England and Wales Court of Appeal (Criminal Division) Decisions

		Neutral Citation Number: [2002] EWCA Crim 1856
		Case No: 2002/03061/Y5

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM MIDDLESEX CROWN COURT
(His Honour Judge Blacksell)

		Royal Courts of Justice Strand, London, WC2A 2LL
		19th July 2002

B e f o r e :

LORD JUSTICE DYSON
MR JUSTICE SILBER
and
HER HONOUR JUDGE GODDARD QC
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Between:


	MITHUN MUHAMAD	Appellant
	- and -
	THE CROWN	Respondent

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(Transcript of the Handed Down Judgment of
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Mr A. Campbell-Tiech (instructed by Messrs Sherman Bowen) for the Appellant
Mr J. Eadie and Miss E.Smith(instructed by Department of Trade and Industry Legal Services Directorate) for the Respondent
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Lord Justice Dyson :

Introduction

1. On 12 April 2002 in the Crown Court at Middlesex Guildhall, the appellant was convicted of the offence of materially contributing to the extent of his insolvency by gambling contrary to section 362(1)(a) of the Insolvency Act 1986 (“the 1986 Act”). He sought leave to appeal against his conviction and the Registrar referred his application to the full court, because there are a number of cases pending in the crown court in which the same issue arises. The question raised on this appeal is whether the offence under section 362(1)(a) of the 1986 Act requires a mental element, or mens rea. The judge ruled that it does not, and that the offence is one of strict liability.
2. Mr Campbell-Tiech submits on behalf of the appellant that the offence is not one of strict liability. He does not concede that, if section 362(1)(a) is interpreted without regard to Article 7 of the European Convention on Human Rights (“ECHR”), it creates an offence of strict liability. But his primary argument is that, section 6(1) of the Human Rights Act 1998 (“HRA”) requires the court to interpret section 362(1)(a) compatibly with Article 7, and that, therefore, it is necessary to read down the provision so as to import a requirement of mens rea. On behalf of the Crown, Mr Eadie submits that, properly interpreted in accordance with well-established principles, section 362(1)(a) creates an offence of strict liability, and that, so interpreted, it is not incompatible with Article 7.

The relevant statutory provisions

3. Section 362(1)(a) of the 1986 Act provides:

“(1) The bankrupt is guilty of an offence if he has –

(a) in the 2 years before the petition, materially contributed to, or increased the extent of, his insolvency by gambling or by rash and hazardous speculations, .....”

4. Schedule 10 provides that the maximum sentence to which a person may be liable upon conviction on indictment of an offence under section 362(1)(a) is 2 years imprisonment or a fine or both.
5. Article 7 of the ECHR provides:

“1. No one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national or international law at the time when it was committed ...”

Submissions on behalf of the appellant

6. Mr Campbell-Tiech submits as follows. The actus reus of the offence comprises three elements, namely (a) gambling, (b) losing, and (c) the presentation of a petition within two years of the gambling in circumstances where the gambling has materially contributed to the insolvency on which the petition is based. The third element is outside a defendant’s control.
7. The summary of principles contained in the speech of Lord Scarman in Gammon Ltd v A-G of Hong Kong [1985] 1 AC 1, 14B requires modification in the light of Article 7. The issue in that case was whether mens rea was an essential ingredient of a health and safety offence. The relevant passage is this:

“(1) there is a presumption of law that mens rea is required before a person can be held guilty of a criminal offence; (2) the presumption is particularly strong where the offence is “truly criminal” in character; (3) the presumption applies to statutory offences, and can be displaced only if this is clearly or by necessary implication the effect of the statute; (4) the only situation in which the presumption can be displaced is where the statute is concerned with an issue of social concern, and public safety is such an issue; (5) even where a statute is concerned with such an issue, the presumption of mens rea stands unless it can also be shown that the creation of strict liability will be effective to promote the objects of the statute by encouraging greater vigilance to prevent the commission of the prohibited act.”

8. Mr Campbell-Tiech submits, in particular, that the second proposition is not compatible with the ECHR, and is now best disregarded. The jurisprudence of the ECtHR draws no distinction between offences of greater importance and those of lesser gravity: they are all classified as crimes. For the same reason, he submits that the following passage in the speech of Lord Nicholls in B (a minor) v Director of Public Prosecution [2000] 2 AC 428, 464B should no longer be followed:

“I venture to think that, leaving aside the statutory context of section 1, there is no great difficulty in this case. The section created an entirely new criminal offence, in simple unadorned language. The offence so created is a serious offence. The more serious the offence, the greater is the weight to be attached to the presumption, because the more severe is the punishment and the graver the stigma which accompany a conviction. Under section 1 conviction originally attracted a punishment of up to two years imprisonment. This has since been increased to a maximum of 10 years imprisonment.”

9. Turning to Lord Scarman’s third proposition, Mr Campbell-Tiech says that there is no necessary implication in section 362(1)(a) that the presumption of mens rea should be displaced. The mens rea for which he contends is that the defendant knows that, or is reckless as to whether, his act of gambling will materially contribute to his insolvency. The object of section 362(1) is the protection of creditors. Creditors can only be protected from gamblers who know that, or are reckless as to whether, their gambling will or may harm them. That object is not promoted by making the offence one of strict liability.
10. As regards Lord Scarman’s fourth and fifth propositions, gambling is no longer an issue of social concern. That is another reason for holding that the presumption of mens rea is not displaced in section 362(1)(a).
11. Mr Campbell-Tiech makes two particular points with regard to Article 7. First, it is not restricted to retrospective legislation. It requires the criminal law to be sufficiently accessible and precise to enable an individual to know in advance whether his conduct is criminal: see, for example, Kokkinakis v Greece [1993] 17 EHRR 397. No gambler can necessarily know, when he places his bet, whether he runs a real risk of prosecution if he loses. The only way to avoid running this risk is not to gamble at all, or to gamble for low stakes. Without mens rea, the offence is objectionably uncertain. Furthermore, a construction of strict liability is neither necessary in a democratic society, nor proportional to any legitimate aim. There is no pressing social need to criminalise bankrupts who contribute to their bankruptcies. Moreover, to penalise them if they do so without the requisite mens rea is disproportionate. Gambling is no longer regarded as a social evil. It is significant that in July 2001, the Secretary of State for Trade and Industry issued a paper entitled “Insolvency- a Second Chance”. Paragraph 1.32 stated that it was proposed that the existing criminal offences in relation to gambling should be repealed, and that in future such activities could be dealt with more effectively as matters of misconduct leading to a “bankruptcy restriction order”. For these reasons, Mr Campbell-Tiech submits that section 362(1)(a) should be read down so as to import mens rea.

Discussion

12. Substantially for the reasons advanced by Mr Eadie, we are not persuaded by Mr Campbell-Tiech’s submissions, attractively though they have been argued. We shall start by considering the issue without regard to the impact (if any) of Article 7. We have already quoted from the speeches of Lord Scarman and Lord Nicholls. In R v Warner [1969] 2 AC 256, Lord Reid comprehensively reviewed the cases on strict liability and mens rea. He said that there was a presumption of a requirement of mens rea in all cases of serious and “truly criminal” offences. On the other hand, there was a long line of cases in which it had been held with regard to “less serious offences” that the absence of mens rea was no defence. He said of these that they “are only quasi-criminal offences and it does not really offend the ordinary man’s sense of justice that moral guilt is not of the essence of the offence”. He gave many examples of these: they were typically offences under public health, licensing and industrial legislation.
13. In Sweet v Parsley [1970] AC 132, 149G, Lord Reid spoke again of “quasi-criminal acts” in respect of which “one can safely assume that, when Parliament is passing new legislation dealing with this class of offences, its silence as to mens rea means that the old practice [viz of recognising them as absolute offences] is to apply”. But, he said, where it comes to acts of “a truly criminal character”, different considerations apply. The first of these is that “ a stigma still attaches to any person convicted of a truly criminal offence, and the more serious or more disgraceful the offence the greater the stigma. So he [viz the reasonable legislator] would have to consider whether, in a case of this gravity, the public interest really requires that an innocent person should be prevented from proving his innocence in order that fewer guilty men may escape”.
14. It is not clear to us whether an offence under section 362(1)(a) would have been classified by Lord Reid as “quasi-criminal”, or “truly criminal”. A maximum penalty of two years imprisonment is by no means insignificant, although it is towards the lower end of the scale of maximum custodial sentences. On the other hand, it is open to doubt whether, at any rate in 2002, such an offence would be regarded as “truly criminal”. Classificatory difficulties of this kind may well be the reason why Lord Scarman’s second proposition and, in particular, the passage in the speech of Lord Nicholls were expressed in the terms that we have seen.
15. The question whether the presumption of law that mens rea is required applies, and, if so, whether it has been displaced can be approached in two ways. One approach is to ask whether the act is truly criminal, on the basis that, if it is not, then the presumption does not apply at all. The other approach is to recognise that any offence in respect of which a person may be punished in a criminal court is, prima facie, sufficiently “criminal” for the presumption to apply. But the more serious the offence, the greater the weight to be attached to the presumption, and conversely, the less serious the offence, the less weight to be attached. It is now clear that it is this latter approach which, according to our domestic law, must be applied.
16. The starting point, therefore, is to determine how serious an offence is created by section 362(1)(a), and accordingly how much weight, if any, should be attached to the presumption. Some weight must undoubtedly be given to the presumption, but in our judgment it can be readily displaced. As we have said, the maximum sentence indicates that Parliament considered this to be an offence of some significance, but not one of the utmost seriousness. This is not surprising. We do not believe that great stigma attaches to a conviction of this offence. [ We note the government’s proposal to repeal the provision altogether and deal with it as misconduct leading to a bankruptcy restriction order. This may indicate no more than a change of heart since 1986, and not be a reliable indication of the intention of Parliament when enacting the 1986 Act. But it does in our view lend some support for the proposition.] In our view, this is not, and never has been, a particularly serious offence.
17. With that introduction, we turn to consider whether the presumption has been displaced in relation to section 362(1)(a). We address this question by applying the approach commended by Lord Nicholls in B v DPP at page 463H where he said:

“The question, therefore, is whether, although not expressly negatived, the need for a mental element is negatived by necessary implication. “Necessary implication” connotes an implication which is compellingly clear. Such an implication may be found in the language used, the nature of the offence, the mischief sought to be prevented and any other circumstances which may assist in determining what intention is properly to be attributed to Parliament when creating the offence.”

18. First, the 1986 Act created a clear and coherent regime. The majority of the offences include an express requirement of a mental element. This is achieved either in the section which creates the offence (for example, section 356(2)); or by reference to section 352 (which contains a reverse onus of proof provision). Only a few, of which section 362(1)(a) is one, do not specify a mental element. In our judgment, this is a clear pointer to Parliament’s intention in relation to section 362(1)(a). But it is not sufficient by itself. As Lord Reid said in Sweet v Parsley at page 149D:

“It is also firmly established that the fact that other sections of the Act expressly require mens rea, for example because they contain the word “knowingly”, is not in itself sufficient to justify a decision that a section which is silent as to mens rea creates an absolute offence. In the absence of a clear indication in the Act that an offence is intended to be an absolute offence, it is necessary to go outside the Act and examine all relevant circumstances in order to establish that this must have been the intention of Parliament. I say “must have been” because it is a universal principle that if a penal provision is reasonably capable of two interpretations, that interpretation which is most favourable to the accused must be adopted.”

19. Further support for the displacement of the presumption in relation to section 362(1)(a) emerges when a comparison is made of the maximum sentences provided for by the various offences created in Chapter VI of the 1986 Act. The offences where no mental element is specified, for the most part, attract considerably lower maximum sentences than those where a mental element is specified. Thus all the offences where a mental element is expressly required in the sections which create the offence, and (with two exceptions) all the offences to which section 352 applies, provide a maximum sentence of 7 years imprisonment. The maximum for all those offences where no mental element is specified is 2 years imprisonment.
20. The next point relied on by Mr Eadie is the fact that gambling which harms a gambler’s creditors is a matter of social concern. That is obviously right. It follows that this is a case where the fourth and fifth of Lord Scarman’s propositions are engaged. So too they were in Harrow London Borough Council v Shah [1999] 2 Cr App Rep 457. In that case, the Divisional Court had to decide whether the offence of selling National Lottery tickets to a person under the age of 16 was an offence of strict liability. The court decided that it was. In giving the leading judgment, Mitchell J said (p 463E) that the legislation dealt with an issue of social concern, and (p 464A) that it was an excellent example of the sort of legislation contemplated by Lord Scarman’s fifth proposition. He said: “That strict liability attaches to this offence will unquestionably encourage greater vigilance in preventing the commission of the prohibited act”.
21. Of more direct relevance is R v Salter 52 Cr App Rep 549, a decision of this court on section 157(1)(c) of the Bankruptcy Act 1914, which, save for the removal of the requirement that the bankrupt had been engaged in any trade or business, was in the same terms as section 362(1)(a) of the 1986 Act. The court held that the offence was one of strict liability. In reaching this decision, it examined the section in the light of the objectives of the 1914 Act. These included that the Act sought to deter persons from so dealing with their assets “that creditors are deprived of the benefit of assets which in justice should have been available to them” (p 557).
22. It is self-evident that section 362(1)(a) is aimed at an issue of social concern. We do not understand Mr Campbell-Tiech to contend otherwise. His point is that an offence of strict liability does not achieve the object of the statute any more effectively than an offence which requires a mental element. We do not agree. If the offence is absolute, then all that has to be proved is that in the two years before petition the bankrupt materially contributed to, or increased the extent of, his insolvency by gambling. This may have the result that, for some persons at least, the only way to avoid running the risk of committing the offence is to gamble only for low stakes. If that is so, then an offence of strict liability may have a more chilling effect on gambling that may materially contribute to insolvency than an offence which requires a mental element. We are satisfied that strict liability will encourage greater vigilance to prevent gambling which will or may materially contribute to insolvency.
23. We should add that, in deciding that section 157(1)(c) of the Bankruptcy Act 1914 created an offence of strict liability, the court in Salter was also strongly influenced by the structure of Part VIII of that Act (which corresponded with Chapter VI of the 1986 Act). Sachs LJ, who gave the judgment of the court, noted that there were a number of offences, some of which did, and others of which did not, require mens rea. He said that:

“It is thus apparent that the Legislature has exercised considerable care to specify the instances where mens rea is an ingredient of the offence and to make plain the instances where a bankrupt by discharging an onus laid upon him can exculpate himself from what might otherwise be held to be an absolute offence.”

He concluded by saying that having examined the language of section 157(1)(c) in the light of the objectives of the 1914 Act and the adjacent sections, the court held that the offence was one of strict liability: “Section 157(1)(c) creates an absolute offence, and to hold otherwise would result in introducing a proviso to this subsection of a type which the Legislature has carefully refrained from enacting” (p 560).

24. It is true that the decision in Salter is not technically binding on this court, because it was dealing with a provision under repealed legislation. But Parliament decided to re-enact section 157 with minor changes, first in section 191(1)(a) of the Insolvency Act 1985, and then in section 362(1)(a) of the 1986 Act. When re-enacting, Parliament is to be taken to have been aware of the decision in Salter. We would accept in such circumstances that the following passage at page 170 of Cross on Statutory Intepretation (third edition) is a correct statement of the law: “the position is simply that the re-enactment of a provision which has been judicially interpreted provides a reason of limited force why the courts should be more than ordinarily cautious in overruling that interpretation”. We see no reason to overrule the interpretation given to section 157(1)(c) of the 1914 Act by this court in Salter. It seems to us that its reasoning is as compelling today as it was in 1968.
25. We conclude, therefore, that, if the issue is examined without reference to Article 7 of the ECHR, the offence created by section 362(1)(a) of the 1986 Act is one of strict liability.
26. We now consider whether a different conclusion is required as a result of the enactment of the HRA. The classic statement by the ECtHR of the principle underlying Article 7 is to be found at paragraph 52 of the judgment of the court in Kokkinakis in these terms:

“ The Court points out that Article 7(1) of the Convention is not confined to prohibiting the retrospective application of the criminal law to an accused’s disadvantage. It also embodies, more generally, the principle that only the law can define a crime and prescribe a penalty (nullem crimen, nulla poena sine lege) and the principle that the criminal law must not be extensively construed to an accused’s detriment, for instance by analogy; it follows from this that an offence must be clearly defined in law. This condition is satisfied where the individual can know from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him liable.”

27. The purpose of Article 7 is to ensure that those who are or may be subject to criminal sanctions have a sufficiently clear indication of what will or may be the consequence of their actions to enable them, if necessary after taking appropriate legal advice, to avoid that consequence. This rationale underpins both main elements of Article 7, namely the prohibition of retrospectivity, and the general requirement for sufficiently clear criminal provisions.
28. We cannot accept the submission of Mr Campbell-Tiech that, if section 362(1)(a) is interpreted as creating an offence of strict liability, then it offends against the principle of legal certainty. The basis for this argument is that what he describes as the third element of the actus reus, namely the presentation of a petition of bankruptcy within two years of the act of gambling, is outside the gambler’s control and therefore unforeseeable. As Mr Campbell-Tiech put it, if a would-be gambler asks his lawyer whether he will be committing an offence under section 362(1)(a) if he places a bet, the lawyer will not be able to give a definitive answer. His answer at best will be “maybe”. Mr Campbell-Tiech submits that this shows that, if the offence is one of strict liability, it is objectionably uncertain and in breach of Article 7.
29. The answer to this submission is that it confuses factual uncertainty with legal uncertainty. Article 7 is concerned only with the latter. A person who is considering whether to gamble knows for certain that, if he gambles and loses, and if within two years a petition is presented based on insolvency to which the lost gamble has materially contributed, then he will have committed an offence under section 362(1)(a). It is true that, when he places his bet, he does not know whether, if he loses, that will contribute to insolvency so as to trigger the section. But he does not even know that he will lose. We did not understand Mr Campbell-Tiech to submit that the fact that a gambler does not know when places his bet that he will lose renders the offence objectionably uncertain. That would have indeed have been an absurd submission. And yet, it is difficult to see why the fact that a bet may be lost does not render the offence uncertain, whereas the fact that a creditors’ petition may result within two years does so. The short answer is that it is only legal uncertainty that offends against the principle enshrined in Article 7. There is no legal uncertainty in section 362(1)(a). A person knows that, if all three of the factual elements identified by Mr Campbell-Tiech occur, then he will have committed an offence.
30. We turn to the second way in which Mr Campbell-Tiech says that it would be a breach of Article 7 to interpret section 362(1)(a) as creating a strict liability offence. He says that necessity and proportionality are subsumed in Article 7. He submits that an interpretation of strict liability does not answer a pressing social need, and is not proportionate to any legitimate aim. He accepts, as he must, that there is a public interest in deterring persons from gambling which harms their creditors, but he relies on the fact that the Government has proposed to decriminalise section 362(1)(a) as showing that an offence of strict liability is disproportionate.
31. It remains to be seen whether the proposal is accepted by Parliament, but we note in any event that the Government paper goes on to suggest another way of dealing with the problem. In other words, it is clear that the paper recognises the existence of the social problem which inspired section 362(1)(a) and its predecessors. We are in no doubt, therefore, that the offence answers a social need. The existence of the offence is not in itself a breach of Article 7, nor does Mr Campbell-Tiech say that it is. Accordingly, in this part of the argument the narrow question that arises is whether the fact that the offence is one of strict liability is disproportionate so as to render it in breach of Article 7. We accept that a strict liability offence is easier to prove than one requiring a mental element, and that, if section 362(1)(a) is interpreted as creating an offence of strict liability, it may deter persons from gambling who, if the offence required a mental element, might not be so deterred. We do not consider that either of these consequences indicates that it is disproportionate to hold that the section creates an offence of strict liability. First, section 362(1)(a) and its statutory predecessors have been on the statute book for almost a century. It has been interpreted as creating a strict liability offence since 1968 (see Salter). So far as we are aware, gambling flourished ever more vigorously during the latter part of the 20^th century, and continues to do so. If, which we doubt, there is a real public interest in ensuring that gambling is allowed to flourish, there is no evidence that section 362(1)(a) and its predecessors have seriously inhibited its development. Secondly, if strict liability does have a chilling effect on gambling, we are not convinced that the imposition of strict liability is a disproportionate response to the need, in the public interest, to deter persons from gambling in such a way as to cause loss to their creditors.
32. We should add that, so far as concerns the ECHR, there is nothing objectionable in principle with strict liability offences. In Salabiaku v France 13 EHRR 379, at paragraph 27 the EctHR said:

“27. As the Government and the Commission have pointed out, in principle the Contracting States remain free to apply the criminal law to an act where it is not carried out in the normal exercise of one of the rights protected under the Convention and, accordingly, to define the constituent elements of the resulting offence. In particular, and again in principle, the Contracting States may, under certain conditions, penalise a simple or objective fact as such, irrespective of whether it results from criminal intent or from negligence. Examples of such offences may be found in the laws of the Contracting States.”

33. In our judgment, therefore, there is nothing in the ECHR and in particular in Article 7 which requires us to reach a different conclusion from that which we expressed earlier on the basis of an application of domestic law principles. Upon its true construction, section 362(1)(a) creates an offence of strict liability. Accordingly, we dismiss the appeal.