Hirani, R. v

MR JUSTICE BURNETT: The issue that arises in this appeal concerns the circumstances in which an individual who is the subject of a confiscation order essentially made by consent can subsequently come before this court to set it aside. The circumstances are that the appellant suggests that he agreed that he had substantial realisable assets but that it was not in fact the case, and he says that he entered into the agreement on the basis of erroneous legal advice.

On 29th June 2004 at Bolton Crown Court, the appellant pleaded guilty to 14 counts of false accounting and one count of conspiracy to cheat the public revenue. On 10th September that year he was sentenced to a total of 3 years' imprisonment. Confiscation proceedings were commenced and a year later, on 13th September 2005, a confiscation order was made in the sum of £110,000, to be paid within two years with a period of 3 years' imprisonment in default.

Between 19th August 1983 and 18th December 2002, the appellant had made false claims for Income Support, Housing Benefit and Council Tax Benefit. Throughout that whole period of almost 20 years, he was not entitled to any such support. The total sum involved was £110,576.30. He was in fact working as a self-employed photographer throughout this period. However, he did not trouble the Inland Revenue with details of his earnings, at least between 1989 and 2002. The count referring to the public revenue concerned unpaid tax and interest of an amount estimated at £75,000. The total sum involved in the various counts to which he pleaded guilty was just over £185,000.

The regime that governs the confiscation proceedings that we are concerned with is found in the Criminal Justice Act 1988 as amended by the Criminal Justice Act 1993. Its detail is not material for the purposes of this judgment. It is sufficient to identify that the court considering making a confiscation order was primarily concerned to identify two figures: first, the benefit received by a defendant from qualifying criminal activity; and secondly, the value of realisable assets available to the defendant. The confiscation order would then be the lower of the two figures, subject to a discretion which it is agreed is of no relevance for the purposes of this appeal.

In this case the benefit was not the same as the total sum defrauded from the public purse because some of the criminality pre-dated the 1988 Act. In a statement dated 27th July 2004 Keith Lodge for the prosecution calculated the benefit in the sum of £161,023.57. That sum was, and is, agreed. It is for the prosecution to prove the benefit figure, then the burden shifts to the defendant to prove, on the balance of probabilities, that his realisable assets are less, if that be the case.

In mitigation before the sentencing judge it had been submitted that the appellant had been:

A large part of Mr Lodge's statement was concerned with the question of what assets could be realised by the appellant. He identified a large number of relatively small investments and deposits, PEPs and shares. He identified an insurance claim in respect of photographic equipment, a modest Premium Bond win and evidence of a large number of bank accounts both here and abroad. There were, in addition, Premium Bonds and valuable jewellery. It was his case that the appellant had hidden assets. He identified at least four occasions on which he had discovered that the appellant had been paid cash for photographic assignments, and one where a third party had been paid rather than the appellant. There were substantial sums going into and out of the appellant's bank accounts which were not explained, something in the order of £140,000. His income from self-employment between 1989 and 2002 was at least £239,000 and there were earnings in the period before that.

We have identified the sum in respect of the benefits that were dishonestly obtained. Mr Lodge's conclusions on this aspect were as follows (and I quote from paragraphs 5 and following on pages 25 to 26 of his statement):

Mr Lodge did not deal with real property in which the appellant might have had an interest because at that stage he was unaware of any. In fact, in March 1993 the appellant and his then wife, Rozmin Hirani, had jointly purchased a property at 249 Wigan Road, Bolton for £49,000 of which he was still at that time the joint owner. There was substantial equity in that home. The marriage had foundered and he had moved out in 1996 leaving his wife and children in occupation. There is before the court a statement from his ex-wife who says that although they were divorced in 1997, they did not sort out the ownership of the matrimonial home but she took responsibility for the mortgage and outgoings. It was not until 23rd August 2006, long after the confiscation order had been made, that the appellant transferred his interest in the house to his ex-wife for nil consideration.

The appellant responded to the statement from Mr Lodge. His response was served on 10th September 2004. In that response he made no mention of his interest in 249 Wigan Road. He provided short narrative answers to some of the detail of Mr Lodge's statement. He included the assertion that his ex-wife was in possession of most of the assets identified by Mr Lodge. He does not appear then, or since, to have produced any documentary evidence to support any of the matters set out in his statement. In respect of the purchase of the Council house in which he was living, he said:

The prosecution responded to that document. Mr Lodge noted the absence of documents to support anything which had been asserted by the appellant. He noted that the appellant had apparently owned valuable photographic equipment. In the context of the appellant's assertion that his wife had been given everything when they divorced, Mr Lodge asked for details of the divorce settlement and added that if anything was given to his wife it would anyway be caught by the provisions of section 74 of the Criminal Justice Act 1988 since it had been acquired during the period of offending. In that he was obviously correct. He proposed that any suggestion that the shares that he had identified were not under the appellant's control was inconsistent with the fact that the documentation concerning them was with him. One point that the appellant had made was that whilst he had certainly been paid from time to time in cash for photographic services, he (the appellant) would have paid that money into his bank account. Mr Lodge had tried, but failed, to reconcile such payments with bank deposit entries in documentation that was available and he invited the appellant to do so.

There remains in short, on Mr Lodge's evidence, no real explanation by the appellant for the points that he had raised and a complete absence of any documentation to explain them. In particular, there was no explanation to support any suggestions of where the substantial savings and investments had gone. He also explained in his statements that the appellant had in fact gone through with the purchase of his Council house and that the future proceeds of sale of that property would also be available. The current position on that property is that it is in the joint names of the appellant and his second wife, also now estranged, with an equity of perhaps £60,000.

Mr Lodge raised the question of how the appellant could contemplate taking on a mortgage on a property, which had been bought in the autumn of 2004, and incur the usual expenses of purchase if his financial position was as parlous as the appellant was suggesting. He also noted that the appellant had been able to make the payments to the local authority from, it is to be assumed, the money advanced on the mortgage.

The investigation had by this stage expanded to include the appellant's sister. She too was investigated in connection with applications for benefits. It would appear that she had multiple bank accounts, building society accounts and investments which indicated total savings of about £150,000. That was evidenced by details of interest payments she had been receiving. She had apparently not been working and had not been receiving benefits. There was no explanation of where that money had come from, and the prosecution suggested that the appellant was the source. In his statement in rebuttal, Mr Lodge was able to identify a total of £368,000 odd as available as a minimum figure. He was not able to put figures on several bank accounts and he was unaware, of course, of the appellant's interest in Wigan Road.

At the confiscation proceedings the evidence amassed by Mr Lodge, together with the rebuttal by the appellant in his document, had to be seen in the light of the fact that for this aspect of the case the burden rested on the appellant. He was a man whose credibility was, in truth, shot through.

Before turning to the appellant's complaint about the advice he was given, we should record the way in which the confiscation proceedings ended. On 13th September 2005, following a conference with his counsel, Miss Simpson, and solicitor, Miss Dance, the appellant provided written instructions to Miss Simpson to enable her to compromise the confiscation proceedings. He said this in that document:

Unsurprisingly, His Honour Judge Bloom made a confiscation order to reflect that agreement. No money was paid in the two year period and thus the appellant found himself back in custody when enforcement proceedings were commenced on the second anniversary of the order. He had, we should record, earlier been released from prison, having served the appropriate part of the sentence imposed in September 2004. On 22nd February this year Blake J granted bail pending the resolution of his appeal.

The appellant had maintained to his legal advisors in the time leading up to the making of the confiscation order that he had no assets. The essence of his complaint in this appeal is that he says that he was advised that if he was unable to pay the sum he had agreed, he could go back to court to seek relief on the grounds that he had inadequate funds and thereby avoid prison. He is referring to a procedure found in section 83 of the 1988 Act which enables a person subject to a confiscation order of the sort with which this appeal is concerned to apply to the High Court for a certificate of inadequacy. That advice, he said, was wrong. Implicit in his argument must be that had he been properly advised he would have fought the confiscation order and either escaped any order or achieved a lower figure.

On the facts of this case the purpose for which the appellant would have used an application for a certificate of inadequacy would have been very straightforward. He would have explained to the court that he had earlier agreed to make payment for realisable assets of £110,000 for the purposes of compromising the confiscation proceedings and thus avoiding the risk of an order for a larger sum. He would then have gone on to explain to the High Court Judge that at the time he entered into the agreement, he in fact had no realisable assets of any substance and that he knew that to be the case at the time he entered the agreement. He would conclude by inviting the judge to certify that he had no realisable assets or that they were inadequate to meet the confiscation order.

Of course, the appellant was free to make an application for a certificate of inadequacy, but the procedure cannot be used for such an obvious abuse of process. The issue has arisen in other cases in circumstances where a finding of realisable assets had been made by the Crown Court Judge. When a defendant then applied for a certificate of inadequacy on the ground that he did not have, and had not ever had, the realisable hidden assets identified, it would not be open for him to challenge the Crown Court findings as to his realisable assets at that later stage. As my Lord Scott Baker LJ said in the case of Re McKinsley [2006] 1 WLR 3420 at paragraph 34, that position had been put beyond doubt by an earlier case called Gokal v Serious Fraud Office [2001] EWCA Civ 368.

We turn then to the advice that was given. The confiscation hearing had earlier been set for 1st June 2005. We have a note of a conference that the appellant had with counsel on that date. Legal professional privilege has been waived. It is clear from that note that the prosecution were exercised about the disinformation given to the sentencing judge over the matrimonial proceedings which ended the first marriage, since it was plainly not the case that his ex-wife had received everything. The prosecution at this stage were unaware of the situation concerning the former matrimonial home, but nonetheless their concern was already very grave. The appellant told his lawyers that he had never given his counsel instructions of the sort to which we have earlier referred. He was obviously in some difficulties concerning the various accounts and the movements of money which were discussed in that conference, as well as details of the various shares identified by Mr Lodge and also the bank accounts. The note then said this:

On 12th September 2005 Miss Simpson telephoned Miss Dance. The reason for the call was that the confiscation proceedings had been adjourned to 13th September. The attendance note of that call reads:

There then followed on 13th September a conference to which we made earlier reference. There is in the note of the discussion held on that day a reference to a financial statement and references to his matrimonial home, that is to say the first matrimonial home. The note suggests that the prosecution had not gone after that home because of what had been said at the sentencing hearing, but it is clear from this note that as recently as April 2004 the appellant was seeking 50 per cent of the equity in that property. The financial statement showed that he did have an interest in that property. The prosecution were unaware of this still but were bound to become aware of it during any hearing. Counsel's advice was summarised in the note as follows:

Following the hearing, the appellant wrote to his solicitor seeking clarification of the advice he had been given. What he said is this:

Miss Simpson has been approached about this matter and in a letter written to the Criminal Appeal Office on 10th October 2007 she said this:

The appellant explains that he was told that if he was unable to meet the order he could apply for a certificate of inadequacy. He seems to have understood it to be part of the enforcement procedure in the Magistrates' Court. It is to be noted that in neither of the letters dated 13th September 2005, nor another which he wrote to his solicitors on 30th September, did he suggest that his understanding of the advice he had been given was as is now submitted; that is to the effect that he could simply go back to a court and explain that after all he had no money and hoped to be excused. It is right to note that in a later letter which he wrote on 24th November 2005 he did squarely raise the point.

Mr Ashley-Norman, who now appears for the appellant, makes what is in truth a short submission. It is that the appellant entered into an agreement on which the court acted, having been wrongly advised that he could in effect do nothing to meet the order and then seek the indulgence of the court at the time it came to be enforced safe in the knowledge that there would be no adverse consequences. He draws an analogy to circumstances in which courts have accepted that erroneous legal advice upon which a defendant in criminal proceedings has acted in pleading guilty may provide a good ground of appeal against conviction. He submits that there was an identifiable error in the confiscation process which has rendered the process unsafe. He suggests that there has been a want of due process. This court, he submits, should quash the order and in its discretion, which we have indicated existed under the regime that governs the proceedings, impose no order at all.

Mr Ashley-Norman recognises that a recent decision of this court in R v Bailey [2007] EWCA Crim 2873 appears to be against him. There, in the judgment given by MacKay J, the court expressly rejected an argument to extend the approach found in appeals against conviction based on erroneous legal advice to confiscation proceedings. The facts are of course different from those with which we are concerned. MacKay J said this:

Mr Ashley-Norman has sought to distinguish Bailey. Whilst of course it can be distinguished on its facts, we do not consider that it is distinguishable as a matter of principle. The reasoning in Bailey is condensed. We agree with the conclusion of the court in that case but would add a little by way of elaboration. In cases involving an appeal against conviction, an appellant must bring his case within section 2(1) of the Criminal Appeal Act and establish that the conviction is unsafe. If it is unsafe, the conviction will be quashed.

This court has considered on a number of occasions the circumstances in which a guilty plea that follows erroneous legal advice may have led to an unsafe conviction. In R v Boal [1992] 1 QB 591, which is referred to in the section from Archbold to which our attention was drawn by Mr Ashley-Norman, the defendant pleaded guilty to a number of counts under section 23 of the Fire Precautions Act. He was convicted on other counts. The Court of Appeal concluded that there was no evidence to support one of the essential ingredients of the offences. Advice had apparently been given that the point on which in due course the appeal succeeded should not be taken in the trial. Despite the unequivocal pleas of guilty, the appeal succeeded.

In R v Saik [2004] EWCA Crim 2936, the issue was considered in the context of guilty pleas following what the appellant suggested was erroneous legal advice on two matters: first, the length of sentence he would receive; and secondly, the security of his matrimonial home in subsequent confiscation proceedings. In a reserved judgment given by my Lord Scott Baker LJ, and to which my Lord Judge Roberts was a party, the court said at paragraph 45:

Mr Hirani's case is not one where he pleaded guilty to the offences on erroneous legal advice. He contends that he accepted a figure for realisable assets that was inaccurate, in part on the basis that he thought he could revisit the matter generally in subsequent proceedings. The purpose of confiscation orders is to recover from criminals the proceeds of their crimes. They are not in themselves punitive. They become so if the person in question fails to comply with the order and otherwise could not obtain relief by the mechanisms open to him. Nonetheless, they may be challenged in this court as part of the sentence (see section 50 of the Criminal Appeal Act 1968).

This court will interfere with a sentence on appeal on a limited number of well established bases, one of which is that the sentence was manifestly excessive. The appellant in this case suggests that the amount ordered to be confiscated in the confiscation order was manifestly excessive because the court proceeded on a wrong factual basis, namely that the appellant accepted that he had assets which were realisable in the sum of £110,000. In our judgment, it is impossible to squeeze the alleged erroneous advice into this basis for allowing an appeal. In confiscation proceedings, the burden is on the defendant to show a lower figure of realisable assets than the benefit, if he can. The judge in this case made the confiscation order on the basis on which he was invited to by the appellant. He did not proceed on a wrong factual basis, as, for example, may happen if a judge sentences on a factual basis not available on the material that was before him.

Additionally, the appellant was not representing that he had assets of £110,000. He was prepared to agree that figure as a matter of compromise to avoid additional potential liability. Similarly, the prosecution were not representing by this agreement that the appellant had no more than £110,000. This was in effect a consent order in which the appellant had bought off risk, both as to the amount of the confiscation order and the period he would be allowed to meet it. There was also in this case a real concern about perjury which gave rise to additional risks.

In other jurisdictions, those who have entered into consent orders may set them aside on very narrow grounds. We do not exclude the possibility in the arena of confiscation orders that such circumstances might conceivably arise. But we do not consider that they arise where the essence of the complaint is that, in seeking to secure the best deal available, erroneous advice was given to one of those who was party to the agreement, save in the most exceptional circumstances. We would not wish to identify exhaustively what those circumstances might be but, in our judgment, there would need to be a well-founded submission that the whole process was unfair. We do not consider that the circumstances of this case come close to that.

We see no warrant for reading over generally the approach that has developed in appeals against conviction based upon erroneous advice into confiscation proceedings. There is a fundamental difference between sentence and conviction. On an appeal against conviction, where it is suggested that erroneous legal advice resulted in a guilty plea, the court may allow the appeal and then a trial will take place. The defendant will be either acquitted or convicted and, if convicted, he will be given an appropriate sentence. On a successful appeal against sentence, the matter is not sent back to the court with the issue, as it were, at large. This court can vary a sentence but it cannot increase it. So if Mr Ashley-Norman were correct, an appellant in Mr Hirani's position could appeal to this court, having agreed the confiscation order on a false basis, and seek to set it aside, but in doing so he would deny the prosecution the possibility of contending for a higher figure. In other words, the prosecution would in effect be bound by the agreement from which the appellant, on this hypothesis, had been released. That would, in our judgment, be an undesirable -- not to say extremely odd -- result.

We would add that even had we be applying directly the approach of my Lord Scott Baker LJ in Saik, we would not in any event have concluded that the erroneous advice received by the appellant went to the heart of the matter. If Miss Simpson's advice was to the effect that a certificate of inadequacy might be obtained on the basis that the appellant had agreed a figure in 2005 which was wrong and which never represented his true realisable assets, and then just went for the court's help, she would have been wrong. The exiguous nature of the surviving notes does not make the position clear.

The mention of certificates of inadequacy and the procedure in the conferences to which we have referred were not, in our judgment, the centre of discussion, nor, it is apparent, was the procedure explained or really explored at all. Miss Simpson was plainly alive to the point that would be made in any application for such a certificate, namely: "They would say why did you agree to pay it". We do not read the notes as supporting a suggestion that the appellant was told that he could agree to £110,000 but not worry because the order would necessarily be set aside later. The tenor of the advice given was clear. The appellant would lose the confiscation proceedings and he would probably be ordered to pay the whole benefit figure and within a short period. Miss Simpson was obviously concerned about what was going to happen and, with the consent of the appellant, sought to negotiate the best terms available to reduce the amount of indebtedness and extend the period of repayment. We should record that the appellant suggests that he felt under pressure, and no doubt in the circumstances that developed he did, but there is no basis, in our judgment, for believing that this in any way led to his will being overborne.

The reality in this case is that the appellant's credibility was poor. Not only had he been convicted of an almost 20-year continuous course of dishonest conduct, but inaccurate mitigation had been put forward on his behalf when he was sentenced. Documents showed that he had an interest in Wigan Road which he had kept quiet about. He had an interest in the new matrimonial home which he had purchased after the commencement of the confiscation proceedings in circumstances where he pleaded utter poverty. Mr Lodge's investigation has revealed substantial investments which the appellant had not begun to deal with and neither could he explain the large amounts of money passing through his account. He has not dealt with the money held by his sister. Given that the burden lay on him, we consider that Miss Simpson's assessment of the prospects of success were accurate.

For these reasons we dismiss this appeal. The prosecution will no doubt consider whether to utilise the procedure to appoint a receiver to pursue the appellant's interests in the two matrimonial homes, or any of the other assets identified by Mr Lodge. Of course questions would then arise concerning third party interests which might need to be resolved. The appellant will no doubt consider his options.

Mr Ashley-Norman recognised that this appeal potentially had two stages. The first, which we have dealt with, was whether the confiscation order should be set aside. The second was whether to impose a different confiscation order. We are satisfied that we would have had power to do so. That was doubted in Bailey, but the observations of the court in that matter were made without sight of the earlier decision of this court in R v Edwards [2006] EWCA Crim 2596, in which a new order was substituted for the original one. We are confident that this court has power on an appeal against sentence relating to a confiscation order to substitute a new order in place of that imposed in the Crown Court.

MR ASHLEY-NORMAN: My Lord, there are two consequential matters, neither of which, I am afraid, are flagged in the application for leave or any of my documents. They are both very short and I wonder if the court might be prepared to entertain them.

The first is this. Would your Lordship be prepared to entertain a leave to appeal sentence in this regard? The default period was set at 3 years in the agreement as your Lordship will see. Why that was chosen is apparent from the tabulation set out in Archbold and at 5.396 at page 775.

LORD JUSTICE SCOTT BAKER: Yes.

MR ASHLEY-NORMAN: At the foot of that page is tabulation which will be familiar to the court of default sentences to be imposed upon non-payment of fines. My Lord will see from the second to last entry "An amount exceeding £100,000 but not exceeding £250,000" and the dots lead across to 3 years. That, it may be inferred, is how the default was reached. But if read together with the preceding line, "An amount exceeding £50,000 but not exceeding £100,000 -- 2 years", it is apparent from the tabulation that the bracket for £100,000 to £250,000 is between 2 and 3 years. Therefore, the utmost bracket has been selected for a figure which is at the lowermost figure appropriate to that bracket. They all tend to be arranged as the guide. Here what appears to have happened is by consent that the uppermost default sentence has been chosen when the sum of money unpaid relates to the lower end of that bracket. If your Lordships would be prepared to review that, I would be very grateful.

LORD JUSTICE SCOTT BAKER: That is the first point.

MR ASHLEY-NORMAN: That is the first point. The second point is this. On 22nd February Blake J granted this appellant bail. Clearly his appeal is now beaten, so the bail that was granted is come to an end. On the face of it he must return to custody. However, in circumstances that I have described in the course of submissions he had outstanding a judicial review of the decision to commit him to custody on 13th September 2007, the basis obviously being tied up with this appeal.

LORD JUSTICE SCOTT BAKER: We know nothing about that.

MR ASHLEY-NORMAN: No, your Lordships know nothing about that. Those proceedings were adjourned on 2nd October pending the outcome of these appeal proceedings.

LORD JUSTICE SCOTT BAKER: But does he not have a right to apply in those proceedings?

MR ASHLEY-NORMAN: He does have a right under section 37, I think, of the 1948 Act so the High Court can grant bail.

LORD JUSTICE SCOTT BAKER: Yes. What the High Court can then do is form some assessment of when the judicial review might be heard, et cetera et cetera.

MR ASHLEY-NORMAN: What I will very briefly invite this court to do, if you consider doing so, is reconstituting yourself as a High Court to consider the question of bail.

LORD JUSTICE SCOTT BAKER: Then we would need all the judicial review papers, which we do not have, and we have another case in the list this afternoon.

MR JUSTICE BURNETT: Has permission been granted in the judicial review?

MR ASHLEY-NORMAN: No, so there is no respondent yet. I think that the matters were adjourned over. I have very limited papers in the judicial review. Leave has not yet been granted. It has been adjourned pending these Court of Appeal proceedings. That is my short application.

There is one further very short matter which is this. In the event that my Lords are against me in my second application, and therefore Mr Hirani must return to custody, would the court permit him to surrender himself to custody in one week's time in Bolton.

LORD JUSTICE SCOTT BAKER: But he has already surrendered today. We do not have power to do that. That would be tantamount to granting bail.

MR ASHLEY-NORMAN: If that is the effect of what I am asking then I would seek bail to that end. The reason I do so is because it will probably take him the remainder of the default period to find himself in a prison close to home. It is a cri de coeur and no more than that.

LORD JUSTICE SCOTT BAKER: Mr Gutteridge, does the respondent have any observations on either of those points?

MR GUTTERIDGE: My Lord, the court made its observations on the second point. The respondent's position on bail in the proceedings so far has been that we are more interested in the assets than the default sentence. I was instructed on the previous bail application, so I imagine that would be my instruction today.

In terms of the first point, I understand my learned friend's submission absolutely. The table clearly sets out the maximum sentences and so the bracket should be there. I am not sure how to put my observation not to detract from my earlier observations about the agreement, so perhaps it is better if I say nothing about them.

LORD JUSTICE SCOTT BAKER: We will retire and consider the points.

LORD JUSTICE SCOTT BAKER: Mr Ashley-Norman, we have considered both these points. You would require leave to appeal with regard to the additional point about the length of sentence.

MR ASHLEY-NORMAN: Yes.

LORD JUSTICE SCOTT BAKER: We think that it is too late to raise the point now. It was part of the agreed package but ultimately it was a decision for the judge and it fell within the appropriate statutory bracket.

As to the application for bail, we think that that matter ought appropriately to be dealt with in the judicial review proceedings. It is obviously important that the judge dealing with that is appraised of the circumstances of the judicial review claim, which we are not. We do not express any view one way or the other, but that ought to be dealt with.

MR ASHLEY-NORMAN: Forgive me, my Lord, my third and final point is whether your Lordship would entertain the possibility of Mr Hirani surrendering again back in Bolton.

LORD JUSTICE SCOTT BAKER: I am sorry, I thought we made ourselves clear. He has already surrendered. There is nothing we can do about that.