England and Wales Court of Appeal (Criminal Division) Decisions

IN THE COURT OF APPEAL
CRIMINAL DIVISION

		Royal Courts of Justice The Strand London WC2A 2LL
		16 April 2010

Friday 16 April 2010

LORD JUSTICE LEVESON: I shall ask Mr Justice Davis to give the judgment of the court.

MR JUSTICE DAVIS:

1. The appellant is now aged 38. On 13 August 2009, following a trial in the Crown Court at Maidstone, before His Honour Judge McDonald QC and a jury, he was convicted of conspiracy to supply a controlled Class B drug. On 5 October 2008 he changed his plea to guilty to two counts of possessing criminal property and to one count of obtaining a money transfer by deception. On 15 October 2008 he was sentenced by the trial judge in the following way. On the conspiracy to supply the controlled drug, he was sentenced to a term of six years and six months imprisonment. On the two counts of possessing criminal property, he was sentenced to terms totalling fifteen months imprisonment, to run concurrently. On the count of obtaining a money transfer by deception, he was sentenced to a term of two years and six months imprisonment, to run consecutively. The total sentence was therefore one of nine years imprisonment. The period of 275 days spent in custody on remand was ordered to count towards the sentence. In addition a costs order was made against the appellant. He appeals against sentence solely in so far as it relates to the consecutive term of two years and six months imprisonment for the offence of obtaining the money transfer by deception. No challenge is made to the sentence of six years and six months imprisonment on the other count.
2. It is unnecessary to say much about the drugs conspiracy. Suffice it to say that the conspiracy ran for a period of several months in 2008. The appellant was found to be an organiser. Amphetamine in considerable amounts was involved. On at least one occasion a sum of around £125,000 in cash was found on the appellant. When he was interviewed he made no comment.
3. The court has relatively little information on the offence of obtaining the money transfer by deception. The facts so far as identified can be summarised in this way. In June 2006 the appellant and his partner, Miss Hawkins, met a mortgage adviser from Sycamore Financial Management Limited. The appellant said that he was interested in obtaining a loan for £807,500 to be secured by way of mortgage on a property near Aylesford in Kent. That property comprised a house, stables and outbuildings on adjoining land. Northern Rock was identified as the lender. An application for the mortgage was made. It appears that the purchase price of the property was £950,000 and presumably a valuation to that effect was obtained. Thus the loan was around 85% of the purchase price.
4. On the application for the mortgage the declared income of the appellant was stated to be £110,199 per annum and his partner's was recorded as £74,000. Those declarations were entirely false. Moreover, forged pay slips and at least one forged bank statement were provided in support of the application. The application was approved and Northern Rock released the money. Northern Rock has since confirmed that it would never have lent the money had it known the true position.
5. Subsequent enquiries reveal that at the time the legitimate earnings of the appellant were in the region of £42,000 gross per annum. What his partner's income was at the time, if any, is not known. Her last known income was in the region of £21,000. We are told that she has been conducting a riding school business from the property.
6. Although the appellant has some previous convictions, they are of no relevance to the present offence.
7. When passing sentence the judge referred in detail to the background facts and to his conclusions on the drugs conspiracy, and then turned to the background facts on the count of obtaining a money transfer by deception. The judge noted that at that time there was no definitive guideline or guideline case for him to consider. He referred to the then draft guidelines issued by the Sentencing Guidelines Council for statutory fraud offences. (Since then, of course, the Definitive Guidelines have come into effect.) The judge then said this:

"The starting point for this offence, in a contested case, had it stood alone, would have been four years. Because of totality, I start at 40 months, and accord 25 per cent credit [for the guilty plea], giving a sentence of two years and six months."

8. Mr O'Connor, who appears on behalf of the appellant, submitted that the sentence of two and a half years imprisonment, which was ordered to run consecutively to the other sentences, was excessive. He makes no complaint as a matter of principle that the sentence was expressed to be consecutive. His primary submission is that the starting point of four years, expressed by the judge, was out of line with past authority and was too long having regard to the circumstances of the offending. He noted that the maximum available sentence was one of ten years imprisonment. He pointed out that this was a single mortgage application. The advance obtained (albeit by fraudulent means) was obtained for the purchase of a family home, genuinely intended to be lived in long-term by the family unit and with no intent to cause loss to the lender. Moreover, thus far at least, there has been no loss to the building society and Mr O'Connor, albeit without evidence, asserts that (notwithstanding subsequent property market falls) there is still some equity value in the property. The current position seems to be that Miss Hawkins still resides in the property with the children, running the horse riding business, and by some means or another the mortgage instalments are being defrayed. Regrettably, Mr O'Connor was not able to tell us just how the instalments on the mortgage are being funded.
9. Mr O'Connor referred to the Definitive Guideline of the Sentencing Guidelines Council which took effect for sentences passed after 26 October 2009 (that is, shortly after the judge passed sentence in this case). Mr O'Connor placed reliance on paragraph 20 of the guidelines which says:

"In the guidelines that follow, while the amount of money obtained is used as the determinate of seriousness, a court should take the starting point corresponding to the amount that the offender dishonestly intended to obtain and adjust the assessment of seriousness to reflect the degree of loss actually caused by the offence. Common situations include no loss intended. In obtaining credit through fraud, an offender may not intend to cause any loss but to repay any sums advanced or to keep the bank account in credit. Indeed, an application that was not fraudulent may have been successful. Whilst in such a case the offender does not intend to cause any harm, nevertheless a loss may result. A court should use the starting point corresponding to no financial loss and, where a loss occurs, adjust the assessment of seriousness to reflect the degree of loss."

Moving on through the guidelines, there is set out a table at page 24 under the heading "Banking and Insurance Fraud and Obtaining Credit through Fraud". In box 2, by reference to an amount obtained or intended to be obtained of £500,000 or more, with a starting point based on £750,000, for a transaction to be described as "fraudulent from the outset and either fraud carried out over a significant period of time or multiple frauds", a starting point of four years custody is given, with a range of three to seven years custody. The fourth box, which describes "a single fraudulent transaction, fraudulent from the outset", is empty. No starting point or range is specified. Why that is so is not entirely clear. It may be that it was thought that circumstances for such a transaction in individual cases can vary infinitely.

10. Mr O'Connor also referred the court to a number of authorities going back a considerable period of time. He submits that when regard is had to those authorities, they indicate, broadly speaking, that a range of two to four years imprisonment was ordinarily considered appropriate, and sometimes much less. That was so in the case of multiple frauds, and frauds involving professional advisers and the like. The authorities to which we were referred, although we do not think we need deal with the facts in any detail, were R v Callen (1992) 13 Cr App R(S) 60, R v Samra (1991) 13 Cr App R(S) 168, R v Rice (1993) 14 Cr App R(S) 231, and R v Weinberg (1993) 14 Cr App R(S) 381. To these may be added R v Steven (1993) 14 Cr App R(S) 372, where the court also helpfully set out some of the factors that may be relevant in cases of sentencing for mortgage fraud.
11. Although we do not necessarily criticise this citation of authority as unhelpful, we think that matters have moved on since the early 1990s. In any event, there is now the Definitive Guideline of the Sentencing Guidelines Council with regard to sentencing for statutory offences of fraud.
12. Clearly the relevant factors will vary from case to case. However, we would suggest that -- and subject always to the Definitive Guidelines -- in the case of a loan or loans obtained by fraud of this kind some of the potentially relevant features may be (in no particular order) as follows: first, whether one or several transactions are involved; second, whether the fraud is committed by a professional person or is otherwise committed in breach of trust; third, the nature of the fraud will need to be considered and the means by which it is carried through; fourth, whether the fraud was an isolated incident or involved ongoing deception; fifth, the amount of money sought and obtained; sixth, the amount of actual loss, so far as it can be identified, to the lender; seventh, whether the offender has involved others, or is involved with others, in the fraud; and eighth, whether at the time there was an intention to repay (and, if so, the anticipated means of repayment) or whether there was no intention to repay. There may well be other factors, and regard will of course need to be had in the usual way to matters such as a guilty plea, relevant previous convictions or lack of previous convictions, and so on. In particular, regard must, of course, always be had to the relevant Definitive Guidelines.
13. Mr O'Connor submits that this transaction cannot precisely be styled as one which was fraudulent from the outset and carried on over a significant period of time. He submits that it is more appropriately to be described as a single fraudulent transaction which was fraudulent from the outset. Although the instant case does not perhaps squarely fit either of the boxes in the categorisation in the current guidelines, one point may be made. On any view the legitimate income of the appellant was greatly below that which was set out in the application and on the face of it would have been entirely insufficient to discharge the mortgage interest and capital repayments. No material has been placed before us to show that he or his partner had some other legitimate source of income or capital with which to repay the instalments and capital in due course. The inference is that he proposed to repay what was due under the mortgage primarily by virtue of criminal activity. That is an important factor which cannot be ignored.
14. We accept that, given the background, there was doubtless an intention to repay the loan in order to secure the family unit living there. We bear that in mind. But in our view it cannot in this particular case have the weight that Mr O'Connor would seek to give it. Mr O'Connor further submits that no loss has been caused to the building society. Indeed he stresses that there was initially a differential in equity terms of over £100,000 between the amount borrowed and the value of the property. We agree that is a relevant consideration. However the fact that there has, thus far, been no loss is to some extent fortuitous. It also simply cannot be overlooked that a very large loan was dishonestly obtained and moreover it constituted a very significant percentage of the substantial purchase price -- a sharp dip in property prices meant a loss was foreseeable, quite apart from the obvious uncertainty inherent in the applicant's illicit means of funding the mortgage repayments. It is also an unattractive feature of this case that not only did the appellant falsely state his income, he created fraudulent documents in order to bolster his application. It is yet further an unattractive, and another aggravating, factor that the appellant involved his partner in the initial fraud.
15. Having regard to all of those circumstances we can agree that a starting point of four years for offending of this kind perhaps was a severe starting point. However, even if that starting point can be said to be too high (and we do not think so), it may also be noted that the judge in any event gave a discount of about eight months having regard to considerations of totality, before then making a further substantial discount to reflect the guilty plea.
16. We have had regard to all Mr O'Connor's submissions by reference to the sentence on this count, but looking at matters in the round, and having regard to the circumstances, we are not persuaded that there is any reason to interfere with the sentence of two years and six months imprisonment on this count. In our view that was a sentence that could properly be imposed. As a matter of totality, moreover, a sentence of nine years imprisonment was amply justified on the facts of this case for the overall offending. In those circumstances this appeal is dismissed.