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New Confiscation Authority

The Court of Appeal has ruled in R. v Cole [2018] EWCA Crim 888 that when the Prosecution apply under section 22 Proceeds of Crime Act 2002 for a Defendant's available amount to be reconsidered in respect of a historic confiscation order, it was wrong to not give consideration to the a change in the law which post-dated the original confiscation order (at para. [48]). The change of the law in this case was the effect of the Supreme Court judgment in R. v Waya [2012] UKSC 51 in calculating the benefit figure in cases of mortgage fraud.

The Court rejected the argument that there had been undue delay in making the application around 3 years after the original confiscation order was made (at para. [42, 43]).

The Court also confirmed at para. [55] an earlier authority of Oyebola [2013] EWCA Crim 1052 in which it was held that where a property is obtained through fraud and is subsequently rented out, that rental income is properly included in the benefit figure calculation as the proceeds of crime. The Court rejected a novel argument that the income was no longer the proceeds of crime because the lender, for commercial reasons, had continued the arrangement, notwithstanding the original fraud (at para. [37, 38, 56]. The Court therefore rejected an appeal of a later confiscation order made against this defendant. 

Barry Smith was instructed by the Crown Prosecution Service in this appeal. For full details, see the original judgment.

Concurrent civil and criminal cases - a new approach?

Professional clients may find themselves facing both civil and criminal proceedings on the same issue and this can create particular difficulties for them. If concurrent civil, criminal and or regulatory proceedings are a possibility, then it is important that the client has a legal team that understands the broader legal context of any litigation they face.

A good example of when concurrent civil and criminal proceedings can be problematic can be found in the context of investigations by HMRC. Following a detailed investigation, HMRC may launch criminal proceedings which, by their nature, can last some time before they are concluded. At the same time, if cash has been recovered in the investigation then HMRC may apply to the Magistrates' Court for the cash to be surrendered under the civil cash forfeiture provisions.

Following a police investigation it is common for cash forfeiture proceedings to be adjourned pending the outcome of a criminal trial. The reasons for this are simple: firstly, in the event of a conviction it is likely that cash forfeiture proceedings will not be contested, saving time and money for the applicant. Secondly, the applicant will not want to do anything in the civil proceedings which might jeopardise the criminal trial.

However, a new approach by HMRC has led to them seeking to complete civil cash forfeiture proceedings whilst criminal proceedings are ongoing, citing a backlog of cases that they wish to conclude. This can lead to many problems for the respondent to such an application, such as the fact that they are likely to need to give detailed evidence under oath as to the alleged criminality at a much earlier stage than criminal proceedings would have required them to. This is also likely to be before proper disclosure has been made by the prosecutor of any material that might assist them. Any concessions made by a respondent in this situation in cross-examination are likely to be used against them in the criminal trial.

Generally speaking, criminal lawyers have relied on the case of R. v Payton [2006] EWCA Crim 1226 to support applications to adjourn civil proceedings pending the outcome of a concurrent criminal case. In that case, Pill L.J. held that:

'It is accepted that 'close liaison' would be expected between investigators in the civil and in the criminal proceedings. It is submitted that 'the overwhelming likelihood is that the police would lodge an application for forfeiture (and so effect the detention of the cash and the preservation of the status quo) but then seek an adjournment of the application until criminal proceedings (including any appeal) are concluded'" [26].

'It is, however, important that care is taken to ensure that the fair trial of a defendant is not prejudiced by anything arising in civil proceedings in the magistrates' court and steps should be taken accordingly' [31].

More recently, HMRC have deployed the subsequent Court of Appeal authority of Mote v Secretary of State for Work and Pensions [2007] EWCA Civ 1324 to support the progression of civil cash forfeiture despite the existence of a parallel criminal case. In Mote, having considered Payton, Richards L.J. held that the fact that the prosecution would receive an opportunity to rehearse their case did not in of itself give rise to any serious prejudice to a respondent:

'In general, as it seems to me, the fact that the prosecution has had a previous opportunity to rehearse its case cannot be said to give rise to substantial prejudice to the defendant in a subsequent criminal trial. If it were otherwise, it would provide a ground of objection to a retrial in criminal proceedings where the jury have been unable to agree in the first trial or where a conviction in the first trial has been quashed on appeal. If this were a point of substance, I would also expect it to have been mentioned in the previous cases.' [36].

Accordingly, practitioners who wish to adjourn civil proceedings pending the conclusion of criminal proceedings would be well advised to identify a clear and specific prejudice to their client beyond the fact that their client would be at jeopardy of giving evidence twice on the same facts. This is particularly so under the new culture of the criminal courts which expects defendants to outline their case in detail at a much earlier stage that was previously required.

Barry Smith instructed to defend insolvency prosecution

Following an extensive investigation of his client, Barry Smith was instructed by David Fendt of Edwin Coe LLP to defend a prosecution brought against a former Company Director by the Insolvency Service following the collapse of his employment companies. After a period of negotiation with the Insolvency Service and a full analysis of the underlying evidence, he was able to achieve a suspended sentence for his client despite the case involving £4 million worth of transactions and substantial liabilities to creditors remaining.