Friday, June 20, 2014

Who shall yield? Recovering proceeds of crime from joint offenders.

Forfeiture orders, to recover benefits obtained by crime, may be issued against each participant in the offending for the full amount of the group’s benefit, so that the total of the orders may exceed the total of the benefit obtained: see R v May [2008] UKHL 28, R v Green [2008] UKHL 30, and Crown Prosecution Service v Jennings [2008] UKHL 29 (all 14 May 2008), discussed here on 16 May 2008.

The Supreme Court of the United Kingdom has now held that in such cases each order should be subject to a condition:

“ ... that it is not to be enforced to the extent that a sum has been recovered by way of satisfaction of another confiscation order made in relation to the same joint benefit.”

R v Ahmad [2014] UKSC 36 (18 June 2014) at [74] (the Court’s emphasis).
This case follows and clarifies the line of authorities beginning with May, Green and Jennings [39].

In particular, “obtained” in this statutory context of obtaining a benefit from offending has its ordinary, non-technical, meaning. It doesn’t depend on legal concepts involving property transfer. It just means to get something. It doesn’t mean to obtain ownership [42].

Where it is alleged that offenders have obtained something “jointly”, that just means they got it together [44], or they got it between them [45]. In this sense, it can be proper for the court to conclude that where offenders obtained something through acting together, they each obtained the whole of that thing [46], at least in the absence of proof to the contrary [47]-[48].

This conclusion should not be reached automatically, for

“[51] ... Judges in confiscation proceedings should be ready to investigate and make findings as to whether there were separate obtainings.”

But, especially where it is unlikely that all the offenders have been apprehended, it will often be proper to infer that the obtaining was joint [51].

When the obtaining is, in this sense, joint obtaining, each offender is liable for the full amount of the benefit obtained in the joint offending, and the court will not concern itself with squabbles among offenders as to who should pay what (I paraphrase, but see especially [67]).

This liability is subject to the condition quoted above from [74].

Confiscation proceedings (this is me now, not the Court) can raise complex and interesting questions, as is illustrated by R v Waya [2012] UKSC 51 (14 November 2012), discussed here on 2 January 2013. In Ahmad no question was raised about the majority in Waya’s method of determining the value of the benefit, so we can take it that Waya’s authority is undiminished. The market value of what was obtained is determined as at the time of the proceedings for recovery. But this should not be applied too broadly. The statutory context is important, and here the UK legislation was subject to a gloss applied by the European Convention on Human Rights, Protocol 1, Article 1 ("A1P1"), which, as was held in Waya, requires the court to avoid making a disproportionate order. One can distinguish a statutory benefit from a real benefit, and resort to the real benefit where confiscation of the statutory benefit would be disproportionate. For an illustration, see Paulet v United Kingdom [2013] ECHR 13 May 2014, cited in Ahmad at [77]. In jurisdictions not subject to A1P1, statutory limitations on confiscation orders may arise from the need to avoid undue hardship, and one would need to consult the relevant legislation.

People who have to make up problems for students to grapple with may well be thinking along the following lines. If offenders import or manufacture a controlled drug, intending to market it, have they obtained a benefit? Yes, they have got something of value. What value? If the drug was seized by the authorities and thereby forfeited, there was no benefit obtained by the offenders, except in the sense that they had the drug for a period. If they sold the drug, they obtained something of value, and one or more of them may have then bought an investment such as shares or real estate. That value is to be assessed, if Waya is applied, as at the time of the forfeiture proceedings, and it may have diminished since the benefit of the offending was obtained. If another of the offenders used a share of the benefit to make a good investment, there is an inequality, arising probably from mere chance, as between offenders’ loss through enforcement of the forfeiture order. But if there is no evidence of any of that dealing with the immediate proceeds of the drug offending, the court will, applying Ahmad, make an order for equal forfeiture against all offenders, presumably equalling the estimated proceeds of the offending, and ignoring the current value of those proceeds.

Inequities could arise, where orders are made subject to conditions as specified in Ahmad at [74], from the times at which they are enforced. The true benefit may end up being kept by the lucky last, if offenders against whom orders were earlier enforced yielded the full amount. Those earlier enforcements may have been against good investors, whose skill in the markets has protected the share of the offending that can be kept by the others.

And so on. Often the answer, or at least one answer, to these questions will be found in legislation. The legal answer is, as always, able to be evaluated in moral terms. Where there is room to do so, courts should strive to apply legislation in ways that are morally right, and Ahmad illustrates the difficulty of achieving this where constraints on the availability of evidence make fact determination impossible. Some responsibility for the lack of evidence probably rightly rests with the defendant, but where other offenders have not been apprehended and they do not give their account of proceeds, what else can a court do but impose equal liability?