Cases involving the statutory schemes for recovering the proceeds of crime have already given rise to some difficult human rights issues; and unsurprisingly. The purpose of the proceeds of crime legislation is to enable the state to deprive citizens of property in their possession. The provisions are acknowledged to be harsh by their supporters and detractors alike, but their harshness is said to be justified because the public benefits when money which would fund criminal conduct is removed from circulation, and because the provisions have a deterrent effect. The legislation in this field therefore presents features – intervention by the state in the lives of citizens, and a search for a balance between the rights of the individual and the general interest of the community – which correspond to the most fundamental issues with which the European Convention for the Protection of Fundamental Rights and Freedoms ('the Convention') is concerned.
Moreover, the debate as to where the balance should be struck between the rights of the individual and the interests of the state continues. Even as they have upheld the provisions enacted by Parliament, judges have acknowledged their harsh effect: it has become a judicial mantra that the legislation is, and is intended to be, Draconian.1 Yet David Blunkett, the minister who sponsored the Proceeds of Crime Act 2002 ('the 2002 Act') does not view it as a success, saying recently:
"We have failed on the ambition of bankrupting those who had made enormous amounts of money out of criminal behaviour"2
and suggesting that the United Kingdom's overall recovery through confiscation proceedings should be more than four times current totals.
On a political level, the debate will continue, and experience leaves little room to doubt that any new legislation will give rise to its own human rights issues. In the meantime, this article considers some of the cases in which human rights have already had on the law of the proceeds of crime, and outlines some matters which may still give rise to challenge under the current legislation in two areas: the right to a fair trial guaranteed by Article 6 of the Convention and the right to peaceful enjoyment of property under Article 1 of Protocol 1.
Article 6 and Confiscation
The right to a fair trial guaranteed by Article 6 is one of the most extensively litigated provisions of the Convention. Article 6 provides as follows:
"1. In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. Judgement shall be pronounced publicly by the press and public may be excluded from all or part of the trial in the interest of morals, public order or national security in a democratic society, where the interests of juveniles or the protection of the private life of the parties so require, or the extent strictly necessary in the opinion of the court in special circumstances where publicity would prejudice the interests of justice.
2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.
3. Everyone charged with a criminal offence has the following minimum rights:
(a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him;
(b) to have adequate time and the facilities for the preparation of his defence;
(c) to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance, to be given it free when the interests of justice so require;
(d) to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him;
(e) to have the free assistance of an interpreter if he cannot understand or speak the language used in court."
As is clear from the text, one of the most important features of Article 6 is its distinction between those charged with a criminal offence and those whose civil rights and obligations are being determined. The protections in Articles 6(2) and (3) are only expressed to apply to the former. It is not for the state to determine whether proceedings are civil or criminal in nature (although its categorisation is relevant to the determination); being "charged with a criminal offence" has an autonomous meaning under the Convention.3
So far as confiscation proceedings are concerned, the applicable principles have been settled by the Strasbourg court in Phillips v. United Kingdom (2001) BHRC 280. The prior criminal proceedings do of course involve the determination of a criminal charge, and all of the rights guaranteed under Article 6 apply to the trial. Confiscation proceedings which follow upon conviction, however, are analogous to a sentencing procedure. "Once an accused has properly been proved guilty of [an] offence, Article 6(2) can have no application in relation to allegations made about the accused's character and conduct as part of the sentencing process, unless such accusations are of such a nature and degree as to amount to the bringing of a new "charge" within the autonomous meaning of the Convention"4 And although the presumption of innocence is not only guaranteed by Article 6(2) but is also part of the general notion of a fair hearing under Article 6(1), confiscation, which does not lead to a criminal conviction, does not infringe that presumption.5
Phillips was concerned with the statutory assumptions which may fall to be made (in that case, under the Drug Trafficking Act 1994 ('the 1994 Act')) that assets held by an offender on conviction, or received or expended by him during the period prescribed by statute, represent his benefit from criminal conduct. In many cases where the assumptions are made, their practical effect is to place the onus on the defendant to show that his assets had a legitimate origin. The court held that the assumptions did not exceed the reasonable limits within which such a reverse onus should be confined by the presumption of innocence inherent in the notion of a fair hearing under Article 6(1).
The Strasbourg court has also considered, in Grayson and Barnham v. United Kingdom (2009) 48 EHRR 30, whether the burden on the defendant to demonstrate that he does not have sufficient realisable assets to repay his benefit from criminal conduct violates Article 6 of the Convention. It held that it does not. The case involved a straightforward application of the principles in Phillips, the only difference being that the onus on the defendant subject to challenge was not that of demonstrating where his money had come from but where it had now gone. It is surprising that it was declared admissible, but the compatibility of the proceeds of crime procedures with the Convention is at least confirmed.
On analysis, the statutory assumptions in the proceeds of crime legislation, so far from violating any notion of presumption of innocence, neatly sidestep the issue by considering benefit from criminal conduct without tying it to identified offending. Of course, the assumptions would usually be wrong if the offender had committed no other offence than that of which he had been convicted. However, this is to approach the matter in the wrong way and to ignore the fact that the assumptions represent a starting point rather than a conclusion. The focus of the court is on property rather than conduct. The purpose of confiscation proceedings is not to determine guilt or innocence, but to conduct an audit – which is based, as Lord Bingham put it in McIntosh v. Lord Advocate  1 AC 1078, on "an accounting record and not an accusation". Viewed in this way, confiscation proceedings represent no greater violation of the presumption of innocence than a tax inspection.
The strengths of the system of confiscation in the United Kingdom are made plain by considering the case of Geerings v. Netherlands (2007) 46 EHRR 1212, in which the Strasbourg court held that there had been a violation of Article 6(2) of the Convention. Mr Geerings was tried for a number of different offences, and convicted of some but acquitted of most. The prosecution invited the court to make confiscation of the proceeds of all of those offences, on the grounds that there existed "sufficient indications" that he had committed them all. His benefit from those offences was inferred from the factual allegations made by the prosecution rather than from analysis of Mr Geerings' financial position.
The decision in Geerings presents difficulties. It is based on the decision in Asan Rushiti v. Austria (2000) 33 EHRR 1331 that "following a final acquittal, even the voicing of suspicions regarding the accused's innocence is no longer admissible". The problems, and potential injustices, caused by the inflexible application of such a principle are legion. However, the issue would be entirely avoided by confiscation on the principles applicable in the United Kingdom. Rather than considering Mr Geerings' conduct, the court would have investigated his financial dealings. If they disclosed that he had held assets whose origin he could not explain, those assets would be confiscated. The question whether they were the proceeds of an offence of which he had been convicted simply would not arise.
The clear lesson is that the courts should conduct confiscation proceedings through scrutiny of a defendant's assets, save where assessing the benefit of the criminal conduct of which the defendant has been convicted in the criminal proceedings which triggered confiscation. An example of the difficulties which may be caused where this is not done is found in R v. Briggs-Price  UKHL 19. Mr Briggs-Price was tried for an offence of conspiracy to import heroin, and as part of its case the prosecution called evidence that that he already had in place a network which he had been using for the supply and distribution of cannabis. No count of being involved in the supply of cannabis was put before the jury; the evidence was adduced solely because it was said to be probative of involvement in the heroin conspiracy, the suggestion being that the defendant had been approached because he had such a network already in place. However, the jury were directed that they could convict the defendant of involvement in the conspiracy even if they rejected the evidence of the cannabis distribution network.
Following conviction, the focus of the prosecution changed. No heroin had in fact been imported pursuant to the conspiracy, so that the defendant had derived no benefit from the offence of which he had been convicted. Apparently on the basis that applying the statutory assumptions would involve a complex and expensive financial enquiry, the prosecution conducted the confiscation on the basis (agreed with the defence) that the assumptions were not to apply. Instead, the judge was asked to consider the evidence called before the jury, and ruled that he was satisfied by it to the criminal standard that the defendant was guilty of being knowingly concerned in the supply of cannabis. Based on this conclusion, he made a confiscation order in a sum exceeding a quarter of a million pounds.
The case, therefore, was a rare example of confiscation proceedings in this jurisdiction which considered conduct rather than property. The approach taken by the prosecution was rightly criticised by the House of Lords. If the prosecution was to seek confiscation on the basis that the defendant had been proven guilty of an offence through evidence called before a jury, there was no good reason why the offence should not be on the indictment. In any event, the prosecution were wrong to agree that the statutory assumptions should not apply; they were mandatory in the circumstances of the case.
In the result, the House of Lords concluded that the procedure adopted had been compatible with Article 6 of the Convention. The result is plainly right on the facts: the evidence relating to the cannabis distribution network had been fully canvassed in evidence and the defendant had chosen to give evidence about it in a trial subject to the full criminal protections under Article 6; whether or not the allegation had amounted to the bringing of a new charge within the meaning of the Convention (and the majority in the House of Lords, Lord Phillips, Lord Rodger, Lord Mance and Lord Neuberger, held that it did, Lord Brown dissenting on this point), no problem arises in Convention terms as a result of a criminal charge being determined by an independent and impartial judge rather than a jury. The rights guaranteed by Article 6 were fully protected. Yet a conventional approach to the confiscation proceedings – basing them either on a criminal conviction or on a financial investigation – would not have given rise to the ground of appeal which, in the event, led to a delay of over six years between the conviction and final determination of the confiscation proceedings. In any event, the conclusion of a majority of the House in Briggs-Price (Lord Rodger, Lord Brown and Lord Neuberger) that the 2002 Act should be read down under section 3 of the Human Rights Act 1998 to require a prosecutor to prove to the criminal standard any alleged offence upon which he wishes to rely in establishing the defendant's benefit constitutes a further reason why it is good practice to include such an alleged offence on the indictment.
Article 6 and Part 5 of the 2002 Act
No case involving civil recovery or cash forfeiture under Part 5 of the 2002 Act has yet been argued before the Strasbourg court. However, the question whether civil recovery proceedings are to be classified as criminal or civil within the autonomous meaning of the Convention has been raised in all three jurisdictions of the United Kingdom. The starting point in deciding how proceedings are to be considered under the Convention is the criteria set out in the judgment of the Strasbourg court in Engel v. Netherlands:6
- The manner in which proceedings are characterised under national law;
- The nature of the matter contended to be an offence; and
- The character and severity of the penalty to which the proceedings may give rise.
In each jurisdiction the courts considered the criteria and concluded that the proceedings were civil in nature: in England and Wales in Director of the Assets Recovery Agency v. Charrington  EWCA Civ 334; in Scotland in Scottish Ministers v. McGuffie  SLT 401; in Northern Ireland in Director of the Assets Recovery Agency v. Walsh  NICA 6. In England and Wales, Laws L.J. went so far as to adopt the submission on behalf of counsel for the Crown that any submission to the contrary was "untenable". In the first place, the proceedings are of course civil in domestic law. As to the second and third criteria, the Court of Appeal of Northern Ireland noted: "The Appellant is not charged with a crime... He is not liable to imprisonment or a fine if the recovery action succeeds. There is no indictment and no verdict. The primary purpose of the legislation is restitutionary rather than penal."7 The institution of civil recovery proceedings does not impute guilt; indeed proceedings may be brought against individuals who are not alleged to have carried out any unlawful conduct and proceedings are directed, as the Scottish court noted, against property rather than persons. Moreover, as observed in Charrington, the European Court of Human Rights has twice held that cash forfeiture proceedings under the 1994 Act were not criminal in nature: Butler v. United Kingdom8 and Webb v. United Kingdom.9
Walsh made an application to Strasbourg arguing that the procedures violated Articles 6(2) and 6(3)(d) of the Convention. It was held inadmissible on the basis that the proceedings did not involve the determination of a criminal charge, and that these provisions could not be invoked. The general point may thus be regarded as settled.
An insightful article recently published in the Criminal Law Review10 has raised the suggestion that different principles may apply where forfeiture proceedings under Part 5 of the 2002 Act are brought against individuals who have been tried and acquitted of offences which constitute the very unlawful conduct upon which such proceedings are based.
In domestic law, this is clearly permissible. The civil standard of proof applies, so that it does not follow as a matter of logic that assets cannot be recovered from an acquitted defendant. Section 240 of the 2002 Act provides that proceedings under Part 5 of the Act may be brought whether or not there has been a prosecution for any offence in connection with the relevant property. In Director of Assets Recovery Agency v. Taher and Others  EWHC 3406 (Admin), a case in which no evidence had been offered as a result of difficulties with disclosure, Collins J. glossed this by saying, "The legislation provides that if the Director is able to establish on the balance of probabilities that assets are the proceeds of crime, they are recoverable even if there has been a prosecution which has not succeeded and even if there has been no prosecution, because for example the view has been taken that the evidence would not be sufficient to establish criminality beyond reasonable doubt." And the Serious Organised Crime Agency have brought proceedings in which evidence which had founded an unsuccessful prosecution has been relied on: see for example Serious Organised Crime Agency v. Gale  EWHC 1015 (Q.B.).11
The difficulty suggested is, once again, founded on the principle, as expressed in Asan Rushiti v. Austria (supra), that "following a final acquittal, even the voicing of suspicions regarding the accused's innocence is no longer admissible... once an acquittal has become final—be it an acquittal giving the accused the benefit of the doubt in accordance with article 6(2)—the voicing of any suspicions of guilt, including those expressed in the reasons for the acquittal, is incompatible with the presumption of innocence.". The Strasbourg court has applied this principle to find a violation where a defendant was ordered to pay costs on the basis that the proceedings against him would probably have resulted in his conviction, had they not been time barred;12 where an acquitted defendant was denied compensation for time served on remand on the grounds that suspicions against him remained;13 and even where compensation was granted on the based on the civil standard of proof in respect of a rape of which the defendant has been acquitted.14
Surely, the argument runs, proceedings under Part 5 of the 2002 Act following acquittal can only succeed if the court voices a suspicion as to the accused's innocence, thus violating Article 6(2) of the Convention? We would suggest, however, that there are two difficulties with this argument. The first is that the Rushiti principle, applied indiscriminately, has consequences that the Strasbourg court is unlikely to endorse. The second is that the Strasbourg jurisprudence is less clear than the principle would suggest.
The principle that a court may express no doubts as to the correctness of an acquittal seems at first unexceptionable: no more than a reformulation of the principle that a person is innocent until proven guilty. On closer analysis, however, its scope is much wider. Even within the context of a criminal trial, there may be occasions when it is necessary to acknowledge the possibility that an acquitted person was in fact guilty: a clear case would be a defendant who argued that the true perpetrator of an offence was not himself but a man who had been previously acquitted. Previous acquittals may also be highly probative of guilt where the facts are markedly similar, as in the celebrated case of George Joseph Smith and the "brides in the bath"15 or R v. Z  2 AC 483. Where property is concerned, difficulties also abound. For example, the Police Property Act 1897 makes provision for determination of the ownership of property which comes into the posession of the police in connection with their investigation of a suspected offence. A defendant who claimed ownership of property he was alleged to have stolen might be acquitted on the basis of a doubt about the prosecution case. It would be surprising if the jury's verdict gave him an unassailable right to the property.
Given that civil recovery operates against property rather than individuals, the same principle properly applies in relation to it. The issue to be resolved by the court is whether the defendant is lawfully entitled to certain identified property or cash. If it was not obtained through unlawful conduct, the defendant is entitled to it; but if it was, there is a strong public interest in depriving him of it. Just as a dispute between citizen and citizen as to the ownership of property is adjudicated on the balance of probabilities, so too may be the dispute between citizen and state.
So far as the Strasbourg jurisprudence is concerned, the Rushiti principle has not, in fact, been universally applied. In Ringvold v. Norway,16 an accused was tried and acquitted of the sexual abuse of a minor, but ordered to pay compensation for the same acts. Considering whether this violated the presumption of innocence, the court held that:
"the fact that an act that may give rise to a civil compensation claim under the law of tort is also covered by the objective constitutive elements of a criminal offence cannot, notwithstanding its gravity, provide a sufficient ground for regarding the person allegedly responsible for the act in the context of a tort case as being "charged with a criminal offence". Nor can the fact that evidence from the criminal trial is used to determine the civil-law consequences of the act warrant such a characterisation. Otherwise, as rightly pointed out by the Government, Article 6 § 2 would give a criminal acquittal the undesirable effect of pre-empting the victim's possibilities of claiming compensation under the civil law of tort... [and] the undue advantage of avoiding any responsibility for his or her actions."17
In this case, therefore, the Strasbourg court found no violation of Article 6(2) notwithstanding that the determination of the civil proceedings may be said to have "voiced a suspicion" as to the guilt of the acquitted accused. The cases are replete with inconsistencies which call their authority into question. The presumption of innocence where an accused has been acquitted has never been canvassed before the Grand Chamber. As Lord Mance noted in Briggs-Price (supra), it may be that the Grand Chamber will have to look at its application in the context of the proceeds of crime.
Article 1 of Protocol 1
Article 1 of Protocol 1 to the Convention provides as follows:
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
"The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."
The right is a qualified one: the government may interfere with it for the purposes specified in the second paragraph. In cases involving the proceeds of crime, these purposes are likely to be the general interest, or to secure the payment of penalties. However, the second paragraph is to be read in light of the general principle set out in the opening sentence. There must exist a reasonable relationship of proportionality between the means employed and the aim sought to be realised.
The House of Lords in R v. Rezvi  1 AC 1099 and the Strasbourg court in Phillips v. United Kingdom held that the confiscation orders in those cases did not violate Article 1 of Protocol 1 to the Convention. The statutory regime conferred powers on the courts described in Phillips as "a weapon in the fight against the scourge of drug trafficking. Thus, the making of a confiscation order operates in the way of a deterrent to those considering engaging in drug trafficking, and also to deprive a person of profits received from drug trafficking and to remove the value of the proceeds from possible future use in the drugs trade." Both the House of Lords and the Strasbourg court were able to dismiss the alleged violation of Article 1 of Protocol 1 in a few short paragraphs.
The High Court has also ruled that civil recovery proceedings comply with Article 1 of Protocol 1.18 Collins J., considering the need for the provisions, said:
"Whilst the situation in this country is not, I hope, as dire as that represented by the activities of the Mafia in Italy, nonetheless Parliament has quite clearly decided that these measures are neessary to fight crime, and in particular to ensure, as far as possible, that those involved in crime should be unable to enjoy the fruits of their criminal activities."19
The need, in general, for the proceeds of crime legislation is clear. It is tempting to assume that there is no further issue to be raised under this Article. Yet the right of the individual to peaceful enjoyment of his possessions is the right which most clearly encompasses confiscation proceedings within its ambit. Given the (intentional) harshness of the proceeds of crime legislation, it would be surprising if general statements as to the importance of the fight against crime such as those set out above were sufficient to deter future applicants from seeking to argue that confiscation, forfeiture or recovery has constituted a disproportionate interference with their right to peaceful enjoyment of property.
In some cases where confiscation would have a particularly harsh effect, Crown Court judges have sometimes been prepared to stay proceedings as an abuse of process. The practice was has repeatedly been deprecated on appeal, most recently in CPS v. N  EWCA Crim 1573, the Lord Chief Justice reminding Crown Court judges that they have no discretion to interfere with the decision of the Crown to bring confiscation proceedings, observing that orders for stays were being made "perhaps too readily" and holding that an abuse of process argument cannot be founded on the basis that the consequences of the proper application of the legislative structure may produce an 'oppressive' result with which the judge is unhappy. With this argument no longer available, it is to be anticipated that counsel will seek other ways in which to make the argument that confiscation may produce an 'oppressive' result. An argument that the confiscation is disproportionate to the aim of the legislation is an obvious route.
The Court of Appeal has sought to confine the application Article 1 of Protocol 1 to cases in which a stay would be granted in R v. Shabir  1 Cr App R (S) 84, saying (at paragraph 25) that: "Even if it be accepted that the Protocol may be capable of being infringed by a truly oppressive and thus disproportionate individual order for confiscation (as to which we express no opinion), it is clear that the court's power to stay for oppression provides the remedy. Yet it is suggested that Article 1 of the Protocol may provide the better approach. Mr Shabir was a doctor who had dishonestly overclaimed payments to cover the cost of prescriptions. The legitimate claims were very large, and the overpayments very small. The benefit figure was held to be the total value of the payments made, notwithstanding that he was legally entitled to a very large proportion of the money. Even disregarding the fact that the statutory assumptions were triggered, the benefit would therefore have been assessed at nearly £180,000. The amount of the overpayments was less than £500.
Hughes L.J. described the actual confiscation order (of over £212,000, taking into account the statutory assumptions, one of which the defendant could not displace) as "patently oppressive" and it was stayed on this basis. Yet it is suggested that 'disproportionate' would be a better characterisation than 'oppressive'. The unfairness of the confiscation order does not depend on the personal circumstances of the defendant: it would be unfair, for example, even if £212,000 were a sum the defendant could easily afford. What is objectionable about the order is that it is arbitrarily large based on a quirk of the means through which the defendant has committed a criminal offence.
Other instances of criminal conduct giving rise to disproportionately large benefit figures may easily be imagined. For example, a contractor who secures an extremely lucrative contract with the assistance of a small bribe may be said to obtain the whole value of the contract as his benefit even where he has already made payment at, or close to, market rates. Confiscation of the whole sum may or may not be oppressive; but it is disproportionate. A similar difficulty arises in employment cases. In R v. Carter  EWCA Crim 416 and R v. Paulet  EWCA Crim 288, the Court of Appeal has affirmed that where an individual obtains employment through criminal means (such as by the presentation of forged documentation) which he would not have kept had his conduct been revealed, the whole of his wages from the work.
It has long been recognised that the effect of confiscation proceedings is sometimes to extract from an offender more than his profit from the crime he has committed, even without the application of the statutory assumptions. That result, in some circumstances, is justified by the legitimate objects of the legislation. Yet it is suggested that, in cases where confiscation awards become arbitrarily large based on factors in the offending which do not affect culpability, the proportionality assessment to be conducted in the application of Article 1 of Protocol 1 to the Convention may play a useful part.
"This article was first published in Issue 4 of the Proceeds of Crime Review in March 2010. The Proceeds of Crime Review is a new bi-annual publication brings together authoritative articles and expert case analysis in relation to the recovery of the proceeds of crime. Published in an easily accessible format, Proceeds of Crime Review provides busy practitioners with the means of keeping up to date with all the latest developments, and is an indispensible reference for anyone working within this fast-moving specialist area."
1. This observation originates with Lord Lane C.J. describing the Drug Trafficking Offences Act 1996 in R v. Dickens  2 Q.B. 102; more recently, see for example R v. Briggs-Price  UKHL 19;  1 A.C. 1026, per Lord Rodger at paragraph 51.
2. Speaking on the BBC Panorama programme broadcast on 16 March 2009
3. Engel v. Netherlands (1979 – 80) 1 EHRR 647
4. Paragraph 35 of Phillips
5. Paragraph 47 of Phillips
6. See endnote
7. At paragraph 27
8. (2002) App no 41661/98
9. (2004) App no 56054/00
10. Cash forfeiture following acquittal: an "affront to public perception" or a breach of a fundamental human right? Klentiana Mahmutaj, 2009 Crim LR 11, 783 - 793
11. See in particular paragraph 18.
12. Minelli v. Switzerland (1983) 5 EHRR 554
13. Rushiti v. Austria, supra
14. Orr v. Norway (2008) App no 31283/04
15. R v. Smith (1915) 11 Cr App R 229
16. (2003) App no 34964/97
17. Paragraph 38.
18. Director of the Assets Recovery Agency v. Jia Jin He  EWHC (Admin) 3021
19. Paragraph 74
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.