UK: Obtaining Post-Acquired Assets Under POCA: Condemning Criminals To A Life Of Crime?

Last Updated: 26 March 2012

Article by Aoife Drudy, pupil at 6 Kings Bench Walk

Introduction

1. In the opening paragraph of his judgment in Peacock [2012] UKSC 5, Lord Brown posed the following question:

"Suppose that a convicted drug trafficker is found to have benefited from his trafficking to the extent of £1m but, having at the time realisable property worth only £100,000, a confiscation order is initially made against him just for this lesser sum. Suppose then that the defendant, entirely legitimately, later acquires property to the value of upwards of a further £900,000. Is he at that stage liable to a further court order increasing to the full extent of his criminal gain the amount recoverable under the confiscation order by reference to these after-acquired assets?"

2. If the case falls under the provisions of the Proceeds of Crime Act 2002 ("POCA"), the answer is clearly yes. In Peacock, the Supreme Court found, by a majority of 3-2, that the result is the same under section 16 of the Drug Trafficking Act 1994 (the "1994 Act"). Much of the judgment in that case focused on complex questions of statutory interpretation, and this article does not propose to address that analysis. However, the judgment also brought up questions, upon which the Court was divided, about fairness and the proportionality of the interference with the property rights of the defendant. Do those provisions act as a disincentive for defendants to earn a legitimate living following payment of the confiscation order? If so, do the provisions thereby condemn criminals to a life of crime?

Legislative provisions

3. Section 16 of the 1994 Act and section 22 of POCA operate in broadly the same way. Where a confiscation order was made for a sum less than the defendant's benefit, the prosecutor or a receiver can apply for an increase in the amount of the original order. The application takes part in two stages. Under the 1994 Act, the first stage takes place in the High Court and the second in the Crown Court. Under POCA, both stages take place in the Crown Court. The stages are as follows:

  1. The relevant court (the High Court or the Crown Court) makes a new calculation of the defendant's assets as of the date of the application. The new calculation is mandatory.
  2. If, as a result of the new calculation, the defendant's assets are found to be greater than the original order, the Crown Court may substitute the new amount for the original amount. Under the 1994 Act the judge may substitute "such amount ... as appears to the court to be appropriate having regard to the amount now shown to be realisable". Under POCA, the judge may substitute "such amount as it believes is just". It seems unlikely that those tests will differ in substance.

Potential for unfairness

4. The potential unfairness to the defendant is obvious in relation to post-acquired assets. In Peacock, Lord Brown described the problem as follows at [26]:

The main argument in support of the appellant's case is that it is unfair and counter-productive to increase the amount of a confiscation order by reference to after-acquired assets. This, it is said, would militate against his reform and rehabilitation and be likely to discourage him (once he has satisfied any initial confiscation order and been released from any sentence of imprisonment) from engaging in lawful and openly profitable employment. And, of course, the longer after conviction it is sought to confiscate after-acquired assets, the more unfair it may appear."

5. Perhaps the cases where the perception of unfairness is most acute are those cases where the legislation has already operated in a draconian manner against a particular defendant. One example is the case of R v. Smith [2002] 1 WLR 54. The defendant's benefit was calculated to be the whole of the duty evaded following the importation of 1.5m cigarettes, despite the fact that the cigarettes were forfeited and the defendant never actually received any money so as to enjoy the fruits of his crime.

The discretion not to increase

6. Lord Brown in Peacock considered that the potential unfairness to a defendant is mitigated by the discretion afforded to the Crown Court, but he declined to give any guidance as to how Crown Court judges should exercise their discretion. He expressly declined to consider whether the exercise of discretion could ever be affected by considerations arising under the Human Rights Act 1998. However, previous decisions of the Court of Appeal have confirmed that the Crown Court must consider the defendant's rights under Article 6 and Article 1, Protocol 1 of the Convention.

7. In R v Griffin [2009] 2 Cr. App. R. (S.) 89, Aikens LJ observed that the discretion of the Crown Court not to increase the amount provides the defendant with procedural protection against delay, as required by Article 6(1) of the Convention. In Saggar [2005] EWCA Civ 174, Rix LJ held that the passage of time runs for the whole of the period of the proceedings for the offence(s) and not simply from the time that the Crown discovers that the defendant's assets have increased. More recently, in Re Dahner [2010] EWHC 3397 (Admin), following the grant of a certificate under section 16 of the 1994 Act by the High Court, HHJ Hale in the Crown Court declined to substitute a new amount for the original amount on account of the "unconscionable delay" of about 5 years in making the application.

8. There has been little litigation in relation to the property rights of the defendant, but the Court of Appeal in R v Spears [2009] EWCA Crim 2875 accepted in principle that a person's property rights under Article 1, Protocol 1, of the Convention could be violated by an application and/or an order under section 22 of POCA for an increase in the amount to be paid.

9. Lord Wilson in Peacock gave some guidance on the exercise of the discretion at [47], where he observed:

"It is clear ... that factors such as the defendant's abandonment of a life of crime, the legitimate nature of his acquisition of the assets, the passage of time since the confiscation order was made and matters of exceptional hardship may be relevant to the exercise of the discretion."

10. Despite these statements of principle, however, there have been few reported cases in which the courts have declined to exercise their discretion to increase the amount under a confiscation order. In R v. Tivnan [1999] 1 Cr. App. R. (S.) 92, Rose LJ in the Court of Appeal affirmed the decision of the Crown Court judge to increase the amount payable, observing that section 16 of the 1994 Act forms part of the "stripping process".

11. Similarly, in R v. Bates [2007] 1 Cr. App. R. (S.) 2, the Court of Appeal affirmed the decision of the Crown Court judge to increase the amount of the order. The appellant argued that the exercise of the discretion to increase in that way is a significant disincentive to good conduct, to somebody who seeks in the wake of a term of imprisonment with a history of drug dealing to break the mould and to develop and change, because of the threat that anything that he achieves may be taken away from him. Penry Davey J in the Court of Appeal considered that the purpose of the legislation justified the adverse effects on the appellant.

The Dilemma

12. An examination of the above cases is unlikely to give much comfort to a defendant who remains in jeopardy following payment of a confiscation order. Absent significant and culpable delay by the Crown, one cannot be confident that the discretion will be exercised in the defendant's favour. A practical dilemma therefore faces the defendant. Should he proceed with attempts to rehabilitate himself and earn a legitimate living, with the residual risk that it may be taken from him? Or should he seek to stay below the radar, declining to acquire any assets or only acquiring undetectable (criminal) assets, for an indefinite period?

13. The policy factors behind the draconian provisions relating to confiscation are well rehearsed, most notably in the observations made in R v Rezvi [2003] 1 AC 1099 and May [2008] 1 AC 1028. However, as Lord Hope observed in his dissenting judgment in Peacock, there is nothing in those observations that suggests that they had mind the problem raised by the question of post-acquired assets.

14. Arguably, the exercise of discretion by the Crown Court ought to focus more on considerations arising under the Human Rights Act 1998 and on the competing policy considerations in relation to rehabilitation of offenders. The latter considerations ought to be given particular weight when there is no suggestion that the post-acquired assets have anything to do with offending. Otherwise, it may well be that the practical effect of the provisions is to condemn criminals to a life of crime.

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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