This is yet a further appeal involving a confiscation order. The confiscation order was made under the provisions of the Criminal Justice Act 1988 (“CJA 1988”) by His Honour Judge Balston at the Maidstone Crown Court on 1 February 2002.

On 8 January 2001 the appellant, Ian McDonald Simpson, had pleaded guilty on re-arraignment to two counts involving value added tax offences (counts 4 and 6), two counts of producing a false document for the purposes of VAT (counts 5 and 14), one count of cheating the public revenue (count 16) and one count of being knowingly concerned in the fraudulent evasion of VAT (count 18). Following a Newton hearing before the same court, on 1 May 2001 the appellant was sentenced to 30 months imprisonment on count 6 and to concurrent sentences of 12 months imprisonment on each of the other counts.

The confiscation order which is the subject of the appeal was made under section 71 of the CJA 1988. The sum of £209,351.34 was ordered to be confiscated with a sentence of 18 months imprisonment in default of payment. The appellant was also ordered to pay £15,000 towards the costs of the prosecution. There were two other alleged offenders, one was acquitted and the other, Kenneth Anthony Young was prosecuted in Scotland and sentenced to 5 years imprisonment on each count concurrent. In addition, a confiscation order was made in the sum of £26,000.

The frauds involved taking advantage of the special cash accounting scheme which can be used for making VAT returns. The scheme was introduced to give relief to small businesses which would otherwise have to pay VAT charged on a transaction before the business had received payment from its customer. The scheme also took advantage of the fact that a business may legitimately purchase goods and services from a subsidiary, this involving what is known for VAT purposes as “outsourcing”. A number of bogus outsourcing agreements were deployed in carrying out the frauds.

The grounds of appeal fall into two categories. First, there are those in relation to the judge’s jurisdiction to make the confiscation order and secondly, there are those which relate to the amount of the confiscation order. It is the grounds of appeal which relate to jurisdiction which explain the constitution of this court. The Crown’s contention is that the jurisdictional points are of no substance because of the decision of this Court (the Lord Chief Justice, Mr Justice Holland and Mr Justice Keith) in the case of Sekhon and Others[2002] EWCA Crim 2954 which clearly establishes that the points are without substance. However, Mr Raymond Walker QC, who together with Mr Simon Taylor, appears on behalf of the appellant contends that the Sekhon decision wrongly indicates that the decision of this Court in R v Palmer[2002] EWCA Crim 2202 was wrongly decided and that earlier cases applied in Palmer “should be examined with care” (see para 56 of Sekhon). It was the decision in Palmer that caused the appellant to amend his notice of appeal to raise the jurisdiction points. No leave to appeal has yet been granted to the appellant in respect of the jurisdiction points. However, this Court can and does give leave for them to be argued. It should not be thought that we are giving leave because we consider that there is any substance in the jurisdiction points. We only give leave so as to enable the appellant to have a possibility of appealing further by applying to this Court to certify a point of law and then applying to this Court or the House of Lords for leave to appeal to the House of Lords. If there is no further appeal, it is our hope that this decision will put an end to the string of appeals which are continuing to come before this Court. There have already been at least ten decisions in which the Sekhon case has been applied.

The fact that the relevant provisions of the CJA 1988 have been the subject of a number of amendments has contributed to the problem. Powers of confiscation appear in similar terms in the Drug Trafficking Act 1994 and they have also been the subject of amendment and give rise to the same problems. The legislative history is set out in Sekhon (paragraphs 6-18) and it is not necessary to repeat that history. It is sufficient for the purposes of the present appeal to set out the relevant terms of section 71 and 72 of the CJA 1988 as it was originally enacted.

The provisions of section 71 so far as relevant were as follows:

Section 72, so far as material, provided:

Under section 72(1) and (2) the procedure for making an order was dependent on the prosecution giving a notice that there were likely to be sufficient assets to meet it. Where such a notice was given, the Court was bound to consider the making of an order. By section 71(4) the Court was required to determine the amount to be recovered and make a confiscation order before sentencing or otherwise dealing with the offender.

Sections 71 and 72 were amended by the Criminal Justice Act 1993, the Criminal Justice and Public Order Act 1994 and the Proceeds of Crime Act 1995 (the “1995 Act”). It is the amendments which were made by the 1995 Act which are relevant to the argument which is advanced on behalf of the appellant. Section 1 of the 1995 Act amended section 71(1) to (3). It did so in terms described in the Sekhon decision as follows:

The 1995 Act also repeated section 72 (1) to (4). The other amendments made were briefly summarised in the Sekhon case as follows:

The commencement of section 1 of the 1995 Act, which amended section 71 of CJA 1988, was provided for in section 16 of that Act. Subsection (5) and (6) of section 16 provide:

Section 72, prior to being amended by the 1995 Act, required in mandatory terms, if a literal construction of the section is adopted, the service of a notice on the court setting out the information stated in section 72(1). However, after the 1995 Act came into force that notice was no longer necessary because the court could act on its own motion. (See section 71(1)(b) as amended.)

Mr Walker argues that in view of the language of section 72 prior to the amendments of the 1995 Act the court did not have jurisdiction to make a confiscation order unless:

a notice which complies with section 72(1) was served and

none of the offences on which the appellant is indicted and convicted were committed before 1 November 1995.

On the facts of this case Mr Walker has to advance this submission because he can only rely on count 6 of the indictment for arguing that the 1995 Act was not in force at the relevant time and count 6 was not a count on which the confiscation order was based. While Mr Walker accepts that this is the position, he points to the language of section 16(5) which he contends does not limit the restriction of the application of section 16(5) to offences on which a confiscation order is based.

In support of the appellant’s argument reliance was placed upon the decision of this Court in the case of Ahmed (Lord Justice Kennedy, Mr Justice Goldring and Sir Charles McCullough; unreported 8 February 2000 no. 9905818X4). Sir Charles McCullough in giving judgment in that case said:

However, when those paragraphs are read as a whole, it is clear that Sir Charles was not seeking to say anything different from what we have indicated is the position. Sir Charles made it plain that the court was not “persuaded that these arguments would or might persuade the judge to do other than he did”.

Reliance was also placed upon the case of R v Brown[2001] EWCA Crim 2761. It is said that the approach of Sir Charles was approved in that later case. However, that does not provide any further assistance to the appellant. The only other point, that it is important not to ignore in relation to the Ahmed case, is that unlike here, there was no issue in that case that the conspiracies were ones to which the 1995 Act could not apply. The dates in the counts of the indictment reflected the actual dates.

Mr Walker’s submission, if correct, means that in this case if the appellant had been acquitted on count 6 the confiscation order would be subject to the 1995 Act but because he was convicted of count 6 the confiscation order cannot be made. This is obviously an absurd result and we have no doubt that Mr Jonathan Fisher QC, who appeared on behalf of the Crown, is right in his contention that section 16(5) is not intended to produce this very strange consequence. In our judgment section 16(5) has to be applied so that after the word ‘offence’ there appears, the words “in respect of which a confiscation order is or could be sought” as proposed in the admirable skeleton argument prepared by Mr David Barnard who appeared on behalf of the Crown before Mr Fisher was instructed.

Before coming to Mr Walker’s principal point on behalf of the appellant there is the further problem that he faces. This is that while count 6, in the Particulars of the Offence, refers to 16 October 1995, because that is the date on the invoice which is relied upon by the Crown as the initial act constituting the offence, it is clear from the evidence that the invoice was created on 19 November 1995. So in fact, the offence was committed after 1 November 1995. In any event the argument of the appellant, that the 1995 Act cannot be relied upon fails on the facts.

This is the issue which is of considerable significance and explains why it was thought appropriate to have a decision by a court constituted by the five judges who are hearing this appeal. We will deal with the issue as succinctly as we can but we recognise the broad importance of the issue in relation to both statutory construction and the doctrine of precedent.

Initially, it is necessary to identify the limited nature of the dispute between the parties. The issue in dispute is, (on the assumption that section 1 of the 1995 Act was not in force) does the fact that the notice that was served on the court by the prosecution which was not in the form required by section 72, CJA 1988 mean that the court had no jurisdiction to make a confiscation order? This the appellant contends is the position. This is the argument notwithstanding that the Crown had already informed the court prior to the service of the notice that the figure suggested as being the amount that the appellant benefited from the fraud far exceeded the statutory minimum amount of £10,000. In addition, the issue as to jurisdiction was not raised by the appellant prior to the confiscation order being made.

Mr Walker contends that this Court should not follow the decision in Sekhon in so far as it casts doubt upon the Palmer decision. In support of this submission he advances three separate arguments. First, he submits that the issue as to the correctness of the decision in Palmer was not canvassed during the Sekhon hearing. This submission is the result of his being misinformed as to what happened at the hearing of Sekhon. Mr Walker’s junior, Mr Simon Taylor, was also junior counsel for Mr Satnam Singh in the Sekhon case. Mr Walker, no doubt as a result of what he had been told by Mr Taylor, was under the impression that there had been no argument as to the correctness of the Palmer decision on the appeal in Sekhon. This impression was wrong. It is perhaps to be explained by the fact that at the beginning of the hearing in Sekhon the Court indicated that it was proposing to allow the appeals in the case of Mr Taylor’s client and his co-defendants who were involved in his appeal. Accordingly, the court indicated it was not necessary for the legal advisors of those appellants to attend during the argument relating to the other appellants who were also involved in the appeal. The appeals of the other three appellants then proceeded and it was in relation to those appeals that the effect of the Palmer decision was contested. However, unusually since unless Mr Perry was able to persuade us otherwise, those appeals would have to be allowed as well, by agreement Mr Perry advanced his arguments on behalf of the Crown prior to the appellants advancing their argument. The right approach to the law was, however, fully canvassed. There is therefore no substance in this point.

After the course of events in Sekhon had been discussed, Mr Walker turned to his argument that it had not been open to the Court in Sekhon to conclude that Palmer had been decided irregularly and for that reason should not be followed. As to this, there was a striking division between the views of the parties since Mr Barnard in his skeleton argument on behalf of the Crown contended that Sekhon itself was a binding precedent as to the status of Palmer and this Court should refuse to go behind the Sekhon decision.

Mr Walker, when developing his submissions, relies on Halsbury’s Laws (4^th Ed Vol. 37 para 1242) as to the situations in which it is appropriate for the Court of Appeal to depart from a decision otherwise binding on the Court. The situations are stated to be:

where the Court has acted in ignorance of a previous decision of its own court or a court of coordinate jurisdiction which covered the case before it. If this is the case the Court must decide which case to follow,

where the Court has acted in ignorance of a decision of the House of Lords,

where the Court has given its decision in ignorance of the terms of a statute or a rule having statutory force, or

where in exceptional and rare cases, the Court is satisfied that there has been a manifest slip or error and there is no prospect of an appeal to the House of Lords.

He also refers to two further passages in the same paragraph of Halsbury as to the Court of Appeal, Criminal Division. The first stating that a full Court of Appeal has no greater powers than the usual constitution of the Court of three judges and, except in the cases mentioned above has no power to overrule a previous decision of the Court. The other citation is that:

These statements from Halsbury are unexceptional and are soundly based upon the authorities to which they refer. Prominent among them is the decision in Young v The Bristol Aeroplane Company Limited[1944] 1KB 718. However, the paragraphs in Halsbury should not be read as if they are contained in a statute. The rules as to precedent reflect the practice of the courts and have to be applied bearing in mind that their objective is to assist in the administration of justice. They are of considerable importance because of their role in achieving the appropriate degree of certainty as to the law. This is an important requirement of any system of justice. The principles should not, however, be regarded as so rigid that they cannot develop in order to meet contemporary needs.

One of the earliest statements on the rationale underpinning this doctrine was made by Parke J (Mirehouse v Rennell (1833) 1 Cl. & F 527 at 546) when he stated:

In Lord Greene MR’s judgment in Young v Bristol Aeroplane Company Limited, Lord Greene (at p729) was careful to provide for a degree of flexibility. He stated:

The House of Lords is in a special position because it is, so far as this jurisdiction is concerned, the final court of appeal in both criminal and civil matters, but the reasons for it departing from its previous practice are worth repeating. They appear in the practice note (judicial precedent) [1966] 1WLR 1234 and [1966] 3All E.R. 77.

The passage from Halsbury makes a distinction between the position of the Criminal and Civil Divisions of the Court of Appeal but there is no general power in the Court of Appeal Criminal Division equivalent to that contained in the practice direction.

That the position in the criminal jurisdiction of the Court of Appeal should be different from that in the civil is derived from the judgment of Diplock LJ in R v Gould [1968] 2 QB 65. The relevant passage reads as follows:

What Lord Diplock said in Gould has to be read in the light of his later comment in R v Merriman[1973] A.C. 584 at p605 f-g. There he stated:

There is nothing to suggest in Merriman that Lord Diplock was reminded of what he said in Gould. We appreciate that there may be a case for not interpreting the law contrary to a previous authority in a manner that would mean that an offender who otherwise would not have committed an offence would be held to have committed an offence. However, we do not understand why that should apply to a situation where a defendant, as here, wishes to rely upon a wrongly decided case to provide a technical defence. While justice for a defendant is extremely important, justice for the public at large is also important. So is the maintenance of confidence in the criminal justice system. If the result in the Palmer case had to be applied to other cases even though the Court of Appeal had acted in ignorance of the appropriate approach this would indeed, reveal a most unattractive picture of our criminal justice system’s ability to protect the public.

Here we prefer the approach indicated in Bennion on Statutory Interpretation (4^th edition) at p134 which states:

It is now convenient to refer to another argument advanced by Mr Walker. He submits that the issue raised in Sekhon was not the same issue as that in Palmer and therefore that the views in Sekhon about Palmer should not be regarded as necessary for the decision in Sekhon. This argument of Mr Walker misses the point. Although Sekhon was dealing with another procedural failure, namely the need to postpone the confiscation proceedings to a specific date, the approach to interpretation required in both cases was the same. If the Palmer case was correctly decided, then the same approach would have also applied to the contested issue in Sekhon. As Lord Evershed MR said in Critchell v Lambeth Borough Council [1957] 2QB 535 at p545:

This Court considers that the law was misunderstood and misapplied in Palmer. In Palmer the court did not have the opportunity to consider all the authorities which were considered in Sekhon. There was also before Palmer conflicting decisions, including, another decision of this Court with Rix LJ presiding in R v Copeland [2002] EWCA 736. The combination of these features provided in our judgment ample grounds for this Court to regard the decision in Palmer as being irregular and therefore not binding upon this Court. We do not, however, accept the contention of Mr Barnard that this Court was not entitled to look behind the decision in Sekhon. The normal position is that courts will not do so but they undoubtedly have a residual discretion to do so.

In addition, it is not wholly without significance that the present court is constituted by five members of the Court of Appeal Criminal Division. We consider a degree of discretion remains in this Court to decide whether a previous decision should be treated as a binding precedent in future or not when there are grounds for saying that the decision is wrong. In exercising that residual discretion, the constitution of the court is of relevance. We would here refer to the judgment of Widgery LJ in the five judge court in R v Newsome [1970] 2 QB 711. There the court was dealing with the question of a guideline judgment on sentence. In that case, as in Sekhon there was good reason to adopt a flexible approach. In Sekhon the Court made it clear that the discretion to depart from a previous precedent was not to be exercised lightly and we endorse that restrictive and cautious approach.

It is, however, relevant to note in relation to the Court of Appeal Criminal Division that there can be situations when a wrong decision of the Criminal Division can create a greater problem than decisions of the Civil Division with regard to appealing to the House of Lords. There are many situations where in practice there is little prospect of an appeal to the House of Lords because of the requirements, prior to an appeal, of a certificate that there is a point of law of general public importance involved (Criminal Appeal Act 1968 s33) and the absence of a right to appeal after an acquittal. For example, if a judge of first instance is bound by a decision of the Criminal Division and as a result a defendant is acquitted there will be no right to appeal from that acquittal so there can be no confiscation proceedings that will be subject to appeal, as an order can only be made after the defendant has been convicted. In addition, there will be little if any prospect of the Attorney General being entitled to refer the case to the Court of Appeal never mind the House of Lords if a judge refuses to make a confiscation order. So here, if the Palmer case had been allowed to stand notwithstanding that it was indeed wrongly decided, the consequences are that in a future case there could be considerable difficulty in obtaining a decision from the Lords. The only conceivable route would appear to be a reference to the Court of Appeal in the later case by the Attorney General under his powers to refer an unduly lenient sentence. However, it is doubtful that the refusal to make a confiscation order on the grounds of lack of jurisdiction is in fact an unduly lenient sentence. However, we do not finally decide this point.

There is no doubt that if the decision of this Court in Palmer represents the law then it provides very considerable assistance to the appellant, subject to the points made earlier. However, in Sekhon in relation to the case of Palmer it was stated as follows:

We have no doubt we should apply these paragraphs of the judgment in Sekhon. They are fatal to the arguments of the appellant on the jurisdiction issue. Any defects in the notice did not deprive the trial judge of jurisdiction.

Next and finally we turn to the complaints concerning the judge’s approach to two aspects of the merits of making a confiscation order. First, it is said that he erred in including the sum of £115,000 in the benefit figure and second, it is said that the judge erred in his approach to the assessment of the appellant’s realisable assets. The judge made a confiscation order for the full amount of the benefit – namely, £209,351.34.

The benefit of £115,000 is said to have arisen in this way. In the autumn of 1996 the appellant and Young embarked upon a joint enterprise to cheat the public revenue by means of the ‘outsourcing companies’ fraud. Arising out of his fraudulent transactions Young paid the appellant a total of £38,779.70 by way of commissions. That is not disputed nor is it disputed that that money fell to be included as a ‘benefit’ to the appellants.

After HMCE had searched Young’s premises in March 1997 and effectively brought an end to the fraud, Young transferred £115,000 to the appellant who in turn transferred it to a Swiss account. It is not disputed that the money represented the profit from the fraud. It is said on behalf of the appellant that the purpose of the transfer was to enable the appellant to invest the money on behalf of Young. The appellant subsequently in June and August 1997 repaid a total of £35,000 to Young but retained the balance of £80,000. When the appellant applied for an individual voluntary arrangement, Young was shown as a creditor. Did the transfer of £115,000 constitute a benefit for the appellant arising from the offence alleged in count 16? The answer to that question depends upon whether, under section 71(4) of the CJA 1988 (as amended), that money was a benefit obtained by the appellant “as a result of or in connection with” the commission of an offence. On behalf of the appellant it is said first that the £115,000 was outside the scope of the joint fraudulent enterprise involving the appellant and Young and second that the circumstances in which the appellant had obtained control of this money were such that it cannot be described as a benefit obtained “as a result of or in connection with” the offence.

We have unhesitatingly concluded that the appellant did ‘obtain’ this money “as a result of or in connection with” the offence charged in count 16 and that accordingly to that extent he had benefited from the offence. There was the clearest evidence before the judge that this money was obtained as a result of or in connection with the offence of cheating the public revenue because it represented a part of the proceeds of the fraud upon which together the appellant and Young had embarked. The fact that by virtue of some private arrangement part of the proceeds passed from Young’s hands into the appellant’s is neither here nor there. When that occurred he ‘obtained’ the property and the value of the property determined the extent of his benefit.

As to the judge’s assessment of the appellant’s realisable assets, it is settled law (see Barwick [2001] 1 Cr App R (S) 445) that the onus of proving the ‘benefit’ obtained is upon the prosecution. If a defendant wishes to contend that the amount which can be realised falls short of the benefit figure the burden is upon him to establish that to the civil standard. At p453 the court said:

That approach was clearly adopted by Judge Balston:

Over the following 15 pages of transcript the judge proceeded to give clear and unassailable reasons for concluding that the appellant had failed to make a full disclosure of his assets. Furthermore the judge was “satisfied that he has other assets which may well exceed the deductions he is claiming” by way of living and business expenses.

In the result it is not surprising that the judge was unable to conclude that the appellant had satisfied him on a balance of probability that the value of his benefit exceeded the value of his realisable assets. In this case, unlike in many, the judge was not confronted with an acceptance on the part of the prosecution that the value of the realisable assets (whatever it might be) fell far short of the benefit figure. It was the prosecution’s case here that the assets did exceed the benefit figure and that one significant component of his realisable assets was his equitable interest in the matrimonial home at 80 London Road, Hailsham. The appellant claimed that his wife arranged the mortgage and purchased the property herself in the late 1980s. He maintained he had no interest in it. It is true that the property was registered in the name of his wife. The learned judge, however, investigated the background to this transaction in some detail. He concluded that some years earlier (in the early 1980s):

Although not accepted by the defence the prosecution’s valuation of the property was £402,500. There were two endowment policies charged to the Building Society with a surrender value of about £61,799. It was calculated that following repayment of the mortgages and the costs of the sale there should be an equity of £205,746. Contrary to the appellant’s contention the prosecution claimed he had a 50% interest in the equity. The assets thus available from this source alone amounted to £102,873.

Quite apart from not accepting either the figures or the fact of his interest in the property the appellant further claimed that Barclays Bank had a charge on the property. As to that the learned judge while accepting that a caution was registered against the title, declined to allow any reduction, attributable to the charge, from the value of this realisable asset. He said:

Further, as to the policies the judge said:

Finally as to whether or not the appellant did have an equitable interest in the property the judge said:

The appellant’s wife did not give evidence. Of her absence from the witness box the judge said this:

We find it is impossible to fault the judge’s approach to this particular issue. His reasons for rejecting the appellant’s claim as to the extent of his assets seem to us to be unanswerable and in our judgment the conclusion that the appellant had failed to satisfy the judge that the confiscation order should be other than in the sum of the benefit figure was inevitable.

Accordingly, the appeal is dismissed.