THE QUEEN v CHRISTINE DAVENPORT IAIN CATER DIENO GEORGE PAUL SANDERS BRIAN RUANE COLIN WILSON [2005] EWHC 2828 (QB)

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
[2005] EWHC 2828 (QB)Case No Case No: T20040074 (CHESTER CROWN COURT)Venue Royal Courts of Justice, Strand. London. WC2A 2LL
Between
THE QUEENApplicantCHRISTINE DAVENPORT IAIN CATER DIENO GEORGE PAUL SANDERS BRIAN RUANE COLIN WILSONRespondents
Before
Mr Justice PitchersMr Stephen Climie & Rupert Mayo (instructed by the Serious Fraud Office) for the ApplicantMr Edmund Lawson QC & Mark Bryant Heron (instructed by) Herbert Smith Solicitors for Iain Douglas Charles CaterMr Timothy Langdale QC & Ian Winter (instructed by)BCL Burton Copeland Solicitors for Dieno GeorgeMr Jonathan Caplan QC & William McCormick (instructed by) Eversheds LLP for Paul Anthony SandersMr Charles Salmon QC & Christopher Coltart (instructed by) Cooper Kenyon Burrows Solicitors for Christine Ann DavenportMr Peter Wright QC & Elizabeth Nicholls (instructed by) JMW Solicitors for Brian James John RuaneMr David Lane QC & Duncan McDiarmide (instructed by) Maidments Solicitors for Colin Frances WilsonHearing date: 25 November 2005
[1]Mr Justice Pitchers : This is an application by the prosecution, the Serious Fraud Office ('SFO'), for consent to prefer a Voluntary Bill against the Defendants (to whom, for brevity, I shall refer hereafter simply by their last names) following the dismissal of charges against them by His Honour Judge Stephen Clarke at Chester Crown Court on 14 December 2004 (Cater, George and Sanders), 16 June 2005 (Davenport and Ruane in part) and 28 July (Davenport and Ruane as to the remaining counts, and Wilson). History of the case[2]The allegations against these Defendants arose out of the conduct of the business of SSL International plc ('SSL') during 1999 and 2000. All the Defendants save Wilson were very senior members, at director level, of that company.[3]For reasons that will become apparent, it is unnecessary for me to set out save in the most general terms the nature of the prosecution case against the Defendants. In very short summary what is said against them is this. SSL, it is alleged, with the knowledge of the Defendants, had inflated the sales figures for the accounting periods in question by including sales which had not taken place. This had the effect of enabling the company to meet its sales targets and inflated the profits. The defence case in equally summary form is that, to the extent that each Defendant knew what was going on, what was happening was the operation of the legal practice of 'trade loading' that is agreeing with customers, usually at the end of an accounting period, to supply them with goods in advance of their needs usually at a discount. The prosecution acknowledge the existence and legality of 'trade loading' but argue that SSL went further than was legal in the period covered by the indictment.[4]In April 2001, accountants KPMG and solicitors DLA carried out an investigation at the behest of the board of SSL. As a result of that investigation, the SFO were informed in June 2001. Their investigation including interviews with all Defendants concluded with charges in October 2003. On 5 November 2004, the case was transferred to Chester Crown Court under the provisions of section 4 of the Criminal Justice Act 1987.[5]The indictment contained a number of different counts but at its heart were allegations of offences contrary to section 19(1) of the Theft Act 1968: 19 False statements by company directors, etc(1) Where an officer of a body corporate or unincorporated association (or person purporting to act as such), with intent to deceive members or creditors of the body corporate or association about its affairs, publishes or concurs in publishing a written statement or account which to his knowledge is or may be misleading, false or deceptive in a material particular, he shall on conviction on indictment be liable to imprisonment for a term not exceeding seven years.(2) For purposes of this section a person who has entered into a security for the benefit of a body corporate or association is to be treated as a creditor of it.(3) Where the affairs of a body corporate or association are managed by its members, this section shall apply to any statement which a member publishes or concurs in publishing in connection with his functions of management as if he were an officer of the body corporate or association.[6]In December 2004 and June 2005, His Honour Judge Stephen Clarke held hearings of four and five days respectively and dismissed the charges as set out in paragraph 1 above. He gave his reasons for those decisions in two detailed reserved judgments. The argument before the judge centred on the issue of whether the evidence was sufficient for a jury properly to convict in relation to the falsity of the sales figures appearing in the accounts. Because they succeeded on that issue, it was unnecessary for the judge to consider the state of the evidence in relation to the other matters the prosecution had to prove, in particular the knowledge of each Defendant of any proved falsity.[7]On 2 September 2005, the SFO made this application for consent to prefer a Voluntary Bill of Indictment. They supported it with a number of new witness statements by far the most important of which is a report from a forensic accountant, Mr Medland. The grounds of the application are that (Application 4.1(a)) 'there was and is sufficient evidence contained in the papers to prove that the accounts were false and that the learned judge fell into error in determining that this was not so.' The subsidiary grounds are based on the Medland Report which the Crown argue makes good a criticism made by the judge that there was no expert evidence and supports their case as to falsity.[8]In accordance with modern practice, the Defendants were notified of the application and each made written submissions. Those submissions, to an extent, mirrored the submissions that had succeeded before the judge. However, each Defendant advanced the argument that this application was in principle misconceived with or without the new evidence and that the court should not permit the Crown to rely on the new evidence in support of their application.[9]It was clear to all that a full hearing, including reading time for the judge, would take at least two weeks. However, if the defence succeeded on the question of principle, the bulk of the argument would be rendered unnecessary. Therefore, potentially to avoid delay and save time and money, it was agreed that I would hear argument on this issue as a preliminary point. I have done so after hearing oral argument from counsel on both sides. Although the Crown sought to argue that different considerations apply as between Defendants even at this preliminary stage, in my judgment, on the point of principle, the Defendants stand or fall together.[10]This course has meant that it has not been necessary for me to examine the detailed facts of the case nor to hear arguments upon them. I have therefore formed no view as to the underlying merits and hence express no views upon them. I have considered the evidence and the arguments only to the extent that it has been necessary to do so to apply the matters of general principle to this case. The statutory framework.[11]The effect of dismissal of transferred charges is set out in subsection 6(5) of the Criminal

Justice Act 1987:

"Dismissal of the charge, or of all the charges, against the applicant shall have the same effect as a refusal by examining magistrates to commit for trial, except that no further proceedings may be brought on a dismissed charge except by means of the preferment of a voluntary bill of indictment"
[12]The statute does not provide any right of appeal against the allowing or the refusal of an application to dismiss transferred charges. In a number of cases, the Divisional Court has been prepared to entertain a judicial review of the decision to dismiss or not to dismiss. See, for example, R v Central Criminal Court, ex parte Director of Public Prosecutions [1993] 1 WLR 949, R v The Crown Court at Snaresbrook, ex parte the Director of the Serious Fraud Office (1998) LSG 35 and R (on the application of the Inland Revenue Commissioners) v Crown Court at Kingston [2001] 4 All ER 721 .[13]In a more recent case, R (Snelgrove) v Woolwich Crown Court [2005] 1 Cr App R 18 , the Divisional Court held that the decision of the Crown Court on an application to dismiss following the 'sending' of a case to the Crown Court under s51 of the Crime and Disorder Act 1998 was 'a matter relating to trial on indictment' and hence judicial review was not available because of s29(3) of the Supreme Court Act 1981. It is hard to see any difference in principle between a sending of a case under s51 of the 1998 Act and a transfer such as the present. However, that does not fall to be decided in this case.[14]By section 2(2)(b) of the Administration of Justice Act 1933 "the bill is preferred.. .by the direction or with the consent of a judge of the High Court." The procedure is now set out in the Consolidated Criminal Practice Direction IV.35. The correct approach to the application.• What is the nature of the judge's decision at the dismissal hearing?[15]It is important to understand the nature of the decision taken by the judge at the Crown Court. Section 6(1) requires him to dismiss the charges 'if it appears to him that the evidence against the applicant would not be sufficient for a jury to convict [the Defendant]'.[16]In R (on the application of the Inland Revenue Commissioners) v Crown Court at Kingston supra, Stanley Burnton J, giving the judgment of the court, set out the correct approach in the following way:
"On an application under s 6, it is not appropriate for the judge to view any evidence in isolation from its context and other evidence, any more than it is appropriate to derive a meaning from a single document or from a number of documents without regard to the remainder of the document or the other connected documents before the court. We reject the argument that the judge was bound to deal with the application under s 6 by assuming that a jury might make every possible inference capable of being drawn from a document against the defendant. Section 6 expressly provides that the judge will decide not only whether there is any evidence to go to a jury, but whether that evidence is sufficient for a jury properly to convict. That exercise requires the judge to assess the weight of the evidence. This is not to say that the judge is entitled to substitute himself for the jury. The question for him is not whether the defendant should be convicted on the evidence put forward by the prosecution, but the sufficiency of that evidence. Where the evidence is largely documentary, and the case depends on the inferences or conclusions to be drawn from it, the judge must assess the inferences or conclusions that the prosecution propose to ask the jury to draw from the documents, and decide whether it appears to him that the jury could properly draw those inferences and come to those conclusions."
[17]The approach is therefore similar to the approach of a judge to a submission of no case at the close of the prosecution case. It is not an exercise of discretion but it is an exercise of judgment.• What is the test?[18]The Consolidated Criminal Practice Direction at IV.35.3 summarises the effect of earlier authorities:
"The preferment of a voluntary bill is an exceptional procedure. Consent should only be granted where good reason to depart from the normal procedure is clearly shown and only where the interests of justice, rather than considerations of administrative convenience, require it."
[19]It should be noted that the wording of that paragraph in referring to departure from the normal procedure and administrative convenience indicates that the draftsman had in mind, in particular, where the preferment of a Voluntary Bill is sought as an alternative to committal for trial and the drafting of an indictment based on that committal. However, in my judgment, the expression 'exceptional procedure' and the reference to the interests of justice are equally apt in situations such as the present.[20]I have already drawn attention to the fact that no appeal against the dismissal or refusal to dismiss transferred charges is provided.[21]No application for a Voluntary Bill is, in form, an appeal from a decision of another court. However, at least when a High Court Judge is considering an application following a refusal of justices to commit for trial the decision of a lower court is being considered by a judge of a higher court. There may then be scope for taking a broader view of the circumstances in which it is right in effect to overturn the decision of the lower court. That is not this case and I express no further view on the point.[22]That cannot be said where an application for a Voluntary Bill is made after dismissal of transferred charges. It happens that the decision in this case was taken by a Circuit Judge but it could quite well have been by another High Court judge. In those circumstances, it must, in my judgment, be wrong in principle for the prosecution to be able to get round a decision that they do not like by inviting another judge to take a different view of the same material that was before the judge who dismissed the charges. In R v The Crown Court at Snaresbrook, ex parte the Director of the Serious Fraud Office supra, the Divisional Court pointed out that Bell J had refused to grant a Voluntary Bill "On the basis that the application was in effect an appeal from one single judge to another single judge whose judgment appeared to be clearly and carefully reasoned. He said it was not obviously wrong or unreasonable."[23]I make no attempt to list the circumstances in which it might in general be appropriate to invoke the exceptional procedure of applying for a Voluntary Bill in transferred cases. That said, an obvious example would be if the judge had not had a crucial authority or statutory provision drawn to his attention. The context of this case is that the judge in dismissing the charges took the decision after detailed and careful argument and gave full and clearly reasoned judgments. In this case, apart from one point made about the judge's treatment of one area of evidence, the Crown do not really argue that he erred in law.[24]Therefore to the extent that the Crown argue that I should come to a different decision from the judge on the same material that was before him, I reject the argument as fundamentally flawed.• Can fresh evidence be considered?[25]The reality of this application is that the Crown wish to argue that they have made good the defects in their case by obtaining the Medland Report and should be allowed to rely upon it for the purposes of this hearing. Although I have read the general part of that report, I have not considered the documentation that supports it nor its impact upon the arguments on the merits that were advanced on each side before the judge. That would, of course, be necessary at the full hearing were I to find in favour of the Crown on this preliminary point. For the purposes of the present hearing, the proper approach, in my judgment, is to assume without deciding that the report would materially support the prosecution case.[26]The obvious circumstances in which it would be appropriate to argue that the exceptional procedure of a Voluntary Bill should be invoked following dismissal of transferred charges is where the prosecution can produce fresh cogent evidence which was not before the judge who dismissed the charges. For example, a known vital witness whose whereabouts were unknown might have been traced or new eye-witnesses come forward as a result of reading of the dismissal of the case. It would still be necessary for the judge considering the Voluntary Bill to conclude that it was in the interests of justice for a Voluntary Bill to be preferred but he would be making a decision on new material and would not be being asked simply to take a different view from the one taken previously.[27]What should be regarded as fresh evidence for these purposes? I would not for my part want to apply a rigid test so that any material which could technically have been presented to the earlier judge cannot be considered and, conversely, any material obtained afterwards must be. In my judgment, the nature of the new material and the circumstances in which it was obtained must be examined with care when considering the question of whether the interests of justice require a Voluntary Bill to be preferred. It will plainly be much easier for the defence to argue that it would not be in the interests of justice if the prosecution could have produced that evidence in the original proceedings. Application to the present case.[28]The charges that the SFO chose to bring against the Defendants involved proof by them in relation to each Defendant of: i) the publication of materially false accounts; ii) knowledge of the falsity; and iii) an intention to deceive members or creditors of the company.[29]Mr Climie for the SFO told me in argument that, for reasons of cost, a decision was taken not to obtain expert evidence from a forensic accountant because the view was that the documents spoke for themselves and no issue as to falsity had been raised by the Defendants in interview. He says that the first the prosecution knew that this issue was to be raised was on 27 September 2004 when the defence submissions in relation to the dismissal hearing were first served. Accordingly, he argues, the Medland Report is properly to be regarded as evidence which could not reasonably have been placed before Judge Clarke and I should consider it now.[30]This argument does not, in my judgment, bear scrutiny: i) Material falsity was something that the prosecution always had to prove; ii) Since it was always acknowledged that 'trade loading' was a legal accounting practice, it was entirely foreseeable that a technical accountancy issue would arise as to where legal 'trade loading' ended and 'material falsity' began; iii) When alerted to the argument in September 2004, the Crown made no attempt to get expert evidence, accompanied if necessary by an application to adjourn the first dismissal hearing; and iv) Having failed against the first group of Defendants, the Crown then, on 1 February 2005, instructed a forensic accountant. However, they did not disclose that fact before the hearings in respect of the further Defendants and made no attempt to introduce expert evidence into the second dismissal hearing.[31]I therefore approach the case on the basis that the Medland report, based as it is on material available throughout, is to be regarded as material which could, had the Crown so chosen, have been prepared and made part of their case before Judge Clarke.[32]I therefore finally consider whether it is in the interests of justice to consent to the preferment of a Voluntary Bill. I regard the following matters as relevant to that question: i) As the Crown argue, there is clearly a public interest in serious allegations of misconduct against directors of public companies being tried if the evidence is sufficient for them to be tried; ii) The appropriate way for that public interest to be met is for the prosecution to present all cogent evidence available to them so that the charges are not dismissed under section 6(1); iii) Those accused of serious crime are entitled to have the allegations against them determined without unreasonable delay not of their making; iv) Twelve months have already passed since the first dismissal hearing and two or three more will pass before this application could be heard on its merits; v) An application for the preferment of a Voluntary Bill is an exceptional procedure. It is not an appeal against the decision of the judge who dismissed the charges in the Crown Court. In R. v. Horsham Justices ex parte Reeves (1982) 75 Cr. App. R. 236, a case procedurally different from the present in that it concerned a prosecutor re-instituting proceedings following a refusal by justices to commit for trial, Ackner LJ, as he then was, posed the question:
"Should the prosecution be entitled, as they seek, to treat the first committal proceedings, for all practical purposes as a dummy run, and, having concluded that they over-complicated them, bring virtually the same proceedings but in a form in which they should have been brought if proper thought had been given by the prosecution to them, in the first place?"
He gave what he elsewhere in the judgment described as 'a dusty answer' to that question. vi) The judge in this case heard submissions over several days and gave his reasons in detail. It is not argued by the Crown that he erred in law save that they say that he came to the wrong decision on the evidence. They ask me to substitute my judgment for his; and vii) The 'new' evidence relied upon by the Crown could, for the reasons set out in paragraph 30 above, have been obtained before the hearings before Judge Clarke. Conclusion. 33. For all the reasons set out above, I have no doubt that this application for consent to prefer a Voluntary Bill of Indictment is unsound in principle and should be refused in respect of each of the Defendants.

Cited in 5 later judgments