Malhi, R. v

Section 10 of the Serious Crime Act 2015 applies to confiscation orders made after its commencement, irrespective of when the underlying offence was committed, where no transitional provision provides otherwise. A default sentence is a penalty for failing to satisfy the confiscation order, rather than a penalty for the original offence. Its increased maximum therefore does not infringe Article 7 where it was applicable when the order was made.

When fixing a default period, the court should broadly align it with the amount within the statutory band. It must also take account of the sentence’s purpose of encouraging payment and of evidence that payment may not be made. Those matters may justify a longer term, but do not automatically justify the statutory maximum.

In 2006, Hardip Singh Malhi was sentenced to imprisonment and made subject to a confiscation order with a benefit figure exceeding £800,000. He then had no available assets, so the order was nominal.

After he acquired equity of just over £108,000 in a house, the prosecution sought a re-determination under section 22 of the Proceeds of Crime Act 2002. The Crown Court at Birmingham fixed the available amount at £108,010 and imposed a five-year default term under section 10 of the Serious Crime Act 2015.

The Court of Appeal had already rejected renewed applications concerning the conviction and substantive confiscation order, but adjourned the issue of the default term. The remaining questions were whether the 2015 provisions applied despite the date of the offending, whether Article 7 was engaged, and whether the maximum default period was justified.

1. The court gave leave and allowed the appeal to the limited extent of reducing the default period from five years to three years.

2. Section 10 of the Serious Crime Act 2015 applied to every confiscation order made on or after 1 June 2015, regardless of the date of the offence. A confiscation order is made by reference to assets then available. The commencement arrangements contained no transition preserving the former default periods for earlier offending. Other contemporaneous amendments to the Proceeds of Crime Act 2002 also necessarily applied to orders made after commencement.

3. The increased default periods did not contravene Article 7 of the European Convention on Human Rights. A default sentence is not a penalty imposed for the original offence. It is a penalty for failure to discharge the confiscation order. It could first be imposed only after the time for payment had expired, which in this case was necessarily after the new provision had taken effect.

4. The sentencing judge gave no reason for selecting the maximum. Applying the general principles discussed in Pigott [2010] 2 Cr App R (S) 16, the court balanced the position of £108,010 within the applicable statutory band against the need for a default term to encourage payment. There was proper concern that the order might not be met, so the term could exceed one produced by simple arithmetical alignment. However, the sum lay towards the bottom of the band and the maximum was not justified.

• Court of Appeal (Criminal Division). The court had previously dismissed renewed applications concerning the conviction and substantive confiscation order, while adjourning the issue of the default term. In this judgment it gave leave and allowed the appeal on that limited issue, reducing the term from five years to three years: [2016] EWCA Crim 2025.
• Crown Court at Birmingham. On 3 July 2015 the court re-determined the available amount under section 22 of the Proceeds of Crime Act 2002 at £108,010 and fixed a five-year default term.