Neutral Citation Number: [2012] EWCA Crim 2127
Case No: 2012/2643/A4 
IN THE COURT OF APPEAL
CRIMINAL DIVISION 
Royal Courts of Justice
Strand
London, WC2A 2LL 

Date: Wednesday 10 October 2012
 
B e f o r e:

MR JUSTICE SWEENEY 
 
THE RECORDER OF MANCHESTER
- - - - - - - - - - - - - - - - - - - - -
R E G I N A 

v 

JONATHAN KIRTLAND
 
- - - - - - - - - - - - - - - - - - - - -
Computer Aided Transcript of the Stenograph Notes of  
WordWave International Limited
A Merrill Communications Company 
165 Fleet Street  London EC4A 2DY
Tel No: 020 7404 1400 Fax No: 020 7831 8838
(Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -

Sir Ivan Lawrence appeared on behalf of the Appellant 
- - - - - - - - - - - - - - - - - - - - -
Judgment

THE RECORDER:  
1.	On 30th March 2012 in the Crown Court at Blackfriars before Mr Recorder Baughan QC, the appellant was convicted after a trial of four counts of supplying articles for use in frauds, contrary to section 7(1) of the Fraud Act 2006, and was sentenced to a fine of £25,000 on each count, so £100,000 in all, to be paid within 12 months with a period of 18 months' imprisonment in default of payment.  He was also ordered to pay the £15 victim surcharge and prosecution costs of £2,525 within 12 months.  He now appeals against sentence by leave of Openshaw J, the single judge.

2.	Virgin Trains operated a system whereby its contracted staff could travel first class at any time whilst they were on duty.  Staff were issued with an annual pass to enable them to do this.  The appellant supplied forged first class travel passes, in fact intended for Virgin employees, one to a man who was Chief Executive of a company that also undertook contract work for a government ministry and one to another man.  Both thought that the passes were genuine when they received them.  But between 1st February and 23rd May 2010 on four occasions employees of those two men were found to be using the forged passes on Virgin Trains.  

3.	On 4th August 2010 the appellant was arrested.  When interviewed he said he had been approached by a man in Virgin uniform at Birmingham International Railway Station in late 2008 enquiring whether he wanted to buy his friends and family spare passes.  He said he would ask around and he supplied his two friends with the passes.  He said the passes had cost between £1,500 and £2,000 each and that he did not know they were forgeries.  

4.	In passing sentence, the judge said that the appellant had been convicted of dishonesty.  He had thrown away his good character and his good works.  Normally, said the judge, people convicted of fraud went to prison, but this was not the most serious type of fraud.  It was hard to identify any particular loss to Virgin Trains and if they had taken better steps it would never have happened.  However, the judge said he had been deliberately dishonest on a four occasions and made a gain in the region of £10,000.  He had been greedy and accordingly he would be hit financially.  He could afford to pay a substantial fine so would be fined £25,000 for each offence, with the surcharge, and would also pay the prosecution costs.

5.	The grounds of appeal, argued before us by Sir Ivan Lawrence QC, argue that the total fine was manifestly excessive.  It was argued that insufficient account was taken of the fact that the case was at the lower end of the spectrum for fraud, the seriousness of the offence which reflected the imposition of a fine, there was no discernible loss to Virgin or the people who received the passes, there was no evidence the appellant was involved other than supplying passes to the two people, the fact that he made £9,000 from his actions, the fact that the judge found that the appellant had supplied the passes but had not made them, his good character, his strong personal mitigation, that the fine was out of proportion with his criminality and that with his annual income of £70,000, as it was there argued, regard should be had to his necessary outgoings and means to pay and the principle of totality.  

6.	As a result of directions given by the single judge, the appellant has put evidence of his financial position before the court.  It is not as full as it should have been but we have had some information and some explanation from his counsel.  

7.	We consider that the sentencing exercise carried out by the judge was seriously deficient.  While we are prepared to accept that he started off properly by considering the seriousness of the offence, he should then have considered the appropriate sentencing range before considering mitigation.  Given the fact that this involved the supply of forged travel passes, the starting point for the judge should have been to consider the sentencing guideline of the Sentencing Council, as it now is, on fraud, as we shall presently.  If the judge determined that there was to be a custodial sentence, he then had to determine whether it could be suspended and if so which community requirement should be attached.  If there was not to be a custodial sentence, he had to consider if there should be a community sentence and if so which, or whether there should be a fine.  

8.	The sentencing range given in the guideline is as follows.  In a case of articles intended for use in an extensive and skilfully planned fraud, the starting point is four years' custody and the range is two to seven years' custody.  In the case of articles intended for use in a less extensive and less skilfully planned fraud, the starting point is 26 weeks' custody and the range is from a high level community order to two years' custody.  Given the value of the items in question, this is probably a case within category two, but somewhat above the starting point.  The sentencing judge, however, never considered the guideline at all.  Now it may be that as a sentencing judge one ends up at the end of the sentencing process by considering a fine, but one must conduct the process according to the law.  If the judge intended fining the defendant he was required to follow section 164 of the Criminal Justice Act 2003 whereby: 

"(1) Before fixing the amount of any fine to be imposed on an offender who is an individual, a court must inquire into his financial circumstances. 
(2) The amount of any fine fixed by a court must be such as, in the opinion of the court, reflects the seriousness of the offence. 
(3) In fixing the amount of any fine to be imposed on an offender (whether an individual or other person), a court must take into account the circumstances of the case including, among other things, the financial circumstances of the offender so far as they are known, or appear, to the court. 
(4) Subsection (3) applies whether taking into account the financial circumstances of the offender has the effect of increasing or reducing the amount of the fine." 

9.	The judge never made any inquiries at all on these matters.  If he had wanted to remove the gains made by the appellant, then the route should have been to proceed under section   6 of the Proceeds of Crime Act 2002, and if the prosecution did not ask for it, the judge had the power to do so.  If there was to be a confiscation order, it had to be made before a fine could be considered (see section    13 of the Proceeds of Crime Act 2002).  

10.	The level of fines was in fact fixed by the judge on the basis of how much the appellant had made from the offending, but calculated apparently so as to extract from the appellant ten times his net gain as a punishment.  That exercise is in our judgment wrong in principle, and bears little relationship to the proper approach for a judge determining what should happen.  

11.	The judge's approach has created a further difficulty.  Community orders and sentences of imprisonment both involve infringement of liberty.  Given the terms of section  11(3) of the Criminal Appeal Act 1968, this court cannot deal with him more severely than the court could below.  That means that in practical terms this court is now confined to fining the appellant, rather than substituting a more appropriate penalty and setting up a timetable for investigation under the Proceeds of Crime Act.  It follows that this court is also constrained from exploring the question of confiscation.  It follows that this court is limited to considering the level of the fines.  

12.	This court has received some information, although it is not as full as we would have wished.  The position appears to be as follows.  So far as his capital is concerned, the appellant has the shareholding in a company.  That company paid dividends in the sum of £21,111 in year ending 5th April 2011, although we are told that the dividend income more recently has not been taken.  But there is still a shareholding in the company.  We do not have a valuation.  There is a house in this country which he inherited from, if we understand the matter correctly, his late parents.  It is a substantial house.  Sir Ivan Lawrence told us that he knew the house, and that it is worth, even in the current adverse conditions in the property market, something over £2 million.  A mortgage is currently being paid on that in the sum of a little under £45,000 per annum.  There is a house in Madeira.  We were not given a valuation, although Sir Ivan Lawrence told us that there was a negative equity.  But according to the declaration of income we have, in the most recent figures that house produced an income of £29,525 per annum and a mortgage is being paid in respect of that of just under £32,000 per annum.  It follows in our judgment that that house has some value.  

13.	While we are prepared to accept that there has been some constraint on income, so properly called for the purposes of the Inland Revenue, the fact is that this appellant has some affluence.  The figures we have been presented show that in the last year for which we have figures he was paying £45,000 by way of mortgage, over £20,000 in school fees, over £14,000 for car finance and over £12,000 for a housekeeper, among other sums.  

14.	It follows in our judgment that this is an affluent appellant who certainly has the capital wherewithal to be able to raise the funds necessary to pay the level of fine which we have in mind.  

15.	That being so, we now return to consider what the appropriate level of fine is for this level of criminality, bearing in mind the constraints that have been placed upon the powers of this court.  In our judgment, the appropriate figure would have been £5,000 for each offence, making a total of £20,000 in all.  There will be a default payment which is three months' imprisonment on each which would be served consecutively and we order 12 months from today as the time for payment.  To that extent this appeal is allowed.