Jersey Unreported Judgments

[2006]JCA152

COURT OF APPEAl

25^th October 2006

Before     :

The Hon. M.J. Beloff, Q.C., President; P.D. Smith, Esq., Q.C. and; Dame Heather Steel

Peter Wilson Michel

And

Simone Anne Gallichan

-v-

The Attorney General

 

Advocate D.F. Le Quesne for Michel.

Advocate S. Fitz for Gallichan

C.E. Whelan, Esq., Crown Advocate.

JUDGMENT

Smith JA

Introduction

1.        On the day the oral arguments on these applications for leave to appeal against conviction concluded we informed the parties that the Court had decided that the applications must be dismissed and that we would furnish our reasons in due course.  This we now do.

2.        The applications arise out of the prosecution of the applicants on charges of assisting another to retain the benefit of criminal conduct contrary to Article 32 of the Proceeds of Crime (Jersey) Law 1999 ("the Law").  The applicants pleaded not guilty to all of the charges.  On 3 July 2006 the trial opened in the Royal Court before the Inferior Number, Sir Richard Tucker KBE, Commissioner, presiding.  At that time the indictment comprised ten counts.  However, on 7 July 2006, the fifth day of the trial, the Commissioner decided that it should proceed in respect of only one count, namely count 4.  This count reads as follows:

Statement of Offence.  Assisting another to retain the benefit of criminal conduct, contrary to Article 32(1) (a) of the Proceeds of Crime (Jersey) Law 1999

Particulars of Offence.  Peter Wilson Michel and Simone Anne Gallichan (formerly RABET) between 1^st July 1999 and 8^th July 2001 in the Island of Jersey, knowing or suspecting that Mark Stuart Allan, Bernadette Gills and Elsa Goncalves were persons engaged in criminal conduct, namely, cheating the UK Public Revenue and/or theft, were concerned in an arrangement whereby the retention or control on behalf of Mark Stuart Allan, Bernadette Gills and Elsa Goncalves of their proceeds of criminal conduct, namely credit balances in accounts at HSBC and National Westminster Bank (now Royal Bank of Scotland), St. Helier in the name of Morgan Marketing Services Limited, Byford Limited, Westfield Properties Limited and Newgrove Overseas Developments Limited and other entities, other property in the United Kingdom and elsewhere, and cash, was facilitated.

3.        The material portion of Article 32(1) of the Law reads as follows:

"... if a person enters into or is otherwise concerned in an arrangement whereby -

(a)       the retention or control by or on behalf of another (in this Article referred to as "A") of A's proceeds of criminal conduct is facilitated (whether by concealment, removal from the jurisdiction, transfer to nominees or otherwise); ...

knowing or suspecting that A is a person who is engaged in criminal conduct, he or she is guilty of an offence."

4.        "Criminal conduct" is defined in Article 1(1) of the Law as meaning "... conduct, whether occurring before or after Article 3 comes into force, that -  (a) constitutes an offence specified in Schedule 1; or (b) if it occurs or has occurred outside Jersey, would have constituted such an offence if occurring in Jersey."  Schedule 1 (which is headed "Offences for which confiscation orders may be made") reads:

"Any offence in Jersey for which a person is liable on conviction to imprisonment for a term of one or more years (whether or not the person is also liable to any other penalty), but not being -

(a)       a drug trafficking offence; or

(b)       an offence under any of Articles 15-18 of the Terrorism (Jersey) Law 2002."

5.        The reference to Article 3 (which deals with confiscation orders) in the definition of criminal conduct is at first blush rather odd, but it was not disputed before us that the definition must be interpreted as meaning that the criminal conduct relied on may have occurred before the coming into force of Article 32 (1 July 1999) as, according to the prosecution was indeed, for the most part, the case.

6.        At the trial Mrs. Gallichan, besides asserting that the prosecution had failed to prove the requisite elements in Article 32(1)(a) against her, sought to establish two defences provided for in Article 32(4)(a) and (b) of the Law.  The effect of those provisions is that, although a defendant may enter into or be otherwise concerned in an arrangement as described in Article 32(1)(a) of the Law and may know or suspect that the other person is engaged in criminal conduct, he or she is nevertheless entitled to be acquitted if they establish on the balance of probabilities that they did not know or suspect that the arrangement related to any person's proceeds of criminal conduct (Article 32(4)(a)) or if he or she establishes to the same standard that they did not know or suspect that by the arrangement the retention or control by or on behalf of the other person was facilitated (Article 32(4)(b)) (the Crown accepted that the provisions are to be read disjunctively).   The Jurats' verdict of guilty in respect of Mrs. Gallichan meant that she had failed to establish either defence.

The Factual Background

7.        Count 4 related to a company in England called Travco Limited ("Travco").  Its business was to act as ground handlers for tour operators which, for the most part, involved selling them room reservations in Europe which they in turn sold to the public through travel agents.  Travco had three directors:  Mark Stuart Allan, Elsa Goncalves and Bernadette Gills.  Between them they held all of the issued shares.  Allan and Goncalves gave evidence at the trial on behalf of the prosecution.  They said that Travco was very successful.  In the early 1990s the accountant acting for the company had advised them that (as Mr. Allan put it) "we were making far too much money."  He put them in touch with Mr. Michel, the principal in Michel & Company, a firm of chartered accountants and financial advisers in Jersey.  With his assistance the directors moved money out of Travco, which was then made available to the directors or used for their benefit.

8.        This was effected in a number of ways.  A company called Morgan Marketing Services Limited ("Morgan Marketing") was incorporated in Jersey by Mr. Michel.  It was beneficially owned by the directors of Travco.  It purported to introduce customers to Travco which were already its customers and it received fees for doing so.  Dynamic Tours Limited ("Dynamic Tours") was incorporated in Jersey by Mr. Michel.  It was partly beneficially owned by the directors of Travco.  The company purported to convert dollars received from an American company with which Travco genuinely did business into European currencies.  For this it charged commission.  In fact the dollars were not converted by Dynamic Tours but were simply passed on to Travco minus the bogus commission.  Dynamic Tours also received a commission on the business done between the American company and Travco on the pretence that it had introduced the two companies.  In the course of its legitimate business Travco received travellers' cheques from time to time.  These were sent to Michel & Co. and cashed for the benefit of the Travco directors. 

9.        In July 1999 the Jersey company set up by Michel & Co. and beneficially owned by the Travco directors, Byford Limited ("Byford"), sold premises at 92-94 Paul Street, London to Travco.  Byford had purchased the premises some years earlier.  The purchase had been funded by monies the directors of Travco had extracted from that company with Mr. Michel's assistance.  For some years the building had been let by Byford to Travco at a commercial rent.  When it was sold in 1999 Byford made a large profit and this was made available to the directors of Travco by Michel & Co.

10.      Mrs. Gallichan started work for Michel & Co. in 1991.  From 1993 until July 2001 (when the police raided the premises of Michel & Co.) she was in day to day charge of the office.  Mrs. Gallichan was a director of companies which Mr. Michel either formed or acquired for the Travco directors.  She dealt personally with many of the documents relevant to the extraction of money from Travco and it being made available to the directors or for their benefit.  At the trial the prosecution pointed to evidence, which clearly the Jurats found persuasive, that both Mrs. Gallichan and Mr. Michel continued to be concerned in the arrangement whereby the retention or control on behalf of the Travco directors of their proceeds of criminal conduct was facilitated after 1 July 1999, the date when Article 32 of the Law came into effect.

The Applications for Leave to Appeal

11.      A number of grounds were put forward by each of the applicants which, although differently expressed, were either common to both cases or were so similar in their nature that it is convenient to deal with them together.  It is to these grounds which we turn first.  They fell under the following headings:

(i)        Appearance of bias:  The prosecution opening;

(ii)       Appearance of bias:  The Commissioner;

(iii)      The Commissioner applied the wrong tests when considering whether there was a case to answer;

(iv)      There was no case to answer on the evidence of the prosecution;

(v)       The verdicts were unreasonable/cannot be supported having regard to the evidence.

Appearance of Bias: The Prosecution Opening

12.      As we have said, when the trial opened on 3 July 2006 there were ten counts before the Jurats.  Some days before the trial started the prosecution, on the direction of the Commissioner, furnished copies of its opening to both applicants and to the court.  It appears from a remark made by the Commissioner on the first day that the Jurats duly read the opening.  This document dealt in great detail with all of the counts.  For the most part (besides count 4 there was evidence relating to counts other than count 4 which was admitted on a similar fact basis) its contents became irrelevant when the indictment was severed on day 5.  In addition, the Crown case pertaining to all ten counts was opened orally to the Royal Court although not at the same length.  The applicants contended that applying the correct test for appearance of bias (see Magill -v- Porter [2001] UKHL at para. 67 per Lord Hope of Craighead) the Commissioner ought to have ruled that the circumstances were such as to lead a fair-minded and informed observer to conclude that there was a real possibility that the Jurats were biased by reason of the irrelevant and prejudicial material they had read and heard.  In the circumstances the Commissioner ought to have discharged the Jurats.

13.      Advocate D F Le Quesne, who appeared for Mr. Michel, argued that the Commissioner applied the wrong test.  We do not agree.  It is true that when the defence first applied for the discharge of the Jurats on this ground the Commissioner did base his rejection of the application on his own subjective judgment of whether the opening of the extraneous material would influence the Jurats or not.  But on a second occasion, later in the trial, when Magill -v- Porter was opened to him by Mr. Le Quesne, the Commissioner clearly purported to base his refusal to discharge the Jurats on the correct test as adumbrated in that case. In any event it is for us to determine whether, in application of the correct test, such appearance of bias flawed the trial and the verdict.

14.      Counsel for both applicants argued that despite the careful direction given by the Commissioner to the Jurats in the course of his summing up (the adequacy of which, as such, was not challenged) the hypothetical observer could not but have concluded that there was a real possibility of the Jurats being biased because of what they had read and heard.  As Advocate S E Fitz, who appeared for Mrs. Gallichan in this court but not before the Royal Court, put it, it would have required "an almost superhuman feat of intellectual gymnastics" for them to have been able to put all of the highly prejudicial material out of their minds.  Crown Advocate C E Whelan, who appeared for the Attorney General, on the other hand, pointed out that it had been accepted on the applicants' behalf prior to the trial that all ten counts could be tried together so that, if severance had not occurred, the Jurats would have had all of the material complained of laid before them, the risk of what might be called cross-contamination being effectively eliminated by means of an appropriate direction from the Commissioner.  Mr. Whelan argued that the Commissioner had a discretion as to whether, in all the circumstances, the trial should proceed.  He was entitled to take into account the fact that he would give an appropriate direction when summing up, that it would be received by Jurats who are experienced judges of fact, that the trial had commenced, that non-compellable key witnesses had travelled to Jersey and that if the trial were to be aborted it would be necessary to try and obtain the attendance of those witnesses for a second time.  He referred us to the case of R. -v- Azam and Others [2006] EWCA Crim 61 in which the Court of Appeal of England and Wales upheld a decision of the trial judge to continue with the trial notwithstanding that the main prosecution witness had made "wild, reckless and intemperate allegations and assertions about the defendants, their characters and their involvement in criminal activity."

15.      While it is true that in the Azam case authorities on appearance of bias were opened to the court (although not, it seems, Magill -v- Porter) and the appellants' counsel appears to have accepted that what was in issue was the exercise of discretion by the trial judge, it is difficult to see how the application of the Magill -v- Porter test can be viewed in this light.  In our opinion there can only be one correct answer to the question of whether the hypothetical observer would conclude that there was a real possibility of bias.  Moreover, the circumstances to which it is applied cannot, in our view, extend to, for example, difficulties that might be experienced in securing the re-attendance of witnesses in the event of a retrial.

16.      Counsel for the applicants argued that there was a distinction to be drawn between the situation in which the judge rules that there is no case to answer on certain counts at the end of the prosecution case and what happened at the trial in this case.  It was suggested that had the evidence on those counts been led it could have been weakened by cross-examination.  No doubt this is so; but, equally, it could have appeared even stronger.  In our view, this is an essentially neutral factor to which the hypothetical observer would have attached no great weight one way or the other.  In our judgment the crucial issue in this case is how confident the hypothetical observer could reasonably have been that the Jurats could and would have observed the direction to put extraneous material out of their minds when considering count 4.  In reaching a conclusion account would have had to been taken of the quality of the tribunal charged with the obligation of determining guilt, in this case two Jurats.  In Snooks and Dowse -v- United Kingdom 2002 JLR 475 at 484 the European Court of Human Rights recorded that:

"Jurats are ... elected by a special electoral college whose members include the Bailiff, the Jurats, Advocates and Solicitors of the Royal Court and members of Jersey's legislature, the States Assembly.  Jurats do not necessarily have a legal qualification, but are usually individuals with a known history of sound judgment and integrity, which has been consistently demonstrated throughout a lengthy professional, business or civic life."

These remarks were quoted approvingly by Lord Hoffmann when giving the decision of the Judicial Committee of the Privy Council in Attorney General -v- Edmond-O'Brien 2006 JLR 133 at p. 140.  To hold that Jurats (or even juries) are incapable of obeying a proper direction would be inconsistent with the assumptions upon which the criminal justice system in this Island is founded (see Turner -v- News Group [2006] 4 All ER 613 at p 627 para. 46).

17.      We are satisfied that the Commissioner made the correct decision on this issue.  In our judgment the hypothetical observer would have taken the view that, properly directed, the Jurats would have put the extraneous material out of their minds.  In the event, they were properly directed.

Appearance of Bias: The Commissioner

18.      The prosecution introduced in evidence a number of invoices purportedly raised by Travco in respect of introductions by Morgan Marketing which they characterised as false on the basis that the work reflected on them had not been done.  On the sixth day of the trial, in the course of hearing an application in the absence of the Jurats, the Commissioner said of the invoices:

"Speaking for myself - and I am not the fact-finding tribunal - I should have thought it was as plain to anyone as could be what the nature of those documents was to which the witnesses have spoken.  But that is not a matter for me to decide and I would be grateful if the press would not report that observation and if need be I would sit in chambers.  But there is the evidence.  It is for the Jurats to make of it what they will, but there is no difficulty."

19.      Article 15(4) of the Royal Court (Jersey) Law 1948 reads (in part):

"In all causes and matters, civil, criminal or mixed, the Bailiff shall have a casting vote whenever the Jurats -

(a)       being 2 in number, are divided in opinion as to the facts ...".

20.      This provision means that in certain circumstances the judge presiding on a criminal trial before the Inferior Number does become part of the fact-finding tribunal.  The applicants contended that applying the Magill -v- Porter test the Commissioner's remarks gave rise to an appearance of bias on his part.

21.      In response Mr. Whelan contended that the applicants' complaint on this point had no substance as neither had disputed that the invoices were indeed false.  This undoubtedly seems to have been the case as far as Mrs. Gallichan is concerned and, therefore, it does not seem to us to be open to her to rely on this ground.  However, Mr. Le Quesne asserted that Mr. Michel had never accepted that the work to which the invoices related had not been done and that, therefore, viewed at the point in time when the Commissioner made the remarks complained of, the hypothetical observer would have been bound to conclude that there was a real possibility that the tribunal of fact (of which by reason of Article 15(4) of the 1948 Law the Commissioner was a component) was biased against his client.

22.      In our view, the Magill -v- Porter test does not properly fall to be applied at the point in time when the Commissioner made the remarks complained of.  This is because at that point in time he had no role in the determination of the guilt of either applicant. Such role would only have been engaged if and when it became apparent that the Jurats could not reach agreement.  In fact the Jurats were unanimous in their verdicts.  In MacKenzie -v- Attorney General 1995 JLR 9 this Court held that in such circumstances the judge's attitude is not a relevant matter unless it can be established that he allowed it to influence the Jurats in a material way.  Notwithstanding that the Commissioner retired with the Jurats, no such claim was even suggested in the present case.  It follows that the Commissioner's attitude to the invoices could not have given rise to an appearance of bias in any meaningful sense.

The Commissioner applied the wrong tests when considering whether there was a case for the applicants to answer

23.      Each applicant put their arguments under this heading in a slightly different way.  Mr. Le Quesne criticised the Commissioner for approaching the application of no case to answer on the basis that the so-called "predicate offences" were cheating the United Kingdom revenue and theft within the meaning of the English Theft Act 1968 whereas they were fraud as defined by this Court in Foster -v- Attorney General 1992 JLR 6 and fraudulent conversion.  It is true that it does appear from the transcript of the trial that when dealing with the applications of no case to answer the Commissioner did focus on the nature of the offences the Travco directors would have committed in England rather than the offences they would have committed in Jersey if their conduct had occurred here.  It seems likely that he was led into this error by the unhappy wording of the particulars in count 4.  In our view it was a recipe for confusion to describe the criminal conduct as "Cheating the UK Public Revenue and/or theft" when what the Jurats had to decide was whether the conduct of the directors would have constituted an offence falling within Schedule 1 of the Law if it had occurred in Jersey.  Bearing in mind that the Law does not require the conduct in question to have constituted an offence in the place where it occurred, it seems to us that the prosecution case would have been much better appreciated if the offences which it was alleged would have occurred in this jurisdiction had been clearly stated in the relevant count in the indictment.

24.      However, notwithstanding these matters we do not accept that when one looks at the terms of the arguments advanced to him the Commissioner mistook the relevant legal principles.  We say this because the debate did not turn on what might be described as the interstices between cheating the UK Revenue/ "Foster" fraud and theft/fraudulent conversion.  Two propositions were advanced to the Commissioner.  The first was that there was insufficient evidence of fraudulent intent or dishonesty on the part of the Travco directors and the second that because between them they wholly owned Travco in extracting money from it they could not have been guilty of any offence.  As to the first proposition, it is clear from the transcript of the Commissioner's ruling that he did address his mind in an appropriate way to the submissions that had been made to him.

25.      We will deal with the question of whether there was sufficient evidence of fraudulent intent or dishonesty when we come to the next heading (see paragraphs 32 to 34 below).  As to the second proposition, it was argued before us in a different way on behalf of each of the applicants.  Mr. Le Quesne pointed out that an essential element in the offence of larceny is that the taking is "without the consent of the owner" with the implication that as the directors "owned" Travco their consent to the taking negatived the offence alleged.  Miss Fitz, on the other hand, relying on the decision of this court in Marriott -v- Attorney General 1987-88 JLR 285 and a passage from the judgment of the Royal Court delivered by the Deputy Bailiff in In re Esteem Limited 2003 JLR 188, argued that the mischief to which the offence of fraudulent conversion is directed is the use by someone of the property of another, whether natural or corporate, which has been entrusted to him or her.  As Miss Fitz put it: "All funds paid by Travco to Morgan Marketing or Byford were ultimately from the beneficial ownership of Allan, Goncalves and Gills for the beneficial ownership of Allan, Goncalves and Gills." Travco's money was not the property "of another." The directors could not sensibly be said to have stolen property from themselves or to have fraudulently converted their own property.

26.      In our judgment both arguments are fatally flawed.  The Crown relied on fraudulent conversion as defined in Section 20(1)(ii) of the Larceny Act 1916 which reads as follows:

"Every person who - ... being a director, member or officer of any body corporate or public company, fraudulently takes or applies for his own use or benefit, or for any use or purposes other than the use or purposes of such body corporate or public company, any of the property of such body corporate or public company ... shall be guilty of a misdemeanour ... "

It will be noted that this definition makes no reference to the consent of the owner and does not include the word "entrusted."  Marriott's case concerned Section 20(1)(iv) of the Larceny Act which does use the word "entrusted" but  deals with a type of fraudulent conversion quite different from that with which we are concerned.  In our opinion Marriott's case is of no assistance to the applicants. 

27.      Turning to In re Esteem, in the passage on which Miss Fitz relied the Deputy Bailiff contrasted the powers of a shareholder in a company with those of the settlor of a trust.  In the course of doing so he said the following:

" ... if a sole beneficial owner directs the directors to give away the company's assets, they may do so subject only to being satisfied that creditors are not prejudiced.  In other words the control of a shareholder is a lawful control conferred upon him by company law which enables him quite legitimately to procure that the company acts as he wishes (subject only to any duty owed to creditors)."

28.      The authority on which the Commissioner based his ruling is DPP -v- Gomez (1993) 96 Cr. App. R. 359.  In that case Lord Browne-Wilkinson dealt (at pp. 396 and 397) with the argument that there can be no theft, within the meaning of Section 1 of the Theft Act 1968, from a company by  those who, by reason of being the controlling shareholders or otherwise, are "the directing minds and will of the company".  Such persons, so the argument ran, should be treated as having validly consented on behalf of the company to the appropriation of the company's property, irrespective of whether or not there has been compliance with the formal requirements of company law.  His Lordship (with whom the other Law Lords, except Lord Lowry who dissented, agreed) concluded that the approach implicit in the argument was wrong.  We refer, in particular, to two passages at p. 397:

"Where a company is accused of a crime, the acts and intentions of those who are the directing minds and will of the company are to be attributed to the company.  That is not the law where the charge is that those who are the directing minds and will have themselves committed a crime against the company ...

 

The pillaging of companies by those who control them is now all too common.  It would offend both common sense and justice to hold that the very control which enables such people to extract the company's assets constitutes a defence to a charge of theft from the company.  The question in each case must be whether the extraction of the property from the company was dishonest, not whether the alleged thief has consented to his own wrongdoing."

29.      It is true that Lord Browne-Wilkinson was referring to theft as defined in the Theft Act and not to fraudulent conversion as defined by Section 20(1)(ii) of the Larceny Act.  But in our opinion his Lordship's conclusion applies with equal force to both crimes.  Accordingly, the Commissioner was right to rely on and apply Gomez case.  We do not dispute the accuracy of the passage from the Deputy Bailiff's judgment in In re Esteem on which Miss Fitz relied, but that case dealt with issues very different from those before us in these applications and there is no suggestion that the Royal Court was intending to question the validity of Lord Browne-Wilkinson's dicta in the particular context in which they were expressed.

30.      Miss Fitz made a further point to us based on the decision of the Court of Appeal of England and Wales in R. -v- Ghosh and ors.[1982] 3 WLR 110.  For convenience we deal with this and a related submission later in this judgment.

There was no case to answer on the evidence of the prosecution

31.      At the end of the Crown case Mr. Le Quesne submitted that fraudulent intent, as he put it, was a necessary element in the criminal conduct alleged against the Travco directors and that there was insufficient evidence of this to go to the Jurats.  Counsel for Mrs. Gallichan made a similar application limited to the Foster fraud allegation which Miss Fitz reiterated before us. 

32.      In our view there was ample evidence of fraudulent intent or, as it is more appropriately described, dishonesty on the part of the directors.  To give some examples, it was admitted by Mark Allan in the course of his evidence that draft invoices were furnished to Michel & Co. for completion in the name of Morgan Marketing and submission back to Travco in respect of commissions for which nothing had been done by Morgan Marketing.  He further admitted that Travco had requested Michel & Co., to follow up the invoices with chaser letters pressing for payment.  Mr. Allan admitted that Dynamic Tours had done nothing for the Travco money paid to that company.  Mr. Allan admitted that travellers' cheques, the property of Travco, had been forwarded to Michel & Co., to be cashed for the benefit of the directors.

33.      It is true that the directors who gave evidence did not in terms admit that they had acted dishonestly.  However, on the other hand, they did not profess to have acted honestly, merely suggesting that they had inquired from Travco's accountant whether what he proposed was legal and he had responded that everyone was doing that sort of thing.  Miss Fitz argued that the concept of honesty in the context of tax avoidance schemes should be applied with care.  She sought to draw a distinction between under declaration of income supported by fictitious documents (fraudulent) and the situation in which a person is advised that a scheme is legal but knows that the records shown to the tax authorities are not an accurate reflection of what has taken place (not fraudulent).

34.      We doubt very much the validity of the premise underlying this proposition but it is sufficient for us to say for the purposes of this case that it would have been open to the Jurats on the basis of the admissions made by the Travco directors to which we have referred, and other aspects of their evidence, to conclude beyond reasonable doubt that those persons were perfectly well aware that what they were doing was dishonest.

35.      Furthermore, we reject Miss Fitz' complementary proposition (unsupported by authority) that insofar as the directors who gave evidence declined explicitly to admit their own criminality the Crown was "bound by that evidence."  In our opinion the Crown is entitled to rely on those parts of the evidence of its witnesses that support the Crown case and disavow reliance on evidence that conflicts with it.  If it were otherwise many prosecutions which ought to succeed would fail.

The verdicts were unreasonable/cannot be supported having regard to the weight of the evidence

36.      This heading is an allusion to Article 26(1) of the Court of Appeal (Jersey) Law 1961 which (so far as is material) reads as follows:

"... on any appeal against conviction, the Court of Appeal shall allow the appeal if it thinks that the verdict should be set aside on the ground that it is unreasonable or cannot be supported having regard to the evidence ... "

    In the Edmond-O'Brien case, to which we have already referred, the Privy Council emphasized the limitations in the scope of this Court's function in appeals against conviction in criminal cases.  Lord Hoffmann made it clear that in considering whether the verdict "cannot be supported having regard to the evidence" we must be careful not to usurp the function of the Jurats and he quoted, with apparent approval, the passage in the judgment of Lord Goddard CJ in R -v- Hopkins-Husson 34 Cr. App. R. 47 at p. 49 in which he said:

"If there is evidence to go to the jury and there has been no misdirection, and it cannot be said that the verdict is one which a reasonable jury could not arrive at, this Court will not set aside the verdict of Guilty which has been found by the jury."

37.      Against this background we turn to the submissions made on behalf of the applicants not in order to sift through the evidence and arguments as if we were the Jurats trying the case but in order to see whether there was sufficient evidence to support the conviction or whether either verdict can be said to have been unreasonable.

38.      Mr. Le Quesne's contentions under this heading involved two propositions:

(i)        That the evidence did not support a finding to the criminal standard that the Travco directors had the requisite guilty knowledge; and

(ii)       That proof of mens rea on the part of Mr. Michel was absent.

39.      As we have already said two Travco directors in the course of their oral testimony did not, in fact, give evidence as to whether they thought that what they had done was honest or not.  However, even if they had said in evidence that they thought that it was this would not have been the end of the matter.  The Jurats would have had to look at all of the relevant evidence in order to determine whether they had the requisite guilty knowledge or not.

40.      When one looks at the relevant evidence adduced in this case the conclusion that the directors must have had guilty knowledge is virtually inescapable.  To take some examples: as noted at paragraph 32 above Mark Allan admitted that at his request invoices were issued by Morgan Marketing to Travco for services which had not been provided and that those invoices did not tell the truth.  Furthermore, he testified that at his request backdated false correspondence between Morgan Marketing and Travco had been created which appeared to show that the companies were haggling over the scale of Morgan Marketing's fee whereas in truth it was "all completely made up" in order to provide a paper trail "to make it look like it was a proper arms-length company that was negotiating."  Elsa Goncalves was rather less forthright but she admitted, for example, that the backdated letters between Morgan Marketing and Travco to which we have referred were not truthful, and although she alleged that Morgan Marketing introduced some new clients to Travco, she conceded that some of the clients already existed.  Both witnesses admitted that travellers' cheques, the property of Travco, had been sent to Michel & Co. to be cashed and the proceeds applied for the benefit of the directors.

41.      In our judgment there was ample material comprised in the evidence of Allan and Goncalves which could have supported the conclusion that the directors had guilty knowledge.  In addition the Jurats had the opportunity to see the witnesses give evidence.  In our opinion they were entitled to conclude that they were satisfied to the requisite standard on this point.

42.      The same applies to Mr. Michel and his state of mind.  Mark Allan gave evidence that the directors had discussed with Mr. Michel the arrangements for extracting money from Travco and as to how it was to be dealt with on their behalf.  The execution of these arrangements is extensively evidenced in documents found on the premises of Michel & Co. Mr. Michel contended that over a seven-year period he was not aware of false and backdated documents created in his own office. The Jurats may have found telling a fax to Michel & Co. dated 5 December 1991 from Mark Allan and addressed "Attn Peter."  It began: 

"Can you please send me over letters dated at the relevant dates below suggesting that we should approach those clients as they would be interesting contacts ...".

Sample wording then followed together with a list of thirty clients and the "relevant dates".  All of these dates predate 1991, the year in which the directors were introduced to Mr. Michel and, indeed, the incorporation of Morgan Marketing which, in due course, purported to issue the invoices.  This fax was seen by Mr. Michel (he wrote a date on it).  Numerous other faxes relevant to the directors' criminal conduct were sent to Michel & Co during the material period marked for Mr. Michel's attention.

43.      Another aspect of the evidence to which the Jurats may have attached significance was the acceptance by Mr. Michel that he delivered £328,000 in cash to the Travco directors in London over a period of some years.  This method of delivering funds, together with the way in which Michel & Co., gathered up the cash in Jersey, could readily have been viewed by the Jurats as indicating that Mr. Michel knew perfectly well that the money was the product of criminal conduct.

44.      Mr. Le Quesne sought to characterise the evidence against Mr. Michel tending to show that he had the requisite mens rea as circumstantial and suggested that the Commissioner ought to have given a warning to the Jurats of the danger of convicting on the basis of such evidence.  We do not agree.  The crucial evidence was direct evidence of Mr. Michel making and executing the arrangement with the Travco directors.  The Jurats saw and heard the relevant witnesses, including Mr. Michel, giving their evidence and being cross-examined.  It was a matter for them to decide whether or not mens rea had been proved to the requisite standard.  In our opinion there was more than enough evidence (we have given only examples of it) to support their finding of guilt.

45.      Mr. Le Quesne made two further points under this heading which do not readily fall within its scope but with which, for the sake of completeness, we should deal.  The first concerned the fact that in his closing address Mr. Whelan contended that the applicants had decided to divert the blame on to one Charlotte Swanwick, and he continued "always to be deemed a safe bet when the scapegoat is far away, long gone."  Charlotte Swanwick had, it seems, worked for Michel & Co., until about 1993 and, according to the applicants when they gave their evidence at the trial, it was really Swanwick who had carriage of the execution of the arrangement with the Travco directors in the early years, the implication being that she may have known or suspected criminal conduct but that she did not inform either of the applicants.  In fact, although she was long gone in the sense that by the time of the trial it was many years since she had worked for Michel & Co. Mr. Whelan's remark as to her whereabouts did not sit comfortably with the fact that she was named as a prosecution witness on the billet and there had been no evidence that she was either far away or that her address was unknown to the Crown.

46.      Mr. Whelan's comment as to Swanwick's whereabouts should not have been made.  But to suggest that what he said made the verdict against Mr. Michel unreasonable or resulted in a miscarriage of justice is wholly untenable.

47.      The second point was the implication that the prosecution ought to have called as witnesses Swanwick and the Travco directors' financial adviser who put them in touch with Mr. Michel.  There is no substance in this point.  It was a matter for the Crown to decide what witnesses to call at the trial.  Neither applicant was in a position to complain to us that they had required Swanwick to be tendered for cross-examination and that the prosecution had failed to secure her attendance.

48.      Turning to Mrs. Gallichan, Miss Fitz argued that the evidence was insufficient to entitle the Jurats to be sure that her client knew or suspected that the Travco directors were engaged in criminal conduct.  Mr. Whelan responded by pointing out that the relevant Michel & Co. files revealed that over many years she had been deeply involved in carrying out the arrangement made between the directors and Mr. Michel.  He drew our attention to the extensive admissions Mrs. Gallichan had made when interviewed by the police - for example:  that she had been involved in the preparation of false invoices for work never done; that she had backdated correspondence; that she had sent bogus chasing letters; that she did not query what she had been asked to do; that she sent Travco documents to Mark Allan's home address; that viewed with hindsight her own actions were not honest.  It is true that in her evidence at the trial she attempted to row back somewhat from the admissions she had made to the police but it was a matter for the Jurats having heard all the evidence, including Mrs. Gallichan's testimony, to decide what Mrs. Gallichan did or did not know or suspect and it is not open to us to take a different view.

Individual grounds: Gallichan

 

The Commissioner failed properly to direct the Jurats on fraudulent conversion

49.      Miss Fitz argued that having directed the Jurats that "the question must be whether the extraction of the property from the company was dishonest" the Commissioner ought to have gone on and given them directions as to the meaning of "dishonest" and this he did not do.

50.      This submission is related to the submission made by Miss Fitz, and based on R. -v- Ghosh and ors, in support of her argument that the Commissioner applied the wrong test when considering whether there was a case for her client to answer.  In Ghosh the Court of Appeal of England and Wales considered the meaning of the word "dishonestly" in Section 1 of the Theft Act 1968 and ruled that it was not intended to characterise a course of conduct but rather a state of mind.  This meant that the test of dishonesty was subjective, although the standard of honesty to be applied was the standard of honest and reasonable people.  As Lord Lane CJ put it:  "It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did."

51.      Miss Fitz contended that, although neither "dishonestly" nor any cognate appears in a relevant definition of fraudulent conversion in Section 20(1)(ii) of the Larceny Act 1916, the Commissioner himself, having correctly identified dishonesty as an essential ingredient of fraudulent conversion, ought to have directed the Jurats as to what it meant and ought himself to have adverted to the Ghosh test when deciding whether there was a case to answer.

52.      In our view both these contentions must fail.  In Ghosh the trial judge had directed the jury that it was for them to decide whether the defendant had been dishonest by applying contemporary standards of honesty and dishonesty in the context of all that they had heard in the case - an objective test.  In the instant case, when dealing with this point in the course of his ruling on the application there was no case to answer, the Commissioner made it clear that he was satisfied that there was sufficient evidence of the directors' states of mind, viewed subjectively, to permit the Crown case to go to the Jurats.  Turning to his summing up on fraudulent conversion the Commissioner posed the following question for the Jurats:  "Did the three directors have a deliberate fraudulent intention in their minds?"  In our opinion this was, in the circumstances, a perfectly adequate direction.

The Jurats were misdirected as to the proper approach to be taken to the evidence of  Allan and Goncalves

53.      The Commissioner considered that the two directors who gave evidence should be regarded as accomplices of the applicants.  Without objection from Mrs. Gallichan's then counsel he gave the Jurats a direction in the following terms:  "You should consider [the evidence of Allan and Goncalves] with care, and I direct you that it would be dangerous to convict the Defendants on their evidence alone, unless it is corroborated; that is to say independently confirmed by other evidence.  Nevertheless, if your view is that the directors' evidence is not independently confirmed, and provided you bear in mind the danger of convicting without it, you may rely on their evidence if you are sure they are telling the truth."

54.      Miss Fitz submitted that to describe the directors as accomplices was wrong and that the direction given by the Commissioner could only have served to confuse the Jurats.  She went on to contend that the further direction the Commissioner gave that the documents could provide evidence capable of independently confirming the directors' testimony suggested that, insofar as their oral evidence tended to exculpate Mrs. Gallichan, it could not be relied on unless corroborated.

55.      It is not necessary for us to decide whether the directors and the appellants could properly be regarded as accomplices.  The direction as to the danger of convicting on the basis of the directors' uncorroborated evidence can only be regarded as having been in ease of the defence.  There was nothing confusing about the Commissioner's direction on this aspect of the case and what he said could not, in our view, have been construed as suggesting that the oral evidence, insofar as it was or may have been exculpatory, could not be relied on unless corroborated.

The Commissioner misdirected the Jurats as to Mrs. Gallichan's failure to mention Charlotte Swanwick's role in her police interviews

56.      We have already referred to the fact that in his closing address Mr. Whelan contended that the applicants had decided to direct the blame onto Charlotte Swanwick.  This was a reference to the evidence of the applicants at the trial.  Among other things, Mrs. Gallichan was cross-examined on her answers to the police during her interviews and it was pointed out to her that in the course of them she had not sought to implicate Swanwick.  Miss Fitz drew attention to the Commissioner's comment in the course of his summing up that Mrs. Gallichan "... did not, during those interviews, suggest that the responsibility for doing all the relevant work lay with Charlotte Swanwick."  She argued that the Commissioner ought to have gone on and given the Jurats elaborate directions as to what they should do if they considered that Mrs. Gallichan had lied to them on this issue in the course of her testimony.  Miss Fitz relied on R. -v- Lucas (1981) 73 Cr. App. R. 159, a decision of the Court of Appeal in England and Wales. 

57.      Mr. Whelan pointed out that at the trial Mrs. Gallichan's then counsel had dismissed the suggestion that a Lucas direction was required.  We think that she was right.  Mr. Whelan referred us to R. -v- Barnett [2002] EWCA 168; [2002] 2 Cr. App. R. 11.  In that case the Court of Appeal in England said that in the great majority of trials in which the defendant gives evidence and the prosecution contend that the defendant is telling lies a Lucas direction is inappropriate (see para. 20).

58.      In Barnett the court referred, it seems with approval, to "the four categories in Burge and Pegg" a reference to an earlier Court of Appeal decision ([1996] 1 Cr. App. R. 163).  These are the circumstances in which a Lucas direction is usually required and they are as follows:

"1.      Where the defence relies on an alibi.

2.        Where the judge considers it desirable or necessary to suggest that the jury should look for support or corroboration of one piece of evidence from other evidence in the case, and amongst that other evidence draws attention to lies told, or allegedly told, by the defendant.

3.        Where the prosecution seek to show that something said, either in or out of court, in relation to a separate and distinct issue was a lie, and rely on that lie as evidence of guilt in relation to the charge which is sought to be proved.

4.        Where the prosecution have not adopted the approach to which we have just referred, the judge reasonably envisages that there is a real danger that the jury may do so."

The only category which might appear to touch on the instant case is number 2.  But the Commissioner did not in any manner relate what Mrs. Gallichan had not said in her police interviews about Charlotte Swanwick to the issue of corroboration.  All that he was doing when he made the remark quoted was summarising what Mrs. Gallichan had said in the course of those interviews.  In our opinion the directions contended for by Miss Fitz were not required.

That taking all of the grounds advanced on behalf of Mrs. Gallichan the conviction was unsafe

59.      It has been pointed out repeatedly by this Court that it is not open to us to apply this criterion.  The Court is restricted to the statutory criteria set out in Article 26 (1) of the Court of Appeal Law.

Conclusion

60.      It was for those reasons that we dismissed the two applications.

Authorities

Proceeds of Crime (Jersey) Law 1999.

Terrorism (Jersey) Law 2002.

Magill -v- Porter [2001] UKHL para. 67.

R. -v- Azam and Others [2006] EWCA Crim 61.

Snooks and Dowse -v- United Kingdom [2002] JLR 475.

Attorney General -v- Edmond-O'Brien [2006] JLR 133.

Royal Court (Jersey) Law 1948.

MacKenzie -v- Attorney General [1995] JLR 9.

Foster -v- Attorney General [1992] JLR 6.

Marriott -v- Attorney General [1987-88] JLR 285.

In re Esteem Limited [2003] JLR 188.

Larceny Act 1916.

DPP -v- Gomez (1993) 96 Cr. App. R. 359.

Theft Act 1968.

R -v- Ghosh [1982] 3 WLR 110.

Court of Appeal (Jersey) Law 1961.

R -v- Hopkins-Husson 34 Cr. App. R. 47.

R -v- Lucas (1981) 73 Cr. App. R. 159.

R -v- Barnett [2002] EWCA 168; [2002] 2 Cr. App. R. 11.

Burge and Pegg [1996] 1 Cr. App. R. 163.