Ipsofactoj.com: International Cases [2004] Part 12 Case 3 [CAEW]


COURT OF APPEAL, ENGLAND & WALES

Coram

Forwell

- vs -

Regina

LORD JUSTICE SCHIEMANN

LORD JUSTICE SEDLEY

LORD JUSTICE JACOB

12 NOVEMBER 2003


Judgment

Lord Justice Schiemann

  1. This is the judgment of the court. Before us is an appeal by permission of Kennedy LJ from a decision of Gibbs J to refuse to grant a Certificate of Inadequacy pursuant to section 14 of the Drug Trafficking Offences Act 1986 ("the DTOA") to Mrs. Forwell, to whom he referred as the claimant. She was the wife of a major drug trafficker.

  2. She was sentenced in 1994 to three years imprisonment, given 6 months in which to pay a sum of about £700,000 and a period of 12 months imprisonment in default of payment was imposed to run after the conclusion of the sentence. She did not obtain leave to appeal.

  3. The present appeal comes about in these circumstances. She has served her term of imprisonment imposed as a punishment but enforcement proceedings have not yet got to the stage where she has been imprisoned in default of payment. She has paid some but not all of what she was ordered to pay. (That amount was in fact reduced by consent but nothing turns on that.) The judge was told that there was a total shortfall of just over £350,000. The judge found that she was in no position to pay any more. What is to be done in such circumstances? That is the root question with which the judge was, and we are, concerned.

    THE BROAD SCHEME OF THE ACT

  4. Before turning to the details of the present appeal, it is useful to remind oneself of the broad scheme of the 1986 Act. The Act is concerned with the confiscation by the State of benefits which the criminal or his associates may have derived from drug dealing. Once he has been convicted the court must determine whether he has at any time benefited from drug trafficking. If he has, the court must then determine the value of his proceeds of drug trafficking. When it has done that, the court must determine the amount that might be realised at the time of the making of a confiscation order. The court must then make a confiscation order and order him to pay that amount and specify the term of imprisonment which he is to serve if he does not pay that amount within a specified time.

  5. The Act contains numerous rather artificial rules and presumptions by which these various exercises are to be governed. In particular it contains a provision whereunder the court can in some circumstances treat property which the defendant has given to others as if it had remained in his ownership and control. Such property is termed ‘a gift caught by this Act’.

  6. In the course of carrying out this exercise the court has to value various assets, referred to as ‘realisable property’, which either are or are deemed to be within the possession and control of the defendant. Now, it can happen that, when the time comes to realise the realisable property, its value is less than had been assumed at the time of the making of the confiscation order or that for reasons which may or may not involve fault on the part of the defendant the ‘realisable property’ is not in fact realisable at all. For such circumstances Parliament made some provision in section 14 of the DTOA which deals with certificates of inadequacy.

    ENFORCEMENT IN CASES WHERE THERE IS NO CERTIFICATE OF INADEQUACY

  7. The Act provided that where a confiscation order was made and a defendant was ordered to pay a certain amount then that amount was to be treated for enforcement purposes as if it had been a fine imposed by the Crown Court. In those circumstances, under the Powers of Criminal Courts Act 1973 (now repealed and replaced by Powers of Criminal Courts (Sentencing) Act 2000), it was the duty of the sentencing court to impose a certain period of imprisonment in default.

  8. The legislation and the case law indicates in relation to enforcement that if the confiscation order is not satisfied within the appropriate time and it comes to enforcement, the magistrates – to whom it can fall to enforce fines imposed by the Crown Court - should first consider whether any other way of raising the money is practicable.

  9. We have not been taken through the relevant legislation in force at the relevant times or applicable now to the instant case dealing with the powers of various courts in circumstances where, as is apparently the case with Mrs. Forwell, the defendant is in fact not in a position to pay and there are no other ways of satisfying the confiscation order. Miss Saunt, on behalf of the Crown Prosecution Service submits that even if, as the judge found in the present case, Mrs. Forwell has no money and no access to money "the only way for a defendant to avoid serving a period in default is to pay the order in full".

  10. Mr. Russell-Flint QC on behalf of Mrs. Forwell, as I understood him, accepts that, as a matter of law, if Mrs. Forwell cannot obtain a certificate of inadequacy she will indeed be liable to serve such a term of imprisonment.

  11. The judge by contrast took the view that any human problem posed by the threat of imprisonment of someone for non-payment of a sum which she was not in a position to pay could be dealt with in the lower courts. He put the matter thus in paragraph 33 of his judgment.

    33.

    There is a separate question which will have to be considered if matters, as I expect, are taken further in connection with enforcement. Whilst I regret that, having weighed the various factors, I have felt it just to disregard the inadequacy, equally my findings disclose that, on the balance of probability, the sum of £228,000 odd is not available to the claimant, and that she is currently suffering hardship. Those are matters which, no doubt, will be considered by the court which is given the task of enforcing the confiscation order.

  12. The judge did not identify any powers which were available to the magistrates to take into account hardship so as to avoid imprisoning where there are in fact no assets available to satisfy the order. Faced with the agreement of Counsel that there are no such powers, and not having been able myself on a quick look at some of the very complicated legislation which was not placed before the court by counsel, to identify any, I proceed on the basis that there are no such powers. I expressly refrain from so holding.

    CERTIFICATES OF INADEQUACY: CHANGE SINCE THE MAKING OF THE CONFISCATION ORDER

  13. The DTOA has long been repealed and replaced but, as is common ground, it is nevertheless the relevant Act to apply in the circumstances of the present case. The provision replacing section 14 is to be found in section 17 of the Drug Trafficking Act 1994. That in turn has been replaced by section 23 of the Proceeds of Crime Act 2002.

  14. Parliament undoubtedly made provision in Section 14 of the 1986 Act for situations where there has been a change of circumstances since the date of the making of the confiscation order :-

    14.

    (1)

    If, on an application by the defendant, in respect of a confiscation order, the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under the order the court shall issue a certificate to that effect, giving the court’s reasons.

    (2)

    For the purposes of subsection (1) above-

    (a)

    in the case of realisable property held by a person who has been adjudged bankrupt or whose estate has been sequestrated the court shall take into account the extent to which any property held by him may be distributed among creditors, and

    (b)

    the court may disregard any inadequacy in the realisable property which appears to the court to be attributable wholly or partly to anything done by the defendant for the purpose of preserving any property held by a person to whom the defendant had directly or indirectly made a gift caught by this Act from any risk of realisation under this Act.

    (3)

    Where a certificate has been issued under subsection (1) above, the defendant may apply to the Crown Court for the amount to be recovered under the order to be reduced.

    (4)

    The Crown Court shall, on an application under subsection (3) above-

    (a)

    substitute for the amount to be recovered under the order such lesser amount as the court thinks just in all the circumstances of the case, and

    (b)

    substitute for the term of imprisonment or of detention fixed under subsection (2) of section 31 of the Powers of Criminal Courts Act 1973 in respect of the amount to be recovered under the order a shorter term determined in accordance with that section (as it has effect by virtue of section 6 of this Act) in respect of the lesser amount.

  15. The judge accepted a submission by Miss Saunt which she repeated before us. She submitted that, in relation to much of what the sentencing court had found to be ‘realisable property’ there had been no change since the time of the making of the confiscation order.

  16. She submitted that the High Court, when hearing an application under section 14 of the DTOA, had no jurisdiction to consider the question whether at the time that the sentencing court made the confiscation order the sentencing court was correct in the conclusions to which it came. If a defendant wished to challenge that conclusion he had to do so by way of appeal to the Court of Appeal (Criminal Division). To do so later amounts to an abuse of process. She relied on Abbas Kassimali Gokal v Serious Fraud Office [2001] EWCA Civ 368 and the cases cited in Mitchell, Taylor & Talbot on Confiscation and the Proceeds of Crime (3rd Edition) Para 7.007. I shall refer to this work hereafter as Mitchell.

  17. Where the sentencing court, on the evidence before it, was entitled to come to the conclusion to which it came, one can be faced with two separate situations

    1. where there is not to hand in the High Court any new evidence which would have been relevant to the decision of the sentencing court had it been adduced in time;

    2. where there is such new evidence available to the High Court.

  18. The case was not argued in depth nor were all the material Acts and cases before us. If Miss Saunt’s submissions represent the law then this has serious implications, it being common ground that a Magistrates Court has no power to reduce the amount payable under a confiscation order. I proceed nevertheless on the basis that this is the law and that this is one of those cases where certainty must take priority over the ability repeatedly to litigate the same questions. Moreover I proceed on the basis that at least in relation to some of the sums which had been held by the sentencing court to be part of the ‘realisable property’ there had been no material change since the date of the making of the confiscation order.

    WHERE THERE HAS BEEN A CHANGE SINCE MAKING OF THE CONFISCATION ORDER

  19. The primary task of the High Court under section 14 is to determine whether it is satisfied that the realisable property is inadequate.

  20. It is stated in Mitchell at 7.005 that a defendant may have spent his realisable property at the time the application is made but that would not be a bar to the grant of the mandatory certificate by the High Court. I would agree.

  21. This is not as surprising as it might seem since the certificate of inadequacy in itself achieves nothing save to make possible an application to the Crown Court pursuant to section 14(3) to reduce the amount to be recovered and the sentence in default. Whether or not the Crown Court does so is a matter left to that Court’s sense of justice in all the circumstances of the case – see s.14(4)(a).

  22. Section 14(2)(b) gives the High Court a power which it can exercise in favour of the prosecution to disregard any inadequacy in the realisable property which appears to the Court to be attributable wholly or partly to anything done by the defendant for the purpose of preserving any property held by a person to whom the defendant had directly or indirectly made a gift caught by the Act from any risk of realisation under the Act. If the High Court exercises that power so as to disregard the totality of the inadequacy then there is no possibility of an application to the Crown Court under s.14(3).

  23. Why s.14(2)(b) gives the High Court this power to advantage the prosecution in circumstances where the defendant has made a gift to third parties but does not give it this power in circumstances where the defendant has spent the money on himself is not clear to me. In the circumstances, and bearing in mind that justice can be achieved in the Crown Court only if a certificate is granted, I incline towards construing the s.14(2)(b) power narrowly.

  24. In the context of the present case, for reasons which will appear later, it is useful to consider a case in which

    1. The defendant, before the making of the Confiscation Order, made a gift of £100 caught by the Act which was thus realisable property within the definition in section 5

    2. The defendant had other realisable property of £500

    3. A Confiscation Order was thereupon made for £600,

    4. The defendant does something in relation to the £100 which falls within s.14(2)(b)

    5. the defendant has no assets whatever.

  25. In such circumstances, as it seems to me the Court can, pursuant to s.14(2)(b) disregard £100 of the inadequacy but it has no power to disregard all of the inadequacy. On that premise the High Court must issue a certificate of inadequacy.

  26. Even if it appears to the Court that the case falls within s.14(2)(b), whether it decides to disregard any inadequacy is a matter for the Court’s discretion.

  27. Where the Court, in the exercise of its discretion, decides to disregard any inadequacy it should set out its reasons. Subsection (1) expressly requires this where a certificate is issued. In my judgment there is a similar requirement implicitly imposed as a matter of fairness where there is a refusal to issue a certificate. A disregard has huge potential consequences for the defendant as this case all too clearly reveals.

    THE JUDGMENT UNDER APPEAL

  28. The judge said this (the emphases are mine)

    7.

    Time has passed and the claimant has now been released from her prison sentence some substantial time ago. On 12 March 1996 she swore her first affidavit in connection with proceedings to demonstrate the inadequacy of resources. At paragraph 11 of that affidavit she said:

    I accept that prior to my arrest monies were taken out of an account in the ING Bank in the Far East by my family but I am informed and verily believe that monies have been used to look after and care for my three children: their educational and other needs. I do not have any bank account other than the National Westminster Bank account referred to heretofore. I have no other assets either in this country or abroad and I survive on state benefits as aforesaid.

    ....

    14.

     

    It is common ground between the claimant and the defendant in this matter that the transfer of £228,554 is to be regarded as a gift for the purposes of the Act.

    ....

    23.

     

    The final and most problematical point in this application is the issue of whether the claimant's evidence, as a whole, is sufficient to prove that the sum, or what remains of the sum, is now inadequate for the payment of any amount remaining to be recovered under the confiscation order, and, indeed, that nothing remains of that sum. It is agreed that the proof required is the balance of probabilities. Reference has been made to a number of useful decisions illustrating the application of section 14 of the Act in particular cases, for example: Re C, DTOA/114/97, a decision in this court of 18 November 1997 by Dyson J, as he then was; R v Liverpool Magistrates' Court, ex parte Ansen, Divisional Court [1998] 1 All England Reports 692; In the matter of Ali, an unreported application for permission dated 4 October 2002. It emerges from those decisions that the fact that the burden of proof is difficult or even impossible to discharge does not assist the claimant; it is whether it has been discharged that matters.

    24.

    The first point which I raised with counsel, and which has been the subject of anxious consideration in the course of the hearing, is this: if I were to find that the sum of £228,554 had, in fact, been spent and/or otherwise dissipated with the collusion of, or even at the direction of, the claimant, would I, nevertheless, be compelled to grant the certificate on the basis that the asset was no longer realisable? The answer with which I was provided, after the matter had been carefully considered and additional submissions made, was that I would be compelled to grant such a certificate, but subject to a discretion under section 1 subsection (2) to disregard any inadequacy as defined by that subsection.

    25.

    I now turn to the submissions on the facts. I summarise these briefly. There were more extensive and helpful submissions from each counsel. Miss Saunt submits that the burden of proof of the inadequacy is not discharged ....

    26.

    Mr. Del Fabbro [who appeared for the claimant] relies upon the fact that the claimant is divorced now from her husband who, on any view, is a substantial international drug-dealer and the driving force behind the transactions. He points to the fact that the evidence demonstrates that the claimant has lived in poverty since release from prison. She has tried to get back to Singapore but failed to gain entry. He says that it is certain and, at the very least probable, that her children must have had money spent on their upbringing and education in Singapore, and that this confirms the probability that her family, and her sister in particular, will not have made sacrifices in order to look after those children without recompense from the sum in question, which is, effectively, the claimant's sole major asset in Singapore. He points to the lack of resources of the claimant and the hostility of her family to explain the absence of more detailed information. He says that there is no reason to disbelieve the sums in the schedules which relate to the expenditure claimed because, in the light of the background evidence, they are far from exorbitant and they are the sort of expenditure that one would expect in the social context of the family in Singapore. He relies on the claimant's dire financial circumstances in the United Kingdom over a period to support the view that the sums in question have been depleted.

    27.

    The starting point for consideration of these matters is that the sum in question was held to be realisable at the time of the confiscation order. That implies that, at that time, the sum was within at least the claimant's control, if not her possession. It therefore would seem to follow, as a matter of probability, that any disposition of that money thereafter was also probably within the claimant's control.

    28.

    Disregarding that aspect of it, I find also, specifically on the material before me, that she probably did have control, at least in substantial part, over how that money she had acquired was spent. Even if her family had the physical means of disposing of it, she is likely to have cooperated with them over what happened. Having carefully considered the situation, I am of the view that it is probable that costs in relation to the children were discharged from the sum in question broadly in the manner alleged ....

    29.

    However, I do find force in the submission that the poor state of the claimant, who has been physically ill or unwell from time to time, and the state of her finances over a period of years, are inconsistent with the whole or any significant part of that sum any more being realisable. I also consider it probable, however, that she must, at least in substantial part, have been responsible for those assets ceasing to be realisable. She wanted her children brought up and paid for in Singapore.

    30.

    Mr. Del Fabbro submits that the hostility of the family in Singapore and the sense of shame which the claimant's conviction has brought explains why she has not been able to influence events there. I would only accept that submission to a limited extent, in that it may be that, once events were set in train in Singapore, they would not have been easy to reverse, even if the claimant had wished that they could be. But I am not persuaded that the claimant played an insignificant part in what happened to the fund. At the very least, she stood by whilst it was applied for purposes which, as I find, she either approved of or condoned.

    31.

    Had that not been the case, I would have expected some steps to have been taken, once the confiscation order was made, to identify the accounts in which the sum was held. At that stage, as the Crown Court held, the sum was realisable property of hers. It would have been apparent to her that she was responsible for that sum under the confiscation order. Further, it would have been clear that failure to comply with the order, which had a six month time limit after all, may result in the default sentence. The explanations in her affidavit, which are to the effect that she had no influence and that her family, who were honourable, were simply doing the best they could with the money, is, in my judgment, unimpressive. It is implausible, in my judgment, that her family, as well as she, would not have realised that the funds being used had been held by a court in the United Kingdom to be the proceeds of drugs trafficking. As I have said, it is common ground that the transfer of the sum into the account constituted a gift caught by the Act.

    32.

    Having regard to the facts which I have found, I have also come to the conclusion that, for the purposes of the section 14 subsection (b) the inadequacy is attributable, at least in substantial part to the claimant's actions. The question therefore arises as to whether I should exercise my discretion to disregard the inadequacy which I have found to have eventuated. Of course, the court can only have sympathy for the claimant in her current circumstances. She lacks money, apparently, and she has a family, in part at least, dependent on her. Further, there is the fact that some, at least, of the funds were probably used on the education and upbringing of her children in Singapore. Nevertheless, the court is driven inescapably to the conclusion that, following the making of the confiscation order and in the full knowledge that the court had held the sum in question to be the proceeds of drugs trafficking, she did substantially contribute to those funds being placed beyond the reach of the confiscation order. In my judgment, under those circumstances and despite the hardship she is now suffering, I am unable to exercise my discretion in favour of the claimant in this matter, and I find myself constrained to disregard the inadequacy in the realisable property insofar as it relates to the sum of £228,554. In the result, this application must fail.

    CONCLUSION

  29. I confess that I am instinctively unhappy at what the prosecution say is the result of the judge’s decision. Here is a lady with no assets within her control, living in poverty, and yet she will go to prison because she has not paid the sum found to be realisable.

  30. The judge proceeded on the basis that at least some of the funds have been spent with her assent on providing for the children. In those circumstances I have difficulty in regarding her assent as something done by her "for the purpose of preserving [the] property .... from any risk of realisation under the Act". While this no doubt was its effect, the purpose of her action or inaction was surely to try and secure that her children were fed.

  31. As appears from paragraph 20 above, if the assets had been hers and she had dissipated them after the making of the Order a certificate would have been issued. It does not appear that the judge bore this feature in mind. For my part I can see no moral distinction between dissipating the assets oneself and facilitating the dissipation of those assets by someone to whom one has given them. In so far as the ‘dissipation’ is done in order to ensure that ones children are fed rather than on wine, women and song for oneself any moral distinction must be in favour of the former. Why should the person in the morally weaker position be in a position to insist on a certificate and the caring mother go to jail? The judge should, in my judgment, have considered these matters and borne them in mind when deciding whether or not to exercise his discretion in favour of the prosecution. There is no sign that he did so.

  32. I have the impression that the judge was unhappy at his own conclusion. His reference in paragraph 32 to being "constrained" and being "unable" to exercise his discretion may point to him having regarded himself as having no discretion on the facts as he found them to be. However, I accept that in the very sentence where he used that word he also implies that he has a discretion and so this may just be the language which many of us use when sentencing. Nevertheless, he does not appear to have kept in mind that he was being asked by the prosecution to exercise a discretion in their favour. He was not being asked by the claimant to exercise a discretion in her favour which is the way he expresses himself. The default position, if I can use that phrase, was that a certificate should be issued when there was an inadequacy.

  33. It may be that the judge’s unhappiness was assuaged by the thought that problems of hardship could be dealt with in the Magistrates Court. For the reasons indicated in paragraphs 7-12 above I proceed on the basis that he was mistaken. If this was part of his reasoning then it would be an additional reason for allowing the appeal.

  34. It seems from paragraph 27 of his judgment that the judge proceeded on the basis that at the time of the making of the Confiscation Order the sum remained within her control. That sits uncomfortably with the finding by the sentencing judge that this was a gift.

  35. It looks from the phraseology of paragraph 28, 30 and 3 of the judgment as though the judge may have considered that at least some of the sum was dispersed without her assent. If I am right in what I say in paragraphs 26 and 27 above, that would have been a proper basis for issuing a certificate.

  36. I have huge sympathy with the judge. These provisions were hopelessly difficult to construe and I have not found this easy. However, in the end I have come to the conclusion that he has not articulated his reasoning for exercising his discretion in favour of the prosecution and I would allow the appeal. We will hear the parties on the precise form of order unless they can agree the same before hand down.

  37. Although the submissions on behalf of Mrs. Forwell lightly referred to the Human Rights Act I do not base my decision on the Convention or that Act.

    POSTSCRIPT ON JURISDICTION

  38. The respondents raise by way of Respondents Notice a preliminary point to the effect that this court has no jurisdiction to entertain an appeal from a decision by the High Court not to issue a Certificate of inadequacy. As I understood Miss Saunt she took this point on her own initiative pursuant to her duty to the court rather than at the request of the Crown Prosecution Service.

  39. The submission is based on s.18(1) of the Supreme Court Act 1981 which provides that "no appeal shall lie to the Court of Appeal .... from any Judgment of the High Court in any criminal cause or matter" and the decision of the House of Lords in Amand v Home Secretary & Minister of defence of Royal Netherlands Government [1943] AC 147.

  40. This Court in Gokal proceeded on the basis that it had jurisdiction to entertain such appeals albeit without contrary argument. I am indebted to Jan Hinder-Walbank of the Court of Appeal Office for drawing our attention to a decision of the House of Lords in Government of the United States v Montgomery [2001] 1 WLR 196 which in turn refers to In re O [1991] 1 All ER 330 a decision of this Court. In that case Lord Donaldson MR. said this at page 333g

    Essentially the issue in such cases as this is whether the order sought to be appealed was a judgment in a criminal cause or matter or merely a judgment collateral to a criminal cause or matter. If it is in the former category the court has no jurisdiction. If it is in the latter category there is jurisdiction.

  41. Both lend some support to the general proposition that there is an appeal to this court under analogous provisions in other statutes. I would be reluctant to refuse to defendants any right of appeal to this court for the reasons set out in those cases. While it may be possible to distinguish these cases I see no reason to do so, particularly in the absence of any policy reasons being advanced in favour of such a conclusion.


Cases

Abbas Kassimali Gokal v Serious Fraud Office [2001] EWCA Civ 368; Amand v Home Secretary & Minister of defence of Royal Netherlands Government [1943] AC 147; Government of the United States v Montgomery [2001] 1 WLR 196; In re O [1991] 1 All ER 330

Legislations

Drug Trafficking Offences Act 1986: s.4, s.14

Powers of Criminal Courts Act 1973

Drug Trafficking Act 1994: s.17

Proceeds of Crime Act 2002: s.23

Authors and other references

Mitchell, Taylor & Talbot on Confiscation and the Proceeds of Crime (3rd Edition)

Representations

Mr. Russel-Flint QC & Mr. Del Fabbro (instructed by Messrs Whitelock & Storr) for the Appellant

Miss Saunt (instructed by Crown Prosecution Service) for the Respondent


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