Panesar, R. v

In criminal-lifestyle confiscation proceedings, the court must determine separately whether the offender benefited from criminal conduct, the value of that benefit, and the recoverable amount. Statutory assumptions must be applied unless their statutory exception is established.

Where tainted funds make a significant contribution to repayment of a mortgage on a property whose sale finances a later home, the resulting equity may be treated as benefit from criminal conduct. The benefit is not confined to the original tainted payment or reduced because that payment is small compared with the later appreciated value. A court cannot invoke general proportionality to avoid that result where the statutory assumptions properly apply.

The respondent pleaded guilty in the Crown Court at Bradford to conspiracy to supply class A drugs. He received three and a half years’ imprisonment. The offence triggered confiscation under the Proceeds of Crime Act 2002.

In September 2007, HH Judge Benson made a confiscation order for £30,687. The prosecutor appealed, contending that the judge had wrongly excluded the equity in the respondent’s present home from the benefit figure. The Crown also challenged the judge’s allowance for undeclared but legitimate taxi earnings.

The central issue was whether mortgage repayments found to be tainted by criminal conduct required the equity in the later property, bought using the sale proceeds of the former home, to be included as benefit.

1. The Crown’s appeal was allowed. The court dismissed the challenge to the judge’s finding that the respondent had earned an additional £3,000 a year from legitimate taxi-driving work. There was, albeit only just, an evidential basis for that factual finding. The judge’s reference to cash businesses made the respondent’s and Mr Iqbal’s evidence plausible; it was not a substitute for evidence.

2. In a criminal-lifestyle case, the statutory inquiries into benefit, the value of benefit and recoverable amount are separate. The court must first establish the facts on the material available, making statutory assumptions where required. This approach accorded with May [2008] UK HL 28.

3. The judge had found that £8,600 paid towards the mortgage on the respondent’s former home was the proceeds of crime. He had therefore made the relevant assumptions and had not found that they were incorrect or that applying them created a serious risk of injustice. It was then not open to him to exclude the equity in the respondent’s present home by describing the tainted contribution as historically insignificant or by relying on general proportionality.

4. The tainted repayments were substantial when made. They reduced the mortgage on the former home, whose sale proceeds enabled the respondent to buy the present home. The court followed the principle in Mouldon [2004] EWCA Crim 2715: where tainted funds materially enable acquisition of property, the benefit may be the equity in the property at the time of confiscation, including appreciation in value.

5. The benefit, available amount and substituted confiscation order were each fixed at £174,087. Payment was ordered by 31 July 2009, with an 18-month default term.

• Court of Appeal (Criminal Division): the Crown’s appeal was allowed in [2008] EWCA Crim 1643. The confiscation order was substituted in the sum of £174,087.
• Crown Court at Bradford: following the respondent’s guilty plea to conspiracy to supply class A drugs, HH Judge Benson made a confiscation order of £30,687 on 20 September 2007.