R v Sale

JurisdictionEngland & Wales
CourtCourt of Appeal (Criminal Division)
JudgeLord Justice Treacy
Judgment Date25 July 2013
Neutral Citation[2013] EWCA Crim 1306
Date25 July 2013
Docket NumberCase No: 201201876 C1

[2013] EWCA Crim 1306

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM Woolwich Crown Court

HHJ Sullivan

T20100393

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Treacy

Mr Justice MacDuff

and

Mr Justice Dingemans

Case No: 201201876 C1

Between:
Regina
and
Peter John Sale

Mr J Goose QC (instructed by Registrar of Appeals) for the Appellant

Mr S Farrell QC and Mr J Riley (instructed by Crown Prosecution Service) for the Respondent

Lord Justice Treacy
1

This appeal is concerned with a confiscation order. There are three main aspects to it. Firstly, questions relating to piercing the corporate veil; secondly, as to the assessment of benefit, and thirdly, whether the confiscation order was disproportionate in the light of the Supreme Court's decision in R v Waya [2012] 3 WLR 1138.

2

On the 14 th March 2011 in the Crown Court at Woolwich the Appellant pleaded guilty to corruption contrary to Section 1 of the Prevention of Corruption Act 1906 (Count 1), and to fraud by false representation contrary to Sections 1 and 2 of the Fraud Act 2006 (Count 2). On 11 th April 2011 he was sentenced to twelve months imprisonment suspended for two years with a requirement of undertaking two hundred hours of unpaid work. That sentence was passed on each count concurrently.

3

Subsequently, confiscation proceedings took place under the Proceeds of Crime Act 2002 (" POCA"). On 28 th February 2012 the judge held that the Appellant had benefited in the sum of £1,918,562.44. The Single Judge has granted leave to appeal in this case.

4

Count 1 covered the period between January 2006 and April 2008 during which the Appellant offered and gave gifts to Anthony Burgess, an employee of Network Rail. The purpose of this was to secure commercial favour. Burgess died before the case came to court. He was employed as corporate offices manager, leading a team of twenty, at Network Rail. He was responsible for managing office accommodation. His job involved seeking new accommodation, disposing of unnecessary accommodation and refurbishing accommodation when necessary. His job made him responsible for organising suppliers and contractors.

5

The Appellant was managing director of Sale Service and Maintenance Limited ("The Company"), which became a supplier used by Network Rail. The company installed and maintained air conditioning units and undertook electrical engineering work.

6

In the course of the corrupt relationship and in return for gifts and hospitality, paid for by the appellant and/or the company, and whose value was a little under £7,000.00, Burgess arranged for the award of a number of high value contracts to the company. Until this point there had been no prior relationship between the company and Network Rail.

7

Purchase orders exceeding £2.4 million were raised in the company's name. A little over £2 million was invoiced, and around £1.85 million was received.

8

When the Appellant's home address was searched, investigators found documentation relating to three large contracts recently awarded to the company. The company thereby replaced existing suppliers. The value of those contracts was a little over £1 million.

9

The evidence showed that Burgess had shared tender information with the Appellant. There was evidence that they had split sales invoices so that values remained within Burgess' delegated authority of £50,000.00 per order. In some cases invoices were raised before the work was done.

10

Count 2 concerned an invoice for around £60,000.00 which had already been submitted by the company to Network Rail and been paid. The invoice was then resubmitted and paid again in August 2007. Email correspondence showed that this was no mistake. In the spring of 2008 Network Rail, having become alert to what was going on, began disciplinary proceedings against Burgess. On the day of the hearing the company issued a credit note relating to the invoice, so that prior to the time of the Appellant's arrest, the sum obtained on the resubmitted invoice had been repaid.

11

The Appellant submitted a basis of plea which was not challenged. It stated that the period over which gifts were made was one of fifteen months between January 2007 and April 2008. In addition, and significantly for the purposes of this appeal, it stated that the work carried out by the company was done without criticism as to price or quality.

12

The background showed that the company had been started by the Appellant in 2004. He was the sole shareholder, being paid a salary and receiving dividends. By 2006 the company's turnover was £9.9 million, with profits before tax of £631,000.00. We are told that the accounts for 2009 and 2010 show similar levels of turnover and profits. The company employed a large number of people and traded with a wide range of well known established companies. There is no suggestion that the company was anything other than a legitimate business. It is only in relation to its dealings with Network Rail that illegality is involved.

13

For the purposes of the appeal, the Appellant and Respondent have agreed that:

i) £125,000.00 represents the value of the Appellant's personal benefit, taking into account the apportioned salary and dividends of the Network Rail contracts in relation to the total trading of the company, together with interest;

ii) £197,683.12 is the gross value of the profit earned by the company, after deducting the costs of production, but before any taxation, together with interest.

14

The figure in which the confiscation order was made represented the total sum paid to the company by Network Rail (a little over £1.9 million). That sum included an adjustment for interest. The prosecution's case before the judge was that, although those payments were never made to the Appellant, the court should lift the veil of incorporation and declare the total benefit of the Appellant to be in that sum received by the company.

15

The Crown did not proceed under the criminal lifestyle provisions of POCA. Accordingly, the court's task was to assess whether the Appellant had "benefited from his particular criminal conduct". See Section 6(4)(c) POCA. The Crown did not seek to argue that any benefit had been obtained in relation to Count 2.

16

The Appellant argued that the court should not lift the corporate veil, emphasising that the company was not a sham, that Network Rail had received full value under the various contracts, and asserting that the Appellant had not hidden behind the company to carry out the crimes. These were offences personal to the Appellant which did not involve using the company as a vehicle for crime.

17

Having heard the competing submissions, the judge in a brief ruling, held that the corporate veil should be lifted. She referred to Jennings v CPS [2008] 2 Cr App R 29 and R v Seager & Blatch [2010] 1 Cr App R (S) 60. The essence of her ruling was that the Appellant had done acts in the name of the company which constituted two separate criminal offences, to which he had pleaded guilty, so that it was right and just to lift the corporate veil. She distinguished the result from that in R v Seager & Blatch, (where the corporate veil was not lifted), on the basis that there the business carried out by the companies was entirely legitimate. In those cases the matters were before the court purely because the Defendants were disqualified from acting as company directors. The present case was different in the light of the business conducted by the company with Network Rail and the plea of guilty to corruption.

18

When the judge made her decision the Supreme Court had not heard the case of Waya, so considerations of proportionality were not argued before her. However, Mr Goose QC now relies in part on the result in Waya, as will become apparent.

19

Shortly before this appeal was heard, the Supreme Court gave judgment in Prest v Petrodel Resources Limited & Others [2013] UKSC 34. That decision has a bearing on this appeal, although its subject matter related to the question of piercing the corporate veil in relation to the provisions of the Matrimonial Causes Act 1973. Detailed consideration was given to the concept and meaning of piercing the corporate veil in terms which are of general application.

20

Whilst strictly speaking the discussion in Prest about piercing the corporate veil was obiter to the decision, it is plain that the Supreme Court was addressing the issue across the law generally and intended to do so. None of the cases cited to or considered by their Lordships were criminal confiscation order cases, but the principles enunciated apply across the board. Neither party to this appeal sought to argue that the observations in Prest did not apply. Indeed both parties made arguments by reference to Prest.

21

Before us, Mr Goose QC, for the Appellant, argued that the judge below was in error in declaring that the Appellant's benefit from his particular criminal conduct was the same as the turnover of trading between the company and Network Rail. The judge had wrongly lifted the veil of incorporation in assessing the Appellant's benefit, and should have found that his benefit was represented by a proportion of his salary and benefits from his employment with the company in relation to the company's trading with Network Rail compared with the total trading of the company during the relevant period.

22

Mr Goose submitted that the court should not lift the veil by considering the company's position. The payments by Network Rail had only ever been paid to the company and not to the Appellant. The company was a legitimate and profitable business and...

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11 cases
  • R v Scott King
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 3 April 2014
    ...It is suggested that the present facts are to be distinguished from R v Beazley [2013] EWCA Crim 567 and that the approach of this court in R v Sale [2013] EWCA Crim 1306 should be applied. These authorities are considered below. The submissions of the respondent 16 It is submitted that thi......
  • R (London Borough of Haringey) v Boruch Roth
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 24 July 2020
    ...the focus of the confiscation legislation is on what is obtained: not on what is retained. There may be some instances (of which Sale [2013] EWCA Crim 1306, [2014] 1 Cr. App. R (S) 60, is an example) where the vast majority of a particular business undertaking is lawful; and therefore it m......
  • R v Karen Neuberg
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 15 December 2016
    ...there has undoubtedly been a change in the law as a result of the decision in Waya which has been applied subsequently in decisions such as R v Sale [2013] EWCA Crim 1306, [2014] 1 WLR 663. As we have said at paragraph 20, we consider that as certain paragraphs of the CCRC's reference refe......
  • 1. Christopher James McDowell and Another v The Queen
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 19 February 2015
    ...and Blatch , Jennings and Prest were considered by this court (Treacey LJ, MacDuff and Dingemans JJ) in Sale [2013] EWCA Crim 1306; [2014] 1 WLR 663. The appellant was the sole director and shareholder of a successful engineering company. The company secured additional contracts with Netwo......
  • Request a trial to view additional results
1 books & journal articles
  • THE NEW ERA OF CORPORATE VEIL-PIERCING
    • Singapore
    • Singapore Academy of Law Journal Nbr. 2016, December 2016
    • 1 December 2016
    ...in connection with the conduct”. See further R v McDowell[2015] EWCA Crim 173 at [23]–[34]. 96R v McDowell[2015] EWCA Crim 173 at [3]. 97[2014] 1 WLR 663. 98R v McDowell[2015] EWCA Crim 173 at [42]. On the facts, the Court of Appeal dismissed the appellant-arms dealer's appeal, though it al......

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