Frost, R. v

For confiscation under the Proceeds of Crime Act 2002, a court must determine the facts, apply the statutory language closely, and use ordinary common-law principles to decide whether the particular offender obtained property. A defendant may make property available through criminal conduct without obtaining it.

An employee who dishonestly procures payments into an employer’s bank account does not thereby obtain the money if he acquires no interest in the account and lacks absolute control over it. Control sufficient to facilitate a fraud does not itself establish an interest in property. Benefit arises when the employee obtains money by a further dishonest act, such as extracting it through dishonest cheques.

The appellant pleaded guilty to nine thefts from a school where he was employed as business manager. He also asked for unspecified VAT-fraud offences to be taken into consideration. His false invoices caused excessive VAT repayments to be credited to the school’s bank account. He later obtained money through cheques signed by himself and a co-signatory whom he deceived.

At Chelmsford Crown Court, on 14 July 2008, a confiscation order treated both the theft proceeds and the excessive VAT repayments as benefit. The appellant appealed against the confiscation aspect of sentence. The central issue was whether he had obtained property when the VAT repayments entered the school account.

1. The appeal was allowed to the stated extent. The confiscation order was quashed and replaced by an order for £21,555, with a default period of 15 months.

2. Under section 6(4) of the Proceeds of Crime Act 2002, read with sections 76 and 84, benefit depends on property obtained by the offender as a result of or in connection with criminal conduct. The court must first establish the facts, then focus on the statutory language and apply ordinary common-law principles. Criminal conduct may contribute materially to property being obtained without the defendant obtaining it.

3. The appellant had no interest in the school bank account. His employment enabled him to arrange for funds to be credited, including funds obtained by VAT fraud, but it gave him neither an interest in the account nor absolute control over withdrawals. The credits created no thing in action in his favour against the bank.

4. The judge below had treated the appellant’s power of disposition or control over the VAT monies as sufficient. That confused criminal liability with resulting benefit. The observation in R v May [2008] UKHL 28 that ownership will ordinarily connote control did not establish the converse proposition.

5. The appellant obtained property only when he committed the further dishonest acts by which he deceived a co-signatory and extracted funds through cheques. He did not obtain the remaining balance generated by the VAT fraud merely because he might later have attempted to steal it.

• Court of Appeal (Criminal Division): Allowed the appeal to the extent of quashing the confiscation order and substituting an order for £21,555.
• Crown Court at Chelmsford: On 14 July 2008, made a confiscation order following the appellant’s committal for sentence for theft offences and offences taken into consideration.