Paivarinta-Taylor, R v

This case raises the issue, not for the first time in this Court, of the consequences of a failure to comply with the provisions of section 72A (9) of the Criminal Justice Act 1988 (“the 1988 Act”) in confiscation proceedings.

Following refusal by the Single Judge, we granted leave to appeal out of time against the confiscation order made in this case; to add a Ground dealing with the section 72A (9) issue; and to abandon the original Grounds of Appeal that were relied on before the Single Judge. We also grant a representation order.

The background is this. On 20 October 2006, at the conclusion of a seven week trial before H.H. Judge Van der Bijl and a jury in the Crown Court at Canterbury, the Appellant was convicted of one count of obtaining property by deception. Sentence was postponed until 24 November 2006, when the Appellant was fined £1,000 - to be paid at £100 per month, with 28 days’ imprisonment in default. Confiscation proceedings under the 1988 Act regime were further postponed until 22 December 2006. On that date the learned Judge found that the Appellant had benefited in the sum of £35,635, and that (largely in accordance with formal concessions made on her behalf) she had realisable assets in the sum £216,453.11. Accordingly he made a confiscation order in the sum of £35,635 – to be paid within 6 months, and with 15 months’ imprisonment in default. The Appellant was also ordered to pay £500 costs.

It is the imposition of the fine before the making of the confiscation order that gives rise to the section 72A (9) issue.

The Appellant was tried with her former husband David Taylor, who was also convicted of obtaining property by deception. In addition, he was convicted of 22 specimen Counts of false accounting in relation to benefit frauds. He was sentenced to a total of 12 months’ imprisonment. A confiscation order in the sum of £65,324.34 was subsequently made against him, with 20 months’ imprisonment consecutive in default. He was also made the subject of a compensation order in the sum of £4,388.46, and ordered to pay prosecution costs in the sum of £100,000.

The offence of obtaining property by deception of which both the Appellant and David Taylor were convicted was concerned with a joint fraudulent application to purchase a property in Lewisham, at a substantial discount, under the ‘right to buy’ provisions of the Housing Act 1985. The application was successful. The confiscation order made against the Appellant reflected half of the net benefit resulting from the purchase.

On 19 February 2008 this Court, differently constituted, dismissed the Appellant’s then renewed application for an extension of time for leave to appeal against conviction – see [2008] EWCA Crim 680.

Thereafter, some twenty months out of time, the Appellant (then differently represented) applied for an extension of time, for permission to appeal against the confiscation order, and for a representation order. The Grounds then advanced were founded upon the premise that matters had come to light during enforcement proceedings in relation to the confiscation order which showed that the learned Judge had erred in concluding that the Appellant had realisable assets worth in excess of the benefit obtained from her criminal conduct. This premise was always doomed to failure given that, as we have already mentioned, it had been formally conceded before the learned Judge in December 2006 that the Appellant had realisable assets worth in excess of £200,000 - more than five times the benefit figure. Hence the Single Judge refused the application. At that stage, there was no section 72A (9) Ground.

On 7 October 2009 the case was listed before us as a renewed application upon the Grounds advanced before the Single Judge. It was then that Mr Furlong (who did not appear below, and who had only been instructed a short time before the hearing) sought to add the section 72A (9) Ground, and also (being unaware of the formal concession at first instance as to the extent of the Appellant’s realisable assets) indicated an intention still to pursue the original Grounds. In the result, we adjourned the application in order for the Respondent to attend to assist the Court in relation to the section 72A (9) issue, and for Mr Furlong to consider the Appellant’s position as to the merits of the original Grounds.

At the adjourned hearing, Mr Furlong abandoned the original Grounds, and concentrated on the section 72A (9) issue. We are grateful to him, and to Mr Munro who appeared on behalf of the Respondent (but who likewise did not appear at the sentencing hearing below) for the product of their researches and for the clarity of their submissions.

In so far as material, section 71 of the 1988 Act, as amended by the Proceeds of Crime Act 1995, provides that:-

“(1)

Where an offender is convicted, in any proceedings before the Crown Court or a magistrates’ court, of an offence of a relevant description, it shall be the duty of the court –

(a)

if the prosecutor has given written notice to the court that he considers that it would be appropriate for the court to proceed under this section, or

(b)

if the court considers, even though it has not been given such notice, that it would be appropriate for it so to proceed,

to act as follows before sentencing or otherwise dealing with the offender in respect of that offence or any other relevant criminal conduct.

(1A) The court shall first determine whether the offender has benefited from any relevant criminal conduct.

(1B) Subject to subsection (1C) below, if the court determines that the offender has benefited from any relevant criminal conduct, it shall then –

(a)

determine in accordance with subsection (6) below the amount to be recovered in his case by virtue of this section, and

(b)

make an order under this section ordering the offender to pay that amount. ……”

Section 72 (5) of the 1988 Act provides that:-

“Where a court makes a confiscation order against a defendant in any proceedings, it shall be its duty, in respect of any offence of which he is convicted in those proceedings, to take account of the order before –

(a)

imposing any fine on him;

(b)

making any order involving any payment by him, other than an order under section 35 of the Powers of Criminal Courts Act 1973 (compensation orders); or

(c)

making any order under –

(i)

section 27 of the Misuse of Drugs Act 1971 (forfeiture orders); or

(ii)

section 43 of the Powers of Criminal Courts Act 1973 (deprivation orders),

but subject to that shall leave the order out of account in determining the appropriate sentence or other manner of dealing with him.”

Section 72A of the 1988 Act was inserted by the Criminal Justice Act 1993, and provides that:-

“(1)

Where a court is acting under section 71 above but considers that it requires further information before –

(a)

determining whether the defendant has benefited as mentioned in section 71 (2)(b)(i) above;

(b)

determining whether his benefit is at least the minimum amount; or

(c)

determining the amount to be recovered in his case by virtue of section 72 above,

it may, for the purpose of enabling that information to be obtained, postpone making that determination for such a period as it may specify.

(2)

More than one postponement may be made under subsection (1) above in relation to the same case.

(3)

Unless it is satisfied that there are exceptional circumstances, the court shall not specify a period under subsection (1) above which –

(a)

by itself; or

(b)

where there have been one or more previous postponements under subsection (1) above or (4) below, when taken together with the earlier specified period or periods,

exceeds six months beginning with the date of conviction….

(7)

Where the court exercises its power under subsection (1) or (4) above, it may nevertheless proceed to sentence, or otherwise deal with, the defendant in respect of the offence or any of the offences concerned.

(8)

Where the court has so proceeded, section 72 above shall have effect as if –

(a)

in subsection (4), the words from “before sentencing” to “offences concerned” were omitted ; and

(b)

in subsection (5), after “determining” there were inserted “in relation to any offence in respect of which he has not been sentenced or otherwise dealt with”.

(9)

In sentencing, or otherwise dealing with, the defendant in respect of the offence, or any of the offences, concerned at any time during the specified period, the court shall not –

(a)

impose any fine on him; or

(b)

make any such order as mentioned in section 72(5)(b) or (c) above……”

Section 72A(9A) of the 1988 Act was inserted by the Proceeds of Crime Act 1995 and, as later amended, provides that:-

“Where the court has sentenced the defendant under subsection (7) above during the specified period it may, after the end of that period, vary the sentence by imposing a fine or making any such order as is mentioned in section 72(5)(b) or (c) above so long as it does so within a period corresponding to that allowed by section 155(1) or (2) of the Powers of Criminal Courts (Sentencing) Act 2000 (time allowed for varying a sentence) but beginning with the end of the specified period.”

As we have already indicated, the section 72A(9) issue arises because H. H. Judge Van de Bijl fined the Appellant £1,000 on 24 November 2006, in advance of making the confiscation order on 22 December 2006.

In consequence, the learned Judge was also unable to comply with the provisions of section 72(5) of the 1988 Act. Had matters been brought to his attention by Counsel at the hearing on 22 December, the learned Judge would have been able to vary sentence by revoking the original fine and then considering the imposition of a fine again, now in the proper sequence. Given that the value of the remainder of the Appellant’s realisable assets, after deducting the amount of the confiscation order, was in excess of £180,000, it seems inevitable that the learned Judge would have concluded, again, that the appropriate sentence was a fine of £1,000. However the learned Judge was not so assisted by Counsel then appearing.

Before turning to the cases in which this Court has considered the consequences of a breach of section 72A (9), or the analogous provisions in the Drug Trafficking Act 1994 (‘the 1994 Act’), it is necessary to set out some of the general principles to be derived from the three now leading authorities on the general approach to breaches of the procedural provisions relating to confiscation orders in both the 1988 Act and the 1994 Act.

Prior to the judgment in Sekhon & others [2003] Cr. App. R. 34 (a case concerned with breaches of the postponement provisions in both the 1988 and 1994 Acts), this Court had generally adopted a strict approach to breaches of the ‘mandatory’ procedural requirements of both Acts, with the result that confiscation orders made in breach of them were regularly quashed. Examples of this approach, or apparent approach, include Ross [2001] 2 Cr. App. R. (S). 109 (which was concerned with the need for a decision to postpone under the 1988 Act), and Palmer [2002] EWCA Crim. 2202 (a notorious case which was concerned with the notice requirements of the 1988 Act, and resulted in the quashing of a multi-million pound confiscation order).

In giving the judgment of the Court in Sekhon, Lord Woolf LCJ reviewed the prior case law, and the general failure of courts dealing with confiscation orders, up to that point, to recognise that procedural steps usually do not go to jurisdiction; that, absent a specific provision in the relevant legislation as to the consequences of a particular breach, it was left to the Court to infer what Parliament intended to happen as a result; that the use of mandatory terms was far from decisive; and that substantive provisions giving the Court its jurisdiction were not to be automatically defeated, in the ordinary way, by non compliance with procedural requirements, unless that was necessary to achieve the statutory purpose.

Lord Woolf LCJ then went on to identify the correct principles to be applied in future, including the following:-

In the result, the Court concluded that Palmer had been wrongly decided and should not be followed, and that the other cases dealing with the postponement provisions that the Court had referred to (including Ross) should, in future, be examined with care to see whether, in fact, it could be said that they should be regarded as doing any more than deciding that there should be a decision to postpone confiscation proceedings, however generally explained, prior to the completion of sentencing an offender, if confiscation proceedings were to take place after sentencing. As to Ross itself, the Court concluded that it was in part inconsistent with the correct approach, as the Court in that case had failed to ask itself what the effect of non-compliance with the language of the Act was. The Court went on to point out that, on closer analysis, all that Ross required was that there be a decision to postpone – the nature of the decision, and its form, were not treated as critical. As long as there was a decision to postpone, that was all that mattered.

This change of approach was subsequently affirmed by a five member Court, again presided over by Lord Woolf LCJ, in Simpson [2004] 1 Cr. App. R. (S) 24, which was concerned with a breach of the notice provisions in the 1988 Act.

In R v Soneji & Bullen [2006] 1 Cr. App. R. (S) 79 the House of Lords was concerned with an alleged breach of the postponement provisions in the 1988 Act, following the imposition of sentences of imprisonment. Their Lordships concluded that:-

The consequences of a breach of section 72A(9) of the 1988 Act, or of the analogous provisions in the 1994 Act, have been considered in this Court on a number of occasions, with differing conclusions. Mr Furlong draws our attention, in particular, to Threapleton [2001] EWCA Crim 2892, Ruddick [2003] EWCA Crim 1061, Jones [2004] EWCA Crim 2213, Ghebremariam [2006] EWCA Crim 91, and Khan & others [2007] EWCA Crim 718. We propose to examine these authorities in chronological order.

Threapleton was decided in 2001, and thus before the change of approach marked by Sekhon in late 2002. It was concerned with the making of a costs order before a confiscation order – which is prohibited by section 72A (9) (b) of the 1988 Act. The Appellant invited the court to quash the costs order. The court did so, following what it perceived to be the strict approach to a breach of a ‘mandatory’ procedural requirement in Ross (above – which, as we have already indicated, was concerned with the postponement provisions in the 1994 Act), and concluded that the costs order was one that could not lawfully have been made. The Court was then invited to make a costs order itself, by virtue of its power under section 11(3) of the Criminal Appeal Act 1968 to make any order for costs that could have been made by the Crown Court after the making of the confiscation order. The Court declined to make such an order, indicating that even if section 11(3) conferred such power, the requirements of section 72A(9) were not merely formal but were intended to ensure that the amount payable under a confiscation order had priority over, amongst other things, the payment of costs; that to make the order sought would be to condone the fact that the requirements of the 1988 Act were not complied with; and that the Court was not sure that if the correct procedure had been followed, the amount of the order would have been the same. The court emphasised that it was the duty of counsel on both sides to bring the provisions of section 72A(9) to the attention of judges dealing with confiscation orders at first instance.

Ruddick was decided in April 2003, and thus after the decision in Sekhon. It was another case in which a costs order was imposed before, in that case, the making of both a confiscation order and a forfeiture order. In giving the judgment of the court, Rose LJ considered the principles to be derived from Sekhon, and then said (at paragraph 32):-

“…the first question is whether a financial order made before the forfeiture process was completed is null and void, or whether it is simply a potential ground of appeal. What did Parliament intend? The words of the statute are mandatory in form, and the purpose of the statutory sequence of events is to ensure that a forfeiture order is made before the defendant’s assets are depleted by any other financial order made in the course of the sentencing process. And, to this extent, we agree with the decision in Threapleton. But what did Parliament intend in the event of a Judge not following the correct sequence of events? In our view there is no reason to suppose that Parliament intended that a failure to follow the correct procedure would, of itself, render the orders he made ‘unlawful’ or a ‘nullity’. If, for example in this case, the Judge made no forfeiture order, because he was not satisfied that the appellant had received any identifiable benefit from his crime, would the costs order, none the less, have been void? We cannot think that Parliament would have intended this consequence. Procedural requirements must not be allowed to wag the dog. But, a failure to follow the correct procedure enables the Appellant to argue before the Appeal Court that had the proper sequence been observed then the costs order which was prematurely made should be quashed, because, ex hypothesi, the Judge had failed to take into account when he made it the amount of the forfeiture order. In this case, the amount of the forfeiture order, £100,000, was substantial, and we can see the force of the argument that the costs order might have been less after the forfeiture order had been made. Had there been a forfeiture order for a relatively small or nominal amount, the force of the argument would be weakened. We shall return to the size of the costs order after we have considered the other submissions on costs.”

Having concluded that the amount of the costs order was appropriate, Rose LJ continued (at paragraph 34):-

“…..In those circumstances we are not prepared to quash the order made by HHJ Cartlidge, even though it was made out of sequence and did not take account of the forfeiture order he later made. But had we felt that the order made was excessive, we would have had no hesitation in exercising our powers under section 11(3) of the Criminal Appeal Act 1968 to make a new and lesser order. We disagree with the comment of the court in Threapleton that to do so ‘would be to condone the fact that the requirements of the 1988 Act were not complied with.’ Whenever this court corrects an error made in the court below and exercises its powers under section 11(3) it could be said to be ‘condoning’ an error. But that is not the correct approach to section 11(3). That section is there to ensure that this court can properly do justice. The doing of justice is two sided. To deprive the prosecution of their costs order simply because of an error seems to us to be a one-sided approach to justice. In this case it is to be noted that none of the counsel who appeared in the court before HHJ Cartlidge ever suggested that he had acted outwith his powers.”

Jones was decided in July 2004. It was concerned with the provisions of section 2(5) of the Drug Trafficking Act 1994 (the equivalent of section 72(5) of the 1988 Act). Again, a costs order was made prior to the making of a confiscation order. The Court’s attention was drawn to Threapleton, but not to Sekhon, Ruddick, or Simpson (which had been decided, shortly after Ruddick, in May 2003). The Court decided that the making of the costs order was contrary to the general guidance given in Threapleton, and therefore quashed that order.

Ghebremariam was decided in January 2006. It was yet another case concerned with the imposition of a costs order prior to the making of a confiscation order – on this occasion involving the directly analogous provisions of section 3(9) of the 1994 Act. It seems clear that the Court was not referred to Sekhon, Ruddick, Simpson, or Soneji (which had been decided by the House of Lords in July 2005). In the result, the costs order was quashed. The Court concluded that it should not have been imposed, and that it could not do anything else about it – because to do so would be to condone a void order made without jurisdiction (an apparent echo of Threapleton).

Khan & others was decided in February 2007. It was concerned with section 72A (9), and involved fines and/or costs orders imposed prior to the making of confiscation orders. When making the confiscation orders the learned Judge was satisfied, as a matter of fact, that both the confiscation orders and the amount of the previous fines and/or costs orders were within the means of each of the Appellants. Again, it seems that the Court was not referred to Sekhon, Ruddick, Simpson or Soneji, but only to Ghebremariam. Against that background, the Court concluded that the orders for the fines and costs had to be quashed, because they were made unlawfully – given that the Judge had no power to make them. The Court nevertheless went on to decide that, because confiscation orders had eventually been made, it had, by virtue of section 11(3) (b) of the Criminal Appeal Act 1968, the power to make appropriate fine and/or costs orders itself – thereby achieving the appropriate sequence. In the event however, the Court decided not to make such orders - but only upon the basis that it did not have the necessary financial information. The Court emphasised again the duty of both prosecuting and defence counsel at first instance to draw the relevant statutory provisions to the attention of the sentencing Judge.

We note in passing that the conclusion of this Court in Donohoe[2007] 1 Cr.App.R.(S) 88 (a case dealing with a broadly similar problem under the Proceeds of Crime Act 2002, to which our attention was drawn after the hearing) was that Parliament did not intend that the imposition of a fine, or other prohibited order, in advance of making a confiscation order, should render the confiscation order a nullity.

Against the background of these various authorities, Mr Furlong submitted that the imposition of a financial penalty, followed by the making of a confiscation order on a subsequent date, was in breach of section 72A(9) of the 1988 Act, and that in consequence, either:-

As to the Court being functus after the imposition of the fine, Mr Furlong relied upon R v Warwick Justices ex parte Patterson [1971] Crim LR 420 – which decided that Justices were functus officio once they had passed a valid sentence. He also relied (in part) on Soneji & Bullen. He argued that Parliament might well have considered that the consequence of imposing a fine before a confiscation order was to render the Court functus, and that to do otherwise would be to prioritise the section 71(1) duty to proceed over the section 72(5) duty to take account of the confiscation order before imposing a fine or other financial order.

Mr Munro accepted that there had been a breach of section 72A(9), but argued (relying on Sekhon, Ruddick, Simpson and Soneji & Bullen) that this did not result in either the fine or the confiscation order being invalid, particularly given that the Appellant had suffered no injustice whatsoever as a result of the breach. In the alternative, he argued (relying on Ruddick and Khan & others) that if the imposition of the fine was a nullity, then we should impose the same amount of fine again by exercising our powers under section 11(3) of the Criminal Appeal Act 1968.

As the House of Lords made clear in Soneji & Bullen, the purpose of the sequence set out in section 71(1) of the 1988 Act is to ensure the effectiveness of the sentencing procedure overall, and the purpose behind section 72A(9) is to maintain the primacy of confiscation orders by prohibiting the Court from imposing a fine or other financial order until after the making of a confiscation order, even though the Court may impose other types of sentence or order before making a confiscation order. Sections 72(5) & 72(9A) are clearly further reflections of the same purposes.

In this case, there is no dispute that when the learned Judge fined the Appellant £1,000 on 24 November 2006 he was acting in breach of section 72A(9), and was thus unable to comply with section 72(5).

This Court is bound by the decision in Soneji & Bullen as to the correct approach to the consequences of such a breach.

It is clear that the decisions of this Court in Sekhon, Ruddick,Simpson and Donohoe, as to the relevant approach are all consistent with the approach in Soneji & Bullen. It is equally clear that the decisions of this Court in Threapleton, Jones, Ghebremariam, and Khan & others are all inconsistent with Soneji & Bullen in this regard. Equally, Threapleton was decided before the seminal change of approach in Sekhon, was based on Ross (which was itself corrected and restricted in Sekhon), and was not followed in Ruddick. Further, Jones, Ghebremariam and Khan & others all appear to have been based on the approach in Threapleton, and were variously decided without the Court being referred (as appropriate) to Sekhon, Ruddick, Simpson or Soneji & Bullen.

In our view therefore, to the extent that the decisions of this Court in Sekhon, Ruddick and Simpson add to the principles identified in Soneji & Bullen as to the approach to the consequences of a breach of the procedural provisions relating to confiscation orders under the 1988 Act, they should continue to be followed. In contrast, the decisions of this Court in Threapleton, Jones, Ghebremariam, and Khan & others should, in future, be disregarded when considering the consequences of such a breach.

The breach in this case involved the imposition of a fine before the making of a confiscation order. The fine did not impact at all upon the subsequent making of the confiscation order. The fine was in the sum of £1,000, and the Appellant made formal concessions at the later confiscation hearing as a result of which the learned Judge was able to conclude that she had realisable assets worth over £216,000. Even after deducting from that the confiscated sum of £35,635, the Appellant was still left with realisable assets worth in excess of £180,000. Clearly, therefore, the premature imposition of the fine resulted in no prejudice or injustice to the Appellant at all.

Against that background, we have asked ourselves the questions ‘what did Parliament intend should be the consequences which flow from this breach’, and ‘can Parliament fairly be taken to have intended total invalidity’?

It seems to us that the answers are clear, namely that:-

It follows that Mr Furlong’s reliance on the Threapleton line of cases cannot avail him and, in view of our conclusions as to Parliament’s intent, it seems to us that both the Grounds of Appeal advanced are without merit.

We should perhaps add, in deference to Mr Furlong’s argument, that had we concluded that the fine was invalid, we would have been minded to follow the approach in Ruddick and Khan & others (rather than Threapleton), and thus would have considered our power to impose a fine by virtue of section 11(3) of the Criminal Appeal Act 1968.

For the reasons given above, this appeal is dismissed.

Although there are likely to be relatively few confiscation proceedings brought under the 1988 Act in the future, we would emphasise again the duty of Counsel on both sides to bring section 72A(9) the attention of the Court.