Communicated on 10 December 2014
FOURTH SECTION
Application no. 51757/12
Nirmal Kumar SHARMA
against the United Kingdom
lodged on 1 August 2012
STATEMENT OF FACTS
The applicant, Mr Nirmal Kumar Sharma, is a British national born in 1958, who currently resides in Slough, Berkshire. He is represented before the Court by Teacher Sterne LLP, a solicitors’ practice based in London.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. Criminal proceedings
On 14 and 15 February 2007 the applicant was convicted of seven counts of procuring the execution of a valuable security by deception, one count of false accounting and one count of doing acts tending and intending to pervert the course of public justice. At the time of his conviction the applicant had been an accounts auditor for twenty years with his own company, Sharman Associates, as well as a lay magistrate for five. The conviction arose out of a deception upon two of his clients, who had been persuaded to issue cheques for tax liabilities that did not exist.
At trial it appeared that funds derived from third parties had been diverted to offshore accounts in the name of the applicant and members of his family. Although the applicant had never declared income of more than GBP 17,500 and denied owning real property, motor vehicles or shares of any kind, the bank accounts associated with or controlled by him were found to contain transactions in excess of GBP 16,000,000.
On 23 March 2007 the applicant was sentenced to a total of three years and three months’ imprisonment. Touching on the issue of dishonesty, the judge noted that
“[a]t the end of this case, Mr Sharma, the short fact is that you were thoroughly dishonest and benefitted as I say to the extent that I have just mentioned. That in itself is bad enough. Bad enough as a man of trust, an accountant, a magistrate – albeit at the very end of the period of dishonesty – and that leads me on to count twelve.”
On 21 November 2007 the Court of Appeal quashed one of the seven counts of procuring the execution of a valuable security by deception. The sums derived from the remaining offences amounted to GBP 39,726.52.
2. Confiscation proceedings before the Crown Court
Following conviction, the prosecution commenced confiscation proceedings under section 71A of the Criminal Justice Act 1988 (“the 1988 Act”) as amended by the 1993 and 1995 Proceeds of Crime Acts. The judge presiding over the trial was also to preside over the confiscation proceedings.
The prosecution contended for total assets of GBP 4,286,085.64, all of which were attributable to “a course of criminal conduct” pursuant to section 72AA of the 1988 Act. The parties entered into negotiations for settlement over a two-week period in January 2009. Before Winchester Crown Court on 26 January 2009, in response to questioning from the judge, counsel for the prosecution provided the following details of the monetary figures provisionally agreed in the ongoing negotiations:
“approximately 3 million, and shares and bank accounts possibly 2.2 million...that is where we have reached.”
Negotiations eventually broke down and the judge was informed on 14 April 2009. In the same hearing counsel for the applicant stated his intention to apply for the judge to recuse himself on two grounds: he had been informed of provisional figures in the ongoing and now failed negotiations; and he had stated during sentencing that the applicant was “fundamentally dishonest”. With regard to the first ground, the judge said:
“[I] recall clearly on I think it was the last occasion saying that from my position this is like peering through a fog because I am just not given any information. I do not know anything. I have not seen one single sheet of paper. I just do not know what has been going on behind the scenes.”
During a case management hearing on 19 June 2009, counsel for the prosecution denied making any submissions that might give grounds for an application for recusal:
“It is absolutely true that we showed Your Honour none of the documents that were passing to and fro in the negotiation period, and we did indeed keep Your Honour in the dark and there was a reason for that, and Your Honour saw that in a recent defence submission where they were hinting that Your Honour might be disqualified.”
The applicant did not make an application for the judge to recuse himself.
Confiscation proceedings took place on 7, 8, 15, 16 and 17 December 2009. The applicant did not give evidence, nor did he call any witnesses; instead, he relied on one hundred and five witness statements. In his own written statements and through the statements of witnesses the applicant sought to explain his bank transactions by his involvement in Hawala. Hawala is an informal value transfer system based on the performance and honour of a huge network of money brokers, primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent, operating outside of, or parallel to, traditional banking, financial channels, and remittance systems.
However, the judge was satisfied that bank accounts under the names of the applicant’s family members, as well as his own and that of Sharman Associates, were held by him. Moreover, the judge found that the closure of certain bank accounts by the applicant had been an attempt to defeat a confiscation hearing.
On 22 December 2009 the judge ruled that the statutory assumptions should apply and made a confiscation order against the applicant in the sum of GBP 4,101,339.00; that is, the full amount claimed by the prosecution reduced by the diminution in value of residential property by the time of the order. A term of eight years’ imprisonment was set in default of payment.
3. Proceedings before the Court of Appeal
The applicant was granted permission to appeal to the Court of Appeal on the grounds that there had been an appearance of bias and the judge ought to have recused himself; there was an lack of proportionality between the offences the applicant was convicted of and the offences he was assumed to have committed for the purposes of section 72AA(6) of the 1988 Act; and that by operation of the statutory assumptions the applicant was in effect deemed to be guilty of indictable offences and, as such, the burden was on the prosecution to prove those offences to the criminal standard.
The applicant’s appeal was heard together with that of Darren John Bagnall (Bagnall & Anor v R. [2012] EWCA Crim 677). On 18 April 2012 both appeals were dismissed by the Court of Appeal.
On the issue of bias, the Court of Appeal accepted that the judge had been told of the amount of the proposed settlement prior to the hearing but found that, since he had forgotten what he had been told by the time of these proceedings, he only knew that there had a been a suggestion of settlement. This was known to him in any case and deemed insufficient to give rise to a “real possibility” of bias or its appearance. As for comments made during sentencing, the court held that there was no evidence to sustain an accusation of the appearance of bias.
The court further found that it was not disproportionate to require the applicant to establish that there was a legitimate source to monies held in his bank accounts, or accounts connected to him. The court noted that, absent section 72AA(6) of the 1988 Act, a confiscation order could only be made in respect of benefit derived from offences of which the applicant was convicted in the proceedings and offences taken into consideration which were indictable offences, other than drug-trafficking offences. The purpose and effect of section 72AA(6) was to deem a defendant to have been guilty of offences of which he was convicted in the same proceedings or offences which the court would be taking into consideration in determining his sentence. Section 72AA(6) therefore enlarged the scope of section 71 to cover benefit derived from offences other than those of which the defendant was indicted. However, there was no basis for contending that to impose the burden upon the defendant of showing the source of his property was legitimate was either unfair or contrary to Article 6 of the Convention. In relation to Mr Bagnall, it had already noted that the statutory assumption was applied not to facilitate a finding of guilt, but rather to assess the amount of the confiscation order. The appellant was entitled to rebut the assumption that the source of the assets was criminal, on the balance of probabilities, and in Phillips the Court had described this as a “principal safeguard”.
B. Relevant domestic law
1. The Criminal Justice Act 1988
The applicable legislation at the time was the Criminal Justice Act 1988 as amended by the 1993 and 1995 Proceeds of Crime Act. Relevant sections of the act (sections71 and 72AA) have since been repealed and replaced by provisions of the Proceeds of Crime Act 2002.
Pursuant to Sections 72AA(1) and 71(1) of the 1988 Act, where a defendant is convicted of at least two qualifying offences before a Crown Court or Magistrate’s Court and the prosecutor gives written notice declaring that the case is one in which it is appropriate for the provisions of the section to be applied, the court must to first determine whether the offender had benefited from any relevant criminal conduct.
Under section 71(4), a person benefits from an offence if he obtains property as a result of or in connection with the conduct and his benefit is the value of the property so obtained.
Relevant criminal conduct is defined in Section 71(1)(d):
“In this part of the Act (relevant criminal conduct), in relation to a person convicted of an offence in any proceedings before a court, means (subject to s.72AA(6) below) that offence taken with any other offences of a relevant description which are either (a) offences of which he is convicted in the same proceedings, or (b) offences which the court will be taking into consideration in determining his sentence for the offence in question.”
Section 72AA(6) CJA 1988 reads
“Where the assumptions specified in sub-section (4) above are made in any case, the offences from which, in accordance with those assumptions, the defendant is assumed to have benefited shall be treated as if they were comprised, for the purposes of this Part of this Act, in the conduct which is to be treated, in that case, as relevant criminal conduct in relation to the defendant.”
Section 72AA(4) provides for the making of three assumptions for the purpose of deciding whether or not a defendant has benefited from his general criminal conduct and calculating his benefit from that conduct. Where the court sees fit, it may, pursuant to section 72AA(3), assume:
(a) that any property appearing to the court— .
(i) to be held by the defendant at the date of conviction or at any time in the period between that date and the determination in question, or .
(ii) to have been transferred to him at any time since the beginning of the relevant period,
was received by him, at the earliest time when he appears to the court to have held it, as a result of or in connection with the commission of offences to which this Part of this Act applies;
(b) that any expenditure of his since the beginning of the relevant period was met out of payments received by him as a result of or in connection with the commission of offences to which this Part of this Act applies; and .
(c) that, for the purposes of valuing any benefit which he had or which he is assumed to have had at any time, he received the benefit free of any other interests in it.
The “relevant period” referred to in subsections (a)(ii) and (b) is six years before proceedings were started against the defendant (section 72AA(7)(b)). Thus, any property transferred to the defendant at any time in the six years before his conviction, together with property held by him at the date of conviction and between conviction and the determination of the confiscation proceedings will be assumed to have been obtained by him as a result of his general criminal conduct.
Pursuant to section, where the Court decides that the assumptions within section 72AA(4) are to be made, it shall not make any assumptions with respect to property where
(a) that assumption, so far as it relates to that property or expenditure, is shown to be incorrect in the defendant’s case; .
(b) that assumption, so far as it so relates, is shown to be correct in relation to an offence the defendant’s benefit from which has been the subject of a previous confiscation order; or .
(c) the court is satisfied that there would (for any other reason) be a serious risk of injustice in the defendant’s case if the assumption were to be made in relation to that property or expenditure.
When assessing whether a person has benefited from any offence and the amount to be recovered in the case, section 71(7A) requires the standard of proof to be that which applies in civil proceedings.
Pursuant to section 71(1B), where the court decides that the defendant has benefited from the conduct referred to it must calculate the recoverable amount and make a confiscation order requiring him to pay that amount.
2. Case-law in respect of confiscation
(a) HM Advocate McIntosh
In this case the Scottish High Court of Justiciary sitting as a court of criminal appeal (“the Appeal Court”) held, by a majority of two to one, that a confiscation procedure similar to that applied in the present case was incompatible with Article 6 § 2 of the Convention. In particular, it found that in asking the court to make a confiscation order the prosecutor was in fact asking it to conclude that the defendant had committed a criminal offence, even though there had been no indictment or complaint, and no conviction. Moreover, as the allegation against him was unspecific and based on no evidence, his need for the presumption of innocence was all the greater. In such a case the statutory assumptions offended against the presumption of innocence.
However, on 5 February 2001 the Judicial Committee of the Privy Council held unanimously that Article 6 § 2 did not apply, since during the confiscation proceedings the accused was not “charged with a criminal offence” but was instead faced with a sentencing procedure in respect of the offence of which he had been convicted ([2003] 1 AC 1078). Moreover, the Privy Council held that even if Article 6 § 2 could be said to apply, the assumption involved in the making of the confiscation order was not unreasonable or oppressive.
(b) R v. Rezvi and R v. Benjafield and Others
In R. v. Rezvi [2002] UKHL 1 the House of Lords unanimously held that the confiscation scheme under the Criminal Justice Act 1988 was compatible with Article 6 § 1 of the Convention. Lord Steyn, with whom the other Law Lords agreed, observed:
“It is a notorious fact that professional and habitual criminals frequently take steps to conceal their profits from crime. Effective but fair powers of confiscating the proceeds of crime are therefore essential. The provisions of the 1988 Act are aimed at depriving such offenders of the proceeds of their criminal conduct. Its purposes are to punish convicted offenders, to deter the commission of further offences and to reduce the profits available to fund further criminal enterprises.
... ... ...
It is clear that the 1988 Act was passed in furtherance of a legitimate aim and that the measures are rationally connected with that aim ... The only question is whether the statutory means adopted are wider than is necessary to accomplish the objective. Counsel for the appellant submitted that the means adopted are disproportionate to the objective inasmuch as a persuasive burden is placed on the defendant. The Court of Appeal [2001] 3 WLR 75, 103 carefully considered this argument and ruled:
‘The onus which is placed upon the defendant is not an evidential one but a persuasive one, so that the defendant will be required to discharge the burden of proof: see Lord Hope’s third category of provisions in R v Director of Public Prosecutions, Ex Kebilene, [2000] 2 AC 326, 379. This is therefore a situation where it is necessary carefully to consider whether the public interest in being able to confiscate the ill-gotten gains of criminals justifies the interference with the normal presumption of innocence. While the extent of the interference is substantial, Parliament has clearly made efforts to balance the interest of the defendant against that of the public in the following respects:
(a) It is only after the necessary convictions that any question of confiscation arises. This is of significance, because the trial which results in the conviction or convictions will be one where the usual burden and standard of proof rests upon the prosecution. In addition, a defendant who is convicted of the necessary offence or offences can be taken to be aware that if he committed the offences of which he has been convicted, he would not only be liable to imprisonment or another sentence, but he would also be liable to confiscation proceedings.
(b) The prosecution has the responsibility for initiating the confiscation proceedings unless the court regards them as inappropriate...
(c) There is also the responsibility placed upon the court not to make a confiscation order when there is a serious risk of injustice. As already indicated, this will involve the court, before it makes a confiscation order, standing back and deciding whether there is a risk of injustice. If the court decides there is, then the confiscation order will not be made.
(d) There is the role of this court on appeal to ensure there is no unfairness.
... [I]n our judgment, if the discretions which are given to the prosecution and the court are properly exercised, the solution which Parliament has adopted is a reasonable and proportionate response to a substantial public interest, and therefore justifiable.’ (Emphasis supplied)
For my part I think that this reasoning is correct, notably in explaining the role of the court in standing back and deciding whether there is or might be a risk of serious or real injustice and, if there is, or might be, in emphasising that a confiscation order ought not be made.
... ... ...
In agreement with the unanimous views of the Court of Human Rights in Phillips v United Kingdom (Application No 41087/98) 5 July 2001 I would hold that Part VI of the 1988 Act is a proportionate response to the problem which it addresses.”
In R. v. Benjafield [2002] UKHL 2 the House of Lords unanimously held that the confiscation scheme under the 1994 Act was also compatible with Article 6 § 1 of the Convention.
(c) R v. Briggs-Price
The case of Briggs-Price concerned a defendant who was convicted of conspiracy to import heroin. In the course of that trial evidence had been led of the applicant’s involvement in trafficking in cannabis (to support the heroin trafficking charges), although he was not charged with that offence. In the confiscation proceedings which followed it was agreed by all parties that no heroin was ever imported and that there were no proceeds of that offence. Although the applicant owned properties (which he claimed had been funded from a legitimate source), the prosecution did not allege hidden assets. Consequently, the parties agreed not to apply the statutory assumption that the applicant’s property and expenditure during the relevant period were the proceeds of crime. However, based on the evidence he had heard at trial the judge was satisfied that the applicant had been involved in cannabis trafficking. He therefore made an order for around GBP 2.5 million based on an estimate of the applicant’s proceeds from that offence. That approach was upheld by the Court of Appeal and, on the defendant’s further appeal, by the House of Lords ([2009] UKHL 19). Their Lordships unanimously dismissed the defendant’s appeal but for different reasons.
Lord Phillips of Worth Matravers found that the allegations made in relation to the cannabis offences did not constitute criminal charges because they were not so treated under domestic law; they could not and did not lead to criminal convictions; and, most significantly, their consequence, the confiscation of the property of a convicted drug dealer, was precisely the same as that in Phillips and Grayson & Barnham [nos. 19955/05 and 15085/06, 23 September 2008], in which this Court accepted that the safeguards of Article 6 § 2 did not apply.
Lord Phillips noted, however, that the guarantees of Article 6 § 1 nonetheless applied to the confiscation proceedings. That being said, he found that the prosecution, as part of their case on the conspiracy to import heroin, had given the defence particulars of evidence that they intended to adduce of other drug offences. The appellant had challenged these at his trial and could have challenged them again in the confiscation proceedings. The judge had been sure on the evidence that the relevant offences were proved and he had deduced the benefit from the proved offending. Moreover, the Court of Appeal had held that the procedure adopted was compatible with Article 6 § 1. There was therefore no basis for suggesting that the fair trial requirements of Article 6 § 1 were not satisfied.
Lord Mance adopted a broadly similar position to that of Lord Phillips. He agreed that Article 6 § 2 did not apply to the confiscation proceedings in the appellant’s case. He also agreed that the standard of proof required from the prosecution in proving any relevant drug trafficking was the civil standard. He concluded that no breach of Article 6 § 1 was made out in the present case.
Lord Rodger of Earlsferry also agreed that Article 6 § 2 did not apply to the confiscation proceedings, as nothing said or done by the prosecution or the court in the course of those proceedings was designed to convict or acquit the appellant of any other drug-related offence.
He accepted that the presumption of innocence nonetheless applied as part of the guarantees inherent in Article 6 § 1 of the Convention, but considered that the Article was satisfied, noting:
“74. Although the appellant was not ‘charged’ with the cannabis network offence, evidence of his involvement in the network was led by the prosecution at his trial for the conspiracy count. The appellant was represented by counsel. Before trial, he would have been supplied with police statements and other material from which it would have been clear that the prosecution was intending to lead evidence about his involvement in the cannabis distribution network at his trial. The appellant has never suggested otherwise. The trial judge held that that evidence was admissible and the Court of Appeal held that there was no arguable appeal against that ruling. Counsel for the appellant had every opportunity to cross-examine the relevant witnesses and to lead evidence to counter the prosecution evidence relating to the cannabis distribution network. At the trial, accordingly, any requirements of Article 6(1) and (3) were surely satisfied in respect of the allegations relating to his involvement in that network.
75. In the context of the confiscation proceedings the judge had regard to this evidence which had been led at the trial and, on that basis, had ‘no doubt’ that the appellant had indeed been involved in running the network. So, in this case, there is no question of the judge proceeding on a presumption that the appellant had been involved in the cannabis network – indeed, the judge plainly thought that the appellant’s involvement had been proved to the criminal standard, beyond a reasonable doubt. On any view, therefore, the presumption of innocence in article 6(1) was fully respected in the confiscation proceedings.”
However, unlike Lords Phillips and Mance, Lord Rodger considered that the relevant standard of proof was “beyond reasonable doubt” because otherwise the Crown could ask the court to make a confiscation order on the basis of an alleged benefit from a specific offence of which the defendant would have been acquitted if he had been prosecuted for it. He accepted that that standard had been satisfied in the present case because the court’s conclusions as to the benefit derived by the appellant from drug trafficking were based on evidence – rather than a presumption – of guilt.
Lord Neuberger of Abbotsbury agreed fully with Lord Rodger as regards the Convention issues arising in the appeal.
Lord Brown of Eaton-under-Heywood alone found that Article 6 § 2 did apply in the circumstances of the case. He considered the position of this Court to be that the prosecution must either demonstrate that the defendant holds or has held assets the provenance of which he cannot satisfactorily explain, or must establish beyond reasonable doubt that the defendant has committed some other offence (or offences) from which it can be presumed that he obtained advantage. In the latter case, he considered, Article 6 § 2 applied but was satisfied.
In the appellant’s case, the fact that the cannabis offence was not treated under domestic law as a criminal charge and did not lead to a criminal conviction was not a sufficient basis for holding it not to be a charge within the autonomous Convention meaning. Lord Brown observed that, unlike in Geerings v. the Netherlands, no. 30810/03, 1 March 2007, so far from having been acquitted of the cannabis offence, the appellant was found by the judge beyond reasonable doubt to have committed it. On this basis and on this basis alone he regarded Geerings as distinguishable and Article 6 § 2, albeit engaged, to be satisfied.
Lord Brown concluded with the following remark:
“97. At one stage in the preparation of this opinion I wondered whether, assuming for Convention purposes the appellant was indeed to be regarded as charged with a criminal offence, he can properly be said to have been ‘proved guilty according to law’, not least having regard to the terms of section 2(8). Given, however, the obvious overall fairness of the confiscation proceedings here ... I cannot think that Strasbourg would regard the procedure in fact adopted as unlawful. Having swallowed the camel of accepting that our confiscation proceedings generally are compliant with article 6, the European Court of Human Rights is in my opinion unlikely to strain at this gnat.”
Both Lord Rodger and Lord Mance expressed a critical view of the prosecution’s decision not to prosecute the appellant for cannabis trafficking but nonetheless to lead extensive evidence relating to such trafficking at his trial. Lord Rodger observed that the approach adopted by the Crown meant that the jury was not given the opportunity, if so advised, to declare the appellant’s innocence of any involvement in a cannabis network by acquitting him of a count relating to it.
Lord Mance agreed that it was undesirable that a defendant should be charged only with an offence of conspiring to import heroin, but that the Crown should in order to prove that offence adduce extensive evidence of his having a pre-existing distribution network for the transportation and distribution of cannabis, and that the judge should then be invited to make a confiscation order on the basis of the benefit made and proceeds received from the cannabis dealings proved to his satisfaction by such evidence.
Lord Rodger further criticised the judge’s decision not to apply the statutory assumptions in the appellant’s case as the requirement in section 4(2) to apply the assumptions bound the court. However, he concluded that the failure to observe the provisions of section 4(2) and (4) was probably one of form rather than of substance.
After the dismissal of his appeal by the House of Lords, Briggs-Price lodged an application with this Court on 21 October 2009 under Article 34 of the Convention, no. 59494/09. Notice was given of that application to the respondent Government on 21 October 2011. Further questions were put to the parties on 9 July 2013. The case is still pending before the Court.
COMPLAINTS
The applicant complains under Art 6 § 1 of the Convention that there has been a violation of his right to a fair hearing because, objectively, there was a real risk of bias such that the confiscation proceedings were not conducted by an independent and impartial tribunal.
Under Art 6 § 2 the applicant further complains that the application to his case of the assumptions contained in section.72AA(4) Criminal Justice Act 1988 amounted to the bringing of new ‘charges’ within the autonomous Convention meaning.
QUESTIONS TO THE PARTIES
1. Did Article 6 § 2 apply to the confiscation proceedings?
2. Are the assumptions set out in section 72AA of the 1988 Act compatible with Article 6 § 2 of the Convention insofar as the references to a “criminal lifestyle” and “general criminal conduct” would allow confiscation to take place on the basis of benefit derived from conduct possibly constituting criminal offences for which a defendant had not been charged or convicted?
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