Hilary Term [2018] UKSC 2 On appeal from: [2015] EWCA Civ 1148

JUDGMENT
R (on the application of Gibson) (Appellant) v
Secretary of State for Justice (Respondent)
before
Lord Mance, Deputy President
Lord Reed
Lord Carnwath
Lord Hughes
Lady Black
JUDGMENT GIVEN ON
24 January 2018
Heard on 5 December 2017
Appellant Respondent
Pete We
atherby QC David Perry QC
Matthew Stanbury Will Hays
(Instructed by Swain & Co
Solicitors
)
(Instructed by The
Government Legal
Department
)
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LORD REED AND LORD HUGHES: (with whom Lord Mance, Lord
Carnwath and Lady Black agree)
1. This case concerns the enforcement of confiscation orders made by the
Crown Court upon conviction. As well as various statutory mechanisms for
enforcement via the appointment of receivers, successive confiscation statutes have
adopted the scheme of making confiscation orders enforceable as if they were fines
imposed by the Crown Court. That involves using the powers of the Magistrates’
Court, which is the court which can, if payment is not made, issue a warrant
committing the non-paying defendant to prison. When making the confiscation
order (as when imposing a fine), the Crown Court is required by statute to fix a
default term of imprisonment to be served if the defendant does not pay. In a simple
case of non-payment, the magistrates will usually issue a warrant committing the
defendant to prison for the period which the Crown Court fixed as the default term,
and that term has to be served consecutively to any sentence passed for the
substantive offences which led to the making of the confiscation order. There are,
however, two possible adjustments which may have to be considered. The first is
interest. The second is part payment. The present appeal concerns how these two
adjustments fall to be made when they coincide.
2. Because the confiscation order made in this case, and the enforcement action
taken in consequence, happened some time ago, this case falls to be decided upon
legislation now repealed and replaced. It is not, however, of merely historical
interest. Although the drafting of later legislation has not been identical, the issue
raised by this appeal arises in much the same way under the current legislation, the
Proceeds of Crime Act 2002.
3. Put shortly, the issue is this. If between the making of the confiscation order
by the Crown Court and the issue of a warrant by the magistrates committing the
defendant to prison, part payment has been made, but also interest has accrued, what
does the statutory scheme say about how credit is to be given for the part payment?
Is the term of imprisonment ordered by the magistrates to be reduced, by reason of
the part payment, by reference to the total net sum outstanding (including interest),
or is reduction for part payment to be calculated by reference only to the principal
sum payable under the confiscation order? It is trite, but important, to say at the
outset that the question is not what scheme might be thought desirable, but rather
what the convoluted statutes actually mean. It is also relevant to note that although
the issue makes a difference of 11 days in the present case, in the context of a
defendant sentenced originally to a term of 25 years for his substantive offences, it
will apply to a large number of prisoners, and may fall for decision not only by
courts, but also by prison governors who have to determine release dates.
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The facts
4. Mr Gibson was convicted of drug trafficking offences on 21 May 1999 and
sentenced to 25 years’ imprisonment. On 29 March 2000 at the confiscation hearing,
he was ordered to pay a little over £5.4m; that meant that it had been determined by
the judge that his benefit was not less than that sum and that he had assets from
which that sum might be realised. He was given 12 months to pay, and the judge
fixed the term of six years’ imprisonment in default of payment. Interest therefore
ran from the expiry of the 12 months to pay. He paid nothing until 4 May 2007,
when £12,500 was paid, it would appear via a receiver appointed to realise his assets.
A month later, he appeared before the magistrates for consideration of a warrant of
commitment. The magistrates deducted seven days from the six year term in default,
to take account of the recent part payment. As at that time, interest had lifted the net
sum outstanding, allowing for the part payment, to £8.1m. Subsequently, later in
2007 and in 2011, two further realisations were achieved by his receiver, which
produced payments of £12,500 and £65,370. The prison authorities, and through
them the Secretary of State for Justice, calculated the reduction in the six year default
term on the basis of the proportion which these payments bore to the £8.1m
outstanding at the time of his committal. That produced reductions of three days and
21 days, totalling 24 days. If the arithmetic had been applied instead to an
outstanding figure confined to the original £5.4m, something like 11 extra days
reduction would have been made. The issue in the present appeal is whether he was
entitled to those 11 extra days.
Interest on confiscation orders
5. Uniquely amongst orders for payment of money made by criminal courts,
confiscation orders carry interest. They have done so since the early 1990s: see
section 15 of the Criminal Justice (International Co-operation) Act 1990 and section
9 of the Proceeds of Crime Act 1995, which introduced the rule respectively in
relation to drugs offences and to other forms of crime. Interest has been set, by
successive statutes, at the same rate as is prescribed from time to time for civil
judgment debts under section 17 of the Judgments Act 1838.
6. The interest provisions relevant to the present case were contained in section
10 of the Drug Trafficking Act 1994 (“the Drug Trafficking Act”), as in force at the
relevant time:
10. Interest on sums unpaid under confiscation orders.
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(1) If any sum required to be paid by a person under
a confiscation order is not paid when it is required to be
paid (whether forthwith on the making of the order or at
a time specified under section 139(1) of the Powers of
Criminal Courts (Sentencing) Act 2000) that person
shall be liable to pay interest on that sum for the period
for which it remains unpaid; and the amount of the
interest shall for the purposes of enforcement be treated
as part of the amount to be recovered from him under
the confiscation order.
(2) The Crown Court may, on the application of the
prosecutor, increase the term of imprisonment or
detention fixed in respect of the confiscation order under
subsection (2) of section 139 of the 2000 Act (as it has
effect by virtue of section 9 of this Act) if the effect of
subsection (1) above is to increase the maximum period
applicable in relation to the order under subsection (4)
of that section.
(3) The rate of interest under subsection (1) above
shall be the same rate as that specified in section 17 of
the Judgments Act 1838 (interest on civil judgment
debts).
7. For present purposes, the key provisions are:
(1) the concluding words of section 10(1), by which the interest is to be
treated for the purposes of enforcement as part of the amount to be recovered
under the confiscation order; and
(2) section 10(2), which enables a Crown Court judge to re-fix, and
increase, the default term if the addition of accrued interest takes the sum
outstanding into a higher bracket in the relevant schedule of permissible
default terms.
8. If the statutory scheme had stopped at this point, there would no doubt have
been a powerful argument for saying that for all enforcement purposes interest is
simply added to the original confiscation order. But this apparently fairly simple
provision has to be considered in its place in the much more complex statutory
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scheme under which the magistrates’ powers of commitment to prison are made
applicable to confiscation orders.
The application of the magistrates’ powers of commitment
9. In common with other confiscation statutes, the Drug Trafficking Act
referred enforcement by committal to prison to the Magistrates’ Court. By the time
of the 2007 commitment proceedings in this case, section 9 provided:
9. Application of procedure for enforcing fines.
(1) Where the Crown Court orders the defendant to
pay any amount under section 2 of this Act, sections
139(1) to (4) and 140(1) to (3) of the Powers of Criminal
Courts (Sentencing) Act 2000 (powers of Crown Court
in relation to fines and enforcement of Crown Court
fines) shall have effect as if that amount were a fine
imposed on him by the Crown Court.
The provisions there referred to in the (essentially consolidating) Powers of
Criminal Courts (Sentencing) Act 2000 (“the 2000 Sentencing Act”) were
previously contained in sections 31 and 32 of the Powers of Criminal Courts Act
1973, to which section 9 in its original form referred. In the courts below all parties,
and thus the courts, proceeded on the basis that the 1973 provisions were the relevant
ones. It was common ground before this court that the 2000 Act provisions had
become the relevant ones by the time of the commitment proceedings in this case.
The difference does not matter, because although the wording is not identical, it is
agreed that the effect of the two sets of provisions is the same.
10. It follows that section 9 of the Drug Trafficking Act referred one on to
sections 139 and 140 of the 2000 Sentencing Act, which are about fines. So far as
material, they provided as follows:
“139. Powers and duties of Crown Court in relation to fines
and forfeited recognizances.
(1) Subject to the provisions of this section, if the Crown
Court imposes a fine on any person or forfeits his recognizance,
the court may make an order –
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(a) allowing time for the payment of the amount of
the fine or the amount due under the recognizance;
(b) directing payment of that amount by instalments
of such amounts and on such dates as may be specified
in the order;
(c) [applicable only to recognizances]
(2) Subject to the provisions of this section, if the Crown
Court imposes a fine on any person or forfeits his recognizance,
the court shall make an order fixing a term of imprisonment or
of detention under section 108 above (detention of persons
aged 18 to 20 for default) which he is to undergo if any sum
which he is liable to pay is not duly paid or recovered.

140. Enforcement of fines imposed and recognizances
forfeited by Crown Court.
(1) Subject to subsection (5) below, a fine imposed or a
recognizance forfeited by the Crown Court shall be treated for
the purposes of collection, enforcement and remission of the
fine or other sum as having been imposed or forfeited –
(a) by a magistrates’ court specified in an order
made by the Crown Court, or
(b) if no such order is made, by the magistrates’
court by which the offender was committed to the
Crown Court to be tried or dealt with or by which he was
sent to the Crown Court for trial under section 51 or 51A
of the Crime and Disorder Act 1998,
and, in the case of a fine, as having been so imposed on
conviction by the magistrates’ court in question.
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(2) Subsection (3) below applies where a magistrates’ court
issues a warrant of commitment on a default in the payment of

(a) a fine imposed by the Crown Court; or
(b) a sum due under a recognizance forfeited by the
Crown Court.
(3) In such a case, the term of imprisonment or detention
under section 108 above specified in the warrant of
commitment as the term which the offender is liable to serve
shall be –
(a) the term fixed by the Crown Court under section
139(2) above, or
(b) if that term has been reduced under section 79(2)
of the Magistrates’ Courts Act 1980 (part payment) or
section 85(2) of that Act (remission), that term as so
reduced,
notwithstanding that that term exceeds the period applicable to
the case under section 149(1) of the Customs and Excise
Management Act 1979 (maximum periods of imprisonment in
default of payment of certain fines).”
Subsection (5), referred to in section 140(1), removes from the magistrates the
power to remit part of a fine if the fine was imposed by the Crown Court. A similar
stipulation against remission is additionally specifically applied to confiscation
orders by section 9(4)(a) of the Drug Trafficking Act.
11. It follows that the statutory scheme for the enforcement of confiscation orders
proceeded then, as it does now, by a process of successive referrals. First, section 9
of the Drug Trafficking Act makes the confiscation order enforceable as if it were a
fine imposed by the Crown Court. That refers one on to the 2000 Sentencing Act,
by which a fine imposed by the Crown Court is by section 140(1) treated for
enforcement purposes as if it had been imposed by the magistrates, and thus so is a
confiscation order. But the magistrates’ general powers in relation to their own fines
are not in the 2000 Sentencing Act; they are found in the Magistrates’ Courts Act
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1980, to which one is thus further referred on. It is in the Magistrates’ Courts Act
1980 (section 76) that the magistrates’ power to commit to prison for failure to pay
a fine is found, together with an alternative power to issue a warrant of distress (now
re-named a warrant of control). And it is in the Magistrates’ Courts Act 1980 that
the only provision dealing with part payments is found. That is section 79 which at
the time material to these magistrates’ proceedings read as follows:
“79. Release from custody and reduction of detention on
payment.
(1) Where imprisonment or other detention has been
imposed on any person by the order of a magistrates’ court in
default of payment of any sum adjudged to be paid by the
conviction or order of a magistrates’ court or for want of
sufficient distress to satisfy such a sum, then, on the payment
of the sum, together with the costs and charges, if any, of the
commitment and distress, the order shall cease to have effect;
and if the person has been committed to custody he shall be
released unless he is in custody for some other cause.
(2) Where, after a period of imprisonment or other detention
has been imposed on any person in default of payment of any
sum adjudged to be paid by the conviction or order of a
magistrates’ court or for want of sufficient distress to satisfy
such a sum, payment is made in accordance with rules of court
of part of the sum, the period of detention shall be reduced by
such number of days as bears to the total number of days in that
period less one day the same proportion as the amount so paid
bears to so much of the said sum, and the costs and charges of
any distress levied to satisfy that sum, as was due at the time
the period of detention was imposed.
(3) In calculating the reduction required under subsection
(2) above any fraction of a day shall be left out of account.”
The problem of part payments
12. Many of the difficulties which have beset the present case arise out of the fact
that the enforcement of confiscation orders is thus achieved by applying to them
statutory provisions which were not designed for them. In particular, the process of
referrals just described has the effect that a confiscation order is treated for
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enforcement as if it was a fine imposed by the magistrates. But there is a very
important difference in practice as between fines imposed by magistrates and fines
(and confiscation orders) imposed by the Crown Court. In the case of the former,
the magistrates do not fix a default term when imposing the fine. Instead, they
approach the matter of imprisonment in default only after default has occurred. By
then, of course, it will be known whether the default is total or partial, and the term
imposed under the warrant of commitment can be, and ordinarily is, adjusted
accordingly, thus in effect giving credit for part payments made before the
commitment process is undertaken. Section 79(1) and (2) then deal with the situation
if whole (subsection (1)) or part (subsection (2)) payment is made after the warrant
of commitment is issued. But in the case of Crown Court fines and confiscation
orders, section 139(2) of the 2000 Sentencing Act mandates the fixing of an
anticipatory default term at the time the fine or order is imposed. It follows that
something is required to cope with part payments made after the Crown Court order
and before the Magistrates’ proceedings, as well as with payments made after the
latter.
13. This difference of practice led the courts below to analyse section 79(2) as
assuming the standard magistrates’ practice and thus to conclude that the references
in that subsection to a period of imprisonment having been “imposed … in default
of payment …” were references to the act of the magistrates in issuing the warrant
of commitment. That in turn gave rise to the difficulty that, on that basis, section
79(2) would say nothing about how to deal with part payments made in a Crown
Court case between the Crown Court order and the later magistrates’ proceedings,
and there was no other provision which filled the gap. The Court of Appeal
understandably concluded that such part payments had to be taken into account, and
to give effect to that conclusion it read two additional words into section 79(2) so
that it read “Where, before or after a period of imprisonment … has been imposed
…”: see [2017] 1 WLR 1115, para 51.
14. On the very helpful further argument which this court has had from counsel
on both sides, it is now clear that section 79 does not, when it speaks of a period of
imprisonment imposed in default of payment, necessarily refer only to the
magistrates’ proceedings. That will of course be the position when the default term
is imposed in the ordinary case of magistrates deciding whether or not to issue a
warrant of commitment some time after default has occurred. But even then, the
magistrates are entitled to issue the warrant and postpone its execution on terms,
usually no doubt requiring prompt payment and perhaps by instalments. Section
77(2) of the Magistrates’ Courts Act 1980 specifically so provides. It follows that
even in the case of an exclusively magistrates’ case, there may be a warrant of
commitment without immediate imprisonment.
15. Before this court, the parties were agreed that in the case of a Crown Court
confiscation order or fine, the period of imprisonment in default of payment is
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“imposed” for the purposes of section 79 when the Crown Court discharges its
statutory duty under section 139(2) of the 2000 Sentencing Act and fixes the
(anticipatory) term in default. That is clearly the position where the period of
imprisonment in default is imposed by the magistrates’ court, since section 79(1)
specifically says that on full payment the default term ceases to have effect whether
or not the person has been committed to prison, thus providing for the case permitted
by section 77(2) where a warrant of commitment has been issued, but not yet
executed. It also follows from section 150 of the Magistrates’ Courts Act, to which
the courts below were not referred. That definition section provides:
“‘impose imprisonment’ means pass a sentence of
imprisonment or fix a term of imprisonment for failure to pay
any sum of money, or for want of sufficient distress to satisfy
any sum of money, or for failure to do or abstain from doing
anything required to be done or left undone.”
16. This construction is also necessary to make sense of section 140(3) of the
2000 Sentencing Act, to which the courts below were not referred. This section is in
more expansive form than its predecessor, section 32 of the Powers of Criminal
Courts Act 1973. It makes clear by subsection 140(3)(b) that the default term fixed
by the Crown Court may already have been reduced under section 79(2) of the
Magistrates’ Court Act 1980 before the magistrates undertake the assessment of the
length of any warrant of commitment.
17. Lastly, this construction is clearly assumed by the Magistrates’ Courts Rules
1981 (SI 1981/552), to which the courts below were again not referred. These rules
provide for the persons to whom part or full payment may be made for the purposes
of section 79(2). By rule 55(1)(a) the designated officer of the court may receive
such payment “unless there has been issued a warrant of … commitment”, whereas
if there is such a warrant, the payment must be made by rule 55(1)(c) or (d) either
to a constable holding it (for execution) or the prison governor. That again
demonstrates that payments which fall within section 79(2) can be made before a
warrant of commitment is issued, although clearly they can only be made after the
default term has been imposed. Thus the default term in the case of Crown Court
orders must be the term that court imposed at the time of making its order.
Does section 79(2) include interest in its starting point?
18. That leads one to the issue in the present case. If the court which imposes the
default term is, for the purposes of section 79(2), the Crown Court in the case of a
confiscation order, which is the correct starting point for the arithmetical giving of
proportionate credit for part payment? Is it the sum stated in the order as originally
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made by the Crown Court, or is it that sum plus any interest which has accrued by
the time the exercise is conducted by the magistrates? In the present case, is it £5.4m
or is it £8.1m?
19. For the Secretary of State, Mr Perry QC powerfully submits that it must be
the original sum plus interest. The plain purpose of the various statutory provisions
for interest, including section 10 of the Drug Trafficking Act, is, he submits, that
interest is treated for any enforcement purpose as added to the confiscation order
and is expressly made part of “the amount to be recovered from [the defendant]
under the confiscation order”. So, it is said, the references in section 79(2) to the
term set in default of payment of “any sum adjudged to be paid” must, by what he
refers to as a necessary statutory fiction, be references to the sum fixed by the
original confiscation order plus interest. That is to do no more, he argues, than is
already provided for in section 79(2) for the costs and charges of any distress which
has been levied, which are expressly added to the principal sum outstanding. Those
also, he submits, will in the case of a Crown Court order, necessarily have been
incurred after the default term was fixed by that Court. He points to the plain
intention, gathered from section 10(1), that interest is to be paid, and to the fact that
in the case of a criminal who is in default of payment of the principal sum, civil
means of enforcement of interest are unlikely to be effective. He rightly reminds us
that a confiscation order is premised on the proposition that the defendant has the
means to pay, so that any default is his election. If circumstances change in a way
which reduces his ability to pay, the various confiscation statutes provide a
procedure for application for a certificate of inadequacy and consequent downward
reduction in the amount of the confiscation order.
20. Those arguments may well reflect, in a purposive manner, the kind of regime
for which the successive statutory referrals might have provided. The difficulty with
them lies in the operative words of section 79(2), which are the only ones which
provide for the treatment of part payments. They say expressly that the days to be
deducted are to be the number which bear the same proportion to the total default
term imposed (by the Crown Court) as the part payments bear “to so much of the
said sum … as was due at the time the period of detention was imposed”. If the
Secretary of State’s argument is to be accepted, the words “at the time the period of
detention was imposed” have to be done no little violence. At the time the Crown
Court imposed the default term, there was as yet no interest accrued at all.
21. We have concluded that this straining of the wording of section 79(2) cannot
be justified in circumstances where it would adversely impact on the period of
imprisonment to which a person would be subject. Penal legislation is construed
strictly, particularly where the penalty involves deprivation of liberty. The words of
section 79(2) do not provide clearly for a period of imprisonment calculated on the
basis for which the Secretary of State contends; on the contrary, they suggest the
natural construction that the starting point for the arithmetical calculation of
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reduction in days of imprisonment is the sum outstanding at the time of the Crown
Court order.
22. Nor is the Secretary of State’s construction warranted by the example of the
reference in section 79(2) to the costs and charges of distress, where such have been
incurred. Since section 79(2) was plainly not drafted with confiscation, or for that
matter Crown Court fines, in mind, the reference is adequately explained by the
orthodox case of the magistrates first issuing a warrant for distress and only
subsequently fixing the default term for non-payment; in such a case the reference
to the sum outstanding at the time the period of detention was imposed makes
perfectly good sense. In any event, the addition of such costs and charges is
expressly provided; that does not mean that an equivalent provision can be read in
as a consequence of a provision in a different statute, namely section 10(1) of the
Drug Trafficking Act.
23. A scheme under which the period of imprisonment served in default of
payment in full of the amount specified in the confiscation order is based on the
entire amount outstanding, including interest, may or may not be what the framers
of the confiscation legislation might have wished for or intended if the point had
been considered. However, because the means adopted took the form of statutory
reference (and re-reference) to provisions which were drafted for a different purpose
and without confiscation in mind, they have not achieved that effect. If it is desired
that they should do so, express legislation will be needed.
24. It is also of some relevance that the practical consequences of the Secretary
of State’s proposed construction would, without specific machinery, be difficult to
work out. Interest accrues daily, so the net amount outstanding would also vary
daily. That difficulty may be met by a calculation geared to the particular day (or
days) on which any part payment is made. But additionally, this construction would
have the effect of progressively reducing the incentive to make part payment, as
interest rises, because the days credited for such part payment would progressively
reduce. Nor would such a scheme provide any consequences at all for the not
uncommon defendant who simply makes no payment whatever.
Conclusion
25. For these reasons we would allow the appeal.