England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		29th June 2016

1. MR JUSTICE WILLIAM DAVIS: On 14th June 2006 Hardip Singh Malhi was sentenced to 12 months' imprisonment. The sentencing judge, His Honour Judge Orme, also dealt with the issue of confiscation. A benefit figure just in excess of £800,000 was agreed. The applicant had no available assets and so a nominal compensation order was made in the sum of £1.
2. That was all a long time ago. Time has moved on. His Honour Judge Orme has left the circuit bench, doubtless to enjoy a long and happy retirement. Something else has happened: the applicant has bought a house in Uttoxeter in Staffordshire. A purchase price was recorded at the Land Registry of £232,000, with a charge in favour of one of the major clearing banks. That led to an application by the prosecution for a re-determination of the available amount under section 22 of the Proceeds of Crime Act 2002. That application was unanswerable the equity in the house being just over £108,000.
3. The application by the prosecution was listed in the Crown Court at Birmingham on 18th May 2015. The applicant did not attend. It was said that he was unfit. The hearing was adjourned, but on the basis that the applicant would be written to and advised that he must attend on the next occasion. If he failed to do so, the court could proceed in his absence.
4. The case was listed again on 3rd July 2015. Again, the applicant did not attend and he was not represented. On that occasion the judge, His Honour Judge Creed, determined there was no reason why the applicant could not have presented evidence to the court and he was satisfied that it was appropriate to proceed in his absence. We do not recite the precise course of that hearing; it is sufficient to say that the judge heard medical evidence and heard other material which satisfied him that it was appropriate to proceed.
5. The result was that the confiscation order was now set at £108,010, namely the value of the equity in the house. The judge set the period in default of payment at five years' imprisonment. He did so by reference to the provisions of the Serious Crime Act 2015, which had come into force just over a month earlier on 1st June 2015.
6. The applicant then applied for an extension of time to appeal against his conviction. We remind ourselves that was the conviction sustained in 2006. He also applied for leave to appeal against the confiscation order, as it now was, following the order in July of 2015. The single judge refused both of those applications.
7. On 23rd March of this year the full court considered renewed applications in respect of both of those matters. The full court dismissed the renewed application in relation to the conviction. It also dismissed the renewed application for leave to appeal the substantive term of the confiscation order. It confirmed that the judge was entitled to proceed in the absence of the applicant. But the full court adjourned the application for leave in relation to the default period. Two submissions had been made to the full court on 23rd March. First, the maximum default period for an order of this amount, just over £100,000, had been increased from three years to five years with effect from 1st June, as we have already observed. The increase from three years to five years, it was argued, should not apply to offences committed before the increase came into force. Second, it was submitted that the amount of the confiscation order made was £108,010; the relevant range identified in the 2015 Act was £10,000 to £500,000; £108,010 was towards the bottom of the applicable range; therefore it was not appropriate for the judge to order the maximum default period. It was those matters on which the full court adjourned the application in order for there to be full argument, and it is for us to resolve those issues.
8. We have been greatly assisted by the presence of Mr Close for the prosecution, who submitted a lengthy and helpful skeleton argument dated 4th May. We also had a document entitled "Skeleton Argument" from somebody purporting to represent the applicant, but we have not heard from either that representative or anybody else on behalf of the applicant today, and the applicant has not been present. We are quite satisfied from the information provided by the Criminal Appeal Office that the applicant is well aware of today's hearing. There has been some suggestion at one point that he would be represented. His representative has indicated to the office he is no longer instructed. We are content that we should proceed, but we must guard against reaching firm conclusions on wider principles without argument from the applicant. What we say is largely restricted to the particular facts of this case.
9. We turn then to what the statutory background and current provision is in relation to default periods in respect of confiscation orders. Prior to 1st June of 2015, default periods generally were set out in section 139 of the Criminal Courts (Sentencing) Act 2000. Those default periods were of general application in respect of any financial order. In relation to a figure of £108,010, section 139 stipulated a maximum default period of three years. That was for any amount exceeding £100,000 but not exceeding £250,000. As we shall discuss shortly, courts would, as far as possible, align the default period with the sum involved; that is, the nearer a sum was to the maximum amount in the scale, the nearer the default period would be to the maximum. However there was recognition by courts that the purpose of a default period was to encourage payment, and in cases where there was evidence of reluctance to pay the default period would be set further up the scale.
10. Section 10 of the Serious Crime Act 2015 introduces new default periods simply in relation to orders made under the Proceeds of Crime Act. The default periods in the 2000 Act continue to have application in all other cases. Section 10 of the Serious Crime Act increased default periods in a variety of ways. In relation to the amount with which this case is involved, the bracket of amount was extended so that it ran from more than £10,000 to no more than £500,000 and the maximum term was identified at five years. That, of course, was the term in default set by the judge in this case, albeit with no explanation as to why he chose the maximum term when the amount involved was towards the lower end of the relevant range.
11. We identify three issues which arise as set out in the skeleton argument of Mr Close and the material put forward previously by the applicant.
12. First, does section 10 of the Serious Crime Act 2015 apply to any confiscation order made on or after 1st June 2015, irrespective of the date of the offence?
13. We are quite satisfied that it does. Our reasoning is as follows. First, a court making a confiscation order does so on the basis of available assets; that is, the assets available at the time of the making of the order. Save for issues relating to tainted gifts, there is no historic assessment of what the defendant has had in the past in order to determine the amount of the confiscation order. Second, in the relevant commencement order for section 10 no transitional arrangements are provided. Thus, there is no statutory arrangement which would suggest anything other than that section 10 shall apply to any order made after the commencement date. Third, it is clear that other amendments introduced at the same time must apply to all orders made on or after 1st June. We note, for instance, the proviso which has been added to section 6(5) of the Proceeds of Crime Act. It is not necessary to cite it, it is a provision which gives statutory effect to the decision of the Supreme Court in Waya. Self-evidently, that must apply to any confiscation order made after the introduction of the 2015 Act. Further, the 2015 Act introduces a new maximum period within which payment must be made: previously it was six months, now it is three months. It is of interest that in this case that was the reduced period applied to the payment of this order and no point has been taken by the applicant at any point that the reduced period should not be the one that applies to him.
14. Having answered the first question in the affirmative, we address the second question. Are the increases in the default periods incompatible with Article 7 of the European convention on human rights. Article 7 prohibits:

"... a heavier penalty [being] imposed than the one that was applicable at the time the criminal offence was committed."

15. Article 7, on its face, is immediately concerned with a penalty imposed for an offence. Plainly a default sentence, under whatever provision, is not a penalty imposed for an offence. However, we are satisfied it is a penalty: it is a penalty for not discharging the confiscation order.
16. The earliest point at which this penalty conceivably could be imposed in any given case is the point at which the time given to discharge the order had expired. For any order made after 1st June of 2015, that point has to be after the date on which the default term was fixed. It follows that the provisions of section 10 of the Serious Crime Act do not offend Article 7: the penalty imposed was applicable at the time that the order was made.
17. The third question we have to answer is whether the judge in this case was justified in setting the default period at the maximum. As we have already observed, no reason was given as to why he did so. Mr Close, on behalf of the prosecution, very properly and fairly does not submit any reason for him doing so in this case, and indeed concedes that in reality the period in default should have been rather shorter.
18. We take into account the general principles which to some extent we have already set out, but which are discussed in detail in Pigott [2010] 2 Cr App R (S) 16. Here there is the balance between placing the default period somewhere at a point reasonably aligned with the amount of the order in comparison with the maximum sum to which the period in default would apply, whilst at the same time recognising that it is undoubtedly a case in which the court would be concerned as to whether this order was going to be complied with at all.
19. In those circumstances, in our judgment, whilst the default period should be longer than that which might follow from a simple arithmetical calculation and alignment within the band, it nonetheless should not have been the maximum. We shall allow the renewed application for leave and give leave. We shall allow the appeal and reduce the default period from five years to three years. To that very limited extent only, this appeal is allowed.