CASE OF PAULET v. THE UNITED KINGDOM

1. The case originated in an application (no. 6219/08) against the United Kingdom of Great Britain and Northern Ireland lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by an Ivoirian national, Mr Didier Pierre Paulet (“the applicant”), on 4 February 2008.
2. The applicant, who had been granted legal aid, was represented by Dr Keith Lomax of Lester Morrill Solicitors inc. Davies Gore Lomax LLP, a lawyer practising in Leeds. The United Kingdom Government (“the Government”) were represented by their Agent, Ms J. Neenan of the Foreign and Commonwealth Office.
3. On 3 September 2010 the application was communicated to the Government.
I. THE CIRCUMSTANCES OF THE CASE
4. The applicant was born in 1984 and lives in Leeds.
5. The facts of the case may be summarised as follows.
1. The criminal proceedings against the applicant
6. The applicant arrived in the United Kingdom on 26 January 2001 and thereafter lived illegally at an address in Bedford.
7. Whilst living in the United Kingdom the applicant successfully applied for three jobs using a false French passport. Between April 2003 and November 2004 he was employed by a recruitment agency. Between August 2004 and January 2006 he was employed in a cash and carry business and between January 2006 and February 2007 he was employed as a forklift truck driver.
8. The applicant had used the false passport to support his assertion that he was entitled to work in the United Kingdom. All of his employers subsequently stated that they would not have employed him had they known of his true immigration status. Between April 2003 and February 2007 the applicant earned a total gross salary of 73,293.17 pounds sterling (GBP) from his employment. At the end of this period he had total savings of GBP 21,649.60.
9. In January 2007 the applicant applied to the Driving and Vehicle Licensing Agency for a provisional driving licence. The application was accompanied by the same false French passport that the applicant had used to obtain employment in the United Kingdom. When the falsity of the passport was discovered, the police were informed.
10. On 4 June 2007 the applicant pleaded guilty in the Crown Court at Luton to three counts of dishonestly obtaining a pecuniary advantage by deception (counts one, two and three on the indictment). He also pleaded guilty to one count of having a false identity document with intent (count four), one count of driving whilst disqualified (count five) and one count of driving a motor vehicle without insurance (count six). On 29 June 2007 the applicant was sentenced to concurrent terms of fifteen months ’ imprisonment for the first four counts together with a consecutive sentence of two months ’ imprisonment for the offence of driving whilst disqualified. No separate sentence was imposed for driving without insurance. The trial judge also recommended the applicant for deportation.
11. In addition to the custodial sentence and the recommendation for deportation, the prosecution sought a confiscation order under section 6 of the Proceeds of Crime Act 2002 in respect of the applicant ’ s earnings (see relevant domestic law and practice below). The trial judge accepted that the applicant had paid all the tax and national insurance due on his earnings and that the money he had made from his employment had been truly earned. After deducting tax and national insurance payments, it was calculated that the benefit the applicant received from his earnings was GBP 50,000. It was agreed that of the GBP 50,000 the applicant still had assets of GBP 21,949.60. On this basis, on 29 June 2007 the trial judge imposed a confiscation order in the sum of GBP 21,949.60 upon the applicant, with a consecutive sentence of twelve months ’ imprisonment to be served in default of payment. Thus, the confiscation order had the effect of depriving the applicant of all of the savings that he had accumulated during the four years of employment.
12. On 8 April 2008 the applicant sought an extension of time within which to appeal to the Court of Appeal against the imposition of the confiscation order. In his grounds of appeal, he contended that the grant of the confiscation order had not respected “European law”. That application was refused on 13 June 2008. The Single Judge noted that the applicant had failed to establish good reason for the extension of time sought and that he had no arguable grounds of appeal because he had benefited from the use of the false passport to the extent that it had enabled him to work and earn money and there had been no breach of his rights under the Convention.
13. The applicant renewed his application before the Court of Appeal which, on 14 November 2008, granted him an extension of time and leave to appeal. Leading counsel was appointed on his behalf. Counsel initially argued first; that the applicant ’ s earnings were not a relevant benefit from criminal conduct within the meaning of the Proceeds of Crime Act 2002; and secondly, that the prosecutor ’ s decision to seek a confiscation order in this case constituted an abuse of process.
14. The Court of Appeal heard part of the appeal on 18 February 2009. However, it decided to adjourn the appeal pending the publication by the Department of Public Prosecution (“the DPP”) of guidance for prosecutors on the circumstances under which a confiscation order could be sought.
15. In a supplementary skeleton argument dated 5 June 2008, counsel for the applicant accepted that in light of the decision in R v. Carter and Others [2006] EWCA Crim 416 (see relevant domestic law and practice below), the court was bound to reject the first ground of appeal, namely that the applicant ’ s earnings were not a relevant “benefit”. He therefore accepted that the issue on appeal was whether it was oppressive and therefore an abuse of process for the Crown to seek and the court to impose a confiscation order for what amounted to the applicant ’ s entire savings over nearly four years of genuine work. In this regard, counsel submitted that there would be an abuse of process where, on a correct application of the law to the facts, the resulting “benefit” figure yielded a disproportionate or oppressive result. He further noted that Parliament has intended the Proceeds of Crime Act 2002 to be applied in a manner compatible with the requirements of the Convention. Therefore, in light of Article 1 of Protocol No. 1, in order to remain proportionate the application of the confiscation regime had to remain rationally connected to the public interest aims pursued and go no further than necessary to achieve them. It was therefore submitted that to seek the imposition of a confiscation order on the basis of a benefit figure which far exceeded the value of the defendant ’ s crimes could properly be described as disproportionate – either in the traditional sense used in criminal sentencing (“not fitting the punishment to the crime”) or in the language of the Convention – and was therefore an abusive exercise of jurisdiction.
16. The applicant further submitted that a confiscation order could be described as oppressive where it did not pursue any of the legitimate aims of the confiscation regime and/or did not further the Parliamentary intent of stripping defendants of the proceeds of crime. He reiterated that Parliament had intended the legislation to be compatible with the Convention.
17. On 28 July 2009, after the DPP guidance had been promulgated (see relevant domestic law and practice below), the Court of Appeal held that the decision to seek a confiscation order against the applicant did not constitute an abuse of process. The court therefore dismissed the applicant ’ s appeal against the order. In reaching this conclusion, the Court of Appeal said that the guidance represented a fair analysis of the effect of previous Court of Appeal and House of Lords decisions on the confiscation order regime.
“Abuses of the confiscation process may occur and, when they do, the appropriate remedy will normally be a stay of proceedings. However an abuse of process cannot be founded on the basis that the consequences of the proper application of the legislative structure may produce an ‘ oppressive ’ result with which the judge may be unhappy. Although the court may, of its own initiative, invoke the confiscation process, the responsibility for deciding whether properly to seek a confiscation order is effectively vested in the Crown. When it does so, the court lacks any corresponding discretion to interfere with that decision if it has been made in accordance with the statute. The just result of these proceedings is the result produced by the proper application of the statutory provisions as interpreted in the House of Lords and in this court. However to conclude that proceedings properly taken in accordance with statutory provisions constitute an abuse of process is tantamount to asserting a power in the court to dispense with the statute.
As a matter of principle, that is impermissible, and this court has said so. This, in R v. Shabir [2009] 1 CAR (S) 497, it was observed:
‘ This jurisdiction must be exercised with considerable caution, indeed sparingly. It must be confined to cases of true oppression. In particular, it cannot be exercised simply on the grounds that the judge disagrees with the decision of the Crown to pursue confiscation, or with the way it puts its case on that topic. ’
We repeat what was said at an earlier hearing involving Paulet.
‘ The abuse of process jurisdiction is one which needs to be exercised with great circumspection. The jurisdiction cannot be converted on a case by case basis into a structure which involves, on proper analysis, something like wholesale undermining of the statutory provisions. It is not easy to conclude that it is an abuse of process for those responsible for enforcing legislation to see that it is indeed properly enforced. ’ ”
19. The Court of Appeal found that applicant ’ s case could not be distinguished from its previous ruling in R v Carter and Others (see relevant domestic law and practice, paragraph 31 below). It concluded:
“The reality is that throughout the period of his employment [the applicant] was relying on a continuing dishonest representation to three different employers. He deceived them into thinking that he was entitled to obtain employment with them. That was a crucial element of his criminality. His earnings, of course, reflected the fact that he had done the necessary work, as we shall assume, to the satisfaction of his various employers. But the opportunity for him to do so, that is the pecuniary advantage, was unlawfully obtained. If the employee worked to his employer ’ s satisfaction, and he paid his tax and National Insurance contributions on his earnings, and his deception either lacked any significant wider public interest, or, perhaps because of the passage of time, but for whatever reason, had ceased to have any meaningful effect on his employers ’ decision to continue his employment, the resolution of the issue might well be different. As it is there was here a wider public interest. The appellant was deliberately circumventing the prohibition against him seeking remunerative employment in this country in any capacity. No basis for interfering with the order made in the Crown Court has been shown. In our judgment the appropriate link between the appellant ’ s earnings and his criminal offences, in the context of the wider public interest, was plainly established. The appeal therefore fails.”
20. On 27 October 2009 the Court of Appeal refused to certify a point of law of general public importance which ought to be considered by the Supreme Court.
21. Enforcement proceedings have since been instigated against the applicant.
2. The asylum and deportation proceedings
22. On 28 June 2007 the applicant applied for asylum in the United Kingdom, alleging that his father had been killed in a land dispute between the Dioula and Bete community and that he would be at risk in Ivory Coast owing to his Dioula ethnicity. On 4 October 2007 his application was refused by the Secretary of State for the Home Department, who found no objective evidence that the Dioula were targeted solely on account of their ethnicity, and that the delay in claiming asylum had adversely affected the credibility of the rest of the applicant ’ s claim. A deportation order made by the Secretary of State was served on the applicant on 19 November 2007. On 24 April 2008 the applicant brought judicial review proceedings challenging the refusal of asylum and the decision to make a deportation order. This application was refused by the High Court on 16 May 2008 as the application had been lodged out of time and, in any event, the applicant had failed to avail himself of his statutory appeal rights by applying to the then Asylum and Immigration Tribunal. His renewed application for judicial review was rejected by the High Court on 27 June 2008. However, it appears that on 3 April 2008 the applicant submitted a notice of appeal to the Asylum and Immigration Tribunal. This was rejected by the Tribunal on 29 April 2008 as out of time.
II. RELEVANT DOMESTIC LAW AND PRACTICE
1. The Proceeds of Crime Act 2002
23. Confiscation proceedings are now governed by the Proceeds of Crime Act 2002. Section 6(4) sets out the approach to be followed by the court:
“( a ) it must decide whether the defendant has a criminal lifestyle;
(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;
(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct.”
24. Section 6(5) provides that where the court decides that the defendant has benefited from the conduct referred to, it must decide the “recoverable amount” and make a confiscation order requiring him to pay that amount.
25. Under section 7, the “recoverable amount” is defined as 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. In that case the recoverable amount becomes the available amount.
26. Section 8 sets out the test for determining the defendant ’ s benefit from his criminal activity. It reads as follows:
“(1) If the court is proceeding under section 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.
(a) take account of conduct occurring up to the time it makes its decision;
(b) take account of property obtained up to that time.”
27. Section 9 defines the recoverable amount as follows:
“(1) For the purposes of deciding the recoverable amount, the available amount is the aggregate of—
(a) the total of the values (at the time the confiscation order is made) of all the free property then held by the defendant minus the total amount payable in pursuance of obligations which then have priority, and
(b) the total of the values (at that time) of all tainted gifts.
(2) An obligation has priority if it is an obligation of the defendant—
(a) to pay an amount due in respect of a fine or other order of a court which was imposed or made on conviction of an offence and at any time before the time the confiscation order is made, or
(b) to pay a sum which would be included among 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.”
28. Section 76(3)–(7) defines, inter alia, “particular criminal conduct” (as used in section 6(4 )( c) above) and “benefit” as follows:
“(3) Particular criminal conduct of the defendant is all his criminal conduct which falls within the following paragraphs—
(a) conduct which constitutes the offence or offences concerned;
(b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned;
(c) conduct which constitutes offences which the court will be taking into consideration in deciding his sentence for the offence or offences concerned.
(4) A person benefits from conduct if he obtains property as a result of or in connection with the conduct.
(5) If a person obtains a pecuniary advantage as a result of or in connection with 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.
(6) 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.
(7) If a person benefits from conduct his benefit is the value of the property obtained.”
2. The Criminal Justice Act 1998
29. The above provisions of the Proceeds of Crime Act replaced similar provisions contained in section 71 of the Criminal Justice Act 1988. It gave the Crown Court (and where appropriate magistrates ’ courts) the power to make confiscation orders. Section 71(2) provided:
“The Crown Court may make such an order against an offender where—
(a) he is found guilty of any offence to which this Part of this Act applies; and
( i ) that he has benefited from that offence or from that offence taken together with some other offence of which he is convicted in the same proceedings, or which the court takes into consideration in determining his sentence, and which is not a drug trafficking offence...”
30. Section 71(4) and (5) provided:
“(4) For the purposes of this Part of this Act a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained.
(5) Where a person derives a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated for the purposes of this Part of this Act as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage.”
3. R v. Carter [2006] EWCA Crim 416
31. In Carter the defendants were convicted of offences of dishonesty and deception in connection with a business supplying casual labour comprising illegal immigrants and asylum seekers. One defendant was convicted of conspiracy to use false instruments, possession of false registration cards, possession of replica immigration stamps and concealing the proceeds of criminal conduct, namely money laundering. Two other defendants, who had obtained work on the basis of the false documents, were convicted of obtaining a pecuniary advantage by deception and various other counts associated with the conspiracy.
32. Confiscation orders were made under section 71 of the Criminal Justice Act in respect of the wages the defendants had earned in the course of the business. The defendants argued that their wages did not constitute benefit for the purposes of the Criminal Justice Act 1988. In response the Court of Appeal stated:
“It seems to us to be obvious that where you obtain an opportunity to work from an offer of employment being made to you, and the offer has been induced by a false representation that you are entitled to work, the false representation continues thereafter for the benefit of the offender who, permitting the representation to continue, is able to retain employment.
Once made it continues to have effect throughout the employment which has been taken up. At any stage had the representation been corrected, it is plain the employment would have ceased.”
33. The Court of Appeal considered that, in determining whether benefit was obtained within the meaning of section 71(4) of the Criminal Justice Act 1988, the question was whether the deception was “an operative cause” of obtaining the benefit. On the facts in Carter, that test was met. The court also stated that, whilst the confiscation order regime was “draconian”, it was satisfied that it was proportionate for the purposes of Article 1 of Protocol No. 1.
34. In May the House of Lords emphasised the broad principles to be followed by those called upon to exercise the power to make confiscation orders:
"(1) The legislation is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means. It does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine. The benefit gained is the total value of the property or advantage obtained, not the defendant ’ s net profit after deduction of expenses or any amounts payable to co-conspirators.
(2) The court should proceed by asking the three questions posed above: (i) Has the defendant (D) benefited from relevant criminal conduct? (ii) If so, what is the value of the benefit D has so obtained? (iii) What sum is recoverable from D? Where issues of criminal life style arise the questions must be modified. These are separate questions calling for separate answers, and the questions and answers must not be elided.
(3) In addressing these questions the court must first establish the facts as best it can on the material available, relying as appropriate on the statutory assumptions. In very many cases the factual findings made will be decisive.
(4) In addressing the questions the court should focus very closely on the language of the statutory provision in question in the context of the statute and in the light of any statutory definition. The language used is not arcane or obscure and any judicial gloss or exegesis should be viewed with caution. Guidance should ordinarily be sought in the statutory language rather than in the proliferating case law.
(5) In determining, under the 2002 Act, whether D has obtained property or a pecuniary advantage and, if so, the value of any property or advantage so obtained, the court should (subject to any relevant statutory definition) apply ordinary common law principles to the facts as found. The exercise of this jurisdiction involves no departure from familiar rules governing entitlement and ownership. While the answering of the third question calls for inquiry into the financial resources of D at the date of the determination, the answering of the first two questions plainly calls for a historical inquiry into past transactions.
(6) D ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else. He ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject. Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property. It may be otherwise with money launderers."
5. R v. Mohammed Shabir [2008] EWCA Crim 1809
35. The case of Shabir involved a defendant whose defalcations were accepted to amount to GBP 464 but from whom the Crown sought a confiscation order of over GBP 400,000. The applicant argued, inter alia, that the confiscation order was oppressive and/or a breach of his rights under Article 1 of Protocol 1 to the Convention.
36. In considering these arguments, the Court of Appeal concluded:
"The court retains the jurisdiction to stay an application for confiscation, as any other criminal process, where it amounts to an abuse of the court ’ s process. In the present context, that power exists where it would be oppressive to seek confiscation, or to do so on a particular basis.
This jurisdiction must be exercised with considerable caution, indeed sparingly. It must be confined to cases of true oppression. In particular, it cannot be exercised simply on the grounds that the Judge disagrees with the decision of the Crown to pursue confiscation, or with the way it puts its case on that topic. A specific example of that principle is that it is clearly not sufficient to establish oppression, and thus abuse of process, that the effect of confiscation will be to extract from a defendant a sum greater than his net profit from his crime(s). That is inherent in the statutory scheme.
This country ’ s confiscation regime has consistently been held to be a proportionate and legitimate response to crime and thus to occasion no infringement of the Protocol: see for example Phillips v United Kingdom (2001) 11 BHRC 280 and R v Rezvi [2003] 1 AC 1099. Even if it be accepted that the Protocol may be capable of being infringed by a truly oppressive and thus disproportionate individual order for confiscation (as to which we express no opinion), it is clear that the court ’ s power to stay for oppression provides the remedy.
The enormous disparity between the excess of Shabir ‘ s inflated claims (some few hundreds of pounds) and the confiscation order of over £212,000 raises the real likelihood that this order is oppressive. As it seems to us, however, such a disparity will not in every case by itself establish oppression. If it is a case in which the criminal lifestyle provisions of the Act can legitimately be applied, and with them the several section 10 assumptions as to the source of assets, it may well be perfectly proper for a confiscation order to be massively greater than the gain from the offences of which the defendant has been convicted. That is the whole purpose of the criminal lifestyle provisions. They extend the reach of confiscation beyond the particular offences of which the defendant has been convicted."
37. The applicant in this case had obtained a loan of GBP 465,000, which he combined with GBP 310,000 of his own money to purchase a property for GBP 775,000. The mortgage was subsequently redeemed. The applicant was later convicted of making false statements in obtaining the GBP 465,000 loan. By the time of confiscation proceedings in 2008, the value of the property was GBP 1,850,000. At the suggestion of the Crown, the judge assessed his “benefit” as the value of the property at the time of trial, less his original untainted contribution of £310,000. This led to an order being made in the sum of GBP 1,540,000. The Court of Appeal reduced the confiscation order to GBP 1,100,000, being 60% of the market value of the flat, since 60% of the purchase price came from the tainted mortgage.
38. On appeal, the Supreme Court considered, inter alia, the impact of the Human Rights Act 1998 on the Proceeds of Crime Act 2002. It held unanimously that the provisions of the 2002 Act were capable of operating in a manner which violated Article 1 of Protocol No. 1 to the Convention. Consequently, the 2002 Act had to be given effect in a way which was compatible with the Convention. In practice, that meant that a judge should, "if confronted with an application for an order which would be disproportionate, refuse to make it but accede only to an application for such sum as would be proportionate".
39. The Supreme Court considered the Court of Appeal ’ s judgments in a number of cases, including that of Shabir. It noted that:
"Whilst the outcomes of those cases were, as is conceded, correct, the better analysis of such situations is that orders such as those there considered ought to be refused by the judge on the grounds that they would be wholly disproportionate and a breach of [Article 1 of Protocol No.1]. There is no need to invoke the concept of abuse of process."
7. Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings
40. The above Guidance was issued by the Crown Prosecution Service on 28 May 2009. The Guidance sets out four circumstances when it may be inappropriate for prosecutors to decide to instigate confiscation proceedings. The first was where the Crown has reneged on an earlier agreement not to proceed with confiscation. The second was where the defendant had voluntarily paid full compensation to the victim or victims, or was ready, willing and able immediately to repay all of the victims to the full amount of their losses, and had not otherwise profited from his crime. The third was where a court might be compelled to find that property obtained in the most part legitimately by the defendant, and to which the defendant would have been entitled but for his criminal conduct, must be treated as “benefit”. The example was given of a case where the defendant was in fact entitled to the property which he had instead chosen to obtain by deception.
41. The Guidance considered that a fourth situation would be where a defendant had obtained paid employment by a false representation to his employer. The Guidance stated:
“The defendant ’ s wages may be his benefit ( R v Carter [2006] EWCA Crim 416), but some cases will arise where the link between the criminality and the receipt of payment from dishonestly obtained employment is too remote, for example, where had the representation been corrected, the employment would have continued, or where after many years of otherwise lawful employment, a relatively minor previous conviction is discovered.”
I. ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
42. The applicant complains that the confiscation order was a disproportionate interference with his right to peaceful enjoyment of his possessions within the meaning of Article 1 of Protocol No. 1, which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
43. The Government contested that argument.
44. The Government contended that the application should be rejected as inadmissible on the ground that the applicant had failed to exhaust domestic remedies contrary to the requirement of Article 35 § 1 of the Convention as his principal complaint – that the confiscation order disproportionately interfered with his rights under Article 1 of Protocol No. 1 – was never articulated, either in form or substance, before the domestic courts. On the contrary, his complaints were framed only by reference to the established principles of domestic law.
45. In particular, the Government submitted that the applicant could have asserted directly before the Crown Court and the Court of Appeal that his rights under Article 1 of Protocol No. 1 would have been infringed by the grant of the confiscation order in the circumstances of his case. However, despite being represented by leading counsel in the proceedings before the Court of Appeal, this argument was not articulated. As a consequence, the domestic courts were deprived of the opportunity of addressing the particular Convention violation alleged against the respondent State.
46. The applicant submitted that the abuse of process jurisdiction was the appropriate means by which to challenge a confiscation order on the ground that it was a disproportionate interference with the right to peaceful enjoyment of possessions.
47. In any case, the applicant submitted that the substance of his complaint – that the confiscation order was disproportionate – was plainly raised in his skeleton argument and indeed Article 1 of Protocol No. 1 was expressly cited.
48. The Court recalls that the purpose of Article 35 § 1 is to afford the Contracting States the opportunity of preventing or putting right the violations alleged against them before those allegations are submitted to it (see, inter alia, Civet v. France [GC], no. 29340/95, § 41, ECHR 1999-VI). Whereas Article 35 § 1 of the Convention must be applied with some degree of flexibility and without excessive formalism, it does not require merely that applications should be made to the appropriate domestic courts and that use should be made of effective remedies designed to challenge decisions already given. It normally requires also that the complaints intended to be brought subsequently before the Court should have been made to those same courts, at least in substance and in compliance with the formal requirements and time-limits laid down in domestic law (see, among other authorities, Cardot v. France, 19 March 1991, § 34, Series A no. 200, Elçi and Others v. Turkey, nos. 23145/93 and 25091/94, §§ 604 and 605, 13 November 2003, and Azinas v. Cyprus [GC], no. 56679/00, § 38, ECHR 2004 ‑ III).
49. In Ahmet Sadık v. Greece, 15 November 1996, § 32, Reports of Judgments and Decisions 1996 ‑ V, in deciding whether or not an applicant raised a Convention complaint in substance, the Court asked whether or not he had relied on domestic law arguments “ to the same or like effect ” as his Convention complaint. In Castells v. Spain, 23 April 1992, § 30, Series A no. 236 and Fressoz and Roire v. France [GC], no. 29183/95, § 38, ECHR 1999 ‑ I the Court found that where the applicants had relied on equivalent provisions of domestic law, they had raised their Convention complaints in substance before the domestic courts. Likewise, in Guzzardi v. Italy, 6 November 1980, § 72, Series A no. 39 the applicant was found to have “ derived from the Italian legislation pleas equivalent, in the Court ’ s view, to an allegation of a breach of the right guaranteed by Article 5 ” and, in so doing, had “ provided the national courts, in particular the Court of Appeal, with the opportunity ... of putting right the violations alleged against them ”.
50. It is apparent from the applicant ’ s skeleton argument that he raised two distinct grounds on appeal before the Court of Appeal: that his earnings did not amount to a benefit for the purposes of the 2002 Act; and that the making of a confiscation order was oppressive and/or an abuse of process. Prior to the hearing he accepted that he could not succeed on the first ground in view of the court ’ s decision in R v. Carter. In respect of the second ground, he submitted that in light of Article 1 of Protocol No. 1, in order to remain proportionate the application of the confiscation scheme had to remain rationally connected to the public interest aims pursued and go no further than necessary to achieve them. Thus, a confiscation order would be oppressive or an abuse of process in accordance with domestic law where the benefit figure far exceeded the value of the defendant ’ s crimes and could properly be described as disproportionate – either in the traditional sense used in criminal proceedings or in the language of the Convention (see paragraphs 13 – 16 above).
51. The Court notes that it was only in 2012, while giving judgment in R v. Waya (see paragraphs 3 7 – 3 9, above), that the Supreme Court indicated that it would be preferable under British law to analyse confiscation cases in terms of proportionality under Article 1 of Protocol No. 1 than for complainants to invoke the concept of abuse of process. Therefore, at the time the applicant brought his complaint before the domestic courts, it was appropriate for him to argue his case in terms of “oppression” or “abuse of process” (see, for example, R v. Mohammed Shabir, in which the appellant argued, inter alia, that the confiscation order was oppressive and/or a breach of his rights under Article 1 of Protocol 1 to the Convention, and the domestic courts primarily considered whether or not the order was oppressive ). The Court of Appeal in the applicant ’ s case itself stated that “abuses of the confiscation process may occur and, when they do, the appropriate remedy will normally be a stay of proceedings” (see paragraph 18 above). In fact, in arguing that a confiscation order would be oppressive if it was disproportionate pursuant to Article 1 of Protocol No. 1 the applicant gave the domestic courts an opportunity to align, in substance, the criteria for the application of the domestic - law test with the test stated in this Court ’ s case-law for compliance with the Convention (see, for example, Hentrich v. France, 22 September 1994, § 33, Series A no. 296 ‑ A). However, the domestic courts did not follow this approach and the Court does not consider that the applicant could – or should – have taken any further steps to advance his Convention complaint at the domestic level.
52. Consequently, the Court is not persuaded that the applicant ’ s complaints under Article 1 of Protocol No. 1 to the Convention should be declared inadmissible for failure to exhaust domestic remedies.
53. The Court further notes that the application is not manifestly ill ‑ founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
54. The applicant did not dispute that the statutory scheme providing for confiscation in appropriate cases was compatible with Article 1 of Protocol No. 1. Moreover, he accepted that it was justified by the fight against drug ‑ trafficking, money laundering and the financing of terrorism. However, he submitted that the confiscation order made in the present case was not proportionate.
55. In particular, he submitted that his case could be distinguished from case such as Phillips which concerned serious criminal offences such as drug - trafficking and organised crime, and in which there was clearly a compelling need to deter such criminal behaviour. In the present case, the “public interest” relied upon by the Government was that persons who had applied to enter the United Kingdom from overseas would feel justifiably aggrieved if those who had skipped the queue could retain the savings earned through illegal employment.
56. The applicant relied on the case of Ismayilov v. Russia, no. 30352/03, 6 November 2008 as authority for the proposition that where the purpose of a confiscation order was punitive and not compensatory, it might pose an “individual and excessive burden” on an applicant if he had already been punished for the underlying offence by a period of imprisonment.
57. The applicant further averred that no harm had been caused either to his employers or the State; in fact, the sentencing judge indicated that the State had gained more in taxes from the applicant ’ s employment than he himself had saved.
58. Finally, the applicant submitted that there was a discrepancy between the offence that he was convicted of (deceiving his employers) and the alleged justification for the confiscation order (a general deterrent to working without authority).
59. The Government submitted that the making of the contested confiscation order did not amount to a disproportionate interference with the applicant ’ s peaceful enjoyment of his possessions. In particular, they submitted that the order was in accordance with the law; it represented a control of the use of property in accordance with a recognised public interest; and it was proportionate to the aim pursued.
60. The Government submitted that in implementing and enforcing a regime for confiscating the proceeds of crime, it sought to combat serious crime and provide a deterrent against the commission of further or other offences and reduce the profits available for use in future criminal activity. However, pursuit of such legitimate aims was not restricted to cases concerning drug - trafficking or organised crime. In the present case, restrictions on the entitlement of persons such as the applicant to seek and obtain work in the United Kingdom were also in the general or public interest because otherwise persons who had applied to enter the United Kingdom through the visa system would be aggrieved that others could “skip the queue” and retain the benefits of their criminal conduct.
61. With regard to the issue of proportionality, the Government submitted that the regime as a whole was proportionate because confiscation could only be ordered where an individual was convicted of a criminal offence; only available assets with a value equivalent to a person ’ s benefit from criminal conduct could be the subject of a confiscation order; and the convicted criminal could only be responsible for paying what could be obtained from the realisable assets. Moreover, as recognised by the Guidance from the Crown Prosecution Service – and confirmed by the House of Lords in R. v. May – procedures were available to the domestic courts to provide a remedy if a disproportionate order was sought.
62. Finally, the Government submitted that the order made in the present case was proportionate because it was made following the conclusion of fair proceedings; the sum confiscated was lower than the benefit obtained from the crime; and the applicant was able to realise the sum confiscated from assets in his possession.
63. Article 1 of Protocol No. 1 in substance guarantees the right of property (see Marckx v. Belgium, 13 June 1979, § 63, Series A no. 31 ). It comprises “ three distinct rules ” : the first rule, set out in the first sentence of the first paragraph, is of a general nature and enunciates the principle of the peaceful enjoyment of property; the second rule, contained in the second sentence of the first paragraph, covers deprivation of possessions and subjects it to certain conditions; the third rule, stated in the second paragraph, recognises that the Contracting States are entitled, amongst other things, to control the use of property in accordance with the general interest (see, inter alia, Sporrong and Lönnroth v. Sweden, 23 September 1982, § 61, Series A no. 52 ). However, the three rules are not “ distinct ” in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule (see Lithgow and Others v. the United Kingdom, 8 July 1986, § 106, Series A no. 102 ).
64. It is not in dispute that the confiscation order in the present case amounted to an interference with the applicant ’ s right to peaceful enjoyment of his possessions as protected by the first sentence of Article 1 of Protocol No. 1. Moreover, it is clear from Phillips v. the United Kingdom, no. 41087/98, § 51, ECHR 2001 ‑ VII, that confiscation orders fall within the scope of the second paragraph of Article 1 of Protocol No. 1, which, inter alia, allows the Contracting States to control the use of property to secure the payment of penalties. However, this provision must be construed in the light of the general principle set out in the first sentence of the first paragraph and there must, therefore, exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see, among many examples, Allan Jacobsson v. Sweden (no. 1), judgment of 25 October 1989, Series A no. 163, p. 17, § 55).
65. An interference with Article 1 of Protocol No. 1 will be disproportionate where the property-owner concerned has had to bear “an individual and excessive burden”, such that “the fair balance which should be struck between the protection of the right of property and the requirements of the general interest” is upset (see Sporrong and Lönnroth v. Sweden, cited above, §73 ). The striking of a fair balance depends on many factors ( AGOSI v. the United Kingdom, 24 October 1986, § 54, Series A no. 108). Although the second paragraph of Article 1 of Protocol No. 1 contains no explicit procedural requirements, the Court must consider whether the proceedings as a whole afforded the applicant a reasonable opportunity for putting his case to the competent authorities with a view to enabling them to establish a fair balance between the conflicting interests at stake ( AGOSI, cited above, § 55, and Jokela v. Finland, no. 28856/95, § 55, ECHR 2002 ‑ IV).
66. The Court has already observed that at the time the applicant brought his complaint before the domestic courts, it was appropriate for him to argue his case in terms of “oppression” and “abuse of process”. Although the applicant sought to argue that “oppression” should be interpreted in line with the proportionality test required by Article 1 of Protocol No. 1, such an analysis was not adopted by the Court of Appeal (see paragraphs 17 – 19 above). It was only in 2012, while giving judgment in R v. Waya (see paragraphs 3 7 – 3 9, above), that the Supreme Court indicated that it would be preferable to analyse confiscation cases in terms of proportionality under Article 1 of Protocol No. 1.
67. It is clear that in assessing whether or not the confiscation order in the present case was “oppressive” and thus an “abuse of process”, the Court of Appeal did ask whether or not the order was in the public interest. However, having decided that it was, they did not go further by exercising their power of review so as to determine “whether the requisite balance was maintained in a manner consonant with the applicant ’ s right to ‘ the peaceful enjoyment of his possessions ’, within the meaning of the first sentence of Article 1 ” ( see Sporrong and Lönnroth v. Sweden, cited above, § 69). On the contrary, the Court of Appeal made it clear that the abuse of process jurisdiction had to be exercised “sparingly”. In particular, it noted that
“ the responsibility for deciding whether properly to seek a confiscation order is effectively vested in the Crown. When it does so, the court lacks any corresponding discretion to interfere with that decision if it has been made in accordance with the statute ”.
68. Consequently, the Court cannot but conclude that at the time the applicant brought the domestic proceedings, the scope of the review carried out by the domestic courts was too narrow to satisfy the requirement of seeking the “fair balance” inherent in the second paragraph of Article 1 of Protocol No. 1.
69. The foregoing considerations are sufficient to enable the Court to conclude that in the circumstances of the applicant ’ s case there has been a violation of Article 1 of Protocol No. 1 to the Convention. The Court does not consider it necessary to reach any further conclusions in respect of the proportionality of the confiscation order imposed on the applicant.
II. APPLICATION OF ARTICLE 41 OF THE CONVENTION
70. Article 41 of the Convention provides:
“If the Court finds that there has been a violation of the Convention or the Protocols thereto, and if the internal law of the High Contracting Party concerned allows only partial reparation to be made, the Court shall, if necessary, afford just satisfaction to the injured party.”
71. The applicant claimed twenty-one thousand nine hundred and sixty ‑ three pounds and eight pence (21,963.80 GBP), plus interest at such a rate as the Court considered appropriate, in respect of pecuniary damage.
72. The Government accepted that this was the sum which the applicant paid pursuant to the confiscation order but submitted that any interest should only run from the date of payment.
73. The Court recalls that the violation found in the present case was procedural in character, based as it was upon the lack of a review of the confiscation order capable of satisfying the requirements of Article 1 of Protocol No. 1 to the Convention. It cannot be excluded that, had a sufficiently wide review been conducted by the domestic courts, this Court would have found an outcome involving confiscation of the applicant ’ s remaining assets, as occurred in the present case, to be consistent with the Convention. The sum claimed by the applicant in respect of pecuniary damage as just satisfaction under Article 41 is in the region of the amount of the confiscation order made against him (see paragraphs 11 and 71 above). However, in the absence of a proximate causal link between the procedural violation found and financial loss sustained by the applicant by reason of the confiscation order, the Court cannot make an award to the applicant under this head. Nevertheless, the Court recognises that the applicant must have suffered some anguish and frustration as a result of the failure of the domestic courts to conduct a Convention-compliant review of the confiscation order. It would therefore award him EUR 2,000 in respect of such non-pecuniary prejudice.
74. The applicant also claimed GBP 13,353. 5 0 for the costs and expenses incurred before the Court.
75. The Government submitted that this figure was excessive.
76. According to the Court ’ s case-law, an applicant is entitled to the reimbursement of costs and expenses only in so far as it has been shown that these have been actually and necessarily incurred and are reasonable as to quantum. In the present case, regard being had to the documents in its possession and the above criteria, the Court considers it reasonable to award the sum of EUR 10,000 covering costs for the proceedings before the Court.
77. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
1. Declares, unanimously, the application admissible;