Skip to main content


Criminal benefit from fraudulent mortgages

The supreme Court handed down its decision in Waya [2012] UKsC 51 back in November 2012 but it is of no less practical importance for that. The Court was constituted of nine judges and Lord Walker and sir Anthony Hughes gave the lead judgment (with Lord Reed and Lord Phillips dissenting). Lord Walker conducted a detailed analysis of the pre-existing law on the calculation of criminal benefit under POCA 2002. The real issue was the proportionality principle derived from A1 ECHR and its effect on the application of the calculation of benefit from criminal offending. Importantly, the case was about the increasingly popular decisions to prosecute those who inflate their income on mortgage application forms. In this case, Mr Waya had purchased a flat for £765,000. He put down a deposit of £310,000 and the balance of the purchase price was secured through a mortgage on which application he had overstated his income. He later re-mortgaged and overstated his income of that application as well. He was later charged and convicted. HHJ Rivlin made a confiscation order in the sum of £1.54m (sale price of £1.85m less the £310,000 original deposit). The Court of Appeal reduced that figure to £1.1m. The supreme Court held that Mr Waya never in fact acquired anything but an equity of redemption because the mortgage advance remains in the beneficial ownership of the lender until completion, when it passes direct to the vendor.  Lord Walker concluded that the benefit obtained by Mr Waya from his criminal behaviour was a thing in action with no immediate market value. It was an item in property but it had a very short life, since on completion it immediately came to be represented by a fractional 60% share of the leasehold interest in the flat subject to (the whole of) the mortgage with the remaining 40% representing the untainted contribution. In economic terms, the benefit was so much of any appreciation in value as was attributable to the mortgage obtained by his dishonesty. Immediately after completion, this value was nil, but as the market value of the flat increased the benefit came to have a significant value, that is 60% of the appreciation in the net value of the flat, subject to the mortgage. The Court accordingly substituted the Order with one of £392,000.


Legal Disclaimer

Articles are intended as an introduction to the topic and do not constitute legal advice.