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May, R v
Factual and Procedural Background
The Appellant pleaded guilty at The Court on 24 September 2001 to a conspiracy to cheat the revenue by means of a “carousel” VAT fraud that caused an estimated £11 million loss to Agency A. He was sentenced to four years’ imprisonment (reduced from five on appeal) and, on 2 August 2002, a confiscation order under the Criminal Justice Act 1988 was made in the sum of £3,264,277 with six years’ imprisonment in default. The Court of Appeal upheld the confiscation order in 2005. The present appeal to the House of Lords (the “Committee”) concerns only the confiscation order.
Legal Issues Presented
- Whether, under the statutory confiscation regime, a defendant who jointly acquires the proceeds of crime can be ordered to pay the whole value of that joint benefit, or whether the court must apportion the benefit among all conspirators.
- How the three statutory questions—(i) benefit, (ii) value of benefit, and (iii) recoverable amount—should be applied where benefit is obtained jointly.
- Whether a confiscation order for the full joint benefit is disproportionate or incompatible with Article 1 of the First Protocol and Article 5 of the European Convention on Human Rights.
Arguments of the Parties
Appellant's Arguments
- The statutory scheme is intended to be effective yet fair; ordering each conspirator to pay the full joint benefit allows multiple recovery, is oppressive, and exceeds the victim’s loss.
- Such multiple recovery would be disproportionate and violate Convention rights because imprisonment may follow non-payment.
- Authorities such as R v Porter indicate that apportionment between conspirators is permissible and should be applied here.
Respondent's Arguments
- The confiscation legislation is mandatory and penal in nature; courts have no discretion to depart from it except as expressly allowed.
- Where benefit is obtained jointly, each conspirator “obtains” the whole of that property and may properly be ordered to pay its full value.
- The scheme already guards against disproportionality by limiting enforcement to the defendant’s realisable assets; no Convention breach arises.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| R v Cuthbertson [1981] AC 470 | Limits of forfeiture powers and need for confiscation legislation | Historical background motivating the statutory regime |
| R v Johnson [1991] 2 QB 249 | Three separate questions (benefit, value, recoverable amount) | Cited to emphasise that the questions must not be elided |
| R v Dickens [1990] 2 QB 102 | Operation of confiscation assumptions under the 1986 Act | Referenced for guidance on assessing benefit |
| R v Chrastny (No 2) [1991] 1 WLR 1385 | Joint control permits liability for the full amount | Used to support ordering each conspirator to pay the whole benefit |
| R v Walls [2003] 1 WLR 731 | Determining factual value of benefit in mortgage fraud | Illustrates that only property actually obtained counts as benefit |
| R v Ahmed [2005] 1 WLR 122 | Relationship between benefit and realisable assets | Quoted regarding limited judicial discretion and injustice test |
| R v Osei (1988) 10 Cr App R (S) 289 | “Payment” covers gross receipts, not just profit | Background to broad interpretation of benefit |
| R v Smith (Ian) [1989] 1 WLR 765 | Gross payments constitute benefit | Supporting broad reading of “payment” |
| R v Simons (1993) 98 Cr App R 100 | Each sale price in a chain is a payment | Reinforces gross‐receipt approach |
| R v J [2001] 1 Cr App R (S) 273 | Couriers may lack beneficial receipt | Used to distinguish minor participants |
| R v Johannes [2001] EWCA Crim 2825 | Same as R v J | Illustrative of non-beneficiaries |
| R v Banks [1997] 2 Cr App R (S) 110 | Benefit assessed on gross payments | Foundation for acceptance of multiple recovery |
| R v Gokal (unreported, 7 May 1997) | Benefit must be “obtained” by defendant | Cited with caution; joint receipts not excluded |
| R v Simpson (David) [1998] 2 Cr App R (S) 111 | Money laundering may attract multiple recovery | Cited to show duplicative orders permissible |
| R v Moran [2002] 1 WLR 253 | Pecuniary advantage equals tax unlawfully avoided | Supports treating tax evasion as benefit |
| R v Smith (David) [2002] 1 WLR 54 | Import duty evasion confers benefit at moment of import | Analogous support for pecuniary advantage concept |
| R v Ellingham [2005] 2 Cr App R (S) 192 | Confirms principle in Smith (David) | Further authority on duty evasion |
| R v Olubitan [2004] 2 Cr App R (S) 70 | No benefit where defendant received nothing | Shows factual inquiry can result in nil benefit |
| R v Layode (unreported, 12 Mar 1993) | Benefit assessment in property fraud | Referenced then distinguished |
| R v Porter [1990] 1 WLR 1260 | Earlier decision dividing benefit equally | Distinguished; not followed as correct principle |
| R v Rees (unreported, 19 Jul 1990) | Defendant liable for proceeds even if routed elsewhere | Supports full liability principle |
| R v Patel [2000] 2 Cr App R (S) 10 | Passing funds to accomplice does not reduce benefit | Applied by analogy to present facts |
| R v Currey (1994) 16 Cr App R (S) 421 | Benefit is about obtaining, not retaining | Reinforces gross‐receipt approach |
| R v Gibbons [2003] 2 Cr App R (S) 169 | Equal division when no evidence of shares | Cited as pragmatic but not applicable here |
| R v Houareau [2006] 1 Cr App R (S) 509 | Robust inference of beneficial interest | Illustrates factual inference of share |
| R v Sharma [2006] 2 Cr App R (S) 416 | Transfers within conspiracy do not reduce benefit | Supports full benefit approach |
| R v Comiskey (1990) 12 Cr App R (S) 562 | Difficulties in assessing realisable assets | Cited for complexity of third question |
| R v Glatt [2006] EWCA Crim 605 | Further example of realisable‐asset assessment | Background only |
| R v Tivnan [1999] 1 Cr App R (S) 92 | Post-order assets may become recoverable | Issue noted but not decided |
| R v Dimsey [2000] QB 744 | Piercing the corporate veil in confiscation | Used to justify treating company funds as conspirators’ joint property |
| R v Neuberg [2007] EWCA Crim 1994 | Scope of “serious risk of injustice” limitation | Explains narrow discretion under assumptions |
| R v Rezvi [2003] 1 AC 1099 | Confiscation is proportionate and penal | Quoted to rebut disproportionate-penalty argument |
| Welch v United Kingdom (1995) 20 EHRR 247 | European Court recognised penal nature of confiscation | Supports compatibility with Convention |
| Phillips v United Kingdom (2001) 11 BHRC 280 | Same as Welch | Further Convention authority |
| In re Norris [2001] 1 WLR 1388 | “Confiscation” is a misnomer | Cited in definitional discussion |
| Crown Prosecution Service v Jennings [2008] UKHL 29 | One of trilogy of appeals on confiscation | Referenced for context; not discussed in detail |
| R v Green [2008] UKHL 30 | Companion appeal in trilogy | Referenced for context; not discussed in detail |
Court's Reasoning and Analysis
The Committee began by tracing the statutory evolution of confiscation powers, stressing that courts must answer three discrete questions: (1) has the defendant benefited? (2) what is the value of that benefit? and (3) what amount is recoverable from the defendant’s assets. Applying that framework:
- Benefit. Because the Appellant jointly controlled the fraudulent companies, he “obtained” the entire proceeds of the VAT fraud even though others shared in it. Joint possession is legally equivalent to sole possession for the purpose of benefit.
- Value of Benefit. The trial judge’s deduction of £1,175,256 (monies already recovered) conflated benefit with realisable assets. Properly, the gross sum of £4,439,533 (phases 3–4 of the fraud) represented the benefit, but the Committee was content to proceed on the lower figure forming the basis of the existing order (£3,264,277).
- Recoverable Amount. The judge valued the Appellant’s realisable assets at £3,887,198—more than the confiscation order—satisfying statutory limits and avoiding any risk of imprisonment for inability to pay.
The Committee rejected the Appellant’s reliance on R v Porter, treating that case as turning on lack of evidence of joint receipt, not as authority for compulsory apportionment. It further held that ordering each conspirator to pay the full joint benefit neither creates double recovery nor violates Convention rights because:
(a) confiscation orders are penal, not compensatory;
(b) they are limited to what each defendant obtained; and
(c) they can never exceed the defendant’s available assets.
Accordingly, the statutory purpose of stripping criminals of their gains is best served by permitting full-value orders against each joint beneficiary. Any perceived harshness is mitigated by subsequent provisions allowing adjustment if available assets prove insufficient.
Holding and Implications
APPEAL DISMISSED.
The confiscation order of £3,264,277 stands. The decision confirms that where property is obtained jointly, each conspirator may be ordered to pay the whole value of that property, and courts have no power to apportion liability unless expressly authorised by statute. The ruling reinforces the mandatory, penal nature of the United Kingdom’s confiscation regime without creating new precedent beyond clarifying existing principles.
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