Najafpour, R v

For a confiscation order, the recoverable amount must reflect the defendant’s actual available assets. An asset which the court is satisfied has no financial value must be valued at nil, even if it might otherwise fall within the statutory concept of property.

A court should not expose a defendant to default imprisonment for failure to realise an irrecoverable debt. Ordinarily, a defendant claiming that a debt is worthless must provide evidence of recovery efforts and may need to seek a certificate of inadequacy later. Where irrecoverability is already established when the order is made, however, the debt must be excluded from the available amount.

The appellant had been convicted of money laundering and was made subject to a confiscation order of £90,400. The benefit figure was agreed to be £10 million, but the recoverable amount depended on the value of his available assets.

Two assets totalling £50,000 were accepted as available. The disputed £40,400 was a share of a debt owed by a person in Iran involved in drug offending. The sentencing judge found that the appellant was unlikely ever to receive it, but nevertheless included it because the appellant had a right to payment under the arrangement.

The appeal concerned whether the debt was property and, if so, whether an asset found to be irrecoverable could properly be included in the available amount under the Proceeds of Crime Act 2002.

1. Appeal allowed. The confiscation order was reduced from £90,400 to £50,000. The default term was varied to 18 months.

2. The court applied the three-stage confiscation framework stated in R v May [2008] 1 AC 1028. The court must determine whether the defendant benefited from relevant criminal conduct, the value of that benefit, and the recoverable amount. Under section 9 of the Proceeds of Crime Act 2002, the available amount includes the value of free property, less priority obligations, plus tainted gifts.

3. The disputed debt should not have been included. Assuming that it was property and a chose in action, the judge had found that it was in practice irrecoverable. It therefore had no financial value and had to be assessed at nil. To include it would be inconsistent with the statutory scheme, because default imprisonment must not follow where the defendant has shown that he lacks assets capable of meeting the order.

4. The court stressed that this result would be unusual. A sentencing court may properly require evidence that a defendant has attempted to recover an alleged debt before accepting that it is worthless. In the ordinary case it may include the debt and leave the defendant to seek a certificate of inadequacy under section 23 if realisation later fails. But where worthlessness is established when the order is made, it must be reflected then.

5. The court did not decide whether a debt arising from an unlawful arrangement was property within section 84. It added, obiter, that requiring lawful practical steps to recover such a debt would not conflict with the principle discussed in R v Islam [2009] UKHL 30, since it would not require the defendant to carry out an unlawful realisation.

• Court of Appeal (Criminal Division) Allowed the appeal in Najafpour, R v [2009] EWCA Crim 2723. The confiscation order was reduced to £50,000 and the default term was set at 18 months.

• Crown Court Following convictions for money laundering, made a confiscation order of £90,400, with two years’ imprisonment in default.