UK: Proceeds Of Crime: The Benefit Of Paying For Criminal Property

Last Updated: 29 November 2011
Article by Will Hays

1. A defendant's 'benefit' from criminal conduct is the proceeds of his crime, not his net profit. This, we thought, was settled law, so that it is irrelevant to the calculation of benefit that the thief or handler paid for the stolen property he acquires. But this latter proposition may have been put in doubt by the decision of the Court of Appeal in R v Grant Williams [2011] EWCA Crim 275. In that case the Court decided that where drugs possessed by a defendant were purchased using legitimate funds, the value of those drugs should not be included in the calculation of benefit.

2. This article will suggest that defence practitioners may be able to argue that the principle established in R v Grant Williams applies to all cases, regardless of the type of criminal property involved. The principle arguably applies to thieves, handlers and all those guilty of possessing criminal property, where they have paid for the property acquired.

Possessors of Stolen Property

3. Thieves and handlers, and persons convicted of possessing criminal property (section 329 of the 2002 Act) benefit from their criminal conduct, provided they 'obtain' the stolen property as a result of or in connection with their offence (section 76(4) of the 2002 Act). 'Obtain' was defined in R v May [2008] 1 AC 1028. In essence, if the person comes to own the property, he has 'obtained' it.

4. For the purpose of deciding whether the thief, handler or possessor of stolen property has benefited and, if he did, the value of his benefit, the following matters are irrelevant:

  1. That D did not intend to sell the property.

  2. That D no longer holds the property, whether he has destroyed it, or consumed it, or sold it and spent the proceeds.

  3. That D paid for the item of property. The court is concerned with the proceeds of crime, not the net profits of crime. So, for example, the handler who pays £500 for a stolen car worth £1,000 benefits from his criminal conduct. The value of his benefit is £1,000 (rather than nil, or £500).

5. So that is the position in relation to one type of criminal property (stolen property). What is the position in relation to another type of criminal property, namely controlled drugs? One would expect the position to be the same. But is it?

Mere Possession of Drugs

6. The value of controlled drugs may now be included in the calculation of the benefit figure: R v Islam [2009] 1 AC 1076. This means, for example, that the value of controlled drugs imported by a drug trafficker is included in the benefit figure.

7. But does the person who merely possesses drugs thereby 'benefit'? Applying the legal principles which apply to stolen property, one would expect the answer to be 'yes'. This is because the person has obtained property (the drugs) as a result of his offence (the possession of the drugs).

8. Moreover, whether D paid for the drugs should be irrelevant to the calculation of D's benefit. However, recent authority suggests otherwise.

R v Grant Williams

9. The question of whether a person who possesses and consumes drugs thereby benefits was considered in R v Grant Williams, supra. In that case the defendant pleaded guilty to possessing cocaine with an intention to supply it to another. He had been acting as a custodian of the cocaine, looking after it for the dealers. He had fulfilled this role for many years. Over that time he had received payment in the form of quantities of drugs and money. Applying the statutory assumptions, the Crown Court accepted that the drugs he had consumed had been transferred to the defendant as a result of or in connection with his general criminal conduct. The drugs consumed by the defendant were valued at £65,000 and this figure was declared to be the defendant's benefit.

10. The Court of Appeal (Aikens L.J., Irwin and Saunders J.J.) considered that the assumption made by the Crown Court had been justified on the facts of the case. One of the reasons given was that the defendant had obtained the drugs as a result of or in connection with criminal conduct, namely the possession of the drugs themselves. Aikens L.J. said (at paragraph 13):

'In so far as the appellant used quantities of the cocaine he kept with him, those quantities must have been transferred to him. He became the owner and then he used those quantities. The possession of controlled drugs is in itself criminal conduct within section 76(1) of the Proceeds of Crime Act because it is an offence to possess controlled drugs. "General criminal conduct" constitutes all the criminal conduct of a defendant. The appellant had "benefited" from his general criminal conduct for the purpose of section 76(4) of the Act because he had obtained controlled drugs either as a result of or in connection with his offences of obtaining and having possession of controlled drugs.'

11. So far, this is consistent with the position as it relates to stolen property. But the Court of Appeal next observed that the defendant had paid for some of his drugs using legitimate money. The Court decided that the value of any drugs purchased with legitimate funds should not be included in the benefit figure. Aikens L.J. said (at paragraph 19):

'In principle we would say that it is legitimate to reduce the amount of benefit if it is demonstrated that a part of the source for the purchase of drugs is shown to be legitimate income.'

Opportunities for the Future

12. The Court of Appeal's conclusion was that where D pays for drugs using legitimate funds, the value of such drugs should not be included in the calculation of the benefit figure. This principle may be relied upon, and extended by defence practitioners, in a number of scenarios, including those in the following examples.

13. First, where the possessor / importer / dealer of drugs can show he paid for the drugs using legitimate funds, the value of those drugs should not be included in the calculation of benefit.

14. Secondly, the principle established in R v Grant Williams concerning controlled drugs may be extended to cases involving the possession of stolen property, since there is no principled reason to distinguish between different types of property (see R v Islam, per Lord Mance at paragraph 48).

15. Thirdly, if the principle applies to those guilty of possessing stolen property it is reasonable to extend the principle further to handlers and thieves. Thus, where the handler pays a sum of legitimate money to receive stolen goods, the price paid should be deducted from the benefit figure. Similarly, where D, an art collector, commissions a thief to steal a painting worth £1 million, and pays the thief £1 million to do so, his benefit is nil.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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