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
		9th November 2018

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Friday 9^th November 2018

LORD JUSTICE DAVIS: I shall ask Mr Justice Butcher to give the judgment of the court.

MR JUSTICE BUTCHER:

1. This case raises the issue of the consequences of a failure to comply with the provisions of section 15(2) of the Proceeds of Crime Act 2002. The way in which the matter arises can be shortly stated.
2. On 27^th June 2016, in the Crown Court at Southwark, the appellant entered a plea of guilty to a single count of Fraud by Abuse of Position between 4^th March 2014 and 2^nd December 2014. The facts of the offending were that the appellant had been employed as "Head of Digital" at a company called Alison at Home that provided and sold on-line furniture and domestic items. As part of his job he was given complete access to the company's website and to its PayPal accounts.
3. The appellant allowed a friend of his, a Mr Rubai, access to the company's PayPal account from which Mr Rubai stole some £104,581. The appellant himself benefited in the sum of £51,450, which he spent on consumer goods, restaurants and the like.
4. When he pleaded guilty, a basis of plea was put forward on behalf of the appellant, which was acceptable to the Crown. In the Basis of Plea document, it was stated that the appellant promised to make payment by way of compensation in the sum of £51,450.
5. On 19^th August 2016, the appellant was sentenced to three years and three months' imprisonment. In addition, he was ordered to pay compensation in the sum of £51,450, to be paid within six months. All parties were aware at that point that the prosecution intended to pursue a confiscation order under the Proceeds of Crime Act 2002.
6. Leave to appeal against sentence was sought on the ground that the sentence was excessive. Leave was refused by the single judge and the application was not renewed.
7. On 27^th February 2017 there was a final confiscation hearing at Southwark Crown Court. The parties had agreed a benefit figure of £77,343.96, which represented the amount of £52,076 – namely, the amount of £51,450, adjusted for inflation, plus £27,267.96 from general criminal conduct. They had also agreed an available amount of £18,545.65 by way of tainted gifts. A confiscation order was made in the amount of £18,545.65, to be paid within three months. The Crown applied for this sum to be paid as compensation, and the confiscation order as drawn up states that the whole amount of £18,545.65 is to be paid as compensation. The three months' period was subsequently extended on 25^th May 2017 for a further three months.
8. On 27^th February 2017 it had been identified by the appellant's counsel that an issue might arise from the fact that a compensation order had already been imposed. In the period after 27^th February 2017, as we understand it, it was appreciated that the issue was whether the compensation order had been lawfully made because of the provisions of the Proceeds of Crime Act 2002. An application was made to the Crown Court under the slip rule. However, the relevant period for modification under the slip rule had expired and, accordingly, an application to appeal against sentence and against the confiscation order and for an extension of time was made by the appellant.
9. These applications were put before the single judge and were referred to the full court for determination.
10. The way in which the matter was initially put before this court itself represents an error of procedure in that the appellant sought leave to appeal against the compensation order. That order was imposed at the same time as the imposition of the term of imprisonment and was part of the same sentencing exercise in respect of which there was a right to one application for leave to appeal. That one application had been made and refused by the single judge. Accordingly, the appropriate way for the matter to be brought before this court was for the appellant to make an application for an out of time renewal of the initial application for leave to appeal against sentence, coupled with an application to vary the initial grounds of appeal to raise the points which were put forward in the second grounds of appeal. Such an application has now been made. We have granted an extension of time to allow the renewal of the initial application for leave to appeal against sentence. We have granted the application to vary the grounds of appeal and we also grant leave to appeal.
11. We turn to consider the substantive issue raised by the appellant. It is submitted by Mr Vollans, who appears for the appellant, that under section 15(2) of the Proceeds of Crime Act 2002, if a court postpones confiscation proceedings, then in sentencing the defendant for the offence concerned, the court must not in the interval make various financial orders, including a compensation order.
12. It is convenient at this point to refer to the relevant terms of the 2002 Act. Section 15 of the Act is headed "Effect of Postponement". It provides:

"(1) If the court postpones proceedings under section 6 it may proceed to sentence the defendant for the offence (or any of the offences) concerned.

(2) In sentencing the defendant for the offence (or any of the offences) concerned in the postponement period the court must not –

(a) impose a fine on him,

(b) make an order falling with section 13(3),

(c) make an order for the payment of compensation under section 130 of the Sentencing Act,

(ca) make an order for the payment of a surcharge under section 161A of the Criminal Justice Act 2003, or

(d) make an unlawful profit order under section 4 of the Prevention of Social Housing Fraud Act 2013.

(3) If the court sentences the defendant for the offence (or any of the offences) concerned in the postponement period, after that period ends it may vary the sentence by –

(a) imposing a fine on him,

(b) making an order falling within section 13(3),

(c) making an order for the payment of compensation under section 130 of the Sentencing Act,

(ca) making an order for the payment of a surcharge under section 161A of the Criminal Justice Act 2003, or

(d) making an unlawful profit order under section 4 of the Prevention of Social Housing Fraud Act 2013.

(4) But the court may proceed under subsection (3) only within the period of 28 days which starts with the last day of the postponement period."

13. By subsection (6) the postponement period is defined as the period for which proceedings under section 6 are postponed.

14. In accordance with these provisions, it is clear that the court should not, on 27^th July 2016, have imposed a compensation order because confiscation proceedings had been postponed. This much is accepted by the Crown. The Crown, however, contends that the fact that the compensation order was imposed prematurely does not render it a nullity.

14. We were referred in this regard to the decision of this court in R v Paivarinta-Taylor [2010] EWCA Crim 28, which concerned the provisions of section 72A(9) of the Criminal Justice 1988 and confiscation proceedings. In that case, the Crown Court had sentenced Ms Paivarinta-Taylor by imposing a fine of £1,000 at the same time as postponing confiscation proceedings under the 1988 Act. Confiscation proceedings had then taken place and resulted in a confiscation order being made. This sequence was a breach of section 72A(9) of the 1988 Act, which had provided:

"In sentencing or otherwise dealing with the defendant in respect of the offence (or any of the offences) concerned at any time during the specified period, the court shall not –

(a) impose a fine on him, or

(b) make such an order as mentioned in section 72(5)(b) or (c) above."

The argument on behalf of Ms Paivarinta-Taylor was that non-compliance with section 72A(9) meant that the confiscation order and/or the fine were unlawful and should be quashed. The court considered a number of previous authorities on the effect of a failure to comply with the provisions of that section and the analogous provisions of the Drug Trafficking Act 1994. At [23] of the judgment of the court, Sweeney J referred to and summarised the effect of the decision of the House of Lords in R v Soneji & Bullen [2006] 1 Cr App R(S) 79, in part as follows:

"i) It was not necessary to adopt a strict approach to the construction of the relevant provisions of the 1988 Act, given that they dealt with the process of making confiscation orders, not with the definition of crimes.

ii) The context required a purposive construction.

iii) The emphasis … ought to be on the consequences of non-compliance, and posing the question whether Parliament could fairly be taken to have intended total invalidity.

…"

Later in the judgment, Sweeney J said this:

"35. As the House of Lords made clear in Soneji & Bullen, the purpose of the sequence set out in section 71(1) of the 1988 Act is to ensure the effectiveness of the sentencing procedure overall, and the purpose behind section 72A(9) is to maintain the primacy of confiscation orders by prohibiting the Court from imposing a fine or other financial order until after the making of a confiscation order, even though the Court may impose other types of sentence or order before making a confiscation order. Sections 72(5) and 72(9A) are clearly further reflections of the same purposes.

36. In this case, there is no dispute that when the learned judge fined the appellant £1,000 on 24 November 2006 he was acting in breach of section 72A(9), and was thus unable to comply with section 72(5).

…

40. The breach in this case involved the imposition of a fine before the making of a confiscation order. The fine did not impact at all upon the subsequent making of the confiscation order. The fine was in the sum of £1,000, and the appellant made formal concessions at the later confiscation hearing as a result of which the learned Judge was able to conclude that she had realisable assets worth over £216,000. Even after deducting from that the confiscated sum of £35,635, the appellant was still left with realisable assets worth in excess of £180,000. Clearly, therefore, the premature imposition of the fine resulted in no prejudice or injustice to the appellant at all.

41. Against that background, we have asked ourselves the questions 'what did Parliament intend should be the consequences which flow from this breach', and 'can Parliament fairly be taken to have intended total invalidity'?

42. It seems to us that the answers are clear, namely that:-

i) Parliament cannot be taken to have intended total invalidity; and

ii) Parliament did not intend that the imposition of a fine before making a confiscation order should render the fine itself invalid, nor did it intend that the Court could no longer proceed to consider the making of a confiscation order, and nor did it intend that the resultant order should be invalid.

43. It follows that Mr Furlong's reliance on the Threapleton line of cases cannot avail him and, in view of our conclusions as to Parliament's intent, it seems to us that both the Grounds of Appeal advanced are without merit."

15. In our judgment, the reasoning of the Court of Appeal in Paivarinta-Taylor applies with equal force to the consequences of non-compliance with section 15(2) of the Proceeds of Crime Act 2002. We consider that Parliament did not intend non-compliance with section 15(2) to render totally invalid relevant orders made prior to the end of the postponement period.
16. Mr Vollans, nevertheless, contends that Paivarinta-Taylor is distinguishable on the basis that in that case the fine was imposed as punishment, whereas in the present case the compensation order was in addition to a custodial term and was (as he puts it) an "ancillary order".
17. We do not accept that this is a valid ground for distinguishing Paivarinta-Taylor or for contending that its reasoning is not applicable in the present case. Each of a fine and a compensation order is a type of order specified in section 15(2) of the Act. As Mr Vollans accepts, the section – and indeed the Act – does not distinguish between the two in a relevant respect. We do not consider that Parliament can have intended, without indicating it, total invalidity in the case of some of the orders specified in section 15(2), but not in the case of others, when they are imposed before the end of the postponement period. That being so, we consider that there is no force in the argument that the compensation order was a nullity.
18. We go on to consider, however, the question of whether there is any reason to set aside or vary that compensation order by reason of the circumstances and justice of the case. We consider that there is none. The promise given as part of the Basis of Plea was designed to assist the appellant in relation to the sentence which was imposed. There is no reason why he should be released from that order. We do not believe that non-compliance with the terms of section 15(2) has caused any prejudice to the appellant. The sum of £18,545.65, which the appellant has paid under the confiscation order, has been directed towards the compensation order and on that basis only the balance is outstanding.
19. At the confiscation hearing Mr Vollans told the judge that, on the basis that there was no risk of a double liability, he and his client were perfectly satisfied. We do not consider that there is any danger of double liability in this case in light of the fact that the Crown has indicated that it is willing to undertake – and has undertaken to us – that it will not seek to enforce the confiscation order in such a way that the appellant can be liable for more than the amount of £51,450, plus any adjustment for inflation, pursuant to statute. In other words, whether by way of compensation or confiscation, it is that amount in total which will be sought.
20. On the basis that there is no danger of double liability, and on that undertaking of the Crown, the appeal is accordingly dismissed.
21. LORD JUSTICE DAVIS: Miss Prakash, would you kindly draw up a Minute of Order, to include the undertaking you give – and you can agree that with Mr Vollans. Obviously, in point of form, the undertaking will extend to both the enforcement of the confiscation order and compensation order.
22. MISS PRAKASH: My Lord, we will
23. LORD JUSTICE DAVIS: I am sure you can agree a form of words. I think you all know where you stand on that – and then could you lodge that with the court, signed by both of you?
24. MISS PRAKASH: Yes, of course.
25. LORD JUSTICE DAVIS: Are there any other points arising?
26. MR VOLLANS: No, thank you, my Lord.
27. LORD JUSTICE DAVIS: Thank you both very much indeed.
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