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On one view this is perhaps the most esoteric of the 28 appeals regarding the confiscationbodnar_a_bw_indmem or civil recovery legislation which have been determined by the House of Lords, Privy Council or Supreme Court over the past 24 years. It was an appeal which raised the issue whether a defendant convicted of drug trafficking was entitled to 21 days’ reduction or 32 days’ reduction in his six-year sentence in default to reflect part-payments towards the order. However, a closer reading of the judgment of Lords Reed and Hughes (with whom the other members of the Court agreed) suggests that this case should be considered the latest of a series of judgments suggesting that the old principle of confiscation law – that the legislation is intended to be “draconian” and should be given a purposive construction accordingly – should be treated with caution.

The background

Mr Gibson was convicted of drug trafficking offences and sentenced to 25 years’ imprisonment. In March 2000 he was made subject to a confiscation order for something over £5.4m and ordered to serve six years in default of payment. A receiver was appointed and realised some £12,500. In June 2007 enforcement proceedings took place in the Magistrates’ Court, by which time the amount due had risen to approximately £8.1m with accrued interest. The magistrates gave seven days’ credit for the part payment against the sum of £8.1m, and activated the sentence in default. Further payments were made totalling £77,500, which it was decided by the MoJ in calculating Mr Gibson’s release date would reduce his sentence in default by a total of 21 days. If those part-payments were credited against the original amount ordered they would have reduced the time to be served by 32 days. Mr Gibson sought Judicial Review of the MoJ’s decision but his claim was dismissed at first instance and his appeal was dismissed by the Court of Appeal (Lewison, Treacy and Gloster LJJ [2015] EWCA Civ 1148).

The issue on the appeal can be shortly stated: when calculating the credit to be given for part-payment of confiscation orders, should that credit be given against the amount originally ordered to be paid, or the total amount due, including interest?

The legislation and its history

To understand the judgment it is necessary to understand the structure of the legislation which applies to the enforcement of confiscation orders. In contrast to civil methods of enforcement, such as the appointment of receivers (where specific provision is made), each iteration of the confiscation legislation has simply referred to the separate, general legislation governing the enforcement of fines by the Magistrates’ Court. The Justices described the sequence of referrals in the legislation as “convoluted”, and some patience is needed to work through them to identify how the issue arose.

If one begins with the ordinary scheme for enforcing fines imposed by the Magistrates’ Court, one finds in the Magistrates’ Courts Act 1980 that a period of imprisonment is imposed after the magistrates have held that the defendant is guilty of “culpable neglect” in failing to pay the fine. Until that finding is made and a decision is made to commit the defendant to prison for non-payment, no default sentence has been “imposed”. If the defendant makes a part payment towards the amount due after he has been committed to prison, the default sentence “imposed” is reduced proportionately – if the defendant pays 10% of what is due, the total number of days to be served is reduced by 10%.

By what is now the Powers of Criminal Courts (Sentencing) Act 2000 a fine imposed by the Crown Court is enforced as if it were a fine imposed by the magistrates, and the 2000 Act refers back to the Magistrates’ Courts Act for the process to be followed. However there is an important difference; where the Crown Court imposes a fine it is obliged by the 2000 Act to fix the sentence to be served in default at the time it imposes the fine. Without appellate guidance, courts have not experienced much difficulty in giving credit for part payments before enforcement proceedings take place, but more importantly Crown Court fines do not incur interest.

Each iteration of the confiscation legislation has simply provided that confiscation orders are to be considered fines imposed by the Crown Court for the purposes of enforcement through imprisonment, and referred back to the 2000 Act or its predecessors. This was not a problem when the Drug Trafficking Offences Act 1986 was originally enacted because confiscation orders did not carry interest. Interest was added to orders in drug trafficking cases by the Criminal justice (International Co-Operation) Act 1991, but no changes were made to the provisions directing a simple referral to the provisions for enforcing fines. In non-drug trafficking cases interest was not added until the Proceeds of Crime Act 1995, and once again no changes were made to the provisions directing a referral to the procedure for enforcing fines. However, since interest was added, each iteration of the confiscation legislation has provided that it falls to be added to the “amount to be recovered” under the confiscation order, and thus becomes part of the confiscation order.

The issue thus arose: is a sentence in default of payment of a confiscation order “imposed” when the Crown Court pronounces it, or when that sentence is activated by the magistrates’ court? If the former, it was difficult to see how the subsequent accrual of interest could affect the total amount due at the time the sentence was “imposed”.

The Judgment

Lords Reed and Hughes devoted 12 of the 23 substantive paragraphs of the Judgment to a detailed exposition of the statutory analysis above, highlighting that:

“Many of the difficulties which have beset the present case arise out of the fact that the enforcement of confiscation orders is thus achieved by applying to them statutory provisions which were not designed for them.”

The Justices concluded that the sentence in default of payment of a Crown Court fine, and thus a confiscation order, is “imposed” for the purposes of the legislation when it is pronounced by the Crown Court, and not when a warrant of commitment is issued by the magistrates. It followed that the Magistrates’ Courts Act, s 79 referred to the time that the default sentence was originally pronounced, and before any interest had accrued. Accordingly, the correct approach to part-payment was to give proportionate credit against the amount originally ordered to be paid, not the total with accrued interest.

Comment

On the narrow question of statutory construction which arose in this appeal the judgment gives much needed clarity on a difficult point. However perhaps the most interesting aspect is the robustness with which the Justices rejected the argument for the Secretary of State for a purposive construction which would have permitted interest to be taken into account.

In the Court of Appeal Treacy LJ (with whom the other members of the Court agreed) acceded to the plea for a purposive approach and was even moved to adopt the rule in Inco Europe Ltd v First Choice Distribution permitting the courts to correct obvious legislative mistakes by reading in, omitting or substituting words. He began his analysis by recognising the oft quoted dictum that the confiscation legislation is, and is intended to be, “draconian”. The Supreme Court did not address the Court of Appeal’s reliance on Inco Europe directly, but both levels of appeal court were agreed that the real legislative mistake was that Parliament had failed to legislate at all – it had instead chosen to provide for a sequence of referrals to other statutes.

Having said that the purposive approach contended for by the Secretary of State would require that the words of the Magistrates’ Courts Act would “have to be done no little violence”, the Justices concluded:

“A scheme under which the period of imprisonment served in default of payment in full of the amount specified in the confiscation order is based on the entire amount outstanding, including interest, may or may not be what the framers of the confiscation legislation might have wished for or intended if the point had been considered. However, because the means adopted took the form of statutory reference (and re-reference) to provisions which were drafted for a different purpose and without confiscation in mind, they have not achieved that effect. If it is desired that they should do so, express legislation will be needed.”

In R v Norris the House of Lords was content to hold that the benefit of a tobacco bootlegger should be calculated by reference to the amount of duty which should have been paid, notwithstanding that the cigarettes had been seized and thus the defendant had not “benefitted” from his offence in any colloquial sense. It did so saying that if the result was harsh that was not out of place in a draconian system. In R v May, R v Jennings, R v Green the House of Lords directed courts to consider the three questions which arise in making a confiscation order separately, even if the result was a low order. In R v Briggs-Price the House held that if prosecutors wished to introduce alleged benefit from offences not proved at the trial they would have to do so to the criminal standard. In Waya the Supreme Court introduced the concept of proportionality to the calculation of confiscation orders and in R v Ahmed, R v Fields the Court introduced an extra-statutory rule which prevents multiple co-defendants from each being required to pay an amount equal to a jointly obtained benefit.

The Supreme Court did not directly address the Court of Appeal’s restatement of the “draconian” intent of the legislation, but the robust conclusion quoted above is difficult to reconcile with it. The judgment is short, and some of the language is, with respect, a not very veiled expression of judicial exasperation with the state of the confiscation legislation (after 28 appeals in 24 years, judgment is awaited on yet another confiscation appeal from Northern Ireland). However, when it is placed in the context of the sequence of appeals beginning with May, Jennings and Green, it is suggested that it gives a steer that Draco’s time as the primary beacon directing purposive constructions of the confiscation legislation may be nearing its end.