Confiscation & proportionality

Scales of justiceSince the UK Supreme Court decision in R v Waya [2012] UKSC 51 the issue of proportionality in confiscation has been exercising legal minds in England & Wales.

As a direct consequence of that judgment, in 2015 the UK Parliament amended s6(5) Proceeds of Crime Act 2002 by adding at the end of the subsection the words, “Paragraph (b) applies only if, or to the extent that, it would not be disproportionate to require the defendant to pay the recoverable amount”.

But what does this mean in practice?

 

The 5 steps to making a confiscation order

One can now view the Crown Court process at a confiscation hearing (in a simplified way) as involving a 5 step process resulting in the confiscation order.

  1. Identify and evaluate the defendant’s ‘benefit’ in accordance with s76 (taking into consideration as appropriate the valuation provisions of sections 79 & 80 and making where applicable the assumptions in s10),
  2. Evaluate, if possible, the defendant’s ‘available amount’ in accordance with s9 (taking into account the provisions of sections 77 to 81),
  3. Determine which of (1) and (2) is the lower sum, this sum is called the ‘recoverable amount’, s7,
  4. Consider whether a confiscation order requiring the convicted defendant to pay the ‘recoverable amount’ would be disproportionate, s6(5),
  5. If a confiscation order requiring payment of the ‘recoverable amount’ would not be disproportionate make a confiscation order in the ‘recoverable amount’; but if such an order would be disproportionate then make a confiscation order requiring payment of the highest amount which would not be disproportionate.

 

What is meant by ‘disproportionate’?

The need to avoid a disproportionate confiscation order springs from Article 1 of the First Protocol to the European Convention on Human Rights, often referred to as ‘A1P1’.  This in effect requires that there must be a reasonable relationship of proportionality between the means employed by the State in the deprivation of property as a form of penalty and the legitimate aim which is sought to be realised by the deprivation.

To put this another way, legislation should not operate more harshly in removing assets from the convicted defendant than is required by the legitimate aims of that legislation.  The legislation must strike a fair balance between the demands of the general interest of the community and the requirements of the protection of the individual defendant’s fundamental rights.

A confiscation order which is so harsh as to fail to maintain a fair balance between these competing demands and requirements will be disproportionate.

 

What is proportionate?

The UK Supreme Court in Waya gave examples of what it would regard as proportionate in the context of confiscation.

They said that a legitimate, and proportionate, confiscation order may have one or more of three effects:

      (a) it may require the defendant to pay the whole of a sum which he has obtained jointly with others;
      (b) it may require several defendants each to pay a sum which has been obtained, successively, by each of them, as where one defendant pays another for criminal property;
      (c) it may require a defendant to pay the whole of a sum which he has obtained by crime without enabling him to set off expenses of the crime.

It follows from this that a confiscation order will not be regarded by the courts as disproportionate simply because it requires a convicted defendant to pay more than the sum which he would have been required to pay to put him back in the financial position he would now be in if he had not committed his crime.

Although the expression ‘pay back’ is sometimes used in connection with confiscation, a confiscation order can require much more than that.

 

Examples of ‘disproportionate’ orders

The UK Supreme Court however did indicate that where the benefit obtained by the defendant has been wholly restored to the loser a confiscation order which required him to pay the same sum again does not achieve the object of the legislation and so would be disproportionate.

Subsequent decisions of the Supreme Court and the Court of Appeal have extended that to other situations which the courts have considered to be analogous to restoration of property to the loser.

 

Loose ends

The ramifications of the Supreme Court judgment in the Waya case in situations considered to be analogous to restoration of property to the loser are still being worked through in courts up and down England & Wales.  I expect to return to this subject in a future blog article.  I have already written about the parallel issue of the making of both confiscation and compensation orders in respect of the same benefit (‘Confiscation and compensation – double trouble?‘).

But there is another issue arising which as yet has not been addressed, as far as I am aware, either by the courts or by Parliament.

Where a confiscation order is limited by the defendant’s ‘available amount’ it is an order in that amount which the court has to consider proportionate or disproportionate.  If an order in the sum of the ‘available amount’ is proportionate it may still be the case that an order based on the amount of the defendant’s ‘benefit’ would have been disproportionate.

If and when the prosecution seeks a variation of the original confiscation order under s22, perhaps because the defendant has acquired further assets since the date of the original order, the Crown Court will again be obliged not to infringe A1P1.  In consequence the Crown Court on hearing an application under s22 will be required to consider whether the variation it plans to make to the original confiscation order would make the revised order disproportionate.  That will involve careful consideration of the original benefit and any restoration of that benefit to the loser, as well as consideration afresh of the defendant’s current ‘available amount’.  Ultimately under s22(4)(a) the court is obliged to amend the amount required to be paid to such amount as “it believes is just”.  I have written previously on the subject of s22 (‘PoCA section 22 – unfit for purpose?‘).

 

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.)

2 Responses to Confiscation & proportionality
  1. Graham A
    April 22, 2016 | 6:56 pm

    Hi David,

    What is the situation where an amount has been agreed at a hearing, with the prosecution, but where the Defendant knew the origin of some amounts but could not provide evidence at the time. Then managed to find/obtain evidence to prove the origin of some of the funds included in the Order. Can this be deducted by agreement with the original Judge/Prosecution? Or would it require an Appeal.

    • David Winch
      April 24, 2016 | 10:15 am

      Graham
      You are asking a question of law. I am not a lawyer, I am an accountant.
      I suggest you talk to your legal advisers about this.
      David

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