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	England and Wales Court of Appeal (Criminal Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> Anwar, R. v [2013] EWCA Crim 1865 (24 April 2013) URL: http://www.bailii.org/ew/cases/EWCA/Crim/2013/1865.html Cite as: [2013] EWCA Crim 1865

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IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		24 April 2013

1. LORD JUSTICE DAVIS: This appeal, for which this court has given leave, yet again raises a point by reference to Section 327 (1) and Section 329 (1) of the Proceeds of Crime Act 2002. More particularly, it calls into consideration the way in which the jury, after submitting a written note in the course of their deliberations, were instructed by the judge in the circumstances arising at the trial below.
2. The background is this. The appellant faced a number of counts on an indictment on which there was also a co-accused called Adeel Arshad. In due course the appellant pleaded guilty to three counts on that indictment, being counts of possessing articles for use in fraud. The co-accused also pleaded guilty to a number of counts. The prosecution offered no further evidence in respect of certain other counts on the indictment but three counts were pursued to trial. One was a count of possessing criminal property, contrary to Section 329 (1) (c) of the Proceeds of Crime Act 2002; and two other counts were counts of disguising or converting criminal property, contrary to Section 327 (1) (b) and (c) of the Proceeds of Crime Act 2002. It may be noted that none of those three counts, as particularised on the indictment, included any specific allegations as to the precise nature or type of the criminal conduct in question.
3. On 1 April 2011, during a search of the appellant's home in East London, police found a total of some £2,240 in cash, variously discovered in two handbags belonging to the appellant's niece or under the bed of the niece's husband. This was to reflect what was alleged in count 1.
4. As to count 2, it was not disputed that on 20 August 2010 the appellant had purchased a BMW car from Mr Harkinson (in fact a serving police officer, as the appellant apparently knew at the time) for £38,500. The purchase of that car had been made using £37,000 in cash, with the balance being paid by use of a debit card.
5. As to count 3, this involved the purchase of another BMW from Mr Rhodes on 24 January 2011. The agreed price was £47,000 odd, apparently to be satisfied by way of part-exchange of the BMW previously acquired from Mr Harkinson together with a further payment of £12,500. The £12,500 was paid by the appellant by way of cash and use of a debit card or debit cards. At trial, his case was that the £12,500 had been provided by a friend called Mr Bhaji, part of which had been paid in cash into the appellant's own bank accounts to enable him to meet the payments on the debit cards.
6. The appellant was arrested on 1 April 2011 and interviewed. He declined to answer questions but provided a statement. This was to the effect that he denied that the cash found at his home belonged to him. As to the purchase of the BMW cars, amongst other things, he said that the acquisition - and certainly that relating to the car bought from Mr Harkinson - had been funded by use of a combination of wages, rental income and cash gifts from family and friends.
7. The matter came on for trial before Her Honour Judge Dean and a jury at Isleworth Crown Court. After a trial lasting some four days, the appellant was convicted on 15 November 2012 by unanimous verdicts of the jury on each of the two counts. In due course he was sentenced to a total term of twenty-two months' imprisonment which included the matters to which he had pleaded guilty.
8. In opening the case at trial the prosecution made clear - and this, indeed, accorded with the indictment - that it was not alleging any particular kind of criminal conduct. Its case was, in a nutshell, that the circumstances were such that it was an irresistible inference that the cash represented, and the acquisition of the cars derived from, the proceeds of unspecified crime. By agreement, the pleas of guilt by the appellant to the three counts of possessing articles for use in a fraud were before the jury. There was also as part of the prosecution case an unchallenged witness statement read out to the jury to the effect that the appellant's income, as contained in the records of HM Revenue & Customs, indicated that there were no employment records or details for the years 2005/2006 to 2008/2009. A very modest income for the year 2009/2010 in respect of employment by a flooring company was made good in the sum of £1,733 and for 2010/2011 in the sum of £4,160. He was also noted as receiving various tax credits and child tax credits with the amounts being given.
9. The prosecution case therefore, in essence, was that there was a very modest declared or recorded income but nevertheless access to large sums of money and a lack of any convincing explanation for the possession of such large sums.
10. Oral evidence was given at the trial by the appellant and also by his sister. The appellant's case at trial departed somewhat from what he had said in a prepared statement provided at interview. He now said, amongst other things, that he had little in the way of rental income; rather, the rental income from family property belonged to his mother. He also said that he had funded the purchase from Mr Harkinson in part from the sale of bridal gold jewellery originating in Pakistan, generating £14,850 odd, and also, in part, from the sale of yet another BMW car acquired by him for £15,000 in cash. He also relied on an alleged gift of £10,000 in cash, said to have been given to him by his mother. Various documents were produced at the trial to support his explanation. As to the purchase of the BMW car from Mr Rhodes (the subject of count 3), he said that Mr Bhaji had provided the cash balances and in due course he had sold the vehicle on to Mr Bhaji, receiving for himself payment of the appropriate balance. Mr Bhaji did not give evidence at the trial.
11. The appellant's sister in the course of her testimony for the defence gave evidence about the purchase of bridal gold, amongst other things. She also gave some evidence about her mother's tax return which included rental income and which return - the sister said - she had helped her mother to prepare. It was not put to the sister that there had been false statements in the tax returns. No questions were asked of the appellant in the course of his cross-examination as to whether he himself had been engaged in some kind of illegal activity involving the dishonest and unlawful evasion of tax properly payable.
12. During the course of the appellant's evidence, the jury had put in notes asking various questions. One question was this:

"Was the gold declared to HMRC when imported to Pakistan? What was the duty/VAT paid?"

The judge's response in due course to this question was to the effect that the jury simply had to decide the case on the evidence as presented to the jury. In the course of summing up on this aspect, the judge said (page 3A):

"In this case there were a number of interesting questions which you raised. I hope you will forgive me for having dealt with them in the round and for not dealing, I am sure, with the questions in relation to the importation of the gold. Members of the jury, you simply have to decide the case on the evidence which has been presented to you. There won't be anymore. Please do not speculate, in other words guess, about what other evidence you might have heard."

13. The whole trial thus continued at that stage to be conducted on the footing that, so far as the prosecution were alleging, the circumstances were such that the jury could safely and surely conclude that the cash and acquisitions of the cars, in whole or in part, represented or were derived from, unspecified crime. And that is the basis on which the judge summed up.
14. Amongst other things, the judge said this in the course of her summing-up (page 7C):

"The prosecution do not have to prove what the precise criminal conduct was because again the purpose of the legislation is to catch out criminals who are trying to conceal proceeds of crime and hence the prosecution do not have to prove what the precise criminal conduct was. But of course they do have to prove that the money or part of it came directly or indirectly from criminal conduct and the defendant knew or suspected that. The prosecution case in this trial is that that is the only sensible inference that can be drawn. Please bear in mind at all times, members of the jury, that it is not for the defendant to prove that it is was not criminal conduct. It is for the prosecution to prove that it was.

Of course, members of the jury, this case, as I am sure is obvious, is not about whether the defendant got some small change for being a bit part man or middle man in some car deal. This case is about whether this defendant was involved in laundering quite substantial sums of money which came about from criminal conduct. So that is what the prosecution must prove."

15. A little further on in the summing-up the judge dealt briefly with the evidence relating to the applicant receiving working tax credits and child tax credit. She said:

"You heard something about the working tax credits and the child tax credit that the defendant claimed. I am not going to remind you about those because they are not going to assist you in deciding the issues in this case. So he is not earning a great deal."

16. The judge proceeded to sum up the prosecution case and the defence case on the evidence fully and properly. No complaint is or can be made about the summing-up.
17. The problem arises - and which has generated this appeal - from a jury note which was sent in some two hours after the jury had first retired. The note was to this effect:

"Can tax evasion in the UK constitute criminal conduct for the purposes of this case?"

Quite rightly, the judge discussed this note with counsel.

18. Mr Ware, appearing on behalf of the appellant at trial, as he does on his behalf at this appeal, did not wish there to be an unequivocal answer "yes" to the question as put. Mr Ware submitted to the trial judge that "tax evasion" could be a somewhat blurred and confusing matter of law. Mr Ware further submitted to the judge that tax evasion had not been any part of the way in which the case was presented at trial. The judge initially appeared to be receptive to this argument advanced by Mr Ware. Mr Jordan, appearing on behalf of the Crown at trial and also on behalf of the Crown at this appeal, whilst fairly accepting that he had not conducted the trial on a footing that there had been some kind of tax evasion or, indeed, any particular kind of criminal conduct, submitted to the trial judge that the answer sought should not be denied to the jury and it was, indeed, a matter for the jury.
19. Mr Ware then asked for more time to consider the point. The judge rejected that and the debate continued.
20. With hindsight, it would have been very much better if some time to reflect and to research the legal authorities had been accorded to counsel and, indeed, so that the judge herself could reflect further. Of course, one can understand the time pressures on a judge conducting a trial when the jury is out and waiting for some type of answer. The judge, overall, as the argument developed, was clearly concerned that the jury, having asked a straight question (as the judge put it) were entitled to a straight answer.
21. At one stage in the course of debate before the judge, Mr Jordan is recorded as saying:

"I don't want to speculate why they might be asking the question but it is possible that the fact that we are not charging him with tax evasion alongside these crimes has caused them to wonder whether tax evasion is a qualifying crime, if you like, and the clarification about it is quite straightforward, yes. As to whether they are correct in their analysis of tax evasion, we have not provided them with any evidence one way or another, so it is the man on the street's analysis, which may be as good as Mr Ware's or mine. It may not be as good as your Honour's in terms of knowledge of the law."

22. Mr Ware continued to maintain his objection, saying that tax evasion had been put neither to the appellant nor to the sister and the case had never been conducted by anyone on such a possible aspect and the point had not been addressed in speeches or otherwise.
23. The judge decided to direct the jury, indicating her view in this way:

"It is not about how the prosecution puts its case. It is about what the law is. My duty is to tell the jury what the law is irrespective of how the respective cases are put."

She then asked Mr Ware whether he agreed that tax evasion was a criminal offence. Mr Ware, not surprisingly, answered that in some circumstances it may amount to a criminal offence.

24. The judge had the jury back. She directed the jury in this way. She read out the note and said:

"Members of the jury, as I have already reminded you in my summing-up, the prosecution case is that they do not know the sources of these funds in question and I explained to you that nor do they need to prove those sources. The prosecution case, for reasons that I won't remind you of is that the only inference in this case is that those funds were criminal and the defendant knew or suspected as much. You know what the defence case is that he has given an explanation for the sources of the funds, leaving out count 1 of course because that is a different issue, and has certainly had no reason to know or suspect that any of these funds came from criminal conduct.

To answer your question shortly, members of the jury, for the purposes of this case can tax evasion constitute criminal conduct? Well, tax evasion is a criminal offence in the United Kingdom so that is the long and short of it.

Thank you very much. Would you like to go with the jury bailiff?"

The jury retired at 2.32 pm and returned with their verdicts at 2.55 pm.

25. In order to put the arguments before us in context, it is necessary to refer to some legal background. Section 327 (1) of the Proceeds of Crime Act 2002 reads as follows:

"(1) A person commits an offence if he —

(a)conceals criminal property;

(b)disguises criminal property;

(c)converts criminal property;

(d)transfers criminal property;

(e)removes criminal property from England and Wales or from Scotland or from Northern Ireland."

26. Section 329 (1) reads:

"(1) A person commits an offence if he —

(a) acquires criminal property;

(b) uses criminal property;

(c) has possession of criminal property."

27. Section 340 (1) (5) reads:

"(1) This section applies for the purposes of this Part.

(2) Criminal conduct is conduct which —

(a) constitutes an offence in any part of the United Kingdom, or

(b) would constitute an offence in any part of the United Kingdom if it occurred there.

(3) Property is criminal property if —

(a) it constitutes a person's benefit from criminal conduct or it represents such a benefit (in whole or part and whether directly or indirectly), and

(b) the alleged offender knows or suspects that it constitutes or represents such a benefit.

(4) It is immaterial —

(a) who carried out the conduct;

(b) who benefited from it;

(c) whether the conduct occurred before or after the passing of this Act.

(5) A person benefits from conduct if he obtains property as a result of or in connection with the conduct."

28. Those provisions of the statute have given rise in the past to some debate as to whether it was necessary to adduce evidence of the particular type of criminal conduct alleged to have given rise to the property in question. Many of the authorities are help fully summarised in the opinion of Lord Kerr in the Privy Council in Director of Public Prosecutions v Bholah [2011] UKSC 44. The position, so far as the law of England and Wales is concerned, has been authoritatively stated by a constitution of this court in Anwoir [2008] EWCA Crim 1354, [2008] 2 Crim App R 36. In that case the court reviewed the various authorities and concluded that there were two ways in which the Crown could prove that property derived from crime: (a) that it derived from conduct of a specific kind or kinds and that conduct of that kind or those kinds was unlawful; or (b) the evidence of the circumstances in which the property was handled, such as to give rise to the irresistible inference that it could only be derived from crime (see paragraph 21 of the judgment of the court delivered by Lord Justice Latham).
29. It is clear, as will be gathered from what we have said, that in the present case the prosecution case had been put at trial by way of seeking to establish the second proposition - that is to say (b) - having regard to the particular circumstances arising in this case. The prosecution thus had not set out to prove any kind of revenue fraud. But the jury note then raised this as a specific aspect which the jury might be considering.
30. The situation does have some similarity to the case of Gabriel [2006] EWCA Crim 229, [2007] 2 Crim App R 11. In that case also the Crown had set out to prove money laundering without seeking to establish any particular kind of criminal conduct. A jury note submitted after the jury had retired asked if the regular buying and selling of goods to supplement household income without declaring it for tax purpose constituted a criminal offence. The Court of Appeal held that the fact of making profits from trading in legitimate goods without declaring it did not necessarily convert those profits into criminal property. Reference may also be made in this context to a further decision of a constitution of this court on different facts in R v K [2007] EWCA Crim 491.
31. At all events, in Gabriel the court had said that there was a material error on the part of the judge in not directing the jury properly on this aspect arising by reason of the note. The Court of Appeal in Gabriel also said (Lord Justice Gage, paragraph 23):

"This gives rise to what we consider to be one of the main difficulties in the way of the prosecution's attempt to uphold these convictions. The case as opened by counsel, and as put to the appellant, was one of alleged money laundering. It was not put on the basis of an income tax fraud or benefit fraud. The suggestion made to the appellant was that either she or someone else in her house had been engaged in some criminal activity. It was never suggested that she was trading legitimately and not declaring income to the Inland Revenue or the Department of Work and Pensions. The question from the jury raised a matter which had never been the subject of any evidence or any allegation."

32. In R v Yip [2010] EWCA Crim 1381, the position was that the Crown had not sought to allege a specific kind or kinds of conduct by the defendant that was unlawful other than by cheating the Revenue. It was held by a constitution of this court, following Gabriel, that if the prosecution wished to rely on criminal conduct involving a failure to disclose to HM Revenue & Customs income or profits it needed to do more than show mere failure to declare a legitimate income and it would have to prove facts tending to establish the offence of cheating the Revenue. Further, in such a situation it was, as the court there held, incumbent upon the trial judge to instruct the jury at least as to the essential elements of the offence of cheating the Revenue.
33. A consideration of those cases really gives the answer to the proper outcome for this appeal. Mr Jordan, for the Crown on this appeal, accepted that the judge's direction "could have been better". He submitted in his written argument, however, that the only real fault in the judge's direction to the jury, in the light of the jury's note, was that the judge would have done better to have reversed the order of her remarks and should have told them first that tax evasion was a criminal offence. Thus whilst he conceded that the direction could have been improved, it was not a direction which, he submitted, was materially misleading.
34. In the judgment of this court the substance of the judge's direction cannot be changed simply by considering the order in which the judge made her remarks. Indeed, in his own written submissions Mr Jordan said:

"It might also have been better had she crafted a direction based upon the authority of Gabriel ..... setting out the circumstances in which tax evasion could amount to criminal activity within the relevant parts of Section 340 of the Proceeds of Crime Act 2002. That said, to do might have given undue prominence to something that was not part of either party's case and upon which no evidence had been heard."

35. As Mr Ware submitted: precisely so. That was indeed the difficulty. First, the jury were given no instruction as to the circumstances in which "tax evasion" could constitute criminal activity; second, the whole subject matter of tax evasion had been no part of anybody's case or evidence at trial.
36. The judge thought that the jury's note had raised a straight question which deserved a straight answer. We sympathise with that sentiment. We can also see the attraction of saying that if the Crown had not sought to specify or rely on any particular kind or type of criminal activity, then why should any particular kind or type of criminal activity be excluded from the jury's deliberation.
37. But matters demonstrably were not as simple or as straightforward as that and for a number of reasons. The first is this. What did the jury mean by "tax evasion"? Tax evasion is not of itself a defined statutory offence. As Mr Ware pointed out, both to the trial judge and to us, what is to one person lawful if contrived tax avoidance may be to another person unlawful (or at least immoral) tax evasion. The judge broadly gave the jury the answer yes without giving the jury any guidance at all as to the legal elements of the offence of cheating the Revenue.
38. Second, the previous jury note submitted during the course of the trial had indicated a possible interest on the part of the jury as to whether the importation of gold from Pakistan attracted VAT or duty to be paid. It is not clear from the jury note whether the jury still had some thoughts in that regard or indeed were contemplating the position about benefit fraud. All this highlights that it is not clear what the jury had in mind when asking about tax evasion.
39. Third, and reflecting these points, the jury were left with an answer enabling them to convict not only on a basis that was not legally explained to them but on a basis which had never featured at trial. We repeat that it had never been part of the prosecution case that there had been "tax evasion" of any kind. That had never been put to the appellant or to anyone else and it had not been alleged that he had been dishonest in not paying taxes properly due by him or by someone else. In consequence, Mr Ware had had no opportunity or reason to deal with any such point in his closing speech.
40. In substance, the position in the present case is in many way of a kind corresponding to that found objectionable in Gabriel and Yip.
41. As we see it, the judge had two choices. The first - and in our view the correct choice given the circumstances - was to instruct the jury that "tax evasion" had never been part of the prosecution, had never been subject to any evidence and the jury should simply not speculate on that matter any further. That approach would also have been consistent with the way the judge had earlier summed up with regard to the first jury question as to the importation of the gold and with the way she had dealt with the point about the tax and child credits.
42. The second possible approach was to give the jury some legal instruction as to the elements of "tax evasion", perhaps after ascertaining (to the extent that an appropriate question to the jury could reveal it) just what the jury may have had in mind. But that approach would very quickly have led to the difficulties of identifying that there had been no evidence directed to that point at all.
43. In the result, the judge adopted neither course in answering the note. She simply summarised the respective cases and then concluded that "tax evasion is a criminal offence in the United Kingdom so that is the long and short of it". The jury therefore were never told of the legal elements of the offence; nor were they ever reminded of the total lack of evidence on the point. Indeed, it may be noted that the jury, astutely, had not simply asked can tax evasion in the United Kingdom constitute criminal conduct, they had qualified their question by asking if that was so "for the purposes for this case". Had appropriate focus been put on these last words, we would like to think that the answer given to the jury would have been different. At all events, in the clear view of this court, the answer should have been different.
44. We should, in fairness to the judge, explain that in the result we have of course received far more extensive legal argument than was deployed before her. But that in part was due to the fact that the judge had not acceded to the request for an adjournment to enable further research to be made before the jury note was answered.
45. Given all this, we think there was here a material misdirection to the jury. We have considered whether nevertheless the convictions can be upheld as being safe. Given that the jury returned very shortly after the judge's instruction to them with unanimous verdicts, in the light of what the judge had said to them, we cannot be satisfied that these convictions are safe. Accordingly, we quash the convictions and the appeal is allowed.
46. Mr Jordan, do you have any application?
47. MR JORDAN: Yes. I am instructed to seek a retrial. I am in your Lordship's hands on that.
48. LORD JUSTICE DAVIS: He has pleaded guilty and served a sentence in respect of other matters, a sentence of sixteen months on these matters.
49. MR JORDAN: Yes.
50. LORD JUSTICE DAVIS: Your submission is that there should be a retrial on these matters.
51. MR JORDAN: Yes.
52. LORD JUSTICE DAVIS: Mr Ware?
53. MR WARE: Two matters: first, the length of time since the original alleged offences. They are, in my submission, of some age. 10 August 2010, one transaction with a car; 24 January 2011, the second car; and of course the circumstances on 1 April 2011. Indeed, Mr Anwar had been charged on 22 December 2011.
54. Second, I would invite you to consider the extent to which Mr Anwar has already served a custodial sentence. He is due for release, as I understand it, on 16 August. I am not aware of the position as to the home detention curfew but I understand that is under consideration.
55. LORD JUSTICE DAVIS: He has serve the equivalent of what - eight months?
56. MR WARE: Yes.
57. LORD JUSTICE DAVIS: Anything else?
58. MR WARE: No. (Pause)
59. LORD JUSTICE DAVIS: No. Mr Jordan, we think the interests of justice do not require a re-trial here and we decline to order a retrial.