Singh v Director of the Assets Recovery Agency

This appeal raises an issue in relation to the interaction of criminal confiscation proceedings and civil recovery orders which can now be made under the Proceeds of Crime Act 2002 (the 2002 Act). The particular problem with which we are concerned is the question of whether or not, if a confiscation order made in criminal proceedings has been quashed, the respondent is entitled to seek the recovery of assets taken into account in the making of that order in civil proceedings pursuant to Sections 243 and 266 of the 2002 Act. The appellant appeals against two orders made by McCombe J on the 19^th October 2004, whereby he dismissed both the appellant’s application for the discharge of an interim receiving order made under the 2002 Act and his application to strike out the respondent’s claim form, in which the respondent sought a recovery order in relation to fifteen particularised items of property which were said to be, or to represent, the proceeds of crime.

The issue arises in this way. In 1995, the appellant was arrested with others on suspicion of being knowingly concerned in the fraudulent evasion of excise duty. He was thereafter charged with conspiracy to cheat the public revenue; the prosecution alleged that the conspiracy had resulted in more than £5 million in duty and VAT due on alcoholic drinks being evaded. On the 8^th September 1998, he pleaded guilty to a single count charging him with that offence. On the 18^th December 1998 he was sentenced to four years imprisonment. Confiscation proceedings under the Criminal Justice Act 1988, as amended (the 1988 Act), were then commenced which resulted in the judge assessing the relevant benefit to him from the crime in the sum of £400,000 and found that he had realisable assets in the sum of £300,000. The appellant appealed against that order; and on the 16^th December 2002, the confiscation order was quashed by the Court of Appeal, Criminal Division, on the grounds that by reason of procedural irregularities, the court had had no jurisdiction to make the confiscation order under the 1988 Act: the decision is reported as R –v- Sekhon, Singh and Others [2003] 1WLR 1655, [2002] EWCA Crim 2954.

On the 24^th February 2003 the relevant part of the 2002 Act came into force. The respondent accordingly decided to commence the appropriate proceedings which resulted in the interim receiving order which the appellant seeks to discharge, and the claim which is the subject of his application to strike out. The relevant sections which give rise to the claim for the injunction and for a recovery order, are, put shortly, as follows:

Section 308 of the 2002 Act contains, however, certain general exceptions. The critical sub-section is sub-section (9) which provides:

The confiscation order which was successfully appealed was made purportedly under the provisions of the 1988 Act and was accordingly an order, if and in so far as valid, to which section 308(9) applied by virtue of (b). Although there were other arguments before McCombe J, the only issue before us is whether or not the exception precludes the respondent from maintaining its claim. It is accepted that HHJ Wood, the trial judge at the criminal trial, took the items of property which are the subject of the claim into account in deciding the amount of the appellant’s benefit from the conspiracy. The appellant submitted to McCombe J that the words of section 308(9) should be given their ordinary meaning, and that as a matter of historical fact a relevant confiscation order was made so that the exception applied. The respondent successfully submitted to the judge that on normal principles, the quashing of the confiscation order on the grounds that the court had no jurisdiction to make it meant that the order was void and of no effect. In other words, in the eyes of the law, it had never been an order to which the section could have applied. The judge considered that this conclusion accorded with the object of the sub-section which was to preclude double recovery.

Mr Owen QC on behalf of the appellant essentially repeats the submissions that were made to the judge. The object, he submits, of the sub-section is not merely to preclude double recovery, but also to prevent, as he put it, double litigation. He submits that an analysis of the genesis of the 2002 Act shows that Parliament intended to make separate provision for the two forms of recovery, that is recovery in criminal proceedings by way of confiscation orders, and recovery in civil proceedings by way of civil orders. He submits that the clear intention was that wherever it was possible to establish criminal conduct then the appropriate mechanism for recovery was to be the confiscation mechanism, and that the civil recovery order was intended to be used where it was not possible to establish criminal conduct against an individual to the necessary standard of proof, but it was possible to establish to the civil standard that the property was indeed the proceeds of crime. He further submits that we should not be deflected from giving effect to the ordinary meaning, as he has put it, of the words of section 308(9) of the 2002 Act by the fact that this could enable criminals to retain the proceeds of crime where a technicality has, as in the present case, prevented a confiscation order from being made. He points out that in Section 14(11) of the 2002 Act:

This was clearly intended to prevent quashing orders being made in circumstances such as occurred in the appellant’s case. Accordingly, he submits, we should not strain the ordinary meaning of the words in order to deal with what is merely a historical hang-over.

The 2002 Act, for the purposes of the issue before us, essentially does three things. Firstly it resolves the dichotomy between the procedure for making confiscation orders in relation to the proceeds of crime, in accordance with the provisions of the 1988 Act, on the one hand, and the procedures under the Drug Trafficking Act 1994 in relation to drug trafficking, on the other, by providing a single procedure wherever any question of confiscation arises. Secondly, it makes entirely new provision for the civil recovery of proceeds of crime. And thirdly it provides for the establishment of the respondent and for its functions. As Mr Owen correctly submits, the emphasis of the exercise of those functions by the Agency and its Director is to be on using the criminal process. Section 2 of the 2002 Act provides:

There is no doubt that, generally speaking, the civil process is intended to be subsidiary to the criminal process. In a Departmental Paper to which we have been referred by Mr Owen, “Recovering the Proceeds of Crime”, published in June 2000, the authors, in describing the place of civil forfeiture in the overall scheme, state at paragraph 5(1) that:

And later, at paragraph 5.26, they say:

Further, Mr Owen referred us to the original guidance given by the Secretary of State pursuant to Section 2 of the 2002 Act, in January 2003, which states in paragraph 5:

And finally, in this context, Mr Owen has referred us to a paper published by the respondent entitled “Making Sure Crime Doesn’t Pay” in which it states under the heading “Civil Recovery”

All this material seems to me to be helpful in identifying the emphasis and priorities of the respondent’s functions. But Parliament did not intend there to be any legal fetter on the respondent’s powers to obtain a civil recovery order. Section 240(2) of the 2002 Act provides:

Mr Owen can only use this material, as he acknowledges, in support of his basic argument which is that section 308(9) means, literally, what it says, and has a rational and clearly understandable purpose, namely to prevent double litigation. He fully accepts the general principle applied by the judge that the quashing of an order for want of jurisdiction means that the order is void and of no effect as from the date that the order is quashed. However, he submits that we must construe the words of the 2002 Act strictly because it is essentially a penal enactment in the sense that its effect is to deprive persons of property which is prima facie theirs. And the words precisely cover the present case. The purpose, he submits, is to avoid double litigation for reasons which are clearly identifiable from the material which he has provided. In other words it was clearly Parliament’s intention that the respondent should use either one or the other route, that is either the criminal or the civil route, and should not be permitted in effect to relitigate an issue in the civil jurisdiction once the criminal route had been taken, albeit unsuccessfully.

In support of his argument that section 308(9) should be read as if it is dealing merely with historical events, and not the validity or otherwise of the order that was made, Mr Owen has referred us to section 278(9), a provision which deals with property (referred to as related property) which is caught by the tracing provisions of the 2002 Act. The sub-section provides:

The purpose of this provision is to engage section 278(3) which provides:

These two sub-sections taken together enable the court therefore to take into account what has been recovered, if anything, under a confiscation order in determining what order to make in relation to any related property. Mr Owens’s point is that this is the mechanism used by Parliament when seeking to avoid double counting. If that was the intended purpose of section 308(9), he submits that the same mechanism would have been used. Further, the wording of these two sub-sections makes it plain that the confiscation order in question must be an extant and valid confiscation order, in contra distinction to the wording of section 308(9).

Ingenious though these arguments are, it seems to me that they do not meet the inescapable consequence of the Court of Appeal’s decision when quashing the confiscation order. In determining that the court had no jurisdiction under the provisions of the 1988 Act to make the order, it must inevitably follow that no order was made “under a corresponding provision” of a relevant enactment for the purposes of section 308(9) of the 2002 Act. The result, in my view, is precisely what Parliament intended. The purpose of section 308(9) was clearly to prevent double recovery. Its effect is to ensure that the only mechanism for recovery in relation to property taken into account if a confiscation order has been made is that provided for under the confiscation order.

But if criminal proceedings are brought, but no confiscation order is made, or the property in question has not been taken into account in determining benefit for the purpose of any confiscation order that has been made, I can see no justification under the 2002 Act for precluding the respondent from seeking to obtain a recovery order in relation to the proceeds of crime. And Mr Owen was driven to concede that. The clear intention of Parliament was to ensure that, so far as possible, criminals should be deprived of the possibility of benefiting from their crimes. In construing any statute we are now encouraged to search for Parliament’s purpose: see Lord Bingham in R (Quintavalle) –v- Health Secretary [2003] 2AC 687, [2003] UKHL 13, at paragraph 8. Whilst recognising that Lord Steyn at paragraph 21 urged caution in relation to certain categories of statute, in the present case the meaning of the words and the purpose of the legislature are both abundantly clear and march hand in hand. To permit the technicality which resulted in the confiscation order being quashed to preclude recovery by the civil recovery route would be to perpetuate a mischief which the 2002 Act was clearly designed to prevent.

I would therefore dismiss this appeal.