Confiscation: A Question of Judgement?

A high-level review of confiscation law may hold the promise of real change. John Binns explains how.

 

The Law Commission of England and Wales is consulting on changes to the regime in Part 2 of the Proceeds of Crime Act 2002 (‘POCA’) for making confiscation orders against defendants convicted of acquisitive crime. Though there is general agreement that the regime has serious problems, there is a divergence of views about what those problems are.

From the perspective of policy-makers and the media, the problems of the regime are largely about enforcement. Although courts regularly make orders in the sum of many millions of pounds, in practice those sums are often not recovered, with the implication that they are stashed away somewhere offshore, or have been comprehensively spent by the offenders by the time the order is made. Notably, the last set of changes made to the regime (in 2015) were largely aimed at tackling these problems, with a lower threshold to restrain suspects’ assets pending confiscation, and higher default sentences for those who fail to pay.

From the perspective of defence practitioners, meanwhile, the problems are about the regime’s extreme harshness on defendants and their families, and the fact that it often operates in a way that is opaque and counter-intuitive. A recurring feature of the regime that helps explain why these problems occur is its tendency to use words and phrases that, in this context, mean something entirely different to what most people might reasonably expect. In particular:

  1. The word ‘confiscation’ is itself a misnomer here, as the regime does not identify particular assets that come from crime and order them forfeited. Instead, the job of the court is to identify the benefit the defendant has obtained from crime and make an order (sometimes more than one) aimed at depriving him of it;
  2. POCA unhelpfully defines ‘benefit’ here as the value of property obtained, taking no account of the extent to which that value has been enjoyed or retained by the defendant. So for instance someone convicted of possessing £1 million worth of drugs with intent to supply would be deemed to have obtained £1 million of benefit, despite the fact that his profit margin would be much lower, and the drugs will usually have been seized;
  3. The benefit is much higher in cases where the defendant is found to have a ‘criminal lifestyle’, though in fact this is statutorily assumed for most offences or where the offending took place over at least six months. The impact on the defendant is severe, deeming all transfers to, receipts by and assets held by him over a specified period to have a criminal origin unless he can show this is inaccurate or unfair;
  4. The amount of the initial order (called the ‘recoverable amount’) can be lower than the benefit figure, but the onus is on the defendant to show that his means (or his ‘available amount’) is lower. Where he says nothing or fails to make that positive case (which could be so in cases like example above, where he will have to prove he has less than £1 million available), a finding of ‘hidden assets’ is the default;
  5. The figure for the available amount includes ‘tainted gifts’, which includes not only those transfers the defendant has made with a view to defeating the regime, but any transfers at an undervalue within a specified period, whether or not their value is actually available to him; and
  6. Where the defendant has shown that his available amount (including tainted gifts) is lower than his benefit, and duly paid his order, he will increasingly find the prosecution pursuing him years later for a little-publicised ‘reconsideration of available amount’, depriving him of what will often be legitimate earnings until the total benefit is recovered.

With all that in mind, perhaps the most egregiously misleading description in the regime is in the role of the judge, who is rarely called upon to exercise much judgement at all in this context. Following years of unenthusiastic judges opting not to make orders at all or to make orders that were seen as unduly lenient, Parliament deliberately opted to remove judicial discretion from most aspects of the regime. This has undoubtedly backfired, with judges forced to make orders in the maximum possible amounts, based on legal fictions, subject only to a general duty not to act disproportionately within the meaning of the European Convention on Human Rights.

Where the agendas of defence practitioners and policy-makers converge, of course, is with the impact of orders made on the basis of legal fictions and statutory assumptions that are simply not enforceable in practice. While doubtless there are defendants out there who have in fact stashed large amounts offshore (some, but not all, of whom may be deterred by the prospect of long default sentences, and/or in some cases by the seizure of their passports pending payment), in many cases the figures for unenforced orders are simply a reflection of the way the regime works (or rather, how it doesn’t).

The irony perhaps is that many problems of the regime could be solved overnight if its component parts were either described correctly, or amended so that they better fit their descriptions. As a thought experiment, perhaps an honest, judge-led regime for depriving convicted defendants of the benefit they have obtained from crime might look like this:

  1. The judge makes findings about what benefit the defendant has enjoyed or retained from crime including, where he thinks he has led a criminal lifestyle, crimes of which he has not been convicted;
  2. The judge also makes findings about what amount the defendant has available to pay, including anything he has paid to others but still has available to him, and any hidden assets he has failed to declare to the court;
  3. The judge orders the defendant to pay the smaller of the two amounts in the short term, with the explicit prospect of further hearings if that order is unpaid, or where it is in the interests of justice to order a further payment to make up any shortfall.

The Law Commission is in an evidence-gathering stage at the moment, with plans to publish a consultation paper later in the year. While the enforcement agenda will no doubt loom largely in its thinking, it is to be hoped that it will also take the opportunity to mould the regime so that it better fits the reality of the cases it applies to, and which would thereby be better suited to the aims it is designed to achieve.

 

John Binns is partner at BCL who specialises in all aspects of the Proceeds of Crime Act 2002, including confiscation and restraint orders.