Kirman, R. v

This is an appeal with leave given of the single judge against a confiscation order imposed as long ago as 17 October 2005 by HH Judge Roddy at the Liverpool Crown Court. The order in question in the sum of £84,901.50 was made pursuant to an agreement reached between counsel then representing the appellant and Mr Pickavance. This agreement was approved by the judge and so he made the order in the agreed sum. It is said on the appellant’s behalf that the agreement was based on a misapprehension of the legal position, and further, that relevant information had not been disclosed to any of the parties to the proceedings or to the judge.

On 9 May 2009 the appellant pleaded guilty to possession of some 99 kilograms of cannabis resin in a number of packages, themselves contained in three holdalls. These were discovered by police officers who executed a search warrant at the appellant’s home address in Liverpool on 27 November 2004. In addition, there was found £3000 in cash and a mobile phone. The cannabis resin was agreed to have a wholesale value of £74,401.50.

The appellant’s plea of guilty was made on a basis which was recorded in writing. This stated:-

“The cannabis resin of value £80,000 - £100,000 I was minding it having been delivered about 1 hour prior to the arrival of the police. I accept that I failed to make full enquiry of the male who delivered the cannabis resin. The male who delivered the cannabis resin I know and I accept I should have asked what he was leaving and if I had been in a doubt I should have told him to leave my home and take what he had delivered with him.”

The document is countersigned in the following terms:-

“The plea is accepted by me on the basis that the substance being ‘minded’ was cannabis resin, whatever is said as to doubt and/or failure to make a full enquiry.”

We say countersigned because on the face of it it bears the signature of the judge, albeit it has been suggested before us that the approval was not that of the judge but of counsel then prosecuting. It is not necessary to delve into that since it is clear and it is accepted that the judge proceeded to deal with the appellant, who received a sentence of 3 years imprisonment, on the basis of his plea. Thus she clearly accepted that the appellant had been minding the cannabis resin on behalf of the man whom he refused to identify and sentenced him accordingly.

It was decided that a confiscation order should be sought pursuant to the relevant provisions of the Proceeds of Crime Act, 2002 and the conditions requiring the Court to act under s.6 of the Act were met. The further relevant provisions of s.6 are as follows:-

“(4)

The Court must proceed as follows –

(a)

it must decide whether the defendant has a criminal lifestyle;

(b)

if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;

(c)

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

(7)

The court must decide any question arising under subsection (4) … on a balance of probabilities.”

The court was bound to decide that the appellant had a criminal lifestyle because the offence to which he pleaded guilty is specified in Schedule 2 to the Act: see s.75(2)(a).

Thus the court must concentrate on property obtained by the defendant, but in the case of criminal lifestyle, in deciding on benefit must make the four assumptions which are set out in s.10(2) to (5) which read:-

“(2)

The first assumption is that any property transferred to the defendant at any time after the relevant day was obtained by him –

(a)

as a result of his general criminal conduct, and

(b)

at the earliest time he appears to have held it.

(3)

The second assumption is that any property held by the defendant at any time after the date of conviction was obtained by him –

(a)

as a result of his general criminal conduct, and

(b)

at the earliest time he appears to have held it.

(4)

the third assumption is that any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him as a result of his general criminal conduct.

(5)

The fourth assumption is that for the purpose of valuing any property obtained (or assumed to have been obtained) by the defendant, he obtained it free of any other interests in it.”

The ‘relevant day’ is the first day of the period of six years ending with the day when proceedings for the offence were commenced (s.10(8). S.10(6) obliges the court not to make any required assumption in relation to particular property or expenditure if –

“(a)

the assumption is shown to be incorrect, or

(b)

there would be a serious risk of injustice if the assumption were made.”

The court must give reasons for not making any required assumption (s.10(7)).

The 2002 Act replaced the equivalent provisions previously contained in the Drug Trafficking Act 1994. Counsel then representing the appellant believed that, albeit he had pleaded guilty on the agreed basis and so fell to be treated as a minder who had no propriety interest in the cannabis resin but merely stood to receive a reward for keeping it, his benefit was to be regarded as the full value of the cannabis resin. The Crown produced the required statement pursuant to s.16(3) of the 2002 Act setting out the appellant’s property and expenditure which were subject to the assumptions in s.10(2) to (5). Included in these was the value of the cannabis resin, it being assumed that the appellant had spent that sum in purchasing it. The total amount was £233,586.26. The appellant submitted a detailed response and, following negotiations between counsel, it was accepted by the Crown that he could show that all the property save items having a value of £10,500 had been accounted for in a manner which showed that the assumptions were incorrect. This led to the total subject to confiscation being £10,500 in addition to the value of the cannabis resin, namely £84,901.50.

The acceptance by the Crown of a plea of guilty tendered on a particular basis does not of itself mean that in subsequent confiscation proceedings the issue cannot be reconsidered. A plea of guilty may be acceptable on a particular basis because it is recognised that it would be difficult or impossible to prove to the criminal standard that the defendant’s culpability was greater than indicated by the terms of the plea. But in confiscation proceedings the burden and standard of proof differ. The Crown must show only to the civil standard that the defendant has a criminal lifestyle and has benefited from his general or particular criminal conduct as the case may be. Furthermore, the existence of the assumptions places a burden on the defendant to produce evidence to show, in a case such as this in which it is decided that he has a criminal lifestyle, that an assumption is incorrect or that there would be a serious risk of injustice if the assumption were made.

It is, however, important that the Crown should make it clear to a defendant whether or not his involvement in the offending asserted by his plea is accepted for all purposes. In the case of offences which are specified in Schedule 2 to the 2002 Act (which include involvement in trafficking in or supplying controlled drugs), it will inevitably be decided that the defendant has a criminal lifestyle. This will mean that it will be assumed that all property obtained by him or expenditure incurred by him within six years of the commencement of proceedings against him resulted from his criminal conduct and he must produce evidence to show that the assumptions should not apply. Thus it will in most such cases be likely that confiscation orders should be sought. If the Crown accepts the basis of plea without qualification, in subsequent confiscation proceedings the court may well regard an attempt to go behind the acceptance as establishing a serious risk of injustice. This was the position in R v Lunnon [2005] 1 CAR(S) 24.

In R v Lazarus [2005] 1 CAR(S) 98, the court considered the relationship between acceptance of the basis of plea for the criminal proceedings and what could be raised in subsequent confiscation proceedings. The court observed that the case before it and R v Lunnon were salutary reminders that care needed to be taken by the Crown when considering a proferred basis of plea. In some cases, the Crown might be in a position to make the kind of express acknowledgement that was made in R v Lunnon, knowing that it would be carried forward into confiscation proceedings. In other cases, the Crown might be able to say no more than that for the purposes of sentence it did not dispute a particular assertion made by a defendant, but that it could not say what information might arise in any confiscation proceedings. This would particularly be the case if the financial investigation which would arise in confiscation proceedings had not yet taken place. Thus the Crown should always bear in mind the question whether any concession made in relation to the basis of plea could apply to the confiscation inquiry.

It may be that a defendant will recognise that the investigation into his financial affairs required by the 2002 Act may mean that he faces a very substantial confiscation order, since his criminal conduct is not in a lifestyle case limited to that connected with the offence or offences which he has admitted. Thus he may well consider that it is in his interests to persuade the Crown to consent to an amount which may appear to be in excess of that apparently required by his involvement in criminal conduct or in the offences which he has admitted. Accordingly a consent in a given case, which for example accepts for the purpose of confiscation a benefit based on the value of drugs which on the basis of plea would not be appropriate, may well be considered by a defendant to be in his best interests if it avoids a detailed inquiry into his financial affairs.

Counsel’s belief that the full value of the cannabis resin had to be regarded as a benefit was erroneous. In fairness to counsel, the law in this regard has not been entirely clear and that a mere minder should generally not be regarded as having obtained the benefit of the full value of any drugs has only recently been established beyond question: see R v May [2008] 1 AC 1028 at Paragraph 48(6), where the House of Lords said:-

“D ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else. He ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject. Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having an interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property. It may be otherwise with money launderers.”

But there were arguments which counsel could have deployed to establish that the appellant should not be regarded as having benefited to the extent of the value of the cannabis resin. In the s.16(3) statement, the cannabis resin was treated as a benefit on the basis that the appellant had incurred expenditure in its acquisition. In R v J[2001] 1CAR(S) 273, Lord Woolf, CJ observed (at p.276):-

“Normally, if someone is found in possession of drugs, the inference is that they have acquired them and that they have done so by paying for them.”

In R v Johannes [2001] EWCA 2825, the court followed this reasoning in deciding that the assumption had not been correct where the evidence showed that the appellant was a minder for reward.

The first ground of appeal before us is that the acceptance that the full value of the cannabis resin should be regarded as a benefit was wrong and that counsel in advising the appellant and negotiating the agreed order had misunderstood the law. It is submitted that we should in those circumstances allow the appeal notwithstanding that the order was made by consent.

Our attention has been drawn to a decision of this court, R v Hirani [2008] EWCA 1463. The court in that case considered the circumstances in which an individual who was the subject of a confiscation order made by consent could subsequently come to this court to set it aside. In Hirani the appellant had complained that he had been badly advised. The court considered a number of authorities which dealt with the issue whether a plea of guilty following erroneous legal advice may have led to an unsafe conviction. The court declined to apply the same approach in confiscation proceedings, saying this in paragraphs 35 and 36:-

“35.

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.

36.

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 entirely agree with and endorse what was said in R v Hirani. It follows that we would not have allowed this appeal on the first ground. There may be good reasons from his point of view for a defendant to enter into a consent order even if he may for the purposes of sentencing have put forward an inconsistent basis of plea. Thus the court will not save in exceptional circumstances go behind the consent even if it is subsequently asserted that it was based on erroneous advice. There may be other remedies available to the defendant if he can show that there was negligence.

However, there are further relevant matters in this case. Mr Pickavance has made further enquiries to establish the factual position. This arises because in February 2006, after the confiscation proceedings against the appellant, others alleged to have been involved in the distribution of drugs including those found in the appellant’s possession were arrested. In particular, one John Murray pleaded guilty to counts of conspiracy to supply drugs of Class A and the cannabis resin. He was sentenced to 10 years imprisonment, and a confiscation order made against him which included as his benefit the total value of the cannabis resin which the appellant had had in his possession. Murray was the dealer who had given the cannabis resin to the appellant to keep.

Officers of the National Crime Squad had since some date in 2004 been keeping observation on a number of individuals, including Murray and the appellant, who were involved in supplying controlled drugs in Liverpool. Murray had been seen to have been a regular visitor to the appellant’s home and on 27 November 2004 officers had seen what turned out to be the cannabis resin delivered by Murray to the appellant.

The officers of the National Crime Squad were understandably concerned that those drugs should not be distributed and so they asked the local police to obtain a search warrant and so find the drugs. They did not inform Mr Pickavance that there was a wider investigation being carried out by the National Crime Squad or that the dealer whom the appellant did not identify was Murray. The s.16(3) statement against the appellant was prepared by the local police who may themselves have been unaware of the wider investigation. If they were aware of it, no reference was made to it in the statement. This is not surprising since it would clearly have been undesirable to have made public that there was such an investigation before the time had come to arrest those involved.

It is apparent that had counsel for the prosecution known the full extent of the investigation, he might not have agreed the basis of plea. But in all the circumstances, we understand why he was not informed of the position since he would in all probability have had to disclose what he knew to the defence and this could have prejudiced an important investigation. However, the failure to disclose the true position should not now be to the appellant’s detriment.

Mr Pickavance realistically recognised that critical facts were not known to the defence. If they had been, he accepts that those representing the appellant might have argued that the appellant should not be regarded as having benefited from the full value of the cannabis resin. It follows that we cannot be satisfied that the same order would have been either agreed or, if not agreed, made.

While, as we have said, we recognise why there was in the view of the National Crime Squad good reason not to disclose what the true position was before Murray and others were arrested, the result is that those representing the appellant were not aware of the actual facts. Since it might have produced a different result, we are persuaded that the most exceptional circumstances which are recognised in R v Hirani to be capable of permitting this court to intervene exist. The defence were not apprised of the true position. Nor was the Court. We are not to be taken to have decided that the police were at fault in adopting the approach that they did. We are concerned only with the consequences. It may possibly be that ideally an adjournment of the confiscation proceedings should have been obtained so that the full details could be disclosed and the appellant dealt with accordingly. Whether that could have been achieved without disclosing the real reason for it we are not in a position to know. All we would say is that it is unfortunate that confiscation proceedings against this defendant were concluded when relevant information was not made available to the court or this defendant.

Accordingly, we allow this appeal and vary the confiscation order to a sum of £10,500 by taking out the value of the cannabis resin. There will be a sentence of 12 months in default of payment which must be made within 28 days.