R v David Charles Stevens

LORD JUSTICE WARBY: This is an application by David Charles Stevens, aged 72, for an extension of time and leave to appeal against the terms of a confiscation order made against him in February 2022. The circumstances are highly unusual and the applications are not opposed by the Crown. Having read the papers and heard counsel today, we grant the extension of time and we grant leave to appeal. For reasons we shall give, and to the extent we shall indicate, the appeal will be allowed.

The background is this. On 14 October 2020 in the Crown Court at Southwark the appellant pleaded guilty on re-arraignment to one count of obtaining a money transfer by deception, 14 counts of fraud and one count of theft.

The brief facts of the case are these. Over an 11-year period between 2005 and 2016, whilst operating as an Independent Financial Adviser, the appellant carried out a "Ponzi" fraud. He deceived clients into handing over large sums of money on the basis that it would then be lent to others at a higher rate of interest. That was a lie. No such loans had been arranged and none were made. Most of the money was used to fund the appellant's own lifestyle and his business. He did pay some of his clients some money by way of "interest" but when he did the money was drawn from funds which the appellant had fraudulently extracted from other clients by using the same deception.

On 3 November 2020 the appellant was sentenced to a total of five years and nine months' imprisonment. Confiscation proceedings under the Proceeds of Crime Act 2002 followed. It was agreed that the appellant had a criminal lifestyle and that the benefit resulting from that lifestyle was £1,296,603.20. On 24 February 2022 His Honour Judge Hopmeier in the Crown Court at Southwark accepted that to be the case. The judge also found that the "available amount" was £183,673.22. That too was an agreed figure. It was composed of four elements:

To ensure that the order was effective the judge made a Compliance Order. This required the appellant to authorise the payment of funds from his pension policies to the South East Regional Confiscation Unit of HMCTS and ordered the pension providers to make such payments. At the same time the judge made a compensation orders pursuant to the Sentencing Act 2020 requiring payment of the same total sum to victims of the appellant's frauds. A direction was made for the entirety of the monies received pursuant to the confiscation order to be applied in satisfaction of the compensation provisions.

The present applications were brought in February 2025, 1,084 days out of time. The short point raised is that the available amount was calculated on a false assumption about the value of the appellant's CBA pension which in fact had no realisable capital value. The error was identified by the Crown in the course of its efforts to enforce the confiscation order. Responsibly, the Crown drew the appellant's attention to the issue and suggested that he should appeal the order. After some delay, caused mainly by difficulties over the appellant's representation, this application was filed on his behalf by new counsel, Miss Lauren Bates-Brownsword. As we have mentioned, it is unopposed by the Crown. It has been referred to the full court by the Registrar.

The position is explained in a witness statement of 26 April 2024 from Mark Finbow, a financial investigator accredited under the 2002 Act and assigned to the Essex Police Proceeds of Crime Team. We admit this statement and its exhibits pursuant to section 23 of the Criminal Appeal Act 1968. Although the usual formalities have not been complied with, we are satisfied that the evidence is admissible and that it satisfies each of the criteria identified in section 23(2). It is therefore in the interests of justice to admit it.

Mr Finbow, who does not appear to have been responsible for the schedule relied on by the judge, sets out the following. The value which the parties and the court had assigned to the CBA pension was based on statements made in correspondence to the appellant's then solicitors by the pension scheme administrators, Mercer. On 10 May 2021, Mercer wrote to the appellant and to his solicitors providing a "transfer value statement" which identified the "total transfer value" of the CBA pension as the sum of nearly £100,000 that we have mentioned.

After the order was made, the trustees of the CBA pension scheme advised the Crown that this was not in fact the position. The trustees said that:

The trustees explained that this is a defined benefit pension under which the appellant is entitled to a monthly sum until his death but it has no other value. The pension was already in payment and had no capital value, nor could it be transferred to a defined contribution scheme so as to allow a lump sum to be drawn. The only option available to the court, said the trustees, was for the appellant's monthly pension entitlement of some £316 to be used in satisfaction of the confiscation order.

From the time they were notified of the Compliance Order the trustees withheld those monthly payments from the appellant. In February 2024 they transferred a capital sum of £10,767.37 to HMCTS. The Crown then sought, and on 18 June 2024 they obtained, the discharge of the original Compliance Order and in its place further orders designed to ensure that any ongoing monthly pension payments due to the appellant could be applied in satisfaction with the confiscation order and, consequently, the compensation order.

The present application does not seek to challenge any of those measures. It is designed only to correct the mistaken overstatement of the available realisable value of the appellant's assets and to obtain orders consequential on that correction. Miss Bates-Brownsword has sought three principal remedies. First, she has submitted that we should reduce the available amount to £85,426.24. Secondly, she has submitted that the Crown should not recover interest on the element of the recoverable amount that reflects the mistaken valuation. Thirdly, we are asked to make a corresponding reduction in the term of imprisonment to be served in default. There is a further matter that has been raised in the course of argument today, to which we will return.

In assessing these submissions, we begin with the fact the confiscation order under challenge was made in agreed terms. We are satisfied that that is not in itself a bar to the applications. A successful appeal in those circumstances cannot be ruled out, although the power to allow such an appeal is not likely to be exercised other than in "the most exceptional circumstances" such as where there is a "well-founded submission that the whole process was unfair" - see R v Hirani [2008] EWCA Crim 1463 at [35].

The authorities were reviewed by this court in R v Miller [2022] EWCA Crim 1589, [2023] 4 WLR 6 at [72] to [83]. The review makes clear that there is a strong public interest in holding defendants to orders made by consent. In general the court will be entitled to rely upon and to hold the defendant to an unambiguous acceptance of the facts in question "from which the defendant should not be permitted to resile." That will commonly be the position where the defendant has received sound legal advice.

There was no ambiguity in this appellant's position at the time of the confiscation proceedings. There is no suggestion that he was given unsound legal advice. The facts of the case are however quite different from those considered in the cases we have mentioned. Recognising the strong public policy in favour of holding defendants to the position adopted at first instance, we are nonetheless satisfied that the circumstances of this case are such that it is just to permit the appellant to resile from the agreement which he gave at the time the order was made.

The position is that the Crown Court was indisputably led into error. The error flowed from a false representation that was jointly made by the prosecution and defence. That joint representation was made honestly in reliance on a misleading statement made by a third party. The third party mis-statement was no doubt innocent. Whether it was negligent or not is not our concern. What matters is that it was made by the administrator of the CBA scheme, whom the parties and the court could reasonably expect to have an expert understanding of the position. The representation was moreover to the disadvantage of the appellant.

We have examined the documentation provided by Mercer. We can detect no indication in that paperwork that the figure given was "merely illustrative", although we do not doubt the accuracy of that statement in context. The statement on which the parties relied does not appear to us to be qualified in any material respect. We are satisfied therefore that as the Crown put it in the Respondent's Notice "all parties ... were entitled to proceed on the basis that information would be accurate" and it was not. Now that the true position is known and beyond doubt it would, in our judgment, be conspicuously unfair to hold the appellant to the position that he and the prosecution both adopted before His Honour Judge Hopmeier.

For essentially similar reasons we consider it to be in the interests of justice to grant the extension of time. The application for leave to appeal was prompted by the Crown. Until that happened the defence were not on notice of any potential grounds of appeal. The applications could perhaps have been made sooner. It is however possible to understand why the appellant's trial counsel considered it inappropriate to act for him on the appeal. The delay does not cause prejudice to the Crown or to the administration of justice.

As to the merits, we observe that it is not wrong in principle to take account of rights under a pension policy when calculating the "available amount" for the purposes of POCA. That term is defined so far as relevant as "the aggregate of ... the total values (at the time the confiscation order is made) of all free property then held by the defendant" (see section 9(1)). “Property” is defined to include all forms of personal property and things in action and other intangible property (section 84(1)). Property is "held" by a person if he has an interest in it (section 84(2(a)). It is "free" if it is not the subject of any of the forfeiture, deprivation or other measures listed in sections 82(2) and (3).

In R v Chen [2010] EWCA Crim 2669, [2010] 2 Cr.App.R (S) 34, the court applied the statutory tests to a pension policy and concluded that it was "free property". The present case is indistinguishable. It follows that it was not an error to include the CBA policy in the schedule of assets.

The error lay in the value attributed to the policy. The value of property held by a defendant is defined as "the market value of his interest at the relevant time" (section 79(2) and (3)). It follows that property held by a person which has no market value at the time should be given a nil valuation. That was the approach of the court in Chen where the policies under consideration were not due to mature for some eight years. They had an anticipated future value and an underlying asset value but at the time of the court's assessment they had no surrender value nor could they be assigned or sold or otherwise turned to accounts to create any immediate benefit for the defendant. They had in short no market value. The evidence before us makes clear that the same is true in the present case. The appropriate outcome is thus the one arrived at in Chen: the appeal should be allowed, a value of £0 should be substituted for the value attributed to the CBA policy in the schedule and the figures in the schedule and in the order should be reduced accordingly.

As the Crown pointed out in its Respondent's Notice, this has implications for the compensation order. The written grounds of appeal did not include a challenge to that order but in the light of the Crown's observations Miss Bates-Brownsword made an application orally in the course of the hearing today which essentially adopted the Crown's suggestion that there should be a corresponding reduction in the overall sum of the compensation order.

We therefore grant leave to amend the grounds of appeal to assert that the compensation amount also was overstated in error and should also be reduced accordingly. We accept that submission and we will direct that corresponding changes be made to the compensation order.

It has not been entirely clear to us in the course of the hearing today what the terms of that order were. There is reference on the court record to individual compensation orders in specified sums being directed to named individuals at specified addresses. Whether that is properly part of the order formally made by the court is not perhaps clear. We shall therefore invite the parties to agree an appropriate form of order to give effect to that decision and to liaise with the court accordingly.

Next there is the question of interest. The confiscation order contains no provision as to interest, as is standard practice. That is because the obligation to pay interest stems from section 12 of POCA. This provides that a person must pay interest on "any amount required to be paid ... under a confiscation order" which is not paid when it is required to be paid. The rate is the one specified in the Judgments Act 1838.

Two consequences appear to us to follow. The first is that in a case such as this there is nothing to appeal against. Secondly, as it seems to us, the effect of our order will be to eliminate the underlying obligation to pay and to substitute a lesser obligation. The order will consequently extinguish any interest liability that would have arisen in respect of the sum attributed to the CBA pension policy.

We turn finally to the provision for imprisonment in default of payment. The effect of section 35 of POCA and sections 129 and 132 of the Sentencing Code is that the court must pass such a sentence. Section 35(2)(a) of POCA identifies the maximum sentences. For failure to pay a confiscation order in the sum of £10,000 or less the maximum is six months' imprisonment. For more than £10,000 but no more than £500,000 the maximum is imprisonment for five years.

The principles to be applied in sentencing under this regime were restated in R v German Castillo [2011] EWCA Crim 3173, [2012] 2 Cr.App.R (S) 36 at [12]. They include having regard to where the case fits into the statutory scale, although that is not by no means the only consideration. Although the maximum sentences were increased after that decision we do not consider that that affects the right approach.

Applying the principles in Castillo we accept the submission for the appellant. We quash the default sentence of 21 months imposed below and substitute a sentence of 12 months' imprisonment.

For these reasons the orders will be as follows: