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Catherine-RoseIn a judgment delivered by Lord Toulson, the Supreme Court allowed in part the joint appeals of R v Ahmad & Anor and R v Fields & Ors, two cases involving criminal confiscation proceedings. In both cases, multiple defendants had jointly acquired money through criminal activities. The issue for the Court was whether each defendant could be held liable for the total sum and, if so, whether the full amount could be recovered multiple times.

The Court held that, where appropriate, each defendant can be assumed liable for the whole benefit. However, it would be disproportionate and a breach of Article 1 of Protocol 1 to the ECHR for the full amount to be recovered multiple times.

The Court’s judgment is successful in providing a practical solution to the problem of double recovery. However, it appears to overlook some of the issues raised by both sets of defendants in their appeals.

Facts and History

Fields, Sanghani and Sagoo were found guilty of conspiracy to defraud through their company MDL. They had published false accounts in order to secure credit agreements to buy goods and services, but made no payments under the agreements. At first instance, they were found to have acquired £1.4 million jointly, and confiscation orders for the full amount were made against each defendant.

Ahmad and Ahmed were the sole directors and shareholders of MST, a company through which they carried out a complex carousel fraud. By way of 32 circular transactions, they fraudulently reclaimed £12.6 million from HMRC. It was found that the benefit obtained by MST was acquired jointly by the defendants, and that each of them was liable for the full amount.

Both appealed to the Court of Appeal, and both appeals were dismissed.

In the Supreme Court

Although both sets of defendants accepted that they obtained their respective benefits jointly, they appealed to the Supreme Court on the basis that the full amount should not be recovered from each defendant. They pursued two separate lines of argument, each of which was addressed by the Supreme Court in its judgment.

The Fields Argument: Splitting Liability for the Benefit

The Fields defendants argued that, although they obtained their benefit jointly, for the purposes of confiscation the liability should be apportioned between them. The split should be determined after an assessment of their individual roles, but if this was impossible to determine, the presumption should be of an equal split.

The Supreme Court rejected this argument on the following grounds:

1) It would render full recovery of the proceeds of crime less likely;

2) It would make the task of the judge at confiscation hearings more difficult;

3) It would make it easier for defendants to minimise their liability;

4) If it were truly oppressive for each defendant to be liable for the full benefit, no order could be made unless the number of participants involved in the crime and the role of each could be ascertained;

5) Double recovery can be avoided by other means [para. 57-58].

The result of this judgment is that, in some cases where it cannot be determined what role the defendants played, each defendant will be presumed liable for the full benefit. The judgment points out that if defendants are frank with the Court as to their roles, such unfairness could not arise [para. 59]. However, this puts the burden onto the defendant to prove the depth of his participation, in order to avoid a disproportionate confiscation order. This could be seen as an infringement of a defendant’s right to avoid self-incrimination. Although defendants are already convicted at the point of a confiscation hearing, comments made could still prejudice appeals. Defendants may therefore find themselves having to choose between trying to reduce their confiscation order, and appealing their conviction or sentence successfully.

The Ahmad Argument: Avoiding Double Recovery

Unlike the Fields defendants, the Ahmad defendants accepted that they could both be the subjects of a confiscation order for the full amount of the benefit. However, it was argued that the orders should have been capped to prevent double recovery.

The Supreme Court agreed that recovering the benefit twice would go beyond the purpose of the Proceeds of Crime Act 2002. It would also breach the defendants’ Article 1 Protocol 1 ECHR right to peaceful enjoyment of property, as it would not serve the legitimate aim of the legislation and would be disproportionate [para. 72].

The solution, according to the judgment, is for each confiscation order to contain a condition that it should not be enforced if the sum has already been recovered from another defendant [para. 72]. The appeals of Ahmad & & Anor and Fields & Ors were both allowed to the extent that their orders could be amended in line with this finding.

Finally, the Court briefly considered the issue of inequality of outcome between defendants, for example if the full amount were to be recovered from one, and the others were therefore released from their obligation to pay. The Court held that this was an inherent feature of joint criminality, and that in such cases the ‘losses must lie where they fall’ [para. 73].

It might be questioned in what sense inequality of outcome is an inherent feature of joint criminal activity, given that in most cases of organised crime each individual’s ‘cut’ is well decided. It does seem that the Court is allowing the possibility of unfairness, in that the consequences faced by defendants will not necessarily follow from their level of criminality. Rather, the consequences could be based on individuals’ ability to hide their assets more effectively than their co-defendants.

Overall, the Supreme Court does appear to overlook some of the issues raised by the defendants in their appeals. However, the judgment certainly sets out a practical solution to the problem of double recovery of a benefit, a clearly disproportionate situation sanctioned by the notoriously problematic POCA.

 

Catherine is a paralegal at David Phillips & Partners, working in criminal defence. After studying Politics and Philosophy at the University of Sheffield, she completed a Graduate Diploma in Law, and is working towards a career at the Criminal Bar. She is currently gaining her police station accreditation, and regularly volunteering as a Legal Observer on demonstrations.