R v Harvey
| Jurisdiction | England & Wales |
| Judge | Lord Neuberger,Lord Hughes,Lord Toulson,Lord Mance,Lord Reed |
| Judgment Date | 16 December 2015 |
| Neutral Citation | [2015] UKSC 73 |
| Date | 16 December 2015 |
| Court | Supreme Court |
[2015] UKSC 73
Lord Neuberger, President
Lord Mance
Lord Reed
Lord Hughes
Lord Toulson
Appellant
William Boyce QC
Joanna Martin (Instructed by Smith Leaning)
Respondent
Andrew Mitchell QC
Martin Evans (Instructed by Appeals and Reviews Unit CPS)
Lord Neuberger AND (with whom Lord Mance agrees)
This appeal raises a short point in relation to the Proceeds of Crime Act 2002 (" POCA"), namely whether, in assessing the amount of the benefit obtained by a company for the purpose of a confiscation order, any Value Added Tax accounted for and/or paid for to Her Majesty's Revenue and Customs should be subtracted from the turnover figure prior to any final calculation of the benefit. The appellant's arguments involve consideration of the VAT collection system, the interpretation of POCA, and the effect of article 1 of the First Protocol to the European Convention on Human Rights ("A1P1").
In 1972, the appellant, Jack Harvey, established a company, JFL Harvey Ltd ("the Company"), whose business was the hiring out of items of machinery. The Company traded from premises in Cornwall, and at all times the appellant owned 98.9% of the shares, the balance being owned by his wife. The Company was registered for VAT, and its accountants ensured that the requirements of the VAT legislation were duly complied with by the Company.
Following an arson attack orchestrated by the appellant on premises owned by a competitor of the Company, the police raided the Company's premises in May 2009, and discovered that a significant proportion of the items of machinery present had been stolen. The appellant was in due course convicted at the Truro Crown Court of nine counts of handling stolen goods and sentenced to 15 months imprisonment. (He was also convicted on a separate indictment of five counts of arson, for which he was sentenced to a consecutive terms of 12 years imprisonment. On appeal, the total sentence was reduced to nine years and six months.)
Following his conviction for handling stolen goods, there was a five day hearing before His Honour Judge Elwen, starting on 19 March 2012, pursuant to section 6 of POCA. It was conceded on his behalf that the appellant had a "criminal lifestyle" as defined by section 75(3)(a) of POCA. Accordingly, the judge had to decide to what extent, if any, he had benefited over the relevant period from his "general criminal conduct", as defined by subsections (1) and (2) of section 76 of POCA. As the appellant had been charged on 11 November 2009, the relevant period for the purpose of assessing the extent of his benefit began on 11 November 2003.
It was common ground that by no means all the items of machinery hired out by the Company were stolen, and the Crown accepted that the Company would have been viable if it had limited itself to legitimate activities. In a judgment given on 16 April 2012, the judge assessed the benefit obtained by the appellant at £2,275,454.40, comprising £1,960,754.40 from general criminal conduct and a further £314,700 from particular criminal conduct. In very summary terms, the sum of £1,960,754.40 was assessed by means of the following three steps: (i) the Company's aggregate turnover for the relevant period was £5,159,880 (inclusive of VAT); (ii) the proportion of stolen items to the total stock over that period was 38%; (iii) the benefit from general criminal conduct was therefore 38% of £5,159,880, namely £1,960,754.40.
The appellant's "available assets" were agreed at £3,000,000; accordingly, a confiscation order was made in the sum of £2,275,454.40. The appellant was given six months (later extended to 12 months) to pay, and was ordered to serve ten years (reduced to eight years by the Court of Appeal) in default of payment.
The appellant appealed to the Court of Appeal on a number of points. In a judgment given on 3 July 2013 (Jackson LJ, Wyn Williams J and HH Judge Russell QC) his appeal was dismissed (save in relation to the default sentence) — [2013] EWCA Crim 1104; [2014] 1 WLR 124.
The appellant's appeal to this court concerns only one of the issues determined by the courts below, namely whether the judge was right to include the VAT in the figure of £5,159,880 in step (i) of his assessment as set out in para 5 above. The Crown's case, which was accepted by the judge and the Court of Appeal, was that it has been authoritatively established that a benefit is "obtained" for the purpose of POCA if it has been received by a defendant, even if he has subsequently had to account to a third party for some, or even all, of it. The appellant's case is that, given that the Company accounted for the VAT to HMRC, it would involve an unacceptable degree of double counting if the VAT is included in the sum which is the subject of the confiscation order.
The provisions of POCA which are relevant for present purposes are sections 6, 76, 79, 80 and 84. The effect of those sections has been considered in a number of cases in the House of Lords and this court, as well as in a large number of cases in the Court of Appeal. The sections are pretty fully set out in the judgment of Lord Walker of Gestingthorpe and Hughes LJ in R v Waya [2012] UKSC 51; [2013] 1 AC 294, paras 9 and 15, and they are also described in R v Ahmad [2014] UKSC 36; [2015] 1 AC 299, paras 28–33. Accordingly, it is unnecessary to set them out or to describe them in this judgment.
As Lord Bingham of Cornhill pointed out in R v May [2008] UKHL 28; [2008] AC 1028, para 8, a court considering an application for a confiscation order must address and answer three questions. The first question is whether a defendant has benefited from the relevant criminal conduct; the second question concerns the value, or quantification, of that benefit; and the third question is what sum is recoverable from the defendant (and see Waya, para 7, which has a slightly fuller exegesis). When considering the first question, section 76(4) of POCA provides that "a] person benefits from conduct if he obtains property as a result of or in connection with the conduct", and "property" is defined as including "money" by section 84(1). Section 84(2) contains some "rules", which include in para (b) that "property is obtained by a person if he obtains an interest in it".
The proper application of these provisions requires, however, a more purposive approach than the mechanical application of the law of property. In Ahmad, paras 35–36, it was acknowledged that POCA was "poorly drafted", but the court went on to say that this was explicable in part by the fact that "there will be obvious difficulties in applying established legal principles to the allocation of liability under [POCA], as the rules relating to matters such as acquisition, joint and several ownership, and valuation of property and interests in property, and the rights and liabilities of owners, both as against the world and inter se, have been developed by the courts over centuries by reference to assets which were lawfully acquired and owned".
In para 8 of Waya, POCA was described as "framed … in broad terms with a certain amount of … 'overkill'". Lord Walker and Lord Hughes went on to say that "a]lthough the statute has often been described as 'draconian' that cannot be a warrant for abandoning the traditional rule that a penal statute should be construed with some strictness", adding that, "subject to this and to [the Human Rights Act 1998], the task of the Crown Court judge is to give effect to Parliament's intention as expressed in the language of the statute. The statutory language must be given a fair and purposive construction in order to give effect to its legislative policy". Later in their judgment at para 55(a), Lord Walker and Hughes LJ said that "o]nce property has been obtained as a result of or in connection with crime, it remains the defendant's benefit whether or not he retains it".
The overall aim of POCA has been described as being "to recover assets acquired through criminal activity, both because it is wrong for criminals to retain the proceeds of crime and in order to show that crime does not pay" – Ahmad, para 38. To similar effect, in May, para 48(1), Lord Bingham said that the legislation "is intended to deprive defendants of the benefit they have gained from relevant criminal conduct, whether or not they have retained such benefit, within the limits of their available means". Construing the legislation on that basis, in May at para 48(6), Lord Bingham explained that a defendant "ordinarily obtains property if in law he owns it, whether alone or jointly, which will ordinarily connote a power of disposition or control, as where a person directs a payment … to someone else". In Ahmad, para 49, this court observed that "i]t is clear … that the amount of the benefit which a defendant obtains is not affected by the amount which might be obtained by others to whom he transfers any part of it". However, the court immediately went on to accept that "there could be other cases where the court may be satisfied on the evidence that individual defendants obtained (ie assumed the rights of an owner over) only a specific part or share of the property which had been acquired as a result of the criminal activity".
A1P1 was brought into United Kingdom law by the Human Rights Act 1998. The first paragraph of A1P1 provides that each person should be "entitled to the peaceful enjoyment of his possessions", and that nobody should be "deprived of his possessions except in the public interest and subject to the conditions provided for by law …". The second paragraph derogates from the...
To continue reading
Request your trial
-
R v Peter Edwin Morrison
...46 The concept of disproportionality in the field of confiscation was further considered by the Supreme Court in R v Harvey (Jack) [2015] UKSC 73; [2017] AC 105. The Supreme Court held that a trader in a criminal lifestyle case had obtained the VAT element in the sums he had obtained by fra......
-
Stanley Leslie Miller v R
...property to be obtained by a corporate third party may concede that the company's property should be treated as his own, as in R v Harvey 2017 AC 105. Where he does not, it is common ground that, because a company is a separate legal entity, an obtaining by a company pursuant to a natural d......
-
Boyle Transport (Northern Ireland) Ltd v R
...Court the equation of the company with the criminal individual or individuals has been agreed. (For example, in the recent case of Harvey [2015] UKSC 73 it had been conceded in the Crown Court that the company had been the alter ego of Mr Harvey.) The arguments thus have often solely been d......
-
R v Andrewes
... [2018] 4 WLR 33, at para 58(iv). 34 The Supreme Court again addressed the question of the proportionality of a confiscation order in R v Harvey (Jack) [2015] UKSC 73; [2017] AC 105. This was a case involving a criminal lifestyle to which the assumptions in section 10 of POCA applied. The......