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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Wiese v The UK Border Agency [2012] EWHC 2549 (Admin) (29 June 2012) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2012/2549.html Cite as: [2012] EWHC 2549 (Admin), [2012] Lloyd's Rep FC 681

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2A 2LL
		29th June 2012

MR JUSTICE UNDERHILL:

Introduction

1. The appellant is a South African businessman. On 23rd April 2009 he flew from Cape Town to Moscow, and on 26th April he arrived in London from Moscow. Early the next morning he arrived at London City Airport, booked on a flight to Luxembourg returning the same day. He was found to be carrying £120,000 in cash in his hand baggage and another £554,920 in two cases checked into the hold. The cash was seized pursuant to the powers conferred by section 294 of the Proceeds of Crime Act 2002 (to which I will refer as "POCA") and detained under section 295. An application was in due course made to the Magistrates Court for its forfeiture under section 298 of POCA; and following a hearing on 1st and 2nd December 2010 District Judge Snow, sitting at the City of Westminster Magistrates' Court, made such an order. The appellant appeals against that order by way of case stated. I wish to say at this stage that the case stated is to be commended for its clarity and succinctness.
2. The appellant is represented before me by Ms Clare Montgomery QC. Mr Jonathan Fisher QC, leading Mr John Law, appears for the respondent, the United Kingdom Border Agency (to which I shall refer as "UKBA"). Mr Fisher did not appear in the Magistrates Court, but Miss Montgomery and Mr Law did.

The statutory provisions

3. By section 294 (1) of POCA, a customs officer, a constable or an accredited financial investigator may seize any cash "if he has reasonable grounds for suspecting that it is (a) recoverable property, or (b) intended by any person for use in unlawful conduct". "Recoverable property" is defined at sections 304 to 310 of POCA. For present purposes, I need read only section 304 (1), which provides that "property obtained through unlawful conduct is recoverable property".
4. The meaning of the phrase "property obtained through unlawful conduct" is glossed by sections 241 and 242. Section 241 defines unlawful conduct and also contains a provision as to how it is to be proved. It reads:

"(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.

(2) Conduct which -

(a) occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country, and

(b) if it occurred in a part of the United Kingdom, would be unlawful under the criminal law of that part

is also unlawful conduct.

(3) The court or sheriff must decide on a balance of probabilities whether it is proved -

(a) that any matters alleged to constitute unlawful conduct have occurred, or

(b) that any person intended to use any cash in unlawful conduct."

Section 242 is headed "property obtained through unlawful conduct" and reads as follows:

"(1) A person obtains property through unlawful conduct (whether his own conduct or another's) if he obtains property by or in return for the conduct.

(2) In deciding whether any property was obtained through unlawful conduct -

(a) it is immaterial whether or not any money, goods or services were provided in order to put the person in question in a position to carry out the conduct,

(b) it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct.

5. Turning to the forfeiture power exercised in the present case, section 298 reads as follows (so far as material):

"(1) While cash is detained under section 295, an application for the forfeiture of the whole or any part of it may be made -

(a) to a magistrates' court by the Commissioners of Customs and Excise or a constable,

(b) (in Scotland) to the sheriff by the Scottish Ministers.

(2) The court ... may order the forfeiture of the cash or any part of it if satisfied that the cash or part -

(a) is recoverable property, or

(b) is intended by any person for use in unlawful conduct."

I need not read subsections (3) and (4). Section 295, which is referred to in subsection (1) of section 298, gives the identified persons the power to detain cash following seizure under section 294.

6. Forfeiture proceedings are civil in character: see section 241(b).

The evidence and the judge's findings

7. The evidence before the District Judge consisted of a witness statement from a customs officer called David Moulik, who was the case officer; the notes of the officers who initially found the money, which included notes of the appellant's answers to questions which they put to him; an expert report from a South African lawyer, Mr Van Zyl; and a report from an accountant, Mr Lindsay, about the appellant's financial resources. The appellant himself did not attend the hearing or provide a statement.
8. I should note at this stage that Mr Moulik's witness statement went beyond a straightforward statement of primary fact and contained an extended passage setting out his grounds for suspecting that the cash seized represented the proceeds of unlawful conduct or was intended for use in such conduct. Much of that section consisted of argument. Miss Montgomery contended in the Magistrates Court that the passage in question was inadmissible, but the judge held that it was unobjectionable. He said:

"Mr Moulik as officer in the case is in a position to assist the court in identifying the evidence. His opinions are merely sign posts to assist the court. In all cases the court will address its mind to the evidence. The defendant has had plenty of opportunity to deal with any matters which arise in the statement and in this case have the last word. Given that these proceedings are civil in nature, I am satisfied that the statement is admissible in its entirety."

9. The facts are, as I have said, clearly and succinctly stated in the case stated. I need not reproduce them in full. I will confine myself to those which are essential for the purposes of the issues before me.
10. When the appellant was first questioned the officers had only discovered the £120,000 in his hand baggage, which was in the form of used £50 and £20 notes. He said that he had taken that cash out of a safety deposit box at the Ritz Hotel in London: it had previously been in a strong box with UBS in London but he had moved it from there in December 2008. He provided a contact number for the relevant person at UBS - also, though a little later, details of his accountants. He was asked at that stage to fill in a form relating to the cash - an inappropriate form as it happens, but nothing turns on that -- in which he said that he was carrying £120,000 in cash to keep in safe storage. I have not seen the form itself, but the District Judge observes that it was evidently completed "without significant thought".
11. It was shortly afterwards that the existence of the hold baggage was identified and the further cash, not at that point counted but estimated at between £400,000-£500,000, was found. The appellant was asked why he had not declared that money on the form which he had just completed. He said that he had thought he was only being asked about the cash in the hand baggage. The judge was not prepared to find that he had deliberately concealed the existence of the further money, because the evidence about what exactly he had been asked by the officers was unclear; but he did say that he was satisfied that the appellant had not been candid, since he must have appreciated that the further cash would have been of interest to the officers. It is hard to disagree with that.
12. The appellant was then questioned further. I should at this point quote in full the relevant findings in the case stated:

"He stated that he was a regular visitor to the UK. He stated that his company PEPKOR had 4,000 retail outlets selling various goods. He stated that the monies seized had originated from South Africa and were from various 'diamond deals' in the 1980's and 1990's. He stated that the monies were removed from South Africa as travellers' cheques, which had been cashed abroad, and stored. He stated that the money was brought to either the UK or Switzerland because of exchange controls in South Africa.

He stated that he intended to leave the money in Luxembourg to invest or to open an account in Luxembourg to invest.

He was asked why the money was kept in a strong box rather than a bank. He stated that he did not want to leave an audit trail as previously in South Africa one was not allowed to have off shore money and that by keeping it in strong boxes there would be no paper trail."

The appellant was polite and co-operative throughout the questioning.

13. The appellant was in due course released. His solicitors at first indicated that they would be advancing substantive representations in correspondence. Subsequently, however, on the advice of leading counsel, they declined to provide any further information, and, as I have said, the appellant gave no evidence before the judge.
14. The evidence of Mr Lindsay, the accountant, established that the appellant was an extremely wealthy man. Indeed, though this is not strictly in the evidence, Ms Montgomery described him to me as one of the richest men in South Africa. The accountant's statement established that he had "public net assets of £446,690,441" and an income of "about" £25,840,053 per year.
15. A number of other points were established by Ms Montgomery in the cross-examination of Mr Moulik, including that the appellant was a resident of South Africa; that he had no convictions either in the United Kingdom or South Africa; that there was press interest in the case in South Africa; that the appellant was liable to face prosecution in South Africa for foreign exchange violations; and that the South African authorities had instructed solicitors to make a note of the proceedings.
16. The evidence of Mr Van Zyl gave further details about the relevant South African exchange control law.
17. When the cash which had been seized was in due course counted and banked, it was found to comprise 4,980 used sterling £50 notes, 20,667 used sterling £20 notes, 38 used £10 notes, 136 used £50 Scottish notes and a further 5,400 notes which were too damaged to be re-introduced into general circulation. It was bundled in elastic bands and not bank-wrapped.

The case before the Magistrates Court and the judge's reasons

18. Initially, UKBA appears to have relied on both limbs of section 298 (2) - that is, that the cash seized was either the proceeds of unlawful conduct or was intended for use in such conduct - but at some point the case become narrowed to the first alternative: Mr Law, in his submissions to the District Judge, identified the unlawful conduct in question as "money laundering", and, to anticipate, that was the basis of the judge's decision. "Money laundering" is defined in section 340 (11) of POCA as an offence under sections 327, 328 or 329 of POCA, or, to paraphrase, an offence ancillary to an offence under one of those sections. I need not read any of those sections here.
19. UKBA did not identify the particular form of money laundering involved, still less any particulars of such offending, and it called no evidence in support of any specific case. The judge was simply invited to draw an inference that the money was, on the balance of probabilities, obtained through money laundering of some kind - a "generic" case, as it was put.
20. There was an argument before the judge about precisely what UKBA had to prove under sections 241 and 242 in order to establish that the cash was recoverable property. His account of the argument is somewhat condensed, but it is clear that he rejected the submissions which he understood Ms Montgomery to be making, based primarily on the decision of Sullivan J in R (on the application of the Director of the Assets Recovery Agency) v Green [2005] EWHC 3168, and that he accepted in preference submissions made by Mr Law based on the decision of Moses J in Muneka v Commissioners of Customs & Excise [2005] EWHC 495 Admin I will return to those authorities in due course.
21. Adopting that approach, the District Judge held that it had been proved on the balance of probabilities that the cash had been obtained through money laundering. He identified eight facts which he described as "startling" (again, a description with which it would be hard to argue). These are as follows:

"(1) Mr Wiese on 27/04/09 was carrying £674,920 in cash with the huge risk of loss or theft.

(2) This is even more startling when one considers that he had checked about £550,000 into the hold of the plane. At that point this huge amount of money was outside his control. It was extremely vulnerable to loss or theft.

(3) The notes were bundled together in elastic bands, rather than being bank wrapped, which is unusual given the amount and explanation given.

(4) £413,340 were used notes.

(5) £6,800 were in Scottish notes.

(6) £5,400 were mutilated.

(7) Mr Wiese did not have in his possession any documents or other items corroborating his claim to have recently withdrawn the cash from a security box.

(8) He would have remained in Luxembourg for a few hours."

22. Having set out those facts (and having dealt with a criticism that Mr Moulik had made no further enquiries to check what the appellant had said about the cash having been held at the Ritz Hotel and previously at UBS), the District Judge said that the facts in question called for an explanation - by which he subsequently made clear that he meant a fuller explanation, with documentary support, than the appellant had given to the officers - but that the appellant had not provided any such explanation. He accepted that the appellant was acting on legal advice in declining that fuller explanation and that no positive adverse inference should be drawn from his silence; but the fact remained that there was no real explanation for the source of the money. He said at paragraph 11:

"The facts which I have identified above [that is the eight facts which I have set out] ... satisfy me, even given the defendant's immense wealth, that it is more likely than not that the cash was derived from criminal activity. Given the denomination of the notes, the fact that most were used, some were Scottish and some mutilated, I am satisfied on the balance of probabilities that the source was money laundering. Since money laundering involves the laundering of criminal cash into a legitimate form, I do not accept that even adopting the approach in Green, that it is necessary to further identify the matters alleged. As the currency was in Sterling and Scottish notes, the Applicant has satisfied me on the balance of probabilities that the unlawful conduct took place in the UK."

The appellant's challenge

23. The questions raised in the case stated are as follows, namely whether:

"1) It was Wednesbury unreasonable for me to determine that:

a. the facts were so startling that an explanation was called for and no explanation was provided

b. without drawing an inference from Mr Wiese's failure to provide documentary evidence or a full explanation either before or at the hearing, the evidence was capable of establishing on the balance of probabilities that the cash was obtained by or in return for an offence of money laundering committed within the United Kingdom

c. there was no need for any evidence (over and above the startling circumstances) to show that the cash constituted or represented a benefit obtained as a result of or in connection with past conduct of any particular kind or kinds which if it occurred outside the United Kingdom, would have constituted an offence in the United Kingdom;

2) I was correct to hold that, in reliance on Muneka [2005] EWHC Admin 495, the UKBA did not need to identify any matters alleged to constitute past or intended future criminal conduct or that the cash was obtained by or in return for any particular kind of unlawful conduct or intended for use in any particular kind of conduct;

3) the opinion evidence given by Mr Moulik was admissible"

24. As they are formulated, those questions do not wholly reflect the points as they emerged in argument before me, but they are nevertheless broadly indicative of the appellant's grounds of challenge. I take them in turn.

Ground 1

25. Although framed in the language of Wednesbury unreasonableness and somewhat elaborately formulated, the real question here is whether the evidence before the District Judge justified the inference, on the balance of probabilities, that the cash which had been seized was obtained through money laundering.
26. Ms Montgomery submitted that it did not. She did not deny that the facts were startling and that it was entirely reasonable to draw an inference of -- to put it broadly, and perhaps using my language rather than hers -- discreditable conduct of some kind: people do not usually acquire over half a million pounds' worth of used bank notes and then take the risk of taking that cash on an international flight in their ordinary baggage unless they are trying to conceal the money from legitimate enquiry. But to say that that state of affairs cries out for explanation, or indeed that the explanation must be wrongdoing of some kind, is not enough. There were two explanations before the judge: first, that the cash was obtained through money laundering and, secondly and alternatively, that it represented, as the appellant had told the UKBA officers, the proceeds of traveller's cheques which he had taken out of South Africa in breach of exchange control. It is common ground before me that the second of those alternatives would not constitute unlawful conduct as defined in section 241, because, in short, it would not be unlawful conduct in the United Kingdom. The judge had to choose between those explanations and give reasons for his choice. Ms Montgomery submitted that he does not, in truth, give reasons. There is nothing in paragraph 11 of the case stated which identifies why he thought money laundering was more likely to be the explanation of the appellant's conduct than, to put it shortly, exchange control violations. If the judge, she submitted, had faced up to that question, the only reasonable answer was the second. Quite apart from the fact that it was the explanation which the appellant in fact gave, albeit in very general terms and not supported by documentary evidence or ultimately by evidence on oath, it was inherently the more likely explanation. Ms Montgomery referred, if only in passing, to the presumption of innocence. Perhaps more pertinently, she referred to those recent authorities which have confirmed that cogent evidence is generally required, even in cases where the civil standard of proof applies, that a person has committed a serious criminal offence.
27. I accept that submission. It is common knowledge and common experience that in countries with strict exchange control regulations citizens who need or wish to travel abroad frequently try to evade those controls; and exchange control is likely to be particularly irksome to very wealthy individuals who do not want to spend all their money at home, or in any event to be subject to restrictions as to how much of their money, and for what purpose, they can spend abroad. If such individuals succumb to the temptation to evade exchange controls, it will be important for them to leave no audit trail, certainly if the sums are, as here, very significant. By contrast, it is prima facie unlikely that a businessman of previous good character, already enormously rich from legitimate business, would become involved in money laundering. It is not of course impossible: all I say is that it is less likely. Exchange control violation is reprehensible, but it is not regarded by many people as being so morally culpable as the kind of criminal behaviour represented by money laundering. The fact is that the court was told of absolutely nothing which rendered it likely that the appellant was engaged in money laundering, save for the bare fact of his possessing, and attempting to take out of the country, this very large sum in used notes; but, as to that, there was an explanation which, though certainly not creditable, was plausible, and in my judgment inherently more plausible than money-laundering.
28. Mr Fisher's primary response to Ms Montgomery's submission was that the issue was one of fact and that the judge was entitled to draw the inference that he did from the facts which he identified. But the problem with that approach is that on the face of it the facts identified by the judge simply show that the appellant had something to hide. I pressed Mr Fisher to identify any of the facts which were more indicative that what he had to hide was likely to be money laundering rather than exchange control violation. The only feature which he put forward was the nature of the cash - that is, that the notes were used, that some were Scottish and some in poor condition, and that they did not appear to have come from a bank. He said that it appeared that this also was the aspect that the judge had regarded as indicative of money laundering. But I do not think that this helps. If the appellant was indeed taking large sums in hard currency out of South Africa in the form of traveller's cheques in breach of exchange control and wishing, as he clearly would in the circumstances, to avoid leaving an audit trail, he was not likely simply to take the traveller's cheques to a bank and cash them. He, or someone on his behalf, would have to cash them by some indirect and probably irregular means, and it is in my judgment quite unsurprising that in those circumstances he would receive notes of the kind that he did.
29. I must accordingly at the very least conclude that the judge did not give adequate reasons for finding that the cash was obtained through money laundering, rather than that it represented monies taken out of South Africa in breach of exchange control. In those circumstances it is open to me to reach my own conclusion on the question, and for the reasons which I have already given I would hold that the latter explanation was the more likely. But in truth I believe I should go further: in my view, that was the only conclusion open to the judge on the evidence before him.
30. In reaching that conclusion I have not lost sight of the fact that the appellant did not support his original explanation by giving evidence. If he had, the case would have been a great deal more straightforward, since UKBA had nothing to set against the positive evidence that he would have presumably given in support of the explanation that he gave to the officers. But the judge was right to hold that no adverse inference could be drawn from his silence, and it is in fact not difficult to see why he would have chosen not to incriminate himself by giving positive evidence that he had committed serious criminal offences in South Africa. The judge was, as I have already said, told that the case had attracted considerable interest in South Africa and that representatives of the South African government were in court.
31. I wish to emphasise that my decision depends on the facts of this particular case. In many cases where persons are found carrying large sums of cash at an airport there will be circumstances, which may include any refusal to explain their conduct or lies told about the origin or purpose of the cash, which will render entirely legitimate an inference that the cash was obtained through money laundering or some other particular kind of offending, for example drug dealing; but in the present case (a) there were no such other circumstances, and (b) an entirely plausible alternative explanation was put forward.
32. My conclusion on this ground means that I need not make a decision on the other grounds of challenge, but I think I should do so in case the matter goes further.

Ground 2

33. The case law in this field is a little complicated, but it can, I think, be adequately summarised as follows.
34. It is necessary as a background to my summary to note two distinctions in relation to the provisions of POCA with which the cases are concerned. The first is between the provisions which create substantive criminal offences -- that is, Part 7 of POCA - and the provisions permitting "civil recovery of the proceeds of unlawful conduct" which are to be found in Part 5. The second distinction is between the two separate regimes established under Part 5, namely "civil recovery in the High Court or Court of Session" under chapter 2 and "recovery of cash in summary proceedings" under chapter 3, the latter being of course what we are concerned with in the present case.
35. I should start with the decision in Muneka to which I have already referred. The applicant in that case, an Albanian, was found at Heathrow Airport with a ticket to Tirana and with over £20,000 in cash in his baggage. The district judge held that the cash had been obtained through unlawful conduct and that it was therefore recoverable property and liable to forfeiture under section 298. The appellant appealed on the basis that the judge had not identified the kind of unlawful conduct which he found. Moses J held that that was unnecessary. He said at paragraph 10 of his judgment:

"All that has to be shown is that the source of the money was a criminal offence in the United Kingdom and that it was intended for a criminal use either in the United Kingdom or elsewhere..."

36. The case of Green, to which, again, I have already referred, concerned a claim by the Director of the Assets Recovery Agency for civil recovery under chapter 2 of Part 5. The power to make a civil recovery order depends, like the power under Part 3, on whether the property in question is shown to be recoverable within the meaning of section 304. The issue was with what degree of specificity the unlawful conduct relied on had to be pleaded and proved. Sullivan J's conclusion was that it was necessary for the Director to plead and prove a particular kind of conduct, albeit that by virtue of section 242(2)(b) it would be sufficient to show that the property was obtained through conduct of one or other of two or more specified kinds. It was not enough, he held, simply to allege that the property was the product of some kind of unlawful conduct: see in particular paragraphs 19 and 20, but also paragraphs 42 and 50, of his judgment. He quoted and at least implicitly endorsed a passage in the explanatory notes to POCA which referred to "drug dealing ... money laundering or brothel keeping activities" as "kinds" of unlawful conduct: see paragraph 8 of the judgment. That conclusion appeared on the face of it inconsistent with the decision of Moses J in Muneka; but Sullivan J felt able to distinguish that, and some other cases which appeared to be to a similar effect, on the basis that they concerned the regime under chapter 3.
37. The approach taken by Sullivan J in Green was approved by the Court of Appeal in Director of the Assets Recovery Agency v Szepietowski [2008] Lloyd's Rep FC 10, which was another case under chapter 2 of Part 5. Moore-Bick LJ said, at paragraphs 106 to 107:

"106. As Waller LJ has observed, neither party took issue with the conclusions reached by Sullivan J in R (Director of Assets Recovery Agency) v Green, but in my view that should not deter us from considering them with a critical eye. When deciding what the Director must prove it important to bear in mind that the right to recover property does not depend on the commission of unlawful conduct by the current holder. All that is required is that the property itself be tainted because it, or other property which it represents, was obtained by unlawful conduct. Section 304 allows property to be followed into different hands and although section 308(1) of the Act protects a bona fide purchaser for value without notice, it is not difficult to think of circumstances in which property might be recoverable from someone who is himself entirely innocent. It is important, therefore, that the Director should be required to establish clearly that the property which she seeks to recover, or other property which it represents, was indeed obtained by unlawful conduct.

107. In order to do that it is sufficient, in my view, for the Director to prove that a criminal offence was committed, even if it is impossible to identify precisely when or by whom or in what circumstances, and that the property was obtained by or in return for it. In my view Sullivan J. was right, therefore, to hold that in order to succeed the Director need not prove the commission of any specific criminal offence, in the sense of proving that a particular person committed a particular offence on a particular occasion. Nonetheless, I think it is necessary for her to prove that specific property was obtained by or in return for a criminal offence of an identifiable kind (robbery, theft, fraud or whatever) or, if she relies on section 242(2), by or in return for one or other of a number of offences of an identifiable kind. If, as I think, that is what the judge meant in paragraph 50 of his judgment, I respectfully agree with him."

38. In Olupitan & another v Director of the Assets Recovery Agency [2008] Lloyd's Rep FC 253, the Court of Appeal again approved the reasoning of Sullivan J in Green. Carnwath LJ said at paragraph 22:

"I agree with Sullivan J (in Green) that the Director need not allege the commission of any specific criminal offence, provided there are set out the matters alleged to constitute 'the particular kind or kinds of unlawful conduct' by or in return for which the property was obtained. This approach in my view follows from the wording of the Act. Use of the term 'unlawful conduct', rather than reference to a criminal offence or offences, is a clear indication that the power is not so restricted. The Green approach was in effect endorsed by this court in Szepietowski."

He approved as adequately particular the pleading by the Director of the Assets Recovery Agency that the appellant "has committed immigration offences, acquisitive criminal offences, mortgage fraud and laundered the proceeds of these (and possible other offences) in addition to cheating the public revenue". He said:

"In my view that was sufficient indication of the alleged 'kinds' of conduct to satisfy the requirements of the statute..."

39. Thus far, therefore, there is a clear divergence between the degree of specificity required in cases of civil recovery in the High Court under chapter 2 of Part 5, as set out in Green and the cases following it, and cases of forfeiture of cash under chapter 3, as set out in Muneka. That divergence was, however, eliminated by the recent decision of the Divisional Court in Angus v United Kingdom Border Agency [2011] EWHC 461 Admin, postdating the decision of the District Judge in the present case. This was another forfeiture case. The claimant had been found at an airport with £40,000 in cash. The Crown Court, on appeal from the Magistrates Court, had found that that cash "may well have been" the proceeds of money laundering or of income tax evasion, but it made no positive finding, even on the balance of probabilities. In those circumstances the question was raised by way of case stated whether, for the purposes of forfeiture proceedings, it was necessary "to show that the property seized was obtained through conduct of one of a number of kinds each of which would have been unlawful conduct or is it sufficient for the officer to point to criminal conduct of an unspecified kind". The Divisional Court held that Muneka was not authority for the general proposition for which it had been relied on, and specifically that the requirements of sections 241 and 242 must be the same for all the provisions of Part 5, whether under Chapter 2 or Chapter 3.
40. I have so far considered only cases under Part 5. There are decisions of the Court of Criminal Appeal, in NW [2009] 1 WLR 965 and Anwoir [2009] 1 WLR 980, which establish that it is unnecessary for the purpose of proving an offence of money laundering under Part 7 to specify the nature of the underlying criminal conduct; and in NW some reliance was placed on Muneka. But the Divisional Court in Angus firmly rejected the suggestion that decisions under Part 7 are of any assistance in construing Part 5.
41. As I have said above, the District Judge purported to follow Muneka in preference to Green because it was concerned with a case under Chapter 3 rather than under Chapter 2. If that is what he really did, it is now clear as a result of Angus that he was wrong. But in fact his reasoning appears to be entirely consistent with Green. He did identify a particular kind of offence, namely money laundering, and on the approach adopted by Sullivan J in Green and endorsed since by the Court of Appeal that is enough.
42. Recognising this, Ms Montgomery advanced a more sophisticated argument. She pointed out that in principle it is necessary for the purpose of forfeiture to prove all the elements comprised in the definitions in sections 241 and 242 of POCA. That is in truth self-evident, but it is in any event decided by Sullivan J in Green: see in particular paragraphs 19 to 21 of his judgment. Thus it is necessary not only to prove that a particular kind of unlawful conduct has occurred, but that the cash in question has been "obtained by or in return for" that conduct: see section 242(1). That was, she pointed out, narrower language than the terminology of "as a result of or in connection with" adopted in Part 7 of POCA, and it must be properly applied according to its natural meaning. She accepted that in some kinds of case, once you had proved the unlawful conduct in question, you would in practice also have proved that the cash had been obtained through that conduct; but she submitted that that was not necessarily so in every case, and certainly not in the case of money laundering. In principle, as she pointed out, a person can launder his or her own money, and in such a case a sum of cash in the possession of the launderer cannot sensibly be said to have been obtained "by or in return for" the act of laundering which constitutes the criminal conduct: that phrase might be apt to cover a case where cash passes from person to person in the course of money laundering or where the launderer retains or is given a sum of cash by way of reward for his services, but that would not be every case. Accordingly, she submitted, in the case of money laundering at least the court will need more specificity about the nature of the conduct alleged before it can conclude that the cash sought to be forfeited constitutes recoverable property. There was no such specificity in the present case. That was fatal in itself. It was also a failure of due process because the appellant did not know the details of the case which he was meeting. Although Ms Montgomery's analysis focused on the link required by the phrase "by or in return for", she also submitted that specificity was necessary so that the judge could be satisfied that any money laundering occurred in the United Kingdom and during the period that money laundering of the kind in question was unlawful.
43. In my view, Ms Montgomery's formal analysis is correct, but it is more difficult for me to conclude whether it would have vitiated the judge's decision on the hypothesis that - as I must accept when considering this ground - he would otherwise have been entitled to find that the cash seized from the appellant was in his possession because he was engaged in money laundering. I am required to assume a premise which I am unable to accept, and it is accordingly not possible for me to say whether the material which would have justified the judge's primary conclusion would have also entitled him to draw conclusions on the matters which Ms Montgomery says he was required to be satisfied of. I would only say that I can envisage a case in which his finding could have been, if spelt out, that the appellant had "obtained" the cash in question (that is, these particular used notes) "in order to conceal, disguise, convert, transfer or remove" - those being the key verbs - "property representing his or some other person's benefit from criminal conduct"; and that that would be so even if the benefit was his own, so that this was a case of laundering his own money. In those circumstances I would see no real difficulty in saying that he had obtained the cash "by the act of money laundering." However, this is not a matter on which, for the reasons given, I can form a view given my conclusion on ground 1, and it is not necessary that I do so.

Ground 3

44. I can deal with this very briefly. Ms Montgomery revives the challenge that she raised to the admissibility of Mr Moulik's evidence. I agree that what were in effect Mr Moulik's submissions in support of UKBA's case were inadmissible as evidence. But the judge did not treat them as evidence. It is in fact positively helpful that officers seeking forfeiture under section 298 should state the basis of their case. Indeed, where they have been no prior pleadings or any real opportunity to clarify what the case is, it may be essential that they do so. In an ideal world the statement of UKBA's case would have been contained in a distinct document and not characterised as evidence; but that is a counsel of perfection, and I can see nothing substantively wrong in the course which Mr Moulik took.

Conclusion

45. In those circumstances I answer the questions raised by the case stated, though subject to the caveat to which I have already referred: (1) yes; (2) this does not arise; and (3) yes. Because of my conclusion on ground 1, I allow the appeal and revoke the order for forfeiture.

MR JUSTICE UNDERHILL: What consequential matters arise?

MS MONTGOMERY: Just as a matter of formality so far as the cash is concerned, under the provisions relating to interest, the effect of your Lordship's order will be -- and I do not think there is any contest about this -- to direct the release of the cash and any interest accrued on it.

So far as costs are concerned, there is some law on this. I do not know whether you still have my learned friend's file of authorities from the hearing.

MR JUSTICE UNDERHILL: I do.

MS MONTGOMERY: There is a decision of the Court of Appeal behind flag 9.

MR JUSTICE UNDERHILL: Perinpanathan.

MS MONTGOMERY: Perinpanathan, which I understood had got leave to the Supreme Court but obviously it has been withdrawn because I cannot see it in the lists, but in summary the Court of Appeal hold that so far as the costs in the Magistrates Court are concerned under section 64, which governs the proceedings in this type of case, the principles that should govern an order for costs are those set out at page 111 of the judgment of Stanley Burnton LJ, namely those that had been earlier identified by Lord Bingham in a licensing case, that effectively, and it is in the passage summarised between the two hole punched areas:

"1. Section 64(1) confers a discretion upon a magistrates' court to make such order as to costs as it thinks just and reasonable...

2. What the court will think just and reasonable will depend on all the relevant facts and circumstances ... "

And then 3, and this is the important bit:

"Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound ... the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant ... and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions ..."

MR JUSTICE UNDERHILL: Thank you for drawing that to my attention, but even being unaware of that, for reasons I need not spell out, the circumstances do not seem to me to be very propitious for you to make an application for your costs, but you can of course do so.

MS MONTGOMERY: My Lord, can I try the one limb that does appear to me to be open, even on a decision in Perinpanathan. Perinpanathan does, however, distinguish the situation before the Magistrates Court to that which applies by reason of Civil Procedure Rules, 44.3.2.

MR JUSTICE UNDERHILL: I see, so you say that you should have your costs of the appeal.

MS MONTGOMERY: I say I should have my costs of the appeal.

MR JUSTICE UNDERHILL: The difficulty is this. I do appreciate that the appeal is conceptually different, but your client, it seems to me, brought this state of affairs on himself, and in those circumstances I think it would stick in the throat and be contrary to the interests of justice that he should have his costs, even though, as I have held, the magistrate made a mistake in his approach. You are welcome to try and persuade me further.

MS MONTGOMERY: No, my Lord, I am not going to press it further.

MR JUSTICE UNDERHILL: Right. There is a practical problem. I am afraid that I am going to be away, and fairly definitively away, as from the beginning of next week. That will have two practical consequences. First, that -- unless you are very quick off the mark, and you may be -- I will have difficulty approving a draft order. That can probably be dealt with. Secondly, if either party wants a transcript, and it seems to me this is a case where there ought to be a transcript, I will not be able to approve it -- I am basically off the whole of next month and then there is the vacation. So I may not be able to approve it until certainly into the vacation, if they can find me, or certainly September. I do not know whether that is a great difficulty.

MS MONTGOMERY: I do not think so, there has been a fairly full note taken on both sides and we can await your Lordship's return.

MR JUSTICE UNDERHILL: Let us just think about the order, it will be very straightforward. On a case stated do I need to record my answers to the case stated as part of the order? I would have thought probably not. The actual order is that the appeal is allowed.

MS MONTGOMERY: Appeal is allowed, then --

MR JUSTICE UNDERHILL: So the order is: (1) appeal allowed; (2) sum forfeited to be repaid to the appellant's solicitors within 28 days, together with any accrued interest. I suppose I better say so there is a record of it, no order for costs.