Graham & Ors, R. v

Mr Justice Owen: These appeals raise the issue of the appropriate sentence in cases of benefits fraud and, in particular, of the continued applicability of the sentencing guidelines set by this Court in Stewart (1987) Cr App R(S) 135. In granting leave in Whatley the single judge commented that:

The appeal of Whatley also raises again the question of the proper approach to sentence in a case in which a defendant has been convicted on a number of specimen or sample counts, a situation which will often arise in cases of benefits fraud.

The Stewart Guidelines. In Stewart the judgment of the Court was given by Lord Lane CJ. He pointed out that there had been a sharp drop in the number of prosecutions for social security offences between 1980 and 1981 and 1983/1984, and explained that this was attributable to a change of policy, adding that:

Secondly he observed that it was only a small proportion of offences of this nature that were dealt with in the Crown Court and that the deterrent effect of any Crown Court sentence was unlikely to be great. Lord Lane then indicated the appropriate level of sentence in such cases in the following terms:

Lord Lane's observations as to the aggravating and mitigation features of such offences do not require any modification. But there are three issues that have been raised for our consideration: first, whether the figure of £10,000 suggested by Lord Lane as a guide to the appropriate level of sentence should be updated; secondly, whether it remains the case that deterrence is a factor of limited application in such cases; and, thirdly, whether the guidelines reflect current sentencing practice.

The Effect of Inflation. As to the first there has been a substantial fall in the value of money since 1987. In Clark [1998] 2 Cr App R(S) 95, a case involving a theft and breach of trust, this Court adjusted the figures by reference to which guidelines were set in Barrick (1985) 7 Cr App R(S) 142, to take account of inflation. In Barrick Lord Lane CJ advanced guidelines defined by reference to the figures of £10,000, £50,000 and £100,000. In giving the judgment of the Court in Clark, Rose LJ said that:

The Court went on to adjust the guidelines by reference not only to the effect of inflation on the guidelines in Barrick, but also to other considerations, such as the increase in the scale of white collar crime and the changes in the law with regard to remission and parole in the following terms:

The decision in Clark is not only relevant to the need for sentencers to be aware of the effect of inflation on sentencing guidelines, but is also relevant to the relationship of sentences for benefit frauds to sentences for other types of fraud, a point to which we shall return. As to the effect of inflation, the inflation table in Kent and Kent Volume 1 0-1189 indicates that the current value of £1.00 in January 1987 is approximately £1.80. If the Stewart guidelines are to continue to apply, then plainly the figure of £10,000 should be revised.

The Deterrent Element. The second issue is whether it remains the case that deterrence is a factor of limited application in sentencing such offenders. In Stewart, and having considered the statistics as to such offences, and the policy adopted by prosecuting authorities, Lord Lane said:

He continued at page 140:

As Lord Lane said in Stewart, such offences are easy to commit and difficult and expensive to detect, as is illustrated by the facts of both the appeals before us. Furthermore, and as Rose LJ observed in Bendris, social security fraud is increasingly prevalent. In our judgment, there will be cases in which courts will be justified in taking the view that a sentence should contain a deterrent element.

Relevant Decisions Since Stewart. The third issue is whether the guidelines reflect current sentencing practice. As to that, it is first necessary to consider a number of decisions of this Court in cases of benefit fraud since the decision in Stewart. Current Sentencing Practice B6-33F22 provides a helpful selection of such decisions, but there are a number of other decisions that are of assistance.

In Bolarin the appellant pleaded guilty to 11 counts of obtaining money by deception, having made fraudulent claims for income support and unemployment benefit over a period of 21 months obtaining a total of £18,500. The claims were fraudulent from the outset. He was sentenced to two years imprisonment, but on appeal the sentence was reduced to 15 months in the light of Stewart.

Jowitt J, who gave the judgment of the Court, indicated that the case plainly went some considerable way beyond the nine to 12 month bracket in Stewart falling:

In Browne the appellant pleaded guilty to 15 counts of obtaining by deception and false accounting, and asked for 68 offences to be taken into consideration. He had obtained a total of £5,208 over a period of 18 months by making fraudulent claims for benefit in the names of his brother and another man. He was sentenced to a total of 18 months imprisonment. Guided by the decision in Bolarin the Court reduced the sentence to a total of one year.

In Tucker (1994) 15 Cr App R(S) 349, the appellant pleaded guilty to four counts of obtaining by deception, and asked for 43 similar offences to be taken into consideration. The appellant claimed supplementary benefit when her husband left her. Five years later she became employed, but continued to obtain benefit order books by representing that her circumstances had not changed. She drew benefit to which she was not entitled for about 18 months. The sum involved was approximately £1,500. She was sentenced to six months imprisonment. The appellant was a woman of mature years of previous good character with responsibilities for her family. She had pleaded guilty and had started, to the best of her ability, to repay what she had dishonestly obtained. In giving the judgment of the Court Judge J, as he then was, said that the sentencing judge had fairly balanced such mitigating features against the aggravating features of the case, namely:

In Weild the appellant pleaded guilty to eight counts of obtaining by deception and asked for 283 offences to be taken into consideration. She claimed benefit in various forms over a period of three years by failing to disclose that she was co-habiting, that she was working during part of the relevant period, and that she had capital assets, receiving a total of just under £15,000. She was sentenced to 15 months imprisonment, a sentence that was upheld on appeal.

In Adewuyi [1997] 1 Cr App R(S) 254, the appellant was convicted of ten offences of theft and five of obtaining services by deception. She had made false claims for child benefit, income support and housing benefit over a period of four years. The claims had been made both in her own name and in other names. The total sum involved was in excess of £100,000. She was sentenced to four years imprisonment, a sentence that was upheld on appeal.

Nwoya and others [1997] 2 Cr App R(S) 1, was a case of conspiracy to defraud the DSS by making false claims for benefit. A total of 59 claims were made over a period of 21 months. Payments in excess of £300,000 were obtained. The fraud was facilitated by means of information obtained from a DSS computer by one of the appellants, an employee of the Department. Two of the appellants, including the employee of the Department, were sentenced to six years imprisonment, a third to four years. In giving the judgment of this Court, McKinnon J indicated that by reference to the level of sentences for mortgage fraud:

In Oyediran [1997] 2 Cr App R(S) the claimant made false applications for benefit over a period of three years, stating that he had no other source of income when he was at one stage in receipt of a student grant and subsequently employed on a part time basis. He obtained £18,105 and was sentenced to 18 months imprisonment. His appeal was dismissed. In giving the judgment of the Court Lord Bingham CJ said:

In Armour and Sherlock [1997] 2 Cr App R(S) 240, the appellants conspired to obtain money from the DSS by obtaining and using stolen benefit books. One admitted obtaining a total of £1,300, the other £809. Both were sentenced to 18 months imprisonment. The sentences were upheld on appeal, the Court expressly taking account of the increased prevalence of this type of offence and of the degree of organisation and sophistication involved.

In Ellison [1998] 2 Cr App R(S) 382, the appellant pleaded guilty to five counts of obtaining by deception and asked for 88 other offences to be taken into consideration. He had claimed income support over a period of years on the basis that neither he nor his wife were working, when in fact his wife had worked throughout the period. Benefits fraudulently obtained amounted to £10,948. He was sentenced to a total of 15 months imprisonment. The principal ground of appeal was that the total sentence was outside the guidelines set in Stewart. It was also argued that the Court should take account of the effect of inflation. The Court came to the conclusion that the sentence was too high in the light of Stewart and should be reduced to a total of ten months imprisonment.

In Rosenburg [1999] 1 Cr App R(S) 365, the appellant was convicted on nine counts of obtaining by deception. The total sum involved in the counts was approximately £2,000 paid by way of income support, when in fact the appellant had been operating a business known as the UK Glamour Models and Entertainment Limited by which he acted as agent for aspiring dancers throughout the relevant period. The evidence adduced at trial also demonstrated that during the relevant period he was living an extravagant lifestyle, driving a Porsche motor car and acquiring two properties which were let to tenants. He was sentenced to 30 months imprisonment. On appeal this Court concluded that, given the sums involved in the counts upon which the appellant was convicted, the sentences imposed upon him were manifestly excessive. They were reduced to sentences totalling two years imprisonment.

In Bendris [2002] Cr App R(S) 183, the appellant pleaded guilty to conspiracy and to obtaining by deception. He had conspired fraudulently to claim income support and job seekers allowance for a period of over four years. The claim had been made on the basis of a fictitious unemployed person, a false passport bearing the appellant's photograph being used to support the claim. He was sentenced on the basis that £10,000 had been paid in benefits as a result of his activities. In giving the judgment of the Court, Rose LJ indicated that the Court was approaching the matter in accordance with Ellison, and on that basis reduced the sentence to ten months imprisonment.

Finally in Cheryl Eleanor Evans [2000] 1 Cr App R(S) 144, the appellant pleaded guilty to four counts on an indictment containing 24 counts and was convicted on the remaining counts. The offences related to involvement in a housing benefit fraud. She had claimed housing benefit in respect of premises where she lived, when in fact the house was the property of the local council. Claims were also made in false names, supported by false details of a fictitious landlord, in respect of several further addresses. She was sentenced to three years imprisonment on each count concurrently. As Mantell LJ observed in giving the judgment of the Court:

Mr Earnshaw, who appeared for the Crown in Whatley, helpfully provided us with some statistics as to the incidence of such fraud derived from the 31st report of the Public Accounts Committee published in 2002. The Department of Works and Pensions then estimated that more than £2 billion per annum is lost in benefit fraud. Secondly, he informed us that last year between 12,000 and 14,000 cases of benefit fraud were prosecuted by the Department with 80 per cent being dealt with in the Magistrates' Court. Less than 150 defendants were sent to prison, the average sentence in such cases being in the bracket of six to nine months. Those figures suggest that the overwhelming majority of such offences are committed by omission, that is to say where the defendant has been lawfully in receipt of benefit but fails to inform the Department of changes of circumstances affecting their entitlement, and by those who are able to pray in aid substantial mitigation, persons of good character, often with dependent children for whom the conviction has had a devastating effect.

Sentencing guidelines for comparable offences. We have already referred to Barrick in the context of the effect of inflation on sentencing guidelines. But it is noteworthy that in Olusoji (1994) 15 Cr App R(S) 356, a case of benefit fraud, a court presided over by Lord Taylor CJ indicated that the Barrick guidelines were relevant when considering deliberately persistent frauds involving public money. All will depend on the circumstances of the individual case, but as a general proposition benefit frauds will be less serious an offence than frauds committed in breach of trust, the subject of the Barrick guidelines.

In this context Miss Davenport, who appeared for the appellant Whatley, also referred us to the guidelines involving the evasion of duty on tobacco and alcohol recently set in Czyzewski [2004] 1 Cr App R(S) 49 at 289. The Court indicated that following trial for a defendant with no relevant previous convictions and disregarding any personal mitigation, the following starting points were appropriate:

Excise duty cases are very different in nature from benefit fraud, but help to set the context within which to consider the Stewart guidelines.

The decision in Kefford. In Kefford Lord Woolf CJ, who sat with Rose LJ and Judge LJ, considered the problem presented by the overcrowding of the prison system. In giving the judgment of the Court, Lord Woolf observed that in the present situation it is of greatest importance to the criminal justice system as a whole that only those who need to be sent to prison are sent to prison, and that they are not sent to prison for any longer than is necessary.

In the course of his judgment he also drew attention to the recent decision in Mills [2002] 2 Cr App R(S) 52 at 229, in which similar guidance had been given in the context of the dramatic rise in the female prison population. At page 498 he addressed the approach to economic crimes in the following terms:

Conclusions. We draw the following conclusions from that analysis.

As we have already indicated, the aggravating and mitigating features identified in Stewart do not require modification or amplification. As Lord Lane observed, sentences will depend upon an almost infinite variety of factors. Serious aggravating factors, such as the obtaining of large sums, frauds persisted in over length periods, claims for benefit that are fraudulent from their inception, sophisticated fraud involving the use of false and/or multiple identities, the maintenance of an extravagant lifestyle over the periods in question, will be likely to result in substantial periods of imprisonment.

We turn then to consider the two appeals before us.

Whatley. On 25th March 2004 the appellant, Albert John Whatley, who is now 64 years of age, was convicted on an indictment containing 13 counts of benefit fraud and on 14th March was sentenced to a total of two and a half years imprisonment. He appeals against that sentence with the leave of the learned single judge.

The Crown's case in essence is that for a considerable period the appellant claimed sickness benefit to which he was not entitled. He was working as a street trader at East Street Market, Southwark. The story begins in September 1994 when the appellant first made a claim for sickness benefit, claiming that he was unable to work because of degenerative osteoarthritis. In May 1997 the appellant completed an A2 Review Form, by which, as its name suggests, his claim for income support was reviewed, and in which he declared that he was not working either full-time or part-time and that he had no other income. Between May 1997 and the end of the period covered by offences in the indictment, July 2001, the appellant received benefits, both income support and mortgage interest repayments, totalling in excess of £90,000. But from 1992 the appellant held a casual trader's licence for the East Street Market issued by Southwark Council. In April 1997 he applied successful for it to be upgraded to a permanent street licence.

It was the Crown's case that the appellant had worked as a street trader for the period covered by the indictment, namely from May 1997 to July 2001, and as a casual street trader since 1992, but had not declared such work and the income that it generated to the Department of Works and Pensions, in other words that he was guilty of benefit fraud. The Crown adduced evidence that the appellant was seen by trading inspectors at his pitch serving people and paying over his rent. At other times there were what were described as 'assistants' working the pitch or providing temporary cover. Evidence was also adduced as to approximately 16 trips made by the appellant to France between February and September 2001. On three of those trips he was stopped by Customs and Excise, and found to have alcohol and cigarettes in his car. The Crown argued that such evidence proved he was well enough to drive a car to a ferry, take a day trip and load his car with goods, and that it also showed that he could afford the goods.

There was also evidence that during the relevant period the appellant had made an agreement with his bank to pay monthly instalments of approximately £700 off his mortgage. The appellant began to make such payments from September 1998. The amounts varied, and in some months nothing was paid at all, but the payments totalled £21,600.

In a number of voluntary statements, not made under caution, the appellant maintained that he had never worked at the market. He said that others ran his stall and that he had not received any financial benefit from it. He denied taking trips to France, except one in 2001 when he had been apprehended by Customs and Excise.

As we have already indicated, the indictment contained 13 counts. The first count was a charge of false accounting contrary to section 17(1)(a) of the 1968 Theft Act which related to Form A2 completed by the appellant in May 1997. Counts 2 to 11 inclusive also alleged offences contrary to section 17(1)(a). Each related to the falsification of a document required for an accounting purpose, namely a paid order in the name of Albert John Whatley. They covered the period August 2000 to July 2001. Count 12 alleged that the appellant dishonestly obtained a money transfer in the sum of £1,048.74 on or about 28th April 1997 by deception, namely by falsely representing that he was entitled to claim income support and thereby still entitled to receive mortgage interest benefit, an offence contrary to section 15(1)(a) of the Theft Act. Count 13 was an identical offence committed on 14th June 2001. On count 1 the appellant was sentenced to 30 months imprisonment; on counts 2, 3 and 4, nine months imprisonment on each concurrent and concurrent with count 1; on counts 5, 10, 11, 12 months imprisonment on each count concurrent with count 1; on count 12, nine months concurrent; and on count 13, 18 months concurrent, giving a total sentence of 30 months imprisonment.

In passing sentence the learned judge referred to the decision in Stewart and continued:

The learned judge then went on to address the proper approach to sentence in a case where a defendant has been convicted on a number of sample counts. As we have already indicated, the Crown adduced evidence that the total of the benefits received by the appellant during the period in issue was in excess of £90,000. But sums involved in the counts in the indictment totalled approximately £3,100. The learned judge approached the sentencing exercise on the basis that there was no dispute that the sum in excess of £90,000 received by way of benefits could all be traced back, as he put it, to the fraudulent A2 Review Form. He continued:

It is submitted on behalf of the appellant that the judge's approach was wrong in principle and contrary to authority. Miss Davenport took as her starting point the decision the decision of this Court in R v Canavan, Kidd and Shaw [1998] 1 Cr App R(S) 79 at 243, in which the judgment of the Court was given by Lord Bingham, then Lord Chief Justice. Lord Bingham began his judgment in the following terms:

The question was of great practical importance to those responsible for preparing indictments, differing answers to it having been given by this Court in Clark [1996] 2 Cr App R(S) 351 and in Bradshaw [1997] 2 Cr App R(S) 128.

At page 84E Lord Bingham concluded that the Court reached the correct conclusion in Clarke:

Clark was a case of indecent assault on a male person in which the indictment contained a single specimen count. In giving the judgment of the Court, Henry LJ said at page 357:

Clark and Canavan have been followed in a number of cases involving benefit fraud. In Rosenburg, to which we have already made reference, the appellant was convicted on nine counts of obtaining income support by deception. He had claimed income support on the basis of incapacity to work in 1992, and he was paid continuously until March 1996. The prosecution limited the counts to a period from the beginning of 1994 to mid-1996, because that was when the business was most profitable. The total amount obtained in that period was £30,000, whereas the sums specified in the counts of the indictment totalled only £2,500. In passing sentence on the basis of the total amount received by the appellant, the sentencing judge said:

Those observations are understandable given what Lord Bingham CJ acknowledged in Canavan to have been the long standing practice of prosecuting authorities to frame indictments said to be representative of other criminal offences of like kind committed by a defendant, and the practice of the courts to pass sentences that took account not simply of the isolated instances specified in the counts, but also of the conduct of which, on the evidence adduced by the prosecution, those counts were representative. But this Court held that the sentencing judge fell into error in not following Canavan, and that the appellant ought to have been sentenced on the basis of the sum involved in the counts on the indictment and not on the basis of the sums received over the whole of the period in issue.

Similarly in Cheryl Eleanor Evans the appellant was charged with housing benefit fraud over a period of four and a half years. She pleaded guilty to four counts and was convicted on a further 20 counts. The sums involved in the counts to which she either pleaded or was found guilty amounted to £2,807, whereas the prosecution contended that she was involved in a sophisticated fraud involving a sum in excess of £25,000 over the period in question. In passing sentence the judge specifically stated that he was sentencing her for a fraud involving £25,000.

After reviewing the decisions in Clark and Canavan and referring to the decision in Rosenburg Mantell LJ said:

Those are observations with which we wholeheartedly agree. In so doing we respectfully part company with Lord Bingham, who, in Canavan, had suggested that prosecuting authorities would wish in the light of the decision in Clark to include more counts in some indictments saying:

The problem presented by Canavan which is graphically illustrated by the two cases before us; Whatley in which the appellant stands to be sentenced for dishonestly obtaining £3,000, when it was the Crown's case that he had received in excess of £90,000 by fraud, and Graham in which the appellant pleaded to an indictment containing ten counts, but asked for 471 counts to be taken into consideration, has been addressed by the Law Commission in its paper no 277 The Effective Prosecution of Multiple Offending. We are grateful to Mr Earnshaw for drawing it to our attention.

The executive summary contains the following paragraphs:

The Law Commission proposed a number of possible solutions. All would require primarily legislation. Unless and until there is such legislation prosecutors and judges will continue to be faced with an intractable problem.

In the case of Whatley the learned judge sought to distinguish Canavan and Evans on the basis that in Evans there were no concessions, whereas in this case there was no dispute, as he put it, that the whole of the sum of approximately £90,000 could be traced back to the fraudulent A2 Review Form. In our judgment, that attempt was misconceived for two reasons. First, although it was not conceded that a total sum in excess of £90,000 had been received by way of benefits during the relevant period, it was conceded that the appellant had not been entitled to benefits throughout that period. On the contrary, it was the defence case that he had not been working. The highest that it could be put was that the Crown was able to satisfy the jury that the appellant had not been entitled to receive benefit on the dates specified in the counts in the indictment. Secondly, the A2 Review Form was a declaration that at that date the appellant was not working. It was not, and could not be, a declaration as to the future. That is no doubt why the system for claiming benefit requires the recipient to sign a declaration in a benefit book on each occasion that he or she receives benefit; hence counts 2 to 11 of the indictment.

It follows that, in our judgment, the valiant attempt by the learned judge to circumvent the decisions in Clark and Canavan was misconceived and that he erred in imposing a sentence on count 1 intended to reflect the receipt of over £90,000 by dishonest means. The appellant stood to be sentenced for offences of fraud involving a total of approximately £3,100.

The second limb of the appeal in Whatley is that the learned judge gave insufficient weight to the personal mitigation available to the appellant. It is submitted that it was accepted by the judge that this was not a sophisticated fraud and that the appellant had not sought to conceal his identity. Secondly Miss Davenport prayed in aid that the appellant is a family man with two daughters and grand children. At the date upon which he was sentenced his 90 year old father, to whom he was very close, was dying of cancer. Sadly, his father has since died.

According to the appellant's general practitioner, who gave evidence at the trial, the appellant has suffered from chronic degenerative osteoarthritis for many years, and has undergone numerous operations to his knee and shoulder. He is not able to sit or stand for long periods, or walk unaided further than 50 metres. As a result of his disabilities he has been clinically depressed. We are satisfied that in those circumstances life in prison will inevitably be very hard. We were also informed that since being sentenced to imprisonment the appellant has twice undergone surgery and currently has to use crutches. As a result, he cannot be moved to an open prison.

We are satisfied that the learned judge was right to conclude that the offences crossed the custody threshold. These were deliberate and persistent offences, committed over a considerable period. As Miss Davenport conceded in the course of argument, the claims were fraudulent from their inception. We also take account of the fact that during the period in which the offences were committed, the appellant made a number of trips to France to buy alcohol and cigarettes, and was able to pay some £21,600 off his mortgage.

But constrained, as we are, by the decision in Canavan and in the light of the guidance afforded by Stewart, as updated, the total sentence of 30 months imprisonment was plainly manifestly excessive. In our judgment, the appropriate sentence would have been one of 12 months imprisonment on each count concurrently. The appeal is therefore allowed, and we substitute sentences of 12 months imprisonment on each count concurrently.

Graham. On 25th March 2004 Cheryl Graham pleaded guilty to ten offences of benefit fraud at Stratford Magistrates' Court. She asked the court to take a further 471 offences into consideration and was committed to the Crown Court at Snaresbrook for sentence. On 20th April 2004 she was sentenced to two years and six months imprisonment concurrently on each offence.

The appellant is 36 years of age. She lives with a dependent child, her son, who was aged 17 at the time of her appearance at the Crown Court. She was a woman of good character. In December 1992 she started receiving benefits, both income support and housing benefit, on the basis that she was separated from her partner and was not earning. She continued to receive such benefits until 2002, when she applied to change from income support to incapacity benefit. Investigations then revealed that she had been in employment since June 1992 before she began to receive benefits. During the period in question she received income support amounting to £34,500 and housing benefit of £16,000, a total in excess of £50,000. Of the ten charges to which she pleaded guilty five related to the housing benefit and were based on the annual declarations as to her financial circumstances made in the years 1998 to 2002. The remaining five charges related to income support. They were sample charges, but the 471 offences that she asked to be taken into consideration related to income support paid on a weekly basis from 6th September 1993 and 3rd February 2003. When arrested and interviewed, the appellant made a full admission.

It was submitted on her behalf that the sentencing judge failed to have regard to the mitigation available to her. She was of good character, pleaded guilty at the first opportunity, showed genuine remorse for her actions and was deeply distressed by her contact with the police and the courts, of itself a substantial punishment. It was further submitted that the offences were committed against a background of very modest earnings on which she had been unable to cope. The offences were not committed to support an extravagant lifestyle. On the contrary, in September 2002, a year before her arrest, she had submitted to an administration order in the county court. Finally, the appellant is a woman who had suffered from abusive relationships in the past, which had had a detrimental effect upon her son, who had been repeatedly excluded from school, and upon the appellant herself. The medical records show that she had suffered from severe depression, and on two occasions had attempted to commit suicide. It is also submitted that the sentencing judge failed to pay sufficient regard to the decisions of this Court in Kefford and Mills, decisions to which we have already made reference.

In passing sentence the learned judge said:

Those are observations that we strongly endorse. In our judgment, the learned judge was fully justified in forming the view that, taken together, the offences were so serious that only a custodial sentence was warranted.

Against the substantial personal mitigation available to the appellant, there were a number of serious aggravating features. The appellant persisted in her fraud on the state over a period of ten years. She received a total of approximately £59,000. Her claims to benefit were fraudulent from the outset.

Taking full account of her pleas of guilty and of the mitigating factors that we have summarised, we have come to the conclusion that the appropriate sentence in her case was one of 18 months imprisonment. Accordingly, we are satisfied that the sentences imposed upon her were manifestly excessive. Her appeal is allowed and we substitute sentences of 18 months imprisonment on each count in the indictment to be served concurrently.