Mirchandani, R (on the prosecution by) v Somaia

A private prosecutor is not barred in principle from pursuing confiscation or compensation. The court must decide whether the prosecutor may conduct that stage and must ensure that the proceedings are fair, proportionate and free from abuse.

Under the Criminal Justice Act 1988, historical civil proceedings which have ended and cannot affect recovery do not engage the discretion for concurrent or intended civil proceedings. Where statutory assumptions are made, a defendant who alleges that realisable property is less than benefit bears the burden of establishing that proposition. Concealed assets of unknown extent may justify an order for the full benefit where the evidence provides no basis for a lower realisable sum.

Ketan Somaia renewed his application for leave to appeal against a confiscation order made after his convictions for obtaining money transfers by deception. The Crown Court found benefit of £20,434,691 under the Criminal Justice Act 1988, made a confiscation order for that sum, and made compensation orders for the private prosecutor, Murli Mirchandani, and a second victim.

The application challenged the private prosecutor’s statutory notices and alleged conflict, the statutory assumptions, the treatment of unpaid tax and other transfers as benefit, hidden assets, proportionality, default terms and the use of RPI to update historical values. The central issues were whether the confiscation order was lawfully made and whether its terms should be varied.

1. The application succeeded only on the default terms for the compensation orders. The appeal was allowed to require those terms to run concurrently with each other and with the default term for the confiscation order. All other grounds were refused.

2. A private prosecutor remains a prosecutor subject to the duties of a minister of justice. Private interest is ordinarily inherent in a private prosecution and does not create an irremediable conflict merely because the prosecutor is also a victim. The ultimate safeguards are the court’s control of abuse, fairness and proportionality, and its decision whether assistance is required. The prosecutor could benefit from compensation, but never from confiscation. Accordingly, the statutory notices under sections 71 and 72AA of the Criminal Justice Act 1988 were valid.

3. Section 71(1C) concerns extant or intended civil proceedings capable of affecting recovery. It did not apply to long-lapsed proceedings. The court did not need to decide whether section 72AA(3) confers a general discretion about the assumptions: on the evidence, it would have been perverse not to make them.

4. Unpaid tax obtained through cheating the revenue was a pecuniary advantage under section 71(5). The court was entitled to use the statutory assumptions to treat the evaded 20% tax, rather than the gross legitimate receipts, as benefit from general criminal conduct.

5. Under section 71(6), the defendant bears the burden of proving that the realisable amount is less than benefit. The judge was entitled to find hidden assets whose extent was unknown. As there was no evidential basis for a lower valuation, the full-benefit confiscation order was proportionate.

6. The maximum ten-year default term for the confiscation order was justified. A default term is directed to effective recovery, not retributive punishment, and is not assessed by adding it to the substantive sentence. Compensation was to be paid first from sums recovered under the confiscation order under section 72(7).

• Court of Appeal (Criminal Division): renewed application for leave to appeal against the confiscation order under the Criminal Justice Act 1988. Allowed only as to the default terms attached to the compensation orders: [2017] EWCA Crim 741.
• Central Criminal Court: on 12 January 2016, Judge Hone QC found benefit of £20,434,691 and made a confiscation order for that sum, with associated compensation orders.
• Court of Appeal (Criminal Division): the applicant’s appeal against conviction was dismissed on 22 April 2016.
• Central Criminal Court: on 13 June 2014, the applicant was convicted of nine counts of obtaining a money transfer by deception and, on 22 July 2014, was sentenced to eight years’ imprisonment.