Source: http://ukscblog.com/case-comment-r-v-guraj-2016-uksc-65-part-two/comment-page-1/
Timestamp: 2017-04-24 03:38:28
Document Index: 767035630

Matched Legal Cases: ['UKSC ', 'UKSC ', 'UKSC ', 'UKSC ', 'EWCA ', 'UKSC ']

Case Comment: R v Guraj [2016] UKSC 65 Part Two – UKSCBlog	UK Supreme Court Blog	EDITORS: Dan Tench, Cathryn Hopkins, Jack Ballantyne & Emma Cross (Olswang) Hugh Tomlinson QC, Matthew Ryder QC & Anthony Fairclough (Matrix)
On its own this decision once again concludes the arguments about postponement of confiscation proceedings, but it should be read in the light of the decisions in R v Waya [2012] UIKSC 51, R v Ahmad, R v Fields [2014] UKSC 36 and R v Harvey [2015] UKSC 73. Each of these cases considered the issue of proportionality in the making of confiscation orders. In Waya, as is well known, the Supreme Court read into POCA, s 6 (by applying the rule of construction in Human Rights Act, s 3) words ameliorating the statutory obligation to impose a confiscation order in strict conformity with the terms of the Act, so that the obligation ceased (but they duty to consider confiscation was not removed) where the making of an order which was in conformity with the strict requirements of the Act would yield a disproportionate result and therefore be contrary to the defendant’s Convention rights. This decision was soon afterwards given statutory force by an amendment to POCA. The Court set out the principles governing the determination when the application of the statute would yield a disproportionate result, but in the particular circumstances of that case preferred a complex calculation based on the legal mechanics of the purchase of a house with a mortgage to a broad-brush assessment of “fairness” to arrive at the “proportionate” result.
In Ahmad and Fields the issue was that of “joint benefit”; if a number of conspirators jointly obtain the same property, they cannot all pay back the whole and confiscation orders requiring them to do so cannot be said to be “confiscating” the proceeds of crime rather than simply imposing fines on them. The Court rejected the argument that in such circumstances the Crown Court should do its best to identify the “beneficial interests” of the various conspirators, instead holding that in such circumstances the correct and proportionate approach is to impose confiscation orders on each defendant requiring each to pay the whole of the jointly obtained benefit, but to preclude enforcement of such orders to the extent that the same benefit had been recovered from another defendant, so that the amount of the benefit was only in fact recovered once from the conspirators jointly. In this way the Court essentially replicated the position which obtains in civil proceedings, where conspirators are jointly and severally liable to compensate the victim of their fraud.
In Harvey the issue related to the benefit of a VAT fraud, where some VAT had been paid but not all that was due. On a strict analysis the correct assessment of benefit would have required the defendant to pay an amount which included the VAT he had already paid, but the Supreme Court decided that such a result would be disproportionate; it would involve the state achieving double recovery. However, the disproportionality arose from the fact that the VAT had already been paid, not from the fact that there was an independent civil liability to make the payment.
These three cases have in common that the Court strove to achieve a result which achieved what might be described as “substantive justice” in confiscation proceedings; an overly technical approach leading to artificial results is to be eschewed, but at the same time so is an approach which simply invests a Crown Court judge with the discretion taken away by Parliament in 1995 (and which was never present in cases of drug trafficking). Instead what is required is an approach which gives effect to the statutory duty to make a confiscation order in an appropriate case, but to construe that statutory duty in such a way that a defendant is deprived of the full benefit of their wrongdoing but no more.
Into this line of cases comes Guraj, which takes a remarkably similar approach to the procedural requirements of POCA; overly technical constructions which produce artificial (or even perverse) results are to be eschewed in favour of a construction which does “substantive justice” in the case. A cynic might characterise the issue of whether confiscation proceedings were postponed by following the correct procedure as amounting to little more than “whether the case was adjourned properly”, but of course its significance is much deeper; the ability to postpone confiscation proceedings is an exception to the general rule that a defendant should be sentenced at once and as soon as possible after they have been convicted or plead guilty and that exception must be carefully confined if it is not to slide into an instrument of delay and oppression, both for defendants and third parties. Lord Hughes highlighted precisely this issue when identifying the importance of ensuring that procedural requirements are complied with, but rather than permitting those requirements to engender technical procedural arguments leading to possibly arbitrary and even perverse results, the Court has directed the Court’s attention to the prejudice actually caused by the procedural failures. Indeed, Lord Hughes expressly referred to Waya when indicating that a range of options are open to the Crown Court when it is faced with a procedural failure which has in fact caused prejudice.
Thus, taking the four decisions of the Supreme Court in Waya, Ahmad and Fields, Harvey and Guraj together, one may tentatively begin to posit an emerging rule of statutory construction in respect of POCA: “in cases of ambiguity the legislation should be construed, so far as possible, in such a way as to enable the court to focus on the substantive realities of the case and avoid artificial results”. Whether the Court will ever go that far remains to be seen. Whether it is a positive thing that a particular piece of criminal legislation has required the Supreme Court to engage with it on so many occasions in such a fundamental way over such a short period of time is a discussion for another day.
15/03/2017 at 10:27	I would not describe Harvey as a VAT fraud case. It is, I suggest, a little more complex to get to the VAT aspects. Mr Harvey was convicted of multiple counts of ‘handling’ in relation to items of plant & equipment. Those items had been employed in his plant hire business & had generated income from their hire to customers. VAT had (quite properly) been charged on those hire fees & had been accounted for to HMRC on the VAT returns of the business.
Was the ‘benefit’ the VAT inclusive sums received from customers or did that involve double recovery, as the VAT charged had already been accounted for to the state (via the routine business VAT returns)?
The UKSC concluded that such double recovery would be disproportionate.
There remains however at least one major issue which has yet to come before UKSC. That is the issue of ‘piercing the corporate veil’ in confiscation – as to which see the Court of Appeal’s approach in Boyle Transport (NI) Ltd & others v R [2016] EWCA Crim 19.
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