R V McDowell (Christopher James)

R. v McDowell (Christopher James), [2015] 2 Cr. App. R. (S.
) 14 (2015)
For educational use only

*137 R. v McDowell
Positive/Neutral Judicial Consideration
Court
Court of Appeal (Criminal Division)
Judgment Date
19 February 2015
Report Citation
[2015] EWCA Crim 173
[2015] 2 Cr. App. R. (S.) 14
Court of Appeal (Criminal Division)
Pitchford LJ , Knowles J and HH Judge Goldstone QC :
19 February 2015
Benefit from criminal conduct; Confiscation orders; Corporate personality; Proceeds of crime;
Proportionality;
H1 Confiscation—benefit—whether or not benefit obtained arising from criminal conduct—

proportionality—piercing the corporate veil
H2. When assessing “benefit” under the provisions of the Proceeds of Crime Act (POCA) 2002
, it was important to identify the criminal conduct at the first stage of the assessment. Where
trading receipts were obtained as a result of, or in connection with, trading activity that was
lawful in itself, the trading was not criminal conduct from which a benefit had been obtained and
the trading receipts were excluded from the criminal lifestyle provisions under s.75(2) POCA
2002 .
H3. M renewed his application to appeal against the making of a confiscation order following
his conviction for two counts of being knowingly concerned in the supply etc of controlled
goods with intent to evade the prohibition thereon, contrary to art.9(2) of the Trade in Goods
(Control) Order 2003 . With leave of the single judge, S appealed with leave of the single judge
against the making of a confiscation order following his guilty plea to an offence contrary to
s.1(1) and (7) of the Scrap Metal Dealers Act 1964 .
© 2020 Thomson Reuters. 1

R. v McDowell (Christopher James), [2015] 2 Cr. App. R. (S.) 14 (2015)
H4. M and S had each carried on business through companies of which they were the sole
shareholder and director. M was an arms-dealer, who had negotiated the sale of aircraft,
accessories and ammunition from China to Ghana without a licence as required by the 2003
Order. The judge found the benefit figure to be £2.5m, derived from particular criminal conduct,
and made a confiscation order in the agreed available amount of £292,499. S had carried on his
business as a scrap-metal dealer whilst unregistered in contravention of the 1964 Act. The judge
found that S had carried on those activities for a period in excess of six months and therefore
the offence was a criminal lifestyle offence for the purposes of POCA 2002 . The benefit was
identified at just under £1 million and a confiscation order was made in the sum of the available
amount.
H5. On appeal against sentence, M made four submissions: (a) he had been convicted of a
“regulatory” offence, the underlying trading was lawful but for the absence of a licence and no
benefit had derived from the offence, either for M or the company; (b) there was no evidence
before the judge that the company was incorporated for the purpose of concealing M’s activity
or evading his responsibility as its controller and therefore the corporate veil should not have
been lifted; (c) *138 relying upon R. v Waya [2012] UKSC 51 , it would be disproportionate
to order payment of gross receipts for trading otherwise lawful when the actual benefit to the
company (and therefore M) was no more than the gross profit of trading; and (d) it would be
disproportionate to deprive M of commission payments received after the application for, or
grant of, the licence.
H6. On appeal against sentence, S submitted that: (a) his business was lawful but for the absence
of registration under the 1964 Act and any benefit obtained within the meaning of POCA 2002
s.76(4) was obtained through lawful trading and not from the failure to register the business; (b)
the judge should not have lifted the corporate veil; accordingly, M’s benefit could not comprise
the gross receipts of the company; and (c) that the finding of benefit was disproportionate on an
application of the principles identified in both Waya and R. v Sale [2013] EWCA Crim 1306;
[2014] 1 Cr. App. R. (S.) 60 (p.381).
H7. Held, refusing M’s application but quashing the confiscation order made against S, that (1)
it was important to identify the criminal conduct at the first stage of the assessment. It was not
sufficient to treat “regulatory” offences as creating a single category of offence to which POCA
would be uniformly applied. The question of whether or not benefit had been obtained from
criminal conduct had to first depend upon an analysis of the terms of the Statute that created the
offence and, by that means, upon an identification of the criminal conduct admitted or proven.
It may be that, as in Sumal & Sons (Properties) Ltd v Newham LBC [2012] EWCA Crim 1840;

[2013] 1 W.L.R. 2078 , the wider statutory context of the offence would assist to answer the
critical question: what was the conduct made criminal by the statute—was it the activity itself
or was it the failure to register, or obtain a licence for, the activity? There was a narrow but
critical distinction to be made between an offence that prohibited and made criminal the very
activity admitted by the offender or proved against him ( Sumal ) and an offence comprised in
the failure to obtain a licence to carry out an activity that would otherwise be lawful ( R. v Del
Basso [2010] EWCA Crim 1119; [2011] 1 Cr. App. R. (S.) 41 (p.268) ([34])).
H8. (2) The calculation of benefit obtained from criminal conduct was an integral part of the
process of assessing the sum of a confiscation order. It not only represented the ceiling for the
confiscation order but also fixed the sum of benefit for the purpose of further applications by the
prosecutor under s.22 of the 2002 Act (where the amount of the confiscation order was, under
s.7(2) , for less than the amount of the benefit). It was a necessary component of the first POCA
hearing that the test of proportionality was applied to the assessment of benefit. If it was not,
the justness of a further order under s.22 may be placed in doubt ([44]).
H9. (3) The application of the proportionality assessment required an examination of whether
the finding of benefit that the defendant was liable to repay was a proportionate means of
achieving the legitimate objective of depriving him of the proceeds of his criminal conduct.
Where the underlying transactions producing the defendant’s receipts were lawful and not
criminal, the cost of those transactions to the defendant could, on the grounds of proportionality,
properly be treated as consideration given by the defendant for the benefit obtained ( Sale ([51])).
H10. (4) M was “knowingly concerned in the supply, delivery, transfer, acquisition or disposal
of … controlled goods with intent to evade” the prohibition in art.4 of the 2003 Order. The
underlying transactions were, on analysis, therefore prohibited and unlawful. It was not arguable
that M did not benefit from his criminal conduct. M’s grounds of appeal therefore had no
prospect of success ([53] and [57]). *139
H11. (5) S’s criminal conduct was the failure to register before carrying on business on each
day when that business was conducted. There were repeated failures to register but the offence
was still comprised in the failure to register. However, S’s trading receipts were obtained as a
result of, or in connection with, trading activity that was lawful in itself and not from the failure
to register the particulars of the business that comprised the criminal offence. Some support for
the identification of the nature of the criminal conduct could be derived from the alternative
means by which the offence could be committed, e.g. failing to notify a change of circumstances
in breach of s.1(5) of the 1964 Act. It would be an odd and inconsistent result if one means of

committing the offence attracted a POCA benefit finding while the other did not. That was a
distinction drawn from a close examination of the terms of the Statute that created the offence,
including the words used to define the criminal conduct admitted, but such an exercise was an
essential first step in the analysis of whether or not S had benefited from his criminal conduct.
The fact that the judge was conditionally obliged to make the s.10(2) assumption in a criminal
lifestyle case did not change S’s position. Since, as a matter of causation, S’s trading receipts
had not been obtained as a result of, or in connection with, his failure to register his particulars,
s.75(2) served to exclude the criminal lifestyle provisions ([60], [61] and [66]).
H12 Cases cited:
Ben Hashem v Ali Shayif [2008] EWHC 2380 (Fam); [2009] 1 F.L.R. 115
Customs and Excise Commissioners v Hare [1996] 2 All E.R. 391
Director of the Assets Recovery Agency v John [2007] EWHC 360 (QB)
DPP v Compton [2002] EWCA Civ 1720
Jennings v Crown Prosecution Service [2008] UKHL 29; [2008] 1 A.C. 1046; [2008] 2 Cr.
App. R. 29 (p.414)
Petrodel Resources Ltd v Prest [2013] UKSC 34; [2013] 2 A.C. 415
R. v Ahmad; R. v Fields [2014] UKSC 36; [2014] 2 Cr. App. R. (S.) 75 (p.580)
R. v Carter [2006] EWCA Crim 416
R. v Del Basso [2010] EWCA Crim 1119; [2011] 1 Cr. App. R. (S.) 41 (p.268)
R. v Dimsey [2000] Q.B. 744; [2000] 1 Cr. App. R. 203
R. v Grainger [2008] EWCA Crim 2506
R. v Jawad [2013] EWCA Crim 644; [2014] 1 Cr. App. R. (S.) 16 (p.85)
R. v Paulet [2009] EWCA Crim 288
R. v Sale [2013] EWCA Crim 1306; [2014] 1 W.L.R. 663; [2014] 1 Cr. App. R. (S.) 60 (p.381)
R. v Seager [2009] EWCA Crim 1303; [2010] 1 W.L.R. 815; [2010] 1 Cr. App. R. (S.) 60 (p.378)
R. v Sivaraman [2008] EWCA Crim 1736; [2009] 1 Cr. App. R. (S.) 80 (p.469)
R. v Waya [2012] UKSC 51; [2013] 1 A.C. 294; [2013] 2 Cr. App. R. (S.) 20 (p.87)
Salomon v Salomon & Co Ltd [1897] A.C. 22
Snook v London and West Riding Investments Ltd [1967] 2 Q.B. 786; [1967] 2 W.L.R. 1020
Sumal & Sons (Properties) Ltd v Newham LBC [2012] EWCA Crim 1840; [2013] 1 W.L.R.
2078
Trustor AB v Smallbone (No.4) [2001] 1 W.L.R. 1177; [2001] 3 All E.R. 987
VTB Capital Plc v Nutritek International Corp [2012] EWCA Civ 808
H13. References: Current Sentencing Practice , J11-2C. *140
H14 Representation

Giles Bedloe for McDowell.

Paul Prior for Singh.
Kennedy Talbot for the Crown in the case of Singh.
Judgment
Pitchford LJ:
The issues
1. This is a judgment of the court to which each member of the court has contributed.
Christopher James McDowell renews his application for leave to appeal against a confiscation
order; Harjit Sarana Singh appeals against a confiscation order with the leave of the single judge.
Their cases have been listed together because they raise common issues concerning: (1) the
application of the test “property obtained as a result of or in connection with criminal conduct”
in s.76(4) of the Proceeds of Crime Act 2002 (POCA); (2) the lifting of the corporate veil; and
(3) the application of art.1 of the First Protocol to the European Convention on Human Rights
(A1P1) in the assessment of “benefit” for the purposes of s.6(4) POCA .
2. The cases have the following features in common:

(i) each appellant openly carried on business through a company of which he was the sole
shareholder and director;
(ii) McDowell argues that his criminal conduct comprised trading while unlicensed;
Singh that his criminal conduct comprised trading while unregistered. Each claims that his
“benefit” was acquired not from criminal conduct but from lawful trading;
(iii) the Crown Court lifted the corporate veil and treated all the company receipts earned
through trading while unlicensed/unregistered as the receipts of the appellant personally;
(iv) the benefit assessed under ss.6(4) and 76(4) POCA was the sum of the appellant's
receipts from trading. The appellants argue that the assessment was disproportionate because
the Crown Court failed to give credit for the cost of trading; and
(v) the confiscation order was for the agreed sum of the appellant's available assets but that
sum was substantially smaller than the certified assessment of benefit obtained by general
or particular criminal conduct.
3. Each of the appellants appeals against the Crown Court's finding as to the sum of benefit
obtained from his criminal conduct pursuant to s.6(4) and (5)(a) and s.7(1) POCA on the grounds
that:

(1) he earned receipts from “lawful” trading and not from criminal conduct (the criminal
conduct point);
(2) neither on the concealment nor on the evasion principle was it appropriate to lift the
corporate veil so as to treat the receipts of the company as the receipts of the appellant
personally (the lifting the veil point); and
(3) further, and in any event, assessment of benefit as the gross receipts of trading, lawful but
for the absence of a licence or registration, was a *141 disproportionate means of achieving
the legitimate aim of depriving the appellant of the proceeds of his criminal conduct (the
A1P1 point).
4. The respondent to the appeal of Singh argues that:

(1) the trading was unlawful because it was prohibited; trading in breach of the prohibition
was the criminal conduct. It was a criminal lifestyle offence to which the statutory
assumptions applied. Accordingly, the receipts of the business were benefit obtained from
criminal conduct;
(2) the company was the alter ego of the appellant. He committed his offence through the
activity of his company. Whether, strictly, the veil is to be lifted, the court was entitled to treat
the receipts of the company, for confiscation purposes, as the receipts of the appellant; and
(3) a criminal is not entitled to credit for the expenses of his unlawful trade. There is no
difference in principle between this criminal conduct and more serious criminal conduct; or
such difference as there is does not entitle these appellants to different treatment. The benefit
assessment was proportionate to the legitimate aim.
The facts
Christopher McDowell
5. The appellant is an experienced arms-dealer. He was the sole director, shareholder and
controller of a company called Wellfind Ltd (Wellfind). On 28 January 2013 at Guildford
Crown Court, following a trial before HH Judge Critchlow, the Recorder of Guildford, he was
convicted upon two counts (Counts 5 and 6) of being knowingly concerned in the supply etc of
controlled goods with intent to evade the prohibition thereon, contrary to art.9(2) of the Trade in
Goods (Control) Order 2003 . On 31 January 2013 the appellant was sentenced to a suspended
sentence order (two years’ imprisonment suspended for two years) and ordered to pay £10,000
towards the prosecution's costs. On 23 December 2013 in confiscation proceedings the applicant
was found to have obtained benefit in the sum of £2,557,826.30. The available amount was
£292,499.60 and a confiscation order was made in the latter sum, to be paid by 23 May 2014
with 30 months’ imprisonment in default.

6. Wellfind Ltd was appointed agent in the Republic of Ghana on behalf of the China National
Aero-Technology Import and Export Corp (CATIC), a manufacturer of aircraft. On 15 June 2005
an agency contract was signed by which Wellfind was to be paid a fee upon sale of CATIC's
aircraft to Ghana. It was Wellfind's responsibility under the contract to promote the sale of
MA60, K-8 and Y-12 aircraft. Wellfind was given authority to agree a purchase price, subject
to CATIC approval, and commission was payable in two tranches. A second agency agreement
was signed between Wellfind and CATIC on 19 August 2006. The contract provided for the
further promotion of K-8 aircraft to Ghana and again specified a commission payment schedule.
7. The Trade in Goods (Control) Order 2003 (SI 2003/2765) (the 2003 Order) regulates supply
etc. of military goods. Its effect is to prohibit the activities of international dealers in military
equipment between one overseas country and another. Article 4(2) provides: *142
“(2) Subject to the provisions of this Order, no person shall
a) arrange or negotiate; or
b) agree to arrange or negotiate,
a contract for the acquisition or disposal of any controlled goods, where

that person knows or has reason to believe that such a contract will
or may result in the removal of those goods from one third country to
another third country.”
8. Article 4(3) of the order states;
“(3) Subject to the provisions of this Order no person shall in return for
a fee, commission or other consideration
a) do any act, or
b) agree to do any act
calculated to promote the arrangement or negotiation of a contract for

the acquisition or disposal of controlled goods, where that person knows

or has reason to believe that such a contract will or may result in the
removal of those goods from one third country to another third country.”
9. There is no dispute for present purposes that “controlled goods” included the aircraft,
accessories and ammunition the subject of Wellfind's agency agreements.
10. Article 4(8) provides an exception to the prohibitions as follows:
“(8) Nothing in paragraph (1), (2) or (3) shall be taken to prohibit any
activities authorised by a licence in writing granted by the Secretary
of State under this order or under any other order made under the Act,
provided that all conditions attaching to the licence are complied with.”
Article 5(1) provides that the secretary of state may grant a licence authorising any act otherwise
prohibited under the order.
11. The offence created by art.9(2) is as follows:
“(2) Any person knowingly concerned in the supply, delivery, transfer,

acquisition or disposal of any restricted or controlled goods with intent
to evade any prohibition or restriction in Article 3(1) or 4 shall be guilty
of an offence.”
By art.9(4) a person convicted on indictment is liable to an unlimited fine or to a term of

imprisonment not exceeding 10 years or both.
12. The jury by their verdicts found that the appellant agreed to negotiate and did negotiate
the sale of aircraft, accessories and ammunition, being controlled goods, from China to Ghana,
contrary to art.9(2) . On 30 January 2007 the appellant provided CATIC with his bank details.
On 7 February 2007 a payment of $1,214,392.40 was transferred to Wellfind's Barclays bank
account in payment of commission due for the sale of a K-8 jet. On 19 February 2007 the
appellant, for the first time with regard to the present transactions, submitted a controlled
goods licence application to the secretary of state. On 7 March 2007 a second payment of
$1,124,437.42 was transferred to Wellfind's Barclays account. On 3 April 2007 the Department

of Trade and Industry granted a licence permitting Wellfind to trade in the goods the subject of
the application, valid between 3 April 2007 and 3 April 2009; thus, the licence was of current and
not retrospective effect. On 4 February 2008 a third payment for $1,298,275.44 was deposited
into Wellfind's *143 account. Finally, on 22 January 2009 the fourth and final payment due
to Wellfind of $1,087,177.90 was transferred to its account. It follows that commission earned
under the agreements (and therefore from the prohibited activity) totalled $4.7m, approximately
half of which was received before a licence was granted and half of which was received after
the licence was granted. The judge certified the benefit obtained in the (sterling) sum of the
commission receipts, £2,557,826.30, and made a confiscation order in the agreed available
amount of £292,499.60.
13. Mr Giles Bedloe argued that the appellant was convicted of a “regulatory” offence. The
underlying trading was lawful but for the absence of a licence. He sought to derive support for the
proposition that no benefit had accrued for the purpose of s.76(4) POCA either to the company
or to the appellant, by relying on the decision of this court in Sumal and Sons (Properties) Ltd
v The Crown (London Borough of Newham) [2012] EWCA Crim 1840; [2013] 1 W.L.R. 2078 .
In the alternative, it was argued that there was no evidence before the judge that Wellfind was
incorporated for the purpose of concealing the appellant's activity or evading his responsibility
as its controller. For that reason there was no occasion for lifting the corporate veil for the
purpose of attributing to the appellant personally the full sum of commission receipts without
reference to the cost of the trading which attracted that commission. In the further alternative,
applying the proportionality principle introduced to confiscation proceedings by the decision
of the R. v Waya [2012] UKSC 51; [2013] 1 A.C. 294 , Mr Bedloe argued that it would be
disproportionate to order payment of gross receipts for trading otherwise lawful when the actual
benefit to the company (and therefore the appellant) was no more than the gross profit of trading.
In this regard the appellant sought further support from the decision of this court in R. v Sale
[2013] EWCA Crim 1306 . Finally, Mr Bedloe submitted that it would be disproportionate to
deprive the appellant of commission payments received after the application for or grant of the
licence.
14. Included in the costs of earning the commission received was a payment of £1,959,693.57
to Wellfind's agent in Ghana. The company's gross profits for the years in which its commission
was received (which it is probable included the profits/losses of some other trading) were:
2006/2007: £528,594
2007/2008: £399,914
2008/2009: £342,353.

The appellant received emoluments of some £170,000 p.a. from the company. It is submitted
that the maximum benefit obtained by the company and/or the appellant was about £1.27m (the
sum of gross profit) and nothing like £2.55m.
Harjit Sarana Singh
15. On 9 February 2012 the appellant appeared before Leicester magistrates’ court where he
pleaded guilty to an offence, contrary to s.1(1) and (7) of the Scrap Metal Dealers Act 1964
. He was committed to the Crown Court for sentence under s.6 of the Powers of Criminal
Courts (Sentencing) Act 2000 (which limited the Crown Court to the sentencing powers of the
magistrates’ court), and under s.70 POCA for consideration by the Crown Court of the making
of a confiscation order. He was sentenced in the Crown Court to a fine of £350.
16. Section 1(1) of the Scrap Metal Dealers Act 1964 provides: *144
“(1) Every local authority shall maintain a register of persons carrying

on business in their area as scrap metal dealers; and, after the expiration
of three months beginning with the commencement of this Act, no person
shall carry on business as a scrap metal dealer in the area of a local
authority unless the appropriate particulars relating to him are for the
time being entered in the register maintained by the authority under this
section.”
It is common ground that any person wishing to carry on business as a scrap metal dealer shall,
by s.1(3) of the Act , if he provides the necessary particulars relating to him, be entitled to have
his particulars entered in the register (at no cost). The s.1 offence is as follows:
“(7) Any person who carries on business as a scrap metal dealer in

contravention of subsection (1) of this section, or who fails to comply
with the requirements of subsection (5) shall be guilty of an offence and
liable on summary conviction to a fine [on Scale 3].”
The offence of failure to comply with the requirements of subs.(5) is committed if the defendant,
whose particulars have been registered, fails to notify the local authority of a material change

in the relevant particulars or fails to inform the local authority that he has ceased business. The
maximum fine on Scale 3 is £1,000.
17. The charge to which the appellant pleaded guilty in the magistrates’ court was:
“Between 25 June 2009 and 22 August 2011 at Leicester [you] carried

on the business of scrap metal dealer … when the appropriate particulars
relating to you were not for the time being entered in the register
maintained by the said authority under section 1 of the Scrap Metal
Dealers Act 1964 .”
Following his arrest on or about 22 August 2011 the appellant continued to trade unregistered
until 14 March 2012. His receipts during the charge period were £468,912. On arrest the police
found £45,700 in cash and stock valued at £7,475. His (unregistered) trading receipts following
arrest were £297,737.
18. On 10 August 2012 HH Judge Head found that the appellant had benefited from his criminal
conduct, namely carrying on business as a scrap metal dealer without registering the required
particulars, for a period in excess of six months. It was therefore a criminal lifestyle offence.
The judge found that the appellant was the sole shareholder and director of his trading company,
Pro Catalytic Recycling Ltd. The company was wholly the creature of the appellant and should
therefore be identified with the appellant personally. The judge found that the appellant had
benefited in the sum of £965,838.84, being the receipts of the company during the whole period
of trading while unregistered. The available amount was £176,218.11 and the judge made a
confiscation order in that sum.
19. Mr Prior, on behalf of the appellant, advances three grounds of appeal. First, he argues that
the appellant's business was lawful but for the absence of registration under s.1 of the 1964 Act ;
any benefit obtained within the meaning of s.76(4) was obtained through lawful trading and not
from the criminal failure to register the business. The POCA regime did not apply to the receipts
of such trading by analogy with this court's decision in Sumal and Sons (Properties) Ltd and
the decision of Tugendhat J in Director of Assets Recovery Agency v John [2007] EWHC 360
(QB) . Secondly, the judge should not have lifted the corporate veil; accordingly, the appellant's
benefit cannot have comprised the gross receipts of the company. *145 Thirdly, the finding of
benefit was disproportionate on application of the principles identified by the Supreme Court
in Waya and this court in Sale .
20. Mr Prior provided this court with unauthenticated gross profit figures for trading for the
years 2010 and 2011:

2010: £32,579
2011: £57,713.
However, the trading figures omit six months of trading that fell outside the charge period. It
was suggested that £25,000 would be an appropriate allowance, making a total of £115,292.
The appeal against “benefit” findings
21. It is a feature of both these appeals that the benefit as found by the Crown Court vastly
exceeded the amount of the confiscation order. In both cases the sum of the appellant's available
assets was agreed. The question arises: what interest does the appellant have in challenging the
benefit decision? There are two answers. The first is that the appellants contend that POCA
did not apply at all, so that there should have been no order. Secondly, and alternatively, both
these appellants continue to trade, McDowell with the appropriate licences and Singh with the
appropriate registration. The prosecutor is entitled to further recovery from the appellants of a
sum up to the limit of the benefit figure in a future application made under s.22 POCA .
22. On the findings of the Crown Court a profit generated by any future trading will be untainted
by the criminality considered in the present confiscation proceedings. But the prosecutor may
proceed under s.22 POCA to seek from the court a reconsideration of the “available amount”.
To the extent that the new calculation produces an amount that exceeds the existing confiscation
order, the court may vary the order by substituting for the amount of the confiscation order
such sum as it believes to be “just” but does not exceed the amount found as the defendant's
benefit from the conduct concerned ( s.22(4) ). For these purposes, the benefit figure is not
ordinarily reopened. It follows that the Crown Court's initial assessment engages the correctness
and proportionality of the certified benefit sum.
Benefit from criminal conduct
Criminal conduct
23. Section 6(5) POCA requires the court to make a confiscation order in “the recoverable
amount”, which, by s.7(1) , is “an amount equal to the defendant's benefit from the conduct
concerned”, unless ( s.7(2) ) the defendant shows that the “available amount” is less than the
benefit, in which case the recoverable amount is the available amount or a nominal amount.

The terms of s.6(4)(b) and (c) show that the conduct concerned is either the offender's “general
criminal conduct” (in a “criminal lifestyle” case—see [25] below) or his “particular criminal
conduct”.
24. By s.76(1)(a) “criminal conduct” is conduct which constitutes an offence in England and
Wales or would constitute such an offence if it occurred in England and Wales. By s.76(2) the
“general criminal conduct” of the defendant is all his criminal conduct. *146
25. Section 6(4) requires the court to decide whether the defendant has “a criminal lifestyle”
and, if so, whether he has benefited from his “general criminal conduct”. Section 75(2) provides
that a defendant who commits an offence over a period of least six months and has benefited
from the conduct which constitutes the offence has a criminal lifestyle for the purpose of the
Act. By s.10(1) , if the court decides that the defendant has a criminal lifestyle it must make the
four statutory assumptions, including (subs.(2)) that any property transferred to the defendant
was “obtained” as a result of his general criminal conduct unless, by subs.(6), the assumption is
shown to be incorrect or there would be a serious risk of injustice if the assumption was made.
26. In McDowell's case the Crown Court assessed benefit obtained from the appellant's
particular criminal conduct. In Singh's case the Crown Court found that the appellant had a
criminal lifestyle and applied the s.10(2) assumption to catch all the appellant's trading receipts,
including those received between 22 August 2011 and 14 March 2012 (at [17] above).
27. It follows from this analysis that the first step in the assessment of whether the offender has
benefited from his criminal conduct must be to identify his criminal conduct, whether general
or particular.
Benefit from criminal conduct
28. Section 76(4) POCA provides that “a person benefits from conduct if he obtains property
as a result of or in connection with the conduct”. In both these cases the appellant contends that
his receipts were lawfully received. They rely on the obiter dictum of Tugendhat J in Director
of Assets Recovery Agency v John [2007] EWHC 360 (QB) to the effect that the underlying
trading was lawful and, for that reason, property was not obtained through criminal conduct.
In a civil recovery case, s.240 POCA enables the enforcement authority to recover in civil
proceedings “property obtained through unlawful conduct”. By s.242 a person obtains property
through unlawful conduct “if he obtains property by or in return for the conduct”.
29. Schedule 4 to the Local Government (Miscellaneous Provisions) Act Act 1982 created a
scheme by which local authorities could designate streets as “prohibited”, “licence” or “consent”
streets and, on application, grant licences or consents, as appropriate, to permit trading in those
streets under conditions set by the local authority. Paragraph 10 of Sch.4 created the following
offence:

“(1) A person who—
(b) engages in street trading in a licence street … without being

authorised to do so under this Schedule …
shall be guilty of an offence.”
30. The defendant had been trading in a “licence” street in Leeds city centre without being
authorised under the schedule (for which he was fined £50 for each occasion) and the issue
before the judge was whether he had obtained property through his criminal conduct. The
argument for the claimant was that the defendant had obtained property by unlicensed trading.
The claimant identified the unlicensed trading as the defendant's criminal conduct. Tugendhat
J was referred to the explanatory notes to POCA , at [294], which gave examples of property
obtained in return for conduct, such as taking a payment to commit a criminal offence, or taking
a bribe, or *147 corruptly awarding a contract. In the judge's view unlicensed trading was not
conduct in return for which the trader received property; he received the property in return for
trading in goods. At [77] Tugendhat J said:
“77. I do not have to decide the scope of section 242(1) . For the purposes
of this case it would be sufficient for me to decide (as I would if it
were necessary for me to do so) that money received in exchange for
goods sold, where the sales are not otherwise unlawful, does not become
property obtained by unlawful conduct solely because it is a criminal
offence if the sales are conducted without a licence in a place where
trading is required to be licensed. I do not by that intend to suggest
that unlicensed trading could never give rise to a civil recovery order.
Whether it can or not, and if so, in what circumstances, is a point I leave
open.”
31. It was unnecessary for the judge to reach a concluded opinion upon s.242(1) because he
had already concluded that the property in the hands of the defendant was arguably the result of
dealing in cannabis. However, it was the judge's preliminary view that the property acquired by
the defendant through unlicensed trading was obtained by the selling of the goods rather than

through the failure to apply for a licence. The appellants argue that, by a parity of reasoning, the
causative link between their criminal conduct and the receipts of their trading was also missing.
Their benefit arose not from the criminal conduct of failing to obtain a licence or to register
but from lawful trading.
32. By contrast this court has held that trading in criminal breach of a prohibition is criminal
conduct from which benefit may be derived. In R. v Del Basso [2010] EWCA Crim 1119; [2011]
1 Cr. App. R. (S.) 41 (p.268) the appellants created and ran a “park-and-ride” business on land
in contravention of planning restrictions. An enforcement notice was issued that ordered the
appellants to cease the activity but they failed to comply. Subsequently, they pleaded guilty to
an offence contrary to s.179 of the Town and Country Planning Act 1990 of failing to comply
with an enforcement notice. The court held that the business was an illegal operation whose
benefits were represented by its turnover. At [46], Leveson LJ, delivering the judgment of the
court, expressly approved the following passage in the judgment of HH Judge Michael Baker
QC in the Crown Court:
“… Those who choose to run operations in disregard of planning

enforcement requirements are at risk of having the gross receipts of their
illegal businesses confiscated. This may greatly exceed their personal
profits. In this respect they are in the same position as thieves, fraudsters
and drug dealers.”
It followed that the criminal conduct comprised carrying out an activity that was prohibited as
a result of or in connection with which benefit was obtained.
33. In Sumal and Sons (Properties) Ltd v London Borough of Newham [2012] EWCA Crim
1840; [2013] 1 W.L.R. 2078 a property company let a dwelling house in contravention of a
statutory requirement that the letting should be licensed under the Housing Act 2004 . Section
95(1) of the 2004 Act created the following offence:
“(1) A person commits an offence if he is a person having control of or

managing a house which is required to be licensed under this Part (see
section 85(1) ) but is not so licensed.” *148
The company pleaded guilty in the magistrates’ court. This court (Davis LJ, Burton and
Langstaff JJ) held that although the letting was unlawful the receipt of rent was not. At [38]

the court emphasised (as in DAR v John ) that the criminal conduct was the failure to obtain
the licence, not the receipt of rent. The statutory scheme made it clear that, although a property
was let without a licence, the landlord retained his contractual right to recover the rent from
the tenant. Furthermore, the Act contained its own code for the making of a rent recovery order
by the tribunal in an appropriate case. Accordingly, the rent did not comprise a benefit for the
purpose of s.76 POCA . In common with the court in Del Basso the court expressly rejected
an argument that there was, necessarily, a difference between a “regulatory offence” and other
criminality for the purposes of confiscation. At [30] Davis LJ, delivering the judgment of the
court said:
“30. As an initial observation, [counsel for the appellant] re-emphasised

that the present case involves what he calls a ‘regulatory offence’—
it is not a case of dishonestly obtaining property by dishonest means,
such as by the importation of illegal drugs or the importation of alcohol
and tobacco without paying the applicable duties (to take two very
familiar examples). That may be so. But it cannot of itself answer the
question arising. Whether what may be styled a regulatory offence
can, when committed, give rise to the availability of a confiscation
order will depend on the terms of the statute or regulations creating
the offence, read with the terms of the 2002 Act and set in the context
of the facts of the case .” (Emphasis added.)
34. In our judgement these decisions of the court further demonstrate the importance of
identifying the criminal conduct of the offender at the first stage of the assessment. It is not
sufficient to treat “regulatory” offences as creating a single category of offence to which POCA
is uniformly applied. We respectfully agree with the conclusion of the court in Sumal that
the question whether benefit has been obtained from criminal conduct must first depend upon
an analysis of the terms of the statute that creates the offence and, by that means, upon an
identification of the criminal conduct admitted or proved. It may be that, as in Sumal , the wider
statutory context of the offence will assist to answer the critical question: what is the conduct
made criminal by the statute—is it the activity itself or is it the failure to register, or obtain a
licence for, the activity? In our judgement, there is a narrow but critical distinction to be made
between an offence that prohibits and makes criminal the very activity admitted by the offender
or proved against him (as in Del Basso ) and an offence comprised in the failure to obtain a
licence to carry out an activity otherwise lawful (as in Sumal ).
Lifting the corporate veil
35. It is commonplace in confiscation proceedings for the court, when the criminal activity is
conducted through a company, to examine the relationship between the individual criminal and

the company, whether the company has been charged or not. Issues of attribution and causation
of benefit inevitably arise. In R. v Seager and Blatch [2009] EWCA Crim 1303; [2010] 1 W.L.R.
815 , this court (Aikens LJ, Hedley and Hickinbottom JJ) examined the question: what was the
appellants' benefit when, contrary to s.13 of the Company Directors Disqualification Act 1986 ,
and having been disqualified, they acted as shadow directors behind companies *149 that paid
them a salary? In the Crown Court it had been held that they had benefited by the amount of
turnover earned by the companies behind which they stood. The court held that on the facts of the
case the Crown Court's conclusions were wrong in law. The benefit received, if any, comprised
sums paid by the companies to the directors. Aikens LJ, delivering the judgment of the court,
summarised, at [76], the circumstances in which the court was entitled to lift the corporate veil:
“76 There was no major disagreement between counsel on the legal

principles by reference to which a court is entitled to ‘pierce’ or ‘rend’
or ‘remove’ the ‘corporate veil’. It is ‘hornbook’ law that a duly formed
and registered company is a separate legal entity from those who are its
shareholders and it has rights and liabilities that are separate from its
shareholders: Salomon v A Salomon and Company Limited [1897] AC
22 ; In Re H (Restraint Order; Realisable Property) [1996] 2 All ER
391, 401 . A court can ‘pierce’ the carapace of the corporate identity
and look at what lies behind it only in certain circumstances. It cannot
do so simply because it considers it might be just to do so. Each of
these circumstances involves impropriety and dishonesty. The court will
then be entitled to look for the legal substance, not just the form. In
the context of criminal cases the courts have identified at least three
situations when the corporate veil can be pierced. First, if an offender
attempts to shelter behind a corporate façade or veil, to hide his crime
and his benefits from it: see In re H , at page 402, per Rose LJ; Director
of Public Prosecutions v Compton [2002] EWCA Civ 1720 , paragraphs
44-48, per Simon Browne LJ and R v Grainger [2008] EWCA Crim 2506
at paragraph 15, per Toulson LJ. Secondly, where an offender does acts
in the name of a company which (with the necessary mens rea ) constitute
a criminal offence which leads to the offender's conviction, then ‘the
veil of incorporation has been not so much pierced as rudely torn away’:
per Lord Bingham in Jennings v Crown Prosecution Service [2008] AC
104 , paragraph 16. Thirdly, where the transaction or business structures
constitute a ‘device’, ‘cloak’ or ‘sham’, i.e., an attempt to disguise the
true nature of the transaction or structure so as to deceive third parties
or the courts: R v Dimsey [2000] QB 744, 772 , per Laws LJ, applying

Snook v London and West Riding Investment Limited [1967] 2 QB 786,

802 , per Diplock LJ.”
36. The court in Seager and Blatch concluded that the criminal activity of the appellants was
limited to acting as a director when disqualified. In neither case was the company involved
in any unlawful trading activity or prosecuted for participation in any offence contrary to the
Company Directors Disqualification Act 1986 . It was inappropriate to pierce the corporate
veil; the trading turnover of the companies could not be treated as the benefit obtained by the
appellants. Merely because a director had control of funds on behalf of a company, it could not
be said that he had “obtained” those funds save in his capacity as the company's employee. We
observe that the need to identify the capacity in which a defendant received and handled the
proceeds of crime had been emphasised by the court in R. v Sivaraman [2008] EWCA Crim
1736; [2009] 2 Cr. App. R. (S.) 80 (p.469), since R. v Ahmad and Fields [2014] UKSC 36;
[2014] 3 W.L.R. 23 .
37. In Prest v Petrodel Resources Ltd and Others (Prest v Prest) [2013] UKSC 34; [2013] 2 A.C.
415 the Supreme Court addressed the question to what extent the court was entitled in family
proceedings to order the transfer of property whose *150 legal title was held by a company
controlled by the husband. The court ordered that the property should be transferred provided
that the beneficial interest was held by the husband. That was a route to enforcement that did
not depend upon the concept of lifting the corporate veil. In considering the rationale for the
practice the court, obiter, approved the analysis of Munby J, as he then was, in Ben Hashem v
Al Shayif [2009] 1 F.L.R. 115 at [159]–[164]. The six principles identified by Munby J were
summarised by Lord Sumption in Prest at [25] and approved by the court as follows:
“25. … (i) Ownership and control of a company were not enough

to justify piercing the corporate veil; (ii) the court cannot pierce the
corporate veil even in the absence of third party interests in the company,
merely because it is thought to be necessary in the interests of justice;
(iii) the corporate veil can be pierced only if there is some impropriety;
(iv) the impropriety in question must, as Sir Andrew Morritt had said
in the Trustor case [2001] 1 WLR 1177 , be ‘linked to the use of the
company structure to avoid or conceal liability’; (v) to justify piercing
the corporate veil there must be ‘both control of the company by the
wrong doer(s) and impropriety, that is (mis) use of the company by them
as a device or façade to conceal their wrongdoing’; and (vi) the company

may be a ‘façade’ even though it was not originally incorporated with

any deceptive intent, provided that it is being used for the purpose of
deception at the time of the relevant transactions. The court would,
however, pierce the corporate veil only so far as it was necessary in order
to provide a remedy for the particular wrong which those controlling the
company had done.”
38. At [27] and [28] Lord Sumption reached his own classification of circumstances in which
the corporate veil may be lifted or pierced:
“27. In my view, the principle that the court may be justified in piercing
the corporate veil if a company's separate legal personality is being
abused for the purpose of some relevant wrong doing is well established
in the authorities. It is true that most of the statements of principle in
the authorities are obiter, because the corporate veil was not pierced.
It is also true that most cases in which the corporate veil was pierced
could have been decided on other grounds. But the consensus that there
are circumstances in which the court may pierce the corporate veil is
impressive. I would not for my part be willing to explain that consensus
out of existence. This is because I think that the recognition of a limited
power to pierce the corporate veil in carefully defined circumstance is
necessary if the law is not to be disarmed in the face of abuse. I also think
that provided the limits are recognised and respected, it is consistent with
the general approach of English Law to the problems raised by the use
of legal concepts to defeat mandatory rules of law.
28. The difficulty is to identify what is a relevant wrongdoing.

References to a ‘façade’ or ‘sham’ beg too many questions to provide
a satisfactory answer. It seems to me that two distinct principles lie
behind these protean terms, and that much confusion has been caused
by failing to distinguish between them. They can conveniently be called
the concealment principle and the evasion principle. The concealment
principle is legally banal and does not involve piercing the corporate veil
at all. It is that the interposition of a company or *151 perhaps several
companies so as to conceal the identity of the real actors will not deter
the courts from identifying them, assuming that their identity is legally
relevant. In these cases the court is not disregarding the ‘façade’, but
only looking behind it to discover the facts which the corporate structure

is concealing. The evasion principle is different. It is that the court may

disregard the corporate veil if there is a legal right against the person in
control of it which exists independently of the company's involvement,
and a company is interposed so that the separate legal personality of the
company will defeat the right or frustrate its enforcement. Many cases
will fall into both categories, but in some circumstances the difference
between them may be critical. This may be illustrated by reference to
those cases in which the court has been thought, rightly or wrongly, to
have pierced the corporate veil.”
39. At [35] Lord Sumption concluded with the following statement:
“35. I conclude that there is a limited principle of English law which

applies when a person is under an existing legal obligation or liability
or subject to an existing legal restriction which he deliberately evades or
whose enforcement he deliberately frustrates by interposing a company
under his control. The court may then pierce the corporate veil for the
purpose, and only for the purpose, of depriving the company or its
controller of the advantage that they would otherwise have obtained
by the company's separate legal personality. The principle is properly
described as a limited one, because in almost every case where the test is
satisfied, the facts will in practice disclose a legal relationship between
the company and its controller which will make it unnecessary to pierce
the corporate veil. Like Munby J in Ben Hashem v Al Shayif [2009] 1
FLR 115 , I consider that if it is not necessary to pierce the corporate
veil, it is not appropriate to do so, because on that footing there is no
public policy imperative which justifies that course. I therefore disagree
with the Court of Appeal in VTB Capital v Nutritek [2012] 2 Lloyd's Rep
313 who suggested otherwise at para 79. For all of these reasons, the
principle has been recognised far more often than it has been applied. But
the recognition of a small residual category of cases where the abuse of
the corporate veil to evade or frustrate the law can be addressed only by
disregarding the legal personality of the company is, I believe, consistent
with authority and with long-standing principles of legal policy.”

40. We observe that the context for examination of the control of corporate property in Prest was
similar to that of criminal confiscation proceedings. The court was enquiring into the ownership
of property and the ability of the husband to acquire and dispose of its value. That the legal title
was held by the company did not prevent the court making a finding as to the beneficial interest
in the property. It was simply not necessary to resort to the veil-lifting device. Examination
of true ownership or control of property is the bread and butter of confiscation proceedings,
although it is correct to say that judges frequently speak of lifting or piercing the corporate
veil when doing so. In Jennings v Crown Prosecution Service [2008] UKHL 29; [2008] A.C.
1046 , the appellant sought the discharge of a restraint order made under s.77(1) of the Criminal
Justice Act 1988 in anticipation of confiscation proceedings. The appellant was awaiting trial
on a charge of conspiracy to defraud, jointly with others. The conspiracy was described as an
advance fee fraud carried *152 out through a company, UK Finance (Europe) Ltd, which had
been converted for the purpose, having originally been a legitimate business selling second hand
cars and arranging finance for purchasers. The appellant's co-accused, Philips, the sole director
and controlling shareholder of the company had pleaded guilty to the fraud. The appellant was
neither a director nor a shareholder. He was throughout an employee and received salary and
other payments. It was, however, the prosecution case that he too was a prime mover in the
conspiracy. It was contended that each of the conspirators had benefited in the sum of the total
obtained by the fraud. The appellant contended that he could not have received more than
£50,000 comprising his salary, a payment from the company's loan account and some postal
orders that he had cashed.
41. Here were circumstances in which it was necessary to pierce the corporate veil of the
company in order to ascertain the true position. At [16] Lord Bingham of Cornhill said this:
“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 associate Mr Philips 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 but rudely torn away. The crux of the appellant's case, moreover,
is that the prime mover in the company was Mr Philips, not himself, a
case which can only be explored by examining the internal management
of the company, an examination inconsistent with the treatment of the
relevant acts as those of the company. There is no merit in this point.”

Jennings is powerful authority for the proposition that when a company is manipulated for the
purposes of fraud the court will not be restrained by the knowledge that in law the fruits of
the fraud were received by the company. The corporate veil will be lifted for the purpose of
ascertaining who was in control and who “obtained” the benefit. Jennings was not considered
by the Supreme Court in Prest but it seems to us to be a classic example of the concealment
principle—the appellant was a mere employee whom the prosecution accused of being a prime
mover in a fraud whose modus was to use the company for the conspirators' criminal activities.
42. Seagar and Blatch , Jennings and Prest were considered by this court (Treacey LJ, MacDuff
and Dingemans JJ) in R. v Sale [2013] EWCA Crim 1306; [2014] 1 W.L.R. 663 . The appellant
was the sole director and shareholder of a successful engineering company. The company
secured additional contracts with Network Rail by bribing its contracts manager. The work was
done to a satisfactory standard. It was accepted that the company had not been incorporated or
acquired as a vehicle for crime. The issue was: what benefit had been obtained by the appellant
from the contracts unlawfully procured? Treacey LJ noted that Jennings had not been cited
in Prest . The court treated the use (one might say manipulation) of the company to perform
work pursuant to contracts obtained unlawfully as sitting within Lord Sumption's concealment
category. As Treacey LJ put it at [40]:
“40. We do, however, consider that in the circumstances of this case, the
effect of POCA is that this matter falls within the concealment principle.
Thus, we *153 accept the prosecutions argument, rather than that put
forward by Mr Goose, who himself accepted that the matter was one of
fact and degree. In the circumstances of this case, where the defendant
was the sole controller of the company, and where there was a very close
inter-relationship between the corrupt actions of the defendant and steps
taken by the company in advancing those corrupt acts and intentions, the
reality is that the activities of both the defendant and the company are
so interlinked as to be indivisible. Both entities are acting together in the
corruption.
41. Accordingly, in so far as the company was involved, what it did

serve to hide was what the defendant was doing. Although the Supreme
Court did not consider R v Seager [2010] 1 WLR 815 , there is in our
judgement, nothing inconsistent in the approach taken at para 76 of that
case with Prest v Prest . It may be that the three situations identified by
the court in R v Seager might be prefaced as if the preceding sentence
read as follows:

‘In the context of criminal cases the courts have

identified at least three situations when a benefit
obtained by a company is also treated in law by
POCA as a benefit obtained by the individual
criminal .’
42. The italicised phrase replaces the words ‘the corporate veil can be
pierced’. It seems to us that the three situations identified in R v Seager
do not necessarily involve a piercing of the corporate veil in the normal
limited sense of the evasion principle. They appear to be consistent with
the operation of the concealment principle. We see no reason why the
analysis relevant to criminal confiscation proceedings made at para 76 of
R v Seager should not continue to apply in criminal proceedings, subject
to an understanding of Prest v Prest .
43. What is clear to us in this case is that the court is entitled to look to
see what were the realities of this defendant's criminal conduct. We are
satisfied that such an exercise, consistent with the objectives of POCA , is
to seek to discover the facts which the existence of the corporate structure
would otherwise conceal so as properly to identify the defendant's true
benefit.”
Proportionality
43. Both appellants argue that the sum certified by the Crown Court as benefit obtained from
criminal conduct was disproportionate. A1P1 states:
“Every natural or legal person is entitled to the peaceful enjoyment of

his possessions. No one shall be deprived of his possessions except in
the public interest and subject to the conditions provided for by law and
by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right
of the state to enforce such laws as it seems necessary to control the use of
property in accordance with the general interest or to secure the payment
of taxes or other contributions or penalties.”
44. The calculation of benefit obtained from criminal conduct is an integral part of the process
of assessing the sum of a confiscation order. As we have said (at [22]), it not only represents
the ceiling for the confiscation order; it also fixes the sum of benefit for the purpose of further
applications by the prosecutor under s.22 of the Act *154 (where the amount of the confiscation
order was, under s.7(2) , for less than the amount of the benefit). By s.22(2) only the prosecutor
or the receiver appointed under s.50 may make an application for reconsideration of the available
amount. By subs.(3) the court is required to make a new calculation of the available amount
under s.9 of the Act as if the date of the new calculation were the date of a fresh confiscation
order. By subs.(4), if the amount found under the new calculation exceeds the amount found
at the confiscation hearing, the court may vary the original order by requiring the defendant
to pay such amount as “(a) it believes is just but (b) does not exceed the amount found as the
defendant's benefit from the conduct concerned”. It seems to us to be a necessary component of
the first POCA hearing that the test of proportionality is applied to the assessment of benefit. If
it is not, the justness of a further order under s.22 may be put in doubt.
45. In R. v Waya [2012] UKSC 51; [2013] 1 A.C. 294 , the Supreme Court discussed the
impact of A1P1 in confiscation proceedings. The court's focus was on the proportionality of the
finding of benefit and upon the accurate identification and valuation of the property or interest in
property obtained from the defendant's particular criminal conduct (at [43]–[71]). The majority
(at [76]) adjusted the sum of benefit obtained so that “justice can be done”, while the minority
(at [123]) found that it would have been “unjust and disproportionate” to deprive the defendant
of the benefit he had obtained (increase in value of real property) by the use of money for which
he had paid (by making interest payments).
46. During their review of the cases the majority drew attention to the decision of the European
Court of Human Rights (ECtHR) in Jahn v Germany (2006) 42 E.H.R.R. 49 (p.1085) (at [93]).
The ECtHR found that there must be a reasonable relationship of proportionality between the
means employed and the aim sought to be realised by any measure depriving a person of his
possessions, in respect of which, however, the state enjoys a wide margin of appreciation. At
[16] the majority in Waya found it “plainly possible” to read s.6(5)(b) POCA (the duty to make

an order in the “recoverable amount” which by s.7 is, prima facie, the amount of benefit) subject
to a requirement that the confiscation order should be proportionate. At [24] the majority in
Waya emphasised that the application of A1P1 did not mean that the judge exercises a general
discretion as to what confiscation order would be appropriate. The duty of the court is to fulfil
the Parliamentary objective so far as it is proportionate to do so. At [25] the court observed that
the proper application of the s.6(6) savings “ought to mean” that the application of the lifestyle
assumptions would not lead to a disproportionate result.
47. At [26] and [27] of Waya , the court pointed out that “the legitimate, and proportionate,
confiscation order” may require a defendant to pay the whole sum “obtained by crime”
without deduction of “the expenses of crime”. The proceeds were to be recovered from the
defendant whether they had been spent or retained and could properly be recovered from
legitimately acquired assets. However, the court proceeded to examine the proportionality of
double recovery, where the defendant had already returned property or its value to “the loser”.
To require the defendant to pay twice for the same wrong would be disproportionate ([28]–[33]).
The court recognised at [34] the direction in which the risk of double recovery, and therefore
the disproportion of a confiscation order, could take the judge:
“34. There may be other cases of disproportion analogous to that of

goods or money entirely restored to the loser. That will have to be
resolved case by *155 case as the need arises. Such a case might include,
for example, the defendant who, by deception, induced someone else
to trade with him in a manner otherwise lawful, and who gives full
value for goods or services obtained. He ought no doubt to be punished
and, depending on the harm done and the culpability demonstrated,
maybe severely, but whether a confiscation order is proportionate for
any sum beyond profit made may need careful consideration. Counsel's
submissions also touched very lightly on cases of employment obtained
by deception, where it may well be that difficult questions of causation
may arise, quite apart from any argument based upon disproportion.
Those issues were not the subject of argument in this case and must
await an appeal in which they directly arise; moreover related issues are
understood to be currently before the Strasbourg Court.”
48. In R. v Paulet [2009] EWCA Crim 288 (Lord Judge CJ, Wyn Williams and Holroyd JJ), the
appellant pleaded guilty to offences of obtaining a pecuniary advantage by deception. He had

obtained employment by misrepresenting his immigration status in the United Kingdom. His
employers gave evidence that had they known the truth they would not have employed him. The
appellant had made savings from his salary in a total sum just short of £30,000. A confiscation
order in that sum was made. The court found that it was bound by the decision in R. v Carter
[2006] EWCA Crim 416 to the effect (in the case of the appellant Denis Lyashkov) that salary
earned by employment obtained by false representations was benefit obtained as a result of or
in connection with criminal conduct. At a later hearing on 28 July 2009 the court held that the
confiscation order made against Mr Paulet did not constitute an abuse of the process of the
court. Mr Paulet subsequently made an application to the ECtHR (Application No.6219/08, 13
May 2014). He argued that on the facts of his case the order was disproportionate. The source
of his earnings was not criminal in the sense that a drug trafficker profited from the supply of
drugs or a thief from the proceeds of articles stolen: he had performed work for his employers in
return for which he received his earnings. The Fourth Section did not rule on the proportionality
of the confiscation order but confirmed the domestic court's responsibility to apply A1P1 and
to determine “whether the requisite balance was maintained in a manner consonant with the
applicant's right to the peaceful enjoyment of his possessions” (see Sporrong and Lönnroth v
Sweden 24 October 1986 at [69]). The Court of Appeal had carried out a narrow examination
as to whether the proceedings constituted an abuse of process or were oppressive but had not
considered the fair balance requirement of A1P1 . The Fourth Section concluded that there had
been, for this reason, a violation of A1P1 .
49. In Sale the court observed that the terms of s.76(4) POCA were wide enough to capture
the whole of the invoices paid by Network Rail in the total sum of about £1.9m. In addition,
the appellant had obtained a pecuniary advantage, under s.76(5) , of the amount by which his
company's position in the market place had been enhanced by the contracts obtained unlawfully.
Before the decision in Waya , no criticism could have been made of a finding of benefit in excess
of the company's profits. Since Waya , however, the order must be proportionate. The expenses
incurred in carrying out the contracts were some 90 per cent of the invoice value. Although the
case could not be treated as one of full restoration to the loser, the proportionate course would
be to assess the benefit as the sum of the gross receipts *156 before taxes “and to treat the full
value given under the contract as analogous to full restoration to the loser” ([56] Sale ). The
court would also have treated the enhanced value of the company as a benefit had there been
evidence on which that benefit could be valued.
50. In R. v Jawad [2013] EWCA Crim 644; [2013] 1 W.L.R. 3861 the issue was whether
double recovery was permitted by means of a compensation order and a confiscation order in
a larger sum that included the amount of the compensation ordered. If the appellant paid the
compensation and the confiscation order there would be double recovery of the compensation
amount—£64,000 odd. The court made an order which provided that if the appellant paid the

compensation ordered to the loser the confiscation order would be reduced by the equivalent
sum. At [21] of his judgment on behalf of the court, the then Vice President, Hughes LJ, said:
“21. Waya requires the court to consider whether a POCA confiscation

order is disproportionate. We are satisfied that it generally will be
disproportionate if it will require the defendant to pay for a second time
money which he has fully restored to the loser. If there is no additional
benefit beyond that sum, any POCA confiscation order is likely to be
disproportionate. If there is additional benefit, an order which double
counts the sum which has been repaid is likely, to that extent to be
disproportionate, and an order for the lesser sum which excludes the
double counting ought generally to be the right order. But, for the reasons
explained above, we do not agree that the mere fact that a compensation
order is made for an outstanding sum due to the loser, and thus that
that money may be restored, is enough to render disproportionate a
POCA confiscation order which includes that sum. What will bring
disproportion is the certainty of double payment. If it remains uncertain
whether the loser will be repaid, a POCA confiscation order which
includes the sum in question will not ordinarily be disproportionate.”
51. It seems to us that the application of the proportionality assessment requires examination
(as in Sale ) as to whether the finding of benefit the defendant is liable to repay is a proportionate
means of achieving the legitimate objective of depriving him of the proceeds of his criminal
conduct. As the court observed in Waya the judge may need to examine both causation under
s.76(4) (at [34]) and the certainty of double recovery (at [29]). With respect, we agree with
the approach in Sale : in a case in which the underlying transactions producing the appellant's
receipts are lawful and not criminal, the cost of those transactions to the defendant may, on the
grounds of proportionality, properly be treated as consideration given by the appellant for the
benefit “obtained”. There may be no “loser” as contemplated by the Supreme Court in Waya
and by the Vice President in Jawad , but the underlying principle is the same—the defendant
has not gained by his conduct to the extent that he has given value for his receipts. Each case
must be decided according to its particular facts.
Conclusion—Christopher McDowell

(i) Benefit from criminal conduct
52. At [34] above we have emphasised that, as the first step in a POCA assessment, the court
needs to identify the offender's criminal conduct admitted or proved, *157 since it is by this
means that the court may judge what property the offender has obtained as a result of or in
connection with that conduct.
53. The appellant McDowell was “knowingly concerned in the supply, delivery, transfer,
acquisition or disposal of … controlled goods with intent to evade” the prohibition in art.4 of
the 2003 Order . Contrary to the submission made on behalf of Mr McDowell the underlying
transactions were, on analysis, prohibited and unlawful. It is, in our view, not arguable that the
appellant did not benefit from his criminal conduct.
54. Neither is it arguable that, because commission payments were received after a licence was
applied for or granted, they did not comprise benefit from criminal conduct under POCA or that
their inclusion in the certification of benefit was disproportionate. The commission payments
were received as consideration for the prohibited activity and the licence was not retrospective
in effect.
(ii) Lifting the corporate veil
55. We do not consider that it is necessary to lift the corporate veil to ascertain whether and
to what extent the appellant has benefited. The appellant did not attempt to hide his trading
behind the cloak of his company, Wellfind, or seek to evade responsibility for his criminal acts
by interposing the company between himself and those criminal acts. He was, however, the
company's sole controller. As the judge put it he was the alter ego of the company. He used
it openly as his trading vehicle in these transactions. We agree with the court in Sale that the
Crown Court was entitled to examine the receipts and profits of the company for the purpose
of ascertaining the benefit obtained from the criminal conduct of the appellant personally. He
was the beneficial owner. The court would be justified in treating the company's receipts as the
appellant's benefit subject to the issue of proportionality.
(iii) Proportionality
56. The transactions were, we have held, criminal. In our judgement, it was a proportionate
pursuit of the legitimate aim to deprive the appellant of his receipts from his criminal conduct
without regard to the expenses incurred in performing those transactions (see [26] and [27] of
Waya ). Furthermore, we have summarised at [14] above the information made available to HH
Judge Critchlow in the Crown Court. The appellant did not himself give evidence to explain
the circumstances in which he came to make a payment to his agent in Ghana, referred to in
the appellant's s.17 POCA response as his “business partner”; nor was any evidence placed
before the judge or this court as to any other “expenses” incurred in performing the illegal
transactions. We were informed only that the company's accounts revealed the gross profit made
by the company in consequence of all its trading. In these circumstances, even if, in principle,

the court had been prepared to entertain a submission that the appellant's benefit was for a lesser
sum than his receipts, he had manifestly failed to discharge the burden of proof.
57. We conclude that Mr McDowell's grounds have no prospect of success and the renewed
application is refused. *158
Harjit Sarana Singh
(i) Benefit from criminal conduct
58. The appellant Singh was required, by s.1(1) of the Scrap Metal Dealer's Act 1964 , before he
carried on business as a scrap metal dealer, to register his particulars with the local authority. The
section did not create or define a prohibited activity for which authorisation might be obtained
upon application. The appellant was entitled to register his particulars free of cost. The appellant
carried on business as a scrap metal dealer without first registering his particulars. Thus, he
committed an offence under subs.(7) of carrying on a scrap metal business in breach of subs.(1).
59. In a fully reasoned judgment of 10 August 2013, for which we are grateful, HH Judge
Head observed that the purpose of the provision was to discourage metal theft and handling. We
agree that the public interest requires that scrap metal dealing should be accountable, subject to
periodical inspection and therefore registered. The judge found that the offence was “a positive
act, carrying on business each time he did that from day to day while remaining unregistered
… This is an offence committed by a whole series of positive acts … the transactions which
comprised carrying on business.” The judge found that the offence was one of trading while
unregistered. There was no distinction to be made between a scrap dealer trading while
unregistered and a drug dealer receiving money in return for the sale of drugs, except in the
seriousness of the forbidden conduct. Every transaction was unlawful.
60. With respect we disagree with this analysis. We do not accept the submission made by Mr
Talbot, on behalf of the respondent, that the appellant's trading activity was criminal conduct
from which benefit accrued. The criminal conduct was the failure to register before carrying
on business on each day when business was carried on. There were repeated failures to register
but the offence was still comprised in the failure to register. However, the appellant's trading
receipts were obtained as a result of or in connection with trading activity that was lawful in itself
and not from the failure to register the particulars of the business that comprised the criminal
offence. We derive some support for our identification of the nature of the criminal conduct
from the alternative means by which the offence may be committed: failing to notify a change
of circumstances in breach of s.1(5) . It would be an odd and inconsistent result if one means
of committing the offence attracted a POCA benefit finding while the other did not. This is, we
recognise, a distinction drawn from a close examination of the terms of the statute that creates
the offence, including the words used to define the criminal conduct admitted, but, as we have
said, this is an essential first step in the analysis of whether the appellant benefited from his
criminal conduct.

61. The fact that the judge was conditionally obliged to make the s.10(2) POCA assumption
in a criminal lifestyle case does not, in our judgement, serve to change the appellant's position.
Since, as a matter of causation, we have concluded that the appellant's trading receipts were
not obtained as a result of or in connection with his failure to register his particulars, we also
conclude that s.75(2) served to exclude the criminal lifestyle provisions.
62. Before we leave this aspect of the appeal we should draw attention to the fact that the Scrap
Metal Dealers Act 1964 has since been replaced by the Scrap Metal Dealers Act 2013 . The
new Act replaces the former system of free registration *159 with a new scheme of licensing.
The licensing authority will not issue a licence except to suitable persons. While the legislative
history may be of some relevance, the question whether the conduct criminalised under the new
provisions is the trading activity or the failure to obtain a licence will have to be resolved when
it arises in a future case.
(ii) Lifting the corporate veil
63. Had we concluded that the appellant's trading was criminal conduct we would have treated
the receipts of the company as the receipts from criminal conduct of the appellant personally,
since he also was the sole controller of his trading company. No issue arises in Mr Singh's case
as to the beneficial interest in the company's assets.
(iii) Proportionality
64. In a further judgment of 13 September 2013 HH Judge Head found that the entire business
of the appellant was criminal. The judge did not accept that the application of A1P1 required
that any allowance should be given for the costs and expenses of running the business. It was
represented to the judge that the benefit figure should be assessed at some 20 per cent of turnover.
However, there was no attempt to substantiate the figure by adducing evidence. At the hearing
of the appeal Mr Prior advanced figures from unaudited accounts (at [20] above) and proposed
an appropriate figure for benefit. The burden was upon the appellant to establish that the benefit
figure was less than the appellant's receipts and the means by which he sought to do so was, it
seems to us, completely inadequate.
65. Had we concluded that the appellant benefited from his criminal conduct we would have
posed the question, following Sale , whether, since the underlying trading was lawful, it would be
proportionate to seek to recover all the appellant's receipts without regard to the value provided
to customers with whom he traded. In the absence of the necessary evidence we would have
been unable to identify what credit should be given for that value.
66. However, for the reasons we have given at [58]–[61] above, we conclude that Mr Singh's
appeal should be allowed and the confiscation order quashed. *160

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R. v McDowell (Christopher James), [2015] 2 Cr. App. R. (S.

For educational use only

Court of Appeal (Criminal Division)

Pitchford LJ , Knowles J and HH Judge Goldstone QC :

H1 Confiscation—benefit—whether or not benefit obtained arising from criminal conduct—

© 2020 Thomson Reuters. 1

© 2020 Thomson Reuters. 2

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H12 Cases cited:

H13. References: Current Sentencing Practice , J11-2C. *140

© 2020 Thomson Reuters. 4

Giles Bedloe for McDowell.

2. The cases have the following features in common:

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4. The respondent to the appeal of Singh argues that:

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“(2) Subject to the provisions of this Order, no person shall

b) agree to arrange or negotiate,

a contract for the acquisition or disposal of any controlled goods, where

8. Article 4(3) of the order states;

b) agree to do any act

calculated to promote the arrangement or negotiation of a contract for

© 2020 Thomson Reuters. 7

10. Article 4(8) provides an exception to the prohibitions as follows:

11. The offence created by art.9(2) is as follows:

“(2) Any person knowingly concerned in the supply, delivery, transfer,

By art.9(4) a person convicted on indictment is liable to an unlimited fine or to a term of

© 2020 Thomson Reuters. 8

© 2020 Thomson Reuters. 9

Harjit Sarana Singh

“(1) Every local authority shall maintain a register of persons carrying

“(7) Any person who carries on business as a scrap metal dealer in

© 2020 Thomson Reuters. 10

“Between 25 June 2009 and 22 August 2011 at Leicester [you] carried

© 2020 Thomson Reuters. 11

The appeal against “benefit” findings

Benefit from criminal conduct

© 2020 Thomson Reuters. 12

Benefit from criminal conduct

© 2020 Thomson Reuters. 13

“(1) A person who—

(b) engages in street trading in a licence street … without being

shall be guilty of an offence.”

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“… Those who choose to run operations in disregard of planning

“(1) A person commits an offence if he is a person having control of or

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“30. As an initial observation, [counsel for the appellant] re-emphasised

Lifting the corporate veil

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“76 There was no major disagreement between counsel on the legal

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Snook v London and West Riding Investment Limited [1967] 2 QB 786,

“25. … (i) Ownership and control of a company were not enough

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may be a ‘façade’ even though it was not originally incorporated with

28. The difficulty is to identify what is a relevant wrongdoing.

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