England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice Strand London, WC2A 2LL
		6 August 2009

1. LORD JUSTICE SCOTT BAKER: This appellant appeals against conviction with the leave of the single judge. Following a two and a half month trial in the Crown Court at Manchester in early 2008 before Judge Steiger QC and a jury, he was convicted by a majority of ten to two after a long retirement by the jury of three counts of fraud. Two were of carrying on business with intent to defraud creditors and one was of carrying on business for a fraudulent purpose. He was sentenced to 21-months' imprisonment suspended for two years and disqualified from being a director for five years. He was also ordered to pay £20,000 towards the costs of the prosecution. The jury was unable to agree on two other counts of being a party to carrying on business for a fraudulent purpose.
2. There had been an earlier trial alleging the fraudulent obtaining of government grants. The appellant was acquitted but his co-accused, Nevitt, was convicted. Having been granted bail pending sentence, he absconded and did not appear for the second trial at which he was unanimously convicted in his absence of all five counts. The other co-accused, Boardman, pleaded guilty to one count of carrying on business with intent to defraud (count 3) of which the appellant was also convicted and gave evidence for the Crown.
3. The allegations related to the carrying on and eventually collapse of the Ravelle Group of companies that operated out of Trafford Park, Manchester. The group comprised Ravelle Limited ("Ravelle"), Ravelle Printers Limited trading as Just Printers ("Printers"), and Ravelle Computers Limited trading as PC2GO ("PC2GO").
4. The history, in brief, is as follows. Ravelle was incorporated in August 1991. The directors were Nevitt and Stanachevski. Nevitt was the salesman and Stanachevski the controller of finance and administration. From modest beginnings the company grew rapidly trading in secondhand computer parts selling principally to the computer maintenance industry.
5. The appellant joined part-time in 1994 but soon was working full-time. He was an accountant, but at Ravelle performed a number of functions both with IT systems and the accounts department.
6. In 1997 PC2GO was incorporated to sell secondhand computers direct to the public. Nevitt was a director as was his cousin Jacobs. Part of the premises at Ravelle House were converted into a retail outlet to sell these computers to the public.
7. In February 19989 Stanachevski left Ravelle after a disagreement with Nevitt. The appellant became a director of Ravelle in his place between February and July 1998. The offences of which the appellant was convicted covered in the case of count 1 carrying on the business of Ravelle between 23 June 1999 and 1 January 2002 with intent to defraud creditors, in the case of count 2 carrying on the business of Ravelle between the same dates fraudulently to obtain factoring finance and in the case of count 3, carrying on the business of Printers with intent to defraud creditors between 23 September 1999 and 1 January 2002.
8. During the appellant's directorship he dealt with the banks. Ravelle already had a discounting facility with Lombard NatWest ("LNW") and the appellant dealt with the relationship manager at LNW and attempted to hold the ring between him and Nevitt and to control Nevitt, but this proved impossible and he resigned as a director on 31 July 1998 but continued as company secretary. The picture after this was that Nevitt was in control, if he had not been before, of Ravelle and PC2GO.
9. In November 1998 Printers was incorporated whose purpose, as its name suggests, was to buy and sell printers. Again, Nevitt was the driving force and the controller of the finances. Kay Boardman, who Nevitt knew from a previous employment, was a director of Printers from the start. The appellant was company secretary and wrote a business plan in July 1999 in order to get a small firm loan guarantee.
10. Printers had an invoice discounting agreement with LNW. As with Ravelle, who had a similar agreement, this enabled them to get a percentage of the face value of sales invoices from the discounter, LNW, on daily presentation of the invoices, the remainder to be provided on settlement of the invoice by the debtor less the appropriate fee.
11. In May or June 1999 LNW discovered irregularities in the operation of the Ravelle discounting agreement. These were raised by the relationship manager, Steve Noble, with Nevitt. Nevitt provided explanations which Noble did not find satisfactory and he determined to "manage the relationship out of the door". Noble had enjoyed a relationship with Stanachevski but it seems had reservations as to Nevitt's style of management. Ravelle were notified of LNW's intention to withdraw the invoice discounting facility and looked to find an alternative provider.
12. In July 1999 Nevitt entered into a new confidential invoice discounting agreement with IBM and in September 1999 Printers entered into a similar agreement with Barclays Sales Finance. The agreements were very much as before with Lombard. Invoices had to be disclosed to the discounter each day by way of schedule. The discounter would advance to the Ravelle company a percentage, 85 per cent in the case of Ravelle and 75 per cent for Printers, of the debt and upon payment of the debt by the debtor the remaining sum less fees would be paid to the Ravelle company. If the debt was not paid within 90 days, the discounter could claw back the percentage advanced. The company thus had the advantage of increased cashflow to enable it to achieve great profitability.
13. However Nevitt was not content with the legitimate operation of the business and, in particular, he sought to take advantage of the discounting agreements in place in favour of both Ravelle and Just Printers. He had, it seems, great plans for Ravelle in spite of diminishing margins within its core business. In early 2000 sales were down, margins were tighter and there was a pressing need for the companies to diversify and move away from their traditional markets.
14. These matters were identified by McGregor, a sales manager appointed in 1998. He worked through 1999 and 2000 in an attempt to increase the company's turnover to £10 million by 2001. He attempted to introduce a more diverse and a more professional approach to business. However, Nevitt was unreceptive. He had an informal and relaxed approach both to business and to life. He saw the company as an extension of his own personality and he used the money as his own. The company had to finance his lavish lifestyle, including five company cars, expensive foreign holidays and regular entertainment. It was this lifestyle that was draining the company's finances. There were fewer orders, the warehouse contained out-of-date stock, the company was on the slide.
15. Nevitt, in 1999, began trading through Ravelle with two companies, Mad Macs and Track Tech. The companies were run by business associates, James Mangles and Julian Barnard. The trading was legitimate. However, to increase the cashflow of Ravelle, Nevitt used his business as a means to defraud IBM and Barclays Sales Finance. The method was simple. Nevitt created or instructed employees to create false sales orders generating sales invoices for goods which did not exist and had not been sold. The details of the false invoices were included on the daily notification schedules to the discounters, IBM and BSF, who provided advances against what they believed to be genuine debts. In time, within 90 days of dispatch, the debt had to be paid. Money had to be provided by Ravelle to the friendly company, Mad Macs or Track Tech, so that the friendly company could pay the money to Ravelle. In this way the appearance was given of legitimate trading. In fact the money was simply going round in a circle. Nevitt organised the movement of money between the Ravelle companies and used PC2GO as the bank or the vehicle whereby money was collected from Ravelle and Printers and sent to the friendly company. PC2GO did not have a discounting facility. There was no discounter involved and there were no periodic audits of the books of that company.
16. By reason of this circular trading the discounter was deceived into providing factoring finance to the Ravelle companies. An invoice was created and submitted to IBM or BSF. IBM advanced finance on the invoice to Ravelle. Ravelle caused money in time to be transferred to PC2GO and PC2GO in time paid an amount equivalent to the amount of the invoice to Mad Macs or Track Tech and Mad Macs or Track Tech paid against the invoice to Ravelle. The fraud started in a small way with occasional transactions, but, as it had to, it gradually grew and grew until by the summer of 2000 it formed a substantial part of the "apparent" business of Ravelle.
17. In July 2000 Printers collapsed when about £400,000 worth of cheques drawn on Ravelle were dishonoured. In November 2000 Ravelle collapsed with debts of £1.8 million. In 2001 PC2GO failed. An investigation showed it was plain that the companies had been run fraudulently.

The prosecution case against the appellant

18. The main villain and architect of the fraud was obviously Nevitt but the Crown's case was that the appellant participated in it. The Crown argued Nevitt could not have run the fraud alone. He needed a trusted and capable financial administrator who could organise the paperwork, the books and the movement of money, especially at times when Nevitt was out of the office, abroad on holiday, away on business or entertaining clients.
19. The appellant was a qualified accountant. He was, between February and July 1998, the finance director and although he resigned as a director in July 1998 he continued to represent himself to banks and discounters, as well as employees, as finance director or certainly someone with a significant input into the finances of the company.
20. In August 1999 and again in September 1999 he provided the respective relationship managers of IBM, Pauline Chalmers, and BSF, Timothy Rebbick, with business cards on which he was described as finance director. The cards had been printed at different times. The Rebbick card was a later version and printed in late 1999. The banks and discounters, and indeed the company accountants, always regarded the appellant as the finance director.
21. As finance director, or the equivalent, the Crown argued that the appellant would have a complete over view of the business of the Ravelle Group and the fraud needed someone with that over view to keep track of the false invoices, when they had to be paid and the movement of money to pay them.
22. The appellant, together with Julie Bowden, signed a large volume of cheques for significant value. These were the cheques fired between Ravelle and Just Printers and also the cheques drawn on the account of PC2GO in favour of the friendly companies, Mad Macs, Track Tech and CIA. All were, in the main, signed by Julie Bowden and the appellant.
23. A witness, Thomas O'Riordan, said that the appellant and Nevitt had brought invoices for Mad Macs, Track Tech and CIA to him late in the afternoon for inclusion in the daily factoring schedules and, more significantly, he said that the appellant had handed to him blank sales order forms to take to Dennis Upton. He did not understand why he should be asked to do this.
24. Furthermore, Uddin, a friend of the appellant and work colleague at Ravelle, said that the appellant had told him in August/September 2000 that Printers had "gone down because cheques were being rotated within the Ravelle Group of companies in order to generate cash from the factoring companies and that money had been syphoned out of the Ravelle Printers Limited account". The appellant added that he had signed the cheques on the instructions of Nevitt and Price and that he had constantly warned Nevitt as to the rotating of cheques between the Ravelle Group and that it would create a large hole in the company but that his advice had been ignored.
25. Finally, the receivers entered Ravelle's premises and an inventory was made of the assets of the company on 15 November of 2000. It was discovered that the computer used by the appellant was missing. His home and that of his parents was searched in January 2002. He was interviewed in July 2004 and later charged. In interview he answered all the questions asked of him and the transcript of those interviews was before the jury. He was a man of previous good character.
26. The appellant's case was that he accepted that the evidence showed that Nevitt had been operating a fraud and that Ravelle and Printers, certainly during the first half of 2000, were trading whilst insolvent. He denied knowing of that fraud. He denied participation in it and he denied knowing that the companies were trading whilst insolvent. He maintained that after July 1998, which is when he resigned as a director, he played a limited role in the finances of the company, restricting his involvement to the calculation of commission forecasts and budgets and reformatting management accounts. He resigned as a director because he could not control Nevitt. Nevitt ran the finances of the company. The appellant did not want the responsibility of being a director without any control. Thereafter his role was principally IT and systems. Julie Bowden ran the accounts department. She was the financial controller who reported into Nevitt. She had an efficient and hard working staff.
27. The appellant had signed the cheques as instructed by Nevitt. He was not happy signing cheques without supporting documents but he was told to do so. He was uncomfortable but did not think what he was doing was dishonest or that he was playing any part in a fraudulent scheme. He only did what Julie Bowden did. She always signed the cheques first and looked to him as the counter signatory. She had access within the accounts department to the supporting documents, if there were any, and was comforted by the fact that she had signed the cheques. He was further comforted by the repeated assurances given to him by Nevitt. He believed on what Nevitt told him that the cheques were in respect of brokerage sales and inter company loans.
28. When Printers collapsed he was asked by Nevitt to provide him with a mid-year forecast. In the process he had to compare the figures and Julie Bowden's management accounts with the commission sales. The two did not balance because of the circular trading, revealing a hole in the company's finances of about £600,000. Greene was worried. He asked Nevitt and Bowden. Neither could give an explanation and accordingly the appellant tendered his resignation in writing to Neville on 21 August 2000.
29. He was still at Ravelle in October at the time of a meeting with Nevitt and John Pearce on 18 October when Nevitt explained the fraud and how the fraud had kept Ravelle afloat. This was the first the appellant knew of what Nevitt had been doing. He was stunned. He had never had any involvement in the circular trading. He had never created or known of false sales orders or false sales invoice. He never handed Thomas O'Riordan any blank sales order forms. There would have been no need. There were pads of sales order forms freely available within Ravelle House.
30. The appellant accepted that he had confided in Suhail Uddin and told him he had signed cheques on the instruction of Nevitt which had been dishonoured. He told Uddin that he was worried about the consequences for his professional standing. He did not say that cheques had been rotated in order to generate cash from the factoring companies or that money had been syphoned out of the Printers' account. He not did tell Uddin that he had warned Nevitt as to the potential consequences of rotating cheques within the Ravelle Group. Finally, he denied removing the computer. When he left Ravelle on 27 October 2000 his computer was in his office. There was nothing to his knowledge incriminating on the computer. In any event, all the material was copied onto backup tapes on a daily basis which were kept at Ravelle House and were still there when the receivers arrived. The witness statement of Sarah Bell confirmed that Price Waterhouse Coopers, the receivers for Ravelle, had taken a copy of the computer data for themselves.
31. This was, therefore, a classic case in which the jury had to decide whether they were sure that the appellant had acted dishonestly.
32. They concluded that they were sure in respect of Ravelle carrying on business with intent to defraud creditors (count 1), fraudulently obtaining factoring finance (count 2), and carrying on the business of Printers with intent to defraud creditors (count 3), but they could not agree on count 4, fraudulently obtaining factoring finance for Printers and count 5, carrying on the business of PC2GO fraudulently.
33. This appeal has been pursued on grounds 2, 3 and 4 which Mr Pickup realistically accepts are his strongest grounds and if he does not succeed on those he will not succeed on anything else.
34. We turn first, therefore, to ground 2. Ground 2 relates to the evidence of Mangles. The defence tried unsuccessfully to persuade the judge not to allow Mangles' evidence to be read, which it was under section 116(2)(a) of the Criminal Justice Act 2003. The only basis for refusing to admit it would be under section 78 of Police and Criminal Evidence Act and no complaint is any longer made about the judge's decision to admit that evidence. The complaint that is made, however, is that the judge failed to direct the jury about the evidence of Mangles.
35. After argument the judge decided that the statements of Mangles should be admitted subject to two deletions to which it is not necessary for us to refer. The statements included the following important passage:

"Whilst I dealt with Ray Nevitt over these brokerage deals I did have occasion to speak to Jeremy Greene. I would usually speak to him for clarification of certain matters, for example, prices for the brokerage deals I was carrying out on behalf of Ray Nevitt. Dealing with Nevitt was often very unclear. Greene would be able to clear up matters for me such as when Mad Macs would get paid for the brokerage deals. Jeremy Greene was definitely aware of the fact that Mad Macs were carrying out brokerage details on behalf of Ray Nevitt and Ravelle and that we were dealing with Just Printers and PC2GO."

36. The events described in that passage were strongly denied by the appellant. This passage, say the Crown, linked the appellant with the mechanism of the fraud. The Crown say, however, that it is of limited materiality because it really only went to count 4 of the indictment, which was a count on which the jury was unable to agree.
37. We are unable to accept that this passage was of that limited significance because although, on its face, that is correct, it seems to us that an issue of this kind, which is very important from the point of view of credibility and dishonesty, has knock-on consequences with regard to the other counts on the indictment, the counts on which the appellant was convicted.
38. When the judge summed the case up he gave a general warning about the reliability of witnesses with an axe to grind. Those witnesses included Mangles. The judge said this at page 14 letter C:

"I want now to utter a word of caution about some of the witnesses. As well as Kay Boardman, who pleaded guilty to fraudulent trading, as have just mentioned there are a number of others who helped with the fraud, whether or not they knew. How much they knew is a matter for you, if you think it is important, as the judges of the facts, but experienced has shown over the years that witnesses who have an axe to grind, may be less reliable than those who do not. Such witnesses may, for example, seek to diminish their own roles at the expense of others whose roles they exaggerate, for obvious reasons, and so you show bear that in mind when you are considering the weight you give to the evidence of Kay Boardman and the other people who apparently helped with these arrangements, and whatever the state of their knowledge may in fact have been, and those individuals who appeared to have played a part and perhaps an important part, were Patrick Torr, Dennis Upton, whose statement was read to you, so you have not seen him, Julian Barnard and James Mangles who sadly died and whose two statements were read to you."

So the judge is there very plainly flagging up Mangles as a witness whose evidence should be approached with caution.

39. The judge in summing up dealt with Mangles' evidence at pages 78 to 80. He pointed out that it was very much in contention as far as the appellant was concerned. He recited a summary and concluded with these words at page 80 at D:

"Well, you will have to consider that evidence [that is Mr Mangles' evidence] with care, because it does impact to some extent on Mr Greene by the alleged promise that Mr Greene would be able to clear matters up, such as when Mad Macs would get paid. Bear in mind that on any view of it, Mr Mangles was assisting with the scheme, however much or little that he knew. I have drawn to your attention in a manner that I think counsel did not, to two examples which may call into question his account, and he does give in that statement a clear indication of fraud, and you should consider his evidence carefully in the light of the warning I gave yesterday, before relying upon it against Mr Greene."

40. When the court rose Mr Pickup for the appellant tried to persuade the judge to give a more specific direction. Although Mr Pickup received some support from the Crown, the judge, having reflected over night, decided not to say anything more to the jury on this subject.
41. Mr Trimmer makes the point that when Mangles' evidence was read to the jury, before it was done so, the jury was told that he was deceased, that his evidence was in dispute and that he could not therefore be cross-examined.
42. Mr Pickup for the appellant argues that the judge should have gone further in the course of his summing-up, that he should have given that precise warning to the jury in the course of it and that he should have advised the jury that the appellant had been disadvantaged by being unable through his counsel to cross-examine Mangles about whether the events that he described had taken place and, if so, when and what was done about them. But it seems to us that the underlying issue here was whether Mangles was telling the truth and the judge gave a very clear direction about that and, indeed, made two points in the appellant's favour that Mr Pickup had not dealt with.
43. Furthermore, the judge when he came to sum up the appellant's evidence at page 164 reminded the jury in clear terms of the appellant's version of the conversation that was disputed. He said:

"Now he was asked about a passage from Mr Mangles' statement. You will remember the passage about clearing up the paperwork that I read to you yesterday. Mr Greene said that he did not speak to Mangles about that. He did not say that, and I will remind you that he has not had the opportunity of cross-examine Mangles, because Mangles is dead, and I remind you also about the word of caution I uttered about Mr Mangles' evidence in any event."

44. It seems to us clear that the judge had a discretion how his direction about the reading of a deceased's witness's statement should be given to the jury: see, in particular, Grant v The Queen [2006] 2 WLR 835. As Curtis J pointed out in Hardwick [2001] EWCA Crim 369, paragraph 19, what the judge should say is not written in stone. It has to be tailored to the facts of the individual case.
45. In our view the judge did give the essential warning that the evidence was in dispute and was read because Mangles was dead. This was closely linked with the fact that Mangles was at the centre of these events as being the person in control of the friendly company in question. This was a straight dispute effectively, the disputed evidence between Mangles, on the one hand, and the appellant on the other. The evidence does not seem to us to fall into some special category which is particularly difficult to deal with in the absence of the witness, such as, for example, identification evidence or evidence about alibi.
46. In our judgment the directions given by the judge in respect of Mangles, the way in which he dealt with his evidence and the appellant's evidence, together with the warnings that he did give were appropriate to the circumstances of this case. We reject that ground of appeal.
47. The next ground, ground 3, relates to the judge's decision to treat the witness Suhail Uddin as hostile. Uddin was brought to Ravelle by Nevitt in March 2000. He became friendly with the appellant, although there was some evidence that by the time of the trial that friendship was something of the past. At the time of the events with which this case is concerned they socialised together as families outside their working hours.
48. Uddin had made two witness statements: the first on 22 July 2003 and the second on 3 August 2004. These statements included reference to conversations with the appellant soon after the collapse of Printers in July 2000. In particular, in the first statement, there is this passage:

"It was probably during August or September 2000 that Jeremy confided in me that the reason Ravelle Printers Limited trading as Just Printers had gone down was because cheques were being rotated within the Ravelle Group of companies in order to generate cash from the factoring companies and that money had been siphoned out of Ravelle Printers Limited trading as Just Printers account."

49. Then a couple of paragraphs later:

"Jeremy explained that he had been signing cheques initially on the instructions of Ray Nevitt and later on the instructions of Ray and Simon Price and I recall the impression Jeremy had given me was that he had been signing cheques he had not been responsible for but had done so on the instructions of Ray Nevitt and Simon Price."

That second passage was not seriously in dispute. The first passage was very much in dispute.

50. Then at the end of the first statement:

"Jeremy told me that he had constantly warned Ray that with reference to rotating of cheques between the Ravelle Group of companies would create a large hole in the company and that something should be done about it. Ray, however, simply ignored Jeremy's advice."

51. Then in the second statement the penultimate paragraph:

"Whilst Jeremy had confided in me that what had happened within the Ravelle companies had amounted to fraud, at no time during my conversations with Jeremy was I ever told, nor did I seek to ascertain any further details of exactly how the fraud was committed. Jeremy always referred to a large hole being created as a result of him being coerced by Ray Nevitt and Simon Price to sign cheques 'which were being swapped between the companies showing the companies to be financially sound when they were not.'"

52. When the Crown called Uddin to give his evidence the evidence that he gave fell short of what he had said in his statements, in particular his first statement. At volume 4A at page 9 he was asked:

"Q. And in terms of Jeremy Greene, how was his behaviour at around about that time?

A. Oh, yeah, I would say that he had become a totally different person, literally. A totally different person. Very, very, a constant worried look on his face, spending a lot of time in his office, smoking heavily because he would always be outside smoking on his own, so it was quite apparent there was something definitely on his mind.

Q. And did there come a time when he told you?

A. Yeah, he did confide in me.

Q. Now in so far as the detail is concerned, can you remember the detail now?

A. Yeah, I mean it was something along the lines of that he had been, that there was a massive hole in the finances of Ravelle, and a lot of --

Q. Can you, I am sorry, carry on, please?

A. And he had been signing a lot of cheques and these cheques were being passed around the subsidiaries, passed on to Just Printers for instance. What that was entirely being done for, what reason or what purpose, I wasn't clear. I didn't really delve into it that much. Once I understood that he knew he had a problem, I was more concerned about his well-being than about the actual problem. Jeremy was a good friend."

A little later he said:

"Well, I mean, the money that had been siphoned out, I mean whether that is what he specifically said, but that's the impression that I had, that monies were being siphoned out of the company. ... So I mean in essence we were producing invoices and passing them on to the factoring company. The factoring company would then give us the cash or the required cash against those invoices. That money would come into the organisation, and then part or all, I don't know how much, would be either siphoned off or used for some other purpose. What specifically I don't know."

53. Then he was asked this:

"Q. This conversation you introduced as Jeremy being I think confiding in you?

A. Yes.

Q. Right. He told you what you told us, is that fair?

A. Well, the thing is, considering it was a long time ago and considering at the time that I wrote that statement, that it was back in 2003, I am not sure if it was partly or all of this information actually entirely came from Jeremy or whether it's actually, or whether it actually came from, came from other sources. There was a lot of Chinese whispers going around the office at the time."

54. Then he was asked to look at page 9 of his original statement and read it. Then he was asked:

"Q. And what was Jeremy telling you?

A. Well, yes, I mean at the time Jeremy was obviously very, very distressed. His main concern was him losing his licence as a chartered accountant because of what had actually happened and had taken place could severely destroy that.

Q. Let us deal with the detail. Why was he telling you that he could lose his licence? What had happened that might have resulted in that?

A. Well, obviously he was making it clear to me that what had taken place at the time was clearly fraud, and as a direct consequence he could lose his licence, and he did tell me at the time he had a big dispute with Ray, Ray Nevitt, regarding this."

55. So that is what in summary the witness said having been shown what he had signed up to in his first statement.
56. When he was cross-examined by Mr Pickup he said this at page 20 of the same bundle of transcripts:

"Q. And his concern was that he had been, he had signed those cheques. That is what he was telling you?

A. I think that was his main concern, yeah.

Q. That is what was worrying him, that he had signed those cheques and the consequences for him as an accountant of signing a large number of cheques which had been dishonoured by the bank, and he believed and he did use the word fraud, but he believed that that might amount to fraud?

A. (No Response).

Q. You are nodding?

...

A. Well, that is what he believed at the time.

Q. A lot of cheques had Home Secretary been dishonoured. 'I have signed those cheques. That might be fraud, and I am worried about my professional qualifications'?

A. Yes, his main concern was his professional qualification.

Q. Yes.

The Judge: Just so that I am clear about it, are you agreeing that Mr Greene's concern was that he had signed cheques which had been dishonoured and that was the fraud?

A. Well, if a large hole had been created and it was as a direct consequence of signing these cheques, then that's probably what the reference was to."

57. So Uddin had moved from the position where there was a massive hole in Ravelle's finances in the context of cheques signed by the appellant that were passed around subsidiaries with invoices passed to factoring companies in return for cash and money being siphoned out of the company to cheques being dishonoured that the appellant had signed.
58. As the judge put it at 31 at D:

"Well, it seems to me, Mr Pickup, with respect that Mr Uddin has given a very different explanation for this first conversation in cross-examination to you."

59. He repeated at 32H:

"Well, I think the position seems to be, although I shall hear from Mr Trimmer in a moment, that the witness has given a very different account in cross-examination of this first conversation that is referred to in the witness statement."

60. The prosecution then sought leave to ask Mr Uddin in re-examination to read the last paragraph of passages 308 of his witness statement, that is the passage in the original statement which we have already read.
61. The judge ruled in these terms at page 37:

"The essential question is whether or not it is fair for the prosecution to resolve the clear ambiguity between what the witness said in-chief and what he said in cross-examination, by pointing to the terminology of this paragraph which the witness has already identified was in a statement when his memory was better.

It seems to me, applying ordinary principles, that it is open to the prosecution to reduce this material in re-examination. This is material that the witness is entitled to look at, not only as a memory refreshing document, but also pursuant to the provisions of section 120 of the 2003 Act [that is the Criminal Justice Act 2003], material which has the capacity to be evidence of its contents, and for those reasons, I rule that the proposed re-examination is admissible."

62. Mr Trimmer tells us that he did not go along completely with the judge's suggestion because he was concerned that this was not a case which was, strictly speaking, covered by section 120(3) of the Act. It may well be that Mr Trimmer is correct in that analysis but we do not have to go into it and we do not do so and we express no view about it.
63. The witness was indeed shown his witness statements and, as we have said, Mr Trimmer did not take up the judge's ruling in the form suggested, but instead proceeded on the basis of a further memory refreshing exercise. However, the witness was not co-operative and Mr Trimmer found himself facing objections from Mr Pickup for asking leading questions in re-examination, an objection with which the judge expressed sympathy.
64. In the end the judge said that after three unsuccessful attempts to get the witness to refresh his memory it would be inappropriate for Mr Trimmer to have a fourth go. Instead, the judge mentioned the possibility of an application to treat the witness as hostile. The prosecution then made such an application under section 3 of the Criminal Procedure Act 1865 (which is Lord Denman's Act) and is referred to at Archbold at 8-94a.

"A party producing a witness shall not be allowed to impeach his credit by general evidence of bad character; but he may, in case the witness shall, in the opinion of the judge, prove adverse, contradict him by other evidence, or, by leave of the judge, prove that he has made at other times a statement inconsistent with his present testimony; but before such last-mentioned proof can be given, the circumstances of the supposed statement, sufficient to designate the particular occasion, must be mentioned to the witness, and he must be asked whether or not he has made such a statement."

65. The law has now changed with regard to the treatment of hostile witnesses. The position is covered now by section 119:

"(1) If in criminal proceedings a person gives oral evidence and

(a) he admits making a previous inconsistent statement, or

(b) a previous inconsistent statement made by him is proved by virtue of section 3, 4 or 5 of the Criminal Procedure Act 1865,

the statement is admissible as evidence of any matter stated of which oral evidence by him would be admissible."

It is unnecessary to refer to section 119(2).

66. The judge gave his ruling in favour of the Crown's application. He said this:

"I note the nature of the previous statement, and it is very significantly different from the evidence that Mr Uddin has given in evidence thus far, not only as to page 308, but also as to page 311, where significantly there was an alternation made by the witness himself, when the statement, one presumes, was read over to him. The paragraph at the head of 3.111 reads as follows, or read initially as follows: 'Jeremy told me that he had constantly warned Ray that with reference to the cross-firing of cheques between the Ravelle Group of companies, that would create a large hole in the company, and that something should be done about it. Ray, however, simply ignored Jeremy's advice.' The expression 'cross-firing of cheques' has been deleted, and there has been inserted 'rotating of cheques', with an initial of Mr Uddin, and it is that same expression that appears in paragraph 308.

So far as the evidence given by Mr Uddin in cross-examination is concerned, as my earlier ruling identifies, he gave what in my judgment was a very different explanation for his anxieties, or rather, Mr Greene's anxieties in the first confidential discussion in about August or September 2000, a time which on the evidence, was before Mr John Pearce had appeared on the scene and made his conclusions about the honesty of the Ravelle companies.

In cross-examination, Mr Uddin told Mr Pickup that he was anxious, because cheques which he had signed had been bounced. The evidence, as I mentioned in my previous ruling, is therefore very different from that which was given or the account that was given in the witness statement, and in my judgment, has to be borne in mind when considering whether or not this evidence is adverse in the sense contemplated by the Act. It was of course not cheques that bounced that were the basis of this fraud, but cheques which were cashed to enable the circuit of cash to take place to permit the continued defrauding of factors that is significant, and that as I made clear earlier in the day, was a very different answer in cross-examination to what is in the statement.

For all of these reasons, I have come to the conclusion that within the meaning of the 1865 Act, this evidence that Mr Uddin has thus far given has been adverse, and I propose to rule that the prosecution are entitled to cross-examine him upon the statement that he gave."

67. Although unusual for an application to treat a witness as hostile to be made in re-examination, such an application may be made at any time: see Powell [1985] Crim LR 592. There will be borderline cases whether a witness is hostile or merely unfavourable and perhaps this was one. But this is quintessentially a decision for the judge who has heard the evidence and is best placed to assess the demeanour of the witness and his animus. It seems to us that it is the sort of decision with which this court should be very loathe to interfere. Mr Pickup submits that the judge should not have given permission to treat Mr Uddin as hostile in the circumstances.
68. In our judgment, that is incorrect. We cannot accept that submission. In our view there was a sufficient basis for the judge to make the decision that he did in the somewhat unusual circumstances of this case. In the event, when Mr Uddin was cross-examined on his original witness statement in pursuance of the permission to treat him as hostile, he accepted that he had made it and that when he did so he was trying to tell the truth. He signed it and he believed it to be true at the time and his recollection was better close to the events. He was further cross-examined by Mr Pickup and said he was not 100 per cent sure that the appellant told him that the cheques were rotated. He said, "I did hear that but it may not have been said by the appellant." In our view, as we have said, the judge was entitled to treat the witness as hostile, although, in the event, it did not turn out that the witness was as hostile to the Crown as the judge had envisaged that he was.
69. The next ground is ground 4 and here Mr Pickup submits that the judge did not adequately warn or direct the jury as to the approach that they should take in the light of what had happened with Mr Uddin and his evidence and, in particular, that he had been treated as hostile.
70. By section 119 of the Act the first witness statement, which in any event was adopted by the witness in re-examination, was admissible as to the truth of its contents, but, submits Mr Pickup, it was a matter for the jury and the jury should have been warned along the following lines, those lines being:

"That the jury should approach any evidence given by the witness incriminating the defendant after being treated as hostile with caution, pointing out that the evidence was only enlisted as it had been as a result of cross-examination by prosecuting counsel."

71. The judge summed up Uddin's evidence at pages 143 to 146 of the transcript which was essentially a summary of what he had said but with no reference to anything about hostility. Thereafter, in the absence of the jury, Mr Pickup made further submissions about what the judge should say to the jury about Mr Uddin's evidence. At page 152 we see that the judge asked counsel for a note of Uddin's evidence. This was then provided. There was apparently some discussion about a discrepancy between counsel's note and the judge's note but that was resolved. Mr Pickup asked if the judge was going to give any hostile witness direction to which the judge replied at page 176:

"Well, I reflected on that, Mr Pickup, but it seems to me really inappropriate. What I am prepared to say to the jury is that if they discern any discrepancy, it is a matter of weight for them, but there has been, as Mr Trimmer submits in writing, there has been no departure from an earlier statement, as I see it, and so I do not propose to say more than that any discrepancy is a matter for the jury as to weight."

72. The judge then said this to the jury at 177:

"So far as Mr Uddin was concerned, he was the witness, you will remember, who was cross-questioned by the prosecution on two statements he had given, and he had used the expression rotating cheques as having been told to him by Mr Greene. It is right to say that Mr Uddin in his evidence said that Mr Pearce told him as well that cheques had been rotated. The defence suggest that Mr Uddin must or may have got that idea, not from Mr Greene, but from Mr Pearce. He was asked on what he remembered as to the facts. He said at one point in cross-examination, 'I can and I can't say that the topic of rotating cheques came from Mr Greene. ' The defence suggest that that shows he did not at the time when he made the statement remember. The prosecution suggest that it showed that at the time he could remember, but had forgotten since. What it means is a matter for you as the judges of the facts, and if at any stage in considering the evidence of Mr Uddin, or indeed any other witness, you discern any inconsistency between what they said in their evidence and what they said in the witness statements previously, then you give effect to that as being a point significant to the weight to be attached to their account."

73. Now the judge was faced with a dilemma in this case because, having given the prosecution leave to treat the witness as hostile, the witness's subsequent evidence appeared to show that he was not hostile at all. We have been referred, in particular, to three authorities. The purport of these authorities and the principles to be deduced from them, submits Mr Pickup, is that once a witness has been treated as hostile it is imperative for the judge to give a direction to the jury about it, albeit that the terms of the direction will have to be carefully tailored to the circumstances of the particular case.
74. The first case in time is Maw [1994] Crim LR 841. There the appeal was allowed:

"... where a prosecution witness gave evidence contrary to his statement or failed to give the evidence expected, the prosecutor, and the trial judge, should consider inviting him to refresh his memory from material which it was legitimate to use for that purpose such as, in that case, C's statement. It was undesirable to proceed immediately, on not getting the expected answer, to treat the witness as hostile. There might be circumstances where he was displaying such an excessive degree of hostility or animus that that was the only appropriate course. That was not such a case. It would have been better if the intermediate step of inviting C to refresh his memory had been taken. Had that been done, the indications were that he would probably have given the evidence expected. If the witness did not allow his memory to be refreshed and did not give an explanation of why he chose to give different evidence the judge could then consider whether he should be treated as hostile."

75. Then the report records:

"If a witness had been treated as hostile, and thereafter given evidence, it was necessary for the jury to consider whether he was a witness who should be treated as creditworthy at all, and they should be clearly directed on that point. The judge did not direct their attention to that question, nor did it appear he considered it himself. It was of fundamental importance for any tribunal to consider whether a witness who had given conflicting evidence was of any creditworthiness at all. It was not proper to go straight to the stage of considering which parts of the evidence were worthy of acceptance and which were to be rejected."

76. Maw was a case under the law as it previously stood, as indeed was Ugorji [1999] 9 Archbold News at page 3, BAILII: [1999] EWCA Crim 1604. We read from the passage of Tuckey LJ's judgment at page 5:

"Returning then to the first two grounds although Mr Ramzan was treated as a hostile witness he did not in the event give evidence which was inconsistent with his earlier statement to the police. So he was not in fact a hostile witness and the conventional hostile witness direction would not have been appropriate in this case. However some warning about Mr Ramzan's evidence needed to be given in view of the fact that he only agreed that what he had said in his witness statement was true under cross-examination by the Crown which they were only allowed to embark upon as a result of having successfully applied to treat him as hostile. If, of course, he had not been treated as hostile, it is clear that the damning evidence about what the appellant had told him to say to the police would not have been given at all.

This situation is not, as far as we can see, covered by authority. We are not at all sure whether it was right to treat the witness as hostile in these circumstances. We think that the objective which the Crown sought to achieve might have been achieved the objective by following guidance given by this court in the case of Maw [1994] Crim LR 841 but that did not happen. In our view common sense suggests that where evidence has only been given as a result of the witness being treated as hostile the jury should be reminded of this in clear terms and told to bear it in mind when considering what weight to attach to the evidence."

77. The third of the three cases is the much more recent case of Middleton in which Keene LJ referred to Ugorji, BAILII: [1999] EWCA Crim 1604 and also to Maw and then said this at paragraph 24:

"It is to be borne in mind that what happens with a witness who has been held hostile will inevitably vary greatly from case to case, and the precise directions required of a judge will, to a certain degree, also vary as a consequence. The most fundamental direction is the one given by the judge in this case more than once, namely that the out of court witness statement by the witness is not evidence unless accepted as true by the witness at trial in respect of any particular part of it. The other direction which will almost invariably be required is one reminding the jury that if there is serious conflict between the witness' evidence in court and a previous witness statement, then they may reject the witness' evidence altogether. Beyond those directions, what the judge says to the jury will depend upon the circumstances of the individual case."

78. It seems to us that there are significant similarities between Ugorji and the present case.
79. In our judgment, save possibly in the most exceptional cases, once a witness has been treated as hostile some warning should be given to the jury about approaching his evidence with caution. The nature of the warning will obviously be dependent on the particular facts of the case. This case, as we have mentioned, bears some similarity with Ugorji although the facts are different.
80. Obviously the judge in the present case would not wish to tell the jury that he gave leave to treat Uddin as hostile because he appeared to have a deliberate animus against the Crown's case. On the other hand, his accounts of the critical conversation or conversations had varied from his statements to his evidence and in the course of his evidence, albeit reverting ultimately to his original account. We think that the judge, without making any reference to hostility, and indeed Mr Pickup does not suggest there should have been any such reference, should have advised the jury to see treat Uddin's evidence with caution in the light of his varied accounts, albeit he ultimately reverted to his initial account.
81. We note that Mr Trimmer points out that it is certainly a possibility in this case that there could have been more than one conversation: one relating to rotating cheques and the other to bouncing cheques. Notwithstanding that we think that the judge should have given in this case some warning to the jury of the kind that we have described, we do not think that that is of any real significance in the context of the case as a whole and the safety of the conviction.
82. There was a great deal of evidence against the appellant. Necessarily in this judgment we have focused fairly sharply on the evidence of just two witnesses but the court is entirely satisfied that the conviction is safe and accordingly the appeal will be dismissed.