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Judgments - Regina v. Soneji and another (Respondents) (On Appeal from the Court of Appeal (Criminal Division))


SESSION 2005-06
[2005] UKHL 49
on appeal from: [2003] EWCA Crim 1765






Soneji and another (Respondents)

(On Appeal from the Court of Appeal (Criminal Division))

Appellate Committee

Lord Steyn

Lord Rodger of Earlsferry

Lord Cullen of Whitekirk

Lord Carswell

Lord Brown of Eaton-under-Heywood


David Perry
David Wallbank
(instructed by Revenue and Customs
Prosecutions Office)
Nicholas Valios
Christopher Meredith
(instructed by Stanley Tee)

Hearing dates:

20, 21 and 22 June 2005






Regina v. Soneji and another (Respondents) (On Appeal from the Court of Appeal (Criminal Division))

[2005] UKHL 49


My Lords,

    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 [2004] 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:

    "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."

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:

    ". . . designed to stop confiscation orders from being quashed merely because some procedural error has taken place in the application of the postponement procedures. I shall, if I may, provide your Lordships with a little background on this occasion, as it is directly relevant to the amendments.

    As your Lordships will be aware, the Bill amends the postponement regime in the existing legislation. . . . It is important to understand, however, that the basic mechanics of the postponement regime envisaged by the Bill remain rather similar to those in the existing legislation.

    Unfortunately, it is becoming increasingly clear that the courts are finding this legislation difficult to operate. A string of appeal cases testifies to the fact that defendants regularly attempt to have the confiscation order overturned on the ground that the postponement procedures were not applied properly by the court. Confiscation orders are being lost as a result. The case of Woodhead, [[2002] 2 Cr App R (S) 238] decided by the Court of Appeal in January this year, is a good example. In that case, the postponement procedures had been followed to the letter. However, the Court of Appeal overturned a confiscation order of £200,000 on the grounds that the judge had not shown that he was exercising his discretion when agreeing to the postponement."

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:

    "Where an offender is convicted, in any proceedings before the Crown Court or a magistrates' court, of an offence of a relevant description, it shall be the duty of the court -

    (a)  if the prosecutor has given written notice to the court that he considers that it would be appropriate for the court to proceed under this section, or

    (b)  if the court considers, even though it has not been given such notice, that it would be appropriate for it so to proceed,

      to act as follows before sentencing or otherwise dealing with the offender in respect of that offence or any other relevant criminal conduct."

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:

    "(1)  Where a court is acting under section 71 above but considers that it requires further information before -

    (a)  determining whether the defendant has benefited from any relevant criminal conduct; or

    (b)  . . .

    (c)  determining the amount to be recovered in his case . . .,

      it may, for the purpose of enabling that information to be obtained, postpone making that determination for such period as it may specify.

      (2) More than one postponement may be made under subsection (1) above in relation to the same case.

      (3) Unless it is satisfied that there are exceptional circumstances, the court shall not specify a period under subsection (1) above which -

      (a) by itself; or

      (b) where there have been one or more previous postponements under subsection above (1) or (4) below, when taken together with the earlier specified period or periods,

      exceeds six months beginning with the date of conviction.

      (4) Where the defendant appeals against his conviction, the court may, on that account -

      (a) postpone making any of the determinations mentioned in subsection (1) above for such period as it may specify; or

      (b) where it has already exercised its powers under this section to postpone, extend the specified period.

      (5) A postponement or extension under subsection (1) or (4) above may be made -

      (a) on application by the defendant or the prosecutor; or

      (b) by the court of its own motion.

      (6) Unless the court is satisfied that there are exceptional circumstances, any postponement or extension under subsection (4) above shall not exceed the period ending three months after the date on which the appeal is determined or otherwise disposed of.

      (7) Where the court exercises its power under subsection (1) or (4) above, it may nevertheless proceed to sentence, or otherwise deal with, the defendant in respect of the offence or any of the offences concerned.

      (8) Where the court has so proceeded -

      (a) subsection (1) of section 71 above shall have effect as if the words from 'before sentencing' onwards were omitted;

      (b) that subsection shall further have effect as if references to an offence that will be taken into consideration in determining any sentence included references to an offence that has been so taken into account; and

      (c) section 72(5) above shall have effect as if after 'determining' there were inserted 'in relation to any offence in respect of which he has not been sentenced or otherwise dealt with".

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 [2003] 1 WLR 1655, 1672-1673, para 51-56; subsequently affirmed by a five-member court in R v Simpson [2004] 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:

    "(i)  Is the court's common law jurisdiction to adjourn confiscation proceedings subject to a mandatory time limit of six months from the date of conviction save where 'exceptional circumstances' are present?

    (ii)  Once the court has assumed jurisdiction under section 71 of the Criminal Justice Act 1988, is its jurisdiction thereafter extinguished by failure to comply either with the provisions of section 72A of the Act or any common law requirements relating to the postponement/adjournment of the proceedings?"

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 [1963] 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 [2004] 1 Cr App R (S) 219, 232-233, paras 26-28:

    "When the judge gave his ruling on 3 November 2000, that is after the six months had elapsed, he acknowledged, with admirable candour if we may say so, that on 18 August, when the earlier decision was confirmed, no enquiry was made of the defendants as to the postponement and that there had been no analysis of the factors which might amount to exceptional circumstances. In his later rulings, the judge also candidly acknowledged, more than once, that there were not exceptional circumstances and to go behind that judicial finding would create a sense of injustice. Even if the judge's finding may be construed as making a general point that listing difficulties are not an exceptional event, so that it might be said that the use of the expression was not itself fatal, the absence of any judicial enquiry and finding upon the circumstances meant that the requirement was not satisfied.

    Failure to address the question whether the circumstances could properly be described as exceptional and to make a finding to that effect is in our judgment fatal to the upholding of these confiscation orders. We would respectfully seek to sustain the principle that confiscation orders should not be quashed for mere defects in procedure. To give effect to the requirement that there must be exceptional circumstances, and if the expression is not to be a mere incantation, however, enquiry into the circumstances and the possibility and feasibility of a timely hearing, is required . . . To overlook these failures would be to nullify the statutory intention upheld in the cases. . . .

    Even if, contrary to the views expressed, the existence of exceptional circumstances is not invariably a pre-requisite of the exercise of the power to postpone or adjourn beyond six months of conviction, any exercise of the power must recognise, in the light of the authorities, the importance of promptness and the consequent need for a judicial appraisal of the circumstances, including those which it is suggested justify delay. A threshold of difficultness must be crossed. In this case, the lack of enquiry into listing difficulties following conviction and on 29 June, when the date of 30 October was pencilled in, and the lack of analysis of the situation then or, as acknowledged by the judge, on 18 August, make it unfair to uphold orders eventually made in early 2002."

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 [1994] 1 WLR 1286, 1294D-1295H.

VII. A New Perspective.

    15.  In London & Clydeside Estates Ltd v Aberdeen District Council [1980] 1 WLR 182, 189E-190C Lord Hailsham put forward a different legal analysis:

    "When Parliament lays down a statutory requirement for the exercise of legal authority it expects its authority to be obeyed down to the minutest detail. But what the courts have to decide in a particular case is the legal consequence of non-compliance on the rights of the subject viewed in the light of a concrete state of facts and a continuing chain of events. It may be that what the courts are faced with is not so much a stark choice of alternatives but a spectrum of possibilities in which one compartment or description fades gradually into another. At one end of this spectrum there may be cases in which a fundamental obligation may have been so outrageously and flagrantly ignored or defied that the subject may safely ignore what has been done and treat it as having no legal consequences upon himself. In such a case if the defaulting authority seeks to rely on its action it may be that the subject is entitled to use the defect in procedure simply as a shield or defence without having taken any positive action of his own. At the other end of the spectrum the defect in procedure may be so nugatory or trivial that the authority can safely proceed without remedial action, confident that, if the subject is so misguided as to rely on the fault, the courts will decline to listen to his complaint. But in a very great number of cases, it may be in a majority of them, it may be necessary for a subject, in order to safeguard himself, to go to the court for declaration of his rights, the grant of which may well be discretionary, and by the like token it may be wise for an authority (as it certainly would have been here) to do everything in its power to remedy the fault in its procedure so as not to deprive the subject of his due or themselves of their power to act. In such cases, though language like 'mandatory,' 'directory,' 'void,' 'voidable,' 'nullity,' and so forth may be helpful in argument, it may be misleading in effect if relied on to show that the courts, in deciding the consequences of a defect in the exercise of power, are necessarily bound to fit the facts of a particular case and a developing chain of events into rigid legal categories or to stretch or cramp them on a bed of Procrustes invented by lawyers for the purposes of convenient exposition. As I have said, the case does not really arise here, since we are in the presence of total non-compliance with a requirement which I have held to be mandatory. Nevertheless I do not wish to be understood in the field of administrative law and in the domain where the courts apply a supervisory jurisdiction over the acts of subordinate authority purporting to exercise statutory powers, to encourage the use of rigid legal classifications. The jurisdiction is inherently discretionary and the court is frequently in the presence of differences of degree which merge almost imperceptibly into differences of kind."

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 [1994] 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]:

    ". . . their Lordships consider that when a question like the present one arises - an alleged failure to comply with a time provision - it is simpler and better to avoid these two words 'mandatory' and 'directory' and to ask two questions. The first is whether the legislature intended the person making the determination to comply with the time provision, whether a fixed time or a reasonable time. Secondly, if so, did the legislature intend that a failure to comply with such a time provision would deprive the decision maker of jurisdiction and render any decision which he purported to make null and void?

    In the present case the legislature did intend that the commissioner should make his determination within a reasonable time. . . . If the commissioner failed to act within a reasonable time he could be compelled to act by an order of mandamus. It does not follow that his jurisdiction to make a determination disappears the moment a reasonable time has elapsed. If the court establishes the time by which a reasonable time is to be taken as having expired, which will depend on all the circumstances, including factors affecting not only the taxpayer but also the Inland Revenue, it would be surprising if the result was that the commissioner had jurisdiction to make the determination just before but not just after that time. Their Lordships do not consider that that is the effect of a failure to comply with the obligation to act within a reasonable time in the present legislation. Such a result would not only deprive the government of revenue, it would also be unfair to other taxpayers who need to shoulder the burden of government expenditure; the alternative result (that the commissioner continues to have jurisdiction) does not necessarily involve any real prejudice for the taxpayer in question by reason of the delay."

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 [2003] 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:

    "At the outset their Lordships observe that it seems highly unlikely that the Commission can have intended that breaches of time limits at the investigation stage would inevitably prevent it from discharging its public function and duty of inquiring into and, if appropriate, prosecuting relevant indiscipline or misconduct. A self-imposed fetter of such a kind on the discharge of an important public function would seem inimical to the whole purpose of the investigation and disciplinary regime."

He added at p 430, para 17:

    ". . . If a complaint is made about the non-fulfilment of a time limit the giving of relief will usually be discretionary. This discretionary element to which Lord Hailsham referred [in the London & Clydeside Estates case] underlines the fact that problems arising from breach of time limits and other like procedural flaws are not generally susceptible of rigid classification or black and white a priori rules. With this in mind their Lordships note that in the present case the delays were in good faith, they were not lengthy and they were entirely understandable. The appellant suffered no material prejudice; no fair trial considerations were or could have been raised, and no fundamental human rights are in issue."

The reasoning in Charles is along the same lines as Lord Hailsham's observations and the Wang case.