O'Donoghue, Re Criminal Justice Act 1988

This is an application by the Defendant Mr O’Donoghue for a certificate of inadequacy on the ground that the value of his realisable assets are inadequate to satisfy all of the value of the confiscation order. The application is opposed by the prosecutor.

On his conviction for obtaining property by deception and theft on the 16^th July 2001, Mr O’Donoghue was sentenced to three years in jail and a confiscation order was made against him in the amount of £94,587 of which £43,223.42 remains unsatisfied. The £94,587 reflected what the court found to be the realisable value of a number of his assets, of which three are relevant. One is a Vauxhall Vectra car valued at £3,500. It was later sold for £2,450. The second is a caravan valued at £14,000 and later sold for £3,950. Mr O’Donoghue claims that he is entitled to a certificate of inadequacy reflecting the shortfalls of £1,050 and £10,050 in respect of these items. The third item is the sum of £35,500 which approximately one year prior to the confiscation hearing was withdrawn from an account at the Woolwich plc in the name of a Ms Casey and which has not been paid into court or accounted for despite an order that Ms Casey notify the CPS of its whereabouts and repatriate an equivalent sum.

The prosecution accept that, if Mr O’Donoghue establishes that the value of his realisable property other than the car and the caravan remains the same as at the date of the confiscation order, he is entitled to a certificate of inadequacy in the shortfall in respect of the car and the caravan of £11,100. But the prosecution say correctly that in order for Mr O’Donoghue to obtain a certificate of inadequacy, he must establish that the value of his realisable property as a whole has decreased since the date of the confiscation order and that therefore it is no longer adequate to satisfy the amount of the confiscation order and that account must be taken of any undisclosed interest or other fruits obtained from the £35,500.

The question raised is whether account should be taken of the possible or probable interest or other fruits of this sum. It is clear that on an application for a certificate it is not possible to go behind the finding in the original confiscation order as to the amount of the defendant’s realisable assets and accordingly that he was the beneficial owner of the sum of £35,500. A challenge can only be made by way of appeal against that finding in the confiscation order. It is likewise clear that the burden is on the defendant to establish that the value of his assets is inadequate to satisfy all the value of the confiscation order, and for this purpose it is not sufficient for him to come to court and say that his assets are inadequate unless at the same time he condescends to demonstrate what has happened since the making of the confiscation order to the realisable property found by the trial judge to have existed when the confiscation order was made: see Gokal v. SFO [2001] EWCA Civ 368. In the circumstances as a matter of principle the burden must be on Mr O’Donoghue on this application to satisfy the court as to what he has done with and the income and fruits of the £35,500.

Miss Small, counsel for Mr O’Donoghue has sought to qualify this proposition and for this purpose has referred me to a brief agreed note of counsel of a judgment of Collins J of the 4^th June 2003 in In the Matter of Turner CJA No 8 of 2000 as a decision to the contrary effect. I am concerned whether I can properly take any account of this note since it has not been (as it could and should have been) submitted to Collins J for approval. As a practical matter I shall refer to it, but have in mind when doing so the absence of any opportunity on the part of the judge to correct or revise it. In that case the defendant Mr Turner at the date of the confiscation order had as one of his realisable assets the sum of £236,000 in a bank account. The issue arose whether, to offset in whole or in part a shortfall of £15,762.23 in realisation of other realisable assets, it could or should be assumed in the absence of any evidence from Mr Turner that he had received interest on this sum. The note records Collins J as stating that it would be to speculate to say that a sum of money by way of interest was available to meet the £15,762.23, that he could not make the assumption that interest had accrued, and that he should accordingly order a certificate of inadequacy in the sum of £15,762.23. Ms Small invites me to take the same course.

Assuming that the agreed note of his judgment is correct and complete, I cannot think that Collins J would have approved it. For it fails to take account of the burden of proof on the defendant. If the receipt or otherwise of interest is left a matter of speculation, the defendant will surely (at any rate in any ordinary case) have failed to discharge the burden of proof which rests on him to prove that there has been no such receipt. I accordingly decline to hold that the decision is authority qualifying the principle that Mr O’Donoghue has the burden of satisfying me as to what he has done with the £35,500 and as to the income and fruits of the £35,500. He has not discharged that burden.

In the alternative Ms Small invoked Article 6 of the European Convention on Human Rights (“Article 6”). She accepted that the statutory scheme accorded with Article 6, citing in this context Phillips v. UK (Application No 41087/98). But she went on to submit that Article 6 required the principle which I have stated to be inapplicable where the defendant’s realisable assets as found by the trial judge include “hidden assets”, for otherwise the failure or inability of the defendant to place evidence before the court as to what has happened to “hidden assets” may effectively preclude the grant of a certificate in respect of the established depreciation of identified assets.

My first problem with this submission is with the meaning of the word “hidden”. Two questions are raised: (1) hidden by who? and (2) hidden when? If the defendant or someone else has hidden the defendant’s assets, it will ordinarily be presumed that the defendant can recover them and give full information about them. If he cannot recover them at or before the date of the confiscation order, that is a matter to be proved at the hearing before the trial judge, and, if he proves it, the assets will not be included amongst his realisable assets. If he loses the right to recover them after the date of the confiscation order, that fact may found a claim to a certificate of inadequacy in respect of that loss.

I cannot think that for any relevant purpose (including for this purpose Article 6) any distinction is to be drawn between identified and “hidden assets”. The critical issue as to the beneficial entitlement to assets is determined by the trial judge when making the confiscation order. Unless and until that judgment is reversed on appeal, the judge on the application for a certificate of inadequacy is bound to proceed on the basis that the defendant was at the date of the confiscation order the beneficial owner of the asset specified. In the absence of proof of any dealing or event changing the beneficial ownership or the realisability of the asset, the state of affairs existing at the date of the confiscation order will be presumed to continue. The position is exactly the same whether the asset is hidden or not. If the judge got it wrong, the defendant will be seriously prejudiced in respect of later obtaining a certificate of inadequacy. Most particularly he may be unable to say what has happened to the asset. The remedy however lies, not as is suggested by Ms Small in making an exception to the principle which I have stated but by an appeal against the confiscation order.

I accordingly conclude that Mr O’Donoghue, has failed to condescend to disclose the position regarding the £35,500 and he has accordingly failed to discharge the burden of proof upon him. Mr O’Donoghue is accordingly not entitled to the certificate of inadequacy which he seeks. This is not however necessarily the end of the matter. Where a defendant fails to discharge the burden of proof in respect of an asset, the court may, depending upon the significance of the the non-disclosure in respect of the adequacy or otherwise of the realisable assets adopt either of two alternative courses. The first is to refuse the application for the certificate. The second is (for the purposes of the application) to presume that the defendant has obtained a reasonable return. For this purpose every reasonable presumption will be made against him as a wrongdoer i.e. a party who has failed to make disclosure. I leave open to further argument whether in this case Mr O’Donoghue should be refused any certificate of inadequacy or whether the figure in the certificate should reflect a presumed return on the £35,500.