Muneka v Customs & Excise

MR JUSTICE MOSES: This is an appeal by way of case stated from a decision of the district judge for the Petty Sessions area of Hillingdon. She concluded, under section 298 of the Proceeds of Crime Act 2002 ("the 2002 Act"), that cash found in the possession of the appellant, Bujar Muneka, was obtained as a result of unlawful conduct and therefore was recoverable property for the purposes of the 2002 Act. There is annexed to my judgment the full case stated.

The relevant facts, for the purposes of the argument in the instant case, are that the appellant was found in possession of £22,760 cash at 6.50 am on 21st June 2004 at Heathrow Airport. He was travelling from London to Tirana in Albania via Hungary. He was questioned by an officer of Customs and Excise and told that that officer had reasonable grounds to suspect that it was recoverable property or was intended for use in unlawful conduct. When being questioned as to why he was carrying that amount of money and as to the source of the money, this appellant was well aware of the context in which he was being asked those questions. As the case reveals, the appellant gave his trade as an electrician and an explanation that £17,000 of the money was the proceeds of that trade and that most of the rest, £3,000, had been given to him by individuals to take to relatives in Albania.

Before the district judge, where application was made for forfeiture of the cash which had been seized, the appellant gave different explanations as set out at paragraph 3(h) of the record of the evidence given by the appellant and witnesses on his behalf. In short, before the district judge the appellant said that he had saved £13,100 and he had been given other amounts by other friends of his. He said £17,000 consisted of savings and a loan from a Mr Dida. He also gave an explanation as to why he was taking it to Albania: £17,000 of the money was to be given to a Mr Dedja as a business investment and as a loan. He gave further explanations in relation to how he had managed to save so much money and also that other sums were to be given to Mr Dida's fiancée and some of it was a loan. The district judge rejected that explanation and concluded that she was satisfied that the seized cash was recoverable property or was intended for use by any person in unlawful conduct.

The other evidence consisted of evidence of an accountant on behalf of Customs and Excise which demonstrated that the appellant's living expenses were very low and that there had been large deposits in a bank account during the period January to June 2003 (see record of evidence at paragraph 3(b)). Another official from Customs and Excise found that there was no proper explanation in supporting documentation as to the source of the cash or as to why the banking system had not been used. An accountant gave evidence on behalf of the appellant supporting what the appellant said, but not justifying an explanation of all the £22,760 cash. That accountant, of course, could not give any evidence as to the destination.

It is plain that the district judge, as she was entitled to do, found that the appellant had lied not only as to the source of the money, but as to its intended use; in other words, its destination. It was not argued by Mr Drury on behalf of the appellant that the district judge was not entitled so to conclude. The essence of his complaint and of the appeal was that, having found that the appellant had lied both as to the source of the cash and as to its destination, that was not sufficient evidence to establish that the money was obtained as a result of unlawful conduct or was intended for use in unlawful conduct. In short, the district judge had made an unjustified and erroneous assumption merely based upon those lies.

The statutory context in which the district judge had to consider these matters is to be found, as I have said, in the 2002 Act. Under section 298(2) a court may order forfeiture of cash if satisfied that it is either recoverable property (see section 298(2)(a)) or is intended by any person for use in unlawful conduct (see section 298(2)(b)). Recoverable property is defined in section 304(1) as property obtained through unlawful conduct. "Unlawful conduct" is defined in section 241 and "Property obtained through unlawful conduct" in section 242. Under section 241(2):

The issue for the district judge was whether the Crown had proved that this cash was obtained through unlawful conduct or was intended for use in unlawful conduct.

In my judgment, the context of the questions as to whether the property had been obtained through unlawful conduct or was intended for such a purpose, by the Customs officers at the airport, and again the context of resistance to forfeiture proceedings before the district judge, are of significance. The fact that this appellant lied was evidence upon which the district judge was entitled to conclude that the very suggestions put to him were in fact true on the balance of probabilities. The context in which the questions were asked is, in my judgment, important. The district judge was entitled to ask herself: why should this appellant have lied about the source and destination of that cash? He must have appreciated that such lies could have had no reasonable explanation other than that the suggestions made to him as to their source and as to destination were in fact true?

In my judgment, in that context the fact that there was no explanation for the source of that money, no reasonable explanation as to why he was taking that cash to Albania, the fact that there were discrepancies in his explanations as to the source of the money and as to its destination, taken together, did establish, both source and intention. At least the district judge was entitled to conclude on the balance of probabilities.

The only argument advanced on behalf of Mr Drury was that there was authority in a judgment of the Recorder of Cardiff in the case of Eric Williams v Chief Constable of the South Wales Police, given on 11th August 2004, that it was incumbent upon the prosecution to identify the criminal source of the money or the offence for which it was intended to use that cash (see paragraph 17 of his judgment). I am not sure it would be fair to the Recorder of Cardiff to conclude that he was intending to set out any proposition of law other than commenting on the particular arguments and facts of that case, but insofar as it is suggested that it is incumbent upon the prosecution to identify the criminal activity, the source of the money or the criminal offence for which it is intended to use the money, that, in my judgment, is incorrect. All that has to be shown is that the source of the money was a criminal offence in the United Kingdom and that it was intended for a criminal use either in the United Kingdom or elsewhere. In the instant case there was ample evidence of both and no other reasonable explanation.

If authority was needed in support of the proposition that lies in a particular context may establish a positive case as to the source of the money, such authority is to be found in the many cases where this court has had to consider the proceeds of drug trafficking. I was referred to a number of them, but the proposition that an account, once rejected by the fact-finding tribunal, may itself provide a basis for concluding that the source was criminal activity is to be found in the judgment of Watkins LJ in Bassick and Osborne v Commissioners of Customs and Excise [1993] 161 JP 377 at 385 G-H; in Nevin v Customs and Excise, a decision of Simon Brown LJ with a short judgment from Sedley J (as they then were), unreported, 3rd November 1995; and in the judgment of Hallett J in Butt v HM Customs & Excise [2001] EWHC Admin 1066 at paragraph 32.

It is important, in my view, to bear in mind that Parliament has specifically dictated that the standard of proof is one on the balance of probabilities. That has important consequences as to the way the court should direct itself. The lies in the context of the issue may well establish that the source of the money is criminal activity. Nowhere was that better put, if I may say so, than in the short judgment of Sedley J in Nevin, to which I have already referred, where he said:

In those circumstances, there is, in my judgment, nothing in this appeal. The district judge was entitled to reach the factual conclusions she did. She asked herself a number of questions, only the first of which is really relevant to this case: "Was I wrong in law to find on the evidence that the cash was recoverable property or intended for use in unlawful conduct and that a forfeiture order should be made?". The answer is "no". None of the other issues were pursued, but I should say for the sake of clarity that in answer to the question in relation to the reverse burden of proof, although it was not argued before me, it is plain that there was no reverse burden of proof properly so-called; all that happened on the facts was that the facts were so startling that they called for an explanation. No truthful explanation was given. That does not amount to a shift in any burden of proof. So the answer is "no" and therefore question 3 does not arise.

MR BIRD: My Lord, I have an application for costs.

MR JUSTICE MOSES: You ask for the appeal to be dismissed.

MR BIRD: The appeal to be dismissed, the question answered as my Lord has answered it. I seek costs. Two points on costs. Firstly, in my submission, really this appeal should not have been brought to this court, it should have gone to the Crown Court even if the same points were to be argued. Essentially it was an argument on the facts.

MR JUSTICE MOSES: But the district judge could have declined to have stated a case.

MR BIRD: She could have done, and perhaps she would have done had we had the opportunity to make representations, but we were not consulted when she decided to state the case. The other matter is that I am assisted by my learned friend Miss King, who appeared in the court below. Because the points being taken appeared to us not to have been taken in the court below, we thought it desirable that at least one counsel who had been present should be ready to assist this court.

MR JUSTICE MOSES: I am very grateful to her for being here but I cannot see why it was necessary to have two counsel, I am afraid.

MR BIRD: So be it. I would ask for an order for costs in the sum in the schedule.

MR JUSTICE MOSES: Has the claimant seen the schedule?

MR BIRD: I think so, yes.

MR DRURY: My Lord, I have, yes.

MR JUSTICE MOSES: Do you want to say anything about it? I was not proposing to allow Miss King's costs.

MR DRURY: My Lord, no.

MR JUSTICE MOSES: It is only a one counsel case, but, apart from that, I cannot see why you should not pay.

I shall give Customs and Excise their costs, but I shall not allow the fees of second counsel. I do not know what the total is if you knock Emma King's fees off.

MR BIRD: £5,103.50.

MR JUSTICE MOSES: That is taking into account VAT and everything?

MR BIRD: Yes. Oddly enough, the Commissioners cannot reclaim VAT, as I understand it.

MR JUSTICE MOSES: I shall make an order for costs in the sum of £5,103.50. Thank you very much.