Stevens v R – Correcting Confiscation Orders when Defined-Benefit Pensions Have No Market Value: Fairness over Finality

1. Introduction

In Stevens, R. v ([2025] EWCA Crim 1123) the Court of Appeal (Criminal Division) was invited—over three years out of time—to revisit a confiscation order that had been made by agreement under the Proceeds of Crime Act 2002 (“POCA”). The appellant, a 72-year-old former Independent Financial Adviser, had operated a Ponzi-style fraud between 2005 and 2016 and had already been sentenced to 5 years 9 months’ imprisonment. The Crown Court had assessed his criminal benefit at just under £1.3 million and his “available amount” at £183,673.22, which included a defined-benefit (“DB”) pension held with the Commonwealth Bank of Australia (“CBA”) said to be worth £98,246.98.

Post-order enforcement enquiries exposed a fundamental mistake: the DB pension was already in payment, could not be transferred, and carried no realisable capital value. Recognising the error, the Crown itself encouraged an appeal. Although the confiscation figure and the underlying asset valuation had been expressly agreed by both sides, the Court of Appeal—emphasising fairness and accuracy—allowed the appeal, reduced the recoverable and compensation amounts to £85,426.24, and shortened the default sentence from 21 to 12 months.

2. Summary of the Judgment

Extension of time & leave granted: 1,084 days’ lateness excused; the application was prompted by the Crown and caused no prejudice.
Mistaken pension valuation corrected: The CBA pension, although “property” under POCA, had zero market value. The court substituted £0 for the £98,246.98 previously attributed.
Confiscation & compensation orders reduced: Both reduced to £85,426.24; details of individual compensation to be agreed by the parties.
Interest liability extinguished: Because the principal sum was lowered, any interest referable to the removed amount disappeared automatically under s. 12 POCA.
Default sentence recalibrated: Term reduced from 21 to 12 months, applying principles in R v German Castillo.
Key principle laid down: Even where confiscation figures are agreed, the Court of Appeal may intervene in exceptional circumstances to correct an order based on a material, mutual mistake as to fact—especially a valuation error stemming from authoritative third-party information.

3. Analysis

3.1 Precedents Cited & Their Influence

R v Hirani [2008] EWCA Crim 1463
“The power to allow an appeal against an agreed order is unlikely to be exercised other than in the most exceptional circumstances.”
The Court invoked Hirani to underscore the high threshold for disturbing a consent order, then explained why that threshold was nonetheless met.
R v Miller [2022] EWCA Crim 1589 Reviewed authorities on upholding agreed confiscation orders and reiterated the public interest in finality. Stevens distinguishes itself by a joint, innocent misrepresentation on which the Crown Court relied.
R v Chen [2010] EWCA Crim 2669 Addressed whether pension policies constitute “free property” and clarified that market value—not actuarial or future value—dictates the figure. Chen provided the template: a pension with no surrender or transfer value should be treated as £0.
R v German Castillo [2011] EWCA Crim 3173 Restated principles for fixing default sentences. Applied here to justify reducing the term proportionately to the revised order.

3.2 Legal Reasoning

The Court’s reasoning unfolded in four key steps:

Statutory framework (POCA ss. 9, 79, 82, 84). A DB pension is “property” and presumptively “free property” unless restricted by statute. Therefore inclusion of the pension per se was correct.
Market value test. Section 79 requires valuation at “market value … at the time the confiscation order is made.” A DB pension in payment, not assignable and without surrender value, has a market value of nil—as held in Chen. The original £98k figure was wholly speculative and therefore erroneous.
Exceptional circumstances to revisit an agreed order. The error stemmed from an authoritative third-party (the scheme administrator) and disadvantaged the appellant. Both prosecution and defence relied on the misinformation. Holding the appellant to it would be “conspicuously unfair”; thus the court exercised its power to allow the appeal despite public-interest finality considerations.
Consequential orders. (a) Compensation must mirror the recoverable amount (Sentencing Act 2020) → reduced. (b) Interest flows automatically under s. 12 POCA; lowering principal extinguishes interest on the removed portion. (c) Default term must reflect the revised bracket under s. 35 POCA and Castillo guidance. A 12-month term was proportionate.

3.3 Potential Impact of the Decision

Valuation of DB pensions: Forces prosecutors, financial investigators, and courts to scrutinise pension valuations rigorously. “Illustrative” transfer values cannot substitute for actual market value.
Post-order discovery of mistakes: Opens a narrow but important avenue for out-of-time appeals where a confiscation order rests on a shared fundamental mistake of fact. The decision balances the need for finality against gross unfairness.
Encourages proactive Crown conduct: The Crown’s candour was expressly commended; future prosecutors may feel obliged to alert defendants and the court if enforcement reveals material errors.
Default sentence calibration: Reinforces that revision of principal sums should trigger reconsideration of the default sentence, ensuring proportionality within the statutory maxima.
Administrative practice: Compliance Orders relating to pensions may now more commonly divert income streams (monthly payments) rather than seek lump-sum transfers for DB schemes.

4. Complex Concepts Simplified

Confiscation Order (POCA): A court order compelling a convicted defendant to pay the value of benefit gained from crime, up to the “available amount.” Failure to pay can lead to imprisonment in default.
Available Amount: Aggregate market value of a defendant’s “free property” at the time of the order—essentially what can lawfully be realised to satisfy confiscation.
Defined-Benefit (DB) vs. Defined-Contribution (DC) Pensions: • DB pensions promise a fixed periodic payment, generally non-transferable and lacking a cash “surrender” value. • DC pensions accumulate a cash pot that can often be transferred or crystallised into a lump sum. For POCA, DC pots usually have a clear market value; DB pensions may not.
Market Value: The price a willing buyer would pay a willing seller for the defendant’s interest at the relevant time. If an asset cannot legally be sold or transferred, its market value may be nil.
Default Sentence: A custodial term imposed in addition to the substantive sentence, activated only if the confiscation sum is not paid. It does not extinguish the debt.

5. Conclusion

Stevens v R crystalises two vital propositions. First, a DB pension may be “property” under POCA yet still carry a market value of zero if it cannot be realised. Secondly, the Court of Appeal will—albeit rarely—disturb an agreed confiscation order where a material mutual mistake has misled the sentencing court and produced unfairness. The judgment therefore advances both doctrinal clarity (accurate valuation of pensions) and procedural fairness (mechanism for correcting innocent errors), and it is likely to influence the drafting of schedules of assets, the conduct of confiscation negotiations, and the obligations of prosecutors when latent mistakes emerge during enforcement.