R v Secretary of State for Justice

For a Crown Court confiscation order, proportionate credit for a part payment under section 79(2) of the Magistrates’ Courts Act 1980 must be calculated by reference to the sum outstanding when the Crown Court fixed the default term. Accrued interest is excluded from that starting sum.

The default term is imposed when the Crown Court fixes it, rather than when the magistrates later issue a warrant of commitment. Penal legislation affecting liberty must be construed strictly. Interest cannot enlarge the denominator used to reduce imprisonment unless legislation clearly produces that result.

Following his conviction for drug trafficking, Mr Gibson received a confiscation order exceeding £5.4m and a six-year term of imprisonment in default. Interest accrued and several part payments were subsequently made. The prison authorities calculated the resulting reduction in the default term by comparing the payments with approximately £8.1m, which included accrued interest.

The Court of Appeal, in [2015] EWCA Civ 1148, had treated section 79(2) of the Magistrates’ Courts Act 1980 as extending to payments made before or after committal. The appellant contended that the denominator for calculating his reduction should remain the original amount outstanding when the Crown Court fixed the default term. The central issue was whether accrued interest formed part of that denominator.

1. Appeal allowed unanimously. Lord Reed and Lord Hughes delivered the judgment, with which Lord Mance, Lord Carnwath and Lady Black agreed. The reduction of the default term for part payments had to be calculated by reference to the sum outstanding when the Crown Court fixed that term, excluding subsequently accrued interest.

2. In a Crown Court confiscation case, imprisonment in default is “imposed” for section 79 of the Magistrates’ Courts Act 1980 when the Crown Court fixes the anticipatory default term under section 139(2) of the Powers of Criminal Courts (Sentencing) Act 2000. Section 150 of the 1980 Act defines imposing imprisonment to include fixing a term for failure to pay. Section 140(3)(b) of the 2000 Act and rule 55 of the Magistrates’ Courts Rules 1981 also contemplate a reduction under section 79(2) before a warrant of commitment is issued.

3. Section 79(2) measures the payment against the sum due when the period of detention was imposed. No interest had accrued when the Crown Court fixed the default term. Although section 10(1) of the Drug Trafficking Act 1994 treats interest as part of the amount recoverable for enforcement, it does not alter the express temporal basis of the calculation in section 79(2).

4. The Secretary of State’s construction would strain the operative language and increase the period of imprisonment. Penal legislation, especially legislation involving deprivation of liberty, is construed strictly. The express inclusion of distress costs in section 79(2) did not justify reading accrued interest into the calculation through a provision in another statute.

5. The successive statutory referrals applied provisions designed for fines to confiscation orders. They did not produce a scheme under which imprisonment in default was recalculated by reference to principal plus interest. Express legislation would be required to achieve that result. Mr Gibson was therefore entitled to the additional reduction claimed.

1. United Kingdom Supreme Court: The appeal was allowed unanimously. The calculation under section 79(2) of the Magistrates’ Courts Act 1980 was to exclude interest accrued after the Crown Court fixed the default term.
2. Court of Appeal: In [2015] EWCA Civ 1148, also reported at [2017] 1 WLR 1115, the court concluded that part payments made between the Crown Court order and the magistrates’ proceedings had to be recognised. It read section 79(2) as applying before or after the period of imprisonment was imposed.