Gibson, R v [2000] EWCA Crim 20 (23rd February, 2000)

Judgment As Approved by the Court Crown Copyright © The appellant, Leonard Gibson, now 57 years of age, appeals against his conviction on 5th March 1999 in the Crown Court at Southwark. He was found guilty of the acquisition, possession or use of proceeds of criminal conduct contrary to Section 93B of the Criminal Justice Act 1988. On 16th April he was sentenced to 9 months imprisonment suspended for two years. At the close of argument on 14th January we dismissed his appeal for reasons to be given later. We now give them. The Facts. John Bargetto was a bachelor and wealthy businessman who died on 17th April 1995 aged 78 at his house, 60 Beaconsfield Road, leaving an estate valued at just under £3M. He had been terminally ill for some time and, by will dated 14th March, he left substantial bequests to his secretary and nephew and, apart from one smaller bequest, the residue of his estate to the Campaign for Cancer Research. Probate of the will was granted to his solicitors and executors, Amory Glass & Co., on 5th January 1996. Amory Glass believed that they had got in all the assets of the estate but, unknown to them, John Bargetto during his lifetime had paid money into three undisclosed bank accounts containing a total of over £75,000. One of the accounts containing over £44,500 was with the Banco Commerciale Italiano at San Remo in Italy. Shortly after John Bargetto's death, Ferdinando Aguda one of his oldest and closest friends and a former business associate went with his son Michael to 60 Beaconsfield Road. They took possession of documents relating to the three bank accounts of which the executors were unaware and of letterheadings and other papers to enable them to transfer money from the bank accounts into an account with Barclays Bank at Georgetown in Jersey which they designated a "Bargetto" account. Into this account approx. £75,000 was accumulated and then transferred to other bank accounts. The prosecution alleged that the object of these transactions was to disguise the source of the money. Mr Aguda and his family knew that it had been paid into the accounts concerned for the purpose of evading tax and had decided to conceal the existence of the accounts from the executors. To disguise the true source of the money and to give it the appearance of a lawful provenance, substantial sums were paid from the Bargetto Jersey account into accounts operated by the family and their friends. One of these accounts was an account of LG Developers with Lloyds Bank at Willesden Green. This account was managed and operated by the appellant in connection with his business as a property developer. On 6th February 1996 the sum of £41,445.95 was transferred from the Banco Commerciale account to the Jersey account and on the following day, 7th February, a cheque for £28,000 was received by the appellant for the credit of his LG Developers account. The appellant's business included the management of a property, . 19 Firs Avenue, Muswell Hill, N.10. In January 1996 a member of the Aguda family sought to obtain money from John Bargetto's main bank account at Barclays Bank, Whetstone. Staff at that bank knew of John Bargetto's death when on 23rd January 1996 it received a letter purporting to come from Mr Bargetto giving an address at 19 Firs Avenue, Muswell Hill and on 13th March members of the Aguda family tried to get more of the funds transferred from the Whetstone bank account. An enquiry was begun. In due course the three unknown accounts were uncovered and the transfers into and out of Barclays Bank at Georgetown in Jersey were disclosed.. Mr Aguda and members of his family were arrested and subsequently charged with conspiracy to defraud the executors. On 30th January 1997 Det. Cons. Shaw of the Fraud Squad arrested the appellant on suspicion that he was involved in the conspiracy. The basis of the suspicion was the payment on 9th February 1996 of the £28,000 into the LG Developers account. Det. Cons. Shaw said to the appellant: "I believe you have access to that account and also that you control 19 Firs Avenue which is an address used to facilitate the transfer of money from the Bargetto accounts." The appellant was subsequently interviewed in the presence of his solicitor but declined to comment on the matters put to him. Some months later on 16th September 1997 the appellant attended at Holborn Police Station with his solicitor. He was charged with the offence of which he was convicted and at that time handed in a prepared statement. In this statement he related how he had rented out a room at 19 Firs Avenue to a man he believed to be John Bargetto and that in the course of their acquaintance he had mentioned he was dealing with a property development at Green Dragon Lane which was going quite well. Apparently "Mr Bargetto" expressed interest in investing in the venture. A week or two later when according to the appellant he was having a slight cash flow problem, he mentioned the fact to "Mr Bargetto" who offered him a sum of £28,000 by way of investment in the project. "Mr Bargetto" then wrote out a cheque for the sum of £28,000 which on 9th February the appellant paid into his LG Developers account at Willesden Green. In the following month, when he had sold one of his properties, he had sufficient money to reduce the sums owing on all of his accounts and so he repaid "Mr Bargetto" the sum of £28,000 in cash. At the time of paying over the cash to "Mr Bargetto", he added a sum of £500 which in his words: "I believed to be a fair amount of interest for the time I had borrowed the money." He said that at all times he believed this to be a bona fide business transaction. However nothing was recorded in writing and there were no documents of any kind to support an agreement with "Mr Bargetto". The pass sheet of LG Developers bank account showed the receipt of the sum of £28,000 and that £28,500 had been withdrawn in cash in March. It was the prosecution case, and clear upon the evidence, that the man calling himself "John Bargetto" was Michael Aguda, and that the 19 Firs Avenue address had been used for the purpose of facilitating the transactions to launder the money concealed from the executors. The trial of the appellant and the members of the Aguda family lasted from 11th January 1999 to 5th March 1999. The members of the family were convicted of the conspiracy and, as earlier stated, the appellant was convicted of the acquisition, possession or use of the proceeds of criminal conduct contrary to Sec. 93B of the Criminal Justice Act 1988. On 9th February 1999 at the close of the evidence for the prosecution, Mr Waylen submitted that the appellant had no case to answer. He said Sec. 93B of the Criminal Justice Act 1988 (inserted by the Criminal Justice Act 1993, Sec. 30) required the prosecution to disprove the defence open to the appellant under Sec. 93B(2) that he had acquired or used the £28,000 or had possession of it for adequate consideration. The prosecution had failed to do so and accordingly the appellant should be discharged at that stage. Mr Hicks for the prosecution submitted that it was for the defence to raise and to show on the balance of probability that the defence applied and that the appellant had not done so. The judge ruled that there was a case to answer and, in the course of his ruling, indicated that he considered Sec. 93B(2) was intended to cover cases where the funds or property had in fact been acquired by some form of purchase or exchange and that the sub-section was designed to meet or cater for any injustice which might otherwise arise. He said: "The prosecution are saying in effect that this situation simply does not arise here and that therefore Sub-Sec. (2) is irrelevant, and I am bound to say I agree with that assertion." He added: "If, however, I am wrong in this conclusion, it would have to be decided where the burden of proof lies in Sub-Sec. (2)." He then considered an argument repeated before us that, by comparing the words of Sub-Sec. (2) "It is a defence to a charge ..." with the wording of Sub-Sec. (7), "it is a defence to prove that ...", it was for the prosecution to disprove that adequate consideration had been given by the appellant for the acquisition or use of the £28,000. The prosecution submitted that the burden of proof under Sub-Sec. (2) was upon the defendant, at least to the extent of calling evidence to raise an issue that consideration had been given by the appellant. The judge said that the words of Sec. 93B(2) appeared to place a burden on the defence "but only by implication". Accordingly he ruled that the submission of no case failed. The appellant now submits that the judge's decision was wrong. The appellant gave evidence. He accepted that 19 Firs Avenue had been used for the purpose of the fraud but he did not know that at the time. He described how he was carrying out a development in Green Dragon Lane where he was building three bungalows. He had an overdraft facility with his bank at Willesden Green of £45,000-£50,000 for running the business. He said he had spoken to the man who called himself Bargetto to whom he had let 19 Firs Avenue about his development and that the man had made him an offer that "if he needed any funds for investment all he needed to do was to ask". Later he decided to take the man up on his offer, asking him if he was still interested in investing any money, and Bargetto told him that he did have £28,000. He had agreed to take it but there was no formal documentation nor any discussion beyond that. He gave evidence of his financial resources from which it was clear that there was no need for him to take the money and he described how he had later paid back in cash £28,500, the £500 being by way of interest for the use of the money. On the basis of this evidence Mr Waylen submitted to the judge that he should direct the jury to consider the defence raised by Sec. 93B(2). The judge, we are told, ruled that on the basis of his earlier decision the defence did not arise. Mr Waylen submits that the judge ought to have allowed this defence to be considered by the jury. He argues the appellant's evidence that he paid back £28,000 with the addition of £500 was sufficient to raise an issue under Sec. 93B(2). The payment of £28,000 by the man calling himself John Bargetto, on its own, gave rise to an inference that it was a loan made by him to the appellant for use in his business. It was to be implied in any such transaction that interest would be payable by the appellant for the use of the money. Mr Waylen acknowledged that it was clear from the jury's verdict that they had rejected the appellant's evidence. It seems to us they must have done so. It is convenient first to consider whether the judge in the course of his ruling that the appellant had a case to answer was correct to say that he agreed with the prosecution's submission that Sec. 93B(2) was irrelevant, by which we take the judge to have meant that it did not arise on the facts proved in evidence at that stage. The Statute. The provisions of Sec. 93B of the Act relevant to this appeal are: "(2) It is a defence to a charge of committing an offence under this section that the person charged acquired or used the property or had possession of it for adequate consideration. (3) For the purposes of subsection (2) above - (a) a person acquires property for inadequate consideration if the value of the consideration is significantly less than the value of the property; and (b) a person uses or has possession of property for inadequate consideration if the value of the consideration is significantly less than the value of his use or possession of the property. (4) The provision for any person of services or goods which are of assistance to him in criminal conduct shall not be treated as consideration for the purposes of subsection (2) above ... (6) For the purposes of this section, having possession of any property shall be taken to be doing an act in relation to it." At the close of the evidence for the prosecution, which included the prepared statement handed to the police on 16th September 1997, there was plainly a case for the appellant to answer. The consideration argued for by Mr Waylen was either an obligation or a promise to pay interest to be implied from the circumstances of the payment of the £28,000: alternatively it was the actual payment of the £500 in addition to the £28,000. By Sec. 102 of the Criminal Justice Act 1988, "property" includes money, and includes property of all kinds. Whether the cheque which the appellant acquired was regarded as a chose in action which subsequently was converted into a right to claim the sum from his bank, when he acquired that property the appellant had given no consideration for it. Nor was there any express or implied promise or obligation on his part to pay for its use. In our view between 9th February and 8th March he gave no consideration for use of the £28,000. When he paid the cheque into his bank account, he had done an act which amounted to having possession of it. He had thus committed the offence and had no grounds to argue that he had a defence under Sec. 93B(2). Nor does his statement that he gave the man posing as John Bargetto an extra £500 in cash because he believed it to be a fair amount of interest alter the position. In the absence of any promise, agreement or obligation to make the payment when he acquired, took possession of or used the money, he had given no consideration within the meaning of the Act. The prosecution also argued, we think rightly, that in such a case the accused would simply be providing the service of allowing his bank account to be used by the person paying over the money, a service which was of assistance to him in his criminal conduct. By Sub-Sec. (4) such a facility is not to be treated as consideration for the purposes of the Sub-Sec. (2). The next question raised by Mr Waylen was whether the judge was right to hold that to prove an offence under this section the prosecution was not required to prove as part of the offence that no or inadequate consideration had been given. In our view the effect of the words used in Sec. 93B(2) must depend on the intention of the enactment. In its interpretation the court is not simply confined to the language of the statute. As Lord Ackner said in R -v- Hunt [1987] CAR 180: "But the court is not confined to the language of the statute. It must look at the substance and the effect of the enactment. The first question which has to be decided is what is the offence?" In looking at the substance and effect of Sec. 93B the history of the legislation is important and in this case significant. The Act of 1993 introduced into the Criminal Justice Act 1988 three "money laundering" offences. Sec. 93B was the second of these offences. At the same time this country was under obligation to implement European Council Directive 91/308/EEC which provides that member states shall ensure that credit and financial institutions, their directors and employees co-operate fully with the authorities by disclosing suspicious transactions (Article 6) and that such institutions and persons refrain from carrying out transactions which they know or suspect to be related to money laundering until they have made an appropriate disclosure (Article 7). Sec. 93B was clearly modelled on the provisions of Sec. 14(3) of the Criminal Justice (International Co-operation) Act 1990 which created an offence of acquiring property knowing or suspecting that it represented the proceeds of drug trafficking. Sec. 14(3) provided: "A person is guilty of an offence if, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person's proceeds of drug trafficking, he acquires that property for no, or for inadequate, consideration." Thus in Sec. 14(3) of the 1990 Act the failure to give any or adequate consideration was an ingredient in the statement of the offence whereas in Sec. 93B(2) of the 1988 Act the draughtsman has clearly taken the provisions concerning the giving of adequate consideration out of the statement of offence to provide for a defence if adequate consideration has been given. Whether Parliament by implication intended to place any burden on a defendant to raise a defence may also be revealed by the practical consequences of holding where the burden of proof should rest. An accused must know whether he has given any consideration and its nature and extent. The facts surrounding the transaction are within his and not the prosecution's knowledge. It would be easy for him to prove what consideration he had given whereas it would usually be impossible for the prosecution to know or discover if any consideration had been given at all. Mr Waylen drew attention, as he did before the judge, to the different wording used by the draughtsman in Sec. 93B(7). We do not think that great weight can be attached to this submission. Secs. (5), (6) and (7) are concerned with the disclosing of suspicion and belief that property is the proceeds of criminal conduct and, as we previously indicated, were intended to give effect to the European Council Directive 91/308/EEC or at least to encourage compliance with its provisions. We agree it is unfortunate that different phraseology has been used but the indications already referred to that Parliament did not intend that the prosecution should have to prove that no or inadequate consideration was given as part of the offence contained in Sec. 93B(1) are so compelling that the change of phraseology does not, in our view, undermine the conclusion. On this basis we are satisfied that the judge was right to hold that there was no issue for the jury to consider under Sec. 93B(2). The appellant had produced no evidence from which they could have found that he had given adequate consideration for the acquisition, use or possession of the money. The evidence established that he had committed the offence and, as Mr Waylen conceded, the jury plainly rejected his evidence. Accordingly we were satisfied that his conviction was safe and dismissed the appeal. © 2000 Crown Copyright BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII