Cunningham & Ors v R.

On 9 January 2014, in the Crown Court at Newcastle Upon Tyne Terence Cunningham (‘Cunningham Snr’, aged 50) and William Adams (aged 46) changed their pleas to guilty to Conspiracy to Blackmail, charged as count 1.

On 14 February 2014, following a 29-day trial (before HHJ Thorn QC and a Jury) Terence James Cunningham (‘Cunningham Jnr’, aged 27) was convicted on the same count.

On 12 March 2014, Cunningham Snr and Adams were each sentenced to terms of 8½ years’ imprisonment, and Cunningham Jnr was sentenced to 6 years’ imprisonment. Each man was disqualified from acting as a director for 10 years under section 1 of the Company Directors Disqualification Act 1986, and a Serious Crime Prevention Order was imposed for 5 years in relation to each man.

Other Defendants were sentenced on the same occasion. Darren Squire, also convicted on count 1, was sentenced to 4 years’ imprisonment; Michael Howley, convicted (on count 2) a charge of converting criminal property, was sentenced to 4 years’ imprisonment. Tristan Saltmarsh and Jason Hazell were acquitted on count 1.

An appeal against conviction on behalf of Cunningham Jnr on a ground for which leave was given by the Single Judge was abandoned on the morning of the hearing and the Court was informed that the grounds on which leave was refused were not to be pursued. The hearing proceeded on the basis of renewed applications by Mr Pownall QC on behalf of Cunningham Snr and Cunningham Jnr and Mr Rhodes QC on behalf of Adams for leave to appeal their sentences, following refusal by the Single Judge. We have granted leave.

Cunningham Snr and his brother-in-law, Adams, were the prime movers in the conspiracy. During 2011, they made unsolicited approaches, principally to individuals running small companies in different parts of England offering to carry out cheap tarmac work. The work, completed by others including Cunningham Jnr and the co-defendants, was sub-standard and often different to what had been agreed, both in terms of scope and price. Sometimes there had been no agreement at all. Most of the work was carried out to an extremely poor standard. Often new contractors had to be bought in to remedy the defects. When the victims refused to pay the price which was demanded, significantly inflated from that originally quoted, they were repeatedly threatened with serious violence and damage to property by way of enforcement of the fraudulent debt. The threats were sufficiently serious that victims often paid up despite being aware that they were being blackmailed.

A sophisticated arrangement of fake and legitimate companies, false identities, shadow bank accounts and money transfers were deployed to enable the payments to be laundered. Adams and Cunningham Snr were substantial beneficiaries of the payments obtained by menaces and they put in place the mechanism of laundering the proceeds through the use of an accountant, the co-defendant Howley.

Throughout the period of the conspiracy two companies were used by the conspirators as ‘fronts’ for their offending – RTS (NE & South Yorkshire) Limited and Rossmoor Limited. These companies permitted the Defendants to pass themselves off as legitimate contractors and to generate paperwork, including invoices. Disputes resulting from the conduct of the conspirators often led to complaints being made to the police, in many instances the complaints were dismissed by police as civil debt issues.

Payments made by customers to RTS Ltd were paid into a cheque cashing facility. Any payments made by customers by bank transfer or in excess of £5,000 were paid directly to an account in the name of Gem Finance t/a Rossmoor Limited. Howley had control over the Gem Finance account; and every week Squire would meet him and collect the RTS Ltd monies that had been paid into the Gem Finance account. For this service Howley received 2% commission. Cheques payable to RTS Ltd were cashed through the cheque cashing facility; and monies were also paid directly to Gem Finance t/a Rossmoor from RTS customers.

Cunningham Snr was the director of a company known as Contract Associated Roadways Limited and Adams was the sole director of another company, National Highways Limited.

Although the Prosecution relied on 13 incidents, for present purposes it is sufficient to refer to the first of these incidents (incident 1).

Steven John ran a property service company in Hull. On 6 January 2011, he received an unsolicited telephone call from a man named ‘Tom’. The man told him that he had been informed that his car park had pot holes that required filling, and said he had some spare tarmac. Mr John told him that he was not in the office and he would discuss the matter the following day.

Later on the same day, Mr John was called to his work place by his staff, and found that a 16 foot trench had been dug across his car park. Two men were present with equipment to lay tar. They provided him with a business card bearing the name of RTS Limited. Two other men then arrived in a tipper truck. One of these introduced himself as ‘Tom’, and claimed that Mr John had ordered the tarmac earlier that morning. Subsequently Mr John identified Cunningham Jnr as ‘Tom’.

Mr John asked that the trench be repaired, at which Cunningham Jnr became abusive and threatened to off-load the pile of tarmac at the entrance of the property. After Mr John refused to pay, the men began tipping the load; and at this point he agreed that they could finish the work they had begun.

Another man then arrived and gave his name either as ‘John King’ or ‘John Keane’. Cunningham Jnr later telephoned Mr John and told him the price of the works was £2,740.50.

Demands were then made in person by Cunningham Jnr and ‘John King’ or ‘Keane’, and numerous threats were issued over the telephone. He was told that he would have ‘20 gypsy families’ on the car park if he did not pay and they would cause £20,000 of damage. He was also told that they knew where his properties were and that he could not guard them all. He was threatened with violence, mutilation and damage to his property. He was told he would have to pay £10,000 to avoid injury and damage.

The other incidents were marked by grotesque over-charging, abuse of a particularly vile nature to some of the women who had the misfortune to come into contact with the conspirators, threats of violence and threats to put caravans on the site of work.

In broad terms theprosecution casewas that Cunningham Jnr was part of a group, led by his father and uncle, who blackmailed the owners of small businesses into making payments for shoddy or unwanted work. The close family link to the prime conspirators meant it was highly unlikely that he was unaware of the nature of their business.

We turn then to the applications for leave to appeal against sentence.

Save for the fact that certain discussions took place before Cunningham Snr and Adams pleaded guilty, we have set out the relevant facts of the case

These discussions took place over a period of two days and concerned the possible sentences if guilty pleas were offered.

On 8 January 2014, Counsel asked for a Goodyear indication, see R v. Goodyear [2005] 2 Cr App R.20, on the basis that the defence accepted the facts as the Prosecution had, by this stage, opened to the Jury. The Judge indicated, unexceptionally, that in particularly long and complex cases, more credit than usual was available for a guilty plea, but that this diminished once the court heard witnesses. That stage had not yet been reached.

On the following day, further discussions took place. Since the Judge eventually said that he wanted ‘to make plain’ that he was not giving a Goodyear indication, the hearing must be regarded as an exploration of possible subjects relevant to the sentence, about which the Judge might be prepared to commit himself in terms of the range of sentence, and aggravating and mitigating factors. In our view the unstructured discussions which took place between the Judge and counsel was not a satisfactory way of proceeding. The case of Goodyear makes this plain:

[77] If the process we envisage is properly followed, there should be very little need for the judge to involve himself in the discussions with the advocates, although obviously he may wish to seek out better information on any aspect of the case which is troubling him.

If a Goodyear indication is given it will be as to the maximum sentence which would be imposed if a plea is tendered at that point. Once given, the indication is binding on the sentencing Judge. The Judge may reserve his position and has an unfettered discretion to refuse to give an indication.

What happened here is that the Judge expressed a number of views in the light of submissions he heard. It is unnecessary to dwell on what the Judge said during this hearing since Mr Pownall QC and Mr Rhodes QC (neither of whom appeared below) did not contend that their clients had been led to plead guilty on the basis of any assurance given by the Court, or that they could rely on an expectation as to the sentence which would be passed. They did however point to passages in which the Judge gave indications as to his sentencing approach and submitted that his stated approach was correct.

First, the Judge said that he had considered the case of R v Killgallon & Gray [1998] 1 Cr.App R. (S.) 279, and found the case of ‘significant assistance’. Mr Pownall QC submitted that the Judge was right to regard the case as providing significant assistance since it was a similar case in terms of the offence charged and the criminality which was involved.

Secondly, the Judge appeared to acknowledge that, although Cunningham Snr and Adams were both principals in the conspiracy, the former was in ‘a different position’ because of his disability, of which some account would have to be taken, and because Adams had a previous conviction for a similar offence.

Thirdly, the Judge indicated that the discount for a plea would be ‘better than 10%’; and that a discount ‘in the region of 15% was probably what the parties had in mind’. It followed that, if the Judge had given a discount of 15% for their pleas, he must have taken a starting point of 10 years.

So far as their antecedent history is concerned, the Judge indicated he treated Cunningham Snr as rehabilitated; Adams had been convicted of fraud and conspiracy offences in Canada in 2010; and Cunningham Jnr had a single conviction for affray (2003) and had also been convicted of the fraud and conspiracy offences in Canada at the same time as his uncle, Adams.

The Judge had Pre-Sentence Reports in the case of Cunningham Snr and Adams and a large number of character references in relation to both. He also had medical reports about Cunningham Snr and Adams.

In passing sentence the Judge noted that he was sentencing in respect of a well-planned and far-reaching conspiracy to blackmail honest, innocent members of the community. Some £168,000 had been demanded of which £61,850 was paid. Vile threats had been issued which the victims would not forget. There were 13 separate incidents of blackmail, and Adams and Cunningham Snr were involved in all of them. They were the key organisers directing operations, and on more than one occasion, actually issuing threats. They also managed the financial demands, organised invoices and payments, and orchestrated the laundering of the proceeds through Howley.

The conspirators had scared victims into thinking that there was no means of escaping from the harm that they threatened, using police inaction to enforce their demands for payment. The Police treated these criminal demands as matters for the civil courts; and the consequence was that the victims of the blackmail felt beyond the protection of the law and utterly helpless.

Cunningham Snr and Adams had pleaded guilty on the 4th day of the trial after a full Prosecution opening and would receive credit on the basis that their pleas had significantly shortened a complex and lengthy trial and saved both time and Court resources. That said, the evidence against them was overwhelming.

Adams’sposition was made more serious because of his conviction on 2 November 2010 in Canada, for organising a conspiracy of a very similar nature: running a bogus paving company and defrauding a local church and its community, threatening to burn the church down. He was convicted of fraud (of over $5,000), extortion, conspiracy to commit an indictable offence, possessing criminal property and possessing a false identity; and had been sentenced to 25 days in prison and deported to the United Kingdom. It was only weeks later that the first of the incidents in the conspiracy was undertaken. He used a number of aliases and was a director of one of the companies involved, as well as being involved in other companies which were used in furtherance of the conspiracy.

Mitigation in both cases was noted: the character references that had been submitted, and their medical condition.

Cunningham Snrhad shown remorse and felt shame for his family; and the Judge accepted that he had a serious medical condition, was confined to a wheelchair and required surgery. The ill-health of his daughter, whom he had looked after, was also noted.

Adams’s medical conditionwas recognised as long-lasting, difficult to treat and would, as described in the medical reports, have a continuing deteriorating effect upon his eyesight.

Adams and Cunningham Snr were equally responsible, each knowing what the other was doing, and no distinction was drawn between them. The case had been a long and complex fraud and their pleas would result in an approximation of a 15% discount from the starting point of 10 years. Taking into account this 15% reduction, the sentence was reduced to 8½ years’ imprisonment in each case.

So far as Cunningham Jnr was concerned, the Judge noted his previous conviction in Canada for a very similar offence with Adams. He had returned to this country and, within only a matter of weeks, had been involved in the conspiracy from the start, using a bogus name.

He held a position of authority in one of the companies and, in relation to the first incident in Hull, he not only directed operations, but had issued threats of violence, damage and pecuniary loss. He had managed the financial demands for payments for what was plainly shoddy work, and there was evidence which linked him with other incidents and to his presence on other sites.

He was clearly less involved than his father and uncle, but lacked their mitigation of a guilty plea. A sentence of 6 years’ imprisonment was imposed.

For Cunningham Snr, Mr Pownall QC submitted that, as the Judge recognised, Killgallon and Gray was of particular assistance in view of the similarity of the facts. Killgallon and Gray had been charged with 7 counts of blackmail by demanding payment for surfacing work at inflated prices over a six month period targeting small businesses. Threats were made to enforce payment which the Court described as ‘of an extremely intimidating nature’. They had each been sentenced to terms of 10 years imprisonment following their conviction.

There were two grounds of appeal in Killgallon and Gray. The first ground was that, although Killgallon and Gray were convicted on 7 counts of blackmail, the Judge had taken into account another 32 incidents which the prosecution had relied on, but which had not been charged as counts of blackmail and which they did not admit. The second ground was that their conduct did not merit sentences of 10 years imprisonment and failed to take into account their effective good character, the fact that they had been engaged in legitimate businesses for many years and the very serious consequences for them and their families from the sentences which were passed. The Court (Lord Bingham of Cornhill LCJ and Dyson J) accepted the arguments on both grounds and reduced the sentences from 10 years to 6 years.

Mr Pownall QC submitted that the intimidation described in Killgallon and Gray was at least as serious as that in the present case, the appellants were of good character (as was Cunningham Snr) and, although there were differences in the amounts demanded and secured, these were immaterial in view of the passage of time. In short, the Judge in the present case, having rightly said that Killgallon and Gray was a helpful indication of the appropriate sentence, took a starting point of 10 years which was entirely inconsistent with the 6 years sentence substituted on appeal in Killgallon and Gray on their conviction. He accepted that Cunningham Snr’s conduct was despicable, but submitted that the starting point was too high. Furthermore, there was a clear distinction to be drawn between his client and Adams, as the Judge recognised, in view of his particular disability and Adams’s previous conviction.

For Adams, Mr Rhodes QC accepted that it might be appropriate to draw a distinction between the two principals to the conspiracy in view of his client’s previous conviction, but submitted that they were both suffering from serious and debilitating illnesses and no proper distinction between them could be drawn on that basis when it came to sentencing. Like Mr Pownall Q.C he recognised that the criminality was despicable and, as he put it, ‘at a category level’ above the offending in Killgallon and Gray. Nevertheless, he submitted that the starting point should have been closer to 8 years than the 10 years taken by the Judge.

For Cunningham Jnr, Mr Pownall QC took an initial point that the Judge had been in error in describing his client as having been involved in all the incidents. He had only been involved in the first incident, and on another occasion in North Yorkshire when no blackmail had taken place. Unlike his father and his uncle he was neither a principal in the offending nor the principle financial beneficiary of the conspiracy. In circumstances where the Court of Appeal thought a sentence of 6 years was appropriate for the principals in Killgallon and Gray then the same sentence for Cunningham Jnr in his limited and subordinate position within the conspiracy was manifestly excessive.

We have considered these submissions.

Since many of the arguments were based on the decision in Killgallon and Gray it is convenient to start by expressing our view about that case. First, in Killgallon and Gray the decision to reduce the sentences from 10 to 6 years was expressed shortly and in conclusory terms, ‘taking all the circumstances into account’. It was plainly not, nor intended to be, a guideline case, any more than is our judgment in the present case.

Secondly, and importantly, in the 18 years since Killgallon and Gray was decided the Courts have come to focus on the culpability of the offender and the harm caused by the crime when sentencing.

Thirdly, although the facts of Killgallon and Gray were similar to the present case, in that both cases involved particularly brutal threats. There were significant points of difference. First, in the present case the duration of the conspiracy was 12 months with 13 incidents (rather than the 6 months covered by the 7 counts of blackmail in Killgallon and Gray). Secondly, the conspiracy had an extensive geographical reach (from Devon and Cornwall to the North-East of England). Thirdly, the conspiracy was relatively sophisticated in the way in which money was laundered through companies and in the deployment of paper-work, and it was this paper-trail which contributed to the police treating the criminal conduct as if it were a purely civil matter. Finally, large sums were both demanded and obtained.

In our view the Judge was entitled to take a starting point for Cunningham Snr and Adams of between 8 and 9 years before taking into account matters of aggravation and mitigation.

In the case of Adams there was the significant aggravating circumstance of his previous conviction for a similar offence shortly before the start of the conspiracy; but we accept that his serious medical condition would make the circumstances of imprisonment particularly harsh. Taking these matters into consideration we consider that the right starting point in his case was a term of 8 years. From this he was entitled to the full 15% credit in the light of the circumstances in which the plea was entered: a term of 6 years and 9 months.

In the case of Cunningham Snr, the Judge had rightly observed that his antecedent history should be reflected in the sentence; and he had indicated that his particularly serious medical condition should be taken into account. In our view the starting point before credit was given for his plea should have been of the order of 7 years and, with 15% credit, the sentence should have been a term of 6 years.

Cunningham Jnr had contested the case, and this meant that the Judge was in a good position to assess his criminality. Nevertheless we are persuaded that the sentence in his case was too long in the light of his involvement: effectively limited to the first incident and to his position in one of the companies. We note that he has taken advantage of the educational opportunities available in prison and is reported to be doing well. In his case, we consider that the sentence should have been a term of 4 years and 6 months.

In conclusion, in the case of Adams, we quash the sentence of 8 years and 6 months and substitute a sentence of 6 years and 9 months. In the case of Cunningham Snr, we quash the sentence of 8 years and 6 months and substitute a sentence of 6 years; and in the case of Cunningham Jnr we quash the sentence of 6 years and substitute a sentence of 4 years and 6 months.

To that extent the appeals are allowed.