King, R. v

A confiscation order under Proceeds of Crime Act 2002 must be limited to a proportionate amount under Article 1 of Protocol 1. Gross turnover may properly measure benefit, without deduction of criminal expenses. Full restoration cases, and truly analogous cases of oppression, remain exceptional.

A relevant, but non-determinative, consideration is whether lawful goods or services were supplied under a transaction tainted by associated illegality, or whether the business itself was conducted unlawfully. Where deliberate misrepresentations deprive consumers of the protections of a trade sale, the enterprise may be founded on illegality. In that event, confiscation of its gross takings can be proportionate, despite the ordinary lawfulness of the goods sold and the possibility that purchasers received satisfactory goods.

The appellant pleaded guilty at Wood Green Crown Court to falsely creating the impression that he was not acting as a trader, contrary to the Consumer Protection from Unfair Trading Regulations 2008. He had sold 58 used cars as purported private sales in order to avoid providing warranties.

Although the business turnover was £109,970, its net trading profit was about £11,140. The Crown Court made a confiscation order for the turnover figure under section 6 of the Proceeds of Crime Act 2002. The appellant appealed, contending that the order was disproportionate under Article 1 of Protocol 1 because purchasers had received full value and the order involved double counting. The central issue was whether this was an exceptional case in which benefit should be limited to profit.

1. Appeal dismissed. The confiscation order for £109,970 was severe but proportionate.

2. Section 6 of the Proceeds of Crime Act 2002 must be applied compatibly with Article 1 of Protocol 1. Following R v Waya [2012] UKSC 51, the court must refuse or reduce an order that would be disproportionate. That qualification does not introduce a general requirement to confiscate only net profit. A proportionate order may require payment of gross criminal receipts without allowing deduction of the costs of the crime.

3. Full restoration cases are exceptional. Where the offender has restored the proceeds to an identifiable loser, a further confiscation order may become an additional financial penalty. The residual jurisdiction to avoid an arithmetically excessive result must, however, be exercised sparingly and only in cases of true oppression. The associated authorities, including R v Morgan and R v Bygrave [2008] EWCA Crim 1323, R v Shabir [2008] EWCA Crim 1809, and R v Sale [2013] EWCA Crim 1306, did not assist the appellant.

4. A relevant factor is whether lawful goods or services were provided under a contract tainted by collateral illegality, or whether the whole undertaking was unlawful. The distinction is not conclusive, but a business founded on criminal conduct points strongly towards confiscation of gross takings. This case fell on the latter side of the line, consistently with R v Beazley [2013] EWCA Crim 567.

5. Each sale was deliberately misrepresented as private so as to avoid a warranty. The fact that motor trading is ordinarily lawful, that most purchasers appeared content, and that section 14(2) of the Sale of Goods Act 1979 might have protected purchasers did not alter the practical reality. The deception concealed their opportunity to invoke that protection. The business was therefore founded on illegality, and an order directed to its gross proceeds was not disproportionate.

• Court of Appeal (Criminal Division)—dismissed the appeal against the confiscation order: [2014] EWCA Crim 621.
• Crown Court at Wood Green—on 21 August 2012 made a confiscation order of £109,970 under section 6 of the Proceeds of Crime Act 2002, with a two-year default term and £8,000 prosecution costs.
• Crown Court at Wood Green—on 8 March 2011 imposed a community sentence with a 100-hour unpaid-work requirement following the guilty plea.