Hilton, R v (Northern Ireland) [2020] UKSC 29

Ms Hilton pleaded guilty to benefit fraud offences and a confiscation order was made against her half-share in a jointly-owned property. The Supreme Court held section 160A of the Proceeds of Crime Act 2002 did not require third-party representations at the confiscation stage unless a section 160A determination was actually made.

Facts

On 22 September 2015, Bernadette Hilton was convicted at Belfast Magistrates’ Court on her plea of guilty to three offences under section 105A of the Social Security Administration (Northern Ireland) Act 1992, involving failure to notify a change of circumstances and making false statements to obtain Income Support. She was committed to the Crown Court for a confiscation order under section 156 of the Proceeds of Crime Act 2002. Judge Miller QC assessed her benefit from the offences at £16,517.59. The only property she held was a house jointly owned with a former partner, subject to a mortgage. The judge accepted that the value of her half share, after deduction of the mortgage, was £10,263.50, and made a confiscation order in that sum, with a default sentence of six months’ imprisonment.

Neither Ms Hilton’s former partner nor the building society mortgagee had been notified of the confiscation proceedings or given any opportunity to make representations. The Court of Appeal in Northern Ireland allowed her appeal, holding that section 160A(2) of the 2002 Act required the Crown Court to give any person thought to hold (or who may hold) an interest in the property a reasonable opportunity to make representations, and that the failure to do so was fatal to the confiscation order.

Issues

The Court of Appeal certified two points of law of general public importance:

1. Where property is held by the defendant and another person, in what circumstances is the court making a confiscation order required by section 160A of the 2002 Act, in determining the available amount, to give that other person a reasonable opportunity to make representations at the time the order is made?
2. If section 160A does so require, does a failure to give that other person such an opportunity render the confiscation order invalid?

Arguments

The appellant (Director of Public Prosecutions) submitted that confiscation proceedings traditionally involve two distinct stages: (i) the making of the confiscation order (an in personam statutory debt calculation) and (ii) its later enforcement or realisation, at which stage third-party interests could be considered under section 199. Section 160A had not displaced this two-stage process; it merely offered an optional procedure. A section 160A determination had not in fact been made by Judge Miller.

Ms Hilton contended that the judge had effectively determined the extent of her interest in the property for the purposes of the confiscation order and had failed to comply with section 160A(2) by not giving her former partner and the mortgagee a reasonable opportunity to make representations.

Judgment

Lord Kerr (with whom Lord Wilson, Lord Lloyd-Jones, Lord Briggs and Lady Arden agreed) allowed the appeal and restored the Crown Court judge’s order.

The two-stage process

Lord Kerr emphasised that confiscation proceedings under the 2002 Act traditionally comprise two distinct stages: the making of the confiscation order (sections 156 to 163B) and the enforcement or realisation of that order (section 198 onwards). The making of the order was intended to be straightforward, indeed quasi-automatic, concerned only with the arithmetic computation of a statutory debt owed in personam by the defendant. Third-party interests were historically addressed at the enforcement stage, as confirmed in R v Ahmed (Mumtaz) [2005] 1 WLR 122 and In re Norris [2001] 1 WLR 1388.

Effect of section 160A

Section 160A, inserted by the Serious Crime Act 2015, introduced an optional procedure. Under section 160A(1), where property held by the defendant is likely to be realised and a third party holds or may hold an interest, the court may, if it thinks it appropriate, determine the extent of the defendant’s interest. Section 160A(2) imposes a mandatory requirement to give interested persons a reasonable opportunity to make representations before exercising that power. Under section 160A(3), a determination so made is conclusive for the purposes of realisation, subject only to appeal.

Crucially, Lord Kerr held that section 160A does not occupy the field. Section 199, which governs enforcement, was retained and amended (by the introduction of section 199(8B)) on the premise that section 160A and section 199 continue to co-exist. Where no section 160A determination is made, third parties retain their right to make representations at the enforcement stage.

Application to the present case

Lord Kerr concluded that the Court of Appeal had been wrong to proceed on the basis that whenever third-party interests are at stake, the Crown Court must proceed under section 160A. Such an approach would collapse the two stages into one, introducing a cumbersome procedure inconsistent with Parliament’s streamlining purpose. Reviewing the transcript of the hearing before Judge Miller, Lord Kerr was satisfied that no section 160A determination had been made: the section was not mentioned in submissions or in the order, and the judge appeared unaware of the third-party interests. The judge had simply computed the statutory debt, leaving enforcement (and third-party rights) to the later stage.

Answers to certified questions

Lord Kerr held that the certified questions did not arise because no section 160A determination had been made. The appeal was allowed, and the confiscation order restored. Third parties retained the opportunity to make representations at the enforcement stage, and Ms Hilton could raise at that stage her outstanding arguments regarding the costs of sale and article 8 ECHR.

Implications

The decision clarifies the operation of section 160A of the Proceeds of Crime Act 2002 (and the equivalent section 10A in England and Wales). Key points emerging from the judgment include:

• Section 160A provides an optional, not a mandatory, mechanism. A Crown Court making a confiscation order is not required to proceed under section 160A merely because third-party interests may exist.
• Where the court does elect to make a determination under section 160A(1), compliance with section 160A(2) is mandatory: interested third parties must be afforded a reasonable opportunity to make representations before any binding determination is made.
• Unless the court is confident that third-party interests will not be affected, it should not make a section 160A determination which extinguishes the opportunity for later representations.
• The two-stage process – the making of a confiscation order (in personam) and its subsequent enforcement – remains intact. Third-party rights are ordinarily addressed at the enforcement stage under section 199, in particular section 199(8).
• A confiscation order is, in effect, the calculation of a statutory debt. It does not determine proprietary questions binding on third parties unless a section 160A determination has been properly made.

The decision is of practical importance to prosecutors, defence practitioners, and those (such as co-owners, mortgagees and former partners) who may have interests in property potentially subject to confiscation. It preserves the efficiency of the confiscation stage while ensuring that third-party rights can still be ventilated at the enforcement stage. The case illustrates that section 160A was introduced to streamline, not complicate, the confiscation regime, and that whether third-party procedural rights at the confiscation stage are triggered depends on whether the court has in fact purported to make a section 160A determination.

Verdict: Appeal allowed; the Crown Court judge’s confiscation order was restored. The Supreme Court held that section 160A of the Proceeds of Crime Act 2002 had not been engaged because Judge Miller had not made a determination under that section, and third parties could make representations at the enforcement stage.

Source: Hilton, R v (Northern Ireland) [2020] UKSC 29