Judgments - R v. Saik (Appellant) (On Appeal from the Court of Appeal (Criminal Division))

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    57.  In R v Churchill [1967] 2 AC 224 it was held that if on the facts known to them at the time of their agreement what the parties agreed to was lawful, they were not rendered guilty of conspiracy to commit an offence by the existence of other facts not known to them which gave a different and criminal quality to the act or course of conduct that they had agreed on: Viscount Dilhorne, p 237. The offence that was in issue in that case was an offence of strict liability. Section 1(2) codifies this principle. It does so in language which was designed to make it clear that, while ignorance of the law was no excuse, full knowledge of the consequences of the agreement was required: see the Law Commission's Report, Conspiracy and Criminal Law Reform (Law Com No 76), 1976, paras 1.39- 1.41. It was designed also to exclude recklessness as to the consequences. In para 1.41 the Law Commission recognised that the mental element which their proposals required was a stringent one, adding this explanation:

    "However, we think that the stringency we recommend is fully justified by the fact that conspiracy is essentially an inchoate offence which is committed before any prohibited event has in fact taken place."

    58.  A provision to give effect to this proposal was included in clause 1(3) of the draft Bill appended to the report. Section 1(2) does not follow its language precisely, but the requirement that the defendant and at least one other party to the agreement must "intend or know" that the fact or circumstance "shall or will exist" at the time when the conduct constituting the offence is to take place was taken directly from the draft Bill. There is no doubt that the requirement was designed to eliminate the risk that someone could be guilty of conspiracy just because he was reckless as to the existence or otherwise of the circumstances that would make the conduct criminal. In his commentary on this subsection in Current Law Statutes, Professor Edward Griew of Leicester University, noted that offences that might be committed without knowledge of the facts that gave the act a criminal quality are not confined to offences of strict liability. They include offences where recklessness as to some fact was a minimum but sufficient requirement:

    "There are many offences, for example, which require knowledge or recklessness as to the falsity of some statement. But only knowledge of the falsity will ground liability for conspiracy to commit such an offence. All this is as the Law Commission intended: Law Com Report, paras 1.39 et seq."

A preliminary analysis

    59.  The concepts on which sections 1(1) and 1(2) were based are easy to state but not nearly so easy to apply in practice. This has been the subject of a vigorous debate ever since. It began with two articles by Professor J C Smith: Conspiracy under the Criminal Law Act 1977 (1) [1977] Crim L R 598; Conspiracy under the Criminal Law Act 1977 (2) [1977] Crim L R 638. In his first article at p 603 Professor Smith said that the purpose of section 1(2) was to ensure that strict liability and recklessness had no place in conspiracy, even if the agreement was to commit a crime which might be committed recklessly or a crime of strict liability. In his second article at p 641, footnote 32, he observed that most of the difficulties of construction of these two subsections were due to the lengths to which the Law Commission had gone to exclude recklessness, flowing from the use of the words "necessarily" in subsection (1) and "intend or know" in subsection (2). He pointed out that Churchill v Walton [1967] 2 AC 224 did not decide whether recklessness was a sufficient mens rea on a charge of conspiracy at common law. In the law of attempts, while there must be an intention to bring about the consequences of the crime alleged to be attempted, it was possible that recklessness as to the circumstances which were the ingredients of the offence would suffice. At p 642 he said:

    "The question remains open: but probably the better view is that intention in the strict sense as to consequences is necessary, whereas recklessness as to circumstances may be enough."

    60.  These articles were soon followed by an article by Professor Glanville Williams, The New Statutory Offence of Conspiracy- I (1977) 127 New L J 1164, and comments by Professor D W Elliott and Adrian Lynch on Mens Rea in Statutory Conspiracy [1978] Crim L R 202 to which Professor Smith replied in a further comment at p 210 entitled Some Answers. Dealing with recklessness as to circumstances, Professor Glanville Williams disagreed with Professor Smith. At p 1166 he said that it was probable that at common law recklessness as to circumstances was sufficient to found liability for conspiracy where it was enough for the substantive crime. He gave as an example an agreement to make a statement which all the parties to the agreement knew might or might not be true to get money as a result of which, if they got the money, they would be guilty of obtaining property by deception. But he did not accept that recklessness would be enough in the case of the statutory offence:

    "Section 1(2) appears to insist upon knowledge for conspiracy in these circumstances, so that, in the example given, the parties must know that facts exist that are the contradictory of what they say, notwithstanding that this knowledge is not required for the consummated offence. It is difficult to see any solid reason for restricting the offence of conspiracy in this way, and the law may well be different for attempt and incitement.

    A fortiori, there can be no conspiracy by recklessness as to future circumstances. To be guilty of conspiracy, the plotters must believe that the required future circumstances will exist, not may exist."

    61.  The mens rea of the offence which section 93C(2) creates is of a kind that was not discussed, and which may not even have been foreseen, by the Law Commission in 1976. Suspicion was not among the various problems that were mentioned by those who criticised the legislation in 1977. This offence can be committed without knowledge that the property is another person's proceeds of criminal conduct. But it is not an offence of strict liability. Nor is it an offence whose mens rea includes recklessness. The minimum requirement is that, when he entered into the agreement to launder the money that was to be handed over to him, the defendant suspected that the property was criminal proceeds and that he had reasonable grounds for doing so. The problem is that suspicion falls short of knowledge.

    62.  The margin between knowledge and suspicion is perhaps not all that great where the person has reasonable grounds for his suspicion. Failure to ask or to obtain an answer to the obvious question may be described as wilful blindness. In R v Griffiths (1974) 60 Cr App R 14, 18, James LJ said that to direct a jury that, in common sense and in law, they may find that the defendant knew or believed goods to have been stolen because he deliberately closed his eyes to the circumstances was a perfectly proper direction. That no doubt is why, for the purposes of the substantive offence of laundering the proceeds of criminal conduct, knowledge and suspicion for which the person has reasonable grounds are treated by the statute in the same way. It is immaterial, for the purposes of this offence, into which of these two categories the defendant falls. In either case he will have the necessary mens rea if he does any of the acts that the subsection refers to for the purpose of assisting any person to avoid prosecution for an offence or the making or enforcement of a confiscation order.

    63.  But the appellant in this case was charged with conspiracy. It is not easy to see how a case where the mens rea for the substantive offence is based on suspicion for which there are reasonable grounds can be fitted into the language of sections 1(1) and 1(2). The problem has not been assisted by the practice of prosecuting several acts of money laundering which have taken place over a period under the umbrella of the statutory offence of conspiracy. Concepts which were designed to fit with the idea that conspiracy is an inchoate offence are being applied to cases where the only proof that there was a conspiracy is provided by evidence of the course of conduct, from which inferences as to the state of mind of the participants are then drawn. The problem is made all the more acute in this case because the appellant pleaded guilty before any evidence was led. All we have is his plea and the statement that explains the basis for it.

The developing case law

    64.  Your Lordships were referred to a series of cases where the courts have attempted, with varying degrees of success, to make sense of this way of prosecuting offences of money laundering. I do not think that anything is to be gained by examining all of them. The important stages in the development of the law are indicated by the following.

    65.  In R v Singh [2003] EWCA Crim 3712 the appellant was convicted on three counts of conspiracy to launder money. The prosecution case was that he and his co-accused engaged in money laundering between June 1999 and March 2000. The particulars on each count contained an allegation that he and his co-conspirators engaged in transactions which were prohibited by section 49(2)(b) of the Drug Trafficking Act 1994 and section 93C(2)(b) of the 1988 Act, "knowing or having reasonable grounds to suspect that certain property, namely banknotes, was, or in whole or in part directly or indirectly represented, another person's proceeds of drugs trafficking and/or criminal conduct". It was submitted for the appellant that the words "knowing or having reasonable grounds to suspect", whilst apt for an allegation of the principal offences, were not sufficient to describe what had to be proved for guilt of the statutory conspiracy. For the prosecution it was submitted that an averment of intent as an alternative to knowledge was not necessary in a charge of conspiracy. The intent was inherent in the unlawful agreement alleged.

    66.  Rejecting the appellant's argument, Auld LJ said in para 34:

    "If two or more people intend and agree to commit an act that they know to be unlawful, then knowledge or mistake as to a fact critical to the success of the conspiracy is immaterial to its proof; the intention is proxy for, or more correctly an alternative to, knowledge of such a fact. And, it follows, gradations of knowledge, such as 'reasonable grounds to suspect' it, are irrelevant."

He added that the inclusion of words such as "knowing or having reasonable grounds to suspect" taken from the substantive offences was an immaterial averment. Summing up in para 35, he said that there was no point of substance in the appellant's complaint that something short of knowledge was alleged in the indictment when, given the thrust of the prosecution case, knowledge of the precise provenance of the banknotes was not at the heart of the conspiracy but intention to launder illicitly obtained money was.

    67.  I find it hard to accept that an averment taken from the substantive offences is an immaterial averment where the defendant is charged with conspiracy to commit those offences when it would be an essential averment if the substantive offences themselves were the subject of the charge. Proof of an intention to commit the substantive offence, it seems to me, is an essential part of proving the offence of any conspiracy. It must be proved that the activity that the parties to the conspiracy were intending to engage in would amount to or involve the commission of a crime. As a general rule all the elements that require to be established for the commission of that crime must be explained to the jury, because they cannot find the defendant guilty of conspiracy unless they are sure that the activity that he and the others were proposing to engage in was itself criminal. The solution which the Court of Appeal adopted in Singh is no doubt correct, because it is faithful to the wording of the state of mind that requires to be established for a conspiracy. But it is open to the objection that it shifts attention away from the wording of section 93C(2) to the words of section 1(2). It works in favour of the defendant in a way that was not anticipated by Parliament when it enacted section 93C(2). It raises the threshold from that required to establish the state of mind described in section 93C(2) to that required to establish the state of mind described in section 1(2).

    68.  In R v Sakavickas [2004] EWCA Crim 2686; [2005] 1 WLR 857, [2005] Crim LR 293, the appellants were convicted of a conspiracy to assist another to retain the benefit of criminal conduct. The substantive offence was in section 93A of the 1988 Act, which makes this an offence where the accused knew or suspected that the other person had engaged in or benefited from criminal conduct. The issue on appeal was whether a person was guilty of a conspiracy to commit that offence if he had a mere suspicion of the criminal character of the person with whom the arrangement was entered into. It was submitted for the appellants that section 1(2) of the 1977 Act applied and that, in order to be guilty of conspiracy, the alleged offender and at least one other person had to intend or know that the money to be laundered was or was to be the proceeds of another person's crime when the offence contrary to section 93A was taking place. Dismissing the appeal, the court held that section 1(2) did not apply to an offence contrary to section 93A of the 1988 Act. In its view, the fact or circumstance necessary for the commission of the offence was the suspicion of the defendant. Establishing suspicion also established knowledge of that suspicion. The defendant must inevitably have knowledge of his own state of mind: para 17.

    69.  Here too the solution adopted by the Court of Appeal is open to the objection that it avoids, rather than solves, the problem. As Professor David Ormerod points out in his commentary on this case [2005] Crim LR 293, 296, no one would suggest that a defendant who was charged with the substantive offence must be shown to have both a reasonable suspicion that the money was criminal proceeds and knowledge of the fact that his own state of mind was that suspicion. As the language of section 93C(2) itself shows, that is not the way it is intended to work. Why should it work in a different way where the defendant is charged with conspiracy? Various examples can be envisaged where it would make no sense for this double test to be an essential part of proving a conspiracy. The Court of Appeal failed to address the real problem that section 1(2) raises when it is read with section 93C(2). The knowledge which section 1(2) requires is knowledge of the facts and circumstances that must be proved as part of the actus reus of the substantive offence.

    70.  The decisions of the Court of Appeal in Singh and Sakavickas preceded the decision of this House in R v Montila [2004] 1 WLR 3141. In that case the appellants were not charged as parties to a conspiracy. The case against them was directed instead to the substantive offences of money laundering in section 49(2) of the Drug Trafficking Act 1994 and section 93C(2) of the 1988 Act. It was held that the offences described in these sections proceeded on the basis that the property in question in fact had its origins in criminal conduct, and that this was an essential part of the actus reus of the offences. As the Appellate Committee said in its report, para 27,

    "A person cannot know that something is A when in fact it is B. The proposition that a person knows that something is A is based on the premise that it is true that it is A. The fact that the property is A provides the starting point. Then there is the question whether the person knows that the property is A."

In para 30 it said that it would make no sense to say that a defendant was guilty of an offence of money laundering simply because he had reasonable grounds to suspect that the property had a criminal origin, when he was in a position to prove that it was not property of that kind at all.

    71.  In R v Harmer [2005] EWCA Crim 1, [2005] Crim LR 482, which was decided after Montila, the appellant and a co-defendant were charged with conspiracy to launder property which they had reasonable grounds to suspect was the proceeds of drug trafficking or other criminal conduct. The prosecution accepted that they could not establish that the property was the proceeds of crime, and it was not alleged that the defendants knew that it had a criminal origin. The case went to trial before the decision of this House in Montila. The trial judge did not direct the jury that it was necessary for the prosecution to prove that the money was in fact the proceeds of drug trafficking or other criminal conduct, and he was convicted.

    72.  Allowing the appeal, May LJ, giving the judgment of the court, accepted the appellants' interpretation of section 1(1)(a) see para 23:

    "Mr Kane's central submission is that the statutory definition of conspiracy comprising section 1(1)(a) of the 1977 Act embraces an agreement whereby the conspirators intend and agree to commit 'an offence or offences'. Montila decides that converting or transferring property which a defendant has reasonable grounds to suspect represents another person's proceeds of crime is not an offence, unless the Crown also prove that the property is the proceeds of crime. The Crown, therefore, did not establish in the present case that the appellant was guilty of conspiracy under section 1(1)(a), since they did not establish that the object of the agreement was an offence. In our judgment, this is clearly a correct construction of the subsection."

In para 25 he said that there was a further answer to the Crown's submission. As he explained in para 26, this was the requirement in section 1(2) that, where the substantive charge was that the defendant had reasonable grounds to suspect (but did not know) that the money was the proceeds of crime, he was not to be guilty of conspiracy unless he and at least one other party to the agreement intended or knew that the money would be the proceeds of crime when the agreed conduct took place:

    "This intention or knowledge is precisely what the prosecution in the present case accepted they could not prove when the words 'knew or' were omitted from the particulars of count 2. If the prosecution cannot prove that the money was the proceeds of crime, they cannot prove that the appellant knew that it was. So section 1(2) of the 1977 Act applies and is not satisfied."

This decision does, at last, address the real issues that arise in this kind of case, although in his commentary on the following case, R v Liaquat Ali and others [2005] EWCA Crim 87, [2005] Crim L R 864, 867, Professor Ormerod said that the court was right to cast doubt on what was said in Harmer about section 1(1)(a). Referring to the Court of Appeal's judgment in Singh, May LJ said that it did not in the court's view survive Montila. I agree.

    73.  In R v Liaquat Ali and others [2005] EWCA Crim 87 the appellants were convicted on two counts of conspiracy to contravene section 49(2) of the Drug Trafficking Act 1994. It was submitted for the appellants that the effect of the decision in Montila, taken together with sections 1(1) and 1(2) of the 1997 Act, was that a person could not be guilty of a conspiracy to commit an offence against section 49(2) or section 93C(2) unless he and another person knew at the time of the agreement that the property was the proceeds of drug trafficking or of other criminal conduct. So a count of conspiracy to commit either of these offences which included the words "reasonable grounds to suspect" or even the word "suspect" was bad in law under section 1(1)(a) of the 1977 Act in the light of Montila. And a count in these terms fell foul also of section 1(2) of the 1977 Act in the light of Montila, as that subsection required the defendant and another co-conspirator to intend or know at the time of the agreement that the property was in fact the proceeds of drug trafficking or other criminal conduct.

    74.  Allowing the appeal, Hooper LJ, giving the judgment of the court, said in para 111 that, as the jury were directed to convict only if they were sure that at least part of the money was in fact the proceeds of drug trafficking, section 1(1)(a) of the 1977 Act was satisfied. But in para 139 he said that, following Montila, the substantive offences under section 49(2) and 93C(2) required proof that the defendant was in fact dealing with the proceeds of drug trafficking or other criminal conduct. Section 1(2) of the 1977 Act came in at this stage, and the jury could only convict of conspiracy if the defendant knew that he was dealing with such proceeds. In para 147 he said that it seemed to the court that Singh could not survive Montila. An intention to launder illicitly obtained money was not enough. The money must be proved to have been the proceeds of drug trafficking or other criminal conduct and, as he put it, "onto that requirement, section 1(2) of the 1977 Act bites". Hooper LJ recognised that the decision which he felt compelled to reach was unsatisfactory. In para 151 he said that its consequence was that, if it was right, the prosecution had a heavier burden to discharge that it would have in order to prove the substantive offence. But, as he observed in para 150, the prosecution accepted that it would not have been open to it to charge each delivery of money separately, given the rule against duplicity in rule 4(2) of the Indictment Rules 1971. In my opinion the Court of Appeal reached the right decision in Ali, and there is much in its reasoning with which I agree.

The meaning of the words used

    75.  I must now return to the words of the statute. It seems to me that the best way to discover the meaning of the words used in section 1 to define the statutory offence of conspiracy is to assume that one is dealing, as the Law Commission intended, with an allegation of an inchoate crime. A conspiracy is complete when the agreement to enter into is formed, even if nothing is done to implement it. Implementation gives effect to the conspiracy, but it does not alter its essential elements. The statutory language adopts this approach. It assumes that implementation of the agreement lies in the future. The question whether its requirements are fulfilled is directed to the stage when the agreement is formed, not to the stage when it is implemented.

    76.  First there is section 1(1). It refers to (i) an agreement, (ii) a course of conduct to be pursued under that agreement and (iii) the fact that, if the agreement is carried out as intended, it "will necessarily" amount to or involve the commission of an offence by one or more of the parties to the agreement. Let us assume that there are two parties to the agreement: parties X and Y. X is in possession of cash which he knows is the proceeds of crime (A). Y does not know the cash is A, which it is. But he suspects that it is A, and he has reasonable grounds for his suspicion. The agreement is that X will hand over the cash to Y, and that Y will immediately convert it into a different currency. If the agreement is carried out as they intend, the cash will be converted. The conversion of cash which is A by someone who knows that it is A is an offence contrary to section 93C(2). X knows that the cash is A. So the carrying out of the agreement between X and Y in accordance with their intentions will necessarily amount to the commission of an offence by X. This is enough to satisfy section 1(1)(a). But the carrying out of the agreement will also necessarily amount to the commission of an offence by Y. The cash will be A, because that is the fact known to X. And the conversion of cash which is in fact A by someone who has reasonable grounds to suspect that it is A is an offence under section 93C(2).

    77.  In the present case, exiguous though the facts are in the light of the appellant's plea, they must be understood in the light of what is averred in the particulars. We can assume therefore that the conspiracy took the form of an agreement between the appellant and Lemos that the banknotes which Lemos was to hand over to the appellant were to be converted into foreign currency. Lemos pleaded guilty to knowing that the banknotes were the proceeds of crime. That can be taken to be the fact, as he could not know that the banknotes were the proceeds of crime when they were not. I think that it follows that the carrying out of the agreement according to their intentions would necessarily amount to the commission of an offence by Lemos. The same is true of the appellant even though he only suspected, but did not know, that the cash was the proceeds of crime. I would hold that the requirements of section 1(1)(a) are satisfied in this case.

    78.  But there remains section 1(2). It is necessary to address this question too, because Y can incur liability for an offence under section 93C(2) without knowledge of a fact necessary for the commission of the offence - that the cash is A. Section 1(2) tells us that a person shall not be guilty of the conspiracy to commit that offence by virtue of subsection (1) unless he and at least one other party to the agreement "intend or know" that the fact necessary for the commission of the offence - that the cash is A - "shall or will exist" at the time when the cash is converted into a different currency. There is no problem about X, of course. He knows that the cash which he will hand over to Y is A. He knows that it will be A when the conduct takes place - when it is converted into a different currency. But what about Y? He suspects that the cash is A. But he does not know that it is, or that it will be when it is handed over to him and he converts it. Can it be said that he intends that it should be A, when he does not know what he will be dealing with? Solving this problem is not easy because the word "intend" in section 1(2) refers to the existence of a fact or a circumstance, not to the consequences of giving effect to the agreement. But the words "shall or will" indicate that nothing short of intention or knowledge as to its existence will do.

    79.  I think that the answer to this question will depend on the facts. It could be said of Y that he knows enough about the purpose of the transaction because of the grounds for his suspicion for it not to matter whether he will be able to tell by looking at the cash that it is in fact the proceeds of crime. It may be open to the Crown to prove that Y knew very well what the purpose of the agreement was - that he knew that the cash was to be converted to assist someone to avoid prosecution for an offence or the making or enforcement of a confiscation order, which is what section 93C(2) refers to. It might be going too far to say that he knew that the cash would be A when he came to deal with it. But it could be inferred that he intended that the cash would be A, because he knew that that was the only purpose of the transaction.

 
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