Foundations Slides

RESTRAINT

Defined

• A Restraint order is an order prohibiting any specified person from dealing with any realisable property held by him (section 41).

The Power

• Restraint Order may be made, if:–There is reasonable cause to believe that the

alleged offender has benefited from his criminal conduct, AND –Either• Proceedings for an offence have been started

OR • Pre-charge: a criminal investigation has been

started (section 40).

Exercise of the Power

• The power must be exercised with a view to the value for the time being of realisable property being made available (by the property’s realisation) for satisfying any confiscation order that has been or may be made against the defendant (Section 69).

• There must be a real as opposed to a fanciful risk that, if a restraint order is not made, the assets in respect of which the order is requested are liable to be dissipated. (Re B)

• Where, the defendant (or potential defendant) has had ample opportunity to dissipate his assets it is incumbent on both the prosecution and the judge to explain how it could be said that there was a real risk that he would dissipate assets. (Re B)

Windsor [2011] 1 WLR 1519

• Important to consider section 69 and the statutory purpose• Court of Appeal can suspend its

own order quashing a restraint order, pending a further application to the Crown Court

INITIATION

The Duty

• Generally, the court has no discretion in the confiscation process:– D is convicted of an offence or offences– The prosecutor asks the court to proceed

• Then:– The court “must proceed” (section 6)

Statutory exception for victims

• POCA deals with two possibilities:– s6(6) the court must treat the duty... as a power if it

believes that any victim of the conduct has at any time started or intends to start proceedings against the defendant

– s13(6) [where there is insufficient means to pay confiscation and compensation]... the court must direct that so much of the compensation as it specifies is to be paid out of any sums recovered under the confiscation order; and the amount it specifies must be the amount it believes will not be recoverable because of the insufficiency of the person's means.

Abuse

• 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. But his jurisdiction must be exercised with considerable caution. It must be confined to cases of true oppression. (Shabir [2008] EWCA Crim 1809).

Guidance

• Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings, 28 May 2009• For instance, it might be an abuse where:– the prosecution has agreed not to proceed– the defendant has fully repaid the victim– it would be truly oppressive to proceed

Exceptional Jurisdiction

• “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”. Nelson [2010] QB 678

Oppression exampleThe appellant was convicted of six counts of obtaining a money transfer by deception. The appellant was a pharmacist who made a monthly claim to the health service payment body for the cost of prescriptions dispensed. He inflated several monthly claims by a small amount. The counts of which he was convicted were not sample counts. The total amount claimed from the authority in the relevant period amounted to £179,731 but it was accepted that the total amount which had been obtained improperly was £464. A confiscation order was made in the amount of £212,464, following the application of the assumptions required to be made under the Proceeds of Crime Act 2002 s.10 , as the appellant had a “criminal lifestyle” by virtue of the number of offences of which he had been convicted.

Should confiscation be initiated?

Compensation Example

The Defendant was a serving police officer of previous good character. He befriended but also cheated an elderly lady. Between July 2001 and his arrest in March 2004 he obtained from her a total of £279,872.02. Between his arrest and the confiscation hearing, he repaid the loser about five-sixths of these defalcations. Very early on, at the conclusion of his police interviews he relinquished to her the sum of about £170,000 which remained in one or more joint bank accounts in his name and hers, which he controlled, and later he transferred to her the flat in which she lived, which had been bought in his name. That left £51,967.83 outstanding, which he said that he stood ready to repay.

Should confiscation be initiated?

MAKING THE ORDER

May [2008] 1 AC 1028

• May, Green [2008] 1 AC 1053, Jennings [2008] 1 AC 1046• The narrow principles are:

– Where benefit is jointly obtained by a group, each is liable for the whole

– Do not deduct sums retained by co-Ds from the amount jointly obtained

– Where D is a prime mover in a conspiracy he may obtain the whole amount, notwithstanding that he is nominally only an employee

• The narrow principles decided are straightforward, but in the course of their opinions their lordships delivered what amounts to a comprehensive code for determining benefit under the confiscation regime.

Making the Order

• The three questions:– (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?

• These are separate questions calling for separate answers, and the questions and answers must not be elided.

CRIMINAL LIFESTYLE

Criminal Lifestyle

‘Criminal Lifestyle’ is a term of art defined by the Act. (section 75)

Defined

• A defendant has a criminal lifestyle if:– The offence is a specified offence

• e.g. Drug trafficking, Money laundering, Directing terrorism, People trafficking, Arms trafficking, Counterfeiting, Intellectual property, Pimps and brothels or Blackmail.

– He is convicted of three other offences (from which he benefitted in a sum >£5,000) in the same proceedings.

– He was convicted on two other occasions of offences (from which he benefitted in a sum >£5,000) in the six years prior to the commencement of these proceedings.

– The offence was carried out over a period of at least six months.

Effect

• If the defendant has a criminal lifestyle, – benefit is calculated from his general criminal

conduct (all his criminal conduct).• If the defendant does not have a criminal

lifestyle, – benefit is calculated from his particular criminal

conduct (the conduct dealt with in those proceedings).

General Criminal Conduct

1. The conduct in the current proceedings.2. Any other proven criminal conduct3. Property which is assumed to be benefit

unless proven otherwise.

Assumptions

• All transfers to the defendant and all expenditure in the six years prior to the start of the proceedings are the proceeds of criminal conduct

• Any property held by the defendant after conviction is the proceeds of criminal conduct

• Unless: – the assumption is shown to be incorrect, or .– there would be a serious risk of injustice if the

assumption were made. .

GALE [2011] 1 W.L.R. 2760In Briggs-Price the defendant was charged with conspiracy to import heroin. The Crown alleged that he had been brought into the conspiracy because he already had a distribution network for the transportation and distribution of cannabis which would be employed to distribute the heroin, but accepted that no heroin was in fact imported. There was no indictment count in relation to the alleged cannabis distribution network but the Crown adduced evidence at trial in support of the allegation... the judge ruled that on the evidence given at the trial it had been proved to the criminal standard that the defendant had been trafficking in cannabis and that, on the balance of probabilities, he had benefited from that trafficking to the extent of £4m.

The judge included this within the benefit figure.

The House of Lords held that the court was permitted to look at other proven criminal conduct that the judge found proven.

In Gale Supreme Court (in civil recovery) held that the civil standard of proof applied.

BENEFIT

Has D Benefitted? (Question 1)

• A person benefits from conduct if he obtains property as a result of or in connection with the conduct.

• (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.)

May [2008] 1 AC 1028• 48(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.

Minor Players• 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.

• 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.

• Conspirators are criminally liable for the acts of their confederates done within the scope of their employment; but, when considering questions of confiscation the focus of the inquiry is on the benefit gained by the relevant defendant, whether individually or jointly.

Minor Player - Couriers

• May: “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.”

• A money laundering courier is a bailee who receives physical possession of property for another (para 30 – Allpress)

Proportionality

• The benefit figure for each of joint beneficiaries is the total amount obtained. This means that if each had the assets, the state could multiple-recover.

• In May: “There might be circumstances in which orders for the full amount against several defendants might be disproportionate and contrary to article 1 of the First Protocol, and in such cases an apportionment approach might be adopted, but that was not the situation here and the total of the confiscation orders made by the judge fell well below the sum of which the revenue had been cheated.”

• See James and Blackburn.• Also consider fiscal neutrality for MTIC

Benefit Capacity

• Whether the benefit of corporate offending is the turnover of the company or the income to the defendant is a question of fact. May pierce the veil where– where the offender had attempted to shelter behind a

corporate façade to hide his crime – or done acts in the name of a company which constituted a

criminal offence – or where a transaction was a sham to deceive third parties

or the courts• Seager and Blatch

Valuing the benefit (Question 2)

• The value is the greater of– The value of the property at the time of obtaining

(adjusted for the value of money)– The value of the property at the time of the

confiscation hearingSection 79-80

Market Value of Drugs

• In calculating the benefit figure, the black market value of drugs, which have been obtained as a result of or in connection with the criminal conduct, may be included (R v Islam [2009] 1 AC 1076, HL).

• However, the fact that drugs can be assigned a value for the purposes of calculating a defendant’s benefit figure does not mean that drugs should be assigned a value when the court assess what is the recoverable amount. As drugs have no legitimate market value and indeed seized goods are not “available” to the Defendant, when determining the Defendant’s “available amount” seized drugs are treated as having no value.

In connection with…

• A person benefits from conduct if he obtains property as a result of or in connection with the conduct. –What about the cost of smuggled and seized

tobacco?–What about staff costs?–What about rent?–What about money to “prime the pump of a

fraud”?

THE RECOVERABLE AMOUNT

The Recoverable Amount

• The Recoverable amount is the benefit.• The Recoverable amount is the benefit.• The Recoverable amount is the benefit. (No

really!)• Unless the defendant shows that the available

amount is less than that benefit the recoverable amount.

MAY [2008] UKHL 28

• Confiscation orders should be made ‘within the limits of [a defendant’s] available means’ (para 41);

• that a defendant ‘cannot be ordered to pay a sum beyond his means to pay’ (ibid.);

• and that ‘it would be unjust to imprison a defendant for failure to pay a sum which he cannot pay’ (para 35).

Hidden Assets

• There is no statutory concept of hidden assets. It is shorthand for a situation where the defendant fails to show that the available amount is less than the benefit, in which case the confiscation order is made in the amount of the benefit irrespective of whether in fact the defendant can pay. It is as if the difference between the apparent assets and the benefit is made up of assets which are hidden. – In truth there may be (a) more or less assets than the benefit

figure. – Section 7 makes a rebuttable presumption that there are assets

up to the benefit figure.

McIntosh [2011] EWCA Crim 1501

The court must answer the statutory question in s.7 in a just and proportionate way. The court may conclude that a defendant's realisable assets are less than the full value of the benefit on the basis of the facts as a whole. A defendant who is found not to have told the truth or who has declined to give truthful disclosure will inevitably find it difficult to discharge the burden imposed upon him. But it may not be impossible for him to do so. Other sources of evidence, apart from the defendant himself, and a view of the case as a whole, may persuade a court that the assets available to the defendant are less than the full value of the benefit.

Contrast with Telli

Available Amount

• The total of the values (at the time the confiscation order is made) of all the free property then held by the defendant

• The total of the values (at that time) of all tainted gifts

• Less fines and certain limited preferential debts.

Section 9

Tainted gifts

• A gift is a transfer for a consideration whose value is significantly less than the value of the property (section 78)

• In the case of a criminal lifestyle:– A gift is tainted if it was given with six years before the

proceedings started.– Or at any time in the case if it was the proceeds of

crime.• If no criminal lifestyle– At any time after the offence was committed.

The Family Home

• Generally, in practice, a wife is assumed to have a 50% share of the marital home.

• In matrimonial proceedings she can seek a greater share than she has on paper. The family proceedings should come first (Webber v CPS [2006] EWHC 2893 (Fam))

• While non-complicity in the crime is a necessary conduction for the wife to succeed in an ancillary relief claim as a matter of discretion where she is in competition with a confiscation order, such non-complicity is not a sufficient condition. Stodgell v Stodgell [2005] 2 FLR 244

MAKING THE ORDER

The Default Term• (1) All the circumstances of the case had to be considered.• (2) It was of the first importance to have in mind that the purpose of the default

term was to secure payment of the confiscation order.• (3) It was not the court's function to find an arithmetical match to the amount of the

order and the length of the term, so that for any given band or bracket prescribed in the statute, an order at the bottom of the band should attract a default term likewise at the bottom of the bracket, an order in the middle of the band should attract a term the middle of the bracket or an order at the top should attract a term at the top of the bracket.

• (4) The court was not to be influenced by the overall totality of the sentence passed for the crime plus the default term.

• (5) For any given band, the court should have regard to the maxima; the maximum amount of the confiscation order within the band and the maximum default term within the band.

• (6) Where there was no maximum confiscation order, and only a maximum default term, regard must be had to the requirement of proportionality

£- £200,000 £400,000 £600,000 £800,000 £1,000,000 £1,200,000 £1,400,000 £1,600,000 £1,800,000 £2,000,000

Unpaid sum

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Time to Pay

• The defendant may be given up to six months to pay.

• Which may be extended to up to one year if there are exceptional circumstances.

VARIATION

Reconsideration of Benefit (s21)

• The prosecution may apply to reconsider the benefit figure but only upon evidence which was not available to the prosecutor or the Director at the relevant time and only within six years of conviction.

Reconsideration available amount (s22)

• If the confiscation order is made in less than the amount of the benefit.

• The prosecutor can apply at any time for a further calculation of the available amount.

• The court may vary the order by substituting for the amount required to be paid such amount as—– it believes is just, but– does not exceed the amount found as the

defendant’s benefit from the conduct concerned.

RECONSIDERATION: Inadequacy of Available Amount (S23)

• If the court finds that the available amount is inadequate for the payment of any amount remaining to be paid under the confiscation order it may vary the order by substituting for the amount required to be paid such smaller amount as the court believes is just.

• The court may disregard any inadequacy which it believes is attributable (wholly or partly) to anything done by the defendant for the purpose of preserving property held by the recipient of a tainted gift from any risk of realisation under this Part. .