Jennings v Crown Prosecution Service

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Laws,Lord Justice Longmore,Lord Justice Lloyd
Judgment Date24 June 2005
Neutral Citation[2005] EWCA Civ 746
Date24 June 2005
Docket NumberCase No: C1/2004/2603

[2005] EWCA Civ 746

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM Queen's Bench Division

(Administrative Court)

(The Hon Mr Justice Leveson)

CJA/170/2004

Before

Lord Justice Laws

Lord Justice Longmore and

Lord Justice Lloyd

Case No: C1/2004/2603

Between
'J'
Appellant
and
Crown Prosecution Service
Respondent

Mr Anthony Elleray QC and Mr Scott Redpath (instructed by David Hanman) for the Appellant

Mr Andrew Mitchell QC and Mr Stephen Hellman (instructed by The Central Confiscation Branch) for the Crown Prosecution Service

Lord Justice Laws

INTRODUCTORY

1

This is an appeal against the decision of Leveson J made on 24 November 2004 when he declined to set aside a restraint order which had been made against the appellant by Forbes J on 2 November 2004. The order had been made pursuant to s.77(1) of the Criminal Justice Act 1988 ("the Act of 1988") at the behest of the Crown Prosecution Service ("the CPS") at a without notice hearing. Although Leveson J continued the restraint order, he ordered that the CPS should pay the appellant's costs of the application to him. Permission to appeal was first refused on consideration of the papers by Maurice Kay LJ on 16 February 2005, but was granted by Clarke and Jonathan Parker LJJ on 18 March 2005. In the course of his judgment Clarke LJ set out six questions which he described as "questions of principle of potential significance in the future". It will be convenient to set them out after I have introduced the facts and the material provisions of the Act of 1988.

THE FACTS

2

On Thursday 22 May 2003 the appellant was arrested on suspicion of conspiracy to defraud and fraudulent trading. He was charged with conspiracy to defraud on 4 February 2004. His trial in the Crown Court was under way at the time of the hearing of this appeal before us on 27 April 2005; we were told by Mr Mitchell QC for the CPS that it had about a further three weeks to run.

3

The particulars of the conspiracy with which the appellant was charged were drawn in these terms:

"[J] and others on a day between 1 December 2000 and 23 August 2001 conspired together to defraud such members of the public who applied to UK Finance (Europe) Ltd for a loan by falsely representing that:—

(i) upon payment of an administration fee in the sum of £70 a loan would be made;

(ii) UK Finance (Europe) Ltd had funds available from which such loans could be made."

UK Finance (Europe) Ltd ("the company") was incorporated on 21 May 1998. The controlling director and shareholder was RP, who in due course was also to be charged with the conspiracy. The company secretary was RP's wife.

4

I understand it to be common ground that initially the business carried on by the company was legitimate. As the particulars of the conspiracy show, the alleged dishonest activity commenced in or about November 2000. At that time the company started to trade from an office on an industrial estate in Reddish, Stockport. The company advertised as a lender. Its marketing was directed at people with poor credit histories. It offered unsecured loans. Applications for loans were apparently made over the telephone. Applicants were told that there was an up front administration fee of £70. After the phone call a credit agreement document would be sent to the applicant together with a request for the fee of £70. Many applicants duly paid up. A search warrant executed at the company's office on 13 July 2001 revealed, it was estimated, over 12,000 loan applications files.

5

But the company did not make a single loan. Nor (until later) did it return any of the applicants' £70 fees. At length, in April 2001, many of the applicants complained to the Stockport Trading Standards Office. Trading Standards Officers visited the company on 14 May 2001 and spoke to RP. However there were no proceedings at that stage. After this visit some of the more pressing applicants had their fees returned. More complaints were made to the Trading Standards Office. Eventually a search warrant was issued and executed, as I have said on 13 July 2001. RP was unable to supply any records relating to loans said to have been made. He told the officers that the people he was dealing with could not afford to repay the loans. Not long thereafter the company was put into voluntary liquidation. The matter was reported to the police. RP was arrested on 24 April 2002. It is convenient to notice at this stage that a restraint order was thereafter also made against him (we were told in August 2004), as I understand it on the same basis as to the amount of benefit derived from the conspiracy as was relied on against the appellant. RP pleaded guilty to the indictment on 28 November 2004. Other defendants did so at the start of the trial, which then proceeded against the appellant alone.

6

Throughout the period of the alleged conspiracy the appellant was, on the face of it, no more than an employee of the company. He owned none of the shares. It is said on his behalf that over the period in question he received an income of £11,320.89, and his wife, who was also employed by the company, £1,895.91 (I shall have to return to these figures). But the Crown say that this gives an entirely misleading picture of the appellant's true involvement with the company. The reality, it is claimed, is that he was as close to the heart of the conspiracy as was RP. It is convenient to reproduce paragraphs 17–20 of the prosecution opening note prepared for the appellant's trial:

"17 [RP] and [J] were at the head of this conspiracy. They had worked together at Horizon Finance and [J] had expertise in IT that was useful to [RP]. [J] had a business that provided telephone numbers which earned fees for the company out of the very many telephone callers who rang in and were kept on line while their application forms were filled in and more particularly while they were left on hold so that that the nonexistent checks could be 'carried out'. The two of them worked very closely together and they gave the clear impression that they were partners. Whenever [RP] was not present or away on holiday then [J] was in charge. On the internal telephone directory [J] was shown as management (Link to UK Finance Extentions sic). He attended all the management meetings. [J's] position within this conspiracy can be judged by the fact that he was sufficiently important to be able to put his wife on the payroll of UK Finance Europe Ltd even though she never did any work there.

18 It will not surprise you to learn that although on the surface this was a properly run company with an accountant who was shown cheques being paid in, no record at all was kept of the number of blank uncrossed postal orders or amounts of cash that were paid to the company. Many of the applicants simply didn't have £70 in a bank account on which to draw a cheque. They were in dire financial straits and often were trying to consolidate a number of loans and other debts by taking out a single loan on which there would be a single repayment. That is the very nature of the adverse credit market. And so in order to pay the administration fee of £70 many applicants sent in a postal order. The cash, postal orders and cheques were given to [J] who either passed them to [RP] or took them to the Post Office himself. Uncrossed postal orders could be cashed, and didn't have to be shown in the company books. Since no records were kept [RP] must have trusted [J].

19 [J] administered and controlled the records of all the applicants. He administered and directed advertising policy. He administered and oversaw the telecommunications and information technology systems for the company. These were very significant and essential functions for this conspiracy.

20 One problem with a conspiracy such as this was that staff would become suspicious and ask embarrassing questions. It was necessary to keep them sweet. [J] played a full role in this using some of the cash that was being generated to buy goodwill at the bar of a local public house. Every Friday the staff were taken to the Elizabethan public house in Heaton Moor where [J] and [RP] would pay for all the drinks. [J] was heard to boast that he had spent £300 on drinks on one such night. This was clearly more than just generosity to the staff; it was an essential part of the management of this conspiracy that would keep the wheels well oiled."

7

The evidence placed before Forbes J, in the shape of DC Horrocks' first statement dated 27 October 2004, contained this passage:

"3.u. Enquiries revealed that postal orders to a value of £124,000 had been cashed at a local post office. These had been sent by prospective loan applicants as their administration fee. Company accounts were later produced. These demonstrated that £460,903 had been received by the company in administration fees. This figure was comprised entirely from cheques. Of significance is the fact that no cash or postal orders were paid into the company bank account. v. Between 1 December 2000 and 13 July 2001, UK Finance (Europe) Limited, whilst advertising as a lender, obtained a total of £584,637.64 from the administration fees of £70. This figure includes postal orders cashed locally."

Relying on that passage DC Horrocks proceeded to state (paragraph 6) his belief that the appellant had benefited by £584,637.64. His statement then gave details (paragraph 7) of the appellant's personal circumstances and realisable property. This included a house at 165 Styal Road in Cheadle which was in the joint names of the appellant and his wife and occupied by them and their children. The property had been purchased on 19 December...

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