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	England and Wales Court of Appeal (Criminal Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> Berry, R. v [1999] EWCA Crim 1971 (14 July 1999) URL: http://www.bailii.org/ew/cases/EWCA/Crim/1999/1971.html Cite as: [1999] EWCA Crim 1971, [2000] 1 Cr App R(S) 352

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IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2
		14th July 1999

LORD JUSTICE TUCKEY: On 12th December 1997 in the Liverpool Crown Court the appellant was sentenced to three years' imprisonment following his conviction for supplying 4.8 kilogrammes of cannabis resin.

The prosecution's case was based upon observations on the appellant's home. On 30th May 1996 Karl Whittaker was seen entering carrying a small package and later emerging with a bag which he placed in the boot of his car. Whittaker was followed and stopped and the bag was found to contain the cannabis in five large blocks. The appellant was not arrested until September 1996. He made no comment in interview and denied the offence at trial.

On 25th June 1998, following a five day enquiry under the Drug Trafficking Act 1994 ("the Act"), the trial judge, His Honour Judge Crompton, made a confiscation order in the sum of £68,706.54. This was the amount by which the judge found the appellant had benefited from drug trafficking. His realisable assets were larger. The benefit included £34,055 which at trial was agreed to be the street value of the drugs. This was based upon the evidence of the Crown's expert who said:

"Cannabis is commonly sold at street user level in small polythene bags or wrapped in cling film on average for £7 per gramme. If controlled drugs are purchased in bulk the price reduces."

At the Drug Trafficking Act inquiry the appellant, who continued to deny the offence, contended that as it was the Crown's case that he supplied the cannabis in bulk for onward distribution he was acting as a wholesaler and therefore he had only benefited to the extent of the wholesale price and not the retail or street price of the drugs. In the course of the inquiry the officer in the case agreed that the wholesale value of the drugs was substantially less than the street value, but he could not say by how much.

Mr Nichol, counsel for the appellant then as now, submitted to the judge that as there was no evidence of what the wholesale value was, no benefit had been shown, so the £34,055 should not have been included in the confiscation order. The judge rejected this contention saying:

"In my view, in the absence of any other evidence I am entitled to take the view that he has benefited from drug trafficking in that sum and therefore I do rule that he has benefited to the sum of £34,055."

The appellant appeals with the leave of the full court from this part of his decision.

The relevant statutory provisions are contained in the first seven sections of The Act. By section 2(2) if the court is to make a confiscation order it must first determine whether the defendant has benefited from drug trafficking. Section 2(3) says that:

"For the purposes of this Act a person has benefited from drug trafficking if he has at any time...received any payment or other reward in connection with drug trafficking carried on by him..."

If the court decides that the defendant has benefited, the court has to determine and then order to be paid "the amount to be recovered". This is the amount which the court has assessed as the value of the defendant's proceeds of drug trafficking, if that is less than his realisable assets, or the amount of his realisable assets if it is more. The standard of proof required to determine any question under The Act is the civil standard.

Section 4 says how the proceeds of drug trafficking are to be assessed. Thus:

"4(1) For the purposes of this Act-

(a) Any payments or other rewards received by a person at any time...in connection with drug trafficking carried on by him... are his proceeds of drug trafficking; and

(b) The value of his proceeds of drug trafficking is the aggregate of the values of the payments or other rewards.

(2) Subject to subsection (4)...below, the Crown Court shall, for the purpose -

(a) of determining whether the Defendant has benefited from drug trafficking, and

(b) if he has, of assessing the value of his proceeds of drug trafficking,

make the required assumptions.

(3) The required assumptions are -

(a) that any property (defined by the Act to include money) appearing to the court -

...

(ii) to have been transferred to (the Defendant) at any time since the beginning of the period of six years ending when the proceedings were instituted against him, was received by him...as a payment or reward in connection with drug trafficking carried on by him,

(b) that any expenditure of his since the beginning of that period was met out of payments received by him in connection with drug trafficking carried on by him."

Subsection (4) says that the court shall not make any required assumption if it is shown to be incorrect in the defendant's case or there would be a serious risk of injustice if the assumption was made.

Section 6 deals with how realisable assets are to be assessed. Section 7 deals with the value of property. Thus:

"7. (1)...For the purposes of this Act the value of property (other than cash) in relation to any person holding the property is the market value of the property...

(2)...references in this Act to the value at any time...of any payment or reward are references to...the value of the...payment or reward to the recipient when he received it..."

These are not easy provisions to follow but in a case of supply such as this any payment or other reward received by the supplier for the drug at the time he supplies it would obviously be the proceeds of drug trafficking. This can be determined under section 4(1)(a) without recourse to the assumptions. The other approach, relying on the assumption in section 4(3)(b), is to say that the drugs had been purchased out of payments received by the defendant in connection with drug trafficking carried on by him. In this case the proceeds of the drug trafficking are the amount paid by the supplier for the drugs (his "expenditure" to use the language of the section). That was how the court proceeded in R v Dore (1997) 2 Cr.App.R (S), 152 where the appellant pleaded guilty to possessing cocaine with intent to supply. Under the section 4(3)(b) assumption it was held that he must have paid £10,800 for the drugs. This was therefore the value of his proceeds from drug trafficking.

Mr Nichol suggests a third approach which is to say that the drugs are "property transferred to the defendant" so, based on the assumption in section 4(3)(a) they are to be treated as a payment or reward in connection with drug trafficking. The value of the payment or reward (the drugs) would be the value to the recipient when he received it (section 7(2)). We agree that in some cases in which the defendant is found in possession of drugs and the evidence does not suggest that he bought them, it will be necessary to consider under the section 4(3)(a) assumption whether they have been transferred to him as a payment or reward for earlier drug trafficking. It may be that a defendant has received drugs by way of barter or reward or payment in kind. It will then be necessary to decide how the drugs should be valued for the purpose of valuing the defendant's benefit. It is clear from Dore that for the purpose of assessing realisable assets, drugs in the defendant's possession must be valued at nil because they have no market value. However, we observe without deciding that it does not necessarily follow that the same would apply when considering the antecedent question of valuing the defendant's benefit. It is not necessary to decide this point because this is obviously not a case where the section 4(3)(a) assumption was or should be made. The drugs had been supplied by the appellant. The obvious inference was that he had been paid for them (the first approach). If he still had them it would have been more likely than not that he had bought them and so the section 4(3)(b) assumption would have been made (the second approach).

But whichever of these two approaches is adopted in this case the court was still faced with the problem of assessing the value of the appellant's proceeds of drug trafficking in the absence of any evidence from him as to what he paid or received from the drugs or the circumstances in which he came to supply them.

Surprisingly this problem has not been authoritatively resolved in any case which we have been able to find.

In R v Butler (1993) 14 Cr.App.R (S) 537 the court was concerned with an appellant who was found in possession of drugs with intent to supply which had a street value of £8,000. He had purchased them for less and argued that the purchase price was the value of his benefit and not the street value. Of this point Mr Justice Popplewell giving the judgment of this court said:

"That has not been pursued before us, and it has in our judgment no merit."

Later in the judgment the court said that the price paid for drugs held by a drug trafficker may be a payment or other reward if earlier drugs had been sold and the later drugs purchased, but as that had not happened in that case the confiscation order should not have been made. Other than in the passing reference which we have quoted the court did not consider how it might value a payment or reward in the form of drugs.

Most of the text books on this subject do not discuss this problem either. But in the Drug Trafficking Act 1994 (3rd Edition) by Rudi Fortson the following passage appears:

"How, then, does the court assess the value of a controlled drug which was received by a defendant as a payment or reward? One solution is to assess its potential value if sold illegally. It is imprudent always to look to the street value of the drug because that figure is usually based on the drug being broken down and sold in the smallest units encountered at street value.

Much may depend on the quality and quantity of the drug received by the defendant and his position and role in the enterprise. If the amount of the drug is small then its street value may be a meaningful basis upon which to determine its value in the hands of the defendant. If the amount of the drug is large, or substantial, then the defendant is unlikely to sell it in small units at street level. There will be cases when it is much more realistic to look to the wholesale value of the drug."

This discussion assumes that the court is assessing the value of the drugs under the section 4(3)(a) assumption but the passage also suggests how the court might assess the value of a payment or other reward received for the drugs under section 4(1)(a) in a case such as this.

So we return to the instant case bearing in mind that it is generally for the Crown to bring the case within the statutory criteria and prove their case and that there are no assumptions about value as such.

In his submissions Mr Nichol accepted that the evidence showed that the appellant had benefited from drug trafficking but in the absence of evidence as to the wholesale value of the drugs the court could either have ignored the value of the drugs altogether for the purpose of its assessments or adjourned the case to see if the parties were able to agree the wholesale value, failing which to enable the Crown to call evidence of this value. As the Crown were on notice of the point the judge, he submits, should have gone for the first of these options. He adds that the difficulty about the other option is that in the absence of evidence from the appellant the court would not know the circumstances in which he came to supply the drugs. He might have been a warehouseman, a courier or might otherwise have been acting under orders from another.

This last submission vividly illustrates the problem which the court faces where the defendant chooses to say nothing. If he was a warehouseman, a courier or some other minion he might have received very much less than the value of the drugs for his services and would by definition not have bought them. Conversely he might have supplied the drugs to a warehouseman, a courier or a minion to enable them to be sold for his benefit at street value.

Mr Nichol submits that in this case the only possible inference from the evidence and the jury's verdict was that the appellant had supplied the drugs in bulk. He does not suggest that it should be inferred that the appellant was a warehouseman, a courier or some other minion. In other words he was supplying for his own account and the assessment of what he was paid or received fell to be made on this basis. This is a realistic approach. A defendant who chooses to say nothing cannot complain if legitimate inferences are drawn against him. This was clearly a legitimate inference which the judge could have drawn even if Mr Nichol had argued for some other conclusion.

But can the judge's assessment of the value of the proceeds of this supply be justified? We think it only can be if it was open to him to conclude that the appellant had received payment of the street value or some other reward of equivalent value for supplying the drugs as he did. This is what is contemplated by section 4(1)(a) and is the subsection of section 4 which the judge was obviously applying. He could have proceeded on the section 4(3)(b) assumption but that would have yielded a lesser amount since this would be the amount paid by the appellant as opposed to the amount received by him for the drugs.

It is important to note that section 4(1)(a) speaks of payments or other rewards received. Mr Geey, counsel for the Crown, submitted that a prospective reward was within the subsection. We cannot accept this submission. The past tense is clearly used. This shuts out one possible inference on the facts of this case which is that the appellant supplied the drugs in order for them to be sold by others for his benefit at street value or to be warehoused for him until he could sell them himself at such value. In neither case would street value or its equivalent have been received, although in that case the appellant's expenses of selling in such circumstances would not fall to be deducted (see R v Banks (1997) 2 CrAppR (S) 110).

So the only way in which the judge's conclusion can be justified is if it was open to him to infer that the appellant had actually received street value or its equivalent. We think it was not. Whilst the judge could have inferred that the appellant sold to those who were to sell at street value, so he was the last in the line of wholesalers if there were more than one, he could not have inferred that the appellant was paid street value because otherwise those to whom he supplied would have made no profit. That cannot have been the case.

It follows that we do not think the judge's decision can stand. However, as it is clear that the appellant did receive payment or reward for his supply of the drugs, it would be quite wrong to ignore this altogether. We reject Mr Nichol's submissions to the contrary. We have the power to vary the order which the judge made. We think we should do so since if the matter was remitted to the judge for reconsideration (which is the alternative) he is unlikely to be in a better position than he was when he heard the matter and we are now. We bear in mind also that this DTA inquiry has lasted for five days already and its cost.

The judge was not without evidence of value. He had evidence of the street selling price. The absence of evidence from the appellant did not require him either to find that this was what the appellant had received or to fold his hands and make no finding about what his receipts had been. Some discount from the street value which was more than minimal fell to be made to reflect the fact that the appellant was probably selling wholesale. On the evidence to which we have referred and in the absence of any evidence on the topic from the appellant, we think the judge would have been justified in making a 20 per cent discount. That is a substantial discount. If it is less than the actual discount in this case the appellant can hardly complain.

We should make it clear that we are not saying that if this point arises in any other case 20 per cent is the appropriate discount. All we are saying is that on the facts of this case we think this is the right amount. We anticipate that in most cases the Crown should be in a position where its case is that the defendant has supplied in bulk to give the same kind of evidence of the likely price he would have obtained as it did in this case as to the likely price at street value. The defendant may seek to rebut it if he wishes either by his own evidence or by the evidence of those with experience of the illicit market.

It follows that we will allow the appeal to the extent of reducing the confiscation order by £6,811 (that is 20 per cent of £34,055), in other words, to a total of £61,895.54. To that extent this appeal is allowed.

MR NICHOL: My Lord, there is an application for a defendant's costs order. Costs out of central funds. The court has power to make that under section 16 of the Prosecution of Offences Act 1985. The court has a discretion to make that. There is no guidance as to how that discretion would be exercised but in my submission the costs order normally follows the event and since the court has allowed the appeal I would ask for a costs order.

LORD JUSTICE TUCKEY: Yes. Just remind me of the provision. Where is it in Archbold?

MR NICHOL: It is at Chapter 6, paragraph 5, on page 737 of the current edition. The particular section is section 16(4)(c).

LORD JUSTICE TUCKEY: Yes. What is the position so far as his legal aid is concerned? Was he legally aided for the DTA inquiry?

MR NICHOL: He was legally aided for the DTA inquiry in the lower court. I make no application in respect of that. The position at this court is somewhat confused because initially when the application for leave was made to the full court the defendant was not legally aided.

LORD JUSTICE TUCKEY: Yes, because leave had been refused.

MR NICHOL: Yes. He funded that application privately but at that application an order was made granting him legal aid. That was the order of the full court on 14th May 1999 and that covered the application for leave as well as the hearing.

LORD JUSTICE TUCKEY: As well as this hearing. What is not covered by that order?

MR NICHOL: I hesitate to interrupt but there was on the last occasion that I was before your Lordship, on 28th June 1999, a curious note for the full court which is with, I presume, your Lordships' papers.

LORD JUSTICE TUCKEY: I am not sure it was. I remember now that you referred to it.

MR NICHOL: It says that the appellant had been unable to satisfy the Registrar as to his eligibility for legal aid and therefore it seems he was not legally aided. That took me by surprise; I was informed of it five minutes before the hearing. That, as I understand it, remains the position.

MR JUSTICE HUGHES: So entitled to legal aid; has not made the necessary declaration, or not satisfactorily, as to his means and therefore is without. Is that it?

MR NICHOL: Yes, as I understand it his solicitors, my instructing solicitors, furnished the details to the Registrar. The Registrar said he was not satisfied with those details.

MR JUSTICE HUGHES: Yes.

LORD JUSTICE TUCKEY: Can the Crown help?

MR AGEROS: My Lord, it may be that I cannot assist greatly on this. I have spoken to Mr Geey, but I certainly do not know the detail of the appeal or anything relating to the costs.

LORD JUSTICE TUCKEY: This is not something with which the Crown would be concerned anyway.

Mr Nichol, if there is no legal aid and we do preface it by that and we will assume that there is not -- because we are not going to make an order which decides which public purse it comes out of -- but if there is none then we will make a defendant's costs order for the appellant's costs, both of the hearing before the full court and the hearing before us, to be paid out of central funds.

MR NICHOL: I am obliged.