R v Islam

JurisdictionEngland & Wales
JudgeLORD MANCE,BARONESS HALE OF RICHMOND,LORD WALKER OF GESTINGTHORPE,LORD HOPE OF CRAIGHEAD,LORD NEUBERGER OF ABBOTSBURY
Judgment Date10 June 2009
Neutral Citation[2009] UKHL 30
Date10 June 2009
CourtHouse of Lords

[2009] UKHL 30

HOUSE OF LORDS

Appellate Committee

Lord Hope of Craighead

Lord Walker of Gestingthorpe

Baroness Hale of Richmond

Lord Mance

Lord Neuberger of Abbotsbury

R
and
Islam
(Respondent) (on appeal from the Court of Appeal Criminal Division)

Appellants:

David Perry QC

Mark Sutherland Williams

Charlotte Hadfied

(Instructed by Revenue and Customs Prosecutions Office)

Respondent:

Cheryl Drew

Abdul Gofur

(Instructed by Crescent & Co)

LORD HOPE OF CRAIGHEAD

My Lords,

1

This case raises a short but important point about the meaning of the expression "market value" in section 79 of the Proceeds of Crime Act 2002 (" POCA 2002"). The relevant subsections provide as follows:

"(1) This section applies for the purpose of deciding the value at any time of property then held by a person.

(2) Its value is the market value of the property at that time."

The question on which the House granted leave to appeal has focussed the issue in this way:

"For the purpose of calculating a defendant's benefit, as distinct from the available amount, in confiscation proceedings under the Proceeds of Crime Act 2002, must goods of an illegal nature obtained by him be treated as having no value?"

2

My noble and learned friend Lord Mance has described the facts of this case and the statutory background. I gratefully adopt his account of them, and I agree with the reasons that he gives for allowing the appeal and answering this question in the negative. I have not found the issue an easy one to resolve however, and as we are not all of the same view I should like to set out briefly in my own words the reasons that have led me to this conclusion.

3

Although the current provisions have become more complicated, the concepts on which the confiscation provisions in POCA 2002 are based have been part of the law for several decades. They can be traced back to the Drug Trafficking Offences Act 1986, which introduced a scheme for the making of confiscation orders against persons convicted of drug trafficking offences. A new general power to confiscate the proceeds of indictable offences other than those referred to as drug trafficking offences was introduced by Part VI of the Criminal Justice Act 1988. This was followed by a revised scheme for those convicted of drug trafficking offences in the Drug Trafficking Act 1994. Part VI of the 1988 Act and the scheme in the 1994 Act have in their turn been replaced by POCA 2002. This is a lengthy enactment which extends to 462 sections and twelve Schedules. Its length is attributable, at least in part, to the fact that it combines in a single statute provisions extending to all three jurisdictions of the United Kingdom and makes provision also for civil recovery orders against persons who are thought to hold recoverable property.

4

The scheme which the 1986 Act provided for the calculation of a confiscation order was set out quite simply in sections 1 to 4, read together with section 5 which defined the principal terms used. The court was required first to determine whether the person in question had benefited from drug trafficking: section 1(2). If it determined that he had so benefited, the next step was to determine the amount to be recovered in his case: section 1(4). The amount to be recovered was the amount which the court assessed to be the value of his proceeds of drug trafficking: section 4(1). If the court was satisfied that the amount that might be realised at the time the confiscation order was made was less than the amount it assessed to be the value of the proceeds of his drug trafficking, the amount to be recovered was to be the amount that could be realised: section 4(3). Among the expressions that required definition were the amount that might be realised and the word "value". Section 5(3) described the amount that might be realised as the total of the values at that time of all of his realisable property. Section 5(4) set out what was meant by the word "value". It provided that the value of property in relation to any person holding the property, except where another person also held an interest in it, was to be its market value. No distinction was made as between the different parts of the calculation that this definition was to be applied to. Value was to be taken to be market value for all purposes.

5

The same basic scheme is to be found in the relevant provisions of POCA 2002. On the one hand the court must assess the amount of the defendant's benefit from the conduct concerned: section 6(4), read with section 8. For this purpose it must take account of his conduct up to the time it makes its decision and take account of property obtained up to that time. Prima facie the amount of his benefit, so assessed, is the recoverable amount: section 7(1). But if the available amount is less than the amount of his benefit, the recoverable amount is restricted to the amount that is available: section 7(2), read with section 9. The available amount, for the purposes of deciding the recoverable amount, is the total of the values of all the free property held by the defendant when the confiscation order is made: section 9(1). The basic rule about value is set out in section 79, as quoted above: see para 1. It is supplemented by section 80, which deals with the value of property obtained from conduct. There are two methods of calculating this figure: section 80(2). One is to determine the value of the property at the time the defendant obtained it, and then to adjust that figure to take account of changes in the value of money. The other applies where he still holds the property or holds other property which directly or indirectly represents it in his hands. It is to take the value of that property at the time the confiscation order is made. Here again no distinction is made as between the different parts of the calculation to which the word "value" is to be applied. For all purposes it is to be taken to be the market value of the property.

6

The statute has refrained from defining precisely what is meant by the expression "market value". It can be assumed that greater precision on this matter was not thought to be necessary. A market, after all, is a place where goods are bought and sold. The market value of goods is the price that they will fetch in that market. It is the price which a willing seller will accept for them from a willing buyer. This is how transactions between traders in the market are carried on. Of course, the kind of market in which the property in question is commonly sold must first be identified. Some goods can only be bought and sold in markets that are hard to find or are highly specialised. The nature of the goods is likely to provide the best guide as to where or what this market is. This is a matter which will require to be determined by the court, if there is a dispute. So too is the figure that is to be taken to be the price that the property would fetch in that market. This is a question of fact which is left by the statute for determination by the court as the need arises.

7

The statute does not say however that the market in which the price of the property must be determined must always be a legitimate one. At first sight this is not surprising, as confining the concept of market value in this way would be apt to distort the calculation in favour of a defendant who deals in illegal drugs at the stage of calculating the value of the benefit that he has derived from drug trafficking. In the ordinary case, of course, the market to which one naturally goes to determine the market value of a given item of property is the place where such items can be bought and sold legitimately. If there is a legitimate market, that is the market to which one should go to make the calculation. This is the position when attention is being directed, even in drug trafficking cases, to the stage of the formula which directs attention to the amount that is available. At this stage the court is contemplating property that can be realised legitimately when the confiscation order is made. This is not because the statute says that the market in which the value is struck must at all stages in the application of the formula be a legitimate one. It is because this is the kind of market in which the property that is being examined at this stage must be assumed to be being bought and sold.

8

But what is to be done at the benefit stage of the formula if the property that was obtained, because of its nature, condition or quantity, had no value in any legitimate market at all? If it was indeed valueless in any market that can be imagined, then so be it. Its market value must be taken to be nil. But is one driven to the same conclusion in a case such as the present, where the heroin had an undoubted value in the market in which drugs of that kind are commonly bought and sold, simply because the market in which these transactions take place is not a legitimate one? If so, the result will be to restrict the amount of the benefit in a way that ignores the known facts. One would have to discount the value that the defendant could have obtained for the drugs in a market where he would certainly have found a willing buyer for them had his activities not been interrupted. I do not think that there is anything in the wording of the statute that drives one to that conclusion.

9

The position becomes more complicated when one examines the authorities. But I think that it is possible to find a way through them that supports the Crown's argument.

10

I take as my starting point Building and Civil Engineering Holidays Scheme Management Ltd v Post Office [1966] 1 QB 247. In that case a question arose as to whether the stamps the Post Office lost, which if they had been stolen would have been sold in the thieves' market, had a "market...

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