England and Wales Court of Appeal (Criminal Division) Decisions

Royal Courts of Justice

The Strand

London WC2A 2LL

Friday 18 October 1996

B e f o r e:

LORD JUSTICE EVANS

MR JUSTICE SCOTT BAKER

and

MR JUSTICE SEDLEY

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R E G I N A

- v -

JOHN TREVOR GARROD

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Computer Aided Transcription by

Smith Bernal, 180 Fleet Street, London EC4

Telephone 0171-831 3183

(Official Shorthand Writers to the Court)

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MR MARTIN BETHEL QC and MR TOBY HEDWORTH appeared on behalf of

THE APPELLANT

MR JOHN MILFORD QC and MR PAUL SLOAN appeared on behalf of THE CROWN

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J U D G M E N T

(As Approved by the Court )

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CROWN COPYRIGHT

LORD JUSTICE EVANS: The appellant is John Trevor Garrod. He was convicted in the Crown Court at Newcastle upon Tyne on 28 October 1993 of the offence of conspiring to obtain by deception a grant from the Department of Trade and Industry. He was sentenced to nine months' imprisonment suspended for 12 months, with an order that he should pay £14,500 towards the prosecution costs. He now appeals against his conviction by leave of the full court given on 30 June 1995.

The appellant formed and developed a successful business known as Rite-Vent. It was involved in the light engineering industry. It started in Hampshire, but by 1986 it was based in the north-east. The appellant was the Chairman and the Managing Director. In 1986 he took over another business which was owned by a Mr Adamson, and in January 1987 Mr Adamson became the Managing Director of the newly combined business.

In 1987 and 1988 the company took advantage of a Government scheme known as 'AMT' (Advanced Manufacturing Technology). The scheme was simple. The DTI was prepared to grant up to 50% of the cost of consultancy services in an appropriate case. The scheme was administered by a body known as NEL based in Glasgow. It was administered in accordance with rules which included the following. First, the application had to be approved; secondly, invoices paid to the consultants had to be produced; thirdly, the work had to be done after approval and not before; and fourthly, the work had to be done by consultants themselves and not by sub-contractors.

In 1987 the company applied for such a grant based on an estimate in the total sum of £48,865, which had been obtained from a consultancy group, 3i Consultants Limited. 3i is a large national institution and 3iC was its consultancy subsidiary.

It came to light in April or May 1988 that there had been irregularities in the administration of this particular matter. The north-eastern office of 3i included a Mr Ryle, who was described as the local Director, and a Mr Ramsden, who was its Manager. They in that office already had a close relationship with Rite-Vent. There had been a major productivity scheme in 1985 and 1986. That had not been as successful as anticipated and subsequently there was a legal action which was pending at the time of the trial.

When the application for a grant in respect of the £48,865 estimate was received by NEL, it was considered excessive by them and was reduced to a grant to £19,250, representing one-half of £38,500 which NEL considered was the appropriate cost for the purpose of the grant.

That sum of £38,500 was paid by Rite-Vent to 3iC, invoices having been rendered to it. Payments were authorised by the appellant and/or by Mr Adamson. There was evidence that they each showed some reluctance to authorise the payments in question. Fifty per cent of the total was paid as a grant, that is £19,250, but credit notes were issued by 3iC in favour of the company, which also totalled £19,250. So in the result the work that was done cost Rite-Vent nothing and the prosecution case was that only half the work covered by the estimate and the invoices had in fact been done. This was because the combined effect of credit notes which reduced the total invoices by one-half, and a grant payment of the remaining half, meant that the company had incurred no liability.

We should emphasise that there were additional sums involved, but the figures already stated suffice to show the nature of the deception alleged. There was no benefit to 3iC from this scheme, except that they were paid at their usual rates for the work which they had actually done. The money for it all came from the DTI and none of it from the company.

These events came to light in April and May 1988. The final credit note issued by 3iC in favour of the company was required to be sanctioned by Mr Ryle's senior in 3iC. The first two had been approved by another senior officer, but he was not available. So Mr Ryle took it to a Mr Drew and, in short, failed to give a satisfactory explanation to Mr Drew of why the credit note was required or justified. Mr Ryle was called to a meeting where he was interviewed by 3iC's legal advisor. He gave his account of the transaction and then was summarily dismissed.

3iC then commissioned an inquiry by the well-known firm Ernst and Young into all the AMT grant schemes which 3iC had been involved with nationwide. A report was produced in 1990 which showed that the abuse had been widespread.

The appellant was seen by Detective Sergeant Cullen of the Fraud Squad in 1988. On the first occasion the appellant was unaware of the detail. In the presence of Detective Sergeant Cullen there took place a telephone conversation between the appellant and Mr Adamson. A loudspeaker telephone was employed so that Detective Sergeant Cullen could hear what was being said.

The second interview took place in June 1990 when there was a formal interview which extended over two-and-a-half hours. The transcript was reduced to 51 pages, part summary, part verbatim, which was produced in evidence at trial. By this time the appellant had read the correspondence and other documents and was therefore broadly familiar with what had occurred, but he said that he had no knowledge of the relevant figures or the detail of the grant applications at the time when the transactions took place. He said that he had acted as what was called later a "hands-on Chairman". He had attended meetings; he had had dealings with Mr Ryle; but he had had no part in any dishonest scheme.

Charges of conspiracy were brought against four defendants: the appellant and Mr Adamson, and Mr Ryle and Mr Ramsden of 3iC. The trial started in September 1993 and lasted for five to six weeks. Mr Adamson was found not guilty, but the other three were convicted. The appellant did not give evidence, although the other three defendants did. At the appropriate stage of the hearing Mr Bethel QC, on behalf of the appellant, said:

"Your Honour, we do not feel that there is anything further that Mr Garrod can say, six years or so after these events, which could add to the jury's knowledge and understanding of this case and, accordingly, he will not be giving evidence. The case for him will consist of giving evidence as to character."

As already stated, the 51-page interview record was in evidence before the jury.

The defence, as already stated by reference to that interview, was that he was unaware of the details of the transactions and had no knowledge of any dishonest scheme. There was a suggestion that the credit notes, if he knew of them, were received from 3iC by the company in order to make amends for a poor performance by 3iC on the previous productivity scheme and they were nothing to do, so far as he was concerned, with the AMT grant application. My Ryle, however, had given evidence contradicting that explanation of the credit notes. That defence in any event left unaltered the fact that the company had claimed and received a grant of £19,250 on the basis of invoices of £38,500 and that the credit notes had the effect of reversing £19,250 of the sum invoiced by 3iC.

In the course of the trial the learned judge was called on to make a ruling as to the admissibility of evidence from Sergeant Cullen in relation to the telephone conversation already described. There was a voir dire hearing in the course of which Sergeant Cullen gave evidence. The learned judge's ruling was as follows:

"In this case I am asked to exclude from the case the evidence of Sergeant Cullen relating to conversations which took place at the premises of Rite-Vent when he visited there with colleagues in June of 1990, first of all, on the basis that Mr Garrod was a suspect and, therefore, he ought to have been cautioned before any such conversations took place.

Secondly, that in any event, the telephone conversation which ensued between Mr Garrod and Mr Adamson (of which Mr Garrod chose to hold on a conference facility so that all in the room that he was in could hear what was being said) is not evidence against him and, therefore, under the decision of the House of Lords in R v Christie , and section 78 [of the Police and Criminal Evidence Act] .... I ought to exercise my discretion and exclude it.

First, I have to decide .... whether when Sergeant Cullen and his colleagues went to Rite-Vent on that day there were in fact grounds for believing him to be a suspect and, therefore, the Codes of Practice under PACE to come into force and into effect."

She held that there were no grounds for treating him as a suspect at that time.

We have seen a document which was not before the learned judge. It is the authority granted by the Superintendent to the officer in charge of the case, Sergeant Cullen, which resulted in the search warrant which was issued and executed. Suffice it to say that the contents of that document are such as to make it appear to us that Sergeant Cullen should have regarded the appellant as a suspect on that occasion and that therefore the PACE procedures were appropriate.

The learned judge, however, went on to deal with the application on the basis that she was wrong on that matter, and she continued as follows:

"If, however, I am wrong and, by the time the telephone call had taken place he should have treated him as a suspect, then clearly there would be breaches of the code in that he was not then cautioned. The questions and answers such as there were -- and there were in fact only two -- were not contemporaneously recorded and, therefore, clearly there were two breaches. In my judgment, if I am wrong and those cautions should have been administered at this stage and so on, nevertheless, in my judgment the breaches are not so serious as to require me to exclude the evidence in my discretion under section 78."

She then dealt with the "third argument", that she should exclude the evidence so far as the appellant was concerned under Christie and section 78. She also rejected that submission. She said:

"It is certainly not inadmissible against Mr Adamson."

She concluded:

"Nevertheless, in my judgment, it is a matter for the jury to consider what value they can put on that conversation. As I say, it is clearly admissible against Mr Adamson, and the fact that in law it is not admissible against Mr Garrod does not, in my judgment, mean that it has to be excluded at all."

Finally, she said:

".... it is not unfair to Mr Garrod to allow the evidence to go before the jury."

As regards the summing-up which extended over something in excess of two days at the end of a five to six-week hearing, it is only necessary at this stage to refer in general terms to parts of it in relation to what could be regarded as direct evidence of the appellant's guilt. The first was the evidence of a lady called Mandy, who later married a Mr Gordon, one of the company's employees. She gave three pieces of evidence which directly affected the appellant. They were particularly cogent because she had been his secretary during the relevant period. She gave evidence -- and there was no indication that she was hostile towards him -- that he had dealt personally with the grant application, the payment and the credit notes. She said, as already indicated, that there had been some reluctance on his part to authorise the payments in question; all these had been left by him to Mr Adamson. Secondly, she reported a conversation which she had had, first, with Mr Ramsden after he had left the employment of 3iC. In effect Mr Ramsden had told her that there had been a doubtful scheme and that the appellant had been involved. When she asked the appellant about this, she said his reaction was such as to indicate to her that he did know about it, but was unwilling to speak about it. When the police investigations reached him, this matter again was mentioned between them and he denied there had ever been the earlier conversation between himself and Mrs Mandy Gordon about it.

The third piece of evidence she gave which was of particular relevance was of a meeting which took place in February 1987 when she said that the appellant, Mr Ryle and others were present and she, unusually she thought, was excluded from it.

The evidence of another witness, Mr Michael Smith, who was an accountant for the company for part of the period, was also capable of being direct evidence against the appellant of his knowledge of, and involvement in, the scheme. He said there was an occasion when the appellant told him the details of the scheme and he (Michael Smith) said in effect "But that is illegal." That was at a time when Mr Smith was in the process of resigning from the company and there was a suggestion that he was under considerable stress.

The present appeal has been put forward on various grounds which can conveniently be dealt with under three heads. The first matter, which was put at the forefront of Mr Bethel's submissions -- and the major part of the hearing took place over three days in July of this year -- was based on supplementary grounds which were added following further disclosure which took place in 1995 or early 1996 in circumstances to which we shall come.

The second heading was what might be described as the original grounds, of which there are 12. These can be described briefly at this stage of our judgment. The first was concerned with the ruling as to the admissibility of Detective Sergeant Cullen's evidence to which we have already referred. The remaining grounds were concerned with the contents of the summing-up. There was a general allegation in ground 2 which was as follows:

"After a five-and-a-half-week trial the summing-up was merely a direction on the law followed by a recitation of certain of the facts and was neither chronological nor constructed in such a way as to highlight the issues in the case. Indeed the learned judge stated to the jury that she had been unable to keep up with her note-taking of some of the evidence and therefore had no note thereof.... Accordingly the jury were likely to be confused as to the issues for their determination and misled as to the evidence which would be relied upon and the strengths of the cases for the Crown and the appellant."

The third ground was that the learned judge, in the course of the summing-up, had in effect failed to distinguish between the appellant and the company, so as possibly to have misled the jury to the view that anything which the company did or obtained was at the appellant's behest.

The fourth and subsequent grounds raised various matters of detail with regard to the evidence of the witnesses already referred to: first, the witness Mandy Gordon, in relation to whom two points are made; and secondly, Michael Smith, in relation to whom a total of five issues are raised. One of those, in ground 6, referred to the fact that the learned judge had warned the jury that he might be regarded as an accomplice and that corroboration of his evidence should by looked for. She had first suggested that there was some corroboration, but then later in the summing-up had agreed with the submission by Leading Counsel for the Crown that that was wrong. She therefore withdrew her suggestion from the jury.

Grounds 7 and 8 are concerned with particular aspects of the appellant's involvement in the grant application and the scheme. There was evidence that in the early stages another firm of accountants, Arthur Andersen, were considered for the post of consultants. There was some dispute on the evidence as to why they had not been employed, and in particular as to whether they had quoted for the same work as or something less than 3iC. What is alleged in ground 7 is that in the relevant part of the summing-up the learned judge had misunderstood, or failed to direct the jury correctly as to the factual issues that were raised. Similarly, it was alleged in ground 8 that she had made certain errors in relation to evidence that the appellant had been personally concerned in obtaining quotations from various other companies.

Ground 9 alleges that the learned judge, although she gave the appropriate warning to the jury that what the co-defendants, Ryle and Ramsden, had said during their interviews was not evidence against the appellant, nevertheless she failed to repeat that warning when she came later in her summing-up to deal with those interviews and what had been said in them.

The tenth ground is as follows:

"Although the appellant did not give evidence in this trial, unlike his co-accused, he was the only defendant to answer fully all questions asked of him by the police in lengthy interviews in difficult conditions. The learned judge's treatment of this area of the evidence detracted from the weight to be attached to the explanations given by the appellant. When reminding the jury of the appellant's case .... she simply stated that he had not given evidence and reminded the jury of two testimonials read on Mr Garrod's behalf. She made no attempt to summarise the appellant's case either as put in interview in cross-examination or argument on his behalf."

Ground 11 contended that the learned judge had given an inadequate direction to the jury as to the implications of convicting one defendant but not one or more of the others when the charge against all four was conspiracy.

Finally, ground 12 read:

"In the premises aforesaid the summing-up as a whole was imbalanced and did not remind the jury adequately or at all of the case put on the appellant's behalf and accordingly indicated to the jury that the appellant's case was not worthy of the consideration which would and should have been proper. Accordingly the jury's guilty verdict was unsafe and unsatisfactory."

The third heading is the additional ground of appeal which we have heard argued before us today. This was added as a supplementary ground at the suggestion of my Lord, Scott Baker J, on the earlier occasion. The ground reads as follows:

"The learned judge failed to direct the jury as to the significance of the appellant's good character as to credibility when considering his interview by the police."

Reference is made to three authorities, R v Vye (1983) 97 Cr App R 134, R v Fulcher [1995] 2 Cr App R 251 and R v Aziz [1996] AC 41.

We deal, first, with ground 1 relating to the evidence of Detective Sergeant Cullen. The situation, as it appeared to the learned judge, on the assumption that there had been a breach of the PACE rules was, first, that there had not been unfairness or other reasons to cause her to exclude the evidence under section 78 or otherwise. Since she was expressing that conclusion, although in the alternative, at a time when she was not aware of the full evidence as to the extent to which the Code should have been followed, it would seem appropriate to us that we should consider the matter afresh.

The way it appears to us is as follows. The evidence in question was summarised in the summing-up as follows:

"There was then a conversation between the officers and, according to Sergeant Cullen, in Mr Garrod's office at about 10.35 that morning Mr Garrod said he wanted to speak by telephone to Mr Adamson, his former Managing Director, saying that Mr Adamson could probably shed some light on the subject. Mr Cullen thought that the telephone call was to Preston, but it was not Bolton .... You may not think that matters very much ....

Eventually, Mr Garrod got onto the telephone to Mr Adamson and used what is known as an open conference facility which may be well known to some of you, everybody can hear what is being said on both sides. Sergeant Cullen told you that that is exactly what he did do and he was rather surprised. He said it would have been very convenient if he had had a tape at the time to record it. He thought that if he started to write it down, the flow of the conversation might be cut off and so, therefore, it was some hours later that he made a note of his recollection of what was said during the course of the conversation."

The note read as follows:

"MR GARROD: (To Mr Adamson) What do you know about AMT grants?

MR ADAMSON: Something involving 3i and the grants for the computer, just a method of paying for the scheme.

MR GARROD: Do you know anything about the grants themselves?

MR ADAMSON: Somebody brought it up some time ago. Something was said by somebody.

MR GARROD: How much were the grants for?

MR ADAMSON: That bloke Ryle was involved. There was a series of credits coming back from 3i, the net amount of credits equalled the cost of the 3i work."

The appellant further queried this:

"MR GARROD: You should know John."

When he queried it with Mr Adamson, Mr Adamson said:

"Well, you should know John, you fixed it up with Ryle. Credit notes came through so the net cost of the scheme cost less than the total AMT it cost for 3i.

MR GARROD: Was there anything illegal in this?

MR ADAMSON: I do not know, you arranged it."

When this application was made, the prosecution were seeking to adduce that evidence from Detective Sergeant Cullen. The learned judge said twice that the evidence was certainly admissible against Mr Adamson. To some extent therefore the question whether it was admissible against the appellant also was not so much a question of admissibility to be decided at that stage, but a question of what direction should be given to the jury with regard to it so far as the appellant was concerned. But by that stage Mr Adamson had given evidence and he had confirmed that a conversation along those lines took place. That evidence, which Mr Adamson gave in court, was admissible against the appellant in any event. It seems to us therefore that in the result this is not a matter of which the appellant can complain. The evidence was properly admitted as against him whether it came from Detective Sergeant Cullen or from Mr Adamson. To have directed the jury that the evidence against the appellant was admissible so far as it came from Mr Adamson, but not strictly admissible in so far as it came from Detective Sergeant Cullen, would seem to us to be an arid distinction which should not be recognised. In those circumstances it seems to us that there is nothing in this ground of appeal, even if we were to say, which we do not, that the learned judge was wrong in the conclusion she reached that the evidence should be admitted at the stage when it was.

Having said that about ground 1, and putting on one side for a moment ground 10 which has been further argued before us today, we propose to deal compendiously with the remaining allegations made in respect of the summing-up. The terms of the grounds of appeal are such as to make one contemplate them, after reading the summing-up, with a great deal of reserve. The summing-up is, in our view, a perfectly acceptable, well-structured summary of evidence which had been given over a lengthy period and it included a perfectly proper and sufficient direction as to the issues of law and of fact which the case involved. The summing-up dealt in succession with the evidence of the different witnesses in some detail, but it was none the worse for that.

The complaint in ground 2 is of the structure of the summing-up and in particular that it was not chronological. We would reject that complaint. The structure was such that the summing-up began with general observations as to fact and to law which were entirely appropriate. Then the prosecution witnesses and certain documents were considered in a perfectly logical order. At that stage, and understandably, the learned judge dealt with the appellant's interview which had been formally proved by Detective Sergeant Cullen, a prosecution witness. She then dealt with the evidence of those defendants who had given evidence, and with the character witnesses who had been called on behalf of the appellant. Insofar as it was said there was a lack of cross-referencing between different parts of the evidence bearing on particular issues, there were some of these; more could well have tended to complicate rather than to clarify what was, in our view, essentially a perfectly rational and clear summing-up. The summing-up reads well as a summary of the complicated AMT scheme, of its procedures and of the involvement of the various witnesses and of the defendants.

Secondly, with regard to the specific complaints made as to the evidence of the witnesses already identified, it seems to us that those are matters of detail which weigh little against the general merits of the summing-up as already described.

Thirdly, and finally, we think it appropriate to note that there were no questions from the jury so far as the defendant Ryle and the appellant were concerned. The summing-up was concluded at 11.38 on 28 October, and the jury retired. They returned, no doubt after being called back to court, at 4.24 on that afternoon, and they announced unanimous verdicts of guilty against both Ryle and the appellant. The following day, when they did raise one or more questions, they considered the remaining two cases against Ramsden and Adamson. For those reasons, in our view, the grounds of appeal (putting on one side ground 10) must be rejected.

The supplementary ground, arising out of further disclosure, can be summarised in the following way. 3i Consultancy was a national firm with a number of offices in different parts of the United Kingdom. It is now known that there was a major investigation into the activities of all its officers in connection with grant-aided schemes such as the AMT scheme. We also know that in the result a very large sum of money was paid by 3i to the DTI apparently as part re- payment of grants which had been paid to clients of 3iC. The precise basis on which that substantial payment was made is not directly relevant for present purposes. The fact of this payment and settlement was known to the DTI, but not specifically to the prosecution nor the Crown Prosecution Service at the time of the trial. It came to light following persistent pressure on the DTI by the appellant himself. It seems that there was a questionable decision taken by the DTI not to make full disclosure of these matters to the CPS at the time of the trial. What was disclosed was the results of inquiries which had affected the north-eastern office only.

If that was the only office under suspicion, its officers including Ryle and Ramsden, then there would be grounds for saying that they were mavericks, or that there was a particular and local reason why in that office alone they had acted in that way. The suggestion that was made on their behalf was that the appellant was that special reason, that he had been responsible for the dishonest scheme, and that he had influenced Ryle and Ramsden into taking part in it.

At the trial Mr Wilfred Fordham QC made it clear that Ryle's defence involved a frontal attack on the appellant, alleging that he was the instigator of the scheme and that so far as Ryle was concerned it was never a question of dishonesty. That defence failed; indeed, it was never likely to succeed. The grounds of appeal on behalf of the appellant concede in terms that Ryle's conviction was "inevitable".

There are now grounds for saying that the north-eastern office was not the only one involved; that Ryle and Ramsden were not on a frolic of their own; that there was perhaps a culture of dishonesty in 3iC; and that the appellant was more likely to have been influenced by Ryle than the reverse. So it is submitted that the failure to disclose the additional material affected the whole atmosphere of the trial and therefore the safety of the appellant's conviction.

We accept, first, that this additional material is relevant and should have been disclosed if it was in the hands of the prosecution. Secondly (without deciding that), the DTI should have disclosed it to the CPS; and conversely, the CPS should have disclosed it even if it was in the actual possession of the DTI. That we accept without deciding one way or the other whether it is correct. Thirdly, we accept that Mr Bethel, for the appellant, would have been able to mount a sustained attack on 3iC as regards grant schemes such as this and on Messrs Ryle and Ramsden as officers of 3iC.

The question is: might he have done so, and, if "yes", might it have made the conviction of the appellant less likely? In other words, should the conviction be regarded as unsafe on this ground?

In our view, this submission does not bear close examination. It cannot have been to the appellant's advantage to show that Ryle was more likely to have been dishonest than the evidence which was available at the trial already showed that he was.

The appellant's case was that the scheme was perfectly honest so far as he was concerned, and he said that he was not concerned in it very much. All the defendants denied the allegation of dishonesty. If there was a possibility that Messrs Ryle and Ramsden had good reason for acting as they did, and they were not dishonest, then that could only benefit the appellant. Why would the appellant have wished to throw away that chance of acquittal? In truth there is no doubt that the scheme was dishonest. The issue as regards the appellant was the extent of his knowledge of various basic facts.

The scheme clearly was dishonest to anyone who knew: (1) how much was invoiced; (2) how much was claimed by way of grant; (3) how much was received by way of grant; and (4) how much was refunded pursuant to the credit notes. Anyone who knew those facts knew that overall the company received services for which it paid nothing, and that the DTI had paid a grant on the basis that more work was done than had in fact been done. The question so far as the appellant was concerned was not so much the dishonesty of the scheme, as the extent of his knowledge of those basic facts. So far as that issue was concerned, the extent to which Messrs Ryle and Ramsden were, or may have been, dishonest was simply neither here nor there. For those reasons we reject the supplementary grounds of appeal.

We come, finally, to the submissions which we have heard today with regard to the good character direction. The appellant and the other defendants were all of good character. They were entitled, under the law as it now stands, to the good character direction as regards their lesser propensity to commit any crime, especially one involving dishonesty as this one did. That direction was given as follows:

".... you have heard many, many of the witnesses speak of the excellent characters of each one of these four people. I shall remind you as I go through the evidence as to what people say about them. You would hardly be surprised if they said anything else. Each one of them is 50. Mr Adamson, I think, is 63. They have gone through life to that age, they have never been in a criminal court. Nobody has made any suggestion of anything dishonest about them. How do you regard that?"

The learned judge explained why good character of itself can never be a defence to a criminal charge. She continued:

"So it is not a defence but, of course, it is a very important factor in two ways.

First of all, if they go into the witness box, you are entitled to say about them, 'Well, we know that they have held and do hold the reputation of being honest and decent citizens and have done so for half a century,' in relation to each one of them, and you can regard that fact when you are considering the weight and the effect of their evidence.

You can do a second thing, ladies and gentlemen, you can say, 'Well, that being so, is it likely that he would do something dishonest, bearing in mind that good character?' But those are the only two ways you can consider it. As I say, it is not a defence. So that is how you treat character."

She continued:

"Of course, so far as Mr Garrod is concerned, only the second limb applies because he has chosen, as is his right, not to give evidence. He did, of course, as you know and you have it, I think, answered questions quite freely in the long interview that he had with DS Cullen two years or more ago. I must tell you this, ladies and gentlemen, that what he said to the police is not evidence of the facts that are stated in that interview. It is evidence that he made those replies and comments, and it is evidence of his reaction to the questions that were being put, which is part of the general picture to consider, but it is not evidence. Evidence, ladies and gentleman, is given on oath."

She then directed the jury that the appellant was not obliged to go into the witness box.

The learned judge drew a clear distinction between the appellant who did not give evidence and the other appellants who did as regards the "credibility" limb of the direction, which is required when a defendant who is of good character gives evidence at trial. Coupled with that was a direction that what was said in interview was not evidence because it was not given on oath.

The decision in R v Vye , which was reported in April 1993 (before this trial) could be read as requiring the credibility direction to be given even in such a case, i.e. one where the defendant has given his version of events in an out of court interview which the jury is required to assess.

In R v Aziz the House of Lords held that such a direction must be given not only when the defendant gives evidence at trial, but also when the defendant's interviews, or other statements made outside court, are what is called "mixed", meaning that they contain both admissions upon which the prosecution can rely as evidence of guilt and exculpatory statements which support the defendant's denial, but which are self-serving because they are made by the defendant himself.

The rationale of this rule, which has its predecessors in the decisions in Vye and in R v Duncan (1981) 73 Cr App R 359, is that the whole of a mixed statement should be regarded as evidence of the truth of what was said in it, at least for the purposes of the rule that the good character direction should include the credibility limb.

However, the House of Lords also held in Aziz that such a direction is not required when the statement is wholly exculpatory. In the speech of Lord Steyn, with which the other members of the House of Lords agreed, there was first a quotation from the judgment in Vye:

"(1) A direction as to the relevance of his good character to a defendant's credibility is to be given where he has testified or made pre-trial answers or statements. (2) A direction as to the relevance of his good character to the likelihood of his having committed the offence charged is to be given, whether or not he has testified, or made pre-trial answers or statements...."

Later in Lord Steyn's speech there appears the following passage:

"(a) Wholly exculpatory statements

Counsel for the Crown submitted that Lord Taylor .... in effect ruled that wholly exculpatory and self-serving statements by a defendant are admissible and should be the subject of directions in accordance with Vye. The very passage in Vye relied upon by counsel .... contains an express reference to Duncan .... It is clear beyond any doubt that Vye is only concerned with mixed statements. And the position remains that a wholly exculpatory statement is not evidence of any fact asserted."

The reason given, therefore, for this rule is that the exculpatory statement is not evidence of the truth of what was contained in it, and therefore the jury is not required to assess its truthfulness or otherwise.

In the light of those authorities the issue now raised is this. Should the appellant's interview in the instant case be classified as mixed or as wholly exculpatory? This has meant that Mr Bethel for the defence has found himself in the unusual position of submitting that the interview answers contain admissions or what he has called "inculpatory" as well as exculpatory statements, pointing, in other words, to parts of the prosecution evidence which support the jury's finding of guilty. We cannot regard this as a satisfactory exercise, not least because it is almost impossible to conceive of any series of answers -- i.e. something more than a bare denial -- which cannot be regarded as containing some admissions of relevant fact as well as a statement of innocence and denial of guilt (the so-called "exculpatory" part of a mixed statement). The question is how to identify the kind of interview which contains enough in the nature of admissions to justify calling it a "mixed" rather than an "exculpatory" statement.

Mr Bethel submits that the test to be applied should be that a statement is a "mixed" statement if it contains any admission of a fact which is significant in relation to the prosecution case. Mr Milford QC, on behalf of the prosecution, prefers to rely upon a passage in the judgment in Duncan which reads as follows:

"Where a 'mixed' statement is under consideration by the jury in a case where the defendant has not given evidence, it seems to us that the simplest, and, therefore, the method most likely to produce a just result, is for the jury to be told that the whole statement, both the incriminating parts and the excuses or explanations, must be considered by them in deciding where the truth lies. It is, to say the least, not helpful to try to explain to the jury that the exculpatory parts of the statement are something less than evidence of the facts they state. Equally, where appropriate, as it usually will be, the judge may, and should, point out that the incriminating parts are likely to be true (otherwise why say them?), whereas the excuses do not have the same weight. Nor is there any reason why, again where appropriate, the judge should not comment in relation to the exculpatory remarks upon the election of the accused not to give evidence."

We would hold that where the statement contains an admission of fact which are significant to any issue in the case, meaning those which are capable of adding some degree of weight to the prosecution case on an issue which is relevant to guilt, then the statement must be regarded as "mixed" for the purposes of this rule. This is little, if any, different from paraphrasing the use of the word "incriminating" in the passage in Duncan which we have already quoted. If the statement is of that nature, then the credibility direction is required and the whole statement can be regarded as evidence in the case.

Before returning to consider the present case, we make the following general observations. The present rule leads to the somewhat anomalous situation where an exculpatory statement, although given in evidence, is not properly regarded as evidence in the case; whereas if it is accompanied by significant or incriminating admission(s), it is. Strictly, that is a situation which should not arise. Out of court statements are inadmissible if they are wholly exculpatory. The reason given is that an admission is by definition contrary to the defendant's own interests and therefore is more likely to be true. One might add by way of comment that a fortiori if the defendant is of good character, and if good character is relevant to credibility, then an admission by a defendant of good character is more likely than otherwise to be true.

But even though such statements are not strictly admissible, it inevitably occurs that they are admitted in evidence, usually as part of the prosecution case. As Professor Andrews puts it in Andrews & Hurst Criminal Evidence (2nd ed.) paragraph 19.09:

"Different considerations may apply where the statement is largely or entirely self-serving. In practice, the prosecution usually lead evidence of any statement that the accused makes when taxed with the alleged offence, including purely exculpatory statements. This may in fact assist the prosecution, in that it ties the accused to a particular story, and the practice has been approved by the Court of Appeal in R v Storey (1968) 52 Cr App R 334, [ R v Pearce (1979) 69 Cr App R 365] ...."

There are logical difficulties in the present situation. We express the hope that the law will develop further towards a simple rule distinguishing between (1) admissibility, (2) what direction the judge should give to the jury, and (3) in what circumstances does a defendant who has been convicted have grounds for complaint if the direction was not given?

As regards (1), if the evidence is admitted in fact, the distinction between admissions and exculpatory parts need not be drawn. As regards (2), the learned judge could direct the jury simply that a defendant of good character is more likely to tell the truth, whether in or out of court, just as any defendant is less likely to make admissions against interest (the point noted in Duncan). As regards (3), a defendant who is convicted could complain that the direction was not given when the statement went beyond admissions -- i.e. gave his side of the story, which he says is consistent with innocence, not guilt. We should add that we have not considered in this context the relevance, if it has any, of the Criminal Justice and Public Order Act 1994.

We return to the present case in order to consider what are alleged to be admissions in this particular interview, which result in the interview properly being regarded as "mixed". The particular passages relied upon are, first, four at pages 10, 11, 17 and 19, which were concerned with the preliminary correspondence where the appellant had been concerned with the obtaining of a quotation from 3iC, another from Arthur Andersen, and deciding which of those should be accepted. The effect of statements by the appellant was to indicate that he had been involved in those processes. He said at one stage that he had "banged the table" with 3i with regard to them obtaining this job, and it can be said that he thereby admitted that there was that degree of involvement so far as he was concerned in that stage of the AMT grant application. But any reading of those passages overall shows beyond doubt that what the appellant was saying was that although he was the Chairman, although he had played a Chairman's role in relation to these matters, although he had some little knowledge of the detail, he had no idea of the precise figures, he had no personal involvement in the administration of the scheme, and he was totally unaware of anything which could be called dishonesty. It seems to us that taking those passages first, in so far as they were admissions, they were admissions merely of what was obvious, and admissions which the appellant could hardly fail to make, even for the purposes of what he was saying, which was that he had no personal knowledge of the matters which were the basis subsequently of the charge.

Similarly the next passage referred to at page 23 of the interview involves an admission by him that he had been present at a particular meeting. But again he went on to say that he had no recollection of it; he had no detailed knowledge at the time. The theme of what he was saying was wholly exculpatory rather than otherwise so far as any matter relevant to the charge subsequently brought against him was concerned.

On page 24 he accepted that the "buck in terms of decisions stops with me and I appreciate that". That, it is submitted, is an admission that he had at least the responsibility of Chairman. To that extent it supports the prosecution case. But the same answer continues immediately as follows:

"But if I have been given or feel that I've been given misrepresentation of information, then that does not make me guilty of any crime. I have no intention to defraud the DTI."

It seems to us that that is clearly to be regarded as an exculpatory answer. The limited admission contained in the first sentence is not the kind of admission which qualifies the nature of the answer.

The next matter referred to involves a passage in the interview which covers three to four pages. The police officer produced a manuscript document, which was not strictly admissible in evidence against the appellant, although a note on it appeared to have been addressed to him. It set out details of the scheme sufficient to show that there was dishonesty of the kind that was subsequently alleged. When asked about that document the appellant volunteered that he had found a copy of the same document in his own file and, what is more, it was a copy which contained a note written by himself. He went on to say:

".... I've obviously seen it because I've written a note on it, but it didn't register as being, it didn't alert me, it didn't ring any blinking bells. I wish it had. There are other people I pay to, you know, to have information and correlate ....

I've admitted I've seen the wretched document and if I hadn't found that document through searching in my files, in Mandy Simons' memo files of which there are thousands of the things, I would have said to you 'Never seen it before'. Can I make that clear?

Whatever it implies, a document like that has not got a lot of meaning to me ...."

At the same time, however, he accepted that what the document said was something in the nature of a plan which would be suspicious. He said:

"Yes, it does look like some sort of a plan almost, but it would mean nothing to me."

The fact that he volunteered a copy of the document and admitted having seen it at the time were certainly admissions of fact which might perhaps be sufficient to bring this statement within the "mixed" category. But overall, even those passages read in their context show that the appellant essentially was making an exculpatory statement. This was because not only was the emphasis placed upon his lack of understanding of the document, but in fact the comment which he had made was precisely that. His manuscript note was "I don't understand this", plus some further reference to the figures.

It seems to us overall that what the appellant was saying in that interview, notwithstanding that he had volunteered the fact that he had seen the document, was that he did not understand the contents at the time any more than he did when these matters were put to him by the police. It seems to us that to regard that as anything other than an exculpatory statement, or as part of an overall denial, would not be correct. It seems also that little, if anything, was made of that particular answer and admission at the trial.

We ask ourselves the question already posed: were these limited admissions "significant" in relation to the central issue in the case against the appellant, or incriminating in the sense already described, the issue being did he have knowledge of the dishonest grant application scheme? It seems to us that it is only possible to classify this as an exculpatory statement, notwithstanding the presence of those limited admissions of fact.

We therefore conclude that the summing-up cannot properly be criticised for failing to include the credibility aspect of the good character direction so far as the appellant was concerned.

We have been referred R v Fulcher . Consistently with what Kennedy LJ said there, we can in the present case confidently assert that the absence of that direction did not, and cannot have made any difference to the jury's assessment of the evidence as against the appellant.

Finally, what has also been argued today in the light of the submissions made with regard to the good character direction is ground 10 of the original Notice of Appeal. The interview was dealt with in the summing-up in a passage which covers a total of 14 pages on Day 3. Those pages were taken up with a detailed consideration of the content of the interview, and the learned judge concluded as follows:

"Well, that was his interview, ladies and gentlemen. I have gone through it, as I say, in some detail because that is the only explanation you have got so far as he is concerned."

When it came to the later stage of the summing-up, when she was considering the cases for the defence, she said this about the appellant:

"As you know, Mr Garrod did not give evidence, but there were two character witnesses, one of them in person."

The submission is that the learned judge at that stage should have summarised the appellant's case and dealt with a number of specific issues where the prosecution evidence either was contradictory or had been challenged on behalf of the appellant, or was itself favourable to the defence. The specific matters are set out in Mr Bethel's skeleton argument in relation to ground 10. The submission is aligned with the general ground under head 2 of the grounds of appeal that the summing-up was not fairly structured so far as the appellant was concerned.

We would hold that it cannot be said that there was any obligation on the judge to devote part of the summing-up to a summary of the prosecution case against each of the defendants and of the defence of each defendant. Sometimes it is useful to do so, but one cannot say, in our view, that it was necessary or even desirable here.

So far as the appellant is concerned, his interview, even if it was not strictly evidence, was treated in detail by the learned judge, followed by the comment already made. She said in terms that she had done that because it was the only account by the appellant which the jury had before them. To complain that in those circumstances the jury were not invited to consider whether or not that account might have some merit in it as an answer to the prosecution charge seems to us to involve a highly technical approach to what should be regarded as a matter of good sense, not only by the jury but also by the judge for the purposes of the summing-up. If the learned judge had included her detailed consideration of the interview in the summing-up, not as part of the prosecution case, but when she was dealing with the defence case -- and it must be recognised that that would be conceptually quite wrong -- then the appellant would have had no ground for complaint. In the ultimate analysis it seems to us that the learned judge did deal fairly and sufficiently with the content of the interview and that it cannot be a serious ground for appeal that the summing-up should have dealt with it in a different place from where in fact it was dealt with. In those circumstances it seems to us that there is nothing in this final ground of appeal.

We stand back in the light of the interlocking but separate issues that have been raised and ask ourselves: in all the circumstances, and taking account of all the matters which have been raised, can we say that this conviction is one which should be regarded as unsafe? We are quite satisfied overall that that cannot be said. The conviction is entirely safe, in our view, on the basis of the evidence that was given. This appeal must be dismissed.

MR MILFORD: There is the question of costs. The appellant is a man of means and we ask for our costs. They are estimated at about £23,500.

MR BETHEL: My Lord, two observations about that. First of all, of course, this was a case where leave was given by the full court. But that apart, in my submission it would not be appropriate for the appellant to have to pay the costs of the hearing a year ago in front of a court chaired by Roch LJ when the case had to be adjourned because of disclosure immediately before that appeal. Your Lordship has indicated in the course of the judgment that the additional material was relevant and should have been disclosed, whether it was the Department of Trade and Industry or the Crown Prosecution Service who were under an obligation to disclose it.

So, my Lord, first, we would submit that the appellant should not have to bear the Crown's costs of that abortive hearing. But secondly, my Lord, I would submit this, that it was proper in these circumstances, despite your Lordships' views in the end of the merits of it, for the arguments relating to that material which should have been disclosed before trial to be ventilated in this court. We would invite your Lordships to consider that in those circumstances it would be right that the appellant should not have to bear the whole of the costs of the Crown; that if he has to bear any of them, it should be some percentage and not the whole of them.

MR MILFORD: Well, I hear what my learned friend says. The fact of the matter is that the material which was not before the defence has in the event made no difference to the outcome of the case.

LORD JUSTICE EVANS: Was the prosecution represented on the application for leave?

MR MILFORD: No.

LORD JUSTICE EVANS: But it was represented, was it, before Roch LJ?

MR MILFORD: Yes.

LORD JUSTICE EVANS: Was the application opposed?

MR MILFORD: Was the application for an adjournment opposed?

LORD JUSTICE EVANS: Well, there was an application for discovery, was there not?

MR MILFORD: No. We came on 9 October to do the appeal. It then transpired that there were other documents which the appellant wanted to see and it was regarded on all sides as being unwise to proceed with the appeal until such time as the appellant's side had seen everything they wanted to see. So I did not oppose the application for an adjournment, no.

LORD JUSTICE EVANS: We have a note that disclosure was ordered.

MR MILFORD: Yes. In fact 3i were themselves represented on that occasion by my learned friend Mr John Matthew.

LORD JUSTICE EVANS: And then I think what happened was we got the supplementary grounds of appeal some time earlier this year?

MR MILFORD: Yes. What happened was that the files were sent up by the DTI to Newcastle. They were examined by the appellants and supplementary grounds followed.

LORD JUSTICE EVANS: And you got the supplementary grounds some time in April 1996?

MR MILFORD: Yes.

LORD JUSTICE EVANS: Yes. Thank you. Mr Milford, we think that there should be no order for costs up to the date of the service of the supplementary notice of appeal, which seems to have been 15 April 1996. But then you shall have your costs for the appeal since that date.

MR MILFORD: I am grateful. I am just wondering exactly how they would be calculated, but I am grateful.

LORD JUSTICE EVANS: That will not give rise to any difficulties, will it? The date we have is 15 April, which I take it is the date of service.

MR BETHEL: My Lord, I would not expect it to give rise to any difficulty. No doubt those instructing my learned friend will write to those instructing me with their submissions as to what their costs are at that date. May we have liberty to apply?

LORD JUSTICE EVANS: I do not think it is worth that. The date on the document is 15 April 1996.

MR BETHEL: Yes.

LORD JUSTICE EVANS: Service took place within a day or two of that.

MR MILFORD: My Lord, the matter which exercises me quite frankly is this. Obviously the main part of the Crown's costs are the brief fees of my learned friend Mr Sloan and myself and of course they had been agreed by 9 October 1995. On that basis the largest part of our costs would fall before 15 April -- or the Crown Prosecution Service's costs. There would then be refreshers which follow thereafter.

LORD JUSTICE EVANS: There is another point. The DTI might have something to answer for. It was as a result of the non-disclosure.

MR MILFORD: My Lord, I would be slow to make any critical remarks of the DTI because they have not been separately represented in these proceedings and, as you know from the correspondence which you have seen, they have always maintained that we were given the opportunity to see the material. Sergeant Cullen does not recollect seeing it, so it is perhaps not entirely black and white.

LORD JUSTICE EVANS: We do not make any comment, but as between prosecution and defence we say that the appellant should only pay your costs from 15 April 1996. If you have any problem about costs before that date, and if you are able to say that it was as a result of the DTI's failure, you will look to them. Thank you both very much.

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