Gor v R

On 14 February 2012 in the Crown Court at Isleworth, before HHJ Molyneux, the appellant pleaded guilty to two offences: Providing Immigration Services in contravention of s.84 of the Immigration and Asylum Act 1999 (contrary to s.91 of the same Act) and Assisting Unlawful Immigration to a Member State (contrary to s.25 of the Immigration Act 1971).

On 12 April 2012 he was sentenced to concurrent terms of imprisonment of 16 months and 8 months imprisonment, giving rise to a total sentence of 16 months imprisonment.

On 4 December 2015 in proceedings under the Proceeds of Crime Act 2002, before HHJ Denniss, the appellant was found to have benefited from criminal conduct to the tune of £927,356.35 and a confiscation order was made in that sum to be paid within 3 months, with 6 years’ imprisonment, to be served consecutively to the other sentences, in default of payment. A compliance order was imposed requiring the appellant to use his best endeavours to place on the market for sale certain properties and to notify the Crown of the progress of those sales. A restraint order was also made against the appellant, his wife and his son restraining them from removing assets from the country or diminishing their value.

The appellant now appeals against sentence, in respect of the confiscation order only, by leave of the Single Judge. For the appellant, it is submitted by Mr Talbot QC that the correct confiscation order should be in the sum of no more than £119,224.

The facts underlying the convictions are as follows. The first offence was committed by offering immigration advisory services, when not permitted to do so, to some 50 persons seeking leave to enter the UK on student visas or working holiday visas. The second offence involved the appellant enabling non-EU citizens to commit breaches of the law by working longer than the 20 hours per week permitted by their visas.

The background to the offending was the appellant’s activity (with his wife) in running what was, or what purported to be, a college called “Gateway 2 UK Education” from their home premises at 1 Sycamore Road, Ealing, London W5. The appellant and his wife recruited students for the college and also facilitated for them the finding of accommodation (some at properties owned by him) and to get work in bakery businesses in respect of which he worked as a contract manager for an employment agency.

It was common ground that the appellant’s offending in respect of the substantive offences, meant that he was to be treated as having a “criminal lifestyle”: by virtue of s.75(2) (a), (c) and (4) of the 2002 Act. Accordingly, the statutory assumptions of benefit set out in s.10 of the Act applied in deciding the question of whether and to what extent the appellant had benefitted from “general criminal conduct”: s.6(4)(b).

The assumptions required by s.10 to be made are as follows:

“(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 purposes of valuing any property obtained (or assumed to have been obtained) by the defendant, he obtained it free of any other interests in it.”

In this case, “the relevant day” for the purposes of the first and third assumptions was 4 August 2005, namely 6 years ending with the day on which proceedings were started against him: s.8(8). Here, proceedings began when the appellant was charged on 3 August 2011. For the purposes of the second assumption, his date of conviction was 14 February 2012.

Before addressing the individual heads of benefit claimed by the Crown and as found by the court, now challenged under the various grounds of appeal, it is necessary to say a little about the history of the college and its ownership. The details of this are dealt with on pages 4 and 5 of Judge Denniss’s judgment, of which what follows is merely a summary.

The company that initially owned the business called “Gateway 2 UK Education” was Facilities Management and Consultancy Europe Limited (“FMCE”) which was incorporated in April 2003. The appellant was the only director and his wife was the secretary. This company went into liquidation in 2008, with losses said to amount to some £47,000. The company’s initial business was, according to the appellant, providing services in placing foreign students with various colleges in the UK and providing other services to the students recruited. During the course of this business, the appellant set up the college at the Sycamore Road premises. Work was provided for students at various bakery businesses and, according to the liquidator’s report, only a relatively small number of the students involved received courses at the Ealing college. The appellant purchased the goodwill, including the brand name “Gateway 2 UK Education” from the liquidator of FMCE and the appellant then incorporated the company Gateway 2 UK Education Limited (“G2UKE Ltd”)

In July 2009, the appellant sold the latter company and the college to four individuals known collectively as the “Patel/Shah Group”. This group moved the college to larger premises at Hayes in Middlesex. The group in turn sold the business on to an individual called Darpan Shah. It is said, and there is no dispute about this between the present parties before the court, that Darpan Shah used the business to facilitate illegal entry into the UK.

In the confiscation proceedings, the Crown alleged that the college business as run by the appellant was a sham and that the sale to the Patel/Shah Group was also a sham. It was contended, therefore, that the entire tuition fees paid by the students in the period under consideration were to be assumed to be part of the benefit obtained by the appellant as the fruits of his general criminal conduct, pursuant to s.10(2) of the Act. In final written submissions to the judge the Crown said,

“For once a defendant has be found to be – or admitted to be, as here – a man with a criminal lifestyle then it is for him to prove, on the balance of probabilities, that it is incorrect to assume that his income is derived from criminality and that his assets are not equally sourced therefrom or, failing that, there is some other reason as to why to make that assumption would lead to / be a serious risk of injustice. Thus, the Crown alleges that the college was a sham – in the sense that the reality bore little relationship to the story. However, the real issue for the Court is simply to determine whether the defendant has demonstrated, on all the evidence, that his income was indeed legitimate”.

It was asserted further that the sale to the Patel/Shah group was also a sham and that, therefore, the fee income post-dating the supposed sale was benefit derived by the appellant also.

The result was that the Crown said that the total fee income of more than £1 million was relevant benefit for the purposes of the confiscation proceedings.

The judge summarised what for him were the “key issues”. He said this (on page 5 of his judgment):

“In my judgment the key issues in this case which formed the decisive matrix upon which the confiscation statutory assumptions fall involves the following three issues: was the college formed by Mr Gor at one Sycamore Avenue a sham and nothing more than a vehicle for him to abuse vulnerable students: providing unlawful immigration services, providing readily available labour to his employers Adecco Ltd and student tenants for his houses; secondly, was the sale of the company, Gateway 2 UK Education Ltd in July 2009 also a sham transaction and, thirdly in those circumstances can the affairs of the company after the sale be examined to ascertain whether Mr Gore [sic] had a personal interest in receipt of assets.”

He went on to state his conclusion on the first issue as follows:

“I have come to the conclusion, after having reviewed all the evidence carefully that on analysis and looked at from an overall perspective of all of the defendant’s activities, the college was indeed run as a sham. It was a necessary part of the defendants planning that there should be a college providing services which could be assessed by the Border Agency and the ACIS [sic] licensing body and it was in his interest to ensure that the college gave the appearances of being efficiently run: as does appear from the evidence relating to the Border Agency (Mr Gourley) and the evidence relating to the licensing report prepared by Prof Wilson for the ACIS [sic]. This was necessary in order to be able to generate the sponsor VISA letters and to obtain the necessary 30 points in the Visa entry points scheme.”

The judge found that the reality of the case was very different from the image portrayed by the publicity material. He found that that material presented a picture of an international college with a campus and large buildings including a large hall depicted as full of students. It was said to have headquarters in London and branches in other countries. The judge said the pictures relating to accommodation were wholly misleading. All this was far removed from the two and a half rooms in a suburban house in Ealing which was the reality. He found that his impression was supported importantly by witness statements of nine students, speaking to their shock and disappointment on seeing the college for the first time.

The judge found that, in reality, the appellant was anxious to send them to work as soon as possible for the bakery business, where many worked in excess of the 20 hours permitted by their visas. He found also that the appellant benefitted by receiving rent from the students in respect of rooms at investment properties in Ealing and Northolt. He also charged them for taxi fares from the airport and for “enrolment fees”.

The judge scrutinised the evidence pointing towards a true college business. There were some satisfied students in 2006/7. There was a 2007 report from a licensing authority “ASIC” (Accreditation Services for International Colleges, described as “Border and Immigration Agency approved for the purpose of sponsorship under the Points Based System”). A report from the UKBA itself had been produced. There were certificates from apparently worthy institutions approving the college.

The judge found as we have said, however, that the college was a sham. He said this at page 7 of his judgment:

“These all show that Mr Gor was operating a college which was offering various courses and including associated colleges and universities such as the Kaplan group. I find that it was in his interest to do so and part of the fraud which he was running: fundamentally it was a device to obtain a group of students who were very vulnerable, whom he could then financially exploit. In these circumstances so far as the principal issue is concerned in the case I find that the college was a sham.”

In contrast to this finding, the judge decided that the sale to the Patel/Shah Group was not a sham, although he found certain aspects of it to be unusual and/or unsatisfactorily explained. It is not necessary to say more about the features that informed his conclusion in this respect as no challenge to it arises. His finding was, however, this (at page 8 of the judgment):

“Some of the movements of capital appear to be mysterious, but in my judgment this was not a sham sale but that the defendant retained a financial interest in the company and has benefited from the same, but that it is not appropriate to pierce the company veil in relation to the much larger sum of assets, from students tuition fees, which that company acquired after the sale in the region of some £600,000.”

The result was that the judge attributed benefit to the appellant from pre-sale fees originally assessed at £457,812.50, adjusted to reflect refunds paid down to £388,624. He also attributed benefit from fees received post-sale in August 2009 of £215,000, again adjusted for refunds to £102,114. Thus, the total benefit from fees was £490,738.

The remaining constituents were made up of the values of certain properties at Olive Road and Berry Way in west London and rents received from those properties. The value of equity in the properties and the rents received, as found by the judge, totalled £179,171.02 and £240,317.33 respectively. We will turn to these individual aspects of the case later in the judgment when addressing the individual grounds of appeal.

There can be no doubt that the judge’s overall findings were significantly informed by the assessment that he made of the credibility (or lack of it) of the appellant’s evidence. As to this, he said:

“I find that he is a controlling and profoundly dishonest individual and that much of the evidence which he has given is not true and disingenuous”.

He gave nine specific reasons for reaching that conclusion, which he set out on page 10 of his judgment as follows:

“(i)

his evasiveness in relation to answering the questions of whether he was aware of his wife’s current employment and earnings and that of his son.

(ii)

his answers and evidence in relation to the £60,000 payment referred to above and the four different contradictory explanations which he provided.

(iii)

his claims that he did not look at the college website which he had commissioned until he was in the process of selling the college, or the institution of these proceedings and had no knowledge of the photographs displayed in relation to accommodation other misleading matters and false descriptions of what was offered.

(iv)

his suggestion that no student was ever misled by the advertising material containing similar false claims.

(v)

his approach to paying tax and his understanding of the requirement to declare earnings – for example his cash earnings from the private tuition which he provided: implying that payment of tax was a discretionary option.

(vi)

his failure to be able to provide any explanation for the declarations of income for the investment properties which he had purchased in relation to obtaining mortgages which bore no relation either to his declared income or that of his wife at the material time or subsequently went revised albeit with greater income, but claiming much more substantial property losses generating a negative tax position.

(vii)

the proposition that those students who had provided witness statements and Mr Patel were pressured into making them, or that the witness statements were in some way false/invalid because they did not bear a signature from the witnessing officer.

(viii)

the explanation which he gave, set out above, as to why there were additional verbal terms of the agreement for the sale of his company, but which his solicitor stated could remain oral and/or forgot. (See above).

(ix)

the attempts to strip out the equity in his family investment properties by way of sham transactions and gifts and remortgages and to remove his name from the legal titles.”

There are seven grounds of appeal. It is convenient to take each of these grounds in turn.

Ground 1 is that the judge erred in finding that the sums received in respect of fees from students were the result of criminal conduct, i.e. a fraud upon the students.

In helpful submissions, Mr Talbot argued that no causal connection had been demonstrated between the receipt of the fees and any criminal conduct, in particular any fraudulent misrepresentations made to students. His overall submission was that, on the facts, there was undoubtedly a college facility at the Sycamore Gardens property and some courses had been provided and pursued to successful outcomes. He made four points: a) the eight statements provided by students expressing discontent with what each found at the College, and relied upon by the Crown, were given by students who had appeared late in the appellant’s control of the business, just before the sale to the “Patel/Shah” group; b) No statements were produced from students in the earlier period from 2003 onwards; only one of the eight students had attended the college before the middle of 2009; c) the statements given were from students being treated as suspects, potentially liable for immigration offences; none alleged positive misrepresentation, as opposed to disappointment, having expected better from publicity material; none had been cross-examined; d) none said that he had parted with money because of misrepresentation.

Mr Talbot was able to take us to the two reports, both of which were before the judge, from ASIC and UKBA. Both these, it was argued, pointed out that there was a college active at the property and which the inspectors said were providing satisfactory education facilities. It was submitted that there was no evidence from the UKBA inspector who had prepared its report. However, Mr Talbot argued, the UKBA had been active in the prosecution of the appellant for the substantive offences. He argued that there was a true college being run and that it could not properly, therefore, be characterised as a sham.

For the Crown, Mr Dennison pointed out the judge’s conclusion on this issue was reached after hearing the cross-examination of the appellant, whose credibility he found to be as we have already recited. He had evidence before him from nine students which he accepted. The judge found it clear that the appellant was anxious to get the students to work as soon as possible; immediately after enrolment they were taken to the bakery to be trained there and to be set to work. The appellant had pleaded guilty to enabling students to work in excess of 20 hours. Further, the appellant had been able to gain benefit from letting out his investment properties for students. For all this, he needed an apparently genuine educational establishment to front the principal reason for his activity, namely to exploit a group of vulnerable young people for his own benefit. In these circumstances, said Mr Dennison, the words “front” or “cover” would perhaps be better than “sham”, but the effect had been the same. He argued that the judge had ample evidence of the fraudulent nature of the activity as a whole and he had acted on the evidence that he had seen and heard, rather than upon speculation as to what might have been said by other students. Mr Dennison reminded us that the appellant had even said in evidence that he had not seen the website advertising material, which was clearly untruthful. The judge had been entitled, therefore, to conclude that the appellant had not discharged the onus upon him to rebut the statutory assumption in this respect.

In his oral submissions, Mr Dennison had said that the appellant had not produced statements from satisfied students. In papers submitted since the hearing, Mr Talbot has referred to some further student statements adduced in evidence by the appellant.

We were taken to these various snapshots of evidence upon which the parties relied before the judge. We have not, of course, seen the whole. In particular, we have not heard the evidence of the appellant which was clearly telling in the judge’s mind. In the circumstances, we are quite satisfied that, on the material before him, the judge was fully entitled to reach the conclusion that he did on this part of the case, broadly for the reasons advanced in the submissions of Mr Dennison which we have sought to summarise above. We, therefore, reject the first ground of appeal.

We turn to ground 2. This relates to sums totalling £124,317 out of the £388,624 referred to in paragraph 21 of this judgment above. These were sums of money received by the appellant’s wife, having been paid into her bank account. These sums were not, it is argued, “transferred” to the appellant for the purposes of s. 10(2) of the Act.

The judge’s short finding on this issue appears at page 12 of his judgment as follows:

“Insofar as any of the above monies were received by Mrs Gor into any of her sole bank accounts I find that in those circumstances she received the monies as a nominee for her husband on the basis that this was a family firm/business and that in these circumstances of this case, the statutory assumptions under section 10 should apply to any such benefit received.”

Mr Talbot argued that the burden was on the Crown to prove that the transfer to Mrs Gor was effectively in law a transfer to the appellant. Only then would the statutory assumption apply. He argued that the evidence did not bear out a case that Mrs Gor was a mere nominee and the judge’s finding did not explain what evidence there was to demonstrate that she was such a nominee only. It was submitted that the accepted fact that this was a family business did not demonstrate that what Mrs Gor received from the business was in truth a transfer to the appellant. There was no evidence that the appellant was giving instructions with regard to the bank account; nor was it put to the appellant that he was using the accounts as his own. It was pointed out that the Crown’s financial witness, Mr Wells, said in his statement under s.16 of the Act that the spouses each had a beneficial interest in the business.

Mr Dennison argued that we should not go behind the finding of the judge in this respect. Mrs Gor had not given evidence and the judge’s finding that she was a nominee should be accepted, not least from his overall findings as to the nature of this business.

In our judgment, Mr Talbot’s arguments on this ground of appeal are correct. The burden to establish the fact of the transfer to Mr Gor, by dint of a transfer to his wife as a nominee, was upon the Crown. Until that burden was satisfied the statutory assumption did not apply. In our judgment, the passage in the judgment which we have quoted above did not ground the judge’s finding that Mrs. Gor was a nominee only. It may have been that there was evidence that would have provided such a conclusion, but in the absence of a fuller statement of reasons we are unable to be satisfied of this.

We, therefore, propose to allow the appeal on this ground, with the result that the benefit figure and the resultant confiscation order will have to be reduced by the relevant sum.

Ground 3 arises out of the application of the assumption in s. 10(3) of the Act, which the Crown said was satisfied in respect of two properties situated at 1 Berry Way and 40 Olive Road. If these properties were held in the appellant’s name after the date of his conviction and they would be assumed (under s. 10(3)) to have been obtained by his general criminal conduct unless the contrary were shown or serious injustice would result.

Mr Talbot accepted that the judge had been correct to find that the acquisition of the two properties had been financed in part by a mortgage fraud. He argued, however, that the property held had not derived from general criminal conduct; it had come (in part) from the particular criminal conduct constituted by the fraudulent mortgage transaction. It had to be shown that that the property held was the same as the property obtained by the criminal conduct: see s. 80(3).

It was argued, therefore, that as a result of the Supreme Court’s decision in Waya [2013] 1 AC 294, the property acquired with the benefit of a fraudulently obtained mortgage advance was not the property itself or the lawfully acquired equity of redemption. The right acquired as a result of the criminal conduct was the chose in action constituted by the right to have the mortgage advance paid to the vendor of the property: see the judgment of Lord Walker of Gestinghtorpe at [43] – [53] in the Waya case.

In our judgment, however, Mr Dennison’s answer to Mr Talbot’s attractively advanced submission was correct.

Waya was not a criminal lifestyle case and the statutory assumptions in s. 10 did not apply: see the headnote at [2013] 1 AC at 294F. It was a “particular criminal conduct” case. It was necessary, therefore, for the Crown to show that the property to which it said the legislation applied had been obtained as a result of the particular criminal conduct alleged and proved: s. 76(4). As a result of the analysis of Lord Walker referred to above, it was the very limited chose in action that had been acquired and the relevant property had become the amount represented by the increase in value of the property derived from the fraudulently obtained advance: s. 80(3)(b).

This case, however, is a “lifestyle” case and s. 10(3) requires the court to assume that the relevant property held was obtained by his general criminal conduct. That assumption is, in our view, not rebutted by showing that one part of the past criminal conduct resulted in the obtaining of a chose in action, constituted by the acquisition of the right to have a fraudulently obtained advance applied in part satisfaction of the purchase price of a property. The property in issue here was not a mortgage advance; it was the properties themselves which were to be assumed to derive from “general criminal conduct”, unless it was shown by the appellant not to have been so derived. To point to a particular bit of fraud that assisted in the acquisition of the properties (by the procurement of the right to have mortgage money paid as part of the acquisition price) does not rebut the presumption that the house itself was a product of general criminal conduct.

Moreover, it is not necessary to resort to the tracing provisions in section 80 of the Act since one is not trying to trace the property into which the chose in action derived from the fraudulently obtained mortgage advance. One is simply trying to discover whether the offender has come by the property in issue otherwise than by criminal conduct. The appellant in this case did not achieve that simply by showing that a particular bit of chicanery helped to produce the result.

Accordingly, we reject ground 3.

Ground 4 arises upon our having rejected Mr Talbot’s argument on Ground 3. Mr Talbot argues here that the properties at 1 Berry Way and 40/40A Olive Road were not held by the appellant on the day of the confiscation order and thus could contribute no part for the purposes of calculating the benefit.

So far as the Berry Way property is concerned, this argument is based upon the fact that, following his arrest in March 2010, as part of a transaction in December 2010 whereby this property, originally acquired by the appellant and his wife in joint names in 2004, was transferred into the names of Mrs Gor and the Gors’ son, Minesh. As part of this arrangement, as the judge records, the appellant gave his interest in the property to the son for “love and affection”, said to be “pursuant to a Hindu custom”. It is submitted that by virtue of the transfer, no part of the property could make up the “value” of property obtained by criminal conduct as the “material time is the time the court makes its decision”: s. 80(1)

The judge’s finding in this respect appears at pages 15 and 16 of the judgment as follows:

“Defendant submits that this property does not fall to be considered as a recoverable benefit because it has not been held since conviction (16^th of February 2012) by him. I do not accept that contention on the basis that as the gift transactions were tainted and a sham he still retained an interest at the relevant date which is caught by section 10 and the statutory assumptions.

I find for the purposes of available assts calculation that the gift transaction was tainted and a sham. The current equity is £151,300. I accept the defendant’s submissions that as the defendant’s interest as the property was held originally in joint names in one half of the sum namely: £75650, representing the defendant’s share of property.

In order to calculate the recoverable benefit figure, it is agreed that I should use the valuation principles from Waya and I accept the calculations prepared by prosecuting counsel in relation to a property obtained by fraud with a criminally acquired deposit. On the above figures this amounts to £151,300. This is on the basis that the percentage of the property tainted at the time of purchase is the market value and that the market value at the time of sale less the value of the outstanding mortgage is the relevant benefit. Again as the property was held in joint names originally I accept the defendant’s submission that the relevant figure is one half of this: £75,650.”

In our judgment, the judge’s finding that this transaction was “tainted and a sham” and that the appellant “retained an interest” amounted to a requisite conclusion that the appellant’s equitable half interest in the property remained with him: s. 84(2)(a) and (f). It was thus a property of value in which he held an interest even after the date of the 2010 transaction. The judge was, therefore, right to hold that the assumption applied to that interest.

The position with regard to 40/40A Olive Road is rather different. 40 Olive Road was a property held by the appellant after the date of his conviction. However, in the course of 2014, after conviction, the appellant divested himself of legal title. The property had been acquired originally in the joint names of the appellant and his wife in 2003 for £283,000. The judge described the subsequent history of the property in this way:

“The subsequent history of the property is as follows: on 20^th of May 2014 Mr Gor “sells” his interest in the property to his wife for £10,000. His evidence is that he “can’t pay the debts: maintenance and mortgage on the property properly”, this does not make sense in relation to the additional figures involved in servicing the property, and the fact that the property was kept within the family. 14^th of July 2014 land Registry shows the sole proprietor as Mrs Gor.

40A Olive Road was split from 40 (again a self-contained flat) and a new title was created. Mrs Gor price paid 31^st July £100,000, sold to Mrs Gor and Minesh Gor.

The property was remortgaged and mortgage raised on security of No 4A [sic].

No 40 outstanding mortgage: £316,764

No 40A: outstanding mortgage: £232,749

Total mortgage debt on both properties £549,513

Agreed valuation of both properties together:

(a)

£750,000 on open market basis

(b)

£525,000 on forced sale basis

In relation to the original mortgage of £200,000, equity has been stripped out of the property in the sum of £349,513.

Mr Gor has arranged for himself to be taken off the title deeds and has apparenty divested himself all his equitable interest in both properties. The properties meanwhile remain within the family.

There is no satisfactory explanation for the current whereabouts of the consideration of £1000,000 for No 40A and £10,000 for half of No 40.”

In our judgment, while this part of the learned judge’s judgment might have been better expressed, it seems to us that he was saying (as he had done in the case of the Berry Way property) that this was a case where the appellant had “apparently divested himself of all his equitable interest” but had not done so in reality because of the other circumstances which he mentioned. The apparent consideration had been lost and an apparent substantial equity had been “stripped out”. In our judgment, the judge was saying that the “apparent” was not the “real” and, as he went on to find, that one half of the equity, as agreed between counsel in this event, was relevant benefit of the value indicated.

Accordingly, we reject Ground 4.

Ground 5 also concerns the Berry Way property. Mr Talbot submitted that this property also fell out of account because it was not “held by the defendant at any time after the date of conviction”.

In our judgment, this ground of appeal must also fail for the same reason as ground 4 fails with regard to this property: the judge simply found that he had not in reality divested himself of his equitable interest in it.

Ground 6 was an argument as to the proper value to be attributed to 40 Olive Road and 26A Olive Way for the purpose of calculating benefit. The judge took the open market values of the two properties which were £750,000 for No. 40 £375,000 for 26A. On a “forced sale” basis, the respective figures were £525,000 and £300,000. It was submitted that the lower values should be attributed to the properties in calculating the benefit since by virtue of s. 11 of the Act, as amended from 1 June 2015, the court is unable to allow longer than 3 months for payment of a confiscation order. (The previous limit had been 6 months.)

It was submitted that “the market value” of a property for the purposes of s. 79(2) of the Act had to be the real market in which the relevant property was to be sold. In this case, the real market was, therefore, on the forced sale which the Act imposed upon the offender in order to realise property within the maximum period of grace (3 months) in which he was allowed to satisfy the confiscation order.

Before the judge the appellant relied upon the decision of the House of Lords in Islam [2009] 1 AC 1076. In that case it was decided that the market value, in reality, of a consignment of heroin should enter into the benefit calculation and that it was wrong to assign a nil value to it because there was no lawful market in heroin.

The judge’s conclusion on the point in the present case was this:

“In my judgment the argument is misconceived: the court in Islam was dealing with the situation of whether the court should consider, when assessing the value of drugs the artificiality of a legal market in illegal drugs which would have produced a “commercial” valuation. In my judgment the amendment to the compliance provisions does not affect the assessment of the actual market or affect the market value. This should remain the open market value based on the price which a willing vendor and a willing purchaser are prepared to sell and buy a property. It is inconceivable that a court would not grant an extension to an initial three-month period if a property had not achieved its market price and further time was needed to sell it. Even after the maximum new sic-month compliance period, the reality of enforcement proceedings is that a defendant will be given time to arrange for the orderly realisation of assets and in particular the sale of real property if there is a reasonable delay in sale or completion.”

In our judgment, the judge’s decision was correct and that the proper open market value of the property in question is the amount to be used. We can see no reason why the meaning of open market value in s. 79 should not be the normal one, i.e. the open market between willing buyer and willing seller, without constraint as to any particular time of sale – s.79 of the Act provides no qualification to the definition.

Further, the order is directed to the individual offender without specifying the property from which the order is to be met. There is nothing in the Act to direct out of what assets a confiscation order is to be met or by what means. In the present case, the judge found that there were substantial hidden assets. In our judgment, the judge was correct in bearing in mind that a defendant would be given time to arrange for orderly realisation of assets if demonstrated that that was what he was doing. In our judgment, Mr Talbot sought to read too much into the Islam decision and there is nothing to show that we should, in effect, read words into s. 79 of the Act which are not there.

The final ground of appeal, ground 7, relates to the rental income derived from the property at 26A Olive Road. The judge dealt with rental income from all the properties in the same section of his judgment and recorded the concession that if he were

“…to find that any of these properties were obtained dishonestly and by mortgage fraud then the rents received from the relevant properties would be caught by section 10 and the statutory assumptions”.

The rents derived from this property amounted to £40,114.78, out of a total for all the properties of £240,317.33.

It is objected that the element of the purchase price of this property derived from tainted funds was only £32,900 (or 10.74%), with the bulk being provided by way of a lawful mortgage of £306,099. It was submitted that to find that the entirety of the rental income resulted from general criminal conduct would be disproportionate.

Mr Dennison argued before us initially that all the rents could be taken as derived from the students attracted to the college venture which was the front for dishonest obtaining of benefit for this appellant; it was income derived from a workforce were paying rent and tuition fees and to generate business for the appellant.

Mr Talbot answered by saying that this was not the case made before the judge and that there was no evidence to show what proportion of tenants were in fact students recruited by the appellant. In the face of that submission, at the end of the hearing, Mr Dennison very fairly rose to say that he did not maintain his submission that all the rents from this property were tainted.

In the circumstances, therefore, it seems to us that we should allow this ground of appeal to the extent contended by Mr Talbot and should reduce the benefit figure in this respect by 89.26%, i.e. £35,805.76. The appropriate benefit figure on this basis, under this head would be 10.74% of £40,114, which is £4308.24.

Accordingly, drawing the threads together, we allow the appeal by reducing the benefit figure stated in the order by £124,317 (Ground 2) and £35,805.76 (Ground 7) – a total reduction of £160,122.76. The benefit figure becomes £927,356.35, less £160,122.76, which is £767,233.59. The confiscation order will also be reduced to the same figure of £767,233.59. To that limited extent only, we allow this appeal.