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28 November 2013

Is there room for POCA apportionment after Waya?

Times have moved on in confiscation, and the subject often dearest to a defendant’s heart is so-called apportionment. Of course most defendants are not concerned whether apportionment applies to benefit or realisable assets, just whether it means that they can pay less.

A decade ago, Gibbons [2003] 2 Cr. App. R. (S.) 34 was regularly relied upon in an attempt to argue for division of benefit amongst defendants. That was because at paragraph 62, Hallet J (as she then was) said:

“In our judgment, where there is clear evidence of movement of money to conspirators as in this case and in the absence of any evidence as to how the benefit of the conspiracy has been divided between individuals, dividing the total amount between those identified is as good a starting point as any.”

Gibbons was regularly distinguished, so much so that it lost any real impact to the benefit of defendants. This was not surprising; citing that part of paragraph 62 ignored the fact that Mrs Gibbons was appealing against an order that she had obtained a quarter of the overall benefit figure of a conspiracy involving four people.

Later cases, even before Waya [2013] 1 AC 294, moved the focus on apportionment to realisable assets rather than benefit, some hope being given to the possibility that an order would not be proportionate if the prosecution recovered from a number of defendants more than their joint enterprise had obtained as a whole. Waya obviously did not involve direct questions of apportionment, Terry Waya being a sole defendant who obtained a mortgage by making false statements about his savings and employment record.

The most important case on apportionment since Waya is Fields and others [2013] EWCA Crim 2042, in which judgment was given on the 14th November 2013. Lord Justice Davis considered apportionment at both the benefit and assets stage. The two central points were:

(i) Where two or more conspirators have been adjudged to have been co-principal conspirators who have jointly obtained the benefit of the proceeds of the conspiracy, is the benefit obtained by each of them, for the purposes of the 2002 Act, to be valued in a sum equalling the full amount of the proceeds of the conspiracy?  Or – as the appellants argue – is the value of the benefit to be attributed to them in rateable shares?

(ii) Alternatively, if the benefit is properly assessed in the whole amount with regard to each of them, and assuming that each has realisable assets matching or exceeding the benefit, is – as the appellants argue – the amount of the confiscation order to be apportioned between them in each case rateably in order to avoid a disproportionate outcome?

The simple answers to the questions are to (i) yes, each obtains the whole benefit, and to (ii) no, realisable assets need not be apportioned.

The case was a “long firm fraud”. Four appealed their confiscation orders to the Court of Appeal; the first three were described by the Judge as being “at the heart of the fraud”. Two co-accused were acquitted and the jury could not agree on the seventh defendant. The total benefit of the fraud was £1,410,762, adjusted for changes in the value of money to £1,565,945. In the case of Fields, the Judge could find no reason to depart from the principle that each defendant obtains the whole of the fraud. Adding some lifestyle benefit findings and finding that the defendant had not proved that he had less, an order was made against Fields in the sum of £1,957,905. Fields’ benefit and assets order was reduced to £1,650,591 on appeal, effectively by agreement, because a subsequent case meant that the lifestyle findings were open to question.

In subsequent proceedings against the other defendants, adjusting for subsequent money changes, the Judge made orders of £1,650,591 each against Sanghani and Sagoo. Against Rajput, a less prominent defendant, the Judge used a conceded benefit figure of £167,414 but a nominal order of £1 was made.

1. Benefit

The first three appellants, accepting the finding that each was a co-principal, argued that each had a beneficial interest in the whole, to be apportioned robustly as one-third each, in accordance with section 79(3) of the Proceeds of Crime Act 2002 as explained in Waya. The Court began at paragraph 36 by saying that there were strong policy objections to the argument. But in any event, settled authority was against the appellants. May [2008] 1 AC 1028 was not in this respect displaced by Waya in any way. Lambert and Balding [2012] 2 Cr App R (S) 90 was also a strong authority in favour of the May approach. Any suggestion in the Court of Appeal in May that apportionment might apply at the benefit stage in fact referred to apportionment at the liability stage (see paragraph 45).  Finally, the approach in reality sought, impermissibly, to go behind the trial judge’s finding that the appellants were co-principals.

2. Available Amount

The Court of Appeal emphasised that in this case, the appeal related to a challenge to factual findings and raised “no wider grounds of principle at all” (paragraph 51). There was no reason to interfere with the judge’s findings, and he had avoided falling into the type of trap found in McIntosh and Marsden [2012] 1 Cr App R (S) 60. That case was neatly summarised in the headnote: “There is no principle that a court is bound to reject a defendant’s case that his current realisable assets were less than the full amount of the benefit, merely because it concludes that the defendant has not revealed their true extent or value, or had not participated in any revelation at all. The court must answer the statutory question in s.71(6) in a just and proportionate way. The court might conclude that a defendant’s realisable assets were less than the full value of the benefit on the basis of the facts as a whole. A defendant who is found not have told the truth and had declined to give truthful disclosure would inevitably find it difficult to discharge the burden imposed on him. But it might not be impossible for him to do so. Other sources of evidence, apart from the defendant himself, and a view of the case as a whole, might persuade a court that the assets available to the defendant were less than the full value of the benefit.”

3. Apportionment of Benefit

This argument had already been advanced, and failed, in Lambert and Walding; but the Court was prepared to revisit the subject because in Lambert it was held that the statutory provisions, including s.6(5) as to the making of a confiscation order, “were to be read ‘shorn of judicial glosses and paraphrases’ whereas in Waya it was held that “in order to achieve compliance with Article 1 of the First Protocol (A1P1) – s.6(5) is to be ‘read down’ or qualified so as to include the words ‘except in so far as such an order would be disproportionate and thus a breach of A1P1.’ (paragraph 76)”

Ultimately, however, Waya produced no real change in the Court’s approach to apportionment of benefit. Although “Waya certainly makes it now legally possible, in principle, for a confiscation order to be made under s6(5) to be qualified by the application of principles of proportionality” (paragraph 79), the Court reminded itself of what had been said at paragraph 16 of Green, [2008] 1 AC 1053:

“The committee cannot, however, regard it as disproportionate to make an order depriving a defendant of a benefit which he has in fact and in law obtained, within the limits of his realisable assets….”

Thus Dr David Thomas QC had been right in his commentary on Waya in the Criminal Law Review to say “The judgment recognises that an order requiring the defendant to pay the whole of a sum which he has obtained jointly with others is not disproportionate, presumably even if the others are also ordered to pay the same sum.”

The Court of Appeal set out at paragraph 82 the four reasons why it took the view that Dr Thomas:

(i) a defendant was simply being disgorged of his criminal benefit, and not being additionally fined;

(ii) established high level authority took the view that such an order was not disproportionate;

(iii) apportionment left the real risk that in the future the order would not be satisfied in full; and

(iv) apportionment may lead to impractical inquiries into financial dealings as between criminals.

A Glimmer of Hope for Defendants?

Ahmad [2012] 1 WLR 2335, an MTIC confiscation case, is due to be heard in the Supreme Court on the 10th and 11th February 2014. The Court will consider the issue of apportionment of assets, and although it might be thought that Fields will provide the Court with all the help it needs to end the argument once and for all against defendants, Lord Justice Davis at paragraph 88 did leave the question open. In response to the submission that this is an emerging and developing area of the law, which allowed the Court to break new ground, he simply said “If this argument is to succeed, it will need to do so by further decision of a higher court than this one.”

The full judgment in Fields can be downloaded here.

Article by Nigel Power QC

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