PoCA section 22 – unfit for purpose?

SlipperyThe Proceeds of Crime Act 2002 was a reform and strengthening of UK law designed to strip criminals of the proceeds of crime.  Section 22 allows the Crown to require the court to re-examine the ‘available amount’ of a convicted defendant with a view to increasing the amount he must pay under an existing confiscation order.

On the face of it this enables a convicted defendant to be pursued for money for the rest of his life until he has ‘repaid’ his total ‘benefit’ (uplifted for inflation).

But is s22 so badly drafted that it creates too many problems and uncertainties? Is s22 unfit for purpose?

WARNING – THIS IS A LENGTHY BLOG POST – IN EXCESS OF 3,000 WORDS

  1. Genesis of s22
  2. Context of s22
  3. Case law
  4. Operation of s22
  5. Problems
  6. Suggested solutions

 

Genesis of s22

Prior to the Proceeds of Crime Act 2002 there was a provision, originally in s16 Criminal Justice (International Cooperation) Act 1990 and repeated in s16 Drug Trafficking Act 1994, which provided that where a person had been ordered to pay by a confiscation order an amount less than the full value of his proceeds of drug trafficking and his available amount was greater than the amount which he had been ordered to pay (whether it was greater than was thought when the order was made or had subsequently increased) then the court could, on an application by the prosecutor or a receiver, (i) substitute a new amount to be paid (not exceeding his total proceeds from drug trafficking) and (ii) if as a result the maximum default sentence moved into a higher band, increase the default sentence.

This was to be done in a two stage process involving both the High Court and the Crown Court.

There was at the time no equivalent provision in relation to proceeds of non drug-related crime.

Part of the rationale of the new proceeds of crime legislation which became PoCA 2002 was to transfer all confiscation proceedings to the Crown Court and to provide a single confiscation process applicable to all types of crime from which a benefit had been obtained by the offender.

A draft bill was published for consultation in February 2001.  That draft bill contained, as clause 21, a clause very similar to s22 but without subsections (6), (8) & (9).  The draft bill proposed major changes to UK proceeds of crime law including the creation of the Assets Recovery Agency, the streamlining & consolidation of confiscation law, the introduction of civil recovery of the proceeds of crime, sweeping changes to money laundering law and new investigation & taxation powers.

The draft bill ran to 325 clauses.  It would have been surprising had clause 21 attracted much attention during the consultation period.

In October 2001 the Proceeds of Crime Bill, running to 444 clauses, was introduced into the House of Commons.  It included, as clause 23, the clause from the draft bill but with the addition of subsection (6).

When the bill came to be considered in detail by a House of Commons committee as part of the normal legislative process, clause 23 was approved without any discussion whatsoever on 27 November 2001.

In due course the bill passed to the House of Lords.  When the bill was considered in detail there on 22 April 2002 the government added subsections (8) & (9) and made a consequential amendment to the wording of subsection (4) but again there was no debate on the clause.  The amendments made at that stage appear to be directed towards accommodating the possibility that the original confiscation order had already been amended before the court came to apply this clause.

Ultimately clause 23, as amended, became s22 Proceeds of Crime Act 2002.

In that way s22 became law without being subject to any detailed parliamentary scrutiny.

 

Context of s22

Section 22 is one of a series of sections dealing with reconsideration of a confiscation order.

Sections 19 to 21 apply where there is evidence which was not available to the prosecutor when the court originally considered making a confiscation order.  Accordingly the prosecutor may, within 6 years of the defendant’s conviction, require the court to reconsider the original confiscation order.  The sections apply where (i) the court never proceeded under s6 (s19), (ii) the court originally decided that the defendant had obtained no benefit (s20), or (iii) the prosecutor believes that if the court reconsidered the matter it would find a higher figure of benefit (s21).

These sections in effect require the court to re-perform the making of a confiscation order under s6, calculating the defendant’s benefit as if it were doing so at the time that the court originally considered making a confiscation order but taking into account the newly discovered evidence.  However when re-performing the making of the confiscation order it appears that the court is to take account of the defendant’s current available amount.

For that reason when an application is being made for reconsideration of benefit under sections 19 to 21 it is not necessary to make a simultaneous application for reconsideration of available amount under s22.

When sections 19 to 21 operate the prosecutor and the defendant are, in effect, subject to the provisions of sections 16 to 18 which require statements of relevant financial information to be prepared and served (see s26).

So the procedure under sections 19 to 21 is akin to a complete re-run of the confiscation proceedings.

On the other hand sections 23 to 25 (and section 25A when it comes into effect) are intended to deal with events which have occurred after the confiscation order was made and, in particular, to address a diminution in the defendant’s available amount.

Section 23 permits the court to reduce the figure of the defendant’s available amount to reflect an inadequacy in his available amount which has become apparent (for example where assets have been sold but have realised less than the amount anticipated).  Sections 24 & 25 (and s25A) permit the court to discharge a confiscation order in specified circumstances where it would not be appropriate to pursue a modest remaining amount outstanding.

 

Case law

One might have hoped that, prior to the drafting of s22, there would have been case law on the previous provisions – s16 Criminal Justice (International Cooperation) Act 1990 and s16 Drug Trafficking Act 1994 – which had a somewhat similar purpose.  But there appears to have been only one case of note prior to 2002, R v Tivnan [1998] EWCA Crim 1370.

In January 1992 Mr Tivnan was sentenced to 5 years’ imprisonment for a drug trafficking offence.  A confiscation order was made (the date of the order is not given in the Court of Appeal judgment) by which his benefit was said to be £479,376 and he was ordered to pay £72,481 (presumably his available amount at the time) with two years’ imprisonment in default.  In 1996 the Crown made an application under s16 CJ(IC)A 1994 which resulted in an order that Mr Tivnan pay £479,376 (the full amount of his benefit) within 12 months, with four years’ imprisonment in default.  Mr Tivnan’s appeal against the later order was dismissed.

The judgment does not indicate what transpired between the original and revised orders, so we do not know whether Mr Tivnan had actually paid anything under the original order or whether he served any part of the default sentence under it.  Nor does the judgment give full details of the assets which the court had taken into account in concluding that Mr Tivnan’s available amount had increased in 1996 to a figure in excess of £72,481.

It does appear that the Court of Appeal did take into account assets which had been first acquired by Mr Tivnan after the original confiscation order was made.

It was not until 2012, in the Supreme Court judgment Re Peacock [2012] UKSC 5, that it was finally determined that s16 Drug Trafficking Act 1994 did catch after-acquired property (assets acquired legitimately by the convicted defendant in later life).

The case of Saggar Re Drug Trafficking Act 1994 [2005] EWCA Civ 174 dealt in particular with the passage of time between Mr Saggar’s original arrest in November 1993 (and conviction in September 1995) and the Crown’s application in October 2003 for a revision of his confiscation order.  It was argued that the Crown’s application was in breach of article 6(1) of the European Convention on Human Rights.  The matter was remitted to the Crown Court for further consideration on the facts.

In a recent case under s22 PoCA 2002, Padda v R [2013] EWCA Crim 2330, the defendant had been the subject of a confiscation order in September 2006 which assessed his benefit at £156,226 and his available amount at £9,520.  He was ordered to pay the £9,520 with six months in default.  He paid the £9,520 in full.  In February 2013 as a result of an application by the Crown under s22 he was ordered to pay £74,652 with 12 months in default.

It appears that the £74,652 represented the defendant’s available amount in February 2013 (which of course would exclude monies used to satisfy the original confiscation order) and that the effect was that the defendant was required to pay both the £9,520 originally paid and the further sum of £74,652.  The order was upheld on appeal.

 

Operation of s22

Section 22 requires the Crown Court, on an application by the prosecutor or by an enforcement receiver appointed under s50, to perform a new calculation of the defendant’s current available amount.  If the new calculation produces a figure in excess of the ‘relevant amount’ the court may vary the amount to be paid under the confiscation order.

The ‘relevant amount’ is the amount previously determined to be the defendant’s available amount, adjusted for changes in the value of money, s22(7) & (8).

The variation to be made by the court is made “by substituting for the amount required to be paid such amount as it believes is just but does not exceed the amount found as the defendant’s benefit”, s22(4).

For this purpose the “amount found as the defendant’s benefit” is the amount previously determined to be the his benefit, but adjusted for changes in the value of money, s22(7) & (9)Section 22 does not expressly incorporate any reconsideration of the defendant’s benefit beyond an inflation uplift.

Potentially confusingly, by subsection (5)(b), in deciding what is just the court must have regard to any order which falls within s13(3) and has been made against the defendant in respect of the offence 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 s9 (calculation of available amount).  Subsection 13(3) refers, amongst other things, to “any order involving payment by the defendant”.

But it seems that subsection (5)(b) is not intended to direct attention to the original confiscation order since similar wording appears, for example, in s19 (where no confiscation order has been made).

So s22 does not require the making of the original confiscation order to be effectively re-performed (in the way that sections 19 to 21 do).  It does not refer back to the machinery of s6.  Instead it permits the court in appropriate circumstances to vary the original confiscation order by amending the amount to be paid under it.

Where sections 19 to 21 deal with reconsideration following the discovery of new evidence relevant to the state of affairs when the original confiscation order was made, and sections 23 to 25 deal with reconsideration in consequence of events occurring after the original confiscation order was made, section 22 (unwisely perhaps) attempts to deal with both types of reconsideration.

 

Problems

I suggest the drafting of s22 leaves a host of unresolved problems.  The section seems to be unclear as to whether it is attempting simply to authorise further action against a person who has been subject to a confiscation order limited to his available amount so that he may be required to pay a specified additional amount, or whether it means to have the entire amount payable specified afresh by the court.

The section appears not to be designed to deal with the defendant who has already paid an amount under the original order.  The section is silent as to that possibility.  Does the “substitution” of a new amount to be paid under s22 expunge the requirement to pay any amount under the original order?  Should an amount which has previously been paid be returned to the defendant?  Presumably not!

The best way of dealing with this may be to regard s22 as permitting the court to vary the original confiscation by requiring an additional payment.  The result may be that the total sum shown as to be paid by the confiscation order exceeds the defendant’s available amount either at the time the confiscation order was made or at the time it was varied (because the amount to be paid could be as much as the aggregate of those two amounts).  However it would seem that s7, which would normally prevent such an occurrence, has no application in s22 proceedings.

The practicalities are rather different where (i) a defendant has retained his original available amount and made no payment, and alternatively where (ii) he has paid an original order in full and subsequently acquired new assets.  But s22 attempts to deal with these two contrasting situations in the same way.  In the second case the ‘trigger’ in subsection (4) – that the defendant’s current available amount exceeds his previous available amount – will arguably be inappropriate and misconceived.  See my earlier blog article ‘Confiscation – after-acquired property‘ for an example of this.

Because, unlike sections 19 to 21, section 22 does not give fresh effect to the principal order making power of s6, it implicitly suggests that the only variation which can be made to the confiscation order is to “substitute” the new amount which must be paid.  The court arguably has no authority under s22 to vary other matters fixed by the original order, for example, the due date for payment (which under the original order may have passed many years earlier).  The significance of the due date for payment is that under s12(1) the defendant “must pay interest”.

In practice courts appear simply to have assumed the authority to set a new date for payment – see, for example, the case of Padda referred to above.

With regard to the default sentence, s39 authorises the court to vary the default sentences in the circumstances detailed in that section.

One of the trigger conditions in s39 is that a confiscation order has been varied under s22 and the effect of the variation is to vary the maximum period applicable in relation to the order under s139(4) Powers of Criminal Courts (Sentencing) Act 2000.

Unfortunately when s35 (which deals with the default sentence when a court “makes” a confiscation order) was amended by s10 Serious Crime Act 2015 corresponding amendments to s39 (which deals with the default sentence when a court “varies” a confiscation order) were not made.  The effect appears to be that the court can vary the default term in accordance with the table of default terms in certain circumstances, but only in accordance with the default terms set out in s139(4) Powers of Criminal Courts (Sentencing) Act 2000.  These are the default terms which applied to confiscation orders made before 1 June 2015.

However a problem may arise, I suggest, where a defendant has not paid – and has already served a default sentence.  Can he be required to serve a second default sentence for what may be, at least in part, the same debt?

Because s22 effectively requires the defendant’s benefit to be adjusted to take account of any change in the value of money it is conceivable that a court could order a defendant to pay an amount greater than the figure of benefit shown in his confiscation order.  That would appear anomalous.

Ordinarily in confiscation proceedings the burden is on the defendant to satisfy the court as to his available amount but clearly the provisions of s7 (recoverable amount) are incompatible with s22.  Under s22 that burden of calculating the defendant’s available amount appears to fall on the prosecution.  There appears to be no provision in s22 to deal with a situation in which the prosecution is unable to put a figure on the defendant’s current available amount so that no “new calculation” can be made.

Where a list of assets comprising the defendant’s available amount has been appended to the original confiscation order there is no express power in s22 to amend that list.

There are no time limits in s22, in contrast to the six year time limits in sections 19 to 21.  But it is now accepted that article 6(1) of the European Convention on Human Rights, requiring a hearing within a reasonable time, applies to confiscation proceedings including applications for reconsideration under sections 19 to 22.  Arguably therefore the existing legislation in s22 is incompatible with the Convention.

 

Suggested solutions

No change to s22 is proposed in the Serious Crime Bill currently completing its passage through parliament.

However I would suggest that the best way to deal with these issues would be for parliament to amend PoCA 2002 by repealing the existing s22 and introducing in its place two new sections.

My suggested new s22A would deal with the situation where evidence is discovered which indicates that the defendant may have had, at the time the confiscation order was made, an available amount greater than the figure specified in the original confiscation order.

In these circumstances the prosecutor or a receiver could make application to the court under s22A, within six years of the date of conviction, for a re-performance of the making of the confiscation order, giving effect to sections 6 to 13 with appropriate modifications.  The court would, if satisfied, make a new confiscation order entirely replacing the original confiscation order.  Section 22A would permit the new order to reproduce any requirement to pay specified sums on specified dates which had been contained in the original order (even where those dates preceded the making of the new order) along with any requirement to pay one or more additional sums immediately or on future dates.

My suggested new s22B would deal with the situation where evidence indicates that the defendant may currently have an available amount which may justify a requirement that he pay a further sum of not less than (say) £5,000 in relation to an existing confiscation order.

In these circumstances the prosecutor or a receiver could make application to the court under s22B for an addition to the existing confiscation order requiring the payment, by way of an additional recoverable amount, of one or more further sums on one or more specified dates (and permitting an additional list of assets, reflecting the defendant’s current available amount, to be appended to the order).  The aggregate recoverable amount would not be permitted to exceed the defendant’s benefit, but subject to that the court could order payment of such additional amount as it believed to be just.  An application under s22B would need to be made (i) within two years of sufficient evidence in support of the application coming to the applicant’s knowledge, and (ii) within twenty years of the defendant’s conviction.

Amendments to existing confiscation orders under s22B would apply sections 9, 10A (to be inserted by the Serious Crime Act 2015) and 13 with appropriate modifications.  The court would decide any question arising on the balance of probabilities (the civil standard) in the same way that it does under s6.

Under both my suggested new sections the court would be permitted to (i) increase the benefit figure, but only in respect of changes in the value of money since the court had previously determined the defendant’s benefit, and (ii) set the defendant’s aggregate recoverable amount equal to his benefit where the court was not satisfied that the defendant’s available amount was insufficient to justify that.

Amendments would in consequence be required to some other sections of PoCA 2002.

Section 26(1) would need to be amended to include reference to s22A (effectively applying sections 16 to 18 to applications under s22A).

Section 11 (time to pay) would require amendment to allow time to pay to be related to the date of any reconsideration under the new sections.  In my view it would also be appropriate to allow time to pay to be related to the dates of reconsideration by the Crown Court under existing sections 19 to 21 and on an appeal to the Court of Appeal or Supreme Court.

Legislation already before parliament will amend s11 to expressly provide for payments by instalments.

With regard to default sentences the legislation could be amended to permit separate default sentences to be related to separate instalments, providing always that the aggregate default sentences did not exceed the maximum permitted default sentence for the aggregate amount payable.  The legislation should also provide that the time required to be served in aggregate should be reduced by the proportion which the aggregate amount paid bears to the aggregate amount ordered to be paid.

These suggested amendments to PoCA 2002 would I believe provide a workable basis on which to deal with the issues which are left unresolved by the existing s22.

 

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.   Appropriate professional advice should be sought in each individual case.)

11 thoughts on “PoCA section 22 – unfit for purpose?”

  1. Hi David

    Does a default sentence apply to unpaid interest accrued before the coming into force of the Serious Crime Act 2015?

    Jackie

    1. Jackie

      The short answer is “Yes”. When calculating an early release date in respect of a confiscation order which has been paid in part, accrued interest will be taken into account (& the Serious Crime Act 2015 has not altered the position in that respect).

      David

  2. Hi David,
    Just want to find out options available to me under section 23 of POCA.
    My matter relates to a confiscation order made in 2006. The realisable assets set under the order were just assumed as the CPS did not provide any evidence that I owned the alleged assets. They assumed that based on my Dad’s Will for assets I may inherit in Uganda when he passed away. They also got a DEED OF TRUST. Which was drafted in Uganda for my sons, and me and my wife as the settlors.
    The judge in the hearing though mentioned on the day in Swindon Crown Court refused to look at it but all this is mentioned in the court transcripts.
    My assumption is because he knew it was binding and that it indeed exempted us and therefore our property in Swindon would not even have been considered for confiscation we cannot sell it as we are trustees and as such do not have the beneficial interest other than the legal interest.
    I recently re-resented the copy of the DEED OF TRUST as the police raided my house and took the original copy of which I also brought a summons to have both my original Dad’s will, as well as the original of the DEED OF TRUST. This seems to me as if the police were trying to make sure that any evidence pertaining to the DEED OF TRUST.
    I appeared in the court recently and presented the copy. It seems they thought I did not have a copy. The CPS some how managed to get a charge on my sons property as stipulated in the DEED of TRUST.They requested information as to why the DEED OF TRUST should be binding to which I stated that provided it is attested or rather witnessed by witness and dated and it does not need to necessarily be drafted by a lawyer to be binding. It is a private document in any case. Plus we did take out a DEED OF TRUST rather WILL when we bought the house in 2001 well long ago before the alleged crime in 2005. So how this becomes a proceeds of crime with a well documented DEED Of TRUST is any ones guess.
    This has been going on for far too long and despite the fact that I served default sentence in lieu of non-payment plus the amount recoverable was “DOUBLED” under the apparently the “DOUBLE RECOVERY” rule a very draconian law or rule which was invoked because the monies were transferred from my wife’s account to mine thus allowing the double recovery under the “BENEFITS” we allegedly received.
    I cannot travel to Uganda as I am a refugee in the UK under the UN Conventions. I have exhausted my appeals in the UK jurisdiction and I intend to take this to the ECtHR as violation of my rights under Article 6 of the ECHR as well as under the HRA Act 1998 under the UK law. Purely on the time scale having gone the six year time period.
    Can you please comment if you may. Your input will be highly appreciated. Thanking you in advance.

    1. David

      You need advice from a lawyer (either a solicitor or barrister) with appropriate knowledge & experience of confiscation under the Proceeds of Crime Act 2002. I am not a lawyer, I am an accountant.

      You raise a number of points but, amongst other things, have not said whether your father is still alive or, if he is not, whether he died before or after the confiscation order was made against you.

      Also you do not say why you were in court recently. Perhaps the Crown are trying to appoint an enforcement receiver over one or more assets in order to collect money under the confiscation order.

      If it is the case that your father died before the confiscation order was made against you, and property was left to you, and you had created a trust over that property in favour of your son (whilst retaining the legal ownership of the property), then it may have been the case that you put all this before the judge at your confiscation hearing – but that the judge rejected the Deed of Trust as being invalid or involving a ‘tainted gift’ by you. In that event the judge may have included the value of the property in your ‘available amount’ for confiscation purposes when he made the confiscation order.

      If that is the case & you think the judge was wrong to do that then you need to appeal against the confiscation order to the Court of Appeal. But an appeal normally needs to be initiated promptly after the confiscation order is made. In your case the confiscation order was made many years ago and so you may be refused leave to appeal.

      According to an old press report you were convicted of stealing £65,885 from your employers & paying that into a bank account in your wife’s name. Therefore your benefit was £65,885. The court found your available amount to be more than your benefit.

      Your wife was also convicted in relation to the stolen money & her benefit was also found to be £65,885 (plus some more money from other offences) but her ‘available amount’ was said to be £50,636.

      You should talk to a lawyer about whether there is any scope to have the double recovery (from yourself & your wife) limited following the Supreme Court decision in R v Ahmad [2014] UKSC 36.

      You can also take advice from a lawyer about s23. My own view, for what it is worth, is that s23 will not help you as it is intended to deal with a different situation.

      David

  3. Hi David

    When a court considers imposing a default sentence for non-payment of interest only, will it do so where the defendant simply has no realisable assets to pay that interest?
    I am thinking that it might take the same view as it does with the gap between the ‘available amount’ and ‘benefit’ figures, which are simply not pursued?

    Jackie

    1. Jackie
      It would be for a Magistrates’ Court to commit a defendant to prison for non-payment of a confiscation order (whether for the amount of the original order or for interest on that amount). At the Magistrates’ Court hearing the defendant or his legal representative could make the point that the defendant has no means of paying the amount and the Magistrates would need to take into consideration those representations.
      But I am not aware of any rule of law, or any custom or practice of the courts, which would prevent the Magistrates from committing the defendant to prison in respect of an amount outstanding which was only interest.
      Bear in mind that a defendant’s ‘available amount’ is calculated according to s9 and this calculation includes monies / assets gifted away by the defendant and ignores his unsecured liabilities (credit card debts, most bank overdrafts, etc). So a defendant’s ‘available amount’ might, in the ordinary course of events, be an amount which he is unable to pay. That would not prevent him being committed to prison for non-payment.
      David

  4. My ex-husband was convicted of benefit fraud in the UK in January 2014, when a confiscation order was imposed on his Spanish property, with a prison sentence in default. (The conviction was a result of him failing to declare his overseas property.) Sadly he died in August that year. No restraint order was put on the property and it was transferred to our daughter in early June 2016. In late June this year – more than a year later – the CPS instigated proceedings to get the confiscation order executed by the Spanish Court. My daughter and I are currently fighting the application on the basis that she has owned the property for more than a year, the original ‘defendant’ has passed away, and no restraint order was put on the property. (We are having a considerable struggle finding a solicitor / barrister who is able to help.) If the application fails, what can the CPS / Proceeds of Crime Unit do to recover the money, given that my ex-husband had no assets other than the (modest) house in Spain? I’ve been led to believe Section 23 could help?

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