Confiscation for Trading Standards Ruth Bala and Lee Finch | GOUGH SQUARE CHAMBERS

Overview Restraint Page 3 Prosecution of the offence(s) Page 9 lifestyle offences section 329 POCA Page 9 Bringing Confiscation Proceedings is it worth it? the treatment of assets (incl unexplained cash deposits and property equity) Page 12

Restraint Preserving property to satisfy confiscation orders

Restraint Making confiscation work: The purpose of the confiscation regime is to remove the financial incentives and rewards associated with crime. Obtaining confiscation orders following conviction is an important step in depriving criminals of the benefit of their crimes (or criminal lifestyles) but confiscation orders are only effective if assets are available for confiscation. Taking steps to restrain assets prior to conviction can ensure that confiscation is not frustrated by the dissipation of assets.

Restraint Applying for Restraint Orders: Power to make Restraint Orders is conferred on the Crown Court. They can be made on an ex parte application to a judge in chambers. The Crown Court may make a Restraint Order if one of the conditions in section 40 POCA is satisfied, including if: An investigation has been started with regard to an offence and there are reasonable grounds to suspect that the alleged offender has benefited from his criminal conduct; Proceedings for an offence have been started (but not concluded) and there is reasonable cause to believe that the defendant has benefited from his criminal conduct. There is a wealth of authority which holds that the discretion should only be exercised if there is a reasonable apprehension that, without it, realisable property may be dissipated.

Restraint Restraint Orders Generally: Restraint Orders may include an exception for reasonable living expenses (including legal expenses which are not connected to the offences in question). Restraint Order should only be made in relation to “realisable property” (defined in section 83 POCA): This is wider than property obtained from the criminal conduct; but Does not extend to a third party company’s assets even if the restrained party wholly owns and operates the company Once a Restraint Order is made, applications can be made to vary or discharge that Order (section 42(3) POCA). Appeals can be made to the Court of Appeal and, ultimately, the Supreme Court (sections 44 and 45 POCA).

Restraint Restraint Orders – the need to act promptly: It is important to consider the appropriateness of restraint and confiscation proceedings at an early stage and then proceed efficiently. Delay in bringing restraint proceedings/investigating alleged offences/advancing a prosecution should be avoided. Delays can prevent a Restraint Order from being granted; and Delays can lead to the discharge of the Order: sections 41(7B) and 42(7) POCA – a Restraint Order (granted on the basis of an investigation) must be discharged if proceedings are not commenced within a reasonable time.

Prosecuting the Offences Keeping Confiscation in Mind

Prosecution of the Offences Lifestyle Offences Defendant must have a “criminal lifestyle” in order for (i) s10 ‘assumptions’ to be triggered and (ii) ‘benefit’ to derive from ‘general’ criminal conduct (beyond offences in these proceedings); Easiest to prove this by including a Schedule 2 ‘lifestyle offence’ on the indictment: Includes Trade Marks Act 1994 s92 (unauthorised use of TM in relation to goods – manufacture, sale or possession) and some copyright offences; Suffices if a single count is a lifestyle offence (s75(2)); Unnecessary to include lifestyle offence on indictment if: offence is committed over 6 month period and defendant obtains £5k benefit; or offence is part of a ‘course of criminal activity’ (i.e. a series of offences – s75(3)) and defendant obtains £5k benefit

Prosecution of the Offences PoCA s329: possession of criminal property If indictment contains sample counts re items seized, may wish to include count re ‘totality’ of seizure: PoCA s329(1)(c): possession of criminal property; Value of totality of seized items then clearly within ‘benefit’ figure; Alternatively, totality of items should fall within first assumption (that property “transferred to” defendant within 6 years prior to prosecution is obtained as result of general criminal conduct) Definition of “criminal property” (s340(3)): property which: constitutes/represents a “benefit” from criminal conduct (in whole/part, directly/indirectly); and defendant knows/suspects this; Are seized counterfeit goods “benefit”?

Prosecution of the Offences PoCA s329: Are counterfeit goods ‘benefit’? s340(5) and (8), and s76(4): “benefit” from general criminal conduct is property obtained as a result of, or “in connection with” the conduct; Are counterfeit goods tools to obtain benefit (i.e. sale proceeds), or benefit itself? R v Islam [2009] UKHL 30: wholesale value of imported heroin could be included in the ‘benefit’ when making a PoCA confiscation order. Its value was determined by reference to the illegitimate market; Not a case under s329 Equally, the totality of a seizure of counterfeit goods should constitute ‘benefit’ (and therefore ‘criminal property’)

Bringing Confiscation Proceedings

Bringing Confiscation Proceedings Is it a good idea? Confiscation should be considered in all cases where the defendant has benefited from his crime. Always depend on the facts of the specific case. Factors to bear in mind: Will necessitate transfer to the Crown Court in even the simplest of cases; The prospects of succeeding in obtaining a Confiscation Order; Has the defendant retained any benefit from the crime? Are the lifestyle provisions triggered? Are there any assets? The costs involved in bringing the confiscation proceedings; and The impact upon recovery of prosecution costs.

Bringing Confiscation Proceedings Treatment of Unexplained Cash Deposits Police can obtain transaction histories from defendant’s bank accounts (discount credits < £100); compare with any tax returns re legitimate employment income (obtained from HMRC); First assumption: any property transferred to defendant within 6 year period prior to prosecution = obtained as a result of general criminal conduct; Therefore starting point is that unexplained cash deposits are included in ‘benefit’; BUT the assumption will not be made if the defendant shows it is incorrect, or there is a “serious risk of injustice” (s10(6)); Wallbrook and Glasgow (1994) Crim L.R. 613: “vague and generalised assertions are not sufficient to discharge the burden, the defendant must produce clear and cogent evidence”

Bringing Confiscation Proceedings Treatment of Equity in Defendant’s home Second assumption: any property “held” by defendant after conviction date = obtained as a result of general criminal conduct; Therefore starting point is that equity in home is included in ‘benefit’ : defendant needs to demonstrate how he financed purchase and mortgage payments; s79: property value = market value of defendant’s interest in property; Even if defendant persuades Court to exclude value of his interest in home from ‘benefit’, it remains in ‘available amount’ s9: when calculating ‘available amount’, strip out obligations with priority (incls mortgages and final charging orders following CCJs); Unsecured debts owed by the defendant are irrelevant to calculating the available amount (Ghadami [1998] 1 Cr App R (S) 42)

Questions? ruth.bala@goughsq.co.uk lee.finch@goughsq.co.uk