Basso & Anor v R

On 8 June 2007, at the Crown Court at St Albans, Luigi Del Basso (“Mr Del Basso”) and Bradley Goodwin (“Mr Goodwin”) pleaded guilty, on re-arraignment, to five and two counts respectively of failing to comply with an enforcement notice contrary to s. 179(1) and (2) of the Town and Country Planning Act 1990 (“the 1990 Act”). As a consequence, there was then initiated a hearing under the Proceeds of Crime Act 2002 (‘POCA’) conducted initially by the Asset Recovery Agency and latterly the Serious Organised Crime Agency. This led to substantial hearings before His Honour Judge Michael Baker QC who was required to deliver two lengthy judgments (on 28 July 2008 and 10 July 2009). We shall return to the complexity of these proceedings at the conclusion of this judgment.

The upshot of the prosecution was that Mr Del Basso was fined £3,000 on each count (with six months imprisonment concurrent on each count in default of payment) and ordered to pay £20,000 costs. Additionally, he was adjudged to have received a benefit of £1,881,221.19; the judge having determined that £760,000 was available, he made a confiscation order in that sum under s 6(5)(b) of POCA; in default of payment, he imposed a term of 18 months imprisonment consecutive to the term of 6 months. Mr Goodwin was fined the nominal sum of £5 on each of the two counts that he faced, adjudged to have received the same benefit but, because of his financial position, the recoverable amount was determined to be nil. Both appeal against the confiscation order with leave of the single judge; Mr Del Basso’s application for leave to appeal against the fine was refused and has not been renewed.

In order to understand the background to this prosecution, it is necessary to go back to June 1999 when an application was made for 201 parking spaces on land at Dunmow Road, Bishop’s Stortford. This land was owned by a company, Timelast Ltd, owned by Mr Del Basso, but rented to Bishop’s Stortford Football Club (‘the Football Club’) and intended to provide parking for those attending football matches. Conditional planning permission was granted but restricted to days when football matches were taking place at the Football Club. Four weeks later, however, a further application was made for a ‘park and ride’ parking facility. In July 2000, this application was rejected.

At the time that this application was rejected, the relevant local authority became aware that part of the Football Club site was being used as a ‘park and ride’ airport parking facility for passengers using Stansted Airport. On 2 August 2000, the local authority wrote stating that planning permission was required to operate the parking business and advised the Football Club that the unauthorised parking business should cease. Although this warning was repeated in numerous letters and meetings held between the local authority and the Football Club, it was ignored and the parking business continued to operate.

On 28 January 2003 the local authority served an enforcement notice. Timelast Ltd and the Football Club appealed to the Planning Inspector. On 30 October 2003, following a two day hearing, the appeal was dismissed. In the period of 9 months between service of the enforcement notice and the appeal hearing, however, far from taking heed of the local authority’s concerns, the parking operation was expanded. A further appeal to the High Court was mounted but, in February 2004, permission to appeal was refused. Thus, the end of the line had been reached.

Throughout this time, the ‘park and ride’ business had continued to be operated by Mr Del Basso and Mr Goodwin trading as Bishop’s Stortford Football Club Members’ Parking Association (‘the Parking Association’). On 9 March 2004, the local authority advised the Parking Association that if the business remained in operation beyond 11 August 2004, a prosecution would be commenced immediately and without further notice. So it was that, on 13 August 2004, officials from the local authority visited the Football Club site. The airport parking business was still operating, apparently expanded; since the appeal decision, no attempt had been made to comply with the Enforcement Notice.

On 17 September 2004, the local authority commenced a prosecution against Timelast Ltd (the owner of the land), the Football Club (which occupied the site) and Mr Goodwin (trading as the Parking Association) for failing to comply with the enforcement notice. The allegation was confined to the single day of the visit, 13 August 2004. On 10 November 2005, after a trial, all three were convicted and, on 22 December, each defendant was sentenced to a fine of £20,000. Applications for leave to appeal were refused by the single judge, not renewed in relation to conviction and, as to sentence, were also refused by the full court (see R v Bishop’s Stortford Football Club and others [2006] EWCA Crim 3098).

Meanwhile, prior to the criminal trial, the arrangements for the ‘park and ride’ business were changed. The Parking Association had operated as a non-incorporated partnership of which Mr Del Basso and Mr Goodwin were the only partners and the revenue received was paid into a bank account over which they had joint exclusive control. From 1 July 2005, it was operated by Bishop’s Stortford Football Club Members’ Parking Association Limited (‘the Parking Company’) with 50% of the beneficial interest in the shares being held by Mr Del Basso and Mr Goodwin. Having said that, in the period 1 July 2005 to 31 October 2005 there was a crossover between the Parking Association and the Parking Company. During this period revenue from the ‘park and ride’ business continued to be paid into the Parking Association bank account despite the operation of the Parking Company.

On 22 November 2005, after the conviction in the trial, local authority officials again visited the Football Club site and found the parking business continuing as before. As a result, on 17 January 2006, a second prosecution was commenced, again for offences arising from the failure to comply with the enforcement notice. The defendants were: Timelast Ltd, the Football Club, the Parking Company, Mr Del Basso and Mr Goodwin; proceedings against two further defendants were discontinued. It is this prosecution that culminated on 8 June 2007 when all five defendants pleaded guilty to the charges which they faced. Timelast Ltd, the Football Club and the Parking Company were fined nominal sums.

Confiscation proceedings under section 6(3)(a) of POCA were initially commenced against all five defendants but, during the course of legal argument, discontinued against all but Mr Del Basso and Mr Goodwin. The first hearing lasted a week and in a detailed 38 page reserved ruling delivered on 11 August 2008, Judge Baker determined a number of preliminary issues (reduced into 15 written questions not all of which he then answered) although he gave leave to the parties to submit further argument in the light of a recent decision of this court. There were then further hearings and his second ruling, dated 10 July 2009 (covering a further 24 pages of transcript) made a number of findings of fact and reached conclusions on remaining issues sufficient for him to determine the matter.

The case for the Crown was that the ‘park and ride’ operation became criminally unlawful from the moment the enforcement notice became effective, that Mr Del Basso and Mr Goodwin were to be treated as having had a criminal lifestyle and, as a result, were subject to the assumptions set out in s. 10 of the 2002 Act, unless these assumptions were incorrect or would result in a risk of serious injustice. The turnover of the scheme represented the benefit of the offenders irrespective of the corporate vehicle through which the turnover was generated.

On behalf of Mr Del Basso, it was argued that the purpose of the Parking Association, later the Parking Company, was to provide income for the Football Club; it had an altruistic motive and no element was run for personal profit. In fact the Football Club was in a parlous financial state and the scheme had provided much needed income in the form of rent for the use of the land: over the life of the scheme, total payments to the Football Club amounted to some £500,000 and represented nearly 30% of the Club’s income. Further, virtually all the income from the scheme was spent on necessary running expenses. Mr Del Basso, himself, had made a very significant financial contribution to the football club and derived only modest income from services or loans; his income had been approximately £125,000. On behalf of Mr Goodwin, it was added that the breaches of the 1990 Act were modest and had caused little environmental harm and no economic harm.

The judge concluded that although the Parking Association and Parking Company were run on business-like lines, employing staff, honouring contractual obligations towards employees and third parties alike, while at the same time conducting business in an open manner, they were, nevertheless, illegal operations. He also concluded that Mr Del Basso and Mr Goodwin had a criminal lifestyle within the meaning of the 2002 Act as they had committed offences over a period of at least six months and had received some benefit from their offending: this last finding was not challenged.

Having regard to the grounds of appeal, it is appropriate to set out rather more extensively some of the questions posed for the judge and the answers he provided. Thus, the first question was whether the continued operation of the ‘park and ride’ after the enforcement notice became effective was in itself “an entirely lawful activity” such as to make the application of the confiscation regime of POCA misconceived. Judge Baker dealt with this question in this way:

“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.”

Question 3 concerned the issue whether the offences with which the court was concerned were outside the confiscation regime of POCA. The judge concluded that the offences brought into operation the scheme of the legislation (“four square within it”) and rejected the contention to the contrary for the following reasons:

“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.”

The sixth question concerned the creation of the Parking Company and whether it was apt to allow the court to pierce the corporate veil to equate the activities of the company with those of Mr Del Basso and Mr Goodwin. Although he initially declined to deal with this question, by his second ruling, he determined that it was not appropriate to pierce the corporate veil of the Parking Company. He explained:

“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.”

Question 7 dealt with the question of benefit as defined by POCA and asked whether, in the circumstances of this case and, in particular, the nature and purpose of the ‘park and ride’ operation and the use to which the money received into the accounts maintained by the partnership and the Company was put, the payments made in the periods covered by the relevant counts amounted to a statutory obtaining of benefit by the defendants. The judge answered in the affirmative, making vital findings of fact (the emphasis of which is ours) which it is important to note are not the subject of appeal:

“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….”

It was also contended that the confiscation proceedings represented an abuse of the process of the court. Without reaching a definitive conclusion, in the course of his first ruling, the judge dealt with the arguments about level of economic and environmental damage and lack of proportionality in this way (at paragraphs 89-90):

“…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”.

Discussing the decision of this court in R v Morgan [2008] EWCA Crim 1323, [2009] 1 Cr App R (S) 60, in which Hughes LJ observed (at paragraph 29) that it would not be sufficient to establish oppression (and thus abuse of process) where the effect of a confiscation order would be to extract from a defendant a sum greater than the profit from his crime, Judge Baker went on (at paragraph 94):

“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.”

Returning to the argument in his second ruling, Judge Baker noted that the effect of his decision not to pierce the corporate veil was to reduce the amount of benefit for both appellants from £5.05 million to £1.88 million which, he observed, “to some extent reduces the potency of any argument based on financial disproportion”. He rejected the submission that the motive behind the running of the ‘park and ride’ scheme was “entirely altruistic” because the appellants had received significant income during the period of its illegal operation. Notwithstanding an apparent lack of evidence of economic or environmental loss, and notwithstanding what he described as “some financial disparity” if the benefit figures in the sums retained while the operation continued unlawfully were contrasted, he decided that the proceedings were not oppressive and that proceedings should not be stayed, stating:

“…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.”

Having decided that the credit transfers to the scheme passing through the Parking Association (i.e. between 16 August 2004 and 31 October 2005) amounted to £1,881,221.19, the judge went on to consider the recoverable amount. He determined that Mr Del Basso’s realisable assets were the value of his company Servebase and a motor boat and amounted to £760,000 whereas Mr Goodwin was bankrupt. It was in those circumstances that the orders were made.

We need only add that, after the judge had prepared his second ruling, those representing Mr Del Basso and Mr Goodwin invited him to consider further submissions in the light of the very recent decision in R v Seager; R v Blatch [2009] EWCA Crim 1303. The judge declined to do so, first, on the basis that the proceedings had already taken nearly a year; secondly, he did not believe that the decision would necessarily affect any of the issues he had decided and, finally, he considered that it was in the interests of justice that final disposal of the case should proceed on the day that had long been fixed for judgment to be handed down.

It is against these decisions that the appeal is mounted. Mr Andrew Trollope Q.C. for Mr Del Basso (supported and adopted by Mr Antony Heaton-Armstrong for Mr Goodwin) has argued that the judge erred in not deducting money spent to meet legitimate expenses incurred by the parking business when calculating the benefit figure and that the benefit was to be equated with net profit, not turnover. Further, it was said that the decision by the prosecution to pursue confiscation in the circumstances of the case represented an abuse of the process of the court and should have been stayed: the judge should have had regard to the lack of environmental and economic damage caused by the breaches of the enforcement notice, the legal advice which had been received and the effect of confiscation. Finally, it was argued that the judge was wrong not to reconsider his decision in the light of R v Seager; R v Blatch although this ground does not add anything on the basis that if the proper reading of that decision is that the judge erred, the decision will fall for review for that reason alone.

In the light of Mr Trollope’s arguments, it is appropriate to start with the legislation. The relevant part of s 6 of POCA provides:

“(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.”

A defendant has a ‘criminal lifestyle’ if one of the offences of which he is convicted falls within the statutory catalogue in s. 75 of POCA: the list includes:

“(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.

Section 76 of POCA defines the terms ‘conduct’ and ‘benefit’ in this way:

“(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”

In the context of this case, it is common ground that the appellants were convicted of offences before the Crown Court and that the prosecutor asked the court to proceed under these provisions. Although challenging the implication of the description, Mr Del Basso and Mr Goodwin concede that they fall within the statutory definition of having a criminal lifestyle, although in the context of the case, s. 6(4)(c) of POCA would, in any event, require a similar analysis. Thus, the court was then required to proceed under s. 6(5) as defined by s. 76(4) of POCA to decide whether the relevant appellant had benefited from the conduct and the recoverable amount, making a confiscation order accordingly.

These provisions have generated a great deal of case law although the position has been considerably clarified by three decisions of the House of Lords heard consecutively by the same constitution and each the subject of a single opinion of the Appellate Committee: R v May [2008] UKHL 28, [2008] 1 AC 1028, Jennings v Crown Prosecution Service [2008] UKHL 29, [2008] 1 AC 1046 and R v Green [2008] UKHL 30, [2008] 1 AC 1053. Each of these cases was concerned with the calculation of criminal benefit albeit under different (but similar) statutory regimes.

May was concerned with apportionment of benefit between co-conspirators, reflecting the share that each conspirator received. It was held that to apportion liability between those jointly liable would be “contrary to principle and unauthorised by statute” and that in any case “the statutory questions must be answered by applying the statutory language, shorn of judicial glosses and paraphrases, to the facts of the case” (see [46] per Lord Bingham). Similarly in Green, the approach to confiscation arising out of drugs related offences (the aggregate of the overall purchase and sales prices of the drugs plus expenditure) was upheld without deduction of the profits retained by co-defendants.

Reverting to May, in what was described as an “Endnote”, in recognition of the importance and difficulty of this jurisdiction, the Appellate Committee emphasised “the broad principles to be followed by those called upon to exercise it” in these terms ([48]):

“(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.”

Jennings concerned the refusal to discharge a restraint order and turned upon s. 71(4) of the Criminal Justice Act 1988 (“a person benefits from an offence if he obtains property as a result of or in connection with its commission”) which is reflected in the language of s. 76(4) of the 2002 Act. In the Court of Appeal ([2006] 1 WLR 182), Laws LJ had concluded that the approach was an instance of the conventional approach to causation explaining (at [38]) that the word ‘obtain’ contemplated that the relevant defendant had been “instrumental in getting the property out of the crime” so that his acts “must have been a cause of that being done”. Disagreeing with that construction of the language, Lord Bingham expressed the view of the Appellate Committee in this way ([13]):

“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’.”

.

This movement away from the concept of causation has been reflected in a number of the subsequent authorities which have generated dicta upon which Mr Andrew Trollope Q.C. (for Mr Del Basso) relies. Thus, in R v Sivaraman [2009] 1 Cr App R (S) 80, this court was concerned with the manager of a service station who accepted deliveries of ‘off road’ diesel on behalf of his employer, then sold by his employer without payment of duty. The judge felt constrained (“contrary to his commonsense view of the true benefit”) to conclude that the manager who had been paid £15,000 by his employer for his participation had jointly benefited in the total amount of duty evaded, amounting to £128,520, and made an order in that sum. On appeal, it was held that the judge was not so constrained: he had not received the diesel as a joint trader but as an employee. Toulson LJ observed (at [20]):

“[W]hen considering questions of confiscation the focus of the enquiry is on the benefit gained by the relevant defendant, whether individually or jointly.”

In R v Grainger [2008] EWCA Crim 2506, the appellant had been convicted (along with the controlling shareholder) of fraudulent trading in a company of which he was group financial director and in which he had a small interest. A confiscation order was made on the basis that he had obtained benefit that represented the total receipts into the company from the fraud although what he had personally obtained was employment by a company that would otherwise have gone into liquidation and a variety of fringe benefits. Toulson LJ explained (at [14]) that it was :

“... 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.”

The following day, in the same constitution of the court, Toulson LJ returned to the same issue in R v Xu & Xu [2008] EWCA Crim 2372 which concerned a facilitation of the breach of immigration law by the employment of illegal immigrants in a Chinese restaurant. The recorder had assessed the benefits as the entire receipts of the business over the period when the immigrants were employed. Toulson LJ observed that had the appellants been forthcoming about the real part played in the business by these employees, they might have been able to show that the “true benefit” was relatively modest.

In this regard, Mr Trollope pointed to the decision in R v Seager, R v Blatch [2009] EWCA Crim 1303, [2010] 1 WLR 815 which concerned management of a company in contravention of a disqualification undertaking contrary to s. 13 of the Company Directors Disqualification Act 1986. That court discussed the decision in R v Neuberg [2007] EWCA Crim 1994, [2008] 1 Cr App R (S) 481 which had examined turnover to calculate the “benefit” as opposed to looking at her profits from her use of the unlawful name for trading. Aikens LJ considered the decision on that issue inconsistent with the analysis in the trilogy of House of Lords cases and said (at page 840 E):

“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…”

Mr Trollope argues that each of the expressions – “focus on the benefit gained”, “commonsense”, “real benefit”, “true benefit” and “benefit” all point to a requirement that the court should pay attention to the reality and look at what Mr Del Basso ‘actually made’ from the crimes to which he pleaded guilty. That requires the court to recognise that almost all the income which derived from payments by members of the public to park and then be taken to Stansted Airport was expended on the costs of operating the scheme, including VAT, national insurance contributions for the staff and business rates to the council (which had initiated the prosecution) as well as the rent that went to support the Football Club (which itself was laudable). Mr Heaton Armstrong, for Mr Goodwin, supported that argument saying that any other would produce an unjust result and that what as required was a more liberal and common sense approach to this jurisdiction.

Mr David Perry Q.C. for the Crown submits that this analysis represents a fundamental misunderstanding of the law. The phrases “benefit gained”, “real benefit” and “true benefit” are not directed to the profit (i.e. turnover less expenses) made by the offender but, instead, to any benefit as defined by the statute rather than benefit that he might have played a part in assisting others to obtain. Thus, the diesel in Sivaraman was obtained by the appellant’s employer: he was simply paid for assisting. In Grainger, Seager and Blatch, the relevant company had obtained the benefit and, without piercing the corporate veil, as Aikens LJ made clear, it is not necessarily appropriate (our emphasis) to equate the turnover of the business with the benefit although, as in Xu, turnover might well be relevant to ascertaining benefit.

In our judgment, it is necessary to revert to the words of the statute as explained by the House of Lords in May. Thus, it is clear that the legislation looks at the property coming to an offender which is his and not what happens to it subsequently; the court is concerned with what he has obtained “so as to own it, whether alone or jointly, which will ordinarily connote a power of disposition or control”; whatever disposition of that property is made (whether for socially worthwhile reasons or otherwise) is irrelevant. If it was otherwise, the court would be called upon to make a series of almost impossible value judgments: profit is not the test and the use of the words “true” or “real” to qualify “benefit” does not suggest to the contrary.

This analysis is clearly confirmed by the decisions of this court in R v Nelson, R v Pathak and R v Paulet [2009] EWCA Crim 1573, [2010] 2 WLR 788 which concerned three different sets of facts. Thus, Nelson was found in possession of a digger worth £14,000; he admitted handling stolen goods on the basis that he had been promised £1,000 (which he had not then received) for providing a log book and duplicate number plates. The digger was recovered undamaged for its owner. Although the judge had stayed confiscation proceedings as an abuse of process (to which issue we shall return), this court held that Nelson had obtained the digger so as to own it and thereby benefited from his criminal conduct: a confiscation order should have been made. Pathak had stolen from his employers, using the proceeds to buy property (which, in one case, had been sold at a profit and in another used to obtain rent). The fact that he had repaid what he had stolen did not make confiscation an abuse of process: what was required was an assessment of benefit resulting from criminal activities. Finally, Paulet, living in the UK illegally, had obtained employment by false representations that he was entitled to work; notwithstanding that his wages had been paid in consideration of his performing the work, a confiscation order was made in the total amount of his earnings less tax and national insurance which Mr Perry explained on the basis that his earnings had been paid net of those sums which had been deducted by his employers.

In the circumstances, we reject the argument that the language of the statute permits the court to look at what Mr Del Basso ‘actually made’ net of all expenses: the reverse is the case as the first paragraph in the Endnote to May (“benefit gained is the total value of the property or advantage obtained, not the defendant’s net profit after deduction of expenses”) makes abundantly clear. It is for the judge to find as a fact what property the two men had obtained and, thus, the extent of the benefit. What happens to that benefit after it has been obtained (for example, how it might have been spent) forms no part of the statutory test. Here the judge did just that in the emphasised part of the citation from his remarks at [17] above: those findings have not been challenged as wrong or unjustified by reference to the evidence. Neither did he fall into error in his analysis of the law.

As for the refusal to reconsider his second judgment in the light of R v Seager, R v Blatch, this authority emphasised the need to focus on the property obtained by the offender (in place of the causation test which had been undermined in Jennings). In this case, Judge Baker did focus on property personally obtained; indeed, he refused to pierce the corporate veil of the corporate vehicle through which the scheme latterly operated and so did not bring the money obtained directly by the Parking Company into the calculation at all. Seager and Blatch thus had no impact on Judge Baker’s ruling.

The alternative argument advanced by the appellants was to approach the commencement of confiscation proceedings in this case as an abuse of the process of the court. Mr Trollope relied on R v Shabir [2008] EWCA Crim 1809, [2009] 1 Cr App R (S) 84 which concerned a pharmacist who inflated several monthly claims to the health service payment body by a small amount. Hughes LJ made it clear that the jurisdiction to stay must be exercised with considerable caution “indeed sparingly” and that the fact that the effect of confiscation will be to extract a sum greater than the net profit from the crimes is “clearly not sufficient”. In that case, however, he said (at page 509):

“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.”

Thus, Mr Trollope explained that Mr Del Basso was an entirely respectable local businessman who had attempted to help his local football club and for whom the consequences of this prosecution had been utterly devastating. His ‘profit’ over the period of the operation of the scheme (including the period not covered by the convictions) had amounted to less than £180,000, that is to say less than 10% of benefit assessed, and that the way that he had operated the scheme, paying taxes, rates and VAT was utterly different to the normal situation in which this legislation is brought into play in relation to drugs dealers, fraudsters and similar criminal operations.

In R v Nelson, R v Pathak and R v Paulet (supra) this court expressed concern that orders staying confiscation proceeds were perhaps too readily being made in Crown Courts. The Lord Chief Justice said ([35] at page 798E):

“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.”

In our judgment, that observation entirely disposes of the argument advanced in this case. This case is not similar in any way to Shabir, where the court was concerned that had the charges been chosen differently, the criminality would have been fully reflected but the confiscation regime not engaged. In this case, from the moment that Mr Del Basso had exhausted his rights of appeal against the enforcement notice, it was his duty to obey the law: he chose, deliberately, not to do so. The local authority could have prosecuted immediately but provided him with another five months to comply and yet, still, he refused to do so. Even after Timelast Ltd (Mr Del Basso’s company), the Football Club and Mr Goodwin were prosecuted to conviction, again, Mr Del Basso and Mr Goodwin refused to comply; it was only after the second prosecution that confiscation proceedings were commenced. The economic or environmental harm is only one part of the picture: the other is that a requirement to observe the law is imposed on all and Mr Del Basso and Mr Goodwin have only themselves to blame for their persistent failure to do so. The confiscation aspect of these proceedings does not represent an abuse of process.

It is worth concluding this aspect of the case by further reference to Judge Baker’s final remarks which are to like effect and with which we entirely agree:

“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.”

Before parting with this case, we must express concern at the length of time that these proceedings took. That is not to criticise the parties but to recognise that, at least in part, it was a consequence of the complexity of the law. We hope that the trilogy of House of Lords decisions and the subsequent decisions of this court (particularly the judgment of the Lord Chief Justice in Nelson) will have served to clarify the position and, for the future, ensure that the parties and their legal representatives, work to reach agreement as to the principles and the basic figures, if not the outcome.

These appeals are dismissed.