Proceeds of Crime Act 2002, section 77

Tainted gifts

Part 2 Confiscation: England and Wales

(1)Subsections (2) and (3) apply if—

(a)no court has made a decision as to whether the defendant has a criminal lifestyle, or

(b)a court has decided that the defendant has a criminal lifestyle.

(2)A gift is tainted if it was made by the defendant at any time after the relevant day.

(3)A gift is also tainted if it was made by the defendant at any time and was of property—

(a)which was obtained by the defendant as a result of or in connection with his general criminal conduct, or

(b)which (in whole or part and whether directly or indirectly) represented in the defendant’s hands property obtained by him as a result of or in connection with his general criminal conduct.

(4)Subsection (5) applies if a court has decided that the defendant does not have a criminal lifestyle.

(5)A gift is tainted if it was made by the defendant at any time after—

(a)the date on which the offence concerned was committed, or

(b)if his particular criminal conduct consists of two or more offences and they were committed on different dates, the date of the earliest.

(6)For the purposes of subsection (5) an offence which is a continuing offence is committed on the first occasion when it is committed.

(7)For the purposes of subsection (5) the defendant’s particular criminal conduct includes any conduct which constitutes offences which the court has taken into consideration in deciding his sentence for the offence or offences concerned.

(8)A gift may be a tainted gift whether it was made before or after the passing of this Act.

(9)The relevant day is the first day of the period of six years ending with—

(a)the day when proceedings for the offence concerned were started against the defendant, or

(b)if there are two or more offences and proceedings for them were started on different days, the earliest of those days.

Definitions used in section 77 1

the court

(10) In this section, sections 120 to 140 and Schedule 3 “the court” means—

(a)the Court of Session, where a trial diet or a diet fixed for the purposes of section 76 of the Procedure Act in proceedings for the offence or offences concerned is to be, is being or has been held in the High Court of Justiciary;

(b)the sheriff exercising his civil jurisdiction, where a diet referred to in paragraph (a) is to be, is being or has been held in the sheriff court.

Defined in s.119(10) · see it in the full Act

Cases considering section 77 15

Hayes, R v

[2018] EWCA Crim 682 · 28 March 2018Interprets

The court construed the provision as part of a broad anti-avoidance tainted-gifts regime. That statutory purpose rejected a technical construction under which funding a joint acquisition could defeat confiscation. (see paras [23]-[25]; [36]) The court held that a gift made after the relevant day fell within the tainted-gifts regime even though the purchase money was not shown to be criminal proceeds. The initial transfer of a half interest was therefore capable of being tainted. (see paras [25]; [41]; [59]) The court recorded that the relevant day for the criminal-lifestyle assessment had been fixed as 19 June 2007. (see paras [22]; [26])

Lehair, R. v

[2015] EWCA Crim 1324 · 1 July 2015Interprets

The court compared these provisions with section 77(5). Their application where no criminal-lifestyle decision is made reinforced the anomaly produced by the appellant’s literal construction. (see para [18]) The subsection was construed purposively. A literal calendar-day reading would frustrate the statutory recovery purpose by allowing a period for disposal of assets after an offence. (see paras [19]; [22]) The reference to the date on which the offence was committed was held to refer to the actual time of commission. A gift made later on the same day may therefore be a tainted gift. (see paras [19]; [22]-[23])

Heron v Serious Organised Crime Agency & Anor

[2013] EWCA Civ 1106 · 22 July 2013Defines

The court uses the rule that, for a defendant with a criminal lifestyle, a gift may be tainted by its timing or its connection with criminal conduct. That rule underpinned the enforcement finding. (see paras [8], [24]-[25])

What each judgment says about section 77 is in the case-law panel in the full Act.

Explanatory note

141.Section 77 is another section which aligns two similar but slightly different provisions in the earlier drug and non-drug confiscation legislation (where a tainted gift is referred to as a “gift caught by this Act”). Like the Act, the earlier legislation enables gifts made by the defendant to other persons to be recovered in satisfaction of the confiscation order, and makes ancillary provision (for example, to enable assets of the recipient of a gift to be placed under restraint)..

142.The new scheme provides that, where the court has decided that the defendant has a criminal lifestyle, any gift made by the defendant to any person in the period beginning six years before the commencement of proceedings is caught, together with any gift made at any time out of the proceeds of crime. This is relevant both at the confiscation hearing and for the purposes of enforcement. If the court decides that the defendant does not have a criminal lifestyle, only gifts made since the beginning of the earliest of the offences committed are caught. Again, this is relevant at the confiscation hearing and for the purposes of enforcement.

143.However, in relation to a time before the court has decided whether the defendant has a criminal lifestyle, for example, at a pre-trial restraint hearing, the wider definition of tainted gifts applies. When making a restraint order, the court must exercise its discretion as to how much property to restrain by reference to the size of the confiscation order that may eventually be made. So, although a court can technically apply the wider definition of tainted gifts at the restraint stage, if it is clear at that time that the defendant does not have a criminal lifestyle and that therefore the narrower definition will apply at the confiscation hearing, the court will have to take this into account when making the restraint order.

144.Section 78 makes it clear that a gift includes a transaction for a consideration which is significantly less than the value of the gift at the time of the transfer; for example, if the defendant sells a car worth £10,000 at the time of the transfer for £2,000. This is a departure from the earlier legislation, where an undervalue transaction is defined as the difference between the value of the property when the defendant received it and its value at the time of the transfer. The old definition could cause injustice when the property transferred at an undervalue has depreciated in value between its receipt by the defendant and its transfer.

All the explanatory notes for the Act

Amendments and notes

1 notes from legislation.gov.uk

Commencement

  1. I67S. 77 in force at 24.3.2003 by S.I. 2003/333, art. 2, Sch.