Case No:
2002/02921/X3
Neutral Citation Number:
[2004] EWCA Crim 2237
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM BRADFORD CROWN COURT
HIS HONOUR JUDGE HULL
Royal Courts of Justice
Strand, London, WC2A 2LL
Date:
Thursday, 26
th
August 2004
Before :
THE RIGHT HONOURABLE LORD JUSTICE MAY
THE HONOURABLE MR JUSTICE GRAY
and
THE HONOURABLE MRS JUSTICE HALLETT DBE
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Between :
R W PRIESTLEY
Appellant
- and -
R
Respondent
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(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
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D NATHAN QC
for the
APPELLANT
G KEARL QC and N EDWARDS
(instructed by
THE CROWN
) for the
RESPONDENT
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Judgment
Lord Justice May:
Introduction
1.
On 16
th
April 2002, the appellant, who is aged 62 or thereabouts, pleaded guilty in the Crown Court at Bradford before His Honour Judge Hull to counts 2, 5 and 11 of an indictment containing 15 counts. Each of these counts alleged conspiracy to sell or distribute goods which bore a sign likely to be mistaken for a registered trade mark contrary to
section 1(1) of the Criminal Law Act 1977
. The conspiracies were to contravene
section 92(1)(b)
of the
Trade Marks Act 1994
. For count 2, the offending articles were bottles of perfume and fragrance; for count 5, bottles of Moet & Chandon champagne; and for count 11, a quantity of clothing. The other 12 counts were left on the file. The period during which the appellant was alleged to have committed the offences in each of the three counts to which he pleaded guilty was between 1
st
January 1996 and 4
th
November 2000.
2.
On 17
th
April 2002, the appellant was sentenced to 18 months imprisonment on count 2, 9 months imprisonment concurrent on count 5, and 4 months imprisonment concurrent on count 11. His total sentence of imprisonment was thus 18 months.
3.
On 17
th
December 2002, Judge Hull made a confiscation order against the appellant of £2,290,907.52. The judge fixed the period to be served in default of payment as 10 years, wrongly understanding that he was obliged to impose that as the alternative sentence. Mr Kearl QC, for the Crown, accepts that he mistakenly so submitted – see
R v Szrajber
(1994) 15 Cr. App. R. 821 at 824. The judge also ordered the appellant to pay £30,000 towards the prosecution costs.
4.
The appellant appeals, by leave of the full court, against the amount of the confiscation order, the period of imprisonment in default and the costs order.
5.
As the amount of the confiscation order indicates, the appellant was engaged with others in a counterfeiting operation of factory proportions. The prosecution case summary had described a police operation in Huddersfield in November 2000 and a Trading Standards operation in Leeds in November 1999. These operations identified a warehouse premises used for the production of counterfeit champagne in the Leeds area and three premises in the Huddersfield area used for the production of counterfeit perfumes. All or most of the major perfume houses and their products, together with the respective registered trade marks, were counterfeited on a massive scale. The police investigation suggested that the illicit operation had been running since 1996. It had been operated on a grand scale for the two years up to November 2000 from these premises. It was said that the scale of the operation had undoubtedly resulted in the loss of millions of pounds of revenue to both the perfume houses and the exchequer. The appellant was arrested on 3
rd
November 2000. He was charged with others, but his major role in the operation gave rise to the confiscation proceedings in his case. The main subject of the confiscation proceedings was counterfeit perfume and fragrance.
The confiscation proceedings
6.
The procedural history of the confiscation proceedings is relevant. It is as follows.
7.
The appellant was arrested on 3
rd
November 2000. On 29
th
January 2001, Maurice Kay J made a restraint order prohibiting him from dealing with or disposing of his assets except as authorised by the High Court.
8.
The appellant was sentenced on 17
th
April 2002. On that day, there was produced a document headed “Proposed Basis of Plea”. This was a 19 paragraph document which asserted an understanding that the main focus of the offending concerned the distribution of some 230,000 bottles of perfume and other fragrances. It was suggested that the majority of these had been sold abroad in Spain or Hungary, and that only some 37,000 bottles had been sold within the United Kingdom, being the territorial extent of the 1994 Act – see section 106 of that Act. It was suggested that the appellant had charged between £2.75 and £3.50 per bottle and that, where the charge was £3.50, 50p per bottle was retained by an associate. Broadly speaking, the judge sentenced the appellant on this basis. But Mr Nathan QC, who appears for the appellant on this appeal, accepts that the prosecution had made clear that they did not accept this basis of plea for the purpose of the confiscation proceedings.
9.
On 17
th
April 2002, the defendant was ordered to provide by 15
th
May 2002 an affidavit in response to questions set out in a schedule provided to him asking for details of his income, bank and building society accounts and property. No affidavit was received by that date.
10.
On 13
th
June 2002, the prosecution served its statement under
section 73 of the Criminal Justice Act 1988
in accordance with the timetable set out by the court. On 25
th
June 2002, the case was mentioned at the crown court at the request of the prosecution. The appellant was again ordered to provide an affidavit, and also a response to the prosecutor’s statement, by 23
rd
July 2002. No sworn affidavit was received or filed at the court by that date. A short unsworn affidavit was received on 31
st
July 2002.
11.
Because the defence had failed to respond to any of the court orders, the prosecution again had the case listed for mention on 9
th
September 2002. On that day, a response to the prosecutor’s statement was provided, but still no sworn affidavit had been received. An explanation was given for this. The court ordered that the defendant’s affidavit should be served within 7 days and that the defence were to provide details of any accountancy evidence to be relied on within 7 days. No accountant’s report was served. No sworn affidavit was received.
12.
On 30
th
September 2002, the hearing of the confiscation proceedings began. The judge considered a submission on behalf of the appellant that the confiscation should relate only to counterfeit goods sold within the United Kingdom, the territorial extent of the 1994 Act. The judge rejected this submission. There was a ground of appeal to this court to the effect that this ruling was wrong. But Mr Nathan did not pursue this ground orally before the court in the face of the obvious facts that the conspiracy took place within the jurisdiction and all the counterfeit goods were at least distributed within the jurisdiction for the purposes of
section 92(1)(b)
of the 1994 Act. Also on 30
th
September 2002, DC Whittleston gave evidence. He adopted the contents of the prosecutor’s statement which he had compiled and was cross-examined by Mr Nathan.
13.
On 3
rd
December 2002, the defendant was again ordered to answer the schedule of questions served by the Crown and to serve a sworn affidavit. No sworn affidavit was received.
14.
Applications to adjourn the proceedings further were made by the defence on 10
th
December and 16
th
December 2002. By this time, the appellant had dismissed his legal representatives, including Mr Nathan. On 16
th
December 2002, Mr Hatton QC appeared for the appellant to apply for a further adjournment. When this was refused, his instructions were withdrawn, but he remained to assist the court. DC Whittleston was recalled to correct an error in the calculations. The appellant then had the opportunity to give evidence and call witnesses. He did neither of these. There was still no sworn affidavit before the court. The hearing concluded. The judge adjourned the matter to the following day to give judgment.
15.
On 17
th
December 2002, the appellant was permitted to address the court further on an application to adjourn. The judge rejected this application. The appellant also referred to two witnesses who would be able to contradict details of the prosecution’s case derived from certain documents. The judge declined to hear these witnesses. There were subsequently applications to this court for the two witnesses to give fresh evidence on this appeal. Mr Nathan did not pursue these applications before us.
Criminal Justice Act 1988
16.
The confiscation proceedings were brought under the
Criminal Justice Act 1988
.
17.
Section 71
of the 1998 Act provided that, where an offender is convicted before the crown court of an offence of a relevant description, it is the duty of the court to act in accordance with the section, if the prosecutor has given written notice to the court that he considers that it would be appropriate so to proceed. The prosecution gave the appropriate notice in the present case.
18.
Section 71
(1A) requires the court first to determine whether the offender has benefited from any relevant criminal conduct.
Section 71
(1D) provides that relevant criminal conduct means offences of which the offender is convicted in the same proceedings, or offences which the court takes into consideration in determining his sentence. This is, however, subject to section 72AA(6).
19.
Section 71
(1B) provides that, if the court determines that the offender has benefited from any relevant criminal conduct, it shall determine the amount to be recovered in accordance with sub-section (6), and make an order under
section 71
ordering the offender to pay that amount.
Section 71(6)
provides that this sum shall be equal to the benefit in respect of which it is made, or the amount appearing to the court to be the amount that might be realised at the time the order is made, whichever is the less.
20.
Thus the court in the present case had to determine the amount by which the appellant had benefited from his relevant criminal conduct; and the amount that might be realised at the time of the order; and order him to pay whichever was the lesser of these amounts.
21.
By
section 71(4)
a person’s benefit, if he obtains property as a result of or in connection with committing an offence, is the value of the property so obtained. This means that the court is concerned with the gross value of property obtained and is not concerned, for instance, to deduct the cost of obtaining it.
22.
By
section 71
(7A), the standard of proof required to determine any question arising as to whether a person has benefited from an offence or the amount to be recovered is that applicable in civil proceedings. It is accepted that the burden of proof of the amount by which an offender has benefited is on the prosecution; but the burden of proving that the amount that might be realised is less than this is on the defence.
23.
Since in the present proceedings the appellant did not give evidence or call witnesses, the likelihood of his establishing that his realisable property was less than any amount found as his benefit was not great. This was particularly so in the light of
section 73A
of
the 1988 Act
.
Section 73A(2)
provides that, for the purpose of obtaining information to assist it in carrying out its relevant functions, the court may at any time order the defendant to give it such information as may be specified in the order. Sub-section (3) provides that such an order may require all, or any specified part, of the required information to be given to the court in such manner, and before such date, as may be specified in the order. Sub-section (5) provides that, if the defendant fails, without reasonable excuse, to comply with any order under
section 73A
, the court may draw such inference from that failure as it considers appropriate.
24.
The appellant was ordered on a number of occasions to provide information and a sworn affidavit. He eventually provided a response to the prosecutor’s statement, but no other information and no sworn affidavit. The court was, in our view, entitled to disregard the appellant’s short unsworn affidavit, just as it would have been entitled to place little weight on a sworn affidavit, if the appellant had provided one, but declined to be cross-examined upon it.
25.
The central point here is that the appellant gave no evidence and called no witnesses. In particular, although Mr Nathan has emphasised the terms of the Proposed Basis of Plea, the prosecution had not accepted this for the confiscation proceedings. It was not evidence in the absence of the appellant giving evidence to support it. The court was entitled under
section 73A(5)
to draw such inferences from the appellant’s failure to comply with its orders as it considered appropriate. Such available inferences extended to inferences from his failure to give evidence.
26.
Section 72AA
applies to confiscation proceedings under
section 71
, where the prosecutor’s notice contains a declaration, as it did in this case, that it is the prosecutor’s opinion that the case is one in which it is appropriate for the provisions of the section to be applied; and where (relevantly for present purposes) the offender is convicted of at least two qualifying offences. It is accepted that this appellant was so convicted in these proceedings.
27.
Sections 72AA
further provides:
“ (3)
When proceeding under
section 71
above in pursuance of the notice mentioned in subsection (1)(a) above, the court may, if it thinks fit, determine that (subject to subsection (5) below) the assumptions specified in subsection (4) below are to be made for the purpose-
(a)
of determining whether the defendant has benefited from relevant criminal conduct; and
(b)
if he has, of assessing the value of the defendant’s benefit from such conduct.
(4)
Those assumptions are-
(a)
that any property appearing to the court-
(i)
to be held by the defendant at the date of conviction or at any time in the period between that date and the determination in question, or
(ii)
to have been transferred to him at any time since the beginning of the relevant period,
was received by him, at the earliest time when he appears to the court to have held it, as a result of or in connection with the commission of offences to which this Part of this Act applies;
(b)
that any expenditure of his since the beginning of the relevant period was met out of payments received by him as a result of or in connection with the commission of offences to which this Part of this Act applies; and
(c)
that, for the purposes of valuing any benefit which he had or which he is assumed to have had at any time, he received the benefit free of any other interests in it.
(5)
Where the court has determined that the assumptions specified in subsection (4) above are to be made in any case it shall not in that case make any such assumption in relation to any particular property or expenditure if-
(a)
that assumption, so far as it relates to that property or expenditure, is shown to be incorrect in the defendant’s case;
(b)
that assumption, so far as it so relates, is shown to be correct in relation to an offence the defendant’s benefit from which has been the subject of a previous confiscation order; or
(c)
the court is satisfied that there would (for any other reason) be a serious risk of injustice in the defendant’s case if the assumption were to be made in relation to that property or expenditure.
(6)
Where the assumptions specified in subsection (4) above are made in any case, the offences from which, in accordance with those assumptions, the defendant is assumed to have benefited shall be treated as if they were comprised, for the purposes of this Part of this Act, in the conduct which is to be treated, in that case, as relevant criminal conduct in relation to the defendant.”
28.
These provisions, indeed the provisions for confiscation as a whole, have been described as draconian. Their evident purpose is to enable the court to make orders depriving criminals of the proceeds of their crime when precise quantification of those proceeds may be very difficult. Section 72AA(3) gives the court a discretion (“… the court may, if it thinks fit, determine …”) to make assumptions for the purpose of determining under
section 71
whether a defendant has benefited from relevant criminal conduct, and, if he has, of assessing the value of his benefit. The discretion in this sub-section is to be contrasted with the requirement to make equivalent assumptions in
section 4(2) of the Drug Trafficking Act 1994
. This contains confiscation provisions for drug trafficking offences which are otherwise broadly equivalent to those in
the 1988 Act
for criminal conduct generally.
29.
In
the 1988 Act
, the assumptions are that property held by the defendant at or after the date of his conviction, or transferred to him since the beginning of the relevant period, was received by him as a result of or in connection with the commission of relevant offences. The same applies to any expenditure of his since the beginning of the relevant period. By sub-section (5), if the court has determined to make these assumptions generally, it shall not do so in relation to particular property or expenditure, if the assumption is proved to be incorrect in the defendant’s case; or if the court is satisfied that there would be a serious risk of injustice if the assumption were made. It is accepted that the burden is on the defendant to establish for particular property or expenditure that the assumptions should not be made for these reasons. The effect of sub-section (6) is that, where the assumptions are made, the ambit of “relevant criminal conduct” for the purpose of
section 71
(1D) is enlarged beyond the offences of which the defendant is convicted in the proceedings or offences taken into consideration in determining his sentence. As will be seen, it is accepted in the present case that, from 1
st
January 1996 to 4
th
November 2000, the appellant had established no income other than that derived from his criminal activities. Accordingly, if the assumptions were to be made, they could apply, subject to section 72AA(5), to his entire expenditure during that period and to all money in or transferred into his bank accounts during that period.
The prosecution case
30.
The relevant bones of the prosecution case as contained in the prosecutor’s statement and supported in evidence by DC Whittleston were as follows.
31.
The most recent of the appellant’s 6 previous convictions was at Leeds Crown Court on 22
nd
December 1994. He was then convicted of 13 offences contrary to the
Trade Marks Act 1938
. He was sentenced to a total of 4 years imprisonment, subsequently reduced to 3 years on appeal. The court also made a confiscation order under
the 1988 Act
of £93,000 and a deprivation order of £35,255 under
section 43 of the Powers of Criminal Courts Act 1973
. A receivership order was made to enforce these orders. We were told that they were paid. The appellant was released from prison on 15
th
February 1996.
32.
The relevant period for the purpose of the present confiscation proceedings began on 5
th
November 1994 – 6 years before the appellant was first charged. But DC Whittleston restricted the period to one beginning on 15
th
February 1996, the date when the appellant was released from prison. DC Whittleston concluded that the appellant had no legitimate source of income during this reduced relevant period.
33.
The prosecutor’s statement proceeded on the assumptions in
section 72AA
of
the 1988 Act
.
34.
There had been recovered from the appellant’s home address and one of the industrial units a total of £107,642.69 in cash. This was property held by the appellant within section 72AA(4)(a)(i) of
the 1988 Act
.
35.
There was money found to have been lodged in four bank accounts within the relevant period amounting to £280,896.69. Of this, £245,213.72 related to an account with Banco Santander in Tenerife. The balance was in three accounts in England which were joint accounts of the appellant and his wife. These sums were property held by the appellant within section 72AA(4)(a)(i) of
the 1988 Act
.
36.
DC Whittleston then calculated income from the sale of counterfeit perfume. Cheshire Services (UK) Limited had supplied 361,075 bottles for perfume or fragrances between January 1997 and November 2000. When the appellant was arrested, a total of 142,741 unsold bottles of counterfeit perfume were known to have been in his possession. From this, it was deduced that the appellant had sold “a minimum of 218,334 bottles of counterfeit perfume” within the relevant period. On the basis that a genuine bottle of perfume sold for approximately £40, DC Whittleston calculated a benefit of £8,733,360 (i.e. 218,334 @ £40 each.) This might have been treated as a directly calculated benefit under
section 71
(1A). The prosecution in fact treated it as property transferred to the appellant under section 72AA(4)(a)(ii).
37.
The total of the cash, the lodgement in banks and the calculated sale proceeds of the counterfeit perfume was £9,121,899.38.
38.
DC Whittleston also made a very detailed investigation of the appellant’s expenditure during the relevant period. This was under 18 headings amounting to £810,698.14. This was expenditure of the appellant since the beginning of the relevant period within section 72AA(4)(b). Seven of the 18 headings broadly related to expenditure on the production of counterfeit perfume. The expenditure on these 7 items totalled £576,442.18, including just over £400,000 for the purchase of essences and empty perfume bottles and £25,755 for shipping of consignments.
39.
DC Whittleston then made a calculation of the appellant’s “minimum known realisable assets”. This was initially subject to a substantial miscalculation of the value of some shares held at Banco Santander. After correction of this error, the total was £655,627.96. The largest component of this was the value of the equity in the appellant’s home in Leeds.
The judge’s ruling
40.
In his ruling of 17
th
December 2002, the judge related the procedural history of the confiscation proceedings in explaining why he had refused a further adjournment. We have set this history out earlier in this judgment. He had heard evidence from DC Whittleston. The appellant had chosen not to call any evidence. The judge referred to the statutory assumptions. He had no evidence to contradict that of DC Whittleston.
41.
It seemed to the judge that there were really only two issues. The first issue related to the calculated income from the sale of bottles of perfume. The appellant was not in a position to challenge the number of bottles sold (218,334). But he did challenge the price per bottle. The prosecution had taken £40 as the full market price of a bottle of genuine perfume. The price at which the appellant sold his counterfeit perfume was not this. The judge said that various hand written documents found by the police were likely to produce greater inaccuracy, but might suggest a figure of £4 per bottle. There was said to be a market price of £15 per bottle. The appellant had suggested a figure which the judge gave as £2.50 to £3.50 in his Proposed Basis of Plea. Other evidence might suggest a figure of £10 per bottle.
42.
The judge concluded on the material before him that the appropriate figure was £5 per bottle. He had regard to the broad picture that the appellant was selling these items in bulk in a less than prestigious market place. This decision reduced the calculated minimum amount for the sale of counterfeit perfume to £1,091,670. This was the only reduction which the judge made from the prosecution figures. The reduced amount, with the other amounts for cash, lodgements in banks and expenditure produced the amount for which the confiscation order was made.
43.
The second issue related to what was termed “double accounting”. Mr Hatton had submitted on behalf of the appellant that, since the appellant had established no other source of income than his criminal conduct, his income and his expenditure were the same. To aggregate them was counting the same thing twice. The submission seems to have been put, with reference to
section 71AA(5)
(c) of
the 1988 Act
on the basis that aggregation would result in a serious risk of injustice.
44.
The judge was unable to say that aggregation would result in a serious risk of injustice. The appellant had been less than forthcoming in disclosing his financial position. He had repeatedly failed to comply with directions of the court relating to his financial position and had not put any evidence before the court to contradict the position arrived at by the application of the assumptions.
45.
The judge then considered the amount which might be realised. He noticed that DC Whittleston had expressed the firm belief that the appellant had considerable undisclosed assets, especially real estate, in foreign jurisdictions. DC Whittleston had referred to recovered documents said to support this and to what appeared to DC Whittleston to be a bank code and a PIN number on paper sellotaped to the underside of a drawer at the appellant’s home. The judge regarded these as realistic suspicions in relation to the appellant’s failure to disclose his entire financial assets. An exchange of correspondence between the appellant and an unknown person contained a clear suggestion that the appellant had acquired property in Spain which it had not been possible to trace. The judge concluded that the appellant had failed to satisfy him that the amount that might be realised was less than the amount of his benefit. The judge accordingly made an unreduced confiscation order of the amount which he had determined to be the benefit.
Grounds of appeal and submissions
46.
Mr Nathan produced extended and, in some respects, diffuse amended grounds of appeal supported by a written skeleton argument, but he only pursued some of these grounds. We deal only with those grounds which he did pursue. His main general submissions were:
a)
that the amount of the confiscation order was unjustly large; and
b)
that practical justice did not require a confiscation order greater than the amount of the appellant’s identified realisable assets, which would in any event require him to sell his home.
As to (b), the judge and this court are obliged to apply the statutory provisions. Beyond that, palm tree practical justice has no place.
47.
The particular grounds of appeal which Mr Nathan pursued are that the judge’s decisions relating to
(a) the sale price of a bottle of perfume;
(b) double accounting;
(c) the appellant’s realisable assets;
(d) the term of imprisonment to be served in default of payment; and
(e) costs
were wrong. As to (a) to (c), Mr Nathan did not ask the court to take account of evidence which was not before the judge. But he submitted that there was no perfect evidential answer and that the court should do its best on the evidence before it. We do not consider that this properly characterises the task of this court. We are not the first instance court. Absent fresh evidence, which Mr Nathan does not seek to produce, this court’s task is to consider the grounds of appeal to determine whether the judge’s decision was in any respect wrong in law or in fact. Insofar as this may be regarded as an appeal against sentence, and insofar as the provisions of
the 1988 Act
provide for judicial discretion, it may also be for this court to determine whether the judge’s exercise of discretion was wrong in principle or manifestly excessive. But this is really no more than to re-express in different words the provisions of section 72AA(5)(c).
Sale price of perfume
48.
Mr Nathan submitted that the judge was wrong to determine a price greater than £2.75 to £3, as in the Proposed Basis of Plea. The prosecution evidence only referred to £40 per bottle, which was plainly wrong. The evidence given in September 2002 went no further than that of a Trading Standards Officer, Ruth Taylor, who produced a schedule to indicate that the street market value in England was between £10 and £15. The appellant’s case was that much of the perfume had been sold abroad at much lesser prices, but there was no evidence of this.
49.
Mr Nathan said that, at the hearing on 16
th
December 2002, the prosecution produced hand written documents out of the blue, when the appellant was unrepresented and unable properly to deal with them. We understand that the documents were from exhibits in the appellant’s trial, although they had not featured in DC Whittleston’s statement. The prosecution claimed that they indicated prices at which the perfume had been sold. Mr Nathan showed us some of them, submitting that some of these did not indicate prices for which the prosecution were contending; or that others could be dated to 1991 or 1994, outside the relevant period. Mr Nathan said that these documents should not have been taken as persuasive evidence of prices in excess of the £2.75 to £3 for which the appellant contended. There were documents showing that substantial sales were made at or about £3 per bottle.
50.
Mr Kearl submits that the judge’s figure of £5 per bottle was entirely supportable on the evidence. Ruth Taylor’s material had been part of the original prosecution case summary. Mr Hatton had sought to explain some of the documents, including document 1419, which does appear to show prices for various counterfeit brands between £3.25 and £4 (except for Coco Channel at £5.10). Mr Kearl accepted that some of the documents suggested a figure of the order of £3 per bottle and that some of them appear to date from 1991 or 1994. That was some embarrassment. But he was not embarrassed to find a 1991 diary entry apparently showing prices between £4.25 and £5.50, when these were likely to have been greater at a later date.
51.
Insofar as the appellant complains that the prosecution attempted to derive inaccurate information from documents which were sprung on him, the judge was not misled by this. He said that the various handwritten documents were more likely to produce greater inaccuracy. As to document 1419, he read it broadly in the way suggested by Mr Hatton (and by Mr Nathan before us) as suggesting a figure of £4 per bottle, and not as representing greater figures originally suggested by the prosecution. He noted Ruth Taylor’s evidence.
52.
In our judgment, the judge was fully entitled on the evidence before him to determine a price of £5 per bottle. For this amount, he did not need to resort to
section 73A(5)
to draw inferences. The prosecution had called evidence which might have established an amount greater than £5. The appellant had called none. We reject this ground of appeal.
Double accounting
53.
Mr Nathan’s essential submission was that the judge was wrong to aggregate the appellant’s calculated income from the sale of perfume with his cash, the lodgements in banks and his expenditure. The probability was that income from the sales was, for instance, the same money which was lodged with Banco Santander; and that, since the appellant had no other income, income from sales was the same money as that which financed expenditure on the production of bottles of perfume. The calculation of benefit should not have taken this same money twice. Precisely how much double accounting there was could not be stated. But there plainly was some double counting which the court should in justice eliminate as best it might.
54.
Mr Nathan put this submission in a number of ways with reference to
the 1988 Act
. First, he said that the income from sales of perfume was a direct benefit determined under
section 71
(1A). There was no need or warrant to resort to
section 72AA
. Second, he said that the court has a discretion under section 72AA(3) whether to make assumptions and that the judge was wrong to exercise the discretion to do so in this case. Third, he said that there would be serious injustice within section 72AA(5)(c) if the assumptions were applied without modification to eliminate double accounting. Fourth, he submitted that the assumptions in relation to particular property or expenditure were incorrect in the appellant’s case under section 72AA(5)(a).
55.
We do not consider that the judge was wrong to proceed by way of assumptions under
section 72AA
. The conditions for the application of the section were fulfilled. The prosecution were entitled to seek to bring the income from the sale of perfume within the section 72AA(4)(a)(ii) as a route to inviting the judge to determine the appellant’s benefit under
section 71
(1A), although an assumption was scarcely necessary here, since the appellant did not contend that this income was legitimate. Even if this element of the determination had been made directly under
section 71
(1A), that did not prevent the court from making statutory assumptions in relation to other property or expenditure. Since the appellant had no legitimate income, the assumptions on the face of it applied to all his expenditure within the relevant period, and also to the cash and the bank lodgements.
56.
We do, however, accept that it was in principle open to the appellant to contend, for instance, that some or all of the cash or the money lodged with Banco Santander or that some or all of the expenditure probably derived directly from the sale of the 218,334 bottles of perfume at £5 per bottle, and therefore represented the same money. To the extent that the court was persuaded on the evidence that this was probably so, it could then decline to make the statutory assumption in relation to it under section 72AA(5)(c), if satisfied that otherwise there would be serious injustice. The burden was on the appellant to establish this. The question for the judge was whether he discharged this burden. The appellant was in difficulties in trying to do so, when he had not given or called evidence. He was also at risk of adverse inferences under
section 73A(5)
.
57.
Mr Kearl reminds us that this is and is intended to be draconian legislation. He accepts the possibility that there might be some double counting here. The prosecution do not know whether any property or expenditure did or did not represent the same money as the income from the sale of 218,334 bottles of perfume. The only person who knows where the money came from and went is the appellant. He chose not to give evidence, thus protecting himself, as he was entitled to do, from cross-examination.
58.
The appellant, through Mr Nathan, in effect attempted to persuade the court that the income from the sale of the 218,334 bottles of perfume represented the appellant’s entire benefit from criminal activity. Mr Kearl submitted that this was not so. Counterfeit perfume was the subject of only one of the three counts of the indictment to which he pleaded guilty.
Section 72AA
had the effect of enlarging the potential compass of relevant criminal conduct beyond the offences to which he pleaded guilty. The prosecution evidence explicitly put the 218,334 bottles as a minimum. This approximated to the number in the appellant’s unsupported Proposed Basis of Plea, but Mr Kearl referred to a Mr Corley as having stated that he had received 3 to 400,000 bottles from the appellant in the previous five years.
59.
In our judgment, the appellant’s double accounting case rests on a premise which he did not attempt to establish by evidence, that is that the income from the sale of the 218,334 bottles was all or most of his benefit from relevant criminal activity during the relevant period. It was not on any view his entire benefit. It may not have been his entire benefit by a very large margin. As Mr Kearl said, only he could tell, and he chose not to try to do so. The judge would have been speculating if he had concluded that there was double accounting and, if so, by how much. Speculation of this kind from assertions unsupported by evidence does not, in our view, discharge in this case the burden of proof which was on the defendant. In these circumstances, we agree with Mr Kearl that the product of the assumptions should not be reduced. The judge was entitled to conclude that there was no serious risk of injustice in applying the assumptions in full. He had no secure evidential basis for concluding otherwise. We reject this ground of appeal.
The appellant’s realisable assets
60.
Mr Nathan accepts that the burden is on the appellant to show that his realisable assets are less than the determined benefit. He submitted that, where a person has been the subject of two substantial investigations for confiscation purposes, the court was entitled to find that his discovered assets represent his entire realisable assets. What has been unearthed by the prosecution is likely to be right, unless there is some compelling reason to reach a different conclusion.
61.
Mr Kearl submitted that the judge was entitled to reach the conclusion that he did. The realisable assets which the prosecution unearthed were stated to be the minimum. There were proper grounds for suspicion that the appellant had other property in Spain and at least one undisclosed bank account.
62.
In our judgment, the appellant simply did not attempt to discharge the burden on him to show that the disclosed assets were his only realisable assets, or that his true realisable assets were less than the determined benefit. He was wide open here to adverse inferences from his failure to give evidence and under
section 73A(5)
. But in truth inferences were unnecessary. There was no evidential basis on which the judge could have concluded that his realisable assets were less than the determined benefit. We reject this ground of appeal.
Individual items
63.
Mr Nathan made short submissions challenging some of the individual items which made up the total for expenditure of £810,698.14.
64.
Purchase of empty perfume bottles
. The calculated amount was £163,867.02. This was the product of 154,956 empty bottles which a Mr McLuckie did not supply at £10,575 per 10,000. Mr McLuckie is a director of Cheshire Services (UK) Limited, the company that supplied the 218,334 bottles which feature earlier in this judgment. The price per 10,000 came from an invoice dated 16
th
December 1998 from Jean Cristian for “Blank bottles sold as clearance” for which the purchaser paid cash. The invoice was produced by Mr Coleman of Jean Cristian Perfumes Limited, who stated that he had supplied bottles to the appellant on four or five occasions over a two year period from December 1998. The appellant historically challenged the information from Mr McLuckie, but Mr Nathan did not persist in a contention that he should have been called to be cross-examined. It was suggested that Mr Coleman’s statement was inadmissible. Mr Nathan’s main point was that the price should have been no greater than 31p per bottle – this derived from a document exhibited by the prosecution. There was cross-examination indicating that the 31p per bottle was not the only cost component. In our view, the prosecution and the judge were entitled to proceed on the higher price substantiated by the Jean Cristian invoice in the absence of any evidence from the appellant.
65.
Shipping of Consignments
. The calculated amount was £25,755.73. Of this, £1,002.00 related to shipments by Hellman Worldwide Logistics. The consignee was Priest & Co at the appellant’s address. Mr Nathan’s point appears to be that there was no evidence that the costs were paid by the consignee. Other deliveries had been arranged by Mr Corley from Spain. Mr Kearl points out that the Hellman invoices were addressed to Priest & Co and payment was made in England. In the absence of evidence from the appellant, we consider that the judge was entitled to conclude that the appellant paid these costs.
66.
Counterfeit compact discs
. These were recovered from the three industrial units when the appellant was arrested. The calculated amount was £16,146.30. The appellant did not accept that these items were his. The count on the indictment in relation to them was not proceeded with, it being left on the file. The prosecution were entitled to include this item of expenditure under section 72AA(4)(b). The compact discs came within section 72AA(6) as the product of relevant criminal conduct, notwithstanding that the charge in relation to them remained unadjudicated. The appellant did not give evidence to establish his case.
67.
Purchase of jewellery, paintings and antiques
. The calculated total was £25,543.00. The appellant’s case was that a clock, a statue and perhaps one or more paintings were acquired outside the relevant period. There were some auction documents indicating this as a possibility, but the appellant did not give evidence to substantiate his case.
Costs
68.
Mr Nathan submits that a costs order should not be made where the confiscation order will deprive an appellant of his entire realisable assets. We accept the principle, but we have no basis for concluding that it would apply in the appellant’s case. Our reasons are the same as those under the ground of appeal relating to the appellant’s realisable assets. We reject this ground of appeal.
Period of imprisonment in default of payment
69.
We accept that the 10 year default period determined by the judge was on the erroneous basis that 10 years is a mandatory maximum for the amount of this confiscation order. We shall reduce the period below 10 years to a period which we will determine after the appellant has had the opportunity, through junior counsel, of making short submissions in the light of the rest of this judgment. We are prepared to determine this question on written submissions without a substantive oral hearing, if the appellant is content for us so to proceed. Our provisional view is that the period should exceed 5 years.
Conclusion
70.
We shall therefore allow the appeal in relation to the default period and substitute a lesser period than 10 years after receiving submissions after this judgment has been handed down. Otherwise this appeal is dismissed for the reasons given in this judgment.
-----------------------
LORD JUSTICE MAY: A matter arises in Priestley, does it not?
MR BUELIANAN: My Lord, it does, in relation to the period of 10 years' imprisonment in default.
LORD JUSTICE MAY: I have read Mr Nathan's very helpful short further submissions on that subject. As you know the constitution of the court currently sitting is not the constitution which heard the appeal and my present view is that it is not possible for me alone to determine this question of the default period, without at least consulting the other two members of the constitution, because Mr Nathan raises a point, if not two, which they have not considered, I can tell you that for the moment, and which it is appropriate that they should before we as a constitution decide the matter. Is there any other solution than that it should go over?
MR BUELIANAN: My Lord, I entirely agree with my Lord.
LORD JUSTICE MAY: I am afraid that is the case. When that has been done, is it your view that it is necessary to have another oral hearing or would the appellant be content if we communicated a decision in writing?
MR BUELIANAN: I am sure he would. I have spoken to Mr Nathan who has indicated that he does not wish to add any oral argument to the submissions that the court already have.
LORD JUSTICE MAY: In that case what I will do is I will consult with the other two members of the court. I will discuss with them not only generality but this submission that is put before us and we will communicate a decision. It will have to be given in open court but there is no need for attendance unless you actually want to. Very well. Does anything else arise?
MR BUELIANAN: No, thank you.