In the context of confiscation proceedings one of the greatest dangers to a defendant is that the prosecutor will allege the existence of 'hidden assets'. In the nature of things the prosecutor cannot be expected to identify those allegedly hidden assets - precisely because (he asserts) they have been hidden from him.

The burden is then placed upon the defendant to show that these unspecified assets do not exist. A tricky task! Unsurprisingly prosecutors have had striking success in cases of alleged hidden assets, such as the case of R v Barnham [2005] EWCA Crim 1049 - which was upheld in the European Court of Human Rights in September last year.

The consequence is that the defendant's 'available amount' becomes incapable of quantification and the court is virtually obliged to make a confiscation order against the defendant in the full amount of his alleged 'benefit'.

But now a defendant, ably represented by Jonathan Fisher QC, a well known specialist in the field, has actually been able to satisfy a court, on appeal, that he has no hidden assets. The case is R v McMillan-Smith [2009] EWCA Crim 732. Mr McMillan-Smith had been convicted, along with two co-defendants, of conspiracy to produce cannabis. In confiscation a 'benefit' figure of just under £2 million was indicated, being £1.5 million proceeds of the conspiracy and a further sum, just short of £0.5 million, by operation of the statutory assumptions in relation to the defendant's personal financial affairs. Although this defendant's share of the proceeds of the conspiracy was 32.5%, the entire sum had been obtained jointly by the conspirators and so the entire £1.5 million fell to be included within the figure of 'benefit' obtained by Mr McMillan-Smith.

At the Crown Court confiscation hearing Mr McMillan-Smith gave no evidence as to his available amount on the basis of the legal advice he received at the time. He failed to deal with allegations from the prosecutor that he had hidden assets. The judge made a confiscation order in the sum of £273,000, which figure included the judge's estimate of the defendant's hidden assets based on the information available concerning the conduct of the conspiracy. Both sides appealed the confiscation order - and, in a sense, both sides won!

The Court of Appeal agreed that, as the defendant had completely failed to satisfy the judge regarding his available amount, the judge in the Crown Court ought to have made a confiscation order in the sum of the 'benefit' of just under £2 million.

However, in the light of the erroneous legal advice on which the defendant had relied at the time of the original confiscation hearing, the Court of Appeal (most unusually) agreed to hear evidence from Mr McMillan-Smith regarding his assets. That evidence enabled the Court of Appeal to satisfy itself, on the balance of probabilities, that the defendant had no hidden assets. The confiscation order would therefore be made in the amount of Mr McMillan-Smith's known assets of just £215,000.

This case is one which will be carefully studied by lawyers dealing with confiscation cases involving allegations of hidden assets.

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