How interest and Part payment adjustments on Fines are Determined.
March 29, 2018
R (on the Application of Gibson) v Secretary of State for Justice
The Supreme Court of the United Kingdom
Lord Mance, Lord Reed, Lord Carnwath, Lord Hughes, Lady Black
January 24, 2018
Reported by Linda Awuor & Wanjiru Njihia
Criminal Law –penalties-payment of fines and imprisonment-part payment of fines and interest accrued-release from custody and reduction of detention on payment-whether interest was to be included in the starting point for the giving of proportionate credit for part payment of a confiscation Order-Magistrates’ Courts Act 1980 chapter 43 (United Kingdom), section 79(2).
The Appellant was convicted for drug trafficking offences on May 21, 1999 and sentenced to 25 years imprisonment. On March29, 2000, he was ordered to pay a little over £5.4 million by way of a confiscation order. The order required the Appellant to pay the amount within 12 months or serve six years’ imprisonment in default of payment.
On May 4, 2007, a receiver appointed to realize the Appellant’s assets paid £12,500. The magistrates deducted seven days from the six-year term in default, to account for that part payment. At that time interest had increased the net sum outstanding, allowing for the part payment, to £8.1 million. Later in 2007 and 2011, the Appellant’s receiver made further payments of £12,500 and £65,370. The prison authorities calculated the reduction in the six-year default term on the basis of the proportion which these payments bore to the £8.1 million at the time of his committal. That produced a total reduction of 24 days. Had the arithmetic been applied instead to an outstanding figure confined to the original £5.4m, an extra 11 days reduction would have been made.
The issue in the appeal was whether interest was included in the starting point under section 79(2) of the Magistrates’ Courts Act 1980 for the giving of proportionate credit for part payment of a confiscation order.
i. Whether interest was included in the starting point for the giving of proportionate credit for part payment of a confiscation order as per section 10 of Drug Trafficking Act 1994.
ii. What was the credit to be given on part payment?
iii. Was the term of imprisonment ordered by the magistrates to be reduced, by reason of part payment as provided under section 79 (2) of the Magistrates’ Court Act 1980 or by section 140(1)?
iv. Was the reduction in reference to the total net sum outstanding (including interest), or was reduction for part payment calculated by reference only to the principal sum payable under the confiscation order?
Relevant provisions of the law
The Criminal Justice (International Co-operation) Act 1990
Section 15(1) –Interest on sums unpaid under confiscation orders
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 31(1) of the powers of Criminal Courts Act 1973 or under section 396 (1) of the Criminal Procedure (Scotland) Act 1975) 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.
Proceeds of Crime Act ,1995
Section 9-payment of interest on sums unpaid
The following section shall be inserted in the 1988 Act after section 75
75 A—interest on unpaid sums unpaid under confiscation orders
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 making of the order or at a time specified under section 3(1) of the Powers of the Criminal Courts Act 1973 or for the purposes of section 75 (1) or (2) of the Magistrates’ Courts Act 1980—
- 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
Judgements Act 1838
Section XVI—Judgement Debts to carry Interests.
And be it enacted, that every judgment debt shall carry interest at the rate of four pounds per centum per annum from the time of entering up the judgement, or from the time of the commencement of this act in cases of judgements when entered up and not carrying interest, until the same shall be satisfied, and such interest may be levied under a writ of execution on such
Magistrates’ Courts Act 1980
Section 79 (1) & (2)-release from custody and reduction of detention on payment
79.41) 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 the rules 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.
- The straining of the wording of section 79(2) could not be justified in circumstances where it would adversely impact on the period of imprisonment to which a person would be subject. Penal legislation was construed strictly, particularly where the penalty involved deprivation of liberty. The words of section 79(2) did not provide clearly for a period of imprisonment calculated on the basis for which the Secretary of State contended; on the contrary, they suggested the natural construction that the starting point for the arithmetical calculation of reduction in days of imprisonment was the sum outstanding at the time of the Crown Court order.
- 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 had been incurred. Since section 79(2) was plainly not drafted with confiscation, or for that matter Crown Court fines, in mind, the reference was 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 made perfectly good sense. In any event, the addition of such costs and charges was expressly provided; that did not mean that an equivalent provision could be read in as a consequence of a provision in a different statute, namely section 10(1) of the Drug Trafficking Act.
- A scheme under which the period of imprisonment served in default of payment in full of the amount specified in the confiscation order was based on the entire amount outstanding, including interest, may or may not have been 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 had not achieved that effect. If it was desired that they should do so, express legislation would be needed.
- It was 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 accrued daily, so the net amount outstanding would also vary daily. That difficulty was probably met by a calculation geared to the particular day(s) on which any part payment was made. But additionally, that construction would have the effect of progressively reducing the incentive to make part payment, as interest raised, 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 made no payment whatever.
Relevance to the Kenyan Situation
Kenya’s Criminal Procedure Code cap 75 provides at Section 340 for part payment after commitment. It provides at subsection (1) that if a person who is confined in prison for non-payment of a sum adjudged by a court in its criminal jurisdiction to be paid under the code or under any other Act pays a sum in part satisfaction of the sum adjudged to be paid, the term of his imprisonment shall be reduced by a number of days bearing as nearly as possible the same proportion to the total number of days for which that person is committed as the sum so paid bears to the sum for which he is liable. At subsection (2), if a prisoner applies for reduction as per subsection 1, the officer in charge of prison ought to take the prisoner before a court, and the court should certify the amount by which the term of imprisonment originally awarded is reduced by the payment in part satisfaction, and shall make such order as is required in the circumstances.
The penalties under the Kenya’s Criminal justice system are Death, imprisonment, fines, forfeiture, compensation, security for good behavior, probation and community service orders.
Despite the Kenyan Criminal procedure code providing for part payment and reduction of imprisonment days, it is hardly ever taken advantage of. Most Kenyans only use either fine or imprisonment but are not aware of such a provision in the Kenyan Law.
Need for public awareness is inevitable