King Edward VII Avenue
Cardiff CF10 3PG
B e f o r e :
|(1) ERIC EVANS
(2) DAVID ALAN WHITELEY
(3) FRANCES BODMAN
(4) STEPHEN DAVIES
(5) RICHARD WALTERS
(6) LEIGHTON HUMPHREYS
Patrick Harrington QC, John de Waal QC and Benjamin Douglas-Jones (instructed by Blackfords LLP) for Eric Evans
David Hackett QC and David Hassall (instructed by Morgans Criminal Law) for David Alan Whiteley
Henry Blaxland QC and Neil Davis (instructed by Glaisyers) for Frances Bodman
Tim Barnes QC, Timothy Morshead QC and Guy Ladenburg (instructed by Speechley Bircham) for Stephen Davies
Jonathan Barnard (instructed by Hugh James) for Richard Walters
John Charles Rees QC and Jonathan Rees (instructed by De Maids) for Leighton Humphreys
Hearing dates: 16-19 December 2013, and 10 February 2014
Crown Copyright ©
Mr Justice Hickinbottom:
"Eric Evans, David Alan Whiteley, Frances Bodman, Stephen Davies, Richard Walters, Leighton Humphreys, between the 1st of January 2010 and the 31st December 2010, conspired together to defraud Neath Port Talbot County Borough Council, Bridgend County Borough Council and Powys County Council ("the Mineral Planning Authorities") and the Coal Authority by deliberately and dishonestly prejudicing their ability effectively to enforce restoration obligations relating to open cast mining at sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales by:
(i) establishing companies registered in the British Virgin Islands, in the ultimate beneficial ownership of Eric Evans and David Alan Whiteley; and
(ii) transferring the freehold title in the land containing and surrounding the open case coal mining sites known as East Pit, Nant Helen (Nant Gyrlais), Selar and Margam (Park Slip West and Kenfig) situated in South Wales from Celtic Energy to those companies registered in the British Virgin Islands;
thereby intending that the financial liability to restore those open cast coal mining sites to open countryside and/or agricultural use would pass from Celtic Energy Ltd to those companies in the British Virgin Islands, thereby releasing some of the money set aside in Celtic Energy Ltd's annual accounts to restore those open cast coal mining sites, and allowing some of that money to benefit the Defendants personally."
These differ, slightly, from the particulars upon which the Defendants were originally charged and sent to this court: for example, dates of the conspiracy have been added, as have the words "… and dishonestly…" and the final phrase, "… and allowing some of that money to benefit the Defendants personally". The particulars of the charge are required to set out clearly and unambiguously the case the Defendants have to meet (see R v K  EWCA Crim 2685; and R v Goldshield Group plc  UKHL 17;  1 WLR 458 at ); and in an application to dismiss the charge such as this, they are of especial importance. However, there is no material difference between the original particulars upon which the Defendants were charged, and those upon which the Crown now wishes to proceed. If this prosecution were to go ahead, I would allow it to proceed on the basis of particulars drafted by Mr Michael Parroy QC for the Crown; and those are therefore the relevant particulars for the purposes of these applications.
i) Starting with a letter dated 17 June 2010, a paper trail was set up which suggested a company called Celtic Environmental Developments Limited ("CED") was instrumental in arranging the introduction of Celtic to Oak; but CED was in fact owned by Mr Walters (80%) and Mr Humphreys (20%) and, of course, no introduction was necessary because Oak was their creation. The initial letter purportedly from CED to Celtic referred to a percentage finders' fee; and CED was to be one of the vehicles by which the conspirators were directly to derive profit from the scheme.
ii) A letter on Oak notepaper dated 18 June 2010, and signed by an anonymous director, making a purported initial approach to Celtic expressing interest in purchasing the sites. The evidence is that this was drafted by Ms Bodman, who appears to have sent a draft of it to Mr Humphreys on 17 June.
iii) Celtic were not legally restrained from selling the freeholds, nor were they under any legal obligation to obtain the authorities' consent to (or even notify the authorities of) any such sale. In the event, at the time the MPAs and the Coal Authority were entirely unaware of the sale of the freeholds to Oak. However, after the sale, the conspirators were concerned that the MPAs would find out the true nature of the transaction, and seek to set it aside as a sham. In November 2010 – of course, some weeks after the sale of the freeholds to Oak had taken effect – Ms Bodman wrote a document entitled "Strategy Paper Oak Regeneration", which urged that Oak be seen to be doing something, as:
"If Oak sits back and does nothing this will simply bring forward the day when people (particularly the local authorities) begin to scrutinise the transaction. In the event that [NPT] try to communicate with Oak and receive no response they are more likely to seek external advice which simply increases the chances of a legal challenge sooner rather than later....
In order to establish the two companies as separate entities and avoid unnecessary confusion the directors of [Celtic] need to step back from any dealings with the land and not give the impression to the [MPAs] or anyone else that they are at liberty to make decisions in relation to the land (particularly Margam).
If Celtic continues to deal with Margam as if the transaction had not happened this heightens the risk of the transaction being challenged as a sham. The opinion from [Mr Davies] is on the basis of an arms-length transaction and this must be maintained."
Thus, at a meeting with NPT on 13 December 2010, Mr Evans stated that he acted as solicitor for Oak, but maintained the fiction that the sale was at arms-length.
"Whilst the freehold titles in the Sites could be transferred pursuant to the Proposal, Celtic would remain liable under the Leases to fulfil all of its covenants, quite apart from the remediation requirements under the Town and Country Planning Act 1990…".
In other words, even if the freeholds were transferred to Oak, Celtic would remain liable for all the restoration obligations. Mr Davies consequently concluded that the proposal was not viable (paragraph 41).
Scope of Conspiracy to Defraud
"I have an instinctive dislike, and I think that many judges have, of these catch-all offences such as conspiracy to defraud" (Hansard, HL, 22 June 2005, col 1665).
In similar vein, the learned authors of Ormerod and Montgomery, Fraud: Criminal Practice and Procedure (2008) ("Ormerod & Montgomery") – who provide an excellent analysis of the offence, which I commend – say (at paragraph D7.24):
"The offence is therefore exceptionally broad. It seems that any dishonest act, even when it involves no deception nor the more general falsification of a transaction, which has the effect of depriving a person of anything or, indeed, prejudicing him economically in any other way will suffice…".
"There are two versions of the offence of conspiracy to defraud:
(i) agreeing dishonestly to prejudice another's economic interests; or
(ii) agreeing to mislead a person with intent to cause him to act contrary to his duty."
Although limbs of the same offence, these are conceptually quite distinct.
"To cheat and defraud is to act with deliberate dishonesty to the prejudice of another person's proprietary right."
"… [I]t is clearly the law that an agreement by two or more by dishonesty to deprive a person of something which is his or to which he is or would be or might be entitled and an agreement by two or more by dishonesty to injure some proprietary right of his, suffices to constitute the offence of conspiracy to defraud."
"It is a conspiracy by unlawful means, viz by making representations known to be false, to procure from a department of government an export licence which, but for the representations, could not have been lawfully obtained. It is an example of a conspiracy by unlawful means to achieve an object in itself lawful…".
"… [T]he economic explanation is sufficient. But in that special line of cases where the person deceived is a public authority or a person holding a public office, deceit may secure an advantage for the deceiver without causing anything that can fairly be called either a pecuniary or economic injury to the person deceived.".
Lord Denning put it thus (at pages 132-4):
"What is the common element in all these cases? It is, I think, best expressed in the definition given by East in his Pleas of the Crown, vol 2, page 822. He treats the subject, I think, better than any writer before or since: 'To forge (a metaphorical expression borrowed from the occupation of the smith) means, properly speaking, no more than to make or form: but in our law it is always taken in an evil sense; and therefore Forgery at common law denotes a false making (which includes every alteration of or addition to a true instrument), a making malo animo, of any written instrument for the purpose of fraud and deceit. This definition results from all the authorities ancient and modern taken together'.
That was written in 1803, but it has always been accepted as authoritative. It seems to me to provide the key to the cases decided since it was written, as well as those before. The important thing about this definition is that it is not limited to the idea of economic loss, nor to the idea of depriving someone of something of value. It extends generally to the purpose of fraud and deceit. Put shortly, 'with intent to defraud' means 'with intent to practise fraud' on someone or other. It need not be anyone in particular. Someone in general will suffice. If anyone may be prejudiced in any way by the fraud, that is enough….
… The intent to defraud [in the Forgery Act 1913] is the same intent as was required by the common law….
Applying this meaning to the present case, it appears that Welham on his own evidence had an intent to defraud, because he uttered the hire-purchase documents for the purpose of fraud and deceit. He intended to practise a fraud on whomsoever might be called upon to investigate the loans made by the finance companies to the motor dealers. Such a person might be prejudiced in his investigation by the fraud. That is enough to show an intent to defraud…".
"This authority [i.e. Welham] establishes that the expression 'intent to defraud' is not to be given a narrow meaning, involving an intention to cause economic loss to another. In broad terms, it means simply an intention to practise a fraud on another, or an intention to act to the prejudice of another man's right."
Having referred to Lord Diplock's judgment in Welham (which suggested that noneconomic prejudice was relevant only where the purpose of the fraud was to cause the victim to act contrary to his public duty), he continued (at page 277):
"With the greatest respect to Lord Diplock, their Lordships consider this categorisation to be too narrow. In their opinion, in agreement with the approach of Lord Radcliffe in [Welham], the cases concerned with persons performing public duties are not to be regarded as a special category in the manner described by Lord Diplock, but rather as exemplifying the general principle that conspiracies to defraud are not restricted to cases of intention to cause the victim economic loss. On the contrary, they are to be understood in the broad sense described by Lord Radcliffe and Lord Denning in [Welham] – the view which Viscount Dilhorne favoured in [Scott], as apparently did the other members of the Appellate Committee who agreed with him in that case (apart from, it seems, Lord Diplock)."
Although the only alleged victims in the case before me are public bodies – the MPAs and the Coal Authority – after conflicting dicta in Welham (and other cases such as R v Withers  AC 842), Lord Goff thus made clear that the duty that it is agreed to subvert need not be a public one.
The Prosecution Case against the Defendants: Uncontroversial Requirements of the Offence
i) As I have already indicated (paragraph 19 above), on 16 June 2010, all of the conspirators except Mr Davies signed a confidentiality agreement under which they agreed severely to restrict disclosure of information in relation to the transaction to advisers, bankers etc.
ii) Meetings involving some of the conspirators were held in the BVI with regard to the importance of confidentiality for the deal and the conspirators' part in it.
iii) There was correspondence with regard to the deed of trust in respect of the shares in Oak, in which Mr Evans indicated that Mr Walters ought not to be mentioned in the deed to ensure there was no link in the documents to him.
iv) Save for Mr Davies, the conspirators used personal emails and addresses to communicate, with Mr Evans at one stage advising Mr Whiteley that it was inadvisable to use work email addresses to which the latter responded, "Point taken".
v) Records in relation to the deal were not maintained on the internal M & A systems.
vi) Considerable numbers of false and misleading documents were generated, to which I have already alluded (paragraph 19 above), including correspondence purportedly from Oak indicating that Oak was an arms-length company interested in purchasing the sites on a commercial basis, a Celtic Board minute suggesting that Celtic had been negotiating for some time with regard to the sale, and the recital in Celtic/Oak sale agreement that Oak had done its own due diligence
vii) The written instructions from Mr Evans to Mr Davies (which, the prosecution say, Mr Davies himself had a hand in settling) did not reveal the true status of Oak, presenting the deal as one at arms-length, which was duly recorded in Mr Davies' second advice.
viii) On 7 December 2010, after the sale, Mr Walters wrote to the Coal Authority to tell them that Celtic had sold the sites, but, despite pressure, he refused to say to whom, Mr Evans later suggesting to the Coal Authority that it was indeed an arms-length transaction.
The Rights, Interests and Obligations of the Coal Authority
"(1) The Commission shall acquire in accordance with this Part of this Act the fee simple in all coal and mines of coal, together with such property and rights annexed thereto and such rights to withdraw support as are hereinafter mentioned, subject to such servitudes, restrictive covenants and other matters adversely affecting any of the said coal or mines as are hereinafter mentioned…
(3) On the vesting date [i.e. 1 July 1942] all coal and mines of coal as existing at that date shall vest in the Commission for a title comprising all interests the subsisting in any such coal or mine…".
"… coal that is unworked, that is to say, not so severed as to have become a chattel".
"… a space which is occupied by coal or which has been excavated underground for a coal mining purpose, and includes a shaft and an adit made for a coal mining purpose".
"Interests in unworked coal, and in mines of coal, of colliery concerns and of the Coal Commission…".
"… a space occupied by unworked coal or excavated underground for the purposes of colliery activities, and includes a shaft or adit made for the purposes, a coal quarry and open cast workings of coal".
"On the restructuring date [the BCC's] interests in unworked coal and coal mines, including its interests in any coal that, notwithstanding having been worked at some time, is so attached to or incorporated in any coal mine as to be, in law, part of it, shall vest without further assurance in the [Coal] Authority".
The restructuring date was 31 October 1994 (section 7(1) and Coal Industry (Restructuring Date) Order 1994 (SI 1994 No 2553)). The BCC's other assets (i.e. the whole of its operations undertaking) were vested in a number of private, successor companies, including of course Celtic who purchased sites and operations as I have already described (see paragraph 7 above).
(a) any space excavated underground for the purpose of coal mining operations and any shaft or adit made for those purposes;
(b) any space occupied by unworked coal; and
(c) a coal quarry and open cast workings of coal".
"An application for a licence under [Part II] may be made by any person who has acquired, or is proposing to acquire, (from the Authority or some other person):
(a) such an interest in land comprised in the area with respect to which the application is made, or
(b) such rights in relation to coal in that area,
as, apart from the need for a licence, would entitle him to carry on the coal mining operations to which the application relates".
In other words, only a person who has a relevant interest in the coal to be mined (e.g. by virtue of a mining lease) can apply for a licence to mine.
"in the manner it considers is best calculated to secure, so far as practicable… that [licensed] persons are able to finance both the proper carrying on of the coal mining operations that they are authorised to carry on and the discharge of liabilities arising from the carrying on of those operations;…".
"… to provide such security as may be so determined for his performance of any of the obligations to which he is or may become subject, either in accordance with the licence itself or otherwise by virtue of his being at any time the holder of that licence;…".
i) As a result of sections 25 and 26, to enable it to mine, a coal mining operator needs both (a) an interest in the coal sufficient to enable him to mine it (usually by way of a coal mining lease from the Coal Authority) and (b) a licence to mine.
ii) The statutory scheme does not impose a duty on the Coal Authority to restore land which has been mined.
iii) However, section 2(1)(b) imposes a duty on the Coal Authority to carry out its licensing functions in the manner it considers is best calculated to secure, so far as practicable, that licensees are able to finance coal operations including restoration of land. The terms of the statutory provision make clear that it has a very wide discretion in respect of the steps that it takes, but these may include obtaining security for contingent liabilities and/or a condition that the licensee remains liable for all restoration liabilities and costs irrespective of any transfers of legal or other interests in the relevant coal or land. Of course, any such conditions must be considered by the Coal Authority, and imposed on the licence at the time of grant, as part of the Coal Authority's licensing function.
The Rights, Interests and Obligations of the Mineral Planning Authorities
"… requiring that such steps shall be taken as may be necessary to bring the land to the required standard for whichever of the following uses is specified in the condition, namely (i) use for agriculture, (ii) use for forestry, or (iii) use for amenity".
Furthermore, the authority may impose aftercare conditions requiring treatment of the restored land for a period of five years after the restoration conditions have been performed, or a period as otherwise fixed (paragraph 2(2) and following).
"The instrument by which a planning obligation is entered into may provide that a person shall not be bound by the obligation in respect of any period during which he no longer has an interest in the land."
"… recover from the person or persons against whom the obligation is enforceable any expenses reasonably incurred by them in doing so" (section 106(6)).
Although a section 106 requirement can be enforced by injunction, if the person against whom the obligation is enforceable fails to comply, then the authority is left to fall back on its right to seek the costs of the relevant works from that person.
"Where any steps required by an enforcement notice to be taken are not taken within the period for compliance with the notice, the local planning authority may:
(a) enter the land and take the steps; and
(b) recover from the person who is then owner of the land any expenses reasonably incurred by them in doing so."
" 'Owner', in relation to land, means a person, other than a mortgagee not in possession, who, whether in his own right or as trustee for another person, is entitled to receive the rack rent of the land or, where the land is not let at a rack rent, would be so entitled."
It is uncontroversial that "rack rent" here means simply the normal market rent.
i) As a result of section 57(1), to mine coal, an operator must have planning permission from the relevant MPA.
ii) By section 72(1)(b) and paragraph 2 of Schedule 5, an MPA has a very wide power to impose conditions requiring the land to be fully restored for subsequent use for (e.g.) agriculture. Furthermore, the MPA has power to impose section 106 obligations, including obligations relating to restoration. Such conditions and obligations must, of course, be imposed at the time permission is granted. The evidence is that restoration obligations are in practice imposed by way of section 106.
iii) Where such conditions or obligations are imposed and breached, then there are statutory enforcement procedures, as follows. The MPA serves an enforcement notice and/or a breach of condition notice on the person or persons against whom the obligation or condition is enforceable, requiring them to fulfil the obligation or remedy the breach. If the person(s) fail to comply with the notice, then the MPA may enter the land and carry out operations to fulfil the obligation or remedy the breach, and recover the costs from the relevant person(s). In the case of a section 106 obligation, recovery can be made "from the person or persons against whom the obligation is enforceable" (section 106(6)), namely both the owner of the land at the time of enforcement and the person entering into the obligation (unless the MPA has formally released the latter under section 106(4)). In the case of breach of an enforcement notice, recovery can be made from
"the person who is then owner of the land" (section 178(1)).
iv) However, recognising that such a procedure may be fraught with practical difficulties for the enforcing MPA, at the time planning permission is granted, the MPA can take steps to make future enforcement easier or more effective, e.g. by requiring security. It must impose a condition requiring security unless it considers the development acceptable in planning terms without such a condition.
v) If there is non-compliance with an enforcement notice, then criminal sanctions may apply, but the maximum penalty is a fine.
The Restoration Obligations in Respect of the Four Mining Sites
"The Authority hereby demises to the Tenant [i.e. Celtic] (so far as the Authority has power to do) the Mine TOGETHER WITH (so far as aforesaid) the right to carry away the Coal and the Minerals… TO HOLD the same for the term… YIELDING AND paying TO THE Authority on each anniversary of the date hereof the yearly rent of one peppercorn (if demanded) and at the time stipulated herein for the payment thereof any monies of any description payable by the Tenant to the Authority under this Lease."
i) By paragraph 1, "the Mine" is effectively defined in the Third Schedule as:
"All the coal and (where relevant) coal mine situated within the areas edged red shown on the Plan down to a depth of thirty (30) metres below Ordnance Datum".
ii) "The Term" is 99 years from the date of the Lease (paragraph 1).
iii) "Satisfactory Condition" is defined (again in paragraph 1) as:
"… at any time such state and condition as is required in all respects to ensure that the Authority does not have or incur any present or future liabilities or potential liabilities (including any liabilities that may revert to the Authority on the expiry or sooner determination of this Lease) as a result, directly or indirectly of:
(i) the existence, state or condition of the Mine… or anything containing or occurring therein or passing through or emanating therefrom at any time; and/or
(ii) any omission at any time to take steps which might reasonably be expected to be taken by a prudent mine operator or landowner".
iv) Celtic covenants are set out in the Sixth Schedule (paragraph 4). They include the following:
Paragraph 4.1: "… [A]t all times throughout the Term to take all requisite steps at the Tenant's expense to keep the Mine… in Satisfactory Condition".
Paragraph 4.2: "To carry out on or prior to any closure or part closure of the Mine (or immediately after such closure or part closure where the works in question can only be carried out at such a stage) all works necessary to ensure that the Mine (or any relevant part of it) is left and will (so far as is foreseeable) remain in Satisfactory Condition…".
Paragraph 7.3: "To observe and perform all agreements, covenants, restrictions and stipulations of whatever nature affecting or relating to the Mine or the consequences of any activities carried out… in the Mine…, and to keep the Authority indemnified against all actions, claims, demands, costs, expenses, damages and liability in any way relating thereto".
Paragraph 7.4: (Unless otherwise required by the Authority) to carry out before the determination of this Lease, howsoever determined, any works stipulated to be carried out to the Mine or any nearby land as a condition of any statutory consent or permission relating to the Mine… or otherwise binding on the Authority whether under any town and country planning legislation or otherwise or if the Authority so requires (in place of the carrying out of such works) to pay the Authority a sum equal to a reasonable estimate of the cost to the Authority of carrying out any such works thereafter…"
Paragraph 16: "To keep indemnify and keep indemnified the Authority at all times from liability howsoever and whensoever incurred in respect of any… damage to property, court action, the infringement, disturbance or destruction of any rights, easements or other privileges or otherwise by reason of or arising, directly or indirectly, out of the state of repair, existence or condition of the Mine, anything in, occurring or passing through or emanating from it, any activity in the Mine or any failure or omission by the Tenant… in the implement and observance of the covenants on its part contained in this Lease and from all proceedings, costs, claims and demands of whatsoever nature in respect of any such liability or alleged liability."
v) The term of the lease being 99 years, Celtic is given a right to determine on three months' notice; but only if the date specified in that notice is earlier than:
"… the fifth anniversary of the date on which the Tenant shall have apparently complied in all material respects with all of its obligations (including without prejudice completion of any relating to restoration and aftercare) relating to the leaving of the Mine in Satisfactory Condition as set out in this Lease".
vi) The Lease is expressed not to terminate by frustration, even if the subject of it is destroyed (paragraph 7).
"Neither the Developer not any successor in title to the developer shall be liable for breach of any covenant or obligation in this Agreement which occurs after the developer or its successor as the case may be has disposed of all interest in the Site or the part in respect of which such breach occurs but without prejudice to liability for any subsisting breach of covenant prior to parting with such interest."
i) Under the lease, the obligation in paragraph 4.1 is restricted to keeping
"the Mine… in Satisfactory Condition". "The Mine", is, unhelpfully, defined in terms of the coal and, "where relevant", coal mine. "Mine" for these latter purposes is presumably defined by section 61 of the 1994 Act to include coal and the space left by worked coal, but (at least arguably) to exclude the space left by the removal of overburden (including rock between coal seams) by open cast mining.
ii) Because of clause 5.1 of the Section 106 Agreement, upon Celtic disposing of the site, it ceases to be liable for a breach of section 106 obligations.
iii) Because the lease is at a peppercorn rent, once Celtic had disposed of the freehold, it ceased to be "owner" of the site for the purposes of enforcement under section 178 of the Town and Country Planning Act 1990 (see paragraphs 78 above), i.e. if and when it disposes of the freehold, the costs of restoration works cannot be recovered from it as a mere tenant.
The Prosecution Case
"The Prosecution has complied with the Attorney General's Guidelines on the Use of the Common Law Offence of Conspiracy to Defraud. It considered whether there was an alternative statutory offence appropriate for the facts of this case. The Prosecution concluded that the interests of justice can only be satisfactorily served in this case by proceeding against the Defendants on an Indictment containing a single allegation of Conspiracy to Defraud contrary to Common Law."
"63. … The issue in the trial in this regard is likely to be restricted to whether Mr Davies was correct in his first opinion when he concluded that the restoration liabilities could not be exported to the BVI [companies] or whether he was correct in his second opinion when he concluded that they could be.
This matters because it is the prosecution case that Mr Davies knew that he was wrong in law in his second opinion when he concluded that the restoration liabilities could be exported. He gave his second opinion because he had been paid £250,000 to join the conspiracy and provide the bogus legal opinion critical to its success."
If and insofar as the obligations were transferred, the opinion was irrelevant; because the reason for any prejudice to the authorities' ability to enforce the restoration obligations would then be as a result of the actual transfer of the obligations not Mr Davies' opinion. The opinion becomes crucial, however, if the transfer of obligations was in truth illusory.
"(i) conspiracy to defraud is not restricted to cases where an intention to cause or risk economic loss is present; and
(ii) conspiracy to defraud extends to prejudicing the rights and obligations of other bodies"
"It is the Prosecution case that the MPAs and the Coal Authority have a public duty to ensure that the mines are restored to open countryside or to agricultural use. That public duty was protected to a degree by Celtic maintaining the provisions for the restoration works in its accounts. It was also protected by the escrow accounts that were required to be maintained. The escrow accounts remain unaffected by the sale and thus are irrelevant for these purposes. The case focuses on the deliberate decision of the conspirators to sell the freeholds on the basis that the restoration provisions would be released. This plainly prejudiced the ability of the MPAs and the Coal Authority to ensure that the restoration works were performed."
"1.5 I have considered the Prosecution Case Statement dated 31.5.13 prepared by Ian Winter QC and whether the manner in which the case for the Crown is there put forward is in accordance with the evidence and should be the manner, broadly speaking, in which the case is presented at any trial."
"16.1 I have considered the prosecution case as it is expressed in the Prosecution Statement….
16.2 As is inevitable in a document of this length I have identified a few minor factual errors such as wrong document references etc, but, those apart, I consider that it is, as it recites the evidence, a proper and accurate reflection of the case…
16.4 In general terms, therefore, I consider that the [Prosecution Statement] is a proper reflection of the evidence, puts the Crown's case correctly and remains the approach which basically the case will take…".
In other words, he confirmed that the Crown would proceed on the basis of the case as set out in the Case Statement, which I have briefly summarised above (paragraph 101).
"The Crown will submit that no competent senior counsel, advising honestly and independently, would have come to the conclusions arrived at by [Mr Davies] in the Opinion nor would it have been expressed in these terms…. The Crown does not resile from the suggestion that the terms of the Opinion were tailored to meet the requirements of the conspiracy and were motivated by the payment of a very substantial fee."
Therefore, after the Review, Mr Davies' second opinion remained at the very core of the Crown's case.
"The prejudice to the MPAs and the [Coal Authority] by the transfer to Oak is not, as suggested,… the way in which the restoration reserves are treated in the Celtic accounts but rather the difference between attempting to enforce against an onshore company with substantial liquid funds and other assets and against an off-shore company with neither."
"38. It is the prosecution case that the Defendants agreed to export the restoration liabilities to the BVI [companies] for the deliberate purpose of releasing the provisions that had been made in Celtic's annual accounts to enable the restoration works to be paid for. They did so knowing that there was at least the risk that the restoration works would not be paid for as a result of the transfer of the freeholds in the sites to Oak and its subsidiaries. They did so knowing that the ability of the MPAs and the Coal Authority to ensure that Celtic performed the restoration works would be prejudiced as a result. This was an intention to practise fraud on the MPAs and the Coal Authority. It was an intention to act to the prejudice of the rights of the MPAs and the Coal Authority. It was as a result a conspiracy to defraud contrary to Common Law.
It is the prosecution case that the MPAs and the Coal Authority have a public duty to ensure that the mines are restored to open countryside or to agricultural use. That public duty was protected to a degree by Celtic maintaining the provisions for the restoration works in its accounts. It was also protected by the escrow accounts that were required to be maintained. The escrow accounts remained unaffected by the sale and thus are irrelevant for these purposes. The case focuses on the deliberate decision of the conspirators to sell the freeholds on the basis that the restoration provisions would be released. This plainly prejudiced the ability of the MPAs and Coal Authority to ensure that the restoration works were performed."
"As a result of the sale of the sites it was released and was no longer secured for that purpose" (emphasis added).
"Thus the effect of the sale to Oak has been to significantly reduce the ability of the MPAs to enforce surface restoration, under either the original planning permission or the section 106 agreements and, if such restoration is to occur, transfer the liability and cost to the MPAs" (emphasis added).
Prosecution Case: Discussion
i) An agreement to deceive the MPAs and/or the Coal Authority and, as a result of the deception, to cause them to act differently from the way in which they would have acted if they had know the true position.
ii) An agreement whereby the economic interests of the MPAs and/or the Coal Authority are prejudiced by lawful means.
iii) An agreement whereby the economic interests of the MPAs and/or the Coal Authority are prejudiced by unlawful means.
(i) falls within the second way in which the offence may be committed, as described above; (ii) and (iii) fall within the first way (see paragraphs 36 and following above).
The First Basis
"It is not disputed that the sale of the freeholds of the sites was effective in the sense that it passed some legal title to Oak and its subsidiaries. In so doing the restoration liabilities, which ran with the land, also passed to Oak" (Skeleton Argument of 9 December 2013, paragraph 77)
The Second Basis
"There are two guiding principles: no one should be punished under a law unless it is sufficiently clear and certain to enable him to know what conduct is forbidden before he does it; and no one should be punished for any act which was not clearly and ascertainably punishable when the act was done. If the ambit of a common law offence is to be enlarged, it 'must be done step by step on a case by case basis and not with one large leap' (R v Clark (Mark)  2 Cr App R (S) 363 at )."
"… what has become an important democratic principle in this country: that it is for Parliament representing the people of the country in parliament, not the executive and not the judges, to decide what conduct should be treated as lying so far outside the bounds of what is acceptable in our society as to attract criminal penalties. One would need very compelling reasons for departing from that principle."
"In some cases, such as conspiracy to defraud, the other elements of the offence are not prima facie unlawful, so dishonesty renders criminal otherwise lawful conduct."
But, as Mr Rees pointed out in argument, that is at best ambiguous; and the reference to "lawful conduct" could refer to object alone, and not means. Indeed, when read in its full context, it seems to me that it probably does mean that: it is said in the context of a comparison of offences in which unlawfulness is inherent in the elements of the offence, and those in which otherwise lawful conduct is rendered unlawful by the means. In any event, I do not consider that that gives any significant support to the proposition that an agreement to act dishonestly, without more, is liable to be prosecuted as a conspiracy to defraud.
"Dishonest breach of a contractual obligation is not in itself an offence, though there will be a deception offence if the defendant intends to break the contract from the start".
In this case, of course, there is no suggestion that the conspirators, or any of them, intended from the outset or at any relevant time before 2010 that Celtic should seek to avoid any liability for the restoration obligations.
"In effect, conspiracy to defraud is a 'general dishonesty offence', subject to the irrational requirement of conspiracy".
"The offence is therefore exceptionally broad. It seems that any dishonest act, even when it involves no deception nor the more general falsification of a transaction, which has the effect of depriving a person of anything or, indeed, prejudicing him economically in any other way will suffice…
However, where possible economic loss is concerned there must exist some right or interest in the victim which is capable of being prejudiced, whether by actual loss or by being put at risk.
[The offence] embraces not only 'every offence of which the ingredients include dishonesty and either some injury to private proprietary rights or some fraud upon the public' but also every dishonest act, not amounting to an offence, which injures or risks some 'proprietary right or amounts to a fraud upon the public."
That again suggests that, on a conceptual basis, the offence may be very wide, even potentially covering lawful objects by lawful acts; but it is to be noted that the authors acknowledge there are limits to its ambit. They consider there to be an important restriction on the offence if based on "economic prejudice", namely in the need for some injury or risk to the proprietary rights of the victim, which I deal with below.
"In the absence of any aggravating feature such as misrepresentation, compulsion, intimidation, violence, molestation or inducement of breach of contract, the defendants' conduct would not have been unlawful if done by a single independent party and was not rendered unlawful by their combination."
In other words, even if an agreement to fix prices is unlawful in the limited sense of being void and unenforceable, in the absence of aggravating features it is not criminal. Such material aggravating features may make the means unlawful. The aggravating features to be material have to be aimed at the victim. In the case before me, there is no evidence of material aggravating features.
"Put shortly, "with intent to defraud" means "with intent to practise fraud" on someone or other. It need not be anyone in particular. Someone in general will suffice. If anyone may be prejudiced in any way by the fraud, that is enough…."
"Economic loss may be ephemeral and not lasting, or potential and not actual; but even a threat of financial prejudice while it exists may be measured in terms of money."
But that was clearly intended merely to confirm that actual economic loss was not required; as I have indicated, it is well-established that a risk to a relevant right is sufficient.