England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT IPSWICH
Lower Court Judge: MR RECORDER BRYAN
Lower Court Case No.: S20150237

		Royal Courts of Justice Strand, London, WC2A 2LL
		22 February 2017

Mr Justice Supperstone :

1. This is the judgment of the court.
2. On 16 September 2015, having pleaded guilty before Magistrates, the Appellant was committed for sentence in respect of three offences contrary to s.112 of the Social Security Administration Act 1992.
3. On 23 October 2015 at the Crown Court in Ipswich before His Honour Judge Goodin the Appellant was made subject to a community order for 13 weeks with a curfew requirement. She was also ordered to pay a victim surcharge order in the sum of £60.
4. On 24 June 2016 before Mr Recorder Bryan in confiscation proceedings under s.6 of the Proceeds of Crime Act 2002 ("POCA") the Appellant was adjudged to have received a benefit of £31,785.51 with a recoverable amount of £21,686.73. She was made subject to a confiscation order in the sum of £21,686.73, payable within 3 months and with 9 months' imprisonment in default of payment.
5. She appeals against sentence, limited to the confiscation order, by leave of the single judge.
6. On 21 December 2016, having heard submissions from Mr Steven Dyble on behalf of the Appellant, and Ms Lynne Shirley on behalf of the Respondent, we directed that the parties file further written submissions. We indicated that we would then consider the totality of the material before us and determine the appeal without there being a further hearing, unless it was absolutely necessary to have one. We consider that there is no need for a further hearing.
7. The facts are these. The Appellant (then aged 59) lived in a three bedroom terrace house in Lowestoft with her husband, aged 66. The house was purchased in their joint names. Their adult children, aged 25 and 23, also lived at the address.
8. The Appellant's known sources of income were Disability Living Allowance of £21.80 per week; Carer's Allowance of £62.10 per week and an Occupational Pension of £229.99 per month.
9. Her husband's known sources of income were Disability Living Allowance of £112.55 per week; State Pension of £113.85 per week and an Occupational Pension of £535.62 per annum.
10. An investigation was started after an allegation of undeclared earnings was received and evidence was obtained which indicated that the Appellant had failed to declare a change of circumstances to the Department of Work and Pensions ("DWP"), namely that her husband had been employed by Wessex Foods from February 2004. Had this fact been known it would have affected her entitlement to benefit.
11. The amount of benefit overpaid related to incapacity benefit (£14,497.21) and pension credit (£13,728.81). The total overpayment was £28,226.02.
12. The Appellant later entered into an agreement with the Benefits Agency for repayment of the overpayment from future benefits which were deducted at source. Approximately £3,000 has been repaid in this way.
13. At the confiscation proceedings Mr Dyble, who appeared on behalf of the Appellant, as he does before us, made two submissions. First, that there was in force a repayment strategy whereby the deficit was being repaid at about £50 per week, which equated to £2,500 per annum. The overpayment would be repaid in 9 years. To make a confiscation order would therefore be disproportionate.
14. Second, Mr Dyble submitted that the order sought would be disproportionate and unfair, particularly having regard to the unchallenged disabilities suffered by the Appellant and her husband.
15. The only asset of any real value of the Appellant is her share in the terraced house. The property was valued at £149,500. It had been purchased many years before the claim for benefits made by the Appellant became an unlawful claim. It was subject to a mortgage (£63,779) and a secured loan for disability improvements (£31,132). After the costs of sale, the net equity divided between the Appellant and her husband was £21,643.05 each (the Crown give a figure of £25,044.50). She also has £40 in sole bank accounts. The confiscation order would be of no value unless it was enforced by an order for the sale of the property, the Appellant having no other significant assets.
16. Mr Dyble further submitted that the court should take into account the consequences of an order upon an innocent third party, in this case the Appellant's husband, who jointly owned the property, given that an alternative mechanism to secure repayment had been agreed.
17. Ms Shirley, who appeared on behalf of the prosecution, as she does before us, submitted that the existing repayment order was not a relevant consideration. The prosecution would ensure that there was no double-counting; if the confiscation order was made and paid credit would be given for the repayments made under the voluntary agreement. Further the confiscation order was a draconian measure and for that reason the court could not take into account either the personal, physical or medical circumstances of either the Appellant or her spouse.
18. Giving his Ruling the Recorder said that he believed that the correct view of the law, when considering the issue of disproportionality, is that he must not take into account (1) that there is in force a repayment agreement, or (2) the matters referred to as "personal medical situation" of the Appellant, and that the family may have to be re-housed (3A-C). He said that he would expect, as the prosecution had indicated, that those matters would be taken into consideration at the enforcement stage (3D-F).
19. Before us Mr Dyble submits that the Recorder erred in saying that he had no discretion. Further, for the reasons he advanced before the Recorder, Mr Dyble submits that this is a case where the court, in the exercise of its discretion, should not have made a confiscation order. Compensation could have been ordered as an alternative.
20. It was, Mr Dyble submits, disproportionate and unjust on the facts of this case to make an order that would necessitate the sale of the property for the reasons given at paras 14 and 15 above. There is, Mr Dyble contends, no option open to the Appellant other than the sale of the house in circumstances where she has no access to a mortgage or loan facilities. Whilst the loss of a home is draconian, Mr Dyble accepts that it is not of itself an excessive burden (see Parkinson [2015] EWCA Crim 1448), however the disability of the Appellant, and that of her husband, is an additional hardship. The loss to them of a home that has been modified at considerable expense to the taxpayer imposes hardship over and above what would normally be encountered. The sale will trigger additional financial loss, namely the repayment of the disability grant and early mortgage redemption. Mr Dyble submits that given these factors and that for over a year there has been in place, at the instigation of the DWP, the statutory mechanism for ensuring repayment the order that has been made is disproportionate. Further it would, Mr Dyble submits, amount to a breach of the ECHR Article 8 rights of the Appellant and her husband.
21. Ms Shirley summarises the Crown's position as being that the making of the confiscation order was proportionate, just and fair, when considering all of the circumstances in this case, including the medical conditions of the Appellant and her husband and the adaptations made to the property they live in.
22. Ms Shirley submits that there is no general principle, when considering making a compensation order, in relation to the implications of sale of the family home; each case is to be decided upon its own particular facts.
23. Ms Shirley referred to the case of Brian John Roisetter [2004] EWCA Crim 1827, which concerned s.71 of the Criminal Justice Act 1988 ("the 1988 Act"), the predecessor of s.6 POCA, where Stanley Burnton J said (at para 4):

"…section 71 confers no discretion on the court to avoid making a confiscation order in circumstances where there is realisable property…"

24. In Michael Richards [2005] EWCA Crim 491 David Steel J, applying Roisetter, held that s.71(1B) of the 1988 Act requires the defendant to pay the amount of benefit obtained (para 26), and the court is afforded no discretion whatever the impact on the defendant may be (para 33).
25. Ms Shirley submits that the issue of how a confiscation order may be satisfied is only of relevance when and if enforcement proceedings are commenced. That being so it is in a person's best interests to explore ways of meeting the order once it has been made. It is, she suggests, a matter for the Appellant as to how the confiscation is satisfied.
26. It is not oppressive, Ms Shirley submits, for confiscation to be pursued whilst deductions from benefit are being made. In this case the amount deducted from the Appellant and her husband's benefits means that it will take in excess of 10 years to recoup the overpayment. That timescale has now increased significantly, given an amendment to the deductions.
27. The jurisdiction of the court to make a confiscation order is set out in s.6 of POCA. Section 6(5) provides that:

"If the court decides under sub-section (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.

[Paragraph (b) applies only if, or to the extent that, it would not be disproportionate to require the defendant to pay the recoverable amount.]"

The words in brackets were inserted by the Serious Crime Act 2015, Sch.4, para 19, following the decision of the Supreme Court in Waya [2012] UKSC 51.

28. In Waya the Supreme Court made clear that the Proceeds of Crime Act 1995 ("the 1995 Act"):

"removed from the Crown Court almost all discretion as to the making or quantum of a confiscation order, if it was applied for by the prosecution and the statutory requirements were satisfied. That remains the position under POCA. The Crown Court no longer has any power to use its discretion so as to mould the confiscation order to fit the facts and the justice of the case…" (per Lord Walker and Sir Anthony Hughes, delivering the majority judgment at para 4).

29. As the Supreme Court emphasised (at para 21):

"The purpose of the legislation is plainly, and has repeatedly been held to be, to impose upon convicted defendants a severe regime for removing from them their proceeds of crime."

30. However the Crown Court has a duty to avoid making a confiscation order which is an infringement of Article 1 of the First Protocol to the ECHR ("A1P1") because it is disproportionate (see paras 16 and 19 of the majority judgment in Waya).
31. 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."

32. It follows that it is only if the confiscation order would involve a violation of A1P1 by not conforming to the test of proportionality that it is the duty of the Crown Court judge not to make such an order. However the Supreme Court in Waya said:

"…it must clearly be understood that the judge's responsibility to refuse to make a confiscation order which, because disproportionate, would result in an infringement of the Convention right under A1P1 is not the same as the re-creation by another route of the general discretion once available to judges but deliberately removed."

33. In Paulet v UK [2015] 61 EHRR 39 the European Court of Human Rights stated at para 65:

"An interference with art.1 of Protocol No.1 will be disproportionate where the property-owner concerned has had to bear 'an individual and excessive burden', such that 'the fair balance which should be struck between the protection of the right of property and the requirements of the general interest' is upset. The striking of a fair balance depends on many factors."

34. Mr Dyble submits that "the fair balance which should be struck between the protection of the right of property and the requirements of the general interest" is upset by the confiscation order made in this case.
35. We are not persuaded that the making of this order does amount to a violation of A1P1. In Parkinson the court did not accept that there is some "general principle" that where a confiscation order would require the sale of the family home a confiscation order will not, or at all events will not usually, be made. Davis LJ, delivering the judgment of the court, said:

"31. Overall, … 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 section13(6) direction, let alone with regard to the making of the confiscation order itself."

36. Lord Justice Davis added:

"32. … We suggest that Crown Court Judges should nowadays be a little careful, in the course of confiscation or compensation proceedings, in not 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."

37. These observations apply equally to the making of the confiscation order itself. We agree with the Recorder that the appropriate time for consideration of whether the house in which the Appellant and her husband live has to be sold is at the enforcement stage, if it be reached.
38. Further, we reject Mr Dyble's submission that the fact there is in force a repayment agreement makes the confiscation order disproportionate. In Mohid Jawad [2013] EWCA Crim 644 the Court of Appeal considered the relationship between confiscation orders and compensation orders in the light of Waya. Hughes LJ (as he then was) said at para 21:

"… we do not agree that the mere fact that a compensation order is made for an outstanding sum due to the loser, and thus that that money may be restored, is enough to render disproportionate a POCA confiscation order which includes that sum. What will bring disproportion is the certainty of double payment. If it remains uncertain whether the loser will be repaid, a POCA confiscation order which includes the sum in question will not ordinarily be disproportionate."

39. The same considerations apply to the repayment arrangement in the present case. The terms of the voluntary agreement and the financial circumstances of the Appellant make it uncertain that the overpayment will be repaid. In any event the prosecution have given an undertaking that there will be no double-counting.
40. In our judgment there was no error of law made by the Recorder. Accordingly this appeal is dismissed.