Neuberg, R. v

Whether an offender has benefited for confiscation purposes depends on the proper construction of the statute creating the offence and on identifying the criminal conduct proved or admitted. Labelling an offence as regulatory, or drawing analogies with other licensing regimes, does not answer that question.

Where carrying on a business under a prohibited name is itself the criminal conduct, and that conduct enabled the business to trade, its receipts may constitute the offender’s benefit. For a sole trader, benefit may properly be assessed by turnover rather than profit. A confiscation order may nevertheless require proportionality review, but that review requires reliable evidence capable of showing disproportionality.

The appellant pleaded guilty to carrying on business under the prohibited style “Neuberg Metal Spinners”, contrary to section 216 of the Insolvency Act 1986. Birmingham Crown Court found that use of the name enabled the business to continue trading and made a confiscation order of £100,000, assessed against turnover of £288,948.

A first appeal against the order was dismissed by the Court of Appeal in [2007] EWCA Crim 1994. Following a reference by the Criminal Cases Review Commission, the appellant contended that later authorities on licensing offences showed that she had obtained no benefit, or that benefit should be confined to profit. She also relied on the proportionality principle recognised in R v Waya [2012] UKSC 51.

The central issues were whether the statutory offence produced a benefit, how that benefit should be valued, and whether the order was disproportionate.

1. Appeal dismissed. The earlier analysis of the offence remained correct. The question was not whether the offence could broadly be described as regulatory. The court had to construe the statute creating it and identify the conduct made criminal.

2. Section 216 of the Insolvency Act 1986 made it criminal to carry on the business under the prohibited name. This was not merely a failure to obtain permission to undertake an otherwise lawful activity. On the judge’s unchallenged findings, use of the name preserved the appearance of business as usual, enabled the appellant to trade successfully, and gave her a significant benefit. The licensing decisions relied on by the appellant turned on different statutory schemes and did not alter that conclusion.

3. Under section 71(4) of the Criminal Justice Act 1988, the benefit obtained by the appellant as sole trader through the offending conduct was the turnover: the receipts paid into the business account. The court therefore rejected the submission that benefit had to be limited to net profit.

4. R v Waya [2012] UKSC 51 had changed the law by permitting a proportionality assessment after statutory benefit had been determined. That principle could be considered on the reference. However, the unaudited and draft accounts, unsupported by a proper analysis or further evidence, could not establish that the £100,000 order was disproportionate. No ground for allowing the appeal arose.

5. The court additionally observed that, where a change of law is relied on in a sentence reference, the Criminal Cases Review Commission must itself address whether substantial injustice would result. Unlike a conviction reference, there is no corresponding section 16C power under the Criminal Appeal Act 1968 for the Court of Appeal to refuse an appeal on that basis. A failure by the Commission to apply the established approach could be susceptible to judicial review.

• Court of Appeal (Criminal Division) — on a reference from the Criminal Cases Review Commission, dismissed the second appeal and left the confiscation order undisturbed: [2016] EWCA Crim 1927.
• Court of Appeal (Criminal Division) — dismissed the first appeal against the confiscation order: [2007] EWCA Crim 1994.
• Birmingham Crown Court — made a confiscation order of £100,000 on 12 April 2006 after the appellant’s guilty plea.