Communicated on 15 December 2014
FOURTH SECTION
Application no. 52335/12
Mark PEACOCK
against the United Kingdom
lodged on 15 August 2012
STATEMENT OF FACTS
The applicant, Mr Mark Peacock, is a British national, who was born in 1969 and lives in Preston. He is represented before the Court by Mr S. Austin, a solicitor practising in London.
A. The circumstances of the case
The facts of the case, as submitted by the applicant, may be summarised as follows.
1. The criminal conviction and the confiscation proceedings
On 7 January 1997 the applicant and his co-defendant pleaded guilty at the Crown Court to two counts of conspiracy to supply a Class A controlled drug and three counts of conspiracy to supply a Class B controlled drug. On 8 January 1997 they were sentenced to a total of twelve years’ imprisonment each. On 5 October 1998 the Court of Appeal reduced the applicant’s sentence to ten years’ imprisonment.
Meanwhile, the prosecution applied for confiscation orders under section 2 of the Drug Trafficking Act 1994 (“the 1994 Act” – see “Relevant domestic law and practice”, below).
On 10 July 1997 His Honour Judge Slinger found that the total value of the proceeds of drug trafficking by the applicant and his co-defendant was 547,435 pounds sterling (“GBP”). They were each found to have benefited from drug trafficking in the sum of GBP 273,717.50.
The applicant was found to have realisable assets in the sum of GBP 823. A confiscation order was made in that sum to be paid within fourteen days. The applicant paid the order.
2. Subsequent developments
(a) The applicant’s release
On 9 November 2000 the applicant was released from prison. He entered a business partnership with his father, the latter providing the start-up capital from the sale of the family home. The business was successful and the applicant acquired substantial assets.
The prosecution subsequently became aware of the value of the applicant’s equity in the business. It applied to the High Court for a certificate under section 16(2) of the 1994 Act declaring that the amount that might be realised from the applicant’s assets was greater than it had been at the time when the original confiscation order was made.
On 18 May 2005, Mitting J issued a certificate under section 16(2) declaring that the amount that might now be realised was greater than the GBP 823 taken into account when the confiscation order was first made.
3. The subsequent confiscation proceedings
(a) The application under section 16(4)
The prosecution subsequently applied to the Crown Court under section 16(4) of the 1994 Act for an increase in the amount to be recovered under the confiscation order. A similar application was made in respect of the applicant’s co-defendant.
A hearing on both applications took place over a seven-day period. Evidence was lodged of the further assets identified and the applicant lodged witness statements. He also gave oral evidence on oath. He accepted that he had acquired further assets since his release from prison but submitted that he had taken a conscious decision to live an entirely honest, law-abiding and hard-working life.
On 26 October 2007 Judge Slinger handed down his judgment. He identified two issues: the first was a factual question as to the existence and value of further recoverable assets; the second concerned the exercise of the court’s discretion to order further payment and impose a term of imprisonment in the event of non-compliance.
The judge indicated that his assessment of the applicant’s credibility would be a significant factor in both aspects of the case. He declined the prosecution’s invitation to take account of adverse credibility findings made in the context of the earlier confiscation proceedings, explaining that he began on the basis that convicted criminals were able to rehabilitate themselves and to turn from crime. However, taking into consideration the incomplete details of his assets in his first witness statement made in 2006 and his subsequent evasiveness when giving oral evidence, the judge concluded that the applicant was not a reliable witness.
After considering in some detail the applicant’s assets and business activities, the judge found the applicant to hold realisable assets to the value of GBP 348,315.54. However, he added:
“40. ... [T]hat is not, necessarily, the end of the matter. I preface this section by specific remarks about [the applicant’s] credibility ... [H]e failed, at the outset, to make proper disclosure of his finances. The discovered torn up paper relating to matters in Spain was revealing, particularly with its reference to a few business interests and to not wishing to declare matters. His explanations were risible. Furthermore, despite his protestations of honesty since his release from prison, there was clear evidence of fraudulent dealing with mortgage lenders in the supply of financial information ... I find [the applicant] to be an intelligent man, fully aware of all aspects of his business dealings. I find, too, that he has over a period dealt to a large extent in cash, with the specific intention of frustrating any enquiries by Authorities into his financial affairs ...”
In the light of his findings, the judge then turned to consider how to exercise his discretion as to whether, and if so, in what amount the confiscation order should be increased. He explained that had he found the applicant a credible witness, who, having paid his debt to society in terms of punishment, had set out to lead a law-abiding and responsible life, he might have felt able to give sympathetic consideration to submissions that the court’s discretion should be exercised in the applicant’s favour. However, he was satisfied that the applicant had lied to the court and had set out quite deliberately to deceive the court and others as to the truth as to his financial affairs and assets. In the judge’s view, this was entirely the type of case for which statute had provided the opportunity for society to recoup some of the damage caused to it by criminality. The judge also considered the length of time which had elapsed since the applicant’s release from prison but considered that this did not prevent the modification of the confiscation order, explaining:
“... [T]he reality is that the State cannot be expected to monitor the financial affairs of all those released from prison and in relation to whom there are outstanding Confiscation Order debts. Once the authorities became aware of the evidence of assets, they acted with proper expedition, notwithstanding the efforts of the Defendants to evade full investigation.”
He accordingly exercised his discretion to substitute for the GBP 823 originally recoverable the full amount of the benefit previously assessed, namely GBP 273,717.50. The order was to be paid within six months, with a period of imprisonment of three years in the event of non-compliance.
The applicant appealed to the Court of Appeal, contesting the calculation of his assets conducted by HHJ Slinger and seeking a reduction in the recoverable amount. The appeal was dismissed by the Court of Appeal (Criminal Division) on 20 February 2009.
(b) The appeal to the Court of Appeal against the section 16(2) certificate
The applicant appealed the decision of Mitting J to issue a section 16(2) certificate. He argued that section 16(2) was unclear and was not intended to allow confiscation of after-acquired assets (i.e. assets acquired after the date of conviction). If that had been the intention of Parliament, the statutory provision should have been unequivocal. He emphasised in particular that other provisions of the 1994 Act set a time-limit of six years to revisit a confiscation decision, but that no time-limit appeared in section 16(2). He contended that the definition of realisable property in section 6(2) of the Act was restricted to property held at the time of the original confiscation proceedings. Finally, he submitted that section 16 no longer had effect after the entry into force of the Proceeds of Crime Act 2002 in 2003.
The appeal was dismissed by the Court of Appeal (Civil Division) on 20 December 2010. The court held that section 16 applied to assets lawfully acquired post-conviction, referring to the absence of any time limitation in that section. This conclusion was not undermined by the fact that the Proceeds of Crime Act 2002 contained clearer provisions on the matter. Finally, the court held that the savings provisions in the relevant commencement order made under the 2002 Act clarified that section 16 remained in force for the purposes of the present proceedings.
(c) The appeal to the Supreme Court against the section 16(2) certificate
The applicant appealed the December 2010 judgment to the Supreme Court. He argued that section 16 was no longer in force at the time of the second confiscation proceedings and, alternatively, that Article 16(2) did not allow the High Court to have regard to after-acquired assets. He submitted that it was unfair and counter-productive to increase the amount of a confiscation order by reference to after-acquired assets. His written case included the following argument:
“C. The Compatibility Issue
The interpretation of the statute by the Court of Appeal ... is in conflict with a defendant’s rights under Article 6(1) of the Convention ... For a defendant to be liable in perpetuity to an increased penal sanction is submitted to amount to a clear breach of his right to determination of any criminal charge within a reasonable time, as well as raising issues under Article 8 ... and the First Protocol (protection of property). The construction of Article 16(2) contended for by the Appellant is compliant with the Human Rights Act whereas the interpretation adopted by the Court of Appeal arguably is not.”
On 22 February 2012 the Supreme Court delivered its judgment. On the preliminary question whether section 16 was still in force at the time of the second confiscation proceedings, the court was satisfied that it was.
As to the correct interpretation of section 16(2), the justices were divided by three votes to two, with the majority finding that the section applied to after-acquired assets and dismissing the applicant’s appeal after careful consideration of the legislative framework.
Lord Brown, for the majority, explained:
“29. As for the main argument, based on fairness and rehabilitation, naturally I recognise that Parliament could have chosen a different policy with regard to after-acquired assets. But it seems to me perfectly understandable that in fact Parliament decided (as indisputably it did when later enacting POCA [the Proceeds of Crime Act 2002]) to leave it open to the courts as a matter of discretion to mulct a defendant of his criminal gains on an ongoing basis irrespective of precisely how and when he came by any increased wealth.
30. That the court does indeed have a discretion in the matter is plain both from the wording of section 16(4) and from a number of authorities ... This is not, however, the occasion to explore the approach to the proper exercise of that discretion – or, indeed, the question whether its exercise could ever be affected by considerations arising under the Human Rights Act 1998. As already noted, there is no challenge here to the exercise of the Crown Court’s section 16(4) discretion, only to whether the section 16(2) certificate was lawfully issued.”
Lord Hope, in the minority, referred to the general principle of construction that a statute should not be held to take away property rights without compensation unless the intention to do so was expressed in terms which were clear and unambiguous. He was therefore of the view that where assets were subsequently acquired entirely legitimately, it ought not to be assumed that Parliament intended their confiscation unless it provided for this in clear terms. While the relevant provision in the Proceeds of Crime Act 2002 satisfied this test, Lord Hope considered that section 16(2) of the 1994 Act did not.
B. Relevant domestic law and practice
The applicable legislation at the time was the Drug Trafficking Act 1994. The 1994 Act has now been replaced by the Proceeds of Crime Act 2002.
Section 16 of the 1994 Act allowed for the increase in the value of a confiscation order in certain circumstances. It applied where the amount which a person was ordered to pay by a confiscation order was less than the amount assessed to be the value of his proceeds of drug trafficking. Pursuant to section 16(2):
“If, on an application made in accordance with subsection (3) below, the High Court is satisfied that the amount that might be realised in the case of the person in question is greater than the amount taken into account in making the confiscation order (whether it was greater than was thought when the order was made or has subsequently increased) the court shall issue a certificate to that effect, giving the court’s reasons.”
Section 16(3) provided that an application could be made by the prosecutor or by a receiver appointed in relation to the realisable property.
Section 16(4) allowed a prosecutor who obtained a section 16(2) certificate to apply to the Crown Court for an increase in the amount to be recovered under the confiscation order. Upon such an application, the court had discretion to:
“(a) substitute for that amount such amount (not exceeding the amount assessed as the value referred to in subsection (1) above) as appears to the court to be appropriate having regard to the amount now shown to be realisable; and .
(b) increase the term of imprisonment or detention fixed in respect of the confiscation order ... if the effect of the substitution is to increase the maximum period applicable in relation to the order ...”
Section 6(1) of the Act provided that the amount that might be realised at the time a confiscation order was made was the total of the values at that time of all the realisable property held by the defendant, less where there were obligations having priority at that time, the total amount payable in pursuance of such obligations, together with the total value at that time of all gifts caught by the Act. Pursuant to section 6(2), “realisable property” meant any property held by the defendant and any property held by a person to whom the defendant had made a gift caught by the Act.
COMPLAINT
The applicant complains under Article 1 of Protocol No. 1 to the Convention that the interference with his right to peaceful enjoyment of his possessions, such as it derived from the issuing and upholding of the section certificate under section 16(2) of the 1994 Act, was (i) not subject to conditions provided for by law because the 1994 Act had been repealed by the 2002 Act; and (ii) not provided for by law because section 16 of the 1994 Act merely allowed for deprivation of assets held at the time of the making of the original confiscation order. He also submits that the quality of the applicable domestic law did not meet the standards required by the Convention in terms of its foreseeability, precision or clarity; and that the rule embodied in that legislative provision, as interpreted by the courts, failed to strike a fair balance between public policy considerations and individual rights, thus excluding a reasonable relationship of proportionality between the means employed and the aim sought to be realised.
QUESTIONS TO THE PARTIES
1. Has the applicant exhausted all effective domestic remedies, as required by Article 35 § 1 of the Convention? In particular, did he properly invoke before the national courts, at least in substance, the right under Article 1 of Protocol No. 1 and did he raise the relevant arguments on which he now wishes to rely before the Court?
2.(a) Did the issuing of the section 16(2) certificate constitute an interference with the applicant’s peaceful enjoyment of possessions, within the meaning of Article 1 of Protocol No. 1?
(b) If so, did section 16(2) of the 1994 Act meet the standards required by the Convention in terms of its foreseeability, precision and clarity and did the rule embodied in that legislative provision, as interpreted by the courts, strike a fair balance between public policy considerations and individual rights?
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