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GIBSON, R v. [2000] EWCA Crim 20 (23rd February, 2000)
Case No: 9902661 Z3
IN THE COURT OF APPEAL
(CRIMINAL DIVISION)
Royal Courts of Justice
Strand, London, WC2A 2LL
Wednesday 23rd February 2000
B e f o r e :
LORD JUSTICE BELDAM
MR JUSTICE DYSON
and
MR JUSTICE RICHARDS
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R -v- GIBSON
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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040, Fax No: 0171 831 8838
Official Shorthand Writers to the Court)
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Mr B.J. Waylen the Appellant
Mr M. Hicks for the Crown
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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
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