McDowell & Anor v The Queen

For confiscation under Proceeds of Crime Act 2002, the court must first identify the precise conduct criminalised by the statute creating the offence. A critical distinction arises between an offence prohibiting the trading activity itself and an offence consisting of a failure to obtain a licence or registration for an activity otherwise lawful.

Receipts from prohibited trading are benefit obtained as a result of or in connection with criminal conduct. Conversely, receipts from trading lawful in itself are not benefit merely because the trader failed to register. Proportionality under A1P1 applies when benefit is assessed. Where an underlying transaction is lawful, value given may require consideration; no deduction is ordinarily due for the expenses of genuinely criminal transactions.

Two sole directors and shareholders appealed confiscation orders made after offences committed through their companies.

McDowell was convicted of being knowingly concerned in dealings in controlled military goods with intent to evade the prohibition in the Trade in Goods (Control) Order 2003. The Crown Court treated the company’s commission receipts as his benefit. His renewed application challenged that conclusion and its proportionality.

Singh pleaded guilty to carrying on a scrap-metal business while unregistered under the Scrap Metal Dealers Act 1964. The Crown Court found a criminal lifestyle, treated the company’s receipts as his benefit and made a confiscation order.

The common issue was whether the receipts were property obtained from criminal conduct, whether company receipts could be attributed to each appellant, and whether the assessed benefit was proportionate.

1. McDowell’s renewed application for leave was refused; Singh’s appeal was allowed and his confiscation order quashed.
2. Under section 76(4) of the Proceeds of Crime Act 2002, the initial task is to identify the conduct made criminal by the statute. A regulatory offence is not a separate category attracting a uniform confiscation rule. The decisive question is whether the statute prohibits the activity itself or criminalises a failure to obtain authority for activity otherwise lawful.
3. McDowell’s conduct was prohibited trading in controlled goods, undertaken with intent to evade the prohibition. His commission was consideration for that activity and therefore benefit from criminal conduct. The later licence was not retrospective. It did not alter the character of commission earned from the prohibited activity.
4. Singh’s offence consisted of repeated failures to register before carrying on a scrap-metal business. Trading in scrap metal was lawful in itself. Its receipts were obtained from that lawful activity, not from the failure to register. Since he had not benefited from the conduct constituting the offence, the criminal-lifestyle provisions did not apply.
5. It was unnecessary to pierce either company’s corporate veil. In confiscation proceedings the court may examine the reality of ownership and control to identify the defendant’s benefit. McDowell, as sole controller and beneficial owner, could be treated as having obtained the company’s receipts, subject to proportionality.
6. A1P1 requires proportionality at the benefit-assessment stage, including because that figure caps a future variation under section 22. Where the underlying transactions are lawful, value provided may be treated as consideration for the receipts. McDowell’s transactions were criminal, so no allowance for trading expenses was required; in any event he had not proved the alleged expenses. Had Singh benefited, the court would have required adequate evidence before allowing credit for value given.

• Court of Appeal (Criminal Division): Singh’s appeal against his confiscation order was allowed and the order quashed. McDowell’s renewed application for leave to appeal against his confiscation order was refused.
• Guildford Crown Court: McDowell was convicted of offences under the Trade in Goods (Control) Order 2003. A benefit of £2,557,826.30 was certified and a confiscation order for £292,499.60 was made.
• Leicester Crown Court: Following Singh’s guilty plea to trading as an unregistered scrap-metal dealer, the court found a criminal lifestyle, assessed benefit at £965,838.84 and made a confiscation order for £176,218.11.