The Supreme Court has held that a Crown Court has a duty to make a confiscation order against a convicted defendant, where the criteria in section 6 of the Proceeds of Crime Act 2002 are satisfied, regardless of whether the defendant receives an absolute or conditional discharge.
Background
In 2007 and 2008, Varma was detained at Gatwick Airport three times and found to have brought tobacco into the UK without paying import duties. He pleaded guilty and was convicted of being knowingly concerned in fraudulently evading duty on goods under section 170(2)(a) of the Customs and Excise Management Act 1979 ('the 1979 Act').
Varma was given a two year conditional discharge under section 12 of the Powers of Criminal Courts (Sentencing Act) 2000 (‘the 2000 Act). The court also made a confiscation order requiring him to pay £1,500. Varma appealed against the confiscation order.
The Court of Appeal decision
In this case, the Court of Appeal quashed the confiscation order, but commented that it would have reached a different decision if it hadn't been bound by the decision in R v Clarke (2009).
In R v Clarke, the Court of Appeal held that a Crown Court does not have the power to impose a confiscation order where a defendant has been given an absolute or conditional discharge. Under the 2000 Act, conditional discharges are given where the court considers it is 'inexpedient’ to punish an offender.
In R v Clarke, the Court of Appeal reasoned that the making of a confiscation order is inconsistent with a finding that it is inexpedient to inflict punishment. Although section 12 of the 2000 Act allows judges to impose certain punishments, such as compensation and costs orders, it does not explicitly refer to confiscation orders.
The Court of Appeal concluded that parliament had deliberately intended to exclude them.
The Supreme Court decision
The Supreme Court held that judges not only have the power to make confiscation orders where offenders are absolutely or conditionally discharged, but that they have a duty to do so under section 6 of the Proceeds of Crime Act 2002 (POCA). It allowed the appeal and reinstated the confiscation order for £1,500.
Lords Clarke, Dyson and Reed reasoned that a true construction of POCA required the court to make a confiscation order regardless of the sentence imposed.
Lord Clarke said section 6(1) of POCA is expressed in absolute terms and that, if sections 6(2) and (3) are satisfied, the court has no discretion over whether or not to make a confiscation order.
Section 13(4) of POCA provides that the Court must leave the confiscation order out of account when deciding the appropriate sentence for the defendant. This section assumes a confiscation order has been made and in Lord Clarke's view, making an absolute or conditional discharge is part of ’deciding the appropriate sentence‘.
Section 15 of POCA provides for the postponement of proceedings under section 6, with sections 15(2) and (3) expressly contemplating confiscation proceedings occurring after the postponement period.
Lord Clarke reasoned that this shows the statutory scheme requires confiscation proceedings to take place after any postponement. He could see no basis on which it could be argued that no confiscation order should not be made because it would be appropriate to give the defendant an absolute or conditional discharge, and further that there was nothing in POCA that gives the court the power to decline to make a confiscation order under section 6.
Lord Clarke drew attention to the position in Scotland; section 92 of POCA provides that, in the case of Scotland, the Court has a duty to make a confiscation order where an order for an absolute discharge is made, whether there is a conviction or not.
Lord Clarke reasoned that as Parliament intended this to be the case in Scotland, it would be inconceivable that it intended a different position in England and Wales.
Lord Phillips agreed with the main judgment but noted as an aside that HM Revenue & Customs' practice is to initiate confiscation proceedings in the amount of the duty payable, rather than require payment of the duty.
Lord Phillips questioned whether a defendant could be said to have evaded duty when the only reason he has done so is that HMRC have chosen not to impose it. Lord Mance pointed out that the criminal conduct in question was the importation without declaration or non-payment, not the failure to pay when the payment was demanded. His initial view was that the focus of s170(2) of the 1979 Act is on the conduct of the accused as against their statutory obligation to pay the duty, rather than the actions of HMRC. However, he also indicated that it may be appropriate for the courts to look in detail at the appropriateness of HMRC's expedient approach in these matters in a future case.