O'Donoghue, Re

Under Criminal Justice Act 1988 section 83(1), a defendant seeking a certificate of inadequacy bears the burden of proving that his current realisable property, assessed as a whole, is insufficient to meet the confiscation order. The procedure does not permit the defendant to reopen the original finding as to his assets.

An unexplained former asset, including any interest or other fruits it may have produced, may prevent the burden being discharged. The court must assess all the evidence, but may not replace that burden with a presumption that the defendant received a reasonable return. This requirement does not impose a statutory assumption of hidden assets and is not unfair under Article 6(2).

Following his conviction for obtaining property by deception and theft, the applicant was made subject to a confiscation order of £94,587. £43,223.42 remained unpaid. He applied for a certificate of inadequacy after a car and caravan had sold for less than their assessed values.

At the confiscation hearing, £35,500 held in an account in his wife’s name had also been treated as his realisable property. Its whereabouts and any return from it remained unexplained. Lightman J, sitting in the Administrative Court, refused a certificate on 10 February 2004.

The appeal concerned whether the applicant could rely on the reduced value of particular assets without accounting for the £35,500 and its possible fruits, and whether that requirement infringed Article 6.

1. Appeal dismissed. Laws LJ’s reasoning was agreed by Sir Martin Nourse and Pill LJ. The applicant had not proved that his realisable property was inadequate within section 83(1) of the Criminal Justice Act 1988.

2. A section 83(1) application requires an assessment of the defendant’s realisable assets as a whole when the certificate is sought. It is not a means of challenging the original confiscation finding that the defendant beneficially owned a particular asset. That finding could only have been challenged on appeal from the confiscation order.

3. The defendant bears the burden of showing what has happened to realisable property found to exist when the confiscation order was made. An unexplained asset raises the question whether it has produced interest or other fruits. Silence may therefore lead the court to find that the statutory burden has not been discharged, subject to its assessment of all the evidence. This approach was consistent with Gokal v SFO [2001] EWCA Civ 368.

4. The court explained that the fact-specific decision in Turner did not establish a general proposition that treating banked money as interest-bearing would be speculative. If it had done so, it would have been wrong.

5. Lightman J was wrong to contemplate a presumed reasonable return on an undisclosed asset. That approach would dilute the defendant’s burden and introduce avoidable uncertainty.

6. The Article 6 argument failed. Unlike the statutory assumption considered in Phillips v United Kingdom, application 41087/98, section 83(1) imposed no assumption for the defendant to rebut. It required proof of the present position concerning assets already found to have existed. That requirement was neither excessively harsh nor unfair.

7. Pill LJ added that the fact-finding exercise must remain proportionate. In an appropriate case, the whole evidence might establish inadequacy despite a defendant’s failure to explain every asset. On the facts here, however, the unexplained £35,500 justified refusal of the certificate.

• Court of Appeal (Civil Division): The appeal was dismissed: [2004] EWCA Civ 1800.
• High Court, Queen’s Bench Division (Administrative Court; Lightman J): On 10 February 2004, the court refused the applicant’s application for a certificate of inadequacy under section 83(1) of the Criminal Justice Act 1988.
• Crown Court: Following conviction on 16 July 2001, a confiscation order of £94,587 was made against the applicant.