Posted: 03 / 11 / 2020

Section 8, Proceeds of Crime Act 2002, deals with benefit and is an important pillar in the structure of confiscation.  But it is often overlooked.

Here David Winch signposts and explains the important elements of section 8 – outlining their significance in confiscation.

The key sections on confiscation

There are a string of key sections in the Proceeds of Crime Act 2002 – most of which will be very familiar to confiscation practitioners. Section 6 deals with the making of a confiscation order.  Section 7 deals with the ‘recoverable amount’ (which is generally the lower of the ‘benefit’ and the ‘available amount’).  Section 8 deals with ‘benefit’.  Section 9 deals with the ‘available amount’.  Section 10 deals with the statutory assumptions to be made in relation to ‘benefit’ where the defendant has a ‘criminal lifestyle’.  Section 11 deals with the time allowed for payment by the defendant of the amount ordered to be paid.

But for some reason the provisions of section 8 appear to be often overlooked by the courts – and by practitioners.  Why is this?

 

The provisions of section 8

Section 8 essentially spells out three matters relevant to a defendant’s benefit.

Including all benefit

As the Explanatory Notes published alongside the Act put it, “This section describes how the court must work out whether the defendant has benefited from criminal conduct and what the value of that benefit is. Subsection 2 explains that the court must regard the defendant as having benefited by the value of any property obtained by him from criminal conduct up to the time the court makes its decision”.

This means that no benefit is excluded from the court’s consideration when making a confiscation order, simply because the benefit was obtained by the defendant too soon or too late.

There is a common misconception that benefit obtained by a defendant is excluded from the court’s consideration simply because it has been obtained too soon – for example where benefit has been obtained prior to the ‘relevant day’ described in section 10 – or too late – for example where benefit has been obtained after the date on which the defendant was charged.

The correct approach is for the court not to exclude any benefit obtained by the defendant simply on the ground of the date on which the benefit was obtained.  This however is a separate issue from the earlier step of determining whether or not a benefit has been obtained (or should properly be assumed to have been obtained) by a defendant.

Section 8 has also to be read alongside section 76 which deals with benefit of particular criminal conduct and benefit of general criminal conduct.

The finality of a previous decision

Subsections 3 and 4 deal with the situation where a defendant has previously been subject to a confiscation order based on his general criminal conduct.  In the event that the same defendant is subject, a second time, to confiscation proceedings based on his general criminal conduct then on that second occasion the court must accept that the previous order correctly recognised his benefit of general criminal conduct up to the day on which that first confiscation order was made.

Similar rules apply where the defendant is subject to criminal lifestyle confiscation on a third or subsequent occasion.  In effect the last previous criminal lifestyle confiscation order will always be taken to correctly reflect the defendant’s cumulative benefit obtained up to the day on which the order was made.

Avoiding double counting of benefit

Section 76 confirms that a defendant’s benefit of general criminal conduct is the benefit of all his criminal conduct.  In other words, the benefit of all criminal conduct in which this defendant has ever engaged (since birth).  This ‘whole of life’ approach to the benefit of general criminal conduct is an important facet of confiscation under PoCA 2002.

Where a defendant has been subject to confiscation on a previous occasion, and is now subject to confiscation on the basis of his general criminal conduct, a problem therefore arises.

The Explanatory Notes put it this way, “Subsections (3) to (8) deal with the situation where the court is holding a confiscation proceeding in respect of the defendant’s general criminal conduct, and a previous confiscation order or orders has been made against the defendant in respect of such conduct. General criminal conduct means all the defendant’s criminal conduct at any time, so a court making a general criminal conduct confiscation order could confiscate the same benefit twice, unless the legislation prevented it”.

A simple example may make this clear.  Pete was subject to confiscation in 2012.  The confiscation order made then showed Pete’s benefit to be £300,000 and his available amount to be £100,000.  Pete was ordered to pay £100,000.  The order has not subsequently been varied.  (For the purpose of considering Pete’s benefit in this example it does not matter whether Pete has actually paid the £100,000 (although any outstanding liability may impact upon his current available amount), nor does it matter – at least in my view – whether this confiscation order was made on the basis of Pete’s particular or general criminal conduct.)

In 2020 Pete is again subject to confiscation (in consequence of a new conviction).  On this occasion the court finds that Pete has a ‘criminal lifestyle’ and so will take into account the benefit of his general criminal conduct.  That benefit of Pete’s general criminal conduct includes the £300,000 benefit found by the court in 2012.  However in order to avoid double counting when computing Pete’s benefit for the purpose of making the confiscation order in 2020 the court should include the £300,000 benefit but then deduct the £100,000 which Pete was ordered to pay in 2012.

So the benefit included in the confiscation order the court will make in 2020 will include benefit of £200,000 (that is £300,000 minus £100,000) found by the court in 2012.

Naturally if Pete has not fully paid the £100,000 he was ordered to pay in 2012 then the usual steps can be taken under that order to enforce payment of that amount (and any outstanding interest).  But equally, once a new confiscation order has been made in 2020 incorporating the £200,000 further benefit found in 2012, then no subsequent variation should be made to the 2012 order under section 22 (and if an application were made under s22 concerning the 2012 order one would expect the court would find that it would not be “just” to make any such variation).

In that way the confiscation orders made in 2012 and 2020 will not require Pete to pay an amount exceeding the total benefit obtained by Pete in his lifetime.

(For a more detailed explanation of this topic see “Confiscation – the second time around“.)

This ‘whole of life’ approach has also been described as a ‘running total’ approach to confiscation (see Chapter 23 of the Law Commission Consultation on Confiscation, September 2020).

Is section 8 overlooked?

It appears that in practice courts (and practitioners) do not operate in the way I have described.  Instead on a second (or subsequent) confiscation courts appear to keep different confiscation orders entirely separate by ignoring any benefit which has been dealt with in a previous confiscation order.  In consequence courts will then entertain a subsequent application under s22 in relation to an earlier order.

We can see an example of this in the case of R v O’Flaherty [2018] EWCA Crim 2828. This was a case in which Mr O’Flaherty was subject to confiscation orders in 2010 and again in 2013.  It appears that both of these confiscation orders were made on a criminal lifestyle basis (both were consequent upon convictions for Schedule 2 offences). Nevertheless it appears that the benefit reflected in the 2013 order did not include the benefit found in 2010, and the court in 2016 varied both the 2010 and the 2013 orders under s22. These s22 variations were the subject of an appeal – but it appears that no one in the Crown Court or even the Court of Appeal highlighted the significance of the s8 provisions.  In short, section 8 was overlooked.

Conclusion

It does seem that in practice the provisions of section 8 Proceeds of Crime Act 2002 are not well understood by practitioners and courts and may not be correctly applied when a confiscation order is made.

Contacting us

Our contact details are here.

David

(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.)