Reconsideration of the available amount: Court clarifies the meaning of “new calculation” in s.22 of PoCA
R v Wood [2022] EWCA Crim 1243
Summary
On an application for reconsideration of the available amount under section 22 of PoCA 2002 the Crown Court must look at all of the assets held by the defendant that are or have been available in the context of the original confiscation order and in the light of all the evidence available at the time of the “new calculation”. Amounts already paid towards the original order should be included when making the “new calculation”.
The facts
The Appellant [A] case was convicted of mortgage fraud in 2013. A confiscation order was made against him in January 2014; the benefit was £978,011.99 and the available amount was £610,564.94: a shortfall of £367,447.05. He was given 12 months to pay and 4 years’ imprisonment in default. The assets considered included a house and a flat, valued at circa £127,500 and £60,000 respectively.
The confiscation order was not paid for some 4 years; interest accrued in the meantime. The Flat was sold in 2015 for more than three times as much as the original valuation. Payments totalling £42,500 were made by a third party. In the event, the House was not sold; A continued to live in it with his family.
In September 2020 a s.22 application was made by the CPS on the basis that (i) the confiscation order was made in a sum less than the benefit and (ii) the Applicant held valuable assets that had not been used to satisfy the confiscation order, including the House – which by this time was worth circa £333,000.
The combined value of the assets held by the Appellant at the time of the application was £311,891.29. It was submitted by A that since this figure was lower than the amount that was the subject of the original confiscation order (£610,564.94), the court had no power to vary the order, given the wording of s.22(3) and (4) and section 9 of PoCA. It was further submitted that it would be unjust to vary the confiscation order.
The judge rejected A’s submissions and increased the confiscation order to £922,456.20 comprising the amount already paid (£610,564.94) plus the value of the assets held at the time of the application (£311,891.29) – still less than the benefit of £978,011.99.
A appealed.
The decision of the Court of Appeal
In the Court of Appeal [CoA] A repeated those arguments.
As to the statutory construction argument, the CoA rejected A’s “appeal to literalism” concluding that a reasonable and purposive interpretation of “new calculation” does not confine that calculation to a reconsideration of assets held at the time of the application, rather, it involves looking at all of the assets held by the defendant that are or have been available in the context of the original confiscation order and in the light of all the evidence available at the time of the “new calculation”. As such it must take into account what has happened to the assets that formed the basis for the original confiscation order, even if they are no longer held.
As to the argument that it would be unjust to vary the order, particularly given there was no element of previously concealed or newly obtained assets, there was no error in the Judge’s approach to the question whether increasing the amount of the order was just; he took all material factors into account and reached a conclusion that he was fully entitled to reach so there was no basis upon which the CoA could properly interfere with the exercise of his broad discretion.
Comment
The decision is interesting as an example of the purposive approach to construing provisions of PoCA. The CoA noted that the purpose of the Act is to recoup from a defendant the entirety of the benefit they have obtained from their criminal conduct - even after the making of a confiscation order. This statutory purpose must inform all aspects of the Court’s consideration (and reconsideration) of orders made or to be made pursuant to the Act and must also inform the Court’s approach to interpretation of the statutory.
A phrase or passage in a section must be read in the context of the section as a whole and in the wider context of a relevant group of sections (quoting from the judgment of Lord Hodge DPSC (with whom the other members of the Court agreed) in R (on the application of O (A Child)) v SSHD [2022] UKSC 3, [2022] 2 WLR 353 at [29]-[32]. Here, the context was ss.21 to 24, described by the Court as a “suite of provisions” dealing with reconsideration of confiscation orders in differing circumstances (see [25] & [37]); sections 21 and 22 provide for increasing the sum ordered to be confiscated where the defendant’s benefit or available assets warrant it whilst sections 23 and 24 provide relief where the available assets prove to be inadequate to enable the defendant to discharge the original order.
The phrase “new calculation” appears in both sections 21 and 22. It was “obvious” that in the former, the phrase meant a calculation of the defendant’s benefit taking into account all the relevant and admissible evidence. Where that “new calculation” results in an assessment of the defendant’s benefit that exceeds the amount found as benefit when the confiscation order was made the Crown Court is given power to vary the original order by substituting for the amount to be paid under the original order such amount as it believes to be just.
Although s.22 is silent as to how the Crown Court should treat the fact that the defendant may have paid all or part of the original confiscation order and (as in this case) may have disposed of some of the assets that were included in the original calculation of the available amount, the CoA considered there was no good reason why the phrase “new calculation” should bare a different meaning in s.22 to that in s.21. In neither is the calculation confined to a reconsideration of assets held at the time of the application [48]. Rather, it involves looking at all of the assets held by the defendant that are or have been available in the context of the original confiscation order and in the light of all the evidence available at the time of the “new calculation”. As such, the reconsideration must take into account what has happened to the assets that formed the basis for the original confiscation order, even if they are no longer held. The literal interpretation contended for by A would provide a powerful additional incentive to concealment or undervaluing of assets at the time of the original confiscation order [46].
The CoA left open the question of what account should be taken of assets that are no longer retained but which were disposed of for significantly more than the value included in the schedule to the original confiscation order or significantly less [62]. If instead of selling assets to pay for the confiscation order the defendant disposes of them at an undervalue and uses the money to live on, or to take the family on holiday, the reasoning in this case would suggest that the value of those assets would be taken into account on a reconsideration regardless. But what would be the position if an asset that was taken into account in making calculating the available amount was destroyed by fire when not insured? In such a case, it is likely the Court would conclude that it would not be just to vary the confiscation order (applying s.22(4)(a)) but on the Court of Appeal’s approach, the value of the no longer existing asset would form part of the “new calculation” regardless.