Togher v Revenue and Customs Prosecutions Office & Anor

The appellant, Mr Togher, a convicted drug trafficker, appeals against an order of Collins J made on 3 April 2006 refusing to discharge an order dated 22 February 1995 made by Hidden J under the drug trafficking legislation restraining Mr Togher from dealing with his assets.

In circumstances which I shall describe in more detail, a confiscation order against Mr Togher was made under the Drug Trafficking Act 1994 (DTA 1994) in July 1997 in the sum of £800,000 with a default term of 4 years imprisonment (as amended by the Court of Appeal Criminal Division in October 2000). He did not pay. On 20 July 2005, he commenced the prison term to which he was committed in default of paying that sum. As a result of a payment of about £210,000 in October 2005, in circumstances I shall also describe more fully, the default term was reduced to approximately 2 years and 10 months. On 5 January 2007, Mr Togher was released under s. 258 of the Criminal Justice Act 2003 (and its transitional provisions) which obliged the Home Secretary to release unconditionally a person who had served half of the term for which he was committed to prison after 4 April 2005 in default of a sum adjudged to be paid on conviction. Mr Togher has therefore served his sentence of imprisonment in default.

The Drug Trafficking Offences Act 1986 (DTOA 1986) was in force at the time the offences were committed between August 1993 and February 1994. The material sections of the DTA 1994 were brought into force (under the provisions of s.66 and schedule 2 to that Act) in relation to all offences in which charges were preferred after the date the Act came into force, 3 February 1995. The relevant charges were preferred in July 1995. It was common ground that:

As he had served his sentence in default, Mr Togher contended before us that any further enforcement of the confiscation order would be a retrospective penalty which would contravene his Convention rights under Article 7(1):

“No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the criminal offence was committed.”

He submitted that, as he can be under no further liability to pay the amount of the confiscation order by reason of the provisions of Article 7(1), the court should in the exercise of its discretion discharge the restraint order made by Hidden J.

On 28 March 2007, after Brian Doran, who was convicted of drug trafficking along with Mr Togher, had heard of these proceedings, an application was made to this court that he be joined as the second respondent to the appeal on the basis that he was in an equivalent position to Mr Togher and wished to avail himself of any remedy achieved by Mr Togher. His application was wider in scope to that made by Mr Togher, as he sought to challenge the making of the confiscation order against him.

Before considering the contentions, it is necessary to set out the facts and the legislative provisions in force at the different times in a little more detail.

Mr Togher, Mr Doran and others were alleged by the then Customs and Excise Prosecution Authority to have been involved in two separate large scale criminal enterprises in relation to trafficking in cocaine:

On 12 January 1995 charges were laid in respect of the Frugal indictment; it was consequent upon those charges that Hidden J made the order dated 22 February 1995 to which I have briefly referred. The order stated it was made under the DTOA 1986. The order identified as many of the assets as the Customs and Excise Prosecution Authority were then aware of, forbade dealing in all his assets and directed that Mr Togher should make an affidavit informing Customs and Excise of the full value of his assets. A similar Order was made by Ognall J against Mr Doran on 10 October 1995.

On 19 July 1995 Mr Togher and Mr Doran were charged with the offences under the Madrid indictment. The indictment subsequently preferred was:

“Count 2

Statement of offence: Assisting in the commission outside the United Kingdom of an offence punishable under a corresponding law contrary to section 20 of the Misuse of Drugs Act 1971.

Particulars of offence

Anthony Michael White, Brian Peter Doran, Robert Parsons, Kenneth Togher, Madeleine Togher, Paul Hearn between the 1^st day of August 1993 and the 5^th Day of February 1994 assisted in the United Kingdom in the commission in the Kingdom of Spain of an offence punishable under the provisions of corresponding law in force in the Kingdom of Spain, providing for the control and regulation in the Kingdom of Spain of the supply, export and import of drugs, by assisting the possession with intent to supply of 32.312 kilograms of cocaine hydrochloride by Joseph Godwin Tanner and Michael William Cahill.”

On 17 March 1997 after an abortive trial of the charges under the Frugal indictment, Mr Togher and Brian Doran were convicted at a second trial before HHJ Foley on that indictment. Both were sentenced to 25 years imprisonment.

On 30 April 1997 Mr Togher and Mr Doran pleaded guilty to the Madrid indictment; they were sentenced to 9 years imprisonment concurrent with the sentences passed on the Frugal indictment.

On 14 July 1997 after a confiscation hearing before HH Judge Foley a confiscation order was made in the sum of £2.41m against Mr Togher and in the sum of £2.091m against Mr Doran, payable within 5 years; the default terms were 10 years. The order of the Crown Court made on 16 July 1997 specified it was made under the DTA 1994.

An appeal against the conviction on the Frugal indictment was heard by the Court of Appeal Criminal Division. On 2 November 1998 the Court quashed the conviction because of misdirections by the trial judge and ordered a re-trial. Prior to the re-trial Mr Togher and Mr Doran contended there had been an abuse of process in relation to the charges under the Frugal indictment as a result of the conduct of officers of Customs and Excise. This contention was upheld by Turner J who stayed all further proceedings on the Frugal indictment on 6 July 1999.

Mr Togher and Mr Doran then appealed to the Court of Appeal Criminal Division on the basis that the decision of Turner J applied equally to the Madrid indictment; it was contended that the appellants’ plea of guilty to that indictment should not stand.

On 13 October 2000, the appeal was heard by Lord Woolf of Barnes CJ, Steel and Butterfield JJ. They dismissed the appeal on the basis that shortcomings on the part of the prosecution were not of the category of misconduct which would justify interfering with the appellants’ freely entered pleas of guilty on the Madrid indictment.

That court also considered the confiscation orders which had been made in July 1997. It held that, although as a matter of probability the appellants might be guilty of the offence under the Frugal indictment and therefore liable to a confiscation order in respect of that offence, it would not be right on the material before the court to hold there was evidence on which the court could say that the appellants had as a matter of fact benefited from that offence. The Court held:

“5.

… We therefore come to the conclusion that, while the confiscation orders can be upheld in part, it would be only right to approach those confiscation orders on the basis that any element which could be attributable to Frugal should be deleted from the calculation. It is impossible to carry out that exercise precisely but, doing the best we can with the assistance of counsel, we consider that we can be sure that the result would be just under the statutory provisions contained in the 1994 Act if we reduce the sums which were ordered by the judge to £800,000 respectively.

6.

The maximum period of imprisonment which can be imposed in default of a confiscation order of that amount is five years’ imprisonment. The conclusion we have come to is that five years should be reduced to four years. Accordingly, the period in default will be that of four years.”

A formal order dated 12 February 2001 was drawn up varying the order made on 16 July 1997 (to which I have referred at paragraph 12) requiring payment of the first instalment within 14 months and the second within 4 years. The first instalment was therefore payable on 11 August 2002. The order stated on its face:

“Notice: Section 9(5) of the Drug Trafficking Act 1994 and section 8(1) of the Proceeds of Crime Act 1995 state that the serving of any term of imprisonment in default does not expunge the Confiscation Order which can still be enforced by other means”

In February 2004 Mr Togher made an application to Pitchford J (on grounds it is not necessary to set out) for discharge of the order made by Hidden J in February 2005; that application was dismissed.

No realistic attempt was made by Mr Togher to satisfy the outstanding order. Customs and Excise believed he had hidden assets. Various further applications were made to the court to vary the restraint order. It is again not necessary to refer to these other than to say that Gibbs J made an order on 9 June 2004 that Mr Togher make a disclosure statement and, if that was not done, the application would be dismissed. No disclosure statement was made and the application therefore stood dismissed.

No further attempt was made to satisfy the confiscation order. Mr Togher was ordered to serve the sentence in default with effect from 20 July 2005. Mr Doran was ordered to serve a term of 4 years in default on 21 July 2005.

After Mr Togher had begun to serve his default sentence, funds attributable to him became available. In about Easter 1994 Mr Togher had made arrangements to buy a yacht called “The Sweet Caroline of Alloway” for £255,000 of which £205,000 was paid in cash; in January 1995 a restraint order had been made in Guernsey against various assets, including the yacht. That yacht was sold on 26 January 1996 for £169,994 pursuant to that order. Various steps were taken to try and enforce the confiscation order against the sale proceeds. By September 2005, the sale proceeds amounted with accumulated interest to over £210,000. On 23 September 2005, that sum was paid into the client account of Mr Togher’s solicitors.

On 27 September 2005, Mr Togher applied to Collins J to discharge the restraint order made by Hidden J and any further prohibition in relation to the proceeds. The application was advanced on the basis that, as Mr Togher had started to serve his default sentence, he would be subject to a retrospective penalty if steps were taken to enforce the order against him.

On 6 October 2005, Collins J ordered the sum of £210,246.53 and further accrued interest be paid to the enforcing Magistrates Court towards the satisfaction of the outstanding amount of £800,000 due under the confiscation order. This had the effect of reducing his sentence from 4 years to 1071 days (approximately 2 years and 10 months); the order for committal made on 20 July 2005 was amended accordingly. The application for the discharge of the restraint order was adjourned. On 20 October 2005, the application was further adjourned on terms that the Revenue and Customs Prosecution Office (RCPO) need serve no further evidence until they were notified that the matter would be proceeded with.

The application was reactivated and heard by Collins J on 3 April 2006. It was dismissed for reasons which I set out at paragraphs 41 and 52. It is from that judgment that this appeal is brought after permission was granted by this court.

On 5 January 2007, Mr Togher was unconditionally released from serving his default sentence under the provisions to which I have referred at paragraph 2, though it appears that the prison authorities purported to impose a condition on him which is immaterial to the present proceedings. In the skeleton arguments and revised skeleton argument provided by the RCPO it was stated that Mr Togher was to be released on licence. If he had been on licence, then there would have been an argument that, if further assets attributable to him had been discovered, these would have been available to count against the remaining period of his default sentence to be served on licence. As his release is now accepted by the RCPO to be unconditional, the discovery of further assets attributable to him cannot reduce his default sentence.

Mr Doran remained in prison. He was due to be released under s. 258 of the Criminal Justice Act 2003 on 28 June 2007.

It is necessary next to refer to the legislative provisions relating to confiscation.

S.1 of the DTOA 1986 set out the power of the court to make a confiscation order following a conviction for a drug trafficking offence. It provided:

“(1)

Subject to subsection (7) below, where a person appears before the Crown Court to be sentenced in respect of one or more drug trafficking offences (and has not previously been sentenced or otherwise dealt with in respect of his conviction for the offence or, as the case may be, any of the offences concerned), the Court shall act as follows.

(2)

The court shall first determine whether he has benefited from drug trafficking.

(3)

For the purposes of this Act, a person who has at any time (whether before or after the commencement of this section) received any payment or other reward in connection with drug trafficking carried on by him or another has benefited from drug trafficking.

(4)

If the court determines that he has so benefited, the court shall, before sentencing him or otherwise dealing with him in respect of the offence … determine in accordance with section 4 of this Act the amount to be recovered in his case by virtue of this section.

(5)

The court shall then, in respect of the offence or offences concerned—

(a)

order him to pay that amount,

(b)

take account of the order before—

(i)

Imposing any fine on him, or

(ii)

making any order involving any payment by him, or

(iii)

making any order under section 27 of the Misuse of Drugs Act 1971 (forfeiture orders), section 39 of the Powers of Criminal Courts Act 1973 (criminal bankruptcy orders) or section 43 of that Act (deprivation orders), and

(c)

subject to paragraph (b) above, leave the order out of account in determining the appropriate sentence or other manner of dealing with the defendant.”

The relevant provisions in relation to enforcement of a confiscation order were:

Provision for the conclusion of drug trafficking proceedings and confiscation orders made under the DTOA 1986 was made by s.38 (12) and s. 8(5):

In R v Harrow Justices, ex parte DPP [1991] 3 All ER 873 the Divisional Court (Stuart Smith LJ and Turner J) considered the effect of these provisions in relation to the committal by magistrates of a defendant who had failed to pay a sum of over £106,000 due under a confiscation order made under the DTOA 1986. The magistrates had committed him to serve the default term of 30 months without enquiry into his means. The court observed:

“This had the effect of relieving him of the requirement to satisfy the confiscation order pro rata that the period of imprisonment actually served bears to the period specified in the warrant in proportion to the amount of the confiscation order”

The issue of the warrant had therefore relieved the defaulter in part of the need to satisfy the confiscation order; this was in total contradiction to the purpose of the Act which was to deprive drug traffickers of the benefits of their crime. I do not consider that it is necessary to review the correctness of that decision. It was accepted by the RCPO in its skeleton argument that proceedings under the DTOA 1986 were, by reason of the operation of s.38(12), concluded when a person against whom a confiscation order was made had served his default sentence. Mr Togher has, as a result of the operation of s.258 of the Criminal Justice Act 2003, served his default sentence.

It is clear that Parliament considered that a number of provisions in the DTOA 1986 were unsatisfactory; see the article by Dr David Thomas in [1994] Crim LR 93, published in February 1994. One of these included the effect of the provisions of the DTOA 1986 which enabled a drug trafficker to escape from payment of the confiscation order by serving a term of imprisonment in default. An amendment was made by s.13 of the Criminal Justice Act 1993 to add to s. 6 of the DTOA 1986 a further subsection providing that the service of a term in default would not prevent the confiscation order from continuing to have effect. However that provision was never commenced as the change to the law was effected by the DTA 1994, which provided by s. 9 (5):

“Where a defendant serves a term of imprisonment or detention in default of paying any amount due under a confiscation order, his serving that term does not prevent the confiscation order from continuing to have effect, so far as any other method of enforcement is concerned.”

This change was carried through to the definition of the conclusion of confiscation proceedings by a provision necessarily in different terms to that in s.38(12) of the DTOA 1986 - namely 41(3) of the DTA 1994, which states:

“Proceedings for a drug trafficking offence are concluded –

(a)

when the defendant is acquitted on all counts;

(b)

if he is convicted on one or more counts, but the court decides not to make a confiscation order against him, when it makes that decision; or

(c)

if a confiscation order is made against him in those proceedings, when the order is satisfied. ”

Like the DTOA 1986 which by s. 38(4) was applicable to all proceedings commenced after the coming into force of the Act whenever the offence was committed (see s.1(3)), the DTA 1994 was made applicable to all offences where proceedings began after its commencement. In the article by Dr David Thomas to which I have referred, Dr Thomas referred to the provision under s.78(6) of the Criminal Justice Act 1993 (which was never brought into force) to apply its confiscation provisions only to offences committed after the date of the commencement of the provisions:

“The Drug Trafficking Offences Act 1986 made and makes no concession to this principle [of retroactive criminal legislation]; it applied to proceedings begun after the commencement date, irrespective of the date of commission of the offences concerned and continues to authorise the confiscation of the proceeds of offences committed long before the Act was passed. The restriction of the application of the amended version of the Act seems a recipe for chaos in cases involving drug trafficking. The old and the new versions of the Act will in effect continue to exist, side by side, possibly for a period of many years, until all offences committed before the commencement date of the amending Act have passed through the system…. Given the confusion which changes in maximum penalties can cause, the scope for error when much more complex rules are allowed to remain in force is obvious…... Given the fact that other changes made by the 1993 Act (such as the amendments of ss.1(2)(a) and 29) took effect immediately on the relevant commencement day, even though they were detrimental to the interests of offenders, it is difficult to see any logic in adopting this mode of commencement for the amendments of the Drug Trafficking Offences Act 1986, and every reason for bringing them into force for all cases where the defendant is convicted on or after a specified date. An amendment to the 1993 Act to this effect in the current Criminal Justice Bill is urgently needed.”

As I have set out, in the event the commencement provisions of the DTA 1994 followed those of the DTOA 1986 and not those of the Criminal Justice Act 1993. However, it should be noted that when the DTA 1994 was repealed by the Proceeds of Crime Act 2002, commencement provisions similar to those in the Criminal Justice Act 1993 were adopted; its commencement provisions (made under the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003 (SI 2003 No 333) provided that the making of confiscation orders under that Act should not apply to offences committed before 24 March 2003. As the editors of Archbold comment (see paragraph 5-449 of the 2007 edition), that means that for an indefinite period of time, two confiscation regimes will operate; it also means that the issue raised by Mr Togher will not arise under that Act.

Another of the changes effected by the DTA 1994 to the regime under the DTOA 1986 was that it was no longer mandatory for the court to make an order. Although the provisions of s.2 of the DTA 1994 followed almost identically those of s.1 of the DTOA 1986 (to which I have referred at paragraph 28), the court was only to make a confiscation order if either the prosecutor thought it necessary or the court thought it appropriate to do so. It is important to note that s.2(3) and 2(5) of the DTA 1994 were in all material respects identical to s.1(3) and 1(5) of the DTOA 1986. The court was also given power by s.3 of the DTA 1994 to delay for a specified period the determination of the confiscation order where it did not have sufficient information.

As under the DTOA 1986, confiscation orders under the DTA 1994 were, by s.9(1) of that Act, to be enforced as if they were a fine imposed by the Crown Court under the same sections of the Powers of Criminal Courts Act 1973 as were set out in s. 6(1) of the DTOA 1986; sections 139-40 of the Powers of Criminal Courts Act 2000 were substituted for the provisions of the 1973 Act in s.9(1) of the DTA 1994 in August 2000. The powers of the High Court and County Court in respect of their powers of enforcement were set out in ss. 25-30; the power to discharge a restraint order was set out in s.26(5)

“(5)

A restraint order—

(a)may be discharged or varied in relation to any property; and

(b)shall be discharged on the conclusion of the proceedings or of the application in question.”

S.31(1) provided that the powers under s.25-30 were to be exercised in accordance with the provisions of s.31(2). (This was in the same terms as s.13(2) of the DTOA 1986):

“Subject to the following provisions of this section, the powers shall be exercised with a view to making available for satisfying the confiscation order, or as the case may be, any confiscation order that may be made in the defendant’s case, the value for the time being of realisable property held by any person, by means of the realisation of such property.”

Having set out these somewhat complex provisions, I now turn to set out more fully the nature of the argument advanced on behalf of Mr Togher.

The argument advanced on behalf of Mr Togher was:

These contentions were disputed by the RCPO for reasons it is more convenient to set out when discussing the five issues which in the light of the respective contentions, arose for decision:

Was imprisonment in default of payment a penalty or means of enforcement?

Collins J decided that imprisonment in default under the DTA 1994 was not a penalty but a means of enforcement. He was referred to Welch v United Kingdom and to Malik. On the basis of the latter decision (to which I will refer at paragraph 46 below), he held:

“20.

It seems to me that the penalty is the confiscation which is directed to the relevant assets. The means by which the penalty is to be enforced is something which goes not to the substance but to the procedure for dealing with that confiscation order, this it is not to make the penalty heavier. I do understand that it may seem like that to such as Mr T who serve their sentences. ….

21.

… It is open to the defendant to disclose those assets, to pay them and so to discharge the confiscation order. Alternatively if the truth is that there are no such assets, then he must produce some evidence ..

22.

But, as things stand there is no retrospective penalty here and no breach of Article 7…”

The RCPO contended that the judge was correct in concluding that imprisonment in default was a means of enforcement of the order and not a penalty; there was therefore no retrospective penalty.

It is convenient to begin with the decision in Welch v United Kingdom which was handed down a few days after the DTA 1994 came into force. Welch was convicted in August 1988 of conspiracy to obtain cocaine with intent to supply in 1986 and sentenced to 22 years imprisonment, subsequently reduced on appeal to 20 years; a confiscation order was made under the DTOA 1986 in an amount (after the appeal) of £59,914, with a sentence of 2 years in default of payment. The provisions of the DTOA 1986 came into force on 12 January 1987. It was accepted that the imposition of a confiscation order under the DTOA 1986 Act in respect of an offence committed between January and November 1986 was retrospective, as the offence was committed before the Act came into force. The issue was whether the order constituted a penalty within the meaning of the second sentence of Article 7(1). The court held that it did:

“27.

The concept of a "penalty" in this provision is, like the notions of "civil rights and obligations" and "criminal charge" in Article 6(1), an autonomous Convention concept. …

“29.

As regards the connection with a criminal offence, it is to be observed that before an order can be made under the 1986 Act the accused must have been convicted of one or more drug trafficking offences. This link is in no way diminished by the fact that, due to the operation of the statutory presumptions concerning the extent to which the applicant has benefited from trafficking, the court order may affect proceeds or property which are not directly related to the facts underlying the criminal conviction. While the reach of the measure may be necessary to the attainment of the aims of the 1986 Act, this does not alter the fact that its imposition is dependent on there having been a criminal conviction.”

30.

In assessing the nature and purpose of the measure, the Court has had regard to the background of the 1986 Act, which was introduced to overcome the inadequacy of the existing powers of forfeiture and to confer on the courts the power to confiscate proceeds after they had been converted into other forms of assets. The preventive purpose of confiscating property that might be available for use in future drug-trafficking operations as well as the purpose of ensuring that crime does not pay are evident from the ministerial statements that were made to Parliament at the time of the introduction of the legislation. However it cannot be excluded that legislation which confers such broad powers of confiscation on the courts also pursues the aim of punishing the offender. Indeed the aims of prevention and reparation are consistent with a punitive purpose and may be seen as constituent elements of the very notion of punishment.

After referring to the decisions of the UK courts (including Dickens to which I refer at paragraph 45.i)) and to the acceptance of the submission that the severity of the order was not decisive, the court continued:

33.

However, there are several aspects of the making of an order under the 1986 Act which are in keeping with the idea of a penalty as it is commonly understood even though they may also be considered as essential to the preventive scheme inherent in the 1986 Act. The sweeping statutory assumptions in section 2 (3) of the 1986 Act that all property passing through the offender's hands over a six-year period is the fruit of drug trafficking unless he can prove otherwise; the fact that the confiscation order is directed to the proceeds involved in drug dealing and is not limited to actual enrichment or profit; the discretion of the trial judge, in fixing the amount of the order, to take into consideration the degree of culpability of the accused; and the possibility of imprisonment in default of payment by the offender - are all elements which, when considered together, provide a strong indication of, inter alia, a regime of punishment.

34.

Finally, looking behind appearances at the realities of the situation, whatever the characterisation of the measure of confiscation, the fact remains that the applicant faced more far-reaching detriment as a result of the order than that to which he was exposed at the time of the commission of the offences for which he was convicted.

35.

Taking into consideration the combination of punitive elements outlined above, the confiscation order amounted, in the circumstances of the present case, to a penalty. Accordingly, there has been a breach of Article 7(1).”

The decision in Welch centred on the confiscation order. The subsequent decision of the ECtHR in Jamil v France (1996) 21 EHHR 65 centred on the sentence in default. Jamil had been sentenced in June 1987 by a French court for a drugs offence committed in June 1986, to a term of imprisonment, a fine with a term in default of 4 months and a confiscation order. On appeal in June 1988, the Cour d’appel in Paris increased the term to 2 years in default in accordance with a law of 31 December 1987 which had come into force in January 1988. Jamil contended that, as imprisonment in default was a custodial penalty of a punitive nature, a law which made provisions governing it more severe by increasing the duration of the period of imprisonment by 20 months, could be applied only to offences committed after it had come into force. The Cour de Cassation held that imprisonment in default was a means of enforcing a fine and not a penalty; customs fines were intended to indemnify and compensate. The ECHR held at paragraphs 30-31 of its judgment that the starting point for considering whether the measure was a penalty within the meaning of Article 7 was whether it was imposed following conviction for a criminal offence; other factors to be taken into account were the characterisation under national law, its nature and purpose; the procedures involved in the making and implementation of the measure and its severity. The court concluded at paragraph 32:

“.. In order to determine how imprisonment in default should be classified for the purposes of Article 7, it is therefore necessary to ascertain its purpose and the rules which govern it. The measure in question is intended to ensure payment of fines, inter alia, by enforcement directed at the person of a debtor who cannot prove his insolvency, and its object is to compel such payment by the threat of incarceration under a prison regime. This regime is harsher than for sentences of imprisonment under the ordinary criminal law, mainly because it is not attenuated as they are by such measures as parole or pardon. Imprisonment in default is a survival of the ancient system of imprisonment for debt; it now exists only in respect of debts to the State and does not absolve the debtor from the obligation to pay which led to his committal to prison. Although he can no longer thereafter be compelled to pay by means directed against his person, his goods are still subject to distraint. It is not a measure which can be likened to the seizure of movable or immovable property referred to by the Government.

The sanction imposed on Mr Jamil was ordered by a criminal court, was intended to be a deterrent and could have led to a punitive deprivation of liberty. It was therefore a penalty.”

I turn first therefore to consider how confiscation orders and sentences in default are characterised under the law of the United Kingdom. There are many decisions which support the view that the provisions are penal; some were cited in Welch, but it is only necessary to refer to:

However, in R v Malik (Court of Appeal Criminal Division Transcript 9 May 2000, briefly reported in the Times, 30 May 2000), counsel for the appellant raised what was described as “a European point” in relation to what appear to have been ordinary confiscation proceedings with no issue as to their retrospective nature. The Court of Appeal Criminal Division concluded that there was nothing in the point and that it was misconceived, but before doing so observed:

“15.

Some mention was made of Article 7. The [DTA 1994] creates a statutory procedure for confiscating the proceeds of those convicted of drug trafficking; it follows from the conviction of a defendant as a result of a criminal trial; it is not a means of imposing a heavier penalty than the relevant conviction

16.

In this case the appellant was ordered to serve 20 months imprisonment should he default in payment of the amount confiscated. That is simply a method of enforcing a confiscation order and therefore the statute is not in conflict with Article 7. Welch does not assist the appellant in this regard.”

The observations of the Court of Appeal Criminal Division in Malik were plainly not necessary to the decision; the “European point” in that case appears to have been misconceived, but there does not appear to have been detailed argument, other decisions of the United Kingdom courts were not cited and the reasoning of the court is not consistent with the decisions in Welch and Jamil.

It is necessary next to consider the other factors referred to in Welch and Jamil which all point to a confiscation order and the default sentence being a penalty for the purposes of Article 7(1). The confiscation order and the default sentence were imposed following a conviction for a criminal offence. The nature and purpose of the confiscation and the term in default is to punish the offender. In R v Clark & Bentham [1997] 2 Cr App (S) 99, Lord Bingham CJ giving the judgment of the Court of Appeal Criminal Division made it clear that a judge should approach the period of imprisonment to be served in default by asking the question – what period of imprisonment not exceeding the statutory maximum is necessary to coerce the defendant into realising and paying the sum due under the confiscation order? The procedures for the making of the confiscation order and the imposition of the term in default were those of a criminal court. Both the confiscation order and the term in default were severe in their consequences. In my view it is artificial to seek to categorise separately the confiscation order and the term in default; to categorise the term in default as the means by which the penalty is to be enforced is to disregard the overall scheme and to put form before substance. In my view each is a penalty within the meaning of Article 7(1), but both should be considered together. If they are, they plainly are a penalty within the meaning of Article 7(1).

Was the confiscation order and the sentence in default part of the overall penalty which was applicable at the time of the commission of the offence?

The RCPO raised in its oral argument a further point which had not been raised before the judge or in the skeleton argument for this appeal. It was contended that if the confiscation order and the term in default were to be characterised as a penalty for the purposes of Article 7(1), the confiscation order and the sentence in default were part of the overall penalty for the offence for which Mr Togher had been indicted. If the term in default was added to the sentence of imprisonment then the total prison sentence was not greater than that which could be imposed under s.20 of the Misuse of Drugs Act 1971; nor was the confiscation order greater than the penalty under that Act, because an unlimited fine could be imposed in addition to the prison sentence. Those representing the United Kingdom in Welch had not put forward the argument that the imposition of a confiscation order with a term of imprisonment in default was not a penalty separate from the penalty specified in the legislation for the offence and, in considering whether the penalty was heavier than that applicable at the time the offence was committed, a court should look at the totality of the penalty available at the time the offence was committed.

In support of this submission, the RCPO relied on the decision in R (Utley) v SSHD [2004] UKHL 38 ([2004] 1WLR 2278). Utley had been convicted in 1995 of sexual offences, including three rapes, committed before 1983 and sentenced to 12 years imprisonment; the maximum term at the time he committed the offence and at the time of his trial was life imprisonment. He was released on licence in 2003 under the provisions of the Criminal Justice Act 1991 which allowed the Secretary of State to impose licence conditions on long term prisoners who had served more than two thirds of their sentence. Under the sentencing regime applicable at the time he committed the offences, he would have been released at the same time but without licence conditions. Utley contended that the imposition of licence conditions was a breach of his Convention rights under Article 7(1) and sought a declaration of incompatibility. The House of Lords rejected that contention on the basis of its interpretation of the phrase “heavier penalty be imposed than the one that was applicable at the time” in Article 7(1); it was held that this meant that the Article was only infringed if the sentence imposed on a defendant constituted a heavier penalty than that which could have been imposed on the defendant under the law in force at the time the offence was committed. “Applicable” referred to the penalties which the law authorised at the relevant time, not to the penalty which might have been imposed. Lord Rodger of Earlsferry made clear that the proper comparison was between the penalties the court imposed when it passed the sentences and the penalties prescribed by the legislature at the time they were committed. He said of Article 7(1) at paragraph 42:

“Its purpose is not to ensure that the offender is punished in exactly the same way as he would have been punished at the time of the offence, but to ensure that he is not punished more heavily than the relevant law passed by the legislature would have permitted at the time. So long as the court keeps within the range laid down by the legislature at the time of the offence, it can choose the sentence which it considers most appropriate.”

The RCPO relied in particular in a passage in the speech of Lord Phillips of Worth Matravers at paragraphs 26 and 27:

“26.

In Welch the United Kingdom did not argue that the sentence of 22 years' imprisonment, coupled with the confiscation order, was a less heavy penalty than that which could have been imposed for the offences for which Welch was convicted, namely life imprisonment. Nor does this point appear to have been considered by the Commission or by the court. The confiscation order was considered in isolation as a discrete penalty.

27.

I do not believe that the decision in Welch requires your Lordships' House to consider the conditions of the respondent's licence as a discrete penalty, divorced from his sentence of imprisonment. One cannot properly consider in isolation that part of a sentence of imprisonment which will be spent released on licence. The remission regime is an integral feature of the sentence of imprisonment. When considering how heavy a penalty has been imposed by the sentence it is necessary to consider the overall effect of the sentence. That, indeed, has been the respondent's case throughout.”

It is clear that the total sentence that could have been imposed on Mr Togher for the offence under s.20 of the Misuse of Drugs Act 1971 was greater than the combined amount of the sentence of imprisonment and the default term and the confiscation order. But is it correct to aggregate the penalties in this way? In Utley the sentence was a series of sentences imposed under the provisions of the Sexual Offences Act 1956, the Indecency with Children Act and the Protection of Children Act 1978; the maximum sentences for rape were life imprisonment at the time Utley committed the offences and at the time he was convicted; nor was there any change in the provisions of the legislation criminalising the offences or in the penalties for those offences. In the present case, the sentence of imprisonment was imposed under the terms of the Misuse of Drugs Act 1971 in accordance with the provisions of that Act and the decisions of the Court of Appeal on that Act; the principal consideration in determining the severity of the penalty was the quantity of drugs involved. Under the drug trafficking legislation, the objective of the penalty was directed at removing any benefit that the defendant had obtained from drug trafficking; the amount of the financial penalty was determined by an examination of the proceeds of the drug trafficking and the defendant’s realisable assets; the maximum length of the default sentence was determined by a statutory table based on that amount. The terms of s.1(5) of the DTOA 1986 and of s.2(5) of the DTA 1994 make it clear that in determining the appropriate sentence (other than a fine) the court must leave out of account the amount of the confiscation order. The objectives of the provisions, the way in which they operate and the specific provisions to which I have referred all point in my view to the conclusion that the maximum penalties available at the time under the Misuse of Drugs Act 1971 should not be aggregated in the way suggested by the RCPO. The issue is whether the confiscation order and the term in default is a heavier penalty than that applicable for confiscation at the time the offence was committed.

Was the penalty under the confiscation order and default sentence in fact heavier than that applicable at the time the offence was committed?

The RCPO next contended that the penalty under the confiscation order and default sentence was not, looked at together without reference to the sentence under s.20 of the Misuse of Drugs Act 1971, in fact heavier than the penalty available under the DTOA 1986. It was submitted that the decision in Welch could be distinguished. Prior to the enactment of the DTOA 1986 courts were unable to order the forfeiture of the proceeds of any offence once they had been “laundered” into other assets. The DTOA 1986 had been intended to provide a means of closing an avenue through which drug traffickers could retain the proceeds of their crimes. In Welch, the ECHR had made this clear at paragraph 11 of its judgment where it set out the remarks of the Secretary of State to the Commons to this effect. The RCPO contended therefore that Collins J had been right when he said at paragraph 16 of his judgment that Welch related to the imposition of a new sort of order, confiscation of assets into which the proceeds had been laundered; that in contradistinction, the argument of Mr Togher, had related to a change in the manner of enforcement effected by the DTA 1994 which prevented a defendant buying himself out of the confiscation of his assets by serving a term of imprisonment.

The RCPO also contended that there was no essential change to the legislative scheme; under the DTOA 1986 and the DTA 1994, a defendant was sentenced to pay a monetary amount and if that was not paid a term in default had to be served. Nor was the term that had to be served any different. The only difference was that the service of the term did not extinguish the amount owed. Mr Togher was aware of the legislative scheme and nothing had essentially changed in the scheme.

I cannot accept these submissions. It is correct that the factual position in Welch was that the 1986 Act had extended the scope of assets to which a confiscation order could apply. The provisions of the DTOA 1986 had been enacted, as the ECtHR pointed out at paragraph 30 of its judgment, because of the inadequacy of the existing powers. Similarly the change made by the DTA 1994 in respect of the effect of the default sentence must have been made to make the effect of the default sentence more coercive by providing that it did not discharge the liability to pay the confiscation order. But the question as to whether it was a heavier penalty must be judged by considering the effect of the new legislation on the defendant and not merely its scope. In Utley, Baroness Hale said at paragraph 46:

46.

However, it is clear from the court's decision in Welch v United Kingdom (1995) 20 EHRR 247 that article 7 is not limited to the sentences prescribed by the law which creates the offence. It can also apply to additional penalties applied to that offence by other legislation. The concept of a penalty is an autonomous Convention concept. When considering what are the "limits fixed" by the law, the maximum duration of any permitted sentence of imprisonment (or the maximum fine which may be payable) may not be the only relevant factor. There may be changes in the essential quality or character of such a sentence which make it unquestionably more severe than any sentence which might have been imposed at the time of the offence. Examples might be the reintroduction of hard labour with every sentence of imprisonment or the automatic conversion of a sentence of imprisonment into a sentence of transportation. These may seem fanciful today. Less fanciful might be the replacement, for certain juvenile offenders, of committal to the care of a local authority with determinate sentences of detention in prison department establishments. The care order was ostensibly a welfare disposal rather than a penalty, although of indefinite duration up to the age of 18. The detention order was unquestionably punitive in intent and effect, although of definite duration. There must, at the very least, be an argument that article 7 is engaged by such a change.

If, as I consider it to be the case, the effect of the confiscation order and the sentence in default have to be looked at together, the penalty under the DTA 1994 is, in my view, a heavier one than that available under the DTOA 1986 as the defendant was at risk of serving the sentence in default and thereafter paying the confiscation order; the defendant faced more far reaching detriment as a result of the order than that to which he was exposed at the time he committed the offence.

It was next submitted by the RCPO that the default term was not a heavier penalty, because it was a consequence of the failure to pay the amount of the confiscation order and not part of the original penalty for the offence committed in 1993/4. All that had happened when the default term was pronounced by the trial judge (as varied by the Court of Appeal Criminal Division) was that the period to be served had been fixed. It was the failure to pay when the sum became due in August 2002 that was the offence that triggered the service of the default term.

I cannot accept this further submission. There was no new penalty when Mr Togher failed to pay; it was the consequence of the confiscation order made in 1997. In R.(Lloyd) v Bow Street Magistrates Court [2003]EWHC 2294 (Admin) ([2004] 1 Cr App R 11), there had been very substantial delay on the part of both the prosecution and the court in proceedings to enforce the confiscation order by seeking committal of the defendant to prison to serve the default term for failure to pay a confiscation order. The defendant sought a stay on the grounds of a breach under Article 6(1). It was held that the prosecution was under a duty to progress proceedings for enforcement once the decision had been taken to commence them and that the provisions of Article 6 applied. At paragraph 18 the court concluded that the prosecution had been right to accept that enforcement by seeking a warrant of committal were part and parcel of the confiscation proceedings which were part of the original criminal proceedings: “They are no more separate from the original criminal proceedings than is the application for the confiscation order itself.”

This observation, in my view, lends support to the view that the confiscation order and the default term were imposed together as a penalty in the proceedings under the DTA 1994 and there was no new penalty when Mr Togher failed to pay.

It follows therefore that I have come to the view that it would be a breach of Mr Togher’s Convention rights under Article 7(1) to seek to enforce the confiscation order against him.

Did the amount outstanding in respect of interest remain enforceable separately from the confiscation order?

It was argued on behalf of RCPO that interest continued to accrue at the rate of £126.65 per day on top of the accrued interest at 9 November 2004 of £128,000. Even if Mr Togher was not liable to pay the outstanding amount of the confiscation order, he remained liable for interest.

It was common ground that interest was payable on the sum outstanding under a confiscation order whether made under the DTOA 1986 or the DTA 1994: see s. 15(1) of the Criminal Justice (International Co-operation Act) 1990 and s.10 of the DTA 1994. However, as these sections of both Acts make clear the amount of interest for the purposes of enforcement is treated as part of the amount to be recovered under the confiscation order. In my view therefore it is clear that the amount due for interest is payable if the confiscation order can be enforced; but if the confiscation order cannot be enforced, the outstanding amount for interest cannot be enforced separately.

Should the court now exercise its discretion to discharge the restraint order?

As I have set out at paragraph 39, Mr Beloff QC made clear that Mr Togher had not sought a declaration of incompatibility nor did he (or could he) contend that the DTA 1994 could be read in a way so as to make it compatible with his contentions on Article 7(1). Nonetheless, he contended that the court should exercise its discretion to discharge the restraint order as it served no useful purpose as the confiscation order could not be enforced against Mr Togher without infringing his Convention rights under Article 7(1).

The response of the RCPO was that:

The powers to enforce the confiscation order are, as I have set out, contained principally in the DTA 1994 and the Magistrates Courts Act 1980; some further powers are set out in the Courts Act 2003. The powers that are relevant to the enforcement against any assets acquired by Mr Togher are all discretionary.

The scheme of the HRA 1998 recognises the sovereignty of Parliament; unless a statutory provision can be read in a way to make it compatible with Convention rights, a court is bound to give effect to the provisions of an Act or make a declaration of incompatibility. In my view it would be contrary to the basis of the HRA 1998 for a court to seek to circumvent this position by exercising a discretion in a way which was contrary to the express purpose of an Act.

This is made clear in my view by s.6(2) of the Human Rights Act 1998 which sets out the duty of a public authority to act in a way which is compatible with Convention rights:

“(1)

It is unlawful for a public authority to act in a way which is incompatible with a Convention right.

(2)

Subsection (1) does not apply to an act if –

(a)

as the result of one or more provisions of primary legislation, the authority could not have acted differently; or

(b)

in the case of one or more provisions of, or made under, primary legislation which cannot be read or given effect in a way which is compatible with Convention rights, the authority was acting so as to give effect to those provisions.”

In Parochial Church Council of the Parish of Aston Cantlow [2003] UKHL 37, Lord Nicholls of Birkenhead made clear that the purpose of this section together with s 3(2) and s. 4(6) was to preserve the primacy and legitimacy of primary legislation, as that was one of the most basic principles of the Human Rights Act. He said at paragraph 19:

“a public authority is not obliged to neutralise primary legislation by treating it as a dead letter. If a statutory provision cannot be rendered Convention compliant by application of section 3(1), it remains lawful for a public authority, despite the incompatibility, to act so as to 'give effect to' that provision: section 6(2)(b).”

Lord Hobhouse at paragraph 93 referred to the contrast between subsections (a) and (b):

“Paragraph (b) of the subsection is to be contrasted with paragraph (a) which is manifestly intended to cover cases where the public authority did not have any alternative but to act as it did (ie it was compelled to do so). Paragraph (b), on the other hand, covers situations where the public authority was empowered by legislation to act as it did and the intention of the legislation, whilst leaving open a measure of discretion, was that it should use the power provided”

The general principle contained in s.6(2)(b) is therefore that a court in the exercise of a discretion does not act unlawfully if, in giving effect to the provisions of an Act, it infringes a Convention right. The statutory scheme of the DTA 1994 applied the new confiscation regime to all proceedings after the coming into force of the Act. I accept that one of the purposes of so doing was for principles of good administration; it would for the reasons given by Dr Thomas in the article cited at paragraph 34 have been very complex to have had two schemes operating at the same time. I also accept that the scheme of the DTA 1994 (and of the legislation which was to be applied under the Act) also gave the court considerable discretion in the operation of the powers under the Act. I accept again that the principal scope of the operation of the powers under the DTA 1994 would, very soon after its coming into force, have been directed at offences committed after the coming into force and thus the discretions would ordinarily be exercised in accordance with s.31(2) in respect of an order that continued to have effect under s.9(5).

Furthermore the objective of s.31(2) was to preserve the value of the property to satisfy the confiscation order, if the order was otherwise enforceable. In my view that particular subsection does not stand in the way of Mr Togher’s contention as to the manner in which the discretion should be exercised, as it presupposes an enforceable order. The terms of the subsection did not mean that a court must enforce an order where to enforce the confiscation order would infringe a Convention right.

However, s. 9(5) of the DTA 1994 makes it clear that notwithstanding the service of a term in default, the confiscation order continues to have effect so far as any other method of enforcement is concerned. It was not contended that this subsection could be read in such a way as to make it compatible with the Convention rights under Article 7(1). If that cannot be done, then it seems to me that a court would not be entitled to circumvent this express provision of primary legislation by in effect overriding it by the exercise of a discretion which was contrary to its express purpose. Although, as I have said one of the purposes of applying the provisions to offences committed before the coming into force of the Act was the principle of good administration, it must also have been the intention of Parliament to make a heavier penalty applicable to offences committed before the Act came into force. It could have made an express provision to except such cases, but chose not to; as Mr Togher accepted, the Act cannot be read so as to imply such an exception. In my view, a court can therefore give effect to the express provisions of s.9(5) in the way in which it exercises the discretion it has to enforce the confiscation order.

I therefore consider that a court would, under s. 6(2)(b) be entitled to exercise its discretion to enforce the confiscation order under the terms of the DTA 1994 notwithstanding the service of the default term. Even though it would be acting in a way which is incompatible with Mr Togher’s Convention rights under Article 7(1), it would be giving effect to the provisions of primary legislation. Mr Togher’s remedy lay in seeking a declaration of incompatibility; it would be inconsistent with the principles of the HRA 1998 and the primacy of primary legislation to permit him to achieve that result without bringing himself within either s.3 or 4 of the HRA 1998.

If I had considered that the court would inevitably have exercised its discretion against the enforcement of the confiscation order, then would it still be premature to discharge the restraint order before the court determined that the confiscation order was unenforceable? It seems to me that the question is answered by asking the question whether in such circumstances the restraint order would have served any useful purpose. If it would not, then it should be discharged. In Re Peters [1988] 1 QB 871, this court considered that the making of a restraint order under the DTOA 1986 was analogous to a Mareva injunction (freezing order). Nourse LJ summarised it:

“the jurisdiction to make or vary a restraint order is closely analogous to the jurisdiction to make or vary Mareva injunctions. In both cases the object is to strike a balance between keeping assets available to satisfy a final order, if and when one is made, and meeting the reasonable requirements of their owner in the meantime”

If I had concluded that a court would inevitably have exercised its discretion against enforcing the confiscation order, then I would have seen no reason for so continuing the restraint order and I would in that event have considered that it was right to discharge the restraint order.

I therefore consider that the appeal should be dismissed and the restraint order should continue in effect.

Mr Doran applied very late to be joined to this appeal and contended that the confiscation order should not have been made against him. It was not clear whether he wished to seek a declaration of incompatibility; in the circumstances, I do not consider that it would be appropriate to make any order on his application.

I agree.

I agree with the order proposed by Lord Justice Thomas; and with the reasons which he has given. I, too, would have been minded to discharge the restraint order if I had been persuaded that it could no longer serve any proper purpose. But, for the reasons which Lord Justice Thomas has explained, that premise has not been made out.