Zenith Crime Current Awareness

Mortgage Fraud, Waya and Section 22 POCA - R v Cole [2018] EWCA Crim 888

8 May 2018

Jonathan Holsgrove

The Court of Appeal has provided some useful guidance on the interaction between the seminal case of R v Waya and applications under section 22 POCA.

In 2008, the Defendant had been convicted of offences including concealing and converting criminal property and false accounting.  These related in part to funds raised by mortgage to purchase two properties.  He was sentenced to 6 years imprisonment.  A confiscation order was made by agreement between the parties.  The benefit was agreed at £575,000, the available amount agreed at £55,000 and a confiscation order made in the same sum.  The assets available included the two properties.  The confiscation order was paid in two tranches not by the Defendant but his mother and an associate.

The Defendant did not learn his lesson and in 2014 was convicted of drug offences.  An application came before the Court under section 22 POCA and also for a confiscation order in respect of the new offences.  In respect of the section 22 application the Court held that there was a further £471,547 of assets available in addition to the £55,000 already paid.  This was made up of equity in the two properties and cash on arrest.  The original benefit figure was utilised and an order was made in that sum.  In respect of the confiscation order for the new offences the benefit was assessed but in light of the order under section 22 a nominal order of £1 was made in 2017.  The Defendant appealed the order made in the section 22 application.

Since the making of the original not only had the value of the two properties increased but the Supreme Court had also given us their decision in R v Waya [2012] UKSC 51.  The thrust of the appeal concerned the interaction between Waya and section 22(4), which requires the Court to make an order that is ‘just’.  As well as introducing proportionality to the lexicon of POCA lawyers, Waya also provided a method of calculating benefit in mortgage fraud cases.  The proper calculation is to ascertain the benefit to the defendant from the use of the mortgage (the equity) rather than utilising the amount of the mortgage.  When the original order was made Waya had not been decided and the benefit was not calculated in the proportionate and proper manner.  In this case the proper assessment would have been to take the value of the properties (£575,000) less the mortgages (£377,000) being a Waya Compliant figure of £198,000.  As £55,000 had been paid then the limit on what would be a ‘just’ amount to be ordered under section 22 was £143,000 and not £471,547.

The Court of Appeal held that once it is accepted that the benefit figure in a mortgage fraud case is to be calculated in accordance with Waya then a Court should not, when considering what was ‘just’, proceed under section 22 POCA as if Waya had not been decided.  The appeal was allowed on the section 22 to that extent.  However, the Court of Appeal went on to state that it would be appropriate for the Prosecution to make a section 22 application to vary the available amount in the 2017 order, only ‘if it wishes to do so’.  I think that it is likely they will!

Current Awareness

By the Crime team