Nwangoro, R v [2006] EWCA Crim 3061 (05 December 2006)

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Cite as: [2006] EWCA Crim 3061

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		Neutral Citation Number: [2006] EWCA Crim 3061
		Case No: 2005 00704 B4

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM HARROW CROWN COURT
MR RECORDER MITCHELL QC

Royal Courts of Justice
Strand, London, WC2A 2LL

05/12/2006

B e f o r e :

LORD JUSTICE RIX
MRS JUSTICE DOBBS DBE
and
SIR CHARLES MANTELL
____________________

Between:

	Regina
	- and -
	Samuel Uwankonyemma Nwangoro	Appellant

____________________

Mr S. Connolly & Mr J. Wing (instructed by Crown Prosecution Service) for the Crown
Mr N. Valios QC & Miss P. Rose (instructed by Messrs Fisher Meredith) for the Appellant
Hearing date : 20 October 2006
____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

Lord Justice Rix :

This appeal arises out of confiscation proceedings following a plea of guilty to a single count of conspiracy to defraud made by the appellant, Samuel Uwakonyemma Nwangoro, at the Crown Court at Harrow on 2 April 2004. On 7 January 2005 those confiscation proceedings concluded in a confiscation order made by Mr Recorder Mitchell QC whereby the appellant was ordered to pay £240,000 under the Criminal Justice Act 1988 with 35 months imprisonment in default of payment. That, if served, would be consecutive to the sentence of 9 months imprisonment which the appellant received for the substantive offence. Issues concerning jurisdiction, fairness, benefit and realisable property arise.

The background to the sentence can be briefly stated. Over a nine year period between 1995 (starting with 20 November 1995) and 2003 (ending with 26 January 2003) the appellant had made false claims to the London Borough of Brent (the "council") in respect of housing and council tax benefit. He failed to declare that he owned his own house or that he was in receipt of rent by letting it out. As a result he had obtained accommodation from the council, most recently at 15 Tillett Close in Neasden, where he lived, and substantial discounts on the rent which he would otherwise have been charged for living there. The direct benefits thus wrongly obtained amounted to £48,899.73. The long period of offending only came to light following his application in April 2002 to purchase his council flat under the right to buy scheme.

Checks then made revealed a string of property transactions which had begun in June 1975 when he and his wife had jointly purchased 61 Pendle Road in Streatham with the aid of a mortgage. By the end of the confiscation proceedings the following facts had emerged. Pendle Road had been purchased as a matrimonial home. However, by August 1994 the appellant had started to rent it out. By then he was living in another property, 61 Conifer Gardens, which he had purchased in his own name on 10 August 1993, almost entirely with the aid of a mortgage, putting in a deposit of only £2,850. He claims that this was also a matrimonial home shared with his wife. From 25 October 1995, however, having moved (or being just about to move) into council accommodation, he was able to rent out Conifer Gardens. On 14 December 1998 he sold Conifer Gardens and personally received the net equity, after all expenses, in the sum of £80,767.67. The next year, on 24 September 1999, the appellant purchased his third property at 66 Stag Lane. Again he did so almost entirely with the aid of a mortgage, this time putting in a deposit of only £6,200, and for these purposes using part of the proceeds of sale of Conifer Gardens. He rented out Stag Lane from 29 November 1999. He still owned Stag Lane at the time of the confiscation proceedings. His fourth purchase, in December 2001, was of 74 Frithwood Crescent, again almost entirely with the aid of a mortage: his deposit on this occasion was only £7,750 (but that was funded out of an additional mortgage obtained on Stag Lane). This too he rented out.

Thus at the time of the confiscation proceedings, the appellant still owned the matrimonial home at Pendle Road, and also the properties at Stag Lane and Frithwood Crescent. He had meanwhile sold Conifer Gardens at a substantial profit. What has happened to that profit is not clear: the subsequent properties were purchased almost entirely with borrowed funds, but the appellant claims to have spent the sale proceeds on buying and renovating Stag Lane and on his children.

Following his arrest, the appellant sought to dispose of his property or conceal his interest in it in an attempt to protect himself from just such proceedings as have occurred. Thus on 22 June 2004 he gifted his 50% interest in Pendle Road to his wife. He has maintained that Stag Lane was jointly owned with another, but the recorder found that the transfer into joint names which he relied upon was a forgery. He has also maintained that Frithwood Crescent was purchased by him for another and that he has no beneficial interest in it. The recorder, however, said that there was no evidence to support that contention, a fortiori where its deposit had been financed out of the further mortgage on Stag Lane.

Benefit and realisable property

In these circumstances the recorder found that the appellant had received benefits and/or pecuniary advantages as a result of or in connection with the commission of his offence and that his realisable property was more than sufficient to support a confiscation order in the amount of £240,000. We think there is no need to burden this judgment with unnecessary detail about the make-up of the figures concerned. However, the essence of the matter is as follows.

The recorder found benefit obtained in the sum of £369,740.97. This was made up of (a) the direct benefit of £48,899.73 referred to above ("the £49,000"); (b) the rental income on the various properties which had been let following the commencement of the appellant's offending, totalling about £81,000; and (c) the capital appreciation on Conifer Gardens, Stag Lane and Frithwood Crescent (about £240,000).

The recorder next found realisable property in the sum of £317,943.15. This was made up of the appellant's equity in Pendle Road, Stag Lane, and Frithwood Crescent, plus some modest amounts of cash in the bank.

On the basis of these sums, the recorder then took account of £40,000 which the appellant had already borrowed and paid by way of compensation to the council, and of an additional compensation order in the sum of £8,889.73 which the recorder made in order to compensate the council entirely for its direct loss, so as to arrive, in his discretion, at an overall figure for the confiscation order in the sum of £240,000. In effect, the recorder discounted the maximum sum in which he might have made an order by some £28,000 (if allowance is also made for the compensation payments). He gave the appellant 15 months to realise his assets, and fixed a term of imprisonment in default of payment of the confiscation order of 35 months.

Finally, the recorder sentenced the appellant to 9 months in prison for the offence itself. This sentence was heavily discounted by reason of personal mitigation, including ill health.

The prosecutor's statements served for the purpose of the confiscation proceedings had summarised its findings as follows: (i) direct benefit of £48,889.73, (ii) a pecuniary advantage of £386,027.58, (iii) realisable property of £365,214.61, and (iv) compensation of £81,747.40.

The appellant served reports prepared by Mr Maurice Faull, a forensic accountant, in which Mr Faull submitted that (a) a causal link between the criminal activity and the rentals received was accepted albeit on one house only, in the sum of £69,216.05; (b) that that sum should be rebated as to 50% to £34,608.03 on the ground that, even if the appellant had not had subsidised housing from the council, he would have lived in only a few rooms of his house and let out the rest; and (c) that no causal connection between the offending and the capital appreciation on the appellant's properties had been shown, since he would have been able to support his mortgages on the basis of his rental income, his wife's income, and other legitimate benefits. It was conceded, however, that there was no need to take into account the cost to the appellant of servicing his mortgages.

The appellant did not give evidence on his own behalf at the confiscation proceedings.

Criminal Justice Act 1988

Since the course of offending went back to 1995 the relevant provisions for the conduct of the confiscation proceedings were those of the Criminal Justice Act 1988 as amended by the Criminal Justice Act 1993 (the "1988 Act"). However, the further amendments introduced by the Proceeds of Crime Act 1995 ("POCA 1995") did not apply. For relevant purposes it should be noted that under the 1988 Act, as distinct from POCA 1995, the court did not have a discretion of its own to institute confiscation proceedings, which were in the hands of the prosecutor, who was required to give to the court notice that, were the court to make a confiscation order it would be able to do so in the sum of a minimum amount of at least £10,000 (section 72). This was a procedure designed to ensure that sentencing was not delayed or the court's time wasted on confiscation proceedings which would ultimately be of little financial consequence. Another important difference between the 1988 Act regime and that regime as amended by POCA 1995 was that under the latter, once it seemed appropriate either to the prosecutor or to the court to undertake confiscation proceedings, it was the court's duty to do so and to make an order where it could in an amount equal to either the benefit or the amount that might be realised, whichever is the less; whereas under the 1988 Act, the undertaking of confiscation proceedings or the making of any order always remained entirely in the court's discretion, even where the prosecutor had initiated matters by serving its minimum amount notice. Consistently with these changes, the requirement of the prosecutor's minimum amount notice was also dispensed with by POCA 1995. When years later in 2004 in this case the recorder came to consider the question of confiscation proceedings, the fact that the 1988 Act and not the POCA 1995 regime applied was initially overlooked. As will be seen, this has caused complications and given rise to issues on this appeal.

A full account of the relevant provisions of the 1988 Act and the changes wrought by POCA 1995 can be found in the judgment of this court (Lord Woolf of Barnes CJ) in R v. Sekhon [2002] EWCA 2954, [2003] 1 Cr App R 575. For present purposes it will we think suffice to set out the following sections of the 1988 Act:

Section 71 is headed "Confiscation orders":

"71. (1) The Crown Court and a magistrates' court shall each have power, in addition to dealing with the offender in any other way, to make an order under this section requiring him to pay such sum as the court thinks fit.

(2) The Crown Court may make such an order against an offender where –

(a) he is found guilty of any offence to which this Part of this Act applies; and

(b) it is satisfied –

(i) that he has benefited from that offence…and

(ii) that his benefit is at least the minimum amount…^[1]

(4) For the purposes of this Part of this Act a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained.

(5) Where a person obtains a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated for the purposes of this Part of this Act as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage.

(6) The sum which an order made by a court under this section requires an offender to pay [must be at least the minimum amount, but must not exceed]^[2] [shall be equal to]^[3]

(a) the benefit in respect of which it is made; or

(b) 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.

(7) For the purposes of this Part of this Act the minimum amount is £10,000…"^[4]

Section 72 is headed "Making of confiscation orders" and provides:

"72.(1) A court shall not make a confiscation order unless the prosecutor has given written notice to the court that it appears to him that, were the court to consider that it ought to make such an order, it would be able to make an order requiring the offender to pay at least the minimum amount.

(2) If the prosecutor gives the court such a notice, the court shall determine whether it ought to make a confiscation order…

(4) If the court determines that it ought to make such an order, the court shall [before sentencing or otherwise dealing with the offender in respect of the offence or, as the case may be, any of the offences concerned]^[5] determine the amount to be recovered in his case by virtue of this section and make a confiscation order for that amount…"^[6]

As Lord Woolf said in Sekhon (at paras 7, 8 and 30/31) –

"7…Thus, by reason of s. 71, before a Court had power to make a confiscation order the Court had to be satisfied that the defendant had benefited by at least £10,000. This followed a recommendation made by the Hodgson Committee which had been in favour of limiting the power to make confiscation orders by reference to a sum of money so as to prevent its operation in impracticable small cases…

8…Under s 72(1) and (2) the procedure for making an order was dependent on the prosecution giving notice that there were likely to be sufficient assets to meet it…

30. Having set out this general approach, it is convenient to return to the procedural requirements themselves. Here it is important to note that s.71 is dealing with the jurisdiction of the court. It does contain provisions which undoubtedly have to be complied with to give the court jurisdiction to make an order. The defendant must have been found guilty of the required offence. In addition, the court must be satisfied that the offender has benefited from the offence to the required extent. Section 72, on the other hand, is dealing with the procedure and procedural requirements do not usually go to jurisdiction.

31. Notwithstanding the actual language of s. 72(1) which read literally is mandatory in its terms, we would not regard it as likely that Parliament would, for example, be concerned to deprive the court of jurisdiction because of defects in the contents of the written notice which is required by s. 72(1). The notice, which does not have to be given to the defendant, starts the procedure and avoids the court being involved in confiscation proceedings if the prosecutor thinks that the court would not be able to order the defendant to pay more than £10,000…"

Section 72A was introduced into the 1988 Act by the Criminal Justice Act 1993, is entitled "Postponed determinations", and was designed both to give the court time to enable the information necessary to consideration of the making of a confiscation order to be assembled and to enable sentence otherwise to be dealt with in the meantime. Postponement can only exceed six months from the date of conviction if the court is satisfied of exceptional circumstances. Thus:

"72A.(1) Where a court is acting under section 71 above but considers that it requires further information before –

(a) determining whether the defendant has benefited as mentioned in section 71(2)(b)(i) above;

(b) determining whether his benefit is at least the minimum amount; or

(c) determining the amount to be recovered in his case by virtue of section 72 above,

it may, for the purpose of enabling that information to be obtained, postpone making that determination for such period as it may specify.

(2) More than one postponement may be made under subsection (1) above in relation to the same case.

(3) Unless it is satisfied that there are exceptional circumstances, the court shall not specify a period under subsection (1) above which –

(a) by itself; or

(b) where there have been one or more previous postponements under subsection (1) above or (4) below, when taken together with the earlier specified period or periods,

exceeds six months beginning with the date of conviction…

(7) Where the court exercises its power under subsection (1) or (4) above, it may nevertheless proceed to sentence, or otherwise deal with, the defendant in respect of the offence or any of the offences concerned."

Section 74 is headed "Definition of principal terms used". It reads in relevant part:

"74. (1) In this Part of this Act, "realisable property" means, subject to subsection (2) below –

(a) any property held by the defendant; and

(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Part of this Act…

(10) A gift (including a gift made before the commencement of this Part of this Act) is caught by this Part of this Act if –

(a) it was made by the defendant at any time after the commission of the offence or, if more than one, the earliest of the offences to which the proceedings to which the proceedings for the time being relate; and

(b) the court considers it appropriate in all the circumstances to take the gift into account."

Section 102 is an "Interpretation" section and extends the definition of benefit and pecuniary advantage under section 71(4) and (5) so as to make it clear that it does not avail to break the connection between offending and the obtaining of a benefit or a pecuniary advantage that the offending is only a contributing cause or connection. Thus:

"102. (5) References in this Part of this Act to property obtained, or to a pecuniary advantage derived, in connection with the commission of an offence include a reference to property obtained or to a pecuniary advantage derived, both in that connection and in some other connection."

The grounds of appeal

The first ground of appeal on which Mr Valios QC, on behalf of the appellant, seeks to discharge the confiscation order relates to jurisdiction. It is submitted, in essence, that the prosecutor failed to institute confiscation proceedings by serving a notice on the court that if it chose to make a confiscation order it would be able to do so in the sum of at least £10,000 (see section 72(1) and (2)); that in error, thinking that he was dealing with the proceedings under the 1995 Act, the recorder entered on the proceedings on his own initiative and in the absence of a prosecutor's notice; that when he purported to postpone the proceedings under section 72A, and even beyond six months from the date of conviction on the basis of exceptional circumstances, the recorder was still acting under that misapprehension; that when at last the prosecutor served a minimum amount notice on the court, but not before 6 January 2005, the six months had expired and it was too late to enter on confiscation proceedings; therefore all that had happened up to that time had been done without jurisdiction and the confiscation order that the judge proceeded to make on that day was for the same reason invalid and ineffective.

The appellant's second ground of appeal relates to the unfairness of the proceedings. The point is also put in terms of abuse of process, on the basis that the appellant had been led to believe that there would be no confiscation proceedings. In the alternative it is said that the recorder wrongly failed to exercise his discretion in connection with making a confiscation order, because of his erroneous belief that he had no discretion but to do so (as if he were acting under the 1995 Act). At times the submission had some appearance of amounting to an allegation of bias, on the basis that the recorder was determined in any event to make a confiscation order: although the word bias was never used, it was submitted that the recorder had from beginning to end approached the question of a confiscation order with a closed mind. Ultimately, we regard this rather protean range of submissions as being essentially encapsulated by the concept of unfairness, and we therefore refer to this ground under that heading, but not to the exclusion of any part of the submissions that we have heard.

The third ground relates to the benefit found to have been obtained by the appellant. Mr Valios submits that the judge was wrong to have accepted the prosecutor's case that there had been a causal connection between the commission of the offence and the increase in capital values of the appellant's properties.

The fourth ground attacks the judge's findings as to realisable property, on the basis that no or insufficient allowance was made for the appellant's wife's interest. In particular it was submitted that, even beyond any strict legal or beneficial interest the wife had in the properties, the judge ought to have made a general 50% allowance on the basis that the appellant and his wife shared their property equally, in part because of his wife's contributions, through her own income, towards the meeting of mortgage obligations.

In order to enable these grounds to be better understood and discussed, it is first necessary to refer in greater detail to the course that the confiscation proceedings took.

The confiscation proceedings

The appellant pleaded guilty, as stated above, on 2 April 2004. At the same time, the prosecution said that it would in due course offer no evidence against Mrs Nwangoro, who had been jointly charged with her husband. Sentence was then adjourned for reports and for questions of compensation, and its quantum, to be considered. Counsel for the prosecution (Mr Space) specifically referred to the adjourned hearing as dealing with "(a) sentence; and (b) the question of amount of money and compensation". The judge at that hearing was HHJ Black.

On 4 June 2004 the adjourned sentence hearing came before HHJ Mole. There appears to have been some difficulty in the preparation of a pre-sentence report, and as a result it proved necessary to adjourn the hearing a second time. Nevertheless, the appellant had come to court with "cheques for nearly £33,000" for the purpose of compensating the council. A final compensation figure, however, had not yet been agreed, although Mr Heimler, on behalf of the appellant, spoke of the total amount being "about £48,000". He said that he proposed making a virtue out of necessity in that over the adjournment the compensation should be agreed: if agreed, the agreed figure would be paid; if not agreed, the appellant's figure would be offered to the court in any event, in a sum which would be "above £33,000". He submitted that with a further adjournment "we will be able to resolve this completely by then financially". Judge Mole said that the total benefits involved seemed to him to be almost £100,000 (including the value to the council of the housing improperly obtained by the appellant). Mr Heimler disputed that latter element, saying there was no evidence for it and that it represented a "classic civil claim for the value of the loss of an opportunity". He said –

"for the record that I have been advising my client on the basis of my understanding of the law regarding criminal compensation and the £48,000, which is a direct financial loss".

Sentence was adjourned on that basis. There was no suggestion from the Crown that confiscation proceedings were being contemplated.

Before the matter returned to court, on 20 June 2004, the appellant transferred to his wife his half-interest in Pendle Road, so that title to that property was now entirely in her name.

On 9 July 2004 the matter came back for sentence, this time before Mr Recorder Mitchell QC, who retained essential control of it thereafter. The appellant came to court with a cheque for £40,000. Prosecution counsel, on this occasion Mr Connolly who appears again for the Crown on this appeal, introduced the matter as being a question solely of sentence and compensation, thus: "The case was, after his plea, adjourned because there were some concerns about how much money was involved…and what the proper claim for compensation should be." He mentioned the (now established) benefits figure of £49,000 and said "I am assuming the case is ready to be dealt with and I should now open the case". However, as he did so, the recorder raised the question of a confiscation order. It first arose in the context of Mr Connolly telling the recorder about another aspect of the council's claim for compensation, for a further £50,000 in respect of the value of the accommodation provided. The recorder said: "But that is more likely to impact upon a confiscation order, is it not?", to which Mr Connolly assented. The recorder then probed the facts, suggesting that the appellant had benefited not only from housing benefit but also from the rental income on his own properties.

The recorder then asked this (R for the recorder and C for Mr Connolly):

"R. What is the Crown's position on confiscation?

C. Well, I have only just [been] instructed last night. It seems that although there was a request for the Police to carry out a financial investigation, that has not been done. So there is no statement dealing with the question of confiscation.

R. And here is a man who owns property, who has benefited from renting out those properties by being able to live in council accommodation, which he has pretended that he is entitled to, and at the same time claimed housing benefit. What are the public going to think if steps are not taken to recoup from him that which he can properly afford to pay, namely his benefit from his criminal conduct. Over, what, seven or eight – nine years I think. What is the answer to that?

C. Well it seems to me that there certainly should have been and still can be, a financial investigation into his benefit.

R. It seems to me that I have the power, do I not, to institute such an enquiry of my own volition?...

C. Yes."

Mr Connolly then proceeded to go through the facts of the case, with the recorder asking many questions. There came a point when the following further exchange took place:

"R. But has a forensic accountant been instructed to look at this?

C. No he has not. The first step would normally be for a specialist officer from the Police Financial Investigation Unit to make enquiries and that has not been done.

R. Why has it not been done?

C. I think the police were asked to, but I they think they balked. Can I get specific instructions? I have not had a chance to speak to the officer. I have only spoken to the Benefit Agency.

R. I have a horrible feeling that we are about to allow to slip through the net a decade of dishonesty that has accumulated a small empire of property or value, at the expense of the taxpayer, without actually finding out whether that is right or wrong…"

There was then some inconclusive discussion as to whether the case fell under the POCA 1995 amendments to the 1988 Act or not, with the recorder saying that if it did not "there will be an element of discretion available to the Court, which was taken away in 1995". He also said: "I could postpone sentence, if necessary, to allow for the enquiry". The judge was told that the value in the three houses still owned by the appellant was "probably close to £1m", subject to mortgages. The recorder said that "there has to be a proper financial enquiry" and expressed the view that it would be a scandal for the court to condone the absence of one. Mr Connolly agreed, saying that it appeared to him, on first sight, to be crying out for an investigation. Later in the discussion Mr Connolly was able to tell the judge that on one property alone, Pendle Road, there was equity of about £300,000.

Counsel for the appellant, on that occasion Ms Evans, was asked for her views. She said that everything was in dispute as far as the properties were concerned: she was instructed that the appellant no longer had an interest in any of them: one had gone to his wife, described as his "ex-wife", another was in the hands of relatives, but on precise details her instructions were opaque. She herself asked for the matter to be adjourned "so that it can be properly dealt with on the next occasion", and suggested that the recorder might like to consider reserving it to himself. She had earlier expressed her concern for the appellant's health and "his terrible tearfulness this morning", submitting that it was no fault on his part that an investigation for the purposes of a possible confiscation order had not taken place in the three months since conviction. She took instructions from the appellant, and concluded by asking the recorder not to deal with the case that day, and submitted that, as a matter of fairness to the appellant, the facts should be explored before the case came back to court. As for the £40,000 cheque which the appellant had brought to court that day, in fact a banker's draft payable to the council, that was, again on instructions, handed to the prosecution. The recorder said that it would be taken into account in any order that the court subsequently made.

The recorder therefore postponed (or adjourned) sentence so that an investigation for the purposes of confiscation proceedings could be made. He said "I am going to adjourn it until the 9^th August at 10 o'clock". (It was at one time submitted on behalf of the appellant that the recorder's use of the word "adjourn" rather than "postpone" was significant.) He gave directions for a statement from the Crown by 30 July 2004, to which the appellant could respond up to 6 August. He explained to the appellant that the court sought to put him back in a position that he should have been in if he had not taken advantage of the state, and he asked him to cooperate.

On 22 July 2004 the appellant made a statement, in which he said: (1) as to Pendle Road, that it had been purchased jointly with his wife in 1975, and was now occupied by her (he said nothing about any subsequent transfers); (2) as to Conifer Gardens, that he had purchased it in August 1993 and subsequently sold it in December 1998 with net proceeds of £80,767.69; (3) that those proceeds were in part used in the purchase and renovation of Stag Lane, and in part spent on the education and relocation of his children; (4) as to Stag Lane, that he had made nothing from its rental; (5) as to Frithwood Crescent, that he had purchased it on behalf of a relative living abroad and had transferred it to its true owner in October 2003, without any personal profit; and (6) that the £40,000 handed to the prosecution had been borrowed from a bank and a finance company.

On 30 July 2004 the prosecutor's statement was served on the court. It referred to the Criminal Justice Act 1988 as amended not only by the 1993 Act but also by POCA 1995. It defined the direct (section 71(4)) benefit obtained in the form of housing and council tax benefit as £48,889.73 and the pecuniary advantage (section 71(5)) benefit as totalling £362,989.24, made up of rentals and the increase in the equity of the houses over the relevant period. For this latter purpose, no increased value benefit was asserted as flowing from Pendle Road, since it had been owned since 1975. There was a compensation claim from the council in the total sum of £81,747.40. Realisable property, mainly in the form of the equity in Pendle Road, Stag Lane and Frithwood Crescent, was assessed at £365,214.61, including the £40,000 borrowed by the appellant and represented by the cheque, which the council had banked. Reference was made to some 30 bank accounts of the appellant, not all of which had been investigated. (By a supplementary prosecutor's statement dated 9 September 2004, these figures were slightly amended: the section 71(5) benefit had risen to £386,027.48 and the realisable property to £365,214.61). On this appeal, the Crown rely on the service of the 30 July 2004 statement as amounting to a section 72(1) notice to the court that a confiscation order, if made, could be made in at least the minimum sum of £10,000.

On 9 August 2004 the proceedings returned to court, before the recorder. Mr Connolly continued to represent the prosecution, and on this occasion Ms Hayne appeared for the appellant. It was common ground that the confiscation proceedings could not be completed that day, and in any event the appellant wanted Mr Heimler, his original counsel, to represent him for the purpose of confiscation and sentence. The recorder therefore had to consider a further postponement or adjournment, and, in that connection, whether there were exceptional circumstances which entitled him to go beyond the period of six months from the date of conviction. In a ruling given that day, he concluded that there were. It appears from that ruling that the recorder considered the court to be acting under the 1988 Act as amended by POCA 1995. He said that in July he had determined that it was appropriate for there to be a confiscation enquiry, and that he had accordingly "adjourned" the case for such an enquiry as there was no doubt that the appellant had benefited to some extent. The 30 bank accounts still needed investigation. He concluded the circumstances to be exceptional and adjourned the proceedings to 12 November 2004.

Subject to the submission that the proceedings as a whole were incompetent in the absence of a prosecutor's notice under section 72(1), and that it was too late to rectify that omission after the six months period had expired, no complaint is made about the recorder's finding of exceptional circumstances.

On 15 October 2004 there was a hearing before HHJ Madge to adjourn the 12 November fixture at the appellant's request. The appellant was represented by Mr Heimler, who explained that there had been delay in the obtaining of legal aid for a forensic accountant. Mr Heimler flagged up a possible argument as to jurisdiction, telling the judge that the confiscation proceedings had not been initiated by the Crown but by the court, and that there had not been a postponement under the 1988 Act, but an adjournment at common law. In due course, on 22 November 2004 the recorder gave further directions including a new fixture date for 6/7 January 2005.

On 3 December 2004 the appellant served a forensic accountant's report prepared by Mr Faull. His main points were concerned with (1) the causal connection between the offending and the pecuniary advantage asserted of the rise in the capital values of the houses; and (2) the failure of the prosecutor's statement to take account of the cost of mortgage payments. As to the latter, he estimated that a total mortgage debt of £342,850 would have been costing the appellant some £1,571 per month (at an average of 5.5%); as to the former, he observed that there were sources of income available to the appellant and his wife other than the monthly value (which he put at £461 per month) of his housing and tax benefits, such as the wife's income (on a gross salary of over £20,000 per annum) and rental income and other benefits, such as incapacity benefit. His submission was that if such other income enabled the appellant to maintain his mortgage payments, then the capital appreciation of the appellant's houses over the relevant period could not be connected with his offending; and that in any event, the cost of ownership of the property in the form of mortgage payments should be debited from any rise in the value of that property. In an addendum to that report, dated 5 January 2005, Mr Faull made two concessions. The first was that there might be a causal link between the offending and rental income received, albeit he submitted that that link operated only in respect of one house. However, he failed to acknowledge the consequential relevance of the importance of such rental income in support of the maintenance of the mortgage payments. The second concession was that the cost of mortgage payments could not be taken into account as a debit from any benefit obtained. As stated above (at para 12), he conceded a rental income benefit in total of only £34,608.03.

The first judgment, on jurisdiction

On 6 January 2005 the matter came back before the recorder for argument and decision. On behalf of the appellant it was argued that the court lacked jurisdiction because there had been no written notice from the prosecutor for the purposes of the 1988 Act and it was now too late, after the six months from the date of conviction had expired, for such a notice to be served (as it had been that day).

In his first judgment during that hearing the recorder rejected that submission. He acknowledged that, as had at last become clear, the 1988 Act unamended by POCA 1995 was the relevant regime; that his own intervention had originally triggered an enquiry for the purposes of confiscation proceedings; and that it was only under the POCA 1995 amendments that the court could itself initiate a confiscation hearing. Nevertheless, he considered that he had had power under section 72A to postpone the proceedings to enable enquiries to be made, even in the absence of a minimum amount notice. Such a notice was only required ultimately as a condition of his power to make a confiscation order (see section 72), and the notice had now been served. In any event, there had never been any dispute that the appellant had benefited by more than £10,000.

The second judgment, on benefit

The recorder later that day gave a second judgment on the subject matter of benefit. As stated above, he found a primary benefit in the sum of the £49,000, and further benefit by way of pecuniary advantages to be found in rental income and the increase in value of the Conifer Gardens, Stag Lane and Frithwood Crescent properties. He recognised the issue as to the need for a causal connection between the offending and that income and increase in value, but he made detailed findings that the offending had enabled the appellant to obtain rental income from his own property at Conifer Gardens, that that income had enabled him to make mortgage payments which he would otherwise have been unable to pay, and thus to save that property from being repossessed, and/or upon the successful sale of that property to enable him to purchase further properties, which he was thus in turn in a position to rent out. Thus the renting out of Conifer Gardens had saved that house from repossession; when it was sold, it generated a substantial equity, which enabled him to purchase Stag Lane; the increase in the value of Stag Lane enabled him in due course to take out a further mortgage on it to help finance the purchase of Frithwood Crescent; and in the meantime he had benefited from rental income from all three properties. He found the total benefit figure to be £369,740.97.

The third judgment, on realisable property

The recorder dealt with the subject of realisable property in a third judgment. As stated above, he found that the appellant had a half-share in Pendle Road and that the June 2004 transfer of that half-share to his wife was a gift for the purposes of the Act and therefore caught by the relevant provisions relating to gifts: it remained to be counted as realisable property. As for Stag Lane and Frithwood Crescent, he rejected the attempts to say that the true ownership in them was wholly or in part in other people. He found the total figure for realisable property to be £317,943.15, made up entirely of the equity in those three houses save for an additional £10,000 in the appellant's bank accounts.

The fourth judgment on discretion

The recorder next turned to the question whether, in his discretion, he should make a confiscation order, and if so in what amount. He concluded that the facts of the case clearly indicated to him that he should: the appellant had over many years made cynical use of council accommodation, obtained at heavily discounted rates, to enable him to profit from not only rental income but also, with the help of further false representations to lending institutions, capital appreciation on his properties.

As for the amount of a confiscation order, the recorder, having pointed out that the upper limit was the benefit figure of £317,943.50, and having taken into account the £40,000 already provided to the council by way of compensation, resolved on a somewhat discounted figure of £250,000.

The fifth judgment on sentence

In sentencing the appellant to a term of imprisonment of 9 months, the recorder made it clear that for the offending itself, he would have had in mind a sentence of 25 months on a conviction, or 20 months on the plea of guilty in the case. However, he took into account the appellant's previous good character, his age (at 64), his medical condition, and the anxious time that the appellant had suffered over the extended course of the proceedings. He found that no delay was to be laid at the appellant's door. That was in response to a submission from Ms Rose, then representing him, that back in June his expectations had been that compensation was all that the Crown were asking for, and that he would have been sentenced in the previous year. In the event, the judge reduced his sentence to one of only 9 months.

The final ruling, a revised confiscation order

Finally, when the Crown came to revisit the question of compensation, because of the outstanding sum of £8,889.73 claimed by the council (£48,889.73 less the £40,000 already paid), the recorder indicated that he was unwilling to add to the appellant's obligations. Therefore, in ordering further compensation to the council in the sum of £8,889.73, he revisited his confiscation order and revised it down by a round £10,000 to £240,000. This served to re-emphasise that, in selecting the final amount of his confiscation order, the recorder had taken full account of the compensation already paid or payable to the council and had in addition discounted the total benefit figure by some £28,000.

The first ground: jurisdiction

We therefore turn to the appellant's first ground of appeal, to the effect that the recorder lacked jurisdiction to make any confiscation order. In the written material before us, this ground was presented as the most significant of the arguments before the court, essentially on the basis which had been argued before the recorder. However, at the hearing of this appeal Mr Valios, while taking this ground first, was willing to accept that it was not his best point, and that the point that he really wished to stress on the facts of this case was that of unfairness (see the second ground below).

Thus Mr Valios accepted that even though the statute visualised a prosecutor's section 72 notice as the trigger for confiscation proceedings under the 1988 Act, and he relied for these purposes on what Lord Woolf had said in Sekhon at para 8 (cited at para 17 above), he nevertheless acknowledged that the essential reasoning of that case (now reaffirmed by other authorities, see below) was to the effect that a timely prosecutor's notice, although part of the procedure contemplated by the statute, was not essential to the court's fundamental jurisdiction in entering upon confiscation proceedings: see Sekhon at paras 27/31 and the distinction there made between the court's jurisdiction under section 71 and the procedural requirements dealt with under section 72. On the facts of this case a prosecutor's notice in the terms of section 72(1) had been served on the Harrow crown court by at latest 6 January 2005, before the recorder made his confiscation order. Therefore the terms of section 72(1) were fulfilled and we do not have to decide whether the absence of any notice before the making of a confiscation order would have deprived the court of all jurisdiction, even in circumstances where everyone knows that, if a confiscation order is made, it can be made in the sum of at least £10,000.

Indeed, on the facts here it may well be the case, and we are inclined to think that it is, that the prosecutor's statement dated 30 July 2004 was already a written notice which fulfilled all the requirements of section 72(1). That subsection does not stipulate for any particular form other than writing, and it was clear from the prosecutor's statement that it appeared to the prosecutor that the court would, if it thought it right to do so, be able to make an order in at least the minimum amount of £10,000, since both the alleged benefit and the appellant's alleged realisable assets vastly exceeded that sum. On that basis, all that happened thereafter was entirely within the contemplated procedure under section 72, and the only error was that the recorder thought that, because the amendments of POCA 1995 applied, he had power to initiate confiscation proceedings himself. It is true that that error appears to have persisted until 6 January 2005 and was shared by the prosecutor himself: but in the circumstances it had no substantive effect on anything, other than in galvanising the prosecution into action at the initial stages. After all, on 9 July 2004 it was already clear to everyone that, at the very least, the appellant had benefited directly to the tune of around £48,000 and was possessed of various properties of value, of which Pendle Road alone had an equity (even if shared with his wife, and even if the appellant's interest had arguably now been transferred to her) greatly in excess of £10,000; moreover the appellant had brought to court a cheque in the sum of about £40,000 (see paras 30, 33/34 above). In the circumstances, even though there was no formal notice in writing from the prosecutor, it would have appeared to everyone, as it certainly appeared to Mr Connolly, counsel for the Crown on that day, that a confiscation order for the minimum of £10,000 could be made, if it seemed appropriate to the court to make one. Moreover, it would seem from section 72A(1)(b) that the court might be able to postpone the proceedings even for the purpose of "determining whether his benefit is at least the minimum amount": although it might be argued that formally speaking even that presupposed a prosecutor's notice, but one that may have led to some dispute.

In any event, on the facts of this case it is plain to us, and not strongly disputed by Mr Valios, that, despite the error made by the judge in thinking that he had power of his own initiative, in the absence of a prosecutor's notice, to embark on confiscation proceedings, there was nothing which should lead us to conclude that that error by itself destroyed the court's jurisdiction either to postpone sentence or to make a confiscation order on 6/7 January 2005. Mr Valios did not press any point which depended on the use of the term "adjourn" instead of "postpone". There was no complaint that the postponement beyond the six months was wrongly made because exceptional circumstances were lacking.

Moreover, the pre-1995 need for a prosecutor's notice was simply to protect the court (and defendants) from being overwhelmed by a multiplicity of wasteful confiscation proceedings where the prospects of making an order in a worthwhile amount were dim: see the general note by Professor Martin Wasik on section 1 of POCA 1995 in the publication of that Act before the court.

Since Sekhon, other decisions have emphasised the importance of the distinction between errors of procedure, which do not by themselves invalidate proceedings, and matters which undermine the court's jurisdiction as a whole: see R v. Simpson [2003] EWCA Crim 1499, [2004] QB 118, R v. Soneji [2005] UKHL 49, [2006] 1 AC 340, and R v. Knights [2005] UKHL 50, [2006] 1 AC 368. In effect, the submission under this first ground seeks to resurrect the error of this court (my error) in R v Palmer (No1) [2002] EWCA Crim 2202, [2003] 1 Cr App R (S) 112, despite that decision being disapproved or overruled in the subsequent jurisprudence cited above.

For these reasons we dismiss this appeal on the ground of jurisdiction.

The second ground: unfairness

For Mr Valios, this was the principal ground argued on behalf of the appellant. It does not figure at all in the appellant's written notice of appeal. It was only introduced at the original hearing fixed for this appeal, which resulted in an adjournment and directions, on 20 June 2006. We are told that this court (Lord Justice Moses presiding) then extended leave to appeal for this fresh ground, that of unfairness or abuse of process. We have not been able to confirm that by reference to the partial transcript of the proceedings from that day, but Mr Connolly on behalf of the Crown does not dispute it.

This ground, as a separate basis of appeal, appears first to have been briefly raised in Ms Rose's skeleton argument on behalf of the appellant dated 14 June 2006, albeit it also figured within the argument on jurisdiction. On 20 June 2006 this court granted the appellant representation by leading counsel, hence the entry on to the stage of Mr Valios. He then prepared a new skeleton argument dated 4 August 2006 which dealt with this new ground as follows:

"Abuse of process, prejudice and/or Article 6 ECHR

(i) It was an abuse of process to instigate and/or permit the Crown to seek confiscation at such a late stage, when the appellant and all parties had believed that, save for sentence in respect of the offence admitted, the Crown were seeking compensation of the actual loss of the local authority and sentence was expected to take place on 9 July 2004.

(ii) The appellant in the belief at (i) above borrowed £40,000 towards repayment of the sum of £48,000 lost by the local authority in housing benefit and council tax and thereby suffered prejudice by reason of the Crown thereafter seeking confiscation at the Court's suggestion.

(iii) The appellant was prejudiced by reason of delay and the proceedings were in breach of article 6(1) of ECHR: sentence had been adjourned twice for pre-sentence report and an agreed figure for compensation and final disposition of the case was expected on 9 July 2004 and by reason of the learned recorder's intervention and 'instigation' of confiscation proceedings on that later date the disposal of the appellant's case was delayed for a further six months and he faced a new and unexpected investigation of his affairs and risk both as to financial consequence and imprisonment that he was not aware of at the time of his considering and entering his plea of guilty.

(iv) The learned recorder failed to exercise his discretion under the 1988 Act properly or at all, consequently the appellant was prejudiced and/or there was an abuse of process and/or a breach of the said Convention; his remarks in the course of the hearing on 9 July 2004 showed that he was intent on making a confiscation order in a substantial sum and gave from the start the perception of unfairness.

(v) Consequently the court…on appeal has jurisdiction to quash the confiscation order or reduce the same."

In developing this ground before us, Mr Valios has emphasised different strands of the argument as follows. Most seriously, and going even beyond his skeleton argument, he has submitted that the recorder's remarks on 9 July, cited above, demonstrate that, quite irrespective of his error in thinking that he had a right himself to initiate confiscation proceedings, he was determined to make an order, and in the highest possible amount. It was his intention to make an order, whatever the facts turned out to be. It was rather like lack of good faith in bringing a prosecution. Thus, any appearance of exercising a proper discretion at the hearing on 6/7 January 2005 was mere lip service: his mind was made up. Although the word bias, or even the appearance of bias, was not used, we think that this aspect of this ground amounted to a direct attack on the recorder's judicial good faith.

Alternatively, Mr Valios emphasised a different aspect of unfairness, which he described as an abuse of process, consisting in the prosecution misleading the appellant into thinking that he would be sentenced and be made subject to a claim for compensation, but would not have to face confiscation proceedings. That, he submitted, was the prosecution's attitude to the offence, as plainly shown by what had occurred up to and on 9 July 2004. But for the judge's intervention, however legitimate his error as to his right to initiate might have been, especially in the light of the changes already effected by POCA 1995, the appellant would have been sentenced on 9 July and would never have had to face confiscation proceedings. In the result, however, the appellant's legitimate expectations had been disappointed, and he had suffered prejudice by the delay in sentencing, by borrowing the £40,000, and by the anxiety involved in the confiscation proceedings themselves. Indeed, it was even suggested that the appellant had pleaded guilty on the basis that he would only have to face a compensation order.

In either event, Mr Valios submitted that there was unfairness in the process of the confiscation proceedings and a breach of article 6(1) of the European Convention on Human Rights.

In this connection Mr Valios relied on the following citations from the authorities. He referred in the specific context of confiscation orders to the acknowledgments by Lord Steyn, Lord Rodger of Earlsferry and Lord Brown of Eaton-under-Heywood at paras 24, 42 and 80 of Soneji that the courts could remedy any undue prejudice arising from excessive delay or lack of good faith by means of the abuse of process jurisdiction and perhaps in other ways. Similarly, he referred to Lord Woolf's remarks at paras 37 and 48 of Sekhon to the effect that the court could always ensure that, if justice demanded, a confiscation order procured in unfair circumstances could be quashed on appeal, when this court would look beyond technicalities to concentrate on the substance of what had occurred. More generally, he referred to R v. Bloomfield (1997) 1 Cr App R 135 as an example of how the abuse of process jurisdiction has been employed, albeit in a different context, to quash unfair process. However, he accepted that the recorder had never been requested to stay the proceedings for abuse or anything such; and indeed that no complaint of any kind was made to the judge save finally in the context of sentencing on 7 January 2005 (see at para 49 above).

In Bloomfield the defendant was charged with possession of a class A drug. At a plea and directions hearing the prosecution indicated to the defendant that it would offer no evidence as it accepted that the defendant had been the victim of a set-up. The judge was so told. Subsequently, following a change of prosecuting counsel, the defence was informed that the prosecution would continue. An application to stay for abuse was rejected, and the defendant pleaded guilty. His appeal was allowed. Lord Justice Staughton, giving the judgment of this court, referred to the Code for Crown Prosecutors for its provision that "People should be able to rely on decisions taken by the Crown Prosecution Service. Normally, if the Crown Prosecution Service tells a suspect or defendant that there will not be a prosecution, or that a prosecution has been stopped, that is the end of the matter and the case will not start again. But occasionally there are special reasons…" Lord Justice Staughton said that no special reasons had been shown to the court. He concluded (at 143):

"Looking at the case in the round, it seems to us that this an unusual and special situation. The decision to defer the trial on December 20 was taken for the benefit of the prosecution in order that they would not be embarrassed when it was said in court that no evidence was being offered. The statement of the prosecution that they would offer no evidence at the next hearing was not merely a statement made to the defendant or to his legal representative. It was made coram judice, in the presence of the judge. It seems to us that whether or not there was prejudice it would bring the administration of justice into disrepute if the Crown Prosecution Service were able to treat the court as if it were at its beck and call, free to tell it one day that it was not going to prosecute and another day that it was."

However, he added –

"we are not seeking to establish any precedent or any general principle in regard to abuse of process. We simply find that in the exceptional circumstances of this case an injustice was done to this appellant."

On behalf of the Crown, Mr Connolly on the other hand submitted that at the time of the early hearings in 2004 the prosecution were still in the dark as to the true factual position. Meanwhile, they said nothing to the appellant to mislead him. In any event, it could only have been after the hearing of 4 June 2004 that the appellant could have formed any view that matters would proceed without confiscation proceedings – and within the space of five weeks, the appellant knew better. During the whole of this time, only the appellant knew his true financial situation – and he was presenting himself to the court, through his pre-sentence report interview, as impoverished, scrabbling to raise the £33,000 brought to court on 4 June from friends and relations (in fact it was borrowed from commercial lenders). On 20 June 2004, despite what the appellant now said, he had sought to protect himself and/or his wife by transferring his half-interest in Pendle Road to her; and that was not the only purported protective transfer. It was unlikely that he had not received advice from his legal representatives about the possibility of confiscation proceedings – even if it looked for a while that he might, if he kept his head down, get away with only a compensation order against him. There was no evidence that he had been advised that he had nothing to worry about in the shape of confiscation of his benefit through his realisable property. In any case, on 9 July 2004 he was still protesting financial embarrassment while facing a compensation claim in the sum of the £49,000 as a minimum: and any financial investigation would have opened up the can of worms which was already coming into view as the facts were opened to the court that day. The judge was entitled to ask the prosecution to get at the truth of the matter.

It may be, Mr Connolly continued, that the judge had erred in thinking that he could initiate confiscation proceedings himself: but that did not mean that he had failed to exercise his discretion. Patently, he had done so at the hearing in January 2005. The material on which he had done so fully justified his order, and in any event this court could exercise its own discretion, if necessary. A fortiori, there was nothing to support a case that the recorder had been in judicial bad faith or paying mere lip service to the need for a properly considered exercise of his jurisdiction. There was no abuse of process. As for Bloomfield, that was a special and different case. There had been an express representation made there, not only to the defendant but also to the court. The calling of no evidence was entirely a matter for the prosecution. In the absence of a prosecution, no question could arise as to any trial of the defendant's guilt. In the present case, however, what the court was concerned with was the sentencing process of a defendant whose guilt had been established. That process had to be gone through, and it was primarily for the court and not the prosecution. Although the 1988 Act contemplated that a prosecution notice would be the trigger for confiscation proceedings, the substance of that was only in the need for the £10,000 minimum. Finally, if nevertheless there was any unfairness at all, a remedy could be given in the court's discretion by discounting to some degree the recorder's order.

Over the whole breadth of this ground our mind has wavered somewhat, but of one thing we are sure: that there was no lack of judicial good faith. On the basis of what the judge was told and what he read in his papers for the purposes of the 9 July 2004 hearing, and on the basis that he considered himself, albeit in error, to be sentencing under the 1995 regime, the judge was entitled to be concerned that the prosecutor appeared so far to have ignored the large-scale profiteering that lay behind the abuse of housing and council tax benefit. For the best part of a decade the appellant had falsely presented himself to the council as indigent: he received emergency housing assistance, and secured a five-bedroom house which must have been much in demand by those truly in need. In the meantime, and from the very beginning of his offending, he had owned two houses. He was subsequently to sell one, at a substantial profit, and buy two further houses. His rental income supported the mortgages, so that over the years he had used his offending not only to secure housing and housing benefit to which he was not entitled, but to raise income with which to support and create the opportunity to make capital appreciation out of the growing value of his properties.

As for the recorder, despite the strength of his language on 9 July, as to which more below, his subsequent conduct of the confiscation hearings demonstrates that he gave careful consideration to the matters which were then put before him. We say this in any event, albeit subject to the points which are raised before us under the third and fourth grounds of this appeal as to the recorder's findings on benefit and realisable property. Thus the recorder (a) declined to give effect to the claim to compensation for more than the £49,000; (b) found both benefit and realisable property in total sums less than those put forward in the prosecutor's statements; (c) deducted the £49,000 paid or payable to the council as compensation from any sum payable under the confiscation order; (d) discounted the maximum sum in which he could have ordered confiscation by a further £28,000; (e) gave to the appellant a merciful sentence of only 9 months, which expressly took account of the submissions made on his behalf concerning inter alia the delay and anxiety involved in the protracted confiscation proceedings. In sum, we think that the submission calling in question a lack of judicial good faith should not have been made.

When, however, we turn to the broader submission of unfairness, we conclude on balance that Mr Valios's submissions are justified. We would not say that there was an abuse of process in the sense in which that term has been used, where applicable, to require a stay or quashing of proceedings. We think that this case is not like Bloomfield, essentially for the reasons put forward in Mr Connolly's submissions: the recorder here was already seized of sentencing, for an admitted crime. There was never any application to stay the confiscation proceedings; the delays were at each stage accepted by the appellant; and any prejudice he suffered, and we acknowledge that there was some, was inherent in the process itself. We do not, moreover, acknowledge any prejudice by reason of his plea of guilt, nor by reason of his borrowing of funds for the purposes of compensation: for there is nothing whatsoever to suggest that his plea was based on any holding out to the effect that there would be no confiscation proceedings, and his attempts to improve his position for the purposes of sentencing by offering compensation (out of his ill-gotten gains) were tactically understandable and also ultimately assisted him. Moreover, we agree that it was likely that he had been advised by his legal representatives of the dangers of confiscation proceedings.

Nevertheless, we think that the prosecution did allow the appellant to think for a while, between 2 April and 9 July 2004, that he would not be pursued for confiscation purposes, only for compensation. We agree that there was no open representation to that effect, but it was implicit in the express mention of compensation without reference also to confiscation, and we think it possible that the implication would have been explained to him by his own legal representatives.

Moreover, and this is a matter of real concern to us, we think that the recorder's remarks on 9 July 2004 were unfortunate. On the basis that he thought that he had the power to initiate confiscation proceedings himself, he had no need to put the matter as strongly as he did, even if he may not at that time have contemplated that he would be requested, by defence counsel herself, to reserve the matter to himself – as a recorder, he was not a permanent judicial member of Harrow crown court. On the true basis that he needed the prosecutor's cooperation for confiscation proceedings, it was all the more unfortunate that he should have spoken so strongly in demanding that cooperation. The substance of the matter is that, although on the one hand the appellant thoroughly deserved to be required to open up his property dealings to scrutiny for the purposes of a confiscation enquiry, on the other hand but for the recorder's intervention it seems likely that that enquiry would never have occurred.

In sum, while rejecting any necessity to say that the confiscation proceedings should never have taken place, we conclude that there was an element of unfairness in what happened on 9 July 2004. We therefore think that there is a real need to look carefully at the outcome of those proceedings, to enquire whether there is any suggestion, despite what we have said above about the recorder's apparent exercise of his discretion, of anything going amiss in his findings, and also for the purpose of considering whether, in the exercise of our own discretion, some remedy for the consequential breach of article 6(1) should be granted to the appellant. First, however, it will be necessary to consider the third and fourth grounds of appeal.

The third ground of appeal: benefit obtained

Mr Valios's submission under this heading was limited to the complaint that the recorder's finding of a causal connection between offending and the increase in capital value of the properties was not proven, in particular in relation to Frithwood Crescent. It appears to have been contemplated by the recorder that this last acquired property was "a different creature to the earlier properties". This was apparently because it was bought with the aid of a further mortgage on Stag Lane, which provided the funds for the deposit of £7,750. However, in our judgment there was no difference in principle between the three properties, even if the causal connection became somewhat weaker over the appellant's series of purchases. Conifer Gardens' mortgage was directly supported by the rental income the appellant was able to derive from it as a result of obtaining accommodation from the council at a discounted rental. The subsequent sale of Conifer Gardens provided capital for the purchase of Stag Lane, which was likewise rented out; and the rise in the value of Stag Lane allowed for the further borrowings which supported the purchase of Frithwood Crescent. The only difference, we suppose, was that while the council accommodation directly freed one house for the opportunity of rental income it did not do the same for two. However, without the success which the offence allowed the appellant to make of Conifer Gardens and Stag Lane, he would never have been able to purchase Frithwood Crescent. We think that the recorder was fully justified in finding the necessary causal connection, as to which the statute does not lay down a demanding test: see sections 71(5) and 102(5).

There is a different point, however, from that which Mr Valios has presented on this appeal, which relates to the mortgage payments. Should Mr Faull have conceded that the mortgage payments need not be taken into account for the purpose of computing benefit? Although this point was conceded before the recorder, and not raised as a ground of appeal here, our concern about the fairness of the proceedings under the second ground has led us to look at this issue. Indeed, on behalf of the Crown, Mr Connolly was inclined to concede himself that the mortgage payments should have been taken into account.

In the absence of adversarial argument, we would be inclined to be cautious. We do not hold that the mortgage payments ought to have been taken into account for the purpose of computing benefit. In any event, the matter was conceded before the recorder. We do consider, however, that the point is capable of debate. The relevant increase in value of the properties was found to be a pecuniary advantage under section 71(5). For these purposes the statute requires the pecuniary advantage to be valued ("as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage"). What is the value of the pecuniary advantage of an increase in the value of a property the mortgage of which has been paid with the help of rental income which the offence in question has facilitated and which has itself been accounted as a benefit under the statute? It seems to us that it is arguable that the cost of preserving the mortgage and thus possession of the house in that way should be brought into account. It is not as though the pecuniary advantage here in question is a direct benefit, as in R v. Smith [2001] 1 WLR 54 (HL), or in the way in which the housing and council tax rebates were. In Smith the pecuniary advantage was obtained once and for all at the moment of importation of the smuggled cigarettes and constituted the benefit obtained as a direct result of the criminal offence; whereas in the present case the value of the pecuniary advantage is being taken at the time of the confiscation order itself and represents the proceeds of prima facie legitimate activity, viz investing in property. If the mortgage payments had not been regularly paid but had accumulated on the mortgage account, the value of the equity would clearly have been struck after the mortgage liability had been taken into account.

However, whatever be the correct view of that question, the amount of a confiscation order under the 1988 Act is ultimately a matter for the court's discretion: see section 71(1) ("such sum as the court thinks fit"). It would have been open to the recorder, even though the value of the pecuniary advantage had been conceded to have been in the full amount of the then current equity in the relevant properties, to have modelled his confiscation order so as to take into account the financial cost of the mortgages which had, by a process of gearing, produced the capital appreciation in question. However, the point does not appear to have been made to the recorder. We bear these matters in mind, but in the meantime visit the fourth ground of appeal.

The fourth ground of appeal: realisable property

The question of realisable property raises different issues. For this purpose, the fact of the houses' current equity value at the time of the confiscation order was all that mattered, so far as value was concerned. That represented "the amount that might be realised" under sections 71(6)(b) and 74(3). Under this heading, however, different questions might arise, namely whether the property in question belongs to the defendant or another.

In this connection, Mr Valios's submissions did not seek to revisit the disputes debated before the recorder, such as whether or not the appellant's half interest in Pendle Road which he had transferred to his wife in June 2004 could be treated as "a gift caught by this Part of this Act" for the purpose of section 74 of the 1988 Act and thus part of what the Act calls realisable property (see section 74(1)), or whether or not Stag Lane or Frithwood Crescent were partly or wholly owned by other persons. His point was rather concentrated on the judge's unwillingness, in the exercise of his ultimate discretion, to discount the value of the appellant's realisable assets so as (a) to make it possible for her to retain her home at Pendle Road in which she had in any event a half interest, and (b) to take into account her general prospective interest in 50% of her husband's property, as being property brought into the marriage and effectively shared, in part because of her role in contributing towards the mortgage outgoings by means of her own income. For these purposes Mr Valios referred in his skeleton argument, but not in his oral submissions, to some of the jurisprudence in recent years relating to the court's concern to balance the public interest in stripping offenders of the proceeds of their crime together with a recognition of the wife's and wider family's interest in the preservation of a matrimonial home.

We were not impressed, however, with this submission. There was in effect no evidence before the court as to Mrs Nwangoro's position, and she did not give evidence in the confiscation proceedings. Although sometimes referred to as the appellant's ex-wife, it appears that she and the appellant are separated rather than divorced. It is said that the separation occurred in 1997 and that that was after the purchase of Conifer Gardens, but that is not established by any documentary evidence. In any event, Stag Lane and Frithwood Crescent were both bought after that separation. Her half-interest in Pendle Road was taken into account, so that only half of the equity in that property counted towards the realisable property assessed by the recorder. To the extent that she claims any further interest, and the claim sketched out by Mr Valios was somewhat unfocused, she is entitled to advance that claim in the High Court: see In re Norris [2001] UKHL 34, [2001] 1 WLR 1388 and Customs and Excise Commissioners v. A [2002] EWCA Civ 1039, [2003] Fam 55.

Remedy and discretion

We revert therefore, in the light of the matters discussed under the third and fourth grounds of appeal, to our conclusion as to the consequences for the appellant of the unfairness which we have found to have occurred in discussing his second ground of appeal.

We conclude that that element of unfairness can and should be remedied by discounting the final amount in which the recorder made his confiscation order. In any event that was essentially a matter in the recorder's discretion, and now in ours. For the reasons which we have discussed above, we think that the judge was careful in the exercise of his ultimate discretion, and it may be that he cannot be criticised, in the absence of a direct submission to the appropriate effect, in not considering whether he should make any allowance for the cost to the appellant of maintaining his mortgage borrowings on the three houses through which he obtained both rental income and capital appreciation. In any event, the recorder made an unallocated allowance both in respect of the compensation payments and in respect of a further £28,000. Moreover, he expressly took account of the effect of delay and anxiety on the appellant in subsequently sentencing him to only 9 months imprisonment. In all these circumstances, we think that the appellant can have no complaint if we provide him with a remedy for the breach of article 6(1) which we have found to have occurred by discounting the amount of his confiscation order by a further £40,000 so as to arrive at a substituted confiscation order in the sum of £200,000. The effect is that, whereas the appellant remains liable to disgorge the capital appreciation which he has managed to secure by means of his offending, he is spared the double effect of repaying in addition the great majority (£68,000 out of £81,000) of the rental income he secured on those properties. That probably fairly reflects, for our current purposes, the mortgage cost or a large part of it of earning that income.

Conclusion

For these reasons, we would allow the appeal to the extent indicated above, by quashing the confiscation order made by the recorder in the sum of £240,000, and substituting for it a new order in the amount of £200,000. Subject to any further argument which might be addressed to us, we would be disposed to say that the period of imprisonment in default, which under the quashed order was 35 months, should instead be a period of 2 years and 3 months.

Note 1   Subsections (1) and (2) were replaced by POCA 1995. In particular the new section 71(1) said that “it shall be the duty of the court” to conduct confiscation proceedings if either the prosecutor has given written notice to the court that he considers that it would be appropriate for the court to do so or the court considers, even in the absence of such a notice, that it would be appropriate to do so.    [Back]

Note 2   The language of the 1988 Act.    [Back]

Note 3   As amended by POCA 1995.    [Back]

Note 4   Deleted by POCA 1995.    [Back]

Note 5   Taken out by section 72A(8)(a) of the 1988 Act (by virtue of section 28 of the Criminal Justice Act 1993).    [Back]

Note 6   Section 72(1) to (4) was repealed by POCA 1995 (section 15).    [Back]

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URL: http://www.bailii.org/ew/cases/EWCA/Crim/2006/3061.html