Ford, R. v

LADY JUSTICE HALLETT: I will ask Mr Justice Openshaw to give the judgment of the court.

MR JUSTICE OPENSHAW:

1. On 2 June 2006, following a trial at the Crown Court at Southwark, before His Honour Judge Rivlin QC and a jury, the appellant, Laurence Ford, was convicted of assisting another to retain the benefits of criminal conduct (money laundering) contrary to section 93A of the Criminal Justice Act 1988. Others were acquitted. On 6 June he was sentenced to six years' imprisonment. Confiscation proceedings under section 71 of the Criminal Justice Act 1988 were concluded on 15 January 2007. It was agreed that the appellant had benefited from the offences to the sum of £148,350,000 -- a figure which the judge accepted. The judge found that the appellant's realisable assets amounted to £114,054.30 and made a confiscation order in that sum. He ordered that it be paid within twelve months, with 18 months' imprisonment in default of payment, to be served consecutively to the six years.

2. It is now agreed that there was an error in the calculations made at the time and that the proper sum should have been £113,354.58. If we uphold the judge's decision in principle, that sum should be substituted.

3. With the leave of the single judge the appellant now appeals against the confiscation order and the term in default.

4. The facts were complicated but they can be simplified considerably to identify the narrow point at issue in this case. The co-accused were the principal partners in the solicitors firm of Beveridge Gauntlett. The appellant was one of their senior legal executives. Between May 2002 and March 2003, as part of a carousel fraud, over £254 million was paid into the solicitors' client account by a number of so-called hollow companies and paid out to a number of unknown and untraceable recipients. The solicitors in effect provided a banking service for these companies for which they were ostensibly paid modest fees. No other services were offered or sought.

5. The appellant was the manipulator of this dishonest use of the client accounts. The fraud resulted in a loss to the Revenue of approximately £29 million. For his part in this money laundering operation, the appellant received substantial cash payments from the fraudsters. The prosecution moved to confiscate his proceeds of this crime. Again the full history of the confiscation proceedings is complicated, but in order to focus on the point in issue we can move directly to the end position after much protracted negotiations.

6. By the time of the hearing of the confiscation proceedings the prosecution and the defence had agreed a benefit figure of £148,350,000 which the judge accepted. The judge then had to assess the extent of the appellant's realisable assets. The value of some of his assets (his two cars, his equity in the matrimonial home and in one particular pension fund) had been agreed in the total sum of £33,547.68, which again the judge accepted.

7. The issue that the judge had to determine was the extent to which three other pensions counted as realisable assets. These pension plans had been bought before the inception of the fraud, but that does not protect them from seizure since all his assets are liable to confiscation up to the value of his benefit. The pensions were to mature in five years' time when the appellant was 60. None could be assigned, whether by way of sale or otherwise. So the funds had no market value (if that term is to mean the value at which the asset could pass between a willing buyer and a willing seller). However, each could be surrendered by the appellant to the pension fund provider. There was a marked difference between the immediately realisable cash-in surrender value of these pensions, which was a little over £17,500, and the so-called fund value (that is the value of the funds in each pension) which was nearly £80,000.

8. The relevant statutory authority is to be found in section 71(6) of the Criminal Justice Act 1988, which provides as follows:

"The sum which an order made by a court under this section requires an offender to pay must be at least the minimum amount, but must not exceed --

(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."

Section 74(3) provides:

"For the purposes of this Part of the Act the amount that might be realised at the time a confiscation order is made is --

(a)the total of the values at that time of all the realisable property held by the defendant ...."

Section 74(4) provides:

"Subject to the following provisions of this section, for the purposes of this Part of this Act the value of property (other than cash) in relation to any person holding the property --

(a)where any other person holds an interest in the property, is --

(i)the market value of the first-mentioned person's beneficial interest in the property, less

(ii)the amount required to discharge any incumbrance (other than a charging order) on that interest; and

(b)in any other case is its market value."

Section 73(1) of the Act defines "realisable property" as:

"Any property held by the defendant".

Section 102(1) provides:

"'property' for this purpose includes money and all other property, real or personal, heritable or moveable, including choses in action and other intangible or incorporeal property."

Section 102(7) provides:

"Property is held by a person if he holds any interest in it."

Section 102(1) provides:

"'interest' in relation to property includes a right...."

9. The appellant contended that the fund value was not an immediately realisable asset at all. He had no claim upon the fund until the policies matured when he reached the age of 60 in five years' time; and even then he would not be entitled to take the full value at once as a single lump sum since the fund value would be payable partly as to a lump sum, but the rest would have to buy an annuity which would pay only a small income year by year. The so-called fund value was therefore little more than a notional figure which certainly was not an immediately realisable asset and therefore should not be included in the relevant calculation. He contended that his realisable assets were limited to the cash-in surrender values of the pension funds which amounted to a little over £17,500. Those submissions have in essence been repeated before us. Furthermore, he said, it was the realisation that there was this lacuna in the Act, which is one of the reasons why Parliament provided in the Proceeds of Crime Act 2002 that the prosecution could come back to court if the defendant's assets later increased. We should point out that there were also some alterations to the powers to seize pension funds, but they only operate upon policies bought with tainted funds, which is not the case here.

10. Mr Doyle QC on the appellant's behalf at one stage sought to rely on R v Cornfield [2007] 1 Cr App R(S) 124, which was not cited before the judge (indeed it was not then reported). In that case a similar problem of valuing an unmatured pension arose. The vital part of the decision is at paragraph 27 where May LJ said:

"In our judgment, market value in section 74(4) of the 1988 Act has to be viewed in the context that it is seeking to define 'realisable property'; and in the context of legislation, draconian certainly, but whose purpose is to confiscate that which a defendant is able to realise. It must be realisable in some real way. Although it could extend to a contingent beneficial interest under a will .... it does not, in our judgment, extend to the putative possible future receipt of a lump sum pension payment which could not be used as a security for a loan; which, if it were paid, would go to the trustee in bankruptcy; and when the real possibility of the appellant borrowing money with reference to it was zero. On that analysis, the pension payment, its value or any value with reference to the possibility of a lump sum payment, was not part of the amount that might be realised at the time the order was made against the appellant."

It is clear to us from a careful reading of that case that the critical factor was that the appellant there was a bankrupt and as a result the appellant had no remaining interest in his pension fund which had vested in the trustee in bankruptcy. The appellant in that case had no remaining interest in the pension fund and it was not in any way a realisable asset. We do not think that this helps us in this case where the appellant is not a bankrupt.

11. Mr Davies for the prosecution submitted to the judge and to us that the confiscation order should be based upon the fund values of the pension plans which they claimed were realisable assets available to the appellant. He reminded us that the social policy behind the legislation is to strip those convicted of crime of their assets up to the value of their criminal benefits. He argues that it would be wrong if the appellant's value in the pension fund was assessed at only £17,500. It is said that if he raised just £17,500 now so to pay off this part of his confiscation order, he could retain an asset worth £80,000 which would be available to him in only five years' time and this would be a serious erosion of the principles of stripping criminals of their identified assets. He makes the point that although the sums in this case are not insignificant, in other cases they may be huge. The policy may have a low surrender value, or even no surrender value at all, but yet may have a very substantial contingent value when it matures. If the appellant's argument is right, the amount of the confiscation order should be based on the surrender value, which might be minimal; but the pension fund, which might be substantial, will be left intact. This, he argues, cannot be right. Such a case would, of course, need to be decided on its particular facts, as this must be. He also reminds us that it is for the appellant to prove that his realisable assets are worth less than the benefit in respect of which the order is made.

12. In his submissions below, counsel on the appellant's behalf (not Mr Doyle) submitted that no one would lend money to this appellant, a convicted money launderer now serving six years' imprisonment. One can see the force of this so far as a commercial high street bank is concerned. But it was further asserted by counsel that the appellant himself could not raise the money from any other source. It was said that he had neither friend, nor associate (including the co-conspirators in this huge fraud), nor any member of his family who would hand him £17,500 now to save the value of his pension of £80,000 in five years' time. He did not call any evidence to support these assertions. The appellant did not give evidence himself to this effect, and neither did he call anyone else.

13. It seems to us that on the facts of this case the appellant simply has not proved that he could not raise the money in question and so he has not proved in relation to these particular pension figures that his realisable assets are less than his benefit. There is no injustice in this since, if he is right and if he has to surrender the policies in an attempt to raise the money to discharge his liability under the confiscation order, and if he can only raise the cash-in surrender value, he can then come back to the court and seek a Certificate of Inadequacy under section 83 of the Criminal Justice Act 1988 on the basis that his assets were over-valued. He will then have been stripped of his assets and will not come out of prison with an £80,000 nest egg waiting for him. The social policy of the Act will therefore have been achieved. It was essentially these reasons which led the judge to decide that he was required to fix the appellant's realisable assets as including the fund value rather than the cash-in surrender value, and he made an order in those terms in the total sum of £114,054.38. We think that he was quite right to do so. The appeal must therefore fail in principle.

14. We make only one alteration to correct the error in calculation. The confiscation order therefore will be confirmed in the sum of £113,354.58, not £114,054.30, otherwise the appeal fails. Having regard to the difficulties of realising some of these assets, the judge was right to allow the generous period of twelve months to pay. The amount ordered to be paid fully justified a sentence of 18 months in default of payment which, as the judge correctly ordered, must be served consecutively to the six years.

________________________