The principles by which the proceeds of crime are confiscated are deliberately draconian. But at times they seem to go so far as to stretch the very language which defines them. How to calculate the ‘benefit’ a person has received from his criminal conduct is a good example.
On 5th May, a seven Justice Supreme Court, comprising Lord Phillips, Lord Walker, Lady Hale, Lord Kerr, Lord Clarke and, reflecting, coincidentally, the changes confirmed earlier this week, Lord Collins (who will shortly retire) and Lord Justice Wilson (who, on this occasion will sit as an acting Justice but who will be sworn in as a full time Justice on 26th May), will consider this issue in the case of R v Waya  EWCA Crim 412.
Although it will be the Supreme Court’s first foray into the sphere of the confiscation regime under Proceeds of Crime Act 2002, the issues are familiar to the Justices concerned. Lord Phillips and Lady Hale, considered similar questions in relation to the meaning of ‘benefit’ in confiscation cases (albeit in relation to the preceding statutory regime under Criminal Justice Act 1988) relatively recently as Law Lords in CPS v Jennings  UKHL 29.
In 2003, Mr Waya obtained a loan of £465,000. He combined it with £310,000 of his own money and purchased a property for £775,000. The mortgage was redeemed in 2005 and the Property was remortgaged with a different lender.
In July 2007, Mr Waya was convicted of making false statements in obtaining the £465,000 loan. But there was no suggestion of any dishonesty in his obtaining of the second mortgage.
The confiscation proceedings
By the time of confiscation proceedings in 2008, the value of the Property was £1,850,000. By then Mr Waya had paid back the £465,000 3 years earlier. What was the “benefit” of his criminal conduct?
At the suggestion of the Crown, the judge assessed Mr Waya’s “benefit” as the value of the property at the time of trial, less his original untainted contribution of £310,000. This led to an order being made in the sum of £1,540,000.
Mr Waya appealed.
The Court of Appeal proceedings
Relying on the dictum in the case of R v Preddy  1 AC 815, Mr Waya submitted that he had not “obtained” the money loaned to him. It had merely been paid to his solicitor as part of the conveyancing process. As such he obtained no “benefit” for himself and no confiscation order should have been made against him.
The Court of Appeal rejected that argument. It held that all that was necessary for a person to obtain a “benefit” for the purposes of section 76 of POCA was that the person obtained “property” as a result of or in connection with criminal conduct. The property he purchased was held to constitute “property” for the purposes of section 84 POCA.
However, all parties agreed that the trial judge had erred in his calculation of the “benefit” at £1,540,000. But they did not agree on what the figure should be:
Mr Waya argued that if he did receive a “benefit” it was no more than the amount of the loan he had obtained dishonestly: £465,000.
The Crown argued that his “benefit” was the proportion that the dishonest loan represented as 60% of the original purchase price. Accordingly, his “benefit” under POCA was 60% of the current value: £1,100,000.
The Court of Appeal agreed with the Crown. It found that it was necessary to trace the character of the money financing the purchase of the property. Accordingly it was the proportion, not simply the amount that the money represented, that was important.
The issues before the Supreme Court
The issues certified for determination by the Supreme Court are: –
1. Whether, where a person obtains a “benefit” within the meaning of Part 2 POCA where he/she obtains a money transfer by deception and thereby causes a lending institution to transfer funds to his/her solicitor by way of a mortgage advance to enable the purchase of a property;
2. If so, whether the value of this “benefit” is the value of the loan advanced, the person’s interest in the property concerned or some other value; and
3. If not, whether the person obtains a “pecuniary advantage” for the purposes of Part 2 of POCA.
Only twelve of the 100 decided cases so far decided by the Supreme Court have related to criminal appeals. This means that when they do arise, they sometimes have a greater impact and more immediately applicable than many of the civil appeals heard to date.
Waya looks set to continue this trend through the examination of important issues relating to the breadth of the meaning of key tenets of the POCA confiscation regime. Resisting and minimising the scope of the confiscation order upon which this appeal is based has proved difficult for the appellant so far. It is unlikely to be any easier in the Supreme Court. However, our highest court in its previous dealings with confiscation and asset forfeiture issues, has shown real cognisance of the delicate balancing exercise to be performed when considering the interpretation of draconian legislation. Criminal practitioners will be watching with interest how the Court approaches these issues when it revisits confiscation issues for the first time in its current manifestation.
Chris Stott, Pannone LLP