Who: London Borough of Brent (Trading Standards) and Scott King
Where: Court of Appeal, UK
When: 3 April 2014
Law stated as at: 14 May 2014
What happened:
The Offence
For a period of 9 months between 2008 and 2009 Mr Scott King of Winton Cars sold 58 used cars to individuals that he advertised and sold as a private seller. The reality was, however, that Mr King was acting in the course of his trade and was attempting to avoid providing the purchasers with a warranty or guarantee.
Barnet Council’s Corporate Anti-Fraud Team caught up with Mr King under its ‘Operation Impreza’ and Mr King pleaded guilty at the Crown Court in September 2010, to the offence of falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession in breach of Regulations 12, 13 and paragraph 22 of Schedule 1 of the Consumer Protection from Unfair Trading Regulations 2008.
Over the following 2 years Mr King was sentenced to 100 hours unpaid work and a confiscation order in the sum of £109,970 pursuant to Section 6 of the Proceeds of Crime Act 2002 (“Confiscation Order”), in addition to paying the prosecution’s costs of £8,000.
The Appeal
The appeal to the Court of Appeal centred on the level of the Confiscation Order. This had been linked to the turnover of the business in the sale of the 58 cars, as opposed to the profit that Mr King made from those transactions. This was estimated at £11,140.
The grounds of the appeal were based on the fact that the Confiscation Order was disproportionate within the meaning of Article 1 of Protocol 1 of the European Convention on Human Rights (the right to peaceful enjoyment of property) in light of the majority judgement by the Supreme Court in R v Waya [2012] UKSC 51 and subsequent post-Waya cases (R v Sale [2013] EWCA Crim 1306 and R v Beazley [2013] EWCA Crim 567).
Amongst Mr King’s arguments were:
1. that the objective of a confiscation order is to access the financial benefit of the offender as opposed to deterring others. The purchasers received full value for the purchase price and therefore a confiscation order greater than the profits from the sale was disproportionate and would amount to double counting as Mr King would have to pay the same sum twice;
2. that a confiscation order based on business turnover is appropriate where the underlying activity is unlawful, such as drug dealing, but there was a clear distinction between that type of case and here, where the underlying activity in question was the sale of used cars and was perfectly lawful. In such cases,a confiscation order linked to business turnover was not appropriate; and
3. that the community sentence was a just sentence, whereas the Confiscation Order had meant that Mr King had lost his home.
The Result
The Court of Appeal dismissed the appeal on the basis that they considered that Mr King’s business was founded on illegality and characterised by deliberate misrepresentations with the objective being to gain significant advantage by avoiding providing a warranty.
The Appeal judges acknowledged that the result was severe, but did not believe it was disproportionate, nor did they regard it as relevant that all except one purchaser was satisfied with their purchase. Borrowing from the Beazley case, Lord Justice Fulford said ‘there is nothing remotely disproportionate about removing from [an] unlawful business the proceeds which it has generated’.
Why this matters:
Mr King had argued that as his 58 customers had all received good value for their purchases, the case was analogous to those where victims had received full restoration and therefore the confiscation of more than the profit derived was disproportionate.
The Appeal Court held, however, that “restoration” was only one of the factors to be taken into account. This was not merely a case in which the transaction was tainted by associated illegality (R v Sale), but a scenario where the entire undertaking was unlawful (R v Beazley), with Mr King attempting to deprive 58 consumers of their rights. Accordingly the confiscation of the entire proceeds was proportionate.
Another important point underlined by the Appeal judgment was that merely because a sole trader is operating from home does not, as Mr King had submitted he believed, make him a private seller.
