After Bernadette Hilton was convicted of social security offences, a confiscation order was made for £10,263.50, the accepted value of her interest in a house owned jointly with a former partner. The Supreme Court held that the order remained valid even though neither the former partner nor the mortgagee had been given an opportunity to make representations when it was made. Section 160A of the Proceeds of Crime Act 2002 allows the court to determine third-party interests at the confiscation stage, but it does not require the court to do so in every case.
The convictions and the confiscation order
Following convictions for social security offences Ms Hilton faced confiscation proceedings. Part of the calculation concerned a property in which other people also had interests.
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The application was heard by His Honour Judge Miller QC on 20 October 2016. The benefit she had obtained was calculated at £16,517.59, and the judge assessed her benefit at that sum. Her only property was a house owned jointly with a former partner. She contended that her half share, after deduction of the outstanding mortgage, was worth £10,263.50. The judge accepted that figure as the available amount and made a confiscation order requiring her to pay it within three months, with six months’ imprisonment in default.
The Court of Appeal
Ms Hilton appealed. Although the point had not been in her original grounds, she argued that the judge had failed to comply with section 160A(2) of the 2002 Act. Neither her former partner nor the building society mortgagee had been given an opportunity to make representations, and neither had known of the criminal proceedings or the confiscation application. On 12 May 2017 the Court of Appeal (Gillen LJ, Deeny J and Keegan J) held that section 160A(2) required anyone thought to hold, or who might hold, an interest in the property to be given that opportunity when the confiscation order was made. Deeny J said that the failure was fatal to the judge’s decision, although the subsection had not been drawn to his attention. Two further arguments, concerning an allowance for the costs of sale and the relevance of article 8 of the European Convention on Human Rights, were left undecided.
The Director of Public Prosecutions was refused permission to appeal, but the Court of Appeal certified two questions: in what circumstances section 160A requires another person holding property with the defendant to be given a reasonable opportunity to make representations when the available amount is determined, and whether a failure to give that opportunity invalidates the confiscation order.
Making the order and enforcing it
Lord Kerr, with whom Lord Wilson, Lord Lloyd-Jones, Lord Briggs and Lady Arden agreed, explained that confiscation proceedings can have two stages. The first is the making of the order under sections 156 to 163B. The conditions for making an order are readily satisfied, and the legislation contemplates that this stage should be straightforward. The court decides whether the defendant has benefited from the relevant conduct, decides the recoverable amount, and orders the defendant to pay it, subject to the proportionality qualification added in 2015. The recoverable amount starts as the benefit obtained. If the defendant shows that the available amount is less, the order is limited to that lesser sum. The available amount is the value of the free property held by the defendant, after priority obligations, and it is the value of the defendant’s interest that matters, not the value of the property as a whole. That is how Ms Hilton’s order came to be limited to £10,263.50.
Section 160A, inserted in 2015, deals with a particular situation. Where property held by the defendant is likely to be used to satisfy the order, and another person holds or may hold an interest in it, the court may, if it thinks it appropriate, determine the extent of the defendant’s interest. It must not exercise that power unless it gives anyone it thinks holds or may hold an interest a reasonable opportunity to make representations. A determination under the section is conclusive when the property is later realised or transferred to satisfy the order, unless there is an appeal.
The second stage is enforcement. If a confiscation order is not satisfied and is not under appeal, section 198 allows a receiver to be appointed. Section 199 permits the court to give the receiver powers to manage or realise property, and to order a payment in respect of the defendant’s beneficial interest. Those powers cannot be used unless persons holding interests in the property are given a reasonable opportunity to make representations. Representations cannot contradict a section 160A determination, unless the person was not given a reasonable opportunity when that determination was made and has not appealed, or there would be a serious risk of injustice. The retention of this enforcement procedure shows that Parliament intended the two stages to continue to coexist.
Why section 160A did not invalidate the order
Before section 160A, making a confiscation order was an arithmetical exercise in computing what was in effect a statutory debt owed by the defendant personally. It did not decide how the debt would be paid. Third-party rights were resolved, if necessary, at the enforcement stage. Section 160A modified that position by permitting a determination of the defendant’s interest at the confiscation stage, but only where the court thinks it appropriate and only after possible interest-holders have been heard. It does not require the court to proceed under section 160A whenever a third-party interest may exist. If no such determination is made, third parties can still be heard when enforcement is sought.
The Court of Appeal’s approach would have required a full investigation of third-party rights whenever they arose. The case would have to be adjourned, possible interest-holders such as a former partner or mortgagee would have to be notified, and the traditionally straightforward making of a confiscation order would become cumbersome. Lord Kerr considered that this was not the purpose of section 160A. The section was intended to allow the stages to be combined in simple cases where there could be no sensible debate about enforcement, not to complicate every case involving shared property.
The transcript and the order showed that Judge Miller had not made a determination under section 160A. The section was not mentioned, and third-party interests were not discussed. He was not obliged to make an order under its provisions, and he had not done so. Section 160A therefore had no bearing on the validity of the order.
Verdict: The Supreme Court unanimously allowed the Director’s appeal and restored the confiscation order. The judge had made no binding determination of third-party interests under section 160A. Those parties could make representations at enforcement, when Ms Hilton could also raise sale costs and article 8.
