Smallman & Anor, R. v

An assumed ultra vires contribution by a potential victim towards a police investigation does not require a stay unless it amounts to a serious abuse of state power or the defendant proves prejudice sufficient to prevent a fair trial. The safety of a conviction following a lengthy trial depends on whether the summing up, viewed in its context, adequately equipped the jury to decide the defined issues.

Property may represent a benefit from criminal conduct even where it has been mixed with other funds. A jury may therefore find that transfers from a mixed fund represent criminal property in part, provided the statutory mental element is proved.

At Teesside Crown Court, Michael Smallman was convicted of three counts of fraudulent trading and one count of transferring criminal property. Angela Smallman was convicted of money-laundering offences and received a total sentence of 15 months’ imprisonment.

The prosecution alleged that companies controlled by Michael Smallman dishonestly marketed unaccredited distance-learning courses, made improper claims under the Individual Learning Account scheme, and diverted funds intended for students. It also alleged that Association of Professional Development funds were used as personal funds.

Both appellants challenged their convictions on grounds concerning police-investigation funding, the summing up and disclosure. Angela Smallman also challenged the refusal of a submission of no case to answer on the arrangement count and appealed her sentence.

1. All appeals were dismissed. The convictions of both appellants were safe, and Angela Smallman’s sentence was not manifestly excessive.
2. The court assumed, without deciding, that the Department for Education and Skills funding arrangement was ultra vires. That did not approach the serious abuse of executive power addressed in Bennett [1994] 1 AC 42 and Mullen [1999] 2 Cr App R 143. In the absence of such abuse, a stay required proof, on the balance of probabilities, that the defendants could not have a fair trial through actual prejudice. There was no interference by the Department with investigative or charging decisions, and the judge was entitled to find that neither the investigation nor the prosecution lacked independence.
3. The summing up was lengthy, turgid and only marginally adequate. Nevertheless, it contained no legal misdirection. The judge ultimately identified the central issue of dishonesty, explained the competing cases, and accommodated defence requests to revisit evidence. Unlike Sampson and others [2007] EWCA Crim 1238, it did not leave the jury unable to understand and determine the issues.
4. There was ample evidence for the jury to determine Michael Smallman’s intention and dishonesty on Counts 1 and 2. This included false or misleading representations about accreditation and qualifications, substantial diversion of company funds, and claims under the Individual Learning Account scheme without student contributions.
5. Late disclosure concerning City and Guilds did not render the trial unfair. The defence obtained sufficient material, time and opportunity to advance its case that City and Guilds had acted defensively or misleadingly. That material did not materially weaken the evidence against Michael Smallman.
6. Under section 340(3) of the Proceeds of Crime Act 2002, criminal property includes property representing a benefit from criminal conduct in whole or in part, directly or indirectly. Michael Smallman’s gambling winnings had become part of mixed general wealth containing criminal property from the Association of Professional Development account. It was open to the jury to find that payments to Angela Smallman represented that benefit in part, subject to proof of her knowledge or suspicion.
7. Immediate custody for Angela Smallman was proper. Although 15 months’ imprisonment was severe given her limited participation, good character and family commitments, it was not manifestly excessive.

• Court of Appeal (Criminal Division). The court dismissed the appeals against conviction of Michael and Angela Smallman, and dismissed Angela Smallman’s appeal against sentence: [2010] EWCA Crim 548.
• Crown Court at Teesside. Michael Smallman was convicted on 27 October 2008 of fraudulent trading and transferring criminal property, and sentenced to seven years’ imprisonment. Angela Smallman was convicted of money-laundering offences and sentenced to 15 months’ imprisonment.