Bell & Ors v R

During the hearing we announced that all five applicants were granted leave to appeal out of time confiscation orders made against them. In the cases of the appellants Bell, Leigh, Bevan and Peratikou we quashed the confiscation orders made against them (in respectively July 2007, July 2007, August 2005 and September 2007) and, with consent, substituted new orders. In the case of Middlecote, having granted leave, we announced our decision that we would at a future hearing set aside the confiscation order made against him and that we would ourselves determine the appropriate confiscation order having examined the evidence available at the time of the confiscation hearing. We indicated that we would permit Middlecote to give evidence should he choose to do so. We gave directions for that hearing.

The five cases are the first of a series of cases listed for this term. It is hoped that this judgment may lead to a consensual resolution of at least some of the remaining applications for leave to appeal confiscation orders out of time. It is not necessary to set out the details of the evidence against Bell and Leigh who were co-defendants or Bevan and Peratikou. All were involved in different ways in the handling post importation of smuggled cigarettes.

In all of the five cases confiscation orders were made in respect of what was alleged to be evaded duty on tobacco products smuggled into this country for resale. In Middlecote the judge rejected an argument that he had not benefited from the evasion of duty. In the other four cases the confiscation orders were made by consent.

Under the Proceeds of Crime Act 2002, if a person obtains a pecuniary advantage as a result of or in connection with conduct, he is treated, for confiscation purposes, as having received a sum of money equal to the pecuniary advantage (see section 76 (5) of the 2002 Act). Thus his benefit will be deemed to include a sum of money equal to the pecuniary advantage. The predecessor legislation contained similar provisions.

Most unfortunately, in none of the cases did anyone apply their mind to whether the defendant had obtained a pecuniary advantage either directly because he was liable for the duty himself or indirectly because he had the necessary causal link with the non payment of the duty by another which the Court of Appeal Civil Division in Jennings [2005] EWCA Civ 746, [2006] 1 WLR 182 held (wrongly as it turned out) was sufficient.

It is not disputed that, in the cases of Bell, Leigh, Bevan and Peratikou, the appellants were not liable to pay the duty nor did they have the necessary causal link with the non payment of the duty by another. In the case of Middlecote the respondent submits that the appellant was liable for the duty and, for that reason, we have adjourned the hearing of the appeal.

To understand the background to these cases it is necessary to read the decision of this Court in White, Dennard and others [2010] EWCA Crim 978. In that case the Court examined in detail (and for the first time) the primary legislation and the Regulations which lay down when excise duty on smuggled tobacco products is due and who is liable to pay it. It is sufficient to say for our purposes and in general terms that a person is not liable for the excise duty on smuggled tobacco products unless he has a connection with the smuggled goods at the time of their importation, that being (in the case of smuggled goods arriving by sea) when the ship enters the port of destination in this country.

The respondent submitted that leave to appeal should be refused on the grounds that the appellants were relying on a change of law, namely the decision of the House of Lords in May [2008] UKHL 28, [2008] 1 AC 1028, [2009] 1 Cr App R (S) 31 and Jennings [2008] UKHL 29, [2008] 1 AC 1046, [2008] 2 Cr App R 29 overturning the decision of the Court of Appeal Civil Division in Jennings (above paragraph 4). The respondent cited Cottrell and Fletcher [2007] EWCA Crim 2016, [2007] 1 WLR 3262, [2008] 1 Cr App R 7. May and Jennings is discussed in White, Dennard and others.

During the course of argument, Mr Bird conceded that even if the decision of the Court of Appeal Civil Division in Jennings was right, Bell, Leigh, Bevan and Peratikou were not liable for the duty nor did they have what the Court of Appeal in Jennings decided was the necessary causal link with the non payment of the duty by another. He accepts that no-one involved in the five cases asked the right questions, namely whether they were liable for the duty or had what the Court of Appeal in Jennings (wrongly) decided was the necessary causal link with the non payment of the duty by another. Having accepted that, he also rightly accepted that this was not a change of law case.

The failure to ask the right questions was apparently due to conflating the ingredients of the offence charged with the issue of whether the defendants had obtained a benefit, namely a pecuniary advantage. All the appellants, except Middlecote, pleaded guilty to offences alleging that they had been knowingly concerned in the fraudulent evasion of the duty chargeable on cigarettes contrary to section 170(2) (a) of the Customs and Excise Management Act 1979. Middlecote pleaded guilty to a conspiracy to commit that offence. It was wrongly assumed by all concerned in these cases that the defendants having been knowingly concerned in the evasion of the duty must have been liable for the duty (in some way or another). The offence is a continuing offence and a person may commit the offence by becoming involved some time after the importation (Blackstone, Criminal Practice, 2011, para. B16.39). It does not follow that a person committing the offence is himself liable for the duty and thus has obtained a pecuniary advantage.

Mr Bird submitted that those appellants who had accepted the benefit put forward by the prosecution should not now be able to resile from that acceptance, albeit that all concerned had erred in law in believing that the defendants were liable for the duty (either directly or indirectly). He pointed to section 17(3) of the Proceeds of Crime Act 2002 (and its predecessor) which provides that a judge is entitled to treat as conclusive any acceptance by a defendant that he had benefited from criminal conduct. He also referred us to Emmett [1997] UKHL 4, [1998] AC 773, [1998] 1 Cr App Rep 247. In that case Lord Steyn said:

…the burden rests on an appellant, who asserts that his acceptance of any allegation in a [prosecutor’s] statement was the result of a mistake of law or fact, to persuade the Court of Appeal that his assertion is correct.

Mr Bird, whilst accepting that the prosecution in all the cases except Middlecote were wrong, in the light of the primary legislation and the Regulations, to seek an assessment of benefit based on the proposition that the appellants had directly or indirectly obtained a pecuniary advantage, it was for the appellants to spot the error and having not done so, leave should be refused.

We find Mr Bird’s arguments neither convincing nor attractive.

In our view it would be a grave injustice not to grant leave in cases such as the present cases. Even if Cottrell and Fletcher (to which we have already referred) applies to these cases, on the basis that there has been a previous misconception as to the state of the law, there would be a substantial injustice if we did not grant leave.

Having granted leave Mr Bird rightly conceded that the appeals in the cases of Bell, Leigh, Bevan and Peratikou had to succeed given that not one of them was liable for the duty and thus not one of them had obtained a pecuniary advantage in relation to it.

In the case of Bell, it was agreed that he had benefited in the sum of £950.00 (reduced from £157,775) and that the confiscation order should be in that amount and we so ordered. £950 represented the amount of money he was given to hire two vans to transport smuggled cigarettes and a reward of £100.

In the case of Leigh, it was agreed that he had benefited in the sum of £420 (reduced from £157,775) and that the confiscation order should be in that amount and we so ordered. £420 represented the amount of money he was given to hire a van to transport smuggled cigarettes and a reward of £100.

In the case of Bevan, it was agreed that he had benefited in the sum of £123,428.65 (reduced from £194,525) and that the confiscation order should be in that amount and we so ordered. £123,428.65 represented the value of smuggled cigarettes acquired by him and sold and the VAT which he ought to have paid on the sales.

In the case of Peratikou, it was agreed that he had benefited in the sum of £42,479 (reduced from £120,000) and that the confiscation order should be in that amount and we so ordered. £42,479 represented the value of smuggled cigarettes acquired by him and sold and the VAT which he ought to have paid on the sales.