CONFISCATION – POCA
The law on the “recovery” of the ”Proceeds of Crime” – is often hard to explain to clients, since it is “draconian” in intention, and (rather than construing such legislation strictly, as used to be the law) the courts have until recently enthusiastically endorsed wide interpretations.
Put simply, everything owned received or spent by a “lifestyle criminal” during the previous 6 years IS ASSUMED TO BE THE PROCEEDS OF CRIME until the criminal proves otherwise; since judges tend not to believe anything criminals say, defendants are sometimes find it hard to provide such proof. EXPERT ACCOUNTANCY EVIDENCE MAY BE ESSENTIAL.
Note that it does not matter if a particular asset can be shown to be lawfully obtained. Once the “benefit” figure has been calculated, ALL ASSETS can be confiscated ( “recovered” ) up to that amount.
Dedicated and experienced legal representation is absolutely necessary; often it will be necessary to instruct experience Forensic Accountants to show that assets, income or expenditure has a lawful source or is duplicated in the prosecution calculation.
STAGE 1 – Proof of crime
Where a person is “convicted” in the Crown Court, if the Court wants to, or the prosecution ask it to, the Court MUST institute POCA proceedings. (It is arguable that if the sentence was Conditional Discharge the person has not been”convicted”, but this is under appeal as at May 2012 — Click for more information)
All offences of supplying drugs are “lifestyle” offences (but not the offence of producing controlled drugs)
Some offences, or a series of offences over a period of time, can also trigger confiscation, and the Assumptions
Cash : Cash in large quantities may be prima facie evidence that it is of unlawful origin, but it may be possible to show that cash was required for use in other countries
STAGE 2 – amount of “benefit”
If the Court decides that he does not have a “criminal lifestyle” it must decide whether he has benefited from his “particular criminal conduct” ie the crime he has been convicted of.
If the Court decides that he does have a “criminal lifestyle” there are “Assumptions” – the convict’s benefit = value of property received, and all income and expenditure during previous 6 years, and property owned.
(Benefit includes drugs and other property not lawfully saleable – but cf Stage 3) No deduction is made for expenses – “Benefit” is not “profit” (but cf Stage 3, unless “hidden assets” assumed)
No deduction for joint ownership – R-v-Chrastny 1991 Where a crime is committed jointly, the “Benefit” is attributed to each person convicted – so (at least in drugs cases) the amount “confiscated” can be many times the value of the actual offence – R-v-Lambert & Walding
STAGE 3 – Realisable assets
Often the amount ordered to be confiscated will be less than the STAGE 2 BENEFIT FIGURE, if the “realisable amount” is less. However, it is sometimes hard for clients to understand that ALL assets are confiscated up to the benefit figure
This applies even if the convict subsequently acquires property legitimately
Eg: In the Matter of Peacock [2012] UKSC 5 (An appeal concerning a confiscation order under section 16 of the Drug Trafficking Act 1994. A convicted drug trafficker was found to have benefited from his trafficking to the extent of £1m but, having at the time realisable property worth only £100,000, and a confiscation order was initially made against him just for this lesser sum. The defendant, entirely legitimately, later acquired property to the value of upwards of a further £900,000. The question in this appeal was ‘Is the High Court, on an application made under section 16(2), entitled to have regard to after-acquired assets’? In dismissing the appeal the court held that assets acquired legitimately could be forfeit.)
Interests in property, trust property, pensions, debts, wills:
If a defendant proves that it is impossible to realise an asset, what is contended as its value cannot be included in the defendant’s recoverable amount: see, e.g.,
Houssam Ali [2002] EWCA Civ 1450 (but burden on D to PROVE NOT RECOVERABLE)
A factual feature sometimes overlooked is where there are young children residing in a matrimonial home. It is a principle of property law that “trusts for the sale of land” may have the duty or power of sale deferred to allow the purpose of the trust to be fulfilled – ie in this case to “provide a home for the children of the family until they reach (18)
Chen [2009] EWCA Crim 2669 at paragraph 27. – pension policies constitute free property. The appellant does not dispute that. It is property because the defendant has an interest in it; it is free because there is no order in force with respect to it within the meaning of section 82. But what is its value? There are two authorities which bear upon the question of how policies of this nature should be valued. In R v Cornfield [2007] 1 Cr App R(S) 124 this court had to determine how to treat a pension policy which, as in this case, could only be realised at a future date, …purpose is to confiscate that which a defendant is able to realise. It must be realisable in some real way. Although it could extend to a contingent beneficial interest under a will (see the decision of Walbrook v Glasgow (1994) 15 Cr App R(S) 873), it does not, in our judgment, extend to the putative possible future receipt of a lump sum pension payment which could not be used as security for a loan; which, if it were paid, would go to the trustee in bankruptcy; and when the real possibility of the appellant borrowing money with reference to it was zero. On that analysis, the pension payment, its value or any value with reference to the possibility of a lump sum payment, was not part of the amount that might be realised at the time the order was made against the appellant …. it is not legitimate to treat the underlying value of the fund as the value of the asset. Ford was a different case. It was under a different statutory regime. The policy in that case had a surrender value, which this one does not
R v Ford [2008] EWCA Crim 966, – how to value three pension policies. The fund value in these policies was nearly £80,000, although only 25% could be taken by way of a lump sum on realisation. There was in that case, however, a surrender value of around £17,500 which could be immediately realised. The polices could not be assigned, whether by way of sale or otherwise. The judge fixed the value as the full fund value of the polices. The defendant appealed and submitted that it should be the surrender value. He relied upon the analysis of the court in Cornfield. This court (Hallett LJ, Openshaw and Blair JJ) rejected that submission. It is plain that they did so for policy reasons. They were concerned that if the sum was limited to £17,500, the defendant would be able to borrow that money from a member of his family or friends in order to meet the terms of the order. In those circumstances he would retain his interest in the asset which in due course would be worth £80,000. The judgment, given by Openshaw J, continued as follows:
“13. It seems to us that on the facts of this case the appellant simply has not proved that he could not raise the money in question and so he has not proved in relation to these particular pension figures that his realisable assets are less than his benefit. There is no injustice in this since, if he is right and if he has to surrender the policies in an attempt to raise the money to discharge his liability under the confiscation order, and if he can only raise the cash in surrender value, he can then come back to the court and seek a Certificate of Inadequacy under section 83 of the Criminal Justice Act 1988 on the basis that his assets were overvalued. He will then have been stripped of his assets and will not come out of prison with an £80,000 nest egg waiting for him. The social policy of the Act will therefore have been achieved.”
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