Background
Defence practitioners will be all too familiar with the draconian nature of the confiscation regime under the Proceeds of Crime Act. However, a situation arose recently in a case in which I was instructed that was so oppressive the court stayed proceedings as an abuse of process.
My client was convicted of drug trafficking offences back in 2019. Confiscation proceedings ensued. The benefit figure was found to be £36,745 and the available amount £87,730. On 3 November 2020, a confiscation order for £36,745 was therefore made and the client given the usual 3-months to pay with 9-months in default.
An estimated £35,870 of the benefit figure was already in the Crown’s hands, comprised of cash and property seized during the investigation, including vehicles and watches. The police undertook to auction the property in the usual manner. Based on the estimated valuations of the property, the defendant was told he would have a shortfall of just £875 to pay to meet the order.
Anxious not to fall foul of the default sentence, the defendant contacted the confiscation unit from prison after a few weeks and attempted to pay the £875. He was told not to pay as his property had not yet been auctioned and might fetch more or less than the initial valuation, meaning the shortfall would need to be recalculated.
The defendant contacted the confiscation unit again as the end of 3-month period for payment approached in late January 2021. He was told auctions had been suspended due to the Covid lockdown; he would not suffer any detriment as the situation was out of his hands, and that the confiscation unit would contact him once the property was auctioned if he had anything to pay.
The defendant then heard nothing for many months. Understandably, he assumed the property had been sold for more than the original valuations and the confiscation order had been met. However, in early 2022 he received a summons to the magistrates’ court informing him that the property had been sold for less than the original evaluation and he had to pay £1309 to meet the order.
The unfairness arose because he was also told that he now owed an additional £1627 interest, which had accrued since the expiry of the 3-month time limit. He was in effect being asked to pay interest on a debt, which did not crystallize until the Crown auctioned his property, a process over which he had no control, and which took place after the deadline for payment had passed.
There followed several hearings in the magistrates’ court in which he was erroneously advised by various parties that he would need to apply to vary the confiscation order under s.23. This section in fact deals with what happens when a defendant has insufficient funds to pay the order because, for example, property has sold at an undervalue. This was not the case here – the defendant still had a larger available amount, but simply argued it was unfair that the interest should be paid at all.
The defendant paid the outstanding £1,309 from the original order. The issue of the interest landed back on my desk to be dealt with before the Crown Court.
Legal Framework
Section 12 of the Proceeds of Crime Act states:
If any amount required to be paid by a person under a confiscation order is not paid when it is required to be paid, he must pay interest on that amount for the period, which it remains unpaid.
Section 11(7) states:
Periods specified or extended under this section must be such that, where the court believes that a defendant will by a particular day be able –
- To pay the amount remaining to be paid, or
- To pay an amount towards what remains to be paid.
That amount is required to be paid no later than that day.
The net effect of these provisions is that there is no power within the Act to vary the date at which interest becomes due. If there is any outstanding debt at the expiry of the 3-month period or, if extended, the maximum 6-month period, then interest will accrue on the debt from that date.
What remedy, then, was available to the defendant? The only course was to seek to stay the enforcement proceedings as an abuse of process.
Submissions
The defence submission was simple – a stay was “necessary to protect the integrity of the criminal justice system” (Crawley [2014] EWCA Crim 1028).
My instructing solicitors had contacted the auctioneers and discovered the last of the defendant’s property had not been auctioned until 28 July 2021. Despite this, the Crown had been charging interest since 3 February 2021 (the expiry of the 3-month payment period). Not only that, the defendant was not informed the property had been auctioned, and that interest was accumulating, until he was summonsed before the magistrates’ many months later.
To refuse to allow the defendant to pay the estimated £875 shortfall, then to charge interest on a debt which did not in fact crystallize until 28 July 2021, then not to inform the defendant that his property had been auctioned and interest was accruing, amounted to both a manipulation of procedure and an abuse of executive power.
Lucy Taylor on behalf of the Crown made submissions that the defendant was either lying about his attempts to pay the order and his conversations with the confiscation unit or, in the alternative, that the responsibility for ensuring his property was auctioned in a timely manner lay with the defendant in any event. There had been no abuse of process, and post R v Waya [2012] UKSC 51, the court should only stay confiscation proceedings in the most exceptional circumstances.
The Ruling
HHJ Burgess found the account given by the defendant at the hearing entirely credible. As a serving prisoner, it was clearly not within his power to auction his property. That responsibility lay with the confiscation unit.
The judge relied on R (Secretary of State for Work & Pensions) v Croydon Crown Court [2010] EWHC 805, in which a Crown Court judge had given an offender an unequivocal representation that confiscation proceedings would not go ahead if the offender repaid the benefit obtained from her criminal conduct. The offender had done so, and the High Court held it would have been an abuse of process for the court to renege on its indication after she acted on that inducement to her disadvantage (see Archbold 5B-298).
In this case, the court had a similar responsibility to prevent justice from being administered in a way that would undermine public confidence in the integrity of the system. The defendant had made efforts to pay the order and been expressly told, not only that he should not pay, but also that he would suffer no prejudice from not paying within the time-limit. To then force him to pay interest on the outstanding debt from the expiry of that time limit was wholly disproportionate to the public good and amounted to the imposition of a further pecuniary penalty when the defendant had done no wrong.
The judge made a point of observing that if the confiscation unit had taken a more fair-minded approach, they could have waived the interest themselves avoiding the need for litigation. Given the occasionally intractable attitude of financial investigators, this advice may not be heeded in future. Defendants in similar situations would do well to ensure their property is auctioned in good time and they are not being asked to pay interest on a debt that is not in their power to repay.
