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PLC - Chapter 2 - Basic principles of confiscation law
Chapter 2 - Basic principles of confiscation law
Confiscation Law Handbook Resource type: Chapter
This is a chapter from the Bloomsbury Professional book Confiscation Law Handbook, which is a practical guide to all the major areas of confiscation law. It reviews the issues relevant to criminal law professionals and the confiscation provisions of the Proceeds of Crime Act 2002 (POCA), including the growing area of civil recovery provisions. It is an easy to use reference aid, enabling the reader to quickly identify relevant case law.
This chapter, the table of contents and the index are FREE to view, as a sample of the book's contents. To view the other chapters, please subscribe to Books online.
Chapter 2 Basic principles of confiscation lawTable of ContentsContents SummaryThe basic provisionsWhat are the requirements for a confiscation order to be made?Criminal lifestyleThe defendant's benefitRelevant benefitCriminal conductWhen does a person benefit from criminal conduct?Pecuniary advantage and conductPecuniary advantageValue of the benefitValue of property obtained from criminal conductValue of the property obtained by the defendantGeneral criminal conductParticular criminal conduct When does conduct form a part of a course of criminal activity?Offences committed before 24 March 2003The assumptionsDate of convictionWhat is the recoverable amount?What is the available amount?Priority obligationsTainted giftsRelevant dayTransfers at an undervalueValue of tainted giftsThe value of property held by the recipient (tainted gifts)Hidden assetsTime for paymentImprisonment in defaultInterestEffect of the confiscation order on the court's other powersPostponement of confiscation proceedingsPostponement pending appeal against convictionAbuse of processSummaryWill an order be made?Burden and standard of proof?PostponementTable of definitions'Life is not fair. Get used to it.'
Bill GatesContents SummaryBreakdown of POCA 2002, ss 6–14 of POCA 2002 – the making of the order – the recoverable amount – the defendant's benefit – the available amount – assumptions to be made in case of a criminal lifestyle – time for payment – interest – effect on sentencing – postponement of proceedingsThe basic provisions
The making of the order
Sets out the steps that must be taken for the order to be made.
The amount that the defendant will be ordered to pay.
Defendant's benefit
What constitutes benefit.
Those assets that can be considered by the court as recoverable – some obligations have priority over a confiscation order.
Assumptions to be made in case of a criminal lifestyle
These are assumptions that will made by the court about the defendant's assets and transactions in the event he is found to have a criminal lifestyle. The assumptions are potentially rebuttable by the defendant.
Payment is due upon the making of the order but can be deferred in certain circumstances.
Interest is due on sums unpaid when the order is due for payment.
Effect on the court's other powers
The court must deal with confiscation before imposing a fine or certain other orders involving the defendant's assets.
Proceedings may be postponed for up to 2 years. If there are 'exceptional circumstances' this period may be extended.
What are the requirements for a confiscation order to be made?2.1 POCA 2002, s 6 can be broken down into the following elements:1	A mandatory requirement for the Crown Court to proceed if the elements are satisfied.2	Proceedings must be in the Crown Court, either as a result of conviction, sentence or committal to the Crown Court for the purpose of confiscation proceedings.3	The prosecutor must ask the Court to proceed, or the court can proceed of its own motion.4	The court must decide whether the defendant has a criminal lifestyle, and if so whether he has benefited from his general criminal conduct. If he does not have a criminal lifestyle the court must decide whether he has benefited from his particular criminal conduct.5	If the court decides that the defendant has benefited from either his general or particular criminal conduct it must decide the recoverable amount and make an order requiring him to pay that amount.6	If the victim of the conduct intends to start proceedings against the defendant in respect of loss, injury or damage sustained in connection with the conduct, 5 above is not a duty but a power of the court.7	The court decides the defendant's benefit and whether he has a criminal lifestyle on the balance of probabilities.8	An order cannot be made if the defendant absconds.[1](The words in bold are defined below.)Criminal lifestyle2.2 'Criminal lifestyle' is defined in POCA, s 75.The defendant has a criminal lifestyle if the relevant offence(s) is:(a)	specified in Sch 2 to POCA ('lifestyle' offences);(b)	part of a course of criminal activity; or(c)	committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence.BUT – in order to be found to have a criminal lifestyle through either (b) or (c), the defendant must have obtained a relevant benefit of at least £5,000.The defendant's benefit2.3 Under POCA s 8, if the court is proceeding under s 6 this section applies for the purpose of:(a)	deciding whether the defendant has benefited from conduct; and(b)	deciding his benefit from the conduct.The court must:(a)	take account of conduct occurring up to the time it makes its decision;(b)	take account of property obtained up to that time.Relevant benefit2.4 There are two definitions of relevant benefit under s 75(5) and s 75(6). These depend on whether the offence constitutes conduct forming a course of criminal activity or whether the offence has been committed over a period of at least six months.2.5 If the offence constitutes conduct forming a course of criminal activity then relevant benefit is:(a)	benefit from conduct which constitutes the offence;(b)	benefit from any other conduct which forms part of course of criminal activity and which constitutes an offence of which the defendant has been convicted;(c)	benefit from conduct which constitutes an offence which has or will be taken into consideration by the court in sentencing a defendant for an offence in (a) or (b).2.6 If the offence has been committed over a period of a least six months and the defendant has benefited from conduct which constitutes the offence then relevant benefit is:(a)	benefit from conduct which constitutes the offence; or(b)	benefit from conduct which constitutes an offence which has been or will be taken into account by the court in sentencing the defendant for the offence mentioned in (a).Criminal conduct2.7 Criminal conduct is defined in POCA, s 76(1) as:'Conduct which constitutes an offence in England and Wales or would constitute such an offence if it occurred in England and Wales'When does a person benefit from criminal conduct?2.8 Under POCA s 76(4), a person benefits from conduct if he obtains property as a result of or in connection with the conduct.Pecuniary advantage and conduct2.9 POCA, s 76(5), (6) provide that if a person obtains a pecuniary advantage as a result of or in connection with the conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained both in that connection and some other.Pecuniary advantage2.10 Pecuniary advantage is the evasion of a debt that the defendant would otherwise be liable to pay, typically evasion of excise duty or underpayment of income tax.[2]Value of the benefit2.11 POCA, s 76(7) provides that if a person benefits from conduct his benefit is the value of the property obtained. Under POCA, s 84(2)(b), property is obtained by a person if he obtains an interest in it, and its value is defined by ss 79 and 80.The material time for valuing property is the time when the court makes its decision.Value of property obtained from criminal conduct2.12 Under POCA, s 80(2), the value of the property at the material time is the greater of the following:(a)	the value of the property (at the time the person obtained it), adjusted to take account of later changes in the value of money;(b)	the value (at the material time) of the property found under s 80(3).Value of the property obtained by the defendant2.13 POCA, s 80(3) provides that:'(a)	if the person holds the property obtained, the property found under this subsection is that property;(b)	if he holds no part of the property obtained, the property found under this subsection is any property which directly or indirectly represents it in his hands;(c)	if he holds part of the property given, the property found under this subsection is that part and any property which directly or indirectly represents the other part in his hands.'General criminal conduct2.14 Under POCA, s 76(2), general criminal conduct of the defendant is all his criminal conduct, and it is immaterial:(a)	whether conduct occurred before or after the passing of POCA;(b)	whether property constituting a benefit from conduct was obtained before or after the passing of POCA.General criminal conduct is inclusive of particular criminal conduct.Particular criminal conduct 2.15 Under POCA, s 76(3), particular criminal conduct is conduct which:(a)	constitutes the offence or offences concerned;(b)	constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offences(s) concerned;(c)	conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned.When does conduct form a part of a course of criminal activity?2.16 POCA, s 75(3) provides that:'Conduct forms part of a course of criminal activity if the defendant has benefited from the conduct and(a)	in the proceedings in which he was convicted, he was convicted of three or more other offences, each of three or more of them constituting conduct from which he has benefited, or(b)	in the period of six years ending with the day the proceedings were started, (or if there is more than one such day, the earliest day) he was convicted on two separate occasions of an offence constituting conduct from which he has benefited.'Offences committed before 24 March 2003Conduct will not form part of a course of criminal activity where any of the three trigger offences under POCA, s 75(3)(a) was committed before 24 March 2003.[3]The court must not take into account benefit from any offence being taken into consideration under s 75(5)(c) committed before 24 March 2003 as conduct forming part of his criminal activity when assessing whether the defendant has a criminal lifestyle.Conduct shall form part of a course of criminal activity under s 75(3)(b) if the two trigger offences were committed before 24 March 2003. Equally benefit from those offences can be taken into account in determining whether the defendant has a criminal lifestyle.Where criminal lifestyle is being considered as a result of an offence committed over a period of at least six months, benefit from offences being taken into consideration committed before 24 March 2003 under s 75(6)(b) must not be taken into account.The assumptions2.18 When the defendant has a criminal lifestyle, POCA, s 10 provides that the court must make four assumptions for the purpose of deciding whether he has benefited from his general criminal conduct and deciding his benefit from the conduct. Although the assumptions are mandatory the court must not make the assumptions if they are shown to be incorrect or there would be a serious risk of injustice if the assumption were made.[4] The defendant, if he is able to do so, can rebut these assumptions on the balance of probabilities.2.19 There are four assumptions:1	That any property transferred to the defendant at any time after the relevant day[5] was obtained by him:(a)	as a result of his general criminal conduct;(b)	at the earliest time he appears to have held it.2	That any property held by the defendant at any time after the date of conviction[6] was obtained by him:(a)	as a result of his general criminal conduct;(b)	at the earliest time he appears to have held it.3	That any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him as a result of his general criminal conduct.4	For the purpose of valuing any property obtained (or assumed to have been obtained) by the defendant, he obtained it free from any other interest in it.Date of conviction2.20 The date of conviction is either the date on which the defendant was convicted of the offence concerned, or if there are two or more offences and the convictions were on different dates, the date of the latest.What is the recoverable amount?2.21 Under POCA, s 7, the basic principle is that the recoverable amount is an amount equal to the defendant's benefit.It is for the defendant to show on the balance of probabilities[7] that the available amount is less than the benefit.If the amount available is nil, an order will be made in a nominal amount, usually £1.What is the available amount?2.22 The available amount as defined in POCA, s 9 is the value of all the defendant's free property minus the total amount payable in pursuance of obligations which then have priority plus the value of any tainted gifts made.Priority obligations2.23 Obligations which take priority are:a fine or other order made by the court at any time before the confiscation order is made;a sum which would be included amongst the preferential debts if the defendant's bankruptcy had commenced on the date of the confiscation order, or his winding up had been ordered on that date.Tainted gifts2.24 Tainted gifts are suspicious disposals of the defendant's assets.The issue of whether a gift is tainted can only be considered if the court has decided that the defendant has a criminal lifestyle, or no decision has been made as to whether the defendant has a criminal lifestyle.[8]However, if the court finds that the defendant does not have a criminal lifestyle a gift will be tainted if it was made by the defendant at any time after the offence was committed or, if his particular criminal conduct consists of two or more offences and they were committed on different dates, the date of the earliest.[9]When is a gift tainted?2.25 Under POCA, s 77(2), (3), a gift is tainted if it was made by the defendant at any time after the relevant day and was of property which:(a)	was obtained by the defendant as a result of or in connection with his general criminal conduct; or(b)	(in whole or in part and whether directly or indirectly) represented in the defendant's hands property obtained by him as a result of or in connection with his general criminal conduct.Relevant day2.26 Section 77(9) of POCA defines the relevant day as the first day of the period of six years ending with:(a)	the day when proceedings for the offence were started against the defendant; or(b)	if there are two or more offences and proceedings were started on different days, the earliest of those days.Transfers at an undervalue2.27 Under POCA, s 78(1), if the defendant transfers property to another person for a consideration whose value is significantly less than the value of the property at the time of the transfer he is to be treated as making a gift.Value of tainted gifts2.28 POCA, s 81(1) provides:'The value at any time (the material time) of a tainted gift is the greater of the following:(a)	the value (at the time the gift) of the property given, adjusted to take account of later changes in the value of money(b)	The value (at the material time) of the property found under subsection (2).'The value of property held by the recipient (tainted gifts)2.29 POCA, s 81(2) provides that:'(a)	if the recipient holds the property given, the property found under this subsection is that property;(b)	if the recipient holds no part of the property given, the property found under this subsection is any property which directly or indirectly represents it in his hands;(c)	if the recipient holds part of the property given, the property found under this subsection is that part and any property which directly or indirectly represents the other part in his hands.'Hidden assets2.30 The defendant should, however, be aware that the value of the confiscation order is not limited to the amount which the prosecution can prove is that value of the defendant's assets. The recoverable amount is an amount equal to the defendant's benefit from the conduct concerned unless the defendant shows that the available amount is less than that benefit.[10] It is for the defendant to satisfy the court as to the amount which is realisable.[11] A judge can simply conclude from the facts that hidden assets are available;[12] the prosecution is not required to establish a prima facie case of hidden assets before the defendant is required to address the issue.[13] The prosecutor's section 16 statement should make clear the basis of the prosecution assessment of benefit. The court is entitled to draw reasonable inferences as to the existence of realisable assets from evidence satisfying it to the requisite standard of proof.[14]Any assets whether legitimately acquired or not are vulnerable in confiscation to satisfy an order.[15]Time for payment2.31 Under POCA, s 11, the amount due is payable upon the making of the order, but the defendant may show that he needs time to pay. The court may then make an order for payment to be made in a specified period which starts on the day the order is made and must not exceed six months. If within the period the defendant applies to the Crown Court for the order to be extended and the court believes there are exceptional circumstances, the period can be extended, but must not exceed 12 months from the date the order was made. The court can direct payments of the order by instalments. Any appeal against the order does not affect the time for payment.Imprisonment in default2.32 If the defendant does not pay, the periods of imprisonment in default as shown in the table below may be ordered. These are maximum periods and the court may order a lesser period if it is minded to do so.
An amount not exceeding £200
An amount exceeding £200 but not exceeding £500
An amount exceeding £500 but not exceeding £1,000
An amount exceeding £1,000 but not exceeding £2,500
An amount exceeding £2,500 but not exceeding £5,000
An amount exceeding £5,000 but not exceeding £10,000
An amount exceeding £10,000 but not exceeding £20,000
An amount exceeding £20,000 but not exceeding £50,000
An amount exceeding £50,000 but not exceeding £100,000
An amount exceeding £100,000 but not exceeding £250,000
An amount exceeding £250,000 but not exceeding £1,000,000
An amount exceeding £1,000,000
Under s 38(2) and (5) of POCA, the provisions of the Powers of Criminal Courts (Sentencing) Act 2000 apply to the enforcement of a confiscation order in the same way as they do to the enforcement of a fine in the Crown Court. The court therefore must impose a term to be served in default at the time of making the order. Serving the default sentence does not extinguish the debt. Other forms of enforcement can be employed.Only half of the period in default will be served, and the defendant will be unconditionally released after this period.[16]Interest2.33 Under POCA, s 12, if the amount to be paid under the order is not paid on time interest will be paid[17] on the sum outstanding and forms part of the order.Effect of the confiscation order on the court's other powers2.34 POCA, s 13(2) and (4) provide as follows:'(2) The court must take account of the confiscation order before(a)	it imposes a fine on the defendant or(b)	it makes making an order falling within subsection 3.''(4)Subject to subsection 2 the court must leave the confiscation order out of account in deciding the appropriate sentence for the defendant.'Compensation orders and orders under ss 130 and 143 of the Powers of Criminal Courts (Sentencing) Act 2000 are orders made under subs (3). Under POCA, s 13(5) where the court makes both a confiscation and a compensation order under s 130 of the Powers of Criminal Courts (Sentencing) Act 2000, if the court believes the defendant does not have sufficient means to satisfy both orders, the court must specify the amount of compensation which is to be paid from the amount recovered in the confiscation order. This will be the amount the court believes will not be recoverable because of the defendant's insufficiency of means.Orders for prosecution costs should only be made where the defendant has funds available after payment of the confiscation order.[18]Postponement of confiscation proceedings2.35 Under POCA, s 14, the court may either proceed under s 6 before it sentences the defendant for the offence(s) or postpone proceedings for a specified period.The court may order more than one postponement and the period of postponement may be extended, but any period of postponement must not end after the permitted period had finished.The permitted period is a period of two years starting with the date of conviction. Postponements can be granted beyond two years as long as the application for further postponement is made before the previous period of postponement ends and the court finds that there are 'exceptional circumstances' which justify further postponements.The judge is entitled to find there are exceptional circumstances, if there was a prospect that an earlier hearing would be wasted and an unjust order made.[19]Postponement pending appeal against conviction2.36 Under POCA, s 14(6) unless there are 'exceptional circumstances', proceedings cannot be postponed for more than three months after the determination of any appeal against conviction.Abuse of process2.37 Following a request by a prosecutor, the court has no discretion whether or not to make a confiscation order against a defendant who falls within the statutory regime. The court does retain a power to stay proceedings as an abuse of process in those limited and exceptional cases where seeking a confiscation order might be considered oppressive.[20]In May 2009, guidance was published by the CPS to inform the exercise of the prosecutor's discretion to instigate confiscation proceedings.[21] The guidance identifies four particular heads of potential abuse, although applications can be argued under other heads.1	Where the crown has previously agreed not to proceed.2	Where the defendant has voluntarily paid full compensation to the victim(s) and has not otherwise profited.3	When the property obtained by the defendant was in the most part obtained legitimately.[22]4	Where employment has been obtained as a consequence of lies. Strictly wages would then constitute benefit, but the link may be regarded as too remote.[23]On 5 November 2009 guidance was issued by the Attorney General[24] on the use of asset recovery powers in cases where there has been no conviction. This guidance provides a non-exhaustive list of circumstances in which use of the non-conviction based powers might be appropriate because it is not feasible to secure a conviction (in summary):1	The only known criminality is overseas, and proceedings cannot be instigated in the Courts of England and Wales or Northern Ireland.2	No identifiable living suspect is within the jurisdiction or capable of being brought within the jurisdiction.3	Proceeds of crime can be identified but not linked to any individual suspect or offence.4	A criminal investigation is unlikely to generate enough evidence to create a realistic prospect of conviction.5	A criminal investigation has been conducted and insufficient evidence has been found to create a realistic prospect of conviction.6	A prosecution has not resulted in a conviction.SummaryWill an order be made?2.381	Are the proceedings in the Crown Court? If not, have the magistrates committed the case to the Crown Court for the purposes of confiscation proceedings?2	Has the prosecutor asked the court to proceed to confiscation? If not, has the court proceeded of its own motion?3	Does the defendant have a criminal lifestyle? If not, has he benefited from his particular criminal conduct?4	Has he benefited to at least the value of £5,000?6	If the above requirements are fulfilled the court will now decide the recoverable amount and make an order in that sum.Burden and standard of proof?2.391	Standard of proof for both the prosecution and the defence is the balance of probabilities.2	The prosecution are required to prove the defendant's benefit and the value of the defendant's proceeds from criminal conduct. They are assisted by the four mandatory assumptions.3	The order will be made in the sum of the defendant's benefit unless the defendant proves that the available amount is less than the benefit.Postponement2.401	Confiscation proceedings can be delayed beyond two years if there are exceptional circumstances.2	Proceedings may be delayed pending appeal against conviction, but not longer than three months after the appeal is determined.3	An appeal against the confiscation order will not extend the time allowed for payment which is a maximum of 12 months.4	If the order is not paid when due a period of imprisonment in default will be imposed.5	Interest is payable on unpaid sums.Table of definitions2.41
Section of POCA where phrase is defined
R v Chambers [2008] EWCA Crim 2467
R v Jennings [2008] UKHL 29
value of benefit obtained
77(2) and (3)
R v Wright [2006] EWCA Crim 1257
75(5) and 75(6)
[1] Except in accordance with the powers granted under POCA, ss 27 and 28.[2] R v Dimsey and Allen [2000] 1 Cr App R (S) 497: deferring payment of tax is a 'pecuniary advantage'.[3] See Proceeds of Crime Act 2002 (Commencement No 5) (Amendment of Transitional Provisions) Order 2003, SI 2003/531; CPS v Moulden [2009] 2 All ER 912.[4] POCA, s 10(6).[5] Defined at 2.26 below.[6] POCA, s 10(10).[7] R v Cominskey [1991] 93 Cr App R 227.[8] POCA, s 77(1).[9] POCA, s 77(5).[10] POCA, s 7(1) and (2).[11] R v Ilsemann [1991] Crim LR 141[12] R v Wright [2006] EWCA Crim 1257.[13] R v Barnham [2005] EWCA Crim 1049.[14] R v Peacock and Gillett [2009] EWCA Crim 645.[15] R v Currey [1995] 16 Cr App R(S) 421.[16] Criminal Justice Act 2003, s 258.[17] At the rate of civil judgement debts, currently 8%.[18] R v Szrajber [1994] Crim LR 543.[19] R v Jagdev [2002] 1 WLR 3017.[20] R v Paulet [2009] EWCA Crim 288.[21] Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings (available at http://www.cps.gov.uk/news/assets/uploads/files/prosecutors_discretion_280509.pdf).[22] R v Shabbir [2009] 1 Cr App (S) 84.[23] R v Carter [2006] EWCA Crim 416.[24] Attorney General's Guidance to Prosecuting Bodies on their Asset Recovery Powers under the Proceeds of Crime Act 2002 (reproduced at Appendix 4).
Resource ID: C-000-0212
Products: All Bloomsbury Books, Book: Confiscation Law Handbook
An overview of the UK anti-money laundering and counter-terrorist financing regime (http://uk.practicallaw.com/topic4-102-5253)
Confiscation Law Handbook Confiscation Law Handbook (http://uk.practicallaw.com/topicB-000-0012)
Appendix 1 - Proceeds of Crime Act 2002
Appendix 1 - Proceeds of Crime Act 2002 (http://uk.practicallaw.com/topicC-000-3480)
Appendix 2 - Criminal Procedure Rules 2010
Appendix 2 - Criminal Procedure Rules 2010 (http://uk.practicallaw.com/topicC-000-3481)
Appendix 3 - Magistrates' Court (Detention and Forfeiture of Cash) Rules 2002
Appendix 3 - Magistrates' Court (Detention and Forfeiture of Cash) Rules 2002 (http://uk.practicallaw.com/topicC-000-3482)
Appendix 4 - Attorney General guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002
Appendix 4 - Attorney General guidance to prosecuting bodies on their asset recovery powers under the Proceeds of Crime Act 2002 (http://uk.practicallaw.com/topicC-000-0227)
Appendix 5 - Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings
Appendix 5 - Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings (http://uk.practicallaw.com/topicC-000-0229)
Chapter 1 - A brief history and overview of confiscation law
Chapter 1 - A brief history and overview of confiscation law (http://uk.practicallaw.com/topicC-000-0209)
Chapter 3 - Restraint
Chapter 3 - Restraint (http://uk.practicallaw.com/topicC-000-0213)
Chapter 4 - Practice and procedure
Chapter 4 - Practice and procedure (http://uk.practicallaw.com/topicC-000-0214)
Chapter 5 - Cash seizures
Chapter 5 - Cash seizures (http://uk.practicallaw.com/topicC-000-0215)
Chapter 6 - Enforcement, reconsideration of orders and appeals and the dead, absconded and insolvent
Chapter 6 - Enforcement, reconsideration of orders and appeals and the dead, absconded and insolvent (http://uk.practicallaw.com/topicC-000-0217)
Chapter 7 - Case law
Chapter 7 - Case law (http://uk.practicallaw.com/topicC-000-0218)
Chapter 8 - Civil recovery
Chapter 8 - Civil recovery (http://uk.practicallaw.com/topicC-000-0220)
Chapter 9 - Third-party interests
Chapter 9 - Third-party interests (http://uk.practicallaw.com/topicC-000-0221)
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