International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Thursday, July 9, 2020

When can 3rd Parties bring a claim of interest in property to be confiscated because of financial crimes? (UK Supreme Court case)

BACKGROUND TO THE APPEAL
On 22 September 2015 Bernadette Hilton was convicted of three offences contrary to section 105A of the Social Security Administration (Northern Ireland) Act 1972. Following conviction, Ms Hilton was committed to the Crown Court and that court was asked to make a confiscation order under section 156 of the Proceeds of Crime Act 2002. The application was heard by His Honour Judge Miller QC on 20 October 2016. He made a confiscation order in respect of £10,263.50, which was the equivalent of Ms Hilton’s half share of her matrimonial home. Ms Hilton appealed against the order. The Court of Appeal decided that Section 160A(2) of the Proceeds of Crime Act 2002 required that, at the time of making a confiscation order, the Crown Court must give to anyone who is thought to hold an interest in the property an opportunity to make representations on whether a confiscation order should be made and, if so, in what amount. The failure to give Ms Hilton’s estranged partner and the building society the chance to make representations was “fatal to the decision of the judge” and the confiscation order was thus invalid. The Director of Public Prosecution appeals to this Court. The Court of Appeal certified the following points of law of general public importance:

“1. Where property is held by the defendant and another person, in what circumstances is the court making a confiscation order required by section 160A of the Proceeds of Crime Act 2002, in determining the available amount, to give that other person reasonable opportunity to make representations to it at the time the order is made?

2. If section 160A does so require, does a failure to give that other such an opportunity render the confiscation order invalid?”

JUDGMENT
The Supreme Court unanimously allows the appeal. It holds that the questions certified do not arise on the present appeal because a determination under s. 160A was not made. Lord Kerr gives the judgment.

REASONS FOR THE JUDGMENT
The Proceeds of Crime Act 2002 provides for two stages to confiscation proceedings: the first is the making of the confiscation order itself and the second the order securing its  enforcement. The first stage is dealt with in sections 156 and 163B and envisages that the making of a confiscation order should be straightforward, indeed quasi-automatic [8]. Section 160A of the Act provides that

(1) Where it appears to a court making a confiscation order that
(a) there is property held by the defendant that is likely to be realised or otherwise used to satisfy the order, and
(b) a person other than the defendant holds, or may hold, an interest in the property, the court may, if it thinks it appropriate to do so, determine the extent (at the time the confiscation order is made) of the defendant’s interest in the property.
(2) The court must not exercise the power conferred by subsection (1) unless it gives to anyone who the court thinks is or may be a person holding an interest in the property a reasonable opportunity to make representations to it.

(3) A determination under this section is conclusive in relation to any question as to the extent of the defendant’s interest in the property that arises in connection with -
(a) the realisation of the property, or the transfer of an interest in the property, with a view to satisfying the confiscation order, or
(b) any action or proceedings taken for the purposes of any such realisation or transfer.

The critical question is whether, at the stage of making the order, the Crown Court judge made a determination of the extent of Ms Hilton’s interest in the jointly owned property under section 160A. If made on foot of such a determination, the confiscation order becomes immutable unless there is an appeal [11-14]. A determination under s. 160A therefore effectively extinguishes the opportunity for third parties to make later representations. On the other hand, the judge can at this stage form a view of the extent of the interest of the person in question, here Ms Hilton, without making a determination under s. 160A.

Parliament intended this to be the case, as is evident from the provisions relating to the second, enforcement stage of a confiscation order [14].

see decision here for Hilton, R. v (Northern Ireland) [2020] UKSC 29 (1 July 2020) URL: http://www.bailii.org/uk/cases/UKSC/2020/29.html
Cite as: [2020] UKSC 29

https://lawprofessors.typepad.com/intfinlaw/2020/07/when-can-3rd-parties-bring-a-claim-of-interest-in-property-to-be-confiscated-because-of-financial-cr.html

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