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England and Wales High Court (Queen's Bench Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Serious Fraud Office v Evans & Ors [2014] EWHC 3803 (QB) (14 November 2014) URL: http://www.bailii.org/ew/cases/EWHC/QB/2014/3803.html Cite as: [2014] EWHC 3803 (QB), [2015] 1 WLR 3526, [2015] Lloyd's Rep FC 59 |
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QUEEN'S BENCH DIVISION
(SITTING AT NEWPORT CROWN COURT)
ON AN APPLICATION FOR A VOLUNTARY BILL OF INDICTMENT
Strand, London, WC2A 2LL |
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B e f o r e :
(Sitting as a judge of the Queen's Bench Division)
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Serious Fraud Office |
Applicant |
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- and - |
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Eric Evans David Alan Whiteley Frances Bodman Stephen Davies Richard Walters Leighton Humphreys |
Respondents |
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David Fosdick QC
Allison Clare
Ben Valentin
(instructed by The Serious Fraud Office) for the Prosecution
Patrick Harrington QC
John de Waal QC
Ben Douglas-Jones
(instructed by Blackfords) for Eric Evans
Phillip Hackett QC
David Hassell
(instructed by Declan McSorley & Jon Lewis) for Alan Whiteley
Michael Beloff QC
Gabriel Moss QC
Timothy Morshead QC
James Potts
(instructed by Charles Russell Speechlys LLP) for Stephen Davies
Nicholas Purnell QC
Jonathan Barnard
(instructed by Hugh James) for Richard Walters
John Charles Rees QC
Jonathan Elystan Rees
(instructed by de Maids) for Leighton Humphreys
Hearing dates: 14, 15, 16, 17, 20, 21 and 22 October 2014
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Crown Copyright ©
Lord Justice Fulford:
Introduction
Count 1
STATEMENT OF OFFENCE
CONSPIRACY TO DEFRAUD contrary to Common Law.
PARTICULARS OF OFFENCE
ERIC EVANS, DAVID ALAN WHITELEY, FRANCES BODMAN, STEPHEN DAVIES, RICHARD WALTERS, LEIGHTON HUMPHREYS, between the 1st of January 2010 and the 31st of December 2010, conspired together to defraud Neath Port Talbot County Borough Council, Bridgend County Borough Council and Powys County Council ("the Mineral Planning Authorities") and the Coal Authority by deliberately and dishonestly prejudicing their ability effectively to enforce restoration obligations relating to open cast coal mining at sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales by:
i) establishing companies registered in the British Virgin Islands, in the ultimate beneficial ownership of Eric Evans and David Alan Whiteley; and
ii) transferring the freehold title in the land containing and surrounding the opencast coal mining sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales from Celtic Energy Ltd to those companies registered in the British Virgin Islands;
thereby intending that the financial liability to restore those open cast coal mining sites to open countryside and/or agricultural use would pass from Celtic Energy Ltd to those companies in the British Virgin Islands, thereby releasing some of the money set aside in Celtic Energy Ltd's annual accounts to restore those open cast coal mining sites, and allowing some of that money to benefit the Defendants personally.
Count 2
STATEMENT OF OFFENCE
CONSPIRACY TO DEFRAUD contrary to Common Law.
PARTICULARS OF OFFENCE
ERIC EVANS, DAVID ALAN WHITELEY, FRANCES BODMAN, STEPHEN DAVIES, RICHARD WALTERS, LEIGHTON HUMPHREYS, between the 1st of January 2010 and the 31st December 2010, conspired together to defraud Neath Port Talbot County Borough Council, Bridgend County Borough Council and Powys County Council ("the MPAs") and the Coal Authority by deliberately and dishonestly prejudicing their ability effectively to enforce restoration obligations relating to open cast mining at sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales ("the sites") by dishonestly agreeing:
i) to establish and control shell companies registered in the British Virgin Islands ("the BVI companies"), and
ii) to cause one or more than one of the BVI companies to act against its/their financial interests by entering into a transaction at an undervalue, by which it/they acquired the freehold title of the sites from Celtic Energy Ltd ("Celtic"), and assumed liability to undertake substantial restoration works in respect of the sites and/or to indemnify Celtic in respect of any liabilities it might have in respect of the sites, without receiving adequate consideration in return and in the knowledge that Oak would be unable to meet those legal obligations, and
iii) to conceal from, and/or misrepresent to, the MPAs and other relevant parties the true nature of the transaction as set out at 1 and 2 intending thereby that:
a.the MPAs and/or Coal authority [sic] and other relevant parties would accept that substantially all of the financial liabilities to restore the sites to open countryside and/or agricultural use had passed from Celtic to the BVI companies;
b.the BVI companies would be unable to, and would not, meet any such liability;
c.the MPAs and/or the Coal Authority would be unable, during any investigation they conducted, to discover the true nature of the transactions as set out at 1 and 2 above and the MPAs would thereby be inhibited or deflected from carrying out their duty to consider how best to secure compliance with the relevant planning conditions;
d.the MPAs would be deterred from exercising their planning enforcement rights (including pursuant [sic] section 178 Town & Country Planning Act 1990) against the BVI companies;
e.provisions in Celtic's accounts in respect of the liability to restore the sites would be significantly reduced;
f.Celtic monies would be paid to the benefit of some or all of the conspirators personally.
The Prosecution's Case: the core factual contentions
42. In causing Oak to sign the agreement for sale on the terms set out above i.e. at a gross undervalue from Oak's perspective, [Evans and Whiteley] could not have been acting in the financial interests of Oak and were in breach of those fiduciary duties.
43. A breach of a fiduciary duty owed to the company must prima facie amount to an abuse of that position. Causing a company to take on vast and unquantifiable restoration obligations for no value in order to secure a financial gain personally or for another must prima facie amount to an abuse of that position.
If Oak sits back and does nothing this will simply bring forward the day when people (particularly the local authorities) begin to scrutinise the transaction. In the event that [NPT] try to communicate with Oak and receive no response they are more likely to seek external advice which simply increases the chances of a legal challenge sooner rather than later [ ]
In order to establish the two companies as separate entities and avoid unnecessary confusion the directors of [Celtic] need to step back from any dealings with the land and not give the impression to the [MPAs] or anyone else that they are at liberty to make decisions in relation to the land (particularly Margam).
If Celtic continues to deal with Margam as if the transaction had not happened this heightens the risk of the transaction being challenged as a sham. The opinion from [Davies] is on the basis of an arms-length transaction and this must be maintained.
Eric said it took on average two years to obtain disclosure of the ownership of a BVI company and that as he had set up nine companies with their ownership hidden, then in theory, it would take eighteen years to establish the true owners and by which time he felt he would not be around to face the music. I recall him telling me that after some 18 months or so had elapsed he would simply put the BVI Company into liquidation and the liability for filling the holes would then fall back on the Local Authorities. I told him that the Local Authorities "were all clients of the firm" and he simply replied "fuck them".
The Prosecution's Case: the legal analysis
The first case
The second case
The prejudice to the MPAs [...] by the transfer to Oak is not, as suggested [ ] the way in which the restoration reserves are treated in the Celtic accounts but rather the difference between attempting to enforce against an on-shore company with substantial liquid funds and other assets and against an off-shore company with neither.
The third case
In its Case Statement and Review, the prosecution case was based on the obligations to restore that were not transferred to the BVI company, and the allegedly bogus opinion of Mr Davies designed to give the illusion that they were transferred which prompted the reduction in the provision in Celtic and the consequent "distribution" to the conspirators [ ] However, in its response to those applications and, particular, at the December hearing the Crown indicated that it did not intend to pursue the case on that basis. Mr Parroy QC made it clear that it is now intended to pursue a case based only on the obligations to restore that were transferred to the BVI company, and the prejudice to the MPAs and the Coal Authority caused thereby in terms of their ability to enforce those obligations. The Defendants submit that neither the end nor the means they employed, in setting up the BVI company and transferring the freeholds to it, were criminal or otherwise unlawful. The Judge wishes to have your further assistance on one issue relevant particularly to this intended case, namely whether, as a matter of law, a common law conspiracy to defraud encompasses circumstances in which the ends are neither criminal nor otherwise unlawful; and, if so, the scope and limits of that legal proposition [ ]
126. [ ] the case statement and similar documents are important in a prosecution for conspiracy to defraud, to enable the defendants to know precisely the case they face and to have a proper opportunity to meet it; and also to prevent the prosecution case drifting around in this nebulous offence, for example to counter defences that are made.
127. However, important as the case statement is, in these applications we are concerned primarily with the charge and its particulars. Mr Parroy has made no application to amend those, nor has he suggested that the Crown might in the future wish to do so. He submits that those particulars are still good, and the "new case" is entirely consistent with them. Indeed, he might have said but for obvious reasons he refrained from doing so that the new case was more consistent with the particulars of charge than the old.
128. In those circumstances, although the Case Statement would of course need amending if the case were to proceed, I propose dealing with the applications on the basis of the case that the Crown now wishes to pursue. [ ]
167. [ ] Of one thing I am sure; if a case of conspiracy to defraud an individual is, in terms of means, based entirely upon conduct that amounts to statutory offences by those defendants against others or, for that matter, the taking of secret profits at the expense of others then that needs to be made plain in the particulars of charge to enable the defendants properly to prepare their case, and to enable the jury to consider whether that specific criminal conduct has been made out. They are not in the particulars of charge here, and there is no application to amend to include them. [ ]
168. That is sufficient to determine these applications, by dismissing the charge as it is brought. [ ]
The Application for a Voluntary Bill
10. This court should approach the [application for a voluntary bill] by firstly assessing whether on the case presented by the SFO before the original Judge, he erred in law (the principal basis).
[ ]
15. Only if such an error of law is not made out need the court go on to consider whether on the basis of those additional matters now put forward by the SFO, it would be in the interests of justice to allow the (application for a voluntary bill) (the secondary basis).
The principal basis
i) there was an indictable conspiracy effected by means of the sale at an undervalue [ ] which involved the commission of a criminal offence and
ii) this caused prejudice to the enforcement rights of the MPAs pursuant to section 172 and 178 of the TCPA by deliberately emasculating those rights
iii) this basis was presented to the court in advance of the ruling on dismissal
iv) in rejecting this basis, the Judge erred in law.
4. Fraud by abuse of position
(1) A person is in breach of this section if he
(a) occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,
(b) dishonestly abuses that position, and
(c) intends, by means of the abuse of that position
(i) to make a gain for himself or another, or
(ii)to cause loss to another or to expose another to a risk of loss.
(2) A person may be regarded as having abused his position even though his conduct consisted of an omission rather than an act.
The applicant submits that the Judge erred in law by effectively ruling that the agreement in the case could only amount to a conspiracy to defraud if it was committed in one of two ways, namely by
i) Agreeing dishonestly to prejudice another's proprietary right or interests ["First Limb"]
or
ii) Agreeing to deceive a person with intent to cause him as a result of that deceit to act contrary to his duty ["Second Limb"] [skeleton 60]
167. I pause to mark that, whilst I do not say that it is conceptually impossible, a charge of conspiracy to defraud various public authorities and only them, reliant for its illegality only on conduct amounting to statutory offences against two private companies, both apparently owned and controlled by the conspirators, would be a strange creature. The Defendants do not accept that they were guilty of any statutory offences against anyone. They have not of course been charged with any. Of one thing I am sure; if a case of conspiracy to defraud an individual is, in terms of means, based entirely upon conduct that amounts to statutory offences by those defendants against others or, for that matter, the taking of secret profits at the expense of others then that needs to be made plain in the particulars of charge to enable the defendants properly to prepare their case, and to enable the jury to consider whether that specific criminal conduct has been made out. They are not in the particulars of charge here, and there is no application to amend to include them.
137. [ ] As Mr Parroy put it, the right of the authorities which was to be prejudiced by the conspirators' dishonest agreement was their right to recover the costs of restoring the sites, if they exercise their statutory power to do the restoration works themselves and seek to recover the costs thereof. If they do take that course, recovery against Oak (an off-shore company with limited assets) will be "commercially and practically" more difficult and, he submits with force, probably impossible. In other words, the concern is about the contingent financial liability owed to the authorities in respect of the costs of restoration if the authorities perform those works themselves. The fact that the victims happen to be public bodies is merely coincident.
137. If there were the errors of law [set out] above on the case as presented to the Judge, the use of this exceptional procedure would be warranted.
and
141. This court will determine whether in all the circumstances the preferment of a (Voluntary Bill) is in the interests of justice. If there have been the errors of law as contended for above by the SFO, it would be prima facie in the interests of justice to put that right.
The secondary basis
Discussion
The prosecution's justification
The circumstances in which a court can issue a voluntary bill of indictment
Subject as hereinafter provided no bill of indictment charging any person with an indictable offence shall be preferred unless either
(a) [...]
(b) the bill is preferred by the direction of the Criminal Division of the Court of Appeal or by the direction or with the consent of a judge of the High Court
Applications for dismissal
2 [ ]
(6) If the charge, or any of the charges, against the applicant is dismissed
(a) no further proceedings may be brought on the dismissed charge or charges except by means of the preferment of a voluntary bill of indictment [ ]
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.
"[ ] In coming to his decision the D.P.P. or the judge should treat the decision of the resident magistrate with the greatest respect and regard their jurisdiction as one to be exercised with great circumspection. There have to be exceptional circumstances to warrant prosecuting a defendant after it has been found in committal proceedings that there is no case to answer: see the judgment of Ackner LJ in Reg v. Horsham Justices, Ex parte Reeves (Note) (1980) 75 Cr App R 236." (page 581 H)
The first situation: new evidence
Where evidence has become available to the prosecution that was not available when a charge was dismissed under paragraph 2 of Schedule 3 to the 1998 Act and the totality of the evidence is sufficient for a jury properly to convict, leave to prefer a voluntary bill may be given. In such a case, if the application to prefer is heard on notice, the proposed defendant is not denied the opportunity to seek dismissal of the new charge on the ground of the insufficiency of the prosecution evidence. He has the opportunity on application for leave to prefer the bill.
59. Following all that my conclusions on the law are as follows:
(1) The power of a High Court Judge to prefer a Bill of Indictment is a common law power preserved by statute, not granted by statute.
(2) Although judicial review is not available in respect of dismissal by a Judge of charges following transfer or sending, the approach consistently recommended in authority where such a remedy is available, or was thought to be available, was itself highly restrictive. That approach applied both to where a Voluntary Bill of Indictment was sought as an alternative to committal and perhaps even more so where a Voluntary Bill was sought following a refusal to commit or a dismissal by a magistrate after consideration of the evidence.
(3) By section 58 of the Criminal Justice Act 2003, Parliament introduced limited interlocutory appeals at the behest of the Prosecution. Parliament did not grant any right of interlocutory appeal where there had been a dismissal of charges following transfer. The decision by Parliament must be taken to be intentional.
(4) At the same time in the 1998 Act, Parliament preserved the Voluntary Bill explicitly where charges had been dismissed. The fact of preservation, with no express limit or qualification in the statute, cannot of itself widen the circumstances when the power should be exercised. The limits on that exercise, and the absence of an interlocutory appeal on this point, are consistent with the historical position whereby the Prosecution could not on occasion obtain redress for the wrongful failure of a Prosecution.
(5) All the authorities suggest that, following dismissal, a Voluntary Bill of Indictment should be preferred only in an exceptional case, without defining what is an exceptional case. Obvious mistake of law, a serious procedural error, or significant fresh evidence where the evidence taken as a whole represents a satisfactory body of evidence for trial may, if they arise, be exceptional cases. An alleged failure to take a reasonable view of the evidence by magistrates or by a Judge, although such can be characterised as "unlawful" because irrational, has not usually been held to be an exceptional case.
(6) One reason why that outcome is to be maintained is the rarity, devoutly to be wished, of the situation where a truly unreasonable view has in fact been taken by a Judge dismissing charges. Another reason why that outcome is to be maintained is that given by Bell J in the Snaresbrook case: the difficulty arising when one single Judge is sitting on appeal on another, both being potentially judges of the same judicial rank, although sitting in different courts. Another reason is the practical point touched on by Pitchers J in Davenport. The consequence of accepting that an application for a Voluntary Bill of Indictment may be used for a general review of major cases, on the basis that an irrational decision had been reached below, is a prospect of extensive, time-consuming and costly hearings, to be followed by a trial if successful. (emphasis added)
The second situation: a basic and substantive error of law
62. The attack on the decision of the learned Judge below does not involve a suggestion of a basic error of law, does not involve the suggestion that there is significant fresh evidence now available, does not involve the suggestion of any perversity on his part, and does not contain any suggestion of procedural irregularity. The attack is on the reasoning of the Judge. It is that it was Wednesbury unreasonable and nothing more. Given the analysis of the law which I have reached, it follows that, even if correct, that [sic] nature of that attack takes it outside the ambit of a proper application for a Voluntary Bill of Indictment. (emphasis added)
Where the 'normal procedure' has involved a successful application to dismiss a case sent to the Crown Court, the authorities underline the caution which should be exercised before a High Court Judge grants leave to prefer a voluntary bill see R v Christine Davenport & Ors [2005] EWHC 2828 (QB) Pitchers J. at [21] [23] and R v McGuiness [2007] FWHC 1772 QB Griffith Williams J at [6]. Without attempting to give an exhaustive list, there may be circumstances which would justify the granting of leave if the Judge who had dismissed the charge had taken the decision without regard to a relevant statutory provision or judicial authority, or had otherwise erred in law, or if the Crown had new evidence which made a significant difference to its case, or if the decision to dismiss lacked a rational foundation.
The third situation: a serious procedural irregularity
The circumstances in which a court should decline to issue a voluntary bill of indictment
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 the 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 [ ], 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."
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 could have been brought if proper thought had been given by the prosecution to them, in the first place?
To allow prohibition in this case should bring home to the prosecution the desirability of following the advice which the Appellate Courts have given again and again. The prosecution must direct its energies to the simplification of cases they desire to present. All too often juries, and to a lesser extent magistrates, are treated like computers into whom superfluous and ill-digested material is fed in the over-optimistic hope that somehow or another they will produce the right result.
Conclusions as to when a voluntary bill of indictment can be preferred
Did Hickinbottom J err in law?
37. The case presented to the Judge alleged that the means employed were unlawful, principally on the basis of a section 4 Fraud Act [FA] 2006 offence in respect of Oak.
[ ]
52. The other offences within the case presented to the Judge included Fraud by Abuse of Position and Fraud by Failing to Disclose Information/False Representation by those controlling CE (section 2-3 FA 2006).
[ ]
59. The applicants submit that the case presented to the original Judge revealed a dishonest agreement to prejudice the rights and obligations of the MPAs by unlawful means (a criminal offence) and that this in law amounts to a conspiracy to defraud even if there was no agreement to deceive the MPAs and the unlawful means did not operate upon the MPAs.
166. However, I do not have to rule on that (viz. the third basis). I have to rule on the legal integrity of the particulars of charge as relied upon by the Crown. There has been no application to change the particulars. Mr Parroy accepts rightly that the objects of the conspiracy were lawful. He accepts again, rightly that the only means relied upon in the particulars were also lawful. I have concluded that a conspiracy to defraud in which both the object and the means are lawful is unknown to the common law.
167. [ ] Of one thing I am sure; if a case of conspiracy to defraud an individual is, in terms of means, based entirely upon conduct that amounts to statutory offences by those defendants against others or, for that matter, the taking of secret profits at the expense of others then that needs to be made plain in the particulars of charge to enable the defendants properly to prepare their case, and to enable the jury to consider whether that specific criminal conduct has been made out. They are not in the particulars of charge here, and there is no application to amend to include them. [ ]
3. [ ] These differ, slightly, from the particulars upon which the Defendants were originally charged and sent to this court: for example, dates of the conspiracy have been added, as have the words " and dishonestly " and the final phrase, " and allowing some of that money to benefit the Defendants personally". The particulars of the charge are required to set out clearly and unambiguously the case the Defendants have to meet (see R v K [2004] EWCA Crim 2685; and R v Goldshield Group plc [2008] UKHL 17; [2009] 1 WLR 458 at [18]); and in an application to dismiss the charge such as this, they are of especial importance. However, there is no material difference between the original particulars upon which the Defendants were charged, and those upon which the Crown now wishes to proceed. If this prosecution were to go ahead, I would allow it to proceed on the basis of particulars drafted by Mr Michael Parroy QC for the Crown; and those are therefore the relevant particulars for the purposes of these applications.
The interests of justice
Conclusion
Costs
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