Carass, R v [2001] EWCA Crim 2845 (19th December, 2001)

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England and Wales Court of Appeal (Criminal Division) Decisions

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URL: http://www.bailii.org/ew/cases/EWCA/Crim/2001/2845.html
Cite as: [2002] 1 WLR 1714, [2001] EWCA Crim 2845

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Carass, R v [2001] EWCA Crim 2845 (19th December, 2001)

		Neutral Citation Number: [2001] EWCA Crim 2845
		Case No:2001/4788/S3

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
INTERLOCUTORY APPEAL
Under section 9(11) Criminal Justice Act 1987

Royal Courts of Justice
Strand,
London, WC2A 2LL

19 December 2001

B e f o r e :

LORD JUSTICE WALLER
MR JUSTICE ROUGIER
and
MR JUSTICE STANLEY BURNTON
____________________

REGINA

- and -

Clive Louden CARASS

____________________

(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)

____________________

Christopher M Batty and Guy A Kearl (instructed by CPS Northallerton for the Crown)
John Lodge and Nicholas Johnson (instructed by Hutchinson & Buchanan 77 North Street Ripon HG4 1DS for the Appellant)
James Eadie (instructed by Legal Services Group 10 Victoria Street London SW1H ONN for the Department of Trade and Industry)
____________________

HTML VERSION OF JUDGMENT
AS APPROVED BY THE COURT
____________________

Crown Copyright ©

Lord Justice Waller :

The appellant is to face trial at Teesside Crown Court in February 2002 before His Honour Judge Bowers. He has been charged under two indictments the first containing a count alleging conspiracy to defraud the creditors of a company ABS Leeming Ltd (ABS). On that indictment Michael Williamson and Timothy Horner are co-defendants. On the second indictment there are four counts alleging the concealing of debts of ABS in anticipation of winding up, contrary to section 206(1)(a) of the Insolvency Act 1986.

On 13 August 2001 Judge Bowers initially ruled that the two indictments should be joined. He was then asked to rule on severance. The basis on which an application for severance had been made was that, in relation to any offence charged under section 206(1)(a) of the Insolvency Act 1986, by section 206(4) it is provided:

“(4) It is a defence -

(a) for a person charged under paragraph (a) or (f) of subsection (1) …. to prove that he had no intent to defraud, ….”.

The argument in favour of severance was that a jury would be confused by having to consider the conspiracy count without any reverse burden provision at the same time as four counts under section 206 in relation to which it was a defence for the appellant to prove no intent to defraud. As will appear however the hearing at which the judge made the above ruling was in reality designed to bring up before this court the question whether section 206(4) was incompatible with Article 6 of the European Convention on Human Rights.

Jurisdiction

The first question that arises is whether this court has any jurisdiction to entertain this appeal. As already indicated the Crown wished to join all counts in one indictment. The appellant’s advisers seem to have taken the view that if section 206(4) was incompatible with Article 6, that would provide an answer to those counts so far as the appellant was concerned. The lawyers acting for the appellant recognised that Judge Bowers had no jurisdiction to make declarations of incompatibility. Their aim was to devise a basis on which such a declaration might be made by the Court of Appeal. The prosecution also seem to have been persuaded by the validity of that course and Judge Bowers was also prevailed upon to assume the validity of that course.

Unfortunately, two fundamental errors were being made. It is possible that they would not have been made if more attention had been paid to the decision of the House of Lords in R v Lambert [2001] 3 WLR 206 which it seems had been brought to the attention of all but only a short time prior to the hearing.

The first fundamental error was to fail to appreciate that any declaration of incompatibility could make no difference so far as the appellant was concerned. Section 4(6) of the Human Rights Act 1998 (HRA) preserves in being the provision in relation to which such a declaration is made pending legislative change and declares such a declaration not to be binding on the parties to the proceedings in which it is made. Thus, as Lord Hobhouse recognised in R vDPP Ex p Kebilene [2000] 2 AC 326 at 395G-H:

“… irremediable incompatibility would not assist [the appellant in that case].”

The second fundamental error was not to have appreciated the possibility of reading down section 206(4) in reliance on section 3 of the HRA as the House of Lords in Lambert had done in relation to sections 28(2) and (3) of the Misuse of Drugs Act 1971. An appreciation of that possibility would have involved the judge considering the incompatibility of section 206(4) with Article 6(2) of the Convention, not for the purpose of making any declaration of incompatibility (in relation to which of course he had no jurisdiction) but in relation simply to construing section 206(4).

Thus it was that both sides proceeded on the basis that the judge should not consider any compatibility question and that a declaration of incompatibility in the Court of Appeal would assist the appellant in this case. Thus it was that the lawyers on each side gave consideration to the possibility that if a trial was allowed to proceed, and if the jury convicted the appellant on counts under section 206(1)(a), the appellant would be able to come to the Court of Appeal and get the convictions quashed. That would involve a substantial expenditure of public money which would be all for nothing if that were the correct view.

It was in those circumstances that consideration was given to the way in which the question whether section 206(4) was incompatible might be considered by the Court of Appeal prior to the trial. The answer appeared to be that if the judge would hold a preparatory hearing under section 7 of the Criminal Justice Act 1987, that would enable an appeal to be brought to the Court of Appeal under section 9 and allow the Court of Appeal to consider the compatibility or incompatibility of the relevant section.

Unfortunately, proper consideration was not given to the nature of a preparatory hearing and to the question whether, and in what circumstances, the Court of Appeal had jurisdiction to entertain an appeal. Section 7 of the Criminal Justice Act 1987 provides as follows:

“7. Power to order a preparatory hearing

(1) Where it appears to a judge of the Crown Court that the evidence on an indictment reveals a case of fraud of such seriousness or complexity that substantial benefits are likely to accrue from a hearing (in this Act referred to as a “preparatory hearing”) before the jury are sworn, for the purpose of -

(a) identifying issues which are likely to be material to the verdict of the jury;

(b) assisting their comprehension of any such issues;

(c) expediting the proceedings before the jury; or

(d) assisting the judge’s management of the trial,

he may order that such a hearing shall be held.

(2) A judge may make an order under subsection (1) above on the application either of the prosecution or of the person indicted or, if the indictment charges a number of persons, any of them, or of his own motion.”

Section 9 of the Criminal Justice Act 1987 provides:

“The preparatory hearing

9. (3) He may determine

(b) any question as to the admissibility of evidence; and (c) any other question of law relating to the case.

(11) An appeal shall lie to the Court of Appeal from any order or ruling of a judge under subsection (3)(b) or (c) above, but only with the leave of the judge or of the Court of Appeal.”

Thus it is only if the hearing is for one of the purposes identified in section 7(1) that a preparatory hearing can be convened. Furthermore, it is only if a point on admissibility of evidence or a point of law has been determined that the Court of Appeal has any jurisdiction to entertain an appeal.

The judge was persuaded by both sides that a preparatory hearing would assist in identifying issues which were likely to be material to the verdict of the jury. Both sides rightly submitted that he (the judge) had no jurisdiction to make a declaration of incompatibility. Argument then proceeded on the basis that, as submitted by counsel for both sides, section 206(4) imposed a legal burden of proof on the accused and not simply an evidential burden. The judge expressed his agreement with that view and did not consider whether, if that would make the section incompatible with Article 6 of the ECHR, that should lead to the section being “read down”, following the House of Lords in Lambert.

On the assumption that the judge was making that section 206(4) imposed a legal burden, the judge decided that the counts should not be severed, albeit he did express some anxiety about compatibility and he indicated that he would keep the matter under review insofar as the effect of section 206(4) might be to compel the appellant to give evidence.

The judge gave leave to appeal. The appellant appeals to this court asking for the decision of the judge to be reversed but in addition asking the Court of Appeal to declare that section 206(4)(a) is incompatible with the Convention relying on Lambert (supra), and that it would be unfair for the appellant to be tried on those counts. The request for a declaration of incompatibility has led to the Department of Trade and Industry seeking to intervene, and indeed they appeared before us represented by Mr James Eadie.

The Secretary of State, and the Crown, represented by Mr Kearl, (possibly prodded by the intervention of the Secretary of State), took the jurisdiction point. The submission in short was that in reality there was no “preparatory” hearing since the provisions of section 7 were not complied with, and, in any event, it was submitted that the judge had not determined any question of law and thus the Court of Appeal had no jurisdiction to entertain an appeal. In addition, and in support of that point, both the Crown and the Secretary of State laid emphasis on the fact that the one thing that the judge could have done but had not done was to consider whether, by virtue of section 3 of the HRA, section 206(4) should be read down so as to impose simply an evidential burden, and the compatibility of section 206(4) on that basis.

It was however accepted that a preparatory hearing would have been permissible under section 7 for that question of law to have been decided by the judge. If the judge had held that section 206(4) was compatible with Article 6 then the defence could have appealed that point in order to argue that the section should in fact be read down. If the judge had decided that the section should be read down then the prosecution could have appealed that point to the Court of Appeal.

What however is argued with great force by the prosecution, and by the Secretary of State, is that there simply is no determination of the only relevant point of law which could have been brought to this court. Thus, it is submitted, this court has no jurisdiction to entertain any appeal.

It is of course of great importance that those representing defendants, those representing the Crown, and judges, appreciate that a preparatory hearing cannot be conjured up and used as a device to enable the Court of Appeal to look at any matter at an interlocutory stage. R v Claydon & ors (CAT 13/6/01) particularly paragraphs 16-40 was a case dealing with equivalent provisions, sections 28-38 of the Criminal Procedure and Investigation Act 1996. It summarises the relevant authorities. It found there was jurisdiction in the particular case but, as it states in paragraph 16:

“It is well established by a line of authority in this court that for there to be an interlocutory appeal to this court there must not also be a ruling as to admissibility of evidence or law made at the hearing held pursuant to the judge’s order that there be a preparatory hearing, but the ruling must also be for a purpose covered by the purposes set out in section 7(1) or 29(2) of the applicable Act. If the ruling is not for such a purpose, it does not fall within the preparatory hearing and there is no appeal under section 9(11) or 35(1)”. (see also R v M (CAT 5/10/01 paragraphs 7 and 17).

A preparatory hearing can only be held if section 7 (or its equivalent 29(2)) applies and no appeal will lie to the Court of Appeal unless the judge has determined a question of law or a question relating to the admissibility of evidence. Furthermore, it is most unsatisfactory for this court in an appellate position to be considering a point which was not argued in the court below and in relation to which thus it has no reasoned judgment of the judge to consider. Whether or not technically it might be possible to argue that this court had jurisdiction, there is clearly a powerful argument that the appropriate course is to send the matter back so as to emphasise the importance of addressing the above points.

On the other hand, if it can be seen that the judge was actually right, albeit for the wrong reasons, to rule that the conditions of section 7 were met, and if it could be seen that in fact the judge determined a question of law which should have been conveniently decided at an early stage of the trial, and which will affect the way the jury are to be directed at the trial, then despite the inconvenience of not having any reasoned judgment on the point, the Court of Appeal should not, it seems to us, be too reticent to find that it has jurisdiction. A decision to the contrary will simply mean the matter going back to the judge for re-argument, a decision from that judge, and a return to the Court of Appeal some months hence with the obvious delay to the trial process, in relation to which a date is at present fixed for February 2002.

The question whether section 7 applied was in fact considered (see p. 4A-D of the transcript). Furthermore this was a case in which a preparatory hearing should have been held. There are cases where, if the question is whether someone’s human rights have been or may be infringed, it will be better to wait until the end of the trial when the extent to which a defendant has been disadvantaged can be fully assessed. Lord Hope in R v DPP Ex p Kebilene at 387D clearly favoured that course so far as the provisions under consideration in that case were concerned But, if the question in issue relates to the proper interpretation of a section and as to the way in which a jury is to be directed, it seems to us that on the whole it must be better to clarify that position earlier rather than later.

Furthermore we think we can see, although no proper argument took place in relation to it, that the judge did in fact find that section 206(4) imposed a legal or persuasive burden, a factor which troubled him. Thus he said, in response to a submission by Mr Batty for the prosecution that the defence were right in their submissions in relation to the burdens and standards of proof i.e. that it was a legal/persuasive burden “Yes that is obviously right”. (see transcript 12C-D). He furthermore at 13C said to Mr Batty “I mean you accept do you that it is a legal burden under section 206?” Mr Batty said “It is” and the judge said “It looks to me as if it is a legal burden”, and then further “I must say it still looks to me as if it is. It is not an evidential burden, but it seems to me that it is likely to fall foul of what Lambert says but yes. Have you anything else to say Mr Lodge about this?” In the result the judge was ruling on severance but also ruling as to the way he would have to direct the jury at the trial. The idea that he would keep the matter under review would not, we think, have been likely to assist. If his view was that the primary legislation required him to direct the jury that the legal/persuasive burden lay on the defendant, then section 6(2)(a) of the HRA would apply so as strictly to require him so to direct the jury, even though he might think that the defendant was not getting a fair trial in the result.

Finally, Mr Lodge for the appellant in this case before this court, appreciating it is fair to say which way the tide was running so far as his argument was concerned, did submit that in the alternative to any argument on compatibility he was contending that section 206(4) simply imposed an evidential burden by virtue of the application of section 3 of the HRA in reliance on Lambert.

We believe the position can be properly summarised as follows. First, what happened in this case should not have happened. It is thus important to send out a message that the provisions of sections 7 and 9 of the Criminal Justice Act 1987 (and the equivalent provisions in the Criminal Procedure and Investigation Act 1996) are sections to be carefully borne in mind when consideration is given as to whether it is appropriate to have a preparatory hearing and as to whether it is appropriate for the matter to come to the Court of Appeal. Second, as it happens, it was appropriate in this case to have a preparatory hearing and a decision was taken to have one. Third, as it happens, a point of law was determined, and although it was not properly argued the Court of Appeal does thus have jurisdiction. Fourth, although it is deeply unsatisfactory for an appellate court to consider the decision of a lower court without the assistance of a reasoned decision on that point, in circumstances where a criminal trial is about to take place, (in this case in February 2002), and where all sides were prepared to argue the point that needed to be decided, it would not be right to send this matter back to the judge to be re-argued with the consequence of delay which would take place before the matter came back to this court.

We thus consider we have jurisdiction and that we should go on to consider the critical question in this case.

Construction

It is convenient at the outset to set out the provisions with which we are concerned. Section 206 provides:

“(1) When a company is ordered to be wound up by the court, or passes a resolution for voluntary winding up, any person, being a past or present officer of the company, is deemed to have committed an offence if, within 12 months immediately preceding the commencement of the winding up, he has –

(a) concealed any part of the company’s property to the value of Ј120 or more, or concealed any debt due to or from the company, or ….

(4) It is a defence –

(a) for a person charged under paragraph (a) … of subsection (1) …. to prove that he had no intent to defraud, …”.

Article 6(2) of the Convention brought into effect by the HRA provides:-

“Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law”.

The argument is that subsection 4 of section 206 is inconsistent with Article 6(2). It became common ground during the hearing of the appeal that if section 206(4) was inconsistent with Article 6(2) then the subsection could be read down in reliance on section 3 of the HRA which provides as follows:

“(1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.”

In R v Lambert the House of Lords, despite their ruling on retrospectivity, went on to consider whether sections 28(2) and (3) of the Misuse of Drugs Act 1971 were incompatible with Article 6(2) and whether if so the same should be read down pursuant to section 3(1) of the HRA. Sections 28 (2) and (3) provide as follows:

“(2) Subject to subsection (3) below, in any proceedings for an offence to which this section applies it shall be a defence for the accused to prove that he neither knew of nor suspected nor had reason to suspect the existence of some fact alleged by the prosecution which it is necessary for the prosecution to prove if he is to be convicted of the offence charged.

(3) Where in any proceedings for an offence to which this section applies it is necessary, if the accused is to be convicted of the offence charged, for the prosecution to prove that some substance or product involved in the alleged offence was a controlled drug which the prosecution alleges it to have been, and it is proved that the substance or product in question was that controlled drug, the accused – (a) shall not be acquitted of the offence charged by reason only of providing that he neither knew nor suspected nor had reason to suspect that the substance or product in question was the particular controlled drug alleged; but (b) shall be acquitted thereof – (i) if he proves that he neither believed nor suspected nor had reason to suspect that the substance or product in question was a controlled drug; or (ii) if he proves that he believed the substance or product in question to be a controlled drug, or a controlled drug of a description, such that, if it had in fact been that controlled drug or a controlled drug of that description, he would not at the material time have been committing any offence to which this section applies.”

Albeit obiter having regard to their decision on retrospectivity, the Lords ruled that section 28(2) and (3) should be read as creating an evidential burden only. That involved reading the words “prove” and “proves” as meaning “giving sufficient evidence.” Lord Hutton dissented on this aspect. Lord Hutton took the view that the Crown in that case had justified the imposing of a persuasive or legal burden.

In the instant case it was common ground that section 206(4) on its normal construction would impose a legal burden. The question is whether by virtue of section 3 of the HRA and following Lambert the section should be read down so that the word “proved” means giving sufficient evidence.

There are two decisions of the House of Lords which need consideration. Obviously Lambert is one but the background to Lambert is the decision in R v D.P.P. Ex p. Kebilene.

Kebilene

That decision was concerned with whether consent to prosecute was amenable to judicial review and whether if it was, the decision should be declared unlawful because section 16A of the Prevention of Terrorism (Temporary Provisions) Act 1989 reversed the onus of proof, that reversal being alleged to be a breach of Article 6(2) of the Convention. The submission in that case was that despite the relevant provisions of the HRA not being in force at the time, a breach of Article 6(2) was relevant to the decision making of the DPP. An issue raised was thus the compatibility of section 16A with Article 6(2).

Lord Steyn, with whose speech Lord Slynn agreed, did not deal with the compatibility point having regard to their views on other aspects of the case.

Lord Cooke was of the view that it was doubtful whether Article 6(2) could be watered down to an extent that would leave section 16A unscathed, but took the view that it was likely, once the HRA came into force, that section 3 of that Act would enable section 16A to be read as imposing only an evidential burden (see p.373C-G).

Lord Hope examined the incompatibility argument in greater detail. First, and importantly, he said that if the burden on the accused was evidential only, then it would not be incompatible with Article 6(2) (see p.379B). Second, he examined the different classifications of a reverse burden provision. His categories were (1) “mandatory” where presumption of guilt is an essential element of what the prosecution must establish; (2) “discretionary” presumption of guilt as an essential element of what the prosecution must prove; and (3) provisions which contain an exemption or proviso which the accused must establish if he is to avoid conviction which is not an essential element, such as having a licence e.g. R v Edwards [1975] QB 27; [see pp.379-380].

Lord Hope also drew attention to the existence of the area of judgment where it will be appropriate for the court to defer to the considered opinion of the elected body on democratic grounds. [see p.381].

Lord Hope parted company with the Divisional Court on their view as to incompatibility. The Divisional Court had been of the view that a finding of incompatibility was inevitable. Lord Hope took the view that the balance had to be struck between competing interests of the individual and society and drew attention to the Convention jurisprudence. This supported the striking of a balance and showed that account may be taken of the problems that the legislation was designed to address. At p.386C he then said this:

“Mr Pannick suggested that in considering where the balance lies it may be useful to consider the following questions: (1) what does the prosecution have to prove in order to transfer the onus to the defence? (2) what is the burden on the accused – does it relate to something which is likely to be difficult for him to prove, or does it relate to something which is likely to be within his knowledge or (I would add) to which he readily has access? (3) what is the nature of the threat faced by society which the provision is designed to combat? It seems to me that these questions provide a convenient way of breaking down the broad issue of balance into its essential components, and I would adopt them for the purpose of pursuing the argument as far as it is proper to go in the present case.”

Ultimately, Lord Hope having pointed out the burdens imposed on the accused by section 16A which might be different depending on what was ultimately in issue at the trial, and having further dealt with the strong interest that there was in preventing acts of terrorism, felt that it would not be appropriate to resolve the balance in that case at the stage that the case had reached. He took the view it was likely to be better to resolve the matter after a trial.

Then finally on Kebilene it is helpful to quote a passage from the speech of Lord Hobhouse at p.397C so as to conveniently summarise the main Convention jurisprudence relied on and to demonstrate further that he too was of the view that a reverse burden provision, even if of the persuasive or legal kind, was not necessarily contrary to the Convention.

“There are further arguable points: whether section 16A is incompatible with the Convention and whether all the defendants would properly be described as “victims” of any breach of the Convention. That these are arguable points can be illustrated by reference to Bates v United Kingdom (Application No. 2628) (unreported), 16 January 1996, where the Commission declined to admit a complaint that section 5(5) of the Dangerous Dogs Act 1991 infringed the Convention even though it provided that:

“If in any proceedings it is alleged by the prosecution that a dog is one to which [the Act] applies, it shall be presumed that it is such a dog unless the contrary is shown by the accused by such evidence as the court considers sufficient; and … he has given … notice of his intention to do so …”

This made the mere allegation suffice to impose on the defendant in a criminal trial the burden of disproving the allegation. He was guilty unless he proved his innocence; he might be convicted on the civil burden of proof even though the court was not sure that he might not be innocent. However the Commission following earlier decisions of the court in Salabiaku v France (1988) 13 E.H.R.R. 379 and Hoang v France (1992) 16 E.H.R.R. 53 did not regard the provision as objectionable. The provision was of a type that fell within reasonable limits. It gave the defendant an opportunity to adduce evidence to disprove the allegation. The defendant had failed at his trial to take advantage of that opportunity.

This case and other similar cases decided under the Convention show that it is necessary to examine each case on its merits. There may be a justification for the terms in which the legislation is drafted even though on its face it would appear to be contrary to the Convention. Similarly, it is necessary to examine whether the relevant provision has in fact resulted in an injustice to the complainant. The last point ties in with the use in section 7(1) of the Human Rights Act of the term “victim”. Criminal statutes which in certain circumstances partially reverse the burden of proof are not uncommon nor are they confined to the United Kingdom. The judgments and decisions of the European Court of Human Rights and the Commission (account of which must be taken under section 2 of the Act) show that they are not necessarily incompatible with the Convention. Such a need to look beyond the bare words of the statute is also borne out by what Lord Woolf said in Lee Kwong-kut [1993] AC 951, 969 concerning the identification of the essential criminality which the prosecution must prove and the justification for requiring the defendant to prove that he comes within the exception to it. These are difficult concepts and, indeed, his approach may have been more stringent than is required under the European Convention. For myself, I am not presently persuaded that the approach advocated by Professor Glanville Williams in his article “The Logic of ‘Exceptions’” [1988] C.L.J. 261 is the right one. Similarly there are clearly arguable questions as to the breadth to be ascribed to the construction of statutes which will be required of the courts by section 3(1).”

Following the decision in Kebilene the HRA came into force. That is important because it brought into play section 3 of the HRA already quoted. It is furthermore of some interest that, as pointed out by Lord Steyn in Lambert,

“Responding to Ex p Kebilene Parliament enacted the Terrorism Act 2000 which in section 118(1) and (2) provides that the reverse onus of proof is satisfied if the person adduces evidence which is sufficient to raise an issue with respect to the matter unless the prosecution can prove the contrary beyond reasonable doubt.” [see paragraph 40].

That was also noted by Lord Hope in paragraph 92.

Lambert

It is in the above context that the decision in Lambert must itself be examined. We have already quoted the provisions of the Misuse of Drugs Act with which that decision was concerned. Lord Slynn having cited Salabiaku v France said that he inclined to the view that section 28(2) read alone would violate Article 6(2). However he found it unnecessary to finally resolve that matter and applied section 3(1) of the HRA so as to read the relevant provisions down in the way suggested by Lord Steyn.

Lord Steyn also referred to Salabiaku v France quoting the following paragraph:

“Presumptions of fact or of law operate in every legal system. Clearly, the Convention does not prohibit such presumptions in principle. It does, however, require the contracting states to remain within certain limits in this respect as regards criminal law … Article 6(2) does not therefore regard presumptions of fact or of law provided for in the criminal law with indifference. It requires states to confine them within reasonable limits which take into account the importance of what is at stake and maintain the rights of the defence.”

He then continues:

“This test depends upon the circumstances of the individual case. It follows that a legislative interference with the presumption of innocence requires justification and must not be greater than is necessary. The principle of proportionality must be observed.”

He then analysed the relevant sections of the Misuse of Drugs Act. He puts on one side the R v Edwards type of case where the onus placed on the accused is to prove that he has a licence or similar such authorisation. He quotes from Dickson CJC in R v Whyte (1988) 51 DLR (4^th) 481 in the Canadian Supreme Court in the following terms:

“The real concern is not whether the accused must disprove an element or prove an excuse, but that an accused may be convicted while a reasonable doubt exists. When that possibility exists, there is a breach of the presumption of innocence. The exact characterisation of a factor as an essential element, a collateral factor, an excuse, or a defence should not affect the analysis of the presumption of innocence. It is the final effect of a provision on the verdict that is decisive. If an accused is required to prove some fact on the balance of probabilities to avoid conviction, the provision violates the presumption of innocence because it permits a conviction in spite of a reasonable doubt in the mind of the trier of fact as to the guilt of the accused.”

Lord Steyn adopted the above reasoning and then said:

“In the present case the defence under section 28 is one directly bearing on the moral blameworthiness of the accused. It is this factor alone which could justify a maximum sentence of life imprisonment. In my view there is an inroad on the presumption even if an issue under section 28 is in strict law regarded as a pure defence.”

He then recognised the objective justification for some interference of the burden of proof in drug cases. Having so recognised however he said that that was not the end of the matter because of the principle of proportionality. He then stressed again:

“The burden is on the state to show that the legislative means adopted were not greater then necessary. Where there is objective justification for some inroad on the presumption of innocence the legislature has a choice. The first is to impose a legal burden of proof on the accused. If such a burden is created the matter in question must be taken as proved against the accused unless he satisfies the jury on a balance of probabilities to the contrary: 11^th Report of the Criminal Law Revision Committee, Evidence (General) (1972) Cmnd 4991, para 138. The second is to impose an evidential burden only on the accused. If this technique is adopted the matter must be taken as proved against the accused unless there is sufficient evidence to raise an issue on the matter but, if there is sufficient evidence, then the prosecution have the burden of satisfying the jury as to the matter beyond reasonable doubt in the ordinary way: para 138. It is important to bear in mind that it is not enough for the defence merely to allege the fact in question: the court decides whether there is a real issue on the matter: para 138. A transfer of a legal burden amounts to a far more drastic interference with the presumption of innocence than the creation of an evidential burden on the accused. The former requires the accused to establish his innocence. It necessarily involves the risk that, if the jury are faithful to the judge’s direction, they may convict where the accused has not discharged the legal burden resting on him but left them unsure on the point. This risk is not present if only an evidential burden is created.”

In the result he would have held that section 28 of the Misuse of Drugs Act 1971 was a disproportionate reaction to perceived difficulties facing the prosecution in drug cases. He then turned to the interpretative obligation by virtue of section 3 and found there was no difficulty in reading down the section so that the words “prove” and “proves” meant “adduce sufficient evidence”.

Lord Hope construed section 28 as imposing a persuasive burden if section 3 of the HRA were not in play [see paragraph 72]. He then raised as an important question whether a statutory provision which transfers the burden of proof to the accused can ever be compatible with Article 6(2) [see paragraph 73]. His conclusion was that a reverse burden provision even if imposing a legal or persuasive burden will not always be incompatible. [see paragraph 87]. Again Lord Hope cited Salabiaku v France and concludes in paragraph 88:

“…. The article 6(2) right is not absolute and unqualified, the test to be applied is whether the modification or limitation of that right pursues a legitimate aim and whether it satisfies the principle of proportionality: …. It is now well settled that the principle which is to be applied requires a balance to be struck between the general interest of the community and the protection of the fundamental rights of the individual. This will not be achieved if the reverse onus provision goes beyond what is necessary to accomplish the objective of the statute.”

In relation to sections 28(2) and (3) Lord Hope concluded that the practical effect of imposing an evidential burden and not a persuasive burden was likely in almost every case that can be imagined to be minimal. He then pointed out the change in the Terrorism Act 2000 since Kebilene. He then concluded that:

“It is not unreasonable to think that, if Parliament were now to have an opportunity of reconsidering the words used in section 28(2) and (3) of the 1971 Act, it would be content to qualify them in precisely the same way. …” [i.e. the way now adopted in the Terrorism Act 2000].

Thus he too would read the words to “prove” as if the words used were to “adduce sufficient evidence.

Lord Clyde said at paragraph 131 that he “should be slow to construe a criminal provision so as to impose a persuasive burden upon [the accused].” That would have led him, even without the assistance of section 3 of the HRA to construe section 28(2) as imposing simply an evidential burden. However he recognised that that approach ran counter to what was generally recognised as the proper construction in England, and thus he started from the premise that on a possible construction of section 28(2) it imposed a legal burden.

Lord Clyde thus too considered the European Court of Human Rights jurisprudence. In that context however he made this observation in paragraph 152:

“But the decision may have to turn upon the particular circumstances. The focus of attention paid by the European Court of Human Rights tends to be directed at the particular circumstances of the case before them. Considerations which have weighed with the court in deciding in particular cases that there was no infringement have included a consideration of the whole evidence and such matters as these: that while the accused was deemed liable for the offence, he had the opportunity to put extenuating circumstances before the court and was entitled to be acquitted if he succeeded in establishing a case of force majeure, unavoidable mistake, or necessity (Salabiaku v France 13 EHHR 379 and Hoang v France 16 EHRR 53), that the domestic courts had also identified in the case an element of intent, even although they were under no legal obligation to do so (Salabiaku), and that the courts had also made a careful discrimination between the two charges originally brought against the accused and acquitted him of one of them while convicting him on the other (Salabiaku). But it would be of little assistance for the future to decide the present case simply on its own particular facts. Some more general opinion ought to be possible.”

Then Lord Clyde ultimately carried out the balancing exercise and said this at paragraph 156:

“While it may be that offences under section 5 of the Misuse of Drugs Act 1971 may be described as regulatory they can lead to the most serious of consequences for the accused. Of course trafficking in controlled drugs is a notorious social evil, but if any error is to be made in the weighing of the scales of justice it should be to the effect that the guilty should go free rather than that an innocent person should be wrongly convicted. By imposing a persuasive burden on the accused it would be possible for an accused person to be convicted where the jury believed he might well be innocent but have not been persuaded that he probably did not know the nature of what he possessed. The jury may have a reasonable doubt as to his guilt in respect of his knowledge of the nature of what he possessed but still be required to convict. Looking to the potentially serious consequences of a conviction at least in respect of class A drugs it does not seem to me that such a burden is acceptable.

But I have no difficulty in finding the solution by an application of section 3 of the 1998 Act. It requires no straining of the language of section 28 to construe the references to proof as intending an evidential burden and not a persuasive one. Indeed, as I have already stated, it would be a construction to which I would in any event have inclined, even without the added compulsion of the 1998 Act.”

Lord Hutton would have held that the Crown had justified the imposition of a legal/persuasive burden. It is clear that what ultimately persuaded him was the evil of drugs. At paragraph 193 he said:

“Support for the appellant’s argument is to be found in the opinion of the Criminal Law Revision Committee in paragraph 140 of its 11^th Report, Evidence (General) (1972) (Cmnd 4991) that: “both on principle and for the sake of clarity and convenience in practice, burdens on the defence should be evidential only.” But in my opinion the threat of drugs to the wellbeing of the community and the peculiar difficulty of proving knowledge in such cases justifies an exception to the general principle advocated by the Criminal Law Revision Committee, and this was clearly the view taken by Parliament in enacting sections 5 and 28 of the Act.”

Analysis of the offence under section 206(1)(a)

The argument of Mr Eadie and Mr Kearl is that the important elements of the offence have to be proved by the prosecution. They are said to be (1) the winding up of the company; (2) that the person charged is or was an officer of the company; (3) that within 12 months preceding the winding up of the company that person (4) had concealed a debt due to the company. It is thus submitted that the ingredient of concealment puts the state of the defendant’s mind in issue. Thus, the submission is, the prosecution must prove deliberate hiding or concealment of the asset in question. The further submission is that section 206(4)simply gives a defendant an opportunity to show that despite deliberate concealment there was no intention to defraud.

Mr Eadie set out in paragraph 18 of his skeleton argument what he suggested had influenced their Lordships in Lambert. He submitted that the factor which had influenced Lord Steyn was that section 28 applied to offences which carried life imprisonment as a maximum penalty and that it was not necessary for the prosecution to prove actual knowledge on the part of the defendant that the article in his possession was in fact a controlled drug.

Lord Hope it was submitted was influenced by the fact that the prosecution would not need to prove that the defendant knew that the thing in his possession was a controlled drug.

Lord Clyde it was submitted was influenced by the fact that section 28 applied in cases where the accused faced a sentence of life imprisonment and might be convicted of the offence on the basis that he possessed a controlled rug, albeit that he might not know that the item in his possession was a controlled drug.

As forcefully as Mr Eadie and Mr Kearl presented their arguments we feel bound to reject them. In our view section 206(4) is certainly not in any way similar to a proviso or licence type exception exemplified by R v Edwards. The heading to section 206 is “Offences of fraud, deception etc”. In truth, albeit the onus is on the Crown to prove concealment of a debt, it is unrealistic to argue that an intent to defraud is not also an element of the offence and indeed an important element of the offence.

Furthermore, what we would glean from Lambert is that albeit it may be possible to justify imposing a legal or persuasive burden, the onus on those seeking to persuade the court that that is necessary in any case is a high one. Lord Steyn says that expressly and we believe that view to be consistent with all of the other speeches including Lord Hutton’s dissenting speech. Thus the proper approach has to be that if a reverse legal burden is to be imposed on an accused it must be justified and in particular it must be demonstrated why a legal or persuasive burden rather than an evidential burden is necessary. If one poses the third question of those suggested as appropriate by Lord Hope in Kebilene at p.386C quoted above “what is the nature of the threat faced by society which the provision is designed to combat?” – the nearest one gets to an attempt to meet that question is we believe in Mr Eadie’s skeleton argument at paragraph 22 where he says:

“There is obvious sense in, and justification for, this approach. It operates to make it for the defendant to prove matters which the prosecution would be highly unlikely to be able to know about and which it might be difficult, if not impossible, for them to rebut.”

We do not believe that what is said there justifies a persuasive burden rather than an evidential burden. With an evidential burden it will be for a defendant to produce some evidence that any concealment established against him was not with the intention to defraud. Common sense dictates that if concealment is proved the evidential burden will itself be quite a difficult burden for the defendant to surmount. If however he were to surmount it, then it would be less than satisfactory if he could still be convicted if the jury were not sure that he had intended to defraud. Nothing that we have seen demonstrates a justification for that being a possible result in some cases because of some “threat faced by society.” In the words of Lord Hutton, (the dissenter in Lambert), there is no threat which “justifies an exception to the general principle advocated by the Criminal Law Revision Committee ….”

Thus we would declare that the judge was wrong insofar as he felt obliged to direct the jury that section 206(4) imposed a persuasive burden on the defendant, the appellant in this case.

“We would declare that the burden is evidential only and it is therefore appropriate to read the section as follows:-

‘It is a defence for a person charged under paragraph (a) … of subsection (1) (under subsection (2) in respect of the things mentioned in either of those two paragraphs) to adduce evidence sufficient to raise an issue that had no intent to defraud, unless, if he does so, the prosecution proves the contrary beyond reasonable doubt’”.

I am instructed by the CPS and the DTI to inform the Court that there is no application to the Court to certify a point of law of general public importance or for leave to appeal to the House of Lords.

© 2001 Crown Copyright

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