Seager, R v

For confiscation following breach of a director’s disqualification order or undertaking, the ordinary statutory inquiry applies. The court must identify property or a pecuniary advantage obtained by the offender as a result of or in connection with the offence; it must not treat the offender’s contribution to a company’s receipts as personal obtaining.

Company turnover is not necessarily the offender’s benefit, although it may be relevant evidence. A company’s separate personality remains effective unless there is a proper basis to pierce the corporate veil, such as use of the company to conceal crime or its proceeds, or a sham structure. Control of company property alone does not establish ownership.

Two conjoined appeals concerned confiscation orders imposed after contraventions of director-disqualification restrictions.

Mr Blatch had continued to manage legitimate group companies despite a disqualification order. The Crown Court treated the turnover of two trading companies as his benefit and made an order for £941,272. Mr Seager had continued to participate in managing Tabline Ltd despite a disqualification undertaking. The Crown Court treated its turnover of £1.5 million as his benefit and made an order for £356,249.20, being the realisable amount.

Both judges had followed earlier Court of Appeal authority. The central issue was whether company turnover could properly be treated as benefit obtained by a disqualified or prohibited director under the confiscation legislation.

1. Appeals allowed. The confiscation orders were founded on an erroneous equation of company turnover with benefit obtained by each appellant.

2. The governing inquiry under section 71(4) of the Criminal Justice Act 1988 and sections 6(4) and 76(4) of the Proceeds of Crime Act 2002 is whether the particular offender obtained property as a result of or in connection with the criminal conduct. The three questions are whether the offender benefited, the value of that benefit, and the recoverable amount. The legislation deprives an offender of the product of crime, rather than imposing a further fine.

3. The benefit is the total value of property or pecuniary advantage obtained, rather than net profit. However, property obtained by a company is not thereby obtained by a person who managed it. The offender’s acts may materially contribute to the company obtaining property without the offender obtaining it personally. The court disapproved the reasoning in R v Neuberg [2008] 1 Cr App R (S) 481 which necessarily equated business turnover with the offender’s benefit.

4. There was no basis to pierce the corporate veil. Both companies were legitimate entities conducting legitimate businesses. Neither appellant had used a company as a façade to conceal another crime or its proceeds, and control or disposition of company assets did not establish personal ownership. The fact that an offender’s unlawful conduct was acting as a director did not itself remove the company’s separate legal personality.

5. The court could substitute a lawful figure only from facts found below or material properly available on appeal. Mr Blatch accepted personal receipts of £221,109.81 for his services during the offending period. A confiscation order in that amount was substituted, payable within two months, with three years’ imprisonment in default. No material enabled the court to assess any personal benefit obtained by Mr Seager, so his order was simply quashed.

• Court of Appeal (Criminal Division): appeals allowed; the turnover-based confiscation orders were quashed in [2009] EWCA Crim 1303.
• Wood Green Crown Court: HHJ Browne QC had assessed Mr Seager’s benefit by reference to Tabline Ltd’s turnover and made a confiscation order for the realisable amount.
• Portsmouth Crown Court: HHJ Cowling had assessed Mr Blatch’s benefit by reference to the turnover of the relevant companies and made a confiscation order for £941,272.