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 WC2A 2LL
		3 July 2012

1. LORD JUSTICE AIKENS: This is an appeal by way of case stated by the justices of the Birmingham Local Justice Area in the county of West Midlands. It raises an issue on the scope of section 298(2)(b) of the Proceeds of Crime Act 2002 ("POCA"), which section permits the court to forfeit cash which has been detained by a constable if the court is satisfied that this cash "is intended by any person for use in unlawful conduct".

The statutory framework

2. Part 5 of POCA is entitled "Civil Recovery of the Proceeds etc of unlawful conduct". Section 240(1)(b) states that this Part of the Act has effect for the purposes of enabling cash which is or represents property obtained through unlawful conduct or which is intended to be used in unlawful conduct to be forfeited in civil proceedings before a magistrates' court in England and Wales. Section 241(1) defines "unlawful conduct" as being conduct occurring in any part of the United Kingdom that is unlawful under the criminal law of that part of the United Kingdom. Subsection (2) deals with what can be unlawful conduct outside the United Kingdom. Section 241(3) states that a court must decide on the balance of probabilities whether it is proved that any matters alleged to constitute unlawful conduct have occurred or that any person intended to use any cash in unlawful conduct.
3. Chapter 3 of Part 5 of the POCA is entitled "Recovery of Cash in Summary Proceedings". Section 294 entitles a customs officer or constable to seize cash when he has reasonable grounds for suspecting that the cash is "recoverable property" or is cash which is "intended by any person for use in unlawful conduct" subject to the cash concerned being greater than a minimum amount, which amount is set by virtue of a statutory instrument. That threshold has been passed in this case. In section 304 of POCA, "recoverable property" is defined as property obtained through unlawful conduct.
4. Cash that has been seized under the powers conferred by section 294 of POCA may be detained for an initial period of 48 hours, but that period may be extended by order of a magistrates' court for up to three months by each order, up to a total maximum of 2 years, provided that the statutory conditions set out in sections 295(5) and (6) are fulfilled.
5. Sections 298(1)(a), (2) and (4) of POCA provide:

"(1) While cash is detained under section 295, an application for the forfeiture of the whole or any part of it may be made—

(a) to a magistrates' court by the Commissioners of Customs and Excise or a constable,

...

(2) The court or sheriff may order the forfeiture of the cash or any part of it if satisfied that the cash or part—

(a) is recoverable property, or

(b) is intended by any person for use in unlawful conduct.

...

(4) Where an application for the forfeiture of any cash is made under this section, the cash is to be detained (and may not be released under any power conferred by this Chapter) until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded."

Facts and proceedings before the justices

6. The facts of this case, as found and stated by the justices, are as follows:

"(a) On the 17th April 2009 the Appellant was searched following her detention with 2 others on suspicion of shoplifting and was found to be in possession of a tied up black plastic bag inside her handbag. The black plastic bag contained £7,150 in cash. This sum was seized by the police and detained under the Proceeds of Crime Act 2002;

(b) The Appellant had accumulated the sum of £7,150 in cash over a period [of] time from various sources, and this sum represented her savings;

(c) She did not deposit the sum in the bank as she was aware that it might affect her claim for child benefits and or income support;

(d) The Appellant claimed and was in receipt of child benefits and income support. She did not declare this cash as savings on her application for benefits (which amounted to a false declaration);

(e) The Appellant would not have declared this cash on any future application for benefits. This was confirmed on oath by the Appellant;

(f) The existence of this sum of money in savings would have had an effect on her claim for child benefits and/or income support, in that she may not have been eligible for as much benefit as she was in fact paid."

7. The facts relating to the proceedings are as follows: on 8 July 2009, an application for forfeiture of detained cash was sent to the appellant and the Birmingham Magistrates' Court. The application stated that an amount of £7,150 had been seized from the appellant on 17 April 2009 at 1555 hours. It stated that an application would be made for forfeiture of this sum of money under section 298(2) of the Proceeds of Crime Act 2002 on the grounds that the cash was recoverable property or intended for use in unlawful conduct.
8. The forfeiture hearing took place before the justices on 6 October 2009. The court heard evidence from both the appellant and a person on behalf of the West Midlands Police. Before the justices the West Midlands Police also argued that the cash found on the appellant was recoverable property because it was said it had come from unlawful conduct. The justices did not make such a finding. That argument has not been pursued subsequently.
9. We have been informed in the course of argument before us that there was evidence before the justices that there is a limit for savings of £6,000, above which the amount of benefits or income support that can be received by a person will be reduced. For each £250 over the £6,000 level limit, the benefit payment will be reduced by £1 per week. Thus, in the case of the appellant, who admittedly had savings of £7,150, if those savings had been declared then her benefit payments would have been approximately £5 per week less.
10. The conclusions of the justices as stated in the case are as follows:

"(a) The sum of £7,150 in cash had been seized from the Appellant and was detained by the police under section 295 of the POCA;

(b) The Appellant was in receipt of benefits. Her eligibility to receive those benefits would have been affected by the fact that she had savings of £7,150;

(c) She did not declare, and would not in the future declare her savings in making her applications for benefits;

(d) She kept the savings in cash at home and out of the bank to prevent the Department of Work and Pensions from being able to trace the fact that she had savings of this amount;

(e) The fact that the cash is kept in cash and is not in the Appellant's bank account is the tool by which the offence is committed. The funds being in cash is the means by which the crime is committed;

(f) We were therefore satisfied that the cash was intended by the Appellant for use in unlawful conduct."

The question for the High Court

11. The question for the opinion of the High Court posed by the justices is set out at paragraph 10 of the case. It is in the following terms:

"If cash is kept at home, and it is accepted that in a future application for state benefits the Appellant would not have declared those funds because the existence of those funds in savings would have had a detrimental effect on the amount of benefit that the Appellant was to receive following that future application, can that cash be said to be intended for use in unlawful conduct for the purposes of section 298(2)(b) of the Proceeds of Crime Act?"

The argument of the parties

12. On behalf of the appellant, Mr Rhodes submits that the justices were wrong in law in their decision. He submits that it is important to remember that the forfeiture proceedings act in rem on the very cash that has been seized and detained. He submits that the cash itself has to be intended for use in the "unlawful conduct". He gives a classic example of cash that is seized in a raid on a known drugs dealer, where the cash was intended to buy illegal drugs. But, he submits, in the present case it could not be proved that the cash was intended for use in unlawful connect, viz in committing a fraud on the Department of Work and Pensions in claiming benefits. By definition, he submits, the cash was to remain where it always was: in a plastic bag either in the appellant's handbag or in a drawer in her house.
13. Mr Baran, who appeared on behalf of the Chief Constable of the West Midlands Police, submits that the justices were correct in law. He submits that the question is: for what future purpose was it intended that this cash should be used? The answer is, he submits, that it would be used in order to make a false declaration that would affect the appellant's entitlement to benefits and the cash was kept as cash so as to evade detection of the unlawful conduct. He submits that paragraph (b) of section 298(2) should be construed so as to add the words "connection with" after the word "in" and before the words "unlawful conduct", so that that paragraph would read "...is intended by any person for use in connection with unlawful conduct". He further submits that the appellant's construction of section 298(2)(b) would limit its effect unreasonably and only to cases where it was proved that the cash was intended for use to fund unlawful conduct. He submits such a limitation is not warranted either by the statutory wording or the intention of the statute itself.
14. Both counsel told us that they had been unable to find any helpful authority on the construction of this provision.

Discussion and conclusions

15. The admissions of the appellant in the course of the evidence before the justices made it plain that her intention was to keep this sum of £7,150 in cash and that this sum was not to be declared when making any future claims for benefit from the Department. The failure to declare that she was saving over and above the limit allowed of £6,000 when claiming benefits must involve "unlawful conduct" because it would mean that the appellant intended deliberately to deceive the Department as to the amount of her savings. This would have given rise to more than one criminal offence. There can be no doubt that the appellant intended to engage in unlawful conduct.
16. It is not now suggested that the actual cash, the £7,150 that was found wrapped up in a plastic bag, itself constituted the proceeds of criminal conduct. Therefore the sole question is whether that actual cash was "for use in" the intended unlawful conduct of the appellant. Although the forfeiture procedure is not a criminal procedure, the fact that this paragraph of this subsection of this part of POCA provides for the summary forfeiture of the lawfully obtained property of a person is a draconian step. This means, in my view, that if there is any doubt or ambiguity in the ambit of the wording in the section, we have to construe it narrowly, even in the case of a statute whose object and provisions are to strip those who commit crimes (or who intend to do so) of the proceeds of the crimes committed or the wherewithal to commit future unlawful conduct.
17. The word "use" is employed as a noun in section 298(2)(b) and in other sections where that word appears in this part of POCA. The noun "use" has various connotations, but in this case I think that its sense, when used in conjunction with some other noun (such as "cash" as in this instance) is that of "the application" of the other thing (in this case the cash) for some purpose which, in this case, is that of intended unlawful conduct. However, to my mind, the appellant did not intend to apply this cash in any positive sense to deceive the benefit authorities. The unlawful conduct of concealing the fact that the appellant had more than the limit of savings of £6,000 would have occurred whether or not the appellant had the money in cash. She could, after all, have had the additional £1,150 in a bank account or, indeed, all £7,150 in a bank account. The intent was to conceal the fact of having that sum of money in savings.
18. In my view, the unlawful conduct that was intended by this appellant was to conceal the fact that she had savings greater than the limit of £6,000 in order that her benefits would not be reduced. That does not amount to the "use" of the cash in the unlawful conduct intended in this case. In fact, it was the very opposite of a "use". The appellant intended to conceal the fact that she had the money, but did not intend its use in any other way in order to further her intended unlawful conduct.
19. Therefore, I would conclude that the justices erred in law. My answer to the question posed by them in the case stated is therefore "no".
20. MR JUSTICE GLOBE: I agree.
21. LORD JUSTICE AIKENS: Thank you both very much.
22. MR RHODES: Just two matters. Firstly, can I (Inaudible) that the cash is released to Mrs Begum.
23. MR BARAN: I have no objection.
24. MR RHODES: Secondly, the appellant is legally aided. May I have a detailed assessment of her costs?
25. LORD JUSTICE AIKENS: Yes, that must follow. We are lacking an associate this morning, so it would be a great help to the court administration if you could between you just outside draft an order for the court and then hand it in to the usher. Thank you both very much indeed.