Berr, R (on the prosecution of) v Lowe

A confiscation order remains mandatory under Proceeds of Crime Act 2002 unless section 6(6) applies. That exception requires victim proceedings, or intended proceedings, against the defendant. Recovery of property from a corporate transferee under insolvency legislation does not satisfy that condition.

The jurisdiction to stay confiscation proceedings for abuse of process is exceptionally narrow. It is confined to true oppression, ordinarily where an offender has made, or can immediately make, full restitution to identifiable victims and the statutory conditions identified in the authorities are met. Restitution outside that narrow class, or an order exceeding the offender’s net profit, does not itself make confiscation oppressive.

The appellant, a director of a company in compulsory liquidation, caused its valuable land to be transferred without consideration to another company in which he was a director and shareholder. He pleaded guilty to an offence under section 206 of the Insolvency Act 1986. The liquidator recovered the land from the transferee company and, after the liquidation, there was a small surplus.

The Crown Court at Birmingham made a confiscation order of £41,920 under the Proceeds of Crime Act 2002. The appellant contended that section 6(6) applied and that the order was an abuse of process because the land had been restored and creditors compensated. The appeal concerned whether those circumstances displaced or restrained the statutory confiscation regime.

1. Appeal dismissed. The Court extended by three months from 17 February 2009 the time for compliance with the Crown Court confiscation order.

2. Section 6(5) of the Proceeds of Crime Act 2002 imposed a duty to make a confiscation order. Section 6(6) could convert that duty into a power only if a victim had commenced, or intended to commence, proceedings against the defendant for loss connected with the conduct. That condition was not met.

3. Under section 127 of the Insolvency Act 1986, the post-commencement transfer was void unless the court ordered otherwise. The land was transferred to, and recoverable from, Penwood, not from the appellant personally. Even a claim under section 238 would have been against Penwood. Accordingly, the recovery process did not involve victim proceedings against the appellant within section 6(6).

4. The abuse jurisdiction identified in Morgan and Byegrave [2008] EWCA Crim 1323 and R v Shabir [2008] EWCA Crim 1809 must be exercised sparingly and only for true oppression. It does not permit a judge simply to disagree with the prosecution’s decision to seek confiscation. Nor is it enough that the order exceeds the offender’s net profit.

5. The exceptional restitution circumstances were absent. The appellant had not offered to restore the land; its recovery followed the statutory consequences of the void transfer and an agreement made by his co-director. The fraud was directed at stripping an asset from a company to the detriment of all creditors, rather than causing loss confined to identifiable victims. There was therefore no oppression or abuse of process.

6. In a postscript, the Court endorsed the guidance in R v May [2008] UKHL 28: confiscation courts should focus closely on statutory language. They should identify and record the material agreed and found facts, and advocates should avoid unnecessary authorities.

• Court of Appeal (Criminal Division). In [2009] EWCA Crim 194, dismissed the appeal from the confiscation order, while extending the time for compliance by three months.
• Crown Court at Birmingham. HH Judge Ross made a confiscation order of £41,920, with 14 months’ imprisonment in default, following the appellant’s conviction and sentence.