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Expert evidence – updated Part 19 Criminal Procedure Rules 2015

(c) FreeFoto.comPart 19 of the Criminal Procedure Rules 2015 dealing with expert evidence in Crown Courts and Magistrates’ Courts in England & Wales has been updated with effect from 5 October 2015. For convenience the new materials are brought together in a single document here.

The Criminal Procedure Rules are in future to be referred to by the abbreviation CrimPR to distinguish them from the Civil Procedure Rules, see new rule 2.3.(2).

 

Expert evidence – guide to the amendments to the Rules

Part 19 (Expert evidence) is amended to include a new rule about an expert witness’ obligations to the court.  At the same time the Criminal Procedure Rules as a whole have been rearranged – the new Part 19 dealing with expert evidence previously appeared as Part 33 of the 2014 edition of the rules.

Rule 19.2 (Expert evidence; Expert’s duty to the court) now requires an expert witness, as part of her or his duty to the court, to help the court in some of the same ways as a party to the case, by complying with directions (for example, as to the time by when a report must be served), and by warning the court of any significant failure to act as required by a direction (for example, by warning of substantial delay in the preparation of a report).

In response to observations by the Court of Appeal in its judgment in R v Reynolds, R v Rosser [2014] EWCA Crim 2205, and in response to reports by Rule Committee members of increasing difficulties in obtaining expert reports within the same times as before, the Committee agreed that an expert’s implicit duty to the court to give a realistic estimate of the time within which expert evidence can be prepared, and to adhere to that estimate, should be made explicit.

 

Expert evidence – the Rules as amended

When this part applies
19.1.
(1) This Part applies where a party wants to introduce expert opinion evidence.

(2) A reference to an ‘expert’ in this Part is a reference to a person who is required to give or prepare expert evidence for the purpose of criminal proceedings, including evidence required to determine fitness to plead or for the purpose of sentencing.

Expert’s duty to the court

19.2.

(1) An expert must help the court to achieve the overriding objective —

    (a) by giving opinion which is —
      (i) objective and unbiased; and
      (ii) within the expert’s area or areas of expertise; and
    (b) by actively assisting the court in fulfilling its duty of case management under rule 3.2, in particular by —
      (i) complying with directions made by the court, and
      (ii) at once informing the court of any significant failure (by the expert or another) to take any step required by such a direction.

(2) This duty overrides any obligation to the person from whom the expert receives instructions or by whom the expert is paid.

(3) This duty includes obligations —

    (a) to define the expert’s area or areas of expertise —

      (i) in the expert’s report, and
      (ii) when giving evidence in person;
    (b) when giving evidence in person, to draw the court’s attention to any question to which the answer would be outside the expert’s area or areas of expertise; and
    (c) to inform all parties and the court if the expert’s opinion changes from that contained in a report served as evidence or given in a statement.

Introduction of expert evidence

19.3.
(1) A party who wants another party to admit as fact a summary of an expert’s conclusions must serve that summary —

    (a) on the court officer and on each party from whom that admission is sought;
    (b) as soon as practicable after the defendant whom it affects pleads not guilty.

(2) A party on whom such a summary is served must —

    (a) serve a response stating —
      (i) which, if any, of the expert’s conclusions are admitted as fact, and
      (ii) where a conclusion is not admitted, what are the disputed issues concerning that conclusion; and
    (b) serve the response —
      (i) on the court officer and on the party who served the summary,
      (ii) as soon as practicable, and in any event not more than 14 days after service of the summary.

(3) A party who wants to introduce expert evidence otherwise than as admitted fact must —

    (a) serve a report by the expert which complies with rule 19.4 (Content of expert’s report) on —
      (i) the court officer, and
      (ii) each other party;
    (b) serve the report as soon as practicable, and in any event with any application in support of which that party relies on that evidence;
    (c) serve with the report notice of anything of which the party serving it is aware which might reasonably be thought capable of detracting substantially from the credibility of that expert;
    (d) if another party so requires, give that party a copy of, or a reasonable opportunity to inspect —
      (i) a record of any examination, measurement, test or experiment on which the expert’s findings and opinion are based, or that were carried out in the course of reaching those findings and opinion, and
      (ii) anything on which any such examination, measurement, test or experiment was carried out.

(4) Unless the parties otherwise agree or the court directs, a party may not —

    (a) introduce expert evidence if that party has not complied with paragraph (3);
    (b) introduce in evidence an expert report if the expert does not give evidence in person.

Content of expert’s report

19.4.
Where rule 19.3(3) applies, an expert’s report must —

    (a) give details of the expert’s qualifications, relevant experience and accreditation;
    (b) give details of any literature or other information which the expert has relied on in making the report;
    (c) contain a statement setting out the substance of all facts given to the expert which are material to the opinions expressed in the report, or upon which those opinions are based;
    (d) make clear which of the facts stated in the report are within the expert’s own knowledge;
    (e) say who carried out any examination, measurement, test or experiment which the expert has used for the report and —
      (i) give the qualifications, relevant experience and accreditation of that person,
      (ii) say whether or not the examination, measurement, test or experiment was carried out under the expert’s supervision, and
      (iii) summarise the findings on which the expert relies;
    (f) where there is a range of opinion on the matters dealt with in the report —
      (i) summarise the range of opinion, and
      (ii) give reasons for the expert’s own opinion;
    (g) if the expert is not able to give an opinion without qualification, state the qualification;
    (h) include such information as the court may need to decide whether the expert’s opinion is sufficiently reliable to be admissible as evidence;
    (i) contain a summary of the conclusions reached;
    (j) contain a statement that the expert understands an expert’s duty to the court, and has complied and will continue to comply with that duty; and
    (k) contain the same declaration of truth as a witness statement.

Expert to be informed of service of report

19.5.
A party who serves on another party or on the court a report by an expert must, at once, inform that expert of that fact.

Pre-hearing discussion of expert evidence

19.6.
(1) This rule applies where more than one party wants to introduce expert evidence.

(2) The court may direct the experts to —

    (a) discuss the expert issues in the proceedings; and
    (b) prepare a statement for the court of the matters on which they agree and disagree, giving their reasons.

(3) Except for that statement, the content of that discussion must not be referred to without the court’s permission.

(4) A party may not introduce expert evidence without the court’s permission if the expert has not complied with a direction under this rule.

Court’s power to direct that evidence is to be given by a single joint expert

19.7.
(1) Where more than one defendant wants to introduce expert evidence on an issue at trial, the court may direct that the evidence on that issue is to be given by one expert only.

(2) Where the co-defendants cannot agree who should be the expert, the court may —

    (a) select the expert from a list prepared or identified by them; or
    (b) direct that the expert be selected in another way.

Instructions to a single joint expert

19.8.
(1) Where the court gives a direction under rule 19.7 for a single joint expert to be used, each of the co-defendants may give instructions to the expert.

(2) A co-defendant who gives instructions to the expert must, at the same time, send a copy of the instructions to each other co-defendant.

(3) The court may give directions about —

    (a) the payment of the expert’s fees and expenses; and
    (b) any examination, measurement, test or experiment which the expert wishes to carry out.

(4) The court may, before an expert is instructed, limit the amount that can be paid by way of fees and expenses to the expert.

(5) Unless the court otherwise directs, the instructing co-defendants are jointly and severally liable for the payment of the expert’s fees and expenses.

Court’s power to vary requirements under this Part

19.9.
(1) The court may extend (even after it has expired) a time limit under this Part.

(2) A party who wants an extension of time must —

    (a) apply when serving the report, summary or notice for which it is required; and
    (b) explain the delay.

 

Expert evidence – the Practice Direction

19A.1 Expert opinion evidence is admissible in criminal proceedings at common law if, in summary, (i) it is relevant to a matter in issue in the proceedings; (ii) it is needed to provide the court with information likely to be outside the court’s own knowledge and experience; and (iii) the witness is competent to give that opinion.

19A.2 Legislation relevant to the introduction and admissibility of such evidence includes section 30 of the Criminal Justice Act 1988, which provides that an expert report shall be admissible as evidence in criminal proceedings whether or not the person making it gives oral evidence, but that if he or she does not give oral evidence then the report is admissible only with the leave of the court; and CrimPR Part 19, which in exercise of the powers conferred by section 81 of the Police and Criminal Evidence Act 1984 and section 20 of the Criminal Procedure and Investigations Act 1996 requires the service of expert evidence in advance of trial in the terms required by those rules.

19A.3 In the Law Commission report entitled ‘Expert Evidence in Criminal Proceedings in England and Wales’, report number 325, published in March, 2011, the Commission recommended a statutory test for the admissibility of expert evidence. However, in its response the government declined to legislate. The common law, therefore, remains the source of the criteria by reference to which the court must assess the admissibility and weight of such evidence; and CrimPR 19.4 lists those matters with which an expert’s report must deal, so that the court can conduct an adequate such assessment.

19A.4 In its judgment in R v Dlugosz and Others [2013] EWCA Crim 2, the Court of Appeal observed (at paragraph 11): “It is essential to recall the principle which is applicable, namely in determining the issue of admissibility, the court must be satisfied that there is a sufficiently reliable scientific basis for the evidence to be admitted. If there is then the court leaves the opposing views to be tested before the jury.” Nothing at common law precludes assessment by the court of the reliability of an expert opinion by reference to substantially similar factors to those the Law Commission recommended as conditions of admissibility, and courts are encouraged actively to enquire into such factors.

19A.5 Therefore factors which the court may take into account in determining the reliability of expert opinion, and especially of expert scientific opinion, include:

    (a) the extent and quality of the data on which the expert’s opinion is based, and the validity of the methods by which they were obtained;
    (b) if the expert’s opinion relies on an inference from any findings, whether the opinion properly explains how safe or unsafe the inference is (whether by reference to statistical significance or in other appropriate terms);
    (c) if the expert’s opinion relies on the results of the use of any method (for instance, a test, measurement or survey), whether the opinion takes proper account of matters, such as the degree of precision or margin of uncertainty, affecting the accuracy or reliability of those results;
    (d) the extent to which any material upon which the expert’s opinion is based has been reviewed by others with relevant expertise (for instance, in peer-reviewed publications), and the views of those others on that material;
    (e) the extent to which the expert’s opinion is based on material falling outside the expert’s own field of expertise;
    (f) the completeness of the information which was available to the expert, and whether the expert took account of all relevant information in arriving at the opinion (including information as to the context of any facts to which the opinion relates);
    (g) if there is a range of expert opinion on the matter in question, where in the range the expert’s own opinion lies and whether the expert’s preference has been properly explained; and
    (h) whether the expert’s methods followed established practice in the field and, if they did not, whether the reason for the divergence has been properly explained.

19A.6 In addition, in considering reliability, and especially the reliability of expert scientific opinion, the court should be astute to identify potential flaws in such opinion which detract from its reliability, such as:

    (a) being based on a hypothesis which has not been subjected to sufficient scrutiny (including, where appropriate, experimental or other testing), or which has failed to stand up to scrutiny;
    (b) being based on an unjustifiable assumption;
    (c) being based on flawed data;
    (d) relying on an examination, technique, method or process which was not properly carried out or applied, or was not appropriate for use in the particular case; or
    (e) relying on an inference or conclusion which has not been properly reached.

NOTE: A previous article dealing with the 2014 revisions to the Criminal Procedure Rules can be found HERE.

Post Office ‘Horizon’ issue in the news again

Post OfficeThe Post Office has again been mired in controversy over the alleged failings in its ‘Horizon’ software system used in thousands of sub-postoffices around the country.

It is clear that there has been a breakdown of trust between the national Post Office organisation and Second Sight, the independent forensic accountants appointed by the Post Office to investigate the allegations.

 

This has resulted in the Post Office terminating their contract with Second Sight and closing a Working Group which had been set up to examine outstanding disputes between the Post Office & sub-postmasters.

Following an investigation by the parliamentary Business, Innovations & Skills select committee the chairman wrote to the Secretary of State on 17 March 2015 commenting on the “lamentable lack of information” provided to Second Sight by the Post Office.

It is understood that Second Sight completed a report recently but this report remains confidential to the parties involved in the dispute.  Nevertheless media reports have surfaced indicating serious disagreements between the Post Office and the forensic accountants with the forensic accountants claiming that the Post Office have failed to disclose relevant documents to the investigating accountants & the Post Office disputing the accountants’ assertions.

 

Prosecutions

The heart of the dispute has been a number of prosecutions of sub-postmasters following investigations into their figures.  Many of those prosecutions have resulted in conviction of the sub-postmaster for dishonesty.  But matters may not be as straightforward as they appear.

The Justice for Sub-postmasters Alliance (JFSA) believes that in many cases the root cause of the problems have been failures in the Post Office ‘Horizon’ software – which have created unexplained apparent shortfalls in cash in local post offices.  Since sub-postmasters are contractually obliged to make good such shortfalls out of their own pockets they have in some cases ‘cooked the books’ in an attempt to hide these apparent shortfalls from the Post Office organisation.

It is these false entries which have been identified by Post Office internal auditors & which have led to the successful prosecutions.

But JFSA says that this is an injustice where the original computer failings have remained uninvestigated.

The Post Office say that there “has been an exhaustive and informative process which has confirmed that there are no system-wide problems with our computer system and associated processes” and that they “will now look to resolve the final outstanding cases as quickly as possible”.

But we may not have heard the last of this controversy.

David

Expert evidence – updated Part 33 Criminal Procedure Rules 2014

Photo 33 copyright David Winch 2014Part 33 of the Criminal Procedure Rules dealing with expert evidence in Crown Courts and Magistrates’ Courts in England & Wales has been updated with effect from 6 October 2014.  For convenience the new materials are brought together in a single document here.

 

Expert evidence – official guide to the amendments to the Rules

Part 33 (Expert evidence) is amended to include new rules about an expert witness’ duty to the court and about establishing the reliability of expert evidence.

Rule 33.1 is amended to redefine the scope of the Part.  Rule 33.2 is amended to redefine an expert’s duty to the court.  Rule 33.3 is amended to supply the procedure for introducing a summary of an expert’s conclusions, and to require service of information detrimental to an expert’s credibility.  Rule 33.4 is amended to require that an expert’s report must include information relevant to assessing the reliability of the expert’s opinion.

In Law Commission Report No. 325, entitled ‘Expert Evidence in Criminal Proceedings’, published in March, 2011, the Commission concluded that “special rules are required for assessing the reliability of expert evidence as a factor bearing on admissibility, and … opinion evidence with insufficient indicia of reliability (that is, pointers to reliability) ought not to be admitted in criminal proceedings … there should be further disclosure obligations in relation to all expert evidence, whether the evidence is relied on by the prosecution or by the defence” (from paragraphs 1.8 to 1.12 of the Report).

The Commission recommended that Parliament should enact legislation which, among other things, would contain a list of ‘indicia of reliability’.  The Government’s response was published last year.  Instead of introducing a Bill, it asked the Rule Committee to make changes to the Criminal Procedure Rules, so as to encourage the prompt introduction of expert evidence due to be relied upon at trial, in order that parties and courts would have enough time to consider it carefully, and so as to require that experts’ reports should deal explicitly with reliability, especially the reliability of scientific evidence.

In response, the Rule Committee has made a number of amendments to the rules accordingly, the purpose of all of which is to clarify what information the court must have so as to be able to make an informed decision about the admissibility of expert evidence, having regard to the reliability of the expert’s opinion and, where relevant, having regard to the expert’s credibility.

Where expert evidence is unlikely to be in dispute, the rules now provide for it to be introduced in a summary, with a full report required only if the conclusions are contested.  Although the rules do not list ‘indicia of reliability’ of the sort recommended by the Law Commission, the Rule Committee has asked the Lord Chief Justice to amend the Criminal Practice Directions that supplement Part 33 of the Rules to include such indicia and to give courts guidance on how to apply them.

[NOTE: A more recent article dealing with the further amendments effective from 5 October 2015 can be found HERE.]

 

Expert evidence – the Rules as amended

When this part applies
33.1.
(1) This Part applies where a party wants to introduce expert opinion evidence.

(2) A reference to an ‘expert’ in this Part is a reference to a person who is required to give or prepare expert evidence for the purpose of criminal proceedings, including evidence required to determine fitness to plead or for the purpose of sentencing.

Expert’s duty to the court

33.2.
(1) An expert must help the court to achieve the overriding objective by giving opinion which is —

    • (a) objective and unbiased; and
    • (b) within the expert’s area or areas of expertise.

(2) This duty overrides any obligation to the person from whom the expert receives instructions or by whom the expert is paid.

(3) This duty includes obligations —

      • (a) to define the expert’s area or areas of expertise —

        • (i) in the expert’s report, and
        • (ii) when giving evidence in person;

(b) when giving evidence in person, to draw the court’s attention to any question to which the answer would be outside the expert’s area or areas of expertise; and

(c) to inform all parties and the court if the expert’s opinion changes from that contained in a report served as evidence or given in a statement.

Introduction of expert evidence

33.3.
(1) A party who wants another party to admit as fact a summary of an expert’s conclusions must serve that summary —

    • (a) on the court officer and on each party from whom that admission is sought;
    • (b) as soon as practicable after the defendant whom it affects pleads not guilty.

(2) A party on whom such a summary is served must —

      • (a) serve a response stating —

        • (i) which, if any, of the expert’s conclusions are admitted as fact, and
        • (ii) where a conclusion is not admitted, what are the disputed issues concerning that conclusion; and

(b) serve the response —

      • (i) on the court officer and on the party who served the summary,
      • (ii) as soon as practicable, and in any event not more than 14 days after service of the summary.

(3) A party who wants to introduce expert evidence otherwise than as admitted fact must —

      • (a) serve a report by the expert which complies with rule 33.4 on —

        • (i) the court officer, and
        • (ii) each other party;

(b) serve the report as soon as practicable, and in any event with any application in support of which that party relies on that evidence;

(c) serve with the report notice of anything of which the party serving it is aware which might reasonably be thought capable of detracting substantially from the credibility of that expert;

(d) if another party so requires, give that party a copy of, or a reasonable opportunity to inspect —

      • (i) a record of any examination, measurement, test or experiment on which the expert’s findings and opinion are based, or that were carried out in the course of reaching those findings and opinion, and
      • (ii) anything on which any such examination, measurement, test or experiment was carried out.

(4) Unless the parties otherwise agree or the court directs, a party may not —

    • (a) introduce expert evidence if that party has not complied with paragraph (3);
    • (b) introduce in evidence an expert report if the expert does not give evidence in person.

Content of expert’s report

33.4.
Where rule 33.3(3) applies, an expert’s report must —

    • (a) give details of the expert’s qualifications, relevant experience and accreditation;
    • (b) give details of any literature or other information which the expert has relied on in making the report;
    • (c) contain a statement setting out the substance of all facts given to the expert which are material to the opinions expressed in the report, or upon which those opinions are based;
    • (d) make clear which of the facts stated in the report are within the expert’s own knowledge;
    • (e) say who carried out any examination, measurement, test or experiment which the expert has used for the report and —
      • (i) give the qualifications, relevant experience and accreditation of that person,
      • (ii) say whether or not the examination, measurement, test or experiment was carried out under the expert’s supervision, and
      • (iii) summarise the findings on which the expert relies;
    • (f) where there is a range of opinion on the matters dealt with in the report —
      • (i) summarise the range of opinion, and
      • (ii) give reasons for the expert’s own opinion;
    • (g) if the expert is not able to give an opinion without qualification, state the qualification;
    • (h) include such information as the court may need to decide whether the expert’s opinion is sufficiently reliable to be admissible as evidence;
    • (i) contain a summary of the conclusions reached;
    • (j) contain a statement that the expert understands an expert’s duty to the court, and has complied and will continue to comply with that duty; and
    • (k) contain the same declaration of truth as a witness statement.

Expert to be informed of service of report

33.5.
A party who serves on another party or on the court a report by an expert must, at once, inform that expert of that fact.

Pre-hearing discussion of expert evidence

33.6.
(1) This rule applies where more than one party wants to introduce expert evidence.

(2) The court may direct the experts to —

    • (a) discuss the expert issues in the proceedings; and
    • (b) prepare a statement for the court of the matters on which they agree and disagree, giving their reasons.

(3) Except for that statement, the content of that discussion must not be referred to without the court’s permission.

(4) A party may not introduce expert evidence without the court’s permission if the expert has not complied with a direction under this rule.

Court’s power to direct that evidence is to be given by a single joint expert

33.7.
(1) Where more than one defendant wants to introduce expert evidence on an issue at trial, the court may direct that the evidence on that issue is to be given by one expert only.

(2) Where the co-defendants cannot agree who should be the expert, the court may —

    • (a) select the expert from a list prepared or identified by them; or
    • (b) direct that the expert be selected in another way.

Instructions to a single joint expert

33.8.
(1) Where the court gives a direction under rule 33.7 for a single joint expert to be used, each of the co-defendants may give instructions to the expert.

(2) A co-defendant who gives instructions to the expert must, at the same time, send a copy of the instructions to each other co-defendant.

(3) The court may give directions about —

    • (a) the payment of the expert’s fees and expenses; and
    • (b) any examination, measurement, test or experiment which the expert wishes to carry out.

(4) The court may, before an expert is instructed, limit the amount that can be paid by way of fees and expenses to the expert.

(5) Unless the court otherwise directs, the instructing co-defendants are jointly and severally liable for the payment of the expert’s fees and expenses.

Court’s power to vary requirements under this Part

33.9.
(1) The court may extend (even after it has expired) a time limit under this Part.

(2) A party who wants an extension of time must —

    • (a) apply when serving the report, summary or notice for which it is required; and
    • (b) explain the delay.

 

Expert evidence – the new Practice Direction

33A.1 Expert opinion evidence is admissible in criminal proceedings at common law if, in summary, (i) it is relevant to a matter in issue in the proceedings; (ii) it is needed to provide the court with information likely to be outside the court’s own knowledge and experience; and (iii) the witness is competent to give that opinion.

33A.2 Legislation relevant to the introduction and admissibility of such evidence includes section 30 of the Criminal Justice Act 1988, which provides that an expert report shall be admissible as evidence in criminal proceedings whether or not the person making it gives oral evidence, but that if he or she does not give oral evidence then the report is admissible only with the leave of the court; and Part 33 of the Criminal Procedure Rules, which in exercise of the powers conferred by section 81 of the Police and Criminal Evidence Act 1984 and section 20 of the Criminal Procedure and Investigations Act 1996 requires the service of expert evidence in advance of trial in the terms required by those rules.

33A.3 In the Law Commission report entitled ‘Expert Evidence in Criminal Proceedings in England and Wales’, report number 325, published in March, 2011, the Commission recommended a statutory test for the admissibility of expert evidence. However, in its response the government declined to legislate. The common law, therefore, remains the source of the criteria by reference to which the court must assess the admissibility and weight of such evidence; and rule 33.4 of the Criminal Procedure Rules lists those matters with which an expert’s report must deal, so that the court can conduct an adequate such assessment.

33A.4 In its judgment in R v Dlugosz and Others [2013] EWCA Crim 2, the Court of Appeal observed (at paragraph 11): “It is essential to recall the principle which is applicable, namely in determining the issue of admissibility, the court must be satisfied that there is a sufficiently reliable scientific basis for the evidence to be admitted. If there is then the court leaves the opposing views to be tested before the jury.” Nothing at common law precludes assessment by the court of the reliability of an expert opinion by reference to substantially similar factors to those the Law Commission recommended as conditions of admissibility, and courts are encouraged actively to enquire into such factors.

33A.5 Therefore factors which the court may take into account in determining the reliability of expert opinion, and especially of expert scientific opinion, include:

    (a) the extent and quality of the data on which the expert’s opinion is based, and the validity of the methods by which they were obtained;
    (b) if the expert’s opinion relies on an inference from any findings, whether the opinion properly explains how safe or unsafe the inference is (whether by reference to statistical significance or in other appropriate terms);
    (c) if the expert’s opinion relies on the results of the use of any method (for instance, a test, measurement or survey), whether the opinion takes proper account of matters, such as the degree of precision or margin of uncertainty, affecting the accuracy or reliability of those results;
    (d) the extent to which any material upon which the expert’s opinion is based has been reviewed by others with relevant expertise (for instance, in peer-reviewed publications), and the views of those others on that material;
    (e) the extent to which the expert’s opinion is based on material falling outside the expert’s own field of expertise;
    (f) the completeness of the information which was available to the expert, and whether the expert took account of all relevant information in arriving at the opinion (including information as to the context of any facts to which the opinion relates);
    (g) if there is a range of expert opinion on the matter in question, where in the range the expert’s own opinion lies and whether the expert’s preference has been properly explained; and
    (h) whether the expert’s methods followed established practice in the field and, if they did not, whether the reason for the divergence has been properly explained.

33A.6 In addition, in considering reliability, and especially the reliability of expert scientific opinion, the court should be astute to identify potential flaws in such opinion which detract from its reliability, such as:

    (a) being based on a hypothesis which has not been subjected to sufficient scrutiny (including, where appropriate, experimental or other testing), or which has failed to stand up to scrutiny;
    (b) being based on an unjustifiable assumption;
    (c) being based on flawed data;
    (d) relying on an examination, technique, method or process which was not properly carried out or applied, or was not appropriate for use in the particular case; or
    (e) relying on an inference or conclusion which has not been properly reached.

Confiscation – challenging the prosecutor’s s16 statement

Legal wig copyright David Winch 2014How should the defence challenge the prosecutor’s assertions concerning the defendant’s benefit and available amount?

The prosecutor’s s16 Proceeds of Crime Act 2002 statement is a key document in confiscation proceedings.  In preparing the s16 statement the prosecution will have considered the offence(s) of which the defendant has been convicted; the evidence at trial (or readied for trial where there has been a guilty plea) and other information collected during investigation of the offence; information provided by the defendant in any statement under s18 or in response to any requirement in a restraint order under s41(7); information obtained from banks and others (perhaps by way of a production order under s345); and the results of the prosecution’s own investigations – probably undertaken by an accredited financial investigator.

 

Variety

Prosecution s16 statements are prepared in a wide variety of circumstances.  No two s16 statements will be the same – though they all have some similarities.  In any event the s16 statement will need careful study.  Typically the body of the s16 statement will run to between 10 and 30 pages with supporting appendices which could run to several hundred pages, and may include spreadsheets.

The s16 statement is likely to include some background narrative which sets the confiscation proceedings into context, including a description of the court proceedings resulting in the conviction and any restraint order which has been obtained.   There may also be information about the defendant (date of birth, previous convictions, etc) and information about his known legitimate income.

The defence legal team will wish to challenge any incorrect factual assertions in that narrative – but this narrative background is not at the heart of the s16 statement.

 

Financial investigations and ‘benefit’

The s16 statement will then move on, probably providing some details about the financial investigations undertaken by the prosecution and their findings about the defendant’s financial affairs.  That leads to the prosecution assertions about the defendant’s ‘benefit’ for confiscation purposes.

In this context ‘benefit’ has a special meaning based on the statutory provisions – it does not refer to what might be the defendant’s benefit in the everyday sense of the word.

 

‘Benefit’ of the offences

The first element of the defendant’s ‘benefit’ which the s16 statement will deal with is the ‘benefit’ of the offences of which the defendant has been convicted, sometimes referred to as the ‘direct benefit’ or the ‘benefit of particular criminal conduct’.  Here the prosecution are considering what the defendant ‘obtained’ as a result of the offences of which he has been convicted in the proceedings which triggered the confiscation.

This may be very easy to establish.  If the defendant has been convicted of, say, stealing a cheque for £10,000 payable to someone else and paying it into his own bank account then the ‘benefit’ of that offence is £10,000 (possibly uplifted for changes in the Retail Prices Index since the date of the theft).

But in many cases the ‘benefit’ of the offence will be less clear cut.  For example there may be theft of cash where there are inadequate records to quantity the amount of cash stolen, or supply of controlled drugs where there are no records of the monies received for the drugs, or the defendant may have been a member of a conspiracy (meaning it will be necessary to ascertain the amount ‘obtained’ by this particular defendant in his role in that conspiracy).

In rare cases the ‘benefit’ may be based on the profit deriving from fundamentally legitimate business operations which have been tainted by criminality, as in the case of R v Sale.

The ‘benefit’ asserted by the prosecution may also include assets which need to be valued, such as controlled drugs seized at the time of the defendant’s arrest.

In other cases the ‘benefit’ may be based on a ‘pecuniary advantage’ arising from the evasion of a liability – for example evasion of income tax, VAT or duties on goods.

In a minority of cases the prosecution may not be asserting that the defendant has obtained any benefit at all from the offences of which he has been convicted.

 

Assumed ‘benefit’

If the prosecution assert that the defendant has a ‘criminal lifestyle’ then the s16 statement will also deal with additional assumed ‘benefit’ which arises under the statutory assumptions of s10 PoCA 2002.  The statutory assumptions apply to the defendant’s receipts and expenditures since the ‘relevant day’ (which is usually 6 years prior to the date on which the defendant was charged with the offences of which he has been convicted) and to any assets held by the defendant since the date of his conviction.

Typically the prosecution will have obtained bank and credit card statements for all known bank and credit card accounts held by the defendant and will have reviewed all deposits to those accounts since the ‘relevant day’.  They may also have information about the defendant’s expenditures since the ‘relevant day’ – for example as a result of examining documents seized from searches of the defendant’s premises or considering information provided by the defendant in recorded interviews or in his s18 statement.  In addition the prosecution may have obtained Land Registry records or solicitors’ conveyancing files regarding property purchases, and mortgage account statements.

These same sources of information may be the basis for assertions of assumed ‘benefit’ in respect of any assets held by the defendant after the date of his conviction.

 

‘Available amount’

Finally the prosecutor’s s16 statement will deal with the defendant’s ‘available amount’.  Again this is a term defined by statute which does not mean simply the amount which the defendant has available to meet the confiscation order.  It refers to the current market value of the defendant’s assets, less any mortgage or other liability which is secured on those assets, plus the current value of any ‘tainted gift’ which the defendant has made.

However many of the defendant’s liabilities, such as unsecured borrowings and unpaid bills, will be ignored when computing the defendant’s ‘available amount’.

 

Default sentence

The s16 statement may conclude with an indication of the range of default sentences applicable where a confiscation order remains unpaid.

 

Challenging the s16 statement

The defence will wish to scrutinise in detail the prosecution assertions in relation to both the defendant’s ‘benefit’ and his ‘available amount’.  The focus of the defence challenge to the prosecutor’s figures will depend very much on the details within the s16 statement.

In relation to the ‘benefit’ of the offences of which the defendant has been convicted the defence will wish to consider the existence of the asserted ‘benefit’; whether it has been ‘obtained’ by the defendant himself, solely or jointly; and whether it is correctly valued.

Regarding the assumed ‘benefit’ the defence will wish to consider whether the criteria for a ‘criminal lifestyle’ have been met; whether the ‘relevant day’ has been correctly identified; the existence of the asserted receipts, expenditures and assets of the defendant himself (which may involve careful consideration of bank accounts and assets held in joint names and consideration of ‘lifting the corporate veil’); any evidence of the legitimate nature of those receipts and legitimate funds used to finance those expenditures and the purchase of those assets; any overlap or double counting between the various heads of asserted ‘benefit’ including, for example, where monies have been withdrawn from one of the defendant’s bank accounts and paid in to another; and the valuation of the various items reflected in the assumed ‘benefit’.

In relation to the asserted ‘available amount’ the defence will again consider the existence of those assets; the ownership of them by the defendant himself so as to exclude any interest of third parties; the current market value of those assets; and the amount of any liabilities secured on those assets.

Particular difficulties may arise where the ‘available amount’ is said to include any ‘tainted gifts’ or ‘hidden assets’.

Ultimately the defence will also wish to consider whether the use of the statutory assumptions involves a ‘serious risk of injustice’ or the confiscation order sought by the prosecution would be disproportionate and so infringe the defendant’s human rights.

All of these matters will feed in to the drafting of a s17 statement to be signed by the defendant and filed in response to the prosecution’s s16 statement, and the defence preparation for the confiscation hearing in the Crown Court.

 

Use of a forensic accountant

A forensic accountant may be able to assist the defence in challenging a number of aspects of the s16 statement.  This is likely to be particularly important in cases involving ‘assumed benefit’ under the ‘criminal lifestyle’ assumptions.  A forensic accountant may be better placed than the solicitor to undertake detailed examination of the figures and financial documents underlying the prosecution’s s16 assertions.

The cost of a forensic accountant’s report will normally be met by criminal legal aid under prior authority arrangements.

As a first step it is advisable to ask the forensic accountant to provide a fee quotation (to be forwarded to the Legal Aid Agency with an application for prior authority).  In order to prepare his quotation the forensic accountant should ideally be provided with a copy of the body of the prosecutor’s s16 statement, an approximate page count of the appendices to that statement, a copy of the defendant’s s18 statement, any advice which may have been obtained from counsel in relation to the s16 statement, and a note of the court timetable for the submission of the defendant’s response in the form of a s17 statement.

Where the appendices to the s16 statement include spreadsheets it is usual to ask the prosecution to supply electronic copies of the Excel spreadsheets (not the PDFs) either on disc or as email attachments.

Once the prior authority has been obtained the forensic accountant’s work can get underway!

David

(Note: This article applies to confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation proceedings in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)

Criminal lifestyle confiscation and output VAT

The Court of Appeal have recently handed down a judgment in the ‘criminal lifestyle’ confiscation case of R v Harvey [2013] EWCA Crim 1104.

This was a case in which I had been instructed by the defendant’s solicitors in the confiscation proceedings in the Crown Court.

 

Background

The defendant was a director and majority shareholder in a limited company engaged in hire of plant and equipment (sometimes with drivers, sometimes just the plant itself).

A number of items of plant used by the company were found to be stolen property and the defendant pleaded guilty to 9 counts of ‘handling’ contrary to s22 Theft Act 1968.  A further 30 counts were left to lie on the file.

The defendant was subject to confiscation under PoCA 2002 on the basis that he had a ‘criminal lifestyle’ and that the veil of incorporation of the company should be pierced.

 

Benefit for confiscation purposes

The prosecution contention initially in a statement under s16 PoCA 2002 was that the entirety of the gross receipts of the company (inclusive of VAT) since the ‘relevant day’ constituted assumed ‘benefit’ of the defendant for the purposes of confiscation.

By the time of the hearing in the Crown Court the prosecution had changed its position.  Whilst it was unable to put a figure on the proportion of company receipts which were derived from criminal conduct, it was significant that the police had inspected 91 items of plant (both large and small) and considered 39 of those items to be stolen property (that is approximately 42.8% on an ‘item count’ basis).

 

The decision in the Crown Court

At Crown Court the judge held that 38% of the company’s gross receipts (inclusive of VAT) since the ‘relevant day’ were to be regarded as ‘benefit’.  Those gross receipts included not just trading income but also receipts from the sale of plant.

This 38% figure was based on the 42.8% on an ‘item count’ basis, reduced to recognise the greater earning power of the (legitimate) larger and more expensive items of plant.  The judge concluded that the defendant had known that all 39 items of plant (not just the 9 items in relation to which he had pleaded guilty to ‘handling’) were stolen property.

The Crown Court judge did not accept that he should be guided by a detailed analysis of a representative sample of company sales invoices over the period since the ‘relevant day’ which appeared to show a much smaller proportion of the company’s income was derived from the stolen plant.  He concluded that the defendant was dishonest and his company records did not reflect the entirety of the transactions of the business and so figures based on company records were not persuasive.

The benefit found by the judge was calculated accordingly at approximately £2.2m (based on the value of the 39 stolen items plus 38% of gross receipts of the company since the ‘relevant day’) and he set a default term of 10 years.

 

The appeal to the Court of Appeal

The defendant appealed on the grounds that:

  1. VAT charged to customers and accounted for to HMRC should be excluded from the gross receipts figure.
  2. Stolen plant had been recovered by the police and returned (sometimes after many years of use) to its rightful owners, but no reduction had been made in the benefit figure to reflect this.
  3. The 38% figure was too high on the facts and, in particular, had been applied to all receipts including demonstrably legitimate income from the sale of legitimately acquired plant.
  4. The default sentence of 10 years was excessive.

The Court of Appeal reduced the default term to 8 years but otherwise upheld the confiscation order in full, dismissing the appeal on each of the first three grounds.

The Court of Appeal took the opportunity to review and comment upon various confiscation cases – some very recent, some older – in the light of the decision of the Supreme Court in R v Waya.  In particular the Court of Appeal opined that the decision in R v Del Basso and Goodwin [2010] EWCA Crim 1119 now “does seem excessively harsh and may arguably be characterised as disproportionate”.

Defendants and accountants may be disappointed to note the Appeal Court’s decision (even after the Waya case) that output VAT charged on the (assumed) illegitimate receipts of a legitimate business is to be regarded as a component of benefit in a ‘criminal lifestyle’ confiscation – even where that output VAT has been properly accounted for and paid over to HMRC.  The Court of Appeal considered that there was nothing in Waya which called into question the manner in which the Court of Appeal in Del Basso dealt with VAT and that therefore Del Basso was binding authority on that point.

But the Court of Appeal in any event approved this approach, commenting, “It would be wrong in principle to carry out an accounting exercise in respect of VAT which [the business] collected through the use of stolen property”.  The total monies paid by customers, including the VAT charged, constituted property obtained by criminal conduct.

[UPDATE:  On 16 December 2015 the UK Supreme Court upheld Mr Harvey’s appeal against this element in the calculation of his benefit for confiscation purposes.  The UKSC held that where VAT has been accounted for to HMRC it would be disproportionate under A1P1 to make a confiscation order calculated on the basis that the VAT, or a sum equivalent, was “obtained” by the defendant for the purposes of PoCA 2002.]

The Court of Appeal’s view must, by implication, be taken to be that they did not consider the confiscation order of £2.2m to be disproportionate in all the circumstances.

David

(Note: This article applies to confiscation orders under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation order in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)

Expert evidence from outside the witness box

What is the position where a jury or tribunal has arrived at its conclusion based on expert evidence from outside the witness box – where a juror or tribunal member has relevant expert knowledge?

Juries and tribunals are generally required to decide matters based on the evidence which they hear in the course of the legal proceedings. But in the Crown Court the jury might include someone with prior knowledge relevant to the general circumstances and issues in the case. Would there be any objection to that juror sharing his knowledge and insight with other jury members when they retire to consider their verdict?

Tribunal members for professional regulation hearings and dealing with other specialist areas of law (such as tax appeals) are selected expressly because they already have expert knowledge and experience which may be relevant to the matters to be considered by them. Could there be any objection to the tribunal reaching its conclusion on the basis of the expertise of the tribunal members?

 

Jurors in the Crown Court

A recent case in the Court of Appeal, Pouladian-Kari v R [2013] EWCA Crim 158 (22 February 2013), highlighted the issue with regard to the prior expert knowledge and experience of a juror in the Crown Court.

The defendant had been charged with being knowingly concerned in an attempt to export prohibited or restricted goods, namely, electrical switchgear, contrary to s68(2) of the Customs and Excise Management Act 1979.  This related to an attempted export of goods from the UK to Iran.  When the matter came to trial in the Crown Court an issue was whether the defendant knew that he required a licence to export this switchgear to Iran because the switchgear might have a military use.

As it happened one of the jurors was himself employed in a merchant bank in a role which involved supervision of exports to the Middle East – similar to the transactions in which the defendant had been engaged.  Having heard some of the prosecution evidence this juror wrote a note to the judge on the second day of the trial explaining his background and commenting that as a jury member he would find “it difficult to forget about specific details of the case that at least in my professional environment are definite red signals”.

Furthermore he was concerned that “I may drive the discussions and conclusions of my fellow jury members in my own conclusions right or wrong”.

The juror offered to remain on the jury if the judge considered that he could properly do so, but had felt it appropriate to alert the judge to the situation in the interest of a fair trial.

The judge consulted with both counsel.  He decided that he should speak to the jury.  He told them that one member of the jury had sent him a note explaining that the juror had some professional knowledge of the freight forwarding position about which evidence had been adduced during the last two days.  He stated that every juror brought his or her own experience of life and common sense to the jury system which was one of the strengths of the system.  As a result, there was no impediment in sitting on a case in which a juror might have some professional understanding.  Indeed, it might be of some benefit.  However, the case was to be tried on the evidence given in the courtroom and not on any other evidence.  That didn’t mean that jurors could not bring their own commonsense to bear on the evidence adduced in the trial upon which the case was to be decided.  He thanked the juror who had written the note.  He told the juror it was the right thing to have done.  He concluded by saying that, in the circumstances, the case could carry on with all of the jury.

The case continued and the defendant was convicted.  He appealed his conviction.

The Court of Appeal quashed the conviction.  The appeal court criticised the judge’s guidance to the jury about the previous knowledge of one juror insofar as it indicated that “the knowledge and experience that he had might be of benefit to their discussions.
That direction did not alert the jury as a whole to the caution they should exercise in relation to any views being expressed by the juror who had written the note.  If anything, it did the reverse”.

In general terms the difficulty is that the jury in the course of their deliberations might be swayed by expert ‘evidence’ from the juror which was not part of the evidence in the trial and was not subject to the rigours of cross-examination by counsel.  That would be unacceptable.

While it is generally acceptable for persons with expertise to sit on a jury it is not appropriate for them to provide expert ‘evidence’ to other jury members.  The verdict of the jury should be based on the evidence which they hear in court.

 

Expertise of Tribunal members

In a similar vein, in the case of Lawrence v The General Medical Council [2012] EWHC 464 (Admin) the High Court quashed a decision by a Fitness to Practise Panel of the General Medical Council which had conducted a hearing into allegations that Dr Lawrence acted in various ways which were said to have been inappropriate, not in the best interests of his patient and an abuse of his professional position.

The case was a complex one and the judgment is lengthy, but one issue concerned a decision by the Panel which began, “From its own expertise the Panel reasoned that . . .” .    On behalf of Dr Lawrence it was submitted that this statement revealed an illegitimate reliance by the Panel on expertise which it did not have and showed that it reached a conclusion on an issue which had not been raised by either of the parties at the hearing and on which Dr Lawrence was therefore unfairly deprived of the opportunity of calling evidence or making submissions.

In quashing the Panel’s decision the High Court judge accepted that had been the case.  The Panel should have based its decision on the evidence it had heard – not based on its own reasoning related to an issue which had not been raised in evidence by either side.

 

Conclusion

The general rule therefore appears to be that juries and tribunals should not base their decisions on expert ‘evidence’ from outside the witness box.

David

(Note: This article applies to proceedings in England and Wales.  Appropriate professional advice should be sought in each individual case.)

When an expert is challenged concerning his expertise

What should be done if one side considers that the expert instructed by the other side lacks the necessary expertise to support his opinion? That issue arose in a recent case before the Court of Appeal.

 

Violence and death

The case of R v Clarke and Morabir [2013] EWCA Crim 162 was a case of murder in which both prosecution and defence had instructed expert pathologists. It was alleged that at some time on 6 November 2010 the victim, Bradley Hamilton, had been subjected to very serious violence as a result of which he suffered multiple injuries. At 11:27 p.m. on that day the defendants called the emergency services. Paramedics arrived at 11:33 p.m. and unsuccessfully attempted to resuscitate Mr Hamilton for about 20 minutes but then pronounced him dead.

 

The prosecution case

The Crown’s case was that Mr Clarke had attacked Mr Hamilton in the early part of the evening of 6 November and that, as a result of the injuries suffered in the attack, Mr Hamilton had either died, or was near to death, at the time that Mr Clarke left Mr Hamilton’s flat at about 9.30 p.m. that evening. The prosecution case was that Ms Morabir remained in the flat with the dead or dying Mr Hamilton whilst Mr Clarke was out and that she was in touch with him by mobile telephone. It was alleged that events after 10.30 p.m., in which both defendants were involved, were an elaborate cover up.

 

The defence case

The case for Mr Clarke at the trial was that he admitted that he had assaulted Mr Hamilton early in the evening but not so as to inflict any injuries that could have led to his death. Mr Clarke’s case was that he had left the flat at about 9.30 p.m. and when he returned Mr Hamilton was lying on the living room floor unconscious. Mr Clarke asserted that he had attempted, clumsily, to apply resuscitation to Mr Hamilton for over 20 minutes but without success. He and Ms Morabir then called the emergency services at 11.27 p.m.

 

A key issue

A key issue was whether Mr Hamilton’s death had been caused by Mr Clarke’s assault earlier in the evening or was the inadvertent result of Mr Clarke’s clumsy attempts at resuscitation of the unconscious Mr Hamilton. It was undisputed that Mr Hamilton had underlying medical problems of osteoporosis and cirrhosis of the liver as a consequence of a long history of alcohol dependency.

Mr Hamilton had a number of broken ribs and other injuries – but which injuries were occasioned by the initial assault and which by the resuscitation attempts? Expert evidence was to be called by both sides concerning the length of time which appeared to have elapsed between Mr Hamilton suffering the broken ribs and his death and as to whether the initial assault led to injuries which were the cause of Mr Hamilton’s death.

 

The defence expert’s written report

A Professor Freemont, instructed by the defence, had provided a written report in which he said that: “The fractures to the lower left ribs could not, of themselves, have led directly to death and there is no evidence that they indirectly led to death as there is no report of significant damage to adjacent vital organs. There is therefore evidence of two fracturing episodes, one at or immediately around the time of death and the other that happened within 3 to 4 hours of death. The earlier injury is extremely unlikely of itself to have caused death. The second, because of the degree of osteoporosis, could have been caused by overenthusiastic CPR [resuscitation attempts]”.

 

The prosecution’s objection

The case came to trial and, on the final day of the trial, Professor Freemont was to be called by the defence – but the prosecution raised an objection. They submitted that Professor Freemont was an expert on bone fractures and, though he was perfectly entitled to express an opinion on the bone fractures and how long prior to death they had occurred, he did not have the necessary expertise to voice an opinion to the jury as to the cause of Mr Hamilton’s death. That, said the prosecution, was a matter outside his field of expertise.

Professor Freemont was questioned in the absence of the jury in a process known as voir dire. He had carried out many autopsies in cases of death by unnatural causes, including cases of sudden and violent death – for example as a result of a road accident or a suicide – but had never carried out a post-mortem in a case of suspected murder and, since he was not a ‘Home Office Pathologist’, it would not be appropriate for him to do so.

 

The judge’s ruling

In the light of the voir dire the judge ruled that Professor Freemont “is not an expert who is able to give evidence on the cause of death in this case, save and beyond that it might be immediately apparent from the particular ribs he examined in the course of his task on behalf the defence”.

As a result the jury remained unaware of Professor Freemont’s opinion that the earlier injuries were extremely unlikely to have been the cause of Mr Hamilton’s death.

Both defendants were convicted and appealed to the Court of Appeal.

 

The Court of Appeal’s comments

Both appeals were dismissed, but the court did have something to say about the conduct of both prosecution and defence in the original trial. They were concerned that the challenge to the expertise of the defence expert was only made immediately before he was due to give his evidence.

The Court of Appeal said: “if one side intended to challenge the expertise of an expert witness of the other side, then written notice, together with the reasons for the challenge, should have been given as soon as possible so that the other side could consider what it would do. Even if that were not done, it should have been obvious to the defence once it had seen the note of the [prosecution’s] medical conference of 20 January 2011 that there was a strong possibility that the expertise of Professor Freemont would be challenged. Defence counsel should have taken the initiative immediately and asked the prosecution whether it was going to challenge the professor’s expertise”.

 

Conclusion

Expert witnesses are used in a wide range of Crown Court cases but it is unusual for the relevant expertise, experience or qualifications of an expert witness to be challenged in the criminal courts of England and Wales.  (Applications to exclude expert evidence are more common in the Federal Courts of the United States following the US Supreme Court’s landmark opinion in Daubert v. Merrell Dow Pharmaceuticals Inc.)

There are lessons to be learned here for both prosecution and defence teams in future cases where such a challenge is anticipated.

David

(Note: This article refers to expert witness evidence in the criminal courts in England and Wales. There are a number of additional issues which could be relevant to expert evidence in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)

Criminal lifestyle confiscation – a case study

Brian considered himself unlucky.  Some friends of his had come under police observation.  He had been having a coffee with them in Starbucks in Wolverhampton one morning when the police swooped and arrested everyone, Brian included.

Then the police searched the car in which Brian and some of his friends had driven to Starbucks – finding £24,000 in a bag in the boot.  The police also searched the homes of all the persons arrested.  Brian had had £2,000 worth of cocaine (with an 8% purity) in a kitchen drawer at home, which he had foolishly agreed to look after for a friend.  There was also another £10,000 in cash at Brian’s house and a couple of valuable watches.  The police seized the drugs, the cash, the watches and Brian’s mobile phone.

Brian and the others from Starbucks were charged with a serious drugs conspiracy involving an organised criminal enterprise importing and supplying drugs over a wide region.

But the cash in Brian’s house was not contaminated with drugs and there were no suspicious messages on Brian’s mobile phone.  Although the alleged conspirators had been under observation for some time, Brian had not been observed with any of them prior to that morning at Starbucks.  Brian had no criminal record.

Brian was advised to plead guilty to possession of the cocaine with intent to supply

Brian was advised to plead guilty to possession of the cocaine found in his kitchen with intent to supply and possession of the cash found in the car boot (possession of criminal property).  The serious conspiracy charges against him were dropped.  He was sentenced to 3 years imprisonment.

Confiscation proceedings followed.  Although he had no previous criminal convictions Brian was deemed to have a ‘criminal lifestyle’ for confiscation purposes because he had been convicted of the cocaine offence.

The prosecution had obtained copies of Brian’s bank statements, from the two banks he had accounts with, going back to the ‘relevant day’ (which was 6 years prior to the date on which Brian had been charged) and his tax records from HMRC.  They also had Land Registry records showing the purchase of his home, the price he had paid and the mortgages on it (Brian had taken out a second mortgage because his business was struggling).

A prosecutor’s s16(3) PoCA 2002 statement was prepared which, to Brian’s amazement, showed Brian’s benefit from criminal conduct to be over £500,000 and his available amount to be over £100,000.  Brian told his solicitors that he had, in truth, had no benefit from crime and he was broke.  Now he was faced with a demand for £500,000 with the threat of an additional 5 year default sentence for non-payment.

Attached to the prosecutor’s statement were, amongst other things, spreadsheets listing all the deposits in Brian’s bank accounts since the relevant day (both cash and cheques), a valuation of the two watches of £900 in total, and a calculation of the value his home based on the price he had paid for it some years ago uplifted by a national house prices index.

Brian’s solicitors contacted me for help.  I submitted a fee quotation to them for them to obtain a prior authority from the Legal Services Commission

Brian’s solicitors contacted me for help.  I submitted a fee quotation to them for them to obtain a prior authority from the Legal Services Commission.  I asked them to obtain from the prosecution electronic copies of the spreadsheets of bank credits and to obtain a professional valuation of Brian’s home.  I also asked them to obtain from Brian his explanations of the credits to his bank accounts (with any supporting evidence he could provide) and a letter of authority to enable me to obtain further detailed information from his accountant (who had prepared his tax returns).

Brian had been a self-employed electrician.  It transpired that his accountants had prepared tax returns for him based on limited business records and Brian’s verbal explanations concerning his earnings and expenditures.  They had seen his bank statements for one of his accounts but not the other.  They had not prepared annual Balance Sheets as these were not required for tax purposes.

Brian told his solicitors that not all his earnings had been banked in the account for which he had shown the statements to his accountants, but he had told them of all his earnings (or at least he had given them a fair estimate of them).  He sometimes had to juggle money between the two banks to keep within overdraft limits and have sufficient to pay his mortgage and other direct debits.  So he would take cash out from one bank and put cash in the other.  On these occasions the dates and amounts of cash drawn and deposited would be more or less the same, but the amounts drawn and deposited might not be identical and, although the transactions would be within a few days of each other, they would probably not be on the same day.

Also he had done some work as an electrician for builders who had paid him cash in hand and not bothered to go through the cumbersome CIS (construction industry scheme) tax procedures.  Those builders would probably not want to come forward and give evidence of this in court.

Brian was confident that he could ‘prove’ at least three-quarters of the deposits were legitimate.

Nevertheless Brian confirmed that none of the bank deposits were drug related and he was confident that he could ‘prove’ at least three-quarters of them were legitimate.

The watches seized by the police had belonged to his late father and were of considerable sentimental value.  Brian did not think the watches would have been listed in his father’s probate papers.

I obtained further details from Brian’s accountants, checked the prosecution’s s16(3) statement figures and looked for evidence of deposits in one bank account possibly being linked to withdrawals from another.

I prepared a report bringing together all the defence evidence in relation to benefit and available amount.  The property valuation had shown that Brian’s home was in negative equity – the current value being far below that indicated by the national house prices index used by the prosecution.

When the matter came to be heard I attended the Crown Court ready to give evidence.  However, as is usual in such cases, negotiations got underway that morning with both sides exploring the possibility of reaching an agreement that would avoid a lengthy hearing before the judge.

The Crown were persuaded to considerably reduce their benefit figure

The Crown were persuaded to considerably reduce their benefit figure to recognise that cheque deposits were unlikely to be proceeds of crime and that at least part of the cash was likely to be from Brian’s work as an electrician.  They accepted that there was no evidence of tax evasion as Brian had given his accountants information in addition to the bank statements on the one account.

The Crown also accepted, to a limited extent, that some cash deposits could be cash drawn from the other bank.  As a result Brian’s benefit figure would be reduced to £180,000.

In relation to Brian’s available amount the Crown accepted that there was no equity in Brian’s house and they agreed that Brian’s mother could purchase the watches back (at their expert’s valuation).

Brian accepted, for the purposes of confiscation, that his available amount included the cash seized from the car and from his house (which was already in police possession), the balances in his bank accounts and the market value of the watches and his car.  In total this was nearly £45,000.  This would be the amount Brian would be ordered to pay.

Brian was not happy with the outcome – but he did recognise that things could have been a great deal worse!

A brief hearing followed in which the judge was invited to make a confiscation order in the agreed figures.  Brian was given 6 months to pay (although in practice he signed over the cash already held by the police at the conclusion of the hearing, meaning there was only £11,000 left to pay) with a 15 month sentence in default (although in practice that would be reduced pro-rata to reflect the £34,000 already effectively paid).

Brian was not happy with the outcome – but he did recognise that things could have been a great deal worse!

David

Names, locations and certain other details have been changed to protect the identities of those involved.

A club treasurer called to account for the money

It is often difficult to find someone willing to act as honorary treasurer for a local club or voluntary organisation and Upper Slagbank’s Over 60s Club was no exception.  When the current treasurer died the club cast about for a new ‘volunteer’.  The accounts had got into a bit of a mess and accounting procedures, if you can call them that, were a bit lax – but probably no more so than many other similar organisations up and down the country.  Finally Peter was persuaded to take on the responsibility, although he was only in his 50s and held no professional qualifications.

He used to work in a bank, so he knew about money, and he was well respected in the community.

Peter was a local man who now ran his own recruitment agency for top-flight executives.  He used to work in a bank, so he knew about money, and he was well respected in the community.  But life was about to take a turn for the worse for Peter.  A few months after he became treasurer his home was repossessed by the mortgage company (business had actually not been going too well for a while) and his wife, surprised to find herself out on the street, left him.

Vera, the club chairwoman, asked him if in the circumstances he no longer wished to be treasurer, but Peter said it gave him some continuity and normality in a turbulent time and he was willing to continue.

The club held several fund-raising events each year and had income from membership fees and contributions to the costs of excursions.  Its expenditure was on the outings themselves and the costs of speakers, entertainers, room hire and food and drink for evening meetings.  The club also made donations to good causes.  The management team (for want of a better description) met from time to time and there was the annual AGM.

Peter produced some figures on individual fund-raising events for the management team meetings and annual accounts for the club AGM, which were accepted without demur.  The figures took the form of an income and expenditure account resulting in a net surplus or deficit.  They did not show the bank balances or cash on hand.

Peter explained that due to some confusion between the two club bank accounts some cheques had bounced, but he was sorting it out.

After about 18 months William, the club’s President, began to hear grumblings in the village about club bills not being paid.  He had a word with Peter who explained that due to some confusion between the two club bank accounts some cheques had bounced, but Peter was sorting it out.

But things went from bad to worse until finally Vera and William demanded that Peter surrender all the books and records.  A Tesco carrier bag full of jumbled receipts, bills, bank statements, cheque books and some cash was left on William’s doorstep next morning.

William went through these in a meticulous manner, preparing his own schedules of club receipts and payments over the period for which Peter had been their treasurer.  Vera compared the bank statements to the accounts which Peter had presented to management meetings dealing with the fund-raising events.  They were horrified to find that the club’s finances were in a most unhealthy state.  On numerous occasions cash had been drawn from the bank – even in August when the club had no activities!  In fact the only time no cash was being drawn from the bank seemed to be when there was no cash in the bank to be drawn.

Profits from fund-raising events had not been paid into the bank.

Amongst the receipts in the bag were two post office chits for the purchase of Peter’s TV licences – bought with club cheques.

The police were contacted and Vera and William accused Peter of stealing over £7,000 from the club.

The police were contacted and Vera and William made statements.  William handed over the schedules he had prepared.  Vera and William accused Peter of stealing over £7,000 from the club.

Following a police investigation Peter was charged with the theft of cash drawn from the bank on over 30 occasions, theft of profits from the fund-raising events which had not been banked, and fraud in relation to the cheques used to purchase the TV licences.

Peter denied any wrongdoing.  He admitted the records were in a muddle but he vigorously denied any thefts.  Indeed on occasion he had found it necessary to put his hand into his own pocket to meet club bills.  It was because the club owed him money that he had used the club cheques to buy his TV licences.

There had been a lot of cash expenditures on this and that and he was not always given receipts.  Because of the cash expenditures, which arose unpredictably, he did not bank the surpluses from the fund-raising events but retained a tin of club cash.  He did bank ‘surplus’ cash from time to time.

He had not kept a cash book (and neither had the previous treasurer).  The records had been in a mess when he first received them and, to his regret, he had muddled along without ever really getting a ‘grip’ on things.

I was instructed by Peter’s lawyers to see if the evidence did support the theft and fraud charges.

It seemed to me that there was evidence to show substantial cash expenditures and that the fact that the surpluses from individual fund-raising events had not been banked separately did not necessarily indicate those surpluses had been stolen.

In the absence of a cash book it was not clear how cash drawn from the bank had been spent.

In the absence of a cash book it was not clear how cash drawn from the bank had been spent.  However it did seem, based on the annual accounts presented to the AGM by Peter, that he would have to have drawn at least some cash from the bank to pay those expenses which had not been paid by cheque.

It was not unreasonable to suppose that some of those expenses had needed to be paid in August, although there were no club activities that month.

William had prepared two sets of schedules.  One set based on the bank statements, the other set based on the receipts in the carrier bag.  There was at least one bona fide expenditure on the bank statement schedule which was not reflected on the other schedule – presumably because there was no receipt for it in the carrier bag.

Without a cash book it was not possible to exclude the possibility that there were further bona fide expenditures, which had been paid by cash, and for which the receipt had been lost (or never obtained).

I could not be sure that any monies had been misappropriated.

In the circumstances I could not be sure that any monies had been misappropriated.  Nor could I be sure whether, overall, Peter owed money to the club or they owed money to Peter.  In other words, I did not think the evidence proved that any crime had been committed.

When the matter came to trial Peter was acquitted of all the charges against him.

 

David

Names, locations and certain other details have been changed to protect the identities of those involved.

Residential property valuations for confiscation

I frequently see, in the course of confiscation proceedings under PoCA 2002 and earlier legislation, figures put on the value of residential properties by prosecution and defence.  Those figures are most often used in connection with determining the ‘available amount‘ of the defendant.  But they can also be relevant to determining the defendant’s ‘benefit’, for example where there are allegations of mortgage fraud or where the property in question is said to have risen in value after being purchased with funds tainted by criminality.

Although I am not a property valuer (and claim no expertise in the valuation of tangible assets) I am aware of the context in which issues of valuation arise.

The legislation

The key valuation legislation under PoCA 2002 in England & Wales is the segment on interpretation and in particular s79 which provides that in relation to property held by a person “its value is the market value of the property at that time”.  If another person has an interest in the property, then the relevant value “is the market value of his interest at that time”.  This means that a reduction will be made to reflect amounts due to lenders secured on the property, the legitimate interests of joint legal owners and the equitable interests (if any) of a spouse / domestic partner or others.

In relation to the value of property obtained from criminal conduct s80 indicates that “the material time is the time the court makes its decision” and for the purpose of determining the defendant’s ‘available amount’ s9(1) indicates that the values “at the time the confiscation order is made” are to be used.

But what do we mean by the “market value”?

the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion

In the case of R v Islam 2009 UKHL 30 Lord Hope of Craighead said at paragraph [6]: “The statute has refrained from defining precisely what is meant by the expression “market value”.  . . . The market value of goods . . .  is the price which a willing seller will accept for them from a willing buyer”.  This remark may well be obiter dicta and not strictly relevant to residential properties (the case was concerned with the value of illegal drugs) but it does not appear to be contentious.

The International Valuation Standards Committee defines “market value”  as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.   The Royal Institution of Chartered Surveyors (the RICS) adopts that same definition of “market value” in the ‘Red Book’ – the RICS Valuation Standards.  Valuations on this basis are sometimes referred to as being at ‘Red Book market value’.

But what is actually done about residential property valuations in confiscation cases?

The likelihood is that the prosecutor will have placed a value of some sort on the residential property in the course of his s16 statement.  He might have done that based on information obtained, probably from the Land Registry, concerning the date of purchase of the property and the price paid then – uplifted by a published index of movements in UK property prices since that time.  Alternatively he may have based his valuation on relatively recent data concerning the sales of local comparable properties.  He will then have deducted from that value a figure obtained from the mortgage lender (or from a credit check) for the current amount outstanding on the mortgage.

A danger is that these types of ‘desktop’ valuations may not reflect the value of the actual property in question

A danger is that these types of ‘desktop’ valuations may not reflect the value of the actual property in question, especially if it was purchased some years ago, may have been modified since it was purchased and may not be truly comparable to other local properties.  There may also be a long delay between the prosecutor undertaking this exercise and the hearing in court which results in the confiscation order.

The defence on the other hand will be informed by the defendant’s own view as to the value of the property.  They may also have obtained an independent valuation.  This may be a figure from a local estate agent based on the asking price he would recommend if he were to be asked to sell the property.  Such a valuation is sometimes referred to as a ‘market appraisal’ to distinguish it from a ‘Red Book market value’ valuation.

a figure from a ‘market appraisal’ may be in excess of the ‘Red Book market value’ because it is based on an estimated asking price rather than an estimated sale price.

The defence may rely upon the prosecution’s s16 statement for the amount of the secured liabilities.

It is immediately apparent that a figure from a ‘market appraisal’ may be in excess of the ‘Red Book market value’ because it is based on an estimated asking price rather than an estimated sale price.

 

What should be done?

In giving an opinion of value the valuer is acting as an expert witness in criminal proceedings.  The valuer ought to be a person who, either by qualifications or experience, or both, is in a position to give an authoritative expert opinion.  His written valuation ought to comply with Part 33 Criminal Procedure Rules.

The valuation should take into account the estimated costs of realisation of the property such as estate agent’s and legal fees, see R v Davies [2004] EWCA Crim 3380 at paragraph [15], and even, where appropriate, the costs of legal proceedings to force the sale by way of an application under s14 Trusts of Land and Appointment of Trustees Act 1996, see R v Modjiri [2010] EWCA Crim 829 at paragraph [23].

Of course the valuation needs to take account of the interests of persons other than the defendant in the property.  So, for example, if the defendant is one of four legitimate joint owners each having an equal interest in the property then the value of the defendant’s interest will be one-quarter of the value of a 100% interest in the property.  There should however be no additional adjustment to reflect the defendant’s minority interest (except by recognition of potential additional costs of realisation).

But subject to these adjustments, the value adopted should be the ‘Red Book market value’, that is to say the ‘market value’ as required by s79.

In practice a defendant subject to a confiscation order has a limited time to realise the monies required to satisfy that order.

In practice, of course, a defendant subject to a confiscation order has a limited time to realise the monies required to satisfy that order.  If he fails to satisfy the order on time the amount outstanding will attract interest  and he is at risk of the default sentence being triggered.  So he may not  be in a position to ensure “proper marketing” of the property and he is, to  a certain extent, “under compulsion”.  He is not a “willing seller”.

Should these factors be taken into account in the valuation of the property?

The law suggests that they should not, since to do so would be to adopt a basis which is not “market value”.  However it may be the case that the defence will request the valuer to produce two valuation figures, one on a  ‘Red Book market value’ basis and another on the basis of a need to obtain the proceeds of sale within 6 or 12 months of the confiscation order – a ‘quick sale’ basis.  In that way the court may be better informed of the likely sales proceeds.

But why is this not done in practice? 

I suggest that there are two reasons for this.  The cost of obtaining a ‘Red Book market value’ will act as a disincentive to both prosecution and defence (who would need to obtain a prior authority from the LSC to cover the valuer’s fees).  The other alternatives are cheaper or even free.

Also prosecutors and lawyers may not be fully acquainted with issues surrounding different bases of property valuations.

Does it matter?

If the value of the property is relevant to the defendant’s ‘benefit’ in confiscation then there is a danger of his ‘benefit’ being overstated in the confiscation order.  In that event it is not normally open to the defence to seek a downward revision to the ‘benefit’ figure if the property is subsequently sold for less than the valuation figure.

If there is no arm’s-length sale, for example if the ownership of the property passes to the defendant’s spouse or domestic partner, then there may be no basis on which to amend the valuation.

If the value of the property is relevant to the defendant’s ‘available amount‘ then this, and the consequent default sentence, may be excessive.  If the property is subsequently sold at arm’s-length and realises less than the valuation figure it may be possible for the defence to have the ‘available amount‘ adjusted downwards under s23.  However this involves the reconsideration of all the assets within the defendant’s ‘available amount‘.  Furthermore the actual sale may take place a long time after the making of the confiscation order – by which time the default sentence may have been triggered.

If there is no arm’s-length sale, for example if the ownership of the property passes to the defendant’s spouse or domestic partner, then there may be no basis on which to amend the valuation.

There is a recorded case, R v Lemmon [1991] EWCA Crim 1, in which a confiscation order was quashed on appeal when a professional residential property valuation obtained after the date of the confiscation hearing showed that the defendant’s ‘available amount‘ had been overstated.  However that decision may be specific to its facts.  In particular it appears that in that case “the figures put as the value of his realisable assets were unknown to the appellant until the day of the hearing”.  Ordinarily a defendant will be made aware of the prosecution’s assertions regarding his ‘available amount‘ in advance of the hearing, as they will be set out in the prosecutor’s s16 statement.

In the case of R v Davies [2004] EWCA Crim 3380 a prosecution valuation (which proved to be an over-valuation) was not challenged at the confiscation hearing.  Subsequently a professional valuation was obtained in a substantially lower figure and an appeal was lodged against the order.  In the Court of Appeal defence counsel indicated that the valuation had not been challenged due to an oversight on his part.  The Court of Appeal considered, at paragraphs [11] to [14], that the Crown Court judge had been misled as to the value of the property and it amended the defendant’s ‘available amount‘ and hence the amount of the confiscation order.

As a result of amendments made to the Criminal Appeal Act 1968 by s140 Coroners and Justice Act 2009 it is now open to the Court of Appeal to remit confiscation cases to the Crown Court for re-hearing.  However it would be unwise, I suggest, to assume that a failure to carefully consider the value of residential property could always be remedied on appeal.

Conclusion

So there is something to be said for getting the most appropriate value recognised by the court at the time the confiscation order is made by appointing a properly qualified and experienced valuer to provide a ‘Red Book market value’ taking into account costs of sale, and supported perhaps by an alternative ‘quick sale’ valuation.  I would suggest that the amounts due to secured lenders (the current redemption figure, including any early repayment or arrears penalties) should also be checked shortly before the confiscation hearing.

David