Bagnall & Anor v R.

Statutory confiscation assumptions may be applied despite specific allegations of uncharged criminal conduct. Those allegations do not constitute a new criminal charge where they determine only the amount of the confiscation order and expose the defendant to neither conviction nor further punishment.

Article 6 permits a defendant to rebut an assumption about the criminal source of assets on the balance of probabilities. The prosecution may disclose evidence challenging an asserted lawful source without assuming a criminal burden of proof. The statutory safeguard against a serious risk of injustice preserves fairness.

Benefit does not include capital borrowed to commit or facilitate offending. A financial reporting order may rest on the defendant’s whole lifestyle. Apparent bias requires a real possibility of bias in the eyes of the fair-minded and informed observer.

Two conjoined appeals challenged confiscation orders.

Bagnall was convicted of one money-laundering offence under the Proceeds of Crime Act 2002. The Crown relied in the confiscation proceedings on evidence suggesting his involvement in MTIC fraud, although it had decided not to prosecute him for that fraud. He contended that this infringed Article 6, was an abuse of process, and that a loan of £200,000 had wrongly been included in his benefit. He also challenged a financial reporting order.

Sharma was convicted of deception, false accounting and perverting the course of justice. His confiscation order was based on statutory assumptions concerning substantial funds held in accounts connected with him. He relied on witness statements giving inconsistent explanations involving accountancy services and Hawala banking. He challenged proportionality, the construction of section 72AA, and the judge’s refusal to recuse himself.

1. Bagnall’s appeal was allowed only to reduce the benefit figure by £200,000. His other grounds, including the challenge to the financial reporting order, were dismissed. Sharma’s appeal was dismissed.

2. The Crown’s specific allegations of MTIC fraud in Bagnall’s confiscation proceedings did not amount to a new criminal charge for Article 6(2). The proceedings concerned the amount of an order following a conviction, not a further conviction or punishment. Applying the assumptions in section 10 of the Proceeds of Crime Act 2002 did not require the Crown to prove the alleged fraud beyond reasonable doubt. The Crown was entitled, and in material respects obliged, to disclose evidence relevant to the asserted lawful source of assets.

3. Article 6(1) applied, but the proceedings were fair. The defendant could rebut the assumptions on the balance of probabilities. Requiring an explanation of the lawful source of assets was not unfair where the defendant was well placed to provide it. Nor was it an abuse of process for the Crown to invoke the statutory regime instead of prosecuting the alleged MTIC fraud. The safeguard in section 10(6)(b), requiring the court to avoid a serious risk of injustice, was material.

4. Following R v Ahmad [2012] EWCA Crim 391, the court held that R v Waller [2009] 1 Cr. App. R.(S) 76 should not be followed. Criminal benefit is not increased by the costs incurred in offending. The £200,000 loan supplied as working capital therefore had to be deducted, although the six-year default term remained appropriate.

5. For Sharma, section 72AA(6) of the Criminal Justice Act 1988 enlarged the relevant criminal conduct for confiscation purposes. It did not deem him criminally convicted of further offences so as to require proof of them to the criminal standard. The assumptions were neither disproportionate nor unfair. The judge could reject untested written accounts that were internally inconsistent.

6. The judge was entitled to consider Bagnall’s whole lifestyle when assessing the risk for a financial reporting order. There was no apparent bias in Sharma’s case: the judge had forgotten the proposed settlement figure, and his earlier sentencing observations and treatment of the evidence did not establish a real possibility of bias.

• Court of Appeal (Criminal Division) — In [2012] EWCA Crim 677, Bagnall’s appeal was allowed only on the benefit-calculation issue; Sharma’s appeal was dismissed.
• Manchester Crown Court — Bagnall was convicted of money-laundering and later made subject to a confiscation order under the Proceeds of Crime Act 2002 and a financial reporting order.
• Winchester Crown Court — Sharma was convicted following a retrial and later made subject to a confiscation order under the Criminal Justice Act 1988.