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
		27th October 2017

Friday 27^th October 2017

LORD JUSTICE HOLROYDE:

1. The appellant, Benjamin Staff, appeals by leave of the single judge against his convictions at re-trial for offences of fraud and converting criminal property. The single ground of appeal is that his convictions are unsafe because the trial judge was wrong to admit evidence of certain previous convictions of the appellant and not to exclude them, pursuant to section 101(3) of the Criminal Justice Act 2003. It is submitted that the evidence which was admitted would have had an overwhelmingly prejudicial effect, such that there could not be a fair trial.
2. The court is grateful to counsel, Mr Vollenweider for the appellant and Mr Wilson for the respondent, for their concise and focused submissions, which we have found very helpful.
3. The charges against the appellant had originally been counts 6 and 9 in an eleven-count indictment. For convenience, we will continue to refer to them by those numbers.
4. Count 6 alleged an offence of fraud, contrary to section 1 of the Fraud Act 2006. The particulars of the offence alleged were that the appellant, between the 30^th day of April 2012 and the 30^th day of September 2012 "committed fraud in that, dishonestly and intending thereby to make a gain for himself or another, or to cause loss to another, or to expose another to risk of loss, he made a false representation to Alex Sexton which was and which he knew was or might be untrue or misleading, namely that £140,000 belonging to Alex Sexton would be invested in Morpheus Homes Limited when at the time of the bulk of the investment, Morpheus Homes Limited did not exist and monies were paid through the personal bank accounts of Ben and Catriona Staff, in breach of section 2 of the Fraud Act 2006."
5. Count 9 alleged converting criminal property, contrary to section 327(1)(c) of the Proceeds of Crime Act 2002. The particulars of this offence, which was alleged against both the appellant and his wife, were that during the same period of time they "converted criminal property, namely, £140,000 from Alex Sexton, knowing or suspecting it to represent in whole or part and whether directly or indirectly, the proceeds of criminal conduct".
6. The circumstances of the case were such that it was common ground that, so far as the appellant was concerned, the two charges would stand or fall together.
7. The appellant was a builder. He was introduced to Mr Alex Sexton in 2011, when Mr Sexton was looking for a property developer to assist him in building three houses on a plot of land which he had inherited. Mr Sexton engaged the appellant's services. During the building of the houses the appellant fell into some financial difficulty. Mr Sexton and his sister assisted the appellant by making payments to contractors. By February 2012, two of the three houses had been built and had been sold at a profit to Mr Sexton of £45,000.
8. Between May and September 2012, Mr Sexton transferred a total of £140,000 to the appellant in response to requests made by the appellant. Mr Sexton's evidence was that the appellant asked him if he wished to invest in Morpheus Homes for the purposes of developing property. Mr Sexton was promised a house built by Morpheus Homes as a return on his investment. The appellant initially asked for £200,000, but Mr Sexton replied that he could only manage £180,000. He was told by the appellant that the money would be used to buy land and build property. Mr Sexton maintained that the monies were transferred to the appellant as an investment into a company called Morpheus Homes, and were to be used solely for Morpheus Homes to purchase land and develop properties. He paid the monies totalling £140,000 into bank accounts, the details of which were given to him by the appellant. He did not know that some of these were personal bank accounts of the appellant's wife. Mr Sexton had no involvement in the appellant's companies and would only occasionally ask about his investment, as he trusted the appellant. He became aware of the offending when the appellant was arrested in 2014 as part of a police investigation into his business affairs.
9. In cross-examination by Mr Vollenweider, Mr Sexton agreed that he knew that the appellant's company, M R Trades, was to become Morpheus Homes. He further agreed that he had never asked the appellant for the return of his money. Those answers are, understandably, relied on by Mr Vollenweider as providing support for the appellant's case. He is able to point to other answers in cross-examination on the part of Mr Sexton which were also favourable to the appellant.
10. Morpheus Homes Limited was not, in fact, incorporated until late August 2012. The monies obtained from Mr Sexton were paid into the personal bank accounts of the appellant and his wife. They were subsequently converted by being moved around or used either for the appellant's business or for the appellant's personal matters.
11. The appellant answered questions when interviewed, but did not give evidence at his re-trial. The case presented on his behalf, as stated in his interview, was that he did not make any false representations to Mr Sexton and that Mr Sexton had transferred the monies to him, to be used as the appellant saw fit in the furtherance of his own building business and Morpheus Homes. Mr Sexton knew that an existing company, M R Trades Limited, was to become Morpheus Homes Limited. The appellant had taken Mr Sexton to see two potential development sites. Further, it was the appellant's case that Mr Sexton had been content for the monies which he gave to the appellant to be used to pay various suppliers.
12. Thus, the issues for the jury on the re-trial were whether or not the appellant had deliberately and dishonestly misled Mr Sexton as to the nature of his investment and the way in which the £140,000 would be used (count 6) and whether the appellant used the £140,000 transferred to him by Mr Sexton, knowing that it was the proceeds of criminal conduct (count 9).
13. The conduct which gave rise to counts 6 and 9 fell within a period of about five years when the appellant was engaged in other dishonest activities in relation to his building businesses. As the judge was to summarise the position when he came to pass sentence, the appellant was capable of producing good work and wanted to succeed, but had quickly run into cash-flow difficulties with his building businesses and had resorted to dishonesty.
14. The eleven-count indictment had been the subject of a first trial before the same learned judge, His Honour Judge Dennis QC, and a jury for a period of about a month in early 2016. The jury at that first trial convicted the appellant of six offences in relation to fraudulent trading, false accounting, converting criminal property and fraud. They acquitted him of three further charges of fraud. They failed to agree on counts 6 and 9, and so it was that a retrial was ordered.
15. The re-trial, again before Judge Dennis, lasted for about a week in late 2016. It ended with the convictions which are the subject of this appeal.
16. At an early stage of the re-trial, the prosecution applied to adduce evidence of the appellant's convictions at his first trial. We are told by counsel that the application was made rather earlier in the course of the proceedings than would normally be the case, because this was a re-trial and both parties and the judge felt confident that they could properly proceed on the basis that the evidence given at the re-trial would be in materially the same terms as the evidence given in relation to counts 6 and 9 at the first trial. So, indeed, it proved, and there is no suggestion that any development in the course of the re-trial should have prompted the judge to take a different view of the wisdom of hearing the bad character application earlier than might be normal.
17. The application was, of course, governed by section 101 of the Criminal Justice Act 2003. So far as is material for present purposes, that section is in these terms:

"(1) In criminal proceedings evidence of the defendant's bad character is admissible if, but only if –

…

(d) it is relevant to an important matter in issue between the defendant and the prosecution,

…

…

(3) The court must not admit evidence under subsection (1)(d) … if, on an application by the defendant to exclude it, it appears to the court that the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it.

(4) On an application to exclude evidence under subsection (3) the court must have regard, in particular, to the length of time between the matters to which that evidence relates and the matters which form the subject of the offence charged."

18. The prosecution submitted that the evidence of the earlier convictions was relevant to an important matter in issue between the parties because it showed a propensity on the part of the appellant during the relevant period to behave fraudulently and dishonestly in his business practice.
19. The application was opposed by the appellant on the grounds that the previous convictions were of a different character and therefore did not make it any more likely that the appellant was guilty of counts 6 and 9, and that in any event the evidence would give rise to overwhelming prejudice.
20. The learned judge rejected those grounds and granted the application. He noted that the relevant conduct fell within the period covered by the previous convictions and related to the same course of trading. He said that the competing contentions of the prosecution and the defence would not be properly understood by the jury if they were not aware of the convictions. At page 2A of his Ruling, he summarised what had happened at the first trial and then said (at 2D):

"There, of course, was an issue as to the nature of the representation – the issue as to the purpose for the money that was undoubtedly obtained and how it was then used, having been received into the bank account of the defendants. For the defence it was contended that there was no false representation and that the money was used honestly for the purposes which Mr Sexton knew full well. There was an issue as to whether he did know that full well."

At page 5A of the Ruling, the learned judge went on to say this:

"… I do not accept that this evidence would have an overwhelming – or overriding - effect. The jury are perfectly able to consider the whole picture, guided, as they will have to be, by appropriate directions as to the use and avoidance of the misuse of such material evidence. But this is a matter for the jury to consider and, in my view … the evidence is highly relevant to achieve a fair trial of the central issues on these two counts."

Earlier in his Ruling, the judge had rejected the submission that the evidence should be excluded because the previous convictions were of a different kind. We need not say more about that aspect of the case, because in his oral submissions today Mr Vollenweider helpfully told us that he no longer relied on that point.

21. We should note that it was also part of the prosecution's application to seek to adduce evidence of a previous conviction of the appellant for breach of a restraining order. The learned judge refused that application for reasons which he explained. We need say no more about that.
22. Following that Ruling, the parties very sensibly agreed terms of admissions which briefly summarised the previous convictions and the conduct to which they related, and also summarised the three allegations in respect of which the first jury had returned not guilty verdicts. In the circumstances of this case it was entirely fair for the jury to have that information as to the not guilty verdicts, as well as the guilty verdicts, returned by the first jury.
23. At the conclusion of the prosecution case, there was a submission on behalf of both defendants that they had no case to answer. The submission was successful in relation to Mrs Staff, who faced count 9. It was unsuccessful in the case of the appellant. We are told by counsel, again very helpfully, that, in making the submission of no case to answer, Mr Vollenweider did not invite the judge to revisit the bad character ruling.
24. The trial proceeded. The appellant, as we have indicated, did not give evidence. In his summing-up, the judge gave (at pages 11G to 13F) what are accepted to be entirely proper and fair directions as to how the jury should approach the evidence of the previous convictions. At the very beginning of that passage he forcefully emphasised the need for the jury to treat the facts of the previous convictions "with great care and caution".
25. Mr Vollenweider realistically accepts that the statutory criteria for the admission of this bad character evidence were fulfilled and that the judge was accordingly not wrong in law to admit it. But he submits that the judge should have excluded the evidence pursuant to section 101(3), because it was so prejudicial that no direction given by the judge could secure a fair trial. He submits that, in view of concessions made by Mr Sexton and other features of the evidence which were favourable to the appellant, this was a weak prosecution case. On that basis he invites this court to infer that the prejudicial effect of the evidence of previous convictions was the probable reason why the jury at the re-trial convicted.
26. Mr Vollenweider submits that, in making his decision as to admissibility, the learned judge failed to take into account the features of weakness of the prosecution case. He also failed, submits Mr Vollenweider, to address or analyse those features in his Ruling. Both counsel point to the following passage in the Ruling as indicating the view taken by the judge. He said (at page 4E):

"I have considered whether the admission of such evidence … would be unfair, having an adverse effect on the fairness of the proceedings (section 78 consideration). I have considered the point that is forcefully made that the admission of such evidence of these convictions would have an overwhelming – overriding effect."

Counsel agree that when the judge there referred to section 78 of the Police and Criminal Evidence Act, he had in mind the considerations which he was required to take into account under section 101(1) and (3) of the 2003 Act.

27. The respondent submits that the judge was right to admit the evidence and that he did so for proper reasons. Mr Wilson argues that if the evidence had been excluded, there would not have been a fair trial of the central issues of the case, and that the judge was entitled in his discretion to refuse to exclude it on grounds of prejudice. Any risk of prejudice, submit the prosecution, was cured by the directions properly given by the judge.
28. In his seminal judgment in R v Hanson [2005] EWCA Crim 824, [2005] 2 Cr App R 21, the then Vice-President (Rose LJ) said at [15] that if a trial judge had directed himself correctly in relation to the admission of bad character evidence, this court would be very slow to interfere with a ruling on that issue and would do so only if the judge's judgment as to the capacity of prior events to establish a propensity was plainly wrong, or if the discretion had been exercised unreasonably in the Wednesbury sense. In the years since then, numerous decisions of this court have affirmed that approach. Some of them are mentioned in Mr Wilson's Respondent's Notice.
29. Mr Vollenweider sensibly grasped that point head-on at the beginning of his oral submissions. He recognised that this court will be slow to interfere with an exercise of judicial discretion. He put at the forefront of his argument his submission that the learned judge had failed to take into account a most material matter, namely the weakness of the prosecution case.
30. We have reflected on the competing submissions. It seems to us that there were undoubtedly valid points to be made on each side of the admissibility argument. Given that the jury which had returned the previous convictions had been unable to reach any verdicts on counts 6 and 9, there was some force in Mr Vollenweider's submission as to the danger of unfairness if the second jury were made aware of the convictions. But, equally, there was force in the prosecution's submission that the jury would be given an artificial picture if they were left to try the case without knowing about the manner in which the appellant was, during the same period, carrying on other aspects of his business.
31. Tensions of this nature can arise when there is a re-trial of some counts, after a previous jury has reached verdicts on other charges but has been unable to agree on those which are re-tried. The defendant in such a re-trial should not be exposed to unfair prejudice. But nor is there any necessary reason why he should have the advantage of a re-trial in which the prosecution case has been unfairly weakened.
32. We are unable to accept Mr Vollenweider's central submission that the learned judge failed to take into account the material feature of the strength (or, as Mr Vollenweider would argue, the weakness) of the prosecution case. True it is that in the short passage which we have quoted from page 4E of the Ruling, the learned judge dealt with this consideration in brief terms. But it must be remembered that earlier in his Ruling (at page 2D), he had referred specifically to the evidence which had been given at the first trial, over which he had of course presided. It is, in our judgment, perfectly clear that the learned judge, with his considerable experience of criminal trials, was fully alive to all relevant factors. As is accepted on the appellant's behalf, the judge was right to conclude that the evidence was admissible, pursuant to section 101(1)(d) of the 2003 Act. He was right to have in mind that he could and would give appropriate directions, and he was right to proceed on the basis that experience shows that juries do follow judicial directions. It is not suggested that he misdirected himself in law. So it is that the case is put – and indeed must be put – on the basis that the judge was wholly wrong in the exercise of his discretion.
33. Notwithstanding Mr Vollenweider's able submissions, we are unable to accept that argument. It is, in our view, clear, as we have indicated, that the judge did take into account all relevant matters. We do not accept the submission that the prosecution case was so weak that the bad character evidence was improperly used to bolster it. Nor, however, was it such a strong prosecution case that the bad character evidence could be said to be an unnecessary and unfair supplement to it. On the contrary, Mr Vollenweider, as we have indicated, was able to point to a number of features of the evidence which were favourable to the appellant, and no doubt able to address the jury cogently about them. He goes rather too far, however, in inviting the court to infer that the evidence of the previous convictions must have been unfairly decisive in the minds of the jury. The jury may equally well have been influenced by, for example, the fact that the appellant did not give evidence.
34. In those circumstances the judge was, in our view, clearly entitled to exercise his discretion in the way that he did. Having declined to exclude the bad character evidence, the judge went on in clear and forceful terms to give the jury entirely appropriate directions about it, which were sufficient to avoid any risk of unfairness.
35. This, accordingly, is a case in which there is no basis for this court to interfere with the judge's exercise of his discretion. We bear very much in mind that he was exercising that discretion with the benefit of the particular experience of having conducted the trial before the first jury over a period of about a month. We are satisfied that the convictions are safe. This appeal accordingly fails and it is dismissed.
36. The appellant has abandoned his renewed application for leave to appeal against sentence and it is appropriate that the court record should show that the application has been abandoned.