Gangar & Anor v R. [2012] EWCA Crim 1378

[2012] EWCA Crim 1378

Case No 2010004750 D2 and 201006252 D2

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM

Venue THE CROWN COURT AT BIRMINGHAM (SITTING AT LEEDS)

Mr Justice Langstaff

T20077407

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 21/06/2012

Before

LORD JUSTICE HUGHES

MR JUSTICE BURNETT

MR JUSTICE NICOL

Between

Shinder Singh Gangar and Alan WhiteAppellants

The QueenRespondent

Geoffrey Cox Q.C. and Nathaniel Rudolf (instructed by Messrs Janes) for appellant Gangar

Rex Tedd Q.C. and Martin Liddiard (instructed by Messrs Frisby & Co) for appellant White

James Curtis Q.C. and Martin Pinfold (instructed by Crown Prosecution Service) for Respondent

Hearing Hearing dates: 22nd and 23rd May 2012

Judgment

[1]This is an appeal in a confiscation case. The question is how assets which are the joint property of two or more defendants ought to be treated when it comes to assessing the amount which can be realised.

[2]The present case is governed by the Criminal Justice Act 1988 (non-drugs confiscation law prior to the enactment of the Proceeds of Crime Act 2002). However, a similar question would arise under the pre-2002 drugs confiscation regime (in the Drug Trafficking Act 1994) and also under the post-2002 regime for all post-conviction confiscation cases (in the Proceeds of Crime Act 2002). We have heard argument only about the 1988 Act, but we believe that the principles which we set out here will apply equally to all these regimes.

[3]The common feature of all three confiscation regimes is this. The assessment of the amount of a confiscation order proceeds by way of four steps. i) First, ask whether the defendant has benefited from his crime. (It may be benefit from the particular crime of which he has been convicted or, in some cases, benefit from his general criminal conduct.) ii) Second, if he has, the amount of the defendant’s benefit or criminal proceeds must be determined. iii) Third, the assets available for realisation must be ascertained. iv) Fourth, the order must be for the amount of the benefit, or for the amount available, if that is smaller. That analysis is derived, with gratitude, from Lord Bingham’s speech in May

[2008] 1 AC 1028

;

[2008] UKHL 28

, save that we have separated his third stage into our third and fourth.

[4]The terminology employed by the three different statutes to achieve these stages varies a little, and sometimes confusingly so, but each has this essential four-step feature. We shall here use the convenient (but deliberately non-statutory) expression “available assets” when referring to step three.

[5]The particular question which arises here is this. If two defendants (D1 and D2) are the co-owners of an available asset, is the full value of that asset part of the available assets in both their cases at step three, or is there a different rule ? Note that this is a step three (available assets) question and not a step two (benefit) question; whether the answer differs as between the two steps has been the principal issue debated before us.

This case

[6]The two defendants were convicted of a determined Ponzi-type investment fraud. Subscriptions were invited from high-worth individuals on the faith of promises that investments would be made which guaranteed abnormally high returns. None of the money subscribed was either invested or kept separate. Instead, parts of it were used to make payments to earlier investors which purported to be gains, and the rest was used by the defendants and a number of associates to sustain their own lifestyles. Like many of its kind, the fraud involved sustained and complex untruthfulness on the part of both defendants together with an enormous web of financial transactions, offshore accounts, nominee asset-holders and rapid movement of assets, all designed to hide where the money had gone, whilst putting it out of reach of authority but available to the defendants.

[7]The fraud of which the defendants were convicted ran from not later than October 2001 until it was effectively ended by searches of the defendants’ houses, and their subsequent arrests, on 23 October 2002. The fraud was copied from one practised by a US citizen called Dowdell until he was interrupted in about March 2001. In August 2002 the defendants were parties to an attempt to bribe the US authorities to halt the investigation into Dowdell. Their fraud was carried out at a time when their assets were frozen under a court order of November 1998, made in connection with a different investigation, and after Gangar had pleaded guilty in August 2000 to charges brought by the Financial Services Authority of failing to provide information without reasonable excuse. After their arrests in October 2002 the defendants continued their financial activities, inviting investments in a number of ventures. At their trial, both denied the offences of fraud and bribery but were convicted by the jury after a trial lasting no less than eight months.

[8]The trial ended on 22 February 2008. Confiscation proceedings duly followed. There were two extensive hearings, first from 26 October to 6 November 2009 and second from 10 June to 1 July 2010. Both gave evidence at both hearings. Langstaff J gave a highly detailed, albeit largely extempore, judgment running to well over 100 pages, on 2 July 2010, reserving some points for further argument. The second part of his judgment, itself 36 pages in length, was delivered on 26 July 2010.

[9]The defendants’ benefit was agreed comparatively early, on 1 April 2009, in the sum of £60,750,000 in each case. Because of the way benefit is calculated under confiscation legislation, as gross receipts, it is necessary to remember that this did not all represent potential gain to the defendants. It is in the nature of a Ponzi scheme that receipts from later dupes are used to pay apparent profits to earlier victims, and this happened here. The calculation of benefit under the statute requires all the receipts to be added up, whether or not some of them have been paid out to later victims. Nevertheless, the sums involved were very substantial.

[10]Owing to the excessively, and plainly deliberately, complex manner in which money had been moved around the world by the defendants, the investigation of what had happened to the stolen money, and of what assets the defendants had available to them, was a long and difficult process. The investigators received no assistance from the defendants. By the time of the confiscation hearings, there were remarkably few assets which could be identified with a view to seizure. There was about £50,000 representing the proceeds of sale of a villa in Antigua, which was in the hands of local lawyers but subject to a third party claim. There were two sums, each of around £50,000 which were in the bank accounts of two Liechtenstein stiftungs used by the defendants, and there was about £450,000 which might be in a Mexican bank, although it might have been withdrawn by a Mr MacDuff. Those were the only assets which were arguably available for direct seizure. Otherwise, there were extensive records of transactions which suggested that the defendants either had, or had had, substantial assets, but no sign of where the money now was. The law is that it is for the defendant to demonstrate, on the balance of probabilities, that his available assets are smaller than his benefit. The two long hearings before the judge were in effect directed to deciding, item by item, whether the defendant(s) had discharged this onus by showing that assets of which there were records were not now available to them to realise. The judge concluded in the case of numerous assets that they were not, but in others that they appeared to be available, or at least that the defendants had not shown that they were not.

[11]At the end of this process the judge concluded that each defendant had available to him (solely) substantial assets. Gangar had available over £1.7m. White had available rather more than £185,000.

[12]Apart from these assets which the judge held each of the defendants to have individually available, he found further assets which he held to be available to them jointly. After argument, he concluded that those assets should be treated as available to each of them. That meant that the available assets of each defendant were lifted by the whole value of the jointly held items, which amounted in this case to something over £971,000. That brought the total for Gangar to about £2,750,000 and for White to £1.2m. In effect, the jointly held assets were counted twice, once for each defendant. The issue in this appeal is whether this was right. The defendants contend that the right conclusion ought to have been that the £971,000 held to be available jointly was held by them in equal beneficial shares, so that what ought to have been added to their individual assets was, in each case, half of it, ie £485,500 in round figures. The judge regarded the point as a difficult one and himself certified it fit for appeal.

Statute

[13]It is not necessary to set out the relevant terms of the Criminal Justice Act 1988 in full. S 71(1A) requires the court first to determine whether the defendant has benefited from his criminal conduct. If he has, ss 71(1B) and (6) require a confiscation order to be made in the sum of the lesser of two amounts, namely the benefit or ‘the amount appearing to the court to be the amount that might be realised…’ The ‘amount that might be realised’ is, by s 74(3) the total value of all ‘realisable property’ held by the defendant (less certain priority obligations which do not concern us here). ‘Realisable property’ is, by s 74(1) any property held by the defendant, plus gifts caught by the Act.

[14]Section 74(4) deals with valuation of property. It provides (omitting irrelevant words): “…the value of property (other than cash) in relation to any person holding the property – a) where any other person holds an interest in the property, is – i) the market value of the first-mentioned person’s beneficial interest in the property, …. ii) ……………; and b) in any other case, is its market value.” i) the market value of the first-mentioned person’s beneficial interest in the property, …. ii) ……………; and

[15]We observe that, although there are differences of terminology, the Proceeds of Crime Act 2002 substantially follows this approach. Section 6(5) requires the court to determine the recoverable amount and to make an order in that sum. The recoverable amount is, by section 7(1) and (2) the benefit unless the ‘available amount’ is less, in which case it is the available amount. The ‘available amount’ is, by s 9(1), the total value of all free property held by the defendant, less priority obligations, but plus tainted gifts. Value is dealt with by s 79(2) and (3), the effect of which mirrors section 74(4) of the 1988 Act, set out above at [13].

[16]The same is true, again with terminological variations, of the pre-2002 drug confiscation regime under the Drug Trafficking Act 1994. Section 2(3) provides that a defendant has benefited if he has ‘received any payment or reward in connection with drug trafficking’. The order must, by s 5(3) be for that amount (his ‘proceeds of drug trafficking’) unless the court is satisfied that the ‘amount that might be realised’ is less, in which case it is to be in that lesser sum. The ‘amount that might be realised’ is, by s 6(1), ‘realisable property held by the defendant’ (less priority obligations). ‘Realisable property’ is, by s 6(2), all property held by the defendant plus gifts caught by the Act. Valuation is dealt with in s 7, which again mirrors the valuation provisions to which we have previously referred.

Authority

[17]In May

[2008] 1 AC 1028

;

[2008] UKHL 28

, the House of Lords dealt with the case where two or more criminals have jointly obtained property by their crime. Since property obtained is benefit, it follows that the benefit of each is the whole sum jointly obtained. That is the second of the four steps involved in arriving at a confiscation order (benefit). That is recognised to have the potential for recovery from a defendant of a sum exceeding the gain which he has made, but no more so than in the ordinary case where the gross proceeds of a single defendant exceed his net profit because of the expenses of committing the crime. In May Lord Bingham approved at [45]-[46] the judgment of Keene LJ in this court, where he had said, at [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.”

A similar potential for recovery beyond the net gain of the defendant will also exist where the same criminal proceeds pass from one criminal hand to another. Just as each may jointly, and thus concurrently, obtain the proceeds, so may it happen that each obtains the proceeds consecutively, for example where one pays the other for criminal property. These possible consequences are well established as inherent in the statutory scheme for confiscation.

[18]Much of the argument before the judge, and before us, centred upon whether it follows that the same approach must apply to jointly held assets at the third step (amount that might be realised). Extracts from the classic exposition delivered by Lord Bingham in May have been relied upon by both sides.

[19]One of the many cases reviewed by Lord Bingham in May was the early decision of this court in Porter

(1991) 92 Cr App R 126

. There, two defendants had jointly committed drugs offences and had received, jointly, a total of £9600 from their sales of cannabis resin. By pure chance they also happened to be the joint owners of a house, not itself the proceeds of crime, but available to them as property which could be realised, and the evidence in the Crown Court was that the equity was £25000 or more. The judge had made a joint confiscation order in the sum of £9600. This court held, plainly correctly, that a joint confiscation order could not be made. A confiscation order is part of the sentence and moreover carries a period of imprisonment in default of payment. There has to be certainty in sentencing; a defendant must know the extent of his obligation, especially when he is liable to lose his liberty for not discharging it. A sentence must be individual to the defendant, not shared between two or more. In so holding, this court expressed the further views that, first, the respective shares of each defendant in the total benefit must be determined, rather than the joint benefit being attributed to both, (step two) and, second, that in deciding the amount available for recovery the separate means of each defendant must be assessed (step three). It quashed the joint order for £9600 and substituted separate orders for £4800 each. This decision as to step two (benefit) was relied on by the defendant in May as justifying the apportionment of benefit, but was rejected by both this court and the House of Lords. In rejecting it, Lord Bingham said this of the separate orders for £4800 substituted, at [27]:

“This might…have been a proper disposal had there in fact been no evidence of the parties’ shares in the proceeds. But the judge’s finding, not challenged on appeal, was that the proceeds had been received jointly. That being so, each had received a payment or other reward in the full sum of £9600 and orders in that sum should have been made against each of them severally.”

Later, in expressing the House’s conclusion on the case before it, he said this, at [46]:

“R v Porter …is not authority that the court has power to apportion liability between parties jointly liable, a procedure which would be contrary to principle and unauthorised by statute.”

[20]True it is that in the passage from [27] quoted above, Lord Bingham was, when he spoke of orders in the sum of £9600 being the right orders against each defendant, speaking of the final stage in the process of determining confiscation (step 4). But it does not follow that he was considering step 3, which is the one which matters for present purposes. He did not in fact consider it, and there was no occasion to do so, because in Porter each defendant had a half share in an equity in the house worth £25000 or more. Each thus had more than ample means (or available assets) to meet a confiscation order in the sum of £9600. The question of how to assess their available assets if the equity in the house had only been worth, say, £7500, simply did not arise. The treatment of Porter in May was directed to the assessment of benefit, because it was on this point that it was relied on by the defendant.

[21]The same applies to Lord Bingham’s approval of the Court of Appeal’s reference to Simpson (David)

[1998] 2 Cr App R (S) 111

. Keene LJ had adverted to this case as illustrating that there could be multiple recovery where the same sums had passed through several hands. But that too was a reference to the assessment of benefit (step 2) and its carriage through to orders (step 4). The issue in Simpson was confined to whether money which had passed through several criminal hands was received as payment or reward by each (step 2). There was no occasion to consider the assessment of the amount of available assets (step 3), there is not a word in the judgment about it, nor, so far as is known, were there any jointly held such assets. The sentencing judge had dealt with step 3 and had (correctly) assessed the available assets in the case of each defendant separately and, we note, at sums which in all but one case were less than the proceeds or benefit. [For the avoidance of doubt it ought to be said that to the extent that some defendants in that case were couriers of money, the step 2 question of whether they had ‘obtained’ the money carried, or only the fee paid to them, would now, if the facts were to recur, fall to be considered in the light of May at [48(6)] and Allpress & others

[2009] 2 Cr App R (S) 58

;

[2009] EWCA Crim 8

[22]The judge in the present case also referred to a passage from the speech of Lord Bingham in May at [45]. Lord Bingham was citing, with approval, something said in the Court of Appeal by Keene LJ. Referring to the case of two or more people in joint control of (for example) a company, he said this:

“Once the corporate veil was pierced…the property in question was to be regarded as the joint property of those controlling the company. It was analogous to the situation where conspirators had put the proceeds of the fraud straight into their joint bank account. Each is then entitled to the full amount in the account. Each individual, in the statutory language, “obtains” the property jointly held.”

In the present case Langstaff J was undecided as to whether this was a reference to step 2 (benefit) or step 3 (available assets). On our reading of May it is clear that it is step 2. That was the only issue in May. The context was that Keene LJ was rejecting the argument that jointly obtained benefit had to be divided up between the joint obtainers (step 2).

[23]The key to May, when considering the question now before us, is that Lord Bingham repeatedly emphasised the absolute necessity of separating out what we have termed step 2 from step 3:

“…the questions are distinct and the answer given to one does not determine the answer to be given to another. The questions and answers should not be elided.”

(at paragraph [8]) and, in the valuable summary or “endnote” at [48] “(2) The court should proceed by asking the three questions posed above: (i) has the defendant (D) benefited from relevant criminal conduct ? (ii) if so, what is the value of the benefit D has so obtained ? (iii) what sum is recoverable from D ?....These are separate questions calling for separate answers and the questions and answers must not be elided.”

[24]Secondly, when dealing with available assets (his third question) Lord Bingham made it very clear that it is an important feature of the confiscation scheme that it is designed to ensure that no order is made against a defendant which it is beyond his means to pay. See, for example:

“[35] From the 1986 Act onwards, the courts have been required to reinforce confiscation orders by the imposition of a term of imprisonment to be served in default of payment. But it has been recognised that a defendant may lack the means to pay a sum equal to the aggregate of the payments or rewards he has received…..It has also been recognised that it would be unjust to imprison a defendant for failure to pay a sum which he cannot pay. Thus provision has been made for assessing the means available to a defendant and, if that yields a figure smaller than that of his aggregate benefit, making a confiscation order in the former, not the latter, sum.” and: “[41] The answering of this third question is a very important stage in the procedure for making confiscation orders since, however great the payments a defendant may have received or the property he may have obtained, he cannot be ordered to pay a sum which it is beyond his means to pay.”

[25]It is instructive to see how the question now before us arose in the present case. It had not been anticipated, nor the subject of any submissions. As the judge worked his necessarily lengthy way through a Scott Schedule of 185 potential sources of available assets, a passing reference to one of them as a joint asset triggered a brief discussion between Bench and Bar. Mr Curtis QC, appearing for the Crown, was noting down the amounts to be attributed as available assets to each defendant. He enquired whether the judge had meant, as he (counsel) had assumed, that in respect of the joint assets, half was to be attributed to each man. He rightly said in passing that the available assets question (step 3) was different from the benefit question (step 2). After a brief discussion, the hour being late and the schedule still not completed, the point was adjourned for argument on another day. Mr Curtis reconsidered the position and, as he was fully entitled to do, made the submission to the judge that he has made to us, namely that available assets held jointly should be counted as the available assets of each defendant to their full value. The judge, who had re-read May in the interim, reminded himself that all counsel had initially thought that it ought to be half each, and expressed himself as follows:

“I confess that before I had read and considered the case of May, I had shared that same intuitive response myself.”

That was reflected in the point certified by him as fit for appeal, which was whether his conclusion was required by May.

[26]The judge made it clear, by citations from May, that the passages in it which had influenced him particularly were those which we have referred to above at [17] – [22]. However, for the reasons which we have explained, those passages do not carry the implication which it was thought that they did. They are not references to the available asset stage (step 3), which did not fall for consideration in May, and the references which are made to step 3 make clear that a defendant must not be ordered to pay more than he has.

[27]Appeal of S; D (UK) Ltd v RCPO

[2005] EWCA Crim 2919

, to which the judge also referred in passing, was also not a step 3 case. It was concerned with the making of a restraint order and thus with a time before there was any conviction at all. As the judge rightly recognised, this court there held that one fraudster could have a beneficial interest in property in a bank account in the name of another even if the money were the proceeds of fraud. But the court was not concerned with the extent of the beneficial interest of co-fraudsters in joint funds.

[28]The only other case which may have contributed to the judge’s conclusion was Chrastny

(1991) 93 Cr App R 406

. The defendant wife had been party with her husband to extensive drug offences. He had escaped from custody prior to trial and was not before the court, leaving her to be convicted alone. Her benefit was in the end established (in the Court of Appeal, differing from the judge) via the several assumptions required by the statute (then the Drug Trafficking Offences Act 1986). The assets considered included, as well as items which were her sole property held either in her own name or that of others, some well-filled safe deposit boxes held in the joint names of husband and wife and some joint bank accounts. Since it was an assumptions case, these assets fell to be considered at two different stages. They were relevant at step 2 (benefit) if the defendant could not displace the assumption that they had been acquired through crime. They were also relevant at step 3 (available assets). This court treated the jointly held assets in the same way as those held in her sole name. It was referred to Porter (see [19] above) for the defendant’s submission that the assets should be apportioned. The court distinguished Porter on the very briefly expressed ground that since the husband was not before the court there was no question of a joint sentence, that the wife had “sufficient control” to realise the property, and that there was no injustice in her being ordered to do so.

[29]In May Lord Bingham pointed out at [29] that whilst the treatment of joint benefit as attributable to both criminals was correct, the court had elided steps 2 and 3 in a way which the House now made clear could not be done. That alone make this case one which it is difficult to treat as surviving intact after May. Next, there is no sign that the court in Chrastny gave any extended consideration to the true position of assets jointly held when it comes to step 3. Thirdly, it does not appear to us to be possible for the approach to such jointly held assets to be different in principle as between the case where the joint holders are both defendants and the case where only one is. The Crown did not submit that there was a difference of principle, but rather that the difference is an evidential one arising from the burden of proof laid on a defendant: we will consider this below.

[30]For the defendant White, Mr Tedd QC referred us to Buckman

[1997] 1 Cr App R (S) 325

. There the sole defendant’s benefit was assessed at £51000 (step 2). The issue related to the available assets (step 3). The only potential asset consisted of a bank account in the joint names of the defendant and his wife. Most of the contents appeared to have derived from the sale of their matrimonial home, which itself had been held in joint names. Counsel for the Crown submitted that as long as the defendant had any interest in the bank account, it followed that the whole of the contents of it were, for the purposes of the confiscation statute (there, the Drug Trafficking Act 1994) his available assets.

(a) , which provided that:

“For the purposes of this Act, property is held by any person if he holds any interest in it.”

Identical provisions are to be found in both the Criminal Justice Act 1988, at s 102(7) and, now, in the Proceeds of Crime Act 2002, at s 84(2)(a).

[31]In Buckman, this submission was roundly rejected. Brooke LJ said:

“In our judgment, this is convenient language to show that if someone holds, say, a 15% or 30% or 50% beneficial interest in property in which the legal title is held either by him or her or by somebody else, then that beneficial interest pro tanto is property which is caught by the language of the Act. It certainly does not mean, in our judgment, that he or she holds the whole beneficial interest in the property in question or that it should be regarded as being wholly his or her property.”

With that proposition we respectfully agree. The various statutory provisions referred to are there to ensure that a defendant’s partial interest in an asset is treated as his property, and at step 2 and/or step 3 as appropriate. A partial interest counts as property. They cannot mean that a partial interest is to be treated as if it were a 100% interest. Apart from the obvious impossibility of such a proposition, it would make a nonsense of the valuation provisions, such as s 74 of the 1988 Act, or s 79 of the 2002 Act, which clearly require the partial interest of the defendant to be valued separately from the whole.

[32]In Buckman, Brooke LJ went on to say this:

“This was prima facie money held by the parties jointly. On the presumption that equity is equality…this money was owned jointly. It would have been open to the judge…to proceed to make a specific finding that the husband’s more than 50% contribution towards that building society account represented, as to the appropriate amount, a gift caught by the Act. But he did not make any such finding…. The correct approach in a case of this type, where property is held in joint names, is for the court to start with the pirma face position as to where the beneficial interests lie…”

With that also, we respectfully agree, whilst observing that the husband was, on the facts of that case, very fortunate to have escaped a finding that either he was the sole beneficial owner of the money in the account, or that he had made a gift to the wife of her half share. But that evidential quirk cannot alter the principle. An asset jointly owned is partly owned by each of the owners. That begs the question what is the extent of the beneficial interest of each.

The Crown’s submission

[33]For the Crown, Mr Curtis QC submitted that the judge was right to include the full value of any jointly held assets in the available assets of both defendants at step 3.

[34]The argument proceeds as follows. i) Once the benefit of each defendant is established at £60m, it is for him to discharge the onus of proving that his available assets are less than that sum. ii) There is no basis on which the judge could determine the beneficial interests of the defendants in the jointly held assets. These assets are the product of once-identified items, but where they now are and, for the most part, what they consist of is simply unknown. The defendants may have been partners in the accounting firm through which they conducted the fraud, and thus prima facie equal partners under s 24 Partnership Act 1890, but it does not follow that they treated each other as equally entitled to any or all of the assets in question. iii) This distinguishes the position of innocent third parties with whom a defendant shares ownership, such as a wife unconnected with the crime. In such a case, the respective beneficial interests can be ascertained. Here, they cannot. iv) What the judge did know was that as joint holders of the joint assets, each had control of them. Moreover, on the facts of this case, evidence had been given of their joint and several control of a number of bank accounts in the names of compliant third parties. v) Accordingly, neither defendant had discharged the burden of proof laid upon him and the order that the joint assets must be attributed to each follows. vi) Section 102(7) of the Criminal Justice Act 1988 means that joint ownership is, under the statute, to be treated as ownership of the whole. vii) The effect of treating the joint assets as those of both defendants would not be to risk penalising one defendant for failing to pay what he could not pay because the other had used up the joint asset to meet his own confiscation order. That is because if D1 were to pay the money, D2 could apply to the court under s 83 CJA 1988 for a certificate of inadequacy (or, now, could apply to the Crown Court for a variation of the order under s 23 POCA 2002) on the basis that the asset in question was no longer available to him.

Conclusion

[35]As to the Crown’s first submission, we agree that it is clear law that the onus is on a defendant at step 3 to prove, on the balance of probabilities, that his available assets are less than his benefit. We do not, however, agree, that this aspect of the case fell to be resolved on the basis of failure to discharge the burden of proof. The defendants had not, on the findings properly made by the judge, failed to show that the joint assets (or their product) were available only as to half each.

[36]It may no doubt be true that one of a number of co-owners can, as against a third party, control or call for the whole of the property. Subject to the kind of bank instructions given, for example as to multiple signatures, one of two or more co-holders of a bank account can draw out the contents. But that ability begs the question as to what he can do with the proceeds. What he can do with them depends on his beneficial interest. If he is the sole beneficial owner, then they are his to do with as he will. If, however, his beneficial interest is something less, he cannot treat the proceeds as all his, and indeed they are not, in law, all his.

[37]This is conceded to be the position when the other co-owner is a third party unconnected to the crime. The suggested distinction between this case and the case of two defendant co-owners is, we are satisfied, non-existent in principle. Any one defendant can only be called upon to realise what is his to realise (and, but for the confiscation order, to keep). That is limited to his beneficial interest. The remaining question is one of evidence.

[38]There can indeed be real difficulties in determining the proprietary position when the deliberately obscured activities of criminals are concerned. Records are often few or non-existent. The assertions of the criminals are peculiarly likely to be untruthful. But the judge simply has to make such findings as he can. In fact, in a case such as the present, it is perfectly clear that on the balance of probabilities the beneficial interests of the two defendants were the same. That is not so much because they were also partners in a firm which at least began legitimately, since that would not necessarily indicate their shares in stolen money. But for the reasons explained by Brooke LJ in Buckman, the starting point in a case of co-ownership is that equality is prima facie equity. The beneficial interests are, prima facie, equal. There was nothing to displace that starting point in this case. Such material as there was, summarised by the Crown at point (iv) in [34] above, only tended to confirm equal interests.

[39]The essential feature of confiscation at step 3 is, as explained by Lord Bingham in May, that no-one is to be penalised for not paying what he has not not got. That is one reason why the general English scheme for confiscation has been held to be compliant with the European Convention on Human Rights. If the Crown’s argument in the present case were correct, then the result would be orders which, by definition, required one or other defendant to pay what he could not have. That is because the orders as made require, as to the joint assets, the payment in total of 200% of the value found to exist. If D1 were to realise the asset, D2 could not, by definition, also realise it. The Crown’s point (vii) effectively concedes this, because it amounts to a suggested solution to the impossibility of D2 meeting the order which has been made against him.

[40]We do not believe that it can possibly be the law that a judge is required to make two confiscation orders on the basis that if one is satisfied the other, which becomes impossible of obedience, will then require an application for a certificate of inadequacy or for a variation in order to cure a defect which was always patent. Moreover, even if such applications were to be required in every case, they would not, in many instances, cure the defect because it cannot be predicted that they would succeed. It may well be that they would succeed in the very simple case of orders made against two defendants whose only asset was a joint one, identifiable and extant. Such a case might be, for example, that of two defendants jointly holding a house or a bank account which is known to exist and accessible. In such a situation, we agree that if D1 sold the house, or removed the money from the bank account, D2 could be sure that he could establish, when he made his application for a certificate of inadequacy or for variation, that there had been a material change of circumstance since the confiscation order was made because the asset was no longer available to him. But in that simple case, the identifiable asset will usually be frozen and there would be no difficulty in ensuring that it is fully recovered by the State, although the order was for half each against each defendant. Much more difficult is the more typical case, such as the present, where the asset which the judge has held to be jointly owned, is one whose whereabouts or nature are wholly unknown. If in such a case D1 at some later stage were to come forward with a sum of money towards satisfaction of his confiscation order, no one could know whence it had come. Even if he revealed its immediate source, it does not follow that it would be shown to derive from the joint asset in question. In such a situation, D2 would not be able to show, on an application for a certificate of inadequacy or for a variation, that the joint asset which has been attributed also to him no longer exists. In some cases, it might positively be known that the source of the money tendered by D1 was not the joint asset, for example where some or all of it was borrowed from, or given by, a third party to meet the confiscation order and to relieve D1 of his sentence in default; then there could be no question of an application for inadequacy or variation succeeding.

[41]We should add that we have considered submissions as to the practical consequences of our clear conclusion. It may be that in a case where there are several co-owners, all alleged by the Crown to be conspirators in the crime, but only one or few of whom are before the court, the court must find that in making confiscation orders the beneficial interests of other alleged accomplices falls to reduce the confiscation order which can be made against those present. That is, however, the inevitable consequence of the fact that such persons have a beneficial interest. That ought not to lead to any identified asset being left available to any person who is alleged to have been guilty of the offence, since a restraining order will ordinarily be available to freeze it until the missing criminal is apprehended. Moreover, in cases arising since 2002, any traceable proceeds of crime can be recovered by the civil recovery process under Part 5 of the Proceeds of Crime Act whether or not anyone is prosecuted for the crime. As to unidentified assets, the judge will, if the evidence justifies it, find against the defendants who are present that there are hidden assets, whether identified or not.

[42]For these reasons we conclude that the orders made against these defendants were wrong insofar as they were based upon treating the jointly held assets as 100% available to both of them. That was not required by May, nor does it accord with the scheme of the Act or with principle. The appeals must be allowed to the limited extent of repairing the error. Absent the element of double counting, it is agreed that the order against Gangar should be in the sum of £2,289,074.03 and that against White should be in the sum of £686,996.81. We quash the orders made below and substitute orders in those sums, both for confiscation and compensation. There is a consequential effect on the sentence in default in the case of White. We are extremely grateful to Langstaff J for indicating what the term would have been if the outcome had been as we have now decided it must be. White does not ask us to depart from his indicated term, and there is no reason to do so. In his case we quash the term of five years’s imprisonment and substitute one of three and a half years. In Gangar’s case, the difference between £2.7m and £2.2m does not call for an alteration to the default term of six years. We decline to alter the time given for payment. There is no indication that either defendant has been inhibited from payment by the outstanding appeal.

Other proposed grounds

[43]Both defendants additionally sought leave to appeal on other grounds. The single judge refused leave. We heard oral renewals of the applications at the outset of the hearing and indicated then that they must be refused. We give now our short reasons.

[44]Gangar sought to challenge the judge’s finding that he had available to him the proceeds of sale of his family home, called Woodlands. The house had been hidden from view by being held by a Liechtenstein stiftung, via a wholly owned limited company. In April 2003 the shares in the company had been transferred to a man called Ahmed for nil consideration. In September 2003 the company sold the house to an associate of Gangar for an undervalue. Throughout, Gangar continued to live in it. Gangar’s case is that the sale was forced on him by threats of harm made by disappointed investors via Ahmed in a telephone call, and thus that the proceeds had gone to them; he contended that the judge was wrong not so to find. This was an attempt to challenge findings of fact and credibility by a judge who heard Gangar in an eight month trial and two confiscation hearings. As he said, the manoeverings with the house reeked of collusion unless explained. Gangar relied on the facts that(i) he had reported threats from Ahmed to the police at the time,

(ii) Ahmed had made an admission against interest when interviewed by the police, to the extent that he said that he had retained about a third of the proceeds of sale, which he claimed represented a debt due to him from a disappointed investor for whom he was acting, and further that he had taken the disappointed investor to a house which was consistent with Woodlands, and

(iii) a man called Collins, a dishonest associate of Gangar who arranged nominee transactions for him, had said that Gangar had spoken of having to leave his house under pressure. The difficulty was that when first giving evidence in October 2009 Gangar had sworn that Ahmed’s telephone call had been in March/April, as it would have to have been to explain the transfer of the house-company to Ahmed at the end of April. However, the report to the police had not been until July 2003, and he had then told the police that the call had been a few days earlier, much too late to account for the transactions. Faced with this, and with other differences between the accounts given to the police and to the court, Gangar had told the judge that there had been two such calls. The judge heard him and was satisfied that he was lying. There was ample justification not only for that conclusion but also for the conclusion that the whole transaction was yet another device, of a kind much practised by Gangar and White. The judge considered all the factors relied upon in the proposed ground of appeal and reached a conclusion which was not only open to him but appears to us to be plainly right. There is no prospect of a successful appeal against it. That being so, an additional proposed ground contending that the judge’s approach to Gangar’s credibility is also unarguable, as indeed it would have been even if the Woodlands ground had succeeded.

[45]Secondly, Gangar sought to challenge the judge’s decision to treat a payment of £1000, which Gangar said he had made to the pastor of his church, as a gift caught by the Act. It is agreed that it was made within the timescale specified in section 74(10)(a). That being so, the decision whether it should be brought into account depended whether or not the judge thought it was “appropriate” to do so: s 74(10(b). The judge held that it was, on the basis, in part at least, that Gangar had been making an ostentatious gift for his own advantage. Mr Cox QC sought to argue that that was an illegitimate consideration, but the discretion given to the judge is unfettered. He was entitled to hold that the largesse should be brought into account.

[46]Gangar did not pursue an additional proposed ground relating to assets deriving from loans made to him by a Mr Martin, and it is not necessary to say more about it.

[47]White sought leave to argue that the judge’s conclusions that the proceeds of certain overseas bank accounts (Coggia, Albaned and SCC), used by the defendants to receive and disburse some of the fraudulently obtained money, were still available assets. The basis of that contention was that the accounts were used by their holders not only as nominees for the defendants but also for their own unconnected purposes. The judge paid attention to that factor, as also he did to the timing of some payments from the accounts, to the defendants’ assertions that the holders of the accounts did whatever the defendants wanted, and to the fact that they were for round figures and wholly unexplained. There is no basis for suggesting that he was wrong to find, in those circumstances, that the defendant had failed to discharge the burden of proving that the proceeds were not available. It was to be expected, after all, that the organisers of a Ponzi scheme of this magnitude and sophistication would, as well as paying out notional gains to early investors, also remove sums for their own use. Nor is there any basis for saying that the judge did not sufficiently allow for any lack of disclosure by the Crown; he clearly said that he had borne this in mind. For the same reason, the contention that the judge proceeded on an unjustified view of White’s credibility cannot succeed.

[48]White did not pursue a separate proposed ground arising from the status of funds in the hands of the liquidator of the unincorporated partnership between the defendants.