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20 most popular to date | Bartfields Forensic Accountants | Page 2
Confiscation – default sentence
9 November 2012 David Winch	64 Comments
When making a confiscation order in the Crown Court the judge will specify a ‘default sentence’ – a consecutive prison term which the defendant may be required to serve if he fails to satisfy the confiscation order. A default sentence could be described as an additional penalty for failing to pay the confiscation order on time.
The intention is that the threat of triggering the default sentence will encourage the defendant to pay up. Serving the default sentence is not an alternative to paying the confiscation figure – the amount originally ordered to be paid remains payable even after the default sentence has been served.
How long is the default sentence?
The MAXIMUM length of the default sentence which the Crown Court judge may specify when making the confiscation order is set out in s139 Powers of Criminal Courts (Sentencing) Act 2000. The maximum is related to the amount which the defendant is ordered to pay, which is sometimes referred to as the ‘recoverable amount’. This will be the lower of his ‘benefit’ and his ‘available amount’ as found by the Crown Court.
These maximum sentences are set out in bands in s139(4), depending upon the amount ordered to be paid:
[UPDATE: See a revised table of default sentences from 1 June 2015 HERE.]
However a judge may specify any length of default sentence, even a very short one – provided he does not exceed the relevant maximum length from this table.
In practice judges have been encouraged by decisions of the Court of Appeal in cases such as Pigott v R [2009] EWCA Crim 2292 to use appropriate discretion in fixing default sentences and not to automatically apply the maximum sentences set out in s139. Typically the judge will fix a default sentence somewhere between the maximum for the appropriate band in the table and the maximum for the band below, bearing in mind that the purpose of the default term is to secure payment of the confiscation order. But judges are discouraged from applying a purely mathematical approach to fixing the default term.
So, for example, if a confiscation order was being made in the sum of £500,000 one would expect the judge to set a default sentence no greater than the maximum permitted for that amount (which is 5 years) and no less than the maximum for the band below (which is 3 years).
But one would not expect the judge to feel bound to fix the default sentence at a term based on a mathematical calculation, which would be 3 years 8 months (i.e. 3 years plus one third of an extra 2 years because the amount of £500,000 is one third of the way between £250,000 and £1,000,000).
Although the judge should consider all the circumstances of the case in fixing the default sentence, he is likely to be particularly influenced by the co-operation, or lack of it, which the defendant has displayed in his conduct in relation to the confiscation proceedings.
A particular difficulty arises where the confiscation order is for an amount in excess of £1 million because the table gives no guidance as to when it may become appropriate for a default sentence to be made in the maximum period of 10 years.
The Court of Appeal considered this point in the case of R v Castillo [2011] EWCA Crim 3173 in which a default term had been set at 10 years in relation to an order for £3 million against a defendant who was held to have deliberately hidden his ill-gotten gains outside the UK.
Notwithstanding the size of the order and the lack of co-operation from the defendant, the Court of Appeal reduced the default sentence in Mr Castillo’s case to nine years.
Prisoners who are further detained at the end of their sentence in default of a confiscation order are eligible for early release at the halfway stage of the default sentence under s258 Criminal Justice Act 2003 and are eligible to be considered for early release on temporary licence (see chapter 5.3 of Prison Service Order 6300).
[UPDATE: See revised position re orders of £10 million or more from 1 June 2015 HERE.]
But in addition a default term is reduced pro-rata to any payments received in part satisfaction of the confiscation order. This is a purely mathematical exercise. (The underlying statute law involves a complex path from s35(2) PoCA 2002 to ss139 & 140 Powers of Criminal Courts (Sentencing) Act 2000 to s79(2) Magistrates’ Courts Act 1980. There are worked examples of the calculation in Chapter 16 of PSO 6650 ‘Sentence Calculation’.) So, for example, suppose Timothy had been ordered to pay £600,000 with a four year prison term in default. Let’s say Timothy has paid £500,000 and there remains £100,000 outstanding. Timothy’s default sentence has now become 8 months – or, more accurately, 243 days (i.e. one-sixth of his original default sentence of 4 years because one-sixth of the original amount remains outstanding).
Contrast this with Gerald who has a confiscation order made against him for £100,000 with a default sentence set at 2 years and has made no payment off it. Gerald also has £100,000 outstanding but, unlike Timothy, his default sentence is 2 years. That apparent unfairness is a result of the non-linear basis of the table of default sentences in s139.
In the past default sentences have proved to be a fertile ground for appeals by defendants – particularly where the Crown Court judge has been too quick to apply the maximum term specified in s139. In all likelihood we shall continue to see a steady stream of such cases making their way to the Court of Appeal.
However it appears that the prosecution has no right to appeal against a default sentence which it considers is too short, see R v Mills [2018] EWCA Crim 944 at para [37].
(Note: This article applies to default sentences relating 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 default sentence 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.)
confiscationcourt of appealcrown courtdefault sentenceenglandgbPoCA 2002prosecutionSerious Crime Act 2015ukwales
20 most popular to date, Case law, Civil recovery, Prosecutions
16 June 2011 David Winch	2 Comments
Under Part 5 Proceeds of Crime Act 2002 the Crown can pursue civil claims in respect of ‘recoverable property’ and can seek the forfeiture of ‘cash’. Both of these terms have specific meanings in this context.
‘Recoverable property’ is defined by sections 304 – 310, but the essence is that it is proceeds of crime (or, as the legislation puts it, property obtained through unlawful conduct) and property representing the proceeds of crime. So if I steal a valuable painting that painting is ‘recoverable property’. If I then sell the stolen painting the money or asset which I obtain from the sale is ‘recoverable property’.
‘Cash’ is defined in s289(6) and (7). It includes not only notes and coins but also cheques, traveller’s cheques, bankers’ drafts and bearer shares (but not bank balances).
These are civil – not criminal – proceedings and the standard of proof is ‘the balance of probabilities’
The key point in proceedings under Part 5 is that the Crown do not have to show that anyone has been convicted of any criminal offence in order to succeed. (The civil recovery provisions of Part 5 of the Act are quite different from the confiscation provisions of Part 2 – which DO require that a person has been convicted of an offence.) Nor do the Crown have to show that the person from whom the asset is being taken is himself the perpetrator of an offence, he may simply be holding an asset which was obtained by the criminal conduct of someone else (although a bona fide purchaser for value is protected). These are civil – not criminal – proceedings and the standard of proof is ‘the balance of probabilities’, see s241(3).
The Crown do not even have to identify a specific offence by which the money or asset was obtained. (In civil recovery proceedings the Crown need not allege the commission of any specific criminal offence but must specify the kind or kinds of unlawful conduct involved.)
Indeed, in relation to cash the Crown may succeed simply by showing that the cash was intended for use in a future crime (s298(2)).
But, apart from that, what the Crown do have to do is satisfy the Court, on the balance of probabilities, that the money or asset in question has been derived from criminal conduct (by somebody who may, or may not, be identified). In the case of ‘cash’ the Magistrates’ Court may then order the cash to be forfeit to the Crown. In relation to other assets the High Court (in England and Wales) may order the property to be vested in a civil trustee who will realise the property for the benefit of the enforcement authority (for example SOCA, the SFO or the CPS).
If a defendant has been acquitted of a crime can an asset or cash believed to have been derived from that crime be subject to civil recovery
This raises an interesting technical question. If a defendant has been acquitted of a crime (meaning that it has not been proved to the criminal standard – ‘beyond reasonable doubt’) can an asset or cash believed to have been derived from that crime be subject to civil recovery (since the lower standard of ‘the balance of probabilities’ applies in civil recovery proceedings)?
You may remember the notorious case of OJ Simpson in the United States. Mr Simpson was acquitted of the murders of Nicole Brown and Ronald Goldman, but was subsequently ordered by a civil court to pay substantial damages to the Goldman family as he was (in the civil court) held to be liable for Mr Goldman’s ‘wrongful death’.
Let’s consider the case of Peter who has been acquitted of mortgage fraud. Can the Crown now commence civil recovery proceedings against the house he purchased with the mortgage?
Or the case of Gwen who has been acquitted of ‘possession of criminal property’ in relation to cash of £30,000 which the police found and seized when they searched her home. Can that cash now be subject to forfeiture in the Magistrates’ Court?
It seems to have been the view of the (then) government when PoCA 2002 was being debated in the Houses of Parliament that civil recovery proceedings could be pursued in these circumstances. In the House of Lords Lord Goldsmith, speaking for the government, said on 13 May 2002, “We certainly do not accept that, where a criminal case has not resulted in a conviction, civil recovery action should automatically be barred”. Later he added, “I do not shrink from the fact that . . . evidence is available in the civil process which would satisfy a court, even though it did not satisfy the criminal process”.
But the UK has brought into effect the European Convention on Human Rights, by virtue of the Human Rights Act 1998. The Convention Rights are set out in Schedule 1 to the Act. Article 6(2), reproduced in the Schedule, says simply, “Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law”.
But if a person has been acquitted of an offence in the criminal courts can it be right for a civil court to proceed on the basis that actually he is guilty of that same offence?
The European Court of Human Rights (ECHR) has answered that question with a firm, “No”.
In the Scottish case of Scottish Ministers v Doig, reflecting a number of ECHR judgments, the court put it this way (at para 24):
“It is perhaps not immediately obvious as a matter of language that article 6(2) could ever be said to apply to proceedings in which a person is not charged with a criminal offence. It is nevertheless clear from decisions of the European Court of Human Rights that article 6(2) may be said to apply, and be said to be infringed, in the course of proceedings which are not criminal in nature but which follow an acquittal in criminal proceedings. In particular a clear strand of authority suggests (a) that article 6(2) would apply if the later proceedings can be said to be sufficiently linked (in particular by law and practice) as to be the consequence, and to some extent a concomitant, of the criminal proceedings in which the person was acquitted, and (b) that the article would be infringed in these later proceedings if it can be said that the court casts doubt on the soundness of the earlier acquittal.”
More bluntly in the case of Geerings v The Netherlands the ECHR held (at para 49):
following a final acquittal, even the voicing of suspicions regarding an accused’s innocence is no longer admissible
“following a final acquittal, even the voicing of suspicions regarding an accused’s innocence is no longer admissible”.
It has to be said however that the UK Supreme Court has expressed disquiet on this issue. In its judgment in Gale v SOCA [2011] UKSC 49 Lord Phillips said (at para 44), “If confiscation proceedings do not involve a criminal charge, but are subject to the civil standard of proof, I see no reason in principle why confiscation should not be based on evidence that satisfies the civil standard, notwithstanding that it has proved insufficiently compelling to found a conviction on application of the criminal standard”. Although he refers to “confiscation” it may be that Lord Phillips has civil recovery proceedings rather than confiscation proceedings particularly in mind here.
However the European Court judgments apply where there is a close link between the civil and criminal cases, so that the civil proceedings “constitute a consequence and the concomitant of the criminal proceedings”. The Supreme Court found no such link in the case of Mr & Mrs Gale.
The principle might be summarised as – one court cannot treat a person as guilty (even on a balance of probabilities) of an offence of which he has previously been acquitted in another court.
But where does leave Peter and Gwen?
Peter purchased a house with the aid of a mortgage and has been acquitted of mortgage fraud. In these circumstances I cannot see that the Crown can pursue civil recovery proceedings in respect of the house (which Peter has acquired as a bona fide purchaser for value).
Gwen has been acquitted of ‘possession of criminal property’ in relation to cash found in her home. I would suggest her position is rather different. Suppose the facts of her defence were that the money in question had been passed to Gwen to look after by her friend Alice. Unknown to Gwen, Alice had obtained the money by drug trafficking, but Gwen neither knew nor suspected that the monies were tainted by criminality.
On that basis Gwen would be properly acquitted of ‘possession of criminal property’ but the cash itself would still be proceeds of a crime (Alice’s drug trafficking). So the cash could, I would suggest, be subject to civil recovery proceedings without casting any shadow of doubt on Gwen’s acquittal.
It seems to me that there are three sets of circumstances in which civil recovery could properly proceed:
where the acquitted defendant lacked the mens rea or actus reus for the offence of which he was acquitted but that nevertheless the money or asset concerned is recoverable property (having been derived from an offence committed by someone else) which is able to be traced into the hands of the acquitted defendant;
where the money or asset concerned has been derived from a different offence committed by the defendant (i.e. an offence of which he has not been acquitted); or
where (in the case of cash) it is liable to forfeiture as property intended for use in a future crime.
depending upon the circumstances, it may, or may not, be permissible for civil recovery proceedings to be pursued in relation to money or an asset held by an acquitted defendant
In short, depending upon the circumstances, it may, or may not, be permissible for civil recovery proceedings to be pursued in relation to money or an asset held by an acquitted defendant.
For obvious reasons it is preferable for the defendant’s guilt or innocence to be determined in the criminal courts before any cash forfeiture or civil recovery proceedings are concluded (as noted in Harrison, R (on the application of) v Birmingham Magistrates’ Court [2011] EWCA Civ 332).
(Note: This article refers to civil recovery in England and Wales under the provisions of Part 5 of PoCA, the Proceeds of Crime Act 2002.)
civil recoverycourtcourt of appealcrimeenglandgbPoCA 2002scotlandukwales