England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		Tuesday, 20 March 2018

1. MRS JUSTICE WHIPPLE:

Introduction

2. This is an appeal against a confiscation order made on 27th January 2017 by Recorder Studd at the Reading Crown Court. The order was made under the Proceeds of Crime Act 2002 ("POCA"). This appeal is brought with the leave of the single judge. The appellant was represented before us by Mr Myrie, who did not appear below. The confiscation order is in the amount of £14,763 to be paid within three months or in default to serve 12 months' imprisonment.

The facts

3. The facts are as follows. The appellant was a subcontractor working for a firm called King Brothers which was a construction company engaged in renovation works at a property belonging to Mr Mike Elliott. The property was known as Red Cedar. There were a number of valuable items in the property, some of which were on display and others stored in a safe. The items included jewellery, two Rolex watches and a ladies ring.
4. On 9th October 2015 the appellant gained entry to the property by force and took cash, jewellery, watches and the ring.
5. It was accepted by both parties at trial that the appellant was a class A drug user. He gave evidence that he had owed £1,500 to his dealer, that he offered the dealer the two watches that he had stolen from Red Cedar and that the drug dealer had accepted those watches in satisfaction of the drug set. The market value of the two Rolex watches was estimated to be £16,623. The dealer said the rest of the items were worthless and he was not interested in them. None of the stolen items has been recovered.

Crown Court proceedings

6. On 17th March 2016 the appellant pleaded guilty to offences of theft (in relation to theft of a watch which was in fact returned to its owner) and the burglary from Red Cedar. On 8th April 2016 the appellant was sentenced to a period of two years' imprisonment for the burglary, with two months' imprisonment concurrent on the theft.
7. The prosecution brought proceedings under POCA. It was not contended that the appellant had a criminal lifestyle, but it was said that there had been a financial benefit from his criminal conduct, namely the proceeds of the burglary. The POCA matters came to trial before the Recorder in January 2017.
8. The Recorder had before her the Crown's statement of information under section 16 of POCA. She also had the appellant's section 17 statement. The appellant gave evidence at the hearing.

The confiscation ruling

9. The Recorder resolved the disputes relating to the amount of the benefit and value of the stolen items. She concluded that the benefit from offending, including the value of the two watches, was £25,222.90. She went on to consider the available assets. She held that the appellant had no free property and no hidden assets. The issue was whether the two Rolex watches with a total value of £16,263 were tainted gifts within the meaning of POCA. She referred to section 78(1) of POCA which provided that:

"If the defendant transfers property to another person for a consideration whose value is significantly less than the value of the property at the time of the transfer, he is to be treated as making a gift."

She also referred to section 78(2) which addresses the value of the gift.

10. The Recorder concluded that the value of the gift was £14,763, that is the value of the Rolex watches, less the £1,500 which the appellant received for them in the form of the debt waiver.
11. Having regard to the statutory definition, she held that the transfer of the watches to the appellant's drug dealer amounted to a tainted gift. This gave an available amount of £14,763, being the aggregate of the appellant's free property (of which there was none) and the value of the tainted gift. This was the recoverable amount under section 7 POCA.
12. The Recorder noted the defence submission that in reality the appellant would not be able to recover the gifts and that therefore the default period of imprisonment would inevitably be served. The Recorder referred to R v Smith (Kim) [2014] 1 WLR 898 to support the proposition that the purpose of the legislation was to apply pressure to those who dissipated assets obtained in the course of their criminal conduct and to coerce them into making good the losses by all means at their disposal. She noted that if defendants were always able to defeat confiscation proceedings by reliance on lack of recovery of a tainted gift that would defeat the purpose of the legislative scheme. She also referred to R v Johnson (Beverley) [2016] EWCA Crim 10, [2016] 4 WLR 57 at [25] where the court had recognised that the tainted gift regime was designed to deprive offenders of proceeds of crime which had apparently been given away, that the prison sentence in default exerted a pressure on the offender to recover the value of the gift from the recipient and that Parliament must have envisaged hardship in some cases where the gift could not, for whatever reason, be recovered so the default term was imposed. The Recorder made the confiscation order in the amount of £14,763. She noted that POCA had been amended and that she was entitled to make a substantial reduction of that amount if she was satisfied that the order was or would be impossible to enforce (this was, we interpose, a reference to section 6(5) of POCA, which we set out below). She referred again to Johnson and concluded that she should only reduce the amount in an exceptional case.
13. Of the appellant's circumstances, she said this:

"This defendant, like so many others, is being pursued for a sum of money, which, on the face of it, he appears unable to pay. I do not know whether, as in the case of Johnson, others will pay it on his behalf, but I cannot say that such a position is wholly exceptional and therefore I am unable to reduce the period in default."

She imposed the confiscation order to be paid within three months, with a period of 12 months' imprisonment in default. She also made a compensation order in favour of the victim and in favour of King Brothers.

This appeal

14. In the grounds of appeal, which were drafted by Miss Xena Semikina, who appeared for the appellant in the Crown Court confiscation proceedings, the appellant advanced four grounds of challenge to the confiscation order:

1. The confiscation order should not have been made under section 6(5) of POCA because it would be disproportionate to require the appellant to pay this amount.

2. The term of imprisonment in default should have been reduced to a nominal period of one day because it is disproportionate to require the appellant to serve a longer term.

3. The sale of the Rolex watches to the drug dealer was not a tainted gift.

4. If the sale of the watches was a tainted gift the value is nil.

15. In a skeleton argument prepared very shortly before the appeal, Mr Myrie abandoned grounds 3 and 4. He accepted that the sale of the watches constituted a tainted gift, to which the Recorder had attributed the appropriate value. Further, in his oral submissions before us, Mr Myrie did not press ground 2 which related to the 12-month term of imprisonment set in default by the Recorder.
16. The focus of Mr Myrie's submissions before us was on ground 1 and on the proposition that a confiscation order should not have been made against this appellant in this case, or if it was made it should have been made in a substantially lower amount, on the basis of proportionality.

Discussion

17. Before considering that ground, we wish to align ourselves with Mr Myrie's abandonment of grounds 3 and 4. We are satisfied that the sale of the Rolex watches in this case was, and was properly identified by the Recorder to be, a tainted gift and that the value attached to that gift for the purposes of POCA was £14,763.
18. We are further satisfied that the term of 12 months imposed by the Recorder in default of payment was proportionate. Mr Myrie was correct not to press ground 2.
19. We turn to consider the proportionality of the confiscation order, which is ground 1.
20. We start with the statutory scheme. The available amount is defined in section 9 of POCA. Once established that the Rolex watches were the subject of a tainted gift, the value of that gift fell to be included in the available amount - see section 7(2). Section 6(5) provides as follows:

"(5) If the court decides under subsection (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."

Mr Myrie relies on the closing words of section 6(5) to argue that a confiscation order was disproportionate in this case. He acknowledges that the court in Waya [2013] 1 AC 294 confirmed at [21] and [24] that it would be very unusual for orders under the statute to be found to be disproportionate. He further acknowledges that the court could only conclude that a confiscation order was disproportionate within section 6(5) if the court was "affirmatively satisfied" that enforcement of the order was impossible, as confirmed by this court in Johnson at [31(iii)]. He submits that the Recorder in this case did make affirmative findings that the appellant would be unable to pay any confiscation order. Alternatively, he argues that she ought to have made such findings based on the evidence which was before her.

21. We are unable to accept Mr Myrie's submissions. In relation to his first submission, the Recorder was not affirmatively satisfied that enforcement of the order was impossible. Rather, she noted the appellant's submission that he was a habitual class A drugs user and that he appeared to be unable to pay, but she concluded that she did not know if others might pay on his behalf. We have already set out the relevant passage from her judgment. Thus, the Recorder self-evidently did not make an affirmative finding that the appellant would be unable to pay. She concluded that she did not know whether he would be able to pay.
22. In relation to Mr Myrie's alternative submission, we are not persuaded that on the evidence before her it would have been appropriate for the Recorder to have concluded affirmatively that the appellant could not pay. She was correct to conclude that the matter was uncertain, because so it was.
23. For those reasons, this appeal must fail. There was no basis on the facts as found to depart from the usual rule requiring a confiscation order to be imposed. The confiscation order was not disproportionate.
24. We observe that there are many cases where defendants appear before the Crown Court saying that they are impecunious for one reason or another. Sadly, the dependency on drugs is a common reason given. There is nothing exceptional in that situation. Yet the logical end point of Mr Myrie's submissions is that the Recorder should have been affirmatively satisfied that the appellant would not be able to meet the confiscation order simply because he was at that time impecunious and drug dependent. Mr Myrie argues, in effect, that on the basis of his impecuniosity and drug dependency, the Recorder should have treated his case as an exceptional one and disapplied the usual rule in section 6(5). But this was not an exceptional case, and the Recorder was right to conclude that it was not an exceptional case. This was an ordinary case to which the usual rule applied. A confiscation order had to be made.
25. We repeat what has been said in previous cases, that assessing proportionality for the purposes of POCA is not to be equated with a broad discretion on the part of the Crown Court Judge; for this proposition see Waya at [24] and Johnson at [31(ii)].
26. Further, we note that Mr Myrie's submissions are inconsistent with Johnson because in that case too the appellant was out of funds at the time the confiscation order was made in the Crown Court. Yet this court upheld the confiscation order. In fact by the time that case came on appeal to this court, the funds to meet the confiscation order had been found, demonstrating that impecunious defendants can sometimes find funds or be funded by others to meet the terms of any confiscation order.
27. We also note that this court has very recently confirmed the following in R v Box [2018] EWCA Crim 542 at [21]:

"… A court making a confiscation order will treat protestations that the case before it is such a case [ie where to make a confiscation order would be disproportionate within section 6(5)] with scepticism and will require the clearest, most complete and unassailable evidence before avoiding the usual statutory order on this ground. This is because, necessarily, the court is dealing with criminals whose mere assertion is unlikely to carry much weight. The ease with which criminal property may be concealed by being passed to others was emphasised in the judgment of the court in Johnson and requires such an approach to the facts."

Conclusion

28. This appeal is dismissed.

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