An interesting case whereby the application to reduce the applicant's confiscation order was refused. The case provides a review of the relevant case law that will be of assistance to practitioners, especially in how the Court will approach cases where an applicant seeks to reduce his confiscation order where he has been found to have “hidden assets”.
An application for a Certificate of Inadequacy under the Drug Trafficking Act 1994 was refused by the High Court. The Defendant had been convicted of attempting to import 69 kilograms of cocaine. At confiscation his benefit was found to be £2m and a confiscation order was made in that sum: his property included a substantial amount of unidentified or “hidden” assets.
All parties submitted and the Court accepted that in considering such applications the propositions set out by Mr David Holgate QC in B  EWHC 3217 at paragraph 17 applied:
(1) The burden lies on the applicant to prove, on the balance of probabilities, that his realisable property is inadequate for the payment of the confiscation order (see Re O'Donoghue  EWCA Civ 1800 , per Laws LJ at para 3).
(2) The reference to realisable property must be to ‘whatever are his realisable assets as a whole at the time he applies for the certificate of inadequacy. If they include assets he did not have when the confiscation order was made, that is by no means a reason for leaving such fresh assets out of consideration’ ( Ibid and see also Re Phillips  EWHC 623 (Admin) ).
(3) A s83 application cannot be used to go behind a finding made at the confiscation hearing or embodied in the confiscation order as to the amount of the defendant's realisable assets. Such a finding can only be challenged by way of an appeal against the confiscation order. (See Gokal v Serious Fraud Office  EWCA Civ 368 , per Keene LJ at paragraphs 17 and 24).
(4) It is insufficient for a defendant to say under section 83 ‘that his assets are inadequate to meet the confiscation order, unless at the same time he condescends to demonstrate what has happened since the making of the order to realisable property found by the judge to have existed when the order was made’. (See Gokal paragraph 24 and Re O'Donoghue at paragraph 3).
(5) The confiscation hearing provided an opportunity for the defendant to show that his realisable property was worth less than the prosecution alleged. It also enabled the defendant to identify any specific assets which he contended should be treated as the only realisable property. The section 83 procedure, however, is intended to be used only where there has been a genuine change in the defendant's financial circumstances. It is a safety net intended to provide for post-confiscation order events. (See McKinsley v Crown Prosecution Service  EWCA Civ 1092 per Scott Baker LJ at paragraphs 9, 21-24, 31 and 35).
(6) A Section 83 application is not to be used as a “second bite of the cherry”. It is not an opportunity to adduce evidence or to present arguments which could have been put before the Crown Court judge at the confiscation hearing (paragraph 38 of Gokal and paragraphs 23, 24 and 37 of McKinsley ).”
“A” sought to argue that the above propositions should also be modified in light of 2 Court of Appeal decisions: Re O'Donoghue  EWCA Civ 1800 and Glaves v CPS  EWCA Civ 69 , and that the Court should approach the statutory test contained in Section 17 by considering all the evidence and “ maintaining a sense of justice and proportion ”.
At paragraph 34 Mr Justice Graham drew four conclusions from Court of Appeal decisions:
(i) The principles enumerated by Mr Holgate in B provide a convenient starting point for the Court's consideration of a s17 application; those principles are not, however, to be construed as if they were statutory rules;
(ii) The statute contemplates that there will be cases when it will be possible for an applicant to establish that a confiscation order was properly made against him in a larger sum than in truth he is able to pay;
(iii) The burden of proof will be on him, but an applicant is entitled to try to persuade the court that his identified assets have diminished in value and that as a result he is not able to pay the amount outstanding; he is entitled to attempt that task even in circumstances where he cannot provide full disclosure of what had happened to all his assets, including previously unidentified assets; and
(iv) It is a matter for the judgment of the court, on the facts of an individual case, whether the applicant has made out such a case; in reaching that judgment the court must maintain a sense of proportion, however dishonest a defendant may have been about his assets.
However, Mr Justice Graham stressed that neither O’Donoghue nor Glaves permitted an applicant to attempt this task by means of an attack on the findings of fact made by the Crown Court when it made the confiscation order.
Although the application was pursuant to DTA 1994, the principles are of general application to applications under section 23 of the Proceeds of Crime Act 2002. The Court provided a review of the relevant case law that will be of assistance to practitioners, especially in how the Court will approach cases where an Applicant seeks to reduce his confiscation order where he has been found to have “hidden assets”. It should be noted that a Defendant cannot attack the Crown Court findings as part of a COI application. If he wishes to do so, he must appeal the Confiscation Order to the Court of Appeal.
James Fletcher practises in both civil and criminal law. He is a specialist in Asset Recovery and Proceeds of Crime work. He is instructed on behalf of businesses, by individual members of the public and by Government departments.