Posted: 06 / 03 / 2022

When we were writing our book ‘A Practical Guide to Confiscation and Restraint‘ one of the topics myself and my co-authors, Narita Bahra QC and John Carl Townsend were keen to cover was the variation of a confiscation order, to reduce the amount required to be paid, under s23 PoCA 2002.These applications are commonly made for defendants where, upon realisation, the proceeds of sale of an asset are less than the value placed on that asset when the confiscation order was made. To help practitioners we included a fictional s23 application as an appendix to the book.

The situation

Section 23 applications are relevant where a confiscation order has been made and, since the order was made, there has been a change in circumstances affecting the defendant’s available amount. The s23 application is made (normally) by the defendant (assisted by his legal team), although a s23 application can be made by the prosecutor or a receiver.

A succesful s23 application can only result in a reduction in the amount requred to be paid under a confiscation order. (If the prosecutor requires an increase in the amount required to be paid he has to make an application under a different section – s22.)

The court process

The court process can be broken down into two steps. Firstly the court has to ask itself whether the defendant’s available amount today is sufficient to enable him to pay the balance remaining to be paid under the confiscation order.

If, and only if, that amount is insufficient, the court has discretion to reduce the amount required to be paid under the confiscation order. In practice it will reduce the amount required to be paid under the confiscation order so that the balance remaining to be paid does not exceed the defendant’s current available amount.

The application

The application will therefore need to briefly set out the relevant details of the confiscation order and the court’s findings at that time regarding the defendant’s available amount, explain what has changed since the confiscation order was made, and set out the defendant’s current available amount and the balance remaining to be paid.

The application will need to deal with all of the components of the defendant’s available amount as found by the court at the time the confiscation order was made.

Is a hearing necessary?

In a straightforward case it may be possible for the defence and prosecution to reach agreement upon an appropriate amendment to the amount required to be paid under the confiscation order. Where an agreement has been reached it is possible for the court to amend the order without requiring a hearing.

What a s23 application is not

A s23 application is not:

  • an opportunity to re-argue issues on which the court made decisions when making the confiscation order (such as the extent of the defendant’s interest in a jointly owned asset)
  • an appeal against the confiscation order
  • an opportuinty to correct factual errors in the confiscation order drawn up after the confiscation hearing (it may be possible to deal with these under the ‘slip rule’ instead)
  • an opportunity for a re-examination of the defendant’s benefit as found by the court when making the confiscation order.

Ups and downs

Suppose a defendant’s available amount includes a portfolio of shares in companies quoted on the London Stock Exchange. When these shares are sold some realise more than, and some less than, the amounts at which they where stated in calculating the defendant’s available amount when the confiscation order was made.

Since the court has to recalculate the defendant’s available amount today, the court will need to take account of the ups as well as the downs. It is not appropriate for the defendant to request the court to reconsider only those assets which have fallen in value.

Hidden assets

Where, when making the confiscation order, the court has not been satisfied that the defendant has revealed, or the prosecution has identified, all the assets which form components of his available amount, and so the court has based the confiscation order on a figure in excess of his identified available amount, then there will be a difficulty in persuading the court that it is subsequently able to find a new (and lower) figure for the defendant’s current available amount.

Whether, in these circumstances, the court will vary the original confiscation order will depend on the facts of the case.

Legal Aid

A s23 application is a separate matter from the making of the confiscation order and attracts a separate legal aid payment.

A simple example

It may help to explain a s23 application to reduce the available amount by using a simple worked example. Let’s imagine ‘John’ a defendant who was made subject to a confiscation order on 6 July 2021.  On that day the Crown Court made a confiscation order against John on the following terms:

  • Benefit £500,000
  • Available Amount £90,000
  • Amount to pay £90,000
  • Default sentence 18 months

John’s available amount of £90,000 is made up of £10,000 which he has in a bank account in his sole name and £80,000 equity in his home.  The value of his home is £300,000 and he has an outstanding mortgage balance of £220,000 on it.

John paid the first £10,000 due under the confiscation order on time from the monies in his bank account, but he was not able to sell his home quickly.

John did finally find a buyer for his home in March 2022. Unfortunately the price was below that at which the property had been valued at the time the confiscation order was made in July 2021, and additional mortgage arrears had racked up. There were also additional advertising costs incurred.

After paying off the estate agent’s fees, advertising costs, the outstanding mortgage and the conveyancing solicitor’s fees, only £50,000 remained to use to pay off the confiscation order.

John’s available amount now is £50,000 (the net proceeds of the sale of his home – he has no other assets). This of course does not include the £10,000 he had in a bank account as he no longer has that – he used it to pay the first £10,000 due under the confiscation order.

The amount remaining to be paid under the confiscation order is £80,000.

The court concludes that John’s available amount today – £50,000 – is inadequate to pay the amount remaining to be paid under the confiscation order – £80,000 – so, under s23(3) the court may vary the confiscation order by reducing the amount required to be paid under the order to “such smaller amount as the court believes is just”.

John invites the court to fix the amount required to be paid at £60,000 (of which £10,000 has already been paid).

If the court agrees John will be able to settle the amount remaining to be paid, which is £50,000, from the proceeds of sale of his home.

 

The book ‘A Practical Guide to Confiscation and Restraint’ by Narita Bahra QC, David Winch and John Carl Townsend is available from Law Brief Publishing at £49.99 (Paperback: 978-1-913715-44-1). Readers of this blog can use the discount code NVB45NC which will give a 10% discount (along with free delivery) when purchasing the book from Law Brief Publishing.

This brief article can only provide an outline of the main issues. Lots more information is available on our website blog HERE or via our recorded webinars HERE.

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David

(Note: This article applies to confiscation proceedings under the provisions of Part 2 of the Proceeds of Crime Act 2002 in England and Wales. There are a number of additional issues which could be relevant to a defendant’s confiscation proceedings in particular cases which it is not possible to deal with in a relatively short article such as this. Appropriate professional advice should be sought in each individual case.)