Balance of probabilities in confiscation

balance-scalesIn confiscation law ‘the balance of probabilities’ plays a key role.  Under s6(7) Proceeds of Crime Act 2002 the court must decide any question relevant to the determination of the amount which the defendant is to be ordered to pay on the balance of probabilities.

But what does that mean?

 

The balance of probabilities

Some years ago the House of Lords (as the UK Supreme Court was known at the time) considered the meaning of the phrase ‘the balance of probabilities’ in the case of Re H & Others (minors) [1995] UKHL 16.  The case actually concerned an application by a local authority for a care order under the Children Act 1989 in respect of certain children who may or may not have become subject to significant harm if they remained in the care of their mother and step-father.

Nevertheless I suggest that the House of Lords’ comments in that case on the meaning of the expression ‘the balance of probabilities’ are of wider application.  Indeed when s6(7) of the then Proceeds of Crime Bill was being considered by a committee of MPs they were referred by the government minister to this judgment.

The House of Lords’ judgment includes the following:-

“The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury.  . . .  Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation.”

“Although the result is much the same, this does not mean that where a serious allegation is in issue the standard of proof required is higher. It means only that the inherent probability or improbability of an event is itself a matter to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. The more improbable the event, the stronger must be the evidence that it did occur before, on the balance of probability, its occurrence will be established.”

In the later case of Re B (Children) [2008] UKHL 35, the House of Lords commented on this passage, stressing the importance of the words “to whatever extent is appropriate in the particular case“.  The judgment went on:-

“There is only one rule of law, namely that the occurrence of the fact in issue must be proved to have been more probable than not. Common sense, not law, requires that in deciding this question, regard should be had, to whatever extent appropriate, to inherent probabilities.”

In another House of Lords case in 2008, Re CD (Northern Ireland) [2008] UKHL 33 Lord Carswell said, at para [28]:-

“A possible source of confusion is the failure to bear in mind with sufficient clarity the fact that in some contexts a court or tribunal has to look at the facts more critically or more anxiously than in others before it can be satisfied to the requisite standard.  The standard itself is, however, finite and unvarying.  Situations which make such heightened examination necessary may be the inherent unlikelihood of the occurrence taking place (Lord Hoffmann’s example of the animal seen in Regent’s Park [which may have been a lioness or an Alsatian]), the seriousness of the allegation to be proved or, in some cases, the consequences which could follow from acceptance of proof of the relevant fact.  The seriousness of the allegation requires no elaboration: a tribunal of fact will look closely into the facts grounding an allegation of fraud before accepting that it has been established.  The seriousness of consequences is another facet of the same proposition: if it is alleged that a bank manager has committed a minor peculation, that could entail very serious consequences for his career, so making it the less likely that he would risk doing such a thing.  These are all matters of ordinary experience, requiring the application of good sense on the part of those who have to decide such issues.  They do not require a different standard of proof or a specially cogent standard of evidence, merely appropriately careful consideration by the tribunal before it is satisfied of the matter which has to be established.”

In a further case, Re S-B Children [2009] UKSC 17, Lady Hale in the Supreme Court said:-

“There is no necessary connection between the seriousness of an allegation and the improbability that it has taken place. The test is the balance of probabilities, nothing more and nothing less.”

So it is the inherent improbability of an event, not its seriousness, which as a matter of common sense will be in the mind of the court when deciding an issue on the balance of probabilities.

 

Confiscation proceedings

In confiscation proceedings the court will be dealing with a defendant who has been convicted of an offence.  The existence of that conviction, and the evidence already accepted by the court in relation to it, cannot be ignored by the court when drawing conclusions relevant to the confiscation order.

However I suggest the court should not lose sight of the significance of ‘the balance of probabilities’ when determining matters which are in dispute in the consequent confiscation proceedings.

 

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.)

Defence opening statements to be introduced

Two way trafficDefence opening statements are to be introduced in the Magistrates’ Court and Crown Court in England and Wales from 4 April 2016.  Changes are to be made to Rules 24.3 and 25.9 of the Criminal Procedure Rules 2015 to introduce defence opening statements, which are to be heard immediately after the prosecution opening speech, where a defendant pleads ‘not guilty’.

One of the aims of this change is to better identify for Magistrates and jurors, at an early stage, those matters which are in dispute between prosecution and defence.  They may then have this in mind when hearing the prosecution and defence evidence.

Prior to this rule change it has normally been the case that only the prosecuting counsel has made an opening speech, immediately before calling witnesses for the prosecution.  The prosecution evidence has typically been followed by the presentation of any witnesses called by the defence (usually starting with the defendant himself if he is to give evidence), then closing speeches – first by the prosecution and then by the defence.  In the Crown Court this has been followed by the judge’s summing up of the evidence and his directions on the law, before the jury retire to consider their verdict.

It could therefore be the case that it would not be until almost the conclusion of the trial that the Magistrates or jurors would hear a structured presentation of the key elements of the defence challenge to the prosecution case.

Under the new Rules it is intended that Magistrates and jurors should be enabled to have the essence of the defence in mind, focussing on what is in issue, when hearing all of the evidence.

The Rule change follows a recommendation in the Review of Efficiency in Criminal Proceedings by Sir Brian Leveson, the President of the Queen’s Bench Division of the High Court, published on 23 January 2015.

 

Contacting us

Our contact details are here.

David

(Note: This article discusses the criminal law of England and Wales.  There are a number of additional issues which could be relevant to a defendant’s trial 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.)

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.)

Confiscation & compensation – double trouble?

doppelgangerFor some years courts have wrestled with the issue of compensation & confiscation.  Should the Crown Court make both a compensation order (in favour of the victim of the crime) & a confiscation order (effectively in favour of the Crown) in respect of the same benefit obtained by a convicted defendant?

The Court of Appeal recently considered the issue again in the case of Davenport v R [2015] EWCA Crim 1731.

 

Statute law

The power to make a compensation order in the Crown Court derives from s130 Powers of Criminal Courts (Sentencing) Act 2000.  The power to make a confiscation order in the Crown Court derives from s6 Proceeds of Crime Act 2002.  The legislation clearly envisages that the Crown Court may make both a compensation order and a confiscation order when dealing with an offence.

In particular s13 PoCA 2002 (as amended by s6 Serious Crime Act 2015 with effect from 1 June 2015) defines a “priority order” in subsection (3A) to include a compensation order and sets out what the court is to do where a court is making both a confiscation order and one or more priority orders against the same person in the same proceedings and the court believes the person will not have sufficient means to satisfy all of those orders in full.

In these circumstances the court must direct that so much of the amount payable under the priority order(s) as it specifies is to be paid out of any sums recovered under the confiscation order; and the amount it specifies must be the amount it believes will not be recoverable because of the insufficiency of the person’s means, subsection (6).

The other types of priority order now identified in subsection (3A) include a surcharge order under s161A Criminal Justice Act 2003, an unlawful profit order under s4 Prevention of Social Housing Fraud Act 2013 and a forfeiture order under s23 or s23A Terrorism Act 2000.  It is anticipated that a slavery and trafficking reparation order under s8 Modern Slavery Act 2015 will be added to the list of priority orders in due course.

 

Case Law

The Court of Appeal have considered the making of both compensation orders and confiscation orders against the same person in the same proceedings in the cases of Jawad v R [2013] EWCA Crim 644 and of Davenport v R [2015] EWCA Crim 1731.  Both of these judgments post-date the UK Supreme Court decision in the case of R v Waya [2012] UKSC 51 which highlighted the importance of proportionality in the making of confiscation orders and resulted in the amendment to s6(5)(b) PoCA 2002.

 

The issue

The problem is that whilst the statute law makes clear that it is possible for the court to make a compensation order and a confiscation order against the same person in the same proceedings – and sets out what the court should do if the offender cannot pay both orders in full, the statute gives no guidance as to what the court should do if the offender can pay both.

Since the decision in Waya and the amendment to s6(5)(b) would it now be disproportionate, and therefore wrong, for the court to make a compensation order and a confiscation order in respect of the same benefit obtained from the same offence against an offender who appears to be in a position in which he can pay both?

This was the question addressed in Jawad and in Davenport.

The Court of Appeal considered in Jawad that it generally will be disproportionate to require the defendant to pay for a second time money which he has fully restored to the loser – and an order for a lesser sum which excludes the double counting ought generally to be the right order.  What will bring disproportion, said the Court, is the certainty of double payment.  If it remains uncertain whether the loser will be repaid, a POCA confiscation order which includes the sum in question (and therefore requires the same benefit to be recovered twice – by compensation & confiscation orders) will not ordinarily be disproportionate, concluded the Court of Appeal.

In Davenport the Court of Appeal appears to have taken a slightly more relaxed approach.  It held that mathematical certainty of restitution is not required.  The court should approach matters in a practical and realistic way in deciding whether restitution is assured.  Restitution to the victims in the future is capable of being properly assessed as assured, depending on the particular circumstances, notwithstanding that such restitution will not be immediate, or almost immediate, at the time of the confiscation hearing.  Obviously the longer the time frame the greater force there will be to an argument that restitution is not assured: but a prospective period of delay in realisation is not of itself necessarily a conclusive reason for proceeding to make a combination of such orders without adjusting the amount of the confiscation order.

Whilst a defendant who is truly intent on making restitution in full to his victims ordinarily should be expected to have arranged such restitution prior to the date of the confiscation hearing there may sometimes be cases where that is not possible.  If, in such a case, the court has firm and evidence-based grounds for believing that restitution may nevertheless be forthcoming, albeit that cannot be taken as “assured” at the time of the hearing, the court has power in its discretion to order an adjournment to enable matters to be ascertained.

But, said the Court of Appeal, each case must be decided on its own facts and circumstances.

 

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.)

Section 330 Proceeds of Crime Act 2002

ER 1 sigSection 330 Proceeds of Crime Act 2002 requires persons working in the ‘regulated sector’ to report their suspicions of money laundering by others, subject to certain exceptions.

The ‘regulated sector’ is defined by Schedule 9 PoCA 2002, as amended.  The most significant amendment to Schedule 9 was made by the Proceeds of Crime Act 2002 (Business in the Regulated Sector & Supervisory Authorities) Order 2007 which entirely replaced Parts 1 & 2 of the originally enacted schedule.  There have been a number of more minor amendments to the extent of the ‘regulated sector’ subsequently.

But s330 itself has been subject to important amendments on a number of occasions, not only has the original text been amended but six entirely new subsections have been added.  In consequence there is not, as far as I am aware, an up to date copy of s330 freely available on the internet.

I set out below my understanding of the current wording of s330 at the time of writing (November 2015).

 

Section 330 Proceeds of Crime Act 2002

Failure to disclose: regulated sector

(1)     A person commits an offence if the conditions in subsections (2) to (4) are satisfied.

(2)     The first condition is that he –

    • (a) knows or suspects, or
    • (b) has reasonable grounds for knowing or suspecting,

that another person is engaged in money laundering.

(3)     The second condition is that the information or other matter –

    • (a) on which his knowledge or suspicion is based, or
    • (b) which gives reasonable grounds for such knowledge or suspicion,

came to him in the course of a business in the regulated sector.

(3A)  The third condition is –

    • (a) that he can identify the other person mentioned in subsection (2) or the whereabouts of any of the laundered property, or
    • (b) that he believes, or it is reasonable to expect him to believe, that the information or other matter mentioned in subsection (3) will or may assist in identifying that other person or the whereabouts of any of the laundered property.

(4)     The fourth condition is that he does not make the required disclosure to –

    • (a) a nominated officer, or
    • (b) a person authorised for the purposes of the Part by the Director General of the National Crime Agency,

as soon as is practicable after the information or other matter mentioned in subsection (3) comes to him.

(5)     The required disclosure is a disclosure of –

    • (a) the identity of the other person mentioned in subsection (2), if he knows it,
    • (b) the whereabouts of the laundered property, so far as he knows it, and
    • (c) the information or other matter mentioned in subsection (3).

(5A)   The laundered property is the property forming the subject-matter of the money laundering that he knows or suspects, or has reasonable grounds for knowing or suspecting, that other person to be engaged in.

(6)     But he does not commit an offence under this section if –

    • (a) he has a reasonable excuse for not making the required disclosure,
    • (b) he is a professional legal adviser or relevant professional adviser and –
      • (i) if he knows either of the things mentioned in subsection (5)(a) and (b), he knows the thing because of information or other matter that came to him in privileged circumstances, or
      • (ii) the information or other matter mentioned in subsection (3) came to him in privileged circumstances, or
    • (c) subsection (7) or (7B) applies to him.

(7)     This subsection applies to a person if –

    • (a) he does not know or suspect that another person is engaged in money laundering, and
    • (b) he has not been provided by his employer with such training as is specified by the Secretary of State by order for the purposes of this section.

(7A)    Nor does a person commit an offence under this section if –

    • (a) he knows, or believes on reasonable grounds, that money laundering is occurring in a particular country or territory outside the United Kingdom, and
    • (b) the money laundering –
      • (i) is not unlawful under the criminal law applying in that country or territory, and
      • (ii) is not of a description prescribed in an order made by the Secretary of State.

(7B)   This subsection applies to a person if –

    • (a) he is employed by, or is in partnership with, a professional legal adviser or a relevant professional adviser to provide the adviser with assistance or support,
    • (b) the information or other matter mentioned in subsection (3) comes to the person in connection with the provision of such assistance or support, and
    • (c) the information or other matter came to the adviser in privileged circumstances.

(8)     In deciding whether a person committed an offence under this section the court must consider whether he followed any relevant guidance which was at the time concerned –

    • (a) issued by a supervisory authority or other appropriate body,
    • (b) approved by the Treasury, and
    • (c) published in a manner it approved as appropriate in its opinion to bring the guidance to the attention of persons likely to be affected by it.

(9)     A disclosure to a nominated officer is a disclosure which –

    • (a) is made to a person nominated by the alleged offender’s employer to receive disclosures under this section, and
    • (b) is made in the course of the alleged offender’s employment.

(9A)   But a disclosure which satisfies paragraphs (a) and (b) of subsection (9) is not to be taken as a disclosure to a nominated officer if the person making the disclosure –

    • (a) is a professional legal adviser or relevant professional adviser,
    • (b) makes it for the purpose of obtaining advice about making a disclosure under this section, and
    • (c) does not intend it to be a disclosure under this section.

(10)   Information or other matter comes to a professional legal adviser or relevant professional adviser in privileged circumstances if it is communicated or given to him –

    • (a) by (or by a representative of) a client of his in connection with the giving by the adviser of legal advice to the client,
    • (b) by (or by a representative of) a person seeking legal advice from the adviser, or
    • (c) by a person in connection with legal proceedings or contemplated legal proceedings.

(11)   But subsection (10) does not apply to information or other matter which is communicated or given with the intention of furthering a criminal purpose.

(12)   Schedule 9 has effect for the purpose of determining what is –

    • (a) a business in the regulated sector;
    • (b) a supervisory authority.

(13)   An appropriate body is any body which regulates or is representative of any trade, profession, business or employment carried on by the alleged offender.

(14)   A relevant professional adviser is an accountant, auditor or tax adviser who is a member of a professional body which is established for accountants, auditors or tax advisers (as the case may be) and which makes provision for –

    • (a) testing the competence of those seeking admission to membership of such a body as a condition for such admission; and
    • (b) imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.

 

Contacting us

Our contact details are here.

David

(Note: This article applies to the provisions of Section 330 of the Proceeds of Crime Act 2002 in England and Wales.  There are a number of issues which could be relevant to obligations or proceedings under these provisions in particular circumstances which it is not possible to deal with in an article such as this.  Appropriate professional or legal advice should be sought in each individual case.)

Expert evidence – updated Part 19 Criminal Procedure Rules 2015

(c) FreeFoto.comPart 19 of the Criminal Procedure Rules 2015 dealing with expert evidence in Crown Courts and Magistrates’ Courts in England & Wales has been updated with effect from 5 October 2015. For convenience the new materials are brought together in a single document here.

The Criminal Procedure Rules are in future to be referred to by the abbreviation CrimPR to distinguish them from the Civil Procedure Rules, see new rule 2.3.(2).

 

Expert evidence – guide to the amendments to the Rules

Part 19 (Expert evidence) is amended to include a new rule about an expert witness’ obligations to the court.  At the same time the Criminal Procedure Rules as a whole have been rearranged – the new Part 19 dealing with expert evidence previously appeared as Part 33 of the 2014 edition of the rules.

Rule 19.2 (Expert evidence; Expert’s duty to the court) now requires an expert witness, as part of her or his duty to the court, to help the court in some of the same ways as a party to the case, by complying with directions (for example, as to the time by when a report must be served), and by warning the court of any significant failure to act as required by a direction (for example, by warning of substantial delay in the preparation of a report).

In response to observations by the Court of Appeal in its judgment in R v Reynolds, R v Rosser [2014] EWCA Crim 2205, and in response to reports by Rule Committee members of increasing difficulties in obtaining expert reports within the same times as before, the Committee agreed that an expert’s implicit duty to the court to give a realistic estimate of the time within which expert evidence can be prepared, and to adhere to that estimate, should be made explicit.

 

Expert evidence – the Rules as amended

When this part applies
19.1.
(1) This Part applies where a party wants to introduce expert opinion evidence.

(2) A reference to an ‘expert’ in this Part is a reference to a person who is required to give or prepare expert evidence for the purpose of criminal proceedings, including evidence required to determine fitness to plead or for the purpose of sentencing.

Expert’s duty to the court

19.2.

(1) An expert must help the court to achieve the overriding objective —

    (a) by giving opinion which is —
      (i) objective and unbiased; and
      (ii) within the expert’s area or areas of expertise; and
    (b) by actively assisting the court in fulfilling its duty of case management under rule 3.2, in particular by —
      (i) complying with directions made by the court, and
      (ii) at once informing the court of any significant failure (by the expert or another) to take any step required by such a direction.

(2) This duty overrides any obligation to the person from whom the expert receives instructions or by whom the expert is paid.

(3) This duty includes obligations —

    (a) to define the expert’s area or areas of expertise —

      (i) in the expert’s report, and
      (ii) when giving evidence in person;
    (b) when giving evidence in person, to draw the court’s attention to any question to which the answer would be outside the expert’s area or areas of expertise; and
    (c) to inform all parties and the court if the expert’s opinion changes from that contained in a report served as evidence or given in a statement.

Introduction of expert evidence

19.3.
(1) A party who wants another party to admit as fact a summary of an expert’s conclusions must serve that summary —

    (a) on the court officer and on each party from whom that admission is sought;
    (b) as soon as practicable after the defendant whom it affects pleads not guilty.

(2) A party on whom such a summary is served must —

    (a) serve a response stating —
      (i) which, if any, of the expert’s conclusions are admitted as fact, and
      (ii) where a conclusion is not admitted, what are the disputed issues concerning that conclusion; and
    (b) serve the response —
      (i) on the court officer and on the party who served the summary,
      (ii) as soon as practicable, and in any event not more than 14 days after service of the summary.

(3) A party who wants to introduce expert evidence otherwise than as admitted fact must —

    (a) serve a report by the expert which complies with rule 19.4 (Content of expert’s report) on —
      (i) the court officer, and
      (ii) each other party;
    (b) serve the report as soon as practicable, and in any event with any application in support of which that party relies on that evidence;
    (c) serve with the report notice of anything of which the party serving it is aware which might reasonably be thought capable of detracting substantially from the credibility of that expert;
    (d) if another party so requires, give that party a copy of, or a reasonable opportunity to inspect —
      (i) a record of any examination, measurement, test or experiment on which the expert’s findings and opinion are based, or that were carried out in the course of reaching those findings and opinion, and
      (ii) anything on which any such examination, measurement, test or experiment was carried out.

(4) Unless the parties otherwise agree or the court directs, a party may not —

    (a) introduce expert evidence if that party has not complied with paragraph (3);
    (b) introduce in evidence an expert report if the expert does not give evidence in person.

Content of expert’s report

19.4.
Where rule 19.3(3) applies, an expert’s report must —

    (a) give details of the expert’s qualifications, relevant experience and accreditation;
    (b) give details of any literature or other information which the expert has relied on in making the report;
    (c) contain a statement setting out the substance of all facts given to the expert which are material to the opinions expressed in the report, or upon which those opinions are based;
    (d) make clear which of the facts stated in the report are within the expert’s own knowledge;
    (e) say who carried out any examination, measurement, test or experiment which the expert has used for the report and —
      (i) give the qualifications, relevant experience and accreditation of that person,
      (ii) say whether or not the examination, measurement, test or experiment was carried out under the expert’s supervision, and
      (iii) summarise the findings on which the expert relies;
    (f) where there is a range of opinion on the matters dealt with in the report —
      (i) summarise the range of opinion, and
      (ii) give reasons for the expert’s own opinion;
    (g) if the expert is not able to give an opinion without qualification, state the qualification;
    (h) include such information as the court may need to decide whether the expert’s opinion is sufficiently reliable to be admissible as evidence;
    (i) contain a summary of the conclusions reached;
    (j) contain a statement that the expert understands an expert’s duty to the court, and has complied and will continue to comply with that duty; and
    (k) contain the same declaration of truth as a witness statement.

Expert to be informed of service of report

19.5.
A party who serves on another party or on the court a report by an expert must, at once, inform that expert of that fact.

Pre-hearing discussion of expert evidence

19.6.
(1) This rule applies where more than one party wants to introduce expert evidence.

(2) The court may direct the experts to —

    (a) discuss the expert issues in the proceedings; and
    (b) prepare a statement for the court of the matters on which they agree and disagree, giving their reasons.

(3) Except for that statement, the content of that discussion must not be referred to without the court’s permission.

(4) A party may not introduce expert evidence without the court’s permission if the expert has not complied with a direction under this rule.

Court’s power to direct that evidence is to be given by a single joint expert

19.7.
(1) Where more than one defendant wants to introduce expert evidence on an issue at trial, the court may direct that the evidence on that issue is to be given by one expert only.

(2) Where the co-defendants cannot agree who should be the expert, the court may —

    (a) select the expert from a list prepared or identified by them; or
    (b) direct that the expert be selected in another way.

Instructions to a single joint expert

19.8.
(1) Where the court gives a direction under rule 19.7 for a single joint expert to be used, each of the co-defendants may give instructions to the expert.

(2) A co-defendant who gives instructions to the expert must, at the same time, send a copy of the instructions to each other co-defendant.

(3) The court may give directions about —

    (a) the payment of the expert’s fees and expenses; and
    (b) any examination, measurement, test or experiment which the expert wishes to carry out.

(4) The court may, before an expert is instructed, limit the amount that can be paid by way of fees and expenses to the expert.

(5) Unless the court otherwise directs, the instructing co-defendants are jointly and severally liable for the payment of the expert’s fees and expenses.

Court’s power to vary requirements under this Part

19.9.
(1) The court may extend (even after it has expired) a time limit under this Part.

(2) A party who wants an extension of time must —

    (a) apply when serving the report, summary or notice for which it is required; and
    (b) explain the delay.

 

Expert evidence – the Practice Direction

19A.1 Expert opinion evidence is admissible in criminal proceedings at common law if, in summary, (i) it is relevant to a matter in issue in the proceedings; (ii) it is needed to provide the court with information likely to be outside the court’s own knowledge and experience; and (iii) the witness is competent to give that opinion.

19A.2 Legislation relevant to the introduction and admissibility of such evidence includes section 30 of the Criminal Justice Act 1988, which provides that an expert report shall be admissible as evidence in criminal proceedings whether or not the person making it gives oral evidence, but that if he or she does not give oral evidence then the report is admissible only with the leave of the court; and CrimPR Part 19, which in exercise of the powers conferred by section 81 of the Police and Criminal Evidence Act 1984 and section 20 of the Criminal Procedure and Investigations Act 1996 requires the service of expert evidence in advance of trial in the terms required by those rules.

19A.3 In the Law Commission report entitled ‘Expert Evidence in Criminal Proceedings in England and Wales’, report number 325, published in March, 2011, the Commission recommended a statutory test for the admissibility of expert evidence. However, in its response the government declined to legislate. The common law, therefore, remains the source of the criteria by reference to which the court must assess the admissibility and weight of such evidence; and CrimPR 19.4 lists those matters with which an expert’s report must deal, so that the court can conduct an adequate such assessment.

19A.4 In its judgment in R v Dlugosz and Others [2013] EWCA Crim 2, the Court of Appeal observed (at paragraph 11): “It is essential to recall the principle which is applicable, namely in determining the issue of admissibility, the court must be satisfied that there is a sufficiently reliable scientific basis for the evidence to be admitted. If there is then the court leaves the opposing views to be tested before the jury.” Nothing at common law precludes assessment by the court of the reliability of an expert opinion by reference to substantially similar factors to those the Law Commission recommended as conditions of admissibility, and courts are encouraged actively to enquire into such factors.

19A.5 Therefore factors which the court may take into account in determining the reliability of expert opinion, and especially of expert scientific opinion, include:

    (a) the extent and quality of the data on which the expert’s opinion is based, and the validity of the methods by which they were obtained;
    (b) if the expert’s opinion relies on an inference from any findings, whether the opinion properly explains how safe or unsafe the inference is (whether by reference to statistical significance or in other appropriate terms);
    (c) if the expert’s opinion relies on the results of the use of any method (for instance, a test, measurement or survey), whether the opinion takes proper account of matters, such as the degree of precision or margin of uncertainty, affecting the accuracy or reliability of those results;
    (d) the extent to which any material upon which the expert’s opinion is based has been reviewed by others with relevant expertise (for instance, in peer-reviewed publications), and the views of those others on that material;
    (e) the extent to which the expert’s opinion is based on material falling outside the expert’s own field of expertise;
    (f) the completeness of the information which was available to the expert, and whether the expert took account of all relevant information in arriving at the opinion (including information as to the context of any facts to which the opinion relates);
    (g) if there is a range of expert opinion on the matter in question, where in the range the expert’s own opinion lies and whether the expert’s preference has been properly explained; and
    (h) whether the expert’s methods followed established practice in the field and, if they did not, whether the reason for the divergence has been properly explained.

19A.6 In addition, in considering reliability, and especially the reliability of expert scientific opinion, the court should be astute to identify potential flaws in such opinion which detract from its reliability, such as:

    (a) being based on a hypothesis which has not been subjected to sufficient scrutiny (including, where appropriate, experimental or other testing), or which has failed to stand up to scrutiny;
    (b) being based on an unjustifiable assumption;
    (c) being based on flawed data;
    (d) relying on an examination, technique, method or process which was not properly carried out or applied, or was not appropriate for use in the particular case; or
    (e) relying on an inference or conclusion which has not been properly reached.

NOTE: A previous article dealing with the 2014 revisions to the Criminal Procedure Rules can be found HERE.

S10A PoCA 2002 determinations – appeals & reconsideration

Scales of justiceOnce the Crown Court has made a ‘determination’ for the purposes of confiscation of the extent of a convicted defendant’s interest in an asset can that ‘determination’ be altered on an appeal or reconsideration?

The short answer is ‘Yes’.  A previous article ‘Crown Court section 10A determinations in confiscation‘ considered the new power to make a ‘determination’ introduced by s1 Serious Crime Act 2015 which inserted new s10A into the Proceeds of Crime Act 2002.

This article goes on to consider appeal & reconsideration of s10A determinations.

 

Appeal

A s10A determination may be appealed either by the prosecutor or by a person whom the Court of Appeal thinks is or may be a person holding an interest in the asset in question, but different eligibility rules apply, see s3 SCA 2015.

Whoever wishes to appeal to the Court of Appeal will not be permitted to do so where a receiver has already been appointed under s50 PoCA 2002, or where the Court of Appeal believes that an application is to be made by the prosecutor for the appointment of a receiver, or where such an application has been made but has not yet been determined.

In addition where the intended appeal is to be made by a person who claims to hold an interest in the asset the appeal must be on the basis that either the person was not given a reasonable opportunity to make representations when the determination was made, or that giving effect to the determination would result in a serious risk of injustice to that person, or both.

But what is meant by “a serious risk of injustice”?  I would suggest that this is not restricted to a risk of serious injustice – what is serious is the risk, not the injustice.  When considering the meaning of the same phrase in earlier confiscation legislation the Court of Appeal in the case of R v Benjafield [2000] EWCA Crim 86 held, at paragraph [41.4]: “any real as opposed to a fanciful risk of injustice can be appropriately described as serious”.

It is doubtful whether an error which had an insignificant impact on the outcome would be regarded as creating an “injustice”.  However it may prove to be the case that the need to show “a serious risk of injustice” will not be an especially difficult hurdle for a potential appellant.

On hearing an appeal against a determination the Court of Appeal may confirm the determination, or make such order as it believes is appropriate.  The decision of the Court of Appeal may be further appealed to the Supreme Court.

 

Reconsideration in the Crown Court

When the Crown Court is appointing a receiver under s50 it may confer various powers upon the receiver including (but not limited to) power to manage or realise any realisable assets, and the court may may order a person holding an interest in a realisable asset to make payment to the receiver in respect of a beneficial interest in that asset held by the convicted defendant or the recipient of a tainted gift, see s51(2) & (6).

Where a s10A determination in respect of an asset has not previously been made the Crown Court must not exercise those powers without giving any person holding an interest in the asset a reasonable opportunity to make representations to it, s51(8).

Where a s10A determination in respect of an asset has previously been made that will bind the Crown Court when appointing the receiver, unless the Crown Court finds on an application by a person holding an interest in the asset that either the person was not given a reasonable opportunity to make representations when the determination was made and has not appealed against the determination, or that giving effect to the determination would result in a serious risk of injustice to that person, or both – see s51(8B) inserted by s4 SCA 2015.

The effect therefore is that the s10A determination can be undone by the Crown Court when it is appointing a receiver (unless that determination has already been subject to an appeal to the Court of Appeal).

 

The combined effect

The combined effect of these provisions is that a person with an interest in the asset will have an opportunity either to appeal to the Court of Appeal against the determination or an opportunity to ask the Crown Court to reconsider the determination (but cannot do both).

In either case the person with the interest will have to satisfy the court that either he was not given a reasonable opportunity to make representations when the determination was made, or that giving effect to the determination would result in a serious risk of injustice to him, or both.

He will need to do that on or before the appointment of a receiver under s50.

It remains the case that the powers of the receiver must be exercised with a view to allowing a person other than the defendant or a recipient of a tainted gift to retain or recover the value of any interest held by him, see s69(3)(a).

A s10A determination is a determination of the defendant’s interest in the asset rather than a determination of the interests of others but clearly has a relevance to issues arising under s69(3)(a).

 

Conclusion

The existence of these opportunities to challenge the previous ‘conclusive’ s10A determination may be thought to go a long way to nullify the perceived attractions of inviting the Crown Court to make a s10A PoCA 2002 determination when making a confiscation order.

 

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.)

Crown Court s10A determinations in confiscation

Crown Court judgeThe Serious Crime Act 2015 has introduced a new power enabling a Crown Court judge when making a confiscation order to make a “determination” of the extent of the defendant’s interest in any property which is likely to be used to satisfy the order.

In other words, where more than one person has an interest in the property the judge may ‘determine’ what proportion of the property belongs to the defendant at the time the confiscation order is made.

That determination will then, subject to limited exceptions, be conclusive in further proceedings taken with a view to satisfying the order.

The objective of such a “determination” under the new s10A Proceeds of Crime Act 2002 appears to be to facilitate the enforcement of confiscation orders by a conclusive ruling at the time the confiscation order is made on competing interests in assets which might need to be realised to satisfy the order.  Previously such matters would not be resolved until a later stage – when enforcement proceedings against the defendant’s assets were underway.

But it remains open to the judge to make a confiscation order without making any “determination” – in other words to do precisely what he would have done before s10A was introduced.  It is envisaged that in many cases that is exactly what will happen.

 

The new law

The new law, which came into effect on 1 June 2015, is to be found in sections 1 – 4 Serious Crime Act 2015.

Section 1 is the key provision, inserting a new s10A into PoCA 2002 setting into law the power to make a “determination” and the requirement that, before doing so, the court must give any “interested person” (meaning any third party whom the court thinks has, or may have, an interest in the property) a reasonable opportunity to make representations to it.

So where a judge is considering making a “determination” an “interested person” can be represented at the confiscation hearing, which is a new development in confiscation law.

As always in confiscation law, “property” means an asset of any description – not just land & buildings.

Section 2 deals with the provision of information to the court by the defendant (amending s18 PoCA 2002), the prosecutor (amending s16) and the interested person (inserting a new s18A).

Sections 3 & 4 deal with appeals & reconsideration.  I deal with those aspects in ‘S10A PoCA 2002 determinations – appeals & reconsideration‘.

 

How is it supposed to work?

The idea is that when a convicted defendant is first required by a s18 order to provide information to the court for the purposes of confiscation proceedings he may also be required to provide information which would be relevant to a potential s10A determination.  In other words he may be required to set out his assertions concerning the extent to which he is interested in assets in which he has a less than 100% interest.  Presumably the court would wish at that stage also to be provided with the identities of any “interested persons”.

The court may at any stage require an “interested person” to provide information to it.  New s18A enables the court to place upon an “interested person” similar obligations to those placed on a defendant under s18 – and with the same danger that where an “interested person” fails to comply with the court order the court may draw appropriate inferences.

The prosecutor is required to include in his s16 statement any information known to him which he believes is relevant to a possible s10A determination.  This appears to be a mandatory requirement applying to all s16 statements issued after 1 June 2015.

Although there are no changes to s17, a defendant would be unwise not to respond to any relevant assertions in the prosecutor’s s16 statement with which he did not agree because his silence may be taken for agreement.

Prior to the confiscation hearing if the court was contemplating making a s10A determination any “interested persons” would need to be notified of the hearing to enable them to be represented at it.  (However it is far from clear whether any legal aid funding would be available to an “interested person” who wished to obtain legal advice or instruct a legal representative to appear at the hearing.)

At the conclusion of the confiscation hearing the court could make not only a confiscation order but also a s10A determination of the defendant’s interests in specified assets (i.e. the proportion of each asset which belonged to the defendant).

If the confiscation order was not satisfied & matters proceeded to enforcement then, subject to the provisions relating to appeals and reconsideration already mentioned, enforcement could then proceed on the basis of the defendant’s interests in those assets as had been determined.

 

A fictional case study

To better understand the issues let us consider a fictional case study.

Norman & Monica have been married for ten years & have two school age children.  They jointly own their matrimonial home (as joint tenants) subject to a building society mortgage (also in joint names).  They purchased their current home, Rose Cottage, 3 years ago.

Norman also owns a ‘buy to let’ property, Rainbow’s End, which is occupied by students at the local university.  Norman bought the property 5 years ago in his sole name with the help of a secured bank loan (also in his sole name).  Norman declares all the rents received from Rainbow’s End on his personal income tax returns.

Norman was recently convicted in connection with a drug trafficking conspiracy & is now subject to confiscation on the basis of a ‘criminal lifestyle’.  The figure of his ‘benefit’ is undoubtedly going to be very large so the confiscation order will be limited by his ‘available amount’.

Norman’s ‘available amount’ will include his interests in Rose Cottage & Rainbow’s End.  In relation to any s10A determination which the judge may be considering making in regard to those properties the “interested persons” appear to be Monica, the building society & the bank.

If the court is considering making a s10A determination it may issue s18A orders requiring Monica, the building society & the bank to supply information & must give each of them an opportunity to make representations to it.

In practice the interests of the commercial lenders are likely to be uncontroversial & it is unlikely that they will wish to be represented at the confiscation hearing.  However there is a danger that the interests of the lenders in the properties may change between the date the confiscation order is made & the date the order is enforced.  The new legislation does not appear to be designed to accommodate that possibility, particularly as the legislation refers to the defendant’s interest as a proportion of the value of the property itself, s10A(5).

An alternative approach might be for the court to define the ‘property’ to be dealt with by the determination as ‘Norman & Monica’s interests in Rose Cottage & Rainbow’s End’.  That may enable some potential complications to be side-stepped but arguably would run counter to the natural meaning of the wording of s10A.  Another option may be for the court to give a rather wide meaning to the word “proportion” in this context.

For the purposes of a s10A determination the court would then need to reach a conclusion as to whether Monica had any interest in the ‘buy to let’ property Rainbow’s End.  That might depend upon whether Rainbow’s End was regarded as ‘matrimonial property’ in the sense that term is understood in the Family Court.

As a quite separate matter the Crown Court would have to consider, in the context of deciding Norman’s ‘available amount’, whether Norman had made any ‘tainted gifts’.  It is possible that any interest Monica had in Rose Cottage and / or Rainbow’s End might be considered to have arisen by ‘tainted gift’ from Norman (which would mean that his ‘available amount’ would need to include the current value of the interest gifted by him & still held by Monica).

Suppose the Crown Court made a s10A determination that Norman had a 100% interest in Rainbow’s End, subject only to the interest of the bank as secured lender.  If Monica & Norman were later to divorce would the Family Court be able to take account of the value of Rainbow’s End in the divorce settlement?  Could it do so on the basis that, contrary to to the s10A determination in the Crown Court, Monica did have an interest in the property – whilst at the same time recognising Norman’s obligations under his confiscation order?

In such a case the Crown Court judge might consider the better course would be to decline to make any “determination” under s10A, leaving matters to be resolved if necessary in enforcement proceedings.  Indeed even when legislating the government envisaged that the Crown Court would only make s10A determinations in relatively straightforward cases.

 

Transitional provisions

There appear to be no relevant express transitional provisions in the Serious Crime Act 2015 or the commencement order.  However the practicalities are that a s10A determination cannot be made unless the “interested persons” have been identified & notified of the intention to make a “determination”.

For that reason, although the law came into effect on 1 June 2015, courts are unlikely to be making any s10A determinations just yet.

However I would suggest that all prosecutor’s s16 statements should now contain the information required by new subsection 16(6A) inserted by s2 Serious Crime Act 2015.

 

What will actually happen?

As yet I have detected no enthusiasm on the part of prosecutors for inviting the Crown Courts to make s10A determinations.  This may be because of the extra complexity that this would bring to the proceedings involved in obtaining a confiscation order.

It remains to be seen whether, in the event, this new power is employed often in practice or left to gather dust in the statute book.

 

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.)

Confiscation default sentences under the new law

BewareThe law relating to the default sentence which may be triggered by a failure to satisfy on time a confiscation order made under Part 2 Proceeds of Crime Act 2002 has been amended by s10 Serious Crime Act 2015 with effect from 1 June 2015.

The government’s objective in making the changes seems to be to make default sentences more effective in securing payment by both simplifying & increasing the severity of sentencing.

So what has changed & what has not?

 

Comparing the old & new tiers

It might be helpful to compare the old tiers & the new.  There were twelve tiers previously – now there are only four.  The four new tiers include a new break point at £500,000.  The following table shows all the tiers with both the old & new maximum default terms.

Old New Change
An amount not exceeding £200 7 days 6 months Increased
An amount exceeding £200 but not exceeding £500 14 days 6 months Increased
An amount exceeding £500 but not exceeding £1,000 28 days 6 months Increased
An amount exceeding £1,000 but not exceeding £2,500 45 days 6 months Increased
An amount exceeding £2,500 but not exceeding £5,000 3 months 6 months Increased
An amount exceeding £5,000 but not exceeding £10,000 6 months 6 months No change
An amount exceeding £10,000 but not exceeding £20,000 12 months 5 years Increased
An amount exceeding £20,000 but not exceeding £50,000 18 months 5 years Increased
An amount exceeding £50,000 but not exceeding £100,000 2 years 5 years Increased
An amount exceeding £100,000 but not exceeding £250,000 3 years 5 years Increased
An amount exceeding £250,000 but not exceeding £500,000 5 years 5 years No change
An amount exceeding £500,000 but not exceeding £1 million 5 years 7 years Increased
An amount exceeding £1 million 10 years 14 years Increased

It can be seen that the maximum default sentences are increased for all amounts except for amounts exceeding £5,000 but not exceeding £10,000 & amounts exceeding £250,000 but not exceeding £500,000, for which the maximums are unchanged.

Because in each case the specified sentence for each tier is a maximum sentence, any default sentence which may have been set on or after 1 June 2015 using the old tiers will not be an unlawful sentence under the new tiers.

However when operating the new tiers it seems likely that in very many cases Crown Court judges will be minded to fix a higher default sentence than the one which they would have fixed under the old tiers.

In the author’s view this is particularly likely in relation to higher value confiscation orders.  For example a defendant ordered to pay £400,000 will be subject to a statutory maximum of 5 years (which is unchanged).  But whereas previously the ‘5 year tier’ was from £250,000 to £1 million it is now from £250,000 to £500,000.  Therefore a sum of £400,000 is now much closer to the ceiling of the tier and therefore likely to attract a default sentence which is also closer to the ceiling for that tier.

 

Previous case law

The setting of a default term will always be, in the author’s view at least, dependent upon the particular facts relevant to the defendant & the case.  But previous case law has established a principle that the default term will normally be not less than the maximum term applicable to the tier immediately below.

So, for example, under the old tiers one would expect a default term in respect of an amount of £110,000 to be not less than two years (which was the maximum for sums not exceeding £100,000).

That principle may be a less useful guide under the new regime as there are now four tiers rather than twelve.

It remains to be seen how far, if at all, Crown Court judges will have some regard to the old tiers when setting a default sentence under the new regime.

 

Transitional provisions

The amendment made by s10 SCA 2015 came into effect on 1 June 2015 as set out in regulation 3 Serious Crime Act 2015 (Commencement No 1) Regulations 2015.  But neither the 2015 Act nor the commencement regulations tell us anything useful about transitional arrangements for the new four tiers.

Typically confiscation proceedings (in the broadest sense) might pass through nine significant stages en route to activation of the default sentence:-

  • The offence is committed
  • The defendant is charged
  • The defendant is convicted
  • A prosecution s16 statement is issued or amended
  • A confiscation order is made in the Crown Court
  • Default in payment occurs
  • Interest accrues on the outstanding amount
  • The confiscation order might be varied in the Crown Court
  • The defendant is committed to prison by the Magistrates’ Court

But which of these must occur on or after 1 June 2015 for the new regime to be applicable?  The legislation gives no clue.

One approach is to suggest that whenever the Crown Court makes or varies a confiscation order on or after 1 June 2015 the new regime applies.  I understand that to have been the government’s intention & there is a certain logic to it.

An alternative approach is to suggest that the new regime can only apply where the offence is committed on or after 1 June 2015.  The basis of that is an argument that the setting of the default sentence, and the confiscation proceedings in the Crown Court, are an integral part of the sentencing for the offence.  Since legislation cannot retrospectively impose a greater penalty for an offence than was in operation when the offence was committed, the old regime (it is argued) must apply if the offence was committed before 1 June 2015.

Which is the correct approach may become clearer over the coming months.

 

Pro-rata release

Questions have been raised as to whether early release of the defendant from his default sentence on the basis of part-payment still operates.  The short answer appears to be “Yes”.

Pro-rata release for part payment applies by virtue of a rather complex chain of statute law from s35(2) PoCA 2002 to s140(3) Powers of Criminal Courts (Sentencing) Act 2000 to s79(2) Magistrates’ Court Act 1980.  That chain of legislation is unaffected by the changes made by the Serious Crime Act 2015.

This means that, for example, a defendant who is given a 2 year default sentence in respect of an amount of £100,000 will have his sentence effectively reduced to one year if he makes payment which reduces the amount outstanding to £50,000.

[UPDATE: See a more detailed article about reductions for part payments HERE.]

 

Early release on licence

Similarly – but with one important exception – early release from a default sentence at the half-way stage on licence under s258 Criminal Justice Act 2003 continues to apply.

The exception is that the early release provision is disapplied where “the sum in question” exceeds £10m, see s10(3) SCA 2015.  It appears that “the sum in question” refers to the amount ordered to be paid by the confiscation order or any variation of that order, rather than to the amount currently remaining unpaid under the order (taking into account interest accrued & payments made).  In a sense therefore this provision creates a further tier of default sentence in respect of orders for sums in excess of £10m.

This disapplication of early release in respect of sums exceeding £10m applies where the default occurs on or after 1 June 2015 and so can apply where a confiscation order was made prior to the implementation of the new regime, see s86(2) SCA 2015.

 

Variation of the confiscation order

Application may be made in various circumstances by the defendant or by the prosecution to vary the confiscation order, for example where the available amount proves inadequate (s23), where new assets come to light (s22), or where accrued interest has increased the amount outstanding & the prosecution wish the court to consider increasing the default sentence (although in practice such applications are understood to have been rare).

 

Impact on future proceedings

It might be considered that the increased severity of default sentences under the new regime could have an impact upon the way that prosecutors pursue & settle confiscation proceedings.

For example it may prove to be the case that prosecutors will be less willing to settle confiscation proceedings by compromise agreement, or more willing to pursue assertions of ‘tainted gifts’ or ‘hidden assets’, in the hopes that heavier default sentences may strengthen their hand in negotiations prior to the making of an order & in persuading defendants (& perhaps their families or third parties) to disgorge assets to satisfy an order which has been made.

Similarly prosecutors might have greater expectation of reward from revisiting older PoCA 2002 confiscation orders & pursuing s22 applications.

 

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.)

UK Supreme Court rules on money laundering arrangements

Supreme Court logoThe UK Supreme Court recently ruled on the law relating to prosecutions for entering into, or becoming concerned in, an arrangement which facilitates the acquisition, retention, use or control of criminal property for, or on behalf of, another person – contrary to s328 Proceeds of Crime Act 2002.

The case arose as a result of the actions of a fraudster, referred to as ‘B’.

Shortly before commencing his fraud the defendant, referred to as ‘H’, opened two bank accounts and handed control of them to ‘B’ who then used them in connection with his frauds.  ‘B’ conned unsuspecting members of the public into making payments into these bank accounts (for services which in truth were non-existent).

The prosecution case was that ‘H’ must have known or at least suspected that ‘B’ had some criminal purpose even if he was not aware of the details of the con.  ‘B’ was convicted of fraud.  ‘H’ was charged with becoming concerned in an arrangement contrary to s328 PoCA 2002.

The Supreme Court was required to consider whether, in the circumstances alleged, ‘H’ could be guilty of a s328 offence – R v GH [2015] UKSC 24 (22 April 2015).

The Supreme Court broke the issue down into four key questions.  In addressing those questions it overturned some decisions of the courts below.

 

1  Must the property be ‘criminal property’ before the arrangement operates on it?

Counsel for the prosecution submitted to the Supreme Court that the same conduct could both cause property to become criminal and simultaneously constitute the offence charged under s328.  He made the same submission in relation to sections 327 and 329, correctly recognising that the three sections have to be construed coherently.

So, he submitted, a thief who steals “legitimate” property is necessarily at the same time guilty of “acquiring criminal property” contrary to s329.

The Supreme Court rejected that view, holding that it failed to recognise the necessary distinction between a person who acquires criminal property and one who acquires legitimate property by a criminal act or for a criminal purpose.

Sections 327, 328 and 329 are aptly described as “parasitic” offences because they are predicated on the commission of another offence which has yielded proceeds which then become the subject of a money laundering offence.

The Supreme Court therefore approved the decision of the Court of Appeal in an earlier case R v Geary [2010] EWCA Crim 1925 that to say that s328 extends to property which was originally legitimate but became criminal only as a result of carrying out the arrangement is to stretch the language of the section beyond its proper limits.  I have discussed the Geary case more fully in an earlier article on this blog.

However, for example, a thief who steals legitimate property might then commit a s329 money laundering offence by his possession or use of that property after his acquisition of it.

In practice such a thief should normally face a charge of theft rather than one of money laundering.  But the legal point that he may also be guilty of a money laundering offence is an important one because of the obligation on banks & others in the ‘regulated sector’ to report suspicions of money laundering under s330.

 

2  Must the ‘criminal property’ exist before the defendant joins the arrangement?

The Supreme Court agreed with the decision of the Court of Appeal in holding that it does not matter whether criminal property existed when the arrangement was first hatched.  What matters is that the property should be criminal property at a time when the arrangement operates on it.

It should be noted that the Supreme Court did not hold it to be necessary that the property should be criminal property at the time when the arrangement commences to operate on it.

The offence is complete when the arrangement becomes one which facilitates the acquisition, retention, use or control of criminal property for, or on behalf of, another person and the defendant knows or suspects this to be the case.

 

3  Were the monies ‘criminal property’ before being paid into the defendant’s bank account?

Counsel for the prosecution made a somewhat technical submission to the Supreme Court that the monies banked were criminal property at the time of payment because they represented a chose in action, namely the obligation of the purchasers of the supposed services to pay for them.

The Supreme Court were unimpressed by this submission, holding that there was a stark absence of material before the court to substantiate a case of this nature.

However the court did not close the door on such an argument being successfully presented in a future case.

 

4  Was the actus reus of the offence committed on the facts of the case?

Looking at the substance of the matter, the money paid by the victims into the accounts was lawful money at the moment at which it was paid into those accounts.  It was therefore not a case of the account holder acquiring criminal property from the victims.

But by the arrangement the respondent also facilitated the retention, use and control of the money by or on behalf of ‘B’.  Did the arrangement regarding the facilitation of the retention, use and control of the money fall foul of s328 on the basis that it was criminal property at that stage, since it was the proceeds of a fraud perpetrated on the victims?

In this case the character of the money did change on being paid into the defendant’s accounts.  It was lawful property in the hands of the victims at the moment when they paid it into the defendant’s accounts.  But it then became criminal property in the hands of ‘B’, not by reason of the arrangement made between ‘B’ and the defendant, but by reason of the fact that it was obtained through fraud perpetrated by ‘B’ on the victims.

There was a crucial difference therefore between this case and the situation in Geary (in which the arrangement itself had been the reason that the property in question became criminal property).

The Supreme Court (overturning the decision of the Court of Appeal) held that there was no artificiality in recognising that change in character of the money, and that it would be appropriate to regard the defendant as entering into or becoming concerned in an arrangement to retain criminal property for the benefit of another.

It was the retention, use & control of the monies after they had been paid into the bank accounts as the result of a fraud, under the bank account arrangement made earlier between ‘B’ & ‘H’, which could properly form the basis of a conviction of ‘H’ under s328.

 

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(Note: This article applies to prosecutions under the provisions of Part 7 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 trial 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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