Davenport v R., Court of Appeal - Criminal Division, November 03, 2015, [2015] EWCA Crim 1731

Resolution Date:November 03, 2015
Issuing Organization:Criminal Division
Actores:Davenport v R.
 
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Neutral Citation Number: [2015] EWCA Crim 1731

Case No: 201403898B4 & 201405531 B4

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM THE CROWN COURT SITTING AT SOUTHWARK

HH JUDGE TESTAR

T20097856

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 03/11/2015

Before:

LORD JUSTICE DAVIS

MRS JUSTICE LANG DBE

and

MRS JUSTICE PATTERSON DBE

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Between:

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MR ANDREW MITCHELL QC (instructed by Kaim Todner) for the Appellant

MR SIMON MAYO QC and MR ALEX CHALK (instructed by The Serious Fraud Office) for the Respondent

Hearing date: 6th October 2015

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Lord Justice Davis:

Introduction

  1. The appellant, Edward Davenport, was convicted on 19 May 2011 after a very lengthy trial in Southwark Crown Court before His Honour Judge Testar and a jury of conspiracy to defraud. He received a substantial custodial sentence (subsequently reduced somewhat on appeal on grounds of the appellant's then state of health). He was also disqualified from acting as a company director for a period of ten years.

  2. Protracted confiscation proceedings followed. It was common ground that the criminal life-style provisions of the Proceeds of Crime Act 2002 (``the 2002 Act'') applied. Eventually, the appellant's benefit from general criminal conduct was agreed at £12 million. The available amount was agreed at £13,943,620. The Judge, after a hearing on 22 May 2014, on the 17 July 2014 made a confiscation order in the amount of £12 million (payable within six months and with a default term of 10 years imprisonment) and, in addition, made a compensation order in the sum of £1,943,620. It was and is common ground that the figure representing the compensation order had also been included in the amount of the benefit contained in the confiscation order. Realisations made have resulted in both orders being satisfied in full. The appellant says that such an outcome involves unfair double counting and that the combination of the two orders was such as to give, and has given, rise to a disproportionate result. That is the principal issue before this court. It involves a consideration of the decision of a constitution of this court in the case of Jawad [2013] 1 WLR 3861, [2013] EWCA Crim 644.

  3. The appellant was represented before us by Mr Andrew Mitchell QC (who did not appear in the confiscation proceedings below). The respondent was represented before us by Mr Simon Mayo QC (who did not appear in the confiscation proceedings below) and Mr Alex Chalk.

  4. At the hearing before us the appellant also sought to renew his grounds challenging certain of the terms of a Serious Crime Prevention Order (``SCPO'') made by the Judge on 22 May 2014 and subsequently amended and finalised on 19 September 2014; and the amount of a Prosecution Costs Order made on 22 May 2014 against the appellant in the sum of £753,949. Leave had been refused by the Single Judge on those points.

    Background facts

  5. The fraud itself was long lasting and had its complexities. However, because of the nature of the present grounds of challenge the background facts can be summarised quite shortly.

  6. The appellant had, on the Crown's case, been involved in two companies, Capricorn Group Holdings Limited and Southern Cross Group Plc, which had in 2005 collapsed with a deficiency of some £20 million. In that year he caused an associate to place advertisements seeking to locate dormant companies which had been incorporated before 1965. By these means he attracted the attention of the owner of a company called Industrial Design and Finance Limited, incorporated in 1958: which he then acquired for £10,000.

  7. The company was then renamed Gresham Limited (``Gresham''). Its holding company was a company called Fortune Pond Limited, registered in Nevis, West Indies, which the appellant had caused to be incorporated using the alias ``James Stuart''. The company secretary was another Nevis company also incorporated by the appellant under a false name.

  8. The appellant then retained the services of other individuals to operate Gresham, albeit answerable to the appellant. Elaborate brochures, promoting it as a company specialising in providing finance, were prepared and sent out and internet domain addresses for Gresham secured. Thereafter annual reports gave entirely misleading claims about Gresham's true financial worth and standing - it claimed to have been in business since 1958 (although the reality was that the company in its previous form had never been involved in financial lending), to have expertise in project financing and to have a strong balance sheet. This was not true. For example, Gresham claimed to be the holding company of four highly profitable Nevis subsidiaries which in truth were worthless and which had filed bogus accounts.

  9. The involvement of the appellant in Gresham was very significant although, in the striking phrase of the Judge, designed to leave ``no footprints in the snow.'' The Crown's case was that he took one-half of the net profits. The fraud was, in essence, a form of advance fee fraud. Businesses and companies were attracted by the publicity to seek financing. They were, typically, required to pay substantial fees up front for purported due diligence fees, property surveying fees and the like. In reality, as was the Crown's case, those proffered services were sham. No project or other financing was forthcoming: although as late as 2008 Gresham continued to place advertisements in trade and other magazines still claiming that it could provide capital by way of project finance, refinancing and bridging loans.

  10. By the end of 2008 creditors were circling. However the appellant then caused the winding up of Gresham to be staved off by various dishonest misrepresentations as to Gresham's true worth and by other means, which also included the use of the services of a dishonest solicitor.

  11. Ultimately Gresham was compulsorily wound up on 14 October 2009. Losses to identified creditors were estimated at nearly £2 million (in the form of advance fees paid): although this did not include consequential losses to victims of the fraud and total losses were estimated to exceed £4 million.

  12. By this time the appellant also had acquired a further company called Cutting & Co (Humber) Limited, which was established in 1930. It had shareholders' funds of £1,621. On 1 June 2009 it was renamed Cutting & Co (Investments) Limited and by the end of July 2009 its authorised share capital was increased and the paid up share capital was asserted in a notice filed at Companies House to be £30 million. Advertisements for this new company were placed. The clear inference was that it was designed to be a successor to Gresham.

  13. The trial lasted some 3 months. The sentence in due course imposed by the Judge was one of 7 years and 8 months imprisonment (reduced on appeal to 6 years and 8 months). Two co-accused, closely involved with the appellant in the running of Gresham, and essentially the ``front'' operators, were also convicted. Following those convictions three other co-accused (whose cases had been severed for case management reasons) pleaded guilty. In the light of the appellant's conviction the Crown pragmatically did not seek to pursue to trial various other charges of fraud which had been brought against the appellant.

  14. In subsequent sentencing remarks the trial Judge found the appellant to be the orchestrator of and mastermind behind the fraud. When he came to impose the SCPO, the Judge described the appellant as a very sophisticated operator and as ``a very, very dishonest man and a very competent, skilful and determined fraudster''. The Judge noted the terrible consequential losses for some of the victims of the fraud, a number of whom had been completely ruined. The Judge - who, having presided over the 3 month trial, was in a good position to assess the matter - went on to say:

    ``I am sorry to say that, just as water flows downhill, it is the natural inclination of this defendant, if he is to engage in commerce, to do so dishonestly.''

    Renewed application: Prosecution Costs Order and SCPO

  15. We can deal shortly with the challenges to these orders.

    (1) The Prosecution Costs Order

  16. The making of a Prosecution Costs Order (the Judge also made a Recovery of Defence Costs Order which is not the subject of the current challenge) was, in principle, eminently justified. Mr Mitchell realistically accepted as much. But he challenged the amount of the order. He submitted that in a trial in which there were three accused but overall proceedings in which there were six accused it was wrong of the Judge, as he submitted, to attribute one third of the overall prosecution costs (including pre-trial costs) to the appellant as he in terms did.

  17. He further made complaint about the attribution of all the prosecution confiscation costs to the appellant (not least when the eventual figure was much less than that previously sought and when the prosecution case had been frequently refined). He complained also at the uniform charging rates adopted and what he said was the lack of detail and particularisation in the schedule of prosecution costs provided to the Judge.

  18. There is, in our judgment, no substance in these points. The Judge in terms found that the prosecution had complied with the relevant Practice Direction. He regarded the claimed hourly rates and fees as reasonable. He noted successful points made by the prosecution in the confiscation proceedings. He considered that an overall attribution of one third of all the prosecution costs to the appellant to be readily understandable ``because of the way that he has conducted himself''.

  19. The reality is that the trial Judge knew this whole case backwards. He was fully entitled to exercise his discretion in making this...

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