R v Muhamad

Introduction

On 12 April 2002 in the Crown Court at Middlesex Guildhall, the appellant was convicted of the offence of materially contributing to the extent of his insolvency by gambling contrary to section 362(1)(a) of the Insolvency Act 1986 ("the 1986 Act"). He sought leave to appeal against his conviction and the Registrar referred his application to the full court, because there are a number of cases pending in the crown court in which the same issue arises. The question raised on this appeal is whether the offence under section 362(1)(a) of the 1986 Act requires a mental element, or mens rea. The judge ruled that it does not, and that the offence is one of strict liability.

Mr Campbell-Tiech submits on behalf of the appellant that the offence is not one of strict liability. He does not concede that, if section 362(1)(a) is interpreted without regard to Article 7 of the European Convention on Human Rights ("ECHR"), it creates an offence of strict liability. But his primary argument is that, section 6(1) of the Human Rights Act 1998 (" HRA") requires the court to interpret section 362(1)(a) compatibly with Article 7, and that, therefore, it is necessary to read down the provision so as to import a requirement of mens rea. On behalf of the Crown, Mr Eadie submits that, properly interpreted in accordance with well-established principles, section 362(1)(a) creates an offence of strict liability, and that, so interpreted, it is not incompatible with Article 7.

The relevant statutory provisions

Section 362(1)(a) of the 1986 Act provides:

"(1) The bankrupt is guilty of an offence if he has –

(a) in the 2 years before the petition, materially contributed to, or increased the extent of, his insolvency by gambling or by rash and hazardous speculations, ….."

Schedule 10 provides that the maximum sentence to which a person may be liable upon conviction on indictment of an offence under section 362(1)(a) is 2 years imprisonment or a fine or both.

Article 7 of the ECHR provides:

"1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed …"

Submissions on behalf of the appellant

Mr Campbell-Tiech submits as follows. The actus reus of the offence comprises three elements, namely (a) gambling, (b) losing, and (c) the presentation of a petition within two years of the gambling in circumstances where the gambling has materially contributed to the insolvency on which the petition is based. The third element is outside a defendant's control.

The summary of principles contained in the speech of Lord Scarman in Gammon Ltd v A-G of Hong Kong [1985] 1 AC 1, 14B requires modification in the light of Article 7. The issue in that case was whether mens rea was an essential ingredient of a health and safety offence. The relevant passage is this:

"(1) there is a presumption of law that mens rea is required before a person can be held guilty of a criminal offence; (2) the presumption is particularly strong where the offence is "truly criminal" in character; (3) the presumption applies to statutory offences, and can be displaced only if this is clearly or by necessary implication the effect of the statute; (4) the only situation in which the presumption can be displaced is where the statute is concerned with an issue of social concern, and public safety is such an issue; (5) even where a statute is concerned with such an issue, the presumption of mens rea stands unless it can also be shown that the creation of strict liability will be effective to promote the objects of the statute by encouraging greater vigilance to prevent the commission of the prohibited act."

Mr Campbell-Tiech submits, in particular, that the second proposition is not compatible with the ECHR, and is now best disregarded. The jurisprudence of the ECtHR draws no distinction between offences of greater importance and those of lesser gravity: they are all classified as crimes. For the same reason, he submits that the following passage in the speech of Lord Nicholls in B (a minor) v Director of Public Prosecution [2000] 2 AC 428, 464B should no longer be followed:

"I venture to think that, leaving aside the statutory context of section 1, there is no great difficulty in this case. The section created an entirely new criminal offence, in simple unadorned language. The offence so created is a serious offence. The more serious the offence, the greater is the weight to be attached to the presumption, because the more severe is the punishment and the graver the stigma which accompany a conviction. Under section 1 conviction originally attracted a punishment of up to two years imprisonment. This has since been increased to a maximum of 10 years imprisonment."

Turning to Lord Scarman's third proposition, Mr Campbell-Tiech says that there is no necessary implication in section 362(1)(a) that the presumption of mens rea should be displaced. The mens rea for which he contends is that the defendant knows that, or is reckless as to whether, his act of gambling will materially contribute to his insolvency. The object of section 362(1) is the protection of creditors. Creditors can only be protected from gamblers who know that, or are reckless as to whether, their gambling will or may harm them. That object is not promoted by making the offence one of strict liability.

As regards Lord Scarman's fourth and fifth propositions, gambling is no longer an issue of social concern. That is another reason for holding that the presumption of mens rea is not displaced in section 362(1)(a).

Mr Campbell-Tiech makes two particular points with regard to Article 7. First, it is not restricted to retrospective legislation. It requires the criminal law to be sufficiently accessible and precise to enable an individual to know in advance whether his conduct is criminal: see, for example, Kokkinakis v Greece [1993] 17 EHRR 397. No gambler can necessarily know, when he places his bet, whether he runs a real risk of prosecution if he loses. The only way to avoid running this risk is not to gamble at all, or to gamble for low stakes. Without mens rea, the offence is objectionably uncertain. Furthermore, a construction of strict liability is neither necessary in a democratic society, nor proportional to any legitimate aim. There is no pressing social need to criminalise bankrupts who contribute to their bankruptcies. Moreover, to penalise them if they do so without the requisite mens rea is disproportionate. Gambling is no longer regarded as a social evil. It is significant that in July 2001, the Secretary of State for Trade and Industry issued a paper entitled "Insolvency- a Second Chance". Paragraph 1.32 stated that it was proposed that the existing criminal offences in relation to gambling should be repealed, and that in future such activities could be dealt with more effectively as matters of misconduct leading to a "bankruptcy restriction order". For these reasons, Mr Campbell-Tiech submits that section 362(1)(a) should be read down so as to import mens rea.

Discussion

Substantially for the reasons advanced by Mr Eadie, we are not persuaded by Mr Campbell-Tiech's submissions, attractively though they have been argued. We shall start by considering the issue without regard to the impact (if any) of Article 7. We have already quoted from the speeches of Lord Scarman and Lord Nicholls. In R v Warner [1969] 2 AC 256, Lord Reid comprehensively reviewed the cases on strict liability and mens rea. He said that there was a presumption of a requirement of mens rea in all cases of serious and "truly criminal" offences. On the other hand, there was a long line of cases in which it had been held with regard to "less serious offences" that the absence of mens rea was no defence. He said of these that they "are only quasi-criminal offences and it does not really offend the ordinary man's sense of justice that moral guilt is not of the essence of the offence". He gave many examples of these: they were typically offences under public health, licensing and industrial legislation.

In Sweet v Parsley [1970] AC 132, 149G, Lord Reid spoke again of "quasi-criminal acts" in respect of which "one can safely assume that, when Parliament is passing new legislation dealing with this class of offences, its silence as to mens rea means that the old practice [viz of recognising them as absolute offences] is to apply". But, he said, where it comes to acts of "a truly criminal character", different considerations apply. The first of these is that " a stigma still attaches to any person convicted of a truly criminal offence, and the more serious or more disgraceful the offence the greater the stigma. So he [viz the reasonable legislator] would have to consider whether, in a case of this gravity, the public interest really requires that an innocent person should be prevented from proving his innocence in order that fewer guilty men may escape".

It is not clear to us whether an offence under section...