Bailey, R. v

On 14 March 2006, in the Crown Court at Preston, the appellant pleaded guilty to three counts of using a false instrument and three counts of obtaining a money transfer by deception. On 8 June 2006, she was made subject to a Confiscation Order under section 71 of the Criminal Justice Act 1988 (as amended) in the sum of £195,315, to be paid within twelve months. In default of payment she was ordered to serve a two year prison sentence. The following day she was sentenced on counts 1, 2 and 3 (using a false instrument) to six months' imprisonment, concurrent on each, and on counts 15, 16 and 17 (obtaining a money transfer by deception) she was sentenced to two years' imprisonment, concurrent on each. All the sentences were ordered to run concurrently, making a total of two years' imprisonment. She appeals against the Confiscation Order element of that sentence by leave of the single judge.

The appellant operated a business in and around the Blackburn area which ran buses. It did so by way of three distinct trading entities, the details of which it is not necessary to understand for the purposes of this judgment. Counts 1, 2 and 3 involved the appellant's use of insurance documents which were not genuine. Counts 15, 16 and 17 related to the over-estimating of the fuel that the buses had used in running their routes as a consequence of which there was a gross over-estimation of the fuel duty rebate to which the companies were entitled. The over-estimate related to a period which started in May 2002 and ended in March 2004. The sum on the three counts amounted to £527,304 odd. In addition, the appellant had obtained money on counts 1 and 2 of £4,763 odd by using false insurance documents. She had obtained an additional £77,443 odd by means of ten claims made by the relevant company between June 2002 and May 2003 when no valid motor insurance policies were in force. The total of all these sums was £626,511.45. That was the finding of benefit for the purpose of the scheme of the Act.

The Crown for their part, in circumstances that we will describe, were prepared to fix the realisable assets at £195,315, which represented the value of a house that the appellant and Mr Bailey owned together (we are told today it is in their joint names), valued at £195,000, and a small parcel of land valued at £315. There was no issue about the valuation of these assets.

In relation to the benefit figure the appellant had wanted to run an argument that she should have a discount to reflect the legitimate running costs of the buses. That was not a point pursued in this appeal, and rightly so. But it had this effect. There was a hearing on 8 June 2006 before His Honour Judge Brown at which that argument was ventilated and which he rejected, in our view rightly.

At that hearing the judge turned to assets. The Crown had sought an adjournment (not surprisingly in view of the benefits in this case) to enable it to attempt to prove that the appellant owned further assets, believing that she held some in France. The appellant instructed her counsel to oppose the application because she wanted finality in the matter. The judge refused the prosecution request and found against the appellant on her first argument relating to benefits. In his ruling he went on as follows:

We have no doubt that the appellant had told her lawyers and her counsel at the time that Mr Bailey had an equitable interest in that house by virtue of the financial contributions he had made towards its purchase and (as we are told today) by virtue of the fact that his name was on the title deeds. Although the appellant now seeks to say that he has a majority interest, the presumption would be that he has at least an equal interest with her in the equity of the house.

Counsel then appearing for the appellant agreed the assets figure and advised her that the question of Mr Bailey's entitlements could be "put into the equation" so as to reduce the figure at a further enforcement hearing in the High Court. He had in mind section 83 of the Act and the so-called Certificate of Inadequacy Procedure. So far as relevant that section (which we need not set out in full in this judgment) in its essentials is in the same terms as the equivalent section 17 of the Drug Trafficking Offences Act 1994, which is fully and helpfully set out in R v McKinsley [2006] EWCH 1092 Civ.

On 5 July 2006 there was a second hearing which was mounted under the "slip rule". At that hearing Mr Platts, who then appeared for the appellant, sought to re-open the Confiscation Order. He said that he had probably been wrong to agree the £195,000 and that he should have called evidence from the appellant and from Mr Bailey to explain the position relating to the equity. He would not have not been able to do that because the Crown Court Judge has no power to conduct such an exercise: see R v Norris HL [2001] 3 All ER 961. He said that his problem was that the High Court had no power to change the figure ordered, except under section 83. In response the judge said that he considered that it would be unfair to do that. He put the matter this way:

On 25 July 2006, the court handed down their judgment in McKinsley to which we have referred. That, we would stress, is not a case where third party rights and interests were in play. The court considered the equivalent section of the Drug Trafficking Act 1994. Its decision can be summarised in this way. That section is not apt to form the basis of relief in respect of any event other than those which have happened subsequent to the making of the Confiscation Order. The remedy is to seek leave to appeal to this court, if necessary out of time.

It is now argued that, as the Confiscation Order stands, the appellant cannot challenge the figure of £195,000. If Mr Bailey were to succeed in proving to the High Court in appropriate proceedings brought by him that he has an equitable interest in the house, and what that interest is, the appellant argues that she will be unable to meet the order from the agreed available assets and is at risk of default which will imperil her liberty.

When asked what this court's basis of intervention should be, Mr McKone who now appears for the appellant answered that the Confiscation Order was manifestly excessive or wrong in principle. He argues that the position equates to that where a guilty plea is entered on erroneous legal advice and the defendant seeks to vacate that plea and appeal against his conviction. In our view a better analogy would be where a defendant pleaded guilty on the basis of erroneous legal advice: for example, that he would not receive a custodial sentence. We cannot see this court readily acceding to an argument in those circumstances that the resultant sentence was for that reason manifestly excessive or wrong in principle.

The prosecution for their part say that the judge made no error of law in making the order, made as it was on the basis of the express consent of both parties. The prosecution had never in fact accepted that the house was the only asset, but pragmatically reached a compromise figure in their discussions with the appellant.

This is an appeal against sentence: see section 50(1)(e) of the Criminal Appeal Act 1968. Therefore the traditional grounds for entertaining and allowing such an appeal are limited to those which Mr McKone today argues, or to where the sentence was unlawful (and that is not arguably the case here), or where it was passed on a wrong factual basis (that is not the case; there was agreement between the parties), or where matters were improperly taken into account or where fresh matters should be taken into account.

To revert to Mr McKone's argument that where the vacating of a plea of guilty is in issue the sole ground would be whether the resultant conviction should be viewed as unsafe, very different considerations would apply to those in force in this appeal. The interests of justice would often by offended by a conviction for crime based on defective legal advice. In the area of confiscation we believe the position is very different, not least because in this whole exercise the burden of proof lay on the appellant to show that the realisable assets were less than the benefits.

There is therefore this dilemma: if the order stands and if Mr Bailey establishes his interest, the appellant says that she will still be fixed with the obligation to pay the full amount of the Confiscation Order, which she cannot do, and will therefore lose her liberty. Thus it is argued that it could properly be said that the order was manifestly excessive in its effect and should be reduced accordingly.

On the other hand, if the order is quashed, we cannot send the matter back to the Crown Court. Nor can we replace it with any other order. All we could do is to quash the order and there would be an injustice on the face of it to the prosecution.

Our decision is that the Confiscation Order should stand. It was made with the consent of the appellant, albeit in reliance on legal advice which was or may have been incorrect. Its incorrectness was or may to an extent have been illuminated by a later decision of the court, although we do not consider McKinsley to be directly in point.

The appellant was in a position where the burden was on her to prove that her assets lay at a level below the benefits figure. She was the only person who knew the answer to that question. The judge was not under the impression that the order he made was in relation to the matrimonial home. That was not the order he made. He made the order for the payment of a sum of money calculated on a compromise basis, which included a reference to the value of that asset. The judge was told and was aware that the appellant was only the part owner of the equity. We are not persuaded that his order was wrong in law, was manifestly excessive or fell into any other category where this court is entitled to exercise its power pursuant to an appeal against sentence under the Criminal Appeal Act 1968. Whether the appellant has other remedies available elsewhere in other jurisdictions to mitigate her position we must leave her to decide with the benefit of the advice of her current legal advisors. It is not for this court to dispense advice of that nature.

This appeal is dismissed. The Confiscation Order must remain.