Court of Appeal quashes s10A POCA 2002 determination of beneficial interest in third party property

Wed, 27 Oct 2021

On 22 October 2021 the Court of Appeal allowed the appeal brought by Philip Rule of No5 Barristers' Chambers on behalf of his client, who is the wife of the criminal defendant and was the Interested Party in the proceedings at first instance.

The Crown Court had made an order that determined, pursuant to s10A of the Proceeds of Crime Act 2002 that the offender had a beneficial interest in the home purchased by his wife for the family to live in to the extent of 33%, and an interest in the value of three investment properties situated abroad to the extent of 50% in each. The effect of that was that the criminal confiscation order made against him could be enforced against property held by the innocent wife who had worked hard to pay, by her legitimate income, for her own properties in the absence of financial support from her husband during their marriage.

The appeal (heard by Lord Justice Edis, Mr Justice Turner and Mr Justice Bryan) challenged the determination on several grounds, including on jurisdictional and procedural points that are of wider application and importance. Mr Rule made oral submissions in support of the appeal and the important issues raised. The Court accepted his invitation not to decide the case on a procedural fairness issue alone, but also to address the substance of the failure of the court below to address the law of property and equitable trusts in the correct manner.

The Court’s judgment included the following points:

1. It was properly arguable that there was an absence of jurisdiction under s10A of the Act for the property held in the sole name of the wife to be regarded as properly subject to the procedure for summary determination of the offender’s interest in property it appears he holds. However in view of the Court’s conclusion on other grounds did not fall for decision on this appeal.

2. Section 10A of the 2002 Act was inserted to provide a streamlined procedure whereby disputes as to beneficial entitlements could be determined in the Crown Court. There is considerable procedural flexibility available in s10A determinations, and the Court did not wish to say anything to guide how in particular cases that flexibility should be exercised, but there must be fairness and a court must bear that in mind. In dealing with issues of kind, it should be recalled that they are usually addressed in civil proceedings with pleadings, witness statements, disclosure and other protections against surprise. Considering a disputed issue under s10A a judge should bear firmly in mind the principle set out in Forte [2021] 4 W.L.R. 26 at [12], namely:

12. The lack of a prescriptive procedural structure means that judges dealing with the determination of the property rights of non-parties to confiscation proceedings under section 10A of the Act will be careful to ensure that the procedures adopted are fair and enable an accurate determination of the issue. Article 6 of the European Convention for the Protection of Human Rights and Fundamental Freedoms applies to protect the fair trial rights of such people…

That principle extends beyond procedural fairness. The court must also clearly be careful to apply the relevant law properly and to explain any decision to deprive a third party of property he or she claims to own. It is not necessary to mention every point or piece of evidence that has been argued, but it is however necessary to make clear findings of fact and explain why they were made by reference to the critical issues and evidence.

3. The obligation to articulate reasons as to why the evidence of a witness is rejected is one that falls to be performed in every case, so setting it out in the judgment is hardly to add a burden. The judge must articulate in his or her mind the reasons why evidence is to be rejected before doing so. If no good reason can be identified for that course it means that it is the wrong course to take. The discipline of explaining reasons is part of reaching the conclusion, and a process that ensures the court reaches a conclusion as to the facts properly open to it on the evidence.

4. Whilst the provision for fresh evidence to be admitted on appeal is to the same effect as section 23 of the Criminal Appeal Act 1968, under the applicable regulation 7 of the Proceeds of Crime Act 2002 (Appeals under Part 2) Order 2003 (SI. 2003/82) the considerations are liable to be interpreted differently given the nature of the proceedings. (NB. Materially this regulation requires the Court to consider four principal (but not exhaustive) issues:

7(3).   …in considering whether to receive any evidence, have regard in particular to—

(a)     whether the evidence appears to the Court to be capable of belief;

(b)     whether it appears to the Court that the evidence may afford any ground for allowing the appeal;

(c)     whether the evidence would have been admissible in the proceedings from which the appeal lies on an issue which is the subject of the appeal; and

(d)     whether there is a reasonable explanation of the failure to adduce the evidence in those proceedings...

5. Rather than decide the appeal on a procedural basis, the Court returned to the judge’s ruling. The Court was satisfied that there was an injustice in this case. The Court quashed the s10A determinations.

6. The legislative provisions do not clearly allow for any remittal of the case to the Crown Court (and both counsel advanced that there was no such power). The Court noted the issue was previously considered in Bevan [2020] EWCA Crim 1345 at [49]. The Court recognised that in London Borough of Barnet v Kamyab [2021] 1 W.L.R. 4860 (at [60]) it held that there is no power to remit the case to the Crown Court following a successful prosecution appeal under section 31(1) of POCA, because of the clear terms of section 32(1). However the Court suggested it was more arguable under section 32(4) that there was scope for such power on appeal than in relation to a prosecution appeal under s.32(1) as the power is more open textured, but it remained unclear. It was unnecessary to resolve that for same reasons as in Bevan – if there were a power to remit the Court would not exercise it for similar reasons.

7. The Court noted the financial costs to a third-party of defending her property in the s10A procedure, and absence of legal aid to assist, or costs recovery even if successful. To impose the burden upon her of being put through all of that process again would be quite wrong. Whilst the Court cannot prevent the prosecution from seeking to advance its case at an enforcement stage in another jurisdiction it seems likely in that instance an abuse of process argument would fall to be considered.

Philip Rule is a specialist in appellate work, and undertakes public, criminal, immigration and civil law cases before the higher courts.

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