T8: Freezing and confiscation orders

Disproportionality proviso: general principles

"[28] In deciding on the correct approach to disproportionality it is helpful to look at a number of past cases albeit that none of them has dealt directly with cv fraud. The most significant is R v Waya [2012] UKSC 51; [2013] 1 AC 294, which concerned a mortgage loan obtained by fraud, in which the Supreme Court, in a judgment delivered by Lord Walker and Hughes LJ, laid down the following points:
(i)                Most importantly, prior to the insertion of the proviso in section 6(5), it was accepted that, in order not to infringe Article 1 Protocol 1 (“A1P1”) of the European Convention on Human Rights (“ECHR”), the confiscation order had to be proportionate to the legislative objective of removing the fruits of crime. Proportionality was laid down as the correct principle to apply in preference to the previous judicial approach to POCA of examining whether, as a matter of discretion, there had been an abuse of process (see paras 18, 21 and 24).

(ii)              In a criminal lifestyle case, because of the assumptions as to the criminal source of assets that are required to be made under section 10 of POCA, it will be rare for a confiscation order to be disproportionate (para 25).

(iii)            In deciding on the amount of the confiscation order, the criminal is not entitled to set off against the benefit obtained the cost of committing the crime (eg a bribe paid to an official) because that would be to treat the criminal enterprise as if it were a legitimate business (para 26).

(iv)             As the focus of a confiscation order is on the value of the benefits obtained, it is irrelevant in assessing the value of the benefits that the benefits are no longer retained, as where money obtained by committing an offence has been spent (para 27).

(v)               It would be disproportionate to make a confiscation order where the criminal has wholly restored the benefit to the loser. That would constitute double recovery which would therefore go beyond confiscation and would constitute an unacceptable penalty (paras 28-29).

(vi)             There may be other cases of disproportionality analogous to that of goods or money being entirely restored to the loser. An example is where the defendant, by deception, induces someone else to trade with him or to employ him in a manner otherwise lawful and gives full value for goods or services obtained (para 34). This point bears directly on the facts of this case. It is therefore helpful to set out precisely what Lord Walker and Hughes LJ said in para 34:

“There may be other cases of disproportion analogous to that of goods or money entirely restored to the loser. That will have to be resolved case by case as the need arises. Such a case might include, for example, the defendant who, by deception, induces someone else to trade with him in a manner otherwise lawful, and who gives full value for goods or services obtained. He ought no doubt to be punished and, depending on the harm done and the culpability demonstrated, maybe severely, but whether a confiscation order is proportionate for any sum beyond profit made may need careful consideration. Counsel's submissions also touched very lightly on cases of employment obtained by deception, where it may well be that difficult questions of causation may arise, quite apart from any argument based upon disproportion. Those issues were not the subject of argument in this case and must await an appeal in which they directly arise…”

This case is, of course, one in which those issues directly arise." (R v. Andrewes [2022] UKSC 24)

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