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CONFISCATION IN CRIMINAL CASES - THE BASICS

What this seminar is and what it is not

What it is

- An attempt to give some practical tips on the common issues which crop

up in cases within a framework of some of the basic principles of the

law.

- A brief outline of the provisions at relating to appeals and

reconsideration of orders

- An outline of the powers relating to restraint of assets

- An outline of the procedure of enforcement

Some thoughts about how confiscation interacts with other parts of the

sentencing process.

What it is not

- A seminar for advanced practitioners

- A comprehensive overview of all the recent case law and developments

- A guide to the investigatory powers aspects, which is a seminar in itself.

- A detailed exposition of the law prior to 2002/3 and the advent of POCA

- A specialist guide to the restraint and receivership jurisdiction.

Introduction

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- Most of the confiscation law you will find in daily practice is to be found

in the Proceeds of Crime Act 2002 widely known as POCA.

- Confiscation law goes back much further – forfeiture goes back to the

middle ages and you will occasionally come across cases involving the

previous regimes of the 1980s and 1990s which were separate for drugs

and non-drugs cases – in particular you may come across these if looking

at enforcement proceedings and when consulted by clients coming to

the end of long sentences and now facing an additional sentence in

default for not paying their confiscation order!

- Drug Trafficking Act 1994 and its predecessor DTOA 1986

- Criminal Justice Acts 1988 and 1993 and the Proceeds of Crime Act 1995

- Prior to 1988 - Criminal Bankruptcy Orders under the PCCA 1973

- WE ARE GOING TO CONCENTRATE ON POCA

COMMENCEMENT

POCA was brought in in stages so commencement is quite complicated

and there are some different dates for some bits like civil forfeiture, but

for criminal practitioners the important dates to remember are;

February 24 2003 – commencement for the POCA Money Laundering

and disclosure (tipping-off) Offences and most of the investigatory

powers in POCA

March 24 2003- section 6 of POCA and the ‘new’ Criminal Confiscation

Order regime.

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Surprisingly commencement issues are still coming up – either with

challenges to old orders made under the wrong regime or even with

frauds or other conspiracy cases which go back many years.

Generally speaking it is the date of the offence which determines

whether the old law or POCA applies. The transitional provision is fairly

simple in that if any part of any of the offences giving rise to the

confiscation proceedings is before that date then the old law applies.1

THE GENERAL SCHEME OF THE ACT

POCA shares many common features with the previous legislation - in

particular powers to require detailed statements from both sides setting

out the issues, the use of evidential assumptions against the defendant,

similar enforcement procedures once a confiscation order is made and

the system of restraint orders and receiverships to preserve and realise

assets.

- POCA has civil forfeiture chapters which share some of the same

concepts but you have to be quite careful to note some of the

differences in the civil provisions when your opponent cites a civil POCA

case

- One of the most significant changes brought in by POCA was that

the restraint and receivership jurisdiction was transferred from the High

Court to the Crown Court (but not retrospectively so there are still cases

in the High Court relating for instance to the enforcement of old orders).

1 although there is a route around this by the Crown only asking for confiscation in relation to post commencement

offences of a series

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A word or 2 on Practitioners Books

- The summaries in Archbold and Blackstones are a useful starting point,

but for anything but the simplest case you will need one of the specialist

texts

Mitchell Taylor and Talbot – Confiscation and the Proceeds of Crime This

is a Sweet and Maxwell Loose-leaf with several updates per year. It is the

most comprehensive book on the subject.

It very usefully is in 2 volumes I for Pre POCA and one for POCA cases

and the second volume covers both the civil and criminal parts of the

Act. It also has all the statutory and statutory instrument material and

some very useful case digests. It covers both confiscation and also the

money laundering offences and regulatory regime. It is very expensive

£314 so probably one for the library

Smith, Owen and Bodnar OUP – Asset Recovery, Criminal Confiscation,

and Civil Recovery Loose-leaf – this is really the rival to Mitchell – has

not really taken off against, but some people say it is very good. £245

and £165 per year

Millington and Sutherland-Williams on Proceeds of Crime, currently in its

third edition, a hardback practitioner’s textbook, very detailed but at the

same time accessible and well written. The book is perhaps a little

‘prosecution biased’, but this is unsurprising given the background and

practice of authors. Very useful, at £150, a good option if you don’t want

in invest in one of the loose leafs or want something you can take to

court.

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2 books coming out this year that are worth a look

Adrian Eissa from 2 Garden Court and Ruth Barber of Frisby and Co

- Confiscation Law Handbook – promises to be a pithy practitioner’s

paperback and is due out in September this year published by

Bloomsbury. Probably about £75

Rudi Fortson QC 25 Bedford Row his widely regarded book on the

Misuse of drugs is now titled Misuse of Drugs, Confiscation and Money

Laundering - now covers confiscation as well and a new edition is due

out in August this year-that is another Sweet and Maxwell. Price? – Rudi

also does a running commentary on all drug related case law on his

website which is nothing short of amazing.

THE BASICS OF CONFISCATION PROCEEDINGS

We will deal with the basic structure of the confiscation provisions –

what triggers the power to make a confiscation order, how does the

court arrive at a figure etc.? Then look at some specific topics such as

abuse of process and then go back to look at the powers of the court to

obtain information on which to make its decisions.

The basic process

It is sometimes said that there is no discretion under POCA on whether

to hold a confiscation inquiry. That is not quite right, with one exception

- S 6(6) where a victim has or intends to start civil proceedings the court

has a power and not a duty to consider confiscation (and the Court can

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adjourn to find out) and the court will have a discretion over the amount

of the order.

Where the preconditions in section 6(2) of the Act are fulfilled then

section 6(1) says that the Court must proceed if either the prosecutor

asks it do so or the Court itself thinks it is appropriate to do so. 2

So in most cases the Court does have a discretion, but limited to the

discretion to hold an enquiry where the Prosecution has not asked for

one! This lack of discretion has lead recently to a revival of the abuse of

process doctrine to control the abuse of that prosecution power to

instigate confiscation proceedings – we will come back to that.

The need to consider confiscation therefore arises under section 6(2) in

all cases where there is a conviction in the Crown Court or one of the

committals for sentence listed in s6 so long as either the court of the

Prosecutor decides to initiate proceedings. There are no formalities to

starting proceedings – an oral request by a prosecutor to the court will

do.

Before the Court actually proceeds to any calculations, it has to make a

very important determination

- is the case one in which the offender is to be treated as having a

criminal lifestyle 3 or is it not?- this finding is critical because it leads to

a more draconian regime, which looks beyond the benefit derived from

the current offence SO LOOK VERY CAREFULLY IF IT IS SAID THAT THE

LIFESTYLE PROVISIONS APPLY- THE COURT HAS NO DISCRETION OVER

WHICH REGIME APPLIES - very important difference to the old CJA cases 2 Farquhar [2008] 2 Cr. App. R (S) 104, Morgan and Bygrave[ 2009] 1 Cr. App. R (S) 60

3 S6(4)

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where if there were qualifying offences the Crown could still choose

whether to go for ‘simple’ or ‘extended’ benefit.

An offender will be caught by the lifestyle provisions (defined in s75) if;

The offence is specified in Schedule 2 or

The offence constitutes conduct forming part of a course of criminal

activity or

It is an offence committed over a period of at least 6 months and the

defendant benefited from it. ( and the benefit was not less than £5000)4

Schedule 2 catches a wide range of offences most obviously all of the

drug trafficking and production offences (not simple possession) and

those relating to importation and duty evasion. Also money laundering,

arms or people trafficking, brothel keeping and child prostitution

offences, blackmail and various intellectual property offences and one

or 2 others as well as inchoate offences relating to the same offences.

It does not, apart from Blackmail, catch general fraud and theft offences;

so with dishonesty offences you usually have to look at the nature of the

conduct to see if they will be caught – either because it lasted for longer

than 6 months (and produced a benefit of £5000 or more) or because it

was part of a course of criminal activity.

So what is a course of criminal activity – section 75 says:-

It is when in these proceedings the offender is convicted of at

least 3 offences and has benefited from the criminal conduct in at

least 3. Or

4 S75(4)

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In the 6 years ending with the day

in which these proceedings were started he was convicted on at

least 2 separate occasions of at least 2 separate offences of

offences constituting conduct from which he has benefited.

It will immediately be seen that where a series of offences lasts less than

6 months, the decision to plead to 3 or more as opposed to 2 may be a

critical one as it will trigger the lifestyle provisions. When advising on

plea or sentence and negotiating with Prosecutors it is therefore very

important to bear in mind these triggers.

Assessing the Confiscation order

Whether it is a lifestyle case or not and in common with the previous law

the court has to do 2 calculations.

First to assess the defendant’s benefit ,

Second to assess the defendant’s assets, this under POCA is called the

available amount. (the amount that might be realised under the

previous legislation)

The Court then makes an order for the lesser of the 2 amounts and sets

a term of imprisonment to be served if the defendant fails to pay and

considers how long to give the defendant to cough up!

The important principle involved in that basic structure and the single

most difficult thing for clients to understand is that these 2 calculations

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are not directly related. (Although some items of property might feature

in both)

If the court decides you have benefited up to a certain amount then it

can calculate the amount of assets you have available to pay, by

reference to all of your assets not just those obtained by crime.

In all cases it is for the defendant to show that his assets – the available

amount is less than the amount of benefit.5

Like all issues this is to the civil standard of proof- on a balance of

probabilities.6 In practice this will often be extremely difficult – often

one is having to prove a negative – that the supposed benefit has been

spent and is not salted away somewhere – so called hidden assets.

It seems now to be clear that Judges are not bound by the rules of

evidence that apply to trials when conducting confiscation proceedings

particularly in relation to hearsay. Dimmock [2010] EWCA Crim 1440

Although the term often appears in Prosecutor’s statements ‘hidden

assets’ does not appear in the legislation and what is really meant is that

the Prosecutor is arguing that the Defendant should fail in his attempt to

prove that his assets are less than the assessed benefit. Obviously if the

prosecutor persuades the Judge that your client has been deliberately

hiding assets then you will fail on this. Generally it is just a shorthand for

saying that the defendant has not explained where all the money went!

5 S7(2)

6 . Save where the prosecution allege that you are guilty of an untried offence in which case it has been held

that the standard is the criminal one.

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This has to be done often without the usual records (the defendant is a

criminal after all) and with the main witness who often has lost all

credibility before this tribunal by pleading or being found guilty of the

index offence!

The Difference between lifestyle and non-lifestyle cases.

The first difference is that the court is assessing a different concept of

benefit.

BENEFIT – NON LIFESTYLE CASES

In non – lifestyle cases the court has to assess whether the defendant

has benefited from his particular criminal conduct7

Particular Criminal conduct means the benefit from the particular

offence the court is considering + the benefit from any other offences

for which he was convicted in the same proceedings + the benefit from

any offences taken into consideration for the purposes of sentence (

TICs)8

There are 2 critical provisions affecting what the court will treat as

benefit.

Section 76(4) A person benefits from conduct if he obtains property as a

result of or in connection with the conduct.

7 S64(c)

8 S76(3)

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This mirrors the situation under previous regimes- benefit is not the

same as profit – benefit is all of the property obtained by in connection

with an offence not the property obtained less the costs paid out.

This is the second most difficult concept to explain to defendants (and

to many practitioners)

Confiscation is not just about depriving offenders of their ill-gotten

gains or profits from crime although that may have been the political

basis on which the legislation was sold to the legislature and the

public.

Confiscation orders are a penalty for crime which is calculated by

reference to the property obtained in connection with the offending. 9

Section 76(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.

- This has a very important effect in duty evasion cases or other cases

where the crime is the evasion of a liability- the offender may never in

fact have obtained anything in the ordinary sense of the word, but will

be deemed to have obtained a sum equivalent to the pecuniary

advantage. Hence the failed cigarette smuggler whose goods are seized

who still loses his house. More on the duty evasion cases later from

Neresh.

9 May (2008) 1 AC 1028 HL

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BENEFIT IN CRIMINAL LIFESTYLE CASES

s76 ( 4) and (5) apply equally when considering benefit from particular

conduct and benefit from any other offences which are proven ( to the

criminal standard) in the confiscation proceedings themselves but the

key provisions in lifestyle cases are

s 76(2) - General criminal conduct of the defendant is all his

criminal conduct, - and this has no limitation of time including

time before the commencement of the legislation and after the

offence or even the conviction ( although there is provision when

making the order for deductions for any previous confiscation

sums)

s10 - the evidential assumptions the latter are very similar to

those in the previous legislation. Assumptions – the first 3 treat

various things as having been obtained from the proceeds of

criminal conduct

any property transferred to D in the 6 years ending with the day

the proceedings were commenced

any property held by him after the date of conviction

any expenditure incurred over the same 6 years

4th assumption is a different – that any property held by him is assumed

to be free of other interests- it is therefore down to you to prove any

third party interests.

Important to realise that the assumptions only apply to an item of

expenditure or an asset once that item has been proven to be

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attributable to the defendant – it is a 2 stage process – the assumptions

do not get you past the first stage. 10

The safety valve in 10(6) – not to make assumption if shown to be

incorrect or serious risk of injustice.

This cannot be used as an attack on the whole scheme as it applies to

your client, but can be used to prevent injustices such as double

counting by applying the assumptions to related expenditure and assets.

The Prosecutor need not just rely on the assumptions and in a rare case

can actually allege specific other criminal offences which have not been

the subject of prosecution in order to bring into account proceeds of

such offences, but will have to prove those to the criminal standard in

order to comply with Art 6 ECHR11

Procedure

S.18 Power to order statement of information from the defendant.

The power is very wide and inferences may be drawn from a failure to

comply. It is not a reasonable excuse for not complying that you would

be admitting other criminal offences as no information in a section 18

statement can be used as a confession in proceedings for an offence.

(although it could be used as information on which to base an

investigation to uncover other evidence leading to prosecution)

S16 Prosecutors statement of information (or further statements)

10

Whittington [2010] 1 Cr App R (S) 83 11

Briggs Price [2009] UKHL 19, Whittington [2009] EWCA Crim 1641

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This is the document which sets out the Crown’s case as to the

confiscation proceedings – and their suggested calculations as to benefit

and as to the available amount. They are often quite argumentative and

in complex cases will have appendices of evidential material, statements

schedules and even case law. Note that the Prosecutor may also rely on

information contained in statements made by a defendant or

prospective defendant as a requirement of a restraint order – those

usually only contain a prohibition on their use to found a prosecution.

S17 defence response

This has to answer the Prosecutor paragraph by paragraph and to

indicate whether the Prosecutors allegations are accepted or not. This is

very important because any failure to respond to an allegation giving

particulars can be treated as an acceptance of that allegation. (any

acceptance of an allegation can also be treated as conclusive)

Postponement – The court may deal with sentence first and postpone

the confiscation hearing or may deal with confiscation and sentence

together if all the information is available. Most of the problems under

old legislation have gone because of s14(11) – no order may be quashed

as a result of defects in postponement. There is no provision for

retrospective extension of periods of postponement.

Postponement may be up to 2 years and only more in exceptional

circumstances (s 14)

If there is an and that is decided near the expiration of the 2 year period

and 3 months from appeal ends o/s 2 years then 3 months from appeal

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becomes the new backstop time limit for determination of the

confiscation proceedings.

The only exception so far to the reluctance of the Court Appeal post

Sonej and section 11(4) to interfere with cases on the basis of failure to

comply with time limits has been Iqbal [2010] EWCA Crim 376 where the

2 year time limit was exceeded before an application to extend the

postponement was made.

Agreed figures/ settlement

A confiscation order cannot in the strict sense be settled like a civil case.

In reality however the court is dependent on the evidence and

arguments advanced by the parties and that means that concessions can

be made and negotiated and calculations agreed in whole or in part. It is

virtually impossible to get the Court of Appeal to interfere with an order

made on the basis of agreed figures12

Relationship of confiscation order to basis of plea or verdict

Verdicts

A judge is bound to act consistently with the factual basis which must lie

behind a verdict – e.g. where there are alternative counts and the jury

convicts on one and rejects another

12

Hirani [2008] EWCA 1463

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But a Judge can make his own findings of fact on the basis of trial

evidence he has heard - over and above those that the Jury needed to

consider and can act upon them in the confiscation enquiry.13

Relationship of confiscation to Basis of Plea

The legislation is silent on this,

Of course it depends on the Crown’s stance on the particular aspect of

the basis of plea

And there is the possibility of a prosecutor taking the position that they

cannot for instance prove a role to the standard required in a Newton

hearing, but might be able to satisfy a Judge on the balance of

probabilities in a confiscation hearing. CPS guidelines now suggest that

Prosecutors consider reservations in bases of plea to cover that kind of

position.

But generally the position is that the Crown should not be running its

case as to the benefit obtained from particular conduct on a basis

different to that which it has accepted as a basis of plea in relation to the

same conduct – so long as that acceptance is explicit. 14

In Jones [2007] 1 Cr App R (S) 71 the court suggested that section 10(6) –

the serious risk of injustice provision could be invoked so as to prevent

the Crown doing this by use of the assumptions.

The lesson is to get any concession you think may affect confiscation

made explicit in the basis of plea if you can.

13

Sangha [2009] 2 Cr App R (S) 17 14

Lazarus [2005] 1 Cr App R (S) 98 , Lunnon 2005 1 Cr App R (S) 24 Stroud 2004 EWCA 1048, Green 2008 EWCA Crim 1248

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Also the abuse jurisdiction could be invoked where the Crown seeks to

go behind a basis.

Where a factual aspect is not covered by a written basis a defendant

who has not challenged aspects of the Crown’s case for sentencing

purposes is not prevented from doing so in a confiscation hearing.15

Apportionment

- How does the court treat proceeds of crime obtained by joint offenders

of conspirators?

This has caused an enormous amount of debate and litigation and a

good deal of injustice and confusion.

It is not the case as some prosecutors believe that in all cases they can

recover the whole benefit of a conspiracy from each defendant.

The position we seem to have reached particularly after the cases of

May [2008] UKHL 28, [2008] 1 A.C. 1028, Jennings v CPS [2008] UKHL 29,

[2008] 1 A.C. 1046 and more recently Rooney [2010] EWCA Crim 2, is

that

1 If the amount of benefit for a particular defendant is known or can be

ascertained to the relevant standard of proof then that is his benefit

from that crime.

15

Knaggs [2010] 1 Cr App R (S) 75

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2 If the court simply cannot tell, then co-conspirators can be treated as

jointly having obtained the benefit- but if it is a reasonable inference on

the balance of probabilities –that the agreement was to divide it up,

then the court may divide it equally – often happens in diversion and

duty frauds but in Rooney the court applied that principle to the value of

a cannabis importation

3 If he proceeds of the crime were obtained or handled jointly and there is

no basis for an inference as to whether or how it was to be divided –

each conspirator is liable for the whole amount.

4 Courts should not, where there is a minor player with a clearly defined

role who on the balance of probabilities was in it for a relatively small

remuneration: treat that person as jointly liable for the whole proceeds.

See Allpress [2009] 2 Cr. App R (S) 58 re custodians and couriers, also

Sivaraman [2009] 1 Cr App R (s) 80 re the position of an employee. Very

recently - Clark and Severn [2011] EWCA Crim 15 – facilitator of

shipment of stolen cars played important role in conspiracy, but well

away from the thefts or those receiving the proceeds of onward sales.

5 There may be cases where someone is a proven conspirator but the

correct conclusion is that that individual’s benefit was zero (Olubitan

[2004] 2 Cr App R (S) 14 )

Note the safety valve provisions in section 10(6) – do not usually help on

the apportionment problems – either you are dealing with particular

criminal conduct or you are in the first stage of the 2 stage process of

assessing benefit.

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It may help in the case of an individual who happens to be the person

who held the proceeds for the whole conspiracy- it would cause injustice

to treat that person as having received the whole amount, although in

May 2 cases which create the opposite scenario were approved16-

perhaps because they thought that an injustice could be dealt with when

looking at the recoverable amount.

However what is emphasised in May is that the question of what is

recoverable -the 3rd q –( has he benefited and what was the value of his

benefit being the first 2) is a separate question. – The fact that you lose

on apportionment when looking at benefit does not mean that you have

to be treated as still having that jointly obtained property available to

you when the recoverable amount is looked at.

So having gone through the process of assessing the benefit the court is

going to make an order for that amount unless the defence shows that

the available amount is less than that.

The available amount

This is the amount of free property + any tainted gifts ( We are not

going to go through all the law around s77 but the gist is that tainted

gifts are those given for less than value and the tainted proportion is

taken into account. In lifestyle cases the period catching tainted gifts is

the 6 year period. In non-lifestyle cases it is the period from the date

that the first bit of particular conduct in the relevant offence started)

16

Patel [2000] 2 Cr. App R (S) 10, Sharma [2006] 2 Cr App R (S) 63

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Certain statutory obligations have priority – those that would be

preferential debts in a bankruptcy and other orders to pay money from

the criminal courts.

In practice showing the available amount to be less than the benefit

figure means

- Showing dissipation of assets and showing expenditure ( although the

catch is that the more expenditure you reveal show the more the

assumptions can bite upon

- Showing that items believed to be yours are in fact someone else’s or

your interest is less than the whole of a particular asset

VALUE

Value – s 79 and 80 – value is market value of D’s interest in property

That means value at the time the assessment is made.

And for the purpose of calculating benefit the value of cash obtained can

be uprated to its present value to take account of inflation.

THE VALUE OF THE DRUGS

There were a number of cases under the old legislation trying to unravel

the messes that Circuit Judge’s got into in how to treat the value of the

drugs in trafficking cases

There is now a fairly clear position Islam [2009] 1 A.C 1076

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The market value of the drugs can feature in the calculation of the

benefit figure

Either as property obtained by the crime or as expenditure of an

offender to which in a lifestyle case the assumptions would apply-

generally speaking it is the amount at which they were bought – and

officers can give evidence of the range of prices.

They cannot however be taken into account in the recoverable amount –

there is no lawful market for them !

Making the order – terms of imprisonment in default

The terms are those set out for fines – they are in bands depending on

the amount of the order

V important to realise these are maxima – the term should be

somewhere below the maximum for the band your order is and above

the maximum set for the next band down 17

Totality arguments – there is explicit authority that no account should be

taken of the sentence for the substantive offence 18

If the sentence in default is activated then there is unconditional early

release after serving half.19 There can be compassionate early release

before that.

Interest - see below on enforcement. 17

Szrajber 1994(15 Cr App R (S) 821 Quema [2006] EWCA Crim 2806, Mahmood [2010]EWCA Crim 1749 18

Price [2009] EWCA Crim 2918 19

CJA 2003 s 258

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The position of 3rd Parties

The 3rd party (often a spouse ) who claims an interest in property is not a

party to the criminal proceedings ( although they may be heard in

restraint proceedings if affected by the order)

The confiscation order may have been calculated on the basis of

ownership of particular assets, but it is not an order against any

particular asset it is an order against an individual to pay money.

However the reality is that it is very difficult to unravel findings made at

first instance either on appeal or during the confiscation proceedings. –

The third party often a spouse- may be an important witness and if their

claim is a sustainable one – e.g. that they made a real contribution to the

purchase of a jointly owned property by providing part of the deposit or

by contributing to mortgage payments then it is important to call that

evidence. The same is true of those who are in business with the

defendant and claim an interest in the assets of the business.

Norris (2001) 1 WLR 1388 a third party is not prevented from re

litigating issues of joint ownership in enforcement proceedings – where

a receiver for instance seeks an order for sale of a house. The defendant

cannot re litigate that issue as that would be an abuse but there is no

issue estoppel in Criminal proceedings and the third party may have

been a witness below but they were not a party.

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Special considerations in duty evasion cases

In relation to duty evasion cases (most commonly those involving

smuggling of alcohol and tobacco), there is a need for care when

calculating the benefit figure.

The benefit gained includes obtaining of pecuniary advantage (i.e. a

benefit obtained by a defendant as a result of or in connection with his

criminal conduct which does not result in him obtaining property but

results in an advantage which can be converted into monetary value) –

and covers the evasion of tax (i.e. avoiding a civil liability).

But as was made clear in May20, in the evasion of liability cases, the

defendant must be personally liable for the liability if its evasion is to

attract a benefit - since obtaining benefit for another is not caught. If he

has merely been paid a fee for his involvement, the benefit figure in such

a case is restricted to that fee.

The need for care was recently highlighting in the case of Chambers

[2008] EWCA Crim 2467, where a change in 2001 under the Tobacco

Products Regulations 2001 narrowed the class of people personally

liable to pay duty on importations of tobacco,21 but was overlooked

when confiscation orders were being made. As such, in a large number

of cases involving tobacco smuggling, confiscation orders were made

where the benefit figure was wrongly calculated on the basis of the

liability evaded, even though the defendant would not have not been

personally liable for the duty (for a brief explanation of how the mistake

20

[2008] 2 WLR 1131 21

Essentially the a combination of the new regs and an interpretation of them to make them compatible with EU law narrowed the classes of person who were liable to pay the duty and could therefore be said to have evaded that liability.

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was made and the particular group of defendants to whom it applied,

see Khan & others [2009] EWCA Crim 588 and further guidance on the

regulations was recently provided in White & others [2010] EWCA 978).

The result of the mistake identified in Chambers is that the RCPO have

had to conduct a large scale review of confiscation order in tobacco

smuggling cases identify cases where inappropriate orders were made. It

is worth knowing about because defendants effected by Chambers are

popping up all over the place, many of them with confiscation orders

that should now be quashed (the Court of Appeal provided guidance on

how such cases should be dealt with in Khan).

Abuse of Process

The leading case is now CPS v N [2009] EWCA Crim 1573 (obtaining a job

and therefore wages by a false representation)

The Court of Appeal was explicit in this case that it believed that Courts

were staying cases too readily. It emphasises that a draconian result

caused by proper application of the legislation which the Judge does not

like is not a basis for a stay.

It did approve the use of a stay in Morgan and Bygrave22 situations

where because a victim had not started or said that they intended to

start civil proceedings the court had no discretion to reduce of dispense

with the confiscation proceedings despite the fact that the defendant

had or was ready to repay the whole sum obtained to the victim. The

22

[2008] EWCA 1323

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double recovery was said to give rise to an oppressive abuse of power in

the prosecution decision to proceed.

Where the operation of the legislation produces an absurdly

disproportionate benefit figure compared to the actual benefit obtained

this may be the basis for a stay 23 The difficulty for the practitioner is to

distinguish between an absurd, oppressive or disproportionate result

and one where the legislation produces a draconian penalty massively

greater (because of the lifestyle provisions) than the benefit from the

offences to which the conviction applies which apparently is not

oppressive. _ IF IN DOUBT WHICH SIDE OF THE LINE IT FALLS MAKE AN

APPLICATION TO STAY.

There has been one instance at least of a case being stayed on the basis

that the individual was unable to obtain legal representation in a

complex case where he could not be expected to deal with the

confiscation allegations as a litigant in person.24 This has been largely

dealt with by an amendment to the Grad fee regs

The result of CPS v N was that there are now some fairly extensive

guidelines for prosecutors issued by the DPP on how to exercise the

discretion to pursue confiscation proceedings – they are summarised in

the 2011edition of Archbold at 5-547 and can be downloaded from the

CPS website. They also deal with considering confiscation when deciding

on bases of plea and with exercise of the public interest aspect of the 23

Shabir [2008] EWCA Crim 1809 – the pharmacist case. 24

[2008] EW Misc 2 (EWCC)

26

discretion in relation to offenders who have no or very limited assets or

where a large amount of legitimately obtained assets would be caught

with a small amount attributable to crime.

If you have a view that proceedings may be oppressive then full

representations to the CPS should be made with reference to the criteria

in the guidelines and failing that an application to stay should be tried.

HUMAN RIGHTS CONSIDERATIONS

The lifestyle provisions in POCA are very similar to the extended benefit

and DTA provisions considered by the House of Lords in Benjafield

(2003) 1 AC 1099- the court concluded that the proper application of

those provisions did not involve any breach of ECHR Articles 6 and 7 or

of Article I of the first Protocol ( no arbitrary deprivation of property) It is

unlikely therefore that any general challenge to the scheme on human

rights grounds would succeed but if the provisions produce a truly

arbitrary result in a particular case that would support an application for

a stay or for use of 10(6) to desist from applying an assumption

Absconding defendants – no power under s 6 instead look at s27 but

unclear what happens if absconding happens after the hearing has

started.

Restraint Orders25 and Management Receivers 26

25

Ss 41-44 and Crim Proc Rules Pts 57-62 26

Ss 48-49 and 62-66

27

We are just going to touch on this as really a topic worthy of a whole

seminar.

The restraint order can be applied for as soon as an investigation begins

and investigator (accredited financial investigator) can apply for one as

well as prosecutors, if they can show that there is reasonable cause to

believe that the alleged offender has benefited from criminal conduct.

(including conduct abroad that would be an offence here). It will apply to

all the defendant’s assets and prevent him from dealing with any of

them and may include provisions for the extensive provision of

information by witness statement (disclosure orders) . The law on what

use can be made of such disclosure is frankly a mess with contradictory

authorities and there will no doubt have to be a serious attempt by the

appellate courts to sort out the potential breaches of the right against

self-incrimination. There is some case law on the need for provisions in

the orders limiting the use to which disclosure can be put but it is still in

a state of flux. ( Saunders v UK type problems)

Most orders are granted on the alternate basis that proceedings have

started and that the same reasonable cause is present.

The power can be extended to the assets of any person named in the

order and is often made to cover family members and business partners

where there is reason to believe that assets held by them are in whole or

in part realisable property – that in which the accused has an interest.

There has to be some risk of dissipation of assets to justify making an

order but the court is likely to infer such a risk in any case involving

28

significant sums. The order can restrain property wherever in the world

it is situated but it is an order addressed to individuals and the practical

effect abroad of an order will depend upon international agreements.

Repatriation of assets to the UK may also be ordered.

Funding – restrained funds may not be used for legal expenses at trial or

in the confiscation proceedings that includes any contribution to public

funding.

CLS funding to deal with these applications is available and is dealt with

by the LSC special cases unit there is a hot line for urgent funding advice.

Living expenses – the court should make a provision for an exception to

the order to allow for the reasonable living expenses of the defendant

and his dependents. What is reasonable (for an unconvicted defendant)

will vary depending on the individual and their lifestyle27, but the court

will expect some purse tightening and will not make the exception if

there are other unrestrained assets available for this purpose. Variations

of this aspect of the order can be sought. A stricter line is taken post-

conviction.

The legislative steer s.69 – the powers to restrain and to appoint

receivers are required to be exercised so as to promote the preservation

of property to satisfy a future confiscation order and so as to prevent

the diminution of the assets to which they relate, but the interests of

third party (not the defendant or the recipient of a tainted gift) in

retaining the value of their interest in any property restrained or under

receivership are given priority where this conflict with those aims.

27

RE Peters[1988] QB 871 – private school fees were held to be reasonable

29

For obvious reasons orders are usually sought ex parte and applications

can then be made by the defendant or an affected third party to

discharge or vary the order.

Third parties can apply to the court to release their assets and bring

evidence to show that the accused has no interest in them or that their

interests can be separated. It is up to the court whether to litigate this

before the confiscation enquiry or to wait.

Management receivers

These are appointed under s 48 in cases where there is a danger of

dissipation or diminution of the assets unless someone manages them. It

is a serious step because the costs of the receivership fall to be met from

the assets. It is beyond the scope of this talk to go into detail on the

powers of receivers save to say that they can be granted very wide

powers to deal with assets and to step into the shoes of a defendant in

other respects such as conducting litigation and even selling assets.

Interaction with other sentences

The court has to consider confiscation first before any other financial

orders28

If the available amount is less than the benefit figure calculated by the

court than the entire defendant’s assets will be required to pay it and no

costs or fine can therefore be ordered.

Compensation

28

S15

30

This is given priority over confiscation but the court assesses

confiscation first then compensation. If there are not sufficient assets to

pay both sums then the court orders that the compensation should be

paid out of the money recovered under the confiscation order.29

Don’t forget forfeiture under s143 PCC (sentencing) Act 2000 – it is

sometimes in the interests of defendants to have seized property

forfeited under this provision30

- if the Crown can be persuaded that there are no other assets and

therefore only a nominal confiscation order is needed.

ENFORCEMENT OF CONFISCATION ORDERS

Time for payment – s 11 – 6 months with possible extension up to 12

months on application (usually only if unexpected delay e.g. in sale of

house delayed)

If there is a real prospect of being more able to pay if time is extended,

it may be worth making an application to extend under 11(4) as it stops

the clock as far as interest is concerned (see below)

Despite the calculations based on the offenders assets, and powers in

relation to restraint order to prevent dealing with those assets, it must

be remembered that a confiscation order an in personam order against

29

S13 and 12(5) 30 (a) has been used for the purpose of committing, or facilitating the commission of, any offence, or (b) was

intended by him to be used for that purpose,)

31

the defendant requiring him to pay a sum of money31 and is not an in

rem order against any property itself.

Therefore, unless a defendant is willing to co-operate and voluntarily

satisfies the confiscation order, further court orders will be necessary to

enforce the confiscation order.

The primary mechanism for enforcement of confiscation orders are

i) Through the Crown Court by the appointment of receivers. ii) In Magistrates’ Court

Voluntary payment of the order

The legislation is designed to ‘encourage’ co-operation and voluntary

settlement of the confiscation order:

i) Payment of interest32 a. Interest runs from expiry of the time given by the court to pay the

order and runs at the rate applicable to civil judgments. b. The addition of interest to the capital sum outstanding is

mandatory (there is no discretion vested in the court to not to impose interest33).

c. When the addition of interest to the capital sum is sufficient to raise the maximum period of imprisonment in default of payment, the court has power (on a prosecution application) to increase the default sentence.34

ii) Service of the default sentence for non-payment. a. Where the sentence is activated, the term must be served

consecutive to any other terms of imprisonment the for the offences35

31

POCA 2002, s.6(5)(b) 32

POCA 2002, s.12 33

Hansford v Southampton Magistates’ Court [2008] EWHC 67 (Admin) 34

POCA 2002, s.39(5) 35

POCA 2002, s.38(2)

32

b. Unlike fines, the service of the period in default of payment does not extinguish the obligation to pay the confiscation order.36

iii) the appointment of receivers a. Where receivers are appointed by the Crown Court, the defendant

maybe required to pay the receivers costs and the prosecutions legal costs in applying for such an appointment37

b. Receivers may obtain a lesser price from the sale of the defendant’s assets than the defendant himself may have been able to obtain.

In addition, where a defendant can demonstrate that he has taken active

steps to try and satisfy the confiscation order voluntarily, it may offer

useful evidence at later stages of enforcement proceedings (see below):

i) the Magistrates’ court is less likely to have recourse to activation of the sentence in default.

ii) The Crown Court may be less willing to accede to a prosecution application for the appointment of a receiver

Practical issues with voluntary payment

Where defendant has been sentenced to immediate custody, it will

obviously restrict his ability to satisfy the confiscation order, but there

are still a number of steps that can be taken

i) Getting the defendant to sign letters of authority allowing payment to the court of any money already held by the Prosecutor (e.g. money seized at time of arrest) or in the defendant’s bank accounts

ii) Provide his solicitors with instructions to effect sales of any real property while the defendant is in prison.

36

POCA 2002, s.38(5) 37

HN [2005] EWHC 2982

33

However, care should be taken if a restraint order is in place, it may be

necessary to seek a variation of the restraint order to put restrained

assets on the market with a view to its realisation for the satisfaction of

the confiscation order.

Usually, restrained money held by the defendant and third parties is less

problematic, as standard restraint orders make provisions for payment

of the money to the enforcing Magistrates Court in satisfaction of the

confiscation order. But it is always a good idea to check.

The prosecutor will usually consent to vary the restraint order to allow

the sale of assets to take place. However prosecution concerns about

the undervalued sale of assets (usually to the defendants associates) and

dissipation of the proceeds of sale by the defendant will need to be

addressed. This can usually be done by use of some of the following

conditions:

Valuation of the property by at least two independent valuers (who, if possible, are members of a recognised trade association) and sale for at least the average of the two valuations

Undertaking to instruct named solicitors to act for the defendant in relation to the transactions (whose instruction will not be terminated without agreement of the prosecution or court)

Direct payment of the net proceeds of sale into court by the solicitors

All fees payable in relation to the sale 9e.g for solicitors, valuers, estate agents etc.) to be agreed in advance of being incurred.

Appointment of Enforcement Receivers

Purpose of enforcement receivers

Unlike management receivers, the primary purpose of enforcement

receivers is to realise the defendant’s assets to satisfy the confiscation

order.

34

The power to appoint enforcement receivers

s.50 POCA 2002 provides:

(1) This section applies if –

(a) a confiscation is made (b) it is not satisfied, and (c) it is not subject to appeal.

(2) on the application of the prosecutor the Crown Court may

appoint a receiver in respect of realisable property

The Court may not appoint receiver while a case is potentially subject to

an appeal. Therefore a receiver may not be appointed until the time

limit for an appeal against the confiscation order has elapsed, and where

an appeal has been lodged within time, until the determination of that

appeal.38 Pending CCRC or ECtHR applications do not affect the

appointment of receivers.39

The power is discretionary and the court is not bound to appoint a

receiver, even if the conditions of s.50(1) are met.

While the appointment of receivers can be an effective method realising

the defendant’s assets, it can be expensive one. In Re H [2005] EWHC

Admin 2982 (a CJA 1988 case heard in the High Court) Munby J

observed:

The effect of my ruling [to appoint a receiver] is potentially

to throw onto the defendant’s assets the burden of meeting

the receivers costs, disbursements and fees, it maybe

38

POCA 2002, s.87(2), for these purposes, out of time appeals are to be ignored 39

Re P [1998] EWHC Admin 1049

35

proper, in an appropriate case to defer the appointment of a

receiver for a short period to give the defendant the

opportunity himself (subject of course to suitable

safeguards) to realise the assets – something he may

perhaps be able to do more advantageously and at lesser

expense that the receiver

If seeking to oppose the appointment of a receiver, the court should be

invited to consider

Whether the defendant could reasonably satisfy the order voluntarily

Whether he has been given sufficient opportunity to do so (including what efforts he has already made in this regard)

Whether there are less expensive and/or equally effective enforcement methods available (particularly though Magistrates’ Court enforcement)

While there is nothing to preclude an application to appoint a receiver

being made before the time allowed for payment has expired, it is

clearly something that the court should have regard to when

determining whether or not to make the appointment (Can be argued

that the period to pay should be regarded as a reasonable time frame

envisaged by the judge making to order for voluntary payment of the

order).

But, in complex/large confiscations, the prosecution may seek to argue

that prompt appointment of an enforcement receiver will ensure the

order is satisfied within the time allowed for payment.

The Court’s jurisdiction to appoint receivers over realisable property is

not restricted merely to the property that was taken into account by the

36

Crown Court when the confiscation order was made. So in theory, if the

defendant were to come into assets (such as for example through an

inheritance) after the confiscation order was made, the Court has

jurisdiction to appoint a receiver to realise those assets to pay the

confiscation order.

Powers of enforcement receivers

s.51 of POCA 2002 sets out the powers of enforcement receivers:

(1) If the court appoints a receiver under section 50 it may act under this section

on the application of the prosecutor.

(2) The court may by order confer on the receiver the following powers in relation

to the realisable property—

(a) power to take possession of the property;

(b) power to manage or otherwise deal with the property;

(c) power to realise the property, in such manner as the court may specify;

(d) power to start, carry on or defend any legal proceedings in respect of

the property.

(3) The court may by order confer on the receiver power to enter any premises in

England and Wales and to do any of the following—

(a) search for or inspect anything authorised by the court;

(b) make or obtain a copy, photograph or other record of anything so

authorised;

(c) remove anything which the receiver is required or authorised to take

possession of in pursuance of an order of the court.

(4) The court may by order authorise the receiver to do any of the following for

the purpose of the exercise of his functions—

(a) hold property;

(b) enter into contracts;

(c) sue and be sued;

(d) employ agents;

(e) execute powers of attorney, deeds or other instruments;

(f) take any other steps the court thinks appropriate.

(5) The court may order any person who has possession of realisable property to

give possession of it to the receiver.

(6) The court—

(a) may order a person holding an interest in realisable property to make to

the receiver such payment as the court specifies in respect of a

beneficial interest held by the defendant or the recipient of a tainted

gift;

37

(b) may (on the payment being made) by order transfer, grant or

extinguish any interest in the property.

(7) sets out when subsections (2), (5) and (6) do not apply to property

(8) The court must not—

(a) confer the power mentioned in subsection (2)(b) or (c) in respect of

property, or

(b) exercise the power conferred on it by subsection (6) in respect of

property,

unless it gives persons holding interests in the property a reasonable

opportunity to make representations to it.

(9) The court may order that a power conferred by an order under this section is

subject to such conditions and exceptions as it specifies.

(10) Managing or otherwise dealing with property includes—

(a) selling the property or any part of it or interest in it;

(b) carrying on or arranging for another person to carry on any trade or

business the assets of which are or are part of the property;

(c) incurring capital expenditure in respect of the property.

These powers are similar to those management receivers under s.49, but

with the significant additional power under s.51 (2) (c) to realise

property in such a manner as the court may specify.

Procedure for the application for enforcement receivers

Applications for enforcements receivers is governed by Part 60 of the

Crim PR (2010)

(1)The application must be in writing and must be supported by a

witness statement which must—

(a) give the grounds for the application; (b) give full details of the proposed receiver;

(c) to the best of the witness’ ability, give full details of the realisable property in respect of which the applicant is seeking the order and specify the person holding that realisable property;

(d) where the application is made by an accredited financial investigator, include a statement that he has been authorised to make the application under section 68 of the 2002 Act; and

38

(e) if the proposed receiver is not a person falling within section 55(8) of the 2002 Act and the applicant is asking the court to allow the receiver to act—

1. without giving security, or 2. before he has given security or satisfied the

court that he has security in place, explain the reasons why that is necessary.

Rule 60.1(6) requires that the application (with supporting witness

statements) is served on the defendants, any person holding realisable

property to which the application relates and any other person the

applicants know will be affected, at least seven days before any hearing.

Practical issues in relation to the Defendant’s response to the

application

If the defendant considered that he is in a position to satisfy the order

voluntarily, he should provide a witness statement setting out the

efforts that have already be made to satisfy the order, proposals for how

the order can be satisfied, conditions that can be applied and a

timescale (see above) to satisfy the court that the proposal is genuine.

But in major cases involving large confiscation orders and where the

defendant is serving a length custodial sentence, it may be difficult for

the defendant to find credible grounds in which to resist the application

(particularly where there is a substantial amount of property that might

be subject of third party interests).

Under the old legislation, it was not uncommon for defendants to

indicate that they would rather ‘buy their way out of the order’ by

serving the period in default (though in R v Harrow Justices ex p DPP

39

[1991] 1 WLR 395 the Divisional Court made clear that this was not a

decision that the defendant got to make). However, under POCA 2002,

the serving of the sentence in default does not extinguish the order and

it can still be enforced – something that it may be worth reminding

clients about if they are considering this!

Third Party Rights and Representation

An important factor in the concept that confiscations orders are in

personam orders is that third parties have no right to appear or be

represented at the confiscation hearing, even when the realisable

property is one that the third party claims an interest in.

In Norris [2001] 1 WLR 1388, the House of Lords confirmed that the only

stage at which a third party can seek to assert their rights over realisable

property (to prevent their interest in being realised in satisfaction of a

confiscation order) is in receivership proceedings.

As such, a third party is not bound by the finding in the Crown Court in

the confiscation proceedings, even where the third party has given

evidence on behalf of the defendant in those proceeds (as was the case

in Norris).

s.69(3) seeks to protect third parties:

(a) the power [to appoint a receiver] must be exercised with a view to

allowing any person other than the defendant or recipient of a

tainted gift to retain or recover the value of any interest held by

him

40

(b) in the case of realisable property held by a recipient of a tainted

gift, the powers must be exercised with a view to realising no

more than the value for the time being of the gift

It is essential to note that what is protected is not the property or the

interest itself, but only the value of the interest.

The most common example of a third part interest arises in the context

of matrimonial homes. It is very difficult for a spouse to resist the

appointment of a receiver to realise the matrimonial home, if the

defendant’s interest in the proceeds of the sale of the home are

required to satisfy the confiscation order, all s.69(3) will operate to do is

protect the value of the spouse’s interest from the sale of the home40

(so that the sum proportionate to and representing this value would be

paid over to the spouse from the proceeds of sale, the balance being

paid to the court in satisfaction of the confiscation order).

However, the case of matrimonial homes maybe the subject of property

adjustment orders in family proceedings under the Matrimonial Causes

Act 1973 and there is nothing to suggest that the Family Court is

precluded from (in appropriate cases) transferring a defendant’s

property to a deserving wife, even where that property is required to

satisfy a confiscation order.41 In such circumstances, it is clear that the

confiscation order will need to be revisited, as the available amount will

40

CPS v Richards [2006] EWCA Civ 849, though under s.69(2) POCA 2002 the Court is required to have regard to the right to family life and property conferred by the ECHR, this may in certain circumstances permit the spouse to delay realisation of the matrimonial home 41

Customs & Excise v A [2003] 2 W.L.R. 120 (case relating to DTA) and confirmed in relation to POCA 2002 in Webber v Webber [2006] EWHC 2893

41

have changed after the making of the confiscation order and as a result

of property adjustment order.

If instructed by a third party affected by an application to appoint an

enforcement receiver, a solicitor should notify the court, prosecuting

authority and solicitor acting on behalf of the defendant of his interest in

the matter.

Where the third party is unable to privately fund their representation, an

emergency application for public funding can be made (if the eligibility

criteria are satisfied).

As a third party is only entitled to seven days notice of the application to

appoint an enforcement receiver, it is not uncommon for solicitors

representing a third party to seek an adjournment, in those

circumstances it is not unusual for the court to appoint the receiver in

relation to those assets free of third party interests, but stay the

receivers powers in relation to any assets that the third party claims an

interest in pending their determination.

It is often also prudent for a third party to enter without prejudice

negotiations with the prosecutor and the defendant, as it may resolve

the matter expeditiously and at minimal costs. the encouragement that

court gives to such an approach was made clear in Grimes v CPS [2003]

EWCA Civ 1814

42

Enforcement by the Magistrates’ Court

While the appointment of enforcement receivers is an effective remedy

to secure payment, it is expensive and is usually more appropriate for

larger and more complex confiscation orders (involving substantial

assets and third party claims).

In the majority straightforward case, where the property can be

relatively easily realised, enforcement will usually be through the

Magistrates’ Court enforcement powers.

The key provision for Magistrates’ Court enforcement is s.35 POCA 2002,

by which a magistrates’ court may enforce a confiscation order as if it

were enforcing a fine

Distress Warrants

s.76 Magistrates’ Court Act 1980: empower bailiffs to take possession of

and sell property belonging to the defendant to satisfy the confiscation

order. This is a particularly useful and inexpensive way of dealing with

cars, jewellery and other belongings, particularly if those items were

seized at the time of arrest and the defendant is unwilling to voluntarily

hand them over.

BUT it must be noted

cannot it empower the bailiff with authority to enter premises to

seize items

it cannot be issued until the time to pay has expired

43

Third Party Debtors orders

s. 87 Magistrates’ Court Act 1980, enforced by the Magistrates’ Court

through the High Court/ County Court to require third parties holding

funds belonging to the defendant (and which are not subject to a

restraint order) to be paid over to the enforcing magistrates’ court. It is

particularly useful in cases where the defendant has money in bank

accounts that he will not pay over voluntarily

Seized money

s.67 POCA 2002, gives the enforcing magistrates court power to direct

banks to pay money belonging to the defendant to the court for

satisfaction of the confiscation order. It also applies to money that has

been seized by the police and customs officers. But it can only be used if

there is a restraint order in place in relation to the money (otherwise a

third party debtors order is required).

Activation of the sentence in default

s.76 Magistrates' Court Act 1980: grants enforcing magistrates’ court

power to issue warrant of commitment to activate the default sentence

imposed by the Crown Court in event of non-payment.

There are a number of salient features in relation to activation of the

default period

unlike fines, the service of the period in default will not extinguish the obligation to pay the confiscation order42

42

s.38(5) of POCA 2002

44

the term must be served concurrent to any other term the defendant is serving for the commission of the offence43

if the period in default is activated, the defendant is entitled to be unconditionally released at the halfway point of the term for which he was committed

where payment is made of money in satisfaction of part of the confiscation order after the defendant has started to serve the period in default of payment, s.79(2) of the Magistrates’ Court Act should apply and the defendant should be entitled to a pro rata reduction to the period in default that must be served

Procedure for Magistrates’ Court enforcement hearing

In order to consider activation, the magistrates’ court must convene an

enforcement hearing which the defendant is required to attend. If he

fails to attend, a warrant for his arrest may be issued44 and a default

sentence may not be activated in his absence.

Unlike non-payment of fines, the hearing will not take the form of a

means enquiry as there is no requirement for the court to find a ‘wilful

refusal or culpable neglect’ before the sentence can be activated. The

Magistrates’ Court can take the fact of the confiscation order as

evidence that there are assets to pay it with.45

However, the justices are under a duty to enquire into the defendant’s

proposals for payment and to determine whether any other methods for

enforcement might be effective. It is only when it is clear that these

would not succeed that court should issue a warrant of commitment.46

43

s.38(2) of POCA 2002 44

s.83 Magistrates’ Court Act 1980, this only applies where the court is considering activation of the default term and not to hearing where only civil remedies are being considered – see R(on the application of Necip) v City of London Magistrates’ Court [2009] EWHC 755 45

R v Harrow Justices Ex p. DPP [1991] 1 WLR 506 46

R v City of London Justices Ex p. Garrote [2002] EWHC 2909

45

When determining whether or not to issue a warrant of commitment,

the magistrates’ court is entitled to hear from the prosecuting

authority.47

As a defendant’s liberty is at risk, he is entitled to be legally represented

at the enforcement hearing and public funding is available for this,

though the representation order cannot be extended to representation

by counsel.48

The court has a discretion to adjourn the enforcement hearing if it

considers it appropriate to do so.

Often, the listing of an enforcement hearing will focus a defendant’s

mind on the issue of applying for a certificate of inadequacy. In addition,

if legal representation has only been applied at this stage (as a result of

the matter having been listed and the defendant instructing solicitors),

then it will be clear that an adjournment would be desirable to allow the

necessary steps to be taken.

However, the discretion to adjourn should be exercised judicially. If the

Magistrates’ court is made aware that there is to be an application for a

certificate of inadequacy, the justices should adjourn enforcement

hearings pending the outcome of the application. If however, there is

substantial and unjustified delay in making the application, the

Magistrates were entitled to refuse the application to adjourn. From the

authorities a number of points arise:49

47

R v Harrow Justices Ex p. DPP [1991] 1 WLR 506 48

Taylor v City of London Magistrates’ Court [2009] EWHC 1498 (Admin), enforcement does not qualify under Criminal Defence Regulation Service (General) (No. 2) Regulations 2001 (SI 1473/2001) 49

Barnett v DPP [2009] EWHC 2004, McLeod v City of London Magistrates’ Court [2009] EWHC 897 and R v Liverpool Magistates’ Court Ex p. Ansen [1998] 1 All ER 692

46

i) the decision whether or not to adjourn the enforcement hearing is discretionary

ii) this discretion must be exercised judicially iii) where a defendant can show the court that he has cooperated with

the enforcement authorities by responding to correspondence, realising assets voluntarily, showing that any delays or failures were not of his making (e.g. the sale of a house falling through) and where necessary making efforts to seek any certificates of inadequacy promptly, the court should be willing to grant adjournments

iv) the defendant should be willing to provide evidence to substantiate his activity in seeking to comply, where such evidence is absent the court is entitled to reject his assertions.

Delays in enforcement proceedings

While earlier authorities suggested that even culpable delays would not

act as a bar to confiscation orders being enforced,50 the Divisional Court

in Lloyd v Bow Street Magistrates’ Court [2003] EWHC Admin 2294

quashed the decision of the Magistrates’ Court to activate a sentence in

default on the basis if lengthy delay by the prosecutor in taking

enforcement action.

As a result of Lloyd, a considerable body of case law has developed in

relation to the issue of delay as a bar to enforcement. It is now settled

law that unreasonable delay in taking enforcement proceeding will be a

bar to the activation of a default sentence.

In Lloyd the confiscation order was was made in June 1996 (for aprox.

£33k with 18 months in default), by July 1997 nearly £27k was still

outstanding, the CPS applied for enforcement receivers in November

1998 and they were appointed in January 1999, thereafter there 50

see for example R v Chichester Magistrates’ Court Ex p. Crowther [1998] EWHC Admin 960

47

appeared to have been a breakdown in communication between CPS

and enforcement receivers, and in January 2001 the CPS invite the

Magistrates Court to issue a warrant of commitment, the hearing of

which only took place in October 2002 when the defendant was

committed to prison.

In quashing the warrant of commitment on the grounds that the delay

constituted a breach of the defendant’s rights under Article 6.1 of the

ECHR (fair trial within a reasonable time), Dyson LJ observed

We do not see how the fact that the defendant is in breach of his

continuing duty to satisfy the confiscation order can be relevant. In

our view, the conduct of the defendant can have no bearing on the

question whether he has a right to have proceedings against him in

respect of that conduct instituted and determined within a

reasonable time

…

Similarly, in our view, the fact that a defendant is alleged to be in

breach of a confiscation order is no reason to deny him the right to

have proceedings brought to enforce the order by commitment to

prison determined within a reasonable time

…

It is potentially very unfair on a defendant that he should be liable

to commitment to prison for non-payment of sums due under a

confiscation order many years after the time for payment has

expired, and long after he has been released and resumed work and

family life.

…

If the authority whose task it is to enforce confiscation order are

slow in communicating with one another or in activating

enforcement mechanisms such that they become in breach of

Article 6.1, then the appropriate remedy may well be (as in this

case) that the weapon of imprisonment in default is lost. The

sooner this is appreciated by all agencies of the criminal justice

system, the better.

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However, the Court in Lloyd made it clear, that if the prosecuting

authorities have acted in an appropriate manner, and that the delay is

the consequence of the complexity of the financial affairs, the fact that

assets are taking unusually long to realise, or is of the defendant’s own

deliberate making (e.g. if he is being evasive and avoiding diligent

attempts to extract the money from him), then Article 6.1 will not assist

him.

In R(on the application of Deamer) v Southampton Magistrates’ Court

[2006] EWHC Admin 222, the High Court reiterated mere delay was

insufficient, that a stay on enforcing would only be granted where the

enforcement agency was responsible for the unreasonable and

unjustified delay. Where the defendant caused or contributed to the

delay, it would not normally be appropriate to stay proceedings.

In Minshall v Marylebone Magistartes’ Court [2008] EWHC 2800, the

High Court indicated that where the court itself was responsible for the

delay (in this case there had been lengthy delay in the appeal process

awaiting determination by the House of Lords in R v Sonji & others

[2005] UKHL 49), the appeal process itself could also amount to a

unreasonable delay for the purposes of Article 6.1 (but the court held

that on the facts of the case the delay was reasonable).

European Court of Human Rights considered the issue in Bullen & Sonji v

UK [2009] ECHR 28, here the delay (the defendants successful appeal to

the Court of Appeal and the Crown’s successful appeal to the House of

Lords had resulted in a delay of 5 years and 6 months) was unanimously

held to have violated the applicants’ Art 6.1 rights. The Court reiterated

that Art. 6.1 rights applied throughout proceedings for the

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determination of a criminal charge and extended to the confiscation

proceedings.

Delay in enforcement proceedings – other methods of enforcement

The Divisional Court in Lloyd made clear that the decision applied only

where the enforcement of confiscation order was by committal to

prison.

In Joyce v Dover Magistrates’ Court [2008] EWHC Admin 1448, while the

court dismissed the claim for judicial review of the Magistrates’ Court’s

decision to employ civil methods of enforcement, the Court accepted

that enforcement proceedings could potentially be stayed as an abuse of

process. However in Joyce it was clear that the defendants own conduct

was a significant factor in the delay and did not justify a stay (he had

failed to co-operate, absconded and failed to pursue his stated intention

to apply for certificate of inadequacy). A worthier defendant might have

fared better.

5. Appeals and reconsideration

There are a number of ways in which confiscation orders may be

revisited

The most obvious is by way of Criminal Appeal – the order is treated as a

sentence and can be appealed separately even if no appeal against the

substantive sentence has been made or one has been refused before the

confiscation order was made.

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The Court of Appeal is unlikely to interfere with a confiscation order

unless there is some error of principle or approach and will not review

simple findings of fact.

Unlike other sentences the Prosecution has a separate right of appeal

under section 31 of POCA as well as under the usual AG reference

procedure and the court may confirm quash or vary an order on a

prosecution appeal. If the appeal is against the refusal of the Crown

Court to make an order the Court of Appeal has the choice of making its

own assessments or remitting the case with directions. A section 31

appeal can be appealed to the Supreme Court by either party if the usual

criteria for appeal to that court are satisfied.

The Crown Court may be asked to reconsider a confiscation order in a

number of circumstances –

Section 19 - Where no order was considered 51

Section 20-Where the Prosecutor asks the court to reconsider the issue

of whether the defendant benefited from particular or general criminal

52

Section 21 – Reconsideration of benefit53

51

The most important restrictions is that there is a 6 year limitation period on such applications and they may only be based on evidence that was not available at the original proceedings 52

Similar restrictions to section 19 but also the court has to be persuaded that it would have decided differently if the evidence had been available 53

Similar restrictions but additionally the court has a discretion and may only proceed if it considers that it is ‘appropriate’

51

Section 22 – Reconsideration of the decision that the available amount

was less than the benefit54 this is to deal with the subsequent

enrichment of a defendant

Section 23 where either the defendant or a receiver claims that the

available amount turned out to be inadequate to satisfy the order (e.g.

where assets sold for less than expected)55Although it has to be

remembered that the Court is still looking at all the available assets of

the defendant and just because one asset which featured in the

calculation is less valuable than was thought it does not automatically

follow that the available amount as a whole has gone down.

Section 25 – where less than £50 is outstanding and the Justices Clerk

applies for discharge

Section 29 and 30 - variation of the order when an absconder returns or

discharge of the order when an absconding defendant is acquitted.

A note on Committals for sentence – section 70 of POCA

The Magistrates court has no discretion about committal for sentence

for a confiscation order to be considered – if the prosecution ask for it

then failing an obvious abuse of process the court has to comply.

Importantly this applies to both either way or summary offences

although committals for summary offences are only usually for

54

Sections 21 and 22 – these reconsiderations can in turn be appealed as sentences to the Court of Appeal 55

But this will not allow simple re- litigation of issues already decided in the original proceedings. Shaed Younis (2009) All ER 136 following similar authorities decided under the previous legislation. There is no provision by which s23 applications can be appealed to the Court of Appeal

52

regulatory offences where large amounts of money may have been

made such as copyright offences.

It is absolutely crucial for the magistrates court to consider whether they

would have committed the defendant for sentence apart from the

request for committal for confiscation purposes ( s70(2) (b)

If they state that they would have done (under Powers of Criminal

Courts sentencing Act 2000 s3(2) then the Crown Court will have the

power to sentence for the main offence as if the defendant had been

convicted on Indictment. If they do not so state then the court will be

restricted to Magistrates Court sentencing powers on the non-

confiscation order parts of the sentence. –The lesson being – check the

committal certificate held by the Court as many Judge’s think that the

whole thing is automatically a committal for sentence.

MARTIN HUSEYIN and SRIKANTHARAJAH NERESHRAAJ

17th February 2011