A Ltd & Orsi, R. v

Where a company’s directing mind and will is implicated, evidence of that individual’s acts, knowledge and state of mind is direct evidence against the company under the identification principle. It is not subject to the narrower test governing acts or declarations by one conspirator used to prove another absent conspirator’s involvement.

An out-of-court statement relied upon to show what a directing mind knew or believed is not hearsay merely because the statement’s truth is disputed. Its relevance may lie in its effect on that person’s state of mind.

The Serious Fraud Office appealed under section 58 of the Criminal Justice Act 2003 from rulings made by Judge Pegden QC during a Southwark Crown Court trial of A Ltd and others on conspiracy allegations.

The judge excluded notebook entries made by BK, an absent director and admitted directing mind of A Ltd, on the basis that they were not acts or declarations in furtherance of the conspiracy. He also treated company emails received by BK as hearsay business records.

The prosecution challenged those rulings and the respondent contended that the appeal was out of time because it effectively challenged an earlier ruling. The central questions were whether the 8 June ruling was independently appealable and whether the identification principle and hearsay rules had been correctly applied.

1. The prosecution appeal was allowed. The 8 June ruling was the operative ruling excluding identified documents. It was separate from the earlier ruling and was a “ruling” for the purposes of the Criminal Justice Act 2003. The appeal was therefore brought in time.

2. The judge had conflated the corporate identification principle with the rule governing a conspirator’s acts and declarations. Under the identification principle, a corporation acts and acquires knowledge through those who are its directing mind and will: Lennard's Carrying Company Limited v Asiatic Petroleum Company Limited [1915] AC 705 and Tesco Supermarkets Ltd v Nattrass [1972] AC 153. BK’s notebook entries were capable of proving his guilty state of mind and were therefore direct, relevant evidence of A Ltd’s state of mind.

3. The three-pronged test applies only where one conspirator’s act or declaration is used to prove the involvement of another conspirator who was absent when it was made. It has no application to direct evidence against a company through its directing mind. Nor could it be used, without careful reasons, to exclude such evidence as an exercise of discretion.

4. The fact that BK may have acquired knowledge or formed an intention while acting in another capacity did not prevent that knowledge or intention being attributed to A Ltd when he acted for it. The absence or non-cooperation of a directing mind at trial did not alter that result. Any difficulty in interpreting the notebook entries was for the jury, subject to proper directions.

5. The emails were relevant to what BK knew or believed. They were admissible for that non-hearsay purpose even if the assertions in them were untrue. The judge had therefore erred in treating their admissibility as depending on the business-record exception.

6. Permission to appeal was granted. The trial was to resume, ordinarily before Judge Pegden QC if it could be arranged expeditiously. No order required a different judge.

• Court of Appeal (Criminal Division): In [2016] EWCA Crim 1469, granted the Serious Fraud Office permission to appeal and allowed its appeal against the evidential rulings.
• Crown Court at Southwark: Judge Pegden QC ruled on 8 June 2016 that BK’s notebook entries were inadmissible against A Ltd and treated certain emails as hearsay business records.