We have reported on a number of social housing fraud convictions in this blog, and along with unlawful profit and costs orders the court may consider making a compensation order . For example, a £45,000 compensation order was made in a sub-letting case reported in the Islington Gazette (and here) in April 2018.
In the same month, a former housing officer was ordered to pay £20,000 to his erstwhile employers, after receiving a 3-year sentence in 2016 “after admitting fraud offences relating to social housing applications and job references”.
When it comes to profits from a housing fraud, if a person is convicted of an offence under either sections 1 or 2 of the Prevention of Social Fraud Act 2013 the court must decide whether to make an unlawful profit order. An unlawful profit order can be made instead of or in addition to an order under the court’s sentencing powers (see section 4(1) and (2) of the 2013 Act).
If a court decides not to make an unlawful profit order, section 4(4) of the 2013 Act states that it must give reasons for that decision when passing sentence.
As for questions of loss and compensation orders, the criminal court must consider this in any case where personal injury, loss or damage has resulted from the offence, and the court must also (as with the unlawful profit order) give reasons if it decides not to order compensation.
And so section 130 of the Powers of Criminal Courts (Sentencing) Act 2000 provides:
“(1) A court by or before which a person is convicted of an offence, instead of or in addition to dealing with him in any other way, may, on application or otherwise, make an order (in this Act referred to as a “compensation order”) requiring him—
(a) to pay compensation for any personal injury, loss or damage resulting from that offence or any other offence which is taken into consideration by the court in determining sentence; or
(b) to make payments for funeral expenses or bereavement in respect of a death resulting from any such offence, other than a death due to an accident arising out of the presence of a motor vehicle on a road;
but this is subject to the following provisions of this section and to section 131 below.”
There are some salient points to remember about such orders:
1. They are ordered by the criminal courts following a conviction, and in a housing fraud case may be made, for example, where the local authority ‘victim’ has been put to the expense of putting a household in temporary accommodation because the defendant has wrongly been allocated housing due to their misrepresentation.
2. No upper limit applies to those aged 18 or over (see s. 131 of the 2000 Act, which limits the amount to no more than £5000) though the amount of loss to the victim, such as the social landlord, is the matter being compensated.
3. Victim’s views are paramount whilst alternative civil remedies are ignored.
4. The court must, of course, take into account the offender’s means and this can focus on both income and (acquired by means of the fraud) assets (which could be sold to pay the order).
5. Priority will be given to the compensation order over a fine where the offender has insufficient means to pay both.
Mr Justice Cranston said in R v Stapylton (Ben)  EWCA Crim 728;  1 Cr App R (S) 12:
“11 Since the first legislation enabling compensation to be awarded by the criminal courts was enacted, section 1(1) of the Criminal Justice Act 1972, the courts have laid down a number of principles about the making of compensation orders. First, the court has no jurisdiction to make an order where there are real issues as to whether those to benefit have suffered any, and if so, what loss: R v Horsham Justices ex p Richards  1 WLR 986, 993. Thus in R v Christopher Paul Watson (1990–91) 12 Cr. App. R. (S.) 508 no award was made in favour of insurers because there was no evidence as to the loss. Coupled with that is that because compensation orders are for straightforward cases: R v Donovan (1981) 3 Cr app R(S) 192, a court should not embark on a detailed inquiry as to the extent of any injury, loss or damage. If the matter demands such attention it is better left for civil proceedings. Further, compensation orders must not be made unless there is a realistic possibility of compliance (R v Webb (1979) 1 CR APP R (S) 16). Orders should not be made if they will be protracted in effect, although much will turn on the nature of the offence and the offender: R v Olliver (1989) 1 Cr App R (S) 10.”
The amount of the loss will need to be agreed by the defendant, or established by evidence. Such “evidence” hearings should be straightforward and simple (see Hyde v Emery (1984) Cr App R (S) 206).
In appropriate cases, the court can award a sum representing the loss of interest if the compensation order is large and the period long: R v Schofield 2 All E R 705.
A later posting will look at confiscation orders under the Proceeds of Crime Act 2002.