Posted: 31 / 03 / 2021
One of the most common applications to court in confiscation proceedings is a defendant’s application to reduce the amount which the court specified as his available amount in the confiscation order. The application is made under section 23 Proceeds of Crime Act 2002. It’s simple and straightforward and nothing can go wrong – or can it?
A typical situation
It is easiest to explain a s23 application to reduce the available amount by using a simple worked example. Let’s imagine ‘John’ a defendant who was made subject to a confiscation order on 20 January 2020. On that day the Crown Court made a confiscation order against John on the following terms:
- Benefit £500,000
- Available Amount £90,000
- Amount to pay £90,000
- Default sentence 18 months
There is nothing particularly unusual about this confiscation order.
John’s available amount and time to pay
John’s available amount of £90,000 is made up of £10,000 which he has in a bank account in his sole name and £80,000 equity in his home. The value of his home is £300,000 and he has an outstanding mortgage balance of £220,000 on it.
The court requires the first £10,000 to be paid by 20 February 2020 (one month afer the date of the confiscation order) and the remaining £80,000 to be paid by 20 April 2020 (three months after the date of the confiscation order). Again there is nothing particularly unusual about this.
John is able to make the first payment of £10,000 in full and on time (from the money in the bank account).
Extending the time to pay
John (through his legal team) applies under s11(4) – before 20 April 2020 – for an extension to the time to pay the £80,000 because he was not able to sell his home quickly and had no other means to pay the £80,000.
The court granted John a further period until 20 July 2020 (six months after the date of the confiscation order and the maximum period the court could allow under s11) to pay the £80,000.
Unfortunately the property remained unsold and John was unable to make any further payment by 20 July 2020.
Interest commenced to run under s12, at an annual rate of 8%, on the unpaid £80,000 from 21 July 2020 – that’s approximately £17.53 every day.
John’s home is sold
John did finally find a buyer for his home. The sale was completed in March 2021.
Unfortunately the price was below that at which the property had been valued at the time the confiscation order was made in January 2020, and additional mortgage arrears had racked up. There were also additional advertising costs incurred.
After paying off the estate agent’s fees, advertising costs, the outstanding mortgage and the conveyancing solicitor’s fees, only £20,000 remained to use to pay off the confiscation order.
By March 2021 interest of £4,000 had accrued on the £80,000 outstanding on the confiscation order.
John’s s23 application
John, through his legal team, made an application to the court for his available amount to be reconsidered and reduced under s23. Under s23 the court can reduce the available amount – but cannot increase it. (Applications to increase the defendant’s available amount are made under a different section, s22.)
Section 23 requires the court to calculate John’s available amount now and compare it to the amount remaining to be paid under the confiscation order.
John’s available amount now is £20,000 (the net proceeds of the sale of his home – he has no other assets). This of course does not include the £10,000 he had in a bank account as he no longer has that – he used it in February 2020 to pay the first £10,000 due under the confiscation order.
The amount remaining to be paid under the confiscation order is £84,000 – that is the £80,000 outstanding plus the £4,000 accrued interest.
The court’s decision
The court concludes that John’s available amount today – £20,000 – is inadequate to pay the amount remaining to be paid under the confiscation order – £84,000 – so, under s23(3) the court may vary the confiscation order by reducing the amount required to be paid under the order to “such smaller amount as the court believes is just”.
John invites the court to fix the amount required to be paid at £30,000 (of which £10,000 has already been paid).
If the court agrees John will be able to settle the outstanding amount, of £20,000, from the proceeds of sale of his home.
What s23 is not
Note that a s23 application is not
- an application to have the court reconsider the defendant’s available amount at the time the confiscation order was made (in January 2020 in John’s case)
- an opportunity to ask the court to reconsider decisions it made (such as John’s share in the equity in his home) that it made in the course of arriving at its decision on the confiscation order which it made (in January 2020 in John’s case)
- an application to have the court reconsider the value of some, but not all, of the assets and items included within John’s available amount.
In effect John is asking the court to take into account developments which have happened since the confiscation order was made in January 2020 which have had an impact on his available amount.
The court’s variation of the order
John’s application is successful and on 30 March 2021 the court varies the confiscation order made on 20 January 2020 so that the amount required to be paid under that order is reduced to £30,000.
Must there be a court hearing?
If the defendant and the prosecution reach agreement on a s23 application and on the terms of a draft court order then the court can decide the application without a formal hearing, see Crim PR 33.17 (5) (a).
The default sentence
The court however has no power to vary the default sentence of 18 months which was fixed in January 2020. This is because the variation of a default sentence falls under s39 and s39(1)(b) limits the circumstances in which a default sentence can be varied on a s23 application to those where the amount falls into a different ‘band’ – under s35(2A) – as a result of the variation.
Amounts of £90,000 and £30,000 fall into the same ‘band’ (which covers amounts which are more than £10,000 but not more than £500,000). So the default sentence remains 18 months.
The statute contains no express provisions dealing with the treatment of interest when a confiscation order is varied under s23. In practice the interest which has accrued simply ‘evaporates’ and is ‘forgotten’ by the court.
It appears that interest is regarded as commencing afresh as if the order had been made on the date it was varied.
Time to pay
Similarly the statute contains no express provisions dealing with time to pay when a confiscation order is varied under s23.
Again in practice it appears that court deals with time to pay as if the order had been made on the date it was varied.
It appears that the Court of Appeal has no jurisdiction to hear an appeal (either from the defendant or from the prosecution) on the decision of the Crown Court on a s23 application, but of course there is nothing to prevent either the defendant or the prosecution from making a fresh application under s23 if circumstances change.
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(Note: This article applies to confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation proceedings in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)