CLW/22/29/14

14. Confiscation order — R. v Andrewes [2022] UKSC 24, unreported, 18 August 2022, SC.

  The Supreme Court unanimously reversed the judgment of the Court of Appeal (CLW/20/30/4).

  (1) In assessing the disproportionality of a confiscation order under section 6(5) of the Proceeds of Crime Act 2002 (CLW/02/32/5), the legal burden of proof is on the prosecution, so that it is for the prosecution to establish that it would not be disproportionate to require the defendant to pay the recoverable amount.

  (2) In CV fraud cases, viz where the defendant has obtained employment or some other remunerated position by including lies such as in relation to qualifications or experience they do not have, where the defendant has then given full value for the earnings received, it will normally (putting to one side where the performance of the services constitutes a criminal offence) be disproportionate under the proviso in section 6(5) to confiscate all the net earnings made. If the confiscation order did not reflect a deduction for the value of the services rendered, while requiring the defendant to repay the net earnings (the “take all” approach), the order would constitute double recovery or what can most accurately be labelled “double disgorgement”. Double disgorgement goes beyond disgorgement and constitutes a penalty. That would be disproportionate. It is not, however, the case that to make any confiscation order would be disproportionate (the “take nothing” approach), because the fraudster would be profiting from his crime if no confiscation order were made. The answer is that it will be proportionate to confiscate the difference between the higher earnings made as a result of the CV fraud and the lower earnings that the defendant would have made had they not committed the CV fraud. In many (perhaps most) situations of CV fraud, it will be appropriate, as a pragmatic approximation of that profit, rather than plucking a figure out of the air or adopting a multi-factorial approach, simply to base it on the percentage difference between the fraudster’s initial salary in the new job obtained by fraud and the fraudster’s salary in their prior job. There is no need for much time and effort to be expended in assessing, even in a broad-brush way, the difference between the earnings with and without the CV fraud if it is clear that, in any event, that difference will exceed the recoverable amount. Such an approach provides a principled “middle way” (or “halfway house”) between the “take all” or “take nothing” approaches. However, where the performance of the services is illegal, for example because it is an offence to perform the relevant services without the requisite qualification, it would not be disproportionate to confiscate the full net earnings because the performance of those services has no value that the law should recognise as valid.

  Key cases cited: Considered – R. v Carter, Kulish (Viktoriya), Kulish (Ruslan) and Lyashkov, CLW/09/09/4, [2006] EWCA Crim 416, unreported, 6 February 2006, CA; R. v Waya, CLW/12/42/5, [2012] UKSC 51, [2013] 1 A.C. 294, SC; R. v Sale, CLW/13/38/8, [2013] EWCA Crim 1306, [2014] 1 W.L.R. 663, CA; Paulet v UK, CLW/14/19/15, 61 E.H.R.R. 39, ECHR; R. v Morrison, CLW/19/20/8, [2019] EWCA Crim 351, [2019] 4 All E.R. 181, CA; R. v Asplin and ors, CLW/21/32/3, [2021] EWCA Crim 1313, [2022] Crim.L.R. 586, CA.

Archbold 2022 reference: 2002 Act, s.6, § 5B-22.

Date of judgment: 18 August 2022

Judges: Lord Hodge DPSC, Lord Kitchin JSC, Lord Hamblen JSC, Lord Burrows JSC, Lord Stephens JSC

COMMENT

The eponymous anti-hero of this judgment invented an academic and employment history that enabled him to apply for and fraudulently obtain various senior positions within the NHS care sector. His work record, over a 12-year period, was exemplary. His last formal review gave “a glowing account of his skills in all areas” (at [10]).

At age 63 he was sentenced to two years imprisonment. The CPS then obliged the Crown Court to proceed under section 6(4) of the 2002 Act, i.e. to determine whether Mr Andrewes had “benefited from his particular criminal conduct”. The CPS contended that he had, and to the full extent of his net salary over the entirety of his employment, namely £643,602.91. The available amount, and thus the recoverable amount, was £96,737.24. The Crown Court agreed with the CPS, at least as to the making of a confiscation order in that sum. The Court of Appeal quashed it. Mr Andrewes had given “full value” for the remuneration he had received. Therefore, to make a confiscation order in such circumstances amounted to “double recovery”. And double recovery is the evil identified by the Supreme Court in Waya and to which the proviso to section 6(5) is directed. Doubtless to the very great surprise of the parties, the Supreme Court, at [46], found a middle path. It is likely to prove to be a particularly rocky one.

Henceforth, it is proportionate to make an order based on the difference in salary between the job the defendant used to have before he fraudulently obtained a better-paid one. Reducing that difference to a percentage (here 38%), the Crown Court can easily compute the appropriate order by applying it to the net income received (at [51]). So the appropriate confiscation order in the instant case would have been £244,569 (38% of £643,602). Since the recoverable amount was less, the confiscation order made at first instance was restored, albeit with a wholly new ratio.

What a mess! A number of technical questions arise, not least as to the figure of £244,569. As per Waya (at [78]), is this the defendant’s benefit? Or his “real” benefit (see the dissenting speeches in Waya)? Or is it the recoverable amount? If the last (and this is what the SC has declared at [50]), it is in a sum plainly not contemplated by the operation of section 7 of the 2002 Act:

“(1)      The recoverable amount for the purposes of section 6 is an amount equal to the defendant’s benefit from the conduct concerned.

(2)       But if the defendant shows that the available amount is less than that benefit the recoverable amount is –

            (a)  the available amount …”.

Over and above the opacity of the reasoning, why does this matter? In the unlikely event that the elderly Mr Andrewes recovers from prison and penury to rebuild his life, he is at risk of an application by the CPS under section 22 for a reconsideration of the available amount, predicated upon the benefit figure as certified in the confiscation order. It may be that the pro forma confiscation template used in every Crown Court will have to be adapted to incorporate a new heading of “Maximum Recoverable Amount” so as to limit the reach of these applications.

Yet the real horror of this judgment doesn’t lie in its legal legerdemain but rather in what it portends for future cases. The job seeker who embellishes his CV so as to meet the demand for “previous experience” and who proves (like Andrewes) to be a real asset to his employer will find that confiscation of a sum equal to all of his net income will be deemed proportionate precisely because this was his first paid employment (!). Such an outcome, apparently, “reflects a principled way of determining the defendant’s profit from the fraud” (at [49]). Some might beg to differ.

Andrew Campbell-Tiech QC