Regina v Smith (2001)

For confiscation under Criminal Justice Act 1988, a person derives a pecuniary advantage when he evades or defers a debt arising from the offence. The advantage arises when payment is evaded. It does not depend on the offender later selling, retaining, or otherwise realising the value of the goods.

Sections 71(4) and 71(5) treat the value of that advantage as property obtained from the offence. Under section 74, the relevant value is assessed when it is obtained. Subsequent seizure, forfeiture, destruction, or damage does not reduce the benefit for confiscation purposes.

The respondent pleaded guilty at Sheffield Crown Court to fraudulent evasion of excise duty on cigarettes smuggled into the United Kingdom. Customs officers seized and forfeited the cigarettes and the vessel shortly after importation. The sentencing judge made a confiscation order of £46,250, having treated the unpaid duty as a pecuniary advantage.

The Court of Appeal (Criminal Division) quashed the order. It held that the respondent had gained no benefit from evading duty because the cigarettes had been seized before he could sell or retain them, while he remained liable for the duty.

The Crown appealed to the House of Lords. The certified question was whether an importer obtains a benefit through unpaid duty where the goods are forfeited before their value can be realised.

1. Appeal allowed unanimously. Lord Rodger of Earlsferry gave the leading speech. Lords Bingham of Cornhill, Nolan, Hoffmann and Hutton expressly agreed. The House restored the Crown Court’s confiscation order of £46,250.
2. Pecuniary advantage. Per Lord Rodger, the ordinary meaning of deriving a pecuniary advantage includes evading or deferring a debt. The respondent obtained that advantage when he fraudulently avoided payment of the excise duty at importation. The Court of Appeal’s focus on what later happened to the cigarettes was therefore misplaced.
3. Time for valuing benefit. Sections 71(4) and 71(5) of the Criminal Justice Act 1988 treat a pecuniary advantage as a sum of money, and therefore as property obtained from the offence. Under section 74(5), its value is determined when it is obtained, subject to the statutory provision for a greater later value. Subsequent seizure or forfeiture of the contraband does not affect that valuation.
4. Application. The respondent’s inability to sell the cigarettes was irrelevant. His evasion of duty produced a pecuniary advantage of £130,666.40. The fact that his realisable property was only £46,250 meant that the restored confiscation order remained limited to that sum.
5. Boat issue. Lord Rodger treated the Crown’s separate contention concerning the value of The Vertine as academic. The available evidence did not clearly establish its value to the respondent when obtained, and the restored order exhausted his realisable assets.

• House of Lords: allowed the Crown’s appeal in [2001] UKHL 68 and restored the confiscation order.
• Court of Appeal (Criminal Division): on 16 June 2000 allowed the respondent’s appeal and quashed the confiscation order. On 20 December 2000 it certified the point of law of general public importance but again refused leave to appeal.
• Sheffield Crown Court: the respondent pleaded guilty to fraudulent evasion of excise duty. A confiscation order of £46,250 was made on 22 July 1999.