Source: http://www.accountingevidence.com/blog/tag/supreme-court/
Timestamp: 2019-04-26 01:50:22+00:00

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On 24 January 2018 the UK Supreme Court handed down its judgment in R (Gibson) v Secretary of State for Justice  UKSC 2. As a result of this judgment there will be slightly more generous reductions in default sentences to be served where part of the amount due under a confiscation order has been paid. It may be that in its determination of what the statute law actually says the Supreme Court has found that the law in this area is more generous to convicted defendants than parliament had intended it to be.
Mr Gibson had been made subject to a confiscation order of over £5.4m in March 2000. He was ordered to pay this within 12 months, with a six year prison term in default. Perhaps not surprisingly Mr Gibson did not pay the amount in full on time and from March 2001 interest started to be added, at the rate of 8% per annum, on the amount outstanding.
In fact only relatively small amounts were paid under the confiscation order. By the time the Magistrates’ Court committed Mr Gibson to prison under the default sentence only £90,370 in total had been paid – but the interest added to the amount originally ordered to be paid had resulted in the total amount outstanding rising to over £8.1m.
The original default term had been six years, or 2,190 days. There was no doubt that Mr Gibson was due some reduction in this because he had paid £90,370 off the order. But should the reduction be calculated as a proportion of the original amount ordered of £5.4m or as a proportion of the amount now outstanding of £8.1m?
Originally the calculation was made based on the £8.1m. That resulted in a reduction of 24 days in the default term. But Mr Gibson wanted the calculation to be based only on the original £5.4m – which instead would result in a reduction of 35 days. Mr Gibson commenced legal proceedings to get the extra reduction in his default sentence.
The law on the point is not particularly clear. Mr Gibson originally lost the argument in the Administrative Court. He appealed to the Court of Appeal – and lost again. But in January 2018 the Supreme Court decided in Mr Gibson’s favour. As a result he is entitled to the extra 11 days reduction in his default sentence.
This decision applies in every case (in England and Wales) in which a default sentence has been activated by the Magistrates’ Court, interest has been added to the amount outstanding, and there needs to be some reduction in the default sentence as a result of part of the confiscation order having been paid.
The effect of the decision is that the reduction for the part payment is to be calculated based on the original amount ordered to be paid when the confiscation order was made – not on the amount (including interest) which is outstanding when the Magistrates’ Court activates the default sentence.
Let’s take a simpler example. John is subject to a confiscation order in the sum of £150,000 with a default sentence of 30 months. He has paid £15,000 under the order, but interest of £5,000 has been added. When John is being committed to prison under the default sentence the balance outstanding is £140,000 (including the interest).
John’s default term will be reduced by 3 months (which is 10% of the original default term) because he has paid £15,000 (which is 10% of the original confiscation order amount of £150,000). So he will be committed to prison for 27 months (3 months less than the original default term of 30 months). In practice the default sentence would be calculated in days rather than months.
When calculating the reduction in the default sentence the interest is ignored.
Is this what parliament intended?
It seems doubtful that this is what parliament intended. One effect of this decision appears to be that a default sentence cannot be activated where the remaining balance outstanding is less than the total interest which has been added.
Consider the example of Peter who was originally the subject of a confiscation order for £60,000 with a default sentence of 18 months. Peter does not pay on time and interest of £5,000 has been added. The amount outstanding is now £65,000 – but if Peter pays just the original £60,000 off then he cannot be committed to prison under the default sentence, even though the £5,000 interest is still outstanding. This is because there is a 100% reduction in the default sentence because he has paid 100% of the original amount of the confiscation order.
Of course parliament can change the law by passing new legislation if it wishes.
The revisiting of old confiscation orders by prosecutors under section 22 Proceeds of Crime Act 2002 is becoming more frequent.
This blog post considers the provisions of s22 and ways in which prosecution applications under s22 may be challenged by the defendant.
This blog article does not consider variations to confiscation orders made under earlier legislation, such as the Criminal Justice Act 1988, Drug Trafficking Act 1994 or Drug Trafficking Offences Act 1986. Different rules apply under those Acts.
Nor are we considering the position of a person who has a new conviction and a new confiscation order is being made as a result of that.
We are considering the situation of a defendant who was made subject to a confiscation order, perhaps some years ago, at which time the court ruled that he had a figure of benefit which was higher than his available amount. At that time the court would not have ordered him to pay the full amount of his benefit. Instead the amount he was then ordered to pay would have been restricted to his available amount at that time. The figures of the defendant’s benefit, available amount and the amount he was ordered to pay should all be spelled out in the original confiscation order.
Under s22 the prosecutor asks the court to consider the available amount which the defendant has now and to order him to pay a further amount now towards his total benefit.
Let’s consider Jim’s case. Jim was subject to a confiscation order in September 2008. That order says that Jim’s benefit was £100,000 and his available amount was £500. Jim was ordered to pay £500 which he has paid. Today Jim owns a house with his wife. The house is worth £200,000 but there is a mortgage of £180,000. So Jim’s half share is worth £10,000. Jim also has a car worth £6,000 but no other assets, so Jim’s total available amount today is £16,000.
The prosecution can ask the court under s22 to order Jim to pay a further £16,000 (or some other figure) by making a variation to the confiscation order made in September 2008, requiring a further payment now.
(b) does not exceed the amount found as the defendant’s benefit from the conduct concerned“.
The ‘trigger’ is in the first phrase – “If the amount found under the new calculation exceeds the relevant amount“. What that means is that a s22 variation can only be made where the defendant’s available amount now exceeds the available amount shown on the original confiscation order.
In Jim’s case it obviously does (£16,000 is more than £500) and so the court can consider making an order requiring a further payment from Jim now.
Under s22 a court may “vary” an existing confiscation order – but it does not “make” a confiscation order. The legislation does not regard a variation to amount to the ‘making’ of an order. This can be seen most clearly in the differing provisions regarding default sentence when a court “makes” an order – see s35 – and when a court “varies” an order – see s39.
It follows that an order which has been varied under s22 is an order which was ‘made’ at the time of the original confiscation hearing, not at the time of the variation.
In Jim’s case the confiscation order was made in September 2008 when RPIJ stood at 209.8. The latest figure (May 2016) is 240.1.
So uplifting Jim’s benefit of £100,000 it becomes equivalent to £114,442 and his original available amount of £500 becomes equivalent to £572 today.
So, strictly speaking, the trigger condition is whether £16,000 exceeds £572 – which of course it does.
The prosecutor will most likely ask the court to vary the original confiscation order so that Jim’s amount to pay is £16,500 – that is the £500 which he has already paid plus a further £16,000 payable now.
The prosecutor will point out that this amount (which when adjusted for changes in the value of money is equivalent to £16,572) is less than Jim’s total benefit (which when adjusted for changes in the value of money is £114,442).
An application under s22 is made by the prosecutor (or an enforcement receiver appointed under s50). It would appear that the burden of proof is on the applicant to provide information enabling the court to make a “new calculation” of the defendant’s available amount.
This contrasts with the position when the confiscation order was originally made (at which time the burden was on the defendant to show that his available amount was less than his benefit, by virtue of s7).
Under s22(4) the court is to vary the amount to be paid to an amount which the court “believes is just.” What does that mean?
What is ‘just’ does not only mean what is ‘just’ for the defendant. The concept has regard to the legitimate interests of both sides.
I suggest that part of the process of deciding what is ‘just’ involves looking back at the figure of benefit previously decided by the court and considering whether that figure, in the light of subsequent legal developments, is either faulty because it was based on a misunderstanding of the law (as may have arisen, for example, in a case of mortgage fraud), or is an amount which it would now be considered disproportionate to order the defendant to pay in full (as may be the case, for example, where stolen property has been returned to its owner).
That will involve some detailed reconsideration of the basis on which the original confiscation order was made, which may involve re-examination of the basis of prosecution’s assertions regarding benefit which were set out in the original s16 statement insofar as the court accepted those assertions when making the confiscation order.
Where, in the light of the relevant law as it is understood today, the defendant would not now be ordered to pay an amount based on the whole of the benefit shown in the original confiscation order then, I suggest, it would not be ‘just’ to order a defendant to pay that amount now under s22.
So it is necessary, in my view, to consider the impact of case law such as R v Waya  UKSC 51 (proportionality and confiscation, mortgage fraud), R v Ahmad  UKSC 36 (recovery from co-defendants), R v Harvey  UKSC 73 (VAT and confiscation) and Boyle Transport (Northern Ireland) Ltd v R  EWCA Crim 19 (piercing the corporate veil) on the understanding of confiscation law, when considering an application under s22.
This does not mean that the defendant is appealing against the benefit figure in the original confiscation order. He is asking the court to consider what it would be ‘just’ for him to be ordered to pay now under s22.
More broadly the court appears to have a discretion under s22 to consider what amount, in all the circumstances, it believes it would be ‘just’ for the defendant to be ordered to pay.
When the court is considering a variation to a confiscation order under s22 then – once the trigger condition has been satisfied – the court may order the defendant to pay a further amount of any size, large or small, so long as the total which the defendant is required to pay under the confiscation order (adjusted for changes in the value of money) does not exceed the total of his benefit (adjusted for changes in the value of money).
Strictly speaking, the only relevance of the defendant’s current available amount is in relation to determining whether the trigger condition is satisfied. In practice however the prosecutor is likely to suggest that it would be just for the defendant to be ordered to pay an additional amount which is the lesser of (a) his current available amount, and (b) the maximum which the defendant could be ordered to pay in relation to his total benefit.
Section 22 does not make express provision for a prosecutor’s statement in support of an application for a variation of a confiscation order. There are no express provisions akin to those found in s16.
Equally there are no express provisions akin to sections 17, 18 and 18A requiring statements or information from the defendant or third parties.
Nevertheless the prosecutor (or enforcement receiver) will need to make a written application to the court and the likelihood is that he will append to that a witness statement which will be in some respects similar to a s16 statement. Rule 33.16 Criminal Procedure Rules 2015 applies to the service of the application and any supporting witness statement. It is likely that the defendant will want to respond to the application by way of a statement of his own before the court hearing.
The prosecutor is entitled to apply for a restraint order, under s40(6), when a s22 application is to be made or has been made.
Where the court makes a restraint order it may also require the subject of the restraint order to supply information under s41(7) for the purpose of ensuring that the restraint order is effective.
However it appears that the investigation powers under Part 8 of PoCA 2002 are not available to a prosecutor applying for a s22 variation, because a s22 application does not appear to involve a ‘confiscation investigation’ as defined by s341(1).
There could be some debate as to whether a s22 investigation is an investigation into “the extent or whereabouts of realisable property available for satisfying a confiscation order made” in respect of the defendant, referred to in s341(1)(c). My own view is that “satisfying a confiscation order made” refers to full payment of the amount ordered to be paid under the original confiscation order which has been made, rather than referring to satisfying a variation of that confiscation order which is (perhaps) to be made. If that is the case, and if the original confiscation order has been paid in full, then the s22 investigation would, in my view at least, not fall within s341(1) with the result that the Part 8 investigation powers would not be available to a financial investigator acting for the prosecutor.
There is no statutory time limit. This means that a s22 application may be made many years after the original confiscation order was made.
A s22 application may be subject to a variety of challenges by the defendant.
The defendant may assert that the trigger condition has not been satisfied. Take the example of Bert who was subject to a confiscation order made in February 2012. In that order his benefit was held to be £90,000 and his available amount was £40,000. Bert was ordered to pay £40,000 which he has paid. The prosecutor now finds that Bert has £25,000 in a bank account in his sole name. Bert has no other assets, so his available amount now is £25,000.
The RPIJ in February 2012 was 225.8. The latest figure (May 2016) is 240.1.
So uplifting Bert’s benefit of £90,000 it becomes equivalent to £95,699 and his original available amount of £40,000 becomes equivalent to £42,533 today.
So, strictly speaking the trigger condition is whether £25,000 exceeds £42,533 – which of course it does not.
It follows that the trigger condition is not satisfied and the court should not order Bert to pay a further amount now under s22.
A second area of challenge concerns the defendant’s available amount. Consider Charles who, according to Land Registry records, is the sole legal owner of Rose Cottage. The prosecutor values Rose Cottage at £250,000. There is an outstanding mortgage of £150,000. The prosecutor therefore asserts that Charles has an available amount of £100,000.
Charles may challenge this on the basis that he is not the sole beneficial owner of Rose Cottage and that the current value of Rose Cottage is less than £250,000. That challenge may have a bearing on whether the trigger condition is satisfied and on the value of Charles’ current available amount – with obvious implications for any amount which Charles may be ordered to pay now as a result of the s22 application.
A third area of challenge concerns what might loosely be described as ‘change of law’. In 2005 Peter was convicted of mortgage fraud in that he had purchased a house with a mortgage of £100,000 which he had obtained by giving false information on his mortgage application. Peter was subject to confiscation with a benefit of £100,000 (the amount of the mortgage advance) and an available amount of £20,000. He was ordered to pay £20,000 which he has paid. Peter now has £50,000 in a bank account in his sole name but no other assets (so his available amount is £50,000). He is subject to a s22 application.
Peter may challenge the application on the basis that it would not be ‘just’ to order him to pay £50,000 under s22 as, on a proper and just interpretation of the legal position, he did not ‘obtain’ the mortgage advance and, in any event, the mortgage advance has since been fully repaid to the lender.
The court would then have to consider what further sum, if any, it would be ‘just’ to order Peter to pay under the confiscation order. That may involve consideration of the price for which Peter ultimately sold the mortgaged property.
A fourth possible area of challenge concerns prosecution delay and Article 6(1) of the European Convention on Human Rights. Consider the case of Derek who was subject to a confiscation order in 2006. The court then found he had a benefit of £175,000 and an available amount of £25,000. He was ordered to pay £25,000 which he has paid. In 2011 the prosecution discovered that Derek was the sole owner of a property worth £200,000 which he had inherited from his father who died in 2009. No action was taken by the prosecution at the time. The file was reviewed in 2016 and an application was then made under s22.
Derek may challenge the application on the basis that it infringes his Article 6(1) rights in that the prosecutor has not brought the s22 application to court “within a reasonable time”.
Fifthly, a s22 application may be challenged on the basis that, taking everything into consideration, it would be simply unjust to order the defendant to make any further payment now – or that it would be unjust to require him to pay the full amount requested by the prosecution. It might be argued, for example, that it would be just for the defendant to be ordered an amount based on his bank balance but not any part of the value of the equity in his home or the value of assets he uses in his legitimate business. However such an argument would have to overcome the clear legislative policy in favour of maximising the recovery of the proceeds of crime, even from legitimately acquired assets.
There may be other bases on which a s22 application may be challenged.
The provisions of s22 permit the court to vary the amount to be paid under the confiscation order, but do not expressly authorise the court to vary the original default sentence (which will have been based on the original amount payable).
Section 35 authorises the court to set a default sentence when it “makes a confiscation order”, not when it varies one. However 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 of a default sentence applicable in relation to the order under s139(4) Powers of Criminal Courts (Sentencing) Act 2000.
Unfortunately when s35 was amended by s10 Serious Crime Act 2015 corresponding amendments to s39 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.
In other words, when considering a default term in the context of a s22 variation it is as if the changes to default sentences made by the Serious Crime Act 2015 had never happened.
Strictly speaking, s22 does not authorise the court to vary the due date for payment. Under s11 this is closely tied to the date on which the confiscation order is “made” (not the date on which it is varied under s22). Under s12 the defendant must pay interest on any amount which is not paid when it is required to be paid.
However it would appear to be a nonsense to charge interest, backdated to the date on which the confiscation order was originally made, on an additional amount. Such an interest charge might be considered to infringe the defendant’s rights under Article 1 of the First Protocol of the European Convention on Human Rights.
After a confiscation order has been varied under s22 is it possible to revisit it again at a later date? The short answer is ‘Yes’.
However on a subsequent revisit the ‘trigger’ condition will be interpreted as comparing the defendant’s current available amount with his available amount as determined on the most recent occasion on which an application was made under s22.
It seems clear that a defendant can appeal against a s22 variation where he considers the variation to have been wrong in principle or manifestly excessive (see Padda referred to above).
On the other hand, it does not appear that a prosecutor is able to appeal against the amount by which the court decides to vary a confiscation order on a s22 application, or a decision not to make any variation – but he is able to make a fresh application under s22 at a later date.
There are a number of matters which will need to be carefully considered by prosecution and defence in connection with a prosecutor’s application under s22 for reconsideration of a defendant’s available amount.
In 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.
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)  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.
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.
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.
Since the UK Supreme Court decision in R v Waya  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”.
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.
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.
The UK Supreme Court in Waya gave examples of what it would regard as proportionate in the context of confiscation.
(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.
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.
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?‘).
Confiscation & compensation – double trouble?
For 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  EWCA Crim 1731.
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.
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  EWCA Crim 644 and of Davenport v R  EWCA Crim 1731. Both of these judgments post-date the UK Supreme Court decision in the case of R v Waya  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 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.
Once 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.
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  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.
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 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).
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.
The 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  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  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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