No. 2004/02692/C5
    2004/02693/C5
Neutral Citation Number: [2006] EWCA Crim 2032
IN THE COURT OF APPEAL
CRIMINAL  DIVISION
Royal Courts of Justice
The Strand
London
WC2A 2LL

Thursday  20  July  2006

B e f o r e:

LORD  JUSTICE  WALLER

MR  JUSTICE  MACKAY

and

MRS  JUSTICE  COX  DBE

_______________

ATTORNEY GENERAL'S REFERENCE No. 83 and 84 of 2004

UNDER  SECTION  36  OF

THE  CRIMINAL  JUSTICE  ACT  1988
_______________

R E G I N A

- v -

JEROME  LEGALL

TRACY  MACAULAY
__________________

Computer Aided Transcription by
Smith Bernal, 190 Fleet Street, London EC4
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__________________

MR D PENNY and MR R GRIFFITHS
appeared on behalf of THE ATTORNEY GENERAL

MR P DAVIES appeared on behalf of THE OFFENDER JEROME LEGALL
MR J JENKINS appeared on behalf of THE OFFENDER TRACY MACAULAY
____________________

J U D G M E N T

Thursday  20  July  2006

LORD JUSTICE WALLER:  I will ask Mr Justice Mackay to give the judgment of the court.

MR JUSTICE MACKAY:
1.  This is a resumed reference by Her Majesty's Attorney General under section 36 of the Criminal Justice Act 1988.  On 6 April 2006 before this court differently constituted (Hooper LJ, Owen and Bean JJ) the Attorney General was granted leave for the reasons set out in the judgment of that court ([2006] EWCA Crim 796).  Briefly, the first offender Raymond Jerome Legall pleaded guilty on 23 September 2003 to count 2 of an indictment which charged him with conspiracy to supply a controlled drug of Class A (cocaine) together with other named persons including the second offender.  On the same day, following legal argument, count 1, which alleged a different conspiracy with another person (not the second offender) between 1 January 2000 and 30 April 2002, was the subject of a verdict of not guilty in favour of the first offender.  This was because the quality of certain covert recorded evidence on which that count depended was judged to be too poor to put before a jury.

2.  The second offender had pleaded guilty to count 2 at an earlier appearance before the Crown Court on 1 April 2003.  

3.  The first offender was sentenced by His Honour Judge Denyer QC on 13 November 2003 to ten years' imprisonment.  The following day the second offender was sentenced by the same judge to four years' imprisonment.  On 22 March 2004 the judge refused to adjourn or postpone the hearing of confiscation proceedings under the Drug Trafficking Act 1994.  That was the decision held by this court to be unduly lenient.  

4.  The consequence of this decision was therefore that confiscation proceedings had to be determined.  That has led to this hearing before this constitution of the court.  Perhaps surprisingly, there is no power to remit the matter to the Crown Court for the confiscation hearing to proceed there, which seemed to us, at first sight at least, to be a more appropriate venue, not least because the offenders would have normal rights of appeal.  Further, by virtue of section 55(4)(aa) of the Supreme Court (Senior Courts) Act 1981, this court must sit as a three judge court for the purpose of "reviewing sentencing under Part IV of the Criminal Justice Act 1988".  Part IV of that Act includes section 36 which creates the power for the Attorney General to refer the sentencing of a person where he considers that to have been unduly lenient.  It reads:

"(1) .... he may with the leave of the Court of Appeal, refer the case for them to review the sentencing of that person; and on such a reference the Court of Appeal may --

(i)	quash any sentence passed on him in the proceeding, and

(ii)	in place of it pass such sentence as they think appropriate for the case and as the court below had power to pass when dealing with him."

It was in accordance with these provisions that this court on 6 April 2006 gave certain directions for the hearing which has taken place before us today.

The Facts
5.  The brief facts were that the first offender was arrested on 25 August 2002 after the second offender had been found in possession of 2 kilograms of cocaine which she was intending to deliver to him in Cardiff.  The judge had already heard a trial of other defendants, all of whom were acquitted by the jury, and had also seen and heard the covert evidence involving the first offender in count 1.

6.  In sentencing the first offender the judge said that he was satisfied that he was a central figure so far as the bringing of cocaine into Cardiff and its subsequent distribution was concerned.  He described him as a major regional wholesaler.  The cocaine that the second offender was delivering from London to Cardiff on his behalf was of nearly 50% purity.  He had £70,000 in cash at his flat, which the judge found he intended to hand to the second offender as the price of the delivery.  There was also clear evidence that there had been another such delivery by the second to the first offender on 27 July 2002.  The judge's view was that the value to the first offender of these two deliveries would have been "not much less than a couple of hundred thousand pounds".  His conclusion was that the first offender was at the top of the Cardiff tree, though there were others higher up the chain in London.  He would have been sentenced, had he fought the case, as a substantial wholesaler and received a sentence of fourteen years of thereabouts; but giving credit for a plea of guilty the judge passed a sentence of ten years' imprisonment.  The first offender has not sought to appeal that sentence.

7.  The second offender entered a basis of plea, which was not accepted by the prosecution, that she was a courier acting for a man in London and made deliveries to the first offender "at various times" and that she received £250 per day for her work.

The Relevant Legislation
8.  These confiscation proceedings fall to be considered under the Drug Trafficking Act 1994, which was the legislation relevant to these offences.

9.  It is common ground that the conviction of each offender on their pleas of guilty was a conviction for a "drug trafficking offence" within the meaning of section 1(3) of that Act.

10.  The Act, so far as is relevant to this reference, provides as follows:

2.	(1) .... where a defendant appears before the Crown Court to be sentenced in respect of one or more drug trafficking offences ... then --

(a)	if the prosecutor asks the court to proceed under this section .... 

it shall act as follows.

(2)	The court shall first determine whether the defendant has benefited from drug trafficking.

(3)	For the purposes of this Act, a person has benefited from drug trafficking if he has at any time (whether before or after the commencement of this Act) received any payment or other reward in connection with drug trafficking carried on by him or another person.

(4)	If the court determines that the defendant has so benefited, the court shall, before sentencing or otherwise dealing with him in respect of the offence .... determine in accordance with section 5 of this Act the amount to be recovered in his case by virtue of this section.

(5)	The court shall then, in respect of the offence or offences concerned --

(a)	order the defendant to pay that amount ....

....

(8)	The standard of proof required to determine any question arising under this Act as to --

(a)	whether a person has benefited from drug trafficking; or

(b)	the amount to be recovered in his case by virtue of this section;

shall be that applicable in civil proceedings.

....

  4. (1)	For the purpose of this Act --

(a)	any payments or other rewards received by a person at any time (whether before or after the commencement of this Act) in connection with drug trafficking carried on by him or another person are his proceeds of drug trafficking; and

(b)	the value of his proceeds of drug trafficking is the aggregate of the values of the payments or other rewards.

(2)	Subject to subsections (4) and (5) below. the Crown Court shall, for the purpose --

(a)	of determining whether the defendant has benefited from drug trafficking, and

(b)	if he has, of assessing the value of his proceeds of drug trafficking,

make the required assumptions.

(3)	The required assumptions are --

(a)	that any property appearing to the court --

(i)	to have been held by the defendant at any time since his conviction, or

(ii)	to have been transferred to him at any time since the beginning of the period of six years ending when the proceedings were instituted against him,

was received by him, at the earliest time at which he appears to the court to have held it, as a payment or reward in connection with drug trafficking carried on by him;

(b)	that any expenditure of his since the beginning of that period was met out of payments received by him in connection with drug trafficking carried on by him;

....

(4)	The court shall not make any required assumption in relation to any particular property of expenditure if --

(a)	that assumption is shown to be incorrect in the defendant's case; or

(b)	the court is satisfied that there would be a serious risk of injustice in the defendant's case if the assumption were to be made; 

and where, by virtue of this sub section, the court does not make one or more of the required assumptions, it shall state its reasons.

....

       5. (1)	Subject to subsection (3) below, the amount to be recovered in the defendant's case under the confiscation order shall be the amount the Crown Court assesses to be the value of the defendant's proceeds of drug trafficking.

....

(3)	If the court is satisfied that the amount that might be realised at the time the confiscation order is made is less than the amount the court assesses to be the value of his proceeds of drug trafficking, the amount to be recovered in the defendant's case under the confiscation order shall be --

(a)	the amount appearing to the court to be the amount that might be so realised; or

(b)	a nominal amount, where it appears to the court (on the information available to it at the time) that the amount that might be so realised is nil.

       6.	(1)	For the purposes of this Act the amount that might be realised at the time a confiscation order is made against the defendant is --

(a)	the total of the values at that time of all the realisable property held by the defendant, less

(b)	where there are obligations having priority at that time, the total amount payable in pursuance of such obligations,

together with the total of the values at that time of all gifts caught by this Act.

....

       8.	(1)	A gift (including a gift made before the commencement of this Act) is caught by this Act if --

(a)	it was made by the defendant at any time since the beginning of the period of six years ending when the proceedings were instituted against him ...."

Proceedings against the First Offender
11.  In a prosecutor's statement dated 10 March 2004 the prosecution alleged that the first offender, who is now aged 34 and a single man, had had, according to Inland Revenue records, no income within the previous six years, except for a three-month period when he had earned just over £1,000.  He had also claimed incapacity benefit over a fifteen month period.  It identified deposits in two bank accounts between July 1999 and July 2002 of £62,493 odd.  He had purchased a flat with a mortgage of £90,000 and a deposit of £47,000.  He was found to have £67,163.17 in cash when arrested.  As to his expenditure in that period, the prosecution noted the second offender's admission in the basis of plea that she had been engaged as a courier "at various times" by the first offender.  It also appeared through phone contacts that there would have been six other apparent deliveries and assuming the same value as the two in March and April 2002, an expenditure therefore of some £300,000.  Other items of expenditure were set out and documented.  On this basis the first prosecutor's statement assessed the total benefits applying the section 4 assumptions at £710,000 odd and the amount that might be realised at £153,499, being essentially the net equity in the flat and the cash seized on the first offender's arrest.  As will be seen, these figures have now been replaced by agreed figures.

12.  In his response statement, the first offender took various points about items on the schedules, but as a matter of principle argued that, having pleaded guilty to count 2, which covered a period of 22 weeks only, and having been found not guilty on count 1, which covered a longer period of 28 months, there would be a "serious risk of injustice" within the meaning of section 4(4)(b) if the statutory assumptions were applied, in that "he would be subjected to a form of double jeopardy".  This seemed to us to be the main issue of principle raised in these proceedings.  Counsel likewise urged us to deal with it as a preliminary issue.  We heard argument on it and announced our decision on it for which we now give reasons.

13.  The issue of principle thrown up by the exchanged statements in relation to the first offender seems to us to be clearly covered by a previous authority of this court.  In R v Lazarus [2004] EWCA Crim 2297 this court considered a case where a defendant pleaded guilty to supplying cocaine over a six month period.  He had entered a written basis of plea to that effect and the Crown had accepted it.  In subsequent confiscation proceedings it was then shown that over the six year period described by section 4(3)(a)(ii) some £51,000 odd had gone through the defendant's bank account, of which only some £11,591 related to the six month period covered by the charge and thus by the basis of plea.  The defendant proceeded to give evidence about the provenance of the balance of the sums and he was disbelieved.  His argument was that there would be a serious risk of injustice if the statutory assumption was made in respect of money deposited otherwise than in the six month period.

14.  Giving the judgment of this court Hughes J said:

"A confiscation order is not limited to the proceeds of the offence which is charged on the indictment.  The effect of the Act is that any conviction for a relevant drug trafficking offence opens the confiscation inquiry into property which has passed through the defendants' hands, not simply during the period of offence but for six years prior to the commencement of proceedings.  It is then for the defendant to show on the balance of probabilities that such property was not the proceeds of crime or drug trafficking as the case may be.  It is also for the court to keep a careful eye on whether there is a serious risk of injustice if the statutory assumption is made.  This obligation of the court is a critical part of the scheme of the Act and is essential if injustice is to be avoided: see R v Benjafield [2002] 2 Cr App R(S) 71 but what the scheme of the Drugs Trafficking Act makes clear is that such risk of injustice does not and cannot arise simply because the assets in question were unrelated to the charge on the indictment.  The confiscation scheme is subject to rules quite different to those which govern the laying of charges upon an indictment.  When laying a charge on an indictment the Crown can charge only what it can prove to the criminal standard of proof.  In the case however of confiscation proceedings the onus is not on the Crown but on the defendant (to the civil standard).  Moreover the defendant can be ordered to provide information, which is something which he cannot be required to do when proof of the offences is in question.  It follows that it will often be the case that offending which could not be proved to the criminal standard in support of courts on the indictments does fall to be considered when it comes to confiscation."

15.  In R v Lunnon [2004] EWCA Crim 1125 this court faced a different situation in which a minor member of a conspiracy to supply cannabis set out the part he had played in the conspiracy, including an assertion that he had derived no financial benefit from the transaction, and stated, as the Crown explicitly accepted, that, prior to the single incident of importation charged on the indictment, he had had no previous involvement in drug trafficking at all.  In that case the court held that to deploy the statutory assumptions to the opposite effect would indeed have created a serious risk of injustice to the appellant.

16.  The first offender seeks to distinguish this line of authority and to argue on the basis of Sambasivan v Federation of Malaya [1950] AC 458, a decision which Mr Penny on behalf of the Attorney General correctly analyses as a decision on the admissibility of evidence, that an acquittal is "both binding and conclusive in all subsequent proceedings between the parties to the adjudication".  On the first offender's behalf, Mr Davies, in a skilful argument, acknowledged that this topic was examined in depth and qualified by the House of Lords in R v Z [2000] 2 Cr App R 281, in which Lord Hutton said that:

"provided the defendant is not placed in double jeopardy .... evidence which is relevant on a subsequent prosecution is not inadmissible because it shows or tends to show that the defendant was in fact guilty of an offence of which he had earlier been acquitted."

17.  In oral submissions it was therefore argued that the acquittal on count 1 had the effect of making it seriously unjust to cast the burden on to the first offender, as the legislation does, to show that the six years' benefits were not, in fact, the proceeds of drug trafficking.  In our judgment in so arguing Mr Davies overstates the impact of that acquittal.  That acquittal meant that he was not guilty of a particular prior conspiracy between certain dates with certain persons.  It did not mean that it was proved or accepted that he had not been involved in any form of drug trafficking within that period.  The contrast with Lunnon could not, as we see it, be clearer.  

18.  It seems to this court that references to double jeopardy in this context are misplaced.  The scheme of the Act was carefully scrutinised in R v Benjafield [2002] 2 Cr App R(S) 71 and found to be compliant with Article 6(1) and (2) of the European Convention on Human Rights.  The 1994 Act consciously sets out to subject a convicted drug trafficker to two forms of detriment, namely, punishment by way of imprisonment and confiscation of any benefits from the trafficking, with further imprisonment in default.  The second of these, as will have been seen from the legislation set out above, operates in accordance with its own particular code, which is markedly different from the rules governing the process of sentencing.  The court must, of course, be alive to the potential for injustice.  That injustice will need to relate, in our judgment, however, to something other than the mere fact of exposure to these two distinct but parallel processes.  We agree with the way Hughes J expressed the matter in Lazarus as cited above, a case essentially on all fours with the present reference, save for the fact that the appellant's position in Lazarus was stronger than that of the first offender here, in that he had the benefit of an agreed basis of plea.  There is in our judgment no injustice of any kind in applying the statutory assumptions in this case.

19.  There was a time when the second offender sought to take the same point as the first offender, but that was explicitly abandoned today.  

20.  The result, therefore, of our decision on this issue of principle was that this continued reference became a matter of arithmetic.  Due to the efforts of counsel, for which this court is extremely grateful, that part of the reference has been able to proceed on an agreed basis as follows.  In the case of the first offender it is agreed that the benefits he has received, within the meaning of the legislation, total £336,000; that the realisable property in his hands is £148,000; and that therefore the confiscation order should be made in that sum, namely £148,000.  He will have six months within which to pay that sum.  In default of payment he will serve a further three years' imprisonment consecutive to the term he is now serving.

21.  In the case of the second offender, Miss Macaulay, it is agreed that the benefits were £56,000, and that the realisable assets are £54,395.16.  A confiscation order will therefore be made in the amount of £54,395.16.  She will have three months within which to pay that sum.  If it is not paid, she will serve two years' imprisonment in default.