R v McCool (Appellant) (Northern Ireland) [2018] UKSC 23

By a majority, the Supreme Court held that confiscation orders under the Proceeds of Crime Act 2002 could be made against a husband and wife convicted of benefit fraud, even though each had also been convicted in the same proceedings of one offence committed before the Act came into force. The prosecution had left those earlier offences out of the benefit calculation and relied only on later offending. Two justices dissented and would have quashed the orders.

The benefit claims

Ms McCool and Mr Harkin, who were married, pleaded guilty in the Crown Court to offences arising from dishonest claims for state benefits. They had represented that they were single. Mr Harkin had also claimed housing benefit for one house while living with Ms McCool at another.

Ms McCool’s four offences were false accounting on 26 September 1990 and false declarations on 28 November 2003, 20 October 2005 and 10 August 2010. Mr Harkin pleaded guilty to seven counts, one committed on 16 December 1999 and six committed between 20 October 2005 and 3 August 2009. The relevant provisions of the Proceeds of Crime Act 2002 came into force in Northern Ireland on 24 March 2003. Each appellant therefore had one conviction for an offence committed before that date and further convictions for offences committed after it.

A confiscation order requires a convicted defendant to pay a sum representing benefit obtained from criminal conduct, capped by the amount available to meet the order. The prosecution disclaimed reliance on any offending before March 2003. In Ms McCool’s case, benefit was calculated from her second count. Lord Kerr records an asserted overpayment of £76,817.72 between 11 November 2003 and 17 May 2011, adjusted for the change in the value of money to £84,966.30. In Mr Harkin’s case, the adjusted gross payments were £53,937.12. The available amount was accepted as £38,037 each, being half the estimated equity in a property they owned jointly. The Crown Court judge held that Ms McCool had benefited by £84,996 and made a confiscation order for a sum exceeding £38,000. An order in the same sum was made against Mr Harkin.

On appeal, the appellants said that the Crown Court had no power to make those orders. They also said that the recoverable benefit should be reduced, under regulation 13 of the Social Security (Payments on Account, Overpayments and Recovery) Regulations (Northern Ireland), by the sums they would have received had their applications been honest. The Court of Appeal accepted that second argument and reduced the recoverable amounts to £5,531.95 for Ms McCool and £33,624 for Mr Harkin. The prosecution did not challenge those reductions. The Supreme Court appeal concerned which confiscation statute applied, not the figures.

Why the commencement date was disputed

Section 156 is the provision under which the Crown Court makes a confiscation order. It applies where the defendant has been convicted in the Crown Court, or committed there for confiscation to be considered, and either the prosecutor asks the court to proceed or the court considers it appropriate to do so. Article 4 of the commencement order provides that section 156 shall not have effect where the offence, or any of the offences, mentioned in section 156(2) was committed before 24 March 2003. Where that article applies, earlier legislation continues to have effect.

The appellants argued that if any offence in the proceedings pre-dated 24 March 2003, none of the offences, including those committed later, could be dealt with under the 2002 Act. They contended that the correct legislation was the 1990 Order for Ms McCool and the 1996 Order for Mr Harkin. They accepted that the 2002 Act could have been used if the prosecution had not proceeded on the earlier offences at all. Their objection was to leaving those offences in the proceedings while seeking confiscation only on the later ones. They also relied on section 224(3). That provision defines particular criminal conduct as including both the offence or offences concerned and other offences of which the defendant was convicted in the same proceedings. They said this made it impossible to treat only post-commencement offences as relevant.

The majority reasoning

Lord Kerr held that Parliament intended offences committed before 24 March 2003 to be kept out of the section 156 exercise, and offences committed after that date which could support a confiscation order to be dealt with under the 2002 Act. It cannot have been intended that later offences would fall outside the Act merely because the defendant had also been convicted of an associated earlier offence. He regarded that result as anomalous and objectionable, and preferred a workable interpretation which avoided it.

On section 224(3)(b), Lord Kerr considered that the conduct which could be taken into account was conduct which might have founded a 2002 Act order but which the prosecution had not put forward. He also relied on the commencement order’s criminal-lifestyle provisions. If every case containing a pre-March offence had to be dealt with under the old regime, some of those provisions would have been unnecessary.

The majority followed the approach taken in England and Wales on similar transitional wording, including Simpson, Aslam and Stapleton. In Aslam, the Court of Appeal had treated the transitional bar as preventing the Crown from pursuing confiscation under two statutes in the same proceedings. Where the Crown had expressly abandoned reliance on a pre-commencement count, the later regime could be used for the later counts. Lord Kerr did not consider it necessary to read additional words into the 2002 Act, so long as pre- and post-March 2003 offences could be separated. Here the prosecution relied only on offences committed after 24 March 2003.

Lord Hughes, with whom Lady Black agreed, reached the same result. He did not think it necessary to describe the alternative construction as absurd. He held that applying the 2002 Act only to post-commencement offences involved no retrospective penalty: the orders were the same as they would have been if the earlier offences had never been committed. The risk of unfairness from applying two regimes did not arise once the earlier offences were left out of account. He also read section 224 as showing that a defendant may be convicted in the same proceedings of offences which are not the offences concerned for the purposes of section 156. If omitting an earlier offence would create a demonstrated risk of unfairness, the court could itself include that offence, in which case the earlier regime would apply.

The dissent

Lord Reed, with whom Lord Mance agreed, would have allowed the appeals. On the ordinary meaning of section 156(2) and (9), the offences concerned are all the offences of which the defendant was convicted in the Crown Court proceedings, or all those in respect of which the defendant was committed. Article 4 therefore excludes section 156 if any of those offences was committed before 24 March 2003. The prosecutor could not avoid that result by omitting the earlier offences from the benefit calculation.

Lord Reed saw no absurdity in that outcome. Applying one regime to every offence in the same proceedings avoids retrospective penalties and the difficulty of using two confiscation regimes together. He considered the majority’s reading to strain the statutory language, and thought it impermissible to use the commencement order to determine the meaning of the Act. He also regarded the earlier English decisions as unsatisfactory, including because Simpson had read words into a transitional provision in reasoning that was not necessary to its decision.

Verdict: By three votes to two, the Court dismissed both appeals. The pre-commencement offences were left out of account, and the confiscation orders for the later offences stood as reduced by the Court of Appeal.

Source: R v McCool (Appellant) (Northern Ireland) [2018] UKSC 23