Druzyc, R. v

A conviction founded on a count charging an offence with an essential statutory element which the prosecution evidence cannot prove is unsafe. That is not a mere defect of form or mislabelling, even if a different charge might earlier have been substituted without prejudice.

Under section 3 of the Criminal Appeal Act 1968, substitution of an alternative conviction requires both that the alternative offence was expressly or impliedly alleged by the indictment and that the jury must have found facts proving it. A charge confined to conduct within a stated period does not impliedly allege a distinct offence based on conduct before that period.

The appellant was convicted at the Crown Court at Warwick of two counts of fraudulent trading and one count of fraudulently removing company property in anticipation of winding-up. He appealed only the third count.

That count alleged an offence under section 206 of the Insolvency Act 1986 based on transfers made from the company to the appellant in January and February 2012. The Crown accepted on appeal that the company’s winding-up commenced in August 2013. The transfers therefore fell outside the statutory 12-month period.

The Crown submitted that the defect was merely mislabelling or, alternatively, that the court should substitute a conviction under section 207. The central issues were whether the conviction was safe and whether the indictment could support an alternative conviction.

1. Appeal allowed. The conviction on count 3 was unsafe and was quashed. The convictions and sentences on counts 1 and 2 remained unaffected.
2. Section 206(1)(b) of the Insolvency Act 1986 required proof that the company property was fraudulently removed within 12 months before the commencement of winding-up. It was common ground that the winding-up commenced on 6 August 2013. The transfers relied on occurred about 18 months earlier and could not prove the charged offence.
3. The defect was not mere mislabelling of an otherwise appropriate charge. Although R v Wilson (Michael) [2013] EWCA Crim 1780 showed that a defective indictment may sometimes leave a conviction safe, this indictment was based on a mistaken premise as to a statutory ingredient. The prosecution had charged an offence which its evidence could never establish.
4. The court had no power under section 3 of the Criminal Appeal Act 1968 to substitute an offence under section 207. Applying the two requirements in Graham & Others [1997] 1 Cr App R 302, the jury’s finding of dishonesty meant that the factual requirement would have been satisfied. However, the indictment requirement was not. A section 206 count based on conduct within the 12-month period neither expressly nor impliedly alleged the distinct section 207 offence, which could be based on conduct before that period and carried a different burden concerning intent to defraud.
5. The section 206 and section 207 allegations were mutually exclusive on the facts pleaded. The court therefore rejected both the Crown’s contention that the conviction was safe and its alternative substitution application.

• Court of Appeal (Criminal Division): Allowed the appeal against conviction on count 3 and quashed that conviction.
• Crown Court at Warwick: On 1 October 2018, convicted the appellant of two counts of fraudulent trading and one count under section 206(1)(b) of the Insolvency Act 1986, imposing concurrent terms of two years’ imprisonment.