Local Authority confiscation order quashed

The judgment of Pitchford LJ in the conjoined appeals of R v McDowell & Singh [2015] EWCA 173 is a must read for criminal lawyers and particularly those regularly engaged in confiscation proceedings. The judgment is of particular interest for its examination of the authorities on ‘lifting the corporate veil’ though ultimately neither appeal was determined by reference to that point. Both appellants were convicted of offences that could loosely be described as ‘regulatory’ and made the subject of confiscation orders in not insignificant sums but nonetheless less than the assessed criminal benefit. The points for the appellants were threefold: 1. the benefit was assessed from the lawful trading of their companies; 2. it was not appropriate the lift the corporate veil; 3. the assessment of benefit in each case was ‘disproportionate’ from an A1/Waya perspective. McDowell was an arms trader who had received significant commission payments whilst his business was unlicensed. Singh was a scrap metal dealer who had failed to register with the local authority. McDowell was ultimately unsuccessful because the Court held that “the underlying transactions were, on analysis, prohibited and unlawful” whereas Singh’s confiscation order was quashed. In his case the Court held that the offence was comprised in the failure to register as opposed to the trading activity of his business per se and thus section 75(2) POCA served to exclude the lifestyle provisions. This important distinction highlights the necessity for the Court to examine the relationship between the income of a business and how it is derived to avoid an assumption that the illegality comprised in a regulatory breach should translate into criminal benefit. This decision is particularly important for those defending prosecutions brought by local authorities where confiscation is in issue.