R v McCool (Northern Ireland) [2018] UKSC 23

A married couple convicted of benefit fraud spanning pre- and post-2003 offences challenged confiscation orders made under the Proceeds of Crime Act 2002. The Supreme Court held by majority that POCA 2002 applied to post-commencement offences where the Crown disclaimed reliance on earlier offences.

Facts

The appellants, Ms McCool and Mr Harkin, were husband and wife. Both pleaded guilty at Derry Crown Court to a series of offences involving the dishonest obtaining of State benefits (income support and, in Harkin’s case, housing benefit) by falsely representing they were single. Ms McCool’s indictment contained four counts, one committed in September 1990 and three between November 2003 and August 2010. Harkin’s indictment contained seven counts, one committed in December 1999 and the remainder between October 2005 and August 2009.

The Proceeds of Crime Act 2002 (“POCA 2002”) came into force in Northern Ireland on 24 March 2003. For the purposes of seeking confiscation orders under POCA 2002, the prosecution expressly disclaimed reliance on the pre-commencement offences and calculated benefit only from post-commencement conduct. Confiscation orders were made under POCA 2002, later reduced by the Court of Appeal (applying R v Waya) to £5,531.95 against Ms McCool and £33,624 against Mr Harkin, representing actual overpayments.

Issues

The certified question was whether a confiscation order under section 156 of POCA 2002 could be made by the Crown Court where a defendant was convicted in the same proceedings of offences committed before 24 March 2003, given the transitional provisions in articles 2, 4 and 11 of the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003. Specifically, the question turned on whether the phrase “the offence (or offences) concerned” in section 156(2) meant every offence of which the defendant was convicted, or only those on which the Crown relied for confiscation purposes.

Arguments

Appellants

The appellants argued that the literal wording of article 4(1) of the Commencement Order disapplied section 156 where “the offence, or any of the offences, mentioned in section 156(2) was committed before 24 March 2003”. The presence of pre-commencement offences on the indictment meant the earlier legislative regimes (the 1990 Order for Ms McCool; the 1996 Order for Mr Harkin) applied. They contended that confiscation is penal legislation and must be strictly construed, that the prosecution should not be able to manipulate the regime by tactical election, and that section 224(3)(b) demonstrated that “offences concerned” must mean all offences of conviction.

Respondent

The Crown submitted that “the offence (or offences) concerned” referred only to offences on which it relied (or the court identified) as founding confiscation. Since pre-commencement offences were disclaimed, only post-commencement offences fell within section 156(2), and POCA 2002 properly applied. This interpretation accorded with the line of Court of Appeal authority in Simpson, Aslam and Stapleton.

Judgment

The Supreme Court, by majority (Lord Kerr, Lord Hughes, Lady Black; Lord Mance and Lord Reed dissenting), dismissed the appeal.

Lord Kerr’s reasoning

Lord Kerr held that Parliament plainly intended post-March 2003 offences capable of generating confiscation orders to be dealt with under POCA 2002. A literal reading that excluded a “swathe” of post-2003 offences from the Act merely because of an associated pre-2003 conviction would produce an absurd, unintended result. Citing Bennion on Statutory Interpretation and Lord Millett in R (Edison First Power Ltd) v Central Valuation Officer [2003] UKHL 20, he emphasised the presumption against absurd, unworkable or anomalous outcomes.

Lord Kerr rejected the appellants’ reliance on section 224(3)(b), considering that it referred to conduct on which a confiscation order might have been made under the 2002 Act but which had not been put forward by the prosecution. He also drew support from the substituted article 8 of the Commencement Order, which would be unnecessary if the appellants’ interpretation were correct.

He distinguished R v Ahmed and R v Martin on their facts and endorsed the reasoning in R v Aslam [2004] EWCA Crim 2801, where Bean J observed that the legislative purpose was to prevent the Crown dividing convictions into pre- and post-commencement matters under both statutes, but that where the Crown expressly abandoned reliance on the pre-commencement count, there was no obstacle to applying the new regime. Lord Kerr concluded that it was not necessary to read words into section 156; provided a clear segregation between pre- and post-March 2003 offences could be identified, the Act applied straightforwardly.

Lord Hughes’ reasoning

Lord Hughes (with whom Lady Black agreed) undertook a detailed comparative analysis of the successive confiscation regimes. He held that the Simpson/Aslam construction created no unfairness or retrospectivity contrary to article 7 ECHR, since defendants were subjected only to the regime in force when the offences attracting confiscation were committed. The appellants were in exactly the same position as if they had only been prosecuted for post-commencement offences.

He emphasised section 218 (committal by magistrates), which requires committal “with a view to a confiscation order being considered” and which clearly permits the Crown to determine which offences are committed for confiscation. This demonstrated that an element of Crown election is inherent in the statutory scheme. Section 224(3)(b), contemplating offences of which the defendant was convicted in the same proceedings but which were not “the offence(s) concerned”, confirmed that “offences concerned” means those relied upon for confiscation.

Lord Reed’s dissent

Lord Reed (with whom Lord Mance agreed) considered section 156(2) and (9) unambiguous: “the offence (or offences) concerned” meant all offences of which the defendant was convicted in the proceedings. Article 4(1) of the Commencement Order therefore disapplied POCA 2002 where any such offence pre-dated 24 March 2003. He saw no absurdity in applying the earlier regime to all offences in such proceedings; rather, it was the natural and coherent reading, avoiding retrospectivity and the practical difficulty of two regimes in one set of proceedings. He criticised the majority for relying on subordinate legislation to construe the primary Act, and considered the Simpson line of authority to have impermissibly amended the statutory text.

Implications

The decision confirms that, for confiscation proceedings under Part 4 of POCA 2002 (and by extension Part 2 for England and Wales), the phrase “the offence (or offences) concerned” refers to those offences on which the prosecution seeks, or the court considers it appropriate, to found confiscation proceedings, rather than to every offence of which the defendant is convicted in the proceedings. Where the Crown disclaims reliance on pre-24 March 2003 offences, the 2002 Act applies to post-commencement offences, even if earlier offences appear on the same indictment.

The judgment endorses the long-standing Court of Appeal authority of Simpson, Aslam and Stapleton and the practice built on those decisions. It reaffirms the principle that courts may avoid a construction producing absurd, unworkable or anomalous results where Parliament cannot have intended it, while confirming that such construction does not infringe article 7 ECHR because defendants are subjected only to the regime in force at the time of the relevant offending.

Importantly, the decision leaves open whether the Court of Appeal has power to substitute a confiscation order made under the correct statutory regime where the Crown Court applied the wrong one, since the Crown’s concession on that point was not withdrawn (see Lord Hughes’ postscript at paras 108-115).

The case is significant for prosecutors, defence practitioners and the courts handling confiscation cases that straddle legislative transitions, clarifying that tactical exclusion of pre-commencement offences from the benefit calculation legitimately brings the later offences within the 2002 Act regime. The strong dissent from Lord Reed and Lord Mance highlights continuing concerns about the strained construction of the statutory language and the limits of purposive interpretation in penal legislation.

Verdict: Appeal dismissed. The Supreme Court, by a majority of three to two, held that confiscation orders were properly made under section 156 of the Proceeds of Crime Act 2002 because the prosecution had expressly disclaimed reliance on the pre-24 March 2003 offences, and the certified question was accordingly answered in the affirmative.

Source: R v McCool (Northern Ireland) [2018] UKSC 23