Sharma v R.

This is an appeal against a confiscation order made under section 71 of the Criminal Justice Act 1988 (“the Act”), in the sum of £179,000.34. The sum was ordered to be paid within eleven months or, in default, that the appellant should serve three years’ imprisonment consecutive to that imposed for the substantive offence of conspiracy to defraud, for which he had been sentenced to 30 months’ imprisonment. A co-defendant, Rajesh Datta, was convicted of conspiracy to defraud and other offences, and was sentenced to 51 months’ imprisonment. A confiscation order was made in the sum of £161,772 to be paid by him within ten months or, in default, that he should serve three years’ imprisonment consecutive. Another co-accused, Rajeev Datta, was convicted of substantive offences and was sentenced to 18 months’ imprisonment, and a confiscation order was made in the sum of £5,000 to be paid within three months or, in default, to serve a period of three months’ imprisonment consecutive. Yet further, another defendant, Catherine Aldin, was convicted of conspiracy to defraud and was sentenced to nine months’ imprisonment. A confiscation order was made in the sum of £12 to be paid within 14 days or, in default, she should serve a period of seven days’ imprisonment consecutive to that imposed for the substantive offence.

The appellant appeals against the confiscation order on the following grounds:

The appellant and the co-defendants were convicted of perpetrating a fraud on Pentax which, at the material time, was involved in the production of cameras and camera lenses as well as lenses for spectacles. The essence of the conspiracy was an agreement to cheat Pentax by invoicing the company for goods and services which had not been received by it. The appellant and Rajesh Datta were employees of Pentax. Rajesh Datta had initially been employed as a process technician, but was subsequently promoted to assistant production manager and then production manager. He ordered the goods and services, the subject matter of the conspiracy. He organised the placing of the orders, obtained authorisation from senior management, prepared the invoices and then obtained authorisation for payment. In the period October 2000 to May 2002 the vehicle used for the fraud was a firm called Petra Scientific. Invoices for chemicals during that period totalled approximately £93,000 and the figure for parts and services totalled £85,000. The total paid out by Pentax to Petra during that period (the Petra phase) amounted to about £179,000. Pentax paid the money into a bank account opened by the appellant in the name of Petra Scientific. The appellant was the sole signatory on that account and was a good friend of Rajesh Datta. He provided the address and fax numbers for purchase orders to be sent through. The account was nothing more than a “cash cow” and was used by the appellant for the making of cash withdrawals. Large amounts were taken out by cheques drawn for cash and some transfers were made to overseas beneficiaries. All these transactions were executed by the appellant acting on the instructions of Rajesh Datta.

Rajesh Datta had been married to the co-accused, Catherine Aldin, and was the brother of the co-accused, Rajeev Datta, who was also employed by Pentax. In what has been termed the second phase of the conspiracy, Rajeev Datta provided bank accounts for the payment in of the proceeds of the conspiracy and for two particular cheques which came directly from Petra into his bank account. Catherine Aldin was involved with Rajesh Datta between May and June and November 2002. In that period the vehicle for rendering the fictitious invoices to Pentax was changed from Petra Scientific to a firm called C. Aldin. Thereafter an amount of £33,800 was paid into her bank account by Pentax in relation to invoices for chemicals and a further £56,000 in relation to parcel services. The total amount invoiced during that period of the conspiracy was just under £90,000.

Rajesh Datta was involved in both the Petra Scientific phase and the C. Aldin phase of the conspiracy in which the total amount of invoices involved was about £269,000. The appellant and Rajeev Datta were only involved in the Petra phase in which the total amount of invoices amounted to about £179,000. Catherine Aldin was only involved in the C. Aldin phase where the total amount of invoices was about £90,000.

The benefit of Rajeev Datta for the Petra phase was agreed at £59,000 and Rajesh Datta’s benefit for the Petra phase was agreed at £73,000. Rajeev Datta was found to have realisable assets of only £5,000. The judge observed when sentencing the defendants that it was not easy to work out where the cash which had been withdrawn from the Petra account had gone, although much seemed to have gone to Rajesh Datta, some to the appellant and some to Rajeev Datta. The need to carry out an evidential inquiry was obviated by the agreement reached between the prosecution and the co-defendants, the effect of which we have already recorded above.

His Honour Judge Karsten, QC calculated the benefit of the appellant and made the confiscation order after a contested hearing lasting two days. He delivered a detailed ruling. He had also presided over the trial of the conspirators for the substantive offences in which it was the Crown’s case that nothing had ever been received by Pentax in return for the money paid to the front companies and in the course of which the suggestion that parts and services were supplied to Pentax by the conspirators was made chiefly by counsel for Rajesh Datta. The contention was adopted by the appellant. That said, Rajesh Datta did not give evidence and no defendant gave evidence that parts and services had been supplied. Accordingly, there was no positive evidence that the companies had been operated other than as vehicles for fraud. The contention advanced by the appellant in the confiscation hearing that the judge ought to reduce the amount of the appellant’s benefit on this ground rested entirely upon the evidence of two prosecution witnesses, namely Rod Foster and Sunil Modgill. In addition, reliance was placed upon inferences which it was said could be drawn from the Pentax purchase orders and the out of hours signing-in book.

The judge carefully considered all the evidence upon which the appellant relied and ruled on the factual issue presented to him. He concluded that, although he could not be sure to the criminal standard that no parts or services had been supplied, on the civil standard he was satisfied, on a fine balance of probabilities, that nothing had been supplied. The appellant has advanced no ground for impugning the judge’s conclusion of fact on this issue. The argument has, to a large degree, amounted to an attempt to persuade this court to come to a different conclusion of fact from the one to which the judge came. It was suggested that the judge had erred because he had failed to take sufficient account of the evidence of Sunil Modgill and Rod Foster and failed to take account of the absence of evidence that the parts had been supplied from other companies. The submission is plainly wrong. It is clear from the judge’s ruling that he took account of the evidence of both the witnesses and was aware of the fact that there was no evidence that the parts had been supplied from other companies (see page 6A – 8E). The argument and evidence was carefully balanced against the main thrust of the prosecution’s case which was that the character of the fraud involved no parts or services being supplied. The front companies, being mere vehicles for receipt of the fraudulently obtained money, were not in the business of providing for servicing and service and parts in connection with the products used by Pentax and there was no documentary evidence to support such an activity. It was submitted that it was “unreasonable” to conclude that no parts or services had been delivered. We are satisfied that it was open to the judge to conclude on the evidence that no parts or services had been supplied by the appellant and that his conclusion has not been impugned.

The appellant called his mother as a witness in the course of the confiscation proceedings. His case had been that he and his mother had jointly purchased a property at 97 Salisbury Road in 1992. That his mother had contributed about £1,500 towards the deposit and legal fees for the property and she was registered as the joint owner of the property. In early 2001 the property was sold and the proceeds of sale were used to buy a property at 64 Hanover Circle. But, as Mrs Sharma was not resident in the country at the time and was not working, the property was registered in the sole name of the appellant. At the appellant’s instigation, Mrs Sharma also signed a note in July 2001 stating that she paid the net proceeds of the sale of the former property to her son. The case was that it was the understanding in the family, however, that she remained the joint owner of the property and had an equitable interest of 50% in the property.

Mrs Sharma gave evidence to the effect that she had an equitable interest in the property 64 Hanover Circle. For the purposes of her evidence-in-chief, the contents of a previously prepared statement were adopted by her and thus there was no need for an interpreter in respect of that part of her evidence. The judge was informed that there was an Urdu interpreter present at court. He was told that Mrs Sharma had spent some months every year visiting her family in the United Kingdom and, as a result, initially ruled that there was no requirement that she should give her evidence in cross examination with the aid of an interpreter. It is clear, however, that the judge’s view was a provisional one. The interpreter was sworn and the judge’s expressed intention was to see how well Mrs Sharma could understand the questions and answer them without the aid of an interpreter.

A decision whether an interpreter should be allowed to be used is a matter for the court to decide. It falls within the wide range of discretionary powers a judge possesses in connection with the conduct of a trial. He is not bound to accept the assertion of a witness that an interpreter is necessary. He can investigate the need himself. This much was accepted because it is said the judge made no inquiries about the quality of her English or whether, when present in the country, she had spoken much English or whether, being with her family and in her community, she had used her native tongue or English. In our judgment the judge was not bound to make inquiries on the lines suggested, but was entitled, having been told that she had some command of English, to take the opportunity of assessing for himself the limits of her comprehension and fluency. We have examined the transcript and it is clear that she was able to answer the initial questions put to her in cross-examination without the aid of an interpreter. When she became unable to do so, the judge allowed the interpreter to assist her. During the vast majority of her cross-examination, including questions dealing with the central issues to which her evidence went, she had the benefit of an interpreter. Faced with the potency of this material it was next submitted that, by refusing the assistance of an interpreter at the first stage, the witness was “prevented from giving evidence in a proper and effective manner”.

It is obvious that, since her examination in chief was provided by a written statement prepared in advance of the hearing, no such complaint can be advanced in relation to that statement. The judge rejected the account given by Mrs Sharma and the reasons appear from his ruling. The principal reason for doing so was the lack of documentary proof of an agreement to share the ownership of the house with the appellant. There is nothing in the terms of the ruling from which this court would be entitled to conclude that the judge reached his decision influenced by any impression he had formed of her unreliability as a witness, which might have been the result of her being at a disadvantage because she had been frightened or intimidated by the initial refusal to permit her to give evidence through an interpreter. Indeed, it is clear that the judge had in mind all the factors bearing upon her ability to understand and give evidence and that he properly took account of the quality of her oral evidence.

Section 71 of the Criminal Justice Act 1988 provides in its material parts as follows:

“(4)

…a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained.

(5)

…

(6)

The sum which an order made by a court under this section requires an offender to pay must shall be equal to -

(a)

the benefit in respect of which it is made; or

(b)

the amount appearing to the court to be the amount that might be realised at the time the order is made,

whichever is the less.”

The judge found that the appellant had “obtained” the full amount deposited into the Petra Scientific account and thus, subject to the appellant’s realisable assets, according to the terms of section 71, he was duty bound to make a confiscation order in that amount. The judge assessed the realisable assets at £188,285.71. There is no appeal against that assessment and it followed that the judge was bound to make a confiscation order in the full amount of the benefit, namely £179,000. This ground of appeal turns on whether the judge was obliged to reduce the benefit obtained by the appellant in having £179,000 paid into his account because he must have paid out significant sums to Rajesh and Rajeev Datta (and others).

The appellant submitted that the judge should not have calculated the benefit of the appellant at £179,000 since Rajeev Datta’s benefit had been agreed at £59,000 and Rajesh Datta’s benefit had been agreed at £73,000. The aggregate amount of the benefit of the three defendants, therefore, exceeded the loss to Pentax, from the Petra phase of the conspiracy, by £83,000. As a result, it is submitted the amount of the appellant’s benefit should be regarded as disproportionate and the court should hold that the appellant has been required to pay more under the confiscation order than the law permits. Relying upon the dictum of Lord Woolf CJ in R v. Benjafield [2001] 3 WLR 75, it is submitted that the object of the legislation “is not punishment but the forfeiture of an illicit profit”. As we shall shortly record, similar arguments have been advanced in previous cases, but in this instance the argument, put shortly, is that where a case involves more than one defendant, and one of them has, for example, obtained a sum capable of representing the total benefit from their criminal enterprise but has thereafter permitted the others to share in the benefit, each of the defendants should each be assessed not by reference to what may have been the maximum benefit obtained at one moment in time, but by reference to the individual benefit which has been retained after any others have taken a share in the benefit as originally obtained.

It is submitted that, unless the court adopts such an approach in these circumstances, the court provides for double recovery of the amount which has been obtained so as to breach a defendant’s rights to respect for his home and the peaceful enjoyment of his possessions under Article 8 and Article 1 of Protocol 1 of the ECHR. Next it is said, in this case, the defendant’s principal realisable asset is his home. In order to meet the confiscation order he will be required to sell his home and such a consequence is not justified in a democratic society for the prevention of crime, because it is not in pursuit of a legitimate aim and the means required for the implementation of the order give rise to disproportionate consequences.

In R v. Currey [1995] Cr.App.R(S) 421 CA the appellant had received over £160,000 of criminal funds into bank accounts controlled by him. The Court of Appeal described him as “the banker for the operation”. His role, therefore, was identical to that played by the appellant in relation to the money stolen via Petra from Pentax.

On appeal it was submitted that money which had passed through the appellant’s hands, but being dissipated by him, should not have been included or treated as his benefit since he had not retained it himself and there was no evidence he had acquired any other asset with the money. The appellant contended that the purpose of the legislation was to “mulct the offender of any profits he has not only obtained but has actually retained”. This argument was rejected by the Court of Appeal. It was held that an offender’s benefit included money that had come to him but had subsequently been dissipated otherwise it “would put a premium on offenders appearing before the court, stretching their hands wide and saying, see I have nothing left …”.

In our judgment it is clear, applying general principles of law, that a person, who receives money into his bank account, obtains it from the source from which the money is derived and, where he is the sole signatory on the account, he obtains the money and has possession of it for his own benefit. In this area of the criminal law, where the proceeds of crime are concerned, there is no room for the application of trust principles and the application of the normal legal consequences which flow from the receipt of money for others.. Nor in this area of the law would the purpose of the statute, namely to deprive criminals of the benefits of their criminal enterprise, be assisted by the introduction of collateral inquiries on an issue as to whether, when the benefit or part of the benefit is paid on to another criminal or other person participating in the crime, the original recipient is to be regarded as having never held the benefit for himself and to have obtained no fresh or continuing benefit from making the disposal to another. In this area of the law, the legitimate purpose of the statute is met, where the defendants have not jointly obtained the benefit, but there has been a disposal by one member of a criminal enterprise to another member of the same criminal enterprise who knowingly receives it, by each being treated as a recipient of a benefit to the extent of the value of the money which has come into the possession of each of them. Unlike the case of R v May and Others [2005] EWCA Crim 97, it was not held in this instance that the defendants had held the total proceeds of £179,000 jointly. We emphasise that the Act focuses on the individual benefit obtained by each defendant, the total amount of which is not limited by the amount of the victim’s loss.

In R v. Patel [2000] 2 Cr.App.R(S) 10 CA the appellant had been part of a conspiracy to steal money from the Department of Social Security. His role had involved taking cash from the till of the Post Office. This meant that all the stolen money had passed through his hands before being divided between himself and his co-conspirator.

On appeal it was submitted that the appellant’s benefit should not have included the full sum stolen, because he had given half of it away. The Court of Appeal rejected this submission. It was held that:

“…the appellant, pursuant to the criminal conspiracy, admitted receiving in his hands a total of £51,920.89. That represented his benefit from his relevant criminal conduct. The fact that he had subsequently given some of that money to his fellow conspirator is irrelevant for the purposes of section 71”.

In R v Smith (David) [2002] 1 WLR 54 HL the House of Lords reversed the decision of the Court of Appeal which had held that an importer of cigarettes could not be held accountable for the value of the duty which had been evaded by his illegal importation because the cigarettes had been seized by customs officers before they could be sold by him. The House of Lords held that the offender had benefited within the meaning of the Act notwithstanding what eventually happened to the cigarettes. The House of Lords noted that “in some circumstances [the legislation] can operate in a penal or even a draconian manner” but concluded that “this may not be out of place in a scheme for stripping criminals of the benefits of their crimes”. The section bites the moment that the property is obtained.

In R v Simpson and Others [1998] 2 Cr.App.R.(S) 111, the Court of Appeal held in relation to the “value of his proceeds of drug trafficking” under the Drug Trafficking Act 1994 that the value is the aggregate of the defendant’s payments or rewards, not his net profits.

In our judgment, the law is settled according to the case of R v Smith (David) and R v Patel, supported by the other cases, and these cases conclude the appeal on this ground against the appellant.

In our judgment, since the Act is concerned to force a defendant to surrender the benefit he has obtained from his criminal activity, so long as the benefit he obtained is correctly calculated, it cannot be disproportionate for him to be made accountable for what he obtained. The amount of the benefit he obtained is not affected by the amount which might also be obtained by others to whom he transfers any part of the benefit. The amount of money which might be recovered pursuant to a confiscation order is irrelevant. In every case, at the time a confiscation order is made, there can be no certainty that the amount to be paid will be paid and thus, where more than one confiscation order is made in respect of a victim’s loss, the question of double recovery may not arise.

However, the court’s attention was drawn to the more recent case of R v May and Others [2005] EWCA Crim 97 where Keene LJ, in dismissing an appeal based upon a similar argument that proportionality required that interference with property rights be no greater than is necessary to achieve the aim of removing criminal assets from circulation and after a detailed review of the cases, stated at paragraph 41:

“We see force in that point as a general proposition, and in some circumstances it may lead the court to adopt an apportionment approach. For example, there may be cases where the defendants have substantial assets, with the result that making orders for the full benefit in each case would lead to the Revenue recovering far more than the conspiracy or joint enterprise had obtained. In such a case the court may be prepared to apportion the benefit. But that situation does not apply here. In particular, the total of the confiscation orders made by the judge was well below the £12m of which the Revenue had been cheated by these conspirators.”

Nevertheless the court followed the approach in the case of Patel observing:

“If [the offender] obtains property within the meaning of section 71(4), it matters not that he does so merely as a collector or distributor for others involved in the offence: it is the obtaining, not the retention, which matters”. (see paragraph 36).

It is to be noted that the observation of Keene LJ was made in a case where it was maintained that the disproportionate approach arose from treating offenders who jointly control money as having benefited each to the full amount without apportioning the benefit between them. In this appeal the eventuality of more than the total sum of £179,000 being recovered under the confiscation orders does not arise out of an order of the court based upon each of the defendants being jointly liable for the amount of £179,000. It arises from the fact that each of the defendants actually received an individual benefit from the total amount which was received and each, having received the benefit, has been made liable to repay it.

An application was made to the Court of Appeal in the case of May to certify a point of law of general public importance and to grant leave to appeal to the House of Lords. The court certified in respect of the meaning of benefit under the Criminal Justice Act 1988 as follows:

“Where property is obtained jointly by persons participating as principals in an acquisitive offence, is the benefit of each for the purposes of section 71(4) and 71(5) of the Criminal Justice Act 1988 the value of the property so obtained?”

This court was informed that the House of Lords are likely to consider an appeal arising in connection with that point some time in the current year. On that ground the appellant sought an adjournment of the appeal, which application we refused because it was sufficiently unclear whether the outcome in the House of Lords, even if favourable to the appellant, would directly bear on this appeal.

Accordingly this appeal is dismissed.