B e f o r e :
LORD JUSTICE KENNEDY
MR JUSTICE HUGHES
and
MR JUSTICE KEITH
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(Transcript of the Handed Down Judgment of
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Mr R. Rhodes QC & Mr N. Hood (appeared for the applicant)
Mr P Hackett QC & Mr Mandell (appeared for Carson)
Mr M. Caplan (Solicitor Advocate) & Miss C. Russell (appeared for Sweetbaum)
Mr C. Miskin QC, Mr P.Ozin & Miss S. Campbell (appeared for the Crown)
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LORD JUSTICE KENNEDY :
Introduction
- This matter came before us on 22nd November 2001 as a renewed application for leave to appeal, pursuant to section 9(11) of the Criminal Justice Act 1987, against rulings made by Mitting J in a preparatory hearing at Southwark Crown Court on Tuesday 16th October 2001. In the Notice of Appeal those rulings are summarised as follows –
1. On a proper construction of section 2(8AA) of the Criminal Justice Act 1987 Mr Rosenthal’s interview statements (which were obtained pursuant to the section 2 powers of compulsion) could be put to him in his trial during cross-examination by the co-defendants in his case.
2. In the event that during his trial Mr Rosenthal’s co-defendants cross-examined him using his section 2 interview statements, Mr Rosenthal can receive a fair trial.
Mitting J refused leave to appeal.
Background Facts
- The applicant and his co-defendants in the criminal trial which is due to start in January 2002 before Mitting J were all in the period to which the indictment relates officers of the Wickes group of companies. The applicant was a director of the main trading subsidiary, Wickes Building Supplies Ltd, with involvement in the purchasing function of other Wickes group trading companies. Mr Sweetbaum was chairman and chief executive of Wickes plc. Mr Llewellyn and Mr Battersby were respectively group finance director and group financial controller of Wickes plc, and Mr Carson was finance director of Wickes Building Supplies Ltd.
- In count 2 of the indictment the applicant, Sweetbaum and Carson are charged with fraudulent trading contrary to section 458 of the Companies Act 1985. In count 6 the applicant and Carson are charged with dishonestly making a false statement to auditors contrary to section 389A(2) of the 1985 Act. The circumstances giving rise to the two counts are linked.
- The Crown contend that by means of a “two letter system” auditors were misled in relation to rebates paid by suppliers to companies in the Wickes group in return for multi-year purchasing commitments. One set of letters, which passed between the Wickes companies and their suppliers, recorded the true terms of the deals, but those letters were not shown to the auditors. Another set of letters, the “confirmation letters” contained a false record of the deals, and they were shown to the auditors.
- The applicant accepts that he operated the two letter system but, as is clear from his notice of appeal, his case is that he did so honestly. The system, he contends, was instigated by a previous managing director of Wickes Building Supplies Ltd who recruited him in 1988 and many people in the organisation knew of it. It appears that at present the applicant’s co-defendants deny knowledge of the two letter system, and some allege that the applicant concealed documents from them. Clearly there is a conflict of interests between the applicant on the one hand and his co-defendants on the other.
- After being interviewed for some time the applicant chose not to answer further questions. He was later interviewed pursuant to section 2 of the Criminal Justice Act 1987, which enables the Director of the Serious Fraud Office to require the person under investigation to answer. The applicant’s co-defendants were not so interviewed. In his section 2 interview the applicant admitted that he signed the letter of representation which is the subject matter of count 6, that he read the letter before signing it, that he signed the letter independently without conferring with or relying on Carson, that he was responsible for everything in the letter, that certain statements in the letter were not true and that when he signed the letter he knew those statements were untrue. That however is not now his case. His case, as set out in paragraph 10 of his notice of appeal to this court, is that –
“Mr Carson told him that the document (which Mr Rosenthal now accepts contained false statements to the auditors) had to be signed so that the accounts could be completed that day. Mr Carson, an accountant, either had already signed the letter or was going to sign it, so he (Mr Rosenthal) had no reason to question its contents, and signed it without reading it. Indeed, the only reason Mr Rosenthal was asked to sign the letter was because Mr Waterworth, the Managing Director of W B S, was on holiday at the time.”
Restrictions on use of answers given in section 2 interviews.
- The use in subsequent criminal proceedings of answers obtained in an interview carried out pursuant to section 2 of the 1987 Act has always been subject to the restrictions set out in section 2(8) –
“A statement by a person in response to a requirement imposed by virtue of this section may only be used in evidence against him –
(a) on a prosecution for an offence under subsection (14) below; or
(b) on a prosecution for some other offence where in giving evidence he makes a statement inconsistent with it.”
Subsection (14) provides –
“A person who, in purported compliance with the requirement under this section –
(a) makes a statement which he knows to be false or misleading in a material particular; or
(b) recklessly makes a statement which is false or misleading in a material particular,
shall be guilty of an offence.”
- So answers could never be used unless there was a prosecution for failing to comply with the requirements of the section itself, or the person subjected to those requirements, when prosecuted for another offence gave evidence inconsistent with the answers which he had given in the interview carried out pursuant to section 2. Following the decision of the European Court of Human Rights in Saunders v UK [1998] 1 BCLC 362 the limited use of section 2 material permitted by section 2(8)(b) was further restricted by the introduction into the 1987 Act of section 2(8AA) which provides –
“However, the statement may not be used against that person by virtue of paragraph (b) of subsection (8) unless evidence relating to it is adduced, or a question relating to it is asked, by or on behalf of that person in the proceedings arising out of the prosecution.”
- The issue raised before Mitting J was whether that further restriction, which undoubtedly applies to the prosecution, also applies to co-accused and their legal representatives, because it is clear that if the applicant does give evidence in the forthcoming trial his co-accused will want to cross-examine him in relation to the answers which he gave in his section 2 interview. It was necessary to obtain a judicial ruling on the issue at the outset so as to enable counsel for the applicant and the judge to deal properly with the application which counsel made in the light of the judge’s ruling, namely that the applicant should be tried separately. As is clear from what we said at the start of this judgment, the judge ruled that section 2(8AA) does not bind the co-defendants, but that nevertheless the applicant need not be tried separately because even if he does give evidence the jury can be adequately directed so as to ensure that he has a fair trial. Indeed it was the need to afford a fair trial to the applicant’s co-defendants that informed the judge’s interpretation of section 2(8AA).
Preparatory Hearings and Interlocutory Appeals.
- In a serious fraud case such as this the power to order a preparatory hearing is to be found in section 7 of the Criminal Justice Act 1987. It can be ordered for the purpose of –
“(a) identifying issues which are likely to be material to the verdict of the jury;
(b) assisting their comprehension of any such issues;
(c) expediting the proceedings before the jury; or
(d) assisting the judge’s management of the trial.”
It is common ground that in the present case, for the statutory purposes, the judge ordered that a preparatory hearing be held. Section 8(1) provides that where a preparatory hearing is ordered the trial “shall begin with that hearing”, and section 9 deals with the hearing itself. By subsection (3) the judge can determine, amongst other things –
“(b) any question as to the admissibility of evidence; and
(c) any other question of law relating to the case.”
Subsection (10) provides –
“An order or ruling made under this section shall have effect during the trial, unless it appears to the judge, on application made to him during the trial, that the interests of justice require him to vary or discharge it.”
Subsection 11 deals with appeals, and it provides –
“An appeal shall lie to the Court of Appeal from any order or ruling of a judge under subsection (3)(b) or (c) above, but only with the leave of the judge or of the Court of Appeal.”
- It is worth noting that nothing in section 9 refers to a decision to order separate trials, and, as Mr Miskin QC for the Crown pointed out in his submissions to us, conceptually and in every case other than a case of serious fraud such a decision has to be taken before the trial can be said to have begun.
Jurisdiction
- The first point which we have therefore had to consider is whether section 9(11) confers upon this court jurisdiction to entertain the appeal which Mr Rhodes QC for the applicant wants us to consider. Plainly a decision as to the proper construction of section 2(8AA) for the purpose of deciding what questions can be put in cross-examination is both a determination of a question as to admissibility of evidence and a decision of a question of law relating to the case - see section 9(3)(b) and (c), - so at first blush it might be thought that there should be no problem in relation to jurisdiction, but over the years since 1987 there have been a number of decisions of this court as to the scope of the appellate jurisdiction conferred by section 9(11). The first decision to which we refer is Gunawardena and others [1990] 91 Cr App R 55 where the applicant sought to appeal against the judge’s refusal to order that the indictment be stayed as an abuse of process on the grounds of delay. The issue considered by this court was whether upon a proper construction of section 9 of the 1987 Act the court is entitled to take into account matters other than those specified in section 7. For the applicants it was argued that section 7 merely opens the door to a preparatory hearing which can then deal with matters within and outside the scope of section 7, but at page 60 Watkins LJ said –
“We cannot bring ourselves to believe that Parliament can possibly, while using the clear words which they have used in section 7 and 9, to allow a preparatory hearing to commence for a certain specified purpose have intended to permit once a preparatory hearing for that purpose is in being, argument to range around all manner of issues which cannot be said to relate to any of the specified purposes. We know from experience, and it hardly needs to be said, that outside the purposes referred to in section 7(1) are all kinds of issues which are likely to arise in a criminal trial and which at some time or another will have to be resolved. Whether application in respect of them can be made usefully and effectively before a trial, in a pre-trial review possibly, we do not, in this judgement, have to explore.”
At page 61 the judgment continues –
“Care must be taken to avoid confusion between a preparatory hearing under the Act and the informal pre-trial review. If, looking squarely at the matter, the judge comes to the conclusion that the application before him does not relate to one of the purposes, then he cannot entertain that application within the ambit of the preparatory hearing.”
- Gunawardena was followed in Moore 5th February 1991 unreported, which concerned an attempt to appeal against a refusal to quash one of the counts in the indictment on the basis that there was no sufficient evidence to support it. Lord Lane CJ recognised the desirability of an appellate court being able to consider a ruling on a point of law at an early stage, but said that the court was bound by the wording of the statute. He also recognised that a motion to quash, if successful, might indirectly serve one or more of the purposes set out in section 7, but that indirect benefit he regarded as insufficient.
- In Jennings [1994] 98 Cr App R 308, at a preparatory hearing under section 7 the judge refused to sever two counts from the remaining counts in the indictment. The defendants who had sought severance sought leave to appeal. Rose LJ in this court referred to the earlier authorities and said at 312 –
“The purpose of a severance application is to achieve severance, not any of the ends identified in section 7(1)(a) to (d). It may be possible to argue, though we give no encouragement whatever to such an argument, that a submission seeking severance for the purpose of reducing complexity is capable of assisting the judge’s management of the trial within section 7(1)(d), and is therefore capable of giving rise to an appeal under section 9.”
That, he said, was not the instant case.
- The only other authority to which we need refer is Hedworth [1997] 1 Cr App R 421, where at a preparatory hearing under section 7 the judge refused an application to quash the amended indictment on the ground that there was insufficient evidence to support the charges. In this court the earlier authorities were referred to, and at 432 Evans LJ said –
“We would hold, first, that the reference to ‘purpose’ comes from section 7(1) itself. It is not fruitful, in our view, to consider whose purposes: meaning what subjective purposes the applicant or the court or any other person may have had. Section 7(1) is concerned with an application and a hearing and an order made on that application after that hearing. The purpose of the application or the hearing or the order is clear, or it can be derived, in our view, from those facts alone; maybe this is saying that it is an objective rather than a subjective test. No one can doubt what the purpose of an application or an order to quash one or more counts in an indictment is: it is to obviate the need for arraignment of the defendant on that count or counts and his trial thereafter ...... It should be noted that in the present case the application is made with regard to an amended indictment – some charges were pleaded to, others were not. The fact that an application may be made to quash the original charges even after arraignment does not affect its nature or purpose. Conceptually it precedes the arraignment and therefore the preparatory hearing. As regards the amended counts, the objections which are the basis of the application to quash would normally be taken when leave to amend was applied for and either granted or not granted at that stage. This did not happen here for procedural reasons which have already been described. However in our view the same principle applies: conceptually the application to quash precedes the arraignment and therefore precedes the initiation of the preparatory hearing.”
The emphasis is ours. Mr Miskin submits that those authorities all emphasise the restrictive nature of the appellate jurisdiction granted by section 9(11), and he further submits that there is no meaningful distinction to be drawn between an application to sever or to quash an indictment, and an application by one defendant for a separate trial founded upon rulings made in the context of and as a necessary prelude to that application. That, Mr Miskin submits, is apparent from the skeleton arguments submitted by Mr Rhodes to Mitting J, and from the transcript of the proceedings before the judge.
- Mr Rhodes submits that to speak of the ruling he seeks to challenge being made in the context of severance is to adopt the wrong perspective. He submits that the ruling should be regarded as free standing, and as having a bearing on severance, the decision as to which in turn is effected also by the size and complexity of the case. In paragraph 10 of his skeleton of 4th October 2001, prepared for the hearing before the judge, Mr Rhodes wrote–
“Mr Rosenthal asks that the issue of admissibility of his section 2 interview answers be determined at the preparatory hearing so that he (and other defendants) know whether they need to make any such severance application. Moreover, determining the issue at this stage will save a potentially enormous amount of time and costs. If the issue is raised for the first time during Mr Rosenthal’s evidence at trial it is possible that the jury would have to be discharged in respect of some at least of the defendants in order to ensure a fair trial. Issues of severance ought to be heard after the inadmissibility argument has been determined.”
That passage seems to us to illustrate Mr Miskin’s point as to the real focus of the submissions before the judge.
- Referring to section 7, Mr Rhodes submits that the rulings in relation to the true meaning of section 2(8AA) and the possible scope of cross-examination at the trial were made for the purposes identified in paragraphs (a), (b) and (d) of section 7. We accept that as in the authorities we have cited, some incidental relationship to the purposes of section 7 can be demonstrated, but the fact is, as Mr Miskin contended, and as we accept, that the rulings were properly sought so that if the judge ruled as he did the applicant could develop to the full his application for a separate trial, an application which, like an application to quash one or more counts in an indictment, conceptually precedes any preparatory hearing.
Conclusion
- We therefore conclude that we have no jurisdiction to entertain an appeal so the application for leave to appeal must be refused. We reach that conclusion with real regret for the reasons spelt out by Lord Lane CJ in Moore. In the majority of cases a decision upon an application for severance will involve no question of law, and no grounds will exist on which this Court would interfere with the exercise of the trial judge. In such cases, leave to mount an interlocutory appeal should not be sought, and if sought is very unlikely to be granted. This case differs. The principal points which Mr Rhodes wishes to take in relation to the rulings are pure points of law, and clearly arguable, and it would be far better for this court to rule upon those points now rather than a year or two hence. That would benefit all parties. It would remove one element of uncertainty, and might save a huge amount of time and costs, but we must apply the law as we find it, in the light of the existing case law. Mr Rhodes did suggest that if we have no jurisdiction we should nevertheless offer an advisory opinion in relation to the judge’s rulings. That we decline to do. Such an opinion would have no weight in law, and could well raise further problems.
- Before us Mr Hackett QC for Carson supported the submissions as to jurisdiction made by Mr Miskin, and Mr Caplan for Sweetbaum made no submissions. We are grateful to all of the advocates for their assistance in dealing with this area of the law.
