England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2
		Tuesday, 12th June 2007

1. LORD JUSTICE PILL: On 21st March 2006 in the Bristol Magistrates' Court, Terence John Hockey pleaded guilty to six charges arising out of three mortgage applications: (1) the dishonest obtaining of a money transfer from Bradford & Bingley Building Society in the sum of £180,000 [in fact £171,000] on 26th August 2003; (2) the dishonest obtaining from NatWest Bank of a money transfer in the sum of £142,450 [in fact £127,457] on 6th September 2005, both those offences being under section 15A of the Theft Act 1968; (3) dishonestly attempting to obtain a money transfer from Northern Rock Building Society in the sum of £110,675 on 8th October 2005, charged under section 1 of the Criminal Attempts Act 1981. Charges 4, 5 and 6 were offences relating to the use of false instruments by Hockey in the course of each of the applications, contrary to sections 3 and 6 of the Forgery and Counterfeiting Act 1981.
2. Hockey was committed to the Crown Court for sentence. On 17th November 2006 he appeared before His Honour Judge Lambert. On the charges relating to the Bradford & Bingley (which pre-dated the Criminal Justice Act 2003) he was sentenced to concurrent terms of nine months' imprisonment suspended for 2 years. On the other charges (which postdated the 2003 Act) the judge imposed a suspended sentence on each charge, nine months' imprisonment suspended for 2 years, to run concurrently with the earlier sentences, and a community requirement of 240 hours' unpaid work.
3. In confiscation proceedings under section 6 of the Proceeds of Crime Act 2002 ("the 2002 Act") heard on the same day, the prosecution sought a confiscation order against Hockey in the sum of £298,457. The judge declined to make the order, in circumstances to which we will refer.
4. The prosecutor appeals against that ruling of His Honour Judge Lambert by leave of the single judge, who also granted Hockey a representation order.
5. On 26th August 2003 Hockey completed an application form to obtain a mortgage from Bradford & Bingley for premises in Derby. In the form he stated that he was employed as a catering and events manager for a company called Bigger Fights and earned £60,000 a year. He produced what purported to be a P60 and wage slips in support of the application. He had never worked for the company and the documentation provided was false. Unaware of that, the building society transferred the sum of £171,000 to Hockey.
6. In September 2005 Hockey obtained a mortgage from NatWest for a residential property in Derbyshire. He completed an application form stating that it was for residential purposes and not to buy and let. He stated that he was contracts manager for a company called Fairy Deli and earned £40,000 a year. He again produced false documentation in support of the application, and obtained a mortgage in the sum of £127,457.
7. In October 2005 Hockey prepared a mortgage application in connection with the purchase of Plot 5, Heritage Brewery, Burton on Trent. He applied for £110,675, stating that he was a contracts manager earning £40,000 a year, in support of which representation he provided false documentation.
8. The premises in Derbyshire were intended to be let. At least one of them has been let. With respect to both of them mortgage payments have been made by Hockey and he is up to date with payments. We are told they are interest-only mortgages. He has paid on one for a period of approaching four years and on the other for a period of well over a year.
9. Once the frauds came to light, the lending institutions concerned were prepared to continue with the mortgages and have received the appropriate monthly payments.
10. The questions of the benefit obtained by Hockey as a result of these dishonest transactions, and his realisable assets, were considered at the September hearing before the magistrates. It was agreed by the parties that the benefit obtained within the meaning of the statute amounted to £298,457 and that Hockey's realisable assets were substantially in excess of that, at £471,000. The judge was accordingly invited by the prosecution, on 17th November 2006, to make a confiscation order in the sum of £298,457.
11. No suggestion was made at the hearing in the Crown Court that the realisable assets had changed significantly following the September hearing and no such representation is made to this court today, though counsel for Hockey, Mr Davidson, has mentioned the possibility that the figure may have changed. He has had an opportunity to take instructions from his client and has not pursued a submission that there has been any change relevant for present purposes.
12. On behalf of the prosecution, Mr Wilson invites the court to allow the appeal and itself to make a confiscation order in the sum already mentioned.
13. Section 31(2) of the Proceeds of Crime Act 2002 provides:

"If the Crown Court decides not to make a confiscation order the prosecutor or the Director may appeal to the Court of Appeal against the decision."

14. Section 32(2) provides:

"On an appeal under section 31(2) the Court of Appeal may confirm the decision, or if it believes the decision was wrong it may -

(a) itself proceed under section 6 (ignoring subsections (1) to (3)), or

(b) direct the Crown Court to proceed afresh under section 6."

Thus subsections (1) and (3) are not relevant in the present situation.

15. On behalf of Hockey, Mr Davidson submits that there was not a decision not to make such an order within the meaning of section 31(2). He submits that the judge was merely adjourning proceedings and this court has no jurisdiction under section 32. Subject to that, Mr Davidson does not submit that the provisions of section 6 of the 2002 Act are other than mandatory. His further submission is that if the court, contrary to his submission, assumes jurisdiction under section 32, it should not deal with the matter itself, but direct the Crown Court to proceed afresh under section 6.
16. In view of the comparatively narrow compass of the issue between the parties, it is not necessary to set out in full the statutory procedure. Section 6 of the 2002 Act provides:

"(1) The Crown Court must proceed under this section if the following two conditions are satisfied.

(2) The first condition is that a defendant falls within any of the following paragraphs -

(a) he is convicted of an offence or offences in proceedings before the Crown Court;

(b) he is committed to the Crown Court for sentence in respect of an offence or offences under section 3, 4 or 6 of the Sentencing Act;

(c) he is committed to the Crown Court in respect of an offence or offences under section 70 below (committal with a view to a confiscation order being considered).

(3) The second condition is that -

(a) the prosecutor or the Director asks the court to proceed under this section, or

(b) the court believes it is appropriate for it to do so.

(4) The court must proceed as follows—

(a) it must decide whether the defendant has a criminal lifestyle;

(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;

(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct.

(5) If the court decides under subsection (4)(b) or (c) that the defendant has benefited from the conduct referred to it must -

(a) decide the recoverable amount, and

(b) make an order (a confiscation order) requiring him to pay that amount.

(6) But the court must treat the duty in subsection (5) 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 in respect of loss, injury or damage sustained in connection with the conduct.

(7) The court must decide any question arising under subsection (4) or (5) on a balance of probabilities."

17. Mr Davidson makes the further submission, on the basis of the wording of the section, that by adjourning the judge was entitled to encourage the prosecution not to proceed under section 6. He states that judges frequently dissuade prosecutors from taking action they propose to take and that is all the judge was doing in this case.
18. We accept, of course, that there is an abuse of process jurisdiction. The court can intervene if the prosecuting authorities are, in the view of the court, abusing their powers. It is, however, well established and indeed fundamental to the legal system that the question whether to prosecute or not is for the prosecutor. The House of Lords, while recognising the existence of an abuse of process jurisdiction, has stated that proposition in Connelly v Director of Public Prosecutions [1964] AC 1254 and Director of Public Prosecutions v Humphrys [1977] AC 1. The principle has been restated more recently and frequently. We can see no abuse of process in the prosecution's decision to proceed under section 6 upon the facts of this case.
19. Both parties were represented by counsel before Judge Lambert on 17th November 2006. The judge in the course of argument expressed the view that a confiscation order would be inappropriate having regard to the legitimate interest of the financial institutions. The judge stated at page 10B:

"So the government with its agenda to assist the victims of crime and to put their interests at the very top of the court's priorities has in place a piece of legislation that prevents me from protecting their interests? It seems to be that which they have managed to put on the statute book."

20. He stated at page 9E:

"In the circumstances, my intention is to make no order in respect of the confiscation application and to leave the lenders, if they wish, to a civil remedy."

21. The judge rightly heard submissions as to whether, under section 6(6), the lenders had at any time started or intended to start proceedings in respect of the defendant in respect of loss, damage or injury sustained in connection with the conduct). He stated in the course of his ruling that he did not hold that belief.
22. The judge ruled as follows:

"In the circumstances of this case the question is raised as to whether or not, pursuant to subsection 6 of section 6 of the Proceeds of Crime Act 1992, the court is of the belief that any victim of the conduct has at any time started or intends to start proceedings against the defendant in respect of loss, injury or damage sustained in connection with the conduct concerned.

I am told that from an answer in the letter addressed to the court by Detective Constable Hayres, dated 17th November 2006, I can properly arrive at a state of belief that the mortgage lenders in this case intend to commence proceedings against the defendant.

In the circumstances, much though I should like to do so, I do not hold that belief. In the circumstances, the options open to the court are limited. First, to proceed in a manner which will satisfy the terms of the statute but will do nothing for the victims of the crime concerned. I intend to adjourn confiscation proceedings 'sine die', if one can still say that, and stand it to adjourn generally before this court and reserved to me. I have no intention of restoring them to the list."

It has to be said, in fairness to Mr Davidson, that he did not particularly encourage the judge in the strong line which the judge was taking.

23. Mr Wilson submits that the judge's ruling amounts to a decision not to make a confiscation order within the meaning of section 31(2). He submits that in whatever language the judge dressed it up, it was a decision not to make an order. The judge sought to achieve the result he desired by reserving the question to himself, and then, to make his position clear, stating that he had no intention of restoring the section 6 application to the list. That that was his intention is confirmed by the statement he made in the course of argument, to which we have referred.
24. In our judgment that was plainly a decision not to make an order. The prosecution were entitled to treat it as such and to exercise their right to appeal to this court under section 32(2). There is much authority as to the circumstances in which an application for a confiscation order may be adjourned, as to the limitations upon that power, and as to the time limits which apply. The cases on that subject do not bear upon the present question. There was plainly a decision by the judge, and the court has the power to consider whether an order should be made.
25. It is not disputed that the sum of almost £300,000 did come within the definition of "benefit" under the Act. Recently in R v Nield [2007] EWCA Crim 993 this court explained the effect of section 6:

"9. It is not necessary for the purpose of this judgment to set out the full terms of section 6 of the Proceeds of Crime Act 2002, but it is right to comment that this section sets out a mandatory framework once the confiscation proceedings are triggered by an application by the prosecutor to proceed under this section. The only modification of the strict terms of the duty arises under subsection 6 of the Act ..."

26. The court was applying its earlier decision in R v Dimsey and Allen [1999] EWCA Crim 2261, [2000] 1 Cr App R (S) 497 and the House of Lords' decision in R v Smith (David) [2002] 1 WLR 54. The point has been affirmed even more recently in a case cited by Mr Davidson to this court, R v Brack and Brack [2007] EWCA Crim 1205:

"13. ... There was nothing to suggest that the application was an abuse of process and section 6 gave the prosecution an unqualified right to ask the court to proceed, which the court must do - see section 6(1) - if the two conditions set out in subsections (2) and (3) were satisfied, which they were in this case."

27. The judge's concern appears to have been that the victims of the crime, the lending institutions, would or might be prejudiced if the confiscation order were to be made. Some of the cases cited involve a situation in which there may be hardship, certainly to the defendant. Concern for the interests of the financial institutions did not, however, justify the judge in refusing to make a confiscation order in this case. It was immaterial whether those institutions would or would not suffer loss as a result of the offences committed against them. They apparently are content to allow the mortgages to proceed, notwithstanding their unpromising criminal beginnings, and are continuing to accept payments.
28. This is a case where the realisable assets are greatly in excess of the sum to be paid under the order. It may be, we know not and it is not necessary to find out, whether the sum ordered can be paid without recourse to the properties the subject of these criminal offences.
29. The point has been made by at least one of the lending financial institutions that if they have to foreclose to realise their security, first, if there were to be a downturn in the market they would lose money and, secondly, they lose the interest which would have accrued had the mortgage been allowed to continue. That of course is a matter of speculation. They may lose commercially. At a time of rising interest rates, they may, on the other hand, be able to re-lend at an enhanced level. It is a common occurrence for mortgages to last a shorter term than that originally stipulated.
30. In any event, it is not for this court or any court to speculate upon such matters. We mention it only to show that, in this case at any rate, there is no obvious injustice to the financial institutions concerned, about whose interest the judge expressed great concern in the course of argument and in his ruling. In our judgment, a confiscation order should have been made by the judge in the sum requested. We allow the appeal.
31. There remains the question whether we should exercise our power under section 32(2) to proceed ourselves to make an order, or whether we should remit the matter to the Crown Court with a direction. In our judgment, it is appropriate in the circumstances of this case to make the order ourselves. The respondent should not be permitted to take advantage of the passage of time which has resulted from the judge's refusal to do what he should have done. There is no suggestion in any event that this is a case where the realisable assets have changed significantly or that there can be any injustice to the respondent in this court proceeding, and proceeding today, and thereby preventing further costs from being incurred.
32. We take that course. We make the confiscation order in the amount claimed. We direct that the respondent, Hockey, should have six months in which to make the payment. That is the maximum period for which the statute allows (section 11(3)). We are required to impose a sentence of imprisonment in default of payment. We have regard to the relevant table and the sentence we impose in default is one of 3 years' imprisonment.
33. Before leaving the case, we refer to the issue the judge has raised. The Parliamentary intention is in our judgment clear, and has been stated to be clear in decisions of the House of Lords and this court. In the circumstances which existed it was the duty of the judge to make an order under section 6 of the Act, once he had found that section 6(6) did not apply. There is a borderline between legislative powers and judicial powers, and it is sometimes open to argument where that borderline should run. The intention of this statute is clear. It was not open to the judge to frustrate the intention of Parliament, as expressed in the statute, as he purported to do.
34. Thus, the appeal is allowed and the confiscation order made in the terms we have already mentioned.
35. Does anything else arise?
36. MR TALBOT: No thank you, my Lord.
37. MR DAVIDSON: No thank you, my Lord.
38. LORD JUSTICE PILL: I am grateful to you for your submissions. We have a non-counsel application which we will deal with, there is no need for counsel to stay as a matter of courtesy.