Chen, R v

For confiscation purposes, the market value of a pension policy must reflect what can be realised when the order is made. A policy which cannot be surrendered, assigned, sold, used as security or otherwise turned into money has no market value merely because its underlying fund has a present accounting value or a future transfer value.

Under the Proceeds of Crime Act 2002, the prosecution may seek reconsideration of the available amount when an asset later becomes realisable. That mechanism removes any need to attribute an unreal value to an inaccessible pension interest. A confiscation order should not require payment which the court knows the defendant cannot make at the time of the order.

The appellant pleaded guilty to conspiracy to obtain property by deception arising from a scheme which charged elderly and vulnerable customers for unnecessary and valueless damp-proofing work. He received four years’ imprisonment.

The Crown Court made a confiscation order for nearly £42,000 under the Proceeds of Crime Act 2002, with one month’s imprisonment in default. Apart from a car worth £100, the appellant held two pension policies due to mature in 2018. They had an underlying fund value and anticipated transfer value, but could not be surrendered, assigned or sold and gave him no present right to any money.

The appeal concerned whether those policies were free property with a present realisable value when fixing the available amount.

1. Appeal allowed. The confiscation order was varied to £100, representing the value of the appellant’s car. The period of imprisonment in default was fixed at seven days.

2. The policies were free property: the appellant had an interest in them and no relevant order prevented their being free under the Proceeds of Crime Act 2002. Their status as free property did not determine their value.

3. Market value under the Act had to be assessed by reference to realisability at the date of the order. These policies could not be surrendered, assigned or sold, and could not in reality produce money by borrowing or otherwise. Their underlying fund value and projected maturity value therefore did not provide a present market value.

4. The court preferred the approach in R v Cornfield [2007] 1 Cr App R(S) 124. It distinguished R v Ford [2008] EWCA Crim 966, where the policies had a surrender value. The ability under section 22 of the 2002 Act to seek reconsideration of the available amount when assets later become available was a material difference from the earlier statutory regime. Further, a certificate of inadequacy could not cure the present case because an unsurrendered policy would remain an asset after a loan secured against it.

5. A nominal default term did not answer the principled objection to ordering payment which the court knew could not then be made. The court noted, without deciding the Convention issue, that imprisonment in such circumstances might also raise a question under Article 5 of the European Convention on Human Rights.

• Court of Appeal (Criminal Division): Allowed the appeal in [2009] EWCA Crim 2669 and varied the confiscation order to £100.
• Crown Court: Made a confiscation order for nearly £42,000, with one month’s imprisonment in default. The lower-court citation is not stated in the judgment.