Hollier & Anor, R. v

These are renewed applications on the part of Hollier for permission to appeal conviction and sentence, and Booth for permission to appeal conviction.

The applicants were convicted on 12 April 2012 and sentenced on 18 July 2012. Hollier was convicted of fraudulent trading contrary to section 458 of the Companies Act 1985 and two offences of perjury. He was sentenced to two years imprisonment for the fraudulent trading, and one year imprisonment on each perjury charge to run concurrent with each other but consecutive to the two years. He was disqualified from being a director for seven years. He was acquitted of two other counts of fraudulent trading and a not guilty verdict directed in relation to another count of fraudulent trading. These acquittals are mentioned since they have been referred to in written and oral argument in the application conducted on his behalf by Mr Horwell QC.

Booth was convicted of two counts of fraudulent trading, two counts of perjury and one count of theft. He was sentenced akin to Hollier. He was not represented at the oral hearing here but had submitted further written arguments, including adopting the arguments of Mr Horwell in relation to what was Count 3 on the indictment.

We would grant any necessary extension of time in which to make renewed applications subject to merit. As it is, we have refused permission to appeal conviction and sentence and conviction respectively for the reasons indicated below.

The background to the prosecutions may be stated relatively simply at this stage. Hollier built up a substantial business empire in the insurance industry. Two of his companies were called Shakespeare Underwriting Limited (“SUL”) and CIA Insurance Services Limited (“CIA”) and were very successful. Hollier had been instrumental in their establishment and management. The financial benefits were great.

In 2001 Hollier employed Booth, a Chartered Accountant as an overall financial controller of the companies. Booth had substantial financial and insurance experience.

In 2001/2002 the DTI conducted an investigation into a group of companies called AMBA Group and brought ‘Directors Disqualification’ proceedings against Hollier. He successfully defended the claim in the High Court. He and Booth gave evidence on oath before Etherton J ( as he then was) in 2006. This evidence formed the basis of the perjury claims – Counts 5 -8 inclusive. Both Hollier and Booth denied that the former had acted as a director or been concerned in the management of SUL or CIA since they were sold to the Bentley Group Limited (“BGL”) in 2002.

SUL and CIA were managed by directors on a day to day basis, albeit ineffectually in relation to any control over the company finances. Hollier appeared to use the company accounts as if they were his own and Booth “took rewards.” Ultimately SUI had to be placed into administration. Excessive cash withdrawals from CIA resulted in urgent intervention by the Financial Services Authority which enabled a “management buy out”. These facts formed the basis of Counts 1 and 2 which charged both with fraudulent trading with intent to defraud creditors – that is, in relation to the first limb of section 458.

BGL was prima facie owned by Booth. Hollier and Booth claimed that SUL and CIA had been sold at arm’s length to BGL in 2002. The prosecution case was that the purported sale of the companies to Booth was a sham and a device to distance Hollier from the ownership and control of the companies and that documents had been created subsequently falsely to witness the same. This formed the basis of Count 3 which alleged against both Hollier and Booth fraudulent trading contrary to the second limb of section 458, namely the carrying on of business of a company “for any fraudulent purpose”.

The theft alleged against Booth in count 9 related to a transfer of £45,000 from SUL to Booth after the company had gone into administration.

Hollier and Booth maintained that the former was obliged to sell his relevant business interests to the latter because the DTI investigation had such a deleterious impact upon business reputation as to cause loss to SUL and CIA. Hollier and Booth denied his de facto ownership or control. Monies paid to him were consultancy fees in accordance with the contract of sale. Both Hollier and Booth denied dishonest business dealings.

Hollier was sentenced on the basis that he remained the owner of SUL and CIA and that the sale to BGL was designed to disguise their true ownership. He had deliberately lied when giving evidence in the High Court in 2006. False documents had been created to corroborate his false evidence. He was of good character. He was a successful and self made businessman. He was now bankrupt. Testimonials and a psychiatric report were taken into account. The offences of perjury were an aggravating feature in the overall context of the case.

New grounds of appeal against conviction have been substituted for those previously settled by trial counsel for Hollier after the single judge’s refusal of permission to appeal. Grounds of appeal against sentence remain generally the same, namely that the sentence of 2 years imposed on Count 3 was manifestly excessive as was the period of disqualification in that they do not adequately reflect the facts as determined by the Court or Hollier’s mitigation.

Booth initially sought leave to appeal the convictions for perjury only, apparently on the basis that the judge wrongly rejected his submission of no case to answer. However, he not unreasonably piggy backs upon the submissions of Mr Horwell in relation to Count 3.

Mr Horwell has developed the ‘new’ grounds of appeal with conspicuous skill both in written and oral advocacy.

Booth’s written representations do not advance his case further.

Mr Horwell mounts his challenge with the realistic concession that defence trial counsel did not seek particulars of Count 3, nor did he challenge or correct any aspect of the trial judge’s directions of law as to the constituent elements of the offence of “second limb fraudulent trading” in Count 3 and participated in discussions relating to the “written steps to verdict” subsequently handed to the jury and made no protest of the same. We have not considered it necessary to speculate upon the outcome of a “different approach” and agree that these shortcomings identified in retrospect by “new eyes” would not come close to undermining the safety of conviction. Our function is to review the outcome of the trial with regard to the evidence before the jury in support of the indictment, regularity of procedure and the directions of law.

Mr Horwell sought to identify seven “key” issues before us. With all due deference to his arguments, there is considerable overlap and ultimately he makes two main points on the safety of the conviction:

We deal with these arguments in turn as follows.

Count 3 is particularised to allege that Hollier and Booth “were knowingly a party to the carrying on of the business of [BGL] for a fraudulent purpose, namely to disguise Hollier’s role in the ownership and control of [SUL] and [CIA].” It is differentiated from the particulars of Counts 1 and 2, which alleged “first limb” fraudulent trading, that is an intent to defraud creditors. We note that there was no application to dismiss this count at the outset of proceedings as failing to identify an offence or otherwise a submission that there was no case to answer at the close of the Prosecution case. Counsel for Hollier and Booth were not averse to doing so in relation to Count 4.

The Judge summarised the nature of this Count at the beginning of his summing up in terms that “A defendant acts with fraudulent purpose ….when his conduct evidences an intention to go beyond the bounds of what ordinary, decent people engaged in business would regard as being honest. The Crown contend that there was no sale effectively to [BGL] , that the agreements were a sham…….and that shows dishonesty…and all done to disguise Hollier’s continued involvement effectively in the ownership of those businesses and his control, but , even if effectively the sales may well have been genuine, that he continued to act through Booth who was effectively his nominee.”Counsel for Hollier and Booth sought no correction in relation to this, despite a general invitation from the judge for any observations upon the summing up delivered at times when the jury withdrew. Again, neither were averse to doing so to correct details of evidence.

In any event, we consider that this was an adequate overview of the case that the jury had to consider under Count 3. If the jury were sure that the sale had been a sham, then they were entitled to infer that the machinations behind the false trail of sales agreement was for fraudulent purpose. If the jury were sure that the sale was genuine but, nevertheless, Hollier was effectively pulling Booth’s strings whilst publically and falsely renouncing control – , they were entitled to infer fraudulent purpose subject to being sure that such actions were “beyond the bounds of what ordinary decent people engaged in business would regard as honest”.

“Second limb” fraudulent trading does not necessarily incorporate intent to deceive or actual deception of creditors. Concealment of ownership to obtain business advantage that would otherwise be denied is sufficient if the jury were sure of dishonest intent. There is no obligation upon the Prosecution to identify those who were or may have been subject of the fraudulent purpose if it is inevitably to be inferred, as here, from the circumstances and evidenced by Hollier’s own evidence, that the companies had already suffered in Guernsey trading by virtue of their association with him.

No doubt, if called upon to do so the Prosecution would now submit to the call for further particulars by adding the words “and so gain commercial advantage from individuals, bodies or corporations that would otherwise decline to do business with companies under the control of Hollier”. We do not consider their omission deflected the jury from their proper task.

We consider the status of the Prosecution opening or sentencing notes to be otiose. They are not evidence. The fact that the Prosecution and Defence put their respective cases differently for the purpose of sentence is the norm.

This aspect of Mr Horwell’s argument fails.

The document “Steps to Verdict” prepared by the judge was discussed with Counsel. It cannot be seen in isolation from the additional commentary in the summing up. The relevant part of Paragraph 4 for our purposes reads: “Are we sure that one aspect of the business of the company was carried on….for a fraudulent purpose ..(what was done went beyond ….[etc]”.

We accept Mr Horwell’s argument that the classic exposition therein is derived from that part of Grantham which concerns intent to defraud in “first limb” fraudulent trading. However we reject any implicit argument that it is so confined. Support for its extension to “fraudulent purpose” is found in R v Grantham [1984] 1 QB , 675 itself. The LCJ of the day giving the judgment of the court referred to Maugham J’s ruling on the meaning of “fraudulent purpose” in the case of Re Patrick and Lyon Ltd [1933] 1 Ch to be words that “connote actual dishonesty involving, according to notions of fair trading among commercial men, real moral blame”.

Dishonesty is an essential ingredient of the offence of fraudulent trading– whether first or second limb. It is impossible to abstract the notion of dishonesty from the adjective “fraudulent” but we agree with Mr Horwell that in relation to Count 3 there must be more than dishonesty per se, that is, there also has to be a “purpose” for the dishonesty. This is encompassed adequately in the steps to verdict at paragraph 4 and 6.

The perjury counts were legitimately joined in the indictment. No attempt was made to sever them. The outcome of the perjury counts depended upon the jury’s decision as to dishonesty in relation to BGL, SUL and CIA and thus whether they were sure that Hollier and Booth had deliberately lied in giving evidence in the High Court. Mr Horwell acknowledges that if Count 3 is inviolable on appeal then so are the verdicts in respect of Counts 5 to 8.

The argument that the jury may have been misled into considering that the dishonesty necessary to establish perjury equated with, or was sufficient to amount to fraudulent trading is undermined by the terms of the summing up.

We find the “steps to verdict” and additional commentary is an accurate representation of the law. We go so far as to venture that if the jury were sure of the deceit practised by Hollier and Booth to disguise Hollier’s continued control and influence in SUL and CIA it would be inevitable , on the evidence they heard, that they would infer fraudulent purpose. The only issue would be whether the behaviour exceeded reasonable bounds in present day commercial life and was dishonest.

Mr Horwell’s argument fails to satisfy us that the conviction in relation to Count 3 is unsafe. His renewed application must fail.

We adopt the single judge’s reasoning in dismissing Booth’s application for permission to appeal on the basis that submissions of no case to answer on the perjury counts should have been upheld, namely:

We refuse his renewed application for permission to appeal.

Finally, turning to Hollier’s application for permission to appeal against sentence. In the absence of applicable definitive sentencing guidelines, Mr Horwell attempts to draw comparisons with the sentence in Mackey. [2012] EWCA Crim 2205. In that case the sentence of 18 months for a woman of good character who appropriated £60,000 in fraudulent trading was upheld. In Hollier’s case, Mr Horwell argues that the absence of any defined monetary loss should inform a lesser term of imprisonment.

We do not accept that sentence is informed by monetary loss alone. The judge was required to consider the overall behaviour of Hollier as represented by the guilty verdicts. He had presided over a trial which had continued for months and was able to make assessment of Hollier’s blatant disregard for honest business dealing and the impact upon employees and clients alike over a significant period. A sentence of 2 years imprisonment was merited after trial. It is not manifestly excessive.

Likewise the director’s disqualification. The sentence was merited by the nature and extent of his business misconduct.

The application for permission to appeal sentence is consequently refused.