Kuchhadia v R.

On 24^th June 2014 the appellant was convicted of fraud and converting criminal property. He was sentenced to five years imprisonment for the fraud, and two years six months imprisonment concurrent for converting criminal property. He appeals against conviction with the permission of the single judge in relation to the offence of converting criminal property, arguing that there was no evidence of criminal conduct. He renews his application for permission to appeal against conviction in relation to the offence of fraud, and against sentence. He is represented by Mr Schofield, who was not trial counsel.

The offence of fraud concerned the appellant's application for a mortgage with Barclays Bank for £3.9 million. The issue was whether he had dishonestly misrepresented his means in his attempt to do so. The offence of converting criminal property centred on his purchase of very high value motor vehicles. It was an agreed fact that the appellant had paid no tax between 2004 and 2010 (when the vehicles had been purchased); nor had he provided any tax returns for that period for himself or for First Sterling Finance, a company in his control.

The Prosecution case was that he had no legitimate source of income. The appellant’s case was that he had not acted dishonestly. He always intended to repay the mortgage he applied for and had the means to do so. He had always financed the vehicles from legitimate income (13G)

As we have heard the appeal and the renewed application for permission to appeal it has become apparent to us that the evidence in relation to each count on the indictment should not be segregated. This in itself gives indication of our rejection of the argument advanced in support of permission to advance a ground of appeal that there should have been severance of the indictment. It also explains why we refer in more detail than would normally be called for in an appeal against conviction to the evidence before the jury.

The son of the vendor of the substantial family home in Leicestershire gave evidence that an offer of £3.8 million was accepted from the appellant, who had produced a document headed “Boston Capital Asset Management Ltd” to show that he had sufficient funds and said that he was a cash purchaser. Subsequently the appellant said he needed to secure the release of equity from other houses and that he had a £90 million interest in commercial properties which generated an income of £4million per year. He said he had sold a personal property in London and that he was in the process of selling another. He exported motor vehicles to Malaysia and was involved with trading diamonds from Gujarat and spoke of his luxury car collection. Later still, he assured the witness that Barclays Bank had made a mistake when recording his income as £300,000 when it was actually £3million and said, consequently he intended to deal with the Nationwide Building Society.

The vendor’s solicitor gave evidence to similar effect. He said he always understood from the appellant that he was someone of “significant financial substance”. He produced a note made at an appointment with the appellant detailing his financial status and the avenues available to raise the monies required to purchase the property.

On 31^st August the appellant’s conference telephone call to a bank employee was recorded. The transcript was produced in evidence. During that telephone call the appellant spoke of business interests in jewellery, diamonds and Greek agriculture; he said his annual income was between £650,000 and £750,000. At the end of September e mails were sent by the appellant attaching accounts, a valuation report from Western Avenue Properties and VAT returns for the previous 8 months. An application form was produced in reliance on the information provided by the appellant. He was asked to approve its contents. It asserted an income of £610,000 and a 35% share of a company. It declared that the appellant had no previous convictions, had not been adjudged bankrupt and had no interest in any other company. The application form was submitted in good faith.

Another witness, whose family owned the Western Avenue Properties, indicated that the appellant had assisted by helping restructure a loan and increase revenue from advertising. However, the company had never paid the appellant. They were to give him a 50% shareholding but the shares had never been transferred. Another company was formed in 2003 to export motor vehicles to Malaysia and the Far East. The appellant had assisted in securing the start-up finance. The appellant was to receive 30% shareholding in the company by way of payment but no shares were ever transferred and he would not have been entitled to any shares in the company by January 2011.

Mr Pervaiz, a bookkeeper gave evidence that he had contacted the appellant who informed him that he was seeking an accountant to provide a letter in support of a mortgage. The appellant said that he would send a draft of what he needed and duly e mailed the witness. His previous convictions, including two offences of obtaining a pecuniary advantage by deception in 1992 and theft in 1990, were introduced in cross examination by counsel for the appellant and he was accused of lying and that he had threatened the appellant and demanded money or else he would change his statement and “Screw him over”.

The appellant was interviewed at length regarding his ownership and finance of the four high value vehicles in March 2010 and April 2011. The interviews were extensively summarised. The prosecution provided the jury with a chart dealing with their ownership and finance. He admitted at trial that he lied in his interviews on several points.

Trial counsel submitted that there was no case to be left to the jury on converting criminal property. He argued that: (i) the fact that the Appellant owned expensive motor vehicles was not evidence of criminal conduct in itself; (ii) a failure to account to the HMRC for tax due from legitimate business trading was not a basis for alleging criminal conduct; (iii) the prosecution could not in any event quantify the amount of any alleged cheat by him and that benefit could only be established by reference to a specific sum.

The prosecution responded that the appellant had no lawful or legitimate source of income within the UK and had filed no tax returns for at least six years. The criminal conduct was tax evasion evidenced on the account presented by the appellant in his interview and defence case statement; the fact that there was no count on the indictment alleging cheat of the Revenue did not alter the fact.

The judge ruled against the appellant. He found that this was not a case based on the fact that the appellant ran a legitimate business but had not filed tax returns. Referring to R v Anwoir [2008] EWCA Crim @ 1354 he found that there was an identified criminal conduct which was tax evasion. If the jury were not satisfied of that, the jury could draw an “irresistible inference” from the evidence that the property could only have been derived from crime. It was for the jury to decide if they accepted the appellant's assertions that that he had legitimate income in the United Kingdom and was not a dishonest man. He had taken into account the fact that the appellant appeared to have told repeated lies to the police as indicated in his defence statement.

The appellant gave evidence at trial to the effect that he was engaged in financial brokerage. He would arrange property, vehicle or developmental finance and could be paid by any party engaged in the transaction. For example he had brokered a deal for mining precious gems in Ghana and would receive a commission earning him $50,000 to $100,000 per month. He owned the vehicles outright. He accepted he had lied in his police interview about buying the property for himself because he was not sure how he wanted to buy it and whose name he should register it in. He lied about whether he was a part share owner because he had not wanted the police to be interested in the companies, to interfere with their trading or to freeze their assets. The witness Pervaiz had introduced him to the co-accused, an accountant, and they attended a meeting together. He had never e mailed a draft letter to Pervaiz. That was a lie. He had not asked his co-accused to write the letter that he had.Pervaiz had telephoned him 5 or 6 weeks before the trial and said that he wanted to be paid otherwise he would lie in court. He stated that the accountant’s letter contained incorrect information which did not come from him. He denied that he had used his co accused and that he had tricked him to write the reference. His several previous convictions for dishonesty between 1997 and 2005, the majority involving fraudulent dealing with significant sums of money, were admitted in light of his attack upon the integrity of a Mr Pervais and also to show propensity.

The co-accused gave evidence that Pervaiz had introduced him to the appellant, who was described as a millionaire businessman. The appellant said that he was a millionaire and that he had a diamond business with 100 per cent share holding. The appellant said that he wanted his co-accused to prepare his accounts for four years and two years self-assessment which were outstanding. He also needed a letter for a mortgage. He co-operated but on 12^th October 2010 he wrote to Barclay’s Bank advising they stop processing the loan.

Mr Schofield argues that the judge erred in law when he failed to rule that the appellant had no case to answer at the conclusion of the prosecution’s case in relation to count 3. He repeats the submissions made below to the effect that there was no evidence of criminal conduct before the jury, submitting that the trial judge erred in his analysis of whether the prosecution had established a sufficient foundation of evidence to raise a prima facie case in misunderstanding of the rationale of the decision in Anwoir. That is, it was not sufficient for the judge to rely upon a prosecution assertion that they were entitled to raise a prima facie case without identifying the kind of unlawful conduct from which the property derived, without reference to the evidence upon which they could (or could not) rely, and merely by reference to the fact that the appellant had no visible means of support.

He relies on what he says are the similar facts in the case of R v NW, SW, RC and CC (2008) EWCA Crim 2, an appeal from a terminating ruling pursuant to section 58 of the Criminal Justice Act 2003 in a case in which the prosecution could prove the lack of financial support but in the absence of evidence of the particular criminal conduct, or type of criminal conduct, which generated the benefit which the alleged criminal property represented. He further argues that Anwoir did not decide that NW was decided per incuriam and therefore it remains good law, seeking support no doubt from paragraph 38 in which Laws LJ, giving the judgment of the court said:

“In short, we do not consider that Parliament can have intended a state of affairs in which, in any given instance, no particulars whatever need to be given or proved of a cardinal element in the case, namely the criminal conduct relied on.”

Latham LJ, giving the judgment of the court in Anwoir, reviewed R v NW (above) and R v Craig [2007]EWCA Crim 2913, the apparently two conflicting Court of Appeal Criminal Division authorities, and considered the authorities on the court’s approach in civil enforcement provisions contained in Part 5 of the Proceeds of Crime Act 2002, Green[2005]EWHC Admin 3168 and Szepietowsky [2007] EWCA Civ 766, as did the court in R v NW, dealing with issue of the necessity to establish the class or type of criminal conduct involved for the purpose of a prosecution for converting criminal property.

The court in Anwoir identified what it considered to be a common thread running between the authorities, namely that

“whereas the mere possession of money would not be sufficient. Implicit ...it seems to us, is the conclusion that circumstances could well arise where the only logical inference is that the property is the proceeds of crime. It will all depend on the facts. We think that this is precisely what Laws LJ had in mind in paragraph 16 of his judgment in NW...”

However, Latham LJ went on to refer to what he termed the “clear tension” created by paragraphs 17 and 38 of the decision in NW, concerning the necessity of establishing at least the type or class of crime in question and describing the issue as a pure matter of law. He distinguished the case of NW on the basis that

“NW was a case in which the prosecution’s evidence was essentially based upon the fact that NW had no visible means of support. That is quite a different case from the scenarios envisaged by Sullivan J in paragraphs 22 and 34 of his judgment. We consider that in the present case the Crown are correct in their submission that there are two ways in which the Crown can prove that the property derives from crime, (a) by showing that it derives from the conduct of a specific kind or kinds and that conduct of that kind or those kinds is unlawful, or b) by evidence of the circumstances in which the property is handled which are such to give rise to the irresistible inference that it can only be derived from crime.”

It seems to us that the decisions in R v NW and Anwoir as to the necessity to identify the criminal conduct are reconciled by the clear adjudication in each that criminal conduct, specific or generic, must be evidenced and proved to the criminal standard. We do not accept Mr Schofield’s argument, that a specific crime or criminal conduct must be specified and proved by the prosecution and a direction given so as to ensure that the jury are not divided about the nature of the criminal conduct which entitles them to convict. The statute does not support such a narrow construction. We do not read R v NW to support such a proposition. Anwoir, on its facts, certainly does not. There is no reason why the prosecution could not rely upon alternative or several allegations of different criminal conduct provided that they can prove at least one to the criminal standard to the satisfaction of the jury.

In this case the prosecution appear to have opened its case on count 3 somewhat narrowly, reliant on an inferred cheat of HMRC, based on the fact that the appellant had no legitimate means of income or capital to fund the motor cars. Trial counsel for the appellant identified this as a weakness on the clear jurisprudence, which we summarise, that non payment of tax does not necessarily equate to tax evasion; that which must be proved is either the illegitimate source of income or else the concealment of that legitimately obtained to avoid fiscal implications. His submission that there was no case to answer prompted the prosecution to fall back on, or at least to articulate specifically for the first time, reliance on the “second limb” of Anwoir.

We do not accept the written submission that defence trial counsel was ambushed by this authority, and even if he was, would not accept that fact as undermining the process adopted by the trial judge in determining the submission of no case to answer. The judge’s ruling on the application was notified to the parties, with reasons to follow. Contrary to what appears may be a suggestion otherwise in the advice on appeal, he did not receive further submissions but makes clear that he had re-read the authorities in the meantime, including Anwoir.

The appellant gave evidence, and it seems to us from reading the summing up which deals at length and in detail with his evidence, that he may well have provided further fuel to the prosecution fire. In any event, he was to admit lies, to be proved to have lied and his previous convictions for dishonesty were admitted. Not surprisingly, no further application was made to withdraw the case from the jury.

We agree that it would have been better for the judge to have directed the jury on the circumstantial evidence, as indicated above, which was able to be relied upon, in relation to the essential ingredient of the count alleging conversion of criminal property. However, in the light of the judge’s detailed summary of the evidence and reminders of the competing prosecution and defence cases on the same throughout the summing up, we are not satisfied that this omission renders the appellant’s conviction on count 3 unsafe.

Mr Schofield has raised an additional seven prospective grounds of appeal in pursuit of the renewed application for permission to appeal. In fact they may be condensed into two. The first is based upon the failure to sever count 1, the fraud and count 3 the criminal conversion. This is simply unarguable. The evidence of the appellant’s dishonest dealing in relation to the fraud was admissible on the criminal conversion for the reasons we indicate above. We need say no more. The second relates to the alleged impaired mental state of the appellant during his trial, which Mr Schofield suggests should have prevented his trial from starting when it did or commencing. The appellant criticises trial counsel for failing to take certain steps in this regard.

An overview of the proceedings gives a context for these arguments and we set it out here in light of what we have decided is an unfair criticism of trial counsel or the court process. It demonstrates to us, as it obviously did to the trial judge, that there had been considerable delay and the need to scrutinise the appellant’s self diagnosed mental illness. The process adopted by the trial judge was entirely fair. His withdrawal of bail was justified.

At plea and case management hearing on the 4^th April 2012 a trial date of 4^th February 2013 was fixed for trial. Defence statements were to be served by 2^nd May 2012. They weren’t. On 1^st August 2012 further directions were given that the defence statements should be served by 22^nd August 2012. The appellant's defence statement which dealt with count 1 only was served on 19^th September .at the plea and directions hearing counsel lodged and applied for severance of count 1 from count 3. An application to sever counts 1 and 3 on the indictment was refused.

On 23^rd January 2013 counsel for the appellant applied to break the fixture so that the appellant could have a non urgent elective surgical procedure. The application was refused. On 1^st February 2013 a further application to break the fixture was made but again refused. On 4th February 2013 the appellant failed to attend having undergone an operation on Saturday 2^nd February. The trial was re fixed 23^rd September 2013. On 10^th September 2013 the case was listed for mention. Records from the appellant’s General Practitioner indicated that the appellant was unfit to attend trial due to anxiety and depression. Reports were directed. On 16^th September 2013 the trial date was vacated due to the ill health of the appellant and re fixed for 2nd June 2014. On 20^th May 2014 counsel for the appellant applied to adjourn the trial on the basis that the appellant was unfit for trial. On 30^th May 2014 the case was listed for a pre-trial review hearing. Counsel for the appellant sought a break of the fixture to allow the appellant's expert to see and comment upon the prosecution report. The judge directed that any unfitness hearing should take place on Monday 2nd June, the date fixed for trial and that counsel should ensure readiness for trial immediately should his application fail. On 2^nd June 2014 having had a meeting of the experts at court, counsel for the appellant withdrew his application for a hearing on the appellant's fitness for trial. The trial commenced.

The prosecution closed their case on 10^th June and the court did not sit on the 11^th. On 12^th June 2014 the appellant did not attend and the court was informed by counsel that the appellant had been admitted in to a mental health care unit the night before. The judge directed that enquiries should be made which revealed that the appellant had voluntarily attended the unit and had not been sectioned and that the doctor who had spoken to the officer in the case had stated that the appellant had not been assessed but was fit to attend court.

The appellant was brought to court by officers with further information from the mental health unit. The appellant’s bail was removed over the lunchtime and he commenced his evidence when the court reconvened. At the end of the day an application for bail was made and refused. On Monday 16^th June the appellant was produced before the court and complained that he had not received the correct medication whilst remanded in custody and the judge had the matter put back to investigate. Proceedings were adjourned that day for the appellant to be seen and medicated. On 17^th June the prison provided a report concerning the appellant's treatment and medication and the proceedings continued. He was duly convicted.

We see absolutely no merit in Mr Schofield’s arguments that the judge was in error not to adjourn to seek a further psychiatric report. Why should he? The appellant’s counsel had conceded that there was no issue of fitness to plead – rightly so in view of the consensus between the two psychiatrists, one instructed on behalf of the appellant, who were prospectively to give evidence. Trial defence counsel had no basis upon which to seek a further medical report, nor to seek to exclude the report of the prosecution instructed expert. As to the former, the defence instructed expert conceded that he had reached his opinion without regard to all of the medical background. His previous written opinion was undermined and unequivocally revised orally. The suggestion that the prosecution instructed expert was compromised, being identified as a gazumped purchaser of property owned by the appellant’s girlfriend is fanciful. Whether he was a disappointed purchaser or not, there is nothing revealed in the contents of his report to suggest a lack of objectivity, diligence or expertise. The appellant’s trial solicitor’s comments on this point are revealing; “ our records indicate that it was only following the service of [prosecution instructed expert] report, a copy having been e-mailed to [the appellant], that he then contacted the writer and made a detailed allegation with regard to [the psychiatrist].”

We do not understand the submission that the judge needed to direct the jury with regard to the appellant’s “behaviour in the trial owing to his depression” in the absence of any indication as to what that “behaviour” was supposed to be. Again, the comments of the appellant’s solicitor are revealing: “[The appellant’s] performance at trial is an interesting issue. The writer recalls that during evidence in chief and cross examination [the appellant] was very lucid and appeared confident and articulate. He repeatedly took the jury to documents within the bundle without prompting and challenged the prosecutor. In fact the writer believes that [the appellant] performed very well in evidence”.

In summary, we regard there to have been every indication to support the psychiatric opinion that the appellant was exaggerating his symptoms in order to frustrate the trial process for his own ends and to avoid trial. There is nothing in these arguments.

The appeal against conviction, limited in accordance with the permission of the single judge, is dismissed. The renewed application for permission to appeal conviction on other grounds is dismissed.

The application for permission to appeal sentence is grounded on the fact that the fraud was not successful, however high the prospective benefit to the applicant. That is, Mr Schofield submits, high culpability and low harm. A further psychiatric report is prayed in aid to suggest the applicant’s poor mental health.

These issues were however considered in the sentencing exercise by the trial judge. We agree with his sentencing remarks that Count 1 represented a deliberate and calculated attempt to deceive Barclay’s Bank into advancing a loan they would not otherwise have made. His only real mitigation was that the loan was never made. There were sentencing guidelines but they were of limited assistance since the starting point used was £750,000. It had been a fraud from the outset and was planned. The judge was satisfied that the appellant had no acute medical issues; but he had however continually tried to de rail the proceedings by reference to them which the judge considered showed the appellant's devious character.

We note, that in addition, the judge was entitled to assess the offence as further aggravated by the conviction for criminal conversion of property and the applicant’s previous convictions. In these circumstances, the total sentence of five years imprisonment is not excessive in any degree. The renewed application for permission to appeal sentence is refused.