Back to Blog

Jeremy Summers offers further clarity on the extent of confiscation

A recent judgment from the Court of Appeal (R v Peter John Sale [2013] EWCA Crim 1306) provided useful precedent for assessing the proportionality of confiscation orders under POCA 2002 and at the same time clarified the position on the so called “piercing of the corporate veil” in confiscation proceedings.

The appellant had previously pleaded guilty at Woolwich Crown Court to corruption, admitting that in his capacity as director of Sale Service & Maintenance Limited, he had entered into a corrupt business relationship with the corporate offices manager at Network Rail. Over the course of this relationship, the appellant’s company (of which he was the sole shareholder) was awarded contracts for services which amounted to a total of £1.9 million. This amount was subsequently relied on by the trial judge in assessing the amount to be reclaimed under a POCA confiscation order.

The trial judge had ruled that the assessment of the benefit received by the defendant required the corporate veil to be lifted, and this was a view shared by the appeal judges. In their ruling, their Lordships considered the principles outlined in Petrodel Resources Ltd v Prest [2013] and concluded that this case fell within the concealment principle – namely that the actions of the appellant were almost completely inseparable from those of the company itself.

When considering the amount of the confiscation order, their Lordships acknowledged that £1.9 million was entirely within the realms of possibility under the POCA powers. However, it was considered that this did not represent a proportionate order. The trial judge had been wrong to use the total amount of the invoices paid by Network Rail, especially since the contracts for services had been fully completed to a satisfactory standard. Instead, the order should have looked at the profit figure of £197,683.12, which had been previously agreed by all parties. Their Lordships made it clear that assessments in the future should be calculated in a similar way, also taking into account pecuniary advantages gained by the market share which had not been calculable in this case.

This case gives further comfort that the Courts are seeking to interpret the law with regards to confiscation in a way that is proportionate as opposed to draconian and so follows the reasoning applied in Waya [2012] UKSC 41.

Read more about Restraint & Confiscation and Confiscation Proceedings.

For further information or advice please contact Jeremy Summers or Shula de Jersey in London or Craig McAdam in Manchester.

Business Crime

Comments