Confiscation under the Proceeds of Crime Act 2002

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CONFISCATION MATERIALS Contents

1. Restraint ............................................................................................................................................................ 1

Proceeds of Crime Act 2002 ........................................................................................................................... 1

Re B. (Restraint Order) [2009] 1 Cr.App.R. 14, CA .......................................................................................... 3

re Windsor and others [2011] 1 W.L.R. 1519 ................................................................................................. 3

2. Initiation (and abuse of process)....................................................................................................................... 3

A. The Duty to Proceed .................................................................................................................................. 4

Proceeds of Crime Act 2002 ........................................................................................................................... 4

B. Civil Proceedings ........................................................................................................................................ 5

C. The Director’s Guidance ............................................................................................................................ 5

D. Initiation Authorities ................................................................................................................................. 6

Shabir [2008] EWCA Crim 1809 ...................................................................................................................... 6

Morgan [2009] 1 Cr App R (S) 60 .................................................................................................................... 6

Nelson [2010] QB 678 ..................................................................................................................................... 7

Luigi del Basso [2011] 1 Cr. App. R. (S.) 41 ..................................................................................................... 7

E. Agreement not to Proceed ........................................................................................................................ 7

General principles of Finality .......................................................................................................................... 7

Crudas, Court of Appeal, Civil Division 24 January 1997 ................................................................................ 8

Promise not to proceed Example - R (DWP) v CCC [2011] 1 Cr. App. R. (S.) 1 ................................................ 9

3. The Factual Enquiry ........................................................................................................................................... 9

A. Bases of Plea .............................................................................................................................................. 9

B. Absence of Basis of Plea ............................................................................................................................ 9

Knaggs [2010] 1 W.L.R. 435 ............................................................................................................................ 9

4. Determining Criminal Lifestyle .......................................................................................................................... 9

Proceeds of Crime Act 2002 ......................................................................................................................... 10

A. Particular criminal conduct...................................................................................................................... 11

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B. General criminal conduct ........................................................................................................................ 12


Assumptions under Proceeds of Crime Act 2002 ......................................................................................... 12

C. Other proven conduct ............................................................................................................................. 14

Briggs-Price [2009] 1 A.C. 1026..................................................................................................................... 14

Gale [2011] 1 W.L.R. 2760 ............................................................................................................................ 14

Bagnall [2012] EWCA Crim 677 ..................................................................................................................... 14

5. Benefit ............................................................................................................................................................. 16

A. Defined .................................................................................................................................................... 16


R v Smith (David) [2002] 1 wlr 54 ................................................................................................................. 16

May [2008] 1 AC 1028 .................................................................................................................................. 16

B. Benefit Minor Players - Employees, Couriers and Custodians................................................................. 18

Sivaramen [2009] 1 Cr App R (S) 80 .............................................................................................................. 18

Allpress [2009] EWCA Crim 8 ........................................................................................................................ 19

Anderson [2010] EWCA Crim. 615 ................................................................................................................ 19

C. Benefit – Capacity .................................................................................................................................... 20

Seager and Blatch [2010] 1 W.L.R. 815 ........................................................................................................ 20

D. Benefit – proportionality ......................................................................................................................... 21

May [2008] UKHL 28 ..................................................................................................................................... 21

James and Blackburn [2011] EWCA Crim 2991 ............................................................................................. 21

E. Valuing the benefit .................................................................................................................................. 22

Gibbons [2003] 2 Cr App R (S) 169................................................................................................................ 23

Chambers [2008] EWCA Crim 2467 .............................................................................................................. 23

Wall [2003] 1 WLR 731 ................................................................................................................................. 23

Waya [2011] 1 Cr. App. R. (S.) 4 .................................................................................................................... 23

F. Market Value of Drugs ............................................................................................................................. 23

Islam [2009] 1 AC 1076 ................................................................................................................................. 23

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G. “In connection with…” ............................................................................................................................. 24

Waller [2008] ewca crim 2037 ...................................................................................................................... 24

James and Blackburn [2011] EWCA Crim 2991 ............................................................................................. 24

Ahmed (Shakeel) and Ahmed (Syed Mubarak) [2012] EWCA Crim 391; Times, May 29, 2012 .................... 25

6. Recoverable Amount ...................................................................................................................................... 26


May [2008] UKHL 28 ..................................................................................................................................... 26

A. Hidden Assets .......................................................................................................................................... 26

Telli v Revenue and Customs Prosecution [2008] 2 Cr. App. R. (S.) .............................................................. 27

R v Whittington [2010] 1 Cr. App. R. (S.) 83.................................................................................................. 27

McIntosh [2011] EWCA Crim 1501 ............................................................................................................... 27

7. Available amount ............................................................................................................................................ 27


Insolvency Act 1986 ...................................................................................................................................... 28

A. Tainted Gifts ............................................................................................................................................ 29


B. The Family Home ..................................................................................................................................... 30

8. Order ............................................................................................................................................................... 31

A. Period in default ...................................................................................................................................... 31

Powers of Criminal Courts (Sentencing) Act 2000, ss.139 ............................................................................ 31

Szrajber, 15 Cr.App.R.(S.) 821, CA ................................................................................................................. 31

Castillo [2011] Ewca Crim 3173; [2012] Crim. L.R. 401 (Ca (Crim Div)) ........................................................ 32

B. Time to pay .............................................................................................................................................. 33


9. RECONSIDERATION: Available Amount ........................................................................................................... 34


A. Later acquired assets ............................................................................................................................... 35

Tivnan [1999] 1 Cr App R (S) 92 .................................................................................................................... 35

Bates [2007] 1 Cr. App. R. (S.) 2 .................................................................................................................... 36

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Re Maye [2008] UKHL 9; [2008] 1 W.L.R. 315 .............................................................................................. 36

In Re Peacock [2012] 1 WLR 550, 22 February 2012 (SC) ............................................................................. 36

Criminal Justice Act 2003 .............................................................................................................................. 37

B. Reasonable time requirement ................................................................................................................. 37

Griffin [2009] Cr App R (S) 587...................................................................................................................... 37

10. RECONSIDERATION: Benefit ............................................................................................................................ 37


11. RECONSIDERATION: Inadequacy of Available Amount (s23) .......................................................................... 38


Gokal [2001] EWCA Civ 368, ......................................................................................................................... 39

Re O’Donoghue [2004] EWCA Civ 1800 ........................................................................................................ 39

Telli v RCPO [2007] EWHC 2233 .................................................................................................................... 39

Alan Glaves v Crown Prosecution Service [2011] EWCA Civ 69 .................................................................... 40

R v McIntosh [2011] S.T.I. 1940 .................................................................................................................... 42

12. Enforcement ................................................................................................................................................... 42

A. Committal to prison ................................................................................................................................. 42


Powers of the Criminal Courts Sentencing act ............................................................................................. 44

Magistrates Court Act 1980 .......................................................................................................................... 45

Harrow Justices [1991] 1 WLR 395 ............................................................................................................... 45

Barnett v Director of Public Prosecutions [2009] EWHC 2004 (Admin) ....................................................... 46

L, Re [2010] EWHC 1531 (Admin); ................................................................................................................ 47

B. Seized Money .......................................................................................................................................... 47


C. Other powers ........................................................................................................................................... 48

D. Release .................................................................................................................................................... 49

Magistrates Court Act 1980 .......................................................................................................................... 49

Criminal Justice act 2003 .............................................................................................................................. 50

E. Interest .................................................................................................................................................... 50

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Judgment Debts (Rate of Interest) Order 1993/564 ..................................................................................... 50

F. Reasonable Time Requirement ............................................................................................................... 51

Lloyd v Bow Street Magistrates' Court [2003] EWHC 2294 (Admin) ............................................................ 51

Crowther v United Kingdom [2005] ECHR 45: .............................................................................................. 52

Minshall [2010] 1 W.L.R. 590 ........................................................................................................................ 52

Altaf Syed, Tevor Hamilton-Farrell v City of Westminster Magistrates' Court [2010] EWHC 1617 (Admin) 53

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1. RESTRAINT

A Restraint order is an order prohibiting any specified person from dealing with any realisable

property held by him (section 41).

Restraint Order may be made, if:

There is reasonable cause to believe that the alleged offender has benefited from his

criminal conduct, AND

Either

o Proceedings for an offence have been started OR

o Pre-charge: a criminal investigation has been started (section 40).

Exercise of the power

The power must be exercised with a view to the value for the time being of realisable property

being made available (by the property’s realisation) for satisfying any confiscation order that has

been or may be made against the defendant (Section 69).

There must be a real as opposed to a fanciful risk that, if a restraint order is not made, the assets

in respect of which the order is requested are liable to be dissipated. (Re B)

Where, the defendant (or potential defendant) has had ample opportunity to dissipate his assets it

is incumbent on both the prosecution and the judge to explain how it could be said that there was

a real risk that he would dissipate assets. (Re B)

Important to consider section 69 – Windsor [2011] 1 W.L.R. 1519

PROCEEDS OF CRIME ACT 2002

40 Conditions for exercise of powers.

(1) The Crown Court may exercise the powers conferred by section 41 if any of the following conditions is satisfied. .

(2) The first condition is that— .

(a) a criminal investigation has been started in England and Wales with regard to an offence, and .

(b) there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct. .

(3) The second condition is that— .

(a) proceedings for an offence have been started in England and Wales and not concluded, and .

(b) there is reasonable cause to believe that the defendant has benefited from his criminal conduct. .

…

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(7) The second condition is not satisfied if the court believes that— .

(a) there has been undue delay in continuing the proceedings, or .

(b) the prosecutor does not intend to proceed. .

…

41 Restraint orders.

(1) If any condition set out in section 40 is satisfied the Crown Court may make an order (a restraint order) prohibiting any specified person from dealing with any realisable property held by him.

(2) A restraint order may provide that it applies—

(a) to all realisable property held by the specified person whether or not the property is described in the order;

(b) to realisable property transferred to the specified person after the order is made.

(3) A restraint order may be made subject to exceptions, and an exception may in particular—

(a) make provision for reasonable living expenses and reasonable legal expenses;

(b) make provision for the purpose of enabling any person to carry on any trade, business, profession or occupation;

(c) be made subject to conditions.

…

69 Powers of court and receiver.

(1) This section applies to— .

(a) the powers conferred on a court by sections 41 to 60 and sections 62 to 67; .

(b) the powers of a receiver appointed under section 48, 50 or 52. .

(2) The powers— .

(a) must be exercised with a view to the value for the time being of realisable property being made available (by the property’s realisation) for satisfying any confiscation order that has been or may be made against the defendant; .

(b) must be exercised, in a case where a confiscation order has not been made, with a view to securing that there is no diminution in the value of realisable property; .

(c) must be exercised without taking account of any obligation of the defendant or a recipient of a tainted gift if the obligation conflicts with

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the object of satisfying any confiscation order that has been or may be made against the defendant; .

(d) may be exercised in respect of a debt owed by the Crown.

…

RE B. (RESTRAINT ORDER) [2009] 1 CR.APP.R. 14, CA

The court said that the judge must be satisfied that there is a real as opposed to a fanciful risk

that, if a restraint order is not made, the assets in respect of which the order is requested are

liable to be dissipated. Where, the defendant (or potential defendant) had had ample opportunity

to dissipate his assets, but had not done so, and indeed had actually disclosed the existence of

further assets that the prosecution had not been aware of, the court held that it was incumbent

on both the prosecution and the judge to explain how it could be said that there was a real risk

that he would dissipate assets when he had had every opportunity to do so in the past. The

making of a restraint order can have serious personal and professional consequences on the

citizen concerned and it is therefore important to see that there are good reasons and a proper

basis for making such an order, particularly where the citizen has not been charged.

RE WINDSOR AND OTHERS [2011] 1 W.L.R. 1519

During what was only a 40-minute hearing the Crown Court judge signed various restraint and

receivership orders affecting a group of companies called “the Eastenders group” The Court of

Appeal compared that period of 40 minutes with the day and a half following two days'

preparation for the hearing that it took them.

In the light of the failure on the part of the Crown to understand what is required in a statement

showing reasonable cause and in the light of the legislative steer in section 69 the court

suspended the effect of its order quashing the restraint order, pending a further application to the

Crown Court.

Held , allowing the appeals but suspending the effect of the court's order, that, although the judge who had made the restraint orders had been wrong to find on the evidence before him that there was reasonable cause to believe that the alleged offenders had benefited from criminal conduct within section 40(2)(b) of the 2002 Act, since there was fresh evidence which might fill in the gaps in the evidence against the alleged offenders it would be in the interests of justice to suspend the effect of the court's order quashing the restraint orders until the Crown Court had determined an application by the Crown for fresh restraint orders (post, paras 13, 114, 122).

2. INITIATION (AND ABUSE OF PROCESS)

The Duty

Generally, the court has no discretion in the confiscation process:

D is convicted of an offence or offences

The prosecutor asks the court to proceed

Then:

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The court must proceed

Abuse

The court retains the jurisdiction to stay an application for confiscation, as any other criminal

process, where it amounts to an abuse of the court’s process. But his jurisdiction must be

exercised with considerable caution. It must be confined to cases of true oppression. (Shabir

[2008] EWCA Crim 1809).

For instance, it might be an abuse where:

the prosecution has agreed not to proceed

the defendant has fully repaid the victim

it would be truly oppressive to proceed

Exceptional jurisdiction

“The just result of these proceedings is the result produced by the proper application of the

statutory provisions as interpreted in the House of Lords and in this court. However to conclude

that proceedings properly taken in accordance with statutory provisions constitute an abuse of

process is tantamount to asserting a power in the court to dispense with the statute”. Nelson

[2010] QB 678

A. THE DUTY TO PROCEED


6. Making of order

(1) The Crown Court must proceed under this section if the following two conditions are satisfied.

(2) The first condition is that a defendant falls within any of the following paragraphs -

(a) he is convicted of an offence or offences in proceedings before the Crown Court;

(b) he is committed to the Crown Court for sentence in respect of an offence or offences under section 3, 4, or 6[section 3 ,3A ,3B ,3C ,4 ,4A or6 ] of the Sentencing Act ;

(c) he is committed to the Crown Court in respect of an offence or offences under section 70 below (committal with a view to a confiscation order being considered).

(3) The second condition is that -

(a) the prosecutor asks the court to proceed under this section, or

(b) the court believes it is appropriate for it to do so.

(4) The court must proceed as follows—

(a) it must decide whether the defendant has a criminal lifestyle;

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(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;

(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct.

…

B. CIVIL PROCEEDINGS

The court must treat the duty... as a power if it believes that any victim of the conduct has at any time started or intends to start proceedings against the defendant… (section 6(6)).

C. THE DIRECTOR’S GUIDANCE

Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings 28 May 2009

…

Some examples of when it may be inappropriate for prosecutors to decide to instigate confiscation proceedings.

While the categories of the abuse jurisdiction are not closed, the Court of Appeal has identified three situations in which it is legitimate for proceedings to be stayed.

The first situation is where the Crown has reneged on an earlier agreement not to proceed. As a matter of common sense, it is inappropriate to proceed in such cases.

The second situation is, in a simple benefit case, where the defendant has voluntarily paid full compensation to the victim or victims, or is ready, willing and able immediately to repay all of the victims to the full amount of their losses, and has not otherwise profited from his crime (R v Morgan [2009] 1 Cr App R (S) 60). In such cases it may be inappropriate for the prosecutor to instigate confiscation proceeding but this will require an independent judgment on the facts of each case. A decision one way or the other must be properly reasoned and it is advisable to keep a clear and accurate record of the decision.

The third situation calls for the most careful consideration by prosecutors. This situation arises where proper application of the relevant statute to a defendant’s case would, if the court were asked to proceed to confiscation, compel the court to find that property obtained in the most part legitimately by the defendant, and to which the defendant would have been entitled but for his criminal conduct, must be treated as benefit. An example of this situation arose in the case of R v Shabir [2009] 1 Cr App (S) 84. In that case the defendant was a pharmacist who had submitted false, inflated, claims to the NHS. The total amount obtained by deception was approximately £179,000, but the defendant had been entitled to most of the money claimed, except £464. In that case it was held to be inappropriate to proceed to confiscation, but such examples will be rare and confined to cases of “true oppression‟ (per Hughes LJ, at paragraph 23). In order to establish oppression and thus abuse of process it is clearly not sufficient that the effect of confiscation will be to extract from a defendant a sum greater than his net profit from crime. Moreover, in general benefit cases (where the lifestyle provisions apply), it

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may be perfectly proper for a confiscation order to be “massively greater‟ than a defendant‟s benefit from particular offending (R v Shabir, per Hughes LJ, at paragraph 27). Any injustice as perceived by the court can, in any event, be overcome by the court declining to apply the lifestyle presumptions (the relevant provision in the Proceeds of Crime Act 2002 is section 10(6)). As in the cases set out above, every case will have to be considered on its own facts, but a decision one way or the other must be properly reasoned and it is advisable to keep a clear and accurate record of the decision.

D. INITIATION AUTHORITIES

SHABIR [2008] EWCA CRIM 1809

23. The court retains the jurisdiction to stay an application for confiscation, as any other criminal process, where it amounts to an abuse of the court’s process. In the present context, that power exists where it would be oppressive to seek confiscation, or to do so on a particular basis. ...

24. This jurisdiction must be exercised with considerable caution, indeed sparingly. It must be confined to cases of true oppression. ... it is clearly not sufficient... that the effect of confiscation will be to extract from a defendant a sum greater than his net profit from his crime(s). That is inherent in the statutory scheme...

MORGAN [2009] 1 CR APP R (S) 60

POCA deals with two possibilities:

s6(6) the court must treat the duty... as a power if it believes that any victim of the conduct

has at any time started or intends to start proceedings against the defendant

s13(6) [where insufficient means to pay confiscation and compensation]... the court must

direct that so much of the compensation as it specifies is to be paid out of any sums

recovered under the confiscation order; and the amount it specifies must be the amount it

believes will not be recoverable because of the insufficiency of the person's means.

It does not deal with voluntary compensation:

18 The confiscatory jurisdiction has consistently been interpreted as deliberately draconian. It is not restitutionary...

19 The difference in the present limited type of case is said to be the high public interest in encouraging the voluntary repayment to victims by criminals....

29... We here confine ourselves to ... where demonstrably (i) the defendant's crimes are limited to offences causing loss to one or more identifiable loser(s), (ii) his benefit is limited to those crimes, (iii) the loser has neither brought nor intends any civil proceedings to recover the loss, but (iv) the defendant either has repaid the loser, or stands ready willing and able immediately to repay him, the full amount of the loss.

To be decided on the facts but maybe not where (a) profited in the meantime (b) assumptions

appropriate (c) uncertain if the payment will be made => compensation

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NELSON [2010] QB 678

Nelson, Pathak and Paulet

34 One of the problems illustrated in these cases, and in a number of other cases to which our attention was drawn, is that Crown Courts up and down the country are concerned about the possible consequences of the draconian legislation provided by the developing confiscation regime set out in the Criminal Justice Act 1988 , as amended, the Drug Trafficking Act 1994 and the Proceeds of Crime Act 2002 . Indeed we detect that orders staying confiscation proceedings are perhaps too readily being made in Crown Courts.

35 Abuses of the confiscation process may occur and, when they do, the appropriate remedy will normally be a stay of proceedings. However an abuse of process argument cannot be founded on the basis that the consequences of the proper application of the legislative structure may produce an “oppressive” result with which the judge may be unhappy. Although the court may, of its own initiative, invoke the confiscation process, the responsibility for deciding whether properly to seek a confiscation order is effectively vested in the Crown. When it does so, the court lacks any corresponding discretion to interfere with that decision if it has been made in accordance with the statute. The just result of these proceedings is the result produced by the proper application of the statutory provisions as interpreted in the House of Lords and in this court. However to conclude that proceedings properly taken in accordance with statutory provisions constitute an abuse of process is tantamount to asserting a power in the court to dispense with the statute.

LUIGI DEL BASSO [2011] 1 CR. APP. R. (S.) 41

The Court of Appeal rejected the argument that the language of the statute permits the court to

look at what Mr Del Basso “actually made” net of all expenses. They rejected that argument that

the order was an abuse of process as being oppressive. The court endorsed the trial judge’s view

that:

“They have treated the illegality of the operation as a routine business risk with financial implications in the form of potential fines or, at worst, injunctive proceedings. This may reflect a more general public impression among those confronted by enforcement notices with the decision whether to comply with the law or to flout it. The law, however, is plain. Those who choose to run operations in disregard of planning enforcement requirements are at risk of having the gross receipts of their illegal businesses confiscated. This may greatly exceed their personal profits. In this respect they are in the same position as thieves, fraudsters and drug dealers.

E. AGREEMENT NOT TO PROCEED

GENERAL PRINCIPLES OF FINALITY

In Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd. [1975] AC 581, Privy Council approved the

case of Henderson v Henderson (1843) 3 Hare 100, 115, where it was said:

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"... where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."

There is particular importance in holding a prosecutor to an agreement not to proceed further

with a particular matter. In Bloomfield [1997] 1 Cr App R 135, giving the judgment of the court,

Staughton LJ stated at page 143B:

“The statement of the prosecution that they would offer no evidence at the next hearing was not merely a statement made to the defendant or to his legal representatives. It was made coram judice, in the presence of the judge. It seems to us that whether or not there was prejudice it would bring the administration of justice into disrepute if the Crown Prosecution Service were able to treat the court as if it were at his its beck and call, free to tell it one day that it was not going to prosecute and another day that it was.”

CRUDAS, COURT OF APPEAL, CIVIL DIVISION 24 JANUARY 1997

In Crudas, Court of Appeal, Civil Division 24 January 1997, the prosecution sought to reopen a

matter conceded by the prosecution before the Crown Court judge under section 16 of the Drug

Trafficking Act 1994 to increase the amount of realisable property in a confiscation order, under

the extant regime. Leggatt LJ held that (p13)

“It seems to me that there should be, in a case such as this, an end to litigation when a judge has reached a clearly demonstrable conclusion, by reference to a concession made on behalf of the prosecution by their counsel. It is not in the public interest that litigation should thereafter continue so as to enable the Crown to go back on a concession that they have freely made with full knowledge of all that information by reference to which they could properly have contended that Mr Cruddas enjoyed the interest in 10 Yeavering Close that they now wish to contend renders it part of his realisable property.

Pill LJ agreed and held that it would be an abuse of process to allow the Crown to go back on their

concession (p18):

“In my judgment, in this case it is an abuse to re-litigate an issue which was not only determined in the Crown Court, but was determined in the way it was upon a concession made by the Crown”

Ward LJ agreed (p20):

“The difficult question for me is whether the public policy purpose of the Act that the defendant should not profit from his crime, … is of sufficient weight to overcome another fundamental notion of justice and public interest that there by finality in litigation.

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Not without hesitation, I conclude that, in the particular circumstances of this case, the Crown should not be entitled to resile from concessions which they made in the Crown Court, and for that narrow reason I too would dismiss the appeal.”

The balancing of the public policies that the defendant should not profit from his crime against the

fundamental notion of justice and public interest that there by finality in litigation is a central one.

I would have thought that it is bound to be resolved in this way. There are many litigants at least

as deserving as the crown in proceeds of crime case, but the rules of litigation must apply. If

victims in a pharmaceutical class claim settled litigation in a particular way would anyone seriously

argue that there should be some special rule that allows them to resile because they are so worthy

a litigant?

PROMISE NOT TO PROCEED EXAMPLE - R (DWP) V CCC [2011] 1 CR. APP. R.

(S.) 1

An order staying confiscation proceedings as an abuse of process upheld, where the sentencing

judge indicated to the defendant that if she made full repayment there would be no need

for the confiscation proceedings to continue, and the defendant made repayment.

3. THE FACTUAL ENQUIRY

A. BASES OF PLEA

Bases of plea Lunnon [2004] EWCA Crim 1125, Lazarus [2004] EWCA Crim 2297, Fowles [2005]

EWCA Crim 97 (court is bound by facts contained in the agreed basis of plea in confiscation as it is

in punishment).

B. ABSENCE OF BASIS OF PLEA

KNAGGS [2010] 1 W.L.R. 435

Defendant pleaded guilty and did not seek a Newton hearing. He then sought to challenge

prosecution evidence in the confiscation hearing. The judge ruled that since the defendant had not

contested the prosecution's case, in whole by a trial before a jury, or in part by a Newton hearing,

the defendant was bound by his unequivocal guilty plea and could not seek to challenge that case,

in whole or in part, during the confiscation proceedings.

The Court of Appeal held that the Defendant was not thereby debarred, as a matter of law, from

challenging the prosecution evidence for the purpose of a confiscation hearing.

4. DETERMINING CRIMINAL LIFESTYLE

‘Criminal Lifestyle’ is a term of art defined by the Act.

A defendant has a criminal lifestyle if:

It is a specified offence e.g. Drug trafficking, Money laundering, Directing terrorism,

People trafficking, Arms trafficking, Counterfeiting, Intellectual property, Pimps and

brothels or Blackmail.

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He is convicted of three other offences (from which he benefitted in a sum >£5,000) in

the same proceedings.

He was convicted on two other occasions of offences (from which he benefitted in a sum

>£5,000) in the six years prior to the commencement of these proceedings.

It was carried out over a period of at least six months.

Effect

If the defendant has a criminal lifestyle, benefit is calculated from his general criminal

conduct (all his criminal conduct).

If the defendant does not have a criminal lifestyle, benefit is calculated from his particular

criminal conduct (the conduct dealt with in those proceedings.


6. Making of order

…

(4) The court must proceed as follows— .

(a) it must decide whether the defendant has a criminal lifestyle; .

(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct; .

(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct. .

…

75 Criminal Lifestyle

(1) A defendant has a criminal lifestyle if (and only if) the following condition is satisfied. .

(2) The condition is that the offence (or any of the offences) concerned satisfies any of these tests— .

(a) it is specified in Schedule 2; .

(b) it constitutes conduct forming part of a course of criminal activity; .

(c) it is an offence committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence. .

(3) Conduct forms part of a course of criminal activity if the defendant has benefited from the conduct and— .

(a) in the proceedings in which he was convicted he was convicted of three or more other offences, each of three or more of them constituting conduct from which he has benefited, or .

(b) in the period of six years ending with the day when those proceedings were started (or, if there is more than one such day, the

11

earliest day) he was convicted on at least two separate occasions of an offence constituting conduct from which he has benefited. .

(4) But an offence does not satisfy the test in subsection (2)(b) or (c) unless the defendant obtains relevant benefit of not less than £5000. .

(5) Relevant benefit for the purposes of subsection (2)(b) is— .

(a) benefit from conduct which constitutes the offence; .

(b) benefit from any other conduct which forms part of the course of criminal activity and which constitutes an offence of which the defendant has been convicted; .

(c) benefit from conduct which constitutes an offence which has been or will be taken into consideration by the court in sentencing the defendant for an offence mentioned in paragraph (a) or (b). .

(6) Relevant benefit for the purposes of subsection (2)(c) is— .

(a) benefit from conduct which constitutes the offence; .

(b) benefit from conduct which constitutes an offence which has been or will be taken into consideration by the court in sentencing the defendant for the offence mentioned in paragraph (a). .

(7) The Secretary of State may by order amend Schedule 2. .

(8) The Secretary of State may by order vary the amount for the time being specified in subsection (4). .

A. PARTICULAR CRIMINAL CONDUCT

Particular criminal conduct is the conduct considered in the current proceedings.


76 Conduct and benefit

…

(3) Particular criminal conduct of the defendant is all his criminal conduct which falls within the following paragraphs— .

(a) conduct which constitutes the offence or offences concerned; .

(b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned; .

(c) conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned. .

…

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B. GENERAL CRIMINAL CONDUCT

General Criminal Conduct is all his criminal conduct.

1. The conduct in the current proceedings.

2. Any other proven criminal conduct

3. Property which is assumed to be benefit unless proven otherwise.


76 Conduct and benefit

…

(2) General criminal conduct of the defendant is all his criminal conduct, and it is immaterial— .

(a) whether conduct occurred before or after the passing of this Act; .

(b) whether property constituting a benefit from conduct was obtained before or after the passing of this Act. .

…

ASSUMPTIONS UNDER PROCEEDS OF CRIME ACT 2002

All transfers to the defendant and all expenditure In the six years prior to the start of the

proceedings are the proceeds of criminal conduct

Any property held by the defendant after conviction is the proceeds of criminal conduct

Unless

(a)the assumption is shown to be incorrect, or .

(b)there would be a serious risk of injustice if the assumption were made. .

10 Assumptions to be made in case of criminal lifestyle.

(1) If the court decides under section 6 that the defendant has a criminal lifestyle it must make the following four assumptions for the purpose of— .

(a) deciding whether he has benefited from his general criminal conduct, and .

(b) deciding his benefit from the conduct. .

(2) The first assumption is that any property transferred to the defendant at any time after the relevant day was obtained by him— .

(a) as a result of his general criminal conduct, and .

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(b) at the earliest time he appears to have held it. .

(3) The second assumption is that any property held by the defendant at any time after the date of conviction was obtained by him— .

(a) as a result of his general criminal conduct, and .

(b) at the earliest time he appears to have held it. .

(4) The third assumption is that any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him as a result of his general criminal conduct. .

(5) The fourth assumption is that, for the purpose of valuing any property obtained (or assumed to have been obtained) by the defendant, he obtained it free of any other interests in it. .

(6) But the court must not make a required assumption in relation to particular property or expenditure if— .

(a) the assumption is shown to be incorrect, or .

(b) there would be a serious risk of injustice if the assumption were made. .

(7) If the court does not make one or more of the required assumptions it must state its reasons. .

(8) The relevant day is the first day of the period of six years ending with— .

(a) the day when proceedings for the offence concerned were started against the defendant, or .

(b) if there are two or more offences and proceedings for them were started on different days, the earliest of those days. .

(9) But if a confiscation order mentioned in section 8(3)(c) has been made against the defendant at any time during the period mentioned in subsection (8)— .

(a) the relevant day is the day when the defendant’s benefit was calculated for the purposes of the last such confiscation order; .

(b) the second assumption does not apply to any property which was held by him on or before the relevant day. .

(10) The date of conviction is— .

(a) the date on which the defendant was convicted of the offence concerned, or .

(b) if there are two or more offences and the convictions were on different dates, the date of the latest

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C. OTHER PROVEN CONDUCT

BRIGGS-PRICE [2009] 1 A.C. 1026

In Briggs-Price the defendant was charged with conspiracy to import heroin. The Crown alleged

that he had been brought into the conspiracy because he already had a distribution network for

the transportation and distribution of cannabis which would be employed to distribute the heroin,

but accepted that no heroin was in fact imported. There was no indictment count in relation to the

alleged cannabis distribution network but the Crown adduced evidence at trial in support of the

allegation... the judge ruled that on the evidence given at the trial it had been proved to the

criminal standard that the defendant had been trafficking in cannabis and that, on the balance of

probabilities, he had benefited from that trafficking to the extent of £4m.

The judge included this within the benefit figure.

The House of Lords held that the court was permitted to look at other proven criminal conduct

that the judge found proven.

GALE [2011] 1 W.L.R. 2760

A civil recovery case in the Supreme Court.

54 The views on standard of proof expressed in R v Briggs-Price by members of the House were obiter but the application of the common ground in the views of Lord Phillips of Worth Matravers, Lord Brown and Lord Mance leads to the following conclusion. The commission by the appellants in the present case of criminal conduct from which the property that they held was derived had to be established according to the civil and not the criminal standard of proof.

BAGNALL [2012] EWCA CRIM 677

Bagnall takes this a step further

In Bagnall the appellant was convicted on one count of money-laundering, after being caught with

a bag containing £99,200.00 in Bank of England notes. Three years after that conviction, in

February 2010, a Confiscation Order in the amount of £1,818,619.97 was made against him.

In Sharma, the appellant was convicted, after a retrial, of nine offences of procuring the execution

of a valuable security, one count of false accounting, and one of doing an act tending and intended

to pervert the course of public justice, which resulted in a benefit of just under £40,000.00. But in

his case, a Confiscation Order was made nearly three years later in the sum of £4,101,339.00.

Bagnall was sentenced to 15 months’ imprisonment and ordered to serve in default six years’

imprisonment; Sharma was sentenced to 39 months’ imprisonment in all but in respect of the

Confiscation Order the period in default was eight years’ imprisonment.

The appellants (B and S), in conjoined appeals, appealed against confiscation orders made

following B's conviction for money laundering and S's convictions for procuring the execution of a

valuable security, false accounting and perverting the course of public justice.

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Whilst investigations were carried out in relation to money laundering the investigation team

found documents that strongly suggested B had been involved in missing trader (MTIC) fraud. A

position statement served by the Crown stated that B would not be prosecuted for MTIC fraud but

that allegations of his involvement would be made during the course of confiscation proceedings.

At the confiscation proceedings the judge made the assumptions under the Proceeds of Crime Act

2002 s.10 that the property was obtained by B as a result of his general criminal conduct.

In relation to S, a confiscation order was made under the Criminal Justice Act 1988 s.72AA. B

submitted that the court should not have applied the assumptions under s.10 of the 2002 Act as

the reliance on a specific accusation that he was involved in MTIC fraud required that allegation to

be proved to the criminal standard in order to safeguard his rights under the European Convention

on Human Rights 1950 art.6(2) and art.6(1).

S submitted that there was an absence of proportionality between the offences which he was

convicted and the offences he was assumed to have committed for the purpose of s.72AA of the

1988 Act.

(1) The fact the Crown accused B of specific offences and adduced evidence to support that

accusation did not amount to the bringing of a new charge, Phillips v UK (2011) 11 BHCC 280

considered. B was not at risk of any further conviction, there was no finding of guilt and the

findings reached by the judge on the assumptions under s.10 of the 2002 Act merely went to the

amount of the order the court was obliged to make. The Crown was obliged to include in its

statement of information matters relevant with the making of assumptions and was, accordingly,

obliged to set out the information it had relevant to the fraudulent MTIC activity. B sought to

contend that the assumptions should not apply because the source of the assets was lawful

trading. The Crown was entitled to produce evidence in rebuttal and, in doing so, it did not take

upon the burden of proving that the source of those assets was criminal conduct. There was no

dispute B held the assets; the only question was their source. Since that was the only question, the

assumptions applied and the fact that the Crown had material and evidence to rebut B's assertion

that they should not apply did not shift a criminal standard of proof onto the prosecution (see

paras 18-21 of judgment).

(2) Whilst art.6(1) applied to confiscation proceedings the proceedings were not unfair to B. The

statutory assumption applied to assess the amount of the confiscation order. B was entitled to

rebut the assumption that the source of the assets was criminal on the balance of probabilities.

There was nothing unfair in requiring B to demonstrate that two of the companies through which

he was trading were carrying out lawful business (para.23).

(3) The judge had erred in adding, to the benefit sum, £200,000, which had been loaned to his

company to provide working capital, R. v Ahmad (Shakeel) [2012] EWCA Crim 391, Times, May 29,

2012 followed, and R. v Waller (Sebastian) [2009] EWCA Crim 1096, [2010] 1 Cr. App. R. (S.) 33

considered.

(4) In relation to S, the assumptions under s.72AA(4) of the 1988 Act applied and property, which

it was not disputed had been held by S at the date of conviction, was assumed to have been

received by him as a result of or in connection with the commission of offences to which Part VI of

the 1988 Act applied. It was not disproportionate to require a defendant to establish that the

source of money which he held was from a legitimate and not a criminal source. There was no

basis for contending that to impose the burden upon the defendant of showing that the source of

his property was legitimate was unfair or contrary to art.6 (paras 34, 40).

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5. BENEFIT

A person benefits from conduct if he obtains property as a result of or in connection with the

conduct.

A. DEFINED


76 Conduct and benefit.

(1)Criminal conduct is conduct which— .

(a)constitutes an offence in England and Wales, or .

(b)would constitute such an offence if it occurred in England and Wales. .

…

(4)A person benefits from conduct if he obtains property as a result of or in connection with the conduct. .

(5)If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage. .

(6)References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained both in that connection and some other. .

(7)If a person benefits from conduct his benefit is the value of the property obtained. ..

R v Smith (David) [2002] 1 wlr 54

The defendant had pleaded guilty to fraudulent evasion of excise duty. Duty of some £130,000

should have been, but had not been, paid on the importation of a consignment of cigarettes. The

defendant had been liable to pay the duty, when he imported the cigarettes, as evidenced by his

plea of guilty. However the cigarettes were seized before he had a chance to sell them. What is his

benefit?

The House held, for reasons given by Lord Rodger of Earlsferry, that the defendant derived a

pecuniary advantage at the moment of importation, irrespective of what happened to them later.

MAY [2008] 1 AC 1028

May, Green [2008] 1 AC 1053, Jennings [2008] 1 AC 1046

The narrow principles are:

Where benefit is jointly obtained by a group, each is liable for the whole

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Do not deduct sums retained by co-Ds from the amount jointly obtained

Where D is a prime mover in a conspiracy he may obtain the whole amount,

notwithstanding that he is nominally only an employee

The narrow principles decided are straightforward, but in the course of their opinions their

lordships delivered what amounts to a comprehensive code for determining benefit under the

confiscation regime.

Paragraph 48 of May: Recognition of the importance and difficulty of this jurisdiction prompts the

committee to emphasise the broad principles to be followed by those called upon to exercise it:

(1) The legislation is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means. It does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine. The benefit gained is the total value of the property or advantage obtained, not the defendant’s net profit after deduction of expenses or any amounts payable to co-conspirators.

(2) The court should proceed by asking the three questions posed above: (i) Has the defendant (D) benefited from relevant criminal conduct? (ii) If so, what is the value of the benefit D has so obtained? (iii) What sum is recoverable from D? Where issues of criminal life style arise the questions must be modified. These are separate questions calling for separate answers, and the questions and answers must not be elided.

(3) In addressing these questions the court must first establish the facts as best it can on the material available, relying as appropriate on the statutory assumptions. In very many cases the factual findings made will be decisive.

(4) In addressing the questions the court should focus very closely on the language of the statutory provision in question in the context of the statute and in the light of any statutory definition. The language used is not arcane or obscure and any judicial gloss or exegesis should be viewed with caution. Guidance should ordinarily be sought in the statutory language rather than in the proliferating case law.

(5) In determining, under the 2002 Act, whether D has obtained property or a pecuniary advantage and, if so, the value of any property or advantage so obtained, the court should (subject to any relevant statutory definition) apply ordinary common law principles to the facts as found. The exercise of this jurisdiction involves no departure from familiar rules governing entitlement and ownership. While the answering of the third question calls for inquiry into the financial resources of D at the date of the determination, the answering of the first two questions plainly calls for a historical inquiry into past transactions.

(6) D ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else. He ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject. Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property. It may be otherwise with money launderers.

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Jennings v Crown Prosecution Service [2008] AC 1046 , para 13. It was pointed out:

“There is a real danger in judicial exegesis of an expression with a plain English meaning, since the exegesis may be substituted for the language of the legislation. It is, however, relevant to remember that the object of the legislation is to deprive the defendant of the product of his crime or its equivalent, not to operate by way of fine. The rationale of the confiscation regime is that the defendant is deprived of what he has gained or its equivalent. He cannot, and should not, be deprived of what he has never obtained or its equivalent, because that is a fine. This must ordinarily mean that he has obtained property so as to own it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else.”

… A person’s acts may contribute significantly to property (as defined in the Act) being obtained without his obtaining it. But under section 71(4) a person benefits from an offence if he obtains property as a result of or on connection with its commission, and his benefit is the value of the property so obtained, which must be read as meaning ‘obtained by him’.”

As Lord Bingham held in R v May [2008] 1 AC 1028, at paragraph 35

But it has been recognised that a defendant may lack the means to pay a sum equal to the aggregate of the payments or rewards he has received, or the value of the property or pecuniary advantages he has obtained. It has also been recognised that it would be unjust to imprison a defendant for failure to pay a sum which he cannot pay. Thus provision has been made for assessing the means available to a defendant and, if that yields a figure smaller than that of his aggregate benefit, making a confiscation order in the former, not the latter, sum.

B. BENEFIT MINOR PLAYERS - EMPLOYEES, COURIERS AND CUSTODIANS

Minor Players

D ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily

connote a power of disposition or control, as where a person directs a payment or conveyance of

property to someone else.

Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific

fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have

obtained that property.

Conspirators are criminally liable for the acts of their confederates done within the scope of their

employment; but, when considering questions of confiscation the focus of the inquiry is on the

benefit gained by the relevant defendant, whether individually or jointly.

SIVARAMEN [2009] 1 CR APP R (S) 80

Sivaramen [2009] 1 Cr App R (S) 80: where the manager of a service station accepted deliveries of

“off road” diesel fuel on behalf of his employer, which was then sold by his employer without the

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payment of duty, his benefit was the amount paid to him by his employer for his participation in

the scheme, not the whole amount of the duty evaded.

17 The crucial question in the case of the appellant was: what was his position in relation to his employer with regard to the purchase and sale of the fuel which generated that pecuniary advantage? ... As previously stated, the appellant had admitted receiving eight to ten deliveries, knowing of their illicit nature. But that begs the vital question as to the capacity in which he did so. It would be one thing if he did so as a joint trader...; but another if he was acting as an employee.

20.... Conspirators are criminally liable for the acts of their confederates done within the scope of their employment; but, when considering questions of confiscation the focus of the inquiry is on the benefit gained by the relevant defendant, whether individually or jointly.

ALLPRESS [2009] EWCA CRIM 8

A mere courier or custodian is a bailee who receives physical possession of property for another

(para 30 – Allpress)

49. ... If a criminal asks D, for a reward, to deliver stolen property to a professional receiver and to collect an envelope containing the price which the receiver has agreed to pay, and D does so, we do not see why as a matter of general principle D should be regarded as having an interest in the money which he collects (any more than in the property which he delivers to the receiver) simply because he knows or suspects that the property was stolen, or simply because if D had instead spent the money in a shop the shop keeper would have obtained a good title to it.

The cash courier and cash custodian do not benefit to the amount of the cash – rather their fee.

Laundering through a bank may.

ANDERSON [2010] EWCA CRIM. 615

The Court of Appeal considered an appeal about a pilot who was convicted with his co-defendant,

Hassan, of a conspiracy to effect illegal entries into this country (“people-trafficking”). Anderson

did not give evidence at trial. In discussing an application for leave to appeal against sentence,

Tuckey L.J. rejected the submission that Anderson should be treated as a mere courier. Tuckey L.J.

said:

“The judge clearly formed the view that Anderson was playing a far larger role than that of courier. The use of a plane on a number of occasions and a plane of which he was a part owner clearly put him in a much higher league than some of the others involved in this conspiracy…”

…

20. It is clear that here the appellant was far more than just the pilot. However we do not think that it would be fair to conclude from that alone that the proceeds of the conspiracy were the joint properties of the two. Hassan was the primary organiser, who had the connections…

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21. Given the lack of clear evidence here and any appropriate finding by the judge, we consider that the assumed division of the proceeds is an acceptable solution as Gibbons shows. As we have said, the Crown accept that this should be the outcome if the finding of joint ownership is not sustained. We have some uncertainty as to whether it is right to divide the proceeds three ways. But that is agreed between counsel, and the contrary was not argued…”

C. BENEFIT – CAPACITY

Whether the benefit of corporate offending is the turnover of the company or the income to the

defendant is a question of fact. May pierce the veil where

where the offender had attempted to shelter behind a corporate façade to hide his crime

or done acts in the name of a company which constituted a criminal offence

or where a transaction was a sham to deceive third parties or the courts

Seager and Blatch

SEAGER AND BLATCH [2010] 1 W.L.R. 815

The defendant in the first case was involved in running a company after he had given a

disqualification undertaking not to be a director of a company, and was convicted of an offence of

acting in contravention of a disqualification undertaking, contrary to section 13 of the Company

Directors Disqualification Act 19861 .

The defendant in the second case continued to act as a director of six companies after being

disqualified from doing so, and was convicted of six offences of acting in contravention of a

disqualification order, contrary to section 13 of the 1986 Act.

In each case the Crown Court concluded that the defendant's “benefit” from his criminal conduct

or offence, was equal to the total turnover of the relevant companies during the period of the

contravention. Accordingly the Crown Court imposed confiscation orders in sums equal to such

turnover.

Held , granting leave to appeal and allowing the appeals, that nothing in the confiscation

legislation, the 1986 Act, or the relevant case law required an approach different from that usually

adopted to be taken when ascertaining the “benefit” of an offender whose criminal conduct

consisted of contravening a director's disqualification order or an equivalent undertaking by

working through a company; that a person's acts might contribute significantly to property being

obtained without his obtaining it himself; that, since the benefit gained by an offender was a

question of fact, the offender's benefit in such a case did not necessarily equate to the turnover of

the relevant company during the period of the contravention; that, although it was permissible to

pierce the corporate veil and treat the turnover as being equal to the offender's benefit where

the offender had attempted to shelter behind a corporate façade to hide his crime or done acts in

the name of a company which constituted a criminal offence or where a transaction was a sham to

deceive third parties or the courts, on the facts found by the sentencing judges there was no basis

in either case on which the corporate veil could be pierced; that, therefore, the judges'

conclusions that the defendants' benefit equalled the turnover of the relevant companies had

been wrong as a matter of law and the confiscation orders would be quashed; that since the

defendant in the second case accepted that he had received a specific sum from the six companies

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in return for his services as a shadow director during the relevant period, the court would find that

that sum was the amount of his benefit and substitute a confiscation order in that sum; but that in

the first case, since there were no findings of primary fact or the relevant materials to enable the

court to reach any alternative finding of the defendant's benefit, no other confiscation order could

be substituted (post, paras 68–69, 74–76, 78–80, 83–85, 90, 92–96).

D. BENEFIT – PROPORTIONALITY

Proportionality

The benefit figure for each of joint beneficiaries is the total amount obtained. This means that if

each had the assets, the state could multiple-recover.

In May: “There might be circumstances in which orders for the full amount against several

defendants might be disproportionate and contrary to article 1 of the First Protocol, and in such

cases an apportionment approach might be adopted, but that was not the situation here and the

total of the confiscation orders made by the judge fell well below the sum of which the revenue

had been cheated.”

Also consider fiscal neutrality.

MAY [2008] UKHL 28

The argument in May was:

Such results were oppressive and disproportionate, inconsistent with article 1 of the First Protocol

to the European Convention on Human Rights and also (because of the defendant's liability to

imprisonment in default of payment) article 5 of the Convention. The present case, counsel

contended, illustrated the vice of the Crown's contention, upheld in the courts below. For there

were 16 conspirators named in the indictment: had each been found to have shared jointly in the

proceeds of the fraud and made liable (assuming they had realisable assets of the required value)

for the full sum ordered against the appellant, the same sum would have been recovered 16 times

over and the state would have gained more than HM Customs and Excise had lost.

The House of Lords said:

There might be circumstances in which orders for the full amount against several defendants might be disproportionate and contrary to article 1 of the First Protocol, and in such cases an apportionment approach might be adopted, but that was not the situation here and the total of the confiscation orders made by the judge fell well below the sum of which the revenue had been cheated. The judge's order against the appellant was accordingly upheld May para 45

JAMES AND BLACKBURN [2011] EWCA CRIM 2991

Given that the appellant had realisable assets it seems likely that, if the order is not quashed,

there would be full, or almost full, double recovery . If that were to happen the state would

receive twice the amount of the unpaid duty. In May [2008] UKHL 28; [2008] 1 AC 1028; [2009] 1

Cr App R (S) 31 , Lord Bingham said:

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45. … There might be circumstances in which orders for the full amount against several

defendants might be disproportionate and contrary to article 1 of the First Protocol, and in

such cases an apportionment approach might be adopted, but that was not the situation

here and the total of the confiscation orders made by the judge fell well below the sum of

which the Revenue had been cheated.

In the event, the court allowed appeals in both case on different grounds. So the matter is left

unresolved.

E. VALUING THE BENEFIT

Valuing the benefit

The value is the greater of

The value of the property at the time of obtaining (adjusted for the value of money)

The value of the property at the time of the confiscation hearing

79. Value: the basic rule

(1) This section applies for the purpose of deciding the value at any time of property then held by a person.

(2) Its value is the market value of the property at that time

...

80. Value of property obtained from conduct

(1) This section applies for the purpose of deciding the value of property obtained by a person as a result of or in connection with his criminal conduct; and the material time is the time the court makes its decision.

(2) The value of the property at the material time is the greater of the following -

(a) the value of the property (at the time the person obtained it) adjusted to take account of later changes in the value of money;

(b) the value (at the material time) of the property found under subsection (3).

(3) The property found under this subsection is as follows— .

(a)if the person holds the property obtained, the property found under this subsection is that property; .

(b)if he holds no part of the property obtained, the property found under this subsection is any property which directly or indirectly represents it in his hands; .

(c)if he holds part of the property obtained, the property found under this subsection is that part and any property which directly or indirectly represents the other part in his hands. .

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(4)The references in subsection (2)(a) and (b) to the value are to the value found in accordance with section 79.

GIBBONS [2003] 2 CR APP R (S) 169

Where the is no evidence of how obtained or whether jointly obtained, an equal division may be

the fairest solution Gibbons [2003] 2 Cr App R (S) 169

CHAMBERS [2008] EWCA CRIM 2467

It is important to use the right regulations for valuing pecuniary advantage gained by smuggling

dutiable goods (Chambers [2008] EWCA Crim 2467)

WALL [2003] 1 WLR 731

If D applies £10k of tainted money as a down-payment on a £250,000 house, legitimately

borrowing the remainder, it cannot plausibly be said that he has obtained the house as a result of

or in connection with the commission of his offence Wall [2003] 1 WLR 731, May para 26.

WAYA [2011] 1 CR. APP. R. (S.) 4

Where a defendant obtained a mortgage loan for the purchase of a house by deception, the value

of his benefit was the amount of the loan originally obtained, traced through the investment of

the loan as a proportion of the value of the property at the time the confiscation order was made.

Subject to appeal to the Supreme Court

F. MARKET VALUE OF DRUGS

ISLAM [2009] 1 AC 1076

In calculating the benefit figure, the black market value of drugs, which have been obtained as a

result of or in connection with the criminal conduct, may be included (R v Islam [2009] 1 AC 1076,

HL).

However, the fact that drugs can be assigned a value for the purposes of calculating a defendant’s

benefit figure does not mean that drugs should be assigned a value when the court assess what is

the recoverable amount. As drugs have no legitimate market value and indeed seized goods are

not “available” to the Defendant, when determining the Defendant’s “available amount” seized

drugs are treated as having no value.

As Lord Mance held in Islam at paragraph 49:

“For all these reasons, I consider that it is consistent with both the language and the spirit of the statutory scheme to take account of the black market value of drugs when valuing the benefit obtained by the defendant from their illegal importation, although such drugs have a nil market value after seizure for the purposes of assessing the amount available for confiscation.”

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G. “IN CONNECTION WITH…”

In connection with

A person benefits from conduct if he obtains property as a result of or in connection with the

conduct. (section 76(4)

What about the cost of smuggled and seized tobacco?

What about staff costs?

What about rent?

What about money to “prime the pump of a fraud”?

WALLER [2008] EWCA CRIM 2037

It was held on appeal that the judge had rightly decided that the cost of the tobacco was part of

the benefit in a smuggling operation (albeit that it was not taken into account in Smith),

notwithstanding that, at least in every day parlance, the appellant had obtained no benefit at all

and the Revenue, unlike the appellant, had lost nothing and indeed had, presumably, confiscated

the cigarettes.

The Court in Waller , in an unreserved judgment, gave six reasons for its conclusion. Giving the

first reason Silber J relied upon passages in May and, in particular, the passage which states that a

person ordinarily obtains property if in law he owns it, whether alone or jointly. In our view the

fact that a defendant owned the tobacco cannot of itself be decisive of the issue of whether the

purchase price of the tobacco is a benefit.

The second reason was expressed in this way:

“18. The judge was correct for a second reason which is based on comments which were made by

Lord Rodger of Earlsferry in Cadman Smith case. He said, first, at paragraph 21:

‘The measure of his benefit is the value of the property so obtained.’

Lord Rodger then went on to say at paragraph 23:

‘ … the courts have consistently held that ‘payments' received in connection with drug trafficking

mean gross payments rather than net profit and that ‘proceeds' of drug trafficking mean a gross

payments rather than net profit after deducting the cost of the drug trafficking operation.’

JAMES AND BLACKBURN [2011] EWCA CRIM 2991

CAPACITY OF OBTAINING

Raw tobacco was delivered to the “factory”, namely an industrial unit in Stevenage, where it was

processed in a machine that produces tobacco that can be smoked and can be sold as HRT.

Blackburn was the “manager” of the factory. From the factory the tobacco went in boxes to the

garage adjoining the home in Essex of the appellant, James. There it was put into, or was to be put

into, 50 gram counterfeit plastic pouches to be sold under a well known trade name.

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It was agreed that there was no evidence that Mr Blackburn financed the purchase of the raw leaf

tobacco. The court of appeal held that he was therefore akin to an employee akin to Sivaramen.

The confiscation judge found Mr James to have a financial interest, but the sentencing judge did

not. The court could not resolve this and so quashed the order.

EXPENSES

The judge, at the request of the prosecutor, added a figure to the unpaid excise duty a figure to

represent expenses which it was said the appellants had incurred. Thus, for example, Blackburn

had bought scales, saw blades for the machine (£50), had paid some rent, had paid money out as

wages to those working in the factory and had paid other miscellaneous expenses and that was

held to be a benefit, in the total amount of £6960.00, increased to £7411.00 by reason of a change

in the value of money.

The Court of Appeal held that none of these amounted to benefit. The appellant did not obtain the

items in connection with any criminal conduct. His criminal conduct in participating in the

conspiracy formed no part of the transactions by which he acquired the various items. Their

acquisition was by way of lawful purchase for value. The transactions were entered into for the

purpose of criminal conduct, but that is not the state of affairs caught by section 76(4).

AHMED (SHAKEEL) AND AHMED (SYED MUBARAK) [2012] EWCA CRIM 391;

TIMES, MAY 29, 2012

The appellants were convicted in 2007 of conspiracy to cheat the public revenue. The appellants

were concerned in a missing trader VAT fraud which took place over a short period in 2002. The

appellants were directors and shareholders of a company which acted as a “buffer” company for

the purposes of the fraud. The fraud involved five companies in Ireland purporting to export large

quantities of central processing units to a number of companies in the United Kingdom. The goods

were zero rated on import to the United Kingdom and the first company, the “missing trader” sold

them on to the first “buffer” company, which then sold the goods on to the second buffer

company, which was the company of which the appellants were directors. The appellants'

company then sold the goods on to an exporting company for an amount which included the VAT.

The exporting company then exported the goods back to the company in Ireland which had

originally sold the goods. No VAT was payable on the export, but the exporter reclaimed the VAT

that it had paid to the appellant's company. The amount of the VAT which was fraudulently

obtained was approximately £12.6 million. The missing trader company issued a VAT invoice

enabling the first buffer company to deduct the amount shown as being input tax from the

amount due from the buffer company to the HMRC as output tax in respect of other transactions.

In many cases all the transactions took place on the same day.

In a carousel fraud the conspirators have to put up a significantly large sum of money to “prime

the pump”. That money then passes through the accounts of the buffer companies. As we have

said, to commit an MTIC fraud, it is a necessary part of the deception on HMRC that an amount

representing the value of the goods and the VAT thereon should pass through the accounts of the

buffer companies. The fact that money has to be put up to prime the pump is part of the cost of

committing the fraud.

The Court held that Waller was wrongly decided. IMPORTANT – Court of Appeal not following its

own decision.

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The money was obtained for the purpose of criminal conduct, but not in connection with criminal

conduct.

“The mere fact that a loss to the Revenue of £12.6 million leads to two confiscation orders in the

sum of twice £72 million (before uplift) shows, we believe, that something has gone wrong.”

Difficult to reconcile Ahmad with Shabhir – where court held that the confiscation order was rightly

in the full sum, albeit ought not be made as oppressive – and Simons.

Is the court right that Waller is wrong, but wrong in its own conclusion?

6. RECOVERABLE AMOUNT

The Recoverable amount is the benefit.



Unless the defendant shows that the available amount is less than that benefit the recoverable

amount


7 Recoverable amount.

(1) The recoverable amount for the purposes of section 6 is an amount equal to the defendant’s benefit from the conduct concerned. .

(2) But if the defendant shows that the available amount is less than that benefit the recoverable amount is— .

(a) the available amount, or .

(b) a nominal amount, if the available amount is nil.

…

MAY [2008] UKHL 28

Confiscation orders should be made ‘within the limits of [a defendant’s] available means’ (para

41); that a defendant ‘cannot be ordered to pay a sum beyond his means to pay’ (ibid.); and that

‘it would be unjust to imprison a defendant for failure to pay a sum which he cannot pay’ (para

35).

However it is for the defendant to prove his assets that he does not have the assets to pay.

A. HIDDEN ASSETS

There is no statutory concept of hidden assets. It is shorthand for a situation where the defendant

fails to show that the available amount is less than the benefit, in which case the confiscation

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order is made in the amount of the benefit irrespective of whether in fact the defendant can pay.

It is as if the difference between the apparent assets and the benefit is made up of assets which

are hidden.

In truth there may be:

(a) more or

(b) less

assets than the benefit figure. Section 7 in effect deems the unknown amount to be the benefit

figure.

TELLI V REVENUE AND CUSTOMS PROSECUTION [2008] 2 CR. APP. R. (S.)

In Telli v Revenue and Customs Prosecution [2008] 2 Cr. App. R. (S.) (CA) Moses LJ held

“If a defendant fails to satisfy a court of the value of that realisable property then the court is bound to make a confiscation order in the full value of his proceeds”.

R V WHITTINGTON [2010] 1 CR. APP. R. (S.) 83

“If a defendant chooses to give no explanation or no acceptable explanation of benefits identified by the court he has only himself to blame for the failure to discharge the burden of establishing the lesser amount is available. This is the risk a defendant runs in disputing the amount of benefit, once the prosecution succeeds in establishing a figure which he disputes”.

MCINTOSH [2011] EWCA CRIM 1501

In McIntosh [2011] EWCA Crim 1501, Moses LJ reviewed his dicta in Telli and held

15. In the light of Glaves and May there is no principle that a court is bound to reject a defendant's case that his current realisable assets are less than the full amount of the benefit, merely because it concludes that the defendant has not revealed their true extent or value, or has not participated in any revelation at all. The court must answer the statutory question in s.7 in a just and proportionate way. The court may conclude that a defendant's realisable assets are less than the full value of the benefit on the basis of the facts as a whole. A defendant who is found not to have told the truth or who has declined to give truthful disclosure will inevitably find it difficult to discharge the burden imposed upon him. But it may not be impossible for him to do so. Other sources of evidence, apart from the defendant himself, and a view of the case as a whole, may persuade a court that the assets available to the defendant are less than the full value of the benefit.

7. AVAILABLE AMOUNT

A criminal caught in possession of criminally-acquired assets will suffer their seizure by the state.

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“Where… a criminal has benefited financially from crime but no longer possesses the specific fruits

of his crime, he will be deprived of assets of equivalent value, if he has them. The object is to

deprive him, directly or indirectly, of what he has gained.” May para 9

Defined

The total of the values (at the time the confiscation order is made) of all the free property then

held by the defendant

The total of the values (at that time) of all tainted gifts

Less fines and certain limited preferential debts.


9 Available amount.

(1) For the purposes of deciding the recoverable amount, the available amount is the aggregate of— .

(a) the total of the values (at the time the confiscation order is made) of all the free property then held by the defendant minus the total amount payable in pursuance of obligations which then have priority, and .

(b) the total of the values (at that time) of all tainted gifts. .

(2) An obligation has priority if it is an obligation of the defendant— .

(a) to pay an amount due in respect of a fine or other order of a court which was imposed or made on conviction of an offence and at any time before the time the confiscation order is made, or .

(b) to pay a sum which would be included among the preferential debts if the defendant’s bankruptcy had commenced on the date of the confiscation order or his winding up had been ordered on that date. .

(3) “Preferential debts” has the meaning given by section 386 of the Insolvency Act 1986 (c. 45). .

INSOLVENCY ACT 1986

386.— Categories of preferential debts.

(1) A reference in this Act to the preferential debts of a company or an individual is to the debts listed in Schedule 6 to this Act [(contributions to occupational pension schemes; remuneration, &c. of employees; levies on coal and steel production)] 1 ; and references to preferential creditors are to be read accordingly.

(2) In that Schedule “the debtor” means the company or the individual concerned.

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(3) Schedule 6 is to be read with [Schedule 4 to the Pension Schemes Act 1993] (occupational pension scheme contributions).

Schedule 6

Category 1: Debts due to Inland Revenue [REPEALED]

Category 2: Debts due to Customs and Excise [REPEALED]

Category 3: Social security contributions [REPEALED]

Category 4: Contributions to occupational pension schemes, etc.

Category 5: Remuneration, etc., of employees

Category 6: Levies on coal and steel production

A. TAINTED GIFTS

A gift is a transfer for a consideration whose value is significantly less than the value of the

property (section 78)

In the case of a criminal lifestyle:

A gift is tainted if it was given with six years before the proceedings started.

Or at any time in the case if it was the proceeds of crime.

If no criminal lifestyle

At any time after the offence was committed.


77 Tainted gifts.

(1) Subsections (2) and (3) apply if— .

(a) no court has made a decision as to whether the defendant has a criminal lifestyle, or .

(b) a court has decided that the defendant has a criminal lifestyle. .

(2) A gift is tainted if it was made by the defendant at any time after the relevant day. .

(3) A gift is also tainted if it was made by the defendant at any time and was of property— .

(a) which was obtained by the defendant as a result of or in connection with his general criminal conduct, or .

(b) which (in whole or part and whether directly or indirectly) represented in the defendant’s hands property obtained by him as a result of or in connection with his general criminal conduct. .

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(4) Subsection (5) applies if a court has decided that the defendant does not have a criminal lifestyle. .

(5) A gift is tainted if it was made by the defendant at any time after— .

(a) the date on which the offence concerned was committed, or .

(b) if his particular criminal conduct consists of two or more offences and they were committed on different dates, the date of the earliest. .

(6) For the purposes of subsection (5) an offence which is a continuing offence is committed on the first occasion when it is committed. .

(7) For the purposes of subsection (5) the defendant’s particular criminal conduct includes any conduct which constitutes offences which the court has taken into consideration in deciding his sentence for the offence or offences concerned. .

(8) A gift may be a tainted gift whether it was made before or after the passing of this Act. .

(9) The relevant day is the first day of the period of six years ending with— .

(a) the day when proceedings for the offence concerned were started against the defendant, or .

(b) if there are two or more offences and proceedings for them were started on different days, the earliest of those days.

78 Gifts and their recipients.

(1) If the defendant transfers property to another person for a consideration whose value is significantly less than the value of the property at the time of the transfer, he is to be treated as making a gift. .

(2) If subsection (1) applies the property given is to be treated as such share in the property transferred as is represented by the fraction— .

(a) whose numerator is the difference between the two values mentioned in subsection (1), and .

(b) whose denominator is the value of the property at the time of the transfer. .

(3) References to a recipient of a tainted gift are to a person to whom the defendant has made the gift. ..

B. THE FAMILY HOME

Generally, in practice, a wife is assumed to have a 50% share of the marital home.

In matrimonial proceedings she can seek a greater share than she has on paper. The family

proceedings should come first (Webber v CPS [2006] EWHC 2893 (Fam))

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While non-complicity in the crime is a necessary conduction for the wife to succeed in an ancillary

relief claim as a matter of discretion where she is in competition with a confiscation order, such

non-complicity is not a sufficient condition. Stodgell v Stodgell [2005] 2 FLR 244

8. ORDER

A. PERIOD IN DEFAULT

POWERS OF CRIMINAL COURTS (SENTENCING) ACT 2000, SS.139

Archbold [5-676]

The top of each band is as follows:

An amount not exceeding 200£ max period 7 days

500£ 14 days

1,000£ 28 days

2,500£ 45 days

5,000£ 3 months

10,000£ 6 months

20,000£ 12 months

50,000£ 18 months

100,000£ 2 years

250,000£ 3 years

1,000,000£ 5 years

Over £1,000,000 6,000,000£ 10 years

Archbold [5-679]

SZRAJBER, 15 CR.APP.R.(S.) 821, CA

In Szrajber, 15 Cr.App.R.(S.) 821, CA, it was held that the default terms set out in section139(4) of

the 2000 Act, were maximum terms. The court had a discretion to fix a period below the

maximum. Normally the court was likely to determine that the appropriate period in default

would fall between the maximum for the band immediately below the band that was being

considered, and the maximum for the band itself. In determining the right term in default, the

court had to consider the circumstances of the case and the overall seriousness of the matter, and

in particular that the purpose of the imposition of a period of imprisonment in default was to

secure payment of the amount which the court had ordered to be confiscated. It was not

necessarily appropriate to approach the case on a simple arithmetical basis.

Section 139(4) is applied to the fixing of terms in default for non-payment of a confiscation order

under the s.35 of that Act. Where the amount of the order exceeds £1 million, a judge should not

go straight to the maximum default period. Whilst it is legitimate to take into account that the

purposes of the default sentence are to secure payment and to make clear to the offender that

there is nothing to gain by non-compliance, a judge should have regard to both the amount of the

offender’s benefit and the realisable amount, and, if appropriate, make allowance for the fact that

there will be cases where the amounts involved are considerably higher: Pigott [2010] 2

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Cr.App.R.(S.) 16, CA (reducing the default term from 10 to eight years where the benefit was £27

million and the available amount was £1.5 million).

CASTILLO [2011] EWCA CRIM 3173; [2012] CRIM. L.R. 401 (CA (CRIM DIV))

The appellant was convicted of conspiring to cheat the public revenue. The appellant was involved

in a carousel or missing trader fraud in which an estimated £250 million of VAT was claimed from

HM Revenue and Customs. Sentenced to 10 years' imprisonment, disqualified from acting as the

director of the company for 10 years with a confiscation order in the amount of £3 million, with 10

years' imprisonment in default.

Held, in confiscation proceedings the benefit figure was agreed at £30,791,277 and 25p. The

sentencing judge accepted the Crown's contention that the appellant's minimum profit from the

conspiracy was £4 million. The appellant claimed that he had dissipated the funds obtained from

the conspiracy in various ways. The sentencing judge found that except for certain mortgage

payments, the appellant's account of this expenditure was fanciful. The Crown accepted that in

arriving at the figure for realisable assets, the judge should make some reduction from the sum of

£4 million which was estimated to represent the appellant's minimum profit from the conspiracy

to reflect expenditure which could not be recovered. The sentencing judge was satisfied that the

appellant's minimum profit was £4 million and that there were available hidden assets in the sum

of £3 million. The sentencing judge referring to the default sentence commented that the

appellant's approach had been wholly untruthful and that his purpose was to preserve his

remaining criminal assets of at least £3 million so as to enjoy them on his release from custody.

Accordingly, the sentencing judge imposed a default sentence of 10 years, consecutive to the term

which the appellant was already serving. The sentencing judge added that the appellant would not

serve any part of the sentence if he repaid the money which he had obtained by fraud.

The principles which emerged from the authorities given by the court are:

(1) All the circumstances of the case had to be considered.

(2) It was of the first importance to have in mind that the purpose of the default term was to

secure payment of the confiscation order.

(3) It was not the court's function to find an arithmetical match to the amount of the order and the

length of the term, so that for any given band or bracket prescribed in the statute, an order at the

bottom of the band should attract a default term likewise at the bottom of the bracket, an order in

the middle of the band should attract a term the middle of the bracket or an order at the top

should attract a term at the top of the bracket.

(4) The court was not to be influenced by the overall totality of the sentence passed for the crime

plus the default term.

(5) For any given band, the court should have regard to the maxima; the maximum amount of the

confiscation order within the band and the maximum default term within the band.

(6) Where there was no maximum confiscation order, and only a maximum default term, regard

must be had to the requirement of proportionality

Those were the principles which emerged from the cases. The court would add that although the

court had insisted that the requirement of proportionality had to be respected, that did not imply

what in sentencing parlance might be called a “tariff.” The purpose of the default term was not

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punishment for the achievement of retributive justice. It was to secure satisfaction of the

confiscation order and so deprive the criminal of the fruits of his crime. The demands of

proportionality were much weaker than where the court was punishing the offender but still a

consideration. The order of 10 years would be quashed and a term of nine years would be

substituted.

Extrapolating the graph, it is plain that £1,000,000 does not require a defeault sentence of 10

years, rather it is at the top of the £250,000 to £1,000,000 band which is 3 to 5 years ie. 5 years.

B. TIME TO PAY

The defendant may be given up to six months to pay.

Which may be extended to up to one year if there are exceptional circumstances.


11 Time for payment

(1) The amount ordered to be paid under a confiscation order must be paid on the making of the order; but this is subject to the following provisions of this section.

(2) If the defendant shows that he needs time to pay the amount ordered to be paid, the court making the confiscation order may make an order allowing payment to be made in a specified period.

(3) The specified period—

(a) must start with the day on which the confiscation order is made, and

(b) must not exceed six months.

(4) If within the specified period the defendant applies to the Crown Court for the period to be extended and the court believes there are exceptional circumstances, it may make an order extending the period.

(5) The extended period—

£- £200,000 £400,000 £600,000 £800,000 £1,000,000 £1,200,000 £1,400,000 £1,600,000 £1,800,000 £2,000,000

De

fau

lt p

eri

od

in y

ear

s

Unpaid sum

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(a) must start with the day on which the confiscation order is made, and

(b) must not exceed 12 months.

9. RECONSIDERATION: AVAILABLE AMOUNT

If the confiscation order is made in less than the amount of the benefit.

The prosecutor can apply at any time for a further calculation of the available amount.

The court may vary the order by substituting for the amount required to be paid such amount as—

(a) it believes is just, but

(b) does not exceed the amount found as the defendant’s benefit from the conduct

concerned.


22 Order made: reconsideration of available amount.

(1) This section applies if— .

(a) a court has made a confiscation order, .

(b) the amount required to be paid was the amount found under section 7(2), and .

(c) an applicant falling within subsection (2) applies to the Crown Court to make a new calculation of the available amount. .

(2) These applicants fall within this subsection— .

(a) the prosecutor; .

(b) the Director; .

(c) a receiver appointed under section 50 or 52. .

(3) In a case where this section applies the court must make the new calculation, and in doing so it must apply section 9 as if references to the time the confiscation order is made were to the time of the new calculation and as if references to the date of the confiscation order were to the date of the new calculation. .

(4) If the amount found under the new calculation exceeds the relevant amount the court may vary the order by substituting for the amount required to be paid such amount as— .

(a) it believes is just, but .

(b) does not exceed the amount found as the defendant’s benefit from the conduct concerned. .

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(5) In deciding what is just the court must have regard in particular to— .

(a) any fine imposed on the defendant for the offence (or any of the offences) concerned; .

(b) any order which falls within section 13(3) and has been made against him in respect of the offence (or any of the offences) concerned and has not already been taken into account by the court in deciding what is the free property held by him for the purposes of section 9; .

(c) any order which has been made against him in respect of the offence (or any of the offences) concerned under section 130 of the Sentencing Act (compensation orders). .

(6) But in deciding what is just the court must not have regard to an order falling within subsection (5)(c) if a court has made a direction under section 13(6).

(7) In deciding under this section whether one amount exceeds another the court must take account of any change in the value of money. .

(8) The relevant amount is— .

(a) the amount found as the available amount for the purposes of the confiscation order, if this section has not applied previously; .

(b) the amount last found as the available amount in pursuance of this section, if this section has applied previously. .

(9) The amount found as the defendant’s benefit from the conduct concerned is— .

(a) the amount so found when the confiscation order was made, or .

(b) if one or more new calculations of the defendant’s benefit have been made under section 21 the amount found on the occasion of the last such calculation. .

A. LATER ACQUIRED ASSETS

TIVNAN [1999] 1 CR APP R (S) 92

In Tivnan [1999] 1 Cr. App. R.(S.) 92 , the Court of Appeal referred to the draconian nature of the

provisions relating to confiscation in the 1994 Act:

“It is intended to strip those who deal in drugs of any possible profit from so doing, by

depriving them of their realisable assets, whether or not these are the proceeds of drug

trafficking up to the amount to which they have benefited from drug dealing.”

It went on to deal with the first three stages of the process, and continues at p.97 to set out the

terms of s.16:

“It is to be noted, first, that the section contains no words of limitation as to time. Secondly,

it is expressed throughout in the present tense, by reference to the time of application for

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the further certificate and increased confiscation order. Thirdly, the marginal note refers to

increase in realisable property. Fourthly, there is in the section no reference to the reason,

(whether culpable concealment, subsequent acquisition, or otherwise), why, ‘the amount

that might be realised … is greater than the amount taken into account in making the

confiscation order.”

BATES [2007] 1 CR. APP. R. (S.) 2

An order of the Crown Court increasing the amount of a confiscation order under the Drug

Trafficking Act 1994, s.16 upheld, where the offender had paid the original order in full and

subsequently purchased a council house under the right-to-buy legislation, thereby acquiring a

substantial equity in the house.

Factors such as the defendant's abandonment of a life of crime, the legitimate nature of his

acquisition of the assets, the passage of time since the confiscation order was made and matters

of exceptional hardship may be relevant to the exercise of the discretion.

RE MAYE [2008] UKHL 9; [2008] 1 W.L.R. 315

A confiscation order under the Northern Irish regime was increased to take account of the

appellant's interest in his parents' unadministered estates that had been a “thing in action” at the

time of making the order, so the court left open the question of whether the section referred to

later acquired assets, or those existing at the time of the original order.

IN RE PEACOCK [2012] 1 WLR 550, 22 FEBRUARY 2012 (SC)

About DTA1994 section 16.

It was submitted for the appellant that those definition sections required s.16(2) to be construed

as if it said that the High Court could issue a certificate if it was satisfied that the total value of all

property held by the person in question at the time the confiscation order was made was greater

than the amount taken into account in making the confiscation order. That was a difficult

submission. The words in s.16(2) were not “amount that might be realised at the time the

confiscation order is made against the defendant” but “amount that might be realised”. It

followed that the words “at the time the confiscation order is made” were conspicuously absent

from s.16(2).

Under POCA the wording is much clearer, so Peacock is of little importance.

In passing it was said:

47 Section 16 does not oblige the Crown Court to order an increase in the amount of the confiscation order (which is subject in any event to the ceiling of the assessed value of the defendant's proceeds of drug trafficking) in parallel with its assessment of the amount of the increase in the defendant's realisable property. Subsection (4) confers on it a discretion to order such lesser increase “as appears to the court to be appropriate having regard to the amount now shown to be realisable”. It is clear from the decision of the Court of Appeal (Criminal Division) in R v Bates [2007] 1 Cr App R (S) 9 , paras 12 and 13 that factors such as the defendant's abandonment of a life of crime, the legitimate nature of his acquisition of the assets, the passage of time since the



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confiscation order was made and matters of exceptional hardship may be relevant to the exercise of the discretion. Such is in my view the area which Parliament has provided for the court to make allowance for the type of factors which, as is clear in para 59, Lord Hope of Craighead DPSC instead prefers to weigh in his approach to the exercise of construction.

CRIMINAL JUSTICE ACT 2003

142 Purposes of sentencing.

(1) Any court dealing with an offender in respect of his offence must have regard to the following purposes of sentencing— .

(a) the punishment of offenders, .

(b) the reduction of crime (including its reduction by deterrence), .

(c) the reform and rehabilitation of offenders, .

(d) the protection of the public, and .

(e) the making of reparation by offenders to persons affected by their offences.

…

B. REASONABLE TIME REQUIREMENT

GRIFFIN [2009] CR APP R (S) 587

In Griffin [2009] Cr App R (S) 587, it was held that confiscation and the variation of confiscation

must all take place within a reasonable time of charge. At paragraph 35 it was said the critical

question is whether the State at any stage “sat on its hands” after significant and clear evidence

about the defendant’s means or realisable property comes to its attention. The state “should not

be able to avoid criticism of unreasonable and unfair delay merely by the expedient of an

argument that everything which preceded its new application is irrelevant for the purposes of the

new proceedings”.

10. RECONSIDERATION: BENEFIT

Reconsideration of Benefit

The prosecution may apply to reconsider the benefit figure but only upon evidence which was not

available to the prosecutor or the Director at the relevant time and only within six years of

conviction.


21 Order made: reconsideration of benefit.


(a) a court has made a confiscation order, .

38

(b) there is evidence which was not available to the prosecutor or the Director at the relevant time, .

(c) the prosecutor or the Director believes that if the court were to find the amount of the defendant’s benefit in pursuance of this section it would exceed the relevant amount, .

(d) before the end of the period of six years starting with the date of conviction the prosecutor or the Director applies to the Crown Court to consider the evidence, and .

(e) after considering the evidence the court believes it is appropriate for it to proceed under this section. .

(2) The court must make a new calculation of the defendant’s benefit from the conduct concerned, and when it does so subsections (3) to (6) below apply…

11. RECONSIDERATION: INADEQUACY OF AVAILABLE AMOUNT (S23)

If the court finds that the available amount is inadequate for the payment of any amount

remaining to be paid under the confiscation order it may vary the order by substituting for the

amount required to be paid such smaller amount as the court believes is just.

The court may disregard any inadequacy which it believes is attributable (wholly or partly) to

anything done by the defendant for the purpose of preserving property held by the recipient of a

tainted gift from any risk of realisation under this Part. .


23 Inadequacy of available amount: variation of order.


(a) a court has made a confiscation order, and .

(b) the defendant, or a receiver appointed under section 50 or 52, applies to the Crown Court to vary the order under this section. .

(2) In such a case the court must calculate the available amount, and in doing so it must apply section 9 as if references to the time the confiscation order is made were to the time of the calculation and as if references to the date of the confiscation order were to the date of the calculation. .

(3) If the court finds that the available amount (as so calculated) is inadequate for the payment of any amount remaining to be paid under the confiscation order it may vary the order by substituting for the amount required to be paid such smaller amount as the court believes is just. .

(4) If a person has been adjudged bankrupt or his estate has been sequestrated, or if an order for the winding up of a company has been

39

made, the court must take into account the extent to which realisable property held by that person or that company may be distributed among creditors. .

(5) The court may disregard any inadequacy which it believes is attributable (wholly or partly) to anything done by the defendant for the purpose of preserving property held by the recipient of a tainted gift from any risk of realisation under this Part. .

(6) In subsection (4) “company” means any company which may be wound up under the Insolvency Act 1986 (c. 45) or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

GOKAL [2001] EWCA CIV 368,

In Gokal Keene LJ said at para 24:

“As has been said many times in the authorities, it is not enough for a defendant to come to court and say that his assets are inadequate to meet the confiscation order, unless at the same time he condescends to demonstrate what has happened since the making of the order to the realisable property found by the trial judge to have existed when the order was made…Any other approach would amount to an attempt to go behind the finding embodied in the confiscation order, and such an attempt would be an abuse of process.”

RE O’DONOGHUE [2004] EWCA CIV 1800

The court should ensure that a just and proportionate determination of the benefit figure and the

recoverable amount is reached, even where the Defendant has lied to the court and tried to

minimise his exposure to a confiscation order. As Pill LJ held:

“The judge has a fact-finding exercise to conduct under section 83(1) of the Criminal Justice Act 1988. He has to assess the current value of realisable assets as a whole. All I would add, whilst expressing full agreement with what my Lord has said, is that the judge needs to keep a sense of proportion in conducting that exercise, however dishonest or unco-operative a defendant may have been with respect to what has been found to be one or more of his realisable assets. There could be cases where, on an overall view, it would be open to the judge to hold that the value was on balance of probability inadequate within the meaning of the section, even if the defendant has declined to condescend to give an explanation with respect to every single asset.”

TELLI V RCPO [2007] EWHC 2233

In Telli v RCPO [2007] EWHC 2233, a confiscation order was made by agreement in a sum

approaching £3.5 million. The defendant’s assets included a statue of Dionysus, for which the

keeper of the Greek and Roman Department of the British Museum suggested a market price

between £1 million and £1.5 million. During negotiations leading to the compromise the

defendant indicated that he had available cash in the region of £900,000.00 to £1 million, and

there was evidence that he had control over offshore bank accounts. Ten years later the

defendant applied for a certificate of inadequacy on the basis that the Turkish government had

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recovered the statue of Dionysus as stolen property and that its value to him was therefore nil. It

appears from the report that he was silent on his application about the part of the sum previously

taken to be the value of his realisable assets which had not been itemised. Collins J dismissed the

application and the Court of Appeal upheld his decision.

In the Court of Appeal, Moses LJ (with whom the other members of the court agreed) said that,

absent identification of all the realisable property held by him, a defendant will normally be

unable to satisfy the court that the amount that might be realised at the time the confiscation

order is made is less than the amount assessed to be the proceeds of his drug trafficking (para 31).

Dealing with the particular case Moses LJ said:

‘37. …once it is appreciated that the property held by the defendant included unidentified assets forming part of the total value of the realisable property at the time of the order, it is impossible for Telli to establish that the realisable property is inadequate now to meet payment of the outstanding amounts. The order was made in 1996. If a defendant fails to identify all the assets he holds, no one will know their true value and by the time of the application, the value of the assets he failed to identify may have increased, particularly after ten years. Absent consideration of current value, no court could be satisfied that the realisable property was inadequate. If the assets remain unidentified no conclusion can be reached as to their current value.

38. In short, the appellant's application fails because he is not able to identify the current value of his realisable assets whilst he chooses not to identify all of those assets.’

ALAN GLAVES V CROWN PROSECUTION SERVICE [2011] EWCA CIV 69

In Alan Glaves v Crown Prosecution Service [2011] EWCA Civ 69, a case in which a confiscation

order had been made under section 71 of the Criminal Justice Act 1988 requiring Glaves to pay

£145,000 within 12 months or in default to serve 30 months' imprisonment. Glaves subsequently

made an application for a certificate of inadequacy, asserting that he had paid £94,400.00 towards

the order and that there was an inadequacy of £36,678.40 in the funds available to him.

The figure arrived at for recoverable property included the sum of £22,634.50 from Glaves’

NatWest account, about which he had ‘failed to prove the necessary negative’, i.e. had failed to

establish that the amount of his assumed half share of the cash withdrawals was not still available

to him in some form (para 37);

The Prosecution submitted (para 39), following the above authorities, that:

‘…in a case such as the present an applicant faces an insuperable problem in that he will be unable to show that his current assets are insufficient to meet the balance of the order unless and until he provides “clear and cogent” evidence about what happened to the cash withdrawn from the NatWest account. Since [Glaves] has no more to say on that subject now than at the time when the confiscation order was made, it necessarily follows that his application must fail.’

The existence of ‘hidden assets’ was, so submitted the Prosecution (para 22), a ‘fatal defect’: (i)

the defendant had not shown what had happened to that part of his realisable assets; (ii) without

full disclosure by him of the form which that part of his realisable assets took and what has

become of it, the court is not in a position to know whether that part of his assets may not have

41

appreciated in value in a way that equals any diminution in value there may have been in the

respondent's identified assets (if, that is, the defendant is telling the truth about those matters);

(iii) therefore his application is bound to fail, whatever depletion in value there may have been in

his identified assets.

Collins J, however, decided, as a preliminary issue, that an application for a certificate of

inadequacy was not bound to fail. Collins J reasoned:

1. The question is what his realisable assets now are;

2. Glaves ‘cannot go behind...the finding of the Crown Court against him on the

existence, so far as the order was concerned, of hidden assets’;

3. Glaves ‘can, and should be able to, establish that he has made nothing out of those

hidden assets’;

4. That is so ‘even if his assertion is that they never actually existed’;

5. The proviso is that Glaves ‘produces sufficient evidence before the court’;

6. The test is that the court ‘is satisfied that he has been honest in showing that he did

not actually make anything out of those presumed hidden assets’.

7. It will be a very difficult task for any defendant in his position to persuade the court,

if he has not cooperated in the past…that that is indeed the position.

Without such an opportunity, Collins J observed, it ‘would be entirely unfair, and would lead to

this being a punishment as opposed to an asset stripping exercise if he were liable to be sent to

prison on the basis that he had made a profit, which in this case is over 50% of the assets which

were found against him, simply because he has not accepted and has never accepted that those

assets existed.’

The Court of Appeal (Toulson LJ, Wilson LK, Arden LJ) agreed. Toulson LJ concluded: (i) ‘the

inflexibility of the rule for which [the Prosecution] contends has the potential to cause injustice’;

(ii) although the courts are routinely reminded that a defendant must produce ‘clear and cogent

evidence’ and that generalised assertions will rarely be sufficient to discharge the burden upon

him, the truth is that ‘there is a balance of judgment to be struck’; (iii) the courts are right to treat

with some scepticism generalised assertions by someone whose credibility may be deeply suspect

by reason of the facts of the offence; and (iv) the absence of independent credible evidence to

corroborate a defendant's account is not fatal as a proposition of law, but it may well be fatal as a

matter of fact.

Toulson LJ then held (at para. 54):

‘At the stage of an application for a certificate of inadequacy, the burden of proof is again on the defendant. He is unlikely to succeed unless the court is satisfied that he is being candid, and an application for a certificate of inadequacy is not intended to be a means of the defendant having a second bite at the same cherry. Those principles are clearly established. However, a rule of law which said that the court could not be persuaded that the defendant was unable to pay the outstanding amount by reason of a worsening of his financial circumstances unless he gave full disclosure of what had happened in the meantime to all his assets, including previously unidentified assets, would trammel the width of s83 by imposing a restriction which is not in the statute. It would also be capable of causing not merely hardship but hardship amounting to injustice.’

And at para. 55, Toulson LJ made the following observations:

42

‘In the case of previously unidentified assets, it is possible that a defendant may genuinely have no idea or only a dim recollection what had originally happened to them. He should be allowed to try to persuade the court, if this be the case, that his identified assets have shrunk in value and that as a result he is not able to pay the amount outstanding.’

The rationale was explained by Toulson LJ as follows:

‘If the defendant is not permitted the opportunity of trying to establish this, there is a real risk that even though he can demonstrate a change in his circumstances, possibly very great, he may serve an additional period of imprisonment through failure to do that which is impossible by reason of his change of circumstances.’

The Court’s response to such a submission will depend on the nature of the case before it (supra.):

‘What the court makes of that evidence will be a matter for its judgment. Much will no doubt depend on the nature of the case. Cases involving unidentified assets can vary greatly. The case of an international drug dealer with evidence of a lavish lifestyle, ready access to large sums of cash and connections with a web of offshore companies and bank accounts [e.g. the Telli-type case], may merit different treatment from the case of a defendant whose apparent circumstances and amount of unaccounted for assets are much more modest. It is for the court to consider the totality of the evidence before concluding whether it accepts that the defendant has suffered a change of fortune such that he is probably not able to pay the balance of the outstanding money.’

R V MCINTOSH [2011] S.T.I. 1940

This was a case arising out of confiscation proceedings brought under section 71 of the CJA 1988.

In McIntosh it was held that in light of May [2008] 1 AC 1028 and Glaves a court cannot be legally

bound to reject a defendant's case that his current realisable assets are less than the full amount

of his benefit, merely because it concludes that he has not revealed their true extent or value.

Such a defendant may well find it difficult to discharge the burden imposed upon him. But other

sources of evidence may yet persuade the court that the assets available to him are less than the

full value of the benefit.

12. ENFORCEMENT

A. COMMITTAL TO PRISON

The implementation of the enforcement regime is not easy to piece together from the statute.

Confiscation orders are treated as if the amount ordered to be paid were a fine imposed on the

defendant by the court making the confiscation order. Though there is no power to remit a sum

due under a confiscation order (POCA s35).

A fine imposed by the Crown Court shall be treated for the purposes of collection, enforcement

and remission of the fine as having been imposed by the magistrates' court by which the offender

was committed to the Crown Court to be tried as having been so imposed on conviction by the

magistrates' court in question. PCC(S)A s140(1)

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Where default is made in paying a sum adjudged to be paid by a conviction or order of a

magistrates' court, the court may issue a warrant committing the defaulter to prison MCA1980,

s76.


35 Enforcement as fines

(1) This section applies if a court—

(a) makes a confiscation order

…

(2) Sections 139(2) to (4) and (9) and 140(1) to (4) of the Sentencing Act (functions of court as to fines and enforcing fines) apply as if the amount ordered to be paid were a fine imposed on the defendant by the court making the confiscation order.

(3) In the application of Part 3 of the Magistrates' Courts Act 1980 (c. 43) to an amount payable under a confiscation order—

(a) ignore section 75 of that Act (power to dispense with immediate payment);

(b) such an amount is not a sum adjudged to be paid by a conviction for the purposes of section 81 (enforcement of fines imposed on young offenders) or a fine for the purposes of section 85 (remission of fines) of that Act;

(c) in section 87 of that Act ignore subsection (3) (inquiry into means).

…

38 Provisions about imprisonment or detention

(1) Subsection (2) applies if—

(a) a warrant committing the defendant to prison or detention is issued for a default in payment of an amount ordered to be paid under a confiscation order in respect of an offence or offences, and

(b) at the time the warrant is issued the defendant is liable to serve a term of custody in respect of the offence (or any of the offences).

(2) In such a case the term of imprisonment or of detention under section 108 of the Sentencing Act (detention of persons aged 18 to 20 for default) to be served in default of payment of the amount does not begin to run until after the term mentioned in subsection (1)(b) above.

(3) The reference in subsection (1)(b) to the term of custody the defendant is …

(5) If the defendant serves a term of imprisonment or detention in default of paying any amount due under a confiscation order, his serving that term does not prevent the confiscation order from continuing to have effect so far as any other method of enforcement is concerned.

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POWERS OF THE CRIMINAL COURTS SENTENCING ACT

139.— Powers and duties of Crown Court in relation to fines and forfeited recognizances.

…

(2) Subject to the provisions of this section, if the Crown Court imposes a fine on any person or forfeits his recognizance, the court shall make an order fixing a term of imprisonment or of detention under section 108 above (detention of persons aged 18 to 20 for default) which he is to undergo if any sum which he is liable to pay is not duly paid or recovered:

(3) No person shall on the occasion when a fine is imposed on him or his recognizance is forfeited by the Crown Court be committed to prison or detained in pursuance of an order under subsection (2) above unless—

(a) in the case of an offence punishable with imprisonment, he appears to the court to have sufficient means to pay the sum forthwith;

(b) it appears to the court that he is unlikely to remain long enough at a place of abode in the United Kingdom to enable payment of the sum to be enforced by other methods; or

(c) on the occasion when the order is made the court sentences him to immediate imprisonment, custody for life or detention in a young offender institution for that or another offence, or so sentences him for an offence in addition to forfeiting his recognizance, or he is already serving a sentence of custody for life or a term—

(i) of imprisonment;

(ii) of detention in a young offender institution; or

(iii) of detention under section 108 above.

(4) The periods set out in the second column of the following Table shall be the maximum periods of imprisonment or detention under subsection (2) above applicable respectively to the amounts set out opposite them.

…

(9) This section shall not apply to a fine imposed by the Crown Court on appeal against a decision of a magistrates' court, but subsections (2) to (4) above shall apply in relation to a fine imposed or recognizance forfeited by the criminal division of the Court of Appeal, or by the Supreme Court on appeal from that division, as they apply in relation to a fine imposed or recognizance forfeited by the Crown Court, and the references to the Crown Court in subsections (2) and (3) above shall be construed accordingly.

140.— Enforcement of fines imposed and recognizances forfeited by Crown Court.

(1) Subject to subsection (5) below, a fine imposed or a recognizance forfeited by the Crown Court shall be treated for the purposes of

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collection, enforcement and remission of the fine or other sum as having been imposed or forfeited—

(a) by a magistrates' court specified in an order made by the Crown Court, or

(b) if no such order is made, by the magistrates' court by which the offender was committed to the Crown Court to be tried or dealt with or by which he was sent to the Crown Court for trial under [section 51 or 51A of the Crime and Disorder Act 1998], and, in the case of a fine, as having been so imposed on conviction by the magistrates' court in question.

(2) Subsection (3) below applies where a magistrates' court issues a warrant of commitment on a default in the payment of—

(a) a fine imposed by the Crown Court; or

(b) a sum due under a recognizance forfeited by the Crown Court.

(3) In such a case, the term of imprisonment or detention under section 108 above specified in the warrant of commitment as the term which the offender is liable to serve shall be—

(a) the term fixed by the Crown Court under section 139(2) above, or

(b) if that term has been reduced under section 79(2) of the Magistrates' Courts Act 1980 (part payment) or section 85(2) of that Act (remission), that term as so reduced, notwithstanding that that term exceeds the period applicable to the case under section 149(1) of the Customs and Excise Management Act 1979 (maximum periods of imprisonment in default of payment of certain fines).

MAGISTRATES COURT ACT 1980

76.— Enforcement of sums adjudged to be paid.

(1) Subject to the following provisions of this Part of this Act, and to section 132 below [...], where default is made in paying a sum adjudged to be paid by a conviction or order of a magistrates' court, the court may issue a warrant of distress for the purposes of levying the sum or issue a warrant committing the defaulter to prison.

HARROW JUSTICES [1991] 1 WLR 395

The structure and purpose of the confiscation regime is to enable the Crown Court to strip an

offender of the proceeds of his crimes in so far as they are realisable at the date of making the

confiscation order. The magistrates’ court should consider all other methods of enforcing payment

prior to the issue of a warrant of commitment which would have had the effect of abating the

amount to be received under the order once the warrant of commitment took effect: per Stuart-

Smith L.J. at 398:

We have been invited to provide general guidance to magistrates' courts which are called upon to enforce confiscation orders. It is not the function of this court in applications for an order of certiorari of a particular decision so

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to respond. What we can do is to remind justices that they have a discretion whether or not to issue a warrant of commitment and that the discretion is one which must be exercised judicially. For such discretion to be properly exercised, it is well that the following points should be kept in mind.

(1) The object of a confiscation order is to divest the defaulter of money or other realisable assets. Consequently,

(2) it is not a matter of choice for the defaulter to “buy” his way out of such an order by serving the term of imprisonment imposed in default of responding to the order of confiscation: see Reg. v. Clacton Justices, Ex parte Customs and Excise (1987) 152 J.P. 129.

(3) The mere fact of a confiscation order is evidence that at the date it was made there were realisable assets available to meet the requirements of the order.

(4) Even if at the date when justices have to consider the question of enforcement the value of realisable assets are less than they were at the date of the confiscation order, it is open to the defaulter to apply for a certificate of inadequacy under section 14 of the Drug Trafficking Offences Act 1986 which will lead to a reduction in the amount of the original order.

(5) Given the inter partes nature of the procedure leading to the making of a confiscation order, it will be in the nature of things that the prosecution will in all probability have information available which would be relevant for the justices' consideration. More compellingly, the prosecution has a legitimate interest in being heard before the justices come to any decision.

(6) Given the purposes of the Drug Trafficking Offences Act 1986, it is incumbent on justices to consider all methods of enforcement short of issuing a warrant of commitment in a Drug Trafficking Offences Act case before doing so.

Note: this case was decided at a time when the committal would extinguish the confiscation order

(Drugs offences charged prior to 3 February 1994 and CJA offences committed before 1 November

1995. This has never been the case under POCA (see s38(5))). So it was the prosecution

challenging the magistrates’ decision to commit.

BARNETT V DIRECTOR OF PUBLIC PROSECUTIONS [2009] EWHC 2004 (ADMIN)

Per Maddison J

16 … there is no statutory requirement that a court should be satisfied that no alternative means of enforcement are available for it to commit a defendant to prison in circumstances such as these. But there is clear case law authority to that effect in cases such as R v Harrow Justice ex p Director of Public Prosecutions [1991] 1 WLR 395 and R v City of London Justices ex p Garotte [2003] EWHC 2909 .

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L, RE [2010] EWHC 1531 (ADMIN);

36 Enforcing magistrates are bound by the findings of the Crown Court which made the original order (including the finding that there is realisable property to satisfy the order) but, before issuing a warrant to commit, given that the primary purpose of a confiscation order is to deprive a convicted drug trafficker of the proceeds of his crime, “it is incumbent on justices to consider all methods of enforcement short of issuing a warrant of commitment in a [ Drug Trafficking Act ] case before doing so”, particularly when enquiries reveal that the value of remaining “realisable property” is still sufficient to satisfy the order the court is required to enforce:

“The court should have considered all other methods of enforcing payment prior to the issue of a warrant of commitment which would have had the effect of abating the amount to be received under the order once the warrant of commitment took effect”. ( R v Harrow Justices ex parte Director of Public Prosecutions [1991] 1 WLR 395 at page 398D-H per Stuart-Smith LJ).

B. SEIZED MONEY


A magistrates' court may order a bank or building society to pay the money held by the

defendant on account of the amount payable under the confiscation order.

67 Seized money

(1) This section applies to money which—

(a) is held by a person, and

(b) is held in an account maintained by him with a bank or a building society.

(2) This section also applies to money which is held by a person and which—

(a) has been seized by a constable under section 19 of the Police and Criminal Evidence Act 1984 (c. 60) (general power of seizure etc), and

(b) is held in an account maintained by a police force with a bank or a building society.

(3) This section also applies to money which is held by a person and which—

(a) has been seized by a customs officer under section 19 of the 1984 Act as applied by order made under section 114(2) of that Act, and

(b) is held in an account maintained by the Commissioners of Customs and Excise with a bank or a building society.

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(4) This section applies if the following conditions are satisfied—

(a) a restraint order has effect in relation to money to which this section applies;

(b) a confiscation order is made against the person by whom the money is held;

...

(d) a receiver has not been appointed under section 50 in relation to the money;

(e) any period allowed under section 11 for payment of the amount ordered to be paid under the confiscation order has ended.

(5) In such a case a magistrates' court may order the bank or building society to pay the money to the designated officer for the court on account of the amount payable under the confiscation order.

(6) If a bank or building society fails to comply with an order under subsection (5)—

(a) the magistrates' court may order it to pay an amount not exceeding £5,000, and

(b) for the purposes of the Magistrates' Courts Act 1980 (c. 43) the sum is to be treated as adjudged to be paid by a conviction of the court.

(7) In order to take account of changes in the value of money the Secretary of State may by order substitute another sum for the sum for the time being specified in subsection (6)(a).

(8) For the purposes of this section—

(a) a bank is a deposit-taking business within the meaning of the Banking Act 1987 (c. 22);

(b) “building society”has the same meaning as in the Building Societies Act 1986 (c. 53).

C. OTHER POWERS

Apart from the powers that may be exercised upon the appointment of a receiver, the

magistrates’ have enforcement powers of the own.

The standard powers of magistrates' courts in relation to a defaulter, except imprisonment and

detention are listed in Stone’s Justices Manual as:

(a) Remission: a fine (but only a fine) may be remitted in whole or in part if the court thinks it is just to do so having regard to a change in circumstances which has occurred since the conviction MCA1980 s85. This is not available in confiscation.

(b) Money payment supervision order (Magistrates' Courts Act 1980, s 88).

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(c) Distress warrant: a distress warrant may be issued for the purposes of distraining on the defaulter's money and goods; the issue of the warrant may be postponed on conditions Magistrates' Courts Act 1980, ss 76–78.

(d) Attendance centre order: such an order may be made only where a centre is available and the defaulter is aged under Powers of Criminal Courts (Sentencing) Act 2000, s 60.

(e) Curfew and community service orders: where the court has power to issue a warrant of commitment, it may instead make a community service or curfew order provided it has been notified by the secretary of state that arrangements for implementing the order are available in the relevant area Crime (Sentences) Act 1997, s 35.

The utility of these provisions in relation to confiscation has not been explored. Their applicability

is therefore uncertain. However given the closed list of provisions disapplied by section 35(3) of

PoCA it would appear that those which are not disapplied do apply. Worth exploring.

D. RELEASE

MAGISTRATES COURT ACT 1980

Any sums paid towards the sum after committal reduced the term proportionately: Where, after a

period of imprisonment or other detention has been imposed on any person in default of payment

of any sum adjudged to be paid by the conviction or order of a magistrates' court payment is made

in accordance with rules of court of part of the sum, the period of detention shall be reduced by

such number of days as bears to the total number of days in that period less one day the same

proportion as the amount so paid bears to so much of the said sum.

79.— Release from custody and reduction of detention on payment.

(1) Where imprisonment or other detention has been imposed on any person by the order of a magistrates' court in default of payment of any sum adjudged to be paid by the conviction or order of a magistrates' court or for want of sufficient distress to satisfy such a sum, then, on the payment of the sum, together with the costs and charges, if any, of the commitment and distress, the order shall cease to have effect; and if the person has been committed to custody he shall be released unless he is in custody for some other cause.

(2) Where, after a period of imprisonment or other detention has been imposed on any person in default of payment of any sum adjudged to be paid by the conviction or order of a magistrates' court or for want of sufficient distress to satisfy such a sum, payment is made in accordance with rules of court of part of the sum, the period of detention shall be reduced by such number of days as bears to the total number of days in that period less one day the same proportion as the amount so paid bears to so much of the said sum, and the costs and charges of any distress levied to satisfy that sum, as was due at the time the period of detention was imposed.

…

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CRIMINAL JUSTICE ACT 2003

As soon as a person a person committed to prison in default of payment of a sum adjudged to be

paid by a conviction has served one-half of the term for which he was committed, it is the duty of

the Secretary of State to release him unconditionally. CJA 2003 s258

258 Early release of fine defaulters and contemnors

(1) This section applies in relation to a person committed to prison—

(a) in default of payment of a sum adjudged to be paid by a conviction, or

(b) for contempt of court or any kindred offence.

(2) As soon as a person to whom this section applies has served one-half of the term for which he was committed, it is the duty of the Secretary of State to release him unconditionally.

(3) Where a person to whom this section applies is also serving one or more sentences of imprisonment or detention in a young offender institution, nothing in this section requires the Secretary of State to release him until he is also required to release him in respect of that sentence or each of those sentences.

(4) The Secretary of State may at any time release unconditionally a person to whom this section applies if he is satisfied that exceptional circumstances exist which justify the person's release on compassionate grounds.

E. INTEREST


12 Interest on unpaid sums

(1) If the amount required to be paid by a person under a confiscation order is not paid when it is required to be paid, he must pay interest on the amount for the period for which it remains unpaid.

(2) The rate of interest is the same rate as that for the time being specified in section 17 of the Judgments Act 1838 (c. 110) (interest on civil judgment debts).

…

(4) In applying this Part the amount of the interest must be treated as part of the amount to be paid under the confiscation order.

JUDGMENT DEBTS (RATE OF INTEREST) ORDER 1993/564

In relation to any judgment entered up after the coming into force of this Order, section 17 of the

Judgments Act 1838 shall be amended so as to substitute for the rate specified in that section, as

the rate at which judgment debts shall carry interest, the rate of 8 per cent per annum.

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F. REASONABLE TIME REQUIREMENT

LLOYD V BOW STREET MAGISTRATES' COURT [2003] EWHC 2294 (ADMIN)

Culpable delay in enforcing a confiscation order can constitute a breach of a defendant's right

under Article 6(1) of the Convention to a fair trial within a reasonable time.

Per Dyson LJ:

22 …even if the prosecuting authorities and the magistrates court have no obligation to enforce confiscation orders, it does not follow that, if they decide to seek enforcement by commitment to prison, they are not required to ensure that the enforcement proceedings are determined within a reasonable time. The point can be illustrated by a consideration of the analogous case of an application to stay ordinary substantive criminal proceedings as an abuse on the grounds of delay. It is no answer to such an application for the prosecuting authorities to say that they are under no obligation to prosecute a particular person for an alleged crime and that there is no statutory limitation period within which such a prosecution may be brought. The point is that, even though there is no statutory time limit for prosecutions and no obligation to prosecute individual alleged criminals, the law will protect defendants from facing prosecutions after undue delay has occurred.

23 … we do not see how the fact that the defendant is in breach of his continuing duty to satisfy the confiscation order can be relevant. In our view, the conduct of the defendant can have no bearing on the question whether he has a right to have proceedings against him in respect of that conduct instituted and determined within a reasonable time. It is common ground that a defendant is entitled to have a substantive criminal charge against him determined within a reasonable time. That right is predicated on the basis that the defendant is alleged to have broken the law by committing a crime. The fact that a defendant is alleged to have committed a crime is plainly not a reason for denying him the right to have the criminal charge determined within a reasonable time. Indeed, the existence of the criminal charge is the very reason why he has the right. Similarly, in our view the fact that a defendant is alleged to be in breach of a confiscation order is no reason to deny him the right to have proceedings brought to enforce the order by commitment to prison determined within a reasonable time.

25 … Convicted criminals who are the subject of confiscation orders do not attract sympathy, and not entitled to favoured treatment. But there is nothing surprising about a requirement that, if the prosecuting authorities/magistrates court seek to enforce a confiscation order, they should do so within a reasonable time. It is potentially very unfair on a defendant that he should be liable to be committed to prison for non-payment of sums due under a confiscation order many years after the time for payment has expired, and long after he has been released from custody and resumed work and family life.

27 … in deciding what is a reasonable time, regard should be had to the efforts made to extract the money by other methods, for example (as in the present case) by the appointment of a receiver. If a receiver has been appointed within a reasonable time and has proceeded with reasonable expedition, then the fact that all of this may have taken some time will not prevent the court from concluding that there has been no violation of the

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defendant's Article 6.1 rights if the unsuccessful attempts to recover the money have led to delay in the institution of proceedings to commit. Likewise, if the defendant has been evasive and has avoided diligent attempts to extract the money from him, he will be unable to rely on the resultant delay in support of an argument that his right to a determination within a reasonable time has been violated.

If the delay is found to have infringed Article 6.1 , the appropriate remedy is for the enforcing

court to stay the proceedings to the extent that the prosecuting authority is seeking an order

requiring the defendant to serve the sentence of imprisonment imposed in default of payment:

“34 … (i) The term of imprisonment in default is not intended to be an additional punishment for the original offence. It is simply one weapon in the armoury of those seeking to enforce the confiscation order.

(ii) Over five years have elapsed since the claimant was released from prison on licence after serving one half of the original sentence. Since release from prison he has rebuilt his home life and obtained employment. At this remove in time, it would be inhuman to subject the claimant to a further term of imprisonment arising out of the original offence.

(iii) The only proportionate response to the breaches of Article 6.1 which have occurred is to say that this weapon in the armoury (viz imprisonment in default) is no longer available.”

CROWTHER V UNITED KINGDOM [2005] ECHR 45:

“29… The fact that throughout this period the applicant was under a duty to pay the sum owing under the confiscation order did not absolve the authorities from ensuring that the proceedings were completed within a reasonable time. Even in respect of civil proceedings, where domestic law or practice requires the parties to take the initiative with regard to the progress of the proceedings, the State is obliged to ensure compliance with the reasonable time guarantee under Article 6.1 … This principle must apply a fortiori where the State is itself a party to the proceedings and responsible for their prosecution.”

MINSHALL [2010] 1 W.L.R. 590

20 The powers of the magistrates' court to enforce the payments of a fine include the imposition of a money payment supervision order ( section 88 of the Magistrates' Courts Act 1980 ), the issue of a warrant of distress ( sections 76 to 78 of the 1980 Act), an attachment of earnings order ( section 97 of and Part 3 of Schedule 5 to the Courts Act 2003 ) and, after a means inquiry, a warrant of commitment: section 82 of the 1980 Act. However the means of enforcement are described the fact is that they are employed in the imposition of a financial penalty. In my view, it would be a strange distinction if a means inquiry which might lead to the imposition of an attachment of earnings order was not the subject of a requirement for fairness and reasonable expedition under article 6(1) whereas a means inquiry leading to the issue of a warrant would be the subject of such a requirement. I conclude that the requirements of article 6 apply “throughout the entirety of proceedings” for enforcement of the confiscation order. I do recognise, however, that the fact that unreasonable delay is established does not automatically mean that no enforcement proceedings can be taken. The court must decide in the event of

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breach what would be the appropriate remedy. That remedy might be refusal to enforce by the ultimate sanction of imprisonment but permission to enforce by other means.

In that case the court held that the delay had been largely occasioned by the decision to pursue

various appeals and was not unreasonable. The ECtHR later found that the delay between

permission to appeal and appeal (waiting for Soneji) was unreasonable.

ALTAF SYED, TEVOR HAMILTON-FARRELL V CITY OF WESTMINSTER

MAGISTRATES' COURT [2010] EWHC 1617 (ADMIN)

On 2nd March 2010 at the City of Westminster Magistrates' Court, District Judge Roscoe ordered the two claimants, Altaf Syed and Trevor Hamilton-Farrell (who is known as Trevor Farrell), to serve terms of imprisonment for failing to pay the sums due under confiscation orders made against them by Judge Blacksell at Middlesex Crown Court on 17th April 2002.

Held to be a breach of the reasonable time.

Confiscation under the Proceeds of Crime Act 2002

Documents

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