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R V WEBB AND SIMPSON [2000] EWCA Crim 56 (23rd October, 2000)
Case No: 99/3785 & 99/3786/S3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (C RIMINAL DIVISION)
Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 23rd October 2000
B e f o r e :
LORD JUSTICE KENNEDY
MR JUSTICE FORBES
and
MRS JUSTICE STEEL
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V
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WEBB
AND SIMPSON
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APPELLANTS
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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2HD
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
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Anthony Arlidge QC & Max Hill (instructed by Ashurst Morris Crisp
for the Appellants)
Richard Sutton QC & Jonathan Fisher (instructed by the Solicitor of
Inland Revenue for the Crown)
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Judgment
AS Approved by the Court
Crown Copyright
LORD JUSTICE KENNEDY:
1. In May 1999, after a fifteen week trial at Snaresbrook Crown Court,
these appellants were convicted of cheating the Revenue, conspiracy to cheat,
and false accounting (Counts 1, 2, 6, 7, 8 and - in the case of Webb - Count
9). They were fined substantial sums, and a joint confiscation order was made
in the sum of £1.6 million. They now appeal against conviction by leave
of the single judge.
2. The Copyright/Off-Shore Counts
Most of the facts which form the background to this case are not in dispute.
Robert Webb is about 54 years of age. In 1988 he and Derek Baber were
investigated by the Inland Revenue in relation to an off-shore bank account.
They employed accountants, Appleby and Wood to assist them. Mr Oswald, a
chartered accountant, was the managing partner of that firm, assisted by Mr
Foster, a certified accountant. When it was clear that the 1988 problem could
be resolved by a settlement the accountants referred Webb and Baber to Hemery
Trust and Corporate Services Ltd, Jersey. In June 1990 Webb and Baber met
Kevin Gollop, a director of Hemery, to seek advice in relation to tax planning.
They had a majority shareholding in an English company, Widdocks and Co, which
owned premises at 604 Mitcham Road, Sydenham, where they ran a garage business.
Mr Gollop suggested incorporating in the Bahamas an off-shore holding company
which would then set up or buy a Belgian company, which in turn would take
control of Widdocks. That would enable Webb and Baber to take advantage of
the Anglo-Belgian Double Taxation Treaty. Any capital gain on 604 Mitcham Road
would be taxed in Belgium and not in the United Kingdom.
Initially the proposal appears to have been accepted, and so in 1990 a
Bahamian company Shambord International Limited, was purchased. Two bearer
shares were allocated to Hemery and then transferred to trusts of which the two
appellants and Baber were settlors. Gollop and two business men in Sark were
appointed directors but no Belgian company was acquired, and the proposal then
foundered.
We now turn to the appellant Moira Simpson, who is about 44 years of age. She
had worked for a Swiss company, Schiedegger, which provided a distance learning
course in book-keeping. That company went into liquidation and she and the
appellant Webb then decided to market such a course themselves. Initially she
did so through a short lived company, Coutts de Vere Ltd. In late 1991 she
began to trade as the Learning Library, and by May 1992 Webb had re-written for
the Learning Library the course used by Schiedegger.
It seems that Webb then had the idea that it might be possible to claim
copyright for the re-written course, and that if copyright were to be
transferred off-shore royalties paid in respect of it would be tax free. He
discussed the proposal with Foster, who consulted Oswald, who advised that if
that course were to be followed then, despite the provisions of the Income and
Corporation Taxes Act 1988, it would not be necessary for a United Kingdom
resident to withhold and account for income tax on payments made to an
off-shore account. Webb and Foster disagreed as to why Oswald so advised.
In any event, from at least November 1992, the Learning Library literature
claimed copyright on behalf of Shambord, and, according to Webb, the Learning
Library made royalty payments to Shambord. The payments were variously
described. For example, in the Learning Library accounts they were described
as franchise fees, in the books of Shambord they were copyright payments. No
tax was withheld, and according to Webb he believed this to be a legitimate tax
avoidance scheme.
The Learning Library flourished, so the sums apparently destined for Shambord
were considerable, but a lot of the money did not go to Shambord at all.
Instead it went straight to Moira Simpson Finance, later Empress Finance, which
provided loans to enable students to pay the course fees. According to Webb
this was simply a matter of convenience to save the money having to go from the
Learning Library to Shambord, and then be lent by Shambord to MSF or Empress.
The appellants themselves also derived benefits from the monies which were paid
to Shambord. Some of it was used to buy properties in which they lived,
through the medium of trusts. It was also used to purchase motor cars, and to
furnish them with credit cards.
After about three years the Inland Revenue intervened. It was the Revenue
case that what was going on was simply window dressing, in an attempt to avoid
liability to pay United Kingdom tax. The Revenue contended that, to the
knowledge of the appellants, the re-written course was insufficiently original
to attract copyright, and that even if there was a copyright the ownership of
that copyright, as the appellants knew, was never effectively transferred to
Shambord. The Revenue further contended that even if Shambord did own the
copyright the payments made to it, or to MSF or Empress, were not in reality
royalty payments. They were simply examples of occasions on which money was
shifted out of the accounts of the Learning Library in the hope of putting it
out of the reach of the tax authorities, and without even the interpolation of
a Belgian company the appellants could not, the Revenue contended, have
believed that they were engaging in anything amounting to legitimate tax
avoidance.
In the indictment the Revenue case was encapsulated in the 3 counts of false
accounting contrary to section 17(1) of the Theft Act 1968 (counts 7,8 and 9)
to which we have already referred.
In count 7 the two appellants, together with Baber and Foster, were charged
with dishonestly falsifying the profit and loss account of the Learning Library
for the year ending 31st October 1993 by making an entry therein that the
"costs of course fees" for that period amounted to £994,699. The cost of
course fees was the way in which the alleged royalties paid by the Learning
Library to Shambord (or to MSF or Empress) were described in the accounts.
Count 8 was similar, but related to the year ended 31st October 1994, and the
sum involved amounted to £2,929,081. In 1994-1995 Webb and a man named
Dorney ran a separate venture offering distance learning computer courses. It
operated in the same way as the Learning Library, and was called the Computer
Workshop. Count 9 related to that venture, and was similar to count 7 save
that the defendants were Webb, Dorney and Foster. The profit and loss account
was for a period of about 15 months ending 30th April 1995, and the cost of
course fees was £225,199.
The trial indictment contained 9 counts. In the original indictment there
were 21 counts. In addition to the two appellants there were three other
defendants, Baber, Dorney and Foster. Baber and Dorney were acquitted by the
jury on the directions of the trial judge and disappeared from the case before
the judge began to sum-up. Foster was acquitted on all of the counts in which
he was involved, in some cases on the directions of the trial judge.
3. Vocational Training Relief Counts
The three other offences of which the appellants were convicted (Counts 1,2
and 6 in the indictment) arose out of the way in which they used the VTR scheme
which was then available to assist those attempting to obtain qualifications. A
student who invoked the scheme paid only to the course provider the cost of the
course which he proposed to undertake less tax at the standard rate (for much
of the relevant period 25%). The course provider was able to obtain the
balance from the Financial Intermediaries Claims Office of the Inland Revenue
(FICO). The student and the course provider completed a VTR1 Claim Form, but
those individual claim forms were not submitted to FICO. Instead, on a monthly
basis, course providers submitted a form VTR10 which was in two parts. In the
first part the course provider was permitted to claim for courses he expected
to sell up to a month ahead. In part 2 the course provider was required to
supply his final reconciliation figures for a past period, making allowance for
payments in advance, student cancellations, etc. So, as the scheme progressed,
the periods set out in part 2 of the forms VTR10 submitted by any course
provider should have been consecutive and each part 2 period should have been
supported by original forms VTR1 retained by the course provider, relating to
that period and which had not been cancelled. There was also an annual return
made on form VTR14.
The VTR scheme did place an administrative burden on course providers
especially if (as often) students paid by instalments. We are told that in the
three year period covered by the indictment, 1992 to 1995, Learning Library
students generated about 60,000 forms VTR1 to support a total VTR claim of
about £4 million. In April 1995 FICO carried out an audit of the Learning
Library. They gave notice that they wanted to inspect the VTR1 forms which
supported three specified 1994 VTR10 claims. The result was not satisfactory,
so they collected all of the material relating to 1994. The analysis made then
and subsequently revealed that claims had been made on behalf of students who
had cancelled, and there were duplicate claims. It was the prosecution case
that those irregularities were caused not by administrative errors, but by
cheating which was the offence charged in count 1 in relation to cancellations,
and in count 2 in relation to duplications. In count 6 it was alleged that the
two appellants, together with Baber and Dorney, in preparation for the audit,
conspired to cheat. They attempted to ensure that for the target periods the
Forms VTR10 were supported by valid forms VTR1, even if in reality those forms
related to different periods. For the defence it was said that there was an
administrative inefficiency but no deliberate fraud or concealment.
4. Grounds of Appeal
The grounds of appeal, as developed by Mr Arlidge QC for the appellants before
us, can be summarised under four heads -
(1) the judge should not have questioned Webb and Foster as he did.(Grounds 6
& 7)
(2) After the conclusion of the evidence the progress of the trial was
unreasonably delayed, and the summing-up was inappropriately long and
repetitious, so that by the time the jury retired they no longer had as clear a
recollection of the evidence and of counsel's speeches as they should have
done. Furthermore they did not have the clear unbiased guidance which they
should have received from the trial judge.(Grounds 2,3 & 8)
(3) There were clear and significant misdirections in relation the conspiracy
count, count 6. (Ground 12)
(4) In relation to counts 7,8 and 9 the jury was not assisted as it should have
been as to what the prosecution had to prove, and as to the relevance of the
evidence to those counts. (Grounds 4,5,9,10 and 12)
Ground 11 was abandoned, and ground 1 is compendious. It adds nothing to the
other grounds.
5. Questioning of defendants (Grounds 7 and 8)
We deal first with the way in which the judge questioned the appellant Webb at
the very end of his evidence. At that stage a judge is fully entitled to ask
questions to clear up ambiguities, or even to deal with matters not covered by
counsel, but he must not enter the arena, and experience shows that where, as
here, there are competent advocates on both sides it will not be necessary or
appropriate for there to be many questions from the bench. In this case the
transcript of the judges questioning of Webb is 23 pages long. The judge asked
175 questions, and it is clear that at times he was assuming the role of a
prosecutor and was not displaying appropriate judicial impartiality. Even when
he was factually in error defence counsel was not permitted to intervene to
correct him. Furthermore on the previous day the judge had asked 25 questions
of his own during cross-examination by experienced leading counsel. For the
respondent Mr Sutton QC submits that the judge's questions were searching and
to the point and designed to help the jury to understand the case. Prosecution
witnesses were treated in the same way. That may be so, but prosecution
witnesses are not defendants, and we see no justification for the appellant
Webb having been questioned at length and in the way that he was.
Turning now to the questions which the judge asked of the co-defendant Foster,
it is said on behalf of Webb that the questions asked of the accountant were
overfavourable to the detriment of Webb, as was the way in which the judge
dealt with Foster in the summing-up. In general we do not find that complaint
to be substantiated, but the judge did require Foster to answer for a second
time a question put to him by Mr Sutton at the very end of his
cross-examination, namely whether he thought that he had been duped. We cannot
see what justification there was for that enforced repetition of evidence that
was plainly very damaging to Webb.
6. Delay (Ground 2)
The trial was fixed to commence on 5th January 1999. The jury was sworn in on
11th January 1999. The trial was then estimated to last seven to eight weeks.
Given that there were then 9 counts and four defendants that seems to us to
have been a sensible estimate. The Crown case was concluded on 1st March 1999.
There were then defence submissions which were partially successful, in that
Baber was discharged and the remaining defendants had to face fewer counts.
The defence case concluded on Friday 26th March. The case was already over
running. If the original estimate had been adhered to the whole case would
have been finished before mid-March. Easter Sunday was the 4th April, and at
the start of the trial a juror had said that he had a holiday booked for 30th
April. He had been assured that the trial would be finished before then. What
was not apparent until some time in March was that the trial judge also had
booked a holiday. In his case it was an Easter holiday starting on Tuesday
30th March, and he was not prepared to cancel it. Mr Arlidge also had a
problem. He was retained by a defendant in another serious trial which was due
to commence on 14th April 1999.
In a case of this complexity it has, for many years now, been standard
practice for the trial judge at the end of the evidence,in the absence of the
jury, to seek the assistance of counsel as to the directions of law which
should be given to the jury as part of the summing-up, and to consider to what
extent, if at all, those directions should be reduced to writing, either in the
form of questions or otherwise. We are told that that was not done in this
case. The omission was, to say the least, regrettable, even allowing for the
fact that there had been submissions as to the law at the close of the
prosecution case. Perhaps in an attempt to make good that omission Mr Arlidge,
on Monday 29th March, sought, as he put it, to review some of the propositions
of law raised by the case and to see which pieces of evidence went to which
issue. On that occasion the judge made no rulings save that he acceded to a
submission that the defendant Dorney be dismissed from the case.
The following weekend was Easter weekend, so even if the judge had been
available it was not to be expected that the court would sit after Thursday 1st
April until Tuesday 6th April or Wednesday 7th April. When counsel did
eventually make their final speeches they took three and a half days in all, so
it is clear that the prosecution's final speech could have been made before the
Easter weekend, and the defence speeches could have been concluded by Friday
9th April, the Friday after Easter. A summing-up of 3 or 4 days would enabled
the jury to retire on say Thursday 15th April, at a time when there would have
been no danger of interfering with the holiday commitment of the juror who had
made his position known at the start of the case.
Regrettably that is not what happened. Because of the Judge's holiday
commitment the court adjourned from 29th March to 12th April. As a result of
what was said on 29th March it was no doubt anticipated that the judge would
then give some guidance as to how he proposed to direct the jury as to the law.
So far as we can ascertain he did not do so. So counsel made their final
speeches, finishing on Thursday 15th April. The court then adjourned to enable
the judge to prepare his summing-up. We venture to think that most judges who
had been keeping abreast of this relatively slow moving case would have been
ready to start summing-up as soon as counsels' speeches came to an end, perhaps
after an overnight adjournment, but in this case after speeches came to an end
on Thursday 15th April the court did not sit again until Monday 26th April. By
then it was obvious that if the case proceeded in the normal way not only the
juror who had disclosed his position originally but also another juror would
have to cancel long standing holiday arrangements. So, after two days of legal
argument, the case was adjourned until Monday 10th May. Counsel were then
asked whether, having regard to the lapse of time, they wished to say any more
to the jury. Only Mr Hill, junior counsel for the appellants, availed himself
of that opportunity. He spoke for about an hour and the judge then began to
sum-up. The summing-up lasted 8½ days, and the jury eventually retired on
21st May. The jury returned their verdicts on Monday 24th and Tuesday 25th
May.
So, as has been pointed out, the jury retired 8 weeks after the end of the
evidence, and only 3½ days of that period was taken up with counsel's
speeches. Mr Sutton, who has said all that could be said to account for the
delay, points out, rightly, that in long cases allowance does have to be made
for holidays, and that if, for example, the case is one with many defendants a
lot of time may elapse between the conclusion of the speech for the first
defendant and the retirement of the jury. Mr Arlidge, for his part, concedes
that delay alone, even of the sort encountered here, is unlikely to lead this
court to find the convictions unsafe. But we are in no doubt that after the
end of the evidence the judge was at fault in failing to drive this case
forward as he should have done. His failure to do so inevitably meant that
when the jury retired they did not have the recollection which they should have
had either of the evidence or of the speeches which had been made by counsel on
both sides.
7. Summing-up -Overlong and Repetitious (Ground 3) and Unbalanced (Ground
8)
We turn now to the general criticisms made of the summing-up. It began on
Monday 10th May and spanned 10 working days. On the penultimate day the court
could not sit because jurors were unwell, so that day can be disregarded, but
it is noticeable that on other days significant periods of time were devoted to
discussions in the absence of the jury as to the relevant law. Many if not all
of those discussions would have been unnecessary if there had been a proper
discussion of the law at the end of the evidence, following the standard
practice we referred to earlier in this judgment.
Having heard the oral submissions addressed to us, and recognising that
grounds 3 and 8 in the Notice of Appeal are being pursued, we have read the
whole of the transcript of the summing-up. Having done so we have to say that
it is far too long, and repetitious, but it does have a structure and we are
not satisfied that it is unfair or over-partial to the prosecution case.
Certainly the judge did comment at times in ways which did not favour the
defence, but his comments were appropriate, and, as Mr Sutton points out, he
also commented adversely on parts of the prosecution case - see, for example,
in relation to the evidence of MacLaren Rowe. The judge was also at pains to
put the defence case, as explained by the appellants both in their interviews
and in the witness box.
8. Misdirection as to Count 6 (Ground 12)
Mr Arlidge for the appellants contends that the judge misdirected the jury
that they could convict on this count on the basis that Webb conspired with
Baber and/or Dorney, who by the time of the summing-up had already been
acquitted, and that, Mr Arlidge contends, was a misdirection.
Undoubtedly the judge did direct the jury as alleged. In the transcript for
11th May 1999 (Volume XII, Day 2 of the summing-up) at page 90G he said -
"What you have to be satisfied about here, members of the jury, is firstly that
there was an agreement and the agreement was between Mr Webb and Miss Simpson.
He could have agreed with Mr Baber and Mr Dorney also. You are relieved from
having to determine whether Mr Dorney or Mr Baber did agree with Mr Webb
because of the direction that I gave to you. It does not stop Mr Webb from
being able to have made the agreement with them also, and that agreement was
that they should engage themselves in a way to conceal from the FICO the fact
that the previous claims had been based in parts upon cancelled or duplicated
claims, to remove those from the auditor's view."
Having looked at the evidence as to the parts allegedly played by each
appellant in sanitising the boxes in readiness for the FICO inspection the
judge continued at 94C to D -
"I repeat, in this particular case the offence is the agreement. It doesn't
have to be put into practice. The person who says he did what the Crown allege
is Mr Webb. In order to be a conspiracy, there must be an agreement between
one or more persons, any other person or persons in the plural. If you find
there was no one else who was involved, then are you satisfied that Mr Webb
made this agreement or reached an agreement with Mr Baber and /or Mr
Dorney?"
So, at that stage the possibility is being canvassed of Webb, but not Simpson
conspiring with Baber and/or Dorney. The judge then goes on to refer to what
Dorney and Baber said when they were interviewed, and, as Mr Sutton readily
volunteered to us, that evidence was not admissible against either appellant.
The judge should not have mentioned it at all, save perhaps to tell the jury to
put it out of their minds.
Mr Sutton does however contend that the judge was right to tell the jury that
the appellants could and should be convicted if they were found to have
conspired with Baber and/or Dorney. He drew our attention to section 5(8) of
the Criminal Law Act 1977 which reads -
"The fact that a person or persons who, so far as appears from the indictment
on which any person has been convicted of conspiracy, were the only other
persons to the agreement on which his conviction was based have been acquitted
of conspiracy by reference to that agreement (whether after being tried with
the person convicted or separately) shall not be a ground for quashing his
conviction unless under all the circumstances of the case his conviction is
inconsistent with the acquittal of the other person or persons in question."
That provision was considered by this court in Longman and Cribben
[1981] 72 Cr. App R 121 where Lord Lane CJ said at 124 -
"When a trial judge is faced with the task of directing a jury in a case of
this sort, where the charge is that A and B conspired together but with no one
else to commit a crime, he will, as in other cases involving two defendants, as
a general rule have to tell the jury that they must consider the evidence
against each defendant separately. Where the strength of the evidence against
each is markedly different, usually (as in the instant case) because A has
confessed and B has not, he should then go on to explain that because there is
that difference in the evidence against each, the jury may come to the
conclusion that the prosecution have proved beyond doubt against A that A
conspired with B, but have not proved against B that any such conspiracy
existed.
That may appear to be illogical, but it is the necessary result of the rules of
evidence which are designed to ensure fairness. If, therefore, the jury are
satisfied that A conspired with B but are not satisfied that there is adequate
evidence of B's guilt, they should convict A and acquit B. We can see no
reason why the jury should not understand such a direction.
Where at the close of the prosecution case the evidence against one of the
defendants is such that it would be unsafe to ask any jury to convict, then it
goes without saying that the judge should so rule, and the case can then
continue against the other defendant.
There will, however, be cases where the evidence against A and B is of equal
weight or nearly so. In such a case there may be a risk of inconsistent
verdicts, and the judge should direct the jury that because of the similarity
of the evidence against each, the only just result would be the same verdict in
respect of each: that is to say, both guilty or both not guilty. He must be
careful to add, however, that if they are unsure about the guilt of one both
must be found not guilty."
Baber was acquitted at the close of the prosecution case, and Dorney at the
end of the defence case, he not having given evidence. The judge indicated
that he would not invite the jury to draw any adverse inference from that fact,
and that meant that the only admissible evidence against Dorney in relation to
count 6 was his own admission in interview that he had been present in the
Learning Library premises going through the boxes which FICO were to audit in
order to remove forms relating to students who had cancelled. In a later
interview he said that he was only putting forms in sequence so that cancelled
forms could be withdrawn. The judge then acceded to the submission that the
jury should be directed to return a verdict of not guilty in the case of
Dorney. His precise line of reasoning is not clear from the transcript, but
presumably he was not satisfied that the evidence which was admissible against
Dorney was sufficient to show that (1) there was a conspiracy and (2) he was a
party to it. No doubt the position had been the same in relation to Baber at
the close of the prosecution case.
In theory, as can be seen from section 5(8) of the 1977 Act and from
Longman and Cribben the situation so far as these appellants were
concerned could have been different. There could have been evidence admissible
against one or both of them to show that (1) there was a conspiracy involving
Baber and/or Dorney and (2) one or both of the appellants were a party to it.
But we cannot see how the evidence of the conspiracy involving Baber and/or
Dorney was any stronger when considering the appellants than it was when
considering Baber and Dorney, and certainly if the jury was to be asked to
consider the possibility of finding either appellant guilty of conspiracy with
either Baber or Dorney there was a need for the jury to be carefully instructed
as to how they could legitimately reach that conclusion, having already
acquitted both Baber and Dorney on the instructions of the trial judge.
Patently the jury did not receive a careful instruction of that kind, and the
situation was aggravated by the citation of the inadmissible evidence. In
those circumstances it seems to us that the convictions on count 6 cannot be
regarded as safe, and those convictions at least must be set aside.
9. Directions in relation to false accounting (Grounds 4,5,9,10 and
13).
The prosecution case in relation to counts 7, 8 and 9 was simple, and Mr
Sutton set it out time and time again. The prosecution contended that -
(1) It was at least questionable whether Webb's revision of the book-keeping
course resulted in something sufficiently original to attract copyright.
(2) If it did, then the copyright was never properly transferred to Shambord,
which in effect was only Webb and Simpson operating under another name.
(3) The payments of "royalties" by the Learning Library to Shambord was simply
a means of transferring money out of the Learning Library to prevent it being
taxed as part of that institutions trading profits. No tax was withheld on the
"royalties" payments as it should have been (see sections 349 and 536 of the
Income and Corporation Taxes Act 1988) and much of the money never went to
Shambord at all. It went straight to MSF or Empress and was used to finance
more students. Hardly any of the "loans" made by Shambord to MFS/Empress were
repaid, and they were not properly documented. Other Shambord money was used
for the benefit of Webb and Simpson (accommodation, cars, and credit cards)
without regard to the taxation provisions which require United Kingdom
residents to pay tax on property transferred abroad which they still have power
to enjoy (section 739 and 741 of the 1988 Act), and it all reeked of
dishonesty.
(4) Therefore the entries in the profit and loss accounts were false. The
Learning Library (counts 7 and 8) and the Computer Workshop (count 9) did not
expend those sums of money on "cost of course fees" and the appellants knew it.
The entries in the profit and loss accounts were simply part of the smoke
screen which would enable the appellants if challenged to say that they
believed that what they were doing was legitimate and above board.
The defence case was that the appellants were engaged in what they, at the
time believed to be legitimate tax avoidance, but which they now accept to have
been ineffective. Webb had taken advice in 1990, and although he did not
precisely follow that advice he did believe that there was a valid copyright
which was transferred to Shambord, albeit without any formality. Shamboard was
then entitled to charge for the use of the copyright and the sums in the profit
and loss accounts were the sums it charged. Admittedly money was usually
transferred to MSF/Empress, in amounts dictated by the needs of those bodies,
but there were attempts to reconcile the sums transferred with the charges per
course, or at least that was what was intended. As to the benefits received by
the appellants themselves, they intended to declare those but had not got round
to doing so, and anyway even if they were dishonest in their use of Shambord's
money that does not prove the offences charged - they were still entitled to
say that the profit and loss accounts did accurately reflect what was paid to
Shambord by the Learning Library and the Computer Workshop for the "cost of
course fees" (i.e. copyright).
In his final speech to the jury Mr Sutton summarised the issue in this way
-
"You have to decide whether the prosecution have proved to you the defendants
knew that the arrangement was not tax efficient and whether each defendant,
knowing this, deliberately and dishonestly pursued a course of action which
involved as a fundamental part the falsification of the accounts."
On a number of occasions during the trial the judge, in the absence of the
jury, expressed his concern as to whether the offences charged in counts 7,8
and 9 were appropriate. He thought it might have been better to charge the
appellants with cheating, as in counts 1 and 2. We do not share his concern,
but we do accept that as the counts were framed the focus was on the movement
of money out of the accounts of the Learning Library and the Computer Workshop,
not on what happened to it after it reached Shambord or MSF/Empress. The
evidence about what happened to it was admissible in relation to dishonesty,
but what was alleged was an extraction fraud, not a remittance fraud, and the
thread running through the grounds of appeal with which we are now concerned is
that the judge failed properly to recognise and to give effect to that
distinction.
Naturally Mr Arlidge was anxious to restrict so far as possible the
exploration of the appellants enjoyment of that which formed part of the sums
mentioned in the profit and loss accounts, and, after prosecuting counsel's
final speech, the judge re-opened this topic. The judge then on 27th April
expressed the view that the case was not concerned with the provisions of the
1988 Act, or "other than peripherally, with the identity of the control of
Shambord", but he did recognise that those matters bore on the issue of
dishonesty. Unfortunately when he summed-up in relation to counts 7,8 and 9
the judge seems to have forgotten what he said about a fortnight earlier. He
dwelt at some length on the provisions of the 1988 Act. As Mr Sutton submitted
to us, the judge's explanations of the statutory provisions were accurate, but
neither Mr Sutton nor we can understand why they were considered to be
necessary. In ground 4 of the grounds of appeal it is said that "the
jury were invited to convict if they were satisfied that the appellants knew of
these provisions", but that is not correct, and Mr Arlidge in his skeleton
argument and in his submissions to us did not go that far. He concentrated
more on what he submitted was a failure to identify and limit the relevance of
the statutory material. In ground 5 the complaint is that having said
what he did about the control of Shambord the judge "nevertheless summed-up
this question in great detail without adequately explaining its limited
relevance". But, as Mr Sutton points out, the question of who controlled
Shambord was relevant. If it was Webb, was he attempting to conceal his
control so as to pretend that Shambord and the Learning Library or the Computer
Workshop were dealing with each other at arms length? Furthermore the judge
did, on more than one occasion, explain the limited relevance of the evidence
and to who controlled Shambord. In particular in his outline of the case
against each appellant, and at the end of the summing-up he set the issue in
its proper context, as evidence capable of proving dishonesty.
In ground 9 it is contended that the summing-up failed to direct the
jury on the relevance of the different aspects of the evidence as to the issues
raised by the particular charges brought in the case. In part this is a
complaint about the structure of the summing-up, but otherwise it does not add
anything to grounds 4 and 5.
Ground 10 is more general. It is said that the judge introduced into
his summing-up comments on matters not fully explored in evidence, but the
particulars given do not seem to us to disclose anything improper. The
analysis for example, of the word "fees" in "cost of course fees" was, we would
accept, prolonged, but it cannot realistically be regarded as even part of a
viable ground of appeal, and we note that this ground of appeal did not really
feature in Mr Arlidge's submission to us. As Mr Sutton points out, the jury
received an appropriate direction in relation to the drawing of inferences
quite early in the summing-up, and in relation to this ground of appeal there
is no more to be said.
That brings us to the final ground of appeal, ground 13 which complains
of the judge's failure to discharge the jury when it was pointed out to him
that he had summed-up in contravention of an earlier ruling given by him, and
adopted an unfair approach to the appellants. This is really the same point
made in grounds 4 and 5, and the answer must necessarily be the same. The
judge did not invite the jury to convict on the basis of a remittance fraud,
and after rejecting the defence submission he underlined that point, but the
evidence about what happened to the money after it left the Learning Library
and the Computer Workshop was relevant to dishonesty, which was a key issue in
the case, and so that evidence was important, however much the defence would
have liked to see it down-played. As Mr Sutton pointed out, one of its
compelling aspects was the timing, from which it could be inferred that the
need to obtain funds for other purposes rather than any Shambord right to
royalties was the true explanation for the "cost of course fees".
10. Conclusion.
We turn now to the jurisdiction of this court. We are required to
allow an appeal if we think that the conviction is unsafe, and in any other
case dismiss the appeal. We have already indicated that we think that the
convictions on counts 6 are unsafe. So far as the remaining counts are
concerned we have been critical of the questions asked by the trial judge, of
the delay after the conclusion of the evidence, and of the length and
repetitious nature of the summing-up. Those criticisms have to be taken into
account when considering the grounds of appeal in relation to count 7, 8 and 9,
but even when they are taken into account we consider that the convictions on
counts 1, 2, 7,8 and 9 are safe. The issue on counts 1 and 2 was straight
forward, and the jury cannot have been in any doubt about it. The same can be
said of the fundamental issues arising in relation to counts 7,8 and 9.
Furthermore, in our judgment, looking at the matter overall, the evidence of
false accounting was overwhelming. Accordingly the appeal against conviction
succeeds only in relation to counts 6, and otherwise is dismissed.
******************
LORD JUSTICE KENNEDY: For the reasons set out in the judgment which
has been handed down, this appeal against conviction succeeds only in relation
to Count 6 and is otherwise dismissed. There is, as counsel will appreciate,
an Attorney General's Reference in relation to this matter. That is now listed
for hearing at 10.30 next Monday morning.
MR FISHER: On behalf of the Crown, although we appreciate what my
Lords have said with regard to Count 6, the Crown would apply for their costs
with regard to the other matters, and would ask for in terms the costs of this
appeal.
The total figure is in the sum of £37,700. Neither defendant -- nor
appellants -- are legally aided in this case.
LORD JUSTICE KENNEDY: That is the appeal costs, not the costs of the
court below?
MR FISHER: That is correct.
LORD JUSTICE KENNEDY: Have details been supplied to the appellants?
MR FISHER: I managed to supply details just before coming into court.
I am afraid that there was not an opportunity to give further notice.
LORD JUSTICE KENNEDY:Mr Hill, what I would envisage at the moment -- and
subject to anything which may be said by my Lord and my Lady -- is that this is
something you ought to consider with Mr Arlidge and be in a position to respond
to next Monday.
MR HILL:My Lord, yes. Certainly, as your Lordship knows, Mr Arlidge will
be here Monday next and cannot be here today. I have discussed with him, prior
to his departure from the country last Friday, the question of whether an
application would be made on behalf of these appellants in respect to their own
costs due to the partial -- although one concedes only partial -- success of
their appeal. So I would, as it were, counter my learned friend Mr Fisher's
application by placing before the court our own application which would be
strictly limited to those costs attached to time given during trial and indeed
during appeal in respect of Count 6 matters alone.
Having put that before the court, it is a matter for your Lordship as to
whether those questions be adjourned until next Monday or whether your
Lordship would wish me to address the court further now.
LORD JUSTICE KENNEDY:It seems sensible to deal with the matter
compositely. Apart from anything else, what happens on Monday may have a
bearing on the financial position of the appellant, I do not know. I say that
without having considered what has recently been placed before us by those
acting on behalf of the Attorney General.
MR HILL: My Lord, I am grateful.
Can I mention one further matter, which is this: it is my hope that a further
document reached its way into your Lordships' hands this morning, entitled
"Application for leave to appeal to the House of Lords".
LORD JUSTICE KENNEDY:The answer is "no", but we will look at it now.
MR HILL:I apologise for that. Can I hand up three copies of a short
document of which my learned friend Mr Fisher has notice. Again on the basis
that it may be that your Lordships will say that this matter too should be
adjourned until Monday next.
LORD JUSTICE KENNEDY:I think this will fall into a rather different
category.
MR HILL:My Lord, it does.
LORD JUSTICE KENNEDY:It does not take long to read.
MR HILL:A single question on the basis that simplicity, one hopes, has
more strength than a long document. Can I say this: albeit that in the course
of your Lordship's judgment there were a number of criticisms of the learned
trial judge, we only think it right under these provisions to suggest that
there is one question that might excite the interest of the House of Lords.
That question I have attempted to phrase at paragraph 3 of this short document.
I phrase it though in the knowledge that your Lordship in giving judgment -- of
which we had sight by draft last week -- has indicated that Mr Arlidge during
the hearing of the appeal had conceded that delay alone -- even of the sort
encountered here -- was unlikely to lead this court to find the convictions
unsafe.
Accompanying the original document of which your Lordship now has a copy is a
brief letter (I am afraid there is no other word for it) from Mr Arlidge to
your Lordship --
LORD JUSTICE KENNEDY:I am afraid we do not have that.
MR HILL:I have copies of it, but it indicates that Mr Arlidge himself
did not think that he had gone that far as to concede that delay alone was not
enough. If he did go that far, he would encourage me to say on behalf of these
appellants that having now seen the terms in which your Lordship encapsulated
the delay, and the importance of it with regard to its effect on the jury's
consideration -- I should say, recollection -- of the evidence, Mr Arlidge
would now seek to distance himself from any concession which he made last
month. The court is invited to revisit the question of delay in these
particular circumstances and to say that there is a question fit for
certification.
LORD JUSTICE KENNEDY:I hope I did not misquote him. I certainly did not
intend to and I would not, for my part, hold him to it in any sense in relation
to these proceedings if it was something he said on his feet which may have
gone a shade further than he intended. So I do not think he should be in any
way troubled about that jeopardising the issue, but the issue remains whether
we should certify or not.
MR HILL: Yes, of course.
LORD JUSTICE KENNEDY:Is there anything more you wish to say in respect
of this matter?
MR HILL:No. Thank you, my Lord.
LORD JUSTICE KENNEDY:Do you want to say anything about this, Mr
Fisher?
MR FISHER:My Lord, yes. We would certainly invite my Lords to say that
there is no point here to be certified. The essential basis of my Lords'
decision rests upon the question of safety, and my Lords have condescended to
go into the factual matters to deal with that. That, par excellence, is a
matter for this court rather than for a higher court.
We respectfully say, in those circumstances, that there is no point of law
that is free-standing in a sense of being capable of being decided in a way
that moves apart from the factual basis that my Lords have had to consider.
Therefore, my Lord, we would resist the application.
LORD JUSTICE KENNEDY:Thank you. I am afraid, Mr Hill, we are not
prepared to certify. We thank you for your assistance.
© 2000 Crown Copyright
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