In November 2011 the appellant, Subhash Mehta, and another man called Parminder Kullar stood trial at the Central Criminal Court (HH Judge Wide QC) on an indictment containing a single count in the following terms:

On 29 November 2011, the jury found the appellant guilty and Kullar not guilty. On 1 December 2011 the appellant was sentenced to imprisonment for 3 years.

The nub of the argument advanced on behalf of the appellant by Mr Cox QC is that Kullar’s acquittal was fatal to the conviction of the appellant for the conspiracy advanced by the prosecution. A conspiracy requires there to be two or more conspirators. Mr Cox submitted that there was no sustainable case that any person other than Kullar and the appellant was a party to the conspiracy alleged by the prosecution.

Another man, named Murphy, featured in the case and it will be necessary to examine his role. Mr Cox conceded that if the indictment had been appropriately drawn, and if the jury had been appropriately directed, there was evidence on which the jury could have convicted the appellant of conspiring with Murphy to defraud the bank by making fraudulent loan applications. He submitted, however, that this would have been a different conspiracy, which would have had to be the subject of a separate count and appropriate directions from the judge.

The case was essentially simple. It was founded on 17 loan applications made to the bank’s branch at Eltham in south east London. The first application was made by the appellant in his own name in October 2006 and was said by the prosecution to have been a test operation. The other 16 applications were made by different applicants between June and October 2007. Kullar was employed by the bank and processed all the applications.

The appellant introduced them all. He received no commission from the bank but he would charge the borrower. The appellant ran a business in the name of Pemberton Properties, an offshore company of which he was the beneficial owner. He lived in north west London and his business premises were at Pentax House in South Harrow. The appellant’s evidence was that he was also concerned in other businesses which operated from the same premises. A number of people worked there, either as employees or as notionally self-employed people, but their individual roles and responsibilities were not explored at the trial.

The loans followed a standard pattern. A person would apply to the bank to open an account and take out a loan. The application would be supported by proof of identity and 3 payslips as evidence of income. The payslips proved to be bogus beyond doubt in all the transactions apart from the appellant’s application; in his case the payslips came from Pemberton Properties and there was an issue as to their genuineness. Provided that the paperwork complied with the bank’s standard requirements, approval of the loan application was automatic. The amount of the loan would be immediately transferred to the account, but the bank’s procedure enabled up to £20,000 to be withdrawn by the customer in cash on the same day. If more than £20,000 was to be withdrawn, 24 hours’ notice was required. A standard feature of the transactions was that the appellant would attend with the applicant, and as soon as Kullar approved the paperwork a cash sum between £19,000 and £20,000 was immediately withdrawn. There was no invoice from the appellant to the customer. The appellant’s evidence was that he received a payment in cash from the customer for arranging the loan. Most but not all of the applications resulted in loans being made. In all, nearly £250,000 was taken out in cash.

The events at the bank were recorded on CCTV. The footage showed that the appellant always came with others. They included members of his staff and on a number of occasions they included Murphy. Murphy was himself the borrower on one occasion but he also introduced 7 others to the appellant. 6 of the loan applications were made by Greek customers, but there was no evidence of any link between the Murphy loans and the Greek loans except that the applications were all presented to the bank by the appellant. There were 2 other applicants who appeared to have had no connection with the Murphy applicants or the Greek applicants. So of the 17 applications, 1 was originated by the appellant himself, 8 were related to Murphy, 6 came to the appellant from Greek connections and there were 2 others.

The trial was due to begin on 22 September 2010 at Southwark Crown Court before HH Judge Price. Murphy had by then pleaded guilty to 4 counts of fraud contrary to section 2 of the Fraud Act 2006. These related to his own loan application and 3 others which he introduced to the appellant. Mr Hick applied for leave to amend the indictment to add matching counts against the appellant and Kullar. However, after discussion with Mr Cox he did not proceed with his application for reasons which he explained to the judge as follows:

Mr Cox said that he agreed. So it was that the matter came to trial on a single count as already set out. Subsequent events showed that this was unfortunate. On any view it was wrong and a potential source of confusion that the indictment referred to “other persons unknown” but made no reference to Murphy, when it was clearly the prosecution’s case that Murphy was a conspirator. For other reasons the trial had to be adjourned and did not begin for another year.

Mr Hick opened the case to the jury as a scheme to defraud the bank by false applications for loans dishonestly introduced by the appellant and dishonestly processed by Kullar. Reference was made in broad terms to others, but the only other individual identified was Murphy. Mr Hick said:

Mr Hick told the jury that Murphy had pleaded guilty to being dishonestly involved in four of the transactions and that they would be able to see him on the CCTV. Mr Hick then went through the individual applications and explained the role of Murphy in the Murphy-related applications. The prosecution never sought to allege that any of the customers who applied for loans were dishonest, other than the appellant and Murphy, and in some instances the prosecution adduced evidence from the customers that they were duped by the appellant into making the applications for the purpose of enabling him supposedly to invest the money on their behalf. No dishonest role was attributed to any particular individual other than the appellant, Kullar and Murphy.

As the case progressed, Mr Cox became concerned that there was a lack of clarity in the indictment and in the case which the prosecution were seeking to present. Murphy was not identified in the indictment, but Mr Cox accepted that the prosecution were putting him forward as a conspirator. However, the conspiracy which was being alleged against the appellant and Kullar was broader than the matters in which Murphy was involved. In those circumstances, logic suggested to Mr Cox that the indictment ought to contain an alternative second count directed at the Murphy-related transactions. Mr Cox made that suggestion to Mr Hick in email exchanges at the end of the prosecution case. Mr Hick did not consider it to be necessary. Mr Cox therefore raised the matter before the judge.

The concern expressed by Mr Cox was that unless the agreement alleged by the prosecution was identified with some clarity, there was a risk of confusion continuing through the remainder of the trial and up to the jury’s deliberations. He acknowledged that Mr Hick had been consistent from the outset in saying that Murphy was a conspirator, although not named on the indictment. However, he observed that Murphy was at most involved with eight loan applications. There was no evidence that the appellant and Murphy conspired together to carry out a wider fraud.

In response Mr Hick said that the prosecution alleged a conspiracy between the appellant, Kullar, Murphy and others unknown. When asked by the judge about the others unknown, Mr Hick referred broadly to the “entourage” around the appellant without seeking further to identify them or their role. He said that the pictures of the appellant being accompanied by others on visits to the bank pointed clearly to others being involved, but he added that he could not say “precisely which of those individuals was a party to the fraud”. Murphy was alleged to have joined a conspiracy which was wider than the individual transactions directly involving him, and Mr Hick did not consider it necessary to add a second count.

At the close of the evidence and before final speeches, the judge helpfully supplied counsel with draft directions to the jury for discussion. Mr Cox submitted that if Kullar were found not guilty, the prosecution had not identified any proper basis on which the jury could find that there was any other counterparty to the conspiracy which they alleged.

As to “persons unknown”, Mr Cox submitted that it was insufficient to “gesture to an entourage”: it was necessary to produce evidence as to their roles.

As to Murphy, Mr Cox submitted that there was no basis on which the jury could properly find that Murphy was party to a conspiracy which extended beyond the Murphy-related transactions, and that any conspiracy with Murphy was a different conspiracy from the wider conspiracy alleged by the prosecution.

The judge did not accept those submissions.

At the end of Mr Hick’s closing speech the judge asked the jury to leave while he raised a matter with counsel. In their absence the judge said that he did not consider that Mr Hick had been sufficiently clear about the circumstances in which the appellant could be convicted if Kullar were acquitted. On the jury’s return, Mr Hick asked them to look at the indictment and addressed them as follows:

The judge directed the jury that if they were to acquit Kullar, it would be open to them to convict the appellant, but only if they were sure that he made “a necessary agreement with a person or persons other than Mr Kullar”. As to that, they had to ask themselves:

He summarised the prosecution’s case against the appellant in this way:

In his sentencing remarks the judge said that the appellant had played a part in dishonest applications for loans totalling just shy of £390,000.00, which had resulted in the bank advancing cash just short of £230,000.00. In short, the appellant was sentenced on that basis that he was guilty of a conspiracy which went beyond the Murphy-related loans.

Mr Cox submitted that the judge’s directions on conspiracy were defective in the following respects:

It followed in Mr Cox’s submission that the conviction was unsafe, because the judge’s directions allowed for a conviction on various flawed bases. It was also unsafe because, on Kullar’s acquittal, there was no proper evidential foundation for convicting the appellant of the conspiracy alleged by the prosecution. The sentencing remarks demonstrated that the judge treated the appellant as having been convicted of a conspiracy embracing all the loan applications. There was no evidential foundation for finding that there was any counterparty to that alleged conspiracy.

In support of his submissions Mr Cox repeated the arguments which he had advanced at the trial, citing a number of authorities on conspiracy (some of which had been referred to at trial): Meyrick and Ribuffi (1930) 21 Cr App R 94, Griffiths (1965) 49 Cr App R 279, Greenfield (1973) 57 Cr App R 849, Mintern [2004] EWCA Crim 07, D [2009] EWCA Crim 584 and Ali [2011] 2 Cr App R 22.

Mr Hick submitted that the jury was properly directed and that the conviction was safe.

During the hearing of the appeal there was argument about the proper legal consequences if the court were to conclude that:

As will become clear, that is the conclusion which we have reached. After the hearing, both parties submitted further written submissions on the point. Mr Cox submitted that the conviction could only be upheld on that scenario by the substitution of an alternative verdict under section 3(2) of the Criminal Appeal Act 1968. As to that, he submitted that to do so would be wrong in law because in cases of conspiracy it cannot be said that the greater includes the less, citing in particular Barnard (1980) 70 Cr App R 28. Mr Cox also submitted that it would in any event be a wrong exercise of the court’s discretion to uphold the conviction on that basis.

Mr Hick submitted that there would be no need to substitute an alterative verdict on the scenario under consideration. If the jury were satisfied that the appellant conspired with Murphy, but could not properly be satisfied and/or were not satisfied that the conspiracy went beyond the Murphy-related transactions, or that the appellant conspired with anyone else, he was guilty of an offence within the allegation contained in the indictment, namely conspiring to defraud the bank by making false loan applications. The appellant might have legitimate grounds for appeal against sentence, but that was another matter. Alternatively, if Mr Hick was wrong on his primary argument, he submitted that the court would have power to substitute an alternative verdict and that there would be no injustice in doing so on the facts of the case. He observed that the only reason that the indictment did not contain alternative substantive counts against the appellant relating to the Murphy transactions was because of the concession made by the defence before the trial “that if the jury found that Mr Mehta was dishonestly involved in one or more of [the Murphy] transactions, then on the facts of this case that would inevitably constitute a conspiracy”.

We agree with Mr Cox’s submission that there was no proper foundation for the jury to convict the appellant of conspiring with anybody other than Kullar and Murphy. At the start of the case the prosecution suggested that there must have been others involved, but the suggestion was made in the most general terms. No serious attempt was made to identify and explore who they were or what their particular roles were. It was not a case in which the prosecution sought to say that the appellant’s business was entirely fraudulent. He introduced many loans which were not alleged to have been fraudulent. If it was to be the prosecution’s case that some other individual within his “entourage” or who worked at Pentax House must have been complicit in putting forward a number of fraudulent applications, it was incumbent on the prosecution to make a proper case to support the assertion. The suggestion remained vague and tenuous. As for the producers of bogus payslips, the first suggestion that they should be considered as possible conspirators to the jury came in the postscript to prosecuting counsel’s closing speech. The prosecution never produced any evidence about the provenance of the payslips. The question how they became to be produced, or by whom, was simply not explored at the trial.

If we considered it to be a real possibility that the jury were unsure whether the appellant’s relationship with Murphy was corrupt, and may have convicted the appellant on the sole basis that he had conspired with one or more unknown members of his entourage, employees at Pentax House or producers of bogus payslips, we would have no hesitation in concluding that the conviction was unsafe. However, we do not regard that as a real possibility. The dishonesty of Murphy in putting forward the Murphy-related applications was undisputed, and in convicting the appellant the jury must have been sure that his relationship with Murphy in relation to those transactions was dishonest. Mr Cox did not dispute this point when it was put to him, and to do so would have been hopeless. The critical question is whether the appellant’s dealings with Murphy provided a sufficient foundation to support the appellant’s conviction on the indictment.

At this stage it is helpful to recap where we have reached. The prosecution’s case was that the principal conspirators were the appellant and Kullar, and that Murphy (although not named in the indictment) became a party to the conspiracy. In support of that allegation they relied on Murphy’s pleas of guilty and his demonstrable role in the Murphy-related transactions. The jury’s verdict meant that there was no conspiracy between the appellant and Kullar, but they must have satisfied that there was a conspiracy between the appellant and Murphy.

The judge’s direction, set out at paragraph 21, left it open to the jury to convict the appellant if they were satisfied that he agreed with Murphy that false loan applications would be made to the bank, intending that the agreement should be carried out. There was evidence of Murphy’s involvement in eight applications. There was no evidence of his involvement in, or knowledge of, any of the other nine applications in which the appellant was alleged to have been dishonestly involved. There was therefore no proper foundation for the jury to find (or any reason to suppose that they in fact found) that the agreement between the appellant and Murphy extended beyond an agreement to make dishonest loan applications, of which the overt acts were the eight Murphy-related transactions.

The question is whether on that finding, which the jury must have made, the conviction is sustainable in law and/or can properly be regarded as safe.

The authorities establish the following propositions:

These principles are illustrated by the well known lime fraud case of Griffiths. A supplier of lime to farmers, acting in concert with an employee, entered into agreements with several farmers to defraud the government by making false subsidy claims. There was no evidence that any of the farmers was aware of the arrangements being made between the principal defendant and any of the other farmers, but they were all charged with a single count of conspiracy. The Court of Criminal Appeal held that there was no evidence of a conspiracy between all those convicted, as opposed to a number of different conspiracies, and the convictions were quashed. Paull J gave an illustration which has been quoted in later cases:

Mr Cox relied on that reasoning in the present case, but the present case is different. The prosecution alleged what Mr Hick insisted was a single agreement to which Mr Murphy became a party. The indictment was not on its face bad for duplicity. However, the evidence which he called did not show that Murphy was party to an agreement as broad as that alleged against Kullar and the appellant. In the event, the jury’s verdict meant that there was only one agreement, namely the agreement between the appellant and Murphy, which was limited in scope to the transactions in which Murphy was involved. That fell within the language of the indictment and within the case advanced by the prosecution.

Mr Cox submitted that it was wrong to regard the agreement between the appellant and Murphy as an agreement falling within the scope of what the prosecution alleged; rather, there were two separate agreements. However, what Mr Hick asserted in opening was an agreement between the appellant and Kullar, to which Murphy attached himself. What the jury must be taken to have found was an agreement between two of the alleged conspirators, namely the appellant and Murphy, which was narrower in scope than the conspiracy alleged.

Mr Cox submitted that this analysis was impermissible and he relied on the reasoning in D. In that case the respondents were two of six people alleged to have conspired with others unknown between 1 January 2005 and 31 July 2007 to sell fake wristbands for entry into music festivals in England to members of the public. The principal defendant pleaded guilty on the first day of the trial. The indictment was amended to narrow the timeframe for the respondents to between 1 June 2005 and 31 July 2007. The evidence against them related solely to their involvement in selling fake wristbands for a single festival on the Isle of Wight in 2007. At the close of the prosecution case the respondents successfully submitted that there was no evidence to show that they were participants in the conspiracy to which the principal defendant had pleaded guilty. They may have been guilty of a narrower conspiracy, but they did not share a common design with the principal defendant to sell fake wristbands at other festivals. The prosecution thereupon applied for permission to amend the indictment to include a second narrower conspiracy. The judge refused the application because he considered that the respondents would be prejudiced by things which had already been said during the trial. The prosecution appealed unsuccessfully against his rulings.

The court held that if his first ruling was properly sustainable, there was nothing wrong with his discretionary refusal to allow the prosecution to amend the indictment. In upholding the ruling on the first issue the court said at [21]:

The case exemplifies what we have stated as proposition three in paragraph 36. The principal offender had pleaded guilty to an umbrella agreement. There was no evidence that the respondents were parties to that agreement, but only to a narrower agreement. We do not consider that the case is authority for any broader proposition or that it assists Mr Cox.

Take a case, for example, where the prosecution allege that A, B and C conspired to import unlawful drugs between years 1 and 3. If the evidence leaves the jury unsure that A was a party to the alleged conspiracy, but sure that B and C were parties to it during years 2 and 3, there is no rule of law to prevent the jury from finding B and C guilty. Such cases are in fact commonplace. The present is a somewhat unusual example in that the jury was not persuaded of the guilt of Kullar, but there was compelling evidence that the appellant and Murphy were guilty of conspiring to defraud the bank by making false loan applications during the period alleged.

We do not accept Mr Cox’s argument that the appellant’s conviction could only be upheld by substituting a different verdict for the jury’s verdict. On the basis that the words “others unknown” in the indictment were understood by everybody from the beginning of the trial to include Murphy, the “substituted” conviction would be in the terms of the indictment itself.

Mr Cox would no doubt argue that this confuses form with substance. He submitted that in the area of conspiracy there is no room to apply the principle that the greater includes the less, and that the appellant’s dishonest arrangement with Murphy cannot be treated as falling within the indictment. This submission lies at the heart of the argument in the present case. In support of his argument Mr Cox relied on Barnard (1980) 70 Cr App R 28. Before considering that case, we observe that if Mr Cox’s broad submission is right (i.e. that in the area of conspiracy a broader allegation cannot be taken to include a narrower allegation), in the example given in paragraph 43 B and C would have to be acquitted, albeit that the jury were properly satisfied on the evidence that they had conspired to import drugs within the period of the indictment. It is one thing to hold that parties to a conspiracy must share a common design; it is another matter to argue that if the participants and their design are narrower than the prosecution have alleged, they must necessarily be acquitted. Conspiracy requires a common design, but it is not a bed of Procrustes whose minimum dimensions are fixed by the prosecution’s initial measurements.

In Barnard a jeweller was robbed by three men armed with an iron bar. They tied him up and made off with his stock. In due course the three robbers either pleaded guilty to or were convicted of the robbery. A count against them of conspiracy to rob was ordered to remain on the file. There was evidence that the appellant had previously reconnoitred the premises with two of the robbers, as he admitted when he was interviewed by the police. His explanation was that he was a professional burglar specialising in jewellers’ shops, but that his method involved gaining entry through the premises above the shop. He said that he abandoned any idea of stealing from the shop after surveying the way in which the jeweller conducted his business, and that at no time had he ever discussed robbing the jeweller in his shop.

The appellant was tried after the robbers. At the beginning of the trial he faced a single charge of conspiracy to rob. Counsel for the prosecution realised that the appellant’s case was going to be that if he was guilty of any offence, which he denied, it was a conspiracy to steal and not a conspiracy to rob. Before the case was opened to the jury, he raised before the judge the question whether it would be open to the jury, under section 6(3) of the Criminal Law Act 1967, to find the appellant guilty of conspiracy to steal. That subsection provides:

The judge said that he was not persuaded that the jury would be entitled to do so, and he suggested that a better course would be for a count to be added to the indictment charging conspiracy to steal. The prosecution made that application and the judge granted it. It is not clear from the report whether the case proceeded only on the new count or whether it proceeded also on the count of conspiracy to rob until the close of the prosecution’s case. It is, however, clear that the jury were not asked to give a verdict on the count of conspiracy to rob, and the Court of Criminal Appeal said that there was no sufficient evidence of the appellant having joined a conspiracy to rob. The jury convicted the appellant of conspiracy to steal.

Evidence was given at the trial of the carrying out of the robbery. That evidence was evidence of an overt act referable to an alleged conspiracy to rob, but it was not admissible as evidence of a lesser agreement, i.e. a simple conspiracy to steal. The court so held at page 33:

The court considered that the admission of that evidence had the effect of undermining the defence of the appellant (namely, that he had abandoned any designs which he might have had on the premises) and it observed that there was no direction by the judge to the effect that the jury should ignore the evidence of the robbery. In those circumstances, the court held that the conviction must be quashed.

In our judgment the ratio of the case is to be found in the court’s conclusion that evidence had been admitted which was irrelevant to the count on which he was convicted and had a prejudicial effect.

Mr Cox relied on a passage in the judgment in which the court said, with reference to an argument put forward by counsel for the prosecution about section 6 of the 1967 Act:

That passage has to be read in its context. As the court analysed the evidence, there was arguably an original agreement to steal. If so, the court continued,

If the defendant was charged with entering into the later agreement, but he was not a party to it, he could not be convicted under section 6 of having committed a different offence at an earlier date.

This was the analysis of Professor John Smith in his commentary on the decision at [1980] Crim LR 235:

We agree with that statement of law.

If, as we hold, no principle of law prevented the jury from convicting the appellant on the basis that they were sure that he conspired with Murphy to defraud the bank by making false loan applications, the question remains whether it would be unjust to uphold his conviction in view of the way in which the case was presented. That is a fact specific question and involves no general principle of law.

The indictment was unsatisfactory in its reference to persons unknown. It was unfortunate that the prosecution did not pursue its original application to add substantive counts corresponding to the offences which were the subject of Murphy’s guilty pleas. When the defence invited the prosecution to add a second count of conspiracy, it is regrettable that the prosecution did not do so. That would have avoided the problems which have followed. The question, however, is whether the appellant has suffered prejudice such that the conviction should be considered unsafe.

From the outset the defence knew that they were going to have to deal with the prosecution’s case that the appellant’s relationship to Murphy regarding the Murphy-related transactions was one of mutual dishonesty. It was throughout accepted by the defence that if the appellant was dishonestly involved in one or more of the Murphy transactions, he was guilty of conspiracy. That was the reason for the prosecution’s original decision to proceed on a single conspiracy count. The appellant’s case was that he himself acted honestly but he was duped by Murphy. The judge put that case to the jury and they disbelieved it.

In those circumstances, if the point of the law advanced by Mr Cox is unsound, we do not consider it unjust or unsafe to uphold the conviction. On the contrary, justice would not be served by his acquittal. These observations are subject to one important proviso. We do not consider that the basis on which he was sentenced reflects the scope of the conspiracy which was properly proved. At the end of the argument the court indicated that if we were so to find, we would grant an application for permission to appeal against sentence.

For those reasons the appeal against conviction is dismissed but we grant leave to appeal against sentence.