R v Ahmad and another
| Jurisdiction | England & Wales |
| Judge | Lord Neuberger,Lord Hughes,Lord Toulson,Lord Sumption,Lord Reed |
| Judgment Date | 18 June 2014 |
| Neutral Citation | [2014] UKSC 36 |
| Court | Supreme Court |
[2014] UKSC 36
Lord Neuberger, President
Lord Sumption
Lord Reed
Lord Hughes
Lord Toulson
Appellant
Simon Farrell QC William Hays
(Instructed by CPS Appeals Unit)
Respondents (Ahmad)
Andrew Mitchell QC Kennedy Talbot
(Instructed by Bivonas LLP)
Appellants (Fields)
Tim Owen QC Andrew Bodnar
(Instructed by Morgan Rose)
Respondent
Simon Farrell QC William Hays
(Instructed by CPS Appeals Unit)
Intervener (Secretary of State for the Home Department)
James Eadie QC Mathew Gullick
(Instructed by the Treasury Solicitor)
Since 1986, there has been legislation in this country to meet the perceived need for an effective confiscation process to deter criminal activity, especially large scale fraud and drugs-related activities, which are often of a cross-border nature. This concern has, unsurprisingly, not been limited to this country, as is evidenced by Conventions such as the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988, and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990.
The aim of such legislation is to introduce a robust process of "asset recovery" into the legal system of the United Kingdom. The first statute in England and Wales with this aim was the Drug Trafficking Offences Act 1986 (which was replaced by the Drug Trafficking Act 1994), which was shortly followed by the more broadly targeted Part VI of the Criminal Justice Act 1988, which in turn was amended by the Proceeds of Crime Act 1995. The provisions of Part VI of the 1988 Act (as amended by the 1995 Act) and the 1994 Act were repealed and replaced by the fuller provisions of the Proceeds of Crime Act 2002, although the 1988 Act (like the 1994 Act) still applies to crimes committed before the 2002 Act came into force. These appeals are concerned only with post-conviction confiscation orders. Different provisions apply to civil recovery independent of any criminal prosecution.
The two instant appeals concern the proper approach for the court to adopt, and the proper orders for the court to make, in confiscation proceedings where a number of criminals (some of whom may not be before the court) have between them acquired property or money as a result of committing an offence for which all or only some of them have been convicted in the trial which led to the proceedings.
The statutory exercise of asset recovery often starts before a defendant is convicted, through the medium of an order freezing all or some of his assets, but it is only after conviction that the extent of a defendant's liability is finally assessed by the court. The role of the court at that point is to determine the "recoverable amount" from a convicted defendant and to make an order requiring him to pay it. The extent of a defendant's liability for this sum is based on the value of the property which he obtained "as a result of or in connection with" the conduct which gave rise to the offence or offences of which he was convicted – section 71(4) of the 1988 Act and section 76(4) and (7) of the 2002 Act.
The 2002 Act has widened the potential liability of a defendant who has a "criminal lifestyle". Such a defendant can be made liable for a recoverable amount which is based on the proceeds not merely of the criminal activity of which he has been convicted, but on the proceeds of his "general criminal conduct" – see section 6(4) of the 2002 Act. A defendant has a "criminal lifestyle" if he falls within section 75 and Schedule 2. The conditions there set out include conviction of certain specified offences, such as money laundering and drugs or arms trafficking, conviction of a minimum number of other offences, and conviction of one or more offences committed over a specified period. In a case where a defendant has a "criminal lifestyle", certain rebuttable assumptions are specifically required to be made against the defendant (eg as to the source of his wealth) by section 10 of the 2002 Act when assessing the recoverable amount. Seven years before the passing of the 2002 Act, a new provision, section 72AA, was added to the 1988 Act which had a rather similar purpose albeit a narrower scope.
In order to determine the recoverable amount, the judge first has to assess the "value of the property obtained" by the defendant through the criminal activity in question. That figure is the greater of (a) the value of that property when it was obtained, adjusted for subsequent inflation, and (b) the current value of that property or of any property which has been substituted for it – see sections 71(4) and 74(5) of the 1988 Act and sections 76(2) and 80(2) of the 2002 Act. Having arrived at that figure, the judge must assess the recoverable amount at that figure, save that sections 7(1), (2) and 9(1) of the 2002 Act provide that, if the defendant can show that it is more than the total value of his assets, the judge should assess the recoverable amount as that total value. The 1988 Act had similar provisions in sections 71(6) and 74(1)–(3).
Confiscation hearings can take a long time. In one of the two cases before us, the confiscation hearing lasted over four weeks. Article 6.1 of the European Convention on Human Rights ("the Convention") applies to all aspects of such a hearing. However, article 6.2 of the Convention does not, as the hearing is treated as part of the sentencing process rather than part of the criminal trial – see Phillips v United Kingdom [2001] Crim LR 817, (2001) 11 BHRC 280, paras 34–36. In that case, the Strasbourg court rejected the contention that a mandatory statutory assumption that payments received by a convicted drug dealer were derived from drug trafficking infringed the Convention, and referred to confiscation as "a weapon in the fight against the scourge of drug trafficking" – para 52. In the subsequent case of Grayson v United Kingdom [2009] Crim LR 200, (2008) 48 EHRR 722, the Strasbourg court held that imposing a reverse burden of proof on a convicted defendant in relation to certain issues at the confiscation hearing also did not infringe the Convention – see especially para 49.
In R v Silcock and Levin [2004] EWCA Crim 408; [2004] 2 Cr App R (S) 61, para 60 and R v Clipston [2011] EWCA Crim 446; [2011] 2 Cr App R (S) 101, paras 57–60, the Court of Appeal, Criminal Division explained that the character of a confiscation hearing was more civil than criminal. Thus, the judge can decide issues on the balance of probabilities, compel the defendant to disclose documents, draw adverse inferences from the absence of evidence, and rely on hearsay evidence. In our view, this is plainly right, both as a matter of principle and in the light of section 71(7A) of the 1988 Act and section 6(7) of the 2002 Act.
Once the recoverable amount is determined, the judge should make an order requiring the defendant to pay it within a period which (under section 75(1) of the 1988 Act) would be the same as for a fine, or (under section 11 of the 2002 Act) must be specified by the court but cannot exceed twelve months. If and to the extent that the recoverable amount is not paid, the defendant must serve a term of imprisonment in default, fixed by the judge by reference to section 139(4) of the Powers of the Criminal Courts (Sentencing) Act 2000 – see section 75(2) of the 1988 Act and sections 35–39 of the 2002 Act. Serving that default term does not, however, remove the liability to pay – see section 75(5A) of the 1988 Act and section 38(5) of the 2002 Act.
Confiscation hearings may take place before sentencing, or can be —and often are —postponed, but the postponement should not be for a period of more than six months (under the 1988 Act) or two years (under the 2002 Act) from the date of the conviction unless there are "exceptional circumstances" – see section 72A of the 1988 Act and section 14 of the 2002 Act.
In the first appeal, the appellants, Shakeel Ahmad and Syed Ahmed ("the Ahmad defendants") were convicted by a jury of fraud and sentenced by His Honour Judge Alexander QC to seven years in prison. The fraud was a so-called carousel fraud, which involves criminally misusing the collection system of Value Added Tax ("VAT") to extract money from the revenue authorities. The Ahmad defendants had been the sole directors and shareholders of a company known as MST, which dealt in computer central processing units ("CPUs"), which were zero rated for VAT purposes on import to the United Kingdom. The fraud involved five companies in Ireland, which, in a total of 32 transactions during April 2002, purported to export large quantities of CPUs to five companies in the UK, each of whom was either a registered company which went "missing" or a genuine company the identity of which was hijacked by the fraudsters. The missing trader then ostensibly sold the goods to a company known as GW224, which then sold the goods on to MST.
GW224 was a company interposed to make it more difficult for the authorities to identify the fraud. On paper, the missing trader sold the goods to GW224 at a loss enabling everyone else in the supply chain ostensibly to sell on at a profit. The missing trader issued a VAT invoice to GW224 enabling it to deduct the amount shown as input tax from the amount due from GW224 to HM Revenue and Customs ("HMRC") in respect of output tax on the onwards sale to MST. MST then sold the goods on to an exporting company, for an amount which included VAT. The exporting company then exported the goods back to the company in...
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