 253, in R v Rigby [2006] EWCA Crim 1653; [2006] 1 WLR 3067, and in a dictum in R v Metcalfe and Metcalfe [2004] EWCA Crim 3253; [2005] 2 Cr App Rep(S) 50 at 307.[16]In Moran the defendant had been convicted of cheating the Revenue by under-declaring his income for tax. His benefit was the pecuniary advantage of avoiding payment of tax which was lawfully due. This court held, in a judgment delivered by Mantell LJ, that his benefit was not the whole of his gross receipts from his trade but rather the unpaid tax. That decision was plainly right, and it was approved recently by the House of Lords in R v May [2008] UKHL 28; [2008] 2 WLR 1131 at paragraph 18. But that is because Moran had not obtained a payment-in from anyone, but rather had gained, by his crime, the advantage of not paying out. The value of that advantage of not paying out was the tax he had avoided paying. To say that the benefit he obtained was the amount he avoided paying out is no help to Shabir, whose crime resulted in a payment-in to himself. The limitations of the proposition from Moran can be seen from the decision in R v Foggon [2003] EWCA 270; [2003] 2 Cr App Rep (S) 85 at 507, another case of cheating the Revenue where this court was likewise presided over by Mantell LJ. There the defendant had, with a view to evading the payment of tax, diverted into his own hands large sums of money from a company which he could manipulate. He had thus obtained those sums. Although they exceeded the tax avoided, he was held to have obtained them as a result of or in connection with his crime, for the diversion of them was an integral part of his offence.[17]In Metcalfe and Metcalfe at paragraph 42, Hooper LJ, giving an example of the meaning of the then equivalent of the present section 76(6), suggested that if a person were to receive £100 from a drug addict, £20 for payment for drugs and £80 for work done in the addict’s garden, the £80 would not be obtained both in connection with the crime and in some other connection. We agree, but that only means that in that scenario there are, in reality, two distinct transactions proceeding in parallel. Here there was only one obtaining.[18]In Rigby, the defendants had issued a false trading statement to bolster the affairs of a company of which they were managers. In the aftermath of discovery, they were kept on in their jobs to undo the damage that had been done to the stock market value of the company. The contention that they had obtained their salaries in connection with their offence was rejected. This court held that they had retained their jobs, and thus obtained their salaries, despite, rather than because of, their offence. We agree that this court made clear that there must be a causal connection between the offence and the benefit. We also agree that in R v Jennings [2008] UKHL 29; [2008] 2 WLR 1148, decided at the same time as May, the House of Lords declined to endorse (at paragraph 14) the view that it is sufficient if the defendant’s acts have contributed, to a non-trivial extent, to getting the property. But there was clearly no causal connection in Rigby. The facts of that case are of no help on the present question, which is whether such a causal connection existed when the monthly sums were paid out upon the dishonestly inflated claims, or whether the defendant’s entitlement to the bulk of those sums eliminates any causal connection.[19]We remind ourselves of the warning of their Lordships in May (at paragraph 48(3) and (4) and in Jennings (at paragraph 13) against the dangers of judicial exegesis of the expression ‘obtained’, which has a clear English meaning. We are unable to see how it can be said that this defendant did not obtain by his offences of deception the payments which were actually made in response to his inflated claims, namely in count 3 (see above) £28,333.34. We agree with the Crown that the very nature of the offence of obtaining a money transfer by deception answers the question what the defendant obtained; he obtained the total payment by deception, that is to say by pretending that the claim was wholly honest, when in fact it was not. If what was obtained be characterised, contrary to our view, as a pecuniary advantage, it remains the fact that the value of that advantage was the total amount of the money transfer received in response to the fraudulent claim form and not simply the part of the transfer which represented the inflated excess.[20]That conclusion is also consistent, as it seems to us, with the decision in R vRichards [2005] EWCA Crim 491. There, the defendant had dishonestly obtained overpayment of income support and incapacity benefit to which he was not entitled because he and his partner had both been in work. This court rejected his argument that for the purposes of confiscation there should be offset against what had been paid to him the working families tax credit which he would have received had he owned up to being in work. It is true that in doing so the court cited with approval (at paragraph 14) the opinion of Newman J in the judicial review case of R (Larusai) v SSWP [2003] EWHC (Admin) 371 that working families tax credit was not a debt owed by the State and thus ought not to be characterised as an entitlement. But the court also founded its decision on the broad principle which we have endeavoured to summarise at paragraph 12 above, namely that the calculation of benefit falls to be made at the time of receipt, and that accordingly “no allowance can be made for notional financial returns that might have been recovered from the victim in the absence of dishonest conduct…” If Mr Evans were correct in this case, it is difficult to see why notional tax credit (which would in fact have been payable) ought not to be deducted from the payments received, albeit from a different department of State, in order to arrive at the benefit obtained from the State.[21]For those reasons we conclude that it is not possible to construe section 76(4), or section 76(5) as the case may be, as meaning that Shabir obtained by his offences of dishonestly obtaining money transfers only the inflated excess of his claims. The Judge was right to rule that he had obtained the total sum of £179,731.97.

The Crown’s decision; abuse of process

[22]Once the Crown decides to invoke the confiscation process, the making of an order is mandatory, and its amount is arithmetically determined but cannot be moderated by judicial decision. It follows that that makes the decision to invoke the confiscation process a critical one. It is plain that it is not appropriate to seek confiscation in every single case where some benefit has been obtained by crime. Section 6 POCA does not make confiscation proceedings automatic in every case where some benefit has been obtained from criminal conduct. Accordingly there is an individual decision to be made by the Crown in each case whether to ask the court to apply the confiscation process and on what basis to put the claim if made. Similarly, it is open to the Crown, subject to the approval of the Judge, to discontinue the confiscation proceedings at any stage or to compromise them. Thus, it is accepted by the Crown, there is an individual exercise of judgment involved in each case.[23]The court retains the jurisdiction to stay an application for confiscation, as any other criminal process, where it amounts to an abuse of the court’s process. In the present context, that power exists where it would be oppressive to seek confiscation, or to do so on a particular basis. That has been recognised in several cases and has been accepted before us.

(S) 96 at 570 Thomas LJ said this at paragraph 26:

“It was accepted on behalf of the Crown that a judge had in principle a discretion to stay proceedings if what the Crown was proceeding to do amounted to an abuse of process. We consider that that concession was rightly made by the Crown.”
The same was accepted in R v Hockey [2007] EWCA Crim 1577; [2008] 1 Cr App R (S) 50 at 279, paragraph 18, R v Nield [2007] EWCA Crim 993, R v Farquhar (supra) at paragraph 12 and R v Morgan and Bygrave [2008] EWCA Crim 1323.[24]This jurisdiction must be exercised with considerable caution, indeed sparingly. It must be confined to cases of true oppression. In particular, it cannot be exercised simply on the grounds that the Judge disagrees with the decision of the Crown to pursue confiscation, or with the way it puts its case on that topic. A specific example of that principle is that it is clearly not sufficient to establish oppression, and thus abuse of process, that the effect of confiscation will be to extract from a defendant a sum greater than his net profit from his crime(s). That is inherent in the statutory scheme. The well known general observations of Lord Salmon in DPP v Humphrys [1977] AC 1 at 46 apply to a confiscation case as they do to any other application to stay on grounds of abuse of process:
“I respectfully agree with [Lord Dilhorne] that a judge has not and should not appear to have any responsibility for the institution of prosecutions; nor has he any power to refuse to allow a prosecution to proceed merely because he considers that, as a matter of policy, it ought not to have been brought. It is only if the prosecution amounts to an abuse of the process of the court and is oppressive and vexatious that the judge has the power to intervene.”
[25]Article 1 of the First Protocol to the European Convention on Human Rights provides as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes of other contributions or penalties.”
This country’s confiscation regime has consistently been held to be a proportionate and legitimate response to crime and thus to occasion no infringement of the Protocol: see for example Phillips v United Kingdom (2001) 11 BHRC 280 and R v Rezvi [2003] 1 AC 1099. Even if it be accepted that the Protocol may be capable of being infringed by a truly oppressive and thus disproportionate individual order for confiscation (as to which we express no opinion), it is clear that the court’s power to stay for oppression provides the remedy.[26]No application was made in the Crown Court to stay this confiscation application. That would constitute an impassable obstacle to the point being raised now in this court if either the facts needed to be found or it might be that as a matter of judgment the trial Judge would have refused a stay. The first hurdle does not apply because the facts are agreed before us. What of the second ?[27]The enormous disparity between the excess of Shabir’s inflated claims (some few hundreds of pounds) and the confiscation order of over £212,000 raises the real likelihood that this order is oppressive. As it seems to us, however, such a disparity will not in every case by itself establish oppression. If it is a case in which the criminal lifestyle provisions of the Act can legitimately be applied, and with them the several section 10 assumptions as to the source of assets, it may well be perfectly proper for a confiscation order to be massively greater than the gain from the offences of which the defendant has been convicted. That is the whole purpose of the criminal lifestyle provisions. They extend the reach of confiscation beyond the particular offences of which the defendant has been convicted.[28]But conversely, where the criminal lifestyle provisions do not apply, the court is required by section 6(4)(c) to confine its confiscation enquiry to the benefit which the defendant has obtained from “his particular criminal conduct”. By section 76(3) that means the offences of which he has been convicted or which are taken into consideration.[29]What was patently oppressive in the present case was to rely on the form of the counts for obtaining a money transfer by deception(i) to bring the criminal lifestyle provisions into operation when they could not have applied if the charges had reflected the fact that the defendant’s crimes involved fraud to an extent very much less than the threshold of £5000, and(ii) to advance the contention that the defendant had benefited to the tune of over £179,000 when in any ordinary language his claims were dishonestly inflated by only a few hundred pounds. We accept that those who determined to seek confiscation on the basis advanced did so in good faith, having not applied their minds to the question whether what was being done was oppressive. But we have no doubt that in fact it was. Whether or not, if the criminal lifestyle provisions had applied, there would have been a basis for applying one or more of the assumptions we do not know. But we are clear that without oppression the assumptions could not be brought into play and are thus irrelevant. It might have been different if there were a genuine dispute what the excess of the defendant’s inflated claims was, and whether it did or did not exceed £5000, but that situation did not arise.[30]On the very unusual and exceptional facts of this case, we are sure that if application had been made to the Judge to stay the confiscation application for abuse of process his answer could only have been that such stay should be granted. For that reason we grant the necessary extension of time and leave to appeal. We allow the appeal and quash the confiscation order in the sum of £212,464.17. We make in its place a compensation order in the sum of £464 in favour of the Prescription Pricing Authority.[31]The defendant was rightly ordered in the court below to pay the costs of the Crown. But although he was legally aided, no recovery of defence costs order was made. It is clear that he has ample assets to meet such an order. We can see no reason why the public should pay for his defence in the Crown Court. We make a recovery of defence costs order for the full costs incurred in his representation in relation to the Crown Court proceedings. Given the quashing of the confiscation order, that additional order, even if it be considered part of the sentence, cannot infringe section 11(3) Criminal Appeal Act 1968.[32]We make a representation order for the solicitors who have acted for the defendant in this court only to the extent that their services were necessary to enable counsel to be instructed by the defendant. We do not extend that order to attendance at the hearing of the appeal. We make no recovery of defence costs order in relation to the proceedings in this court, since the appellant has succeeded.

Cited in 15 later judgments

and 6 more of the most senior