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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.)

Appealing out of time after a change of law

When the law changes can an appeal be made to the Court of Appeal outside the normal time limits?

Normally an appeal against a decision of the Crown Court in England and Wales has to be submitted within 28 days of the decision. But the Court of Appeal can give leave for an appeal to be heard where the deadline has been missed – and has done so in some cases where the deadline has been missed by months or even years.

Where a defendant has suffered a decision which, though it appeared to be well founded at the time it was made, now appears to be incorrect in the light of subsequent case law, what is the position regarding the submission of an appeal out of time?

This is an issue which arises from time to time – and may be particularly topical following the decision of the UK Supreme Court in the case of R v Waya [2012] UKSC 51.

 

The general rule

The general rule is that the Court of Appeal will not allow an appeal to be made out of time if the only reason for the appeal is that subsequent cases have shown the previous perception of the legal position was mistaken.

This was set out many years ago in the case of R v Mitchell [1977] 65 CAR 185 when it was said that, “It should be clearly understood, and this court wants to make it even more abundantly clear, that the fact there has been an apparent change in the law or, to put it more precisely, the previous misconceptions about the meaning of a statute have been put right, does not afford a proper ground for allowing an extension of time in which to appeal against conviction”.

That rule has been reiterated many times since.  See, for example, the comment, “alarming consequences would flow from permitting the general re-opening of old cases on the ground that a decision of a court of authority had removed a widely held misconception as to the prior state of the law” from the case of Ramsden [1972] Crim LR 547 and repeated, with approval, in the case of R v Ramzan & Others [2006] EWCA Crim 197 at paragraph [30].

In the case of R v Cottrell [2007] EWCA Crim 2016 it was said, at paragraph [42], “there is a continuing public imperative that so far as possible there should be finality and certainty in the administration of criminal justice.  In reality, society can only operate on the basis that the courts administering the criminal justice system apply the law as it is.  The law as it may later be declared or perceived to be is irrelevant”.

But there have been exceptions made to the general rule.

 

Substantial injustice

It does appear to be the case that where the Court of Appeal can be satisfied that a defendant has suffered a substantial injustice then it can be persuaded to hear an appeal out of time. In the case of Hawkins [1997] 1 Cr.App.R 234 the Court of Appeal commented that “the practice of the Court has in the past, in this and comparable situations, been to eschew undue technicality and ask whether any substantial injustice has been done”.
So, for example, where a defendant has been convicted of an offence of which, under a new understanding of the law, he could not now be found guilty – but the evidence shows that he must have been guilty of another similar offence (of which he had not been charged), then the Court of Appeal will generally not allow an appeal to be heard out of time. This was the position of a Mr Malik who had been convicted of conspiracy to launder money prior to the ruling in R v Saik [2006] UKHL 18 (which changed the law regarding the conspiracy offence where there was merely a suspicion that monies were proceeds of crime). The Court of Appeal considered that there was ample evidence of the substantive offence of money laundering in Mr Malik’s case and refused him leave to appeal his conviction out of time.

In R v Charles [2001] EWCA Crim 1755 the Court of Appeal said, at paragraph [41], “In practice judges and courts are probably not as reluctant to grant extensions of time as the authorities may suggest. It has been the experience of the members of this Court that consideration will usually be given to the merits before declining to grant an extension of time. Both in Jones (No. 2) and Asraf, the merits were considered notwithstanding the absence of any proper explanation for the delay. There are some cases, such as those where the applicant wishes to rely on fresh evidence unavailable at trial, where the extension of time will be readily granted. There are cases such as those envisaged in Hawkins where it will not be”.

 

Failure to address a key issue

Perhaps slightly different are cases where, because the law was not properly understood at the time, a key issue in the proceedings was not recognised and addressed in the Crown Court. This is illustrated by the case of Bell & Others v R [2011] EWCA Crim 6.

Mr Bell was subject to a confiscation order made in 2007 after he had been convicted of being knowingly concerned in the fraudulent evasion of the duty chargeable on cigarettes contrary to section 170(2)(a) Customs and Excise Management Act 1979. The confiscation order was based on the amount of duty evaded when the cigarettes in question had been smuggled into the UK. But in fact it does not follow that a person committing this offence is himself liable for the duty and thus has ‘obtained’ a pecuniary advantage which would form the basis for a confiscation order. That had not been appreciated by the Crown Court at the time the confiscation order was made. In consequence the Crown Court had not addressed the question of whether Mr Bell was himself liable for the evaded duty and evidence relevant to that issue had not been obtained.

Subsequently the Court of Appeal had decided the case of White & Others v The Crown [2010] EWCA Crim 978 which highlighted this issue. Mr Bell then lodged an appeal against the confiscation order made against him three years earlier.

Before the Court of Appeal it was accepted that, in fact, Mr Bell had not been personally liable for the evaded duty. The Court of Appeal granted leave to appeal the confiscation order out of time because “it would be a grave injustice not to grant leave”.

In place of a benefit of £157,775 based on the evaded duty, Mr Bell was made subject to a confiscation order of just £950 based on the payment he had received for his role in the smuggling offence.

 

The impact of R v Waya

We have yet to see whether the Court of Appeal will grant leave to appeal confiscation orders out of time following the decision of the UK Supreme Court in the case of R v Waya [2012] UKSC 51.

The Waya case decided two points of principle: (1) confiscation orders should not be ‘disproportionate’ because that would infringe Article 1 of the First Protocol to the European Convention on Human Rights and (2) a mortgage applicant does not ‘obtain’ a mortgage advance (for confiscation purposes) if that advance is simply paid to a solicitor, acting on behalf of both the applicant and the lender, and then remitted to the vendor of the property being purchased (or his solicitor) – because the mortgage applicant does not at any stage gain ‘control’ of the monies advanced.
It may be that defendants who have been subject to a confiscation order which they consider is more severe than the Crown Court would have made had the decision in Waya been available at the time will now seek to appeal their orders. It will be very interesting to see how such appeals are dealt with by the Court of Appeal.

David

EDIT: A further article on the subject updates the position: Appealing a confiscation order out of time.

(Note: This article applies to confiscation orders 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 order 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.)

Just how is PoCA confiscation supposed to work?

The UK Supreme Court recently heard 3 days of complex legal submissions about a straightforward confiscation case.  Four eminent counsel suggested half a dozen wildly differing figures for the benefit arising from a single mortgage fraud.  Obviously the operation of confiscation under Part 2, Proceeds of Crime Act 2002 is neither simple nor straightforward.  There is a conspicuous lack of clarity and certainty in the confiscation regime.

The appellant, Mr Waya, contested the finding of the Court of Appeal that he pay £1.11 million – R v Waya [2010] EWCA Crim 412.  That was a reduction on the figure originally ordered in the Crown Court of £1.54 million.  His counsel suggested the correct figure was nil – or on an alternative basis it might be £0.255 million.  Counsel for the prosecution contended the Court of Appeal had the correct figure.  But counsel for the Home Department proposed a figure of £0.6 million and counsel for the Attorney General put the figure at £1.0 million.  Each of these figures was said to be based on applying the same statute law to the undisputed facts of the case.

Mr Waya dishonestly obtained a mortgage advance which he used to purchase a flat.  The flat went up in value . . .

The facts are these.  Mr Waya dishonestly obtained a mortgage advance which he used to purchase a flat.  The flat went up in value.  He legitimately obtained a new and larger mortgage, repaying the first mortgage in full.  The flat continued to increase in value.  Mr Waya was convicted of mortgage fraud (in relation to the original mortgage), or more accurately he was convicted of obtaining a money transfer by deception contrary to s15A Theft Act 1968, and was then subject to confiscation under PoCA 2002.  The sole question before the court was the amount of his benefit from the mortgage fraud (referred to as the benefit of his ‘particular criminal conduct’).

There were striking differences of principle in the approach of different counsel to the interpretation of PoCA 2002 as well as some different interpretations of the facts of the case.

 

The submissions of Mr Waya’s counsel

Mr Waya’s counsel put forward four alternative arguments.  Firstly he said that, on careful consideration of the facts, Mr Waya had not obtained anything when the mortgage was advanced since he had never been in control of the monies advanced.  He was never in a position to use the monies for whatever he might have wanted (they could only be used towards the purchase cost of the flat).

Secondly, Mr Waya (if he did obtain something) had obtained something of no market value.  He had not obtained a gift, he had obtained a loan.  The obligation to repay was integral to the money transfer – and the market value of the combination of the monies advanced to him and the repayment obligation was nil.  This result flowed from s79(3) PoCA 2002.

The courts should not take a ‘snapshot’ view but instead “the entirety of the transaction” had to be considered

Thirdly the courts should not, Mr Waya’s counsel contended, take a ‘snapshot’ view (considering only what happened when the mortgage was advanced) but instead “the entirety of the transaction” had to be considered.  The lender had been repaid in full and had lost nothing as a consequence of Mr Waya’s dishonesty.  So, looking at the entirety of the transaction, there was no benefit for the purposes of confiscation.

Fourthly, as a final alternative, the courts should look to the ‘pecuniary advantage’ derived by Mr Waya in accordance with s76(5).  He had been assisted in the purchase of the flat which had subsequently increased in value.  His counsel had calculated the value of his ‘pecuniary advantage’ to be £255,000.

The House of Lords had taken a wrong turning many years ago when it was said that “subsequent events are to be ignored”

Mr Waya’s counsel conceded that his proposal that the court should look to “the entirety of the transaction” rested on his view that the House of Lords had taken something of a wrong turning many years ago in the confiscation case of R v Smith [2001] UKHL 68 when it was said at para [23] that “subsequent events are to be ignored”.  That may be correct where, in the drug trafficking legislation, the benefit for confiscation purposes was to be based on the ‘payment or reward received’ – but it was not the correct approach to confiscation under the Criminal Justice Act 1988 or PoCA 2002 provisions where benefit was based on what had been ‘obtained as a result of or in connection with the criminal conduct’.

In consequence, it was contended, very many confiscation cases had been wrongly decided by courts at every level in England & Wales since that time.

 

The submissions of other counsel

Counsel for the prosecution, on the other hand, contended that the Court of Appeal had come to the correct conclusion in respect of Mr Waya’s confiscation.  Furthermore, with a very few exceptions, appeal courts had come to correct conclusions in confiscation cases over the years.  It was right to ignore subsequent events.  In particular the Court of Appeal had correctly decided in the case of CPS v Rose [2008] EWCA Crim 239 that s79(3) should not have the effect of causing the victim’s interest in any property to reduce the defendant’s benefit in confiscation in connection with his criminal conduct – although there are no words to that effect in the statute.

A defendant should not be entitled to rely on his own crime to limit the benefit of that crime for the purposes of confiscation

Counsel for the Home Department and for the Attorney General suggested a slightly different principle to be drawn from the Rose case.  This was that a defendant should not be entitled to rely on his own crime to limit the benefit of that crime for the purposes of confiscation.  In consequence, it was contended a thief or handler of stolen goods was to be treated as if he had obtained the value of good title to the stolen goods and where, as a result of criminal conduct, property had been obtained jointly by offenders then each of them was to be treated as obtaining the value of the whole of the property jointly obtained.  Again, of course, there are no words to that effect in the statute.

It will probably be 2 or 3 months before we will learn the Supreme Court’s decision in this case.  [UPDATE – Judgment in the Waya case was handed down on 14 November 2012, see below.]  But whatever that decision is I suggest that there will continue to be serious difficulties with the practical application of the confiscation regime – not least because this case did not touch at all on the consequences of the statutory ‘criminal lifestyle’ assumptions.

David

P.S. I have prepared a summary of the detailed legal submissions by counsel to the UK Supreme Court in R v Waya which is on Criminal Solicitor Dot Net HERE.

UPDATE:

The Supreme Court has handed down its judgment in the case, which is discussed in a new blog post R v Waya – the UK Supreme Court judgment.

Confiscation – under PoCA 2002 or earlier legislation?

When confiscation proceedings are initiated in the Crown Court in England and Wales following the conviction of a defendant an issue can arise as to whether those confiscation proceedings should be under the Proceeds of Crime Act 2002 or earlier legislation.

On the face of it there should be no difficulty.  This is because article 3(1) of The Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003 SI 2003 No 333 says:

“Section 6 of the Act (making of confiscation order) shall not have effect where the offence, or any of the offences, mentioned in section 6(2) was committed before 24th March 2003”.

In addition article 1(3) says:

“Where an offence is found to have been committed over a period of two or more days, or at some time during a period of two or more days, it shall be taken for the purposes of this Order to have been committed on the earliest of those days”.

if any of the offences of which the defendant has been convicted occurred, or commenced, before 24 March 2003 the confiscation should be under the earlier legislation

So it would appear that if any of the offences of which the defendant has been convicted in the proceedings occurred, or commenced, before 24 March 2003 then the confiscation should be under the earlier legislation.

So, in the case of R v Lazarus [2004] EWCA Crim 2297, the defendant appealed a confiscation order made under PoCA 2002 on the basis that one of the offences of which he had been convicted related to being concerned in the supply of cocaine between 1 December 2002 and 7 May 2003.  The Court of Appeal quashed the confiscation order made under PoCA 2002 but substituted a confiscation order under Drug Trafficking Act 1994.

However the matter is not always that straightforward.

In the case of R v Stapleton [2008] EWCA Crim 1308 the Court of Appeal considered another appeal against a confiscation order made under the ‘wrong’ statute.  The confiscation had been conducted under PoCA 2002 although the defendant had been convicted of six Theft Act 1968 offences in all, two of which occurred prior to 24 March 2003.  Ordinarily, in these circumstances, confiscation should have been under the provisions of the Criminal Justice Act 1988 (as amended by the Proceeds of Crime Act 1995).   Nevertheless the Appeal Court held the PoCA 2002 confiscation order to be valid because the Crown had not relied in the confiscation proceedings upon the convictions for the offences which pre-dated the introduction of the PoCA 2002 confiscation provisions.

However it seems to me that the Court of Appeal did not suggest that, in such circumstances, it was preferable for the proceedings to be conducted under the PoCA 2002 provisions.

a convicted defendant may be potentially disadvantaged by the use of the PoCA 2002 provisions

Also, in my view a convicted defendant may be potentially disadvantaged (arguably unfairly) by the use of the PoCA 2002 provisions, rather than earlier legislation, in two respects:

(1)   Under s11 PoCA 2002 the Crown Court has very limited scope to postpone the due date for payment of any sum due under a confiscation order, whereas there is no corresponding statutory time limit under CJA 1988 or under DTA 1994; and

(2)   Under s22 PoCA 2002 a court may take into account, at a later hearing, assets legitimately acquired after the date of the confiscation order and recalculate the defendant’s ‘available amount’, whereas there is no corresponding provision under CJA 1988 (but note that there is a corresponding provision by s16 DTA 1994).

It might therefore be said that the defendant will be unjustly disadvantaged if the Crown are permitted to proceed under PoCA 2002 in the face of the natural meaning of the transitional provisions where the defendant has been convicted in the proceedings of one or more offences which pre-date 24 March 2003.  It could be argued that the use of PoCA 2002 provisions in such circumstances amounts to retrospective application of legislation, possibly in breach of the convicted defendant’s human rights.

Where a defendant is unable to satisfy a confiscation order by the due date – which cannot be later than 12 months from the date of the order under PoCA 2002 – interest commences to run on the amount outstanding at the rate applicable to civil judgment debts (s12 PoCA 2002, s75A CJA 1988, s10 DTA 1994).  The judgment debt interest rate remains at 8% per annum, which is out of line with current commercial interest rates.

there may be a case for arguing that an order made under PoCA 2002 should be replaced

So there may be a case for arguing that an order made under PoCA 2002 should be replaced by an order of a similar amount made under earlier legislation where one or more of the offences of which the defendant has been convicted in the proceedings occurred, or commenced, prior to 24 March 2003.

The Court of Appeal has also had occasion to deal with an error of the opposite type.  In the case of R v Bukhari [2008] EWCA Crim 2915 the defendant appealed against a confiscation order made under CJA 1988 provisions following convictions for offences which occurred after 23 March 2003.  The Court of Appeal quashed the order under CJA 1988 and substituted a confiscation order for the same amount under PoCA 2002.

Ultimately it does appear therefore that a convicted defendant will not be able to escape the consequences of confiscation even where initially the court makes the confiscation order under the ‘wrong’ legislation.

David