In the matter of Peacock

For offences committed before 24 March 2003, the confiscation regime under the Drug Trafficking Act 1994 remains available by virtue of the applicable transitional and saving provisions.

By a majority, the court held that section 16(2) requires after-acquired assets to be included when determining the amount that might presently be realised. The inquiry concerns all realisable property held at the time of the application, not merely property held when the original confiscation order was made. Any increase remains capped by the assessed proceeds of drug trafficking. The Crown Court retains a discretion under section 16(4) to order the increase that is appropriate, permitting consideration of legitimate acquisition, rehabilitation, delay and exceptional hardship.

The appellant had been convicted of drug-trafficking offences committed in 1995. Although his proceeds were assessed at £273,717.50, his then realisable property was £823, and a confiscation order was made for that amount. After his release, he acquired substantial assets through a legitimate property business.

The prosecution obtained a certificate under section 16(2) of the Drug Trafficking Act 1994 and the Crown Court increased the recoverable sum to £273,717.50. Following enforcement proceedings, the Court of Appeal dismissed the appellant’s jurisdictional challenge in [2010] EWCA Civ 1465.

The Supreme Court considered whether section 16 remained in force after the commencement of the Proceeds of Crime Act 2002 and whether section 16(2) extended to assets genuinely acquired after the original confiscation order.

1. The appeal was dismissed by a majority of three to two. Lord Brown, Lord Walker and Lord Wilson held that the section 16(2) certificate was lawful. Lord Hope and Lady Hale would have allowed the appeal on the after-acquired-assets issue.

2. The court unanimously held that section 16 of the Drug Trafficking Act 1994 remained in force. Article 3 of the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003 disapplied the confiscation regime under the Proceeds of Crime Act 2002 where an offence was committed before 24 March 2003. Article 10 preserved the whole former statutory scheme, including sections 15, 16 and 17, for such offences.

3. Lord Brown, Lord Walker and Lord Wilson held that section 16(2) addresses the amount that might be realised at the time of the application. The definition in section 6 supplies the concept of the total value of all realisable property held by the defendant. It does not import into section 16 the separate temporal restriction applicable when the original confiscation order is made. The parenthetical reference to an amount which “has subsequently increased” was capable of including genuinely after-acquired assets as well as concealed, undervalued or appreciated assets.

4. The majority found support in the symmetry between sections 16 and 17. Both address a later change in the defendant’s ability to meet the established liability. Excluding after-acquired assets would also generate artificial problems of identification, substitution and tracing. The recoverable amount nevertheless cannot exceed the assessed value of the proceeds of drug trafficking.

5. Section 16(4) does not compel the Crown Court to increase the order by the entire increase in realisable property. It confers a discretion to substitute the amount that appears appropriate. Legitimate acquisition, abandonment of crime, elapsed time and exceptional hardship may be relevant. The exercise of that discretion was not challenged in this appeal.

6. Lord Hope, with whom Lady Hale agreed, considered that legitimate after-acquired assets should not be included without clear and unambiguous statutory language. In his view, sections 6 and 16 created sufficient doubt about Parliament’s intention, which should have been resolved in the defendant’s favour. That construction did not command a majority.

1. United Kingdom Supreme Court: By a majority of three to two, dismissed the appeal and upheld the lawfulness of the section 16(2) certificate: [2012] UKSC 5.
2. Court of Appeal: Dismissed the jurisdictional appeal on 20 December 2010, holding itself bound by R v Tivnan and also agreeing with that decision: [2010] EWCA Civ 1465.
3. Court of Appeal (Criminal Division): On 20 February 2009 dismissed an earlier appeal concerning valuation and the exercise of the Crown Court’s discretion. No citation is stated.
4. Crown Court: On 14 November 2007 increased the amount recoverable under the confiscation order from £823 to £273,717.50.
5. High Court: On 18 May 2005 issued the certificate under section 16(2) of the Drug Trafficking Act 1994 which founded the application to increase the recoverable amount.