The Supreme Court’s (SC) judgment in Waya ( 1 A.C. 294) has been rightly lauded as a landmark decision in the field of post-conviction confiscation, writes Roger Sahota in the fourth of a series of articles considering the impact of the case.
The Mortgage Fraud
The SC’s decision on the facts of the case concerned a mortgage fraud and may be confined to similar factual circumstances. Here, the offender purchased an apartment having obtained a mortgage by lying about his income before it was subsequently re-mortgaged.
In a rising market the value of the property appreciated considerably, so much so that the original mortgage advance could be repaid from the proceeds of sale. In this type of situation, where the deposit was untainted and the mortgage had been or could be repaid, the SC majority held that the benefit obtained by the offender was limited to the fraction of the appreciation attributable to the original mortgage.
The SC thus rejected the Crowns argument that the value of the benefit obtained should reflect the mortgage advance.
It was held that the mortgage advance did not form part of the offender’s benefit as it never came into his control and possession following the dicta in May. Instead the defendant obtained a thing in action (in this case an equity in redemption) with no market value that could only be realised when the flat was sold.
The SC also emphasised that there will be other mortgage frauds where the “thing in action” may have a value (para.53). In these cases the Crown may be entitled to claim that the offender has benefitted to the value of the mortgage advance obtained.
It therefore remains unclear if the formula adopted by the SC in calculating benefit can be applied by analogy in other mortgage frauds.
The Minority View – A True Revolution Averted
Lord Philips and Lord Reed dissented from the Majority view and suggested a completely different approach. When deciding the extent to which the offender benefited from his criminal conduct the Court should ask two questions:
Firstly, ascertain what the POCA benefit is, then
Secondly, ascertain what at the “real benefit” is (in the ordinary sense) and then decide if the POCA benefit figure was proportionate.
Applying this formula in Waya they believed the offenders benefit should be limited to “the money value of obtaining his financing on better terms than might otherwise have been available” when he obtained his original mortgage rather than any part of the increase in value of the flat.
The minority approach, with it’s emphasis on “real benefit” (a concept that is irrelevant to POCA) should be welcomed. It could give the courts far greater flexibility in determining an offenders benefit, thereby allowing some discretion to mitigate the main criticism levelled against the legislation which is that it often produces excessively harsh outcomes.
Waya has been heralded as the dawn of a new era in confiscation law. This description would have been all the more apposite had the minority, not the majority view prevailed.
The original article can be found at www.confiscationorder.com