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Regina v. Soneji and another (Respondents) (On Appeal from the Court of Appeal (Criminal Division))
HOUSE OF LORDS
OF THE LORDS OF APPEAL
FOR JUDGMENT IN THE CAUSE
Soneji and another (Respondents)
(On Appeal from the Court of Appeal (Criminal Division))
Lord Rodger of Earlsferry
Lord Cullen of Whitekirk
Lord Brown of Eaton-under-Heywood
(instructed by Revenue and Customs
(instructed by Stanley Tee)
20, 21 and 22 June 2005
THURSDAY 21 JULY 2005
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
Regina v. Soneji and another (Respondents) (On Appeal from the Court of Appeal (Criminal Division))
 UKHL 49
1. The central question of law arising on the appeal before the House is whether the Court of Appeal acted on the correct legal principle when it quashed two confiscation orders made by the Crown Court pursuant to the Criminal Justice Act 1988, as amended by the Proceeds of Crime Act 1995: R v Soneji and Bullen  1 Cr App R(S) 219.
1. The Confiscation Regime.
2. Parliament has firmly adopted the policy that in the fight against serious crime, apart from ordinary sentences, a high priority must be given by the courts to the making of confiscation orders against defendants convicted of serious offences. The purpose of confiscation proceedings is to recover the financial benefit that the offender obtained from his criminal conduct. In England and Wales the confiscation regime was introduced by the Drug Trafficking Offences Act 1986. It was extended by the Criminal Justice Act 1988 to cover other indictable offences and specified summary offences. Since its introduction this legislation has been amended from time to time. The approach reflected in this legislation has been reinforced by the United Kingdom's ratification on 28 June 1991 of the United Nations Convention Against Illicit Traffic in Narcotic Drugs And Psychotropic Substances 1988 and ratification on 28 September 1992 of the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime 1990.
3. The most recent statute is the Proceeds of Crime Act 2002, which came into force on 24 March 2003. The aim of the new statute is to create an effective unified regime of confiscation law. Given the almost year by year amendment over the last 20 years of sometimes overhasty criminal legislation, and the great difficulties created for the courts by much of this flood of legislation, it would be innocent to predict that the 2002 Act has solved the problems involved in the criminal process of confiscation. On the present appeals the interpretation of the 2002 Act does not arise for consideration. Section 14(11) of the 2002 Act, however, is of some historical interest. It provides:
In the course of moving the Bill in the House of Lords the Lord Chancellor explained (Hansard, HL Debates, 25 June 2002, col 1241) that section 14(11) is:
This provides some retrospectant evidence of the difficulties caused in practice by the postponement procedures under the 1998 Act.
4. The appeals before the House are governed by the 1988 Act, as amended. Under this legislation there is no provision like section 14(11). In other words, there is no express provision that a confiscation order must not be quashed only on the ground that there was a defect or omission in the procedure connected with the application for or the granting of a postponement.
5. For present purposes the relevant provisions of the 1988 Act are section 71(1) and section 72(A). Section 71(1), as amended, reads as follows:
The succeeding subsections of section 71 then spell out the duties of the court in detail. About section 71(1) three points must be noted. First, it places an overarching duty on the court when an offender is convicted to consider how to act in respect of confiscation. Secondly, even if the prosecutor does not seek by notice to persuade the court to consider confiscation, the court must of its own motion consider whether to embark on confiscation proceedings. Thirdly, the court must act in this way act before sentencing.
6. Section 72(A) of the 1988 Act, as amended, governs postponed determinations. It provides:
The genesis of section 72A is as follows. The earlier provisions were premised on the basis that in the normal case the court would deal with the confiscation order before sentencing the defendant. The power to postpone confiscation proceedings was provided in effect as an afterthought by the Criminal Justice Act 1993.
7. Section 72(A) has spawned a substantial case law. A troublesome question has been whether under subsection (3), absent exceptional circumstances, the court is deprived of the power to make a confiscation order after the lapse of six months. In practice lapse of the six month limit has frequently been thought to compel the result that the convicted offender is freed from the penalty of confiscation.
8. In practice the courts have, as the Lord Chancellor observed during the passing of the 2002 Act, found the postponement procedures under section 72(A) difficult to interpret and apply. Many confiscation orders have been overturned for very technical failures. An example is R v Palmer, The Times, 5 November 2002, where the Court of Appeal quashed a confiscation order of more than £30 million because of a defect in a prosecutor's notice. The Court of Appeal has held that Palmer was wrongly decided: R v Sekhon  1 WLR 1655, 1672-1673, para 51-56; subsequently affirmed by a five-member court in R v Simpson  QB 118. In both cases it was held that the provisions concerning postponement were directory only. This was an attempt by the Court of Appeal to ensure that mere procedural errors would not in future deprive the court of the power to proceed, if appropriate, to confiscation. Sekhon and Simpson have, however, not entirely solved the problem of how to deal with errors in the application of postponement procedures. That will become clear when the present case and its disposal by the Court of Appeal after the decision in Sekhon is considered.
II. The Confiscation Proceedings.
9. This prosecution concerned a money-laundering scheme. Between September 1997 and July 1999 more than £15 million in used sterling bank notes were laundered through a small bureau de change close to Victoria Station, London. There were cash deposits on 189 different dates in sums of up to £350,000 at a time. In each instance the cash was exchanged either for high-denomination foreign currency notes (with a view to it being physically carried out of the jurisdiction) or for bankers drafts or for electronic transfers. The scheme was masterminded by a man called Raju Soneji. Accused No 1, Kamlesh Soneji, is his brother. Accused No 1 acted as the runner of Raju Soneji and was responsible for physically delivering to the bureau most of the sterling cash deposits. Accused No 2, David Bullen, acted as a link-man between the Soneji brothers and one of the criminal groups making use of their laundering services. On 24 March 2000 in the Crown Court at Southwark Accused No 1 pleaded guilty to an offence of conspiracy to convert property and to remove it from the jurisdiction knowing or suspecting that it represented the proceeds of criminal conduct, contrary to section 1 of the Criminal Law Act 1977. On 3 April 2000 Accused No 2 pleaded guilty to the same offence.
10. On 21 June 2000 the prosecutor served notice under section 71(1)(a) of the 1988 Act that he considered that it would be appropriate for the court to proceed under that section. On 18 August 2000 the judge sentenced Accused No 1 to 4½ years imprisonment (varied on appeal to 3½ years imprisonment) and Accused No 2 to six years imprisonment (varied on appeal to five years imprisonment). In January 2002, the judge made a confiscation order against the Accused No 1 in the amount of £75,350. Subsequently, the order was varied to £30,284. The judge made a confiscation order against Accused No 2 in the sum of £375,000. Before these orders were made counsel for the two defendants unsuccessfully submitted to the judge that because of the lapse of the six months period under section 72(A)(3) the judge no longer had jurisdiction to make the confiscation orders.
III. The Court of Appeal Decision.
11. The Court of Appeal (Criminal Division) quashed the confiscation orders on the basis that they had been made more than six months beyond the date of conviction. The Court of Appeal accepted that there is a power to postpone the making of a confiscation order under the 1988 Act and a power to adjourn such proceedings at common law, but held these powers may only be exercised where the sentencing court finds that there are established exceptional circumstances which justify the postponement or adjournment. The Court of Appeal held that a failure to consider or make a finding of exceptional circumstances deprived the sentencing court of jurisdiction to make a confiscation order. The Court of Appeal quashed the confiscation orders for want of jurisdiction under the 1988 Act: R v Soneji and Bullen, supra.
IV. The Certified Questions.
12. The Court of Appeal certified that the following points of law of general public importance were involved in the decision to allow the appeals against the confiscation orders:
While the Appellate Committee always pays close attention to the formulation of questions certified by the Court of Appeal, it is not bound by the terms of the certification: Attorney General for Northern Ireland v Gallagher  AC 349, 365, per Lord Reid. In this case I would prefer, in the first place, to consider what are the legal consequences of failures under the confiscation regime under section 72(A), and in particular the time limit under section 72(A)(3).
V. The Assumption.
13. There is an initial difficulty. Before one can consider the legal consequences of failures under section 72(A) it is necessary to identify those failures. An examination of the tortuous history of the confiscation procedures in the present case left me in some doubt whether there were indeed material failures in the process. On balance I am prepared to assume (without deciding) that the findings of fact of the Court of Appeal were correct. The Court of Appeal took into account what it conceived to be the effect of the Sekhon decision. Giving the judgment of the Court of Appeal Pill LJ observed  1 Cr App R (S) 219, 232-233, paras 26-28:
This is the basis on which I propose to consider what are the legal consequences of the failures identified by the Court of Appeal. But the issues have a wider significance.
VI. The Core Problem.
14. A recurrent theme in the drafting of statutes is that Parliament casts its commands in imperative form without expressly spelling out the consequences of a failure to comply. It has been the source of a great deal of litigation. In the course of the last 130 years a distinction evolved between mandatory and directory requirements. The view was taken that where the requirement is mandatory, a failure to comply with it invalidates the act in question. Where it is merely directory, a failure to comply does not invalidate what follows. There were refinements. For example, a distinction was made between two types of directory requirements, namely (1) requirements of a purely regulatory character where a failure to comply would never invalidate the act, and (2) requirements where a failure to comply would not invalidate an act provided that there was substantial compliance. A brief review of the earlier case law is to be found in Wang v Commissioner of Inland Revenue  1 WLR 1286, 1294D-1295H.
VII. A New Perspective.
15. In London & Clydeside Estates Ltd v Aberdeen District Council  1 WLR 182, 189E-190C Lord Hailsham put forward a different legal analysis:
This was an important and influential dictum. It led to the adoption of a more flexible approach of focusing intensely on the consequences of non-compliance, and posing the question, taking into account those consequences, whether Parliament intended the outcome to be total invalidity. In framing the question in this way it is necessary to have regard to the fact that Parliament ex hypothesi did not consider the point of the ultimate outcome. Inevitably one must be considering objectively what intention should be imputed to Parliament.
16. In Wang v Commissioner of Inland Revenue  1 WLR 1286, in an appeal from Hong Kong, the Privy Council followed and applied the dictum of Lord Hailsham in London & Clydeside Estates. At first instance the judge found that the deputy commissioner lacked jurisdiction to make two determinations since he had not done so within a reasonable time required by the imperative language of the statute. The Court of Appeal reversed the decision. On appeal the Privy Council dismissed the appeal on two grounds. First, the Privy Council found on the facts that the determinations were made within a reasonable time. Secondly, on the assumption that there had been a breach of the time limit, the Privy Council held that the deputy commissioner had not been deprived of his jurisdiction. After reviewing earlier case law Lord Slynn of Hadley, giving the judgment of the Privy Council, observed [at 1296D]:
It will be noted that Lord Slynn spoke of jurisdiction not being lost. He was using that notion in the traditional sense of conveying that the authority or power of the court had not been lost: Halsbury's Laws of England, 4th ed, (Re-issue), para 314.
17. Charles v Judicial Legal Service Commission  1 LRC 422 involved an appeal from Trinidad and Tobago. It is a decision of some importance. The case concerned the effect of failures to observe time limits laid down by regulations dealing with discipline and misconduct in the public service. Giving the judgment of the Privy Council Tipping J (of the New Zealand Court of Appeal) observed, at pp 428-429, para 12:
He added at p 430, para 17:
The reasoning in Charles is along the same lines as Lord Hailsham's observations and the Wang case.