Lowther & Ors v The Crown: Principles for Deducting Costs of Sale in Confiscation Orders under POCA 2002

Introduction

In the case of Lowther & Ors v The Crown ([2020] EWCA Crim 1387), the England and Wales Court of Appeal (Criminal Division) addressed significant issues pertaining to the calculation and adjustment of confiscation orders under the Proceeds of Crime Act 2002 (POCA). The appellants, three brothers—John, Luke, and David Lowther—were convicted of serious conspiracy offenses, including blackmail, money laundering, intimidation, and perverting the course of justice. Following their convictions, confiscation orders were imposed to recover benefits obtained through their criminal activities. Dissatisfied with the orders, the appellants appealed, seeking adjustments to the figures calculated for confiscation.

Summary of the Judgment

The Court of Appeal thoroughly examined the appellants' grounds of appeal, which included challenges to the joint benefit obtained through criminal conduct and the deduction of costs associated with the sale of properties. The single judge had previously refused leave to appeal on all grounds except one, related to the deduction of sale costs from the value of properties yet to be sold. The appellate court largely upheld the Crown Court's discretion in determining the benefit figures and the application of statutory assumptions under POCA. However, it allowed a reduction in the confiscation orders to account for the costs of selling certain properties, ensuring that these costs were only deducted from the available, realisable assets and not from the benefit figures, thereby preventing double recovery.

Analysis

Precedents Cited

The judgment extensively referenced several key precedents that have shaped the interpretation and application of POCA:

• R v Ahmad and Fields [2014] UKSC 36: Clarified the principles surrounding joint acquisition of criminal proceeds and the necessity to avoid double recovery.
• R v Cramer (1992) 13 Cr App R (S) 390: Established that costs associated with the sale of property should be deducted from the market value when assessing realisable assets.
• R v Pattison [2007] EWCA Crim 1536: Distinguished between realisable assets and the value of benefit received, emphasizing that costs of sale do not affect the latter.
• R v Islam [2009] UKHL 30: Addressed the valuation of illicit gains and the importance of assessing market value at the time of acquisition.

Legal Reasoning

The court's legal reasoning centered on the correct interpretation of section 10 of POCA, which outlines statutory assumptions regarding the benefits resulting from criminal conduct. The appellants were required to displace these assumptions by providing credible evidence that their assets were acquired through legitimate means. The court evaluated the credibility of the appellants' testimonies and the forensic accountant's reports, ultimately finding that the appellants failed to demonstrate the lawful origins of their income.

A critical aspect of the judgment concerned the deduction of costs related to the sale of real property. The appellate court reaffirmed that such costs should only be deducted from the "available amount" (i.e., realisable assets) rather than the "benefit figure." This distinction prevents twofold deductions and ensures that confiscation orders accurately reflect the defendants' financial benefits derived from criminal activities without overreaching.

Additionally, the court addressed the complexity of joint criminal enterprises, affirming that when appellants act as a cohesive team, benefits obtained are jointly attributable unless evidence suggests otherwise. This alignment with precedents like R v Ahmad and Fields ensures consistency in handling cases involving multiple defendants.

Impact

This judgment reinforces established principles governing confiscation orders under POCA, particularly concerning the treatment of sale costs and joint benefits. By clarifying that costs of sale should exclusively reduce the recoverable amount and not influence the benefit figure, the court safeguards against double recovery, maintaining the integrity of the confiscation process.

Moreover, the affirmation of joint benefit attribution in cases of collaborative criminal conduct provides clear guidance for future cases involving multiple defendants. This ensures that each defendant's financial obligations accurately reflect their individual and collective involvement in criminal activities.

The judgment also highlights the importance of thorough evidence presentation by appellants. The court's dismissal of the Lowther brothers' claims regarding legitimate income underscores the necessity for defendants to substantiate their financial provenance when challenging statutory assumptions.

Complex Concepts Simplified

Confiscation Orders under POCA 2002

Confiscation orders are legal instruments used to recover assets derived from criminal activities. Under POCA 2002, the court assesses the financial benefits individuals have gained from their offenses and mandates the repayment of these proceeds or their value.

Benefit Figure vs. Available Amount

- Benefit Figure: Represents the total value derived from criminal conduct, including both realized gains (like money and sold property) and unrealized benefits (like property still owned).

- Available Amount: Refers to the assets that can be liquidated to satisfy the confiscation order. It excludes unrealized benefits and is reduced by the costs associated with selling specific assets.

Joint Criminal Enterprise

This concept refers to situations where multiple individuals collaborate in criminal activities, sharing both the execution and the profits from their offenses. In such cases, benefits obtained are typically considered jointly owned unless evidence specifies individual contributions.

Double Recovery

Double recovery occurs when an individual is compelled to repay the same funds or benefits more than once through separate legal mechanisms. The court aims to prevent this by carefully delineating how benefits and recoverable amounts are calculated.

Conclusion

The Court of Appeal's decision in Lowther & Ors v The Crown serves as a pivotal affirmation of existing legal frameworks governing confiscation orders under POCA 2002. By meticulously distinguishing between benefit figures and available amounts, the court ensures that confiscation orders are both fair and effective, preventing overreach and double recovery. This judgment underscores the necessity for defendants to present robust evidence when contesting statutory assumptions and reinforces the judiciary's role in maintaining the integrity of efforts to recover illicit gains. Moving forward, this case provides clear jurisprudential guidance for handling complex scenarios involving joint criminal enterprises and the precise calculation of confiscation orders.