Kuchhadia v R.

In a prosecution for converting criminal property, the prosecution must prove criminal conduct, whether specific or generic, to the criminal standard. It need not identify and prove one particular offence. It may rely on alternative forms of criminal conduct if the jury is sure that at least one is established.

Criminal property may be proved either by evidence that it derives from unlawful conduct of an identified kind, or by circumstances which permit the irresistible inference that it can only derive from crime. Non-payment of tax alone does not establish tax evasion. The source of the income must be illegitimate, or legitimately obtained income must have been concealed to avoid tax.

The appellant was convicted at Leicester Crown Court of fraud arising from a £3.9 million mortgage application and of converting criminal property arising from his purchase of high-value vehicles. He received five years’ imprisonment for fraud and a concurrent sentence of two years and six months for converting criminal property.

He appealed against the latter conviction, contending that there was no evidence of criminal conduct from which the vehicle funds could derive. He also sought permission to challenge the fraud conviction, the refusal to sever the counts, the conduct of the trial in light of his asserted mental ill-health, and his sentence.

The central issue was whether the evidence provided a sufficient foundation for the jury to find that the property derived from criminal conduct.

1. Appeal against conviction dismissed. The court held that R v NW, SW, RC and CC (2008) EWCA Crim 2 and R v Anwoir [2008] EWCA Crim 1354 were reconcilable. Criminal conduct must be evidenced and proved to the criminal standard, but the prosecution need not specify and prove one particular offence. It may advance alternative or several allegations of criminal conduct, provided that the jury is sure of at least one.

2. The court followed the two routes identified in R v Anwoir. The prosecution may prove that property derives from crime by showing that it derives from conduct of a specified unlawful kind, or by evidence of the circumstances in which it was handled that gives rise to an irresistible inference that it could only derive from crime. Failure to pay tax does not, without more, amount to tax evasion. The prosecution must prove an illegitimate source of income or the concealment of legitimately obtained income to avoid fiscal consequences.

3. There was an evidential foundation on which the jury could be sure that the appellant had engaged in criminally dishonest financial dealings and, alternatively, that his financial dealings gave rise to the irresistible inference of criminal conduct. The trial judge had wrongly taken account, at the no-case stage, of lies not then established. That error did not expose an evidential gap in the prosecution case. A fuller direction identifying the relevant circumstantial evidence would have been preferable, but the summing up as a whole did not render the conviction unsafe.

4. The proposed severance ground was unarguable. Evidence of dishonest dealing on the fraud count was admissible on the criminal-property count. The court also rejected the complaints concerning fitness for trial and psychiatric evidence. The trial process was fair, and there was no basis for a further report or adjournment.

5. The renewed application for permission to appeal conviction on further grounds was dismissed. Permission to appeal sentence was refused. The fraud was a deliberate and planned attempt to obtain a loan which the bank would not otherwise have made. The fact that the loan was not advanced was the principal mitigation, and the total sentence of five years was not excessive.

• Court of Appeal (Criminal Division): In [2015] EWCA Crim 1252, dismissed the appeal against conviction and dismissed or refused the renewed applications for permission to appeal.

• Leicester Crown Court: Before His Honour Judge R Brown, convicted the appellant of fraud and converting criminal property and imposed concurrent custodial sentences, the longest being five years.