Phillips v R.

Evidence of a co-defendant’s bad character is admissible under section 101(1)(e) only where it has substantial probative value on a factual issue between the defendants which is itself of substantial importance in the trial. Those questions require separate, sequential assessment. The statutory threshold demands more than simple relevance and is assessed in the context of the evidence already before the jury.

Once that gateway is satisfied, Criminal Justice Act 2003 provides no residual discretion to exclude the evidence for fairness or case-management reasons. Save in the rare case of a procedural breach causing incurable unfairness, the judge must instead control the scope and presentation of the evidence.

The appellant appealed, with leave, against his conviction at Birmingham Crown Court for conspiracy to cheat the Revenue. The prosecution alleged that he and Thomas Scragg operated a fraudulent construction-industry payroll structure which enabled gross payments to be made without accounting for tax, national insurance or VAT.

The appellant maintained that Scragg had recruited him as an innocent professional front man to an existing fraud. Scragg denied knowing involvement and implied that responsibility lay with the appellant or the accountants. The appellant sought to adduce evidence of Scragg’s earlier and later alleged frauds, deception and intimidatory conduct under section 101(1)(e) of the Criminal Justice Act 2003. The trial judge admitted one previous fraud conviction but excluded the remaining material as satellite litigation and refused severance.

The appeal concerned the statutory admissibility threshold, any residual exclusionary discretion, severance, and whether the exclusion rendered the conviction unsafe.

1. Appeal dismissed. The judge wrongly excluded evidence that, shortly before the indictment period, Thomas Scragg had participated with others in the fraudulent use of a CIS6 certificate. Assuming its truth as required by section 109, it had substantial probative value on the important issue whether Scragg had recruited the appellant into an existing fraud. It should have been admitted.
2. Section 101(1)(e) of the Criminal Justice Act 2003 requires separate inquiries. The evidence must have an enhanced capacity to prove or disprove a factual issue between defendants. That issue must also be of substantial importance in the case as a whole. The assessment is fact-sensitive and may take account of other evidence already before the jury. Evidence of a propensity is not itself the relevant issue unless it substantially assists proof of a disputed fact between the defendants.
3. Once the section 101(1)(e) criteria are met, there is no residual power to exclude the evidence for unfairness or case-management reasons. The court followed the approach in Musone [2007] EWCA Crim 1237. A rare exception may arise from a deliberate or otherwise unfair breach of procedural requirements, including Rule 35.5, but there was no such breach here. The judge could instead limit the evidence, direct its orderly presentation, and explain the sequential questions the jury had to answer.
4. The later Moya fraud, the alleged diversion of Moya assets, and the old convictions for intimidatory behaviour did not meet the statutory threshold on an important issue between these defendants. The evidence was too remote, insufficiently probative, or concerned an issue marginal to the trial. Accordingly, severance did not arise. Joint trial of alleged conspirators remained strongly in the public interest.
5. The wrongful exclusion did not make the conviction unsafe. The excluded earlier evidence could undermine Scragg’s denial, but did not materially assist the appellant’s central assertion that he was an innocent participant. There was powerful independent evidence of the appellant’s knowing role in sham invoicing, cash-back arrangements, VAT returns and unexplained receipts. The jury’s verdict was therefore safe.

• Court of Appeal (Criminal Division): In [2011] EWCA Crim 2935, dismissed the appeal. Although some bad-character evidence was wrongly excluded, the conviction was safe.
• Birmingham Crown Court: Following an eight-week trial before HHJ Inman QC, the appellant was unanimously convicted on 5 November 2010 of conspiracy to cheat the Revenue.