Gangar & Anor v R.

In confiscation proceedings, the assessment of criminal benefit and the assessment of assets available to meet an order are separate questions. Criminal proceeds jointly obtained may be treated in full as each co-offender’s benefit. At the available-assets stage, however, a co-owner can be required to realise only that person’s beneficial interest. Control over a joint asset does not turn a partial interest into ownership of its whole value. The court must determine the beneficial shares on the evidence. Equality is the prima facie starting point unless displaced. This prevents double counting of a joint asset and an order requiring a defendant to pay more than can be realised under the Criminal Justice Act 1988.

The appellants had been convicted of a substantial Ponzi-type investment fraud. Their criminal benefit was agreed at £60,750,000 each. Following lengthy confiscation hearings, Langstaff J found individual available assets for each appellant and further assets held jointly.

The judge treated the full value of the jointly held assets, exceeding £971,000, as available to each appellant. This counted those assets twice when calculating the confiscation and compensation orders. The appeals concerned whether that approach was required by the Criminal Justice Act 1988, and whether the joint assets should instead be attributed according to each appellant’s beneficial share.

1. The appeals were allowed to a limited extent. The jointly held assets had wrongly been counted at their full value in each appellant’s available assets. The confiscation and compensation orders were quashed and substituted with orders reflecting equal beneficial shares.
2. The court identified four distinct stages in confiscation: whether the defendant benefited from criminal conduct; the value of that benefit; the assets available for realisation; and the lesser sum for which an order must be made. May [2008] UKHL 28 established that jointly obtained criminal property may be the full benefit of each offender. That conclusion concerns benefit, not the available-assets stage. The questions must not be elided.
3. Under section 74 of the Criminal Justice Act 1988, a defendant’s partial beneficial interest is property capable of realisation, but it is not the whole beneficial interest in the asset. At the available-assets stage, a defendant may be ordered to realise only what is beneficially his. The statutory scheme protects a defendant from imprisonment for failure to pay a sum beyond his means.
4. The Crown’s reliance on each appellant’s practical control of joint assets was rejected. Control may allow a co-holder to withdraw or call for an asset, but the permitted use of its proceeds depends on the beneficial interest. It made no principled difference that the other co-owner was a co-defendant rather than an innocent third party.
5. The appellants bore the burden of showing that their available assets were below their benefit. That did not justify treating an indeterminate joint asset as wholly available to each. The court had to make the best proprietary findings possible. Applying the prima facie principle that equality is equity, and finding no evidence to displace it, the court held that the appellants had equal beneficial interests.
6. Buckman [1997] 1 Cr App R (S) 325 was followed. The approach in Chrastny (1991) 93 Cr App R 406 could not support a contrary result because it had elided benefit and available assets.
7. The substituted orders were £2,289,074.03 against Gangar and £686,996.81 against White. White’s default term was reduced from five years to three and a half years. Gangar’s six-year default term and the time for payment were unchanged.

• Court of Appeal (Criminal Division). Allowed the appeals to the limited extent necessary to correct double counting of jointly held assets: [2012] EWCA Crim 1378.
• Crown Court at Birmingham (sitting at Leeds). Langstaff J made confiscation and compensation orders after hearings in 2009 and 2010, treating the full value of joint assets as available to each appellant.