Morrison, R. v

Under section 6(5)(b) of the Proceeds of Crime Act 2002, a confiscation order must be a proportionate means of removing the proceeds of crime. The statutory aim is restorative, not punitive. The proportionality exception is narrow and does not create a general discretion to avoid hardship or perceived injustice to a defendant or an innocent third party.

A defendant cannot defeat the tainted-gift regime merely because a recipient refuses to return the gift or the defendant lacks a legal right to compel its return. The relevant question is whether the asset or value can be realised, rather than whether it is likely to be realised voluntarily. Third-party hardship arising from enforcement is ordinarily addressed at the enforcement stage.

The respondent pleaded guilty to money-laundering offences arising from undeclared income. He transferred £38,200, including £30,000 derived from offending, to his former partner to enable her to buy her council house at a discounted price. The parties agreed that the transfer was a tainted gift.

The Crown Court made a confiscation order limited to £1,923.63. It excluded the tainted gift because the respondent had no legal or equitable interest in the house, could not force its sale, and an order including the gift would in practice lead to imprisonment in default.

The prosecutor appealed, contending that the Recorder had wrongly treated proportionality as a broad enquiry into hardship and had overlooked the possible appointment of an enforcement receiver.

1. Appeal allowed. The Recorder erred in excluding the tainted gift from the confiscation order. The Court varied the order under section 32(1) of the Proceeds of Crime Act 2002 to require payment of £41,409.56 within three months. The three-month default term remained unchanged.

2. The statutory purpose of the Proceeds of Crime Act 2002 is to remove criminals’ pecuniary proceeds of crime. A proportionality assessment under section 6(5)(b) must therefore examine whether the order is a proportionate means of achieving that aim. Following R v Waya [2012] UKSC 51, it is not a general discretion to avoid hardship, serious injustice, or an additional financial penalty.

3. The tainted-gift regime is deliberately severe. A defendant cannot avoid an order merely because a recipient is unwilling to restore the gift, the defendant has no action to recover it, or enforcement may cause hardship to the recipient. The Recorder wrongly treated the respondent’s inability to compel a sale, and the partner’s unwillingness to sell, as decisive. The material question was whether the value could be realised, not whether it would be realised voluntarily.

4. Section 10A concerns the determination of a defendant’s interest in property likely to be used to satisfy an order. It does not authorise a general balancing exercise between the statutory aim and third-party hardship. In accordance with R v Ahmed and Qureshi [2004] EWCA Crim 2599, third-party rights arising from a possible sale are ordinarily considered at enforcement.

5. An enforcement receiver could lawfully be appointed if the order were unsatisfied. The receiver could be given powers concerning realisable property, subject to third parties having a reasonable opportunity to make representations. The parties’ failure to identify that possibility before the Recorder did not cure the legal errors in his reasoning.

• Court of Appeal (Criminal Division): In [2019] EWCA Crim 351, the prosecutor’s appeal was allowed. The confiscation order was varied to include the tainted gift.

• Crown Court at Manchester: On 5 June 2018, the Recorder made a confiscation order for £1,923.63 and made no order in respect of the tainted gift.