England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE BIRMINGHAM COUNTY COURT
(His Honour Dillon QC)

		Royal Courts of Justice Strand London WC2 Wednesday, 25th April 2001

1. MR. JUSTICE BUTTERFIELD: This appeal raises the issue of whether a compensation order made in criminal proceedings can only be enforced by the magistrates' court responsible for administering such an order or whether the order can also be enforced by the beneficiary of it.
2. The facts giving rise to the appeal are simple enough. On 2nd February 1996 Kathleen Kendrick (the appellant) was convicted of conspiracy to steal at the Birmingham Crown Court. She was sentenced to 30 months' imprisonment. In addition, the judge ordered that she should pay £27,500 in compensation to Lizzie Mary Clare with three years to pay that sum. On 11th March 1996 the Sutton Coldfield justices, within whose jurisdiction the respondent lived, made a transfer of fine order whereby the enforcement of the compensation order became a matter for that court. The notification of the transfer order informed the respondent that payment should be made to the magistrates' court and that any cheques in settlement of the compensation should be made payable to the clerk of that court. The notice of compensation order issued by the crown court equally required payment to be made to the clerk to the justices.
3. On 3rd March 1997 the clerk to the Sutton Coldfield justices wrote to solicitors acting for Lizzie Mary Clare in response to a query from them, informing them that the compensation was to be paid in full by 2nd February 1999, failing which the order would be enforced at that time. Lizzie Mary Clare died in August 1997. Probate was granted to Kerry Osbourne, the co-executor of her estate and the respondent in this appeal, in September 1997. Nothing was paid under the compensation order. It appears from the material before us that there were hearings seeking to enforce that compensation order before the justices. There is a suggestion that at one point the appellant offered to pay the compensation at the rate of £50 per week but that the magistrates declined so to order. In April 1999 a distress warrant issued by the magistrates was executed but no goods were found on which to levy distraint. According to an affidavit sworn by the clerk to the justices, on 22nd April 1999 the magistrates ordered that action be taken through the county court to recover the debt. However, that order was overtaken by events. In June 1999 the respondent issued an application in the Birmingham County Court for a charging order in the sum of £27,500 said to be due under an order of the Crown Court at Birmingham made on 2nd February 1996. A charging order was sought in respect of the respondent's beneficial interest in a house in Sutton Coldfield, of which she was the sole registered proprietor. It was in fact her home. On 19th July 1999 District Judge Owen granted a charging order nisi. On 30th July 1999, in apparent pursuance of the order made in April by the magistrates, the finance manager for the Birmingham Magistrates' Court swore an affidavit applying for a charging order against the appellant's home in order to enforce the compensation order. He deposed to the fact that the sum was still outstanding despite numerous attempts by the magistrates' court to enforce the order.
4. The full hearing of the respondent's application for a charging order came before Deputy District Judge Hubball in August 1999. The finance manager for the magistrates' court was neither present nor represented. It appears that he was content to allow the respondent to carry the torch for him at that hearing. The deputy district judge held that the respondent had a right in law to enforce the compensation order made in the Crown Court and made a charging order absolute over the property. The appellant appealed against that decision. Her appeal was heard on 10th January 2000 by His Honour Judge Dillon QC, sitting at the Birmingham County Court. He dismissed the appeal and refused permission to appeal. However, this court granted permission to appeal in May 2000.
5. The power of a criminal court to award a payment of compensation to a victim of crime was greatly extended by section 35 of the Powers of Criminal Courts Act 1973. That provides, so far as material, as follows:

" . . . a court by or before which a person is convicted of an offence, instead of or in addition to dealing with him in any other way, may, on application or otherwise, make [a compensation order] requiring him to pay compensation for any. . . loss or damage resulting from that offence."

6. By section 41(1) and Schedule 9 of the Administration of Justice Act 1970, as amended, any sum required to be paid under a compensation order shall be treated, for the purposes of collection and enforcement, as if it had been adjudged to be paid on a conviction by a magistrates' court. Section 87 of the Magistrates' Courts Act 1980 provides as follows:

" . . . payment of a sum adjudged to be paid by a conviction of a magistrates' court may be enforced by the High Court or a county court (otherwise than by issue of a writ of fieri facias or other process against goods or by imprisonment or attachment of earnings) as if the sum were due to the clerk of the magistrates' court in pursuance of a judgment or order of the High Court or county court as the case may be."

7. The exceptions provided in section 87, of reducing the armoury available to the magistrates under that section, are so included because those powers are to be found elsewhere within the provisions of the Magistrates' Courts Act.
8. There is, however, an important qualification to the power granted by section 87(1). Section 87(3) of the 1980 Act prohibits the taking of such proceedings by the clerk of the magistrates' court unless there has been a means inquiry and the court concludes that the offender has sufficient means to pay the sum forthwith.
9. The power of the court to make a charging order in enforcement proceedings is contained in section 1 of the Charging Orders Act 1979. That provides that:

"Where, under a judgment or order of the High Court or a county court, a person (the debtor) is required to pay a sum of money to another person (the creditor) then, for the purpose of enforcing that judgment or order, the court may make [a charging order].... "

10. The references to "judgment" or "order" in section 1 includes those which are enforceable as if they were judgments or orders of the High Court or the county court. Thus the county court can, unquestionably, enforce by way of charging order a compensation order made in the crown court.
11. Applying that legislative framework to the facts of this appeal, collection and enforcement of the compensation order made by the Birmingham Crown Court was the duty of the designated magistrates' court. That court had power, after conducting a means inquiry, to direct the clerk of the court to take proceedings in the county court to enforce payment of the order. From the material available to this court that is what happened here. There was, it would appear, such an inquiry. The court directed that proceedings be taken in the local county court to recover the debt. In contrast, there is no statutory provision entitling the beneficiary of the compensation order to take such proceedings.
12. Mr. Swinnerton, on behalf of the respondent, submits that the absence of an express statutory provision is no bar to such proceedings being brought. He contends that the making of the compensation order created in effect a debt due from the offender to the victim. Normally the beneficiary would expect the supervising magistrates' court to enforce the order but there was, he submits, nothing to prevent the beneficiary taking proceedings to do so. The compensation order ranked effectively as a civil debt owed by the defendant in the criminal proceedings to the beneficiary of the compensation order. The appellant was effectively jointly and severally liable, both to the beneficiary and in appropriate circumstances to the clerk to the justices. The beneficiary was thus a creditor within the meaning of section 1 of the Charging Orders Act 1979 and entitled to seek a charging order to enforce payment. As to section 87 of the Magistrates' Courts Act 1980, the powers of the magistrates' court under that section are discretionary, as the wording of the section makes clear. There is no mandatory obligation on the magistrates to take enforcement proceedings in the High Court or in the county court. Still less does the section exclude others, and in particular the beneficiary of a compensation order, from taking proceedings.
13. His Honour Judge Dillon QC accepted that submission. He looked first at the policy lying behind the extension of the power to order compensation in criminal proceedings. He cited the observations of Scarman LJ (as he then was) in Inwood (1975) 60 Cr App R 70, to the effect that the policy of the Act was to provide a convenient and rapid means of avoiding the expense of resorting to civil courts when the convicted person clearly had the means which would enable the compensation to be paid. Judge Dillon continued as follows:

" . . . if that is the overall purpose of the matter, it seems to me that it is unlikely in the least to have been in the mind of the legislature that the only way in which it could be enforced was by an action through the magistrates court, acting through their clerk. It seems to me that it is a perfectly feasible interpretation of the reading of the sections together that that was intended, that the person in favour of whom the order was made should have a means of a convenient and rapid means of getting compensation paid, and if it could not be paid directly and rapidly and efficiently through the criminal court, that it must have been envisaged I would have thought that that person would be able to enforce the matter in the county court, the purpose being that they would not then have to go to the expense and trouble of trying to prove the case again. They would have the order already in existence which would enable them to deal with the matter in that way."

14. For my part, I do not accept that conclusion. A compensation order is made in criminal proceedings. It becomes enforceable in the High Court or the county court as if the sum were due to the clerk of the magistrates' court by virtue of the express statutory provisions to that effect. It does not become so enforceable in the hands of the beneficiary. The beneficiary has no judgment to enforce; nor is there any deeming provision deeming the order a judgment enforceable in the hands of the beneficiary. I reach that conclusion not only on the basis of the legislation but also having regard to the consequences of any alternative conclusion. If the applicant was entitled to bring proceedings to enforce the compensation order, the effect would be to avoid the requirement of a means inquiry before such proceedings were instituted. That cannot, in my judgment, have been the intention of Parliament. The protection afforded to the offender would be worthless if it could be circumvented in that way. Further, it is to be noted that section 37 of the Powers of Criminal Courts Act 1973 provides that at any time before the person against whom a compensation order has been made has paid into court the whole of the compensation, that person may make an application to the court to discharge or reduce the amount which should be paid under the order if, amongst other circumstances, his means have suffered a substantial reduction which was unexpected at the time that the compensation order was made. The criminal court retains a power to review and in certain circumstances to reduce the amount paid under the compensation order, which would not again apply if the beneficiary were entitled to enforce the compensation order independently. It is of course correct that there is nothing to prevent the victim of crime bringing civil proceedings against the offender and obtaining judgment for such loss and damage as may be proved to have been caused by that crime, even though a compensation order has been made in respect of that loss and damage. However, in those circumstances section 38(2) applies. That section provides that the plaintiff may only recover an amount equal to the aggregate of any amount by which the damages exceed the compensation and a sum equal to any portion of the compensation which he fails to recover. Section 38 expressly provides that the plaintiff may not enforce the judgment so far as it relates to any portion of the compensation which he fails to recover without the leave of the court. Thus the court retains control over the enforcement even of a judgment obtained in separate civil proceedings, in respect of any amount relating to the original compensation order. That, too, is a clear indication that at all times enforcement of payment of a compensation order remains exclusively within the control and supervision of the criminal courts. The benefit of the compensation order will ultimately go to the respondent, but the obligation of the appellant debtor is to pay the money ordered, not to the respondent but to the magistrates' court. It is the magistrates' court, or rather the clerk to that court, who is the creditor entitled to enforce payment, not the ultimate recipient of the compensation. The respondent is not a creditor within the meaning of section 1 of the 1979 Act and has no entitlement under that section to seek a charging order.
15. In those circumstances I would allow the appeal. It is, however, a matter of considerable regret that I have had to reach that conclusion. Substantial compensation was ordered to be paid over five years ago. The magistrates were satisfied that the appellant had the means to pay that compensation. Not a penny of it has been paid. I express the strong hope that the result of this appeal will not in any way discourage the magistrates from continuing in their proper efforts to enforce the order made.
16. LORD JUSTICE CLARKE: I agree.
17. LADY JUSTICE HALE: I also agree but would add this reservation. The matter does not arise for decision in this case and, without further argument, I would not necessarily accept that the court, whose leave is required for the enforcement of any sum adjudged to be paid as damages in civil proceedings which overlaps with a compensation order, should be the criminal court rather than the civil court. It may or may not be but that is for another day.
Order: Appeal allowed with costs; public funded costs assessment.