The Supreme Court Decision in R v Ahmad (Confiscation Proceedings)
What does it mean on the ground?

Evan Wright

(Appellant) v Ahmad and another (Respondents) [2014] UKSC 36
R (Respondent) v Fields and others (Appellants)
On appeal from [2012] EWCA Crim 391; [2013] EWCA Crim 2042

BACKGROUND

These two appeals to The Supreme Court concern the approach the court should adopt in confiscation proceedings where a number of defendants have together acquired property or money as a result of committing an offence for which all or some of them have been convicted.

In the first appeal, the appellants referred to as “the Ahmad defendants” were convicted of a carousel VAT fraud and were sentenced to seven years in prison. At the confiscation hearing, the court decided that the criminal benefit had been jointly obtained. The Court of Appeal determined that the benefit jointly obtained by the Ahmad defendants was the loss suffered by HMRC (recalculated as £16.1m to adjust for inflation) and that each of the Ahmad defendants was liable for the whole amount.

In the second appeal considered by The Supreme Court, the three appellants referred to as “the Fields defendants” and a fourth man Wasim Rajput, were found guilty by a jury of conspiracy to defraud and were each sentenced to five years in prison. In the subsequent confiscation proceedings, the court found that the total criminal benefit arising from the conspiracy was about £1.4m, acquired jointly by the Fields defendants (recalculated to about £1.6m to allow for inflation) and the judge made confiscation orders under the 2002 Act against each of the Fields defendants for the whole of the amount.

The subsequent appeal to the Court of Appeal was unsuccessful and they all appealed to The Supreme Court. None of the appellants challenge the quantification of the aggregate recoverable amount, or the finding that they had obtained the amount jointly. They challenged the decision of the Court of Appeal that each of the appellants should be separately liable for the whole of that amount.

DECISION

The Supreme Court unanimously allowed the appeal in part. The confiscation orders have been amended to provide that ‘they can be enforced only to the extent that the same sum has not been recovered through another confiscation order made in relation to the same joint benefit. However, the orders should not be amended to apportion the benefit between the respective defendants’.

COMMENTARY

In other words, the appeals did not result in a situation where the benefit was apportioned between defendants, relative to their respective roles. Whilst this may be possible in some cases, it was not possible here. The court effectively decided that the Crown should only be able to recover the loss to the Revenue, rather than recovering the full benefit figure from more than one defendant (i.e. double recovery of benefit). Remember - we are dealing here with cases in which all defendants shared the same benefit figure. In cases where each defendant is given his or her own benefit figure arising out of e.g. different lifestyle assumptions, different issues apply.

The Ahmad decision places a real burden on defendants who have a substantial level of assets, even though they may have played a relatively minor role in the conspiracy. If the court decides that the benefit was obtained jointly between all defendants, the rich defendant may have to ‘subsidize’ the poor defendant and if this results in payment of the full benefit figure, the poor defendant may not have to worry about (legitimately) coming into possession of assets at some point in the future. As is often the case in confiscation proceedings, the strength of prosecution and defence arguments in ‘hidden assets’ cases can make rich defendants look poor and poor defendants can look rich.

Much will turn upon prosecution policy. Will they try to collect as much as they can from the richest defendant before moving onto the next in the hope that, at some point in the recovery process, they will recover the full benefit figure? Alternatively, will they apportion their recovery efforts between all defendants according to each defendant’s level of realisable assets until they recover the benefit figure? Will some defendants drag their feet during the process of realisation in the hope that the full benefit figure will be recovered from another defendant? Will we see an increase in the trend towards ‘POCA planning’ where criminals organise their finances before entering a conspiracy? The answers are probably to be found in the relative cost of realisation between defendants. The defendant with cash in the sole name bank account will be an easier target than the defendant with various trusts and a multitude of determined third party interests in real property.

Whatever the answer, defendants in confiscation proceedings cannot expect much latitude from the prosecution and there will be cases where defendants will feel that they are being unfairly targeted. Careful advice will therefore be required in the proper identification, valuation and attribution of assets. Interestingly, the judgement may make it more difficult for solicitors to represent more than one client in the same confiscation case and this could extend back into the main case if assets need to be considered in certain contexts. Solicitors and clients therefore need to carefully consider this Supreme Court judgement when assessing the potential for a professional conflict of interest at an early stage in the case.

If this Supreme Court decision is applied sensibly, it could make hidden asset arguments more realistic. It could reduce the number of cases in which vast hidden asset arguments are raised for the sake of generating an extra (often very substantial) default sentence as a ‘back door’ punishment. It could also mean that more effort will be spent on accurate valuation of assets. In other words, the prosecution will pay more attention to how difficult it might be to actually realise the value of an asset referred to in the confiscation order. They will not want to re-visit co-defendants and re-open old files because one set of enforcement proceedings did not turn out exactly how they thought it might. The Magistrates Court is very familiar with confiscation enforcement proceedings in which defendants claim they cannot sell assets, even though the assets were determined to be ‘available’ within the permitted period when the confiscation order was made at the Crown Court. Section 23 Proceeds of Crime Act (POCA) and Section 83 Criminal Justice Act (both dealing with what is often referred to as a ‘certificate of inadequacy’) are often misused. Where they are used properly, it will require the prosecution to re-assess the potential for recovery of the benefit shortfall from another defendant – perhaps years after the original confiscation order was made.=

As is often the case, decisions like this send ripples through the process of enforcement and it will take time for practices to settle. In the meantime, defendants will require good advice from representatives who can respond effectively to the various arguments and potential consequences. Ironically, sensible defence advice may also save the prosecution time and effort in reaching a fair and proper confiscation order, requiring less troublesome enforcement.

Evan Wright is a partner in the Business Crime and Regulation department at JMW Solicitors LLP.

T. 0845 402 0001

E. Evan.wright@jmw.co.uk

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