Mundy, R v

On 9 September 2008, in the Crown Court at Cardiff, the respondent, Ian Mundy, pleaded guilty to seven counts of supplying Class A drugs, cocaine (counts 1 to 7); two counts of possession of Class A drugs with intent to supply, cocaine (count 8 and 9); two counts of producing a Class C drugs, cannabis (counts 9 and 10) and one count of concealing criminal property (count 11).

On 30 September 2008 he was sentenced to an overall term of five years' imprisonment.

On 9 December 2008, in confiscation proceedings under the Proceeds of Crime Act 2002 ("POCA"), the benefit figure was assessed at £172,365 and the recoverable amount as £9,275. A confiscation order was made in the sum of £9,275 with six months to pay and a period of six months' imprisonment in default.

It followed that the amount of the confiscation order was determined by the available realisable assets at the time of the order. In making the order, the court, having decided that the respondent had a criminal lifestyle, concluded that he had benefited from drug trafficking and general criminal conduct.

The respondent paid the entire sum of £9,275 by 19 March 2009. He was released from prison on 17 December 2010 on licence and his sentence expired on 19 June 2013. The shortfall of £163,090 between the benefit figure and the assessed available sum remained outstanding.

At some stage in late 2016 on early 2017, it came to the Crown's attention that the equity in a property in Bridgend, which in 2008 had a negative value, now had a value of approximately £17,000, and that in addition the respondent had acquired a number of motor vehicles and had positive balances in his bank accounts.

On 21 February 2017 the Crown obtained a restraint order over these assets. On 26 May 2017, it made an application under section 22 of POCA for reconsideration of the amount available. That application was supported by the witness statement of Cheryl Taylor, a financial investigator accredited by the National Crime Agency, dated 10 March 2017.

The application was for "Reconsideration of the available amount" and for a variation of the available amount to add the sum of £29,791.77 and fix the time for payment and the time to be served in default. This sum was later amended in the light of further information.

Over the course of the summer the parties served documents on each other: the witness statements of Ms Taylor in support of the restraint order and the section 22 application; a response to the application and an abuse of process argument filed on the respondent's behalf on 13 July; a Crown response on 22 July; a defence application of the disclosure on 1 August; a Crown response to that application on 30 August and a final written statement for Ms Taylor dated 8 September.

Following these exchanges, the application came on for hearing before His Honour Judge Daniel Williams on 13 September 2017. He refused the application. The prosecution application for leave to appeal against the ruling of His Honour Judge Williams has been referred to the full court by the Registrar.

The relevant passages from section 22 of POCA read as follows:

it believes is just, but

The basis for the Crown's application was the disparity between the respondent's criminal benefit and his available assets. The Crown's application was to increase the available amount in the confiscation order to £39,066.77. Allowing for the fact that the respondent had already paid £9,275; this would leave a remaining amount of £29,791.77. This was made up as follows: a Honda CBR 1,000 motorcycle, £1,980; a BMW 320D car, £1,100; a Ford Transit van, £1,440; a KTM 300 EXC motorcycle, £2,040; 100 per cent equity in 11 Brynheulog, Bridgend, £15,000; funds in a Barclays saving account, £5,817.32, funds in the Santander account, £2,414.45, a total of £29,791.77.

The respondent accepted ownership of the assets identified by the prosecution but disputed the valuations. In respect of the vehicles, he said that motorcycles were his hobby, one of them had been purchased with a loan which still had a substantial amount owing. The Transit van that was used by him in the course of his employment. A third party had an interest in the BMW and jointly owned in with the respondent. The vehicles were in any event damaged and the valuations were accordingly significantly lower than suggested by the Crown. The valuation of number 11 Brynheulog had been obtained from an advertisement and was not accurate. The evidential basis for the valuation was a hearsay valuation of a comparable property, the property had not been professionally valued. Furthermore, the respondent had been in possession of the property when the confiscation order was originally made. At final time it was deemed to be a property in which the respondent had no equity. He submitted that he was entitled to finality in respect of assets in his possession at the time of the confiscation proceedings. The Santander account was used for the payment of rental money from the property and which the respondent used to pay the interest-only mortgage of the property. The remaining funds were used to pay for the remaining repairs to the property and extensive repairs on the property were required. The Barclays savings account was used exclusively for the preparation of the university education of his daughter.

Attached to the respondent's section 22 response, were the various documents in support of his assertions as to valuation. He valued the assets at £2,561.79.

In the Crown's response dated 20 July, a number of concessions were made: the Honda CBR motorcycle, £1,900, not £1,980, the BMW car £200 not £1,100, the Ford Transit van £800 not £1,440, the KTM 300 EXC motorcycle, £930 not £2,040, the 100 per cent equity in the house in Bridgend, £10,000 not £15,000, funds in the Barclays saving account and the Santander account as before; the total assessed as £22,061 not £29,791.77. The valuation of the equity in the house was arrived at by deducting the outstanding mortgage of £95,000 from an expected sale price of £105,000 based on a desktop appraisal by Wilsons estate agents.

The Crown left it to the court to decide whether it would be unjust, on the one hand, or fair and reasonable on the other to include the funds in the Barclays savings account and the Santander account. From this it was apparent that the Crown had no positive case in relation to the either account. The respondent was put to proof that the Transit van was used for work.

The hearing before the judge began with Mr Greenwood for the respondent making two preliminary points. First, that the Crown’s valuation of the house was unreliable since it was based on another property and secondly, that it was simply unjust to bring the proceedings in 2017, nearly nine years after the initial confiscation hearing.

Counsel for the Crown, not Mr Rees, submitted that in fact the valuation figures were not substantially in issue. He was not able to develop that submission because the judge identified the principal issue as being whether it would be just to make the order. Counsel accepted that time had passed since the original hearing but submitted that the question of realisable assets was kept under review to see whether defendants come into further assets, and made the point that there was still the sum of £163,000 outstanding. The house was identified as an asset at the time but with a negative value. Since then the property had increased in value and that was the reason why the Crown were making the application.

In refusing the Crown's application, the judge set out the history as we have described it and noted that the assets listed in the application stood in the sum of £22,061.77. He observed that section 22(4)A of POCA required him to exercise a discretion to make a just order, not merely an obligation to avoid infringement of Article 1, Protocol 1 of the European Convention on Human Rights, the peaceful enjoyment of possessions. To this end the court could take into account all the relevant circumstances when deciding the issue, for example the amount outstanding, the additional amount that might now be available, the length of time since the original order, the impact on the offender of further payment of any further order and the legislative policy in favour of maximising the recovery from the proceeds of crime, even from legitimately acquired assets.

The judge then referred to a passage in Archbold (new Archbold 2018 5-782) which referred to the case of R v Padda [2014] 2 Cr App R(S) 149:

The judge then continued:

In his helpful submissions for the Crown, Mr Rees submitted that the appeal was brought under section 31(1) of POCA in relation to a confiscation order and that on such an appeal the court's powers are set out in section 32(1), the court may "confirm, quash or vary the confiscation order". Since it is an appeal under part 2 of POCA, the leave of the court is required - see section 89. He further submitted that the question for this court is whether the decision in the Crown Court is wrong. He did so by reference to CPR 42.20 and the provisions referred to there.

In the written grounds in support of the application, it was acknowledged that the judge referred to the legislative policy in favour of maximising the recovery of the proceeds of crime, even from legitimately acquired property. But the complaint was that he treated this simply as one factor to be held in the balance, whereas in fact it was the most important factor. The judge was wrong to conclude that the circumstances in which the respondent acquired the vehicles and the circumstances and the use to which the savings were to be put were dispositive of the issue. The question of what was just involved not merely what was just to a defendant but a broader view of the public interest.

In his written submissions, Mr Greenwood for the respondent submitted that there was a logically prior question that should have been addressed in the Crown Court, namely the respondent's abuse application. If the matter had proceeded to a full hearing the respondent would have applied for full disclosure and Mr Greenwood argued that this may have been a factor which the judge took into account. We have to say that we are not very much impressed by that submission. In any event, he submitted that the judge considered the papers and gave a fully reasoned ruling that it would be unjust to make an order and that finding was within the reasonable parameters of his discretion.

We have considered then submissions. We would make five preliminary points. First, it is clear from Padda at paragraph 49 and from the words of the statute that section 22(4)(a) of POCA establishes a discretion (the word used is "may") to vary an order by substituting for the relevant amount an amount which the court believes is "just". Logically the court will consider the question of whether it is just to make the order first.

Second, on the prosecutor's appeal under section 31(1) against the decision not to make a confiscation order, this court's powers are set out in section 32(1), it will either confirm, quash or vary the decision. In reaching that conclusion the court will bear in mind that it is dealing with the exercise of discretion, it is not a binary question. The Court will consider whether the decision was outside the parameters for the reasonable exercise of a discretion or whether the judge erred in his approach to the question implicit in section 22(4).

Third, the passage of time may be relevant to the exercise of the discretion to reconsider the available amount but there is no express time limit as there is for example in the reconsideration of a benefit (see section 21(1)(d), six years from the date of the order). In Padda the order under section 22(4) was made six years later and in the case of In Re Peacock (Secretary of State for the Home Department) [2012] UKSC 5 it was ten years later.

Fourth, an assessment of an amount which is "just", extends beyond what is just to a defendant. In Leon John [2014] 2 Cr App R(S) 73, it was held that an award of general damages for personal injuries, made after the initial hearing, was an amount available for the purposes of section 22. Equally, the fact that the available amounts may have been acquired by hard work in a legitimate enterprise does not preclude an order, although that fact is a matter to be taken into account (see Padda at [47]). The word "just" means just in all the circumstances, bearing in mind that the purpose of such orders is the advancement of the public interest in confiscating the proceeds of crime.

Fifth, in Leon John at 24, the court said this:

In the present case, the judge held that it would not be just to make the order but his reasoning was so abbreviated that it is hard to see on what basis he reached that conclusion other than that he accepted everything said about the assets in the respondent's statement and rejected everything that was said by the Crown beyond what it had conceded, without inviting any sort of comment on its behalf.

However, the fact remains that in view of the concessions made by the Crown, the sums involved were modest. In relation to the value of the house, there was an issue but it was confined to approximately £10,000 which was itself hotly contested on the basis by which that sum had been calculated. There may well be cases where a house appreciates significantly over nine years in the light of market changes but this was not such a case, or at least not strikingly so. There were two bank accounts, one of which (the saver account) was said to be for the respondent's daughter's education. In relation to both these accounts the Crown was prepared to leave it to the judge to decide whether it was unjust to include the sums in the new assessment. Finally, there were two motor bikes and two cars of less value than the prosecution initially thought.

If the judge had gone through the list and given brief reasons for rejecting each element in it, and if he had added that there must be an element of proportionality in the disposition of court resources, then we doubt there could have been any proper basis for challenging the order. Judges are entitled summarily to dismiss applications that they regard as being substantially without merit, but the Crown had spent considerable time and effort preparing for the application and both it and the public were entitled to know why the judge rejected the application.

However, having considered the material ourselves, we have concluded that it was open to the judge on the material before him to decline to vary the order. In these circumstances, although we consider the judge's reasoning should have been fuller, we consider that the decision was properly open to him on the facts. Accordingly, we grant leave but confirm the decision and dismiss the appeal.