McCool and Harkin [2018] UKSC 23

R v McCool (Appellant) (Northern Ireland) and R v Harkin (Appellant) (Northern Ireland) [2018] UKSC 23 concerned the interpretation of section 156 of the Proceeds of Crime Act 2002 and the applicable transitional provisions. The Supreme Court, by a majority, dismissed the appeals and held that confiscation orders under POCA 2002 could be made in respect of offences committed after the Act came into force on 24 March 2003, notwithstanding that the defendants had also been convicted in the same proceedings of offences committed before that date.

Ms McCool pleaded guilty to four offences of obtaining benefits by fraud. One offence dated from 26 September 1990; the remainder were committed in November 2003, October 2005 and August 2010. Mr Harkin pleaded guilty to making a false declaration in December 1999 and to similar offences between October 2005 and August 2009. The Crown calculated the benefit for confiscation purposes only from the dates of offences committed after 24 March 2003. Confiscation orders under POCA 2002 were made against both appellants. The Court of Appeal reduced the amounts recoverable, applying the principle in R v Waya, but held that the orders had been correctly made under POCA 2002. The Crown accepted the reduction. The sole issue before the Supreme Court was whether POCA 2002 could be applied at all.

The appellants argued that article 4(1) of the Proceeds of Crime Act 2002 (Commencement No 5, Transitional Provisions, Savings and Amendment) Order 2003 precluded the application of section 156 where any of “the offence (or offences) mentioned in section 156(2)” was committed before 24 March 2003. Section 156(2) referred to offences of which the defendant was convicted in proceedings before the Crown Court or in respect of which he was committed to the Crown Court for confiscation. Section 156(9) defined “the offence (or offences) concerned” throughout Part 4 as referring to the offence or offences mentioned in section 156(2). Because one offence in each case pre-dated 24 March 2003, the appellants contended that POCA 2002 could not be applied to any of the offences and the earlier 1990 and 1996 Orders should have governed the proceedings. They submitted that the Crown could not evade this difficulty by electing not to rely on pre-commencement offences.

Lord Kerr, giving the lead judgment for the majority, held that the correct interpretation of the statute was that section 156 applied only to offences in respect of which a confiscation order under the 2002 Act could lawfully be made. The statute’s purpose was to create a clear dividing line between offences caught by the new Act and those falling under predecessor legislation. He emphasised that the context in which the confiscation provisions operated was confined to orders that could be made under the Act. Section 156 set the framework, and sections 218 and 224 reinforced the theme that the Crown Court’s primary purpose was to make confiscation orders in respect of offences to which the new Act applied. The phrase “the offence (or offences) concerned” should be understood as referring to those offences on which the Crown or the court relied as relevant to confiscation under the 2002 Act.

Lord Kerr rejected the proposition that this would produce an absurd outcome. On the contrary, he considered that if a wide range of post-2003 offences were excluded from POCA 2002 simply because the defendant had also been convicted of one pre-commencement offence, the result would be undesirable and inconsistent with the legislative scheme. Parliament could not have intended that defendants convicted of offences after the commencement date should be dealt with under regimes that the 2002 Act had replaced. He noted that the appellants accepted that if the prosecution chose to proceed only on post-2003 offences by not charging or committing pre-2003 offences, POCA 2002 would apply. It followed that the determinative factor was which offences were before the court for the purposes of confiscation, not which offences appeared on the indictment. Lord Kerr did not consider it necessary to read words into the statute; the Act was intended to permit applications for confiscation orders for offences committed after 24 March 2003 and to exclude offences before that date, provided a clear segregation could be maintained.

Lord Kerr also considered section 224(3)(b), which defined “particular criminal conduct” as including conduct constituting offences of which the defendant was convicted in the same proceedings as those in which he was convicted of “the offence or offences concerned”. He held that this subsection was explicable on the basis that the criminal conduct taken into account was conduct which might have attracted a confiscation order under the 2002 Act but had not been advanced by the prosecution. He also observed that amendments made to article 8 of the Commencement Order by the 2003 Amendment Order supported the construction that pre-commencement offences could be excluded from the course of criminal activity calculation and that POCA 2002 was intended to apply to post-commencement offences even when associated with earlier offences. Article 9 of the Commencement Order expressly provided that conduct constituting an offence committed before 24 March 2003 was not particular criminal conduct for the purposes of section 224(3), which again reinforced the distinction.

Lord Kerr addressed the line of Court of Appeal authority on analogous transitional provisions in earlier legislation, including R v Simpson, R v Aslam and R v Stapleton. He noted that those cases had been decided in relation to a provision in section 16(5) of the Proceeds of Crime Act 1995 which was similar to article 4(1) of the 2003 Order. The Court of Appeal had held that the relevant offences were those on which the Crown relied for confiscation purposes. Lord Kerr agreed with the outcome of those decisions, although he emphasised that it was not necessary to read words into the statute to reach that result. The legislation should be construed as applying to offences which could be dealt with under the new regime, leaving earlier offences to be dealt with under predecessor legislation. He rejected the appellant’s argument that the differences between the old and new confiscation regimes made this construction unworkable. Those differences included the abolition of a minimum benefit threshold, the removal of judicial discretion as to the amount of the order, the introduction of the “criminal lifestyle” provisions and variations in assumptions about benefit. He held that none of these differences gave rise to unfairness to defendants dealt with under POCA 2002 solely in respect of post-commencement offences, because they were in exactly the same position as if they had only been prosecuted for those offences.

Lord Hughes agreed with Lord Kerr, writing a separate judgment to address further aspects of the statutory scheme. He emphasised that there was no unfairness in the Crown’s decision to proceed only on post-commencement offences. The decision to charge particular offences was inherent in the prosecution function. Section 218, dealing with committal by magistrates’ courts with a view to confiscation, expressly recognised the Crown’s election whether to commit in respect of particular offences. Lord Hughes held that section 224(3)(b) demonstrated that not all offences of which the defendant was convicted in the proceedings necessarily fell within “the offence(s) concerned”, since that subsection envisaged offences of which the defendant was convicted in the same proceedings but which were not the offences concerned. He also relied on section 143(3)(b), the Scottish equivalent, which could not have been intended to refer to uncommitted offences because there was no system of committal for confiscation in Scotland. Lord Hughes found further support in article 8 and article 9 of the Commencement Order. Article 8(2) and article 8(3) excluded pre-commencement offences from the course of criminal activity calculation, provisions which would have been unnecessary if the appellants’ interpretation were correct. He rejected the argument that the differences between the old and new regimes made the construction adopted by the majority impermissible. In his view, the only relevant consideration was whether the defendant faced retrospective operation of the criminal law or the risk of being subjected to two different confiscation regimes. Neither risk arose if the Crown disclaimed reliance on pre-commencement offences. Where only post-commencement offences were relied on, the defendant was in the same position as if those were the only offences charged. If circumstances arose in which the defendant could demonstrate a risk of unfairness, the court retained power under section 156(3)(b) to determine of its own motion that pre-commencement offences should be included in the confiscation process, with the consequence that the earlier regime would apply. Lord Hughes considered that the result contended for by the appellants would produce anomalous outcomes, such as requiring all offences in a series to be dealt with under predecessor legislation even where a pre-commencement offence generated no benefit and could never have justified a confiscation order.

Lord Reed, with whom Lord Mance agreed, dissented. He held that the natural meaning of section 156(2) and (9) was that “the offence (or offences) concerned” referred to all offences of which the defendant was convicted in the proceedings or in respect of which he was committed to the Crown Court. Article 4(1) of the Commencement Order provided that section 156 did not have effect where any of the offences mentioned in section 156(2) was committed before 24 March 2003. The statutory language was clear and could not be displaced by an assumption about Parliament’s purpose. Lord Reed rejected the majority’s characterisation of the statutory result as absurd. The purpose of article 4(1) was twofold: to prevent POCA 2002 being applied retrospectively to pre-commencement offences, which would breach article 7 of the ECHR, and to avoid the practical difficulties of applying different confiscation regimes in the same proceedings. It was rational to provide that where the defendant was convicted of a pre-commencement offence all offences in the proceedings should be governed by the earlier regime. Lord Reed considered that the majority’s interpretation required either the reading in of words not present in the statute or a strained interpretation which had no foundation in the text. He noted that the logic of the majority’s approach appeared to permit, or even require, the Crown to forego confiscation proceedings in respect of pre-commencement offences entirely. He emphasised that sections 163, 164 and 165, which regulated the relationship between confiscation orders and sentencing and required the court to take the confiscation order into account when dealing with the defendant for “the offence (or offences) concerned”, made sense only if that phrase encompassed all offences in the proceedings. He also observed that section 223, dealing with criminal lifestyle, referred to “the offence (or any of the offences) concerned” and contemplated that a defendant might satisfy the lifestyle test by virtue of a single offence on Schedule 5, regardless of whether he had obtained any benefit from that or any other offence.

Lord Reed rejected the majority’s reliance on provisions of the Commencement Order. He considered it impermissible to use subordinate legislation made under powers conferred by POCA to interpret the meaning of the provisions of POCA itself. In any event, he was not persuaded that the provisions of the Order supported the majority’s construction. Article 8 in its original form contained provisions that were otiose because article 4(1) already precluded the application of POCA where any offence concerned was committed before 24 March 2003. The amendments made by the 2003 Amendment Order removed those provisions but left intact the provisions dealing with offences committed by defendants before the magistrates’ court. Article 9, which provided that conduct constituting an offence committed before 24 March 2003 was not particular criminal conduct, was necessary because section 224(3)(b) and (c) could otherwise apply to pre-commencement offences. Lord Reed also expressed doubt about the significance attached by the majority to section 224(3)(b) and section 143(3)(b). He declined to express a concluded view on those provisions in the absence of fuller argument.

Lord Reed rejected the reasoning in Simpson, Aslam and Stapleton. Those cases concerned section 16(5) of the Proceeds of Crime Act 1995, which provided that section 1 of that Act should not apply where a person was convicted in proceedings of an offence committed before the commencement of section 1. The Court of Appeal had read words into that provision to avoid what it regarded as an absurd result. Lord Reed considered that the supposed absurdity was no such thing, that the judicial amendment of the statute was impermissible, and that the Court of Appeal had been mistaken in thinking that the amount of a confiscation order could be restricted by the prosecution choosing not to rely on particular offences. He noted that under the relevant legislation the court was under a statutory duty to assess benefit from all offences of which the defendant had been convicted in the proceedings. He also noted that the Court of Appeal had not addressed the court’s power to initiate confiscation proceedings of its own motion or the implications of provisions regulating the relationship between confiscation and sentence. He further observed that the premise that certain offences could readily be identified as ones in respect of which a confiscation order could be sought was unsound, because whether an offence had generated a benefit might not be apparent at the outset.

In a postscript, Lord Hughes and Lady Black, with whom Lord Kerr agreed, addressed the appellants’ argument that if the orders had been made under the wrong legislation the Court of Appeal had no power to substitute orders under the correct legislation. The Crown had conceded the point below and had not sought to withdraw the concession. Lord Hughes observed that the concession raised difficulties. Section 10(3) of the Criminal Appeal Act (Northern Ireland) 1980 empowered the Court of Appeal to quash a sentence and pass such other sentence authorised by law as it thought ought to have been passed. Section 10(3A) enabled the court to remit a confiscation case to the Crown Court instead of substituting its own order. Section 10(3C) provided that on remission the Crown Court must proceed under the enactment under which the order had been made. That subsection applied only when the case was remitted. The longstanding power to quash and substitute under section 10(3) was arguably unaffected. Where the Court of Appeal could apply the findings made below, there might be no reason why it should not substitute an order under the correct statutory scheme. Lord Hughes noted that this was the practice of the Court of Appeal in England and Wales. He did not however express a concluded view, since the point had not been argued.

In short, the majority held that POCA 2002 applied to confiscation proceedings in respect of offences committed after 24 March 2003, even where the defendant had been convicted in the same proceedings of earlier offences, provided the prosecution disclaimed reliance on those earlier offences for the purposes of confiscation. The minority held that the presence of any pre-commencement offence on the indictment brought all offences within the scope of the predecessor legislation.

R (Edison First Power Ltd) v Central Valuation Officer [2003] UKHL 20; [2003] 4 All ER 209
Gumbs v Attorney General of Anguilla [2009] UKPC 27
Brown & Ors [2001] EWCA Crim 2761
Simpson [2003] EWCA Crim 1499
Jones v Wrotham Park Settled Estates [1980] AC 74
Aslam [2004] EWCA Crim 2801
Clarke; McDaid [2008] UKHL 8; [2008] 2 Cr App R 2
Waya [2012] UKSC 51, [2013] AC 294
Aniakor [2014] EWCA Crim 2171
Soneji and Another [2005] UKHL 49; [2006] 2 Cr App R 20; [2006] 1 AC 340
Knights and Another [2005] UKHL 50
Guraj [2016] UKSC 65

Johnson [1991] 2 QB 249, [1990] 3 WLR 745, [1991] 2 All ER 428, 91 CrAppR 332, 12 CrAppR S 182
Lazarus [2004] EWCA Crim 2297, [2005] 1 Cr App R(S) 98
Bukhari [2008] EWCA Crim 2915
Stapleton [2008] EWCA Crim 1308
Simpson [2003] EWCA Crim 1499; [2004] QB 118

Varley & Others [2019] EWCA Crim 1074
Wood [2022] EWCA Crim 1243