The confiscation legislation in the Proceeds of Crime Act 2002 and its predecessors has often been described as “Draconian”. But what features of the regime cause it to be so described?
I suggest these half a dozen key features combine to make the confiscation regime unduly severe.
The intention of confiscation is to part the convicted criminal from the proceeds of his crime. But the proceeds are not to be ascertained by an accountant’s detailed examination of the “business” in which the criminal was engaged. Indeed the Court of Appeal over 20 years ago in R v Ian Smith  1 WLR 765 said:
“It seems to us that the section is deliberately worded so as to avoid the necessity, which the appellant’s construction of the section would involve, of having to carry out an accountancy exercise, which would be quite impossible in the circumstances of this case.”
That view was quoted with approval by the House of Lords ten years ago at paragraph  of R v Smith  UKHL 68 and is entirely consistent with the comment at paragraph [48.1] of the House of Lords decision in R v May  UKHL 28 that:
“The benefit gained is the total value of the property or advantage obtained, not the defendant’s net profit after deduction of expenses”.
equating the ‘benefit’ to be confiscated with the gross amounts received
With that in mind the legislation has always been interpreted (in England and Wales at least) as equating the ‘benefit’ to be confiscated with the gross amounts received by the convicted defendant in connection with his criminal conduct. This figure may be far in excess of the criminal’s profit from the enterprise.
A second Draconian feature derives from the long-standing legal doctrine that where monies or other assets are received jointly by two or more persons then each of them receives the whole amount. English courts have held that this means that, in confiscation, each of them obtains as ‘benefit’ the value of the whole of the amount received jointly by them. This inherently leads to double counting (and more than double counting in those cases where more than two people jointly receive monies or assets).
Where a defendant does not have adequate records over the previous 6 years or more he may find himself unable to produce the “clear and cogent evidence” which the courts require
A fourth Draconian feature concerns the ‘available amount‘ of the defendant. A confiscation order is normally made for whichever is the lesser of (i) the defendant’s ‘benefit’ and (ii) his ‘available amount’. But his ‘available amount’ is not the amount which he has available. Rather it is his gross assets, less liabilities secured on those assets, plus the value of any ‘tainted gifts’. Further, the burden is placed upon the defendant to prove to the court, on the balance of probabilities, that his ‘available amount’ is less than the figure of ‘benefit’. This leads to difficulties where the prosecution allege that there may exist ‘hidden assets’.
it is open to the prosecutor to recommence proceedings against the defendant in later life
The final, sixth Draconian feature, is the default prison sentence which attaches to an unpaid confiscation order. When making the confiscation order initially the court may order the amount to be paid immediately or allow the defendant up to 6 months to pay. On further application the defendant may be allowed a further 6 months (making 12 months in all) but PoCA 2002 lays down that no extension beyond that 12 months is permissible.
[UPDATE: With effect from 1 June 2015 these periods have been halved to 3 months & 6 months.]
Given that the order may well require the convicted defendant to dispose of all his assets it may be something of a tall order to satisfy the confiscation order on time. In the event that payment is not made on time interest commences to run at 8% per annum on the unpaid balance. More seriously the defendant may be committed to prison for (or have his sentence extended by) a ‘default sentence’. The length of the maximum default sentence is fixed by law on a scale relating to the amount of the confiscation order. Where the order is for £1 million or more the maximum sentence in default is 10 years. This is not a sentence to be served instead of paying the confiscation order, it is in addition to the order (since the amount due under the order remains payable in full).
In my view the confiscation regime richly deserves its Draconian epithet.