Confiscation – after-acquired property

Money imageUnpaid benefit from an old confiscation order may be pursued by the prosecution under s22 Proceeds of Crime Act 2002 where the original order was made under s6 of the Act.  (A similar provision, differently worded, was included at s16 of the Drug Trafficking Act 1994 in relation to confiscation orders made under that Act.)

But how does s22 PoCA 2002 work and does it achieve the intended result?

 

The wording of s22

The wording of s22 initially appears complex and baffling.  To the best of the author’s knowledge there is no authoritative case law dealing with the detail of some of the provisions of this section.

The section is headed “Order made: reconsideration of available amount“.  It may be assumed that one of the objectives of s22 was to permit prosecutors to follow up benefit on old confiscation orders which the defendant had not previously been ordered to pay in consequence of his limited available amount at the time.

The intention, it may be presumed, was to permit the court, on an application by the prosecutor (or a receiver appointed under the Act), to make a further confiscation order when the convicted defendant had subsequently acquired additional assets (referred to sometimes as “after-acquired property”).  It is this general principle, rather than the detailed operation of the statutory provisions, which has been addressed in case law (see R v Tivnan [1998] EWCA Crim 1370Saggar, Re Drug Trafficing Act 1994 [2005] EWCA Civ 174, Peacock, Re [2012] UKSC 5 and Padda v R. [2013] EWCA Crim 2330).

But the wording of s22 does not refer to a further confiscation order – it refers to a variation of the original order and, potentially more significantly, it fails to take account of the payment already made by the convicted defendant when limiting the overall impact of the confiscation proceedings on him.  Furthermore the statutory test in relation to his current available amount is, in the author’s view at least, misconceived.

The wording of the section is appropriate to the case of a defendant who has not been ordered to pay any amount under the original confiscation order but does not correctly address the situation of a defendant who has made payment previously.  In consequence the section in practice may not have the intended outcome.  For a more detailed discussion of unresolved problems with the legislative wording of s22 see my article PoCA section 22 – unfit for purpose?

Perhaps the best way to explain some of the difficulties which can arise from the wording of this section is by a couple of illustrative worked examples.

 

Worked example – Edward

Edward is a convicted defendant who was consequently subject to a confiscation order under s6 PoCA 2002 in May 2006.  The order made then showed his benefit to be £500,000 and his available amount to be £200,000.  Edward was accordingly ordered to pay £200,000 and he paid this amount on time and in full.

In recent years Edward has operated a successful legitimate business and now (January 2015) has an available amount of £400,000.  The prosecution apply for an order under s22.

Under s22 the court will undertake an examination of Edward’s current available amount (referred to as the “new calculation”) and, if this exceeds the ‘relevant amount’, can order Edward to pay such amount as it believes is just, but does not exceed the amount found as the defendant’s benefit from the conduct concerned, see s22(4).

The ‘relevant amount’ is Edward’s available amount as previously determined by the court, s22(8).  Edward’s benefit from the conduct concerned is his benefit as previously determined by the court, s22(9).

But when deciding whether one amount exceeds another the court must take account of any change in the value of money, s22(7).

 

Change in the value of money

For the purpose of taking account of any change in the value of money we are going to use inflation index figures published by the Office for National Statistics known as RPIJ (which stands for Retail Prices Index Jevons).

(See the article Confiscation – which inflation index? for an explanation of the use of the RPIJ rather than the Retail Prices Index or any other measure of inflation.)

At the time the prosecutor’s s22 application in Edward’s case is being finalised (January 2015) the latest available figure for the RPIJ is that for November 2014.

Figures from the Office for National Statistics show that the RPIJ values (in Table 35a) were

May 2006 191.6 Date of confiscation order
November 2014 238.3 Latest available index

 

Calculating the uplifts

Edward’s available amount of £200,000 was determined by the court in May 2006 when the RPIJ was 191.6. The latest RPIJ is 238.3 so the uplift is

£200,000 x (238.3 – 191.6) / 191.6 = £48,747

So the equivalent available amount now, referred to in s22(4) as the ‘relevant amount’, is £248,747.

The £500,000 benefit of the offence was also determined by the court in May 2006 so by a similar computation the uplift to that benefit is

£500,000 x (238.3 – 191.6) / 191.6 = £121,868

So the equivalent benefit figure now is £621,868.

 

The court’s powers

We can now see that Edward’s current available amount of £400,000 does exceed the ‘relevant amount’ of £248,747.  So the court may order Edward to make a further payment, but this must not exceed £621,868 (Edward’s total benefit uplifted for changes in the value of money).

As Edward currently has an available amount of only £400,000 the court will presumably not order him to pay an amount in excess of that because that would contravene the spirit of s7 and would not be “just”.

However the defence may argue that an order for £400,000 would not be just because Edward has previously paid a confiscation order of £200,000 in respect of the same benefit.

The defence may argue that the new order should be limited to £300,000 or perhaps to £373,121.

The £300,000 is the amount of the benefit that was determined, but not ordered to be paid, by the court in May 2006 (that is the difference between the £500,000 benefit and £200,000 ordered to be paid at that time).

In the alternative, the defence may argue that the order should be limited to that £300,000 of unpaid benefit in May 2006 uplifted for changes in the value of money since that time.  The uplift of that amount may be calculated as

£300,000 x (238.3 – 191.6) / 191.6 = £73,121

So the equivalent unpaid benefit figure now is £373,121.

If the court were now to order Edward to pay a further £400,000 he will have been required to pay a total of £600,000 (including the £200,000 paid many years previously under the original order) in respect of a benefit of only £500,000.

Because the court has, under s22, a wide discretion to order payment of the amount it believes is just, the court may order Edward to pay any amount between nil and £400,000 (but subject always to an appeal to the Court of Appeal).

The court will in practice assume the usual powers to allow Edward time to pay and to set a default sentence (reflecting the new amount ordered to be paid) in the event of non-payment (although there is no express provision in s22 to vary the time to pay and default sentence in the original confiscation order).

 

Worked example – Stephen

Now let’s consider a second worked example. Stephen’s circumstances are identical to Edward’s in every way except that his available amount in May 2006 was £350,000.  Stephen was accordingly ordered to pay £350,000 and he paid this amount on time and in full.

The benefit that Stephen was not ordered to pay at the time was therefore £150,000.

Stephen’s available amount of £350,000 was determined by the court in May 2006 when the RPIJ was 191.6. The latest RPIJ is 238.3 so the uplift to that figure is

£350,000 x (238.3 – 191.6) / 191.6 = £85,308

So the equivalent available amount now, referred to in s22(4) as the ‘relevant amount’, is £435,308.

Since Stephen’s current available amount of £400,000 does not exceed the ‘relevant amount’ of £435,308 the condition in s22(4) is not met and the court cannot make any further order against Stephen.  The prosecutor’s application under s22 will fail on this occasion.

 

Unintended consequences

In the author’s view neither the possibility of a new order against Edward which would result in the total amounts confiscated from him exceeding the total amount of his benefit (when all amounts are uplifted for changes in the value of money), nor the impossibility of the court making any further order against Stephen when he has unpaid benefit on an old confiscation order and the means to pay it, appear to be the consequences likely to have been intended by parliament when s22 was legislated.

Section 22 was not discussed when the detailed provisions of the (then) Proceeds of Crime Bill were considered by a House of Commons committee as part of the normal legislative process, nor was there any debate on the section in the House of Lords (although subsections 8 & 9 were added to s22 at that late stage there was no debate).  Perhaps this section should now be revisited by parliament.

 

Contacting us

Our contact details are here.

David

(Note: This article applies to confiscation proceedings 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 proceedings 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.)

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