Proceeds of Crime - Preparing for Confiscation Hearings
- Introduction
- When must a POCA confiscation hearing be held?
- The procedural steps - a summary
- The discretion to ask the court to proceed: the DPP's guidance and abuse of process
- Postponement of confiscation hearings
- Preparatory steps for a POCA confiscation hearing
Introduction
Thorough preparation is essential in any litigation and confiscation hearings under POCA are no exception. This guidance focuses on the steps that should be taken to maximise the prospects of success at confiscation hearings.
Although it may be tempting to take short cuts and agree with the defence that the statutory requirements or directions handed down by the court need not be complied with in particular cases, it should be remembered that the provisions are there for a purpose and, if the legislation, or the courts directions are not properly followed, it will almost inevitably give rise to problems later. This is particularly so at the enforcement stage when POCU attempts to enforce a confiscation order made by agreement between the parties without it being properly evidenced in writing.
The Court of Appeal has been very critical of failures, particularly on the part of the defence, to comply with the prescribed procedures: see R v Baden Lowe [2009] EWCA Crim 194.
When must a POCA confiscation hearing be held?
Section 6 (1) of POCA provides that the Crown Court must proceed with a confiscation hearing if the following conditions are satisfied:
"(2) The first condition is that a defendant falls within any of the following paragraphs:
(a) he is convicted of an offence or offences in proceedings before the Crown Court
(b) he is committed to the Crown Court for sentence in respect of an offence or offences under section 3,4 or 6 of the Sentencing Act; and
(c) he is committed to the Crown Court in respect of an offence or offences under section 70 of the Proceeds of Crime Act 2002 (committal with a view to a confiscation order being considered).
(3) The second condition is that:
(a) the prosecutor has asked the Court to proceed under this section; or
(b) the Court believes it is appropriate to do so."
The Act therefore proposes a mandatory obligation on the court to hold a confiscation hearing whenever the conditions set out in S6 (2) and (3) are satisfied.
The procedural steps - a summary
In most cases the following procedural steps will need to be taken:
a. Conviction of the defendant for an acquisitive crime - Although work on the preparation of the prosecutor's statement of information should begin long before conviction, the court and prosecutor are only likely to focus on the timetable for confiscation proceedings once the defendant is convicted
b. The prosecutor will ask the Court to proceed under section 6 of POCA - The application is often made orally after the defendant enters a guilty plea or is convicted by the jury. In contrast to the position under the CJA 1988, there is no requirement that the prosecutor must give written notice of his request to proceed under section 6. If the prosecutor does not ask the Court to proceed, it may decide of its own motion to hold a confiscation hearing, although this is rarely done in practice
c. The prosecutor will provide a statement of information in accordance with section 16 of POCA - In most cases the prosecutor will provide a statement of information voluntarily but, if he does not, the Court may order him to do so. The statement serves a similar purpose to pleadings in civil litigation and is the Crown's opportunity to state its case
d. The Crown will identify within the statement of information whether the case is a particular or general criminal conduct matter - If it is a general criminal conduct matter or a lifestyle offence, the assumptions in section of 10 of POCA will apply. If it is a particular criminal conduct matter they will not
e. The Court will require the defendant to respond to the statement of information within a specified time period pursuant to section 17 of POCA - If the defendant fails to comply with an order under section 17, it may lead to the court treating him as having accepted the allegations in the prosecutor's statement
f. The prosecutor may serve a further statement of information at any time, pursuant to section 16 (6) and the court may order him to do so - The prosecutor may, for example, wish to refer to matters which have only come to his attention after the first statement was served or to respond to matters raised in the defendant's response; and
g. The court may order the defendant to provide further specified information, pursuant to section 18. A section 18 order may be made at any time after the court has decided to proceed under section 6
h. The court may postpone confiscation proceedings and sentence the defendant pursuant to section 14 of POCA - The maximum period of postponement is two years unless there are exceptional circumstances; and
i. The court may sentence the defendant if it is proceeding under section 6, prior to making the confiscation order - There is no requirement to complete the proceedings within a particular period or before sentence.
A draft directions order for confiscation hearings is provided in the guidance entitled "Proceedsof Crime - Confiscation Directions Best Practice Model.
The discretion to ask the court to proceed: the DPP's guidance and abuse of process
Prosecutors should not automatically request a confiscation hearing in every case without giving the matter due consideration. In R v Paulet [2009] EWCA Crim 288 the Court of Appeal held that there may be exceptional cases where it could be considered oppressive for the Crown to pursue confiscation proceedings. The Court invited the DPP to give guidance to prosecutors as to the policy to be followed and to identify proceedings in which it would be appropriate to pursue confiscation in order to establish a consistent approach.
In May 2009 the Director issued a document entitled "Guidance for Prosecutors on the discretion to instigate confiscation proceedings".
The guidance confirms that while prosecutors have a duty to carry out their functions in accordance with the intentions of Parliament, it is important that they also remember that they retain a discretion whether or not to instigate confiscation proceedings. In considering how to exercise that discretion, prosecutors need to consider their role as ministers of justice and remember the three legitimate aims of confiscation set out in R v Rezvi [2003] 1 AC 1099 namely to "punish convicted offenders, to deter the commission of further offences and to reduce the profits available to fund further criminal enterprises" (per Lord Steyn, paragraph 14). The guidance emphasises that prosecutors should always consider whether the statutory regime would operate in a way that would be oppressive.
Prosecutors should also remember that the court retains a limited jurisdiction to stay confiscation proceedings as an abuse of process. This jurisdiction should only be exercised with "considerable caution" and is ordinarily confined to cases of "true oppression": see R v Shabir [2008] EWCA Crim 1809.
The DPP's guidance identifies four situations where confiscation proceedings may be stayed if they are instigated unreasonably:
a. Where the Crown has reneged on an earlier agreement not to proceed
b. In a simple benefit case, where the defendant has voluntarily paid full compensation to the victim or victims, or is ready, willing and able immediately to repay all of the victims to the full amount of their losses and has not otherwise profited from his crime: see R v Morgan [2009] 1 Cr App R (S) 60
c. Where proper application of POCA to a defendant's case would, if the court were asked to proceed to confiscation, compel the court to find that property obtained in the most part legitimately by the defendant, and to which the defendant would have been entitled but for his criminal conduct, must be treated as benefit. An example of this situation arose in R v Shabir [2008] EWCA 1809. The defendant was a pharmacist who had submitted false, inflated claims to the NHS. The total amount obtained by deception was approximately £179,000, but the defendant had been entitled to most of the money claims, except £464. The Court of Appeal held that in these circumstances it would be wrong to proceed to confiscation, but such examples will be rare and confined to cases of "true oppression"; and
d. Where the defendant has obtained paid employment by a false representation to his employers. The defendant's wages may be his benefit (R v Carter [2006] EWCA Crim 416), but some cases will arise where the link between the criminality and the receipt of payment from dishonestly obtained employment is too remote, for example, where had the representation been corrected, the employment would have continued, or where after many years of otherwise lawful employment, a relatively minor previous conviction is discovered.
Cases in which an abuse argument will succeed will be rare. In CPS v N, CPS v P and R v Paulet [2009] EWCA Crim 1573 the Court of Appeal said that the jurisdiction to stay confiscation hearings as an abuse of process had been exercised too readily. The court is not entitled to stay a confiscation hearing merely because the proper application of the legislation would produce a result with which the judge is unhappy.
Postponement of confiscation hearings
The statutory scheme
By section 14 (1) of POCA the court may:
"(a) ... proceed under section 6 before it sentences the defendant for the offence (or any of the offences) concerned, or
(b) postpone proceedings under section 6 for a specified period."
The court may order more than one postponement and the period of postponement may be extended in accordance with section 14 (2). The period of postponement must not end after the "permitted period" has finished: see section 14 (3).
What is the permitted period?
"Permitted period" is defined in section 14 (5) as being a period of two years starting with the date of conviction.
Date of conviction
The defendant's date of conviction is defined in section 14 (9) as being the date on which he was convicted of the offence concerned, or where there are two or more offences and the convictions were on different dates, the date of the latest.
Further postponements
Section 14 (8) provides that where proceedings have been postponed already for a period and an application to extend the period further is made before the previous period of postponement ends, the application may be granted, even though the previous period (by the time of the application is heard) may have ended. In effect this means that provided the application is submitted to the court before the postponed period comes to an end, the application may be granted.
Postponement beyond two years
There is no limit to the period of postponement where the court finds that there are "exceptional circumstances": see section 14 (4). The Act does not define when circumstances are exceptional although some guidance may be found from previous case law in relation to the DTA and CJA. In practice, only in exceptional circumstances should the need for postponement take the final date of making any confiscation order beyond the two year period and the timetabling such reflect this. Such circumstances can arise where there are assets abroad which require investigations pursuant to a letter to request.
What amounts to exceptional circumstances?
In R v Jagdev [2002] 1 WLR 3017 the Court of Appeal held that the purpose of the power to postpone confiscation proceedings was to enable the judge to reach a fair conclusion on the confiscation issue: and that where there was a real prospect that the hearing might have been wasted and an unjust order made if the judge had proceeded to hear the case, then the judge was entitled to hold that there were exceptional circumstances.
The Court of Appeal has shown a marked reluctance to interfere with the exercise of the discretion of the sentencing judge to find exceptional circumstances. It is not a question of whether or not the Court of Appeal would find the circumstances in question to be exceptional, but whether the judge was entitled to conclude that they were (see R v Gadsby (2002) 1 Cr App R (S) 97).
Further, it is not necessary for the sentencing judge to use the expression "exceptional circumstances" when he orders the postponement (see R v Chuni [2002] EWCA Crim 453. Judge LJ summarised the position in these words in R v Steele and Shevki [2001] 2 Cr App R (S) 40:
"These decisions involved the Courts discretion, judicially exercised where the statutory conditions are present, taking full account of the preferred statutory sequence ... For example, to take account of illness on one side or the other, or the unavailability of the Judge without depriving a subsequent order for confiscation of its validity."
Postponement for a specified period
By section 14 (1) (b) of POCA, the period of the postponement must be for a specified period. This does not mean that the judge must specify the very date the substantive hearing is to begin.
No requirement to find further exceptional circumstances
In R v Steele and Shevki [2001] 2 Cr App R (S) 40 the Court of Appeal held that once the court had postponed a determination on the grounds that there are exceptional circumstances, it is not then necessary for the court to find further exceptional circumstances for subsequent postponements.
Who may apply for an adjournment?
A postponement or extension may be made upon application by either the defendant, or by the prosecutor. Alternatively, the court may order a postponement of its own motion: see section 14 (7) of POCA.
What happens if the judge gets it wrong?
Under the old legislation, many technical points were taken with regard to the validity of confiscation orders where the sentencing judge had failed to comply properly with the legislative requirements in relation to postponements. A number of confiscation orders were quashed before the House of Lords ruled in R v Soneji and Bullen [2006] 1 AC 340 that a failure to comply with the requirements did not invalidate the confiscation order.
POCA now puts this principle on a statutory footing. Section 14 (11) provides that a confiscation order must not be quashed on the sole ground that there was a defect or omission in the procedure connected with the application for the granting of a postponement.
Postponement pending appeal
By section 14 (6) of POCA a confiscation hearing may be postponed pending the determination of an appeal by the defendant against his conviction for any of the offences concerned. Any such postpone shall not be for a period in excess of three months from the date on which the appeal is determined unless there are exceptional circumstances.
Practical point: the judge may order a postponement without a hearing
Rule 58.2 of the Criminal Procedure Rules provides that the Crown Court may order a postponement without holding a hearing. If agreement can be reached with the defence in this respect the matter can therefore be dealt with by lodging letters with the court to achieve this thus saving costs.
Preparatory steps for a POCA confiscation hearing
Section 16 statements of information
By section 16 (1) of POCA, the prosecutor must provide the court with a statement of information within "any period" that the court orders. It is important to note that section 16 statements may only be ordered if the court is proceeding under section 6 and not if the court has decided to postpone the confiscation proceedings under section 14.
The purpose of section 16 statements
The prosecutor's statement serves a number of purposes. Firstly, it enables the defendant and the court to be put on notice of the Crown's case and prevents them being taken by surprise. Secondly, it identifies the real issues that fall to be determined, thereby saving court time in relation to matters not really in dispute. In R v Benjafield [2001] 2 Cr App R (S) 47 the Court of Appeal observed that:
"A statement serves the useful purpose of forewarning the defendant of the case of the prosecution which he will have to meet as to his assets. It should assist the defendant by making clear the matters with which he has to be prepared to deal. It is right that, as the rules require, the prosecution should identify any information which would assist the defendant."
In many ways section 16 statements serve a similar purpose to pleadings in civil proceedings.
The contents of section 16 statements
Under section 16 of POCA, the prosecutor should give to the court a statement with as much detail as possible relating to the defendant's benefit from criminal conduct. The actual content of the statement will partly depend on whether the prosecutor alleges the defendant has had a criminal lifestyle. Under section 16 (4), the statement should include information relevant to the making of the assumptions if the prosecutor believes that the defendant has had a criminal lifestyle.
If the prosecutor does not believe the defendant has had a criminal lifestyle, the statement of information becomes a statement of matters the prosecutor believes are relevant to deciding whether or not the defendant has benefited from his particular criminal conduct and, if so, his benefit from that conduct: see section 16 (5).
By Rule 58.1 of the Criminal Procedure Rules, when the prosecutor is required under Section 16 to give a statement to the Crown Court, the prosecutor must also, as soon as practicable, serve a copy of the statement on the defendant. Any statement given to the Crown Court by the prosecutor under section 16 must, in addition to the information required by the Act, include the following information in compliance with rule 58.1 (2) of the Criminal Procedure Rules:
"(1) the name of the defendant;
(2) the name of the person by whom the statement is made and the date on which it is made; and
(3) where the statement is not given to the Crown Court immediately after the defendant has been convicted, the date on which, and the place where the relevant conviction occurred."
If any witness statement is included as part of the Statement of Information, by Rule 57.7, the witness statement should be verified by a statement of truth.
In practice, the statement of information will normally include:
i. an outline of the nature of the offences that the defendant has been convicted of, together with references to the indictment, the factual background, the date of conviction, any sentence that has been passed, and the timetable for confiscation;
ii. a portrait of the defendant himself, including age, address, marital status and dependants. This will also include reference to previous occupations, income derived from the same and any relevant previous convictions;
iii. the history of any restraint order proceedings including whether a receiver has been appointed;
iv. the extent of the benefit alleged, and whether the case is one of general nor particular criminal conduct. This will often include references to admissions made at trial or the evidence given. It may also extend to relevant sentencing remarks and the basis of plea;
v. if a general criminal conduct matter, or a lifestyle offence, reference to the assumptions that the court is being invited to draw;
vi. the nature of the assets the prosecutor maintains are realisable. Whilst there is no duty on the Crown to prove the available amount, it is clearly helpful if it refers to what is known in terms of the defendant's property and wealth;
vii. the extent of any allegation of hidden assets and the basis for such a belief;
viii. the amount of the confiscation order the prosecutor is seeking;
ix. occasionally statements of information will make reference to decided case law or the statute itself but, normally, issues of law on which the prosecutor seeks to rely should be addressed in a skeleton argument rather than a witness statement.
Documentation on which the prosecutor wishes to rely should be exhibited to the statement in the usual way and should normally include the restraint order, any variation orders, the defendant's disclosure statement and, where relevant reports from any management receiver appointed by the court.
When should the section 16 statement be served?
By section 16 (1) and (2) of POCA, the prosecutor must give the statement of information to the court "within the period the court orders". It is submitted, however, that whenever possible the best practice is to serve the statement prior to the trial and, save in the most exceptional circumstances, no later than the return of the jury. This will enable the judge to be in the best possible position to give directions as to how the POCA enquiry should proceed.
On whom should the prosecutor's statement be served?
By section 16 (1), the statement of information must be given to the court. At the same time as the court orders a statement to be prepared, it may also direct that a copy be served on the defendant and/or the defendant's solicitors.
There is no requirement, either in POCA or the Criminal Procedure Rules, that a statement should be served on solicitors acting for a co-accused. This is no doubt because statements frequently disclose personal matters relating to the defendant's financial affairs and exhibit his disclosure statement sworn in compliance with a restraint order. As it is in the public interest that the defendant should be encouraged to make full and frank disclosure of all his realisable property in such statements, it is suggested that he is not likely to do so if the statement was to come into the hands of third parties.
The defendant's statement
By section 17 (1) of POCA:
"If the prosecutor gives the Court a statement of information and a copy is served on the defendant, the Court may order the defendant:
1. to indicate (within the period the court orders) the extent to which he accepts each allegation in the statement, and
2. so far as he does not accept such an allegation to give particulars of any matters he proposes to rely on."
The purpose of section 17 is to identify areas of dispute between the parties, so that evidence may be adduced only in relation to the disputed points, thus narrowing the issues. It is also intended to prevent the Crown being taken by surprise at the confiscation hearing and effectively being "ambushed" by issues being raised for the first time and without prior notice.
Defendant's acceptance conclusive
By section 17 (2) of POCA, if the defendant accepts to any extent an allegation in the statement of information, the court may treat his acceptance as conclusive of the matter to which it relates for the purpose of deciding issues as to the defendant's general or particular criminal conduct, as the case may be.
What happens if the defendant fails to respond?
If the defendant fails in any respect to comply with an order under section 17 (1) he may be treated, under section 17 (3), as having accepted every allegation in the statement of information apart from:
a. any allegation in respect of which he has complied with the requirement;
b. any allegation that he has benefited from his general or particular criminal conduct.
Thus, if the defendant fails to respond to a statement of fact in relation to his assets or the available amount, that fact may be deemed by the court to be true. It should be noted that this is a matter for the discretion of the court - it is not bound to treat every allegation as having been accepted simply because the defendant has failed to respond to it.
The defendant who fails to respond to the prosecutor's statement in compliance with an order under section 17 runs the very real risk of having a confiscation order made in the full amount of the benefit figure alleged by the prosecutor.
In R v Comiskey (1991) 93 Cr App R 227 the Court of Appeal held that once the prosecution have proved benefit, the burden then passes to the defendant to show, on a balance of probabilities, the value of his realisable property was less than this sum. If he fails to discharge that burden, the court must make a confiscation order in the full amount by which it has certified he has benefited.
The Court of Appeal has showed a marked reluctance to interfere with confiscation orders made in circumstances where the defendant has failed to respond to the prosecutor's statement and has failed to give evidence at the confiscation hearing. In R v Layode (Unreported, 12 March, 1993) by way of example, in dismissing the defendant's appeal, Macpherson J said:
"If the judge was wrong about the realisable assets and the bank accounts the Appellant has nobody but himself to blame in this regard."
He added that the case underlined the importance of a defendant submitting evidence.
The problem of self incrimination
By section 17 (6) of POCA:
"No acceptance under section 17 (the defendant's response to the prosecutor's statement) that the defendant has benefited from criminal conduct is admissible in evidence in proceedings for an offence."
One of the purposes of section 17 (6) is to prevent invoking his privilege against self incrimination as a justification for failing to respond to the prosecutor's statement. This provision is analogous to the condition subject to which disclosure orders are made in restraint orders and which are designed to protect the defendant's privilege against self incrimination.
Section 17 (6) is also intended to encourage the defendant to be more forthcoming in his disclosure because, if the protection provided by section 17 (6) did not exist, the defendant may be reluctant to admit benefit from criminal conduct that had not been the subject of a prosecution.
Further provision of information by the defendant
Section 18 of POCA makes the obligations on the defendant even more onerous. It applies where the court is proceeding under POCA either because the prosecutor has asked it to do so, or the court has decide to proceed of its own motion.
Section 18 empowers the court to require the defendant to provide information "at any time" for the purpose of assisting the court to carry out its confiscatory functions under the Act.
By Rule 58.1 (4) of the Criminal Procedure Rules, the defendant must provide the information in writing and must, as soon as practicable, serve a copy of it on the prosecutor. The information must be supported by a statement of truth: see Rule 57.7.
The primary purpose of section 18 is to allow the court to make an order where the defendant is relying, or has relied, on certain matters and the court considers it requires more information to assist it in determining the point in question.
What are the consequences of a defendant failing to comply with a Section 18 Order?
If the defendant fails to comply with the court's order without reasonable excuse, section 18 (4) allows the Court to draw any inference it believes appropriate.
What information can the defendant be required to provide under section 18?
This will depend largely on the facts of individual cases but typical examples of the information that may be sought would include:
a. particulars of any sources of income, including bequests;
b. identification of all bank and building society accounts, whether jointly or solely held;
c. particulars of any real property in which the defendant holds an interest;
d. details of any unit trusts, books shares or debentures the defendant holds an interest in;
e. details of any cash held and from where it was sourced;
f. particulars of any motor vehicles, boats works of art, livestock or jewellery owned;
g. details of any safe deposit boxes held;
h. details of all charge and credit cards held;
i. details of any other transfers made to or from the defendant in the previous six years.
Protection from self incrimination
Section 18 (5) contains a similar provision to that in section 17 (6) protecting the defendant from incriminating himself and others in the making of any admission or reply under section 18. However, if the information disclosed leads the prosecutor to other new information or evidence, section 18 does not appear to prevent the authorities from using that other evidence.
Prosecutor's acceptance conclusive
By section 18 (6) of POCA, any acceptance by the prosecutor of any assertion contained in a defendants statement may be treated by the court as being conclusive for the purposes of the confiscation hearing.
Further statements by the prosecutor
Section 16 (6) provides:
"If the prosecutor gives the Court a statement of information -
a. he may at any time give the Court a further statement of information;
b. he must give the Court a further statement of information if it orders him to do so and he must give it within the period the Court orders."
Under the old legislation, a practice developed of the prosecutor submitted a further statement if there were matters in the defendant's statement with which he disagreed or which called for further comment. Section 16 (6) puts this practice on a statutory footing and provides for a further statement to be tendered by the prosecutor either acting of his own volition or in compliance with an order of the court.
Securing the attendance of witnesses
Once section 16 and 17 statements have been served, the parties should advise each other of the witnesses they require to attend the hearing. It should be borne in mind that certain witnesses, in particular those employed by financial institutions, may not be prepared to attend the court voluntarily. In such cases witness summonses should be sought from the appropriate officer of the Crown Court.
Expert evidence
The procedure to be followed for adducing expert evidence in confiscation hearings is set out in Rules 57.9 & 57.10 of the Criminal Procedure Rules.
