Monday, June 15, 2009

At what price?

Market value includes black market value for the purposes of ascertaining the amount of a forfeiture order under the Proceeds of Crime Act 2002[UK]: R v Islam [2009] UKHL 30 (10 June 2009).

The Law Lords split 3 – 2 over this, and overruled R v Hussain [2006] EWCA Crim 621.

There is a difference between calculating the amount of benefit derived from criminal activity and calculating the amount available to meet a confiscation order. Black market values can be used in the former, but not the latter.

Criminal activity may be interrupted by the offender's arrest, as it was in this case, before the proceeds were converted into money or lawfully held property. Here the respondent had imported heroin into the UK and was arrested in possession of it. What was the value of his benefit from the offending?

Pursuant to Hussain, which the Court of Appeal reluctantly followed in this case, it was nil, as the heroin had no lawful market value. Obviously on these facts there was no injustice arising from that conclusion, as the heroin was forfeited to the Crown. The magnitude of the offending, for sentencing purposes, could be measured by the illegal value of the drug, but would a confiscation order have any use?

Confiscation orders are adjusted so as not to exceed the value of property available for their discharge, so the potential injustice is mitigated. But that is a separate consideration from the calculation of the amount of benefit from the offending (44).

So, the value of the drugs on the black market was relevant to calculating the amount of the offender's benefit from the criminal activity.

What might the position be under our new Criminal Proceeds (Recovery) Act 2009[NZ]? (Commencement eagerly awaited: see note for 2 May 2009.) Has an offender like Mr Islam "derived" a "benefit" from the offending (s 7)? No definition of "derived"; it could be argued he was hoping to derive the benefit, but at the time of his arrest he hadn't quite achieved that [but see para 44 of Islam]. On the other hand, he had drugs that were very valuable on the black market. The drugs are "tainted property" (s 5(1) and s 50) and are liable to be forfeited under an assets forfeiture order. Then their value is deducted from the value of the benefit from the criminal activity (s 54(1)(b)) – which on these simple facts would be the same amount – to leave the maximum recoverable amount under a profit forfeiture order. This structure is consistent with the black market values being used in the calculations.

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