Chapman, R. v

In confiscation proceedings for mortgage fraud, the benefit calculation must avoid a disproportionate interference with property where value obtained by fraud has been restored to the lender. Where the lender has realised its security but has not recovered the loan in full, the defendant’s benefit is the gross advance less the net value returned to the lender. Where a fraudulently obtained loan is repaid in full following a profitable sale, benefit is the proportion of the profit attributable to the fraudulent loan.

The finality principle does not ordinarily prevent amendment of grounds in a timely constituted appeal to rely on an intervening change in the law. The court may correct a legally erroneous benefit finding even where the available amount means that the confiscation order itself remains unchanged.

The appellant pleaded guilty in the Crown Court at Southwark to conspiracy to obtain a money transfer by deception in a mortgage fraud. A confiscation order of £152,109 was made after the judge found that she had benefited from particular and general criminal conduct by £2,535,360.

Her original grounds challenged findings that a car, payments to a friend, and gifts to her son formed part of her available assets. While her renewed application for permission to appeal was pending, she sought to amend her grounds following R v Waya [2012] UKSC 51. The proposed ground concerned the correct assessment of benefit, although any reduction would not reduce the confiscation order because the available assets were lower.

The central issues were whether leave to amend should be granted despite finality considerations, and how benefit should be assessed where mortgage-loan proceeds or the secured property had been restored to the lender.

1. Leave to amend and appeal granted; benefit finding varied. The court quashed the finding that benefit was £2,535,360 and substituted £1,557,816.26. However, because that amount still exceeded the appellant’s available assets, the appeal against the confiscation order itself was dismissed.
2. The challenges to the available-assets findings disclosed no arguable perversity. Ownership of the BMW, the character of payments to Mr Hinchliffe, and the alleged gifts to the appellant’s son were factual matters. The appellant had not shown that no reasonable judge could have rejected her evidence. The payments to Mr Hinchliffe were found to be simple gifts; Proceeds of Crime Act 2002 section 78(1) did not require an assessment of consideration where no contract for services existed.
3. Applying R v Waya [2012] UKSC 51, benefit from mortgage fraud must reflect value already restored to the lender, so that confiscation does not become disproportionate under Article 1 of Protocol 1 to the Convention. For the Spanish property, the benefit was the £1,761,240 advance less the £367,333.15 net value returned on sale: £1,393,906.85. For the two properties where the loans were repaid in full, benefit was the proportion of sale profit funded by each fraudulent loan.
4. The finality principle ordinarily restricts late appeals based on a subsequent change in law, but it did not govern a timely constituted appeal. Once an appeal is constituted, the order remains subject to appellate review. The court therefore permitted amendment to advance a legally meritorious ground, notwithstanding that the immediate confiscation order would not change and the future significance of the benefit finding was uncertain.

• Court of Appeal (Criminal Division): Granted leave to amend and leave to appeal; quashed and substituted the benefit finding, but dismissed the appeal against the confiscation order.
• Crown Court at Southwark: On 20 December 2011, His Honour Judge Price made a confiscation order for £152,109, having found benefit from criminal conduct of £2,535,360.
• Crown Court at Southwark: On 24 March 2010, following the appellant’s guilty plea, Judge Beddoe imposed 15 months’ imprisonment and commenced confiscation proceedings under the Proceeds of Crime Act 2002.