England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT TRURO
His Honour Judge Wassall
T20050162

		Royal Courts of Justice Strand, London, WC2A 2LL
		25/02/2008

Lord Phillips of Worth Matravers CJ

Introduction

1. These applications have been referred to the full court by the Registrar. The first applicant ('the Partnership') is a partnership of which the third to the tenth applicants are the partners. The second applicant 'Mr Bick' was an employee of the Partnership. The Partnership is based at Newlyn in Cornwall. The business of the partnership includes auctioning fish. Mr Bick was the auctioneer. All ten applicants have, at all material times, made common cause and shared the same legal representation.
2. The Partnership was indicted under the description 'W. Stevenson & Sons (a partnership)' under six indictments. The prosecutions were brought by the Department for Environment, Food and Rural Affairs ('DEFRA'). The charges were brought under the Sea Fishing (Enforcement of Community Control Measures) Order 2000 ('the Order'). Each charged the Partnership with failing "to submit a sales note which accurately indicated the quantities and price at first sale of each fish species" contrary to Article 3(1)(d) of the Order. The significance of this offence was that it facilitated the evasion of fishing quotas.
3. The first to be tried was the third of the six indictments. Mr Bick was charged under that indictment with aiding and abetting the Partnership. The charges related to catches of fish brought in by the vessel 'Carol H' and charges of breaches of the Order were also brought against the Master and the owners of that vessel. The defendants pleaded not guilty, that plea being entered for the Partnership by their counsel. On 19 October 2006, after a two week trial in the Crown Court at Truro before HHJ Wassall and a jury the Partnership was convicted on eight counts and Mr Bick was convicted on four counts.
4. The Partnership and Mr Bick applied for permission to appeal against these convictions on 15 November 2006. The ground of appeal settled by counsel then acting for them related to a ruling made by the judge on the admissibility of certain documentary evidence. On 8 February 2007 the Registrar received a duly completed Notice of Abandonment on Form A from both applicants together with a covering letter from their solicitors confirming that 'our clients form the view that at the current time they should abandon their appeal'
5. In March 2007 DEFRA decided to seek confiscation orders pursuant to the provisions of section 71 of the Criminal Justice Act 1988. They called on the assistance of the Asset Recovery Agency to assist in this endeavour. On 28 March 2007 search warrants were executed at the business premises of the Partnership and at the home address of the third applicant. At a hearing on 2 April 2007 before Judge Wassall a disclosure order was sought that sought disclosure by all eight partners of their personal assets. In a note prepared for that hearing by Mr Edmunds QC on behalf of the prosecution it was submitted that this was relevant both to the benefit obtained by 'the defendant' and to 'the defendant's realisable assets'. The note explained that the prosecution had been brought against the Partnership, but concluded as follows:

"24. Prosecuting a partnership does not incorporate it, any more than suing a partnership in the civil courts incorporates it. It is a convenient means of identifying the body of partners.

25. Where the legislation refers to a 'person' the Interpretation Act 1978 makes it clear that 'person' includes a body of persons corporate or unincorporate' (see above). Therefore the naming of the Partnership as Defendant includes the 'body of persons' who are partners.

26. The Partners have chosen not to incorporate and therefore cannot claim the limited liability of a limited company (albeit that the Court has power to lift the veil in appropriate cases involving corporate defendants).

27. They have been partners in a 'course of criminal conduct' such that the issues of 'benefit' and 'realisible assets' must necessarily extend to the individual partners."

6. Counsel for the Partnership and the partners protested vigorously that this was at odds with the basis upon which the prosecution had been conducted, for none of the individual partners had been indicted and the prosecution had made it quite plain that, while the Partnership was indicted none of the individual defendants was a defendant. The Judge made the disclosure order sought none the less. In doing so he stated that he was not "tying myself to making decisions now which pre-empt legal argument."
7. A hearing was fixed for 13 April 2007 for re-arraignment of The Partnership on the remaining five indictments, which contained 37 counts of the same offence. These did not involve Mr Bick. Counsel stated that he had express instructions from the Partnership to enter pleas of guilty.
8. The issue of disclosure was again raised. It was argued that the court could not make orders against the individual partners. The judge ruled that he had jurisdiction to make such orders inasmuch as the Partnership did not have a separate legal personality from the partners who made it up.
9. One might have expected the individual partners to stick to their guns and to continue to challenge the attempt to treat them as if they were offenders who had been convicted and were, in consequence, susceptible to confiscation proceedings. Instead they decided to attack, root and branch, the criminal proceedings that have given rise to the confiscation proceedings. They have done so by applying, both in the name of the Partnership and in their own names for permission to appeal against conviction. This course raises procedural questions of some complexity, to which we will come shortly. First, however, we must refer to the Order that has given rise to these proceedings.

The Order

10. The Order sets out in a schedule a number of Community fishing control measures contravention of which constitutes an offence, together with a list of persons liable in each case (eg the owner and the master of the fishing vessel concerned). The measure in respect of which the Partnership was convicted was the requirement under Article 9 of Regulation 2847/93 "where first marketing of fishery products is carried out by an auction centre…to submit a completed sale note within 48 hours of sale". Liability was imposed on the Partnership as "the first seller of the fish".
11. Paragraph 11 of the Order provides:

"11.-(1) Where any offence under article 3 of this Order committed by a body corporate is proved to have been committed with the consent or approval of, or to be attributable to any neglect on the part of, a director, manager, secretary or other similar officer of the body corporate, or a person purporting to act in any such capacity, he, as well as the body corporate, shall be guilty of the offence and liable to be proceeded against and punished accordingly.

(2) Where any offence under article 3 of this Order committed by a partnership is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, a partner, he as well as the partnership shall be guilty of the offence and liable to be proceeded against and punished accordingly.

(3) Where any offence under article 3 of this Order committed by an unincorporated association (other than a partnership) is proved to have been committed with the consent or connivance of, or to be attributable to any neglect on the part of, any officer of the association or any member of its governing body, he as well as the association shall be guilty of the offence and liable to proceed against and punished accordingly. "

The grounds of appeal and the standing of the applicants.

12. Paragraph 11 (2) draws a clear distinction between a partnership and the partners of which it is comprised. It imposes strict liability on the former but only imposes liability on the latter if complicit in the offending. The primary submission of the third to the tenth applicants is that it is simply not possible to treat a partnership as an independent legal entity in this way. There is no distinction in law between a partnership and the partners who are members of it. Indicting the Partnership meant that the individual partners became the subject of the prosecution. Conviction of the Partnership meant that the individual partners were convicted. Thus, so the partners submit, they have standing to apply for permission to appeal against conviction. Alternatively they claim that they should be permitted to align themselves, as 'interested parties', with the application made by the Partnership.
13. Some of the grounds of appeal are premised on the applicants' primary contention that the individual partners were the true defendants. Others treat the Partnership as being the intended defendant. We shall re-order and, to a degree, reformulate the grounds in order to distinguish between the two and to reflect the oral argument before us.

Partners the true defendants

i) The indictment was a nullity as it failed to identify the individual partners as defendants.

ii) The arraignments were a nullity as the partners did not plead to the indictments.

iii) The partners were deprived of all the protections of a fair trial in that they were 'convicted by stealth'.

iv) The conviction of the partners was obtained by an abuse of process in that the prosecution expressly disavowed the prosecution of the partners in their personal capacity.

Partnership as intended defendant

v) The arraignments were nullities in that no statutory basis existed for counsel to enter pleas on behalf of the Partnership.

vi) The convictions were nullities in that they were secured against an entity that had no separate legal status.

14. Mr Bick seeks to jump onto the other applicants' bandwagon. If the proceedings against the Partnership under the third indictment were a nullity, then he contends that his conviction for aiding and abetting the Partnership cannot stand.

The prosecution case

15. Mr Edmunds submitted that the Partnership and not the individual partners were indicted on each of the six indictments. The prosecution had always made it plain that this was the intention. It was something that the law permitted. The jury's convictions in relation to the counts in the third indictment were valid. The pleas of guilty in the five other indictments had been properly and effectively made on the instructions of all eight partners.
16. A number of other arguments were advanced in the lengthy skeleton argument submitted by the prosecution that did not go to the heart of the issues raised by these applications. These included a further procedural point in relation to the third indictment. Mr Edmunds submitted that as the Partnership had withdrawn an application to appeal in that case, this court could only entertain a fresh application if it concluded that the application had been made under a misapprehension of such a nature as to render the withdrawal a nullity – see R v Medway [1976] QB 779.
17. As to the confiscation proceedings, Mr Edmunds submitted that it had yet to be determined in those proceedings whether it was a consequence of the convictions that the assets of the individual partners could be confiscated. It was premature to consider that question. We observe that a further question remains to be resolved, which is whether when fines are imposed it will be lawful to enforce these against the assets of the individual partners. It does not, seem to us that these questions can be ignored when considering the fundamental issue of whether prosecution of the Partnership as a separate entity was possible at all.

The procedural conundrum

18. At the outset of these applications a point arose, foreseen by the Registrar, as to the jurisdiction of this court to entertain applications brought by the individual partners. The only person who has standing to appeal against a conviction is the person who has been convicted. If the prosecution is correct in submitting that the individual partners were not defendants to the indictments and have not been convicted under them, then they can have no standing to appeal. So far as the Partnership is concerned, the fundamental point advanced on this application is that the Partnership does not exist as an independent entity, with the effect that every stage of the proceedings was a nullity. Yet the applications for permission to appeal have been settled and advanced as if the Partnership is a separate legal entity. In these circumstances we indicated early in the hearing that, while the applications raised issues of importance that would justify the grant of permission to appeal, we did not propose to grant permission at that stage because of the problems in relation to standing. We propose to consider the issues raised before turning to the consequences of our conclusions in relation to them.

The issues

19. We propose to consider the following issues:

i) Is it possible for legislation to render a partnership criminally liable as a separate entity from the individual partners? If so:

ii) Does the Order purport to do so? If so:

iii) Was the Partnership effectively indicted under the six indictments? If so:

iv) Were the pleas of guilty that were entered on behalf of the Partnership effective? If so

v) Do the resultant convictions expose the individual partners to liability?

Is it possible to render a Partnership criminally liable as a separate entity from the individual partners?

20. It is important to identify at the outset what is meant by this question. We envisage legislation that renders a partnership liable as an independent entity as being legislation that will lead, in respect of a conviction for a single offence, to the imposition of a single penalty. Conviction of the partnership will not constitute conviction of the individual partners, nor render the individual partners liable to individual penalties. Whether they will be liable between them to satisfy a fine imposed on the partnership, in the same way that they are liable for the civil debts of the partnership, is part of the fifth issue that we shall consider.
21. Section 1 of the Partnership Act 1890 ('the Act') defines partnership as "the relation which subsists between persons carrying on a business in common with a view to profit". The Act was an act declaratory of the effect of common law principles of agency, albeit that it set out to amend that law.
22. The following sections of the Act are particularly relevant:

"4 Meaning of firm

(1) Persons who have entered into partnership with one another are for the purposes of this Act called collectively a firm, and the name under which their business is carried on is called the firm-name.

(2) In Scotland a firm is a legal person distinct from the partners of whom it is composed, but an individual partner may be charged on a decree or diligence directed against the firm, and on payment of the debts is entitled to relief pro rata from the firm and its other members.

5 Power of partner to bind the firm

Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.

…..

6 Partners bound by acts on behalf of firm

An act or instrument relating to the business of the firm done or executed in the firm-name, or any other manner showing an intention to bind the firm, by any person thereto authorised, whether a partner or not, is binding on the firm and all the partners.

Provided that this section shall not affect any general rule of law relating to the execution of deeds or negotiable instruments.

…..

9 Liability of partners

Every partner in a firm is liable jointly with the other partners, and in Scotland severally also, for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in a due course of administration for such debts and obligations, so far as they remain unsatisfied, but subject in England or Ireland to the prior payment of his separate debts.

10 Liability of the firm for wrongs

Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefore to the same extent as the partner so acting or omitting to act.

…..

12 Liability for wrongs joint and several

Every partner is liable jointly with his co-partners and also severally for everything for which the firm while he is a partner therein becomes liable under either of the two last preceding sections.

…..

20 Partnership property

(1) All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement."

23. The effect of these provisions is that partnership is a relationship that enables transactions to take place under a single firm name on behalf of a group of persons who are jointly liable in respect of those transactions and jointly and severally liable for loss or injury caused or penalty imposed for which the firm has become liable. Rights and other property acquired in the name of the partnership are owned jointly by the partners as partnership property, as is property that the partners agree to put into the partnership. The business that the partners do through the partnership is carried on by the partnership in the name of the firm as if the firm were a separate corporate person. It will often not be apparent to those dealing with the firm whether they are dealing with a partnership or with a company. The partnership, and thus the individual partners, can become vicariously liable for the acts of its servants or agents in the course of the partnership business.
24. Archbold states with, as these proceedings show, uncharacteristic inaccuracy, "No difficulty arises where the legislation creating an offence makes express provision for criminal liability on the part of corporations or other bodies of persons". Lindley & Banks on Partnership, 18^th edition states at paragraph 14-01 "As regards criminal proceedings, the existence of a partnership is of little significance, save perhaps in the case of a prosecution under certain provisions of the Trade Descriptions Act 1968."
25. The only text book to which we have been referred that deals in any detail with the position in criminal proceedings of unincorporated associations, including partnerships, is Smith & Hogan, edited by Professor Ormerod, which at p. 243, repeating a passage that appears in the 19^th edition edited by Sir John Smith, states:

"(e) Unincorporated bodies

An unincorporated association is not a legal person at common law and therefore could not incur criminal liability though its members could. This is still the position for common law offences. Statutory offences are different. The effect of the Interpretation Act 1889 was that in all enactments relating to offences, whenever passed, the word 'person' includes bodies corporate (s2) and, in enactments passed after 1889, both bodies corporate and unincorporated (s19). The Interpretation Act 1978 preserves this position. Since 1889 unincorporated bodies have been able to commit any offence under an enactment passed after 1889 which makes it an offence for a 'person' to do or omit to do anything which an unincorporated body is capable of doing. The potential liability of unincorporated bodies seems to have been little noticed. In Attorney-General v Able Woolf J, dealing with an alleged offence under the Suicide Act 1961 said, 'It must be remembered that the [Voluntary Euthanasia Society] is an unincorporate body and there can be no question of the society committing an offence'; but since the offence may be committed by 'a person' it seems that it may be committed by an unincorporated body. An unincorporated body, being the registered keeper of a vehicle, was held capable of liability as a 'person' to fixed penalties for illegal parking under the Transport Act 1982. Sometimes statutes have made express provision for the liability of unincorporated bodies but it seems that this is unnecessary when the word 'person' is used in the definition of the offence.

When an unincorporated association is prosecuted, presumably the court must proceed by analogy to the law relating to corporations. Such associations have officials corresponding to the controlling officers of corporations and it is inconceivable that the association is liable for the act of any one of its members who has no part in the general management of its affairs."

26. This passage suggests that the effect of the Interpretation Acts is, in effect, to create a single legal entity that can itself commit an offence. Those Acts do not, of themselves, produce that result. The effect of those Acts is that where a statute refers to a 'person' 'unless the contrary intention appears' that word should be read as including a partnership. The Acts do not state what the effect is to be of giving the word 'person' such a meaning. There is a dearth of cases in the reports (indeed we have been referred to none) where the prosecution have relied upon one of the Interpretation Acts to bring criminal proceedings against a firm in relation to a statute that makes it an offence for 'any person' to do or to fail to do a specified act.
27. One case where the prosecution might well have done so, but did not, was Clode v Barnes [1974] 1 WLR 544. That involved a summary prosecution for breach of section 14 of the Trade Descriptions Act 1968, which provided:

"(1) Any person who, in the course of a trade or business,-

(a) applies a false trade description to any goods; or

(b) supplies or offers to supply goods to which a false trade description is applied; shall…be guilty of an offence"

The offence had been carried out by one of two partners in the course of their business as partners in a firm called 'the Wholesale Car Co'. The other partner was not complicit in what he had done. An information was preferred, not against the firm, but against each of the two partners. The Divisional Court held that each had been properly charged. Lord Widgery CJ said:

"Partners carrying on business jointly, jointly supply vehicles which it is the business of that partnership to sell. I cannot see any answer to the proposition that the defendant was a joint supplier."

28. This case involved an offence of strict liability. Had it involved mens rea it would not have been open to the court to have convicted the partner who was not complicit. Would it have been open to the prosecution to prefer the information against the firm and then to seek to recover the fine imposed from the two partners jointly? We do not find it easy to answer this question. It is one thing to hold a limited liability company open to prosecution for an offence that requires mens rea. It is another to hold a partnership open to prosecution if the consequence of a conviction will be to render liable in respect of the penalty persons who had no involvement in the offence. In the present case three of the partners in the Partnership had retired and played no part in the running of the firm. One lived abroad. It seems to us that the question of whether or not the context permits one to read 'person' in a criminal statute as including a partnership may depend critically upon whether there is some restriction upon the assets that will properly be available to meet any penalty imposed.
29. The difficult question of whether a criminal statute or statutory instrument applies to a partnership as an independent entity and, if so, how that impacts on the potential liability of individual partners does not arise where the legislation in question provides express answers to these questions. We have been referred to quite a number of offences where the legislation does just that. By way of example we shall set out the relevant provisions of the Health Act 2006:

"76(4) If an offence committed by a partnership is proved-

(a) to have been committed with the consent or connivance of a partner, or

(b) to be attributable to any neglect on his part, the partner as well as the partnership is guilty of the offence and liable to be proceeded against and punished accordingly.

(5) In subsection (4) 'partner' includes a person purporting to act as a partner.

(6) If an offence committed by an unincorporated association (other than a partnership) is proved –

(a) to have been committed with the consent or connivance of an officer of the association or a member of its governing body, or

(b) to be attributable to any neglect on the part of such an officer or member, the officer or member as well as the association is guilty of the offence and liable to be proceeded against and punished accordingly.

(7) In this section and section 77 'offence' means an offence under any provision of this Act.

77 Offences committed by partnerships and other unincorporated associations

(1) Proceedings for an offence alleged to have been committed by a partnership shall be brought in the name of the partnership (and not in that of any of the partners).

(2) Proceedings for an offence alleged to have been committed by an unincorporated association (other than a partnership) shall be brought in the name of the association (and not in that of any of its members).

(3) Rules of court relating to the service of documents shall have effect as if the partnership or unincorporated association were a body corporate.

(4) In proceedings for an offence brought against a partnership or an unincorporated association, the following provisions apply as they apply in relation to a body corporate-

(a) section 33 of the Criminal Justice Act 1925 (c.86) and Schedule 3 to the Magistrates' Courts Act 1980 (c.43);

(b) sections 70 and 143 of the Criminal Procedure (Scotland) Act 1995 (c.46);

(c) section 18 of the Criminal Justice Act (Northern Ireland) 1945 (c. 15(N.I.)) and Schedule 4 of the Magistrates' Courts (Northern Ireland) Order 1981 (S.I. 1981/1675 (N.I.26)).

(5) A fine imposed on a partnership on its conviction for an offence is to be paid out of the partnership assets.

(6) A fine imposed on an unincorporated association on its conviction for an offence is to be paid out of the funds of the association."

30. We can see no ground for suggesting that provisions such as these are not permitted by law or capable of being effective in law. In as much as business activities are conducted in the name of a partnership and the partnership has identifiable assets that are distinct from the personal assets of each partner there is no reason why a partnership should not be treated for the purposes of the criminal law as a separate entity from the partners who are members of it. Whether in such a case effect can be given to Parliament's intention in the absence of rules made for that purpose is a question to which we shall revert.

Does the Order purport to render partnerships liable as independent entities?

31. We have no doubt that the answer to this question is that it does, as has always been common ground between the prosecution and the defence. Article 11(2) draws a clear distinction between a partnership and an individual partner. Not merely does this make it clear that a partnership can be independently liable. It makes it clear that a partner will not be liable unless the offence has been committed with his consent, connivance or due to his neglect.

Was the partnership effectively indicted under the six indictments?

32. Unlike the Health Act 2006 and quite a number of other legislative provisions to which we have been referred, the Order does not provide that a partnership shall be indicted in its partnership name rather than in the name of the individual partners. This was none the less the obvious course and it was the course adopted, without protest. Mr Hackett submitted that, in the absence of some legislative provision for the manner in which a partnership should be indicted, it was simply not possible to give effect to the legislative intent that partnerships should be susceptible to the criminal legal process. We do not agree. The appropriate procedure was obvious. It would have been quite wrong to frustrate the legislative intention by failing to adopt it simply because it had not been enshrined in a rule.
33. The next point raised by the applicants was that the arraignment of the Partnership was defective. Mr Hackett submitted that some statutory authority was required if counsel was to be able to submit an oral plea on behalf of the Partnership. He sought to draw an analogy with the position of a company, which, so he submitted, is required to enter its plea in writing in accordance with the provisions of section 33 of the Criminal Justice Act 1925. We have not fully explored the complex jurisprudence in relation to the arraignment of limited companies, for we cannot see that it applies to the position of a partnership. Difficult questions of authority might arise if partners were in disagreement as to the plea to enter to a criminal charge brought against the partnership. In this instance, however, all the partners were at one and the pleas that were entered by their counsel were entered with the authority of all of them. We can see no ground for suggesting that these pleas were ineffective.

Do the resultant convictions expose the individual partners to liability?

34. Mr Edmunds suggested that we need not concern ourselves this question, but it seems to us that it is one that must be considered in the present context as it bears both on the question of whether it is possible to indict a partnership as a separate entity and whether, if it is some special procedure is necessary to avoid the risk of injustice to individual partners.
35. Most of the statutes to which we have been referred that make express provision for proceedings against partnerships also expressly provide that fines can only be imposed against partnership assets. We cite, by way of example, section 285 (3) of the Copyright, Design and Patents Act 1988, section 143(4) of the Political Parties, Elections and Referendums Act 2000, section 403 of the Financial Services and Markets Act 2000, section 168C(2) of the Education and Inspections Act 2006 and section 1130(3) of the Companies Act 2006. It is only when we get to a series of Orders relating to fishery protection, culminating with the Order that has given rise to this prosecution that we find an absence of such a provision. We are inclined to think that this absence must be by accident rather than by design.
36. Whether we are correct in that surmise is nothing to the point. We have already observed that the effect of the Order is that proceedings can only be brought against an individual partner if that partner is complicit in the offence committed by the partnership. We consider that it necessarily follows that, where a partnership alone is indicted, any fine imposed can only be levied against the assets of the partnership. If fines could be levied against the assets of individual partners who were not complicit in the offence committed by the partnership, this would largely negate the legislative scheme under which they cannot be made defendants unless complicit. We would add that, if individual partners were at risk of being subject to criminal penalties in respect of offences committed by a partnership, then we consider that justice would demand that the criminal process should contain provisions designed to enable individual partners to challenge the alleged liability of the partnership.
37. As to the confiscation proceedings, the relevant provisions of section 72 and following of the Criminal Justice Act 1988 apply to 'an offender'. The individual partners are not 'offenders'. Confiscation proceedings cannot properly be brought against their personal assets on the foundation of the convictions of the Partnership.

Conclusion

38. The individual partners have not been convicted in these proceedings and thus have no standing to appeal against conviction. For this reason their applications for permission to do so are refused. The Partnership was properly convicted under the third indictment and entered pleas of guilty, through its duly authorised counsel, in relation to the other five indictments. It has shown no arguable ground for appealing against its conviction in relation to any of the six indictments. For this reason its applications for permission to appeal against conviction are dismissed.