Attorney General's Reference Nos 59, 60, 61 of 2004

In these References by Her Majesty’s Attorney General under s 36 of the Criminal Justice Act 1988, our decision was given on 7th October 2004. We shall now give our reasons.

The case was concerned with three offenders, all men of positive good character. Guy Pound is 71 years old. He was born in January 1933. Anthony Green is 76, nearly 77 years old. He was born on 6th December 1927. Peter Beard is 56 years old. He was born on 13th October 1947.

The three offenders were indicted together on one count of conspiracy to defraud. On 7th June 2002 each pleaded not guilty. The jury was empanelled on 13th January 2003, and after a trial that lasted longer than a year, on 16th February 2004, all three were convicted. We pause to note that, as the trial judge His Honour Judge Burford QC observed after its conclusion, the case should not have proceeded as a joint trial. Each of these offenders should have been tried on the substantive count or counts, and if so the only lengthy trial would have involved Pound. For much of the trial itself, the direct involvement of Green and Beard in the proceedings was minimal.

On 26th March 2004, in the Crown Court at Winchester, Green and Beard were each sentenced to 9 months imprisonment, suspended for two years. The judge adjourned issues of compensation and confiscation. On 19th April, in the Crown Court at Southampton, Pound was sentenced to 3 years’ imprisonment. Again, he adjourned questions of confiscation and compensation. The applications for leave are dated 17th May. The References are dated 6th July. On 10th August, at Southampton Crown Court, Green was further ordered to pay £167,871 compensation, and £150,000 as a contribution to his defence costs. Beard was further ordered to pay £176,854 compensation and was also ordered to pay £150,000 towards his defence costs. Pound was ordered to pay £860,280 compensation and confiscation on 4th October at Southampton Crown Court. All three, of course, may be liable to the victims of their conspiracy at civil law for sums in excess of the compensation orders made by Judge Burford.

Pound was an architect, appointed as an adviser to a land owning trust. Between 1985 and 1996 the trust was involved in six building projects. He remained the architect throughout. It was pointed out that as a result of his advice, and efforts, the trust benefited not only from his skill as an architect, but managed to achieve a massive increase in the value of its land by obtaining planning permission for the development of 50 acres of what was agricultural land. We shall assume that is right. We do not, however, believe that it provides any mitigation whatever that the trust was enriched when Pound acted honestly, and that its funds were only depleted when he was fraudulent. He defrauded the trust for a period of about 11 years by obtaining excessive fees for himself and the quantity surveyors to the trust, and payments for work which had not been done by the building contractor. He received a total of £3,330,000 in fees for the six projects, of which the judge found £1,000,000 was dishonestly obtained by him. The Trust was defrauded of a further £1,000,000 (that is £2,000,000 in all) as a result of dishonest receipts by others of money belonging to it.

Green was the senior partner in a firm of quantity surveyors, A.E. Green and Partners of Brighton. He has now been retired for twelve years. Beard was a junior partner in the practice until Green’s retirement in 1992, when he became the senior and sole partner. In effect therefore Green’s involvement in the conspiracy came to an end on his retirement from practice and Beard inherited his place in the on-going conspiracy. Green was sentenced on the basis that by 1992, he had dishonestly obtained excessive fees of just under £145,000, £20,000 annually for five years and £45,000 for excessive fees. He, of course, contributed to the success of the fraud. So did Beard, who was sentenced on the basis that between 1992 and 1996, he received a total of £186,000 to which he was not entitled, three retainers of £20,000 and excessive fees of £126,000. The judge concluded that Pound was a dominant personality, and that Green would not have been drawn into the conspiracy without Pound’s powerful, malign influence. He believed that Beard’s involvement too, stemmed from the force of Pound’s personality and his influence over him. Those considerations weighed very heavily with the judge when reaching his sentencing decisions, and after a trial of this length, we can see no basis for interfering with his analysis of the differing personalities and characters of each offender.

The facts need further amplification.

The Talbot Village Trust ("the Trust") was established in the mid-1800s to build and maintain a self-sufficient village and a Christian community in Dorset. The Trust owned 465 acres of open land between Poole and Bournemouth. In the 1970sthe Trust sought to develop part of its land for the benefit of the local community. The Trust is a registered charity with a maximum of six Trustees. It has no paid employees and relies on the advice of various professionals. The Trustees were dependent upon honest and proper advice as to the appropriate level of fees to be paid to the professionals and to the building contractors.

Harry Groome, now deceased, was employed by Savills Estate Agents and was the principal professional advisor to the Trust. Groome dishonestly abused his position to a very substantial degree. The jury were directed that they could not find any defendant guilty of conspiracy to defraud unless they were sure that Groome too was a conspirator. Groome's involvement, therefore, is implicit in the verdicts of guilty which were returned.

Pound was a Chartered Architect and as such was bound by the Code of Professional Conduct of the RIBA. In 1974 he was appointed as architect to the Trust and he was involved in feasibility studies and applications for planning permission for the development of the Trust's land. Pound was paid for his work for the Trust. The offender attended meetings of the Trust and formed a close business and personal relationship with Groome. Pound was the only offender who attended Trust meetings.

The conspiracy to defraud was conducted during the preparation and construction of six building projects for the Trust between January 1985 and March 1996. At the time of these building projects Pound gave Groome substantial inducements or rewards such as very expensive cruises for Groome and his wife; a trip to Venice on the Orient Express; a weekend in Paris; and a payment of £15,000 to Groome in 1991. In this way, Pound was able to manipulate Groome and mislead the Trustees about the appropriate level of fees.

In 1977 Pound was responsible for introducing the Trust to a firm of quantity surveyors, A.E. Green and Partners of Brighton ("AEG"). At the time of introduction, Green was the senior partner.

The principal building contractor for each project was W. Hayward and Sons (Bournemouth) Ltd. ("Haywards").

The Trust was defrauded by the over-payment of monies to the building contractor and the over-payment of fees to the architect and the quantity surveyors. The excessive fees paid to the professional advisers and to the building contractor could not have been achieved without the dishonest involvement of the quantity surveyors through first Green and then Beard. It was the responsibility of the quantity surveyors to produce valuations, to measure work done by Haywards and to approve fees claimed by the professionals.

As to the fees agreed by the Trustees, they were fraudulently induced to accept higher than appropriate levels for the architect. The percentage fee structure calculated on the actual build costs for AEG was admitted by the Crown to be high but within scales. The actual, and even higher, level of fees paid to both Pound and AEG, however, was concealed from the Trustees. The Trustees were not informed about the actual amounts paid and the fees were routed almost entirely through the building contractor, and also through the solicitors and estate agents to the Trust, and not, as would be normal, paid directly to the professional advisers by the Trust itself.

The jury were directed that to convict they had to be sure that the particular defendant under consideration had been engaged in a conspiracy knowingly to defraud the Trust for the benefit of three separate entities, namely, to obtain excessive fees or payments for the benefit of the architect, Pound; the quantity surveyors, AEG; and the building contractors, Haywards. The jury were also directed that they were only to convict if they were sure that the fees obtained by the professional advisers were substantially excessive.

In November 1987, Green wrote to Pound setting out certain "agreed" terms of payment. One such term was the payment to AEG of an "annual retainer" of £20,000. Thereafter, the sum of £20,000 was paid to AEG for each of the eight years during which the various projects were completed. This letter was seen by Groome but not by the Trustees who had no knowledge of the payment of an "annual retainer".

As an example of the fraud in action, AEG were required to prepare valuations on a monthly basis during each building project. AEG were required to agree the monthly claims for payment from Haywards before issuing a RICS Valuation to Pound. Pound would then issue a certificate authorising payment by the Trust in the appropriate amount and Haywards were paid on presentation of that certificate. In fact, Pound orally notified AEG of what fees he wanted when he wanted them. AEG would include the fees requested and their own fees in valuations notwithstanding that the fees substantially exceeded the amounts allowed for in the building contracts. Pound left a pad of architect's certificates for AEG to complete and these certified for payment both the architect's and AEG's excessive fees. No running account of professional fees was sent to the Trust. No accurate and proper Final Accounts were agreed or presented to the Trust, and Pound did not issue Final Certificates. AEG also valued, and Pound certified, claims for building works by Haywards that were not done. As an example, in each of the road building contracts, substantial claims were made by Haywards for the use of concrete which, whilst charged for, valued and certified, was not used at all.

It is obvious that this fraud represented a gross breach of trust by each offender, one as architect to the trust, and the others as quantity surveyors, all with their professional responsibilities to their clients. The losses suffered by the trust were substantial, and the sums fraudulently obtained by each offender were substantial, with Pound taking a huge share. Pound was the principal conspirator. His role was pivotal. He provided the link between the trust’s dishonest trustee, Groome, as well as the quantity surveyors and building contractors. He persuaded the trustees to negotiate with Haywards rather than offer the contracts for tender. He misled the trustees about the appropriate level of fees to be paid. He made corrupt gifts and payments to Groome. His personal profit from his dishonesty was, as we have recorded, massive, and it went on for a very prolonged period indeed. Green and Beard made significantly less personal profit from the trustees than Pound. Neither was involved for as long. However each in his turn was essential to the working of the conspiracy which had Pound at its heart.

The submission on behalf of the Attorney General was that the sentences failed properly to reflect the gravity of this offence or the full extent of the dishonesty and gross breach of trust. Our attention was drawn to a number of authorities, the most significant of which are the guideline cases of Barrick [1985] 7 CAR 142 and, the much more recent decision in Clark [1998] 2 CAR (S) 95. These decisions provide guidance for judges who are passing sentence on those convicted of dishonesty and fraud. They provide and are intended to achieve consistency of approach, while allowing for the sentencing judge to pass an appropriate sentence for the individual case.

Before we begin to consider whether the sentences imposed on each of these offenders was unduly lenient, a brief jurisdictional point was taken by Miss Johnson on behalf of Beard, and adopted by Mr Clark on Green’s behalf. It was submitted that the Attorney General’s application for leave under s 36 of the 1988 Act was out of time.

The statutory arrangements for reviews of sentencing are found in Part IV of the Criminal Justice Act 1988. S 36(1) enables the Attorney General to refer a case to the Court of Appeal where it appears to him that “the sentencing of a person in a proceeding in the Crown Court has been unduly lenient”. Schedule 3 to the 1988 Act makes provision for the time within which an application for leave to refer a case must be made. Notice

“shall be given within 28 days from the day on which the sentence, or the last of the sentences, in the case was passed.”

In essence, the argument on behalf of the offenders is that the phrase, “the last of the sentences”, must refer to the date when sentence was imposed on the offender whose case it is proposed to refer to the Court of Appeal Criminal Division. Mr Horwell for the Attorney General suggested that in relation to a trial on an indictment in which there is more than one defendant, these words refer to the date on which the last of all the defendants in that trial is sentenced rather than the date of the last sentence imposed on any individual defendant.

The opposing contentions were illustrated by examples intended to demonstrate the injustice of the alternative conclusion. We were asked to consider the problem which would arise in a multi-handed trial where most of the offenders were sentenced on one date, and the last offender’s sentence was, for reasons peculiar to him, delayed for two months, and an application to refer was not submitted until the 27th day after sentence was imposed on the last offender. That would mean that the application to refer would, in the case of the first group of offenders, not take place until nearly 3 months had elapsed. Mr Horwell agreed that in theory the construction for which he contended might lead to a Reference being made many months or even years after a sentence had been passed, for example, if a co-defendant had absconded and was not sentenced until recapture. He suggested that the safeguard against any unfairness is that the Attorney General was not entitled to appeal as of right, and that the Court of Appeal would refuse to grant leave if the process had been unfairly delayed.

Interesting as they are, these issues do not arise for decision in the present appeal. When Judge Burford was dealing with the case of each offender shortly after the conclusion of the trial, he made plain that although he was dealing immediately with the question whether the offenders should be deprived of their liberty, issues of compensation and confiscation were being adjourned. The sentencing decision was not completed until he had dealt with those issues. S 50 of the Criminal Appeal Act 1968 makes it plain that “sentence” in relation to an offence, extends far beyond the decision whether to impose a custodial or community penalty. It extends expressly to issues of confiscation, and the decision to impose a compensation orders falls well within the ambit of “any order made by a court when delaying with an offender”. And, for very many years now, a compensation order has been treated as a sentence for these purposes. (See Hayden [1960] Cr App R 304.)

As the timetable shows, each of these applications was made before the sentencing process in relation to each offender was concluded. At the time when it was made, there was sufficient material to justify the decision to do so. Indeed, we agree with the approach of the Attorney General in this case that complaints about the failure of a sentencing court to impose a custodial sentence, or the imposition of a custodial sentence of insufficient length, should be made as soon as possible, and without necessarily waiting for the outcome of further aspects of the sentencing decision. It follows, of course, that on further reflection in the light of decisions about compensation, confiscation, and so on, the question whether the sentence overall is unduly lenient is open to reconsideration, and in an appropriate case, discontinuance by the Attorney General. In our judgment, the applications in this case were well within the permitted 28 day period: indeed they were made before the strict time provisions of paragraph 1 of Schedule III of the 1998 Act started to run.

We must now examine each of the sentences.

The mitigation available to Pound in relation to the offences themselves was minimal. In reaching his conclusion Judge Burford took close account of Pound’s age, and what he described as the “very substantial and excellent work” that he had done for the trust. He also examined medical evidence about Pound himself, and Mrs Pound. He recognised that the couple were very dependent on each other, and that Mrs Pound’s health, like her husband’s, was less than satisfactory. All that said however, Pound was involved in a very long term fraud on the trust. He was believed to be an honest professional man on whose integrity the trustees were entitled to rely. He betrayed this trust for very many years. Throughout this time, its trustees regarded him as a respected and trusted adviser, and while they did so, year after year, the trust was being defrauded. There is what we may describe as a personal element about this case, a sense of personal betrayal which the trustees must have felt when the truth was discovered, which is not always found in cases of fraud. He brought others into the conspiracy to defraud. The case proceeded as a trial, and a substantial proportion of that trial was attributable to the case involving and against him. It was an essential part of the judge’s assessment of the culpability of the three offenders that Pound was the dominant and corrupting personality.

We have, of course, recognised that the trial judge was in a very strong position to assess Pound’s culpability. We do not interfere with his decision lightly. But, when everything that can be said for Pound has been taken into account, he set up a major crime of dishonesty, at massive personal profit, persisted with it, involving others as and when necessary. This sentence was far too lenient. We quashed the sentence of 3 years’ imprisonment. Even allowing for double jeopardy, we cannot avoid raising it to 6 years’ imprisonment.

The cases of the other two offenders have caused us much greater difficulty. As a sentencing decision, it is clear that it would unjust to try and distinguish between them. Green was an older man at the time when he became involved in the conspiracy, and he bequeathed his role to Beard, who took it over. So Beard came to the conspiracy late, and Green ceased to participate in it in 1992. In Green’s case, the past must have been put behind him when the investigation started, and his retirement was interrupted, and in effect, his world came crashing down. There then followed a long attritional process. Both men have been expelled from their professional institution. Green would never have worked again anyway, and Beard’s chances of doing so in any meaningful sense are virtually at an end. In each case, the orders for compensation and costs, rightly made, have effectively deprived both of them of all their ill-gotten gains, and to meet the orders made by the court, they will both be impoverished. These are all consequences brought about by their own conduct, but for each of them we believe that the burdens and massive changes in lifestyle which they have imposed on their wives and families, and the consequent public shame and humiliation will be a constant, haunting reminder of their greed and folly.

There are personal factors relating to the health of Green and his wife which we need not amplify in court, and Beard’s health, too, is not good. These are relevant considerations. And as we have already recorded, the judge was plainly influenced by his insight into the relative personalities of the three offenders. It was their subservience to Pound which effectively led him to suspend their sentences.

We have concluded that these sentences were both lenient, and certainly looked at on paper, unduly so. We also doubt whether the circumstances here were sufficiently exceptional for any custodial sentence to be suspended. However, we were reminded, and we agree, that even if the sentences were unduly lenient, we should have to consider the impact of the double jeopardy principle, and whether in the particular circumstances, we should order an increased sentence or convert the suspended sentence of imprisonment into one taking immediate effect. We have concluded that in these two cases, it was possible and right, to temper the exercise of justice with mercy, and in the result, effectively as acts of mercy, we shall not interfere with any part of these sentences.