L & Ors, R. v

LORD JUSTICE CLARKE: This is the judgment of the Court. This comes before the Court by way of interlocutory appeal under section 35(1) of the Criminal Procedure and Investigations Act 1996 (the CPIA) brought with the leave of the judge, His Honour Judge Holt, against a ruling on a question of law which he made on 17th May 2005 in these circumstances. The appellants are defendants in an indictment which contains as single count, which alleges:

The Crown served a case summary, dated 20th March 2005, which shows that the transfer relied upon took place in the car park of a Holiday Inn in Brentwood Essex at 15.20 on 20th June 2004, when a man walked from a VW Polo to a Vauxhall Vectra and back. He carried a pouch back to the Polo. The driver of the Polo was Gourzoilidis. The Polo was stopped at 15.40 as it was trying to leave the car park. The front seat passenger in the Polo was Arampatizis. A search of the Polo, following the arrest of Gourzoilidis and Arampatizis, led to the discovery of the money. The appellant, Loizou, was arrested at 15.35. She was in the rear seat of a Vauxhall Omega which was also in the car park. Arampatzis had just left the Omega to get into the Polo. Quilligan and McCarthy were arrested, at about 16.10 in London Road, Brentwood, having entered a taxi to leave the area. A mobile telephone was seized from the taxi. The driver and other occupants have denied owning the mobile. Both Quilligan and McCarthy deny being the owner of it as well.

The events of the day began shortly before 10 o'clock when the Omega left the Seven Sisters Road area of North London and went to a car park of a public house called the Halfway House on the A127, arriving at 10.53. In the Omega were Arampatzis, Loizou and two others. They remained at the Halfway House until just after midday. During that period Quilligan and McCarthy had arrived in a VW Passat. Both groups were seen to intermingle. Both the Omega and the Passat left shortly after midday and travelled to McDonald's at Laingdon, arriving at about 12.10. Two customs officers entered McDonalds to keep observation on the participants. Present were Arampatzis, Loizou, Quilligan and McCarthy and their associates. While inside McDonalds both officers heard a conversation between McCarthy and Loizou to the effect that time was pressing for a meeting, which he had been waiting for since 11.30. The Omega and the Passat left McDonalds shortly after 13.30. The Omega needed fuel from a petrol station at 13.43 with the Passat waiting nearby. The Omega then went to a rendezvous point to meet the Polo, driven by Gourzoilidis. The rendezvous happened at 14.02. The Omega and the Polo then moved off in convoy towards the M25, moving on to the A12 towards Chelmsford. At 14.20 both the Omega and the Polo stopped by a Total petrol station nearby. At 14.30 the Passat drove into the car park of the Holiday Inn. Shortly afterwards the Passat was driven into the car park of a public house across the road. The vehicles and the defendants remained in the area. At 15.21 the Polo, driven by Gourzoilidis, entered the car park of the Holiday Inn. There were two men in the rear of the car. One of them was McCarthy. The Polo parked opposite the Vectra very soon after the handover took place. The Omega then moved towards the Holiday Inn, where it parked close to the Polo. Arampatzis and Loizou stood close by each other. Arampatzis then got into the Polo shortly after the arrests of the participants. The Passat left the area at 15.35 heading towards the M25.

It is not necessary for us to refer here to the interviews, except to say that Gourzoilidis confirmed that the Polo was his. He had been asked by a relative, whom he refused to name, to pick up £87,000. He met his contact and went to the rendezvous on the A12. He said he met two Englishmen who got into the Polo. He then described the handover. He denied knowledge or suspicion about the origins of the money being criminal property.

The Crown rely upon mobile telephone evidence. They say that an analysis of the mobile telephone billing reveals timed calls which took place at strategic moments in the case and which they say rebuts any notion of coincidental presence at the particular locations. They also rely on text messages; in particular they rely upon text messages received by Loizou on her mobile telephone. The content of the messages received by her reveals, they say, material referable to the pricing of cigarettes. They rely on references to particular brands of cigarettes and to amounts which they say approximate to the amount of money seized. The messages were sent on 18th June. They also rely on other evidence to which it is not necessary to refer.

Section 327(1) of the 2002 Act provides:

What then is criminal property? Section 340 provides so far as relevant:

The only paragraph of the case summary which gives particulars of the Crown case that £87,010 in cash was criminal property is paragraph 22, which is in these terms:

An issue arose between the parties as to what is meant by "criminal property" in section 340 of the 2002 Act which the parties invited the judge to resolve. The matter came before the judge on 3rd May 2005 when the defence, principally through Mr Overbury, on behalf of Gourzoilidis, invited the judge to treat the hearing designed to resolve the issue as a preparatory hearing under section 29 of the CPIA.

In the form in which it is presently in force, section 29 provides:

It was submitted to the judge that this is a case "of such complexity or a case which is likely to be of such length that substantial benefits" were likely to accrue from a hearing. The principal, if not the only benefit relied upon was the resolution of the issue of law. It was submitted that the case satisfied the criteria of complexity or length because, as Mr Overbury put it: "it fulfils the criteria, it is a 3 week trial" although he added: "I will not say that the facts are particularly complex but the law applying to those facts is..." The judge immediately identified the key reason for the application to treat the hearing as a preparatory hearing. He said at page 4 of transcript of 3rd May:

Mr Fender agreed on behalf of the Crown, indicating that if the Crown lost the issue they would like to take the matter further. The judge accordingly granted the application and correctly observed that the trial started from that moment. The argument took place on the same day, 3rd May, immediately after the passage to which we have referred. He reserved judgment and delivered his ruling on 17th May.

The judge correctly observed that it is a necessary ingredient of the Crown case that the £87,000 in cash was criminal property. He said that the Crown had no direct evidence of the provenance of the money but seeked to prove it by inference. He added that they also argued that it can be proved to be criminal property because it was connected with criminal conduct for which the money was intended to be used.

It appears from the ruling that the Crown put their case in two ways. The first was that they could prove that the money had become criminal property before the event which is alleged to be the transfer of it, contrary to section 327, by inference. According to the ruling the defence response was that although the question is indeed whether the money had been criminal property before the transfer, that fact must be proved by direct evidence. The judge rejected the defence submission and held that it was open to the Crown to prove those facts by inference. It is not clear to me to what extent the appellants in fact argued that point before the judge. In any event they do not, as we understand it, seek to challenge that conclusion by way of appeal. We are not surprised because the judge was, in our opinion, plainly correct.

As we read the case summary that is the way the Crown case was put in that summary. As already indicated, they seek to draw the necessary inferences from factors (a) to (g) in paragraph 22, which we have already quoted. The judge expressed his confusion on this part of the case as follows:

This appeal, or proposed appeal, arises out of a second way in which the Crown seeks to puts its case. It is that it is open to the Crown to prove that the £87,000 became criminal property within the meaning of section 340 of the 2002 Act by reason of the transfer. The judge concluded his ruling on this part of the case by saying this:

The appellants seek to argue in this appeal that the judge was wrong so to hold. Both the appellants and the Crown invite the Court to determine the appeal. However, before entertaining it we must consider whether we have jurisdiction to do so. The Criminal Appeal Office has drawn our attention, by way of Registrar's note, to the question whether the Court has the relevant jurisdiction. Plainly, if it does not, it cannot entertain an appeal as such.

The office first sent us a copy of a recent decision of the Court in the case of R v Mark Singh [2005] EWCA Crim 90, which was decided on 19th January 2005. It is not absolutely clear to us what the Crown's attitude was on that proposed appeal, but a judge had resolved an issue of law at what he held to be a preparatory hearing for a retrial. The first trial had been stopped at the end of the Crown case, which had taken 20 working days. The judge had held that some defendants had no case to answer and had decided that the proper course was to discharge the jury in the case of Mr Singh and two other remaining defendants and order a retrial. The judge recited the criteria in section 29 of the CPIA and decided to have a preparatory hearing. The Court held in strong terms that he was wrong to do so. Hooper LJ, giving the judgment of the Court, said this:

The Court asked counsel to take it through the various counts and expressed these conclusions. Count 1, it said was a fairly standard drugs with certain evidential difficulties. Count 2 was very simple, involving a raid on premises where a quarter of a kilo of heroin was found. Count 3 was what Hooper LJ described as a "very standard importation of cannabis", involving some 10 kilos and count 4 was a very simple count relating to a meeting in a public house. The Court's overall conclusions can be seen from paragraphs 13 to 15 of the judgment as follows:

If the approach in Singh is applied to the facts of this case, it seems to us that it would be impossible for us to say that this was properly treated as a preparatory hearing. Mr Levett, supported by Mr Fender, submits that this trial will be of such a length that benefits are likely to arise from the determination of the issue. Indeed, in the course of his oral submissions, Mr Levett submitted that that may be so however long a trial may last. There is some force in that submission. We certainly see the argument for holding a preparatory hearing in a case like this, because it certainly seems desirable, at any rate from some points of view, that the point which is the proposed subject of the appeal should be determined in this Court in order to regulate the way in which the trial is conducted. Such an approach would not open the floodgates because there must be few cases in which a stark point like this arises for decision. However, that is not the way in which the legislation has so far been framed.

In the course of a very helpful skeleton argument on the issue of jurisdiction, Mr Levett identified the various regimes. Thus, in serious or complex fraud cases the relevant statutory provisions are to be found in sections 7, 8 and 9 of the Criminal Justice Act 1987, as amended. In non-fraud type cases, they are principally found in section 29 of the CPIA, to which we have already referred. There is another procedure in Part IV of the 1996 Act, which makes provisions in respect of pre-trial hearings. These are hearings in the Crown Court before the start of the trial. Section 40(1) empowers a judge to make rulings at a pre-trial hearing as to any question as to the admissibility of the evidence and as to any other question of law relating to the case. There is, however, no provision for an interlocutory appeal. A defendant must wait until the conclusion of the trial before any appeal can be launched. Thus, Mr Levett correctly observes that the 1987 and the 1996 Acts provide three regimes: preparatory hearings in cases of serious or complex fraud; preparatory hearings in complex or long cases; and pre-trial hearings without restriction as to type of case. Each provides for decisions as to admissibility of evidence and as to questions of law. Only the first two provide a right of interlocutory appeal with leave. There have been some amendments to the CPIA in the Criminal Justice Act 2003, but they do not apply to the present case, not being to the relevant extent in force. It is not therefore necessary to refer to them.

It is clear that in this class of case a preparatory hearing and thus the opportunity of an interlocutory appeal can only take place where the criteria in section 29 of the CPIA are satisfied. We have considered whether it could be said that, since the judge considered the section 29 criteria and held them to be applicable, not only has none of the parties sought to appeal the decision to hold the preparatory hearing, but all parties invite this Court to determine the appeal, we should proceed. However, we have reached the conclusion that it is not as simple as that.

The relevant principles are set out in paragraph 61 to 64 of the judgment of a five member Court of Appeal comprising the Lord Chief Justice, Judge LJ, Gage J, Elias J and Stanley Burnton J, in Attorney-General's Reference No 1 of 2004 [2004] EWCA Crim 1025 [2004] 2 Cr App R 27. The Lord Chief Justice, giving the judgment of the Court, said this:

Notwithstanding submissions of counsel to the contrary, in the light of Singh, we have reached the conclusion that this is a case of the kind identified in the first sentence of paragraph 63 which we have just read, namely a case in which there is no relevant material on which the judge could properly conclude that the case fell within section 29(1).

We have reached the conclusion that, despite the force of Mr Levett's submissions, they run contrary to and are inconsistent with the decision and reasoning in Singh. Moreover, it is clear to us, as Mr Fender confirmed, that the evidence will be the same, whatever the outcome of the appeal. As we understand it, the prosecution witnesses are principally surveillance officers. There are a number of those officers whom, we understand will be called, however the issue of law which is the subject matter of this appeal is resolved.

In all the circumstances, we have reached the conclusion, not without some regret, that the Court has no jurisdiction to entertain the appeal. However, it does not, as it seems to us, follow that we cannot express our view on the point, as contemplated in the last sentence of paragraph 63 in the Attorney-General's Reference.

Although judges should be astute to ensure they only hold a preparatory hearing in a case which properly satisfies the criteria in section 29 of the CPIA, because it is important that cases of this kind do not reach this Court on interlocutory appeals in the future, given that this case has reached the Court, we think it is right to express a view, as contemplated in paragraph 63. Indeed we observe that in the Attorney General's Reference case, the Court did precisely that. It gave its reasons for doing so in paragraph 64. They were these:

This case is plainly a very different case on its facts from the Attorney-General's Reference No 1 of 2004. However, here, both parties have invited us to express a view and to follow the course adopted in the Attorney-General's Reference No 1 of 2004. The point has been fully argued before us and it appears to us that the right course is for us to express a view on the point in issue.

We say at once that we have reached the conclusion that the appellants' submissions are correct. By section 327(1) a person commits an offence if he conceals, disguises, converts or transfers criminal property. Section 329(1) provides:

In our view, the natural meaning of section 327(1) of the 2002 Act is that the property concealed, disguised, converted or transferred, as the case may be, must be criminal property at the time it is concealed, disguised, converted or transferred (as the case may be). Put the other way round, in a case of transfer, if the property is not criminal property at the time of the transfer, the offence is not committed.

A simple reading of the indictment reinforces the point. As already indicated the indictment alleged transferring criminal property, the particulars being transferring cash, which was criminal property, knowing or suspecting that the cash constituted a personal benefit from criminal conduct. That naturally means earlier criminal conduct and not the conduct which is the subject of the indictment.

Take this example. Suppose I receive pay as a judge in cash, that cash is not criminal property. Suppose I use that money to pay Hughes J for a car which I know he has stolen. In that event I, of course, commit the offence of receiving goods knowing them to be stolen. I do not, however, commit the offence of transferring criminal property because the property I am transferring, namely the money which I earned as a judge, is not criminal property. Of course, in the hands of Hughes J as the seller of the stolen car, the cash is criminal property because it constitutes "a person's benefit from criminal conduct" within section 340(3)(a) which he knows suspects constitutes such a benefit within section 340(3)(b). Does Hughes J commit an offence under section 327(1)? The answer is plainly no, because he has not concealed, disguised, converted or transferred criminal property. He has simply received what is now criminal property and retained it. Section 327(1) does not create an offence of receiving criminal property.

There was some discussion during the course of the argument as to whether in this example he might have committed an offence under section 329(1)(a) on the footing that he was in possession of criminal property. However, the point was not fully argued and we express no opinion upon it. After all, no charge under section 329 has been brought in this case.

Of course, if the cash were criminal property in the hands of the transferor, immediately before the transfer, the transferee would commit the offence of transferring criminal property, if he was party to a joint enterprise pursuant to which the property was transferred. Indeed, as we understand it, that is the way in which the case is put against some of the appellants on the basis of the inferences sought to be drawn in paragraph 22 of the case summary to which we have referred earlier.

Mr Fender submits in his skeleton argument that property acquired legitimately becomes criminal property within section 340, if a person forms a purpose or intention to use it for criminal purposes. We are not sure that he went so far in oral argument. It would certainly be a very surprising result and it is not in our view justified by the statutory language. Such cases are dealt with by the civil forfeiture provisions in the 2002 Act. They are set out in section 294, which provides for seizure of cash if it is intended by any person for use in unlawful conduct and is section 298, which provides for forfeiture of cash if it is intended by any person for use in unlawful conduct. As Mr Levett puts it in his skeleton argument, both sections are triggered as a pre-emptive measure before any crime has been committed.

More significantly, Mr Fender relies upon section 340(4) and (5). As to section 340(4), he submits that it shows that it is immaterial when the conduct was carried out. We accept, of course, that by section 340(4)(a) and (b), it is immaterial who carried out the criminal conduct, but, except for paragraph (c), section 340 does not address the question when the criminal conduct must be carried out. Moreover, we do not think that the criminal conduct referred in section 340(2) and (3) can be the criminal conduct referred to in section 327(1). Such an argument would be circular.

The essential thrust of Mr Fender's argument this morning is based on section 340(5), which it will be recalled provides:

Mr Fender's submissions may be summarised thus:

That analysis is correct so far as it goes but, in our judgment, it is not sufficient for the Crown's purposes because the recipient did not benefit until after the transfer was made. Thus, when the cash was transferred, which is when the alleged offence occurred, the cash was not criminal property because it did not constitute anyone's benefit from criminal conduct, which on this hypothesis was the conspiracy. The cash was not criminal property until it was in the hands of the recipient, which was after the alleged criminal offence occurred. It is important to note that the Crown do not say, on the facts of this case, that there was any transfer of cash pursuant to the alleged conspiracy before the transfer on 20th June which is the subject of the indictment. We are not therefore concerned with a case in which there was an antecedent transfer, pursuant to the conspiracy, such that it might be said that someone had received a benefit from criminal conduct (the conspiracy) before the transfer the subject matter of the indictment. In short, this case is not concerned with successive transfers but with the single transfer complained of.

In all the circumstances, we are unable to accept Mr Fender's submissions, however they are put, and we have reached a different conclusion from that reached by the judge in this part of the case.

What then is the right course? In our judgment, the right course is that taken by this Court in Attorney-General's Reference No 1 of 2004. In that case the Court considered in detail the facts of each of the cases which were before it. In the case of R v Edwards [2004] 2 Cr App R 27, the Court considered the question of law which was argued before it and concluded, at page 457:

As we understand it, the effect of this approach is that, although the court did not have power to determine the issue of law at a preparatory hearing, it did have power to determine the question under section 40(1)(a) of the CPIA which provides:

Section 40(4) provides:

As we understand it the trial is to begin on Monday.

LORD JUSTICE CLARKE: Speak very nicely to the shorthand writer. I am not sure whether it will be possible to have a transcript of what we have just said by then. I dare say if you did speak very nicely to the shorthand writer it might be possible to have one.

MR LEVETT: I will see if my charm works in the area. First of all, I do ask that a transcript at least be prepared so the judge has the benefit of seeing the remarks made by my Lords in this judgment.

LORD JUSTICE CLARKE: Again, a transcript will in any event be prepared, but I think if you speak nicely to the shorthand writer it may be she will do her best to provide one as soon as possible.

MR LEVETT: Thank you very much indeed. I received a letter, dated 7th June, in which -- I believe it must have been the Registrar -- indicated that that representation by counsel, and for some reason and solicitors and in parenthesis the observation covered by Central Funds. So that at least the right Pay Master deals with the costs. May I make application from the costs of my appearance and the preparatory work to be funded by Central Funds as stated, although it may well be it is covered by the representation, by order in the Crown Court. My reason--

LORD JUSTICE CLARKE: I am not sure that coming here on an appeal which the Court has no jurisdiction to entertain counts, does it?

MR LEVETT: That is the point. If, on the face of it, the Court did not have jurisdiction to hear the appeal, I am not entirely sure whether the representation order in the Crown Court covers my attendance, but for some reason, as I say, despite the point being picked up by the Criminal Appeal Office, on the jurisdiction issues, for some reason, the letters addressed to me indicating that my attendance be covered by Central Funds. Shall I pass--

LORD JUSTICE CLARKE: The lady here today, the Registrar, says that she understands that interlocutory proceedings of this kind will be covered by the Crown Court representation order. Perhaps we could leave it in this way-

MR JUSTICE HUGHES: They come out of Central Funds if it is an interlocutory appeal?

MR LEVETT: That is as it appears.

MR JUSTICE HUGHES: I am not asserting that, I am asking you.

MR LEVETT: That is how it appears to be drafted in the letter. I handed a letter to my Lords.

LORD JUSTICE CLARKE: Mr Levett, I doubt whether we can carry this much further this afternoon. If the costs of representation today are covered by your representation order, whether out of Central Funds or otherwise, then so be it. If it should for some reason turn out that that is not the case, then we give you liberty to apply to the Registrar and we would express the view that, in principle, you should be remunerated by some form of representation order for today. That is the best we can do. Is there anything you want to say, Mr Fender?

MR FENDER: No, thank you.

LORD JUSTICE CLARKE: Thank you very much. We are very much obliged to counsel for their assistance in this interesting case (Pause)

I understand from my Lord that it is not necessary for me to say anything more. Thank you very much. We will adjourn now.

LORD JUSTICE CLARKE: I suppose in reporting the right course would be to say that there should be a restriction on reporting this judgment until the trial is concluded. That is the law. (Pause) We would not lift the reporting restrictions of our own motion, although if the parties agree we should, we shall certainly consider it.

MR LEVETT: Section 37 deals with the point of the CPIA 1996, at page 366. Section 37(4) enables the Court of Appeal, the general prohibition is in section 1. The judge dealing with the preparatory hearing, if it were one, could have lifted it. The Court of Appeal may -- I say that this does not apply, or say that it applies to a certain extent and the extent to which I suspect the usual order would be that the initials of the appellants are used rather than the full names.

LORD JUSTICE CLARKE: What would be your submission about that?

MR LEVETT: The matter can be reported but using the initials.

LORD JUSTICE CLARKE: In a way, this is a case in which whether or not the names or initials are used is not going to impair, it is not going to prejudice the defendants in any way. All we have done is summarised, I think, what the prosecution case is which is going to be summarised in any event on Monday.

MR LEVETT: I thought a reasonable compromise, if someone was concerned, that it might prejudice any matter, then the initials could be used. As I say, I express no concern myself. Do you have any submission that they might.... We leave it in this way: we think it more or less inconceivable that there be any reporting of the argument. It seems to us that there should not be any reporting of the argument until the conclusion of the trial. So far as the judgment is concerned, it appears to us that there should be no reason why the judgment should not been published, including the names because there will simply be no prejudice whatever that we can see. We understand that is accepted on both sides.