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You are here: BAILII >> Databases >> Court of Appeal in Northern Ireland Decisions >> MAYE, Re The Proceeds of Crime Act 2002 [2005] NICA 41 (14 October 2005)
URL: http://www.bailii.org/nie/cases/NICA/2005/41.html
Cite as: [2005] NICA 41, [2006] NI 206
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Ref: NICF5380
NICHOLSON LJ
Introduction
[1] On 23 November 1998 an order was made under the Proceeds of Crime (Northern Ireland) Order ("the 1996 Order") restraining the appellant from disposing of his assets. At arraignments on 8 January 2002 and 15 January 2002 he pleaded guilty to various counts of obtaining property by deception. Sentencing was adjourned, inter alia, to enable the court to consider the making of a confiscation order under Article 8 of the 1996 Order. [2] At a hearing on 26 June 2002 the court determined that the appellant had benefited from his offences in the amount of £168,833.32. The court was satisfied, however, that the amount that might be realised was less than the value of the appellant's benefit from the offences and, pursuant to Article 15(10) of the 1996 Order, ordered that the amount to be recovered under the confiscation order should be £33,269.17. A Certificate of Realisable Property was issued in that sum on that date in accordance with Article 15(10) and a Confiscation Order and Compensation Order for that amount were made. [3] The appellant's mother and father died intestate on 21 July 2000 and 28 September 2001 respectively. Letters of administration of the estates were taken out on 29 July 2002. The appellant became entitled to the sum of £18,000 following the administration of the intestate estates. This sum was not connected to his previous criminal activities. [4] On 5 November 2002 the Director of Public Prosecution in Northern Ireland ("the DPP") applied to the High Court pursuant to Article 21 of the 1996 Order for a certificate that the amount that might be realised in the case of the appellant should be increased by the value of the inheritance and a certificate to that effect was issued by Kerr J (as he then was) on 6 August 2003. The appellant consented to the issue of that certificate. The certificate stated that "… the said amount has been increased in the sum of £18,000 by way of a family inheritance …" [5] On 7 August 2003 the DPP applied to the Crown Court for an increase in the amount to be recovered under the confiscation order by virtue of Article 21(4) of the 1996 Order. At the hearing before His Honour Judge Burgess (as he then was) it was argued by the appellant that the inheritance could not be taken into account since it was an asset acquired after the confiscation order had been made. The learned judge concluded that he had no jurisdiction to re-consider whether or not such an asset should be included in the certificate of realisable property since it was for the High Court to make that decision and it had so decided on 6 August 2003. It is common case that he did not have jurisdiction to re-consider. [6] By summons issued on 27 February 2004 the appellant sought an order from the High Court setting aside the certificate issued on consent by the High Court on 6 August 2003, or alternatively, leave to appeal the said order to the Court of Appeal. The proceedings were brought because the certificate had been issued by consent. The appellant sought to argue that there had been a mistake of law in the issue of the certificate. [7] On 26 April 2004 the Crown Solicitor's Office wrote to the DPP advising him that the appellant had just settled an action against the Chief Constable in the sum of £2,500 and costs and by summons dated 5 May 2004 the DPP applied to the High Court pursuant to Article 21 of the 1996 Order for a certificate that the amount that may be realised in respect of the appellant should be increased by the said amount. [8] Both summonses came before Morgan J who refused the appellant's application to set aside the certificate of 6 August 2003 and refused leave to appeal. He further ordered that a certificate pursuant to Article 21 of the 1996 Order be issued certifying that the amount that might be realised in respect of the confiscation order dated 26 June 2002 should be increased by £2,500, representing the amount of the appellant's settlement of his claim against the Chief Constable on 26 April 2004. It is from these orders that the appellant has appealed to the Court of Appeal.Jurisdiction
[9] Written submissions were made and we heard argument on the issue of the jurisdiction of the Court of Appeal to deal with the certificate issued by Kerr J (as he then was). We are satisfied that Morgan J had jurisdiction to entertain an application to set aside the certificate issued by consent of the parties on 6 August 2003 on the grounds that it was issued by mistake of law. Under Section 35 of the Judicature (Northern Ireland) Act 1978 there is a right of appeal to the Court of Appeal from the decision of Morgan J and leave is not required for an appeal from a decision which is not made on consent.The decision of Morgan J
[10] Morgan J held that the High Court is required to take into account moneys acquired by persons such as the appellant after the making of a confiscation order under Article 21 of the 1996 Order. He set out the framework of the 1996 Order in his judgment. It is also necessary to set it out in our judgment in order to follow the arguments advanced to us.The 1996 Order
[11] The 1996 Order came into operation on 25 August 1996 and applies to the appellant. The Proceeds of Crime Act 2002, read together with S.I. 2003/333, state that Section 156 of the Act which deals with confiscation orders is not to apply when the relevant offences were committed before 24 March 2003. [12] Article 2 of the 1996 Order provides for the interpretation of words and phrases to be found in the Order and for certain expressions in the Order to be defined by other Articles. Where necessary, reference will be made to this Article. The meaning of "property" and related expressions is set out at Article 3 which reads:-"3.—(1) In this Order "property" includes money and all other property, real or personal, heritable or movable, and including things in action and other intangible or incorporeal property.
(2) In this Order 'interest' in relation to property, includes right.
(3) This Order applies to property wherever situated.
(4) ….
(5) ….
(6) For the purposes of this Order—
(a) property is held by any person if he holds any interest in it;
(b) …."
Article 4 has effect for the interpretation of Part 11 which deals with confiscation orders. Paragraph (3) provides that proceedings for an offence are concluded …. (c) if a confiscation order is made against [a defendant] … when the order is satisfied; paragraph (5) provides that an application under Article 21 is concluded – (a) … (b) if the court varies the confiscation order as a result of the application, when the order is satisfied. …..
Paragraph (6) provides that a confiscation order is satisfied when no amount is due under it.
Paragraph (8) provides that an order is subject to appeal until (disregarding any power of a court to grant leave to appeal out of time) there is no further possibility of an appeal on which the order could be varied or set aside.
Article 5 deals with the meaning of "amount that might be realised" and "realisable property". The relevant portion reads:-
"5.—(1) For the purposes of this Order the amount that might be realised at the time a confiscation order is made against the defendant is—
(a) the total of the values at that time of all the realisable property held by the defendant, less
(b) where there are obligations having priority at that time, the total amounts payable in pursuance of such obligations,
together with the total of the values at that time of all gifts caught by this Order.
(2) In this Order "realisable property" means, subject to paragraph (3)—
(a) any property held by the defendant; and
(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Order."
Article 6 deals with the value of property etc and the relevant portion reads:-
"(2) Subject to Article 7(3), references in this Order to the value at any time (referred to in paragraph (3) as 'the material time') of –
(a) any property obtained by a person as a result of or in connection with the commission of an offence;
(b) a gift caught by this Order or of any payment or reward;
are references to –
(i) the value of the property, gift, payment or reward to the recipient when he obtained or received it, adjusted to take account of subsequent changes in the value of money."
Article 8 deals with Confiscation Orders and the relevant portion reads:-
"8.—(1) Where a defendant is convicted, in any proceedings before the Crown Court or a court of summary jurisdiction, of an offence to which this Order applies the court shall—
(a) if the prosecution asks it to proceed under this Article, or
(b) if the court considers that, even though it has not been asked to do so, it is appropriate for it so to proceed,
determine whether the defendant has benefited from any relevant criminal conduct, or as the case may be, from drug trafficking.
(2) …. if, in the case of an offence of a relevant description, the court determines that the defendant has benefited from any relevant criminal conduct, the court shall make an order (a confiscation order) ordering the defendant to pay—
(a) the amount equal to the value of the defendant's benefit from the relevant criminal conduct; or
(b) the amount appearing to the court to be the amount that might be realised at the time the order is made, whichever is the less."
Article 13(5) provides:
"Where the defendant serves a term of imprisonment on detention in default of paying any amount due under a confiscation order, his serving that term does not prevent the confiscation order from continuing to have effect, so far as any other method of enforcement is concerned."
Article 15(10) provides:
"(10) If the court is satisfied as to any matter relevant for assessing the amount that might be realised at the time the confiscation order is made (whether by reason of the acceptance of an allegation made in a statement given under this Article or made in the giving of information under Article 16, or otherwise), the court may issue a certificate giving the court's opinion as to the matters concerned and shall do so if satisfied that the amount that might be realised at the time the confiscation order is made is less than the amount the court assesses to be the value of the defendant's benefit from any relevant criminal conduct or, as the case may be, proceeds from drug trafficking."
Article 21 deals with increases in realisable property. The relevant portion reads:
"21.—(1) This Article applies where by virtue of Article 8(2) … the amount which a person is ordered to pay by a confiscation order is less than the benefit in respect of which it is made or, as the case may be, the amount assessed to be the value of his proceeds of drug trafficking.
(2) If, on an application made in accordance with paragraph (3), the High Court is satisfied that the amount that might be realised in the case of the person in question is greater than the amount taken into account in making the confiscation order (whether it was greater than was thought when the order was made or has subsequently increased), the Court shall issue a certificate to that effect, giving the Court's reasons.
(3) An application under paragraph (2) may be made either by the prosecution or by a receiver appointed under this Order in relation to the realisable property of the person in question under Article 31 or 34 or in pursuance of a charging order.
(4) Where a certificate has been issued under paragraph (2) the prosecution may apply—
(a) where the confiscation order was made by the Crown Court, to that Court; …
for an increase in the amount to be recovered under the confiscation order.
(5) The Crown Court may, on an application under paragraph (4)—
(a) substitute for the amount to be recovered under the confiscation order such amount (not exceeding the amount of the benefit in respect of which it is made or, as the case may be, the amount assessed as the value of the proceeds of drug trafficking) as appears to the Court to be appropriate having regard to the amount now shown to be realisable; and
(b) increase the term of imprisonment or detention fixed in respect of the confiscation order under section 35(1)(c) of the 1945 c. 15 (N.I.).Criminal Justice Act (Northern Ireland) 1945 (as it has effect by virtue of Article 13) if the effect of the substitution is to increase the maximum period applicable in relation to the order under subsection (2) of that section."
Article 22 deals with inadequacy of realisable property. The relevant portion reads:
"22.—(1) If, on an application in respect of a confiscation order by —
(a) the defendant, or
(b) a receiver appointed under Article 31 or 34 or in pursuance of a charging order, the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under the order, the Court shall issue a certificate to that effect, giving the Court's reasons.
(2) For the purposes of paragraph (1)—
(a) ….
(b) the Court may disregard any inadequacy in the realisable property which appears to the Court to be attributable wholly or partly to anything done by the defendant for the purpose of preserving any property held by a person to whom the defendant had directly or indirectly made a gift caught by this Order from any risk of realisation under this Order.
(3) Where a certificate has been issued under paragraph (1), the person who applied for it may apply—
(a) Where the confiscation order was made by the Crown Court, to that Court,
(b) …
for the amount to be recovered under the confiscation order to be reduced."
Article 31 provides for the making of restraint orders.
[13] Mr McNulty QC and Mr Hutton appeared for the appellant. Mr Terence Mooney QC and Mr Sefton appeared for the DPP. We are grateful to counsel for the arguments which they presented in writing and orally to the court. [14] The appellant submitted two separate arguments in respect of the application to set aside the certificate of Kerr J (as he then was) and the application by the DPP to Morgan J. The facts as stated in the introduction to this judgment were not in dispute. The arguments addressed to His Honour Judge Burgess (as he then was) were similar to the arguments presented to Morgan J and to this court. It was argued that there was a mistake of law in the issue of the certificate of the High Court under Article 21 because it dealt with assets received innocently by the appellant after the commission of the crimes in respect of which he had pleaded Guilty before Judge Burgess and after the judge had made a confiscation order under Article 8(1) and issued a certificate under Article 15(10). The judge provided the parties with a draft judgment in which he made it clear that the principal arguments of the appellant went to the jurisdiction of the High Court to issue a certificate and it was not appropriate for him to revisit that issue. It is conceded by the appellant that this was the correct approach to adopt. [15] Accordingly the appellant issued proceedings to set aside the certificate of the High Court on the ground that it was issued under a mistake of law and that the appellant had consented in the mistaken belief that the High Court was entitled to issue it. We were taken through the relevant parts of the 1996 Order as was Morgan J at first instance. Article 21 states:"If, on an application made in accordance with paragraph (3), the High Court is satisfied that the amount that might be realised in the case of the person in question is greater than the amount taken into account in making the confiscation order (whether it was greater than was thought when the order was made or has subsequently increased) the court shall issue a certificate to that effect, giving the court's reasons."
It was, submitted that the use of the past participle ie 'was greater' and 'has increased' should be taken to refer back to the time of the making of the confiscation order itself and the assets and amount that might be realised at that time. Article 21 should only be read as attaching to an increase in the amount that might be realised, as defined in Article 5 of the Order.
[16] Article 5 provides:-"(1) For the purposes of this Order the amount that might be realised at the time a confiscation order is made against the defendant is –
(a) the total of the values at that time of all the realisable property held by the defendant, less …
(2) In this Order `realisable property' means, …
(a) any property held by the defendant
(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Order."
It was contended that assets subsequently falling into account which were not related to the property held by a defendant at the time of the making of the order could not be subject to an Article 21 application. The article would be applicable (a) where an asset had been concealed from the court by a defendant, (b) where an asset had been undervalued by the court and this became apparent when the asset was realised, (c) where an appreciating asset had been correctly valued at the time, but its value had increased between the time of the making of the order and its realisation (where the value had subsequently increased). The `increase' had a connection to the original assets held by a defendant, and could reasonably be presumed to be connected to a defendant's turpitude. It was contrary to the intention of the confiscation order itself that in the circumstances outlined at (a), (b) and (c) that a defendant should obtain any benefit from the identified increase. The identified increase would have been included within the ambit of the order, had the court known of the `increase' or the true value of the assets, at the time of the order. However, to argue that Article 21 could validly attach to an asset of value falling into account after the making of the order was erroneous and oppressive.
[17] The legislative history relating to Article 21 indicated that it was not the intention of Parliament to confiscate assets innocently acquired after the making of the compensation order. The 1996 Order closely followed the legislation relating to Drug Trafficking in England and Wales. The Drug Trafficking Offences Act 1986 was an Act to make provision for the recovery of the proceeds of drug trafficking. Section 5 of the Act provided a definition of the "amount that might be realised" in essentially the same terms as Article 5 of the 1996 Order. Section 14 allowed for "Variation of Confiscation Orders" which variation was in effect the Certificate of Inadequacy provided for by Article 22 of the 1996 Order. There was no provision in the Act for the Crown to apply to vary the confiscation order made under section 1 of the Act where there was an `increase' in the value of the amount that might be realised. We were referred to the Home Affairs Select Committee's Report of 8 November 1989 and the Criminal Justice (International Co-operation) Act 1990. Section 16 of the 1990 Act dealt with the `increase' in realisable property. Section 16 of the Drug Trafficking Act 1994 replaced Section 16 of the 1990 Act and was in identical terms. [18] The mischief aimed at by Article 21 of the 1996 Order was identified in the Home Affairs Select Committee Report. It noted that where assets were cash at back, during the period between the confiscation order and realisation, the case could `increase' in that it could attract interest and it was inappropriate that a defendant might gain the benefit. Where the assets were appreciating in value between the confiscation order and realisation, this represented an `increase' and it was inappropriate for the defendant to gain the benefit. These mischiefs were dealt with by Sections 15 and 16 of the 1990 Act. The same legislative intention should be imputed to Parliament in respect of Article 21 of the 1996 Order. Emphasis was placed on the words "it"; "increased" meant "grown greater". Reliance was placed on statements by Government Ministers in Hansard. [19] Our attention was drawn to an article published by Philip Taylor in the New Law Journal (14 May 1993) 686 in which he contended that section 16 of the 1990 Act did not apply to after-acquired property which would rob a defendant of his legitimately earned income and that as innocently acquired property after criminality was not "realisable property" at the time of the making of the confiscation order. The order could not be varied so as to take it into account. In Re Barretto (Unreported: 30 November 1992) provided support for this argument: see the judgment of Schiemann J. (Incidentally this case went to appeal but there is no discussion about after-acquired property: see in Re Barretto [1994] QB 392). The assets of the estates of the appellant's parents were the property of the personal representative until administered. The reasoning in R v Tivnan [1999] 1 Cr.App(s) 92 was incorrect. [20] The argument advanced by the appellant in respect of the £2,500 damages paid to him by the Chief Constable was partly based on the foregoing submissions and partly by the argument that neither his civil claim against the Chief Constable nor the cash which he received when this claim was converted into a money asset was "property" within the meaning of the 1996 Order because it would not have been regarded as property under the Insolvency (NI) Order 1989 and other analogous legislation. Parliament did not intend to include damages for personal injuries. Rights of action for a person wounded feelings would not be deemed to be included and pain felt in respect of the body, mind or character of a person was not included. Support for this construction was supported by Article 3(1), 5(1)(b) and 37(2) of the 1996 Order. [21] The criticisms of the judgment of Morgan J involved a repetition of the arguments addressed to and rejected by him. [22] The arguments on the part of the respondent were succinct. In so far as the certificate issued by Kerr J was concerned, it was submitted that there was no mistake of law entitling the appellant to set it aside. He held an interest in it for the purposes of the 1996 Order by reason of Article 3 and particularly by virtue of Article 3(6)(a).Reliance was placed on the decision in R v Tivnan (to which we will later refer) in respect of the inheritance and the damages arising out of the settlement of the appellant's claim against the Chief Constable.
The appellant had benefited from his criminality to the value of £168,833.22: the original confiscation order was for £33,269.17. Accordingly, the appellant had acquired money illegally and had spent it, disposed of it or still had it. It was not unfair that he should have a continuing obligation to make restitution.
Our Conclusions
[23] The wording of the relevant portions of the 1996 Order are sufficiently clear as not to require any assistance from debates in Parliament.Article 2(2) defines a "confiscation order" as an order made by a court under Article 8. Article 3(1) states that "property" includes money and all other property … including things in action. Article 3(4) states that references in the Order to property obtained, or to a pecuniary advantage derived, or to anything received in connection with the commission of an offence … include a reference to property obtained or to a pecuniary derived or to anything received … in some other connection.
Article 4 provides that proceedings are concluded, if a confiscation order is made against a defendant in criminal proceedings, when the order is satisfied. By Article 4(5) an application under Article 21 is concluded … (b) if the court varies the confiscation order as a result of the application, when the order is satisfied. Article 4(6) provides that a confiscation order is satisfied when no amount is due under it. Article 5(1) deals with "the amount that might be realised at the time a confiscation order is made against the defendant …". Article 5(2) states that in the 1996 Order "realisable property" means … "(a) any property held by the defendant."
Article 8 deals with confiscation orders. Under Article 13(5) a confiscation order continues to have effect where a defendant serves a term of imprisonment or detention in default of paying any amount due under the order. Article 21 applies where by virtue of Article 8 the amount which a person is ordered to pay by a confiscation order is less than the benefit in respect of which it is made. Article 21(2) provides that if: "
"… the High Court is satisfied that the amount taken into account in making the confiscation order (whether it was greater than was thought … or has subsequently increased) the court shall issue a certificate to that effect …"
There is no time-limit for an application. The relevant time for considering whether the certificate of increase shall issue is the time at which the application is made to the High Court. No restriction is placed on the reasons for the increase.
In our view the words "the amount taken into account in making the confiscation order … has subsequently increased" plainly include amounts which the defendant has acquired since the making of the confiscation order, however acquired. So long as he has not paid the amount ordered to be paid by the confiscation order, any property which he acquires since the making of the confiscation order renders him liable to an application under Article 21 for a certificate that the High Court is satisfied that the amount that might be realised in the case of the defendant is greater than the amount taken into account in making the confiscation order, subject to arguments about delay, breach of Convention rights and abuse of process.
There is nothing in the wording of any Article, least of all Article 21, to suggest that the property of the person which is to be taken into account by the High Court must have existed at the time of the making of the confiscation order. There is nothing in the wording of any Article, least of all Article 21, to suggest that the increase in the amount to be certified must relate back to property which existed at that time.
[24] There is no valid distinction to be made between moneys which are inherited and moneys paid to a person as compensation for a personal injury claim. Whether or not property vests in a trustee in bankruptcy is irrelevant in this context. [25] Article 25(5) empowers the Crown Court to substitute for the amount to be recovered under the confiscation order such amount (not exceeding the amount of the benefit in respect of which it is made …) as appears to the court to be appropriate having regard to the amount now shown to be realisable.There is nothing in the 1996 order which lends support to the contention that "the amount now shown to be realisable" refers back to property in existence when the confiscation order was made.
[26] In R v Tivnan [1991] 1 Cr. App. R.(S) 92 Rose LJ dealt with the meaning of section 16 of the Drug Trafficking Offences Act 1994. section 16(2) is in similar terms to Article 21(2) and section 16(4) is in similar terms to Article 21(4). He stated:"It is to be noted, first, that the section contains no words of limitation as to time. Secondly, it is expressed throughout in the present tense, by reference to the time of application for the further certificate and increased confiscation order. Thirdly, the marginal note refers to increase in realistic property. Fourthly, there is in the section no reference to the reason (whether culpable concealment, subsequent acquisition or otherwise) why 'the amount that might be realised … is greater than the amount taken into account in making the confiscation order. Furthermore section 9(5) of the 1994 Act is in these terms:
Where the defendant serves a term of imprisonment or detention in default of paying any amount due under a confiscation order, his serving that term does not prevent the confiscation order from continuing to have effect so far as any other method of enforcement is concerned.
In our judgment it is apparent, therefore, that when enacting section 16, Parliament contemplated a continuing state of affairs as envisaged by section 9(5). Indeed, as it seems to us, section 16(4)(b) dovetails with the provisions of section 9(5). Accordingly for our part, we prefer Schiermann J's first thoughts in Barrett, rather than his second thoughts, and we prefer the views expressed by Turner J in Re C … The plain words of the statute, in our judgment, provide for the making of an application for a further certificate and for an increase in the amount to be recovered under the confiscation order at any time after the original confiscation order was made. By this means drug dealers can be deprived of their assets until they have disgorged an amount equivalent to al the benefit which has accrued to them from drug dealing."
[27] In Re C (Unreported: 3 February 1995) Turner J said of section 16:
"If the court is of opinion that the defendant has later acquired assets which might be realised, then those assets can properly be said to have 'subsequently increased'".
He rejected the argument that section 16(2 of the 1990 Act (which was replaced by section 16(2) of the 1994 Act) did not bite in respect of what was described in argument as 'after acquired assets". It is sufficient to say that Turner J was in no doubt that assets acquired by a defendant after a confiscation order was made which might be realised could properly be the subject-matter of a certificate which increased the amount taken into account in making the original confiscation order. We respectfully agree with the reasoning of Rose LJ, with the first thoughts of Schiemann J and with Turner J.
[28] It has never been doubted in the courts in England and Wales since then that this construction of section 16 is correct. In Sagger Re Drug Trafficking Act 1994 [2005] EWCA 187 the Court of Appeal had to deal with an alleged delay in seeking to re-open a defendants' confiscation order, so as to increase "the amount which might be realised" under it on the ground that the delay had caused a breach of Article 6(1) of the Convention. Rix LJ stated at 3:"It is of course a standard feature of confiscation orders that the Crown Court is required to assess the value of a defendant's benefit … and the amount that he can realistically pay … But he remains liable to be reassessed on his realistic assets, if the court can be persuaded to open up that issue at some later time, up to the amount of his benefit…."
He cited R v Tivnan with approval and referred to a portion of the judgment of Rose LJ at pp. 96, 97 of which we have cited a part. The remainder of the judgment is not relevant to the issues raised by the appellant.
[29] Accordingly, for the reasons which we have given, we dismiss the appeal.