Scottish Sheriff Court Decisions

SHERIFFDOM OF NORTH STRATHCLYDE AT GREENOCK

 

[2016] SC GRE 17

PC1/15

JUDGMENT OF SHERIFF DEREK J HAMILTON

 

In the cause

 

PROCURATOR FISCAL, GREENOCK

 

 

Against

 

DAVID RUSH

 

in an application under section 107 of the Proceeds of Crime Act 2002

 

Act:   Mr Freeman

Alt:   Mr Foster

 

Greenock:      1 February 2016

The Sheriff, having heard parties on their respective submissions, Grants the Minute lodged on behalf of the Procurator Fiscal, Greenock in terms of Section 107 of the Proceeds of Crime Act 2002, to vary the Confiscation Order made against David Rush, Flat 1/2, 25 Belville Avenue, Greenock, Renfrewshire, PA15 2LQ, granted on 21 November 2006, and varied on 3^rd August 2007, Pronounces a new Confiscation Order in the sum of £36,213.17.

 

Note to Decision

This is a minute under section 107[i] of the 2002 Act asking the court to make a new calculation of the available amount (s107(1)(c)). The court must make the new calculation, and in doing so it must apply section 95[ii] as if references to the time the confiscation order is made were to the time of the new calculation (s107(2)).

If the amount found under the new calculation exceeds the relevant amount the court may vary the order by substituting for the amount required to be paid such amount as—

(a) it thinks is just, but

(b) does not exceed the amount found as the accused's benefit from the conduct concerned (s107(3)).

 

The original confiscation order was granted on 21^st November 2006, and varied on 3^rd August 2007. The original order was made after the parties entered into a joint minute agreeing the extent of the Respondent’s realisable assets. That comprised three Bank of Scotland accounts and cash held by the police. The order was varied in 2007 to reflect a more accurate statement of the sums held in the accounts.

 

The Minuter seeks to have a new calculation made on the basis that the Respondent has an interest in heritable property. That property belonged to the Respondent’s mother, Elizabeth Rush, who died testate on 21^st September 2005. The Respondent was the sole beneficiary of his mother’s estate.

 

The Respondent opposes the minute on the basis it would not be just to vary the order to include the value of the heritable property. In support of his position that it would not be just, the Respondent relies upon the following;

1          Although the benefit from criminal activity was determined by joint minute, the Respondent now disputes that figure.

2          The Crown offered settlement by letter dated 17^th November 2006. That letter referred to other assets which were known to the Crown as a result of its investigations.

3          The title to the property remains in the Respondent’s mother’s name. That was the situation when the offer was made by the Crown and accepted by the Respondent.

4          If the Crown made its offer to settle on the basis of what it knew at the time, but what it knew did not represent the full position (without anything having been done by the Respondent to induce ignorance), then that is a matter for the Crown.

5          Article 3 of the minute misrepresents the position. The Order pronounced did not represent an agreement between the parties as to the value of the property, but represented an acceptance by the Respondent of an offer to settle by the Crown.

6          The time taken to bring these proceedings.

7          It is disproportionate to deprive the Respondent of his family home. The heritable property has nothing to do with the Respondent’s criminal activity. See section 98[iii] of the Act.

8          The Minuter had raised almost identical proceedings in this court and had those proceedings dismissed without reference to the Respondent.

 

 

I seek to address the various points raised by the Respondent.

 

1          I have no power to vary the figure stated as the benefit from criminal activity. Even if I had such a power, I would have considered the fact that the figure was agreed by parties by way of a joint minute to be significant. I do not consider that this issue features at all in my consideration of a just order.

 

2          I have not been shown the letter referred to. The Minuter’s position clearly is that it was not aware of any other assets          when it offered settlement.

 

3          The issue of title is of no relevance.

“150 Property: general provisions

(1) Property is all property wherever situated and includes—

(a) money;

(b) all forms of property whether heritable or moveable and whether corporeal or incorporeal.

(2) The following rules apply in relation to property—

(a) property is held by a person if he holds an interest in it;

(b) property is obtained by a person if he obtains an interest in it;”

 

As was said in Younas v HMA 2015 SCL 162;

“The effect of s.150 of the Act

[51] In my opinion, the answer to all the legal points raised on behalf of the Minuters and the Respondent is to be found in the correct interpretation and application of the provisions of s.150 of the Act. By way of background, it seems to me to be of the utmost importance, in construing the provisions in the Act, to bear in mind that the fundamental purpose of the legislation was to provide the Crown with robust and effective powers to investigate, identify and confiscate the proceeds of criminal activity. The terminology used in the Act was deliberately conceived in broad terms because of an appreciation of the elaborate and often devious lengths to which criminals frequently resort in trying to conceal and protect the rewards of their criminality from discovery and seizure by the authorities. It can, therefore, be seen that throughout the Act great care was taken to frame the powers given to the Crown in terms that are of wide reach. The intention was to empower the Crown to confiscate assets in which a convicted person could be shown to have some interest, even though he had attempted to distance himself from the asset or in some way to disguise or conceal his interest in it or to attempt to shelter his interest by means of arrangements entered into with his associates or other persons.

[52] Against that clear policy background, I turn to consider the relevant provisions contained in s.150 of the Act. In my opinion, looking at the terms of subs.(2)(a) , the question is simply whether, in the circumstances of the case as they now are, the Respondent is a person who “holds an interest” in the property comprising the first floor flat at 82 Polwarth Gardens, Edinburgh. It seems to me that s.150(2)(a) of the Act is couched in terms intended to be of wide application. The language says, quite simply, that property is held by a person if he holds “an interest” in it. No further elaboration or elucidation of what amounts to an interest in property is provided. The clear intention of the provision was to catch any interest of whatever nature.”

 

As sole beneficiary, the Respondent holds an interest in the heritable property. He held such an interest at the time of the original order.

 

4          I have not seen the letter containing what the Respondent claims is an offer to settle. The Crown cannot be tied to the original figure agreed. Clearly the legislation allows the Crown to return to court to adjust the figure to take into account any “after acquired assets”.

In any event, the Minuter can only base any offer to settle on the information that it has at the time. It cannot be the case that the Minuter is constrained in what it can recover to the assets it discovers. That would make a nonsense of the purpose of the legislation, which is to recover money from criminals.

 

I am not sure if the Respondent is claiming (but he certainly has not shown) that the Minuter is somehow personally barred from seeking a recalculation, because it has, in full knowledge of the asset position compromised its’ right to do so.  

 

I am of the view that the Respondent’s submissions in relation to the joint minute are misconceived. Reference need be made to Section 93[iv]. The recoverable amount for the purposes of section 92 is an amount equal to the accused's benefit from the conduct concerned. That is the starting point. The recoverable amount in this case started at the figure of £93,640.65. That is what the Minuter should have been entitled to recover. The legislation provides however that if the accused is able to show that the available amount is less than that figure, then the amount that can be recovered is reduced to the sum available. There was no onus on the Minuter to make enquiries. The Minuter had the figure of £93,640.65. It was the Respondent who sought to have that figure reduced. He claimed he had insufficient assets to pay that sum. He offered to show (as the onus was on him) in terms of s93(2) that his available amount was less. The Respondent falsely represented his position. He did not disclose his interest in his mother’s home. The Minuter cannot be prejudiced because of that. To do so, would make a nonsense of the purpose of the legislation and would simply encourage criminals even more to hide their assets.

 

5          The Respondent would have to show that the Minuter, by entering into the joint minute was somehow personally barred from utilising the provisions of the legislation to seek an adjustment of the recoverable amount. I refer to the reasoning in paragraph 4.

 

6          The Respondent quite properly accepts that there is no time limit for bringing applications such as this. The time taken to bring these proceedings to a hearing was not addressed in any great detail. A detailed time line was produced by the Minuter. It is clear there were attempts by the Minuter to allow the Respondent to dispose of the property. He was also allowed considerable time to apply for legal aid. There was a period of inactivity of approximately eighteen months, but I do not look at that in isolation. I have to consider the total period, and the reasons for the passage of time. The passage of time is a concern, and it is a factor to take into account in considering a just order. That has to be taken into account along with the Respondent’s decision to hide the asset from the Minuter.

 

7          Section 98 applies where a confiscation order has been made in relation to any person and the prosecutor has not satisfied the court that the person's interest in his family home has been acquired as a benefit from his criminal conduct (s98(1)). That was not an issue before me. It is an argument about the disposal of a family home, rather than if the value of it can be taken into account in making a just order. I consider it is premature to consider s98 at this stage. It may well be that the Respondent is able to raise funds against the house which would avoid its’ sale. Section 98 may well be for a later date. In any event, even if s98 was relevant at this stage, I note the Respondent does not reside there full time with his child. There is another home for the child, and that is with his mother where he stays for most of the week.

 

8          The fact the earlier proceedings were dismissed without reference to the Respondent is not greatly relevant to the issue I have to consider. Obviously the fact the earlier proceedings were dismissed and further proceedings had to be raised does factor into the issue of the overall delay in this matter being brought before the court. It is not correct to say the original proceedings were dismissed and then identical proceedings were raised in the same court. The initial proceedings were raised in Greenock Sheriff Court. Those proceedings were booked in as civil proceedings. For four and a half years, neither party noted the proceedings should have been in the criminal jurisdiction.  When this was realised, the original proceedings were dismissed, and the current proceedings raised. The current proceedings are not raised in the same court. They are in the same building but they are now in the correct, criminal jurisdiction.

 

The issue that gave me the greatest concern in considering if an order granted as craved would be just, was the time taken to bring this matter to a hearing. After initial investigations, the Minuter consented to a sale of the heritable property in March 2008. Over a period of two years, the Respondent did not conclude a sale of the property. A s107 minute was then lodged. Unfortunately it was lodged in the wrong jurisdiction and had to be reraised. In considering the lapse of time since the original order, I note the comments in the case of R v Padda 2014 2 Cr App R (S) 22 para 12[v]. That case involved ‘after acquired assets’, and noted that the court can take all relevant circumstances into account in deciding what is a just order. In doing so, the court must take into account the legislative policy in favour of maximising the recovery of proceeds of crime, even from legitimately acquired assets.

 

I am satisfied the order craved is just. It would not be just to allow someone to hide their assets thereby avoiding their value being taken into account. It would not be just to compromise the Minuter’s rights to bring these proceedings by holding the time taken to bring the proceedings to a hearing where much of the delay was caused by the Minuter trying to accommodate the Respondent, either in a sale, or in pursuit of legal aid.

 

I grant the minute as craved.

 

 

 

 

 

[i] Proceeds of Crime Act 2002 c. 29

107 Order made: reconsideration of available amount

(1) This section applies if—

(a) a court has made a confiscation order,

(b) the amount required to be paid was the amount found under section 93(2), and

(c) the prosecutor applies to the court to make a new calculation of the available amount.

(2) In a case where this section applies the court must make the new calculation, and in doing so it must apply section 95 as if references to the time the confiscation order is made were to the time of the new calculation and as if references to the date of the confiscation order were to the date of the new calculation.

(3) If the amount found under the new calculation exceeds the relevant amount the court may vary the order by substituting for the amount required to be paid such amount as—

(a) it thinks is just, but

(b) does not exceed the amount found as the accused's benefit from the conduct concerned.

(4) In arriving at the just amount the court must have regard in particular to—

(a) any fine imposed on the accused for the offence (or any of the offences) concerned;

(b) any order which falls within section 97(3) and has been made against him in respect of the offence (or any of the offences) concerned and has not already been taken into account by a court in deciding what is the free property held by the accused for the purposes of section 95;

(c) any order which has been made against him in respect of the offence (or any of the offences) concerned under section 249 of the Procedure Act.

(5) But in deciding what is just the court must not have regard to an order falling within subsection (4)(c) if a court has made a direction under section 97(6).

(6) In deciding under this section whether one amount exceeds another the court must take account of any change in the value of money.

(7) The relevant amount is—

(a) the amount found as the available amount for the purposes of the confiscation order, if this section has not applied previously;

(b) the amount last found as the available amount in pursuance of this section, if this section has applied previously.

(8) The amount found as the accused's benefit from the conduct concerned is—

(a) the amount so found when the confiscation order was made, or

(b) if one or more new calculations of the accused's benefit have been made under section 106 the amount found on the occasion of the last such calculation.

 

 

“Section 107 applies where the court made a confiscation order for an amount lower than the accused’s assessed benefit because there was insufficient realisable property to satisfy an order in the full amount. The prosecutor may apply to the court for the court to recalculate the available amount. Any number of applications may be made and there is no limitation to the time when an application may be made (in contrast to sections 104 to 106, under which application must be made within six years of the accused’s conviction). If the court calculates that the available amount has increased, it may vary the amount payable under the confiscation order but may not increase it beyond the accused’s assessed benefit (meaning either the benefit assessed when the confiscation order was originally made or when it was increased on a revaluation under section 106). Subsection (4) requires the court to have regard to any fine or order as set out in section 97(3) imposed on the accused following the original conviction (because these may affect the amount the accused is able to pay). However, subsection (5) contains similar technical provisions to section 106(9) to prevent allowance being made twice in the accused’s favour for the same compensation order.”

 

[ii] 95 Available amount

(1) For the purposes of deciding the recoverable amount, the available amount is the aggregate of—

(a) the total of the values (at the time the confiscation order is made) of all the free property then held by the accused minus the total amount payable in pursuance of obligations which then have priority, and

(b) the total of the values (at that time) of all tainted gifts.

(2) An obligation has priority if—

(a) it is an obligation of the accused to pay an amount due in respect of a fine or other order of a court which was imposed or made on conviction for an offence and at any time before the confiscation order is made, or

(b) it is an obligation of the accused to pay a sum which would be—

(i) a preferred debt if the accused's estate were sequestrated on the date of the confiscation order, or

(ii) a preferential debt if his winding up were ordered on that date.

(3) In subsection (2)—

“preferred debt” has the meaning given by section 51(2) of the Bankruptcy (Scotland) Act 1985 (c. 66);

“preferential debt” has the meaning given by section 386 of the Insolvency Act 1986 (c. 45).

 

[iii] “98 Disposal of family home

(1) This section applies where a confiscation order has been made in relation to any person and the prosecutor has not satisfied the court that the person's interest in his family home has been acquired as a benefit from his criminal conduct.

(2) Where this section applies, then, before the administrator disposes of any right or interest in the person's family home he shall—

(a) obtain the relevant consent; or

(b) where he is unable to do so, apply to the court for authority to carry out the disposal.

(3) On an application being made to it under subsection (2)(b), the court, after having regard to all the circumstances of the case including—

(a) the needs and financial resources of the spouse or former spouse of the person concerned;

(b) the needs and financial resources of any child of the family;

(c) the length of the period during which the family home has been used as a residence by any of the persons referred to in paragraph (a) or (b),

may refuse to grant the application or may postpone the granting of the application for such period (not exceeding 12 months) as it may consider reasonable in the circumstances or may grant the application subject to such conditions as it may prescribe.

(4) Subsection (3) shall apply—

(a) to an action for division and sale of the family home of the person concerned; or

(b) to an action for the purpose of obtaining vacant possession of that home,

brought by the administrator as it applies to an application under subsection (2)(b) and, for the purposes of this subsection, any reference in subsection (3) to the granting of the application shall be construed as a reference to the granting of decree in the action.

(5) In this section—

“family home”, in relation to any person (in this subsection referred to as “the relevant person”) means any property in which the relevant person has or had (whether alone or in common with any other person) a right or interest, being property which is occupied as a residence by the relevant person and his or her spouse or by the relevant person's spouse or former spouse (in any case with or without a child of the family) or by the relevant person with a child of the family;

“child of the family” includes any child or grandchild of either the relevant person or his or her spouse or former spouse, and any person who has been treated by either the relevant person or his or her spouse or former spouse as if he or she were a child of the relevant person, spouse or former spouse, whatever the age of such a child, grandchild or person may be; and

“relevant consent” means in relation to the disposal of any right or interest in a family home—

(a) in a case where the family home is occupied by the spouse or former spouse of the relevant person, the consent of the spouse or, as the case may be, of the former spouse, whether or not the family home is also occupied by the relevant person;

(b) where paragraph (a) does not apply, in a case where the family home is occupied by the relevant person with a child of the family, the consent of the relevant person.

Section 98

Introduction

The Government’s Explanatory Notes (See Key Legal Concept: Explanatory Notes) say as follows:

“Section 98 provides some protection in relation to the accused’s interest in his family home. The section applies where a confiscation order has been made and the prosecution has not satisfied the court that the person’s interest in his family home has been acquired as a benefit of his criminal conduct. It replicates existing provisions in the Proceeds of Crime (Scotland Act 1995. An administrator who has been appointed to ingather the estate of the accused in terms of the confiscation order cannot dispose of the family home, as defined in subsection (5), without the relevant consent, again as defined in subsection (5). Where no consent is forthcoming, he must apply to the court for authority to do so. Once the court has taken into consideration all the circumstances of the case, it may refuse to agree to the disposal of the family home or postpone the application to dispose of the family home for up to 12 months.”

 

[iv] “93 Recoverable amount

(1) The recoverable amount for the purposes of section 92 is an amount equal to the accused's benefit from the conduct concerned.

(2) But if the accused shows that the available amount is less than that benefit the recoverable amount is—

(a) the available amount, or

(b) a nominal amount, if the available amount is nil.”

 

[v] R v Padda 2014 2 Cr App R (S) 22 para 12

This opening passage from the application confirms a cardinal point in this case. This is not a case where there is any suggestion that the Appellant concealed assets at the time of the original order, which have subsequently been discovered. At all stages, the case has proceeded on the basis that the assets are legitimate and were acquired after the conclusion of the Appellant's prison sentence.

[…]

[25] Underlying these submissions is the recognition that there are in essence two competing arguments bearing on the exercise of the Judge's discretion. Firstly, it is undoubtedly the policy of the legislation to maximise the recovery of assets from those responsible for serious crime. Secondly, as emphasised by the Appellant, there could be said to be a public interest in the rehabilitation of offenders and a need to encourage those guilty of serious offences to act in a legitimate way, once they have served whatever sentence has been imposed upon them and, as a corollary of such encouragement, not to cause or permit a perverse incentive either to revert to crime or to seek to conceal assets even where they come from a legitimate source.

[…]

[35] Lord Walker went on to re-state useful clarification of the expression “after-acquired property” in para 35 in the following terms:

“A newly-acquired asset may be obtained in place of another asset in numerous ways: for instance, by making changes in a portfolio of investments, or by remortgaging a house in order to pay the deposit on a second house, or by receiving cash on the surrender or maturity of a life policy. These may be termed substituted assets but they are not after-acquired property in the relevant sense, that is property accruing to a person (whether as earnings or by gift, inheritance or some other windfall) without a corresponding diminution in that person's existing assets.”

It is necessary to keep in mind that the debate in Peacock, and in the instant case, concerns “after-acquired property” in the clear, and narrower, sense as defined by Lord Walker. Different considerations would arise in cases dealing with “substituted” assets.

[…]

[44] In our judgment, the obligation of a court under s 22(4)(a), bearing well in mind the policy underlining POCA, is in the exercise of its discretion to make a “just” order. It is in the very highest degree unlikely that any order which is “just” will be found to be disproportionate, so as to infringe A1 P1 of the European Convention of Human Rights.

[45] In that context, it is entirely appropriate for a court to consider such matters as the amount outstanding, the additional amount which might now be available for a further payment, the length of time since the original confiscation order was made, the impact on the Defendant of any further payment contemplated and indeed any other consideration which might properly be thought to affect the justice of the case.

[…]

[49] POCA s 22(4)(a) preserves an obligation on the court and a discretion to make an order which is just. The court can take all relevant circumstances into account when deciding this issue. The court must also take into account the legislative policy in favour of maximising the recovery of the proceeds of crime, even from legitimately acquired assets. The learned judge in this case took a perfectly proper course in the order he made. His order was neither wrong in principle nor manifestly excessive. Accordingly, this appeal is dismissed.”