Leaf, R. v

In a complex fraudulent-trading prosecution, a jury direction is adequate if it identifies the necessary elements and focuses the jury on whether the defendant believed that he had a lawful right to do the acts alleged. A formal Ghosh [1982] QB 1053 direction is not indispensable where the tailored direction is at least as favourable to the defendant and the relevant documents and issues are sufficiently explained. In sentencing sophisticated, persistent multi-count fraud, consecutive sentences may be necessary to achieve proper totality. The sentence must nevertheless reflect realistic loss, rather than a headline tax figure, where lawful alternatives would probably have reduced the loss.

The appellant was convicted at the Crown Court at Southwark of 13 counts of fraudulent trading under section 458 of the Companies Act 1985. The prosecution alleged that he used sham loan and foreign-exchange transactions to extract funds from companies acquired for company purchase schemes, while evading corporation-tax liabilities.

He received a total of 12½ years’ imprisonment through consecutive terms of five and a half years and seven years on the two principal counts. Leave to appeal sentence was granted; leave to appeal conviction was refused, and he renewed that application before the Court of Appeal. The issues were whether the jury had been properly directed on fraudulent purpose, dishonesty and the documentary evidence, and whether the overall sentence was excessive.

1. The court refused the renewed application for permission to appeal against conviction. It allowed the appeal against sentence and substituted a total sentence of 10 years’ imprisonment.

2. The trial judge had adequately directed the jury on the disputed element of fraudulent trading. The central question was whether the appellant believed that he had a lawful right to do what he did. That formulation was intelligible and no less favourable than a formal Ghosh [1982] QB 1053 direction. The reference to an absence of intention to create legal relations was properly confined to its evidential relevance to whether the purported transactions were genuine.

3. The direction on theft, although not comprehensive in the abstract, was tailored to the case and sufficient. The judge was not required to take the jury through the documents page by page. He adequately identified their importance, the issue of whether they evidenced genuine or sham transactions, and the distinction between lawful tax avoidance and fraudulent tax evasion.

4. The court approved the sentencing judge’s assessment that the fraud was sustained, sophisticated and exceptionally serious. Consecutive sentences were necessary because concurrent terms, constrained by the seven-year maximum on a single count, would not reflect the overall gravity of the criminality.

5. However, it was wrong to sentence on the basis of a tax loss exceeding £50 million. The companies were attractive vehicles for lawful company purchase schemes, and some substantial tax liability would probably have been lawfully avoided even without the fraud. The realistic loss was therefore materially lower, although the appellant’s personal benefit of about £22 million and his grave culpability remained highly material. The terms on counts 4 and 12 were reduced to five years each, to run consecutively, with the remaining sentences structured concurrently within their respective groups.

• Court of Appeal (Criminal Division). The renewed application for permission to appeal against conviction was refused. The appeal against sentence was allowed and the total sentence was reduced from 12½ years to 10 years.
• Crown Court at Southwark. The appellant was convicted on 21 November 2005 of 13 counts of fraudulent trading and was sentenced on 1 December 2005 to a total of 12½ years’ imprisonment.