R v Blatch and Seagar

JurisdictionEngland & Wales
JudgeLord Justice Aikens
Judgment Date26 June 2009
Neutral Citation[2009] EWCA Crim 1303
Docket NumberCase Nos: 2008/03022/B3 and 2008/00051/DI
CourtCourt of Appeal (Criminal Division)
Date26 June 2009
Between
R
Respondent
and
Mornington Stafford Seager
Appellant
Between
R
Respondent
and
Endon Barry Blatch
Appellant

[2009] EWCA Crim 1303

Before:

Lord Justice Aikens

Mr Justice Hedley and

Mr Justice Hickinbottom

Case Nos: 2008/03022/B3 and 2008/00051/DI

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM WOOD GREEN CROWN COURT

HHJ Browne QC and

T20070115

on Appeal From Portsmouth Crown Court

HHJ Cowling

T20070011

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr Paul R Hynes for the Appellant

Andrew Mitchell QC and Mr Alex Munro for the Respondent

Miss Clare Montgomery QC and Mrs Clare Sibson for the Appellant

Mr Andrew Mitchell QC and Mr Jonathan Hall for the Respondent

Hearing dates: 1 st May 2009

Lord Justice Aikens

Lord Justice Aikens:

1

There are two cases before the court which both concern confiscation orders. The same issue arises in each case. It is, broadly, how should the court determine the value of the “benefit” obtained by an offender who has been guilty of managing a company as a director in contravention of a director's disqualification order or an undertaking not to act as a director? In each of these cases the Crown Court judge concluded that the benefit obtained as a result of the criminal conduct by the person who had contravened the disqualification order or undertaking was equal to the total turnover of the relevant companies for the period of his contravention. In both cases the Crown Court judges followed the decisions given by this court in Jennings v CPS [2005] 4 All ER 391 and R v Neuberg [2008] 1 Cr App R (S) 481. The resulting confiscation orders were therefore made on that basis.

2

However, since then the House of Lords has delivered judgments in three cases on the question of how “benefit” is to be assessed and what is meant by an offender “obtaining” a “benefit” in the context of confiscation orders under the proceeds of crime legislation. These are: R v May [2008] 1 AC 1028; Jennings v CPS [2008] 1 AC 1046 and R v Green [2008] 1 AC 1053. An important part of the judgment of Laws LJ in the Court of Appeal in Jennings was disapproved, although in the result the appeal was dismissed. It is, at the least, questionable whether all or part of R v Neuberg now represents good law.

3

In the case of Blatch, the applicant participated in the running of six associated companies despite a director's disqualification order which forbade him from doing so. He seeks leave to appeal against the confiscation order for £941,272 which was made by HHJ Cowling on 30 November 2007 pursuant to section 71 of the Criminal Justice Act 1988 (“ CJA 1988”). The judge found that the applicant had benefited from his criminal conduct in that sum. The judge said that the correct measure of the benefit obtained by the applicant was “…the gross turnover of those companies during the relevant period”: ruling at 10F/G. The issue is whether that approach can now be regarded as sound in law. We grant leave on the sole issue of how the appellant's “benefit” is to be assessed under section 71 of the CJA 1988, when the offender is a disqualified director of a company (or companies) in which he has actively been concerned during the period of his disqualification.

4

In the case of Seager, HHJ Browne QC ruled, on 25 April 2008, that Mr Seager had benefited from his particular criminal conduct in the sum of £1.5 million. The judge found that Mr Seager had been actively participating in running a company despite the fact that he had given an undertaking to the court not to do so without the further leave of the court. The judge determined the benefit obtained by Mr Seager, for the purposes of section 6(4) of POCA 2002, “…from the gross turnover and profits of this company [in the relevant period]”: ruling page 9 C-D. It was common ground before the judge that the turnover of the company during the relevant period was £1.5 million. The judge held that Mr Seager had fewer means than that sum, so he assessed the realisable amount and thus the amount of the confiscation order, under section 76(4) of the Proceeds of Crime Act 2002, (POCA 2002”), at £356,249.20.

5

Mr Seager sought leave to appeal that order. Hedley J granted leave, but he said that only one issue that was arguable. That was whether the relevant provisions concerning confiscation set out in POCA 2002 applied to the offence of the type to which the appellant had pleaded guilty so as to give the Crown Court jurisdiction to make any confiscation order at all. The single judge commented: “There is no argument over the “benefit” figure or over assets”. However, that is not now the argument pursued by Mr Hynes, who appeared for Mr Seager before us. We granted leave to amend the Grounds of Appeal. The sole issue in his appeal is whether, for the purposes of section 6(4) of the POCA 2002, the turnover of the company can properly be said to be the “benefit” obtained by the offender, when he is a person who has given an undertaking not to act as a director, but he has actively been concerned in the company during the period of that undertaking.

R v Endon Blatch: The Facts

6

Until February 2001, the appellant Endon Blatch, whom we will refer to as Mr Blatch, owned all of the shares in a company called EBB Investments Ltd (“EBB”), which in turn directly or indirectly owned all of the shares in a number of subsidiary companies including South Shore Freehold Ltd (“South Shore”), Maritime & Leisure Investments Ltd (“Maritime & Leisure”), Northern Counties Leisure Limited (“Northern Counties”), Leisure Experience Limited (“LEL”), Leisure Harbours Limited (“LHL”), and Bembridge Harbour Improvement Co Ltd (“Bembridge Harbour”). We shall call these companies together “the companies”. It was common ground before the judge that all the companies conducted entirely legitimate businesses.

7

Bembridge Harbour was by far the most important of these companies. The company had been incorporated by the Brading Harbour Improvement Railway and Works Act 1878, a private Act of Parliament. The company's name had been changed and its powers amended by the Brading Harbour and Railway Act 1896 and then by the Pier and Harbour Order (Bembridge Harbour) Confirmation Act 1963. Section 31 of this last Act provided that if in any financial year the company received income exceeding the monies required to manage and maintain the harbour, the excess must be spent on dredging the harbour or renewing, constructing or improving works there.

8

Prior to 13 February 2001, Mr Blatch was a director of EBB and, effectively, controlled and ran that company and the subsidiaries. On 13 February 2001, at Scarborough County Court, Mr Blatch was disqualified from acting as a company director for 6 years: (“the Disqualification Order”). However, despite that order, he continued to participate in the direction and management of the companies, in particular through his shareholding of EBB and its control of the various subsidiary companies.

9

On the 11 June 2007, at Portsmouth Crown Court, Mr Blatch pleaded guilty to 6 counts of acting in contravention of the Disqualification Order in relation to 6 companies within the group. The Particulars of Offence stated that Mr Blatch, being a disqualified director, took part in or was concerned in the management of the relevant company during various periods between 6 March 2001 and 20 May 2005. He was sentenced to 8 months imprisonment suspended for 18 months in respect of 3 counts relating to the companies which had traded, ie. South Shore, Maritime & Leisure and Bembridge Harbour. In addition, he was made subject to a Prohibitive Action Requirement that he refrain from participating in the management of any company for a period of 18 months, and an order disqualifying him from acting as a director for 5 years. No separate penalty was imposed in respect of the counts relating to the 3 other companies, which had not traded.

10

In the confiscation hearing it was common ground, in the light of the case law at the time, that Mr Blatch's benefit was not limited to monies that he had personally obtained in connection with his offences, but would include any monies that Mr Blatch had caused the companies to obtain in the sense of having contributed materially to them doing so. Therefore it was common ground that the benefit was equal to the turnover of the companies that he had caused the companies to obtain. The only dispute was over how much of the turnover of the three relevant trading companies Mr Blatch had caused the companies to obtain. The judge found that the entire turnover of Maritime & Leisure was also included in the turnover of Bembridge Harbour, so to include any of the former would be double counting. In relation to Bembridge Harbour, the judge found, contrary to arguments on behalf of Mr Blatch, that he had played a considerable part in its management and had consequently caused that company to obtain its entire turnover of £920,235. Mr Blatch accepted that he had caused South Shore to obtain its entire turnover of £21,037. Hence the benefits figure of £941,272, i.e. the aggregate turnover of South Shore and Bembridge Harbour. As there was no dispute that Mr Blatch had assets to that value, a confiscation order was made in the same amount.

11

The judge summarised his findings as follows (ruling 10F):

“On the facts I have found here it is clear…that a benefit has been obtained as a result of or in connection with the commission of the crime in relation to both [Bembridge Harbour] and [South Shore]. And that the defendant's criminal acts have been a cause, in the sense of having materially contributed to the obtaining the property. The correct measure of benefit in my judgment is the gross turnover of those companies during the relevant period”.

R v Mornington Stafford Seager: the facts .

12

This appellant, whom we shall call Mr...

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