R v. Waya  UKSC 51, 14 November 2012, read judgment
Traditionally, the qualified right to peaceful possession of property conferred by Article 1 of the 1st Protocol (A1P1) has been thought of as a rather feeble entitlement, easily outweighed by public interests. After all, every day of the week, the modern state affects that right – think taxes or planning restrictions, or business bans arising out of public health concerns (e.g. see here), where removal and confiscation or restriction on what we do with property is readily accepted. Last week the Supreme Court ruled that the Proceeds of Crime Act 2002 (POCA) needs a bit of remedial HR surgery as and when its blunderbuss rules would otherwise have a disproportionate effect on those affected. But the importance of the ruling extends far beyond the specific statutory context.
The story is a familiar one. Parliament, quite rightly, decided that we needed a way of taking the benefits of crime away from criminals on conviction – over and above the system of fines. But it also realised that without some set rules this will prove difficult, if not impossible, to administrate. If the exercise were to be to ascertain the net benefit of the crime, then we get into frightful tangles. Can a defendant set off against his profit of crime his expenses – the cash to the getaway driver, the bung to the dodgy public official, or the contract killing payment? The answer in the statute, and in this decision, is – No. This would be offensive and impractical. So far, so good.
But how far may the answer to the question – what did D really gain from this crime – diverge from the answer given by the statute? This was the conundrum facing the Supreme Court. And it found it very difficult. It had an initial hearing in 2011 in front of 7 judges – but then requested a re-hearing in front of 9. And those 9 split 7-2 in the result, thought the critical reasoning was common to all 9 judges.
The core of the reasoning of all 9 judges is given in  in approving the submissions of both prosecution and the Home Secretary as follows:
(a) that POCA must be read and given effect in a manner which avoids a violation of A1P1;
(b) that a confiscation order which did not conform to the test of proportionality would constitute such a violation;
(c) that it is incumbent upon the domestic court to provide a remedy for any such violation; and
(d) that the appropriate remedy lies in the duty of the Crown Court judge not to make an order which involves such a violation.
These submissions are plainly correct. Any such violation can be avoided by applying to POCA, and in particular to section 6, the rule of construction required by section 3 of HRA
- section 3 HRA requiring that all statutes be read “so far as possible to do so” to be compliant with the HRA.
The minority (Lords Philips and Reed) explain at  what this means in practice in terms which support their characterisation of this (common) approach as being “novel and imaginative” :
A1P1 requires the judge hearing an application for a confiscation order to adopt the following approach. First he must decide on the amount of the benefit that the defendant is deemed to have obtained from his crime by the application of the express provisions of POCA (“the POCA benefit”). Secondly he must decide on the real benefit that the defendant has obtained from his crime (“the real benefit”). Thirdly, where the POCA benefit exceeds the real benefit, he must decide whether it is proportionate to base the confiscation order on the POCA benefit. If it is not, he must make an order that is proportionate in place of the order based on the POCA benefit.
So you decide what the statute says – then you decide what the HRA principle of proportionality requires – and then you bend the statutory answer accordingly because section 3 tells you to do so. This approach has been in the HRA from the start, but it is interesting to see it being used in a context where all agree that the public interest requires some legislative action – but not the overkill we see in this particular Act.
Waya, POCA and lying to lenders.
But now to a little of the detail without getting too bogged down in the byways of POCA – on which books have been written. Waya was prosecuted under the Theft Act for lying about his earnings when buying a new flat. He bought it for £775,000. £310,000 (40%) came from his own assets, with the balance of £465,000 (60%) from the lender lied to. Ironically, he would have got the mortgage anyway, though he might have had to pay more interest had he told the truth. What then was the “benefit” as ascertained through the labyrinthine rules of POCA? The property was now worth £1.85m.
At the various stages of this litigation, the courts have come up with four different answers:
1. The judge made a confiscation order of £1.54m, i.e. its current value of £1.85m less Waya’s original £310,000.
2. The Court of Appeal reduced the order to £1.1m, i.e. 60% of the market value of the flat (the remaining 40% being attributed to his investment).
3. The majority of the Supreme Court said that the POCA benefit was £392,400 – after a sustained analysis of the property rights and interests in play – in summary, 60% of the net appreciation, as one can see from . This sum, though substantial, was not disproportionate so hence the majority concluded that A1P1 made no difference to this appeal – though may well may a difference to other potential appeals.
4. The minority of the Supreme Court disagreed with that analysis. It said that the POCA benefit was £987,400, but that this was disproportionate – indeed the only real benefit from the fraud was the potentially cheaper cost of borrowing resulting from the artificially high earnings advanced by Waya. This true benefit would have been modest, and in the circumstances, the only just solution was not to made any order at all.
So, again moving from the complexities of POCA to the A1P1 approach, we see that the A1P1 effect would have saved the hapless Waya £987,400 if the minority’s detailed analysis were correct. Worth going to court about.
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