It is useful to consider separately valuation of drugs in relation to the defendant’s ‘available amount’ and in relation to his ‘benefit’.
It has long been the case that illegal drugs (sometimes referred to as controlled drugs) have been regarded as having zero value when calculating a defendant’s ‘available amount’ for confiscation purposes, because the drugs cannot legally be sold and any drugs seized will have been forfeit and destroyed by the authorities.
The valuation of illegal drugs in relation to the defendant’s ‘benefit’ is not so straightforward. There have been a number of twists and turns in the interpretation of the law.
In 2008 the Court of Appeal concluded that illegal drugs had no value for the purposes of calculating a defendant’s ‘benefit’ but, where the ‘criminal lifestyle’ assumptions operated (as they would under PoCA 2002 in a drug trafficking case by virtue of s75 and Schedule 2), then the expenditure on acquiring those drugs would in many cases form a component of the defendant’s ‘benefit’ figure.
The following year the House of Lords (by a 3-2 majority) overturned that Court of Appeal decision, in the leading case of R v Islam  UKHL 30.
The statute law provides that s79 applies “for the purpose of deciding the value at any time of property then held by a person” and that “its value is the market value of the property at that time”.
The issue in Islam revolved around the meaning of “market value”. Was that expression limited to a ‘legal market value’? Could illegal drugs be simultaneously regarded as having a zero value in relation to the defendant’s ‘available amount’ and a significant value in relation to the defendant’s ‘benefit’?
The majority view was that when determining the “market value” for the purposes of ‘benefit’ “we look at the market in which [the defendant] expected to dispose of the property in question. That is what it was worth to him”. So, for the purposes of evaluation of the defendant’s ‘benefit’ the value of seized drugs could be based on their value on the illegal drugs market.
The House of Lords noted that it was a commonplace of everyday life that the same goods might have a different value depending upon the market on which they were sold. So there was no illogicality in valuing drugs differently for the purposes of ‘available amount’ (based on the impossibility of sale in a legal market) and ‘benefit’ (based their value on the illegal drugs market).
The latest development
On 4 March 2014 the Court of Appeal issued its judgment in the case of Elsayed v The Crown  EWCA Crim 333.
The issue was relatively straightforward. The defendant worked as a hospital porter. He was arrested and his locker at the hospital was searched. In it were found £56,510 in cash, 169 grams of cocaine of 80% purity and a small wrap of 3 grams of cocaine at 5% purity. No cutting agents or other wraps or bags were found.
The defendant in due course pleaded guilty to possession of Class A drugs with intent to supply and possession of criminal property. Confiscation proceedings followed.
The defendant’s explanation was that he had started to use cocaine and had agreed to store the 169 grams of cocaine and cash for his supplier. The small wrap was for his own use.
The prosecution asserted, on the contrary, that this defendant intended to cut the 169 grams of cocaine to a 5% purity for ‘retail’ sale at street level.
In the confiscation proceedings the Crown Court judge found, as a fact, that the defendant himself would cut the cocaine and sell it ‘retail’ at street level.
The importance of this was that, if cut and sold ‘retail’, that cocaine would have a market value of £108,160. In its uncut state and if sold ‘wholesale’ that cocaine had a market value of only £6,857. The judge made a confiscation order based upon the ‘retail’ value of that cocaine. The defendant appealed.
The legal arguments
The defence argued that “benefit figure for the purposes of confiscation is derived from historic transactions and the value of actual property held in the defendant’s possession connected with the relevant offence, not what it ‘might’ be worth ‘if’ it was to be altered in some way.”
In support of that one might refer to the wording of s79 which applies “for the purpose of deciding the value at any time of property then held by a person” and that “its value is the market value of the property at that time”. Similarly the focus of s80(2)(a) was on “the value of the property (at the time the person obtained it)”.
The prosecution argued that the cocaine should be valued by reference to the market on which the defendant intended to sell it – which the judge had found to be the ‘retail’ street market. In consequence, argued the prosecution, the Crown Court judge had been correct to adopt the ‘retail’ street value because that was the market in which the defendant intended to sell the drugs.
The Court of Appeal’s decision
The Court of Appeal upheld the confiscation order based on the ‘retail’ street value of the cocaine. They considered it would be arbitrary to value the cocaine on the basis of it not having been cut at the time it was seized if (as found by the judge) the defendant’s intention was to cut the cocaine and sell it at street level.
The court held that the value of those drugs to the defendant was the value he expected to obtain from their (‘retail’) sale by him. It was not determinative, the court held, that the drugs had not been prepared for ‘retail’ sale when they were seized.
Of course that conclusion may yet be subject to further appeal.
(Note: This article applies to confiscation orders under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation order in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)