On 24 January 2018 the UK Supreme Court handed down its judgment in R (Gibson) v Secretary of State for Justice  UKSC 2. As a result of this judgment there will be slightly more generous reductions in default sentences to be served where part of the amount due under a confiscation order has been paid. It may be that in its determination of what the statute law actually says the Supreme Court has found that the law in this area is more generous to convicted defendants than parliament had intended it to be.
Mr Gibson’s case
Mr Gibson had been made subject to a confiscation order of over £5.4m in March 2000. He was ordered to pay this within 12 months, with a six year prison term in default. Perhaps not surprisingly Mr Gibson did not pay the amount in full on time and from March 2001 interest started to be added, at the rate of 8% per annum, on the amount outstanding.
In fact only relatively small amounts were paid under the confiscation order. By the time the Magistrates’ Court committed Mr Gibson to prison under the default sentence only £90,370 in total had been paid – but the interest added to the amount originally ordered to be paid had resulted in the total amount outstanding rising to over £8.1m.
The original default term had been six years, or 2,190 days. There was no doubt that Mr Gibson was due some reduction in this because he had paid £90,370 off the order. But should the reduction be calculated as a proportion of the original amount ordered of £5.4m or as a proportion of the amount now outstanding of £8.1m?
Originally the calculation was made based on the £8.1m. That resulted in a reduction of 24 days in the default term. But Mr Gibson wanted the calculation to be based only on the original £5.4m – which instead would result in a reduction of 35 days. Mr Gibson commenced legal proceedings to get the extra reduction in his default sentence.
The law on the point is not particularly clear. Mr Gibson originally lost the argument in the Administrative Court. He appealed to the Court of Appeal – and lost again. But in January 2018 the Supreme Court decided in Mr Gibson’s favour. As a result he is entitled to the extra 11 days reduction in his default sentence.
The effect of the Supreme Court decision
This decision applies in every case (in England and Wales) in which a default sentence has been activated by the Magistrates’ Court, interest has been added to the amount outstanding, and there needs to be some reduction in the default sentence as a result of part of the confiscation order having been paid.
The effect of the decision is that the reduction for the part payment is to be calculated based on the original amount ordered to be paid when the confiscation order was made – not on the amount (including interest) which is outstanding when the Magistrates’ Court activates the default sentence.
Let’s take a simpler example. John is subject to a confiscation order in the sum of £150,000 with a default sentence of 30 months. He has paid £15,000 under the order, but interest of £5,000 has been added. When John is being committed to prison under the default sentence the balance outstanding is £140,000 (including the interest).
John’s default term will be reduced by 3 months (which is 10% of the original default term) because he has paid £15,000 (which is 10% of the original confiscation order amount of £150,000). So he will be committed to prison for 27 months (3 months less than the original default term of 30 months). In practice the default sentence would be calculated in days rather than months.
When calculating the reduction in the default sentence the interest is ignored.
Is this what parliament intended?
It seems doubtful that this is what parliament intended. One effect of this decision appears to be that a default sentence cannot be activated where the remaining balance outstanding is less than the total interest which has been added.
Consider the example of Peter who was originally the subject of a confiscation order for £60,000 with a default sentence of 18 months. Peter does not pay on time and interest of £5,000 has been added. The amount outstanding is now £65,000 – but if Peter pays just the original £60,000 off then he cannot be committed to prison under the default sentence, even though the £5,000 interest is still outstanding. This is because there is a 100% reduction in the default sentence because he has paid 100% of the original amount of the confiscation order.
Of course parliament can change the law by passing new legislation if it wishes.
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(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.)