England and Wales Court of Appeal (Criminal Division) Decisions

Kinneir, R v [2002] EWCA Crim 902 (19th April, 2002)

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM BRISTOL CROWN COURT
(HIS HONOUR JUDGE DARWALL-SMITH)

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

Lord Justice Kay :

1. The appellant, Perry Kinneir stood trial in the Crown Court at Bristol before His Honour Judge Darwall-Smith and a Jury on an indictment containing 20 counts, 19 of theft and 1 of furnishing false information. On the 30^th November 2000 he was convicted of 17 offences of theft and the offence of furnishing false information but acquitted of the remaining two counts of theft. He now appeals against certain of his convictions by leave of the single judge.
2. Jointly indicted with him was another man Alan Whitbread, who was also convicted of a number of the thefts. He has not appealed against his convictions but has appealed against sentence. For reasons to which we will refer at the end of this judgment, we propose to deal separately with issues of sentence.
3. The background to the case is that both the appellant and Whitbread were professionals working in the finance industry. The appellant owned companies called Marlborough International, specialising in corporate finance, Mortgage Directory and A. W. Consultants (AWC). Whitbread owned a company called Associated Tax Planning Limited (ATP), which administered independent financial advice to a large number of clients.
4. The counts in the indictment can conveniently be split into two groups. Three of the counts, numbers 1, 2 and 20, involved the appellant alone. In each case the allegation was that he had induced his own clients to part with substantial sums of money by making false representations that the money would be invested in investments with a very high return, when in reality he simply stole the money taking it and using it for his own purposes.
5. The other counts in the indictment (Counts 3-19) involved both the appellant and Whitbread. The alleged victims of these offences were Whitbread’s clients. The prosecution alleged that the appellant and Whitbread had set up an arrangement whereby Whitbread would persuade his clients to invest in a non-existent offshore trading scheme using the name SEPA Traders, on the basis that this would make them substantial profits. The concept of SEPA Traders was based on a trading scheme called CEPA Traders, which had been explained to them by one of the prosecution witnesses, Mr Mackness. The allegation was that the appellant and Whitbread produced false documentation in connection with this scheme and effectively pocketed the clients money, which was never invested as advised. Some of the money was returned as representing income from the investment but the capital was never available for return and as a result the clients lost substantial sums from their savings.
6. Whitbread was said to be the front man who actually spoke to the clients and obtained the money. The appellant was said to be the backroom person who was purporting to make the investment.
7. In due course as a result of the failure to repay money, there was an investigation by the financial regulatory authorities, which led to the matter being reported to the police and these prosecutions.
8. The appellant’s defence in relation to the counts on which he was solely indicted (Counts 1, 2 and 20) was that the money had been provided by the alleged victims as unsecured loans upon which he had agreed to pay interest at the rate of 15% per annum. He denied that he had ever told the alleged victims that the money would be invested on their behalf by him. He accepted that he had been unable to repay the loans but denied that it had ever been his intention to default in this way.
9. His defence in relation to the counts on which he was jointly indicted (Counts 3-19) was that he had an agreement with Whitbread, under which Whitbread would persuade his clients to provide the appellant with unsecured loans to assist in the growth of his corporate finance broking business, Marlborough International. He relied upon a written agreement, purporting to have been signed on the 2^nd April 1994 by Whitbread, which stated that any sum provided would be by way of unsecured loans, repayable in five years.
10. The appellant denied that he had anything at all to do with SEPA Traders. He contended that if any misrepresentations had been made to cause Whitbread’s clients to part with their money, this was something done by Whitbread of which he had no knowledge.
11. Whitbread, for his part, whilst admitting that he had acted dishonestly in relation to some transactions, contended that he had been duped by the appellant. It was his case, in support of which he gave evidence, that the SEPA Trading scheme was something that the appellant had told him about. He contended that he had believed that monies, which he was obtaining from his clients and paying over to the appellant’s company, were being invested in this scheme, which he believed to be entirely genuine. He flatly contradicted the appellant’s account that the money was being provided on the basis of unsecured loans and he denied the genuineness of the agreement dated the 2^nd April 1994. He contended that that document was one drawn by the appellant and signed in 1996 when the appellant’s conduct was being called into question and at that time it was given the false date of the 2^nd April 1994 in order to suggest that there had been such an agreement for sometime.
12. The total sums alleged to be involved were £373,953.15, of which the counts involving the appellant alone amounted to £90,000.00.
13. The appellant appeals against his conviction on each of the three counts on which he alone was indicted (Counts 1,2, and 20). He also appeals against his conviction on six of the fourteen counts on which he was jointly indicted (Counts 10, 11, 14, 16, 18 and 19). Each of these counts is a count where the money alleged to have been stolen was paid to Whitbread or his company ATP. There is no appeal on the other counts of theft where in each case the money was paid to ANC, one of the appellant’s companies. The grounds of appeal in respect of the two different groups of theft are distinct and it will be convenient to deal with each group separately.
14. In addition to these matters, Mr Redhead on behalf of the appellant, at the hearing of the appeal sought the leave of the court to amend his grounds of appeal to include for the first time an appeal against the appellant’s conviction on count three which was a sample count of furnishing false information relating to documentation used in the SEPA Trading scheme. We will deal with that application when we have considered the other grounds of appeal.
15. Before turning to consider the grounds of appeal relating to counts 1, 2, and 20, which relate to the summing up, it is necessary to say a little about the approach adopted by the trial judge to that task.
16. On any view, this was not an easy matter for a jury. The case involved looking at a large number of documents, considering evidence which had lasted for a month and reaching conclusions on 20 distinct counts and two separate defendants with different cases. Although each except one of the allegations was an allegation of theft, the jury had to be able to understand quite technical aspects of the meaning of appropriation, the property of another and intention to permanently deprive if they were to do justice to the case.
17. We have no doubt that it was a case that required a summing up that apart from standard directions on the law, did not simply tell the jury what the definition of theft was and give a recital of the evidence in much the same order as it had been given during the trial. It was necessary, if the jury were to be provided with the help that they would require from the judge, to deal separately both as to the law and the evidence with each distinct count. The jury should have been given a direction on the law on each count that related the definition of theft to the particular issues raised on the particular counts so that they could be quite clear what it was in law that they had to be sure about before they could convict on any particular count. Having had the law explained in this way, it was then necessary to relate the evidence to these issues explaining where there were factual matters that had to be resolved in order that they could determine the issues. It was, we are satisfied, a case that cried out for the evidence for the prosecution and for the two defendants on each count to be married up so that the factual issues were readily understood. Simply reciting the evidence given on behalf of the prosecution on all the counts to the jury and then, and only then, continuing on with each defendant in turn was never likely to provide a great deal of assistance to the jury.
18. Unfortunately the judge’s approach was not that which we have suggested was plainly required. He defined the law of theft, explained in general and not very clear terms the meaning of the language of the definition and never in any way assisted the jury by relating those rather difficult concepts to the precise legal issues on the different counts. His review of the evidence was largely a recital of the evidence given in the order in which it had been led at trial without any attempt to gather together the differing parts that related to particular counts.
19. We, for our part, found it extremely difficult to identify those parts of the summing up that relate to the individual counts and our reading of the summing up as a whole did little to illuminate us as to the issues that had to be decided by the jury. If the approach, which we have suggested was clearly the right one, had been adopted, we have little doubt that many, if not all, of the problems that are raised on this appeal would not have arisen.
20. Against that background, we turn to the appeal on counts 1, 2 and 20, and it is necessary first to deal in a little detail with the issues that were raised.
21. Counts 1 and 2 related to monies handed over by a Mr and Mrs Trowbridge, whom the appellant had known for 20 years. Mr Trowbridge was a farmer who sold his farm and deposited the proceeds in a bank. It was important to the Trowbridges that they maximise the interest that they received from this sum. The appellant indicated that he could obtain a return for them of 15% per annum. Mrs Trowbridge who dealt with their financial affairs arranged to hand over two separate sums to the appellant, one of £60,000 and the other of £20,000 in December 1992 and March 1993 respectively. For some time, they received regular monthly repayments of £500 but eventually these stopped. In all they received back £44,000 of their capital and the income that it should have earned.
22. The basis upon which the sums were handed over lay at the very heart of the issue on these counts. The Trowbridges contended that the appellant had told them that he would invest the money on their behalf so that it would produce £500 a month by way of income and, in addition, capital growth. They said that they were told that they could have their capital returned at any time. In support of their version, documentation was produced, which seemed to provide powerful confirmation of their contentions. By way of example, there was a letter dated the 21^st December 1992 (exhibit BET 2, bundle page 2), which spoke of having “received your investment of £60,000”, referred to “looking to secure the original capital of £60,000”, and confirmed that a monthly bulletin would be sent to them “advising you how your investment monies are performing”.
23. The appellant’s version was very different. He said that the money was paid to him as a loan to his company, Marlborough International, and that there was no question of him investing it on their behalf. The appellant also produced documents relating to this transaction, which, if they were accepted as genuine, supported his case. Again it is possible to give a single example that demonstrates the nature of the conflict that the jury had to resolve. He produced a letter also dated the 21^st December 1992 which purported to be signed by the Trowbridges. It was on paper bearing their address although the appellant said that he had prepared it and then had obtained their signatures to it. It commenced:

“We are very happy to lend your company Marlborough International on an unsecured basis the sum of £60,000 on the understanding that this money is being borrowed by Marlborough International for a period of no more than 3 years from the date of this letter.”

24. It is almost impossible to see how the two letters of the same date to which we have referred can stand together and both be genuine. Mrs Trowbridge denied that she had signed the letter purporting to be signed by her. However, a handwriting expert was called on behalf of the appellant and gave evidence that in his opinion he was confident that Mrs Trowbridge had written her signature and that it was highly probable that Mr Trowbridge had written his.
25. Thus it can be seen that there were difficult factual issues for the jury to resolve. The legal position was, however, relatively straightforward. If it was a loan and there simply had not been the money to repay the loan when it was due for repayment, then the necessary ingredients of theft could not have been made out. If on the other hand the money had been entrusted to the appellant for investment, the appellant on his own admission had not fulfilled the obligation upon him when the money was entrusted to him and had used the money for his own purposes in circumstances which would clearly have been dishonest. Thus, if the Trowbridges’ evidence was accepted, he would have been guilty of theft.
26. Count 20 was a very similar allegation involving a Mr Small. He had some money that he wished to invest. He met the appellant in September 1997, who told him that he could receive 15% interest per annum payable quarterly starting in January 1998. He forwarded £10,000 in two cheques, each of £5,000 payable to Marlborough International. The appellant returned the cheques asking that they be made payable to Mortgage Directory and new cheques were then provided. Mr Small never saw any return of his money.
27. Mr Small’s evidence was that the appellant had said that it would be a safe investment and he had denied that there had ever been any mention of an unsecured loan. However he did concede that the appellant had never told him how the money would be used although he suggested that there might have been some mention of overseas bonds.
28. The appellant contradicted the evidence from Mr Small and contended that he had made it clear, and Mr Small had clearly understood, that this was to be an unsecured loan which he fully intended to repay. The police investigation had caused the crash of his business and as a result he had been in no position to pay the agreed interest or repay the loan which was in any event not repayable for five years.
29. Thus the issue on count 20 was the same as that on counts 1 and 2. If the money was paid as a loan, then unless there was an intention from the outset to default on repayment, the appellant was not guilty. If, as the prosecution contended, it was money entrusted to the appellant for investment, he had used it dishonestly for his own purposes and was guilty of theft.
30. The issues for the jury to decide on counts 1, 2, and 20, could, therefore, have been reduced to a very simple form for the jury if the law had been related to the particular circumstances of these offences. However, as earlier indicated, the judge did not attempt such an exercise and his only direction on the law was a general explanation of the ingredients of theft.
31. The grounds of appeal on these 3 counts attack that general explanation. It is submitted that the jury may have been left with the impression that even if the original receipt of the money was by way of a loan with no dishonest intention not to repay at that stage, nonetheless the failure to repay the loan could in itself amount to theft.
32. It is necessary therefore to see what the judge did say in this regard. The judge told the jury the legal definition of theft and then explained that there were four ingredients about which they would have to be satisfied before they could convict. The first was dishonesty in respect of which he gave the customary direction. He then continued:

“Secondly, appropriate. Well, ‘appropriate’ means takes into his possession and, in the context of this case, a sum of money is misappropriated as soon as the defendants treat it as their own to deal with as they wish. Sums are extracted from the losers account by cheque or handed over in cash, and the allegation in this case is that the defendant knew from the outset that the money was not going to be used for investment, as the losers had been told it was. In that event, members of the jury, misappropriation takes place as soon as it is credited to the account of one of the defendants.

‘Property belonging to another’ means that a defendant of course cannot steal his own property. All the property in this case is money that belonged to the losers named in the particular counts in the indictment and remains in the form of proceeds that are capable of being traced into one or other of the defendants’ accounts.

Fourthly, ‘intention of permanently depriving the other of it’ means not merely borrowing something and intending to return it to the rightful owner. In this case, the allegation is that having used the money for their own purposes they neither intended nor were in a position to return it to the losers.”

33. The first criticism of that passage that can be made is that it does not distinguish between the “allegations” made by the prosecution and that which the jury needed to find proved as the ingredients of the offence. It is, of course, perfectly acceptable in this context to indicate how the prosecution put their case but a jury may not accept fully the prosecution case and need directions that will enable them to known whether or not on some other basis it is still possible to convict.
34. The direction on appropriation made clear that if the prosecution case was made out, namely an intention from the outset not to use the money for investment when such was the agreement, that this was a sufficient appropriation but it did nothing to explain what would be the situation if the jury thought that the appellant may have received the money believing that it was paid to him by way of loan.
35. The direction on “property belonging to another” with its reference to “proceeds that are capable of being traced into one or other of the defendants accounts” again correctly stated the position if this was an investment but ran the risk of causing the jury to think that money in the accounts of the appellant traceable back to the loan could be viewed as the property of another when the property in such money would have passed with the making of the loan.
36. Perhaps of greatest concern is the explanation of “permanently depriving the other of it”. The direction that this “means not merely borrowing something and intending to return it to the rightful owner” is not, with respect to the judge, readily intelligible. If the word “merely” was removed then it could be clearly understood as meaning that a borrowing with an intention to return is not an intention permanently to deprive the owner of it. The inclusion of the word “merely”, however, is unhelpful and perhaps suggests that such a borrowing with that intention is one of many ways in which an intention permanently to deprive may be established.
37. This confusion is then accentuated by the last sentence and the reference to not being “in a position to return it to the losers”. The prosecution allegation was that the appellant did not intend to return the money to the losers. It was the appellant’s case that only the circumstances that arose thereafter put him in a position whereby he could not repay the money having used the money for his own purposes as he was permitted to do since the money had been paid over by way of loan. The passage to which we have referred does nothing to explain the distinction between these two competing positions.
38. Mr Evans QC on behalf of the prosecution has sought to persuade the court that the prosecution’s case was a straightforward one of fraud from the very outset and that the judge did not need to provide any greater explanation than he did. He submits that the jury must have understood that if that dishonest intention from the outset was not established they must acquit.
39. It would have been open to the judge to leave the case to the jury on that very simple basis but nowhere did he spell out to them that that was the case. We have to ask ourselves whether we can be confident that a jury did not understand from the directions that a subsequent using of the money even if paid over by way of loan might have been a foundation for a conviction. Our conclusion is that a jury may have understood that this was sufficient and it follows that in our judgment that the convictions on counts 1, 2 and 20 cannot be viewed as safe and must be quashed.
40. We move next to consideration of the appeals against counts 10, 11, 14, 16, 18 and 19. In essence the grounds of appeal are that in each of these cases there was no evidence upon which a jury could conclude that the appellant was involved in the appropriation of the money which was paid to Whitbread or Whitbread’s company. If any subsequent act was relied upon other than the original receipt of the money, then the direction of the judge was inadequate to identify the subsequent appropriation and to define the circumstances in which the jury could convict.
41. As we have already indicated these counts and the other theft counts on which the appellant was jointly indicted with Whitbread arose out of transactions involving Whitbread’s clients. It was the prosecution case that it mattered not whether the monies were paid directly to Whitbread, to Whitbread’s company or to one of the appellant’s companies. This was because it was a fraudulent scheme in which each was involved whereby sums were obtained from the investors by false assurances that the money would be invested in the SEPA Trading scheme.
42. In considering the appeals on these counts, the court has to start from the proposition that the jury found in respect of some of the counts that both the appellant and Whitbread were jointly involved in the dishonest SEPA Trading scheme, and that those findings were correct because no appeal has been brought against those convictions. Thus it must be accepted that there was an ongoing fraudulent scheme in which each man played his part. Clearly, even within such an ongoing scheme, it does not necessarily follow that each man is involved in each separate theft. That this was understood by the jury is shown from their acquittals of Whitbread on counts 6, 7, 8, 9, 12 and 15 and their acquittal of the appellant on counts 13 and 17 upon which Whitbread alone was convicted.
43. The jury having properly, as it is accepted, concluded that the scheme itself was fraudulent, it seems to us that it is only necessary to look to see on each count whether there was evidence upon which the jury could conclude that the appellant was a party jointly with Whitbread to that matter. It will be necessary, therefore, to look at each count individually.
44. Count 10 alleged the theft of a little over £8,900 from a lady called Emma Lloyd. Mrs Lloyd had invested £20,000 with Skandia Life in two bonds each of £10,000 in April 1994. In September 1994, Whitbread advised her that one of the bonds was not performing well and notwithstanding the losses involved, she should surrender the bond and reinvest in SEPA Trading.
45. Mrs Lloyd was the victim of another count, count 15 and this related to the second £10,000 bond. In March 1996 Whitbread advised her that this bond was also under performing and should be surrendered. He further advised that this money too should be reinvested in SEPA Trading. Having received a little over £9,500 from Skandia Life she sent off a cheque for reinvestment. This was payable to the appellant’s company. The appellant was convicted on this count and no appeal is brought in respect of that matter.
46. The issue on count 10 was whether it could be shown that the appellant was a party to this particular transaction. Mr Evans has placed before the court the relevant documentation upon which the prosecution relied. This shows that the appellant undoubtedly knew about the transaction represented by count 15 but does nothing to demonstrate any knowledge on his part of the matters relating to count 10. Indeed there is a fax transmission from the appellant dated the 4^th March 1997 (exhibit REG/1 bundle pages 103-104) which lists those who had dispersed money to the appellant through ATP. It refers to Mrs Lloyd but only refers to £10,000 which seems consistent with count 15 but not count 10. Thus the evidence does not demonstrate that the appellant was a party to this transaction.
47. Whitbread in his submissions in respect of his appeal against sentence admits that the money involved in count 10 was money which he utilised entirely to support his own company without passing on any of it to the appellant. Whitbread has never at any stage of the case sought to assist the appellant and we doubt that he is doing so on this occasion.
48. The conclusion to which we have come is that there was no evidence justifying the jury reaching their conclusion on count 10 and that this conviction is unsafe and must be set aside.
49. Count 11 related to a sum of £43,000 stolen from a Dawn Hall. Mrs Hall was also the victim of count 6 in respect of which there is no appeal and which relates to the theft of a further £15,000. Mrs Hall like Mrs Lloyd was a client of Whitbread who was persuaded to invest in SEPA Trading.
50. The evidence that the appellant knew about each transaction is overwhelming. The fax dated the 4^th March 1997 from the appellant to which we have referred included Mrs Hall as one of those in respect of whom funds had been sent to AWC and showed the extent of the funds as £59,500. This figure could not have been produced unless the £43,000 was included in the funds. This document in itself fully justifies the jury’s conclusion that this transaction was a part of the dishonest joint enterprise without the need to consider other documentation which only serves to reinforce this clear view. Accordingly we are satisfied that the conviction on count 11 was safe and dismiss the appeal in respect of this count.
51. The next count is count 14. This relates to the theft £5,000 from a Mr Thomas Jones. Mr Jones was also the victim of count 4 in respect of which there is no appeal. Count 4 related to an earlier payment of £5,000. Mr Jones was able to produce a receipt from AWC in respect of the first payment of £5,000 and a further receipt from AWC dated the 14^th June 1996 although this receipt purported to be a receipt for £13,400. Notwithstanding that the wrong sum was being acknowledged the jury were entitled to conclude that this related the count 15 transaction since it was the only transaction involving Mr Jones in 1996.
52. Evidence was given that the police found a number of files at the appellant’s premises that related to these transactions. One such file related to Mr Jones and contained a copy of the receipt produced by Mr Jones.
53. Hence there was evidence that was placed before the jury that the appellant was a party not only to the count 4 transaction but also to the count 15 transaction. The evidence in part was disputed. For example the appellant denied that the files alleged to have been found at his premises had been there and suggested that the police evidence in this regard was false. That these matters were disputed does not affect the consideration of this matter because it was for the jury to decide which evidence it believed to be true and the only real issue for us to decide is whether there was evidence from which they could properly draw the necessary conclusion. However, we should make clear that the jury from its verdicts clearly believed the police and disbelieved the appellant in this regard. That conclusion we view as inevitable when the evidence is examined in detail. On certain of the files produced by the police there were letters written by the victims addressed to the appellant and replies which confirmed that they had been received purporting to be signed by the appellant. The appellant’s contention that he knew nothing of these documents would involve a conspiracy involving not only a large number of police officers but also the various different victims to create and plant documents on such a scale that it beggars belief.
54. For these reasons we are satisfied that the conviction on counts 15 is safe and reject the appeal in respect of that count.
55. Count 16 related to the theft of £7,000 for a Mr Challifor. Mr Challifor made two separate payments of £1,400 and £7,000. He produced a receipt dated the 14^th June 1996 from AW Consultants for £8,400. He was also shown on the fax of the 4^th March 1997 sent by the appellant in respect of the sum of £9,800. This could only be the appropriate figure if the £7,000 was included. Hence there was evidence that the appellant was a party to this particular transaction and the jury were entitled to convict. We reject the appeal in respect of this count.
56. Counts 18 and 19 related to two payments made by a Mr and Mrs Mumby in December 1996 for £11,000 and £2,000 respectively. The second payment was made in cash to Mr Whitbread. In June 1997, Mr Mumby was informed by Mr Whitbread that trading had concluded and that the funds would be returned to him that month. When they were not forthcoming he went to see the appellant personally. There was at this meeting no suggestion that the appellant was unaware of the funds about which Mr Mumby was speaking. From this it was open to the jury to infer that the monies had been received by Whitbread as part of the fraudulent joint enterprise with the appellant and to convict accordingly. We cannot see that these counts can be viewed as unsafe and reject the appeals in respect of them.
57. It follows that we allow the appeals on counts 1, 2, 10 and 20 and quash each of these convictions. In all other respects the appeal against the theft counts is refused and the other convictions stand.
58. It is necessary finally in dealing with the appeal against conviction to consider the application for leave to amend the grounds of appeal out of time so as to include an appeal in relation to count 3, the count alleging the furnishing of false information. No attempt was made to appeal against this conviction until the hearing of the appeal. It was, therefore, approximately 15 months out of time. No satisfactory explanation has been advanced for this very considerable delay and we would only be minded to allow such an amendment, which would inevitably delay the conclusion of the appeal still further, if there was some powerful reason for considering it notwithstanding the unexplained delay. In fact, this conviction would not in our judgment have any significant impact on any aspect of this matter. It can have no bearing on any issue relating to sentence. Indeed from that point of view, it was an unnecessary complication to include it in the indictment in the first place. Equally, having regard to the convictions in respect of which there is no appeal and those which we have confirmed, it cannot possibly have any impact on the perception of the appellant’s criminality in any way that would have any bearing upon his future. For these reasons and in the absence of any proper justification for the lateness of the application, we can see no good reason to permit the amendment of the grounds. Accordingly we refuse that application.
59. The allowing of the appeals in respect of counts 1, 2, 10 and 20 may have an impact upon the sentence passed upon the appellant. It seems clear to us that we should allow Mr Redhead, for whose very considerable help in this case we are indebted, the opportunity to address us on that aspect of the matter.
60. Any variation of the appellant’s sentence may affect the sentence imposed upon Whitbread against which he appeals. We will, therefore, deal with all issues of sentence relating to both men separately when we have heard from Mr Redhead.