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
		23 March 2011

THE LORD CHIEF JUSTICE:

1. This is an application for leave to appeal against sentence by David Chaytor who, on 3 December 2010, in the Crown Court at Southwark, before Saunders J, pleaded guilty to three counts of false accounting and on 7 January 2011 was sentenced to concurrent terms of imprisonment: 18 months' imprisonment on count 2, and twelve months' imprisonment on counts 1 and 3. The total sentence was one of 18 months' imprisonment. Issues of public interest are involved and we shall grant leave.
2. David Chaytor is now 61 years old. He was elected as Member of Parliament for Bury North in 1997. He was re-elected at the general elections in 2001 and 2005. We have been provided with a large body of character references which speak well of him, his dedication and commitment to his responsibilities as a Member of Parliament and to the needs and interests of the constituents in the community he served. However, his good character was thrown away between November 2005 and the end of January 2008, when on about thirteen occasions he dishonestly submitted false claims for expenses allegedly incurred by him as a Member of Parliament. The total amount involved in the false claims, as reflected in the three counts in the indictment, was just short of £23,000, and payment was received from the Fees Office at the House of Commons of some £18,350. This sad fall from grace was entirely self-inflicted.
3. As a Member of Parliament the appellant was entitled, within prescribed rules, to claim for expenses incurred by him in the course of fulfilling the responsibilities of his office. The rules are set out in a document known as the Green Book, published by the House of Commons Department of Resources, which was also responsible for the administration of the expenses claims system. On induction to the House of Commons, every new Member of Parliament is given a copy of the book, and, if he or she sought it, provided with assistance on its application and interpretation. In addition, an advice helpline was available to clarify any problems with the understanding or interpretation of the rules. It was, of course, emphasised in the Green Book that the Member of Parliament himself or herself was responsible for ensuring that the claims made by them were legitimate, above reproach, and in accordance with the rules. For claims for items of expenditure less than £250, in effect the word of the Member of Parliament was good enough, but items in excess of that sum were required to be supported by documentary evidence. Until what became known as the "expenses scandal" it was an essential feature of the operation of the scheme that Members of Parliament were invariably treated as honest, trustworthy people, and the unwritten assumption was that only claims for expenses genuinely incurred in accordance with the rules would be made.
4. In summarising the facts we shall begin with count 2. A claim which Members of Parliament were permitted to make was for costs wholly, exclusively and necessarily incurred to enable them to procure overnight accommodation when they were away from their main home. These costs included rental for a designated second home. In this process, members were required to register their main home by way of the Form ACA1 and to submit any claims on either a monthly or quarterly basis using Form ACA2. The claims had to be supported by a copy of the relevant rental agreement, and expenses were not reimbursed until they were actually incurred.
5. It was clearly stated in the Green Book when the appellant became a Member of Parliament that "the costs of leasing accommodation from yourself" are not allowable. In June 2006 the rules were amended so that a claim for costs of accommodation leased from a family member was similarly excluded.
6. In what Mr Sturman QC for the appellant described to us during the course of this appeal as an "incredibly complex series of domestic arrangements" the appellant made claims in respect of his property at 152 Hyde Tower in London for £15,275, and he received £12,925. This property had been purchased by the appellant and his wife in 1999. The mortgage had been paid off in full by November 2003. They continued to own the property throughout all the transactions to which we shall refer, and no rental payments on this property were made to any landlord. In other words, no rental payments were ever made in respect of this designated second home, and indeed after November 2003 no mortgage repayments were made either.
7. The appellant's registered main home was his family home in Todmorden, at a place called Seven Lumbutts, which was situated in or close to his Parliamentary constituency in Bury. The appellant declared that he had read the relevant rules, and that he intended to make legitimate claims in relation to the designated second home, which was identified as 152 Hyde Tower. In accordance with the requirements of the rules, his application was supported by what purported to be a tenancy agreement which showed that the landlord of the property at 152 Hyde Tower was an individual called Sarah Elizabeth Rastrick, with the appellant as the tenant. This document appeared to be signed by both the landlord and the tenant, and required monthly rental of £1,175 to be paid by standing order to the landlord. The tenancy was for a period of twelve months beginning on 1 September 2005.
8. Seven separate claims were made by the appellant during and around the twelve month period. In stark reality, they were false claims made for expenses which were never incurred and they were supported by false documents submitted by the appellant, and presumably made by him personally or at his request. This was serious dishonesty.
9. The difference between the sums claimed and amounts paid is explained because the claims made by the appellant included claims for a period in September 2006, which was outside the period of the false tenancy agreement.
10. Count 3 was directed to the period between September 2007 and the end of January 2008, when similar claims were made by the appellant in respect of a different designated second home. During the course of the submission of this group of claims the appellant asserted that his main home was at 65 Hyde Tower, which had been purchased in October 2006, and was part of the same block of flats as the property jointly owned with his wife at 152 Hyde Tower. The appellant still owned the home at Seven Lumbutts, but he now elected to designate a property at 1 Castle Street, Summerseat, as his second home. This property belonged to his mother, and was situated within 20 miles of his constituency at Bury.
11. The appellant signed the required declaration providing the details of this designated second home, and gave the appropriate assurances that his declarations were true and in accordance with the rules. The claim was accompanied by another false tenancy agreement which purported to show that the appellant was the tenant of the property under an agrement for a period of six months, at a monthly rental of £775, payable by standing order or direct debit to the landlord, with a deposit of one month's rent to be reduced in lieu of the final month's rent. This agreement was purportedly witnessed by Sarah Fairhead (the married name of the appellant's daughter).
12. The property was in fact owned by the appellant's mother, Olive Trickett, and had been her home for many years. Due to a deterioration in her health her affairs had been registered with the Court of Protection and the appellant was granted enduring Power of Attorney. Then, in May 2007, she was moved into a care home. The false tenancy agreement identified the address of the care home as the address of the landlord, without providing any indication as to the true nature of the address.
13. The appellant claimed £5,425 to cover the costs for rental payments which he never actually made, in accordance with the false tenancy agreement which was submitted in support of the claims. Putting it shortly, the claims for these expenses were based on the false assertion that rental payments were made by the appellant and were supported by false documents. All the sums claimed were paid to the appellant in full. This, again, was serious dishonesty.
14. Count 1 covered a different form of claim in respect of Incidental Expense Provision. This enabled Members of Parliament to pay for commissioned work and bought-in services. The claim could be made either for reimbursement or for direct payment to the supplier of the service.
15. In May 2006 the appellant submitted two claims for reimbursement, purportedly for consultancy fees incurred and paid to Paul France. The total sum of the claims was £1,950 for costs which had already been paid. The appellant signed the relevant forms, vouching for their truth. The form was submitted with the support of two false invoices made out by the appellant for IT services provided by Paul France, and the invoices themselves falsely recorded that the sums had indeed been paid to Mr France.
16. Mr France was a freelance computer programmer and member of the Labour Party who worked as an occasional volunteer in the constituency office, performing administrative tasks such as the inputting of computer data. He had on an earlier occasion performed work for the appellant for which he submitted a genuine bill and had been paid a modest sum. However, in respect of the claims made in May 2006, Mr France had never sought any payment from the appellant, and was therefore not responsible for the false invoices, and indeed he did not believe that he was entitled to any payments from him.
17. In the result the claims were not paid. By the time the claims were made, the appellant had already exhausted the annual amount available to him for claims for incidental expense provision. There was therefore no actual loss to the public purse. That, however, was merely fortuitous.
18. There was an issue at the hearing, the appellant asserting that if the claim had been paid he would have paid the money over to Mr France. The Crown did not accept this, but it was agreed that it was unnecessary for the issue to be tried, as it would make no significant difference to the sentence. The judge said that he was content to deal with the appellant on the basis that he would have paid any sums recovered under these claims to Mr France. That was consistent with the intention he had expressed to others at the time. All this, however, begged the question whether the claims were justified in the first place. If Paul France hade neither billed the appellant, nor submitted any invoices, nor acted on his behalf in a fee-earning capacity, then the claims were not supportable, whether or not the appellant would have passed the proceeds of the claim on to him.
19. It was submitted to us, as it had been to Saunders J, that the seriousness of these offences was mitigated on the basis that much of the money claimed by the appellant could have been properly due to him if he had made legitimate claims for them. The purpose of this submission was to focus on paragraph 21 of the Definitive Guideline, Sentencing for Fraud -- Statutory Offences -- which addressed the way in which the court should approach dishonest claims made in respect of amounts which would have been legitimately due to the offender. It reads:

"In some cases an offender may be entitled honestly to all or part of the money that is obtained following the fraudulent activity. This is a feature of all exaggerated claims but may arise in other cases. In such cases, the starting point should be based on the amount to which the offender was not legitimately entitled."

20. Mr Sturman is right in his submission that Saunders J did not conduct any calculation of this kind. On this issue the judge said that if the sums claimed could have been recovered by legitimate means, then it was "surprising" that the appellant did not make legitimate claims. It was, after all "no easier to make a dishonest claim than an honest one". We agree. Saunders J continued that it was not for him to decide the sums to which the appellant would have been entitled if he had told the truth, adding that "it may well be that had he made legitimate claims then he would have been entitled to a significant amount of money, but the fact is that the claims that he made were false claims which Mr Chaytor accepts he made dishonestly".
21. The contention is that the appellant could have obtained many of the relevant sums by claiming mortgage interest payments on properties that he owned. He could, in effect, have reorganised his mortgage arrangements. Like Saunders J, we find it unnecessary to address this argument further. It is perfectly possible to understand that an individual who is entitled to, say, £100 in respect of his expenses, and who dishonestly inflates the claim and seeks or is paid £150 for his expenses when only £100 was legitimately owed to him should be sentenced on the basis that he dishonestly acquired £50, and this amount represents his profit and the loss consequent on his crime. In this case the element of dishonesty is not simply inflated claims for expenses, but rather the careful preparation of bogus claims, supported by bogus documents. In truth, they were bogus in their entirety, from start to finish. As was observed during the argument, if through a fraudulent tax return an individual escapes liability for, say, £50,000 due to the Inland Revenue, that represents his offence, and the loss consequent upon it. It is not reduced because he could, if he had come round to it, have reduced his liability so that the loss to the Inland Revenue was £40,000 and the remaining £10,000 was legitimately paid into an ISA account. In our judgment, in the present case, the calculation of the losses to the public purse consequent on the dishonesty actually perpetrated by the appellant does not fall to be reduced because he might, operating honestly, and within the rules, have been able to make legitimate claims for expenses. We therefore do not need to address how this process might have been undertaken.
22. These offences were investigated by the police and on 7 December 2009 the appellant attended for interview at a police station. He declined to answer questions. The issue of Parliamentary Privilege was raised. Subsequently the appellant repaid slightly more than the entirety of the sums he had dishonestly obtained, and no order for compensation was sought.
23. The case then proceeded to trial. In February 2010 the question whether the prosecution of the appellant and other Members of Parliament might constitute a breach of privilege was litigated. Saunders J held that Parliamentary Privilege did not apply; so did the Court of Appeal Criminal Division; so did the Supreme Court. Throughout these processes it was not intimated on behalf of the appellant that he would admit the relevant facts relating to his dishonesty, or that he would plead guilty if the decision on Privilege was resolved, as in the result it was. Equally, after the decision of Saunders J on the issue, he did not plead guilty and seek, as probably would have been allowed, bail pending the hearings of the Privilege point before this court and indeed the Supreme Court. If either court had concluded that Privilege applied, the convictions based on the appellant's guilty plea would have been quashed. It was not until after that issue was resolved by the Supreme Court, and after he had also unsuccessfully submitted that the prosecution should be stayed as an abuse of process on the basis that a fair trial could not, in the light of the publicity that surrounded his case, take place, that he did eventually plead guilty. Yet he must have known all along that he had been dishonest.
24. We acknowledge the force of Mr Sturman's submission that it is exceptionally difficult for an individual of good character and high reputation to face up to the realities of what he has done; but acknowledging that to be so, it simply does not follow that in such cases a full discount for a guilty plea should be granted when the guilty plea is postponed until the trial process is well under way. We do not believe that any possible criticism can be made of the fact that Saunders J reduced the sentence by 25% rather than one-third, which might have been available for an earlier plea. Indeed, in the circumstances the discount could, without being open to criticism, have been somewhat further reduced.
25. The essence of the submission before us at the hearing yesterday is not that the sentence should have been suspended, but that 18 months' imprisonment in total was too long, and that a sentence of twelve months' imprisonment would have been sufficient to reflect the appellant's culpability and the available mitigating features. We have already touched on these in the course of the judgment. The appellant's good character has been destroyed, and his public life has been shattered. He has publicly admitted his dishonesty, and his humiliation is complete.
26. We have, of course, reflected on the normal approach taken by courts faced with sentencing men and women of good character who have been dishonest and reflected on the relevant guidelines, in particular the Sentencing Guidelines Council's Definitive Guideline on Fraud issued in October 2009. The reality is that when this guideline was produced, it never occurred to anyone that a Member of Parliament might set about defrauding the public purse in the calculated and deliberate way taken by the appellant. He knew exactly what he was doing. In particular, in relation to counts 2 and 3, he prepared and submitted false documents, knowing they were false, to sustain fraudulent claims for expenses. The loss to the public purse was significant.
27. This was a grave breach of trust and there was a further aggravating feature of this case.
28. It is difficult to exaggerate the levels of public concern at the revelation of significant abuse of the expenses system by some Members of Parliament. Some of those elected representatives, vested with the responsibility for making the laws which govern us all, betrayed public trust. There was incredulous consequent public shock. The result was serious damage to the reputation of Parliament, with correspondingly reduced confidence in our priceless democratic system and the process by which it is implemented and we are governed. This element of damage caused by the appellant (and others) cannot be valued in monetary terms, but it is nonetheless real, and the impact of what has been done will not dissipate rapidly.
29. The appeal is dismissed.

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