Changes to confiscation law: Part one

Major reforms

The changes to confiscation law referred to in this article came into force on 1 June 2015 (Regulation 3 of the Serious Crime Act 2015 (Commencement No 1) Regulations 2015 and Regulation 1 of the Restraint Orders (Legal Aid Exception and Relevant Legal Aid Payments) Regulations 2015).

The major reforms fall into six areas: proportionality; money belonging to a person subject to a confiscation order; determination of third-party interests in assets; restraint orders; time to pay; and default sentence for non-payment and other powers to ensure compliance.

This article deals with the reforms to confiscation law applicable in England and Wales. The Act also introduces amendments to the confiscation law operating in Scotland and Northern Ireland.

Proportionality

Following the proportionality requirement highlighted by the Supreme Court in R v Waya [2012] UKSC 51, the words "[p]aragraph (b) applies only if, or to the extent that, it would not be disproportionate to require the defendant to pay the recoverable amount" are added to section 6(5) of the Proceeds of Crime Act 2002 (POCA).

Money belonging to a person subject to a confiscation order

Amendments to section 67 and section 67A of POCA make it easier for the court to order that money held in a bank account (or similar account) should be paid into court where the money belongs to a person subject to a confiscation order. That will apply when the account is in the name of the defendant or where the money has previously been seized by the authorities.

Previously this power could only be exercised where the money was subject to a restraint order and where the period allowed for payment under the confiscation order had elapsed. These two conditions are now removed.

Determination of third-party interests in assets

Under previous arrangements, a person other than the defendant who claimed an interest in property in which the defendant also had an interest could play no part in the confiscation proceedings until the enforcement stage (that is, after the confiscation order had been made). However, the extent of the defendant's interest in the property (and hence also the extent of the third party's interest in it) may have had a bearing on the defendant's benefit (particularly where the 'criminal lifestyle' assumptions had been triggered) and on his available amount.

In consequence, at the enforcement stage third-party claims on assets might need to be considered by the courts for the first time. That could have the effect of delaying and, in some cases, frustrating enforcement of the confiscation order.

Under the new provisions, at the stage of making the confiscation order the Crown Court has power to make a ruling determining the defendant's interest in property (in which a third party has, or may have, an interest), and such a determination would be conclusive in most circumstances, pursuant to section 10A of POCA, inserted by section 1 of the Serious Crime Act 2015. Such a determination would therefore, for example, defeat any greater claim made subsequently in the family courts by a domestic partner. Determinations would be subject to appeal to the Court of Appeal.

In order to allow third-party claims to be properly considered, the prosecutor must now include in his section 16 statement of information any relevant information known to him. The Crown Court, before making such a determination, must allow interested third parties to make representations to the court. Amendments are made to sections 16 and 18 of POCA and a new section 18A is introduced by section 2 of the 2015 Act.

Complex proceedings

It may be argued that this change risks creating as many problems as it solves. It will in many cases increase the complexity of confiscation proceedings. It carries the risk of Crown Court judges making rulings in matters relating to issues of property law and family law in which they may have little experience. Confiscation orders may be unjust where third parties realise too late that they ought to have been represented in confiscation proceedings in order to protect their own interests.

While the government anticipates that the Crown Court will exercise this power of determination only in straightforward cases, an apparently straightforward case may prove to be more complex when further matters come to light after a determination has been made.

Furthermore, the determination made by the Crown Court at the confiscation hearing remains open to challenge by a third party affected by that determination, not only on an appeal to the Court of Appeal but also following the appointment of an enforcement receiver if 'it appears to the court that there would be a serious risk of injustice to the person if the court was bound by the determination', under section 4 of the 2015 Act.

This may prove to be the most controversial of the reforms.

David Winch is director of Accounting Evidence Ltd