Restraint, Confiscation and Compensation in Private Prosecutions
Confiscation / Compensation
In R (Virgin Media Ltd) v Zinga  EWCA Crim 52, the Court of Appeal confirmed that a private prosecutor could institute confiscation proceedings by inviting the court to proceed under section 6 of the Proceeds of Crime Act 2002 (POCA).
Virgin Media Ltd had commenced a private prosecution against the defendant who was illegally selling set top boxes which allowed customers to obtain their media services without payment. It was estimated that Virgin’s lost revenue as a result of the fraud was £380 million. The defendant was convicted of conspiracy to defraud and sentenced to 8 years’ imprisonment.
During the investigation Virgin had enlisted the assistance of the police, who applied for arrest warrants on its behalf, and then entered into an agreement with the police, agreeing to donate 25 per cent of any sums recovered under a compensation order. Virgin also began confiscation proceedings under POCA. Later, Virgin abandoned its claim for compensation and pursued proceedings solely for confiscation which stood to benefit only the Crown.
The principal issues raised in the appeal were whether a private prosecutor was entitled to bring confiscation proceedings under POCA, even if it had no financial or other personal interest in the outcome; and, the propriety of the agreement with the police.
The Court of Appeal dismissed the appeal. The right to bring a private prosecution is long established and was expressly preserved by section 6(1) of the Prosecution of Offences Act 1985. Under POCA, confiscation proceedings may be commenced by “the prosecutor” which is defined in section 40(9) as the person the court believes is to have conduct of any proceedings for the offence. The Court of Appeal held that the definition at section 40(9) applied to the whole Act. Moreover, it held that it did not matter that private prosecutors could not conduct financial investigations into a defendant’s circumstances and supply the statement of information required by section 16. The 2002 Act distinguished between those who could investigate and those who could prosecute.
Moreover, the agreement reached by Virgin with the police was not deemed an abuse of process although it was acknowledged that it did run some of the risks identified in R v Hounsham  EWCA Crim 1366 because it could have given rise to a perception of compromised police independence.
In R v Somaia  EWCA Crim 2267 the Court of Appeal reaffirmed the principle set out in Zinga and confirmed that a private prosecutor could institute confiscation proceedings both under POCA and the Criminal Justice Act 1988 (CJA 1988). However, the court in Somaia also considered the question of compensation, concluding that in an appropriate case, a private prosecutor could seek compensation in confiscation proceedings.
The defendant had been convicted of obtaining money transfers by deception and, following confiscation proceedings, was ordered to pay a confiscation order in the sum of £20.5 million and two compensation orders to his victims totalling £18.2 million. Following his refusal to make any payments towards the orders, the default sentence was activated. He appealed, arguing that the private prosecutor, who was also the principal victim, was conflicted in carrying out the “quasi-judicial” role required of a prosecutor in commencing proceedings under CJA 1988. This argument effectively sought to prevent private prosecutors from pursuing confiscation proceedings.
The Court of Appeal did not agree that the private prosecutor was “irremediably conflicted”. It held that a private prosecutor is still a prosecutor and is subject to the same obligations as a public prosecutor and that those acting on behalf of the private prosecutor had in place sufficient safeguards to ensure those obligations were complied with.
Given that it is settled that a private prosecutor can institute both compensation and confiscation proceedings, the question arises as to whether the private prosecutor is able to seek a restraint order prohibiting the defendant from dealing with assets held by him at a much earlier stage in the proceedings?
Section 41(1) of POCA provides that, “if any condition set out in section 40 is satisfied the Crown Court may make an order (a restraint order) prohibiting any specified person from dealing with any realisable property held by him”.
Section 40(1) provides that the Crown Court may exercise the powers conferred by section 41 if any of the five conditions identified is satisfied. The second condition (section 40(3)) has particular relevance to the private prosecutor. It reads:
“The second condition is that –
(a) Proceedings for an offence have been started in England and Wales and not concluded, and
(b) There is reasonable cause to believe that the defendant has benefited from his criminal conduct.”
Proceedings for an offence are started when a justice of the peace issues a summons or warrant under section 1 of the Magistrates’ Courts Act 1980 in respect of an offence (section 85(1) POCA 2002).
Therefore, once proceedings have commenced there is scope for the private prosecutor to apply for a restraint order. It should be noted, however, that the private prosecutor is unlikely to be able to apply for a pre-charge restraint order (the “first condition” under section 40(2) POCA) as that requires a “criminal investigation” to have been started. For there to be a criminal investigation for these purposes, the investigators must be police officers or other persons subject to “a duty to conduct [the investigation] with a view to it being ascertained whether a person should be charged with an offence” (section 88(2) POCA).
The grant of a restraint order is discretionary and the following matters will be taken into account:
(a) The court is required to decide whether the statutory test is met (Barnes v Eastenders Group  2 Cr App R 19);
(b) As such, the court must be satisfied, inter alia, that there is reasonable cause to believe that the defendant has benefitted from his general criminal conduct;
(c) The court will exercise its powers in accordance with the “legislative steer” given by section 69(2) POCA;
(d) In addition to the statutory criteria the court must find that there is a real risk that, without the order, the defendant would dissipate assets such that they would no longer be available to satisfy any future confiscation order. Where “dishonesty” is charged there will usually be reason to fear that assets will be dissipated (Jennings v CPS  1 WLR 182);
(e) As the application is likely to be made ex parte there is a duty on the applicant to make balanced submissions and to inform the court of all material facts (Re Standford  3 WLR 941).
To conclude, in an appropriate case, the private prosecutor is able to apply for a restraint order post-charge and for both confiscation and compensation orders post-conviction.