Law Commission’s new idea for Confiscation Orders is unfair – Brian Swan

Partner Brian Swan discusses why the Law Commission’s new idea for Confiscation Orders is unfair, in Law360.

Brian’s article was published in Law360, 16 October 2020, and can be found here.

Since the Law Commission of England and Wales was established as a statutory independent body by an act of parliament in 1965, its mission has been clear: to keep the law of England and Wales under review and to recommend reform where it is needed. The principal aim of the commission is to ensure that the law is fair, modern, simple and cost-effective.

In the intervening years, the Law Commission has enjoyed much success and generally demonstrated an exemplary record, both in consulting widely on its proposals and in achieving its statutory objectives. But its latest proposals in relation to the confiscation regime, affecting confiscation orders and prisoners who have been released from prison, fall a way short on the principle of fairness.

Under proposals published by the commission, after their release from prison, prisoners may be recalled as a breach of their license if they fail to settle their confiscation orders. This, it is said, is designed to ensure that convicted defendants do not benefit from their crimes and ensure confiscation orders are paid. But these proposed powers are deeply unfair.

The stated objective of the proposals is summarised by the commission as follows:

A reformed confiscation regime will aim to improve the process by which confiscation orders are made; ensure fairness of the confiscation regime; and optimise the enforcement of confiscation orders so they are more effective at depriving a defendant of their benefit from criminal conduct.

Under the Proceeds of Crime Act 2002, a confiscation order is made by the Crown Court. It is made personally against a defendant to pay a sum of money equivalent to some or all of his or her benefit from crime, depending on the assets available to the defendant. The defendant is not obliged to realise any particular asset to satisfy the order, as long as the sum of money is paid. The Law Commission’s website states that as of March 31, 2019, the value of outstanding confiscation orders was over £2.06 billion.

Such orders require the convicted defendant to pay to the state a specified sum of money by a specified date — originally, no later than 12 months after the date on which the order was made. This limit was reduced to six months in June 2015. The court is obliged to make a confiscation order if requested to do so by the prosecutor following the conviction of the defendant of an offence from which he has obtained a benefit.

When a prisoner is released on license, the objective is twofold: to monitor and reintegrate the offender into the community and to prevent reoffending. But to use this as a tool in order to ensure the payment of a confiscation order fails to take into account that there is already provision for those who do not pay to be sent to prison.

If the defendant fails to pay the sum ordered by the due date, then payment can be enforced by various means, one of which is that an additional prison sentence (maximum 10–14 years) may be imposed for failure to pay by the specified date.

At the time when a confiscation order is made by the court, a period of imprisonment is attached. That default sentence can be activated, consecutive to the sentence given for the underlying offence. This happens when the enforcing court determines that the defendant has wilfully neglected to pay the order. Those who choose this course of action are already running the risk of receiving further terms of imprisonment.

When they make a confiscation order, judges determine the period in default based on its value, up to a maximum of 14 years. As outlined above, a comprehensive mechanism is already set out in the existing regime for imposing a further term of imprisonment in the event of nonpayment.

The Law Commission’s proposal to recall defendants for a period of their license when they have already served a sentence for nonpayment would, in effect, punish them twice for the same act (nonpayment of the confiscation order).

Moreover, additional mechanisms are in place that allow the Crown to apply to the court in order to appoint a receiver of any known assets belonging to the defendant.

There can be various reasons why original confiscation orders are not paid in full. When assets have been sold, they may not have realised their true potential value. In those situations, an application can be made, either by the Crown or on behalf of the defendant, to vary the terms of the original order.

Alternatively, the assets in question may be subject to third-party interests, which prevents the defendant from being able to sell them even if he or she genuinely wanted to. To punish a defendant because of such circumstances, where nonpayment is completely beyond their control, is manifestly unfair.

It should also be borne in mind that when confiscation orders are made, the burden rests entirely on defendants to show that they do not have the means to pay. Defendants who face confiscation proceedings do so because they have already been convicted of their crimes. Defendants who were convicted after a trial, and gave evidence at their trial, were inevitably disbelieved by the jury when giving evidence at their trial.

Accordingly, it would not be surprising that a tribunal could reach a decision and then make a confiscation order, predicated on the basis that the defendant lacks sufficient credibility to discharge the burden of having to prove that they cannot pay a particular sum. The natural corollary would be that orders are made that the defendant simply cannot pay. Critically, it is not inevitable that because a defendant has been ordered to pay, he has the means available to do so.

It has been noted that the courts have sometimes expressed contradictory views about whether punishment is an objective of the confiscation regime. Let us hope that defendants are not punished twice for the same act, which could be the natural consequence if the Law Commission’s recommendations are adopted.

Having said that, the commission does make other recommendations which are not entirely without merit. One proposal is to limit interest — a power the court should have. There are cases where defendants are never able to pay an order since the interest can, depending on the amount stipulated, exceed a defendant’s capacity to pay. In that context, having the ability to limit or freeze interest should certainly be at the court’s discretion.