Goldstone & Ors, R. v

The background to these cases arises as follows. Originally an indictment was preferred in the ordinary way against 18 defendants. Charges having been preferred, the matter was transferred to the Southwark Crown Court pursuant to the provisions of the Crime and Disorder Act 1998. There were a series of hearings in front of His Honour Judge Higgins, starting in October last year, pursuant to paragraph 2(1) of Schedule 3 of that Act. The provisions are important and therefore I quote them as follows.

On 29th October 2007 His Honour Judge Higgins dismissed the charges lying against Goldstone, Naghibossadat and Ponder and Ebrahim Sodha. The application in relation to the first three named is to reinstate, in effect, the charges so dismissed.

On 20th November 2007, in a second of the series of connected judgments, the learned Judge refused applications to dismiss the charges against Keith Bennett and Joanne Halliday. In the third judgment on 29th January of this year, the leamed Judge dismissed charges in respect of Mr Frost and a man called Khalid Sodha, and a Voluntary Bill is sought by the Crown in respect of Frost. Since the case of Frost came later, the full application for a Bill has not been listed before me. However, it is agreed that that case should join the others in respect of the law only, since the legal approach to all of them should be, and will be, consistent.

In the barest outline, the fraud alleged here is said to be a carousel fraud on the Revenue, which is given the specialist name of Missing Trader Intra-community Fraud ("MTIC"). Mobile telephones entered the UK from the European Union. When entering the country such a transaction is VAT free. The European Union supplier would thus be, as it were, paid El 17,500 for a consignment of mobile phones and at that point no obligation to pay VAT would arise. The Prosecution say that on a repeated basis is the Wpical pattern of the transactions which follow and repeated many times over. I do not understand that proposition to be challenged.

Typically, the first UK buyer was a false company: a purchase was made either in the name of a genuine company, having counterfeited the company's identity and in the ignorance of that genuine company of what was happening, or in the name of a fictitious company; by either such means phones were bought into the UK by a missing trader or missing link in the chain. That missing trader company would enter into an agreement with the next down the chain.

The telephones are then sold on rapidly through two or three further companies, known in the jargon as "buffers". Again, there is a repeated pattern, say the Crown: modest profits, no losses, VAT duly paid along the way. The last port of call is with the broker, again adopting the jargon used by all, a company which re-exports the telephones to an EU buyer. There is once more, say the Crown, a repeated and remarkable pattern. The broker sells out

The broker here Wpically makes a modest profit on the face of the transaction because the price at which he sells is slightly higher than the price at which he bought from the last buffer. However, the broker also reclaims the VAT he paid at the time of purchase from the last buffer and here crystallizes the loss to the Revenue. The refund to the broker of the VAT which he paid is made now. Hypothetically for example, this sum might be E 12,000 or El 5,000, representing seventeen and a half per cent of the gently rising price of the goods as they move along the chain. However, the Revenue never receive the El 7,500 due to them from the missing frader.

In illustration of this pattern, Mr Parroy for the Crown helpfully produced what has been called the Long Schedule, giving the real account of Transaction No 3 from Operation Euripus (which is the name given to the investigation by the Revenue into this batch of trading). Set out also in the schedule are specimen hypothetical variations of Transaction No 3, designed to illustrate some of the variations which arose in the course of the Yansactions investigated. As I have just emphasised, the Crown accept that there was some variation as outlined in this schedule: sometimes more people in the chain, sometimes fewer; sometimes different proportions, slightly, of profit taken along the way. But essentially the Crown say a very highly Wpical pattern is to be observed throughout the evidence they produced before the leamed Judge. The chains are circular, entering and leaving the country. The pattern of profit taking is consistent. No-one ever makes a loss at any link along the chain. The frading is very rapid, often complete within hours and usually within a day. There is always the same rest-icted group of companies, or of people operating under slightly varying company names. There is often payment out from the UK to the EU supplier by a third party, one or even two links down the chain. The end price to the EU purchaser always means that the price plus the distributed profits, that is to say the profit taken along the chain, is always equal to or lower than the price at which the goods entered. The percentage of the trade of the various companies associated with these defendants, they say, representing the portion of their company's trade to be ascribed to Euripus fransactions which were fraudulent, was often very high, particularly during the period which is the focus of the charges. And sales to European Union buyers were often to a very restricted number of buyers, who were often themselves the EU suppliers into the chain as the goods entered the United Kingdom.

A further plank in the Prosecution case is the notes made by a gentleman called Hughes. If I can use the shorthand, the "Hughes documents" demonstrate, say the Crown, pre-planning or at the very least a record of pre-planning. Even if the documents themselves are not created ahead of the chain, they show direct evidence of the orchestration of the fraud. It is accepted by the Crown Mr Hughes was a freight forwarder and that there must be documentation associated with freight forwarding down the chain, but the Prosecution nevertheless suggest that those notes bear the inference which they advance and bear it sfrongly.

Again in the briefest summary, the Crown's submissions as to the role played by these four is as follows. Mr Goldstone, they suggest (and indeed it is not in issue) was a broker trading in mobile telephones. Mr Ponder, they suggest, was both broker and buffer, fulfilling each role in different transactions, often selling to Carphone Warehouse. Mr Naghibossadat was an employee of Carphone Warehouse operating in a small unit dealing with gross or volume sales of mobile phones rather than the supply of phones for consumer or retail consumption. He, they say, acted as both broker and at least once as buffer.

Mr Frost is alleged to have been a broker. I emphasise that in relation to Mr Frost much less has been said in the course of this hearing than in respect of the others, because of the procedural history in his case.

The Crown emphasise the vast scale of these frauds. A figure of 250 million lost to the Revenue has been advanced, as a result of all the Euripus &ansactions. By no means all of those relate to these four defendants, but even in relation to these four, there are many hundreds of deals in very significant sums.

For the purposes of today's proceedings that is I hope a sufficient summary of the goods on the Crown's stall. I will later today address very briefly the Defence response to those suggestions by the Crown.

I gave directions in the applications respectively on 20th February 2007 and 4th January 2008 and, in particular, directed that the structure of the hearings this week should begin by dealing with two, so to speak, preliminary issues. Firstly, the correct approach in law to these applications. Secondly, if the law requires the Crown to identify an exceptional feature necessary before Bills of Indictrnent can be preferred in these circumstances, what do the Crown say constitutes such a feature on the facts of this case?

In fact, Mr Parroy QC for the Crown has not only argued the Crown's legal position, but has given a reasonably broad review of the criticisms of the Judge's rulings and a broad summary of the Crown's case. His criticisms amount to the suggestion that the approach taken and the decisions reached by the learned Judge were Wednesbury unreasonable, that the conclusions were perverse, that no reasonable Judge could properly conclude, as the Judge did, that a jury could not "properly" convict these men. It is not here suggested that there is significant new evidence. It is not suggested that there was a basic error as to the law goveming the charges and it is not suggested there was any procedural error. In essence, the way the case is put before me is that there was an error of law in the sense that the conclusions on the facts were unreasonable. Mr Parroy has not identified to me, so far as I could discern, any exceptional feature or features of this case except by implication that he suggests the Judge here was unreasonable in the conclusions he reached and that is exceptional.

What was the Judge's function in considering the dismissal? I have already recited the test. Under the provisions of the Schedule he is to dismiss a charge if it appears to him that the evidence against the applicant would not be sufficient for him to be properly convicted. With some reservations from Mr Pumell QC, who appears for Goldstone, it is agreed that formulation must be very close to the test, very well known to all of us, set out in Galbraith [1981] 1 WLR 1039 as discussed and elaborated in Shippey [1988] Criminal Law Review 767. Those tests are too well-known to need repetition here.

The process, it is agreed and in my judgment correctly, must involve evaluation of the evidence and an exercise of judgment by the learned Judge, not an exercise of discretion. That judgment is focused not on whether the Judge himself would convict, but on whether a jury could properly convict. It would be remarkable if a different standard applied to this process than the tests which arise for consideration on a submission of no case to answer at the close of a prosecution case. Although the evaluations are conducted at a different time and on a different evidential basis, in the sense that the one is before the case is presented and the other is after the prosecution case is complete, it would be remarkable if a lower standard applied at point of dismissal. If that were frue, it would mean that the prosecution of the case, very extensive and costly in such a case as this, could proceed even where it was anticipated that the probable outcome would be a successful submission of no case to answer, at the close of the prosecution case.

It would be equally remarkable if a higher standard was required on dismissal. The consequence of that would be that a case which was thought fit to justify leaving the defendant to face giving evidence if he chose to do so after close of a prosecution case, and then to await a verdict from the jury, that such a case was not fit to permit the Crown even to present its case in opening and in evidence. So for all those reasons, it seems to me compelling that the test set out in the Schedule to the Act must be the same test as that which arises at the close of a prosecution case and in the face of submissions.

Logically, two linked questions next arise. Firstly, how and when may such a decision be challenged or sought to be overturned? Secondly, may a Voluntary Bill of Indictment be preferred at the instance of the Crown as a remedy for wrongful dismissal of charges following transfer and, if so, when? A series of cases have grappled with the question whether a defendant who has failed to have charges dismissed can challenge such a decision by means

The Divisional Court held, dismissing the application, that the effect in law of the 1998 Act was that, following the sending of the case to it, the Crown Court was seized of the matter and all decisions concerning the issue between the accused and the Crown were decisions that necessarily related to a defendant's trial on indictment and were, therefore, caught by the prohibition in section 29(3) of the 1981 Act. The Court further held that recourse to the importation of Article 6 of the European Convention of Human Rights into domestic law did not affect the outcome, since the test for the purpose of Article 6 had to be viewed over the trial process as a whole.

The long judgment in the Snelgrqve case comes from a Judge whose authority on criminal process is probably unsurpassed. He summarised the legal framework and then set out the history of what had been held to constitute "a matter relating to trial on indictment" or "a decision affecting the conduct of a trial on indictnent", which thereby are excluded by statute from judicial review. It is not necessary for me to rehearse all of that long judgment. Auld LJ cited a passage from which the following policy can be derived. Firstly, that a defendant can turn to the trial process, and appeal following trial, as a safeguard to any miscarriage of the dismissal application. Secondly, historically the Prosecution has often, in many situations, without a right of appeal, review or redress, if things have gone wrong during the process of criminal litigation. Further cases are cited by Auld LJ, but some of them have a degree of contradictory effect.

At paragraphs 22 and 23 of the judgment, the learned Judge dealt with the case of R v The Central Criminal Court ex parte The Director of the Serious Fraud Office [1993] 96 CAR 248, [1993] IWLR 949, which he calls the "Asil Nadir" case. He says at paragraph 23:

The Judge went on to summarise the effect of their Lordships' decision in the House of Lords in the case of Ashton [1994] IAC 9 or 97CAR 203. Again, on the presumption that such a decision was susceptible to judicial review, Auld LJ quotes Lord Slynn at page 20 of the report from Ashton. Lord Slynn said:

When the Manchester case was decided in the House of Lords, as again summarised in paragraph 28 of Auld LJ's judgment, and as is reported at [1994] 98CAR 461, the House of Lords reversed the Divisional Court decision and decided that a Judge's decision to quash an indictment for want of jurisdiction was a matter relating to t•ial on indictment and not amenable to judicial review. So that fonns a key step in the move, even before the later legislation, away from regarding decisions of this character as being susceptible to judicial review.

Finally, at paragraph 31 of the judgment in Snelgrove Auld LJ dealt with the case of Kebilene. He did so as follows:

Towards the end of his judgment, Auld LJ gives his conclusions and they are so helpful that it is worth quoting them at a little length, in what is I hope the longest quotation I will need to give in the course of this judgment. He says this:

At paragraph 46 and 47 Auld LJ reached the conclusion that the claim in his case should fail on the issue ofjurisdiction, because the Judge's decision under section 51 of and paragraph 2 of Schedule 3 to the 1988 Act not to dismiss the charge was an order in a matter relating to trial on indictment. In paragraph 46, he concluded also that:

From all of that, two clear conclusions emerge, in my judgment. Firstly, a decision to dismiss a charge, or not to do so, is not susceptible to challenge in the Divisional Court or by way ofjudicial review of any kind. The defendant's remedy is at trial or on appeal. Secondly, historically the Prosecution has often been without remedy for an error in the criminal process.

Well, how does the express presentation of the potential application for a Voluntary Bill of Indictnent sit alongside the conclusions reached by Auld

Then there follow a number of restrictions on the circumstances under which prosecutors might still present such bills before a grand jury. And then:

It is of interest to those who like such things that in the course of the debate in Parliament a distinguished barrister, Sarjeant Deasy MP, suggested that this Act could have no relevance to Ireland because no such offences were ever committed in Ireland: a fling at the salacious English.

It was urged upon me that the effect of this Act was that the power to prefer a Bill of Indictment at the hands of a High Court Judge was a statutory power. With great respect to that argument from Miss Montgomery QC, that appears to me to be wrong. What happened was that a common law power, previously open to any and abused by some, was restricted by statute, to exercise at the hands of a High Court Judge. The restrictions on a common law power or right did not apply to the High Court Judge, by operation of statute.

In early-mid 20th Century, the grand jury was abolished as being a redundant safeguard. By then magistrates were almost universally responsible for providing scrutiny of evidence establishing whether a prima facie case existed, and if it did, committing for trial. It followed that when the grand jury was abolished as being redundant, the Administration of Justice (Miscellaneous Provisions) Act 1933 preserved the position of the High Court Judge power. In section 2(2) the Act reads:

So once again the 1933 Act preserved the pre-existing position. Neither statutory preservation imposed any restrictions, spelled out any conditions or necessarily imported any conditions into the exercise of the power by the High Court Judge.

Miss Montgomery also argued, in relation to the 1933 Act, that it was not a "speaking statute", in other words not an Act to be construed merely by looking at its own terms. Therefore, it was legitimate and necessary, when construing the Act, to look at the Hansard debates as the Bill proceeded

In the speech of Lord Darling, suggesting why the grand jury was redundant, he said this:

I am quite unsure as to how far this historical material governs the law today. But it does seem to me that insofar as it is of assistance, the 19th and 20th Century statutes, and the surrounding material point, to a common law power @part of a High Court Judge to prefer a Voluntary Bill of Indictment, unrestricted by statute or any authority, no doubt normally only to be exercised where there were no committal proceedings, or other proceedings (such as an inquest), involving a scrutiny of the evidence and a consideration as to whether charges properly arose.

How can the power to prefer be properly exercised now? As we have seen, it is preserved expressly by the provisions of the schedule to the statute. I will not repeat them. Mr Parroy emphasises that the provisions themselves are unrestricted. However, they should be consistent, in my judgment, with the law which arose as to the review of a decision by a properly constituted tribunal examining the evidence, when judicial review was thought to be possible. There is also more modern authority, both where magistrates have declined to commit and where charges have been dismissed following sending or transfer under the different but analogous statutory procedures. It seems to me that here we get closer to the situation the courts face today.

I begin with the decision of Ackner LJ in R v Horsham Justices ex parte Reeves [1980] 75CAR 236. Here, there had been committal proceedings lasting three days and the Horsham Justices found that the defendant had no case to answer. The Prosecution sought subsequently to prefer fresh charges against the defendant based on the original charges, although simplified. The Divisional Court granted the defendant an order of prohibition directed against a fresh bench of justices from continuing the second committal proceedings, on the grounds that to do so would be vexatious and oppressive. In the course of his judgment, Ackner LJ (as he then was) said this:

In other words, Ackner LJ was characterising this second application to the bench as a tactical means of seeking to avoid the poor prospect of success, had a Voluntary Bill been applied for. He did describe the Voluntary Bill as the normal route for seeking to continue criminal proceedings in these circumstances and he did not suggest that there was a procedural bar to the Prosecution in taking that course. It is a necessary implication of that part of his judgment that such would have been the ordinary way for them to proceed.

In the case of Raymond [1981] QB910 at 917E, Watkins LJ said that to avoid committal proceedings and to seek a Bill of Indictment was a very exceptional step, but that case does not address the basis for a grant or withholding of remedy where a committal or analogous procedure has taken place and charges have not been committed or the defendant not committed for trial.

The Privy Council did not attempt to define what exceptional circumstances there should be. The fact is that in that case the resident magistrate turned the case down on the credibility of the witnesses, exercising her judgment. The DPP disagreed. The Judge preferred a Voluntary Bill, and that was held not to be an abuse of process, as well as not to infringe the constitution of Jamaica.

In the case of R v Snaresbrook Crown Court ex parte The Director of Serious Fraud Office [1998] 95 LSG35, this being an unreported case, with the judgment number C0226698, the Court had to consider the situation close to that arising in the instant case. In that case, Bell J refused a Voluntary Bill following a dismissal of charges by a Crown Court Judge on the basis that the application represented an appeal from one single Judge to another. The Divisional Court accepted at that point, that there was jurisdiction for them to review the decision of the Judge, because of the view then being taken as to the question as to whether dismissal of charges was or was not a matter relating to trial on indictment. However, the Divisional Court consisting of Brooke LJ and Sedley LJ gave views relevant to our question. Brooke LJ gave the judgment of the court. He said:

The judgment in that case contains one further helpful passage at page 10, which reads as follows:

In the case of R v Gurpinar [2002] EWHC 628, Stanley Burnton J observed that:

This whole area was then considered in the case of R v Davenport and Others [2005] EWHC 2828. This case is extremely helpful. It was a decision of Pitchers J in a closely analogous situation to the one that arises in the case before me. In that case, the Serious Fraud Office applied for consent to prefer a Voluntary Bill against the defendants following dismissal of charges at the Chester Crown Court by a Circuit Judge. It is not necessary for me to recite the whole history of the case, although it is summarised in a succinct fashion,

Pitchers J then concluded at paragraphs 21 to 23, that the application for a Voluntary Bill is not in form an appeal from a decision of another court. When a High Court Judge is considering an application following a refusal of Justices to commit for trial, then at least it can be said that a decision of a lower court is being considered by a Judge of a higher court, There may then be scope for taking a broader view of the circumstances in which it is right in effect to overturn the decision of a lower court. I agree with the observations of Pitchers J on that point.

He went on to say that the same approach cannot apply when a Voluntary Bill is sought after dismissal following transfer of charges. As was observed by Bell J in the Snaresbrook case, two Judges of the Crown Court and, potentially at least, two High Court Judges, one sitting in the High Court and another sitting in the Crown Court, are addressing the same material. In those circumstances, using a Voluntary Bill of Indictment to overturn a conclusion reached below is an extremely uncomfortable prospect.

Once again, Pitchers J does not attempt to define what is meant by exceptional, but he did decline to issue a Voluntary Bill in his case.

In the case of R v McGuiness and Others [2007] EWHC 1772, at paragraph 6 of the judgment, Griffith-Williams J adopted the approach set out in Davenport. In the McGuiness case the Bill of Indictment was preferred, but on the basis of a clear error of law on the part of the dismissing Judge, not on the basis of a review of conclusions generally as to whether a proper case existed for the jury.

Following all that my conclusions on the law are as follows:

Historically applications for a Voluntary Bill of Indictment were dealt with ex parte or on paper. In more recent times, the Courts have recognised that a paper procedure cannot always be proper. To impose the burden of full hearings reviewing the merits of the case, as this case itself illustrates, would be to add a very significant stage into criminal process, running directly against what Auld LJ in Snellgrove found to be the governing policy of Parliament and the Courts, namely to ensure swift and economical criminal litigation.

I return to this case with those conclusions in mind. The attack on the decision of the learned Judge below does not involve a suggestion of a basic error of law, does not involve the suggestion that there is significant fresh evidence now available, does not involve the suggestion of any perversity on his part and does not contain any suggestion of procedural irregularity. The attack is on the reasoning of the Judge. It is that it was Wednesbury unreasonable and nothing more. Given the analysis of the law which I have reached, it follows that, even if correct, that nature of that attack takes it outside the ambit of a proper application for a Voluntary Bill of Indictnent.

It is appropriate to say two more things. Having outlined the case for the Prosecution so as to make what I have said about the ruling comprehensible, it is fair that I should record that the Defence have advanced, in very summary form, factual answers to the way the Prosecution put their case. They say there was and is a grey market in mobile telephones, particularly before the Bond House Systems Limited v Commissioners of Customs & Excise [2003] Manchester Tribunal Centre, 8 ^th May 2003 decision altered the responsibility for VAT, with the effect that there is several liability up and down the line of those trading in chain transactions. The Defence say the patterns of trading and of money flows are not at all as clear, and do not bear the implications, that the Prosecution suggest. The patterns of trading are in general much more varied, and were much more varied, in relation to these defendants, than the Prosecution suggest. The Defence suggest that the alleged proportions of trades by these companies and these defendants, suggested by the Crown to bear the inference of wholesale fraudulent trading, are a misstatement of the figures. The Judge was right to be sceptical of those alleged proportions. They say that the Hughes documents (to which I have made reference) are fully explicable by the responsibilities of freight forwarders and are perfectly legitimate, representing not a plan for fraud but the necessary day-to-day business of freight forwarding.

I record those submissions. I am not in a position to evaluate, to any kind of satisfactory level, the factual contentions made by either side. Indeed, that might be said to underpin my reasoning as to the limits on the exercise of this power.

However, I must record that I cannot say and do not say, on the basis of my very limited scrutiny of the factual material before me, that the views taken by His Honour Judge Higgins below were erroneous, never mind Wednesbury unreasonable. In the absence of some clear and simple submissions, self-evident as to their strength and destructive of the reasoning advanced by the learned Judge, I am not able to say that there was anything here which reaches the level of irrationality. Thus, even were I to have taken a different view on the ambit and proper use of the power to prefer a Voluntary Bill, on the current state of my understanding of the facts, heavily limited by the practicalities, I would not conclude that this was an irrational series of judgments. It follows that these applications are dismissed.