England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand London WC2
		3rd April 2007

1. LORD JUSTICE LAWS: This is an appeal by way of case stated against a decision of District Judge Harris made on 14 July 2006 in the Mansfield Magistrates Court. It raises a question of some importance as to the correct construction of section 75(2) of the Magistrates Courts Act 1980.
2. The following facts appear from the case stated by the District Judge. On 10th November 2003 at the Nottingham Crown Court the respondent, Mr Greenacre, pleaded guilty to an offence of falsifying documents required for an accounting purpose. On 7 April 2004 he was sentenced to five years' imprisonment. A timetable was set for the hearing of confiscation order proceedings under the Criminal Justice Act 1988. The full confiscation hearing took place at the Nottingham Crown Court on 21 October 2004 before His Honour Judge Teare. What is called the benefit figure was assessed at £818,953.45. The respondent's realisable assets were found to exceed that sum and accordingly a confiscation order was made for £818,953.45. The respondent was allowed six months to pay and a period of four years' imprisonment was fixed in default of payment to be served, if it arose, consecutively to the five year term.
3. On 21 April 2005 the respondent applied to Judge Teare for an extension of time for payment. It was agreed between the parties that the Crown Court had no power to extend time to pay, but the learned judge opined that the magistrates' court would have such power and counsel for the prosecution agreed. Accordingly, the judge proceeded to sit as a District Judge (Magistrates Courts), which he had power to do under section 66 of the Courts Act 2003. He extended time for payment until 6 May 2005. On that date Judge Teare further extended time until 17 June 2005 and, as it was put, "remitted the matter" to the Mansfield Magistrates Court. That was done with the agreement of the prosecution. In the case stated (paragraph 2(e)) the District Judge was to note that counsel for the respondent was anxious that interest should not run against his client until issues concerning a possible appeal and the appointment of a receiver had been resolved.
4. 17 June 2005 was apparently an inconvenient date for defence counsel and the case was re-listed for hearing before District Judge Harris on 4 July 2005. However, on 22 June the prosecution wrote to the court indicating that the respondent had decided not to seek to appeal the confiscation order and would consent to the appointment of a receiver if he was granted a further extension of time, and the prosecution accordingly indicated that they would consent to an extension of six months. The District Judge was reluctant to grant so long an extension and on 4 July 2005, in the parties' absence, he extended time to 29 July 2005.
5. The prosecution reiterated by letter their willingness to agree a further extension of six months, and on 29 July 2005, in the presence of the respondent, who confirmed his consent to the appointment of a receiver, the District Judge extended time again to 27 January 2006.
6. A receiver was at length appointed over the respondent's assets on 17 January 2006. On 27 January, having received a written request from the prosecution that the matter be "adjourned sine die" because the receiver had had no time to get in the assets, the District Judge, in the absence of the parties, extended time yet again to 5 May 2006. He gives reasons for having done so at paragraph 2(n) of the case.
7. On 26 April 2006 the prosecution wrote to the court and for the first time indicated that they would now be contending that the court had no power to extend time to pay. The defence were so informed when the case was re-listed on 5 May 2006. On that occasion it was further adjourned to 22 June 2006 to allow defence counsel to consider the Crown's submissions. On that date, 22 June, the District Judge heard full argument as to whether indeed he had any jurisdiction to grant an extension of time for payment in relation to a confiscation order and reserved his judgment. This he delivered on 14 July 2006. He held that a magistrates' court does have such a power conferred by section 75(2) of the Magistrates Courts Act 1980.
8. This appeal by the prosecutor challenges that conclusion. At the end of the case stated the question put for the opinion of this court is couched in these terms:

"Does the Magistrates Court have power under section 75(2) of the Magistrates Courts Act 1980 to allow a defendant further time to pay a Confiscation Order made under the Criminal Justice Act 1988 by the Crown Court and consequently power to vary the date from which interest on the Confiscation Order begins to accrue?"

9. I should note that on 22 June 2006 the District Judge had made it clear that he would not in fact extend time beyond 22 June even if he were to hold that there was power to do so. However, the matter is not academic: I understand the Crown to contend that it expects interest to run from 21 April 2005, and that might be right (we have not yet heard argument as to the point) if the extensions of time in this case have been made without jurisdiction. In any event, the point is an important one and needs to be decided for the proper administration of other cases.
10. Section 75(1) and (2) of the Magistrates Court Act 1980 provide as follows:

"(1) A magistrates' court by whose conviction or order a sum is adjudged to be paid may, instead of requiring immediate payment, allow time for payment, or order payment by instalments.

(2) Where a magistrates' court has allowed time for payment, the court may, on the application by or on behalf of the person liable to make the payment, allow further time or order payment by instalments."

11. In order to see how section 75(2) might be applied to confiscation orders made, as here, in the Crown Court it is necessary to look at the provisions relating to enforcement of Crown Court confiscation orders in the magistrates' court. Section 75(1) of the Criminal Justice Act 1988 provides that where the Crown Court orders an offender to pay an amount under a confiscation order, section 140(1) of the Powers of Criminal Courts (Sentencing) Act 2000 ("the PCCSA") shall apply as if that amount were a fine imposed by the Crown Court. Section 140(1) of the PCCSA provides in part:

"... a fine imposed or a recognizance forfeited by the Crown Court shall be treated for the purposes of collection, enforcement and remission of the fine or other sum as having been imposed or forfeited -

(a) by a magistrates' court specified in an order made by the Crown Court, or ...

and, in the case of a fine, as having been so imposed on conviction by the magistrates' court in question."

12. The respondent's case is that section 140(1) of the PCCSA gives the magistrates' court power to deal with the confiscation order as though it were a financial penalty imposed by itself, and in that case section 75(2) empowers the magistrates' court to allow further time to pay.
13. However, the matter is in my judgment not so straightforward. First, it is to be noted that the effect of section 75(5)(a) of the Criminal Justice Act 1988 is that the magistrates' court has no power to remit the whole or any part of a confiscation order. One then notes that section 75A(1)(b) of the same Act provides that the amount of interest required to be paid when a confiscation order is not paid on time "shall, for the purposes of enforcement, be treated as part of the amount to be recovered under the confiscation order". If the magistrates' court can, under section 75(2) of the 1980 Act, allow further time to pay in the case of a Crown Court confiscation order, that would vary the date from which interest began to accrue and thereby, as it seems to me, would be tantamount to a partial remittal of the confiscation order; but that the magistrates' court may not do. This is in my judgment a powerful consideration militating against any legislative intent that section 75(2) of the Magistrates Courts Act might be deployed to allow the magistrates' court to extend time for payment of a Crown Court confiscation order.
14. The broader point is that to construe section 140(1) of the PCCSA as deploying section 75(2) for the purpose of "collection or enforcement" of a Crown Court confiscation order would, as it seems to me, allow the magistrates' court to vary orders made by the Crown Court as to time for payment. That is outside the contemplation of section 140 and would be contrary to ordinary principle, which leans against the proposition that the terms of an order set by a higher court might be disturbed by order of a lower court, not least when the lower's court's role is the ancillary one of collection and enforcement.
15. The provisions of the Magistrates Courts Act which are imported by section 140 for the purposes of collection and enforcement are, in my judgment, sections 76 and 77. Section 76(1) provides in part:

"... where default is made in paying a sum adjudged to be paid by a conviction or order of a magistrates' court, the court may ... issue a warrant committing the defaulter to prison."

Then section 77(2):

"Where a magistrates' court has power to issue a warrant of commitment under this Part of this Act, it may, if it thinks it expedient to do so, fix a term of imprisonment ... and postpone the issue of the warrant until such time and on such conditions, if any, as the court thinks just."

Subsection (3):

"A magistrates' court shall have power at any time to do either or both of the following -

(a) to direct that the issue of the warrant of commitment shall be postponed until a time different from that to which it was previously postponed;

(b) to vary any of the conditions on which its issue was previously postponed,

but only if it thinks it just to do so having regard to a change of circumstances since the relevant time.

(4) In this section 'the relevant time' means -

(a) where neither of the powers conferred by subsection (3) above have been exercised previously, the date when the issue of the warrant was postponed under subsection (2) above; and

(b) in any other case, the date of the exercise or latest exercise of either or both of the powers."

16. It can be seen that the provisions of section 76 and section 77 may readily be deployed in the magistrates' court for the purpose of enforcing a Crown Court confiscation order without in the least trammelling over the terms of that order itself, and it seems to me plain that that was the legislative intention.
17. Moreover, it has to be borne in mind, as Mr Hellman submits for the appellant, that whereas the Crown Court can, by force of section 139 of the PCCSA, at the same time both allow time to pay and impose a default sentence, the magistrates' court cannot. When it makes a confiscation order it may then allow time to pay (section 75(1)) and if it does so it may later allow further time (section 75(2)); but it may only impose a default sentence after a default by postponing the warrant of commitment (section 77(2)). Once the warrant is postponed there is no power to allow more time to pay. Section 76 and section 77 therefore can be sensibly and practically operated only after time for payment allowed by the Crown Court has expired. This preserves the critical distinction between the terms of the order on the one hand and collection and enforcement on the other.
18. The District Judge made reference to the later regime under the Proceeds of Crime Act 2002. In particular, he referred to section 35(3), which expressly requires section 75 of the Magistrates Courts Act to be ignored in the enforcement of a confiscation order. In the particular circumstances, however, in my judgment this merely makes express what is already implicit.
19. There has also been some reference in the course of the written submissions that have been placed before us to Schiemann LJ's judgment in Anscombe (1998) 162 JP 340, but the point now in issue did not arise for judgment in that case. However I would accept these submissions made in Mr Hellman's skeleton argument (page 18):

"42. The applicant [in Anscombe] submitted that the justices were in error inter alia in failing to hold a means inquiry and in failing to adjourn the enforcement proceedings to allow the applicant to apply to the High Court for a certificate of inadequacy.

43. Under the heading, 'The powers of the magistrates' at 348 the court approached these questions by setting out the powers of the magistrates' court to enforce a confiscation order made by the Crown Court. Having done so, it concluded, at 350 D:

'It follows that the magistrates' court should approach the enforcement as if they had fixed a term of imprisonment in default just as the Crown Court had done and as if they had postponed the issue of a warrant for the period of time that the Crown Court has set for the payment of the confiscation order.'

44. At 350, under the heading 'Conclusions', the court then applied this general scheme to the applicant's submissions, which were dismissed. It would therefore be wrong to say that the judgment does nothing more than explain the relationship between sections 139 and 140 of the PCCSA and section 77(2) of the Magistrates Courts Act.

45. Schiemann LJ acknowledged that the magistrates could have adjourned the proceedings, and thus further postponed the issue of a warrant, in order to see whether the High Court would issue a certificate of inadequacy, or in order to investigate other possible sources of funds in the applicant's control from which the order could have been satisfied. But on his analysis any such adjournment would have been under section 77 of the Magistrates Courts Act.

46. Had Schiemann LJ thought that it was open to the magistrates' court to give the applicant more time to pay under section 75 of the Magistrates Courts Act, as on the analysis of the learned District Judge it would have been, he would no doubt said so. For the existence of a power to give the applicant more time to pay until after the determination of an application for a certificate of inadequacy would have been directly relevant to the application for judicial review."

20. It seems to me that those observations demonstrate, with respect, that Schiemann LJ's judgment at any rate gives oblique support to the view I take of the correct construction of section 75(2) of the Magistrates Courts Act in the context of the enforcement of Crown Court confiscation orders.
21. Since preparing his skeleton argument, Mr Hellman has come upon the case of Kearney [2007] EWHC Admin 640, in which Gross J gave the first judgment. The decision was given on an appeal by the Revenue and Customs Prosecutions Office by way of case stated from a decision of the Liverpool Crown Court to extend by four months the time limit available to pay a confiscation order made under section 71 of the Criminal Justice Act 1988. The question was whether the Crown Court had jurisdiction to vary or extend the time to pay outside the 28 day slip rule period. The Divisional Court held that it did not; that of course was the same view as was taken by Judge Teare in the present case with the agreement of counsel. In Kearney the appeal was allowed and the order extending time to pay was quashed. The Prosecutions Office had put forward written submissions which the Divisional Court described as powerful and persuasive arguments. They included this:

"If here the respondent needed an extension of time to pay, the proper course, leaving aside any appeal to the Court of Appeal Criminal Division, was to apply to the Magistrates who have both the requisite powers of enforcement and dispensing powers to do justice in the individual case (see section 76 and section 77 of the Magistrates Courts Act)."

As Mr Hellman submits, it is striking that there is no reference there to section 75 of the Magistrates Courts Act. In its judgment, at paragraph 15, the Divisional Court said this:

"The reality of the confiscation order is that it is to pay a given amount within a given period or face a sentence of imprisonment in default. The given period of time to pay is an integral part of the order ... The right answer was for the respondent to seek to persuade the Magistrates in the exercise of their discretion, not then to activate the default sentence so that any injustice, if such there was, could have been addressed."

22. This seems to me to be all of a piece, with respect, with the references in Anscombe to the postponement of a warrant of commitment. Again there is support for the view I would take of section 75(2) in the judgment in the Kearney case.
23. For all these reasons, I have come to the conclusion that the District Judge fell into error and I would answer the question in the case stated in the negative.
24. MR JUSTICE TOMLINSON: I agree.
25. LORD JUSTICE LAWS: Now, there is this reference to interest going from 21 April 2005 date, but that is not before us as an issue in any way, is it, Mr Hellman? If there is some question about that, it is going to have to be sorted out somewhere else; am I not right?
26. MR HELLMAN: That must be right.
27. LORD JUSTICE LAWS: We are only concerned with the four corners of the case stated appeal.
28. MR HELLMAN: Yes.
29. LORD JUSTICE LAWS: I will not say any more about it.
30. MR HELLMAN: There is one further matter, my Lord. There is a clerical error in the skeleton such that references to section 77(1) ought to be references to section 77(2) of the Magistrates Courts Act.
31. LORD JUSTICE LAWS: Well, there is now also a clerical error in my judgment to the same effect no doubt. Can I ask the shorthand writer to make a note, there is a clerical error in relation to section 77, it should be (2) and not (1); is that right?
32. MR HELLMAN: That is right, my Lord, yes.
33. LORD JUSTICE LAWS: Thank you. Nothing else?
34. MR HELLMAN: Can I take brief instructions, my Lord?
35. LORD JUSTICE LAWS: Yes.
36. MR HELLMAN: Nothing else, my Lord.
37. LORD JUSTICE LAWS: I am being asked whether we quash the magistrates' decision. All I have said in the judgment is to propose an answer to the question in the case stated. Is any other relief required?
38. MR HELLMAN: I am just turning to the decision, my Lord.
39. LORD JUSTICE LAWS: I doubt if it is. This particular case stated appeal is really in the nature of proceedings for a declaration.
40. MR HELLMAN: It is, my Lord, yes. The court has made a finding that the court below is satisfied that it does have power to do something --
41. LORD JUSTICE LAWS: Yes, it has not made any executive order, has it, which would require to be quashed if it was based on a legal mistake?
42. MR HELLMAN: That is right, my Lord.
43. LORD JUSTICE LAWS: For the very reason no doubt that the judge had decided he would not extend time in any event, so we do not need to quash anything.
44. MR HELLMAN: We do not.
45. LORD JUSTICE LAWS: Thank you.