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Proceeds of Crime

CHAPTER 1

CHAPTER 2

CHAPTER 3

CHAPTER 4

CHAPTER 5

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CHAPTER 1

Introduction

The CPS Asset Recovery Strategy

Confiscation is an essential tool in the prosecutors toolkit to deprive offenders of the proceeds of their criminal conduct; to deter the commission of further offences; and to reduce the profits available to fund further criminal enterprises .  Prosecutors should consider asset recovery in every case in which a defendant has benefited from criminal conduct and should instigate confiscation proceedings in appropriate cases.  When confiscation is not appropriate and/or cost effective, consideration should be given to alternative asset recovery outcomes.

The CPS has published an Asset Recovery Strategy which stresses the importance of asset recovery work.  The aim of the Strategy is for the CPS to recover more criminal assets, located both in the UK and overseas. The CPS Asset Recovery Strategy is to:

  • Prioritise the recovery of assets from serious and organised crime and serious economic crime;
  •  Pursue the assets of all who profit from crime, when it is proper to do so;
  • Assist our international colleagues to enforce assets on our behalf and where necessary assist them in developing their asset recovery capacity and capability; and 
  • Improve the enforcement of confiscation orders. 

By taking away the profits that fund crime, we can help to disrupt the cycle that sustains these organisations and fraudsters. By prioritising the assets of organised and economic crime, the strategy aims to improve further on our asset recovery performance, and to disrupt, deter and reduce organised crime and economic crime. This will help to protect the public from the harm it causes.

The purpose of the Legal Guidance is to assist prosecutors in identifying potential cases for confiscation and financial investigation; to ensure that, when necessary, assets are restrained pending the making of a confiscation order; that confiscation orders are made in appropriate cases in appropriate amounts; and that when made, confiscation orders are enforced.  The Legal Guidance should be read in conjunction with the DPPs Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings  and prosecutors should apply the principles set out in that document.

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The role of the prosecutor

CPS prosecutors participate in every stage of the confiscation process, in that we:

  •  Advise on the obtaining of investigative and restraint orders and conduct restraint applications.
  • Advise on the confiscation investigation.
  • Conduct confiscation proceedings in court.
  • Obtain receivership orders.
  • Recover assets to satisfy a confiscation order by way of enforcement action in the UK and overseas.
  • Recover assets on behalf of overseas jurisdictions in response to requests for Mutual Legal Assistance (MLA).

On 2 December 2002, the DPP signed a Service Level Agreement (SLA) with the Association of Chief Police Officers of England and Wales (ACPO), which is a general guide to co-operation between the parties on issues arising from POCA. The Agreement has been used as a basis for local protocols between Chief Crown Prosecutors and Chief Constables.  These clarify roles and responsibilities of those involved at Area/force level and set out effective working arrangements for the Acts objectives.

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Early advice

Prosecutors should refer to the SLA and local protocol for specific details, however, Areas will be expected to provide early advice to the police concerning the investigation, preservation of assets, obtaining and enforcement of confiscation orders and confiscation matters generally and will make restraint and confiscation applications to the Crown Court on behalf of the police.

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Charging decisions and acceptance of pleas

The number and choice of charges and/or the acceptance of pleas can have a dramatic effect on the value of a confiscation order, for example charging three offences instead of four; charging four offences to a value of under £5,000; or charging handling rather than money laundering may determine whether the defendant is deemed to have a criminal lifestyle as defined in section 75 of POCA 2002.

The inclusion on an indictment of offences or the acceptance of pleas of offences committed prior to 24 March 2003 could mean that pre-POCA 2002 legislation applies and that notices would need to be served before proceeding to confiscation.  Even within the same proceedings, different legislation can apply to different defendants, depending upon the date of their earliest offence.

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Part 8 Investigative Orders

Applications for investigative orders under Part 8 of POCA include Production Orders, Search and Seizure Warrants, Customer Information Orders and Account Monitoring Orders and they are proceedings, which are linked to the investigation of crime. CPS lawyers may provide general advice but should not make the application. If there is a subsequent challenge to any order that is made the CPS may provide advice and assist in the preparation of a brief to counsel, but may not take part in the hearing.  Law enforcement should be made aware that they bear the costs of the case including any applications for compensation.

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Cash forfeiture

Cash forfeiture proceedings are civil in nature (see the European case of Butler v UK), however, the CPS may act in such proceedings on behalf of the police and HMRC.  The police may seek early advice from the CPS in relation to contemplated criminal proceedings, where cash has been seized during the course of the investigation.

 If the CPS advises that a prosecution should proceed, then it is likely that money seized will either form an exhibit in the case, or will be held with a view to the court making a confiscation order following conviction.  In those circumstances, the CPS will provide advice to the police on the basis that the issue arises from a criminal offence and is ancillary to contemplated, or on-going criminal proceedings. 

Conversely, if the CPS advises against prosecution, then either the cash will be returned, or purely civil forfeiture proceedings will continue without CPS involvement. 

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Is this a confiscation case?

Prosecutors should consider asset recovery in every case in which a defendant has benefited from criminal conduct and should refer cases for financial investigation and, if appropriate, instigate confiscation proceedings.  When confiscation is not appropriate and/or cost effective, consideration should be given to alternative asset recovery outcomes.

Prosecutors should look at the lifestyle and known assets of the suspect or defendant. They will consider relevant information set out on the MG3, MG6 and MG17 forms in police cases and any evidence of a lavish lifestyle, e.g. expensive homes, furnishings, cars, holidays, jewellery and other assets in the witness statements, interviews or custody records. Prosecutors will not assume that because a financial investigation has not been requested by the officer in the case that confiscation is inappropriate.

Offences are included within Schedule 2 of POCA on the basis that they are offences that are typically committed by criminals to acquire wealth.  If a defendant is charged with one of these offences, then unless the defendant is committing offences to fund a drug addiction and has no available assets, a referral will generally be made to law enforcement to consider a financial investigation.

When defendants are making a living from crime, it is likely that their offending will be caught by the provisions of section 75 POCA 2002 and the lifestyle provisions are likely to apply, but whether the assumptions are triggered or not, such cases will be referred for financial investigation and a confiscation application should follow, unless there are no assets and there is no likelihood of assets being located.

If on the face of the prosecution file a suspect/defendant has benefited by more than a minor amount from his particular criminal conduct and is likely to have the means to pay a confiscation order, prosecutors should ask the officer in the case to refer the case for financial investigation.

Generally, it will be appropriate to apply for a confiscation order whenever a defendant has obtained a benefit from or in connection with his criminal conduct and has the means to pay a confiscation order.  Prosecutors should ensure that confiscation is proportionate in accordance with the decision of the Supreme Court in the case of Waya and should apply the principles set out in the DPPs Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings  when deciding whether to apply for confiscation in a particular case. 

If a financial investigation has revealed that a suspect has few or no realisable assets, then it may not be a proportionate use of resources to pursue confiscation.  In such cases, it may be more efficient to seek compensation, deprivation, forfeiture or restitution orders and costs.

It may be appropriate to seek confiscation orders in nominal amounts against serious and/or organised criminals, when it has been agreed with law enforcement that the defendants financial circumstances will be regularly reviewed and a decision made as to whether there should be an application to the court under section 22 POCA 2002 to increase the amount of the confiscation order.  Nominal orders may also be appropriate when a defendant is expected to be in possession of further assets within a short space of time, e.g. due to an inheritance.

Confiscation may not be appropriate when:

  • The defendant has repaid or returned the full extent of his benefit and lifestyle assumptions do not apply ;
  • There is a low value of benefit and a compensation or other order would fully or substantially deprive the defendant of his benefit;
  • The defendant is before the Youth Court and a compensation or other order would fully or substantially deprive the defendant of his benefit; and/or
  • There are no identifiable assets.

For more information on applications for confiscation orders, please refer to the confiscation section below.

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Is there a risk that the assets will be dissipated before the confiscation order is made?

A restraint application may be made at any time following the commencement of the criminal investigation and at any stage of the criminal proceedings.  Prosecutors must monitor the need for restraint throughout the investigation and criminal proceedings.  If there is a risk of dissipation of the defendants assets, they must immediately refer the case to the relevant regional CPS POC Unit for consideration for an application for restraint.

Each case will need to be considered on its merits.  Unconvicted defendants are entitled to regular payments of their living expenses from their restrained assets and in practice this is likely to make the application for a restraint order unnecessary in cases when the value of the available assets is below the amount that is likely to be taken in living expenses before conviction.  A restraint order should still be considered if there are identified assets that may be required to satisfy a compensation order, in circumstances when the compensation order is likely to be paid out of the monies enforced in respect of the confiscation order.

For more information, please refer to the restraint section below.

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Should a Receiver be appointed in this case?

Prosecutors should consider an application for the appointment of a Management Receiver, if the defendants assets are of such a nature that they require active management.  The application may be made at the same time as the application for a restraint order. 

The CPS will generally only apply for the appointment of an Enforcement Receiver if the convicted defendant cannot or will not voluntarily realise his/her assets.

Generally, it will not be appropriate to appoint a receiver in the event that there are insufficient assets available to be realised to cover their costs. In this context, however, value for money is not just a question of how much may be recovered, but should also take into account issues, such as harm and crime reduction and the Government and CPS strategies on serious and organised crime and asset recovery. Each case will need to be considered on its merits and in some cases this may mean that it will be appropriate to appoint a receiver when their fees are likely to equal, or even in very rare circumstances exceed, the amount likely to be recovered.

For further information, please refer to the CPS Strategy on the Use of Receivers and to the section on Receivers below.

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CHAPTER 2

Confiscation

Confiscation - Principle

The purpose of confiscation proceedings is to deprive the defendant of the financial benefit that he or she has obtained from criminal conduct. To do this the court must decide whether the defendant, has a criminal lifestyle. If it decides that he or she does have a criminal lifestyle then Court calculates the benefit from general criminal conduct using the assumptions set out in the Proceeds of Crime Act 2002 (POCA). If it decides that he or she does not have a criminal lifestyle, the court will instead calculate the benefit from particular criminal conduct (the actual offences of which the defendant is convicted).

In an endnote to its ruling in May, the House of Lords set out an important restatement of the relevant principles in these terms:

  1. The legislation is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means. It does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine. The benefit gained is the total value of the property or advantage obtained, not the defendants net profit after deduction of expenses or any amounts payable to co-conspirators.
  2. The court should proceed by asking three questions posed above:
    (i) Has the defendant (D) benefited from relevant criminal conduct?
    (ii) If so, what is the value of the benefit D has so obtained?
    (iii) What sum is recoverable from D?
    Where issues of criminal lifestyle arise the questions must be modified. These are separate questions calling for separate answers, and the questions and answers must not be elided.
  3. In addressing these questions the court must first establish the facts as best it can on the material available, relying as appropriate on the statutory assumptions. In very many cases the factual findings made will be decisive.
  4. In addressing the questions the court should focus very closely on the language of the statutory provision in question in the context of the statute and in the light of any statutory definition. The language used is not arcane or obscure and any judicial gloss or exegesis should be viewed with caution. Guidance should ordinarily be sought in the statutory language rather than in the proliferating case law.
  5. In determining, under the 2002 Act, whether D has obtained property or a pecuniary advantage and, if so, the value of any property or advantage so obtained, the court should (subject to any relevant statutory definition) apply ordinary common law principles to the facts as found. The exercise of this jurisdiction involves no departure from familiar rules governing entitlement and ownership. While the answering of the third question calls for inquiry into the financial resources of D at the time of the determination, the answering of the first two questions plainly calls for a historical enquiry into past transactions.
  6. D ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else. He ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject. Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property.

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Confiscation Order Strategy

Prosecutors should consider asset recovery in every case in which a defendant has benefited from criminal conduct and should instigate confiscation proceedings in appropriate cases.  When confiscation is not appropriate and/or cost effective, consideration should be given to alternative asset recovery outcomes.

Generally, it will be appropriate to apply for a confiscation order whenever a defendant has obtained a benefit from or in connection with his criminal conduct and has the means to pay a confiscation order.  Prosecutors will apply the principles set out in the DPPs Guidance for Prosecutors on the Discretion to Instigate Confiscation Proceedings  when deciding whether to apply for confiscation in a particular case.
 
If a financial investigation has revealed that a suspect has few or no realisable assets, then it may not be a proportionate use of resources to pursue confiscation.  In such cases, it may be more efficient to seek compensation, deprivation, forfeiture or restitution orders and costs.

It may be appropriate to seek confiscation orders in nominal amounts against serious and/or organised criminals, when it has been agreed with law enforcement that the defendants financial circumstances will be regularly reviewed and a decision made as to whether there should be an application to the court under section 22 POCA 2002 to increase the amount of the confiscation order.  Nominal orders may also be appropriate when a defendant is expected to be in possession of further assets within a short space of time, e.g. due to an inheritance.

In recent case law, in particular, Waya, courts have considered the impact of Article 1 of Protocol 1 to the European Convention on Human Rights (ECHR) upon the making of a confiscation order. It was held that a confiscation order must be proportionate to the legitimate aim of recovery of the proceeds of crime.  Waya must be read as a whole, giving due regard to paragraphs 10-35 of the judgment.

Confiscation may not be appropriate when:

  • The defendant has repaid or returned the full extent of his benefit and lifestyle assumptions do not apply;
  • There is a low value of benefit and a compensation or other order would fully or substantially deprive the defendant of his benefit;
  • The defendant is before the Youth Court and a compensation or other order would fully or substantially deprive the defendant of his benefit; and/or
  • There are no identifiable assets.

Confiscation orders may currently only be made in the Crown Court.  A person may be committed to the Crown Court for confiscation proceedings following a conviction of any offence, indictable or summary, in the magistrates' court (section 70 of POCA which needs to be read in conjunction with section 6(2)(c) of POCA). If the prosecutor asks the magistrates to do so, the court must commit the defendant to the Crown Court under this section.

If the defendant is convicted of an either way offence, subsection (5) requires the magistrates' court to state whether it would have committed the defendant to the Crown Court for sentence anyway. This subsection is required because, under section 71, the Crown Court's sentencing powers following a committal for confiscation are normally limited to the sentencing powers the magistrates' court would have had in the same case.

Section 71 provides that, when a person is committed to the Crown Court for confiscation proceedings, the Crown Court will also assume responsibility for the sentencing process.

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Confiscation Order Guidance

An overview of the confiscation procedure

The main points of the scheme are:

  • The regime is mandatory and the Crown Court must proceed to a confiscation hearing if the defendant is convicted of an offence and the prosecution as the court to proceed or it decides to do so of its own motion: see section 6 (1) (2) and (3) of POCA.
  • The standard of proof is proof on a balance of probabilities: see section 6 (7) of POCA.
  • The defendant is committed for sentence and/or for consideration of a confiscation order, or is convicted in the Crown Court;
  • The prosecutor asks or the Court considers it appropriate to consider making a confiscation order (N.B. No written notice is required);
  • The court decides whether the defendant has a criminal lifestyle;
  • If he or she does have a criminal lifestyle the Court calculates the benefit from general criminal conduct using the assumptions;
  • If he or she does not have a criminal lifestyle, the Court will calculate the benefit from particular criminal conduct (the actual offences of which the defendant is convicted);
  • The Court determines the recoverable amount;
  • The defendant may prove that he or she cannot pay the recoverable amount (whether this is the calculation of general criminal conduct or the calculation of particular criminal conduct), but can pay the available amount.  If the defendant is able to prove this, then the recoverable amount will be equal to the available amount;
  • The Court must then make a confiscation order in the recoverable amount;
  • If the Court makes a confiscation order in the available amount, it must include a statement of its findings that sets out how it arrived at that amount;
  • If a victim has, or intends to start civil proceedings in respect of the criminal conduct, the Court has a discretion to decide whether or not to make an order;
  • On the application of the prosecutor, the Court may, if it thinks it appropriate, make a confiscation order against a defendant, who has absconded.  In the case of a non-convicted defendant, the defendant must have absconded for a period of at least two years;
  • When the defendant ceases to be an absconder, the Court may vary the order;
  • Whether or not a confiscation order has been made, the prosecutor may apply within six years of the date of conviction for the Court to reconsider, where there is evidence which was not originally available to the prosecutor; and
  • Both the defendant and the prosecution have a right of appeal (with the leave of the Court of Appeal) against the confiscation rulings.
Defined terms

POCA defines many of the expressions used in the legislation and it is important to have these in mind at all times.

Criminal lifestyle
A person has a criminal lifestyle (section 75) if the offence satisfies one or more of these tests:

  1.  it is specified in Schedule 2;
  2. it constitutes conduct forming part of a course of criminal activity; and/or
  3. it is an offence committed by the defendant over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence.

The criminal lifestyle test is not satisfied unless the defendant has obtained benefit of at least £5,000 in the cases of (2) and (3), however, the value of any TICs in respect of offences started on or after 24 March 2003 will count towards this sum. TICs in respect of offences committed before 24 March 2003 will only count towards the sum of £5,000 in respect of conduct forming a course of criminal activity based on at least two previous convictions on separate occasions over the last six years (section 75(3)(b)).

Schedule 2 specified offences

The following offences are specified in Schedule 2:

  • drug trafficking
  • money laundering offence
  • directing terrorism
  • people trafficking
  • arms trafficking
  • counterfeiting
  • intellectual property
  • pimps and brothels
  • blackmail; or
  • an offence of attempting, conspiring, inciting, aiding, abetting, counselling or procuring an offence specified in Schedule 2.
A course of criminal activity

A course of criminal activity (see section 75(3)) is when the defendant:

  • has been convicted in the current proceedings of four or more offences on the same occasion, each of those offences having been committed after 23 March 2003 and from which he or she has benefited; or
  • has been convicted of one offence committed after 23 March 2003 from which he or she has benefited on this occasion and within six years of the start of the most recent proceedings been convicted on at least two separate occasions of an offence, which may have been committed before or after 23 March 2003 and from which he or she has benefited.

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Criminal conduct

This is conduct, which is an offence in England and Wales or would be an offence if it had occurred in England and Wales (section 76(1)).

General criminal conduct

It is all of the defendants criminal conduct. It is immaterial whether the conduct occurred before or after the passing of the POCA or whether property constituting a benefit was obtained before or after the passing of POCA (section 76(2)).

Particular criminal conduct

Section 76 (3) sets out the definition of particular criminal conduct and it includes the offence(s) of which he or she was convicted, any other offences of which he or she was convicted in those proceedings and offences that the court will take into consideration when deciding his or her sentence.

The role of third parties in confiscation proceedings

Third parties have no right to be heard in the confiscation proceedings until the enforcement stage. The Court will determine the recoverable amount based upon its finding as to the value of the defendants property. This may include a proportion of property owned jointly with others, in which case any finding by the Court as to the defendants interest in that property will not be binding on third parties, as they will not have been a party to the proceedings. If the third parties wish to contest the extent of their interest, then they must raise this in the enforcement proceedings (see Proceeds of Crime: Enforcement). The defendant may call a third party as a witness at the confiscation hearing if he wishes to do so.

Tainted gifts

Third parties may also become involved if they are the recipients of tainted gifts. The term gift includes a sale at a significant undervalue as at the date of transfer. The definition of tainted gift depends upon whether or not the defendant has a criminal lifestyle. A gift may be tainted whether it was made before or after the commencement of POCA (section 77(8)).

If the defendant has a criminal lifestyle and has therefore benefited from his general criminal conduct, it will be a gift made by the defendant:

  • at any time in the period beginning six years before the date of commencement of proceedings; or
  • at any time if it can be shown to be property obtained as a result of or in connection with general criminal conduct or which (wholly or partly and directly or indirectly) represented in the defendants hands property obtained as a result or in connection with his general criminal conduct.

If the defendant does not have a criminal lifestyle and the court is therefore concerned with calculating his or her particular criminal conduct, it is a gift made by the defendant at any time after the date on which the offence was committed and this will be the earliest date if there are two or more offences. Where there is a continuing offence, it will be any time after the first occasion when it is committed. If there are TICs, it will be a gift made at any time after the date on which the earliest TIC was committed.

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What must the Court do?
Proceed under section 6 POCA.

The Crown Court must proceed under section 6 POCA, if two conditions are met.
The first condition is that the defendant:

  • is convicted of an offence or offences in proceedings before the Crown Court; or
  • is committed to the Crown Court for sentence; or
  • is committed to the Crown Court with a view to a confiscation order being made.

The second condition is:

  • the prosecutor asks the court to proceed; or
  • the court considers it appropriate to do so.

Decide whether the defendant has benefited from relevant criminal conduct
By section 76 (4) of POCA, a person benefits from conduct if he obtains property as a result of or in connection with the conduct or (by section 76 (5)) if he obtains a pecuniary advantage.

The evidence adduced at trial will be highly relevant and there is no obligation on the prosecutor to recall this evidence at the confiscation hearing.

Evidence adduced at trial that the defendant was seen selling drugs in the street or has been involved in a fraud will normally provide irrefutable evidence of benefit from criminal conduct.

Meaning of obtains

There has been much recent case law on the meaning of the word obtains. Ordinarily, the word obtains means ownership (whether alone or jointly), which will normally connote a power of disposition or control. A mere custodian or courier is therefore unlikely to have obtained the property in his possession.

Decide the value of the benefit obtained by the defendant

If a person benefits from conduct his benefit is the value of the property obtained (section 76 (7) of POCA). By section 84 (2) (b), property is obtained by a person if he obtains an interest in it and its value is defined in sections 79 and 80. In May [2008] UKHL 28, the House of Lords held that assessing the value of benefit calls for an essentially factual enquiry: what is the value of the property the defendant obtained?

Crucial to the assessment of benefit will be the Courts determination as to whether the defendant has a criminal lifestyle (section 6(4)(a) and section 75 POCA). Please refer to the definition of criminal lifestyle given above.

In the recent cases of Ahmed and Ahmad and Fields [2014] UKSC 36, the Supreme Court held that when property is obtained as a result of a joint criminal exercise, it will often be appropriate for a court to hold that each of the conspirators obtained the whole of that property. However, if the evidence discloses separate obtainings, the judge should make that finding. When joint obtaining has been found, then the benefit should not be apportioned between defendants. In such circumstances, the court should make an order that the confiscation order should only be enforced to the extent that the same sum has not been recovered through another confiscation order made in relation to the same joint benefit.  To take the same proceeds twice would be disproportionate.

Calculate the benefit from the general or particular criminal conduct

The Court must (see section 6(4)(b) and section 8 POCA):

  • if it finds that the defendant has a criminal lifestyle, decide whether he or she has benefited from his or her general criminal conduct and, if he or she has benefited, calculate the benefit from general criminal conduct; or
  • if it finds that the defendant does not have a criminal lifestyle, decide whether he or she has benefited from his or her particular criminal conduct and, if he or she has benefited, calculate the benefit from particular criminal conduct.

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The value of property

For the purposes of calculating benefit obtained as a result of general or particular criminal conduct, the value of any property obtained will be assessed as the greater of the following two values:

  • the market value at the time that the property was obtained adjusted to take account of changes in the value of money between the date that it was obtained and the date of the confiscation hearing; or
  • the market value as at the date of the confiscation hearing.

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Property

Property is all free property wherever situated and includes money; all forms of real or personal property; and things in action and other intangible or incorporeal property.

Free property

Property is free unless an order is in force in respect of it under any of these provisions:

  • section 27 of the Misuse of Drugs Act 1971 (c. 38) (forfeiture orders);
  • Article 11 of the Criminal Justice (Northern Ireland) Order 1994 (S.I. 1994/2795 (N.I. 15)) (deprivation orders);
  • Part 2 of the Proceeds of Crime (Scotland) Act 1995 (c. 43) (forfeiture of property used in crime);
  • section 143 of the Sentencing Act (deprivation orders);
  • section 23 or 111 of the Terrorism Act 2000 (c.11) (forfiture orders); and
  • section 246, 266, 295(2) or 298(2) of POCA
Make assumptions if the defendant has a criminal lifestyle

If the court finds that the defendant has a criminal lifestyle, then unless there is a serious risk of injustice, section 10 POCA requires the court to make the following four assumptions:

  1. any property transferred to the defendant at any time after the relevant day was obtained by him as a result of his general criminal conduct and at the earliest time he or she appears to have held it; and
  2. any property held by the defendant at any time after the date of conviction was obtained by him or her as a result of his or her general criminal conduct or at the earliest time he or she appears to have held it; and
  3. any expenditure incurred by the defendant at any time after the relevant day was met from property obtained by him or her as a result of his or her general criminal conduct, and
  4. for the purpose of valuing any property obtained or assumed to have been obtained by the defendant, he or she obtained it free of any other interests in it. The court has to make these assumptions once it has decided that the defendant has a criminal lifestyle but should not make them if it thinks that there will be a serious risk of injustice.
Relevant day

This is the first day of the period of six years before proceedings were started, or where there are two or more offences and proceedings were started on different dates, the earlier of those dates.

Start of Proceedings

Proceedings are started when:

  • a summons or warrant is issued in respect of an offence
  • a person is charged after being taken into custody without a warrant; or
  • a bill of indictment is preferred.
Date of conviction

The date of conviction is the date on which the defendant was convicted of the offence or where there are two or more offences and conviction was on different dates, the date of the latest.

If the Court does not make any of the required assumptions, it must record the reason(s) why an assumption was not made.

Calculate the Recoverable Amount

If the court decides that the defendant has benefited from general criminal conduct or particular criminal conduct, it must assess the recoverable amount.

The recoverable amount is an amount equal to the defendants benefit from the conduct concerned. If the defendant proves that shows that the available amount is less than that benefit accrued, then the recoverable amount will be assessed as the available amount or a nominal amount if the amount available is nil.

The available amount is the aggregate of:

  • the total value of all the defendants free property (at the time the confiscation order is made) minus the total value of any obligations that have priority; and
  • the total value (at the time the order is made) of any tainted gifts.

If the court decides to make an order in the sum of the available amount, the court must include a statement of its findings in the confiscation order.

Make an order in the sum of the Recoverable Amount

The Court must make an order in the sum of the recoverable amount unless a victim of the conduct has started or intends to start civil proceedings against the defendant in respect of loss, injury or damage sustained in respect of the conduct when the court has discretion by virtue of sub-section 6(6) POCA not to make a confiscation order. This is so that the victim is not prejudiced by any confiscation order.

Ensure ECHR compliance

The Supreme Court held in the case of Waya that the judge has a limited power in particular benefit cases by virtue of the operation of Article 1, Protocol 1 of the European Convention on Human Rights (ECHR), to ensure that the confiscation order made is ECHR compliant.  In the event that the proposed confiscation order calculated according to section 6 POCA would be disproportionate, the judge may make a confiscation in a sum that is proportionate.

Set the time to pay

The amount to be paid under a confiscation order must be paid on the date of the making of the confiscation order (section 11 POCA). If the defendant shows that he or she needs time to pay the confiscation order, the court may extend this time for payment for up to six months. Before granting either an application for an extension of time or an application for a further extension of time, the Court must give the prosecutor an opportunity to make representations. It is important to note that the burden of establishing that time to pay is required rest on the defendant. The Court should be discouraged from allowing time to pay when it is unnecessary or from allowing longer than is reasonably required to realise assets. By way of example, there is no reason why funds held in a bank account or in the custody of law enforcement agencies should not be paid into court within 28 days of the order being made.

Further, before determining time to pay, the Judge should wherever possible ascertain the defendants estimated earliest date of release and set the time to pay accordingly. It is clearly preferable that time to pay should expire well before the EDR so as to enhance the prospect of effective enforcement.

Ask the defendant to sign authorities

Where the defendant holds asserts that can be realised easily such as money in bank accounts, motor vehicles etc. the prosecutor should invite him at the confiscation hearing to sign authorities to permit their realisation in satisfaction of the order.

Draw up the Confiscation Order

The Confiscation Order is drawn up by the Court and should include the following:

  • The amount of benefit found by the court
  • The amount of the Confiscation Order in sterling;
  • The date that the Confiscation Order is made;
  • The default sentence for non-payment of the Confiscation Order and that the service of a term of imprisonment in default will not expunge the debt and notice that that the enforcing magistrates court has no power to remit all or part of the order;
  • The time to pay should be specified on the Confiscation Order. To be deleted as appropriate:
    • Payment is required forthwith
    • Payment is to be made in full by ..
    • Payments are to be made as follows ..
  • Interest is payable on the outstanding balance of the Confiscation Order from the date upon which the Confiscation Order is due to be paid. The rate of interest is the same rate as that for the time being specified in section 17 of the Judgments Act 1838. The rate is currently 8% per annum.

A schedule or schedules representing the Judges Ruling(s) as to the benefit obtained, the realisable assets and their location is to be attached to the confiscation order. This schedule should be drawn up and agreed by both counsel.

Set the Default Sentence

Section 35 (2) of POCA provides that the Powers of Criminal Courts (Sentencing) Act 2000 applies to the enforcement of confiscation orders in the same way as it applies to fines. The Court must therefore set a default sentence to be served in the event that the defendant does not satisfy the confiscation order within the time allowed for payment., The maximum sentences available are the same as in relation to fines and are set out in section 139 (4) of the Powers of criminal Courts (Sentencing) Act 2000.

Applying for confiscation orders against abscondees

On the application of the prosecutor, the Court may, if it thinks it appropriate, make a confiscation order against a defendant, who has absconded (section 27 and 28 POCA). In the case of a non-convicted defendant, the defendant must have absconded for a period of at least two years.

Some provisions, either do not apply (section 10 POCA assumptions, for example), or may be modified in the case of an absconder (see section 27(5) and (6)). It will be necessary to consider what effect this may have on a particular case.

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When the defendant ceases to be an absconder, section 29 POCA allows the Court to vary any order made by virtue of sections 27 and 28.

Appeals

The prosecution has a right of appeal in respect of a confiscation order, or a failure to make a confiscation order to the Court of Appeal. A notice of appeal must be served within twenty-eight days and leave to appeal is required from the Court of Appeal. The procedure is set out in the Appeal Rules.

The prosecutor or the defendant may appeal a decision of the Court of Appeal to the Supreme Court.

Any decision by the prosecution to appeal a confiscation ruling should be referred to a level E with advice sought from the Principal Proceeds of Crime Advisor and the CPS Appeals Unit.

These rights of appeal do not apply to:

  • applications made to the Crown Court to reconsider the case where no confiscation order was made;
  • applications to the Crown Court to reconsider benefit where no confiscation order was made;
  • applications to the Crown Court for confiscation orders where the defendant has absconded (section 31 POCA).

Whether or not a confiscation order has been made, the prosecutor (or in the case of a reconsideration of the available amount, the receiver) may apply within six years of the date of conviction for the Court to reconsider a decision not to make an order, or to reassess the defendants benefit and/or the available amount (see sections 19 to 22. There must be evidence, which was not originally available to the prosecutor. Prosecutors should refer to POCA for the different bases upon which assessments are made on a reconsideration.

The decision as to whether to apply to the Crown Court for reconsideration of a confiscation order should be referred to a Level E, with advice taken from the Proceeds of Crime Unit Rule 58.3 and Rule 58.4 of the Criminal Procedure Rules 2010 require that applications under sections 19, 20, and 21 should be in writing and give details of the name of the defendant; the date on which and the place where any relevant conviction occurred; the date on which and the place where any relevant confiscation order was made or varied; the grounds for the application; and an indication of the evidence available to support the application.

The application must be lodged with the Crown Court and be served on the defendant at least 7 days before the date fixed by the court for hearing the application, unless the Crown Court specifies a shorter period.

Rule 58.5 of the Criminal Procedure Rules 2013 applies to section 22 applications for a reconsideration of the available amount and requires that the application should be in writing and may be supported by a witness statement. The application and any witness statement must be lodged with the Crown Court served at least seven days before the date fixed by the court for hearing the application, unless the Crown Court specifies a shorter period on:

  • the defendant;
  • the receiver, if the prosecutor is making the application and a receiver has been appointed under section 50 or 52 of POCA; and
  • if the receiver is making the application the prosecutor.

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Preparatory steps for confiscation hearings

Postponement of the confiscation proceedings

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).
If the court postpones making a confiscation order it can sentence the defendant for the offence or offences. In the event of postponement, section15(2) of POCA, stipulates the court must not impose a fine, or a compensation order under section 130 of the Powers of Criminal Courts (Sentencing) Act 2000 or a forfeiture order under the Misuse of Drugs Act 1971, or a deprivation order under the Sentencing Act 2000 or a forfeiture order under the Terrorism Act 2000.

Postponement of confiscation proceedings gives rise to a risk that compensation may be overlooked if it is subsequently decided that it is not appropriate to proceed with confiscation. Accordingly, prosecutors should ensure the court explicitly deals with compensation claims separately from confiscation and gives reasons why a compensation order is not being imposed at the point of sentencing. If the reason is explicitly given that a compensation order is not being made because the application is being adjourned to the confiscation hearing, then the ability to pursue the application for compensation is preserved in the event that confiscation is not ultimately pursued.

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 defendants 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.

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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?

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.

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The confiscation timetable

Please refer to the template order on the Hub.

The Prosecutors Statement

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 prosecutors statement serves a number of purposes. Firstly, it enables the defendant and the court to be put on notice of the Crowns 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 defendants 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 defendants 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 defendants disclosure statement and, where relevant reports from any management receiver appointed by the court.

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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 prosecutors 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 defendants 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 defendants 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 Defendants 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:
to indicate (within the period the court orders) the extent to which he accepts each allegation in the statement, and
so far as he does not accept such an allegation to give particulars of any matters he proposes to rely on.

Further statements by the prosecutor

Section 16 (6) provides: If the prosecutor gives the Court a statement of information:

  •  he may at any time give the Court a further statement of information;
  • 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 defendants 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.

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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.

The role of third parties in confiscation proceedings

Third parties have no right to be heard in the confiscation proceedings until the enforcement stage. The Court will determine the recoverable amount based upon its finding as to the value of the defendants property. This may include a proportion of property owned jointly with others, in which case any finding by the Court as to the defendants interest in that property will not be binding on third parties, as they will not have been a party to the proceedings. If the third parties wish to contest the extent of their interest, then they must raise this in the enforcement proceedings (see the Enforcement section below). The defendant may call a third party as a witness at the confiscation hearing if he wishes to do so.

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CHAPTER 3

Restraint

Restraint Order Principle

A restraint order has the effect of freezing property anywhere in the world that may be liable to confiscation following the trial and the making of a confiscation order. It may be made both against the defendant or person under investigation, and any other person holding realisable property. The object in each case is to strike a balance at the interlocutory stage between keeping the defendants assets available to satisfy any confiscation order which may be made in the event of conviction and meeting the defendants reasonable requirements in the meantime (Re Peters [1998] 3 All ER 46, CA).

Restraint Order Strategy

A restraint application may be made at any time following the commencement of the criminal investigation and at any stage of the criminal proceedings.  Prosecutors must monitor the need for restraint throughout the investigation and criminal proceedings.  If there is a risk of dissipation of the defendants assets, they must immediately refer the case to the relevant regional CPS POC Unit for consideration for an application for restraint.

Each case will need to be considered on its merits.  Unconvicted defendants may be permitted to receive regular payments of their living expenses from their restrained assets and in practice this is likely to make the application for a restraint order unnecessary in cases when the value of the available assets is below the amount that is likely to be taken in living expenses before the confiscation order is made.  A restraint order should still be considered if there are identified assets that may be required to satisfy a compensation order, in circumstances when the compensation order is likely to be paid out of the monies enforced in respect of the confiscation order.

Restraint Order Guidance

When should an Application for a Restraint Order be made?

The decision whether or not to apply for a restraint order and if so, the timing of that application are important strategic decisions in the case and should only be taken after careful consideration of the effect on the case both at the investigative or prosecution stage.

An application for a restraint order in respect of an offence begun after 24 March 2003 may be made at any time after an investigation has commenced in England and Wales as to whether such an offence has been committed.

Clearly, from the time that a suspect has been served with the restraint order, he/she will be aware of the criminal investigation and may be in a position to abscond and/or to destroy evidence or otherwise interfere with the course of the investigation. It will necessarily fall upon the investigator to weigh up the pros and cons of an early application.

A prosecutor should provide the investigator with early advice as to whether in law there is sufficient basis for an application for a restraint order to be made and if there is insufficient evidence, what extra material is required.

Generally, it will be in the public interest to make an application, where the investigation is not likely to be compromised to a significant extent; where there are reasonable grounds to believe that the defendant has benefited from criminal conduct; and there is a real (rather than fanciful) prospect that not insubstantial realisable assets will be dissipated, unless a restraint order is granted.

Clearly not every case will require a restraint order. If the hurdle is placed too high, then the purpose of POCA to deprive criminals of the benefit of criminal conduct will be frustrated, whilst to place the hurdle too low would inevitably lead to the law being brought into disrepute. By making local Crown Courts responsible for this jurisdiction, Parliament clearly intended that restraint orders should be more widely used than under the previous legislation.

At the pre-conviction stage, defendants are entitled to request the release of reasonable sums to meet general living expenses. It will not generally be appropriate to apply for restraint order where the value of a defendants assets are such that they will all be used to pay living expenses in the period prior to the conclusion of the criminal proceedings.

The pre-conditions

A restraint order is made on the application of the prosecutor or an accredited financial advisor at the discretion of the court. An accredited financial investigator is a person accredited by the National Crime Agency (NCA) to exercise Part 2 powers and will usually be an employee of the police force financial units (FIUs) or of HM Revenue and Customs (HMRC).

An application by an accredited financial investigator must be authorised by:

  • a police officer not below the rank of Superintendent;
  • an officer of HMRC of similar rank; or
  • an accredited financial investigator designated by the Secretary of State.

In most cases the application will be made by the CPS.The judge may only grant a restraint order pursuant to section 41 POCA if any of the five conditions set out in section 40 are satisfied.

The first condition

A restraint order can be obtained if a criminal investigation has been started in England and Wales with regard to an offence and there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct.

Section 88 (2) POCA defines criminal investigation as being an investigation, which police officers or other persons have a duty to conduct with a view to it being ascertained whether a person should be charged with an offence.

Criminal conduct is conduct that either constitutes an offence in England and Wales or would constitute such an offence if it occurred in England and Wales. An alleged offender will be taken to have benefited from his criminal conduct if he obtains property as a result of or in connection with the conduct.

Important note: Particular care should be exercised in deciding whether to apply for restraint orders at the investigation stage given the concerns expressed by the Court of Appeal in Windsor v CPS [2011] EWCA Crim 143. The case highlights the need for the prosecutor to provide sufficient evidence on an ex parte application for restraint and/or receivership so as to enable the Court to come to its own conclusion that there is reasonable cause to believe that a suspect has benefited from criminal conduct. Suspicion will not suffice.

Costs generally follow the event in restraint and receivership proceedings and prosecutors should only proceed with the application, if they are satisfied that they have been made aware of all relevant information and that the statement in support of the application properly reflects all of the available evidence both for and against the prosecution case.

Applications for production and restraint orders should generally be made to the same judge and court and the prosecutor should ask to see the evidence used in support of the production order. Prosecutors should ensure that the application for restraint, statement in support and draft orders are lodged with the court in good time, so as to ensure that the court can properly consider the papers before the ex parte application. Prosecutors should consider whether the complexity of the case requires that the application be made in person, rather than on the papers and a realistic time estimate should be provided to the court. In complex cases, the court should ensure that a High Court judge or suitably experienced Circuit judge is allocated to the case. Authorisation from the relevant Unit Head must be sought before applications for restraint orders are made at the pre-charge stage.

Section 42 (7) provides that restraint orders obtained because the first condition has been satisfied must be discharged if proceedings for an offence are not brought within a reasonable time. What amounts to a reasonable time will depend on the circumstances of individual cases, but it is particularly important that criminal investigations proceed with all due expedition when a restraint order is in force.

The second condition

An application for a restraint order may also be made once proceedings for an offence have been started in England and Wales and not concluded, and if there is reasonable cause to believe that the defendant has benefited from his/her criminal conduct.

Proceedings do not conclude within the meaning of POCA until such time as any confiscation order made in the proceedings has been fully paid: see section 85 (5) (a) of POCA. Prosecutors should not agree to the discharge of a restraint order until such time as the order has been satisfied. Accordingly it is not best practice to agree to discharge the restraint order following the making of a confiscation order on the basis that discharge is required to enable the defendant to sell property to pay the confiscation order. The proper way to manage such a situation is to agree to vary the order to permit sale of any particular asset. Discharging the order leaves the prosecutor with no control to ensure satisfaction of the confiscation order which was the reason to obtain it originally.

Proceedings are started once a warrant or summons in respect of the offence is issued by a justice of the peace under section 1 of the Magistrates Court Act 1980, or when a person is charged with the offence after being taken into custody without a warrant, or when a bill of indictment is preferred in accordance with section 2(b) of the Administration of Justice (Miscellaneous Provisions) Act 1933.

The second condition will not be satisfied and the application for a restraint order will be refused if the court believes that either there has been undue delay in continuing the proceedings, or if the prosecutor does not intend to proceed.

The third condition

A restraint order may be granted if the prosecutor has applied or will apply for the Court to either reconsider making a confiscation order, to reconsider the benefit figure, to make a confiscation order where a defendant absconds after conviction or committal, or to make a confiscation order where a defendant absconded more than two years previously but was neither acquitted nor convicted in commenced criminal proceedings.
 
The Court must also be satisfied that there is reasonable cause to believe that the defendant has benefited from his/her criminal conduct.

The fourth condition

An application for a restraint order may be made if the prosecutor has commenced or will commence an application for the Court to reconsider the benefit figure in an earlier confiscation order, and if there is reasonable cause to believe that the Court will decide that the amount found under the new benefit calculation of the defendants benefit exceeds the relevant amount.

The fifth condition

A restraint order may be granted if the prosecutor has applied or will apply for the Court to reconsider the amount available to satisfy a confiscation order, and if there is reasonable cause to believe that the Court will decide that the amount found under the new calculation of the available amount exceeds the relevant amount.

The third, fourth and fifth conditions will not be satisfied if the Court believes that either there has been undue delay in continuing the application, or the prosecutor does not intend to proceed (see section 40 (7)(8)).

The term reasonable cause to believe is not defined in the legislation or relevant case law. It clearly connotes something more than suspicion and the belief must be rational and based on adequate supporting material. It does not require the prosecutor to adduce as much evidence as would be required for a jury to convict. A High Court Judge has suggested that it is a belief based on a reasonable evidential source.

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All cases: Establishing a risk that assets may be dissipated

In all cases, regardless of which condition is being relied on, the prosecutor must be able to show there is a real rather than fanciful risk that assets will be dissipated if a restraint order is not made. In many cases, particularly those involving charges of dishonesty, the risk of dissipation will speak for itself and will not prove problematic: see Jennings v CPS [2005] 4 All ER 391 However, prosecutors must be alive to the necessity to establish that such a risk exists. This is especially so in cases where there has been a delay in applying for the restraint order and there is no evidence to show the defendant has dissipated assets in the meantime.

As the Court of Appeal held in Re B [2008] EWCA 1374 in such a case it is incumbent both on the prosecutor and the judge to explain how it can be said there is a real risk of dissipation in the future when the defendant has not dissipated assets in the past when he has had every opportunity to do so.

The extent of a restraint order

The amount of realisable property that can be restrained will depend upon the amount in which the confiscation order is likely to be made. The Court will permit the prosecutor a degree of latitude in the assessment of the amount of benefit where enquiries into its extent have not yet been completed.

A defendant will be restrained from dealing with all of his assets (general restraint) if the prosecutor is going to ask the Court to decide whether the defendant has a criminal lifestyle and has benefited from general criminal conduct.

If the prosecutor is not alleging that the defendant has a criminal lifestyle and the Court is going to be asked to decide whether the defendant has benefited from his particular criminal conduct, a defendant will be restrained from dealing with specific assets which together total in value the amount of his benefit from particular criminal conduct (specific restraint).

Where the amount the defendant has benefited from particular criminal conduct exceeds the value of all his assets it will be appropriate to restrain the defendant from dealing with all of his assets.

Any person who holds assets jointly with the defendant may be specifically restrained from dealing with those jointly held assets. The recipient of a tainted gift may be restrained from dealing with any realisable property they hold up to the current value of the gift.

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Realisable property

Realisable property is defined in section 83 as any free property held by the defendant and any free property held by the recipient of a tainted gift.

The term property is defined in section 84 and covers all property wherever situated and includes money, real or personal property, a thing in action, or other intangible or incorporeal property.

A person holds property if he holds an interest in it. A person obtains property if he obtains an interest in it, and one person transfers property to another, if the first one transfers or grants an interest in it to the second. References to an interest, in relation to property other than land, include references to a right (including a right to possession).

If the defendant or the recipient of a tainted gift has any interest in the property, the whole of the property is realisable property and may be restrained.

Free property

Property is free property (see section 82) unless it is the subject of:

  • a forfeiture order either under the Misuse of Drugs Act 1971 or the Terrorism Act 2000,
  • a deprivation order under the Powers of Criminal Courts (Sentencing) Act 2000.
  • an interim receiving order, a recovery order or an order for the detention or forfeiture of seized cash under the civil recovery provisions of the Proceeds of Crime Act 2002.
Companies

Companies enjoy their own legal personality separate and distinct from the defendant. In normal circumstances, therefore, they do not constitute realisable property of the defendant. However, a long line of authorities have established that where a defendant is in control of a company and it has been used to facilitate the criminal conduct complained of, the court may pierce the corporate veil of the company and treat it as the realisable property of the defendant: see Re H (Restraint Order: Realisable Property) [1996] 2 All ER 391.

The Court will not, however, permit the restraint order to operate at the pre-conviction stage is such a way as to preclude the company engaging in legitimate trading activity. The restraint order will need to make provision for company assets to be released to facilitate such activity. In cases of particular complexity, an application for the appointment of a management receiver may be necessary.

In all cases where an application to pierce the corporate veil of a company is contemplated, advice from the Central Units of the CPS POC service should be sought.

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Tainted gifts

A gift is made if the defendant transfers property to another person for a consideration whose value is significantly less than the value of the property at the time of the transfer.

A gift will be tainted (see section 77) if the defendant made it at any time after the date on which the offence concerned was committed, or the earliest date if two or more offences are alleged to have been committed.

Where the Crown Court has decided that the defendant has a criminal lifestyle, any gift made by the defendant to any person in the period beginning six years before the commencement of proceedings is caught together with any gift made at any time if the property gifted was obtained by the defendant as a result of or in connection with his general criminal conduct or represents property obtained by him as a result of or in connection with his general criminal conduct.

Although a court can apply the wider definition of tainted gifts at the restraint stage, if it is clear at that time that the defendant does not have a criminal lifestyle and that therefore the narrower definition will apply at the confiscation hearing, the court will have to take this into account when making the restraint order.

If the court decides that the defendant has a criminal lifestyle the definition of a tainted gift is even wider as a gift will also be tainted if:

  • it was obtained by the defendant as a result of or in connection with his general criminal conduct, or
  • it represents property obtained by him as a result of or in connection with his general criminal conduct.

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Ancillary Orders

Section 41 (7) of POCA gives the Crown Court jurisdiction to make any such ancillary order as it believes appropriate for the purpose of ensuring the restraint order is effective.
The two orders most commonly made under section 41 (7) are disclosure orders and repatriation orders.

Disclosure orders

A disclosure order requires the defendant to disclose to the prosecutor in a witness statement, verified by a statement of truth, the nature, extent and location of all his realisable property.  This information is essential if the prosecutor is to discharge his duty to police the order effectively and such orders should be sought in every case except where the prosecutor has already identified sufficient assets to meet any confiscation order that may be or has been made in the defendants case.

A disclosure order may be made against a third party holding the defendants realisable property: see Re D (Restraint Order: Non Party) The Times, 26 January, 1995.

Important note on the use of disclosure statements

In order to protect the defendants privilege against self-incrimination, disclosure orders are made subject to a strict condition that the statements may not be relied on in the criminal proceedings. It is of vital importance that this rule is adhered to at all times. In cases of difficulty, advice from the Proceeds of Crime Unit should be sought.

Once a defendant has been convicted, the disclosure statement may be relied on in the confiscation proceedings. Indeed, good practice dictates that such statements should normally be exhibited to the Prosecutors Statement of information made under section 16 of POCA.

Repatriation orders

Repatriation orders are orders requiring a defendant to repatriate to England and Wales assets held overseas. They are most commonly used in relation to funds held in overseas bank accounts which are vulnerable to dissipation before a letter of request can be issued and actioned to secure them.

A repatriation order should only be sought where the realisation of assets held overseas will be necessary to satisfy a confiscation order in the amount of the defendants benefit. If there are sufficient UK based assets available, a repatriation order should not be sought. For more details on the Courts power to make a repatriation order, see DPP v Scarlett [2000] 1 WLR 515.

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Restraint Procedure

The preparation and service of documentation is set out in the relevant chapter of the CPS POC Manual.

What must the Court do?
Apply the correct burden and standard of proof

The burden rests on the prosecution on a balance of probabilities.

Exercise of powers

Section 69(2) of POCA sets out the principles on which the Crown Court should exercise the discretion to grant a restraint order, namely that the power:

  • must be exercised with a view to the value for the time being of realisable property being made available (by the property's realisation) for satisfying any confiscation order that has been or may be made against the defendant;
  • must be exercised, in a case where a confiscation order has not been made, with a view to securing that there is no diminution in the value of realisable property;
  • must be exercised without taking account of any obligation of the defendant or a recipient of a tainted gift if the obligation conflicts with the object of satisfying any confiscation order that has been or may be made against the defendant; and
  • may be exercised in respect of a debt owed by the Crown.

This provision has become known over the years as the legislative steer from which it will be seen that, although the judge has a discretion whether or not to grant an application for a restraint order, the exercise of the discretion is far from unfettered.

Section 69 is much stricter than the equivalent sections in the old legislation and, as the Court of Appeal held in Serious Fraud Office v Lexi Holdings PLC (In Administration) [2008] EWCA Crim 1443, must be taken to represent a deliberate tightening up of the legislation by Parliament. In particular, restrained funds may not be released to enable unsecured third party creditors of the defendant to be paid. The decision to the contrary in Re X [2004] 3 WLR 906 is no longer good law.

Undertakings by the prosecutor

Rule 59.2 (5) of the CPR provides that the Crown Court may require the applicant to give an undertaking to pay the reasonable expenses of any person other than a person restrained from dealing with realisable property, which are incurred as a result of the restraint order. Prosecutors should file a letter giving undertakings as mentioned earlier. The prosecutor cannot, however, be required to give an undertaking in damages: see Rule 59.2 (4) of the CPR.

Cases of unusual complexity

Occasionally cases arise that are of particular complexity, raising issues far removed from those normally dealt with by a Crown Court judge. They may, for example raise difficult issues regarding trusts, company law, insolvency law, property law or family law. In such cases the principles set out in the judgment of Hughes LJ in Stanford International Bank v Serious Fraud Office [2010] EWCA Civ 137 should be followed.

Prosecutors should liaise with the appropriate Courts Administrator with a view to arranging for the hearing to take place before a judge with the necessary expertise. In urgent cases, the judge initially dealing with the application should make the restraint order, but impose a short return date when the matter can be considered by a judge with appropriate expertise.

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Restraint Appeals

The appeal procedure may be found in a combination of POCA, the Criminal Procedure Rules 2010 and in the Proceeds of Crime Act 2002 (Appeals under Part 2) Order 2003 (SI 2003 No. 82). There are resource and other implications for the CPS if unworthy appeals are pursued and prosecutors should refer likely cases to a level E or head of unit for decision. The Head of the Proceeds of Crime Unit should also be consulted.

The prosecutor may appeal in the following circumstances:

  • Section 43(1) to the Court of Appeal where the Crown Court has refused to make an order;
  • Section 43(2) (a) to the Court of Appeal where the Crown Court has made an order; and
  • Section 44 (2) to the Supreme Court of the decision of the Court of Appeal.

In addition, the defendant, or any person affected by the making of an order may apply to the Crown Court to discharge or vary the original order and may then appeal to the Court of Appeal in respect of the refusal of the Crown Court to vary or discharge the order.

A notice of appeal must be served on all parties within fourteen days and leave to appeal must be obtained from the Court of Appeal or from the House of Lords.

Appeals to the Court of Appeal regarding restraint will be limited to a review of the decision of the Crown Court unless the Court of Appeal considers that in the circumstances of an individual appeal it would be in the interests of justice to hold a re-hearing.

The Court of Appeal will allow an appeal where the decision of the Crown Court was wrong, or unjust because of a serious procedural, or other irregularity in the proceedings in the Crown Court.

Any party to an appeal before the Court of Appeal may appeal with leave to the Supreme Court.

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CHAPTER 4

Enforcement

Enforcement Principle

The purpose of a confiscation order, namely to deprive the defendant of the proceeds of his or her crime, is only fulfilled once the order is paid. A confiscation order is a debt owed by the defendant to the Crown. The defendant can choose to pay the order voluntarily, but if he or she fails to pay the order, compulsory enforcement action can be taken.

All domestic confiscation order payments, however enforced, go to HM Treasury after liquidators and receivers have been paid their fees and compensation has been paid to victims by the enforcing magistrates court.

The Home Office operates an Asset Recovery Incentivisation Scheme (ARIS) by which money enforced in respect of domestic and overseas confiscation orders is shared between the agencies involved after liquidators, receivers and compensation are paid and payments are made in accordance with any international treaties, conventions and asset sharing agreements.  The Home Office retains 50 per cent, law enforcement and prosecutors receive 18.75 per cent and the HMCTS receives 12.5 per cent.

Enforcement Strategy

The CPS Asset Recovery Strategy sets out that the CPS will work with its partners in the criminal justice system to improve the enforcement of confiscation orders. 

HMCTS is ultimately responsible for collecting the debt owed by a defendant on a confiscation order. However, the CPS assumes responsibility for cases that require prosecution input in order to enforce effectively. The criteria for determining the lead enforcement agency is set out in the Service Level Agreement between the CPS and HMCTS. When there is nothing more we can do to enforce the debt, we shall remit the case back to HMCTS.

It is essential that CPS plays an active role in the enforcement of confiscation orders by making applications to the Crown Court for the appointment of enforcement receivers and/or by requesting the listing of applications at the enforcing magistrates court to activate the default sentence of imprisonment, if the defendant fails to pay the confiscation order. Any inordinate delay in taking enforcement action may amount to a breach of the offenders right to a fair trial within a reasonable time under Article 6.1 of the ECHR and, in consequence, the criminal powers of enforcement under POCA may be lost.

Restraint Orders

Restraint Orders do not come to an end when a confiscation order is made, but remain in force until the confiscation order is satisfied: see the definition of proceedings are concluded in section 85 (5) (a) of POCA.

A restraint order may be made for the first time after a confiscation order is made if there is a risk that assets may be dissipated whilst an appeal or enforcement action is pending.

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Release of restrained funds to pay general living expenses

The right to draw on restrained funds to meet general living expenses does not continue indefinitely but comes to an end when a confiscation order is made. If the defendant appeals against the order or his conviction, the right to draw on the restrained fund comes to an end when all domestic avenues of appeal have been exhausted: see Stodgell v Stodgell [2009] EWCA Civ 243 and Revenue and Customs Prosecutions Office v Briggs-Price [2007] EWCA Civ 568.
Most restraint orders now provide that such payments should come to an end when a confiscation order has been made. Where the order does not contain such a provision, a prompt application should be made to the Court for a variation to prevent further funds being dissipated for such purposes.

Voluntary satisfaction of the order by the offender

The offender will normally be given the opportunity to satisfy the confiscation order voluntarily before enforcement action is pursued in the courts. There are many advantages to the offender in agreeing to make voluntary payment including:

  • He will avoid liability to pay interest provided he pays before time to pay expires;
  • He will avoid the risk of having to serve the default sentence; 
  • He will avoid the risk of having a receiver appointed over his assets; and
  • As soon as full payment is made, any restraint order will be discharged.

From the perspective of the prosecutor, voluntary satisfaction by the defendant results in the speedy enforcement of the confiscation order without the delays and expense involved in taking court proceedings.

If the offender is to be allowed to realise assets himself, care must be taken to ensure he does not abuse the privilege. This can usually be achieved by a variation to the restraint order allowing a sale to take place, but on strict conditions. A house sale, by way of example, will only be allowed subject to conditions ensuring it is sold for the best possible price to a bona fide purchaser and subject to an undertaking from the conveyancing solicitor to pay the net proceeds of sale directly to the enforcing magistrates court in satisfaction of the confiscation order.

The Proceeds of Crime Unit can provide precedents for variation orders that can be used in such circumstances. A variation order will be required in cases where a land registry restriction in favour of the CPS needs to be removed. In cases involving the sale of chattels it is possible to agree variation of the restraint order by way of correspondence and most restraint orders contain a provision to accommodate this cost effective procedure.

The Joint Asset Recovery Database (JARD)

All restraint, confiscation, cash seizure and civil recovery orders made throughout the United Kingdom should be recorded on the JARD, together with brief details of the assets taken into account in making such orders. It is maintained by the National Crime Agency. Most law enforcement agencies and HM Courts and Tribunals Service have access to it.

It is essential that full details of all confiscation orders are entered on JARD as soon as possible after they are made and thereafter that it is kept up to date. Full details of all enforcement action taken should be entered on the database as and when it is taken.

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Enforcement Guidance

When is payment due?

The amount to be paid under a confiscation order must be paid on the date of the making of the confiscation order (section 11 Proceeds of Crime Act 2002 (POCA)). If the defendant shows that he or she needs time to pay the confiscation order, the court may extend this time for payment for up to six months. If within the six months the defendant applies to the court for a further extension of this time and the court finds that there are exceptional circumstances, it can extend the time for a further six months. Before granting either an application for an extension of time or an application for a further extension of time, the Court must give the prosecutor an opportunity to make representations.

What sum is due?

In the recent cases of Ahmed and Ahmad and Fields [2014] UKSC 36, the Supreme Court held that when property is obtained as a result of a joint criminal exercise, it will often be appropriate for a court to hold that each of the conspirators obtained the whole of that property. However, if the evidence discloses separate obtainings, the judge should make that finding.  When joint obtaining has been found, then the benefit should not be apportioned between defendants. In such circumstances, the court should make an order that the confiscation order should only be enforced to the extent that the same sum has not been recovered through another confiscation order made in relation to the same joint benefit.  To take the same proceeds twice would be disproportionate.

Interest is payable on the unpaid amount of the confiscation order, to encourage prompt payment. If the confiscation order is not paid by the due date, the amount of interest is added to the confiscation order and is treated as if it were part of the order (section 12 POCA).

The rate of interest is that specified in section 17 of the Judgments Act 1838 and is currently 8%.

Interest is not payable if an application to extend time to pay has been made by the defendant within twelve months of the making of the confiscation order and has not been determined by the court.

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Interest is added to the sum due by operation of law and the Court has no discretion to waive payment: see Hansford v Southampton Magistrates Court [2008] EWHC 67 (Admin).

Who may enforce a confiscation order?

The magistrates court is responsible for the enforcement of a confiscation order. The prosecutor has an important role in enforcement by applying to the Crown Court for the appointment of an enforcement receiver to realise the defendants assets, and/or to the Magistrates Court for an enforcement hearing, so that the court can activate the sentence imposed in default of payment of the confiscation order.

The Magistrates Court as enforcement authority

The magistrates court has the ultimate responsibility of enforcing a confiscation order and it will enforce the order as if it were a fine. Nevertheless, the magistrates court is not the preferred enforcer in cases involving the realisation of assets outside the jurisdiction, real property, or enforcing against property held in the names of third parties.

Magistrates power to obtain monies from banks and building societies
Section 67 of POCA makes specific provision for cash held by banks and building societies, in order to ensure that effective enforcement of confiscation orders occurs quickly.

A magistrates court may order a bank or building society to pay the money to the designated officer of the Court towards satisfaction of the confiscation order if any of the following conditions occurs:

  • money is held by a defendant in an account which he holds with a bank or building society; or
  • money has been seized by a constable under section 19 of PACE 1984 and is held by a police force in an account which it holds with a bank or building society; or
  • money has been seized by a customs officer under section 19 of PACE 1984 and is held by the Commissioners of Customs and Excise in an account which they hold with a bank or building society; and
  • the money has been restrained by a restraint order; and
  • a confiscation order has been made against the defendant; and
  • an enforcement receiver has not been appointed in relation to the money; and
  • the period granted by the Court for payment of the confiscation order has expired.

If the bank or building society fails to comply with such an order, the magistrates court may order it to pay an amount not exceeding £5000 and this money will be treated as payment towards the confiscation order (see section 67 (6) POCA).

The information that an order under section 67 must contain is set out in Rule 58.12 of the Criminal Procedure Rules 2013.

Enforcement by the Prosecutor

As the magistrates court is best equipped to recover sums of money from bank accounts or other straight forward cases, it will fall upon the prosecutor to enforce cases involving the realisation of the defendants assets. Fortunately, this task may be easily achieved by the prosecutor applying to the Crown Court for the appointment of an enforcement receiver (see Appoint Enforcement Receiver below).

The prosecutor, rather than the magistrates court, should normally take primary responsibility in cases in which there is an existing restraint order and/or where the realisable assets include:

  • Assets out of the jurisdiction
  • Real property; or
  • Assets held in the names of third parties (including limited companies).

Note This is an administrative arrangement rather than a legal requirement.

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The decision to appoint an enforcement receiver

The prosecutor should consider making an application to the Crown Court for the appointment of an enforcement receiver wherever the realisable assets include assets out of the jurisdiction, real property or assets held by and/or in the names of third parties (including limited companies).

Another factor to consider is the cost of appointing an enforcement receiver. Clearly, if the remuneration and expenses of the receiver are likely to be in excess of the amount that is likely to be realised, a receiver should not be appointed. This may be a particularly pertinent issue in cases where there has been no restraint order, as some assets may have been dissipated prior to the appointment of the receiver.

Although the application to court is made by the prosecutor, once appointed, the receiver is an officer of the court and may be separately represented on future hearings. Separate representation should only occur where there is a potential conflict between the receiver and the prosecutor: see Re G, Manning v G (No. 4) [2003] EWHC Admin 1732.

See Appoint Enforcement Receiver below for the procedure relating to the appointment of the enforcement receiver.

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The role of third parties

Third parties have no right to be heard on a criminal confiscation hearing. The Crown Court will determine the defendants interest in property held by third parties, whether this property is held jointly, is a tainted gift, or is property otherwise held in the names of third parties. The Court at the confiscation stage is only tasked with determining the amount of the defendants free property, in order to calculate the recoverable or available amount in which to make an order for a sum of money and is not concerned with the property itself. Any determinations as to the defendants interest at that stage cannot be binding on third parties, as they are not parties to the proceedings (see Re Norris [2001] UKHL 34).
 

Third party assets may be restrained and/or at the enforcement stage, action may be taken by a receiver to realise property, in which third parties may be claiming an interest. Third parties are entitled to have their claims determined by a court, although not as a part of the confiscation proceedings. Unlike previous legislation, POCA provides that the appropriate court will be the Crown Court.

Resolution of third party interests

The court may order anyone who has possession of realisable property to give it to the receiver and may order anyone who holds an interest in realisable property to pay the receiver the amount of any interest held in the property by the defendant or the recipient of a tainted gift. Once that payment is made, the interest of the defendant or the recipient of the tainted gift in the property is extinguished. Before such orders are made, Rule 60.1 (6) of the Criminal Procedure Rules 2013 require that the defendant or the recipient of the gift must be given notice of the hearing and will, therefore, be able to make representations to the court.

The defendant, or the recipient of a tainted gift, may apply to the court for an order that any property that cannot be replaced should not be sold. Such an order made under section 69(4) POCA may be revoked or varied.

Section 62(3) POCA provides that any person affected by the action or proposed action of a receiver may apply to the Crown Court for an order giving directions as to the exercise of the receivership powers. The court may make such order as it believes appropriate.

Any person affected by an order appointing or giving powers to a receiver may also apply to the Crown Court to vary or discharge the order by virtue of section 63(1)(c) POCA.

Section 69(3) POCA provides that in exercising the powers given to the court and/or to a receiver, the powers must be exercised with a view to allowing a person other than the defendant or a recipient of a tainted gift to retain or recover the value of any interest held by him.

In the case of realisable property held by a recipient of a tainted gift, the powers must be exercised with a view to realising no more than the value for the time being of the gift.

In a case where a confiscation order has not been made against the defendant, property must not be sold if the court so orders under subsection (4).

The matrimonial home

A confiscation order is an order to pay a sum of money and may be enforced against any property held by the defendant, even if some of that property was legally obtained. Accordingly, the matrimonial home may be made subject to an order for possession and sale, if the defendant fails to pay. Subject to the operation of section 31 of the Family Law Act 1996, this may result in the eviction of other family members.

The court may not, however, order the realisation of any share in the matrimonial home owned by the spouse or partner, unless it can be shown that the share was a tainted gift (see Buckman [1997] 1 Cr.App.R.(S.) 325).

It sometimes occurs that the spouse of an offender petitions for divorce and seeks the transfer of the matrimonial home into his or her sole name in ancillary relief proceedings. Where this occurs, it may be necessary for the CPS to seek leave to intervene in the ancillary relief proceedings. The Central Enforcement Unit must be consulted whenever intervention is contemplated.

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Inadequacy of available amount

If the defendant or enforcement receiver applies to the Crown Court to vary the order the court must calculate the available amount. If it finds that the available amount is inadequate to pay the amount outstanding under the confiscation order the court may substitute the amount that it thinks just (section 23 POCA).

The court must disregard any inadequacy that it believes is attributable in whole or in part to anything done by the defendant to preserve property held by the recipient of a tainted gift in order to prevent it from being used to pay the confiscation order.

Discharging the confiscation order

In exceptional circumstances if less than £1,000 remains to be paid under the confiscation order and the designated officer applies to the Court for the discharge of the order, the Court may consider whether the available amount is inadequate.

If the Court finds the available amount to be inadequate to meet the amount remaining to be paid, and if this is due to fluctuations of currency exchange rates for foreign currency or due to any other reason specified by the Secretary of State, the Court may discharge the confiscation order.

If only a small amount remains outstanding (£50.00 or less) and the designated officer applies to the Court for the discharge of the order, by virtue of section 25 POCA, the Court may discharge the confiscation order.

Enforcement abroad

Realisable property is often held abroad. If a confiscation order has not yet been made, but any one of the five conditions for the granting of a restraint order have been satisfied and the prosecutor believes that realisable property is situated outside the United Kingdom, the prosecutor may send a request for assistance to another country via the Secretary of State to prohibit any person from dealing with realisable property and/or to sell realisable property and apply the proceeds in accordance with the law of that country (see section 74 POCA).

If the property is sold by the requested country, the money raised from that sale remains in the requested country, but the remaining balance of the amount ordered to be confiscated will be reduced by the amount raised by the sale. Following a sale a certificate should be obtained from the requested state confirming that the property has been sold, the date of sale and amount of the proceeds.

Procedure

The Crown Court will send the Notice of the Confiscation Order, Confiscation Certificate and Schedule(s) of Assets to the relevant prosecutor and the defence solicitors within seven days of the confiscation order being made.
The prosecutor should then contact the designated officer for the Magistrates Court within fourteen days of receipt of Orders and Schedule(s) from the Crown Court to inform him/her whether CPS intends to take the primary enforcement responsibility, or conversely whether there is an existing restraint order and that the CPS intends to take no enforcement action. The reasons for this should be detailed in a letter.
The designated officer for the Magistrates Courts will contact the prosecutor in cases that he/she believes that the prosecutor should take primary responsibility, if the prosecutor has not already made contact.

Cases with the prosecutor holding lead responsibility

Determine whether an appeal has been lodged
Contact should be made with the Court of Appeal to confirm whether or not an appeal has been lodged. If an appeal has been lodged, then the enforcement process can be stayed pending the outcome of the appeal.
Determine whether any monies have been paid
Before taking the action outlined below, a telephone call should be made to the Magistrates Court to ascertain whether the defendant has voluntarily paid any of the sum due under the confiscation order.

Send letter to the defendant

Within fourteen days of primary responsibility being established, the prosecutor should send a letter to the defendant or defendants representatives indicating the preferred enforcement process (voluntary payment or application for receiver) and enclosing any relevant documents for signature (for example: authorities for accounts, policies, motor vehicles, jewellery).
The letter will inform the defendant that failure to satisfy the Confiscation Order by the due date together with a refusal to consent to the preferred enforcement process may lead to the imposition of the default sentence. The debt will not be expunged after the default sentence is imposed. It cannot be remitted and will increase due to the accrual of interest at the relevant rate. Enforcement action to realise assets will continue even after the default sentence is imposed.

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Determine defendants earliest release date

The prosecutor should obtain confirmation of changes in the defendants earliest release date and current location by faxing the Prisoner Release Service on 0121 626 3474. Where the defendants earliest release date pre-dates the expiry of time to pay, the prosecutor should ensure that any enforcement action is completed before the defendants earliest date of release, and preferably before the expiry of time to pay, so that the magistrates court can issue a warrant of commitment in relation to any unpaid amount while the defendant is in prison.

List an enforcement hearing in the Magistrates Court

At the request of the prosecutor, the Magistrates Court should list an enforcement hearing to see why the default sentence should not be imposed. The prosecutor should supply the Court with copies of the relevant correspondence to and from the defendant showing its efforts to pursue funds.

Once a default sentence has been imposed, it cannot be remitted and must be served in full, or until such time as the Confiscation order is satisfied, whichever is earliest. However, offenders committed to prison to serve their default sentences have the right to be released from custody unconditionally after serving half of the default term: see section 258 of the Criminal Justice Act 2003.

The incentive to the defendant is the fact that wilful refusal to co-operate is likely to lead to the default sentence being imposed and being served in full with the assets then be realised anyway. If there is no penalty for delaying the enforcement process defendants will continue to do so.

At the request of the prosecutor, the Magistrates Court should issue a distress warrant or obtain a garnishee order as appropriate. The prosecutor should supply the Court with copies of the relevant correspondence to and from the defendant showing its efforts to pursue the particular assets and any other information or documentary evidence which the Magistrates Court might reasonably require in order to obtain a garnishee order.

Enforcement hearings at the Magistrates Court should not normally be adjourned for more than two weeks to allow for the defendant to sign relevant documentation or four weeks to permit the defendant to arrange for the transfer to the Courts bailiffs of chattel assets not already in the Crowns possession.

Note: It can be more expedient and cost-effective for the court rather than a receiver to realise certain chattels or cash.
If the offender fails to attend the enforcement hearing, the justices only have the power to issue a warrant for his arrest if they are considering the activation of the default sentence. If the court is only considering the use of civil enforcement powers there is no power to issue a warrant: see R (on the application of Rustim Necip) v City of London Magistrates Court [2009] EWHC 755 (Admin).

Appoint Enforcement Receiver

Please refer to the section on the appointment of receivers below.

Chase up enforcement receiver

Regular contact should be maintained with the enforcement receiver and reports obtained of the amounts recovered and of the remaining balance. This information should be entered on the Excel spread-sheet and submitted to CPS Procurement on a quarterly basis.

Cases where the magistrates court holds lead responsibility

If the Magistrates Court appears to be making little progress, the prosecutor should consider asking the court to list a hearing to activate the default sentence of imprisonment.

Alternatively, further consideration should be given to the appointment of an enforcement receiver, if appropriate.

Useful Sources

Revised National Best Practice on Confiscation Order Enforcement published November 2013 (originally issued with Home Office Circular 43/2003 and reissued with Home Office Circular 27/2005).

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CHAPTER 5

Receivership

Receivership Order Principle

Management Receiver

A Management Receiver (MR) is an officer of the court appointed on the application of the prosecutor to manage the defendants assets pending the making of a confiscation order in cases where the defendants assets are of a nature that require active management and the defendant is either unable to manage the assets (perhaps because he is in custody), or the court is unable to trust the defendant to manage the assets properly.

Enforcement Receiver

An Enforcement Receiver (ER) is an officer of the court appointed on the application of the prosecutor to realise the defendants assets to satisfy a confiscation order.

Receivership Strategy

Receivers have an important role in enabling the CPS to meet the strategic aims set out in the CPS Asset Recovery Strategy by managing assets prior to the making of a confiscation order and by realising assets to satisfy that order when it is made, in circumstances when suspects or defendants cannot, or will not, deal with their assets in a way that is consistent with their restraint or confiscation orders.

The Court may give receivers the power to take possession of property; to start, carry on or defend legal proceedings; to enter premises to search or inspect anything authorised by the Court, to make copies, or to remove property; and following an inter partes hearing, to realise property to pay for a management receivers costs or to pay towards a confiscation order.

Private sector receivers bring specialist skills and experience that may not be generally available in the public sector and have insurance to cover the assets and the work that they undertake. They are highly trained professionals and command professional rates of pay for their services. Accordingly, the CPS must ensure that it only makes applications to the court for the appointment of receivers in appropriate cases and must ensure that their use represents value for money.

Generally, it will not be appropriate to appoint a receiver in the event that there are insufficient assets available to be realised to cover their costs. In this context, however, value for money is not just a question of how much may be recovered, but should also take into account issues, such as harm and crime reduction and the Government and CPS strategies on serious and organised crime and asset recovery. Each case will need to be considered on its merits and in some cases this may mean that it will be appropriate to appoint a receiver when their fees are likely to equal, or even in very rare circumstances exceed, the amount likely to be recovered.

In order to ensure that costs are driven down; our procedures comply with EU Procurement Directives; and the CPS is protected from possible challenge, all requests for an appointment of a receiver must be sent to CPS Procurement via the POCA mailbox in order for a mini-tender competition to take place. Generally, receivers may only be selected from the CPS appointed panel of receivers, who have entered into the current Framework Agreement to undertake receivership work in CPS cases.

Costs follow the event and so the potential consequences of the application for the appointment of a receiver in the event that it is unsuccessful or if the order is subsequently quashed are such that prosecutors should always seek their line managers approval, before any application is made to the Court to appoint a receiver from the CPS Panel.

CPS Procurement is responsible for the management of the Receivers Panel on behalf of the CPS and its partner agencies and will perform the duties set out in the Framework Agreement.

So that it may properly fulfil its duties, prosecutors must advise CPS Procurement on an on-going basis, if there is no longer a need to appoint the receiver; the date of the appointment of the receiver by the Court; the date that the receiver is discharged by the court; the receivers costs and whether the firm is likely to exceed the estimate that it provided; and any other matter relevant to the firms performance of the contract and its status as a receiver on the CPS Panel.

Prosecutors will review the work done and amount charged by receivers on an on-going basis and in any event each quarter on receipt of the quarterly report and spread-sheet from the receiver. The prosecutor should consider making an application to the Court for the receiver to be discharged in respect of all or some of the assets, if all of the assets under receivership have been realised; it is no longer economically viable to proceed with the receivership; or if it is no longer possible to sustain a claim against some of the assets.

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Receivership Guidance

When to appoint a Management Receiver

Management Receivers (MR) are appointed by the Court to manage assets before the making of a confiscation order. A restraint order must be in place for a MR to be appointed, however, the application may be made at the same time as the application for the restraint order. Management receiverships are costly and will often present a high litigation risk at the early stages of the financial investigation when restraint orders are generally obtained. For these reasons, management receiverships are rare.

Nevertheless, prosecutors should consider the appointment of a MR when the defendants assets are of such a nature that they require active management and the MR is likely to be able to recover his costs from the assets under management. The CPS will not provide an indemnity to the MR for costs in respect of appointments under the current Framework Agreement.

A suspect or defendant may be in custody and cannot manage the assets himself, or that the circumstances of the case may suggest that the Court cannot trust him to manage the assets.

For example, a business may need to be managed in order to preserve its value, e.g. a defendant is arrested for money laundering; he trades as an ice-cream maker; and he is remanded in custody thereby putting his stock, business and livelihood at risk of dissipation. The appointment of a management receiver would protect the defendants assets and manage them pending the resolution of the criminal case against him.

Other examples when a MR has been appointed include operating haulage businesses, factories and bureaux de change. MR may deal with letting houses, or finishing a partially completed development and securing property from a suspect, defendant, or third party.

A third party may be forced to give possession of the defendants realisable property to the receiver but must first be given a reasonable opportunity to make representations to the court.

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Management of overseas assets

Prosecutors should consider whether it would be appropriate to seek an ancillary order requiring a defendant to repatriate their assets, or to seek Mutual Legal Assistance (MLA) to freeze overseas assets, rather than seeking the assistance of a management receiver. Most overseas jurisdictions will not recognise the authority of the court appointed receiver to deal with assets within their jurisdictions in the absence of a signed authority from the defendant or third party in whose name the assets are held.

MR costs

The costs of the MR are paid from the assets that he is managing (see section 49 (1)(d) Proceeds of Crime Act 2002), even where the defendant is ultimately acquitted. The CPS will not generally provide receivers with an indemnity as to costs in respect of contracts awarded under the current Framework Agreement.

In the case of Barnes v Eastenders & the CPS [2014] UKSC , the Supreme Court identified a liability for prosecutors to pay a MRs fees and disbursements based on a total failure of consideration in the event that it is subsequently established that property included within the terms of a management receivership order should not have been included and there was no reasonable cause for regarding the assets as those of the defendants.

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When to appoint an Enforcement Receiver

An Enforcement Receiver (ER) is an officer of the court appointed on the application of the prosecutor to realise the defendants assets to satisfy a confiscation order. The CPS will generally only apply for the appointment of an enforcement receiver if the convicted defendant cannot or will not voluntarily realise his assets and the sale of the assets will cover the receivers costs.

There are three conditions that must exist before the court may appoint an enforcement receiver:

  • The court has made a confiscation order;
  • The confiscation order has not been satisfied; and
  • The confiscation order is not subject to appeal.

There is no statutory requirement for a restraint order to be in place, in order to make an application for the appointment of an ER, but an application for restraint should be considered, if a restraint order has not previously been made.

If an appeal is pending and a restraint order is in place, it may be appropriate to apply for the appointment of a MR, if it is believed that the restraint order will not in itself be sufficient to secure the assets. The MR is usually appointed as the ER following the making of the confiscation order.

Prosecutors will generally consider the appointment of an ER in respect of real property; property in the names of third parties, or subject to third party claims; and overseas property, but any property that can be realised to pay towards a confiscation order may be subject to a receivership order. ERs have been appointed to realise bank accounts in third party names, businesses, houses, rental properties, planes, racing cars, horses and Elvis memorabilia.

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The use of in-house receivers

The appointment of a lawyer as in-house receiver may be considered if the nature of the assets is such that any risks arising may be adequately managed without the need for insurance. Typically, this will restrict the use of in-house receivers to enforcement action in respect of bank accounts in third party names. Under POCA 2002, in-house receivers may claim for disbursements, but not their costs.

Enforcing against overseas assets

Generally, the CPS will seek Mutual Legal Assistance (MLA) to realise overseas assets rather than make an application to appoint receivers, if the CPS has sought MLA of the relevant jurisdiction for restraint and/or the provision of evidence.

If overseas assets are in the names of third parties, it may be necessary to obtain a signed consent form from the defendant and/or third party and then apply for the appointment of a receiver. In such cases, whether or not a receiver has an office in the jurisdiction in which the assets are based may be a relevant factor in the choice of receiver.

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ER's fees and disbursements

Monies realised by the ER are paid into the relevant magistrates court. The defendant is then given credit for the costs that are paid by the magistrates court to the ER. The CPS will not provide an indemnity to the ER for fees and disbursements in respect of appointments under the current Framework Agreement.

The amount of an ERs fees will generally be based upon the cost of the receivers time for the work done to realise the assets subject to the receivership. The type of asset to be realised, including its value, condition and location will also be relevant. There will usually be disbursements and any third party litigation can substantially add to the costs. Accordingly, it might cost as little as £1,500 to £2,000 to realise a low value property or a bank account, but it could cost substantially more, depending upon the particular circumstances. ER fees and disbursements in large and complex enforcement cases can exceed £1 million.

In the event, that there is disagreement as to the amount of a receivers fees and disbursements, the court may be asked to order that the costs of the fees and disbursements are taxed.

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Receivership - Procedure

How to appoint a receiver

There are currently ten firms on the CPS Receivers Panel, who signed the current Framework Agreement with the CPS, SOCA (now NCA) and the DPP of Northern Ireland with effect from 1 October 2010.

The ten firms are:

  • Baker Tilly
  • KPMG
  • Deloitte
  • Mazars
  • FTI Forensic
  • Moore Stephens
  • Grant Thornton
  • Price Waterhouse Coopers
  • Haslers
  • Richard Long
The Procurement Process

Before approaching CPS Procurement, prosecutors should consider whether it is appropriate for all of the assets to be included within the receivership. There may be an alternative and cheaper method of dealing with a particular asset. The likely cost of dealing with some assets may make the receivership not financially viable and the prosecutor will then need to consider whether the receivership would meet the CPS strategic aims and so justify the cost in the particular circumstances of the case.

Receivership proceedings are the opportunity for third parties to have their claims to assets determined and it is imperative that all potential third parties are identified and their claims assessed prior to making an application for the appointment of a receiver. If the ownership of an asset is unclear, there may be a need for further financial investigation, or for specialist legal advice to be obtained before the litigation risk can be properly assessed.

When satisfied that the application for the appointment of a receiver is appropriate, the prosecutor should obtain the approval of their line manager. Contact should then be made with CPS Procurement at the mailbox Receivers.POCA@cps.gsi.gov.uk.CPS Procurement will provide the prosecutor and/or caseworker with a request form template and guidance notes.

The request form should itemise all the relevant facts, e.g. legislation and whether assets are restrained and provide as much information as possible about each of the assets to be realised by the receiver. It is important to include every detail of information in the possession of the prosecutor with regard to the location of the assets, their value and anything which might affect the value (e.g. poor condition of properties; potential third party interest; where vehicles/jewellery are held and/or by whom; and arrears in mortgage payments, etc).

As all of the firms have relevant technical knowledge, the mini-tendering competition is generally decided on the basis of cost, however, if the circumstances of a particular case require other factors to be taken into consideration, then this must be agreed in advance with CPS Procurement, who will advise as to the procedure to be followed.

CPS Procurement will invite the firms on the Receivers Panel to enter into a mini-tendering exercise to compete for the receivership work. The firms may seek further information from the prosecutor or caseworker, which should be provided, if possible. This may require liaison with the financial investigator to obtain further information. The more information available to the firms, the easier it is for them to assess the amount of work involved. Questions will be collated by the Procurement Unit and forwarded to the prosecutor to provide a prompt response.

CPS Procurement will advise the lawyer/caseworker of the name of the successful firm. The prosecutor will then need to send a letter of nomination to the nominated firm and make the necessary application to the Court for the appointment of the receiver. Templates for the nomination letter and application are available on the Hub.

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Application to court

The appointment of a receiver is made under section 48 of POCA for a MR and under section and 50 of POCA for an ER. The procedure is similar for both applications. The applications may only be made by a prosecutor: see Re M [1992] 1 All ER 537 for the appointment of a MR and section 50(2) for the appointment of an ER.

Rule 60.1 of the CPR provides that the Crown Court may determine the application for the appointment of a management receiver ex parte without a hearing if the application is coupled with an application for a restraint order, is urgent or there are grounds for believing that giving notice of the application would lead to the dissipation of realisable property which is subject to the application.

Rule 60.1 (6) requires that, unless the application to appoint the receiver is made ex parte, the application and witness statement must be lodged with the Crown Court and served on:

  • the defendant;
  • the recipients of any tainted gifts; and
  • any other person whom the applicant knows to have an interest in any property to which the application relates.

at least seven days before the date fixed by the court for hearing the application, unless the Crown Court specifies a shorter period.

The witness statement should give the grounds for the application including:

  • an overview of the case and the circumstances giving rise to the need for the appointment of a management receiver;
  • full details of the proposed receiver and exhibit the letter of agreement setting out the basis for the receivers remuneration and operation and a consent letter from the receiver that he or she is willing to act in the case and abide by the terms of both the order and letter of agreement; and
  • to the best of the witnesss ability, full details of the realisable property in respect of which the applicant is seeking the order and specify the person holding that realisable property: see Rule 60.1 (3) of the CPR.

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Compliance with the 'Capewell Guidelines'

Prosecutors applying for management receivership orders must comply with the Capewell Guidelines laid down by the Court of Appeal in Capewell v Customs and Excise Commissioners [2005] 1 All ER 900. In particular-

  1. "Within the witness statement in support of the application to appoint a management receiver, the prosecutor should set out the reasons the prosecutor seeks the appointment of a receiver, and what purpose the prosecutor believes the receivership will serve.
  2. The witness statement in support of the application should also give an indication of the type of work that it is envisaged the receiver may need to undertake, based on the facts known to the prosecutor at the time of the appointment.
  3. The witness statement should specifically draw to the Courts attention the proposition that the assets over which the receiver is appointed will be used to pay the costs, disbursements and other expenses of the receivership (even if the defendant is acquitted or the receivership is subsequently discharged).
  4. The letter of acceptance of appointment from the receiver, which must be exhibited to the applicants witness statement, should contain the time charging rates of the staff the receiver anticipates he may need to deploy.
  5. In appropriate cases, where it is possible, and this will not be in every case, the receiver should give in his letter of acceptance an estimate of how much the receivership is likely to cost.
  6. The prosecutors witness statement in support of the application should inform the Court of the nature of the assets and their approximate value (if known) and the income the assets might produce (if known).
  7. If the prosecutor or receiver is unable to comply with any of the above requirements the prosecutor should explain the reasons for the failure in the prosecutors application to the court and the matter will be left at the discretion of the court."

A draft receivership order must accompany the witness statement.

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Hearsay evidence

Hearsay evidence is admissible in restraint and receivership applications, however, Rule 61.8 of the CPR provides that no notice need be served identifying the hearsay statements and of the intention to rely upon hearsay evidence in inter partes hearings. Section 2(1) of the Civil Evidence Act 1995 does not apply to restraint and receivership applications.

Receivers Powers

The receiver gets his authority to act from the court. This is set out in the order appointing him (sections 49 oror 51 POCA). It is extremely important that the order appointing a receiver is drafted so as to give the receiver the powers that he needs to operate to manage and/or dispose of the assets.

On ex parte application to appoint a receiver, the Court cannot give the receiver power to manage and/or realise the assets, as an opportunity to be heard must be given to all parties likely to be affected by the receivership order.

On an ex parte order the MR may be given the power to:

  • Take possession of property;
  • Start, carry on or defend legal proceedings in respect of the property;
  • Power to enter premises in England and Wales:
  • To search for or inspect anything authorised by the Court;
  • To make or obtain a copy or photograph or other record as authorised by the Court;
  • To remove any property as authorised in the receivership order.

After an inter partes hearing he may be given the powers set out above and also the:

  • Power to realise so much of the property as is necessary to meet the receivers remuneration and expenses;
  • Power to realise so much of the property as is necessary to meet the receivers remuneration and expenses.

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Appeals

Prosecution appeals in respect of receivership orders may be made with leave in the following circumstances:

  • Section 65 (1) to the Court of Appeal in respect of the refusal of the Crown Court to appoint and/or give powers to a receiver;
  • Section 65 (2) (a) to the Court of Appeal in respect of an order made by the Crown Court to appoint and/or to give powers to a receiver;
  • Section 65 (3) to the Court of Appeal where on a further application by the prosecutor, the Crown Court refuses to make an order;
  • Section 65 (4) to the Court of Appeal where on a further application the Crown Court has made an order; and
  • Section 66 to the House of Lords in respect of a decision of the Court of Appeal.

The appeal procedure may be found in a combination of POCA, the Criminal Procedure Rules 2013 and in the Proceeds of Crime Act 2002 (Appeals under Part 2) Order 2003 (SI 2003 No. 82).

Notice of Appeal should be served within fourteen days, although application can be made for an appeal out of time.

Any decision as to whether a prosecution appeal should be lodged, should be taken by the relevant Unit Head after consultation with the Head of the CPS POC.

In addition, the defendant and/or any person affected by the appointment or powers given to a management receiver; by the grant of powers to the receiver; by the refusal or the giving of directions; or by a refusal to discharge or vary the order, may appeal with leave to the Court of Appeal. Any party appearing in an appeal before the Court of Appeal may appeal to the Supreme Court. Appeal. Any party appearing in an appeal before the Court of Appeal may appeal to the Supreme Court.

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