England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2A 2LL
		15 March 2013

LORD JUSTICE TREACY:

1. This is an appeal against a confiscation order made in the Crown Court at Nottingham on 22 October 2010. This matter has previously been argued before a constitution which reserved judgment and then learnt of the hearing before the Supreme Court in R v Waya [2012] UKSC 51, [2012] 3 WLR 118. It postponed judgment pending that decision, following which it was decided that there should be a full re-hearing before a new constitution of this court.
2. The confiscation order followed the appellant's plea of guilty to an offence of fraud on 28 October 2009 and the imposition of a sentence of 12 months' imprisonment on 18 November 2009. The confiscation order was made by the sentencing judge, His Honour Judge Stokes QC (the Recorder of Nottingham), in the sum of £49,931.73, with a consecutive sentence of 18 months' imprisonment to be served in default of payment.
3. The offence to which the appellant pleaded guilty was fraud, contrary to section 1 of the Fraud Act 2006. The particulars of offence were in the following terms:

"Susan Hursthouse on the 1st day of July 2009 committed fraud in that, dishonestly and intending thereby to make a gain for herself or another, or to cause loss to another, or to expose another to risk of loss, she made a false representation namely that you [sic] presented a will to Martin Smalley Solicitors that purported to have been signed by the deceased Henry Swinscoe, which was and which she knew was untrue or misleading, intending to make a gain, namely the estate of the deceased Henry Swinscoe, in breach of section 2 of the Fraud Act 2006."

The plea tendered was on a full-facts basis, covering forgery and making a false statement on oath. Counts relating to those matters were left on the file.

4. As to the confiscation proceedings, this was not a criminal lifestyle case within the meaning of section 6(4) of the Proceeds of Crime Act 2002. Accordingly, the first question that the learned judge had to address was whether, under section 6(4)(c), the appellant had "benefited from her particular criminal conduct". "Benefit" is defined in section 76(4) of the Act in the following terms:

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

Section 76(7) states:

"If a person benefits from conduct his benefit is the value of the property obtained."

"Property" is dealt with in section 84. Section 84(1)(c) provides that "property" includes "things in action or other intangible or incorporeal property".

5. Section 84(2) sets out rules which apply in relation to property:

" (a) property is held by a person if he holds an interest in it;

(b) property is obtained by a person if he obtains an interest in it;

....

(e) references to an interest held by a person beneficially in property include references to an interest which would be held by him beneficially if the property were not so vested;

....

(h) references to an interest, in relation to property other than land, include references to a right (including a right to possession)."

6. The first issue in this appeal is whether the appellant can be said to have benefited from her criminal conduct within the meaning of the Act. The appellant's contention is that what occurred did not amount to an obtaining of property in that matters had not progressed to a stage where she had done more than attempt to obtain property through her dishonesty. The Crown contends that there was a sufficient obtaining of property for the purposes of the Act.
7. The offence that gave rise to the confiscation order was committed in the following circumstances. Harry Swinscoe, the father of the appellant, died on 1 July 2008. He had made a will dated 13 May 2004, which was professionally drawn up, leaving his estate to his wife Netta or, in the event of her predeceasing him (which she did), the estate was to be divided equally between the appellant and the deceased's nephew, Paul Spencer. The appellant was the deceased's daughter by his earlier relationship with the co-accused Jean Oldknow (now in her eighties).
8. Throughout the proceedings in the Crown Court all parties were apparently under the misapprehension that the appellant and Spencer had been appointed as executors under the genuine will. In fact, neither of them had been.
9. Prior to the death of the deceased there were concerns about his mental state. The appellant therefore approached Smalley & Co Solicitors, who, on 28 September 2007, prepared an enduring power of attorney, which the deceased signed. It appointed the appellant to act as sole attorney with general powers in relation to his property and affairs.
10. Following the death of the deceased a further will emerged; it had been drawn up on an "over-the-counter" will form dated 10 February 2005. It purported to be signed by the deceased and to have been properly witnessed. It appointed the appellant sole executor and left the whole of the residuary estate to her. The appellant then instructed Smalley & Co to "collect and get in" the estate. However, that will was a forgery; it had been drawn up by Oldknow. It was alleged that the appellant was party to the forgery and had knowingly sworn a false affidavit giving Smalley & Co instructions to obtain probate of what she knew to be a forged will. That was the basis of the count to which she pleaded guilty.
11. On 19 September 2008 probate was granted to the appellant as executor of the estate under the forged will. But the police were alerted when Paul Spencer, who had been one of the beneficiaries under the will, learnt of his uncle's death. Arrests took place in February 2009 and a restraint order was made. Solicitors had by then begun the process of administration of the estate; but it was incomplete by the time of arrests and the making of the restraint order. By then no distribution of monies had been made; nor had the appellant given instructions for distribution or made requests for monies. It was in those circumstances that the prosecution sought a confiscation order in the sum to which we have referred, which represented 50% of the value of the estate under the will, that is the 50% which in truth represented Paul Spencer's share under the genuine will and which the Crown said the appellant had obtained by her dishonesty, she having been entitled to a 50% share under the original genuine will.
12. Mr Beck for the appellant urged that the confiscation order was wrongly made in that the appellant had not obtained property either by virtue of becoming sole executrix of the estate, or by becoming sole beneficiary under the forged will. He accepted that the appellant did acquire a sole beneficial interest in the estate, but asserted that this was not obtaining property for the purposes of the legislation. He said that the appellant did not acquire any proprietary interest as a beneficiary in the monies in the deceased's bank accounts over which prior to his death she had held a power of attorney, since on becoming executor she had given control of those monies to Smalley & Co, and they would not have followed any instructions to dispose of property unless they were lawful. Disposal of property would not be lawful until the estate was ready to be administered. It was further argued that the appellant did not obtain any property as an executor because she was merely getting in the estate and could not dispose of it until it was ready to be administered.
13. As already stated, section 76(4) of the Proceeds of Crime Act provides that:

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

14. "Obtains" is not defined in the Act, but in R v May [2008] 2 Cr App R 28, Lord Bingham giving the opinion of the House stated at [48]:

"(4) In addressing the questions the court should focus very closely on the language of the statutory provision in question in the context of the statute and in the light of any statutory definition. The language used is not arcane or obscure and any judicial gloss of exegesis should be viewed with caution. Guidance should ordinarily be sought in the statutory language rather than in the proliferating case law.

....

(6) 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. It may be otherwise with money launderers."

15. Mr Beck argued that in the circumstances the appellant had no power of disposition or control over the unadministered estate as a beneficiary, even though the court might have been correct in assessing her contingent beneficial interest as being property under the Act. The recognition that an interest in an unadministered estate is a "thing in action" and so falls within the definition of "property" within section 84(1)(c) of the Act arises from the decision in In re Maye [2008] 1 WLR 315: see in particular [16] and [17] of the speech of Lord Scott. Mr Beck argued that, as executor, the appellant had delegated the task of getting the estate in to a firm of solicitors who would not follow any instructions to dispose of any property until the estate was ready to be administered. Thus in his submission it was not possible on any factual analysis to bring the appellant within the meaning of section 76(4) of the Act. He argued that whilst it was plain that the appellant's plan was that at some future date she would become sole recipient of the value in the settled estate, this state had not been reached and so she had not obtained any property within the meaning of the legislation.
16. Mr Beck did not seek to argue that, because the will dated 10 February 2005 was a forgery, the appellant did not obtain property within the meaning of the Act. He was undoubtedly right not to do so. Were it otherwise, and were it the case that an obtaining could be undone on discovery of the fraud so as to mean that there was no obtaining of property in the first place, the confiscation regime would be frustrated. It would become a dead letter in a large number of cases. See also the analysis at [68] of Waya. No doubt once a will is exposed as a forgery, or once a different type of fraud is uncovered, the civil law can be invoked in aid of the true owner. But that is a separate matter from the consideration of confiscation orders by the criminal courts.
17. In our judgment Mr Beck's arguments are not well founded. As a result of the death of her father and the production of the forged will, the appellant became both the apparent sole executor and sole beneficiary under that will. An executor derives title under the will and the deceased testator's property vests in him as from the date of death: see Comber's Case [1721] 1 P.Wms 766; Woolley v Clarke [1822] 5 B&Ald 744. Whilst a court may exercise control over what the executor does with the assets, that does not impinge on his title. The executor's title does not depend on the grant of probate.

18. The question whether these general principles could have any application in the case of a forged will before it is admitted to probate is one of some difficulty, upon which we have not heard argument and which must be left for decision in a case where it arises. For present purposes, the important point is that a grant of probate, while unrevoked, is also conclusive evidence of the due execution and validity of the will. See Halsbury's Law of England, Fourth Edition Re-issue, volume 17(2), paragraph 65. Once a grant of probate has been made the courts still have jurisdiction to decide that the will is a forgery, and to revoke the grant. Unless and until that happens, however, the will is good as against the world.

18. Thus in this case it seems to us that, upon the grant of probate, if not before, the appellant, as executrix, acquired a power of disposition and control over the property comprised in the estate. We agree with the view of the judge below that, as executrix, she was in a position to give directions as to the disposal of the property to the solicitors which could be carried out when the estate was ready to be administered. The solicitors would be acting to her instructions and would have to comply with them, as long as they were not otherwise unlawful. Any property held or called in by the solicitors would be held by them in the name of the estate. In due course monies would be distributed on the instruction of the appellant to the entitled beneficiaries once the estate's debts had been settled. The sole beneficiary under the forged will was, of course, the appellant.
19. It is quite apparent that the 2002 Act is concerned with persons who benefit from their criminal conduct by obtaining property. There is no requirement that the offender should have enjoyed the benefit of what he has obtained: see R v Cadman Smith [2002] 2 Cr App R(S) 37; see also R v Wilkes [2003] 2 Cr App R(S) 105, where this court held in a case where a defendant had committed offences of burglary and handling, but all the stolen goods had been recovered, that section 71(4) of the Criminal Justice Act 1988 (a predecessor of section 76(4) of the 2002 Act) meant that when the appellant had completed committing the offences. He obtained property and it was irrelevant that he was unable to realise that property because of police intervention.
20. We observe that the Act does not provide by way of restriction or limitation for any period of time for which property has to be held in order for it to be treated as having been obtained. Whilst of course in Wilkes the property recovered was real property, that should not affect the principle since there is no dispute about the fact that what we are concerned with in this case also amounts to "property" by virtue of section 84(1)(c).
21. By virtue of the grant of probate of the forged will in this case the appellant's position as sole executrix and sole beneficiary of her father's estate was conclusively established against the world until such time as probate was revoked. She thus obtained full legal and beneficial title to the estate. The solicitors appointed to act for her were acting to her instructions and as they went about their work were acting as her agents, subject only to the necessary rules for lawfully administering an estate. In those circumstances Mr Beck's submission that she should not be regarded as having obtained property under the act because she had not "got her hands on it" is misdirected. To adopt such an approach is not to follow the language of the Act, nor is it to apply the test indicated by Lord Bingham in May.
22. We note that In re Maye demonstrates that the appellant could, while the estate was in the course of administration, have sold or assigned her interest in it in her capacity as sole beneficiary. This appeared to us to be a significant point. Moreover, in R v Wallbrook and Glasgow (1994) 15 Cr App R(S) 783, this court held that a contingent beneficial interest under a will was a "thing in action" or "other intangible property" capable of being assigned for consideration before the contingency occurs. The decision in R v Glatt [2006] EWCA Crim 605 (considered at [52] of Waya) lends further support to our view that this appellant had a sufficient degree of control over the assets of the estate as to constitute an obtaining of property under the Act.
23. We conclude that there was in the circumstances of this case an obtaining of property within the meaning of the 2002 Act for the reasons set out above, which were largely foreshadowed by the ruling of the judge in the Crown Court. Accordingly, the appellant's initial argument before this court must fail.
24. Mr Beck went on to raise a second argument based on the Supreme Court's decision in Waya. He argues that in the circumstances of this case the confiscation order was disproportionate. Even if benefit was obtained by the appellant, such obtaining was from "particular criminal conduct" under section 6(4)(c), as opposed to benefit resulting from a "criminal lifestyle" pursuant to section 6(4)(b). The effective loser as a result of the appellant's fraud was Paul Spencer, who stood to inherit half of the estate under the genuine will. Because the fraud was detected prior to any distribution by the solicitors instructed by the appellant, a restraint order was made; the forged will has been recognised as such; and the genuine will has now been implemented. Thus Mr Spencer has now received the inheritance to which he was entitled. So, argues Mr Beck, he is in a similar position to other victims of crime who have had their property restored to them. Moreover, there was no additional benefit obtained by the appellant by reason of the forged will; to uphold the confiscation order would be disproportionate.
25. This argument was not, of course, deployed before the Recorder, although an unsuccessful abuse of process argument was. In making the order, without the guidance of Waya, the Recorder stated:

"It is quite irrelevant that property is restored to its true owner."

26. Mr Huston for the Crown urged on us that the appellant's criminal conduct had deprived Henry Swinscoe of the opportunity to deal with his estate as he had wished. Had the forgery come to light in his lifetime, he might well have disinherited the appellant. If the confiscation order were not upheld, the appellant would receive half of Mr Swinscoe's estate -- an outcome which it is unlikely he would have desired if he had been possessed of full knowledge. The appellant should be regarded as having fraudulently obtained the whole of the estate, and so the analogy with the burglar who restores the stolen property is not a sound one. The burglar makes full restitution, whereas here only half of the estate has been restored.
27. Article 1 of the First Protocol to the European Convention ("A1P1") provides:

"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."

Mr Huston points to the phrase "in accordance with the general interest". He submits that the general interest of the community is that those who steal from vulnerable individuals should not be entitled to keep the benefits of their criminal behaviour. This is particularly so, it was submitted, where the appellant did not voluntarily restore the property. We note that Waya does not distinguish between mechanisms of restoration; it looks at whether or not there has been a full restoration.

28. Whilst the court notes Mr Huston's argument, it does not consider that it is a sound one. Firstly, the prosecution's statement of information in support of a confiscation order in the Crown Court sought an order in the sum which was the equivalent of 50% of the value of the estate under the will. It said in terms that it was treating this sum as the amount by which the appellant was said to have benefited, since she was legitimately entitled to the other 50% of the estate under the genuine will. The Crown specifically indicated that it would not in this case argue that the whole estate had been obtained through the forged will, and that there should not be deducted from its total value an amount to represent what the appellant would lawfully have obtained had she not engaged in criminal conduct. Thus, in reality, the proceedings below were concerned solely with that part of the estate which, under the original will, would have accrued to Paul Spencer.
29. The purpose of confiscation proceedings is to recover the financial benefit that the offender has obtained from his criminal conduct. In this case the Crown identified the benefit as the sum represented by Mr Spencer's share of the estate.

31. We do not think that the argument that Mr Swinscoe might have altered his will had he become aware of the forgery prior to his death adds to the respondent's argument. It is wholly speculative and artificial, since a forged will would normally only emerge after death. We are concerned only with the actual consequences of the appellant's criminal conduct.

30. The result of the decision in Waya is that section 6(5) of the Act must be read subject to the requirement of proportionality, so that a judge making a confiscation order should not make one in a sum which would be disproportionate to the aim of removing from criminals the pecuniary proceeds of their crimes. Waya makes clear that where property obtained by a criminal has been restored or stands ready to be restored in full to a victim of a crime in circumstances where there is no additional benefit to the offender, a confiscation order will be disproportionate and a breach of A1P1. An order which required the offender to pay the same sum again would amount to a further pecuniary penalty, rather than achieving the legislative objective of removing from a defendant his proceeds of crime. What would in effect amount to double recovery would be disproportionate. In the circumstances we are persuaded that the making of the confiscation order in this case offends A1P1 as being disproportionate. Accordingly, the appeal must be allowed and the confiscation order quashed.
31. Gentlemen, is there any other matter?

MR BECK: My Lord, there is, and I rise with some trepidation, but I am duty-bound to. I appear here today, as I did on the last occasion, with the benefit of a representation order. Prior to that, the appeal was privately funded. Normally I would ask for a defendant's costs order, but I remember the proposition put by my Lords. I make it, but I make a half-hearted application.

LORD JUSTICE TREACY: We make no order.

MR BECK: Thank you, my Lord.

LORD JUSTICE TREACY: Thank you.

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