On 2 April 2004 at the Portsmouth Crown Court, on an indictment containing nine counts, Robin Edward Hounsham, Richard Mayes and Michael George Blake were convicted of counts of conspiracy to defraud. Hounsham was convicted of counts 1, 3, 4, 5 and 8, which were all counts of conspiracy to defraud. Mayes was convicted of counts 1, 5, 7, and 8, also conspiracies to defraud. Blake was convicted of a single count of conspiracy to defraud, count 3.

On 28 May 2004 they were sentenced as follows: Hounsham to 4 years imprisonment on count 1 and 18 months imprisonment concurrent on counts 3, 4, 5 and 8. A confiscation order was made against him in the sum of £5768. Mayes was sentenced to 3½ years on count 1 and 18 months concurrent on each of counts 5, 7 and 8. In his case a confiscation order was made in the sum of £12000. Blake was sentenced to 12 months imprisonment on count 3 and, in his case, a confiscation order of £2065 was made.

Six other co-accused were convicted of conspiracies to defraud and four others acquitted.

Hounsham, Mayes and Blake now appeal with leave of the single judge.

The prosecution arose out of alleged “staged” road traffic accidents which were the basis for fraudulent claims against various insurance companies. The principal grounds of appeal centre on admitted payments by insurance companies to the police towards the costs of the police investigations.

In summary, the prosecution case was that three car dealers, Hounsham, Mayes and another man, Andrew Baker (acquitted by the jury), participated in a dishonest scheme involving the acquisition of vehicles which were used in “staged” collisions. The damaged vehicles were then the subject of inflated claims made to insurance companies. Count 1 alleged an over-arching conspiracy against Hounsham, Mayes and Baker. All the other co-accused, including Blake, were charged with individual conspiracies in respect of one or more of the staged crashes and subsequent false claims on insurers. It was alleged in count 1 that there was an agreement between Hounsham, Mayes and Baker to defraud motor insurers by making false insurance claims in respect of traffic accidents which they arranged. The prosecution relied on a number of features which it alleged, when taken together, suggested fraud.

It was alleged that the dishonest scheme involved the following features.

Hounsham, Mayes and Baker acted in various combinations to acquire prestige cars with a high mileage which were being sold cheaply. The cars were then “clocked”; that is the mileage shown on the odometer was substantially reduced.

The prestige cars were registered and a MOT carried out noting the reduced mileage.

Ordinary cars of low value were also acquired and “clocked” in preparation for the staged collisions.

False invoices were created to show inflated purchase prices which could later be sent to the insurance companies to support large claims.

Drivers, “stooges”, were then “sold” one of the ordinary vehicles and a day arranged for an “accident” to take place.

The staged collisions took place in dark and remote places. The accidents were so arranged that both vehicles were write-offs. A local salvage company was instructed to recover the vehicles.

The “stooges” immediately admitted liability and submitted third-party claims to their insurance companies.

Count 3 alleged against Hounsham and Blake a conspiracy to defraud the Royal Sun Alliance in respect of an accident which occurred on 11 June 1999. The evidence in respect of this conspiracy provides an example of conspiracies alleged in the other counts. Documents showed that on 1 June 1999 Target Cars, a company owned by Hounsham, was registered as the keeper of a Toyota MR2. Records showed that in the previous July it had been sold for £2000 and had a recorded mileage of 138,000. On the same date as the Toyota was registered, Blake was registered as the keeper of a Peugeot 205 which had been purchased from a car auction by Hounsham in January 1999 for £600. The mileage recorded, at the date of purchase from the car auction, was 92,647.

Two weeks later, Hounsham submitted a third-party claim to Blake’s insurers, the Royal Sun Alliance, claiming that on 11 June 1999 his Toyota had been involved in a collision with the Peugeot which, at the time, was driven by Blake. The claim stated that the accident had occurred at about 10.00 – 10.30pm in Adgestone Lane. There were no witnesses and the police were not called.

The Toyota was submitted to motor engineers, Reynolds Parkhurst, for examination. Reynolds Parkhurst considered it to be a category B write-off. In evidence, David Pankhurst explained that the vehicle should be broken up for spares because its assessed market value of £3,300 was less than the cost of repair. There was evidence to suggest that the car had been clocked because by this stage the mileage was recorded as 69,817.

Hounsham was paid the value of the Toyota, namely £3,300, less salvage value of £500, which he retained. He was also paid £987 for car hire and transport expenses. Blake was paid £2,415 for the total loss of the Peugeot. In total the Royal Sun Alliance paid out £6,202 in respect of this claim.

In respect of some of the alleged conspiracies, there was expert evidence from a forensic scientist and a consultant engineer who had examined the road traffic accident. The purpose of this evidence was to cast doubt on the authenticity of the crashes. At interview, Hounsham and Blake answered all questions asked of them and denied the alleged offences. Mayes declined to answer any question.

Hounsham gave evidence and denied that he had been involved in a conspiracy with Mayes and Baker. He also denied being involved in a conspiracy with Blake or any other defendant. Mayes did not give evidence. Blake gave evidence. He denied that he was involved in any conspiracy to defraud insurers. His case was that the accident, in which he had been involved, was not staged. He described the accident and agreed that he had received £1,650 for the wrecked Peugeot. For the purposes of this appeal it is unnecessary to give any further detail in respect of the prosecution case and the respective cases of the appellants.

Towards the end of the prosecution’s case, in circumstances that we shall outline in greater detail later in this judgment, it was disclosed to the defence that three of the insurance companies which had paid out on claims made by one or other of the defendants, had paid sums to the Hampshire Police Force investigating officer, Police Sergeant Wade, to assist in funding the “arrest” stage of the investigation. Arising out of this disclosure the appellants sought further disclosure and, in due course, applied for the proceedings to be stayed as an abuse of the process of the court. The first two grounds of appeal, common to all three appellants, focus on the judge’s refusal to stay the proceedings as an abuse of process. A third ground is raised by Hounsham and Mayes. This ground is based on the inadvertent admission of evidence of two previous convictions of Mayes as a result of which both Mayes and Hounsham applied for the jury to be discharged. Each contends that the judge was wrong to refuse that application.

In the course of giving evidence in respect of count 9, Paul Whittle, a representative of AMP Pearl Assurance (Pearl Assurance) was called to give evidence. It became apparent that the insurance file produced by him included communications between PS Wade and the Pearl Assurance. The correspondence suggested that the insurance company had been approached to fund the arrest and interview phase of the police investigations. These documents had not previously been disclosed by the prosecution and prosecuting counsel was unaware of their existence.

Not surprisingly, this disclosure took all counsel by surprise. Defence counsel asked for full disclosure of all material relevant to payments made by insurance companies to the Hampshire Constabulary. In the course of submissions to the judge it was argued that the prosecution should be directed to approach the insurers involved with the claims, the subject of the indictment, in order to obtain disclosure of any further records that might be in their possession. The judge acceded to this application insofar as it related to the indictment claims.

As a result of this ruling various documents came to light. The documents showed that on 30 May 2002 PS Wade wrote to the Association of British Insurers outlining the nature of the police investigations and seeking advice and “…assistance to ascertain whether the insurance companies involved would be prepared to assist the investigation by providing financial assistance”. There is a dispute as to whether it was the Association of British Insurers who had approached PS Wade first with this suggestion or whether PS Wade first approached the Association. The judge made no finding on this issue and in our judgment it was unnecessary for him to do so. PS Wade’s evidence was that before writing this letter he informed his superior officer, Detective Inspector Merrett, who, in turn, sought advice from “HQ”. In the result, PS Wade wrote to all save one of the insurance companies involved inviting them to help fund a stage of the investigation. In a letter to Paul Whittle dated 3 July 2002 Mr Wade wrote:

The original claim file and ALL associated papers.

A Section 9 witness statement which produces each page of the file and explains fully each page and a procedure that was followed for the claim. A total cost to your company. Exhibit labels signed for each page. (help available from us if needed.) The fact that your company paid out the claim and therefore believed it to be “real”, and the fact that if the claim were bogus that your company had been deceived and had it known, would never have paid out.

A contact point for immediate attention to any further enquiries.

Confirmation whether your company is willing to assist in the financing of our “arrest” phase of the operation. Direct lines, RSA, Norwich Union and Provident have done so.”

At trial counts 3, 5, 7, and 8 involved allegations of false claims made on insurance policies issued by the three companies which had made a financial contribution. Counts 2, 4, 6 and 9 concerned alleged false claims made on policies issued by companies which made no financial contribution. Another insurance company the Zenith Insurance, made no contribution and an alleged false claim against it was not included on the indictment.

The trial started on 6 January 2004. As the prosecution was approaching the end of its case Mr Whittle was called to give evidence in respect of count 9. The production of his file gave rise to the events which we have just described. As we have indicated, the judge ordered disclosure of all insurance files involved in the alleged false claims and all other relevant documents related to the claims. He refused to order any wider disclosure. There followed a period of 10 days in the course of which documents were disclosed, evidence taken on a voire dire and submissions made by counsel for all defendants that the prosecution should be stayed on the ground of abuse of process. PS Wade and a CPS solicitor, John Locke, gave evidence for the prosecution; and a solicitor for one of the defendants, Mr Graham Squires, gave evidence on behalf of all defendants. In his ruling the judge made a number of important findings. First, he ruled that the payments were not prima facie illegal. Secondly, he found that the transactions did not involve an intention to corrupt. He accepted that PS Wade acted in good faith and that he was not acting corruptly. Thirdly, he found that the “modest payments” did not demand a stay of the indictment on that ground alone. Fourthly, he found that the letters sent by PS Wade to the insurance companies seeking financial contributions were relevant and should have been disclosed by the prosecution. Fifthly, he found that those documents and the financial contributions from the insurance companies were capable of undermining the prosecution case or assisting the defence and should have been disclosed as such. Sixthly, he found that PS Wade had not removed these documents from the unused and non-relevant unused material available to be inspected by defence solicitors. Further, in this connection, he found that Mr Squires and colleagues with him at the inspection must have overlooked these documents. Seventhly, he found that none of the defendants had suffered prejudice or been handicapped in their defence by the absence of any other material which might have been available to them if disclosure of the documents had been made at an earlier stage. In the circumstances, he refused the applications for a stay.

In this appeal, the prosecution now concede that in seeking and accepting payments from the insurance companies the police were acting ultra vires their statutory powers. In our judgment this was a sensible and realistic concession. The judge considered the statutory provisions of the Police Act 1996. As we have already stated, he concluded that the payments were not prima facie illegal. He based this conclusion upon the fact that the 1996 Act did not contain any provision for making payments to the police illegal. However, PS Wade and DI Merrett are officers of the Hampshire Constabulary which is the police force for the area of the counties of Hampshire and the Isle of Wight (see s.101 (1) and schedule 1 of the 1996 Act). The statutory body responsible for securing the maintenance of a police force and establishing the police fund to receive all receipts and fund all expenditure of the police force is the Police Authority for the relevant area (see s3, s6 and s14 of the 1996 Act). These statutory provisions, when seen in the context of the whole of the 1996 Act, in our judgment, show that the concession made by the prosecution is correct and the judge’s conclusion was wrong.

The principles upon which the court should act when deciding an application to stay a criminal trial as an abuse of process are not in dispute. The appellants and the respondent have directed attention to a number of authorities of which, for the purposes of these appeals, R v Horseferry Road Magistrate’s Court, ex parte Bennett [1994] 1AC 42 and R v Mullen 1999 2 CAR 143 are the most relevant. In ex parte Bennett Lord Griffiths, giving the leading opinion in the House of Lords stated:

The appellants rely on this statement by Lord Griffiths that, in cases where the conduct of the prosecuting authorities has been so extreme, it is unnecessary for the defence to show that the conduct of the defence has been prejudiced or that the defendant is unable to have a fair trial. In ex parte Bennett the defendant, a citizen of New Zealand who was alleged to have committed criminal offences in England, was traced to South Africa by the English police and forcibly returned to England. He alleged that he had been kidnapped from South Africa by South African and British police.

The above statement of principle is echoed in the judgment of the court in Mullen. In Mullen British authorities, in disregard of available extradition procedures, initiated and procured the unlawful deportation of the appellant from Zimbabwe to England. The appellant was charged and tried for conspiracy to cause explosions likely to endanger life or to cause serious injury to property. It was alleged that he was a member of the IRA. In 1990, following a trial at the Central Criminal Court, he was convicted and sentenced to 30 years imprisonment. Some years later the circumstances in which he was be deported to England came to light and his conviction was quashed by the Court of Appeal. In its judgment the court stated:

It is accepted by the appellants that it is for the defence to prove on a balance of probability that the conduct of the prosecuting authorities was so serious that the court, in the exercise of its discretion, should stay the proceedings. It is further accepted that it is only in exceptional circumstances that the court will exercise its discretion to stay proceedings (see Lord Bingham in A-G’s Ref (No 2 of 2001) (HL (E)) [2004] WLR 1 @ p13H.

The appellants made two main submissions on this part of the appeal. First, it is submitted that the judge was wrong to find as a fact that PS Wade acted in good faith when soliciting and obtaining funds from the insurance companies. In this submission Mr Germain, on behalf of Hounsham, making submissions adopted by counsel for both Mayes and Blake, referred us to three factual matters which he submitted ought to have caused the judge to question P S Wade’s good faith. First, he directed attention to the correspondence between PS Wade and the insurance companies dated 26 June 2001. He referred to a sentence in the letter to the Provident Insurance in which PS Wade stated:

Mr Germain submits that Direct Line cannot have agreed to provide £1000 by 26 June because if it had done so PS Wade would not have needed to write the letter to it of that date.

Secondly, Mr Germain relied on a bill from a salvage company used by Pearl Assurance to recover crashed vehicles, which he suggested showed some form of sharp practice by the salvage company. No statement was taken from the proprietor of the salvage company which, submitted Mr Germain, demonstrated that PS Wade was protecting the Pearl Assurance from criticism. To the response that the Pearl Assurance made no financial contribution to the police, Mr Germain submitted that at the stage of the investigation when this bill matter came to light PS Wade was expecting a contribution from that insurance company.

Thirdly, Mr Germain argued that the judge made a factual error in his ruling when attributing to PS Wade an explanation for not prosecuting the appellants in respect of a crash involving the Zenith Insurance, a non-contributing insurer. Mr Germain submitted that the judge misunderstood the evidence in respect of this matter and that the failure to include this crash in the prosecution demonstrated that PS Wade favoured contributing insurance companies over those companies which did not contribute.

The second submission was the simple submission that, whatever factual errors the judge made, the conduct of PS Wade and his superiors of obtaining financial contributions towards the expenses of the prosecution was unlawful and so contrary to public policy that the court should not allow the prosecution to proceed, whether or not PS Wade had acted in good faith. Mr Germain, supported by counsel for both of the other appellants, pointed out the manifest dangers in a practice such as this. Mr Germain summed up his submission in the expression “He who pays the piper calls the tune”. Counsel on behalf of all the appellants submitted that this conduct by the prosecution was such that it amounted to exceptional circumstances which should have caused the judge to stay the proceedings whether or not it was possible for the appellants to have a fair trial.

We have no hesitation in rejecting Mr Germain’s first main submissions. The judge heard extensive evidence from PS Wade who was subjected to detailed cross-examination. In our judgment the criticisms made of him, and of the judge’s finding in respect of him, are not made out. It is clear from the correspondence of 26 June 2001 and the surrounding documents that PS Wade had been in contact by telephone with representatives of the insurance companies before the letters of 26 June 2001 were written. We find it quite impossible from the documents to infer that PS Wade misled some insurance companies into making financial contributions; or favoured contributing companies over non-contributing companies; or, in his evidence, misled the judge. The judge heard all the evidence and was, in our judgment, in a far better position than this court to assess it. We can see no valid reason for rejecting his findings of fact.

There is considerably more force in the second submission of the appellants on this ground of appeal. The prosecution now accept that the police were acting ultra vires their powers when they accepted financial contributions towards the expense of the investigation from three insurance companies. In our judgment, soliciting by the police of funds from potential victims of fraud, or any other crime, quite apart from being ultra vires police powers, is a practice which is fraught with danger. It may compromise the essential independence and objectivity of the police when carrying out a criminal investigation. It might lead to police officers being selective as to which crimes to investigate and which not to investigate. It might lead to victims persuading a police investigating team to act partially. It might also lead to investigating officers carrying out a more thorough preparation of the evidence in a case of a “paying” victim; or a less careful preparation of the evidence in the case of a non-contributing victim. In short, it is a practice which, in our judgment, would soon lead to a loss of confidence in a police force’s ability to investigate crime objectively and impartially.

It has been unnecessary, in this case, to consider whether the police authority could sanction such activities pursuant to its powers under section 93 of the 1996 Act ( the power to accept gifts and loans ). Even assuming it does have such powers, we find it difficult to conceive of a situation where it would be sensible to exercise those powers in connection with criminal investigations.

However, in this case, the judge found that PS Wade acted in good faith. He consulted his superior officer, who in turn sought advice. Apart from the issue of disclosure, to which we turn next, none of the appellants’ counsel has been able to point to any prejudice caused by the acceptance of the total sum of £4,500 from three insurance companies. The conduct of the police complained of in this case, falls far short of the conduct which led the proceedings in ex parte Bennett to be stayed; and the court in Mullen to quash the conviction. On its own we are not persuaded that this conduct was such that the judge was wrong to refuse a stay.

The appellants submit that the failure by the prosecution to disclose the funding documents as part of its primary disclosure and the inability of the defence, at the stage when the funding came to light, to obtain further disclosure also constituted such an abuse of process as should have caused the judge to stay the proceedings.

It is accepted by the prosecution that the judge’s finding that the funding documents were wrongly allocated to unused and non-relevant unused material at the disclosure stage of the proceedings is correct.

There are three aspects of this ground of appeal. First, it is submitted that PS Wade deliberately failed to disclose the letters sent to the insurance companies seeking financial contributions. Secondly, it is submitted that by the time these documents came to light it was too late for the defence to obtain further disclosure. The reason for this was that the insurance companies had by then either lost or got rid of much of the material. In this respect, it is submitted that PS Wade as the disclosure officer, failed to ensure at the earlier stage that the insurance companies disclosed all the relevant documents. Thirdly, it is submitted that the cumulative effect of the failures of disclosure coupled with the unlawful funding is sufficient to demonstrate an exceptional reason for the proceedings to be stayed.

The prosecution contend that the judge’s findings on the disclosure issue are not open to attack and that, for the reasons he gave, his ruling was correct.

Mr Germain made detailed submissions upon factual issues relating to disclosure. He referred the court to the MG6C list and to the evidence of PS Wade and Mr Locke, the CPS lawyer. The purpose of these submissions was to persuade the court that PS Wade had deliberately concealed the existence of the funding letters of 26 June 2001. The prosecution accepted that there was a degree of confusion about where these documents were actually to be found in the disclosure lists and documents. It was submitted that they were either in the MG6C or in a schedule of non-relevant unused material attached to that list.

In our judgment, the judge correctly concluded that, at the least, these documents ought to have been described as being in a category of material which might undermine the prosecution’s case or support the defence. It is clear from the Attorney-General’s guidelines that the attention of lawyers for the prosecution and the defence must be specifically drawn to this category of material. In this case, as the judge found, this was not done. However, the judge also found that the material was not deliberately withheld from the defence. It is clear that it was seen by Mr Locke. The judge accepted that, although it was not properly described, it was not deliberately removed from material which was available for the defence solicitors to inspect. He found that, unsurprisingly, Mr Squires, a defence solicitor, and his team overlooked the material. In our judgment that finding is one which this court cannot go behind. The judge heard the witnesses; we did not.

The judge went on to find that the prosecution’s failure to disclose this material was not “a foundation for a stay of the indictment”. We agree. In the course of the trial the material did come to light. The defence investigated the matter and the application for a stay followed. Had this material been disclosed earlier, no doubt, the application for a stay would have been made before or at the start of the trial. In our view, the judge was quite entitled to rule that this failure did not form a sufficient reason for staying the proceedings.

Next the judge ruled that the fact that PS Wade, in his capacity as disclosure officer, had failed to ensure that complete files had been obtained from the insurance companies, or preserved, was not a ground for staying the proceedings. Again, in our judgment, this ruling was correct.

It has to be borne in mind what the real issues were in this case. There was no dispute that claims had been made on insurance policies for damages arising out of road traffic accidents. In no case was it asserted on behalf of the defence that the sums claimed on the insurance policies were not paid. The claim forms were available as evidence. The real issues at trial were whether the accidents were genuine or staged; and whether the claims were genuine or fraudulent. In these circumstances, in our judgment, it is unrealistic to suppose that there may have been other documents held, at one stage, by the insurance companies which would have materially assisted the appellants. In answer to the direct question “What prejudice has your client suffered?” each counsel responded to this court that he could point to no prejudice other than that there might have been a document in existence which could have assisted his client. Although, as is clear, disclosure by the prosecution was not properly conducted we are quite satisfied that this fact provided no sufficient basis for a stay of the proceedings to be granted.

Finally we deal with the submission that the conduct of the prosecution and the failures of disclosure cumulatively are sufficient to fund a stay of the proceedings. Having concluded that each of the matters raised was not sufficient to found a stay, we conclude that, even when taken together, they do not amount to a sufficiently exceptional reason for a stay to be granted. The judge’s refusal to grant a stay was one taken in the exercise of his discretion. The fact that he held that the acceptance of financial assistance by the police was not unlawful, does not, in our judgment, in the circumstances of this case, vitiate the way he exercised his discretion. Even if it had done so, we would unhesitatingly have exercised our discretion in the same way.

In his summing up the judge gave the jury a clear direction as to how to deal with the funding issue. It was favourable to the appellants and no complaint is made in respect of it. In the circumstances, both grounds 1(a) and (b) fail.

This ground applies only to Hounsham and Mayes. On 16 March 2003 the judge refused an application made by both appellants to discharge the jury on the ground that two previous convictions of Mayes had been inadvertently disclosed to the jury. The factual background is not in dispute.

On 23 January 2003 a statement made by Paul Adams was read to the jury. He produced as an exhibit, an insurance proposal made by Mayes relevant to count 2. It was agreed that the proposal form should be added to the jury core bundle. On the back of the proposal form was a reference to two previous convictions disclosed by Mayes to insurers, although they do not represent the full extent of his previous convictions. These convictions were for two offences committed in 1993; the first for an offence of obstructing the police for which he received a conditional discharge; the second an offence of handling for which he was sentenced to a community service order of 40 hours.

On 15 March 2003 it was discovered that the back of the form had been inadvertently included in the jury bundle. It was also discovered that three jurors had highlighted the previous convictions. The application to discharge the jury was made by counsel for Mayes on the basis that it was no longer possible for him to have a fair trial. Mr Germain for Hounsham, supported the application submitting that Hounsham’s case was so intimately connected with the case against and for Mayes that he also could not have a fair trial.

The judge refused both applications. After referring to the relevant authorities, including R v Weaver and Weaver [1963] 51CAR 77, he held that the error could be cured by an appropriate direction to the jury. In his summing-up he told the jury to put this matter out of their minds completely, saying that the convictions would not help them at all in their deliberations. No complaint is made about this direction.

The short submission made on behalf of Hounsham and Mayes is that the damage done by the disclosure of these convictions was irreparable and that the judge was bound to accede to the applications to discharge the jury.

We have been referred to all the relevant authorities on this topic. It is trite law that the decision of whether or not to discharge the jury in such circumstances is one for the trial judge to make in the exercise of his discretion. Here the judge took into account that the convictions were relatively trivial and had occurred some years ago. At the stage when the application was made the trial, involving twelve defendants, had been in progress for a little over two months. In our judgment, balancing all the factors, the judge cannot be said to have exercised his discretion wrongly. On the contrary, we are of the opinion that he was correct to refuse both applications.

In our opinion Hounsham cannot be said to have been prejudiced in any way by the fact that these convictions came before the jury. There was no evidence before the jury that he had previous convictions and it is unrealistic to think that he might have been tainted by Mayes’s convictions. As to Mayes, such prejudice as there was, in our judgment, was, by virtue of the relative triviality of the previous convictions, slender. It was completely cured by the judge’s direction. This ground of appeal also fails.

In the circumstances, the appeals of all three appellants must be dismissed.