Kiernan & Ors, R v

In a prosecution for obtaining money by deception, the Crown need not call the individual employee who authorised a loan. Where a large lender processes routine applications, evidence of its established lending practice may prove reliance if it supports an irresistible inference that the loan would not have been advanced had the falsehood been known.

The trial judge, not the jury, should decide whether independent evidence makes a co-conspirator’s statement admissible against an absent alleged conspirator. Property undervalue may be proved without expert valuation evidence if the evidence as a whole permits a properly directed jury to reach the conclusion beyond reasonable doubt.

The appellants were convicted at St Albans Crown Court of offences arising from property and mortgage frauds. Gabriel and Kevin Kiernan were convicted of conspiracy to defraud, forgery, using a false instrument and obtaining money transfers by deception. The other appellants were convicted of specified mortgage-deception counts.

The conviction appeals challenged, among other matters, proof of undervalue, the admissibility and use of co-conspirator statements, proof that lenders were deceived, rulings on evidence and disclosure. Gabriel and Kevin also appealed their four-year sentences because the judge had misstated the period they would serve before automatic release.

1. The conviction appeals and the application for leave to appeal against conviction were dismissed. The evidence of competing offers for Claregate, together with the evidence of the appellants’ conduct, entitled the jury to conclude that a 999-year lease for £500,000 was an undervalue. Expert valuation evidence was not a legal prerequisite. The judge’s observations about the difference between a 125-year and a 999-year lease did not render the verdict unsafe.

2. The correct approach to statements made in furtherance of a conspiracy was that the trial judge should determine whether there was sufficient independent evidence for their admission against an absent alleged conspirator. The evidence was plainly admissible against Kevin. It was therefore immaterial that the judge had left that admissibility inquiry to the jury, and no further hearsay warning was required on the facts.

3. On the mortgage counts, the Crown had to prove that a mind representing the lender acted under the false inducement. It did not have to call the particular employee who authorised each loan. Following the reasoning in Lambie [1982] AC 449, evidence of a lender’s systems and practice could establish reliance where direct recollection of a routine transaction could not reasonably be expected. The evidence that the lenders would not lend on false applications was sufficient. There was no realistic evidential basis for suggesting that the relevant lender knew the income declaration was false.

4. The court upheld the evidential rulings. The proposed evidence from Burton’s former wife had little relevance and, if it was bad-character evidence, lacked the substantial probative value required by Criminal Justice Act 2003 section 101(1)(e). Gabriel had given a false impression that he had reformed after serving his earlier sentence, so cross-examination about his absconding was properly admitted under section 101(1)(f). The judge was also entitled not to exclude Burton’s confession, since he had no reason to doubt its voluntariness and directed the jury to disregard it if the alleged inducement might have been made.

5. The sentence appeals succeeded to a limited extent. The judge intended Gabriel and Kevin each to serve two years before release. Because the offences pre-dated the relevant sentencing regime, four-year terms would have required longer detention. The four-year terms were quashed and replaced with concurrent terms of three years and ten months.

• Court of Appeal (Criminal Division) — dismissed all conviction appeals and Burton’s application for leave to appeal against conviction; allowed Gabriel and Kevin’s sentence appeals only by substituting terms of three years and ten months: [2008] EWCA Crim 972.
• St Albans Crown Court — jury convicted the appellants on the relevant fraud, forgery and deception counts; Gabriel and Kevin were each sentenced to four years’ imprisonment on the conspiracy count, with concurrent sentences on the remaining counts.