Scottish Sheriff Court Decisions

SHERIFFDOM OF TAYSIDE, CENTRAL AND FIFE AT ALLOA

 

 

NOTE BY SHERIFF ALASTAIR BROWN

in causa

 

HER MAJESTY'S ADVOCATE

against

 

YAI KAIN CHEUNG

Prisoner in the Prison of Glenochil

 

 

Alloa, 18 July 2013

1. On 4 July 2013 this case called before me at Alloa Sheriff Court for enquiry into the failure of the accused to pay £13,391.88, being the balance outstanding in relation to a confiscation order in the sum of £29,070.76 imposed in the High Court of Justiciary by the Hon Lord Tyre on 21 March 2011. The solicitor who appeared for the accused invited me, on what he said was "joint motion", to continue the matter for a number of weeks to allow the accused to make progress with payment. It appeared to me that what I was being asked to do was procedurally questionable and I asked for submissions on the matter. Neither the solicitor nor the procurator fiscal was in a position to make reasoned submissions at that stage and I therefore fixed a further hearing for 18 July 2013 for that purpose. On that date, the case called before me again and the motion to continue the matter was renewed. I asked for submissions, in particular in relation to the effect of s116 of the Proceeds of Crime Act 2002 ("the 2002 Act"). The submissions which were made on both sides were directed principally to the desirability of a continuation rather than to the competency of that course. I return to those submissions below. It was, however, submitted on behalf of the accused that the fines enforcement provisions of the Criminal Procedure (Scotland) Act 1995 ("the 1995 Act") apply and that it is therefore competent to continue a hearing (specific reference was made to s216(3) but that subsection does not address this issue). After hearing submissions, I directed that interest should be applied to the amount outstanding in terms of s117 of the 2002 Act and, having reached the conclusion that a further continuation would be incompetent, I imposed a sentence of 12 months' imprisonment, to be served (in terms of s118(5) of the 2002 Act) consecutively to the sentence in respect of which the confiscation order was imposed. This Note explains the reasoning which led me to do that.

 

2. A court will make a confiscation order in the circumstances set out in section 92(1) to (4) of the 2002 Act. In doing so, the court must decide the recoverable amount (in terms of section 92(6)(a)). That involves the determination of the accused's benefit from crime and, if it is less than the benefit, the available amount (2002 Act s93). The court must make a confiscation order in the recoverable amount (section 92(6)(b)). The confiscation order does not directly confiscate anything. It is simply an order to pay a specified sum of money but the way in which that sum is determined distinguishes a confiscation order very clearly from a fine. A fine is a penalty, the level of which is arrived at after taking into consideration the means of the offender (1995 Act s211(7)). Whilst the amount available for satisfaction of a confiscation order is relevant to the determination of a confiscation order, the underlying aim of this part of the 2002 Act is to remove capital from the criminal economy by depriving enterprise criminals such as this accused of the whole of their benefit from their crimes, or at least of as much of it as they have left, and thereby starving the criminal economy of investment.

 

3. In terms of s116 of the 2002 Act, the confiscation order is, in the first instance, payable immediately. If, however, the accused shows that he needs time to pay, the court making the confiscation order may make an order allowing payment to be made in a specified period which must not exceed 6 months from the date on which the confiscation order is made. The law then provides for two intersecting enforcement regimes.

 

4.     First, where a confiscation order has been made and is not satisfied but is not subject to appeal, the court may, on the application of the prosecutor, appoint an administrator with power to take possession of property, to manage or otherwise deal with it, to realise it in such manner as the court may specify (2002 Act s128) and to apply the funds on the accused's behalf towards satisfaction of the confiscation order (s130). The court may order any person who has possession of realisable property to give possession of it to an administrator and the court may order a person holding an interest in realisable property to make to the administrator such payment as the court specifies in respect of the beneficial interest held by the accused.

 

5. Second, s118(1) of the 2002 Act applies specified provisions of the fines enforcement provisions of the 1995 Act to confiscation orders. Those provisions include s211(4), by which a fine (and hence a confiscation order) imposed by the High Court falls to be remitted to the sheriff court for enforcement. For the purposes of this Note, however, it is the omitted provisions which have to be noticed first and which are of particular significance. Those omitted provisions include the power under s213 to remit fines, the parts of s214 which contemplate payment by installments and the whole of s215, which provides for time to pay. In my opinion, it follows that those aspects of the fines enforcement provisions of the 1995 Act have no application to confiscation orders and the sheriff has no power to remit confiscation orders, no power to allow payment by installments and no power under the 1995 Act to allow further time to pay.

 

6. An accused person who wishes to seek further time to pay a confiscation order must apply to the sheriff under s116(4) to (6) of the 2002 Act for the 6 month period to be extended. That may be done only if the court believes that there are exceptional circumstances and it may be done only to such an extent that the total period within which the confiscation order is paid does not exceed 12 months. By s116(6), although such an application may be made after the expiry of the initial 6 month period, it must not be made after the end of the period of 12 months starting with the date on which the confiscation order is made.

 

7. With two small exceptions, there is no other means by which the accused can be granted further time to pay. The first exception is the power conferred in terms of s118(f)(ii) of the 2002 Act to postpone any decision about imprisonment in default until a report is obtained from any administrator who has been appointed. The second exception is the right of the prosecutor, in limited circumstances, to ask the court to delay imposing any period of imprisonment for up to 3 months to allow an application to be made for the appointment of an enforcement administrator (2002 Act s118(2)(f)(iii)). Otherwise, the period of 12 months from the date of imposition of the confiscation order is, in my opinion, the absolute outer limit of the period allowed for payment (an opinion which is strengthened by the fact that Parliament has thought it necessary to grant a specific power to delay imprisoning in cases involving administrators - that would have been unnecessary if a general power had existed).

 

8. If there was any doubt about the conclusion that the court has no power to allow time to pay beyond the 12 month limit, it seems to me that it would be dispelled by para 187 of the Explanatory Notes where it is said that:

"[s]ection 116 indicates how long the court may allow the accused to pay the amount due under the confiscation order. It provides that a confiscation order is to be paid immediately, unless the accused can demonstrate to the court that he needs more time to pay. If the court is satisfied that it is required, the court may allow up to six months to pay, and up to a further six months on a later occasion if there are exceptional reasons justifying the extension. In no case, however, will more than 12 months be granted from the day on which the confiscation order is made" (emphasis added).

 

9. Once the time permitted for payment (whether 6 months or up to 12 months) has expired without the confiscation order being settled, the accused must pay interest at the rate payable under a decree of the Court of Session (2002 Act s117). Section 216 of the 1995 Act, as applied by s118(2)(c) of the 2002 Act, will also operate so that the accused will be brought before the sheriff court for enquiry into the reason why the confiscation order has not been paid. On that occasion, the sheriff has the fines enforcement powers which are applied to confiscation orders by s118 of the 2002 Act. On close examination and comparison of s118 of the 2002 Act with the provisions of the 1995 Act to which it refers, those powers appear to me to be limited to the imposition of a prison sentence in default of payment (in terms of s219(1)(b) of the 1995 Act) and an order that the amount is to be recovered by civil diligence (in terms of s221 of the 1995 Act) except where an administrator has been appointed (2002 Act s118(2)(h)). What the sheriff does not have is any power, apart from s116 of the 2002 Act, to allow further time to pay.

 

10. In my opinion, to continue an enquiry under s216 of the 1995 Act for negotiation about payment or in order to allow the accused time to pay the confiscation order is to do no more and no less than to allow him further time to pay, which is precisely what Parliament sought to exclude by omitting s215 of the 1995 Act from the provisions which are applied by s118 of the 2002 Act. A convicted accused who is subject to a confiscation order may get up to 6 months to pay from the judge who imposes that order and may (in exceptional circumstances) get that extended to 12 months by the sheriff; but that is all he can get.

 

11. Following his conviction of rape and a contravention of s4(3)(b) of the Misuse of Drugs Act 1971, the accused was sentenced to periods of 7 years' and 3 years' imprisonment respectively. A joint minute agreeing the amount of the accused's benefit from criminal conduct, his available assets and the amount of the confiscation order was tendered to the court and the confiscation order was imposed on 21 March 2011. The court directed that payment was to be made to the Sheriff Clerk at Alloa within 6 months. Thereafter, the procedure followed in the present case bears little resemblance to the procedure described above. On 15 July 2011 a letter was received by the Sheriff Clerk in which the accused said that he was unable to pay the order in full. That letter was faxed by the Sheriff Clerk to the Crown Office but nothing else seems to have been done. In particular, the letter does not appear to have been treated as an application under s116 of the 2002 Act for an extension of time for payment. In terms of s117, at the expiry of the 6 month period, interest ought to have begun to be charged on the outstanding balance. That was not done then and has never been done. On 2 November 2012 (over 19 months after the imposition of the order) the Crown Office Proceeds of Crime Unit wrote to the Sheriff Clerk to say that the order was to have been paid by 21 September 2011, that there was an outstanding balance of £13,391.88 and to ask that the accused be cited to a means enquiry court. That happened on 13 December 2012. On that date, consideration of the case was continued to allow the accused's solicitor to attend. The same thing happened on 20 December 2012. On 24 January, the case was continued for legal aid to be granted. On 21 February 2013, the accused was represented and the case was continued "for investigation and negotiation". On 11 April 2013, it was continued "for resolution". On 4 July, it called before me and, as narrated above, I refused to perpetuate that process.

 

12. The effect of all of this is that, whereas the accused was allowed 6 months for payment and the legislation contemplates an absolute limit of 12 months, almost 28 months has passed and this confiscation order has neither been paid nor enforced effectively. The process did, however, metamorphose from the enforcement of a penalty into a quasi-civil recovery (the minutes even use the language of civil practice when they refer to "investigation and negotiation" and to "resolution"). In my opinion, that was an error. The accused is required to explain to the sheriff why he has not paid and the sheriff is required to decide what to do about that, within the limits of the legislative scheme. The prosecutor is given a right to be heard but the idea that the prosecutor can negotiate about how much the accused will pay, when he will pay, and what consequences might ensue from failure to pay is not to be found anywhere in the Act.

 

13. The accused was before me to be dealt with in terms of the provisions applied by s118 of the 2002 Act. Much was made of the difficulties being experienced in realising three assets referred to in the joint minute - an interest in a business (said now to be worthless), the value of an insurance policy and a cash sum seized by the police. All of that might have been relevant to an application to extend the period for payment to 12 months from the imposition of an order. Indeed, if I had been empowered to grant further time to pay apart from s116 of the 2002 Act, it might have been relevant to the exercise of that discretion. However, the first and most fundamental question, was whether I had any power to grant further time to pay. That question was never addressed by the parties. I concluded that I have no such power.

 

 

14. The submissions advanced before me made the assumption that I had power to grant the continuation sought. They were directed, almost exclusively, to the proposition that I ought to exercise my (presumed) discretion in such a way as to grant the continuation. The argument made on behalf of the accused was that he was now trying to realise the assets listed in the joint minute, so far as not already done, in order to satisfy the confiscation order and that he ought to be allowed to do so. The position adopted on behalf of the Crown was that what the Crown really wanted was to get the money in and (by implication) that the continuation was most likely to achieve that. The procurator fiscal expressed concern that if I imposed a prison sentence in default, that would extinguish the confiscation order.

 

15. Although it might very well be that the completion of a term of imprisonment in default of payment exhausts the confiscation order, I am not persuaded that the imposition of such a term of imprisonment extinguishes the order. The law on part payment of fines by those imprisoned for failure to pay a fine is set out in s220 of the 1995, which is one of the provisions which is applied to confiscation orders by s118 of the 2002 Act. Such a person can pay part of the fine (or, it follows, a confiscation order) and the term of imprisonment to be served is reduced by the operation of that section in proportion to the payment made. In a confiscation case, the recovery and payment over of a sum by an administrator has the same effect (2002 Act s118(2)(g)). Moreover, s128 of the 2002 Act, which provides for the appointment of administrators, allows that to be done when a confiscation order is made, is not satisfied and is not subject to an appeal. It is not provided that the power to appoint an administrator lapses upon the imposition of a sentence of imprisonment in default of payment. The imposition of a term of imprisonment in default of payment should, therefore, operate as an additional incentive to the accused to make the payment which he has delayed in making and it leaves it open to the Crown to seek the appointment of an administrator to recover payment of the order out of identified assets.

 

16. It is, further, at least arguable that an accused person who, after serving a sentence in default of payment, retains or deals with property which can be proved to be or to represent, in whole or in part, directly or indirectly, benefit from crime commits a money laundering offence under Part 7 of the 2002 Act. It also seems to me that it is arguable that such property may be the subject of civil recovery proceedings under part 5 of the 2002 Act. The starting point for such an argument, in either case, would be the proposition that a confiscation order is an order to pay an amount of money, not an order which confiscates particular property. Nor does it operate to "launder" the property which is identified as available in the course of determining the recoverable amount for the purposes of s92 of the 2002 Act. If that property is or represents a person's benefit from crime, there is nothing in the 2002 Act so far as I can see which changes its character in any way.

 

17. Much of what was said, on both sides, was focused on the assets listed as available assets in the joint minute tendered to the sentencing judge. Three remained unrealised. They were the accused's interest in a business known as Lily's Cuisine, valued at £5,000; the value of a policy with Zurich Financial Services; and £3,141 seized from the accused by the police and still held by them. It was said on behalf of the accused that the interest in the business now had no value and that, while difficulties were being experienced in securing payment from Zurich Financial Services, it was hoped that this could be done soon. The money held by the police would be recovered and the Crown would then apply to the Court to vary the available amount to nil (presumably in terms of s108 of the 2002 Act).

 

18. It is probably important to recognise that that what is stated in the joint minute is simply the evidential basis upon which the sentencing judge discharges his duty under section 92(6)(a) to decide the recoverable amount and, hence, the amount of the confiscation order. It is with the enforcement of the order to pay that amount that the enforcing court is concerned, not with the realisation of particular assets. The means by which the amount is calculated is of no interest to the enforcing court. That court must proceed on the basis of the order made by the sentencing judge. The enforcing court has no power to vary or remit the amount ordered to be paid and, in particular, a Sheriff has no power to vary or look behind the amount determined by a judge of the High Court. If either the prosecutor or the accused wishes to have the amount of the order varied, application can be made to the sentencing court in terms of sections 104 to 109 of the 2002 Act. In particular, if the accused maintains that the available amount has become inadequate, he can apply to the sentencing court in terms of s108. The focus, for the enforcing court, must, in my opinion, be on the amount of the order made by the sentencing court and on the resources which the accused has to satisfy it at the time he is brought before the enforcing court in terms of s216 of the 1995 Act. Those resources are likely to be the same as those which he had at the time of the making of the order; but not necessarily so, especially where there has been such delay in enforcing the order.

 

19. It was not explained to me why, if the interest in the business had truly become of no value, no application had been made to the sentencing court in terms of s108. It was not explained to me why steps had not been taken long ago to realise the value of the insurance policy. The procurator fiscal seemed to express a general disinclination to seek the appointment of administrators, on cost grounds, but the realisation of an interest in a business and of the value of an insurance policy seem to be exactly the sort of things with which an administrator could assist. No doubt the administrator's fees would have to be paid out of the property realised but the legislative objective of deprivation of the accused would still be realised. The legislative policy is not, as I understand it, to maximize the income stream to the authorities. It was not explained to me why difficulty is being experienced, so long after the making of the order, in getting the police to deliver up cash which has been seized.

 

20. My duty, in terms of s216 of the 1995 Act, was to enquire into the reason why the confiscation order had not been paid (by implication, within the time allowed). The answer appeared to be that the accused, apart from writing to the sheriff clerk to say that he could not pay, had made no effort until very recently to do so. In the interim, it appeared likely that his interest in the business had lost (or been allowed to lose) its whole value. It appeared, too, that the accused and those who came to represent him had adopted a somewhat passive role, except in relation to the insurance policy, leaving it to the Crown to ingather and realise property and even failing to take advantage of the remedy available under s108 of the 2002 Act. It appeared that the Crown had largely acquiesced in that approach.

 

21. Even if I had been persuaded that I had a discretion to allow further time to pay, directly or by continuing the hearing without making any order in respect of the default, I would not have exercised it in the way the parties desired. Far too much time had passed since the imposition of the order without any significant steps being taken to progress payment.

 

22. My duty was, next, to decide what to do about the failure to pay. The options available to me in terms of the provisions of the 1995 Act applied by the 2002 Act were limited to imprisonment or civil diligence. Having regard to the amount outstanding and the serious nature of the matter, I decided to impose imprisonment. I selected 12 months on the basis that the amount outstanding, including interest, was between £10,000 and £20,000 and that s219 of the 1995 Act indicates that period.

 

 

Sheriff Alastair N Brown