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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> Seager, R v [2009] EWCA Crim 1303 (26 June 2009) URL: https://www.bailii.org/ew/cases/EWCA/Crim/2009/1303.html Cite as: [2012] BCC 124, [2009] EWCA Crim 1303, [2009] Crim LR 816, [2010] 1 WLR 815, [2009] Lloyd's Rep FC 492, [2010] 1 Cr App R (S) 60, [2010] WLR 815 |
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COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM WOOD GREEN CROWN COURT
HHJ BROWNE QC T20070115
and
ON APPEAL FROM PORTSMOUTH CROWN COURT
HHJ COWLING T20070011
Strand, London, WC2A 2LL |
||
B e f o r e :
MR JUSTICE HEDLEY
and
MR JUSTICE HICKINBOTTOM
____________________
R |
Respondent |
|
- and - |
||
MORNINGTON STAFFORD SEAGER |
Appellant |
|
AND |
||
R |
Respondent |
|
- and - |
||
ENDON BARRY BLATCH |
Appellant |
____________________
Andrew Mitchell QC and Mr Alex Munro for the Respondent
Miss Clare Montgomery QC and Mrs Clare Sibson for the Appellant
Mr Andrew Mitchell QC and Mr Jonathan Hall for the Respondent
Hearing dates : 1st May 2009
____________________
Crown Copyright ©
Lord Justice Aikens:
R v Endon Blatch: The Facts
"On the facts I have found here it is clear…that a benefit has been obtained as a result of or in connection with the commission of the crime in relation to both [Bembridge Harbour] and [South Shore]. And that the defendant's criminal acts have been a cause, in the sense of having materially contributed to the obtaining the property. The correct measure of benefit in my judgment is the gross turnover of those companies during the relevant period".
Seager, R v: the facts.
The statutory provisions concerning director disqualification: The Company Directors Disqualification Act 1986 ("the 1986 Act").
"1. - (1) In the circumstances specified below in this Act a court may, and under section 6 shall, make against a person a disqualification order, that is to say an order that [ for a period specified in the order—
(a) he shall not be a director of a company, act as receiver of a company's property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of the court, and
(b) he shall not act as an insolvency practitioner.]
……
[ 1A. — (1) In the circumstances specified in sections 7 and 8 the Secretary of State may accept a disqualification undertaking, that is to say an undertaking by any person that, for a period specified in the undertaking, the person—
(a) will not be a director of a company, act as receiver of a company's property or in any way, whether directly or indirectly, be concerned or take part in the promotion, formation or management of a company unless (in each case) he has the leave of a court, and
(b) will not act as an insolvency practitioner.
(2) The maximum period which may be specified in a disqualification undertaking is 15 years; and the minimum period which may be specified in a disqualification undertaking under section 7 is two years.
…….
(4) In determining whether to accept a disqualification undertaking by any person, the Secretary of State may take account of matters other than criminal convictions, notwithstanding that the person may be criminally liable in respect of those matters.]
……..
13. —If a person acts in contravention of a disqualification order or [ disqualification undertaking or in contravention]of section 12(2) [ or 12A], or is guilty of an offence under section 11, he is liable—
(a) on conviction on indictment, to imprisonment for not more than 2 years or a fine, or both; and
(b) on summary conviction, to imprisonment for not more than 6 months or a fine not exceeding the statutory maximum, or both.
14.— (1) Where a body corporate is guilty of an offence of acting in contravention of a disqualification order [F28 or disqualification undertaking or in contravention of section 12A], and it is proved that the offence occurred with the consent or connivance of, or was attributable to any neglect on the part of any director, manager, secretary or other similar officer of the body corporate, or any person who was purporting to act in any such capacity he, as well as the body corporate, is guilty of the offence and liable to be proceeded against and punished accordingly.
(2) Where the affairs of a body corporate are managed by its members, subsection (1) applies in relation to the acts and defaults of a member in connection with his functions of management as if he were a director of the body corporate.
15. — (1) A person is personally responsible for all the relevant debts of a company if at any time—
(a) in contravention of a disqualification order or [ disqualification undertaking or in contravention]of section 11 [ or 12A]of this Act he is involved in the management of the company, or
(b) as a person who is involved in the management of the company, he acts or is willing to act on instructions given without the leave of the court by a person whom he knows at that time to be the subject of a disqualification order [ or disqualification undertaking or a disqualification order under Part II of the Companies (Northern Ireland) Order 1989]or to be an undischarged bankrupt.
(2) Where a person is personally responsible under this section for the relevant debts of a company, he is jointly and severally liable in respect of those debts with the company and any other person who, whether under this section or otherwise, is so liable.
(3) For the purposes of this section the relevant debts of a company are—
(a) in relation to a person who is personally responsible under paragraph (a) of subsection (1), such debts and other liabilities of the company as are incurred at a time when that person was involved in the management of the company, and
(b) in relation to a person who is personally responsible under paragraph (b) of that subsection, such debts and other liabilities of the company as are incurred at a time when that person was acting or was willing to act on instructions given as mentioned in that paragraph.
(4) For the purposes of this section, a person is involved in the management of a company if he is a director of the company or if he is concerned, whether directly or indirectly, or takes part, in the management of the company.
(5) For the purposes of this section a person who, as a person involved in the management of a company, has at any time acted on instructions given without the leave of the court by a person whom he knew at that time to be the subject of a disqualification order [ or disqualification undertaking or a disqualification order under Part II of the Companies (Northern Ireland) Order 1989] or to be an undischarged bankrupt is presumed, unless the contrary is shown, to have been willing at any time thereafter to act on any instructions given by that person.
…….."
The statutory provisions concerning confiscation orders: the CJA 1988 and POCA 2002.
"71. - (1) Where an offender is convicted, in any proceedings before the Crown Court or a magistrates' court, of an offence of a relevant description, it shall be the duty of the court—
(a) if the prosecutor has given written notice to the court that he considers that it would be appropriate for the court to proceed under this section, or
(b) if the court considers, even though it has not been given such notice, that it would be appropriate for it so to proceed,
to act as follows before sentencing or otherwise dealing with the offender in respect of that offence or any other relevant criminal conduct.
(1A) The court shall first determine whether the offender has benefited from any relevant criminal conduct.
(1B) Subject to subsection (1C) below, if the court determines that the offender has benefited from any relevant criminal conduct, it shall then—
(a) determine in accordance with subsection (6) below the amount to be recovered in his case by virtue of this section, and
(b) make an order under this section ordering the offender to pay that amount. …….
(4) For the purposes of this Part of this Act a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained.
(5) Where a person derives a pecuniary advantage as a result of or in connection with the commission of an offence, he is to be treated for the purposes of this Part of this Act as if he had obtained as a result of or in connection with the commission of the offence a sum of money equal to the value of the pecuniary advantage.
(6) Subject to subsection 1(C) above the sum which an order made by a court under this section requires an offender to pay shall be equal to —
(a) the benefit in respect of which it is made; or
(b) the amount appearing to the court to be the amount that might be realised at the time the order is made,
whichever is the less.
…."
"6 Making of order
(1) The Crown Court must proceed under this section if the following two conditions are satisfied.
(2) The first condition is that a defendant falls within any of the following paragraphs—
(a) he is convicted of an offence or offences in proceedings before the Crown Court;
(b) he is committed to the Crown Court for sentence in respect of an offence or offences under section 3, 4 or 6 of the Sentencing Act;
(c) he is committed to the Crown Court in respect of an offence or offences under section 70 below (committal with a view to a confiscation order being considered).
(3) The second condition is that—
(a) the prosecutor or the Director asks the court to proceed under this section, or
(b) the court believes it is appropriate for it to do so.
(4) The court must proceed as follows—
(a) it must decide whether the defendant has a criminal lifestyle;
(b) if it decides that he has a criminal lifestyle it must decide whether he has benefited from his general criminal conduct;
(c) if it decides that he does not have a criminal lifestyle it must decide whether he has benefited from his particular criminal conduct.
(5) If the court decides under subsection (4)(b) or (c) that the defendant has benefited from the conduct referred to it must—
(a) decide the recoverable amount, and
(b) make an order (a confiscation order) requiring him to pay that amount.
………..
8 Defendant's benefit
(1) If the court is proceeding under section 6 this section applies for the purpose of—
(a) deciding whether the defendant has benefited from conduct, and
(b) deciding his benefit from the conduct.
(2) The court must—
(a) take account of conduct occurring up to the time it makes its decision;
(b) take account of property obtained up to that time.
………..
76 Conduct and benefit
…….
(3) Particular criminal conduct of the defendant is all his criminal conduct which falls within the following paragraphs—
(a) conduct which constitutes the offence or offences concerned;
(b) conduct which constitutes offences of which he was convicted in the same proceedings as those in which he was convicted of the offence or offences concerned;
(c) conduct which constitutes offences which the court will be taking into consideration n deciding his sentence for the offence or offences concerned.
(4) A person benefits from conduct if he obtains property as a result of or in connection with the conduct.
(5) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.
…….
(6) References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained both in that connection and some other.
(7) If a person benefits from conduct his benefit is the value of the property obtained
……..
84 Property: general provisions
(1) Property is all property wherever situated and includes—
(a) money;
(b) all forms of real or personal property;
(c) things in action and other intangible or incorporeal property.
…….."
The law prior to the three House of Lords cases
"….
(3) The way in which the court gives effect to section 71(4) is to ask two questions. The first is whether a benefit has been obtained as a result of or in connection with the commission of the crime. If it has not, that is the end of the inquiry. If it has, then the second question is: what is the value of that benefit?
(4) In determining the first question, the test is whether the offender's criminal acts have been a cause (in the sense of having materially contributed to) of obtaining the property. Whether the property has been retained is irrelevant.
(5) In determining the value of any benefit, the court is not limited to considering the extent to which the offender personally benefited; nor is the concept of benefit to be equated with profit. It is the value of the property obtained, irrespective of the cost of obtaining it.
(6) A judge's findings on the two questions which arise out of section 71(4) are findings of fact. He has a wide discretion when applying these principles. His order will stand if he has a proper evidential basis for it and he has not misdirected himself.
………"
"38. What remains to be said about the meaning of the word 'obtain' in section 71(4)? Clearly it does not mean 'retain' or 'keep'. But no less clearly, in my judgment, it contemplates that the defendant in question should have been instrumental in getting the property out of the crime. His acts must have been a cause of that being done. Not necessarily the only cause: there may, plainly, be other actors playing their parts. All that is required is that the defendant's acts should have contributed to a non-trivial (that is, not de minimis) extent, to the getting of the property. This is no more than an instance of the common law's conventional approach to questions of causation.
Laws LJ had then observed that there was no separate requirement that the defendant should be shown to have control over the property. He said, at paragraph 40 of Jennings:
"40. .... The issue in every case is whether the defendant has obtained property by his crime: it means, as I have indicated, whether his acts have materially contributed to the getting of it."
"20……The court [in Jennings] held that "benefit" refers to whatever the defendant's alleged criminal [conduct] has generated or delivered. Laws LJ therefore rejected the defendant's submission that the concept of benefit was restricted to such property as the defendant obtained for himself or for his family. He observed: "36. It is in my judgment plain that the essence of what is meant by "benefit" in section 71(4) is given by the verb "obtain". And whether in any given case a person has obtained any particular property must involve issues of fact"".
"The second ground of appeal can be dealt with shortly. When calculating the benefit, for reasons we have given, the judge was right to look at turnover and not simply to limit the benefit to profits. We have analysed the authorities with regard to that. They establish a clear principle which the judge applied appropriately".
The three House of Lords decisions
"…….. [Buxton J] held that section 71(4) requires "what can fairly be described as an obtaining by the defendant himself" and that "the obtaining of property under section 71(4) must be by the defendant personally". These statements are not incorrect, but they should not, with respect, be understood as excluding joint receipts from the operation of the section, nor cases where payment is made to a third party at the behest of the defendant. "
" ……. In the course of his ruling the judge said that "The fact that he may not have personally received all or some of the money in relation to any of those offences is immaterial for the initial purpose of determining the total benefit ...". That may indeed be so for purposes of section 15, but for purposes of section 71(4) of the 1988 Act, with which the judge was dealing, it is of course necessary that the defendant himself should have obtained property as a result of his offending, even if jointly or through a third party at his behest, and his benefit is the value of the property so obtained. That is the view that the judge took, holding the defendant responsible for all the proceeds of the offence, a responsibility he could not normally shed because his accomplices had got away with their respective shares (although under the legislation as it then stood the court had a discretion to mitigate the effect of its conclusion)."
"34. …….. This argument was rejected. It was rightly held (para. 19), applying general principles of law, that a person who receives money into his bank account obtains it from the source from which it is derived and, where he is the sole signatory on the account, he obtains the money and has possession of it for his own benefit. Where (ibid) the defendants have not jointly obtained the benefit, but there has been a disposal by one member of a criminal enterprise to another who knowingly receives it, each is treated as the recipient of a benefit to the extent of the value of the money which has come into the possession of each of them. The amount of the benefit a defendant obtains (para 25) is not affected by the amount which might be obtained by others to whom he transfers any part of the benefit."
"46. The sum which the appellant, jointly with others, was found to have fraudulently obtained from HM Customs and Excise was, in law, as much his as if he had acted alone. That conclusion leads ineluctably to the further conclusions that he benefited from his offending, and benefited to an extent substantially greater than the confiscation order made again him (because of the deduction erroneously made by the judge as recorded in para 6 above). The order made was less than his realisable assets. It is entirely consistent with the legitimate objects of the legislation, and it requires that he be ordered to pay such sum, which involves no injustice or lack of proportionality. …."
"The exercise of this jurisdiction involves no departure from familiar rules governing entitlement and ownership….[A defendant] ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else….Mere couriers or custodians or other very minor contributors to an offence, rewarded by a specific fee and having no interest in the property or the proceeds of sale, are unlikely to be found to have obtained that property. It may be otherwise with money launderers".
"… to deprive the defendant of the product of his crime or its equivalent, not to operate by way of fine. The rational of the confiscation regime is that the defendant is deprived of what he has gained or its equivalent. He cannot and should not, be deprived of what he has never obtained or its equivalent, because that is a fine. Thus must ordinarily mean that he has obtained property so as to own it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment or conveyance of property to someone else".
"...In the ordinary way acts done in the name of and on behalf of a limited company are treated in law as the acts of the company, not of the individuals who do them. That is the veil which incorporation confers. But here the acts done by the appellant and his associated Mr Phillips in the name of the company have led to the conviction of one and a plea of guilty by the other. Thus the veil of incorporation has been not so much pierced as rudely torn away".
Cases since the trio of House of Lords cases
"If an offender chooses to use a company as a shield to hide his benefits from crime, it is open to the court to look behind the corporate veil in order to ascertain the true position. Again it is necessary in each case for the prosecution in the first instance and then the judge to examine the facts in order to see what benefit the offender has in truth obtained and how it should be valued".
"We have considered whether it is open to us to do so on the material before us, but it is not. The role of this court is that of a court of review. It would involve a primary fact finding exercise which we are not in a satisfactory position to conduct"
The arguments on the present appeals.
Issues to be decided.
Issue One: Do company director disqualification cases call for a different approach to the confiscation legislation from that adopted by the trio of House of Lords cases?
Issue Two: If the general approach of those cases is to be adopted, how does it apply in relation to director disqualification cases? In this connection, is R v Neuberg still good law?
Issue Three: If the general approach of the House of Lords trio of cases is to be adopted, then is the corporate veil to be pierced in either of the cases before the court and, if so, on what basis?
Issue Four: If the corporate veil is not to be pierced in either case, then how is the amount of the "benefit" to be calculated in the case of Mr Blatch and Mr Seager respectively?
Issue Five: Can the conclusion of the judges stand in each case. If not, what figures for "benefit" and confiscation order can this court substitute, if any?
Conclusion.