1. Christopher James McDowell and Another v The Queen

JurisdictionEngland & Wales
CourtCourt of Appeal (Criminal Division)
JudgeLord Justice Pitchford
Judgment Date19 February 2015
Neutral Citation[2015] EWCA Crim 173
Docket NumberCase Nos: 201305268 C3
Date19 February 2015

[2015] EWCA Crim 173

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM

Guildford Crown Court

His Honour Judge Critchlow, the Recorder of Guildford

Leicester Crown Court

His Honour Judge Head

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Pitchford

Mr Justice Knowles

and

THE RECORDER OF LIVERPOOL

Case Nos: 201305268 C3

201400474 B4

Between:
1. Christopher James McDowell
2. Harjit Sarana Singh
Appellants
and
The Queen
Respondent

Giles Bedloe or the First Appellant

Paul Prior for the Second Appellant

Kennedy Talbot for the Respondent in the case of the second appellant

Hearing dates: 11th December 2014

Lord Justice Pitchford

The issues

1

This is a judgment of the court to which each member of the court has contributed. Christopher James McDowell renews his application for leave to appeal against a confiscation order; Harjit Sarana Singh appeals against a confiscation order with the leave of the single judge. Their cases have been listed together because they raise common issues concerning (1) the application of the test "property obtained as a result of or in connection with criminal conduct" in section 76(4) of the Proceeds of Crime Act 2002 (" POCA"), (2) the lifting of the corporate veil and (3) the application of Article 1 First Protocol ECHR ("A1P1") in the assessment of 'benefit' for the purposes of section 6(4) POCA.

2

The cases have the following features in common:

(i) Each appellant openly carried on business through a company of which he was the sole shareholder and director;

(ii) McDowell argues that his criminal conduct comprised trading while unlicensed; Singh that his criminal conduct comprised trading while unregistered. Each claims that his 'benefit' was acquired not from criminal conduct but from lawful trading;

(iii) The Crown Court lifted the corporate veil and treated all the company receipts earned through trading while unlicensed/unregistered as the receipts of the appellant personally;

(iv) The benefit assessed under sections 6(4) and 76(4) POCA was the sum of the appellant's receipts from trading. The appellants argue that the assessment was disproportionate because the Crown Court failed to give credit for the cost of trading;

(v) The confiscation order was for the agreed sum of the appellant's available assets but that sum was substantially smaller than the certified assessment of benefit obtained by general or particular criminal conduct.

3

Each of the appellants appeals against the Crown Court's finding as to the sum of benefit obtained from his criminal conduct pursuant to section 6(4) and (5)(a) and section 7(1) POCA on the grounds that:

(1) He earned receipts from 'lawful' trading and not from criminal conduct (the criminal conduct point);

(2) Neither on the concealment nor on the evasion principle was it appropriate to lift the corporate veil so as to treat the receipts of the company as the receipts of the appellant personally (the lifting the veil point); and

(3) Further, and in any event, assessment of benefit as the gross receipts of trading, lawful but for the absence of a licence or registration, was a disproportionate means of achieving the legitimate aim of depriving the appellant of the proceeds of his criminal conduct (the A1P1 point).

4

The respondent to the appeal of Singh argues that:

(1) The trading was unlawful because it was prohibited; trading in breach of the prohibition was the criminal conduct. It was a criminal lifestyle offence to which the statutory assumptions applied. Accordingly, the receipts of the business were benefit obtained from criminal conduct;

(2) The company was the alter ego of the appellant. He committed his offence through the activity of his company. Whether, strictly, the veil is to be lifted, the court was entitled to treat the receipts of the company, for confiscation purposes, as the receipts of the appellant;

(3) A criminal is not entitled to credit for the expenses of his unlawful trade. There is no difference in principle between this criminal conduct and more serious criminal conduct; or such difference as there is does not entitle these appellants to different treatment. The benefit assessment was proportionate to the legitimate aim.

The facts

Christopher McDowell

5

The appellant is an experienced arms dealer. He was the sole director, shareholder and controller of a company called Wellfind Limited ("Wellfind"). On 28 January 2013 at Guildford Crown Court, following a trial before his Honour Judge Critchlow, the Recorder of Guildford, he was convicted upon two counts (counts 5 and 6) of being knowingly concerned in the supply etc. of controlled goods with intent to evade the prohibition thereon, contrary to Article 9(2) of the Trade in Goods (Control) Order 2003. On 31 January 2013 the appellant was sentenced to a suspended sentence order (two years imprisonment suspended for two years) and ordered to pay £10,000 towards the prosecution's costs. On 23 December 2013 in confiscation proceedings the applicant was found to have obtained benefit in the sum of £2,557,826.30. The available amount was £292,499.60 and a confiscation order was made in the latter sum, to be paid by 23 May 2014 with thirty months imprisonment in default.

6

Wellfind Limited was appointed agent in the Republic of Ghana on behalf of the China National Aero-Technology Import and Export Corporation ("CATIC"), a manufacturer of aircraft. On 15 June 2005 an agency contract was signed by which Wellfind was to be paid a fee upon sale of CATIC's aircraft to Ghana. It was Wellfind's responsibility under the contract to promote the sale of MA60, K-8 and Y-12 aircraft. Wellfind was given authority to agree a purchase price, subject to CATIC approval, and commission was payable in two tranches. A second agency agreement was signed between Wellfind and CATIC on 19 August 2006. The contract provided for the further promotion of K-8 aircraft to Ghana and again specified a commission payment schedule.

7

The Trade in Goods (Control) Order 2003 SI2765/2003 ("the 2003 Order") regulates supply etc. of military goods. Its effect is to prohibit the activities of international dealers in military equipment between one overseas country and another. Article 4(2) provides:

"(2) Subject to the provisions of this Order, no person shall

a) arrange or negotiate; or

b) agree to arrange or negotiate,

a contract for the acquisition or disposal of any controlled goods, where that person knows or has reason to believe that such a contract will or may result in the removal of those goods from one third country to another third country."

8

Article 4(3) of the Order states;

"(3) Subject to the provisions of this Order no person shall in return for a fee, commission or other consideration

a) do any act, or

b) agree to do any act

calculated to promote the arrangement or negotiation of a contract for the acquisition or disposal of controlled goods, where that person knows or has reason to believe that such a contract will or may result in the removal of those goods from one third country to another third country."

9

There is no dispute for present purposes that "controlled goods" included the aircraft, accessories and ammunition the subject of Wellfind's agency agreements.

10

Article 4(8) provides an exception to the prohibitions as follows:

"(8) Nothing in paragraph (1), ( 2) or (3) shall be taken to prohibit any activities authorised by a licence in writing granted by the Secretary of State under this order or under any other order made under the Act, provided that all conditions attaching to the licence are complied with.

Article 5(1) provides that the Secretary of State may grant a licence authorising any act otherwise prohibited under the Order.

11

The offence created by Article 9(2) is as follows:

"(2) Any person knowingly concerned in the supply, delivery, transfer, acquisition or disposal of any restricted or controlled goods with intent to evade any prohibition or restriction in Article 3( 1) or 4 shall be guilty of an offence".

By Article 9(4) a person convicted on indictment is liable to an unlimited fine or to a term of imprisonment not exceeding 10 years or both.

12

The jury by their verdicts found that the appellant agreed to negotiate and did negotiate the sale of aircraft, accessories and ammunition, being controlled goods, from China to Ghana contrary to Article 9(2). On 30 January 2007 the appellant provided CATIC with his bank details. On 7 February 2007 a payment of $1,214,392.40 was transferred to Wellfind's Barclays bank account in payment of commission due for the sale of a K-8 jet. On 19 February 2007 the appellant, for the first time with regard to the present transactions, submitted a controlled goods licence application to the Secretary of State. On 7 March 2007 a second payment of $1,124,437.42 was transferred to Wellfind's Barclays account. On 3 April 2007 the Department of Trade and Industry granted a licence permitting Wellfind to trade in the goods the subject of the application, valid between 3 April 2007 and 3 April 2009; thus, the licence was of current and not retrospective effect. On 4 February 2008 a third payment for $1,298,275.44 was deposited into Wellfind's account. Finally, on 22 January 2009 the fourth and final payment due to Wellfind of $1,087,177.90 was transferred to its account. It follows that commission earned under the agreements (and therefore from the prohibited activity) totalled $4.7m, approximately half of which was received before a licence was granted and half of which was received after the licence was granted. The judge certified the benefit obtained in...

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11 cases
  • R (London Borough of Haringey) v Boruch Roth
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    ...sought to draw some support from the decision of another constitution of this court in the conjoined cases of McDowell and Singh [2015] EWCA Crim 173, [2015] 2 Cr. App. R (S) 14. But those were decisions on statutory regimes wholly different from the present context. Moreover, in Palmer so......
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    • Court of Appeal (Criminal Division)
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    ...confiscation order is being referred on the following grounds: i. Following a fresh interpretation of the law in McDowell and Singh [2015] EWCA Crim 173 it is now recognised that s.216 of the [Insolvency Act] 1986 (use of a prohibited company name) is a regulatory offence from which Mrs Neu......
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    ...Act 1995, on the basis that, as it was put in the application: “Following a fresh interpretation of the law in McDowell and Singh [2015] EWCA Crim 173 , it is now recognised that section 216 of IA 1986 (use of a prohibited company name) is a regulatory offence from which Messrs Weintroub o......
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