Johnson, R v

In a criminal-lifestyle case, a tainted gift must be included in the available amount at the value prescribed by the Proceeds of Crime Act 2002. The absence of presently realisable value does not import the free-property approach into the tainted-gift regime.

A confiscation order remains subject to proportionality under article 1 of Protocol 1. That safeguard does not recreate a general discretion to relieve hardship. A later fall in the value of a gift, without restoration of value by the offender or double recovery, did not make recovery of its statutory value disproportionate. A court should nevertheless assess the evidence of value, proportionality, and the appropriate enforcement term separately.

The appellant pleaded guilty to 16 fraud offences against her employer. She had transferred funds to family members and was accepted to have a criminal lifestyle.

The Crown Court at Leeds made a confiscation order for £20,000. The sum represented equity gifted to the appellant’s daughter in a house. At the date of the order, the daughter’s interest had no value because the mortgage debt exceeded the property’s value. The appellant later sought a variation under section 23, which the Crown Court refused.

On appeal against the original confiscation order, the central issue was whether the worthless present value of the tainted gift prevented an order for its value at the date of the gift, or made that order disproportionate.

1. Appeal dismissed. The Recorder correctly held that the £20,000 equity transferred to the appellant’s daughter was a tainted gift. Under sections 9, 77 and 81 of the Proceeds of Crime Act 2002, it had to be included in the available amount at the greater of its value at the date of the gift, adjusted for changes in money value, and the value of property representing it at the date of the order.

2. The approach applicable to unrecoverable free property did not apply to tainted gifts. The statutory regime deliberately places pressure on an offender to recover value apparently transferred to another person. It can therefore cause hardship where the recipient cannot or will not return the value, but Parliament had not supplied a general recoverability or hardship exception.

3. The obligation to make the order was nevertheless qualified by proportionality under article 1 of Protocol 1 to the Convention. Following R v Waya [2012] UKSC 28, that qualification preserves the essential purpose of confiscation: removing the offender’s financial benefit from crime. It does not reintroduce a general discretion to avoid hardship. This case was unlike cases involving restored value or double recovery. The gift had become worthless, but no value had been restored by the appellant and the statutory aim remained proportionate.

4. The court also held that it had no jurisdiction to entertain an appeal against the later refusal of the section 23 variation application. In any event, the Recorder’s construction of section 23 was correct.

5. For future cases, a court considering a tainted gift apparently worthless at the order date should separately examine the reliability of the gift valuation, proportionality, and the default term. A default term is for enforcement rather than further punishment. Where enforcement is affirmatively shown to be impossible, that may exceptionally justify a substantial reduction. No further issue about the default term arose because the order had been paid.

• Court of Appeal (Criminal Division): Dismissed the appeal against the confiscation order in [2016] EWCA Crim 10.

• Crown Court at Leeds: On 22 January 2014, made a £20,000 confiscation order. On 17 July 2015, refused an application to vary the order under section 23 of the Proceeds of Crime Act 2002; no appeal lay from that decision.