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England and Wales Court of Appeal (Criminal Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> Basso & Anor v R [2010] EWCA Crim 1119 (19 May 2010) URL: http://www.bailii.org/ew/cases/EWCA/Crim/2010/1119.html Cite as: [2011] Lloyd's Rep FC 25, [2010] EWCA Crim 1119, [2011] 1 Cr App R (S) 41, [2011] 1 Cr App Rep (S) 41 |
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ON APPEAL FROM THE CROWN COURT AT ST. ALBANS
His Honour Judge Michael Baker Q.C.
T20070085
Strand, London, WC2A 2LL |
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B e f o r e :
THE HON. MR JUSTICE TREACY
and
THE HON. MR JUSTICE COULSON
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LUIGI DEL BASSO & BRADLEY GOODWIN |
Appellants |
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- and - |
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REGINA |
Respondent |
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Mr Anthony Heaton-Armstrong (instructed by the Registrar) for Bradley Goodwin
Mr David Perry Q.C. and Mr Simon Ray (instructed by the Serious Organised Crime Agency) for the Crown
Hearing date : 29 April 2010
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Crown Copyright ©
Lord Justice Leveson :
The Facts
The Approach of the Judge
"The obligation of the Court to proceed to confiscation is made mandatory by section 6 of POCA. The relevant conditions precedent to the confiscation proceedings in this case are (1) that the defendant is convicted of an offence in proceedings before the Crown Court and (2) that the prosecutor has asked the court to proceed under section 6. Both these conditions are met. There is no suggestion in POCA that certain types of offence are excluded from its operation. The case is in my judgment, akin to R v Neuberg (Karen Jayne) [2007] EWCA Crim.1994 in which the Act was held to apply to a company operated in breach of section 216 of the Insolvency Act which forbids the use of a prohibited trading style. The business of the company itself was lawfully conducted. It became unlawful because it was conducted using a prohibited name associated with another and insolvent company. Furthermore, the suggestion that the activities in this case were either "entirely" or "inherently" lawful is simply wrong. The activity of conducting a 'park and ride' operation was entirely and inherently criminally unlawful from the moment the enforcement notice became effective. This is so regardless of the fact that it appears to have been conducted in a way which complied with the law relating to employment, income tax and VAT. The lawfulness of the manner in which the activity was carried out cannot affect the unlawfulness of the activity itself. My answer, therefore, to the question is "no" which favours the prosecution."
"First the breach of the enforcement notice rendered the activity itself unlawful, however compliant it was with other legal requirements in the manner in which it was actually carried out. Second, as already stated, section 6 of POCA is mandatory. It clearly obliges the Court to apply the confiscation regime to any offence in proceedings before the Crown Court if the conditions within the section are satisfied."
"1. The decision whether or not to pierce the corporate veil is very much a fact-specific decision… it is a matter of judgment on the facts rather than a more general discretionary decision;
2. It is inescapable that the ''park and ride'' business carried on by the [Parking Company] was wholly unlawful;
3. [The Parking Company] was not, however, formed in order to conceal the true nature of the business. It was formed, as I have found, for good business reasons;
4. In the minds of [Mr Del Basso and Mr Goodwin] the hope and at various times the expectation was that the 'park and ride' operations would become lawful and the Parking Company would be the vehicle through which it ran its lawful operation."
"Section 76(4) of POCA… provides that a person who obtains benefit from conduct if he obtains property as a result of or in connection with the conduct. This applies equally to general and to particular criminal conduct. Section 7 provides that the recoverable amount is an amount equal to the benefit unless the defendant shows that the amount available for a confiscation order is less than the benefit figure. …
In the case of May stress is placed on the need to apply the language of the statute shorn of judicial gloss and paraphrases to the facts of the case. In my judgment neither the purpose of the ''park and ride'' nor the use to which the money received into the partnership or company accounts was put, are facts which are relevant to the question whether the defendant "obtained" those sums. The question is not how the monies were used but how they were acquired. The closing words of the end note in May provide the following guidance which both the Prosecution and the Defence rely upon:
'The 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. He ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject. 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 proceeds of sale are unlikely to be found to have obtained that property. It may be otherwise with money launderers'.
The sums claimed as benefit in this case were paid into bank accounts to which the defendants were the only signatories and over which they had exclusive control. They did not have a mere passing interest. They were not mere couriers or custodians, nor were they just very minor contributors to the offending. I conclude that they each obtained the monies paid into the Parking Association account…."
"…I am unable to make any sort of refined value judgment. The best I can do is recognise: (1) that the defendants' breaches were flagrant and long-lasting; (2) they do not seem to have attracted significant criticism from the local populace; (3) the crime they have committed was an environmental and economic one rather than one which caused direct personal physical injury.
The argument that the sums claimed against [the Appellants] were disproportionate to the benefits they gained from them is one which has caused me much more concern. It is not one that can be taken care of by some imaginative construction of POCA or by declining to make the statutory assumptions; at any rate it cannot be done while at the same time following authoritative case law. If the full amount claimed (or anything close to it) were to be the benefit figure used in this case it might very significantly indeed exceed the actual sums made by the defendants, though the actual amounts of benefit attributable to their particular criminal conduct are unclear to me at this stage. The problem is exacerbated by the fact that in many respects the Parking Association and the Parking Company were run as if they were legitimate businesses".
"In the present case… the size of the benefit would not by itself justify a finding of oppression. The present case may, however, possess additional features which leads me to keep open the issue of oppression and a stay of proceedings. The first is that the calculation of benefit in this case necessarily disregards the legitimate manner in which the company appears to have been carried out with the legitimate employment of a significant number of staff, the payment of their wages and related taxes and the payment of VAT. Although both the Parking Company and the Parking Association were vehicles to conduct a business which was illegal, the manner in which the business was conducted appears to have been legal. In that respect if differs significantly from businesses conducted for example, by the distribution of drugs in which every person involved is a criminal. If, as the defendants claim, the effect of a confiscation order in the sum of £5.05 million… would exceed by many times anything they may have made out of it that, in the circumstances of this case would disturb me. The second reason is that although I cannot fully evaluate the aim of the planning legislation, and although I equally cannot disregard it, it does seem to me to be fairly clear that the main concern of those responsible for the prosecution of the breaches of the enforcement order was to stop the defendants from persisting in breaking the law, rather than to punish them for a major environmental or economic crime."
"…the inescapable and fundamental point is that the [appellants] embarked on a 'park and ride' operation without planning permission. They continued it knowing that it was unlawful and they did so in defiance of the authorities in the ill-founded belief that the future profit (of whatever kind) would outweigh any financial or reputational loss which might flow from their unlawful actions."
The Regime of Confiscation
"(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; ....
(3) The second condition is that—
(a) the prosecutor 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."
"(c) ... an offence committed over a period of at least six months and the defendant has benefited from the conduct which constitutes the offence."
This provision is not satisfied unless the defendant obtains relevant benefit of not less than £5,000: s. 75(4) of POCA.
"(1) Criminal conduct is conduct which –
(a) constitutes an offence in England and Wales, or
(b) would constitute an offence if it occurred in England and Wales.
(2) General criminal conduct of the defendant is all his criminal conduct, and it is immaterial –
(a) whether conduct occurred before or after the passing of this Act;
(b) whether property constituting a benefit from conduct was obtained before or after the passing of this Act. …
(4) A person benefits from conduct if he obtains property as a result of or in connection with the conduct. …
(7) If a person benefits from conduct his benefit is the value of the property obtained"
"(1) The legislation is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means. It does not provide for confiscation in the sense understood by schoolchildren and others, but nor does it operate by way of fine. The benefit gained is the total value of the property or advantage obtained, not the defendant's net profit after deduction of expenses or any amounts payable to co-conspirators.
(2) The court should proceed by asking the three questions posed above: (i) Has the defendant (D) benefited from relevant criminal conduct? (ii) If so, what is the value of the benefit D has so obtained? (iii) What sum is recoverable from D? Where issues of criminal lifestyle arise, the questions must be modified. These are separate questions calling for separate answers, and the questions and answers must not be elided.
(3) In addressing these questions the court must first establish the facts as best it can on the material available, relying as appropriate on the statutory assumptions. In very many cases the factual findings made will be decisive.
(4) In addressing the questions the court should focus very closely on the language of the statutory provision in question in the context of the statute and in the light of any statutory definition. The language used is not arcane or obscure and any judicial gloss or exegesis should be viewed with caution. Guidance should ordinarily be sought in the statutory language rather than in the proliferating case law.
(5) In determining, under the 2002 Act, whether D has obtained property or a pecuniary advantage and, if so, the value of any property or advantage so obtained, the court should (subject to any relevant statutory definition) apply ordinary common law principles to the facts as found. The exercise of this jurisdiction involves no departure from familiar rules governing entitlement and ownership. While the answering of the third question calls for inquiry into the financial resources of D at the date of the determination, the answering of the first two questions plainly calls for a historical inquiry into past transactions.
(6) D 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. He ordinarily obtains a pecuniary advantage if (among other things) he evades a liability to which he is personally subject. 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."
"The focus must be and remain on the language of the subsection. ... There is a real danger in judicial exegesis of an expression with a plain English meaning, since the exegesis may be substituted for the language of the legislation. It is, however, relevant to remember that the object of the legislation is to deprive the defendant of the product of his crime or its equivalent, not to operate by way of fine. The rationale 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. This 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.
… A person's acts may contribute significantly to property (as defined in the Act) being obtained without his obtaining it. But under section 71(4) a person benefits from an offence if he obtains property as a result of or on connection with its commission, and his benefit is the value of the property so obtained, which must be read as meaning 'obtained by him'."
.
"[W]hen considering questions of confiscation the focus of the enquiry is on the benefit gained by the relevant defendant, whether individually or jointly."
"... essential, first, for the prosecution and then for the judge to look to see what real benefit the offender has obtained and to examine the evidence relating to it in order to arrive at a fair valuation."
"74 …. The judge should have asked the question: what benefit had Mrs Neuberg, as the relevant offender, obtained as a result of or in connection with her offence of trading under a prohibited style without the leave of the court contrary to the Insolvency Act 1986? It was not correct necessarily to equate the turnover of the business with the benefit that had been obtained by Mrs Neuberg as a result of or in connection with her offence.
75. On the law as it stands, the benefit obtained by an offender is a question of fact to be determined by the judge. However, the turnover of any company through which the offender acted may be relevant to ascertaining the benefit obtained by the offender. That was held to be so by this court in R v Xu…"
Analysis
Abuse of Process
"27. The enormous disparity between the excess of Shabir's inflated claims (some few hundreds of pounds) and the confiscation order of over £212,000 raises the real likelihood that this order is oppressive. As it seems to us, however, such a disparity will not in every case by itself establish oppression …
29. What was patently oppressive in the present case was to rely on the form of the counts for obtaining a money transfer by deception (i) to bring the criminal lifestyle provisions into operation when they could not have applied if the charges had reflected the fact that the defendant's crimes involved fraud to an extent very much less than the threshold of £5,000 and (ii) to advance the contention that the defendant had benefited to the tune of over £179,000 when in ordinary language his claims were dishonestly inflated by only a few hundred pounds."
"Abuses of the confiscation process may occur and, when they do, the appropriate remedy will normally be a stay of proceedings. However an abuse of process argument cannot be founded on the basis that the consequences of the proper application of the legislative structure may produce an "oppressive" result with which the judge may be unhappy. Although the court may, of its own initiative, invoke the confiscation process, the responsibility for deciding whether properly to seek a confiscation order is effectively vested in the Crown. When it does so, the court lacks any corresponding discretion to interfere with that decision if it has been made in accordance with the statute. The just result of these proceedings is the result produced by the proper application of the statutory provisions as interpreted in the House of Lords and in this court. However to conclude that proceedings properly taken in accordance with statutory provisions constitute an abuse of process is tantamount to asserting a power in the court to dispense with the statute."
"I conclude with a final observation about the mentality of the [appellants] and other similar law breakers. I have received the strong impression that neither the [appellants] nor … their accountant appreciated fully the risk that the companies and individuals involved in the park and ride operation faced from confiscation proceedings. They have treated the illegality of the operation as a routine business risk with financial implications in the form of potential fines or, at worst, injunctive proceedings. This may reflect a more general public impression among those confronted by enforcement notices with the decision whether to comply with the law or to flout it. The law, however, is plain. 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. Although the peculiar facts of the present case have led me to exclude the receipts of the parking company from the confiscation, that is a decision reached very much having regard to the unusual circumstances presented to me. [Counsel for the prosecution's] submission that a defendant should not escape the confiscation consequences of his conduct by the expedient of running his unlawful operation through a company will, I expect, generally carry the day."