England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		10 July 2015

LORD JUSTICE DAVIS:

Introduction

1. This appeal involves consideration of the making of a confiscation order and the making of a compensation order in circumstances where it is directed that the amount of the compensation order is to be paid out of the sums recovered under the confiscation order. In considering that point it is also necessary to confront an argument that a compensation order is not, so it is asserted, normally to be made if it will compel the sale of the family home.

Background facts

2. The events giving rise to these issues can be shortly summarised in this way. The appellant, a man aged 41, pleaded guilty in the Crown Court at Preston on 21st January 2014 to a count of theft. He was sentenced to a term of 14 months' imprisonment. He had been employed as a delivery driver by a company called Henry Halstead Ltd, a manufacturer and distributor of small automotive component parts. The appellant and a colleague called Dilworth, who in due course was sentenced to 45 weeks' imprisonment, abused the trust placed in them as employees by stealing brass parts from their employee and then selling them on to a local scrapyard. The total value of the stolen parts was £64,620.
3. Confiscation proceedings were initiated. In due course it was agreed that the appellant's benefit was £39,330. His realisable assets amounted solely to a share in the equity in the matrimonial home, owned jointly with his wife. That share was valued at £14,688. A confiscation order thus was sought by the prosecution in that amount.
4. At the same time a compensation order was sought by the prosecution. It was understandably indicated that the view was taken that here the employer should be recouped for its loss. It was acknowledged that the appellant was in no position to satisfy both a confiscation order and a compensation order and accordingly a direction under section 13(5) and (6) of the Proceeds of Crime Act 2002 was sought, to the effect that any compensation order made should be satisfied out of the sums recovered under the confiscation order.

The hearing below

5. The judge having the conduct of the confiscation proceedings was His Honour Judge Altham sitting in the Crown Court at Preston. He accorded the appellant ample time to put in evidence designed to show, among other things, that the making of such an order would necessitate the sale of the family home where the appellant lived with his wife and two young children (born in 2007 and 2009 respectively). It appears that the property had been purchased in June 2006 for £208,500, although it seems that its value has subsequently declined. There was a very substantial mortgage subsisting on the property. It also seems that the wife has been in employment and has contributed to paying the family bills.
6. There was a hearing before the judge on 4th November 2014. There was evidence to indicate that the appellant's attempts to raise the necessary sum by some means other than by resort to the equity in the family home had failed. In the event the judge made the confiscation and compensation orders as sought, giving a direction under section 13(6) of the Proceeds of Crime Act 2002. In the course of his ruling the judge acknowledged the appellant's attempts to raise money from other sources and he stated:

"It does seem likely to this court that the making of the order would result in the sale of the family home."

7. So the judge had expressly appreciated that to make such an orders would potentially have that consequence.
8. Before the judge it appears that both the defence, by counsel then appearing (not Miss Whalley who appears before us today), and the prosecution were agreed that a compensation order should not be made which would be likely to require the family home to be sold. It seems to have been conceded that that was also so for the purposes of applications under section 13(6) of the Proceeds of Crime Act 2002. However, that was a point which the judge indicated he was not prepared to accept; and Mr Heptonstall, appearing on behalf of the Crown before us (and who did not himself appear below) makes clear that he does not make any such concession as was made below. Miss Whalley raised no objection to Mr Heptonstall adopting that stance.
9. At all events the argument of the defence, as advanced to the judge, was to the effect that, by reason of the asserted general proposition advanced as to the requirement not to force the sale of the matrimonial home by making a compensation order, there could be no compensation order properly made and hence no direction made under section 13(6): for the making of the order would, so it was said, thereby necessitate the sale of the family home. It was thereby said, indeed, that there should be no confiscation order either.
10. The judge would have none of it. He pertinently observed that such an argument would have surprising consequences: in that in such circumstances where a compensation order was envisaged, no confiscation order could, on the defence argument, be made; but in precisely the same circumstances, save that a confiscation order only was sought and not a compensation order as well, then a confiscation order could be made - a position which the judge described, with no degree of understatement, as "anomalous".
11. The judge went on to review the decision in Beaumont [2014] EWCA Crim 1664, much relied on by the defence and which we discuss further later in this judgment. The judge considered that not to be authority binding him to accept the defence argument. The judge towards the end of his ruling went on to say this:

"In this case I find that the benefit is, as agreed, £39,330.60. I find that the available assets are £14,688. It is open to me to make a confiscation order in that sum without reference to the defendant's means and I so order.

Once that order is made I then address my mind to the making of a compensation order under the mechanism of section 13 of the Proceeds of Crime Act. Given that I have already made a confiscation order it is plain that the defendant will not also be able to satisfy a compensation order. That brings section 13 into play. Would the payment of compensation out of the confiscated monies have the effect of requiring the defendant to sell his family home? The answer is no, he will already be required to sell it as a result of the confiscation order. It is the operation of the confiscation order which causes the sale of the home not the ordering of the confiscated monies to meet the compensation order."

12. The question is whether he was justified in so ruling.

The legislation

13. The general scheme of the Proceeds of Crime Act 2002 is all too familiar. The recoverable amount, broadly speaking, is by section 7 the lesser of the benefit and the available amount. Section 8 relates to the defendant's benefit. Section 9 relates to the available amount. Sections 76 to 84 contain detailed provisions as to conduct, benefit and valuation.
14. Section 13 of the Proceeds of Crime Act 2002 is entitled "Effect of order on court's other powers". That section reads as follows:

"13. (1) If the court makes a confiscation order it must proceed as mentioned in subsections (2) and (4) in respect of the offence or offences concerned.

(2) The court must take account of the confiscation order before—

(a) it imposes a fine on the defendant, or

(b) it makes an order falling within subsection (3).

(3) These orders fall within this subsection—

(a) an order involving payment by the defendant, other than an order under section 130 of the Sentencing Act (compensation orders);

(b) an order under section 27 of the Misuse of Drugs Act 1971 (c. 38) (forfeiture orders);

(c) an order under section 143 of the Sentencing Act (deprivation orders);

(d) an order under section 23 of the Terrorism Act 2000 (c. 11) (forfeiture orders).

(4) Subject to subsection (2), the court must leave the confiscation order out of account in deciding the appropriate sentence for the defendant.

(5) Subsection (6) applies if—

(a) the Crown Court makes both a confiscation order and an order for the payment of compensation under section 130 of the Sentencing Act against the same person in the same proceedings, and

(b) the court believes he will not have sufficient means to satisfy both the orders in full.

(6) In such a case the court must direct that so much of the compensation as it specifies is to be paid out of any sums recovered under the confiscation order; and the amount it specifies must be the amount it believes will not be recoverable because of the insufficiency of the person's means."

15. The entitlement to make a compensation order derives from the power conferred by section 130 of the Powers of Criminal Courts (Sentencing) Act 2000, as referred to in section 13 itself. In the relevant respects, section 130 of the 2000 Act provides as follows:

"(1) 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 an order (in this Act referred to as a 'compensation order') requiring him—

(a) to pay compensation for any personal injury, loss or damage resulting from that offence or any other offence which is taken into consideration by the court in determining sentence; or

(b) to make payments for funeral expenses or bereavement in respect of a death resulting from any such offence, other than a death due to an accident arising out of the presence of a motor vehicle on a road;

But this is subject to the following provisions of this section and to section 131 below.

(2A) A court must consider making a compensation order in any case where this section empowers it to do so.

...

(4) Compensation under subsection (1) above shall be of such amount as the court considers appropriate, having regard to any evidence and to any representations that are made by or on behalf of the accused or the prosecutor.

...

(11) In determining whether to make a compensation order against any person, and in determining the amount to be paid by any person under such an order, the court shall have regard to his means so far as they appear or are known to the court.

(12) Where the court considers—

(a) that it would be appropriate both to impose a fine and to make a compensation order, but

(b) that the offender has insufficient means to pay both an appropriate fine and appropriate compensation,

The court shall give preference to compensation (though it may impose a fine as well)."

16. Pausing there, there can be no doubt that for the purposes of the confiscation proceedings the appellant's share in the matrimonial home constituted free property properly to be regarded as forming part of the available amount for the purposes of section 9. Further, that another person may also have a beneficial interest in such property has no impact, for the purposes of a confiscation order, on that outcome. Nor, in general terms, is there any different outcome simply because it may be difficult, as opposed to impossible, to realise that interest or because to realise such an interest may require an application to court - see for example Modjiri [2011] 1 Cr AppR (S) 20.
17. It follows that if a confiscation order alone had been sought such order indeed could properly include as part of the available amount the appellant's share in the matrimonial home valued at £14,688. That was rightly conceded below and is rightly conceded by Miss Whalley before us today. It further follows, under the scheme of section 13 of the Proceeds of Crime Act 2002, that the amount of the confiscation order including the value of the interest in the home is in principle capable of being regarded as means potentially available for the purposes of meeting and satisfying a compensation order.

Argument and conclusion

18. We turn to the argument and discussion of that argument.
19. The premise of the argument on behalf of the appellant is that the decision in Beaumont is authority for the proposition that where a compensation order would require the sale of the family home a compensation order will not - or at all events will not usually - be made. That at least was the argument below: although before us today Miss Whalley was rather more tentative in advancing that as a general proposition and certainly Mr Heptonstall disputed that there is such a general proposition applicable. At all events, the argument then proceeded below to the effect that the compensation order and direction under section 13(6) could only be made by reason of the confiscation order: and since that would result in the sale of the family home, the confiscation order itself, as well also as the compensation order, could not be made.
20. In our judgment this argument breaks down at every stage. We consider that the judge was quite right to reject it and was justified in making the orders that he did.
21. It is quite true that there are decisions of the Court of Appeal Criminal Division, dating back a little time now, to the effect that where a compensation order was likely to require that the family home be sold it was generally not appropriate to make a compensation order having such a result - see, for example, Blackmore (1984) 6 Cr.App.R (S) 244, Hackett (1988) 10 Cr.App.R (S) 388 and Holah (1989) 11 Cr.App.R (S) 282. In the latter case, indeed, it was said that "in ordinary circumstances that course should not be taken." However, no such authority, it may be observed, was directed to the situation arising under section 13 of the Proceeds of Crime Act 2002. Indeed, those authorities ante-date that Act.
22. In any event, in the context of compensation orders there are authorities which go a rather different way. Thus in Maguire (1991) 13 Cr.App.R (S) 332, the court firmly rejected the notion that there was some general principle that a compensation order should not be imposed if the effect would be to force the sale of the family or matrimonial home. The court in terms held (page 334 of the report) that there was no such general principle as asserted; and the court unequivocally stated that each case must depend on its own facts. Moreover, in the relatively recent case of Martindale [2014] EWCA Crim. 1232, the decision in Maguire, albeit without citation of other authority, was approved.
23. In our view it is much better not to maintain that there is some "general principle" of the kind previously asserted. For one thing, that would find no reflection in the wording of section 130 of the 2002 Act. That section requires the court to have regard, amongst other things, to the defendant's means but otherwise essentially leaves unfettered the exercise of the discretion of the judge in this kind of situation. For another thing, such an asserted "general principle" would not meet the reality of many cases which can by no means be regarded as exceptional. For instance, suppose the available amount comprises a half share in the matrimonial home, which half share is worth many hundreds of thousands of pounds. Why should there be any general principle operating to prevent a compensation order being made when, even if the property in consequence had to be sold, the defendant and his family may be able to acquire a cheaper property as a family home with the remaining equity? One can readily think of other examples also.
24. That of course is not to say that a judge, when considering whether or not to make a compensation order, may not, when such an issue arises, properly take such a consideration into account: that is to say, the consideration as to whether the sale of the family home in consequence may be required. Of course he may do so: indeed he positively should do so. But in our view the importance of that consideration will depend upon the facts of the particular case. In some circumstances it may prove to be a paramount consideration; in other circumstances, not. Ultimately, the decision is one for the discretion of the judge weighing all relevant factors, including those specified in section 130 itself; and there should be no starting point or "general" or "ordinary" principle to the contrary relating to the implications of a potential sale of the family home if a compensation order is made. Thus, as stated in Maguire, each case must indeed be decided on its own facts and circumstances. And, as we have said, that would accord entirely with the language of section 130 itself.
25. Beaumont, a decision of a two judge court, is not decisive authority for any contrary proposition. Indeed, before us Miss Whalley had some difficulty in seeking to maintain that it was. In that case the benefit was £17,675 and the available assets were £54,000: that is to say, in contrast to the present case, that was a case where the assets exceeded the benefit. In that case the available assets represented a half share in the family home, which half share was valued at £50,000, and in addition some money at the bank. A confiscation order and a compensation order were sought. The trial judge agreed to this and accordingly made both a confiscation order and a compensation order. But he did not give any section 13(6) direction.
26. Making both such orders might, in the light of the Supreme Court decision in Waya [2013] 1 AC 249 and in the light of cases such as Jawad [2014] 1 Cr.App.R 16, raise issues (depending on the facts of a particular case) of the proportionality of such a course: although it seems that that line of cases was not mentioned in Beaumont. At all events, the court referred in Beaumont to authorities such as Hackett and Holah. The court went on at paragraph 16 of its judgment to say this (as is emphasised on behalf of the appellant):

"This line of authority provides support for the proposition that where a compensation order is likely to require the matrimonial or family home to be sold, it will not generally be appropriate to take into account the value of that home when assessing a defendant's means under section 130 of the 2000 Act. We consider that, in general, a similar approach is justified where the court is considering the defendant's means for the purpose of section 13(5) and (6) of POCA."

27. We might add, however, that the line of authority referred to by the court had not included citation of Maguire.
28. Be that as it may, the court in Beaumont then went on to note that even to fund the confiscation order of £17,675 a further sum of £12,000 over and above the cash available would need to be raised. It was held that "on the facts of this case" the value of the home should not be taken into account in assessing the appellant's means and that there was "good reason to believe that the appellant will not have sufficient means to pay both orders". In such circumstances it is to be noted that the court upheld the confiscation order. But it also included a section 13(6) direction, in the full amount of the sum recovered under the confiscation order, to meet the compensation order made.
29. It thus may be observed that that course was taken (and notwithstanding the observations in paragraph 16 of the judgment) in circumstances where the evidence had shown that some £12,000 would need to be raised by reference to the share in the family home in order to satisfy the full amount of the order. That conclusion, of course, runs contrary to the appellant's present argument.
30. In those circumstances, Beaumont does not lend any real support to the appellant's propositions. Not only was Beaumont a decision on its own facts (as expressly there stated) it was also a decision relating to correcting an order of the Crown Court where no section 13(6) direction had been made: which is in contrast to the present case.
31. Overall, therefore, we conclude that in confiscation proceedings of this kind, whilst a potential consequential forced sale of the family home is of course a matter to be taken into account, it is not to be taken as in principle some kind of trump card in resisting the making of a compensation order or a section 13(6) direction, let alone with regard to the making of the confiscation order itself.
32. We should add one further point. We suggest that Crown Court Judges should nowadays be a little careful, in the course of confiscation or compensation proceedings, in too readily assuming that the making of a compensation order in such circumstances inevitably will require a jointly owned property to be sold in order to realise the defendant's beneficial interest in such property. Commonly, no doubt, that may well be the consequence. But under modern jurisprudence there is at least some prospect, in an appropriate case, for a spouse or partner having the remaining beneficial share in the family home, and perhaps also where there are dependent young children, at least raising an opposing argument as to sale or possession: such arguments being potentially available in the course of enforcement proceedings in the courts which have been subsequently undertaken to realise the value of the defendant's beneficial interest. Such arguments in opposition are capable of placing reliance, in an appropriate case, on the considerations arising under article 8 of the Convention or on wider equitable principles. At all events, one can perhaps reflect that if the enforcing court in subsequent sale and possession proceedings does not consider it in any particular case to be unjust or disproportionate to order sale and possession, then that is suggestive of it not having been unjust or disproportionate to have made the original compensation order in the first place.
33. Finally, we would also endorse the judge's concluding approach in this case as we have set out above: which was in effect to hold that if the effect here would be to require the sale of the family home then that is the consequence not of the compensation order but of the confiscation order. We think that his reasoning was correct on that.

Conclusion

34. Overall, we can see no error of law in the judge's approach. He was fully entitled to exercise his discretion as he did in making the orders that he made. For these reasons we uphold the judge's orders and we dismiss this appeal.