Macfarlane, R. v

Under Criminal Justice Act 1988 section 71, the assessment of benefit must be kept distinct from the assessment of realisable assets at the date of a confiscation order. A benefit attributed to property cannot be added again as an asset where its residual value is already included in the assets figure.

Where civil proceedings make confiscation discretionary, a payment to the victim may properly be deducted from benefit when setting the order. The statutory concept of benefit is broad. It is not confined to a net capital-gains-style profit and may reflect both direct use of stolen funds and the financial advantage obtained by using them to meet living expenses.

The appellant, a solicitor, was convicted of theft after diverting client funds ostensibly intended for tax payments into an account opened in another name. Some of the stolen money was used directly in property transactions conducted through a company owned with his wife. It also enabled him to use legitimate income for those transactions by meeting ordinary living expenses from the stolen money.

Following related civil proceedings by his former firm, substantial sums and properties had been recovered. On 30 June 2006, the Crown Court at Bournemouth made a confiscation order for £426,414 and a recovery of defence costs order for £50,000. The appeal concerned the calculation of realisable assets and benefit, the effect of payments to the victim firm, and the exercise of discretion under section 71 of the Criminal Justice Act 1988.

1. The appeal was allowed only in part. The confiscation order was reduced from £426,414 to £351,197.80. The challenge to the £50,000 recovery of defence costs order failed.

2. The judge had wrongly added £475,350, described as the benefit from four properties, to the agreed realisable-assets figure of £867,193. Realiable assets are the property held at the time of the confiscation hearing. The properties had been disposed of by long leases and their residual freehold value was already included in the agreed assets figure. The benefit calculation therefore could not also inflate that figure.

3. There was no binding agreement that the £916,099 paid to the victim firm should be deducted from realisable assets. In the discretionary regime under section 71(1C) of the Criminal Justice Act 1988, and consistently with Glatt [2006] EWCA 605, it was proper to deduct that payment from benefit in fixing the overall confiscation order.

4. Section 71(4) defines benefit in broad terms. It was not displaced by section 71(5), concerning pecuniary advantage. The court rejected an approach equating benefit with a net capital-gains calculation. It was open to the judge to take account of both stolen money directly applied to the properties and the appellant's use of stolen money for living expenses, which enabled other income to be used for property investment.

5. The correct benefit figure was £1,267,296.80. After deducting £916,099 already paid to the victim firm, the confiscation order was £351,197.80. The court declined to make a further deduction for uncertain future recoveries in the pending civil proceedings, and found no error in the defence-costs order.

• Court of Appeal (Criminal Division) — allowed the appeal in part and substituted a confiscation order of £351,197.80 for the Crown Court order: [2007] EWCA Crim 2293.
• Crown Court at Bournemouth — on 30 June 2006, His Honour Judge Beashel made a confiscation order of £426,414 and a recovery of defence costs order of £50,000.