R v Mylupillai Sivaraman
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE TOULSON |
| Judgment Date | 24 July 2008 |
| Neutral Citation | [2008] EWCA Crim 1736 |
| Docket Number | No. 2007/00904/B3 |
| Court | Court of Appeal (Criminal Division) |
| Date | 24 July 2008 |
[2008] EWCA Crim 1736
IN THE COURT OF APPEAL
CRIMINAL DIVISION
Royal Courts of Justice
The Strand
London
WC2A 2LL
Lord Justice Toulson
Mr Justice Jack And
The Recorder Of Hull
(sitting As A Judge In The Court Of Appeal, Criminal Division)
No. 2007/00904/B3
Mr J Blandford appeared on behalf of the Appellant Mr M Sutherland Williams and Mr M Gullick appeared on behalf of the Crown
Thursday 24 July 2008
Introduction
On 13 February 2006, in the Crown Court at Lincoln, before His Honour Judge O'Rorke, the appellant pleaded guilty to an offence of conspiracy to contravene section 170(2) of the Customs and Excise Management Act 1979. The particulars of the offence were that he and others conspired fraudulently to evade excise duty in respect of hydrocarbons imposed by section 6 of the Hydrocarbons Oil Duties Act 1979. For his part in the conspiracy he received a sentence of twelve months' imprisonment.
On 22 January 2007 the trial judge imposed a confiscation order on the appellant under the Proceeds of Crime Act 2002 in the sum of £59,365, with 18 months' imprisonment to be served in default. He appeals against the confiscation order by leave of the single judge.
The Conspiracy
Under the Hydrocarbons Oil Duties Act 1979 the rate of excise duty paid on fuel varies according to the type of fuel. Diesel Engine Road Vehicle fuel (“DERV”) carries a significantly higher rate of excise duty than so-called “red” diesel which is chemically indistinguishable, except that it contains a chemical marker and a red dye in order that it can be differentiated. The lawful use of red diesel is restricted to agricultural machinery or vehicles for off-road use. The overall conspiracy involved buying red diesel, removing the red dye and selling it on for use as DERV
Grange Farm Service Station
The ringleaders of the conspiracy needed an outlet (or outlets) for the laundered fuel. The statement of information provided by an officer of HM's Revenue and Customs (HMRC) under section 16(5) of the Act for the purpose of the confiscation proceedings against the appellant stated, among other things:
“3.7 The main purchaser for the laundered fuel was Sathasivam Mangaleswaran who is the proprietor of Grange Farm Service Station located on the A508 in Northampton. He had a contract with BP to sell their fuel either directly to general members of the public or via a trade scheme to business customers. In the latter case the fuel is stored and supplied from large bunker tanks that are separate from the other storage tanks.
3.8 The [appellant] started his employment at Grange Farm Service Station in May 2003, having previously been employed by Sathasivam Mangaleswaran at a service station in Essex. Initially, he was employed at Grange Far Service Station as a cashier, with accommodation provided by Sathasivam Mangaleswaran in Northampton. At that time he was earning about £100 per week, but in or about December 2003, it would appear that he was promoted to the position of Manager with an increase in salary.”
As a matter of strict accuracy it appears from the prosecution case summary that the appellant was employed by Grange Farm Service Station Limited, a company of which Mr Mangaleswaran was the proprietor; but nothing turns on that.
The appellant pleaded guilty to the charge of conspiracy on a written basis in which he stated:
“(1) I was employed at Grange Farm Services.
(2)Whilst there during 2003 I accepted between 8–10 deliveries (each tanker containing approximately 30,000 litres of fuel) of diesel.
(3)I knew the delivered diesel referred to at point (2) above had to have excise duty paid on it, and I knew this did not happen.
(4)I accept that by allowing the deliveries above, and by my knowledge of the failure to pay any of the appropriate duty in respect of this fuel, I am guilty of the offence as charged.
(5)For my part in this crime I received £15,000, overall, as my share of the sale proceeds.”
The alleged benefit to the appellant put forward in HMRC's section 16(5) statement was the value of the duty and VAT avoided on 270,000 litres of oil (ie nine deliveries of 30,000 litres). The duty which would have been payable on the purchase of 270,000 litres of DERV was £128,520. Arithmetically that figure was not disputed.
In his reply to HMRC's statement, the appellant said:
“3. In relation to my guilty plea, the maximum I received for my benefit is a figure of £15,000 maximum, not the £130,000 plus VAT as suggested. I received no benefit from the diesel and did so only via my boss for ordering the fuel. This justifies the maximum benefit I have received of a maximum of £15,000. I did not receive any monies from diesel itself.”
The Judge's Ruling
The judge dealt at the same time with confiscation applications made against both the appellant and Mr Mangaleswaran. The law in this area has recently been clarified by the judgments of the House of Lords in R v May [2008] UKHL 28, [2008] 2 WLR 1131, Jennings v CPS [2008] UKHL 29, [2008] 2 WLR 1148 and R v Green [2008] UKHL 30, [2008] 2 WLR 1154. When the judge dealt with the present applications the law was in a number of respects less clear. In his ruling he said:
“I need not go into the details of this complicated conspiracy involving the laundering of red diesel so as to make it appear to be road diesel, save to say that the defendant Sathasivam Mangaleswaran was the proprietor of Grange Farm Service Station at the appropriate time, that the evidence was he received a number of deliveries, as much as 30,000 to 36,000 litres at a time, by way of tanker and that these were commercially sold to members of the public at the full pump price. His employee and associate during at lest part of that period was the second defendant with whom I am concerned, Mr Mylupillai Sivaraman. It cannot be established precisely what part he played or rather the period of time over which he played his part. …. but at the end of the day what the Crown say —and for these purposes the figure is essentially accepted by both defendants —is that some nine deliveries should be attributed to Mr Mangaleswaran on the basis of his plea and similarly nine deliveries laid at the door of Mr Sivaraman. ….
The amount of duty thereby evaded —and it is agreed —is £128,520. Therefore, in the case of each man, if that is the benefit within the construction of the Act which they received, that would be the liability, subject to available funds, of the confiscation order.”
The judge then referred to a number of cases which had been cited to him in argument including May in the Court of Appeal. It was argued, unsuccessfully, on the appellant's behalf that the Act gave the court a measure of discretion. For the reasons which he explained, the judge felt constrained as a matter of law to find that the value of the benefit gained by the appellant was £128,520, but he expressed his misgivings at having to reach this finding.
Having referred to the various authorities cited to him, the judge set out paragraphs 76(4) and (5) of the Act, which provide:
“(4) A person benefits from conduct if he obtains property as a result of or in connection with the conduct.
(5) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.”
He continued:
“Applying those terms strictly, a person who, even on behalf of his employer, receives at a petrol station a delivery of illicit diesel, which then finds its way into the employer's storage tanks and is sold to the public, that employee will only benefit by reason of receiving his wage or enhanced wage from his employer or by way of some other cash payment or backhander from his employer to him, but nevertheless it is quite clear under the general law he is obtaining that pecuniary advantage and he is obtaining the benefit, whether directly to profit himself or to profit his employer, by his action in receiving this diesel into his employer's tanks. I see no way around that. That is consistent with the wording of the Act and, indeed, consistent with the way in which similar provisions in the earlier Acts have been interpreted in the cases I have mentioned and in other leading cases on the subject.
….
Directing myself in accordance with that, I have to say with reservation as to the particular unfairness, but I hope consistently with the authorities I have mentioned, I am constrained to find that in the case of Sivaraman, the employee at the material time of Mr Mangaleswaran, his benefit must be £128,520. As far as Mr Mangaleswaran is concerned, I have no hesitation in finding that his benefit was not only notionally but actually in real life £128,520.”
The amount of the confiscation order made against the appellant was less than the benefit found by the judge because the money available to the appellant was less.
The original grounds of appeal advanced by the appellant have been abandoned. However, in the light of the recent decisions of the House of Lords, the appellant sought leave to amend his grounds to argue that the judge was wrong in law to find that his benefit was £128,520 and that he should have found that it was £15,000. The prosecution opposed the application; but Mr Sutherland Williams...
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