Hussain, R. v

1. MR JUSTICE STANLEY BURNTON: On 14th June 2005 at Manchester Crown Court, before His Honour Judge Atherton, the respondent to this appeal was convicted on a retrial of a single count of being knowingly concerned in the fraudulent evasion of the prohibition on the importation of a Class A controlled drug, namely diamorphine, contrary to section 170(2) of the Customs and Excise Management Act 1979. He was sentenced to 12 years' imprisonment. Confiscation proceedings were instituted. On 29th July 2005 His Honour Judge Atherton declined to make an order of confiscation against the respondent.

2. The Crown appeals with leave of the Single Judge against the refusal to make a confiscation order.

3. The facts may be taken quite briefly. On 29th June 2003 the respondent was intercepted by customs officers as he came through the "Green" channel of Customs at Manchester Airport. He was found to be in possession of a substantial quantity of diamorphine. The issue before the jury was whether he was acting under duress. His case was rejected by the jury.

4. The judge indicated that there was no evidence as to how he came into possession of the diamorphine, whether he bought it to sell as an investment or whether he was acting with others. He therefore proceeded on the basis that the respondent, went deliberately to Pakistan to bring back the consignment of drugs. There was no evidence to indicate any previous involvement by him in importing illegal drugs.

5. The crucial issue which has been argued before us is whether the judge's decision was correct, having regard to the fact that, undoubtedly, the respondent had in his possession a quantity of drugs of considerable value, if sold illicitly.

6. The question whether a confiscation order should have been made depends on the provisions of the Proceeds of Crime Act 2002. Section 6 requires the court to proceed under that section in certain circumstances, and subsection (4) divides the circumstances in which the court proceeds into those in which a defendant has a criminal life-style and those where he does not. It is common ground in this case that there was no evidence that the respondent to this appeal had a criminal life-style. It followed that the Court had to proceed under subsection (4)(c), which is as follows:

"if it (the court) decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct."

7. Subsection (4)(c) leads to the provisions of section 76. Sub-section (1) defines what is meant by "criminal conduct". Again, it is not in issue that the importation of Class A drugs is criminal conduct. Subsection (2) is concerned with "general criminal conduct" with which this case is not concerned. It is subsection (3) which relates to "particular criminal conduct" with which this case is concerned. It is as follows:

"Particular criminal conduct of the defendant is all his criminal conduct which falls within the following paragraphs-

(a) conduct which constitutes the offence or offences concerned;

(b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned;

(c)conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned."

In the present case only (a) was applicable.

8. Subsection (4) provides:

"A person benefits from conduct if he obtains property as a result of or in connection with the conduct."

In this case it was alleged that the drugs represented property which had been obtained in connection with the criminal conduct in question. Clearly it had not been obtained as a result of any criminal conduct, because the importation had been unsuccessful, it had not resulted in any sale of drugs by the respondent, and there was no evidence that those drugs had been purchased with property, including cash, which was itself the result of criminal conduct.

9. The Act requires a valuation of the benefit of an offender, and that is related to the property which he acquires. Section 79(1) provides:

"This section applies for the purpose of deciding the value at any time of property then held by a person."

Subsection (2) provides:

"Its value is the market value of the property at that time."

Subsections (3) and (4) are immaterial for present purposes.

10. Section 80 is headed "Value of property obtained from conduct" but it applies equally to property obtained in connection with conduct. It is as follows:

"(1) This section applies for the purpose of deciding the value of property obtained by a person as a result of or in connection with his criminal conduct; and the material time is the time the court makes its decision.

2) The value of the property at the material time is the greater of the following--

(a) the value of the property (at the time the person obtained it) adjusted to take account of later changes in the value of money;

(b) the value (at the material time) of the property found under subsection (3).

(3) The property found under this subsection is as follows--

(a) if the person holds the property obtained, the property found under this subsection is that property;

(b) if he holds no part of the property obtained, the property found under this subsection is any property which directly or indirectly represents it in his hands;

(c) if he holds part of the property obtained, the property found under this subsection is that part and any property which directly or indirectly represents the other part in his hands."

11. In the present case there were two relevant dates, so far as the valuation of property was concerned. The first was the date at which it was obtained by the respondent. The second was the date when the court made its decision. It is common ground that the property in question, namely the drug, had been obtained in Pakistan. It is equally common ground that the dealing, that is to say the buying and selling of the drug in Pakistan was illegal there as it is here.

12. The question then arises whether the drug had a "market value" at that time, that is to say when it was acquired, or indeed at any subsequent time, the value being "market value" by reason of the prescription in section 79(1) and (2). The natural meaning of "market value" is value in a lawful market. The ordinary meaning of "market value", in relation to something which it is illegal to buy and to sell is that it has no market value. That would be the ordinary meaning to be derived from section 79 and its application unless there were something in the Act or in authority to lead one to a contrary conclusion. See, for example, the judgments of the Court of Appeal in Building and Civil Engineering Holidays Scheme Management Ltd v Post Office [1966] 1 QB 247, and the decision of the Administrative Court in R(HM Revenue and Customs) v Machell [2005] EWHC 2593 (Admin). In our judgment, there is nothing in the Act or in authority to lead one to a contrary conclusion.

13. The words "market value" were considered by this Court, albeit in relation to a previous statute concerned with the confiscation of the proceeds of crime and, in particular, the proceeds of dealing in drugs, in the case of R v Dore [1997] 2 Cr App R(S) 152. In that case Lord Bingham, Lord Chief Justice, stated that drugs which it was illegal to buy and to sell in this country had no "market value" for the purposes of the provisions of the then applicable act, namely the Drug Trafficking Act 1994. He said:

“But even if the drugs had still been held by the defendant within the meaning of section 62(5)(a) of the 1994 Act -- and this could well be the position where it was the police and not the Customs and Excise who seized the drugs -- so that the property would on its face be realisable property within the meaning of section 6(2)(a) of the 1994 Act, the drugs would still be without value as realisable property. That is because, by virtue of section 7(1) of the 1994 Act to which we have already made reference, the value of the property is to be taken as its market value and the market value must be the market value if the property is sold lawfully. In the case of drugs, it is obvious that the drugs cannot be sold lawfully and therefore they have no market value.”

14. The words "market value" were re-enacted in the 2002 Act. Parliament must be taken to have appreciated that this Court had already decided that "market value" meant value in a lawful market, in a market in which goods could be bought and sold lawfully. Notwithstanding that the words "market value" were used in section 79. Different words could have been used. Section 79 might have provided that the value of the property is the value to the defendant. It did not. In our judgment, Parliament must be taken to have advisedly and deliberately used an expression which had already received an interpretation by this Court in this context.

15. The matter does not stop there because, in the case of R v Ajbade [2006] EWCA Crim 368, this Court applied what had been said in Dore to the expression "market value" in the 2002 Act. In our judgment, there is nothing to indicate that the decision in Ajbade was incorrect. Indeed, we consider that that case was correctly decided.

16. The result is not a result which is in any way offensive to common sense. In a case such as the present, the drugs having been seized, the defendant has received and enjoys no benefit by reason of the drugs themselves. Had he sold the drugs, the proceeds of sale, assuming them to be cash or other property which it is lawful to buy and to sell in this country, would have been "a benefit", which would have been the subject of confiscation proceedings. Equally, if it could have been shown that the drugs in this case had been purchased with property which was itself the proceeds of drug trafficking, that property, which would normally be a sum in cash, would have been his benefit for the purposes of the Act. However, none of those circumstances applied in the present case.

17. It follows, in our judgment, that the decision of the judge was correct. "The benefit" in the present case was nil because that which cannot lawfully be bought and sold has no market value. It follows that this appeal must be dismissed.