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DAVID MALCOLM BANKS, R v. [1996] EWCA Crim 1655 (9th December, 1996)
No.
95/2985/W3
IN
THE COURT OF APPEAL
CRIMINAL
DIVISION
Royal
Courts of Justice
The
Strand
London
WC2
Monday
9 December 1996
B
e f o r e:
THE
LORD CHIEF JUSTICE OF ENGLAND
(Lord
Bingham of Cornhill
)
MR
JUSTICE SACHS
and
MR
JUSTICE TOULSON
__________________
R
E G I N A
-
v -
DAVID
MALCOLM BANKS
__________________
Computer
Aided Transcription by
Smith
Bernal, 180 Fleet Street, London EC4
Telephone
0171-831 3183
(Official
Shorthand Writers to the Court)
__________________
MR
MICHAEL BIRNBAUM QC appeared on behalf of THE APPLICANT
MR
ANDREW MITCHELL appeared on behalf of THE CROWN
____________________
J
U D G M E N T
(As
Approved by the Court
)
____________________
Monday
9 December 1996
THE
LORD CHIEF JUSTICE: In the Crown Court at Newport, on 3 January 1996, the
applicant pleaded guilty on re-arraignment to conspiracy to supply class B
controlled drugs, namely cannabis, cannabis resin and amphetamine. On 11 April
1996 he was sentenced to seven years' imprisonment and a confiscation order was
made under section 5 of the Drug Trafficking Act 1994 in the sum of
£37,000 with 12 months' imprisonment in default of payment consecutive to
the substantive term. The applicant sought leave to appeal against sentence,
more particularly against the confiscation order, and his application was
referred to this court by the single judge.
There were other defendants besides the applicant before the Crown Court,
but they play no part in the issue we have to decide.
The prosecution arose out of a police operation code named 'Operation
Peruvian' which involved the collection of drugs from a supplier in Dagenham
and the distribution of those drugs in South East Wales. The applicant was
involved in that operation. It is unnecessary to go into detail for the
purposes of this judgment; it is enough to say that the proceeds of the
applicant's dealings were assessed by the trial judge in the sum of
£200,000; his realisable property was assessed by the judge at
£37,000; and it is contended on behalf of the applicant (and accepted in
principle on behalf of the Crown) that the profit made by the applicant through
his dealing in drugs was in some sum smaller than £37,000 but never
precisely quantified. For the purposes of the Drug Trafficking Act inquiry the
Crown submitted a statement under section 11, the applicant submitted a
counterstatement, and the judge made his orders with reference to those
statements and the facts as found.
In seeking leave to appeal against the confiscation order Mr Birnbaum
QC on behalf of the applicant has addressed five main arguments. The first is
that by construing the Act as applying to gross receipts rather than profits
made by a drug trafficker the courts have failed to give effect to the
intention of Parliament. Counsel has made reference to the report which
preceded the Drug Trafficking Offences Act 1986 and has sought to refer to
various observations made on the floor of the House of Commons when that Act
was being introduced.
Secondly, and centrally in his submissions, counsel has submitted that
the issue which has to be decided under section 2 (and in particular section
2(2) and (3) of the 1994 Act, reproducing similar provisions in the 1986 Act)
is: what benefit has a defendant received from his trafficking in drugs?
Counsel submits that it is a departure from the true construction and intention
of the Act to pay attention to the payments which a trafficker has received, or
to the proceeds of his trafficking in drugs, and criticises decisions reached
by this court as overlooking the central importance of benefit and becoming
sidetracked into consideration of these other expressions. In support of that
submission counsel has referred to other provisions of the Act. He has
submitted that there can be no confiscation within the true meaning of that
word of what a man has never had. He draws attention to the terms of sections
4, 5 and 7 of the 1994 Act, and also section 15, all of which sections he
submits point towards the correctness of his submissions and the incorrectness
of reliance on gross payments or gross proceeds. He accepts that "proceeds"
means the same throughout the 1994 Act, and relies on sections 49 to 51 as
fortifying his submission.
He goes on to argue that the meaning of the legislation, if not clear
in his favour, is ambiguous and therefore (as penal legislation) to be
construed in favour of a defendant. He refers to a number of authorities in
which this legislation has been regarded as penal. He further submits that to
concentrate on gross receipts or payments or proceeds can produce unjust
results, particularly in a case in which there are a number of defendants. He
also submits that this construction can lead to a defendant being penalised
twice, first, because he will be sentenced on the basis of the gross total of
his trafficking in drugs, and then (counsel submits) because he is unjustly
made the subject of a confiscation order on the same basis.
The thrust of Mr Birnbaum's submission can, we think, be demonstrated
by taking an example which, although the court's example and not his,
illustrates the effect of his submission. It is an entirely hypothetical and,
on its facts, perhaps unrealistic example. Suppose that a defendant D inherits
£1,000 from his law-abiding grandmother. Suppose further that D spends
that whole sum on drugs which he then sells for £1,000, making no profit.
Suppose in addition that he repeats that operation on four occasions, on each
of them buying drugs for £1,000 and selling them for the same sum. It is
on those facts plain that his turnover on the five transactions is £5,000,
that being the gross sum received by him by way of payment on the five
transactions. It is, however, equally plain that his profit is nil. At the
end of his dealing he only has the £1,000 with which he started. It can
therefore be said to be unfair if a confiscation order can be made with
reference to the figure of £5,000, his gross receipts rather than his
profits.
The protection which was provided in section 4(3) of the 1986 Act and
which is now to be found in section 5(3) of the 1994 Act does not avail D in
such circumstances because property held by D may be realised even though it is
unrelated to drug trafficking. If, for example, D had inherited £10,000
from his grandfather, which had remained in the bank throughout and had not
been used for drug trafficking at all, that might nevertheless be available for
realisation in satisfaction of a confiscation order. In relation to that sum
of £10,000 D might successfully rebut the statutory assumption in section
4(3), as provided by section 4(4)(a) of the 1994 Act and, if he did so, that
£10,000 could not be treated as a payment or other reward received by him
in connection with drug trafficking. That sum would however still be available
for realisation in satisfaction of an order. If therefore the object of the
legislation is to strip drug traffickers of profits from drug trafficking, the
applicant submits, it would distort the object of the legislation if drug
traffickers were stripped not only of the profits of their trade but of any
funds involved or used in the trade whether or not they had led to a profit.
The thrust of Mr Birnbaum's submissions can, we think, be illustrated by
that hypothetical example. He urges that attention should be concentrated on
the benefit to the drug trafficker and would urge that, on that example, the
drug trafficker has not benefited to the extent of £5,000, or indeed at
all. He submits that it would be unjust that he should be treated as having
made such a benefit. He further submits that it would be penal and involve a
double penalty if D were sentenced on the basis that his transactions involved
a turnover of £5,000, and a confiscation order in that sum were made on
top.
While appreciating the force of this example, we conclude that there
are four insuperable objections to it. The first derives from the language of
sections 2, 4 and 5 of the Act. Section 2 provides, so far as relevant, 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 or,
as the case may be, any of the offences concerned, 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; ...."
We go forward to section 4(1) which provides:
"For
the purposes 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."
Section
5(1) provides:
"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."
The court's duty therefore under section 5(1) is to make a confiscation
order in the amount which the Crown Court assesses to be the value of the
defendant's proceeds of drug trafficking. In order to assess the value of the
defendant's proceeds of drug trafficking in pursuance of that subsection the
court must refer back to section 4(1) which defines the meaning of the proceeds
of drug trafficking. The definition is that those proceeds are the aggregate
value of the payments or other rewards received by a person in connection with
drug trafficking, and those expressions take one back to the first of the
clutch of subsections we mentioned in section 2 where, in subsection (3), there
is an express reference to "any payment or other reward". It accordingly seems
to us that the reference to "benefit" in section 2(2) and (3) is the subject of
clear and express further definition to which the court must pay attention in
applying this Part of this Act. We accordingly conclude that, on the language
which Parliament has used in this Act, reproducing similar language used in the
1986 Act, it is clear beyond argument that the benefit is to be treated in
particular in accordance with section 4 as the aggregate value of the payments
or other rewards made to the defendant in connection with drug trafficking.
That does not, as we read it, direct attention to profit but to gross payments.
The second insuperable objection in the way of the applicant is in our
judgment to be found in a series of decisions concerned with the construction
of the predecessor of the 1994 Act. The first of those decisions was
R
v Osei
(1988) 10 Cr App R(S) 289 in which, at page 293, Glidewell LJ delivering the
judgment of the court said with reference to these sections:
"'Payment'
means payment. It means any payment. The dichotomy is between a payment which
may be by way of reward or may be in some other way in connection with drug
trafficking or some other form of reward. An obvious instance of another form
of reward is an air ticket paid for by the person who is arranging the trip
with the intention that the courier shall get a free holiday in the United
Kingdom and, in return, carry the drugs. That is the sort of matter which
comes under 'other reward'. But 'payment' is apt to include not merely a
payment which is going to be a profit or fee, so to speak, for the courier, but
also a payment such as that which was envisaged in what this appellant
originally said to the customs and in what she said through her counsel to the
court below; that is to say, a payment to her to enable her to have money in
her possession which would persuade the immigration authorities to allow her to
enter the country so that she could bring in the drugs."
The second and leading authority on this point is
R
v Smith
[1989] 1 WLR 756. At page 951A Lord Lane CJ, in giving the judgment of the
court, said:
"The
words 'any payments' are on the face of them clear. They must mean, indeed it
is clear from the wording, any payment in money or in kind. It does not mean,
in the judgment of this court, net profit derived from the payment after the
deduction of expenses, whether the expenses are those of purchase, travelling,
entertainment or otherwise. The same consideration applies to the words 'other
rewards'. They also have to be valued. If for example the receiver of the
drugs has rewarded the appellant by providing him with an expensive holiday or
an expensive motor car, it would not, we think, be legitimate to construe the
words 'value of the rewards' as meaning the value of the holiday or motor car
less the business expenses involved in earning the reward.
It
seems to us that the section is deliberately worded so as to avoid the
necessity, which the appellant's construction of the section would involve, of
having to carry out an accountancy exercise, which would be quite impossible in
the circumstances of this case. It may be that the wording is draconian, and
that it produces a draconian result. But it seems to us that if that is the
case, it was a result intended by those who framed the Act."
It
is worthy of note that on that occasion the court certified a question of
general public importance while refusing leave to appeal to the House of Lords,
and the House of Lords themselves refused leave to appeal against that
decision. So far as we know, however, the House of Lords observed their usual
practice of giving no reasons for dismissing the petition, and accordingly we
have no way of knowing whether the petition was refused because the judicial
committee agreed with the decision of this court or whether it was because the
petition was 14 weeks out of time or because, as appears from page 768H, the
issue before the court on that occasion was on one showing academic. Be that
as it may, the case was not argued before the House.
In a number of cases those two decisions have been applied. Our
attention has been drawn in particular to
R
v Comiskey
(1990) 12 Cr App R(S) 562. At page 567 Tucker J, giving the judgment of the
court, said (having cited the terms of section 2 of the 1986 Act):
"The
meaning of the subsection has been considered by this court in the case of
Ian
Smith
(1989) 11 Cr App R(S) 290. In the course of his judgment in that case the Lord
Chief Justice made it plain that the words 'any payment or other rewards' do
not mean net profit. The section is deliberately worded so as to avoid the
necessity of carrying out an accounting exercise. The wording of the Act is
draconian, but the effect can be mitigated by the provisions of section 4(3),
to which we have referred."
The
case before the court on that occasion was unusual because although the
proceeds of the appellant's trafficking were assessed at £250,000 his
apparently realisable assets amounted only to £32,000. It was held that
there were undisclosed assets of unquantified extent. The judge assessed the
appellant's realisable property in the same sum as the total proceeds of his
dealing in drugs, namely £250,000, and made a confiscation order in that
sum. This court felt that it was unrealistic to assume that his realisable
assets were of the same value as the total of his dealing in drugs and
accordingly made a reduction in the confiscation order. That however, as we
read the decision, has no bearing on the case which is now before us.
The fourth case to which we were referred was
R
v Simons
(1994) 15 Cr App R(S) 126. At page 129 Henry J (as he then was) giving the
judgment of the court said:
"The
proceeds of sale are not profit made in the sale but the sale price. This is
confirmed by the definition of 'proceeds' in the Act, namely the value of
payments or other rewards received in connection with drug trafficking carried
on by him. Thus, one is concerned with the payments made to him in connection
with the drug trafficking carried on by him, and not merely with the profit
element in those payments."
After
reference to the leading case of
Smith
Henry J continued:
"The
natural and ordinary meaning of the word 'proceeds' supports that
interpretation. In any event, the decision is binding on this Court, as it was
on the trial judge, as he properly recognised. There is neither authority nor
academic criticism suggesting that that construction is wrong. It is the only
construction open on the clear wording of the Act, in our judgment."
Then
in a passage on page 130 of the report, which it is unnecessary to read, the
judge went on to identify the mischief which would flow from an interpretation
other than that which had previously been put on these provisions.
We have therefore an unbroken and, as it seems to us, clear line of
authority which is binding on this court and which appears not to have been the
subject of previous criticism.
The third insuperable objection in the applicant's way is in our
judgment the fact that these provisions of the 1986 Act have been re-enacted in
almost precisely the same terms in the 1994 Act. In the 1994 Act the
opportunity was taken to amend some other provisions, for example, statutory
assumptions which were discretionary under section 2 of the 1986 Act have
become mandatory (subject to a qualification) in the 1994 Act. Similarly the
burden of proof has been the subject of express enactment which it formerly was
not. It is however noticeable, in our judgment, that there has been no
amendment of the provisions which are crucial to the determination of this
issue. This cannot be a case in which the language has simply been reproduced
without attention being paid to intervening case law. The amendments which
have been made show that account has been taken of the intervening case law.
We are therefore, in our judgment, bound to proceed on the clear assumption
that Parliament re-enacted these provisions, knowing of the decisions which had
been made on them and intending that the provisions should have that effect.
The fourth insuperable objection to the applicant's argument in our
judgment rests on later sections of the Act which use the expression
"proceeds". Counsel representing the applicant accepts that "proceeds" must
have the same meaning whether it appears in the early sections of the Act or
the later sections. In this instance there were three sections of the 1986 Act
which are material, sections 23A(1), 24(1) and 26B(7). The first and last of
those provisions were added by amendment in 1993. Section 24(1) formed part of
the original Act. In the 1994 Act some of those provisions are repeated. Our
attention was drawn to section 49(1) which makes it an offence if any person:
"....
conceals or disguises any property which is, or in whole or in part directly or
indirectly represents, his proceeds of drug trafficking...."
Section
49(2) provides:
"A
person is guilty of an offence if, knowing or having reasonable grounds to
suspect that any property is, or in whole or in part directly or indirectly
represents, another person's proceeds of drug trafficking, he --
(a)
conceals or disguises ...., or
(b)
converts or transfers that property .... [for a purpose specified in the
subsection]."
Section
50(1)(a) of the 1994 Act makes it an offence for a person to make an
arrangement whereby:
"....
the retention or control by or on behalf of another person .... of [that
person's] proceeds of drug trafficking is facilitated...."
Section
51(1) makes it an offence if:
"A
person .... knowing that any property is, or in whole or in part directly or
indirectly represents, another person's proceeds of drug trafficking, he
acquires or uses that property or has possession of it."
Section
52(7) (which is a provision directed against money laundering) defines money
laundering by reference to the doing of any act which constitutes an offence
under sections 49, 50 or 51 of the Act.
All these provisions are in our judgment directed to trying to stamp on
the transfer of funds which have been used for the purposes of financing drug
trafficking. It would in our judgment reduce those provisions to absurdity if
the expression "proceeds" were to be read as applying only to profits made from
drug trafficking and to leave parties free to bank or transfer or conceal or
disguise sums which are the product of drug trafficking but which do not
represent profits. In our view it is plain beyond argument that "proceeds"
must be understood as meaning, as the earlier sections of the Act suggest, the
aggregate sum of payments made deriving from the trafficking in drugs.
Those four objections in our judgment make it impossible for us to accede to
the argument which has been advanced by Mr Birnbaum on behalf of the applicant.
We should make it plain that we have not accepted his invitation to
study the report which preceded the 1986 Act, nor to consider in detail the
observations made in the House of Commons when the Act was introduced. Since
the meaning of the provisions is, in our judgment, plain and unambiguous we do
not consider that it would be appropriate to refer to those preparatory
materials.
We would accept another argument advanced by Mr Birnbaum to the effect
that these provisions are penal, but we observe that Parliament can lawfully
impose penalties if it does so clearly and unambiguously, and in this case we
conceive it to have done so. We accept the suggestion made by Mr Birnbaum that
in some cases these provisions, where there are multiple defendants, can lead
to difficulties and to a risk of injustice when it comes to apportionment, but
we can see no difficulty of that kind arising here. It is not, as we conceive,
a matter that now calls for decision.
So far as the double penalty argument is concerned, we can see no
reason in principle why two penalties should not be imposed for the same
unlawful act. As we read the legislation it is plain that Parliament intended
both penalties to be imposed.
We have in our judgment to bear in mind the background to these
provisions. The evils of the international drug trade are now recognised to be
such as to justify measures of the utmost rigour. The trail of death and human
devastation which drug traffickers leave behind them is notorious. We think it
clear that Parliament, reflecting the consensus of international opinion on
this subject, intended those who engage in this trade to suffer dire
consequences: hence the provision that assets not themselves attributable to
trading in drugs should be at risk of realisation to satisfy a confiscation
order.
Despite the skill and attractiveness with which Mr Birnbaum has
deployed his submissions, we feel unable to accept them. If we thought,
despite the clarity of our own views on the subject, that the House of Lords
might reach a different conclusion, then we should conceive it to be our duty
to give leave to appeal in this court and certify a question for consideration
by their Lordships. We do not however on reflection consider that the issue
which has been raised is one which could be determined by the House of Lords
otherwise than as we have determined it, particularly in the light of the
recent legislation. For those reasons we dismiss this application for leave to
appeal.
Is there any application?
MR
MITCHELL: My Lord, I think the applicant is legally aided.
THE
LORD CHIEF JUSTICE: If the applicant is legally aided, we make an order for
legal aid taxation.
MR
BIRNBAUM: My Lord, he is.
THE
LORD CHIEF JUSTICE: I imagine you ask for that, do you?
MR
BIRNBAUM: My Lord, I do.
THE
LORD CHIEF JUSTICE: Yes, we make that order.
_________________________________
© 1996 Crown Copyright
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