James & Anor v R

For confiscation under the Proceeds of Crime Act 2002, a defendant benefits from evaded excise duty only where that defendant was personally liable for it and actually obtained the resulting pecuniary advantage. Personal liability alone does not establish benefit.

Property or services acquired through ordinary lawful transactions at market value do not become confiscable benefit merely because they were intended to facilitate criminal conduct. The statutory connection must be to the acquisition itself, not solely to its intended criminal use. A confiscation judge who reaches a materially different factual conclusion from the trial judge on the same evidence must give adequate reasons.

James & Anor v R concerned appeals against confiscation orders made after the appellants’ convictions for conspiracy to evade duty on hand-rolling tobacco. The orders included the evaded excise duty in each appellant’s benefit figure and, for Blackburn, expenditure on equipment, rent and casual labour.

James had allowed his garage to be used for packaging and distribution. Blackburn was the local manager of the processing unit, but had no proven proprietary interest in the tobacco. The central questions were whether either appellant had obtained a benefit from the evaded duty and whether Blackburn’s expenditure was property or a pecuniary advantage obtained in connection with criminal conduct.

1. Appeals allowed. The confiscation orders against both appellants were quashed.

2. Only a person personally liable for excise duty can obtain a pecuniary advantage by evading it. However, personal liability is not itself enough. The confiscation regime deprives a defendant of what has actually been gained; it does not impose a fine for criminal participation.

3. James’s order could not stand. The confiscation judge found that he had attended planning meetings and funded the operation, although the evidence did not support the former finding and the judge gave no reasons for rejecting James’s evidence about the cash withdrawals. Those conclusions also materially departed from the trial judge’s assessment of James as responsible for distribution rather than processing. A confiscation judge may reach a different conclusion, but must explain it adequately.

4. Blackburn, as local manager, could fall within the statutory concepts of holding the tobacco or causing it to reach the excise-duty point. Yet he had no interest in the tobacco or its proceeds. Applying R v Sivaraman [2008] EWCA 1736, his benefit was not the evaded duty merely because he had an important managerial role.

5. Blackburn’s purchases of equipment and materials, payments of rent, and wages for casual labour were not benefit under sections 76(4) or 76(5) of the Proceeds of Crime Act 2002. They were lawful, financially neutral transactions at ordinary value. Their intended use in the venture did not mean that he obtained property or a pecuniary advantage as a result of, or in connection with, criminal conduct. R v Waller [2009] 1 Cr App R (S) No 76 differed because the tobacco bought there was itself the object of the smuggling operation.

• Court of Appeal (Criminal Division): Allowed the appeals and quashed the confiscation orders: [2011] EWCA Crim 2991.

• Crown Court at Ipswich: HHJ Goodin made confiscation orders on 8 December 2010 following convictions for conspiracy to contravene section 170 of the Customs and Excise Management Act 1970.