In this issue
Welcome
Ill-gotten gains and Unexplained Wealth Orders: A new game of hide and seek?
Co-operation need not lead to loss of privilege: SFO v ENRC revisited.
Assessing the Value of Benefit: Gross Turnover or Profit?
Business crime and the draft Sentencing Code
Regina v ALI BAHBAHANI [2018] EWCA Crim 95
R (on the application of Gibson) (Appellant) v Secretary of State for Justice (Respondent) [2018] UKSC 2
R (on the application of Gibson) (Appellant) v Secretary of State for Justice (Respondent) [2018] UKSC 2
 
Richard Fisher QC
Richard Fisher QC

By Richard Fisher QC

 

R (on the application of Gibson) (Appellant) v Secretary of State for Justice (Respondent) [2018] UKSC 2

 

SUMMARY

 

The case concerned enforcement of a confiscation order and the calculation of the default term of imprisonment to be served in circumstances where part payment of the order had been made and interest had accrued.

 

THE FACTS

 

Mr Gibson was convicted of drug trafficking offences and sentenced to 25 years imprisonment. On 29 March 2000 a confiscation order was made in his case under the Drug Trafficking Act 1994 (“DTA 1994”) for £5.4 million, to be paid within 12 months with six years imprisonment in default of payment. On 4 May 2007, an appointed enforcement receiver paid £12,500 towards the order and the magistrates deducted seven days from the six-year term in default to account for that part payment. At that time interest had increased the net sum outstanding to £8.1 million. Later in 2007 and 2011, the enforcement receiver made further payments towards the order of £12,500 and £65,370. The prison authorities calculated the reduction in the six-year default term on the basis of the proportion which these payments made to the £8.1 million, that produced a total reduction of 24 days. Had the arithmetic been applied instead to an outstanding figure confined to the original amount of the confiscation order of £5.4m an additional 11 days would have been added to the reduction. The issue on the appeal was whether interest is included in the starting point under s.79(2) Magistrates’ Courts Act 1980 (“MCA 1980”) for the giving of proportionate credit for part payment of a confiscation order.

 

THE JUDGMENT

 

The Supreme Court decided unanimously that the calculation of the days to be taken off the default term should have been by reference to the amount of the original confiscation order and not the outstanding amount that had increased by the addition of interest. Under s.10(1) interest is treated for the purposes of enforcement as part of the amount to be recovered under the confiscation order and under s.10(2) a Crown Court judge may refix and increase the default term if the addition of accrued interest takes the sum outstanding into a higher bracket in the relevant schedule of defaults terms. Section 76 of the MCA 1980 contains the magistrates’ power to commit an individual to prison for failure to pay a fine. Section 79 of the MCA 1980 is the only provision dealing with part payments.

 

The enforcement of confiscation orders is achieved by applying statutory provisions which were not in fact designed for them. A confiscation order is treated as if it was a fine imposed by the magistrates. The difference between a fine imposed by a Magistrates Court and one imposed by a Crown Court is that the former do not fix a default term if imprisonment when imposing the fine. In the Magistrates Court imprisonment in default is only considered in the event of a default and, at that time, the magistrates will know whether the default is total or partial. If it is partial then credit can be given for the part payments that have been made and the default term can be calculated accordingly. In the Crown Court, s.139(2) of the Powers of Criminal Courts (Sentencing) Act 2000 (“PCCSA 2000”) requires the fixing of a default term at the time the fine or order is imposed.

 

The difference in practices led the lower courts to analyse s.79(2) MCA 1980 as assuming the standard magistrates’ practice and thus to conclude that the references in that subsection to a period of imprisonment having been “imposed… in default of payment” were references to the act of the magistrates in issuing the warrant of commitment to prison. This interpretation overlooked the fact that s.79(2) said nothing about how to deal with part payments made in Crown Court cases between the making of a confiscation order and the later enforcement proceedings in the Magistrates Court.

 

The period of imprisonment in default of payment is “imposed” for the purposes of s.79 when the Crown Court makes the confiscation order (including setting the default term) and discharges its statutory duty under s.139(2) of the PCCSA 2000.

 

The operative words of s.79(2) expressly state that the days to be deducted are to be the number which bear the same proportion to the total default term imposed (by the Crown Court) as the part payments bear “to so much of the said sum… as was due at the time the period of detention was imposed”. At the time the Crown Court imposed the default term of imprisonment there had not been any accrual of interest.

 

Lord Reed and Lord Hughes stated at paragraph 21 of the judgment:

 

21. We have concluded that this straining of the wording of s.79(2) cannot be justified where it would adversely impact on the period of imprisonment to which a person is subject. Penal legislation is construed strictly, particularly where the penalty involves deprivation of liberty.

 

They decided that the natural construction of s.79(2) is that the starting point for the arithmetical calculation of reduction in days of imprisonment is the sum outstanding at the time the Crown Court order is made, not later.

 

 

COMMENT

 

The DTA 1994 provisions have been repealed and replaced with POCA 2002 for all confiscation cases post 2003. The wording of the equivalent provisions in POCA 2002 is not identical. However, the approach in similar circumstances under POCA 2002 should be the same. Where partial payment is made and interest accrues, the term to be served from the default term should be calculated by reference to the amount of the confiscation order and not the latter amount which has increased by the accrual of interest. Bearing in mind the significant number of individuals who are currently serving default terms of imprisonment there will undoubtedly be other instances where the terms have been incorrectly calculated. Those serving such sentences should consider their own positions carefully and take advice. The difference in Mr Gibson’s case was 11 days too much, in other cases it may be more. Frankly, any day is a day too long.