The Vice President:

Regina v. Smith and Bradley

“The prosecution invite me to consider two alternatives and to make rulings. Firstly, they invite me to consider granting leave to them to amend the notice or serve a fresh one. Secondly, they invite me to consider the proposition that although technically the notice is served under the wrong statutory provisions, all parties were on notice that an application was to be made for confiscation and the defendants have not been prejudiced by the invalid notice. They say no injustice has been done and the court is capable of hearing the issues. I have read the judgment of the Court of Appeal in the Palmer case which sets out matters in a clear and unambiguous way. I am bound by that judgment. I am aware that there is likely to be an appeal to the House of Lords in that case and that means that I am being usefully employed as a stepping stone in the present matter.

So far as Mr Drew’s first application is concerned, based on the decision in Palmer, I will not grant leave as requested. The notice was invalid and the service of an amended notice will not save the application. So far as the second application is concerned, again based on the decision in Palmer, a valid notice is a condition precedent to embarking on the whole procedure. The court has no power to continue without it and accordingly both of the prosecution’s applications fail.”

Regina v. Cunningham, Graver and Flowers

“The point which is taken by the defence is that upon sentence, which was last December…I exercised my powers, if I did exercise them, to postpone, and I am satisfied that I did.

What I am also satisfied that I did not do is that I did not specify the period of postponement.

This is a highly technical point. One with no merit save to ensure that procedural provisions are complied with strictly. But the defence say that because that procedural provision was not complied with strictly, as I did not specify the period of postponement the application pursuant to section 71 is a nullity….

[Counsel for the Crown] has argued for the prosecution that the 1988 Act can be interpreted differently. I find much of his argument attractive, but it is argument which really goes to suggest that the Court of Appeal in Pisciotto were wrong because they did not take into account certain lines of authority which if they had done would have led them to the opposite conclusion. I do not find his argument attractive that I should conclude that whilst Parliament in the 1994 Act made it mandatory, that procedural formula, but using the identical wording intended quite the opposite in the 1988 Act. That seems to me be the crux of the problem that [counsel for the Crown] has to face, and here at first instance if I were to reach that conclusion I would be saying that Pisciotto is wrong. I am bound by it and I think I must follow its interpretation of that formula.

If [counsel for the Crown] is right that the Court of Appeal were wrong in Pisciotto I do not suppose they will take much notice of me, but it seems to me that the arguments which he makes are compelling…

It is a great shame that Pisciotto was not heard much earlier, then at least paragraph 25 of the judgment…would have been flagged up, no doubt firstly by Archbold, and secondly, by both prosecution and defence, and this procedural error would not have occurred.

But the fact is that it has and whilst I take no pleasure whatsoever in finding for the defence in this case I do so.”

The Structure of the 1988 Act

“(1) If it appears to the Attorney General-

(a) that the sentencing of a person in a proceeding in the Crown Court has been unduly lenient; and

(b) that the case is one to which this Part of this Act applies,

he may, with the leave of the Court of Appeal, refer the case to them for them to review the sentencing of that person; and on such a reference the Court of Appeal may-

(i) quash any sentence passed on him in the proceeding; and

(ii) in place of it pass such sentence as they think appropriate for the case and as the court below had power to pass when dealing with him.

(2) Without prejudice to the generality of subsection (1) above, the condition specified in paragraph (a) of that subsection may be satisfied if it appears to the Attorney General that the judge erred in law as to his powers of sentencing [or failed to impose a sentence required [by section 109(2), 110(2) or 111(2) of the Powers of Criminal Courts (Sentencing) Act 2000]].”

“Scope of Part IV

(1) A case to which this Part of this Act applies may be referred to the Court of Appeal under section 36 below.

(2) Subject to the Rules of Court, the jurisdiction of the Court of Appeal under section 36 below shall be exercised by the criminal division of the Court, and references to the Court of Appeal in this Part of this Act shall be construed as references to that division.

(3) This Part of this Act applies to any case [-

(a) of a description specified in an order under this section;

(b) in which sentence is passed on a person-

(i) for an offence triable only on indictment; or

(ii) for an offence of a description specified in an order under this section]….

…

(6) In this Part of this Act “sentence” has the same meaning as in the Criminal Appeal Act 1968, except that it does not include an interim hospital order under Part III of the Mental Health Act 1983, and “sentencing” shall be construed accordingly.”

In this Act “sentence”, in relation to an offence, includes any order made by a court when dealing with an offender including, in particular-

…

(d) a confiscation order under the [Drug Trafficking Act 1994] other than one made by the High Court;

(e) a confiscation order under Part VI of the Criminal Justice Act 1988;

(f) an order varying a confiscation order of a kind which is included by virtue of paragraph (d) or (e) above;

(g) an order made by the Crown Court varying a confiscation order which was made by the High Court by virtue of [section 19 of the Act of 1994].

16. Finally, as to time, Schedule 3, paragraph 1 to the 1988 Act is in the following terms:

“1. Notice of an application for leave to refer a case to the Court of Appeal under section 36 shall be given within 28 days from the day on which the sentence, or last of the sentences, in the case was passed”

There is no power to extend this time limit, which it is clear must be strictly observed. Nobody contends to the contrary. The issue is on what day was the sentence or the last of the sentences passed.

The power to make an order

17. It is necessary shortly to refer to the power to make a confiscation order. Thus, in section 71(2) of the 1988 Act, a Crown Court can make such an order when:

“(b) it is satisfied -

(i) that he has benefited from that offence or from that offence taken together with some other offence of which he is convicted in the same proceedings, or which the court takes into consideration in determining his sentence, and which is not a drug trafficking offence; and

(ii) that his benefit is at least the minimum amount.”

Analysis

18. Mr Perry commenced his submissions by enunciating two principles which he suggested should inform our construction of the statutes. The first is that the jurisdiction of the Court of Appeal to deal with unduly lenient sentences exists to safeguard public confidence. The second is that failure to impose sentences which Parliament says should be imposed affects that confidence. It is important to bear in mind that Lord Woolf CJ in Sekhon observed that depriving offenders of their ill gotten assets is “a most useful power”. Countering these submissions, Dr Thomas argued that it was no part of the function of this court to remedy deficiencies in the prosecution process brought about by unacceptable administrative or other error. He also referred to Chapter 2 of the Proceeds of Crime Act 2002 which, he submitted, permitted the Director of the Assets Recovery Agency to start proceedings against these men in any event. Each one of these arguments may be (and we are prepared to accept is) entirely accurate: none assists in the task of construing this legislation. It is to that which we turn bearing in mind the principle that, as a penal statute, it must be construed strictly.

19. It is clear from section 36(1)(b) of the 1988 Act that the Court is enjoined to review “the sentencing” of an offender, that is to say both the process and the actual sentence passed. That the process is included is clear from section 36(2) which specifically provides that undue leniency may be demonstrated if the judge has erred in law as to his powers of sentencing. Furthermore, the sentence, in this context, consists of the totality of the sentences imposed (for it is the totality as well as the constituent parts which would fall for review by the Court of Appeal). Finally, there is no doubt that a confiscation order under the 1988 Act constitutes part of a “sentence”: see section 50(1) of the 1968 Act. Again, none of this is contentious.

20. Mr Perry goes on to argue that if, at a confiscation hearing, an order is made in the sum of £1 when in each case the benefit and realisable amount equalled £1 million, it would be beyond argument that the Attorney General could seek to refer that order and argue that it was unduly lenient. There is a causal link between the judge erring in law as to his powers and a failure to sentence. He submits that it would be curious (and would not constitute a distinction of principle) if a decision to make a confiscation order in the sum of £1 could, whereas a refusal to make such an order could not, be referred to the Court of Appeal. Mr Malcolm and Dr Thomas argue that the difference is that, in the former case, a sentence (confiscation of £1) has been made, whereas in the latter, no such order – and, indeed, no order of any sort – has been made. In the absence of a sentence (which could include an order) being passed when the applications to pursue confiscation proceedings were refused, there was nothing on which a Reference could bite: the only sentence passed in each case was many months earlier when each offender was sentenced to a term of imprisonment. It is too late to seek to refer those sentences (being outside the 28 day period which cannot be extended).

21. The answer to this issue depends on a true analysis of what took place when, in each case, the trial judge refused to embark on a confiscation hearing for what was (wrongly) considered to be want of jurisdiction. It had been the intention of the court to embark on the process with a view to making a determination on the application made by the Crown that a confiscation order be made. Although not expressed in precisely these terms, by ruling in favour of the offenders, in each case the trial judge was making no order on that application. Making no order is, in our judgment, an order in itself; if the judge had conducted the hearing and then, making a mathematical error, had wrongly concluded that there was no realisable benefit and so declared in terms that he was making no order as a result, it could not be said that the decision was not part of the sentencing and, thus, not amenable to reference by the Attorney General. In the circumstances, we conclude that in each case, when jurisdiction was declined, there was an order (making no order on the application for confiscation) which, having regard to section 50(1) of the 1968 Act is itself a sentence and is thus amenable to reference as unduly lenient.

22. We should deal shortly with Mr Perry’s argument that section 36(2) of the 1988 Act should be read as requiring notice of application to refer a case to the Court of Appeal “within 28 days from the day on which the sentence, or last of the sentences, in the case was passed” as including the words “or should have been passed”. Suffice to say, we agree with Dr Thomas that this construction reads too much into a penal provision; further, it would cover a case where an adjourned hearing was simply overlooked and did not come before the court at all.

23. Even on the basis that there was an order in these cases which is amenable to review, Dr Thomas argues that section 71(2)(b) of the 1988 Act clearly provides that the power to make a confiscation order does not arise until the Crown Court has made a determination that an offender has benefited and (in a pre-1995 Act case) that his benefit is at least the minimum amount. If the Crown Court had no such power, it follows that this court, on a reference, similarly would have no power to impose such an order by virtue of the restriction in section 36 limiting its powers to a sentence “which the court below had power to pass when dealing with him”.

24. In support of this argument, Dr Thomas refers to what he describes as the soundly based doubts expressed by Lord Woolf CJ in Simpson explaining the reason why it was appropriate to correct Palmer without waiting for a decision to be taken to the House of Lords when he said (at paragraph 39):

“[I]f 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 suggestion that this point was argued in that case and we can well understand the reason behind the Chief Justice’s doubts. In these cases, of course, the point does arise for decision and has been the subject of full argument. The question is whether that proposition is soundly based.

25. We do not accept that it is. Section 36(1) of the 1988 Act (identical to section 11 of the 1968 Act) gives this court power to “pass such sentence as they think appropriate for the case and as the court below had power to pass when dealing with him”. The latter phrase is concerned with the powers of sentencing available in the Crown Court. In other words the court below had power to impose a confiscation order and thus this court has similar power.

26. This can be tested in this way. Take the case of an offender whose previous convictions qualify him for an automatic life sentence (pursuant to section 109 of the Powers of Criminal Courts (Sentencing) Act 2000) but whose record of previous convictions is deficient and omits the all important qualifying conviction. When sentence is passed, the Crown Court makes no determination that he qualifies and passes a sentence on discretionary principles. It cannot sensibly be argued that the Attorney General would be prevented from referring the matter to the Court of Appeal on the basis that there was no decision that he qualified for such a sentence. Neither would it make a difference if the offender challenged the qualifying conviction and put the Crown to proof of it; the omission to prove the precondition in the Crown Court would not, in our judgment, deprive this court of jurisdiction.

27. Allied to this point is an ancillary argument that the Court of Appeal is not (as Dr Thomas put it) “well equipped” to deal with issues of fact which may require lengthy hearings. He rightly points out that it is the normal practice that all factual matters necessary for the purpose of deciding an Attorney General’s reference are set out in the application for leave and this court has normally refused to entertain any issue of fact on the hearing of a reference. Thus, in Attorney General's Reference No. 95 of 1998 (R.v. Highfield), 8^th March 1999 (unreported), the Court was concerned with a reference in relation to a sentence for causing death by dangerous driving which sought to identify the aggravating features that the offender had driven badly for a significant distance and had been affected by alcohol. That, indeed, had formed part of the way in which the Crown had put the case at the start of the trial but when the plea was tendered and the Crown opened the case, nothing was said about either prolonged bad driving or alcohol. Rather, counsel said “Perhaps no one will ever really know why the defendant drove onto the wrong side as she did”, which formulation was accepted by the judge. Judge LJ observed that this court was in “an impossible position” as these features were not presented to the judge at trial and went on:

“This court cannot constitute itself as a court at first instance enquiring into facts which, for whatever reason, have not been pursued or proved in the Crown Court.”

28. In our judgment, this observation is not addressed to the point at issue in this case. What Judge LJ was correctly observing was that the Attorney General could not seek to re-open the way in which the case had been put by the Crown in the court below to require this court to enquire into facts which, whatever the explanation for the decision made by the Crown at that stage, had not then been pursued. In this case, the facts giving rise to the reference are not in dispute: the Crown has always wanted to pursue confiscation and has only been deprived of the opportunity of so doing by an error of law in the sentencing process.

29. Dr Thomas also refers to the exchange with counsel following the decision in Regina v. Gail October (9th May 2003, [2003] EWCA Crim 1520) which was itself an appeal against a confiscation order. Counsel submitted that there was no authority for the proposition that, on an appeal against sentence, the Court could conduct hearings as to fact, whereupon Kennedy LJ observed: “We can't conduct hearings which involve fresh facts, I entirely agree …”. That observation, like the concern expressed by Lord Woolf CJ to which we have referred above, is a perfectly understandable first reaction to the proposition; there is no suggestion, however, that it was based on any analysis of the underlying principles.

30. The argument that this court is not well equipped to deal with issues of fact is not a principled response to the arguments on the construction of the legislation and ignores the reality that the court not infrequently does deal with issues of fact in relation to applications to hear fresh evidence pursuant to section 23 of the 1968 Act: this evidence can take many different forms and may be called both by an appellant or the Crown. Having said that, however, we need no persuasion that this court will not wish to embark on what might be lengthy hearings of fact: it is hard pressed to deal with appeals and its work will only increase with presently proposed legislation. Nevertheless, this variant of the argument is also not a principled objection and if (as we believe to be the case) the legislation permits the Attorney General to refer these cases and, as we accept, evidence will have to be adduced so that appropriate determinations can be made, it will be the duty of this court to do just that. We can only gain some comfort from the provisions of section 32(2)(b) of the Proceeds of Crime Act 2002 which provide that, in circumstances where the prosecutor appeals against a confiscation order or the failure to make such an order, this court has power to direct the Crown Court to proceed afresh. In other words, for those cases covered after this provision comes into force, the problem will no longer arise.

31. Before considering the question of discretion, we must mention two additional arguments advanced by Mr Malcolm. The first is to the effect that at the time that the Crown Court was considering the question of confiscation, the governing principles were then set out in Pisciotto with the result that, at that time, and on the basis of the law as then correctly understood, the sentences were not unduly lenient: any judge would have come to the same conclusion. This point is utterly misconceived. In Morgans v Director of Public Prosecutions [2001] 1 A.C. 315 Lord Steyn approved the statement in Cross and Harris, Precedent in English Law 4^th Ed (1991),pp127-128 to the effect:

“There is nothing particularly novel about the conception of an express overruling. If in case B a court with power to overrule case A says that case A is overruled, the ratio decidendi of case A ceases altogether to have any authority so far as the doctrine of precedent is concerned. It is completely “wiped off the slate”, to borrow Lord Dunedin’s metaphor.”

The fact that the judges at first instance correctly applied decisions of this court is not to the point. The common law is deemed always to have been that which it is authoritatively declared to be: see, for example, Regina v. Kansal (No 2) [2002] 2 AC 69 at 81E.

32. The second argument concerns the application of the statutory timetable for confiscation proceedings which is set out in section 72A of the 1988 Act and, in particular section 72A(3) in these terms:

“Unless it is satisfied that there are exceptional circumstances, the court shall not specify a period [for the determination of benefit and the amount to be recovered] which –

(a) by itself; or

(b) where there have been one or more previous postponements … when taken together with the earlier specified period or periods,

exceeds six months beginning with the date of conviction.”

33. It is sufficient to elaborate on the statutory provision by reference to only one of a number of decisions of this court. In R v Steele and Shevki [2001] 2 Cr.App.R. (S) 178, dealing with different legislation but similar provisions, Judge LJ put the matter clearly (at paragraph 58 page 194):

“Confiscation orders should normally form part of the ordinary sentencing process. For lack of appropriate information, this will often be impractical. If the conditions set out in s. 3(1) or s. 3(4) are satisfied, and within six months of conviction, the court may decide that the determination should be postponed. Unless the circumstances are exceptional this should not extend beyond six months after conviction. These decisions involve the court’s discretion, judicially exercised when the statutory conditions are present, taking full account of the preferred statutory sequence as well as the express directions in the statute that save in exceptional circumstances confiscation determinations should not be postponed for more than six months after conviction”.

34. Mr Malcolm submits that there are no exceptional circumstances which would have permitted the Court legitimately to postpone the hearing beyond the 6 month period and that, in any event, it did not do so. Here it is necessary to revert to the facts. First, as is clear from the citation from his judgment, Judge Holt specifically decided that he had postponed the hearing (albeit without identifying a date). Secondly, there was good reason for the hearing not proceeding on 26^th April (not least because there was to be a submission as to jurisdiction which, following recent authorities, was in fact ill-founded, and one of the defendants was without his counsel). In that regard, it is beyond doubt that the Crown Court has power at common law to adjourn proceedings beyond the 6 month time time: see Regina v. Tuegel [2000] 2 Cr App Rep 261, explained by Lord Woolf CJ in Sekhon at paragraph 46, Shevki per Judge LJ at paragraphs 57-8 and Regina v. Clayton [2003] EWCA Crim 1209 per Laws LJ at paragraph 20. Finally, these questions (of postponement and the existence of exceptional circumstances) are case management issues which do not deprive the court of jurisdiction (see Sekhon para 32): it is very clear that had he not felt driven to decide otherwise, Judge Holt would have been prepared to extend time appropriately. He was clearly entitled to do so and, insofar as it is a matter for this court, we also take the same view. In the circumstances, there is nothing in this further point.

Discretion

35. It is also submitted that it would be inappropriate to exercise discretion in favour of the Attorney General in the Cunningham case, not least because the delay which occurred in that case had not been occasioned by the offenders themselves; each man had served the sentence of imprisonment imposed on him and had lived with these proceedings hanging over him for a very substantial time (including over a year waiting for the hearing of this Reference). We recognise the very significant effect of delay but, on the other hand, substantial sums were said to have been lost by the victims of this conspiracy and the purpose of the legislation was to deprive offenders of all and any benefit of their dishonesty. Furthermore, neither the court nor the prosecution can, in our judgment, properly be blamed for the delay which has occurred, having regard to the history and complexity of the matter. Notwithstanding the powerful way in which this plea to our discretion was addressed to us, we take the clear view that the Attorney General should be permitted to refer this aspect of the sentences imposed, with the result that this application must go to a full hearing when the facts can be examined.

Conclusion

36. We accept that the Attorney General is entitled to refer the failure to make confiscation orders in both of these cases and that this court has jurisdiction to make such orders (if any) as are appropriate in all the circumstances. We accept that an examination of the facts will be necessary: we anticipate that both sides will take every appropriate step to minimise the extent to which evidence will be required. To that end, however, we will hear counsel on proposed directions.