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Preamble 

In 1986 Parliament in common with other European nations decided something had to be done over and above fines and imprisonment to deter large scale profiteering from serious crimes such as fraud drug running which is often across boarder. One answer was to establish a system of “Confiscation” of criminals assets from crime [Lord’s Neuberger, Hughes and Toulson para 1 R v Afmad and R v Fields 2014 UKSC 36]. 

What was gradually developed through the Drug Trafficking Offences Act 1986, Part VI of the Criminal Justice Act 1988, the Proceeds of Crime Act 1995, the Proceeds of Crime Act 2002 (the “Act”) I and the Serious Crime Act 2015 is now a much wider and comprehensive system of confiscation across the criminal law system. The Act now covers far more offences and crimes than was originally discussed back in 1986. 

A system which has amongst other words been called “robust” (meaning tough) [R v Ahmad], “Draconian [R v Waye para 8] overkill” [Lord Wilberforce] and “poorly drafted” [Ahmad again]. 

The aim is to “recover assets acquired through criminal activity, both because it is wrong for criminals to retain the proceeds of crime and in order to show that crime does not pay” {Ahmas] 

Though “ The purpose of confiscation proceedings is to recover the financial benefit that the offender has obtained from his criminal conduct” [para 9 in R v May 2008 1 A.C.] 

As the higher courts have also pointed out amongst other things POCA; 

  1. does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine” [Lord Bingham in R v May para 48],
  2. The 1995 Act removed from the Crown Court almost all discretion as to the making or quantum of a confiscation order.. That remains the position under POCA [ R v Waye 2012]. In other words do not blame the lawyers blame the politicians if the outcome often seams harsh. 


Applying the Act
 

The fact that there have been so many reported cases on POCA in the higher courts suggests that many experienced practitioners find the wording and operation of POCA difficult. So much more for those defendants or potential defendants within the system. Though one good consequence for a practitioner is that these cases have produced a good deal of careful guidelines from our most senior judges. For me my personal read to check is in R v Waga [2012 UKSC 51]  

From those cases POCA (though it is specific to each case) operates in this way; 

  1. Where POCA is claimed to apply then we need first to ask if it is a one or two crime offence such as the one mortgage fraud case of R v Waya itself. Or a “proceeds of crime” act case. The more serious. See R v Harvey [2015 UKSC 73]. For what is a criminal lifestyle case and the effect that has operating sections 10 and 75 of the Act see below, but whatever then,
  2. To check how and if POCA applies how and why we have a three step approach set out by Lord Walker at paras 6-7 on R v Waya. Which is (a) identify the benefit obtained by the offences [sections 6(4), s8 and s76] then, (b) value the benefit as suggested under the Act [section 79 and 80]. That is usually at the time of the gain or at the date of the confiscation order itself (“the confiscation date”). This task might trigger the old trust rules called “tracing”. Or following the money or goods from one place to the end point from where they might be recovered though certainly the value can be assessed. [s80(3)], (c) Though a recoverable amount is not limited to what is left of the gain or limited to that. The Act requires all the defendants assets or worth to be discovered as defined under section 9 of the Act. See R v Harvey where not all Mr Harvey’s assets or income had been the consequence of crime. [R v Harvey 2015 UKSC 73]
  3. But as a nation we signed up to the Human Rights Act and Article 1 of the First Protocol. So the courts cannot under POCA take the highest amount and in effect do to the convicted what he might have done to his victim. So each time we need to check the process complies with the Protocol and be clear that has been done then,
  4. Regardless of the two different types of case (as above) and taking into account the guidance to be found in R v May [2008 A.C.1028 at para 26] we then need to see how the proposed order falls within the usually three circumstances. Those being; (a) a defendant paying back the entire sum obtained either alone or with others (the usual outcome), (b) though it may be that several defendants or just one pick up the tab it is joint and several as between the convicted, (c) though in the calculations no defendant can claim or seek to knock off the cost of the crime. It is the gross not the net on most expenses [R v Harvey], (d) if the gain has been spent then its value is still to be recovered from the defendants assets or if it cannot be paid there is prison (see below). But if the amount has increased in value then as In R v Waya (the mortgage fraud where the flat increased in price) the increase is payable. The defendant cannot profit from his crime though
  5. Many defendants will find a way of repaying what they took. This is anticipated under section 6(1) of the Act [see the cases like Morgan and Bygrove]. So there should not be a double counting. 


The Criminal Life
Style 

A “Criminal Lifestyle” under the Act is defined through the sections 10 and 75 [see Lord Walker at para 6 in R v Waya] 

 That assessment operates where there are 4 similar offences charged or taken into consideration [para 32 in R v Waya] 

Where there are this creates the assumption that in the last six years under section 10 of the Act the defendants money has been obtained through crime. If it has not it is the defendants obligation to prove it not for the prosecution to prove it was dishonestly obtained. In short three hurdles to consider; 

  1. There is a statutory test on what a criminal lifestyle means under sections 75 and Schedule 2 of the Act. The base point being not so much an enquiry but the number of offences charged or taken into consideration. In short “ a defendant who has in the past six years committed a number of offences from which he has benefited or who has committed certain specified offences will meet the statutory test
  2. If so the benefit will not depend and is not limited to the particular charges but will be based on the statutory assumptions in section 10. This is the assumption of which “must” be made that the last six years money and goods passing were the proceeds of crime. If not the defendants must prove it is not true [R v Harvey]
  3. Subject to two potential life lines for the defendant; (a) if he can prove the assumptions are all or in part incorrect [s10 (6) (a)], or (b) the application of the assumptions would cause serious injustice [ section 10(6)] 

Discussion and Procedure 

Like catching a fish the first most defendants will be aware of a Confiscation case will be when the first order has been made usually after charge and before conviction. This is to try to preserve the defendants assets before they are hidden. So in one case I was involved in  the first knowledge was when the defendants wifes credit card bounced in the super market. Assets are then frozen pending trial and conviction. To ignore the order is a very serious matter. 

Post conviction, an application is made under section 6 (3) (a) and (b). Usually where under section 10 there has been no repayment and the benefit is not less than £5000. (section 75(2) and 74(4). Through a prosecution statement of reasons and assets under section 16. 

In so doing the court needs to consider section 6(6) and what civil if any proceedings are anticipated. 

The section 16 statement will usually trigger a defence reply under section 17. 

Some defendants may not be able or may not want to repay. That would trigger the Serious Crime Act 2015 and the default criminal penalty based on amount obtained by the crime. 

Along the way many issues may occur and have done in the past. So; 

  1. Proportionality and a disproportionate recovery is often a problem. As explained in the Network Rail gifts for contracts in R v Peter John Sale [2013] EWCA Crim 1306,
  2. If stolen money mixed with legitimate money means the whole of any profit or just a correct % of any profit should be recoverable as in R Waya 2012,
  3. Or proportionality of the confiscation when compared with the offence and applying Article 6 of the EU Convention as in the twin appeals in R v Bagnall 2012 EWCA Crim 677,
  4. Or the effect of tax on the amount of the dishonesty. The leading case of R v Harvey was after all a case about if VAT charged and paid to the VAT office should be regarded as part of the recoverable amount. 


Further
Comment 

The above is my take on POCA and the Act together with my reading of the cases referred to. However, it is not specific to any particular case in an area of law where specifics affect results often. it should not be read alone. 

If I can help further,please contact me and I will try where I can. 

David Hassall LLM Msc
Barrister 

[email protected] 

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