Scottish High Court of Justiciary Decisons

 

APPEAL COURT, HIGH COURT OF JUSTICIARY

[2015] HCJAC 9

XC52/13

Lord Justice Clerk

Lady Dorrian

Lord Bracadale

 

OPINION OF THE COURT

delivered by LORD CARLOWAY, the LORD JUSTICE CLERK

in

appeal against conviction and sentence

by

SHAHID RAMZAN

Appellant;

against

HER MAJESTY’S ADVOCATE

Respondent:

Appellant:  Duguid QC, MC MacKenzie; Faculty Appeals Unit (for Bell Brodie, Forfar)

Respondent:  Mackay AD; the Crown Agent

 

13 January 2015

Introduction
[1]        On 14 December 2012, after a trial which heard the testimony of 57 witnesses over 46 days in the High Court at Edinburgh, the appellant was convicted of five charges in connection with fraudulent schemes designed to generate repayments of Value Added Tax, when none was due. 

[2]        Three of the charges related to the commission of Missing Trader Intra Community (MTIC) fraud, also known as carousel fraud.  Charge (1) was that, between 22 October 2002 and 31 May 2003, the appellant was knowingly concerned in the fraudulent evasion of VAT via the trading activities of Cortachy Wholesales Limited.  Cortachy Wholesales evaded payment of a VAT liability of £13,755.90.  In addition, Global Communications Ltd fraudulently evaded payment of a VAT liability of £2,058,414.93 in respect of its trading with Cortachy Wholesales.  Charge (3) was that, between 3 September 2002 and 29 February 2004, the appellant was involved in MTIC fraud via the trading activities of Happyhillock Ltd, which was engaged in similar trading with European suppliers and UK companies.  Happyhillock evaded payment of VAT of £868,211.13.  Charge (4) was that, between 3 February 2003 and 14 July 2004, the appellant was likewise involved in MTIC fraud via the trading activities of Glam Entertainments Limited, also so trading, in the knowledge that five other UK companies (Eurobridge UK Ltd, HK International Imports Ltd, Search 85 Ltd, Silversafe Ltd, and TTX Trading Ltd) would fraudulently evade payment of VAT for specified sums amounting to £2,685,484.20.    The aggregate value of VAT liability evaded as a consequence of the frauds was £5,443,866.16. 

[3]        The remaining two charges concerned the laundering of the proceeds of crime.  Charge (2) is no longer relevant (see infra).  Charge (5) libelled that, on various occasions between 2 October 2003 and 13 July 2004, having received sums of money amounting to £114,848,510.77 from six companies or businesses (Rascal Management Ltd, Danum Trading Ltd, Glam Entertainments Ltd, Mobile Heaven Europe Ltd, Leapfrog Solutions Ltd, and France Affaires International) by electronic transfer into business accounts (Ibiplace SL and Treesandland SL) held under his control, the appellant transferred criminal property, being the proceeds of MTIC fraud to the extent of £20,532,056.96, to various specified companies, businesses and persons, contrary to the Proceeds of Crime Act 2002, section 327(1).

[4]        The common nature of MTIC fraud is that a VAT registered United Kingdom company buys small, high value commodities, such as mobile phones or computer parts, from a company domiciled outside the UK but within the European Union.  The transaction is zero-rated for VAT purposes.  The acquiring company sells the goods on, typically immediately after purchase, to another UK VAT registered company.  The goods do not physically change hands.  If they exist at all, they remain, throughout what may be a chain of similar transactions, in a remote warehouse.  The goods are ultimately re‒exported from the UK to a company within the EU, with the exporting company claiming a repayment of the VAT which they have ostensibly paid to the acquiring company, which had supposedly sold the goods to them.  When efforts are made by HM Revenue and Customs to recover the VAT from the UK acquiring company, that entity will either have vanished or will otherwise default on payment.  By ensuring that the price for the goods is not paid to the acquiring company but to a third party, the VAT is rendered practically irrecoverable.  The consequence of this behaviour is that HMRC do not so much lose the VAT (since the sales may be fictitious in any event), they sustain an actual cash loss represented by the payment to the exporting seller.  Put another way, HMRC pay out a substantial percentage of the value of what may be non‒existent goods.  This apparently costs the UK Treasury billions of pounds.

[5]        The Crown’s position was that the trading of the appellant libelled in the charges, which was primarily in mobile phones, was fraudulent.  It was designed solely to create a VAT credit in the hands of the exporting company at the end of the chain, which would require to be paid by HMRC.  Each intra UK transaction was simply a paper exercise, having no underlying commercial rationale or sense.  The appellant’s contrary position at trial (ibid) was that he was a genuine, if naïve, trader who believed that he was conducting a lawful business.

[6]        On 11 January 2013, a cumulo sentence of five years imprisonment was imposed in respect of the MTIC fraud charges (1), (3) and (4).  Concurrent sentences of one and nine years imprisonment respectively were imposed on the money laundering charges (2) and (5).

[7]        The appellant appealed against his conviction and sentence.  He did not insist in his first ground of appeal, which concerned the sufficiency of evidence on charges (1), (4) and (5).  The respondent accepted that there had been a material misdirection by the trial judge in respect of charge (2) (amended ground 4).  The judge had failed to explain an essential difference between the statutory requirements for convictions on charges (2) and (5).  In the former, but not the latter, any concealment or disguise of the criminal property required to be for the purpose of avoiding prosecution.  The conviction and sentence on charge (2) therefore required to be quashed. 

[8]        Ground 3 is that the trial judge erred in directing the jury that there was sufficient evidence in law to convict on each charge.  This was refused leave to appeal at first sift.  An application to re‒instate this ground under section 107(8) of the Criminal Procedure (Scotland) Act 1995 was also refused.  A proposed amendment to add a ground 5, which purported to raise a compatibility issue, was refused at first sift and not pursued further.  This left for consideration the appellant’s contention in ground 2 that the judge had misdirected the jury by:

“failing to set out … the expert evidence which they would require to accept in order to convict the appellant …

… it was incumbent upon the trial judge to remind the jury of the evidence upon which the parties sought to rely and to the high watermark of their evidence.

            The failure of the trial judge to give assistance to the jury on the expert evidence … was a material misdirection …”.

 

This appeal accordingly, once again, raises the issue of the degree to which a judge ought to explore what is said to be expert evidence when directing a jury.

 

The evidence
[9]        The Crown case commenced with Roderick Stone, an HMRC employee, setting the scene.  He described the nature of a MTIC fraud (supra), the problem that it presented for HMRC, and the particular frauds perpetrated by the appellant.  A variety of witnesses gave evidence about the companies either owned or controlled by the appellant, their banking and accounting arrangements, and their dealings with HMRC in relation to VAT.  Further HMRC witnesses spoke to the VAT registration of the appellant’s companies and the VAT returns lodged by those companies.

[10]      Thereafter, the Crown called a significant number of witnesses who either owned or were employed by companies or other entities who traded with the appellant’s companies.  These witnesses explained that the pattern of trading involved the sale or purchase of large numbers of mobile phones over short periods of time, with no actual physical possession of the goods by either buyer or seller.  The goods were typically retained throughout in remote warehouses.

[11]      The nature of the evidence given by these witnesses was described by the trial judge as “remarkably uniform”.  They each spoke to becoming aware of the potential for trading in high value, low volume items, including mobile phones, through trade advertisements.  The trading was conducted with the appellant’s companies, by electronic means or by telephone.  Offers were made to buy or sell quantities of goods, typically in values of tens of thousands of pounds.  Contracts were entered into quickly and onward sales, conducted by the same methods, were completed shortly afterwards.  The paperwork was completed electronically after the sales had been concluded.  In very short periods, sometimes in as little as a few weeks, the traders could develop turnovers of hundreds of thousands, and in some cases millions, of pounds.  Problems emerged, however, when VAT fell due at the end of a quarter.  Many of the intermediate companies were unable to pay the VAT and had been rendered insolvent.

[12]      The Crown case concluded with a HMRC witness speaking to schedules detailing the trading conducted by the appellant’s companies, which were said to exemplify the operation of typical MTIC frauds.  Michael O’Hagan, a forensic accountant with HMRC, testified over many days, about various trades detailed by him in these schedules.  These were said by him to constitute the links in a chain, or sequence of trades.  There were many hundreds of these deals, each detailed on a separate page setting out the parties, the nature of the trade and its size, the goods and dates; all in diagrammatic form.  The source of the information in the diagrams, that is the underlying documentation, was also produced.  In instances where there was a lack of source information, and the link in the chain could accordingly only be by inference, that was acknowledged.

[13]      The hallmarks of MTIC fraud, as identified by both Mr Stone and Mr O’Hagan were: (i) the trading in high value, physically small items such as mobile phones, computer components or microchips; (ii) the making of third party payments by a defaulting company’s customer direct to the defaulting company’s alleged supplier, thus ensuring that very little money was ever held in the defaulting company’s bank account to be seized by HMRC; (iii) the existence of extra UK, EU suppliers of goods; (iv) the selling of goods at a loss at some stage in the chain; (v) the carrying out of frequent trading over a very short period; (vi) the creation of a distance between importer and exporter by the use of “buffer” companies; and (vii) the processing of large sums of money through company bank accounts, but the making of only marginal profits.

[14]      The appellant gave evidence over 4 days.  He spoke to the companies set up by him, the nature of his control, his employees and the work that they had performed.  He described the various bank accounts opened by him for trading purposes and his dealings with accountants, who had acted for him and his companies.  The appellant did not deny that he and his companies had been involved in the trading libelled.  He did not dispute the factual accuracy of the schedules relied on by the Crown.  He did, however, deny that there had been anything covert or illegal in his trading.  It had been genuine and legitimate.  If anything, he had been the victim of deal chains in which, unknown to him, the planned outcome was the evasion of VAT.  David Bell, a chartered accountant, whose evidence took up some 3 days, testified in support of the appellant.  His report made some criticisms of the inferences or conclusions drawn by Mr O’Hagan, to the extent that these were not the only inferences or conclusions available.  There were, he said, alternative innocent explanations. 

 

Trial judge’s approach
[15]      The trial judge considered that the central question for the jury was whether they were satisfied that there had been no proper commercial purpose to the trading or whether, alternatively, the trades carried out by the appellant had been genuine.  There had been “consistent and persuasive” evidence led by the Crown that no real profits had been generated.  The only real benefit was the creation of a situation in which HMRC would pay a tax rebate, when none was due.  In the majority of trades, the Crown had been in a position to identify the entire chain.  The witnesses had been able point to contract notes and invoices for each transaction and to trace them through to the bank account of one of the appellant’s companies.  In relation to a limited number of consignments, there had been a break in the chain.  Where there was a gap, it had been open to the jury to infer that the gap could be completed or ignored because of the clarity of the remaining elements of the chain and because it was of a type consistent with the other (complete) transactions.

[16]      The trial judge considered that the chains had been “clearly and plainly detailed” in the schedules produced, and spoken to, by Mr O’Hagan.  The jury had had access to these documents during their deliberations.  Notwithstanding the length of the trial, the parameters of the contentions of the Crown and defence had been limited.  Evidential issues had not been focused in the trial judge’s charge because, as he explained in his report: first, the deal chains shown in the schedules were “clear and easy to follow”; secondly, the trades had been “carefully explained” in the evidence of both Mr O’Hagan and Mr Bell; thirdly, the issues had been properly and fully addressed by counsel in their closing speeches; and fourthly, the matters relating to the evidence, which required to be considered by the jury, were not “of such complexity that any attempt at elucidation thereof or guidance were required”.

[17]      In charging the jury, the trial judge stated:

“I don’t intend to go over the evidence with you.  … that is not the function of a judge in a criminal jury trial.  In any event, it’s not appropriate … for me to go over the evidence which was of great length, that you have already listened to, and which you have to assess, and about which you’ve already heard things in the speeches from the advocate depute and [defence counsel] who … dealt at length with that evidence.” 

 

Particular mention was, however, made of the fact that it had been conceded expressly on a number of occasions during the Crown speech that the case was a circumstantial one.  The standard directions on the drawing of inferences from circumstantial evidence were given.

[18]      The trial judge did direct the jury that the charges fell into two groups, as both parties had recognised in their closing speeches.  On the factual bases of charges 1, 3 and 4, he explained that these were allegations of fraudulent evasion of VAT; the fraud in each case being MTIC fraud.  No account was given by the judge of the mechanism of such frauds, as described in the evidence, but the concepts of “fraudulent evasion” and being “knowingly concerned” in, or taking steps with a view to, the fraud were adequately explained. 

[19]      On charge 5, the trial judge directed that the jury were concerned only with the transfer of criminal property, in the form of money.  He said that:

“[T]hree things required to be proved... 

First, … that the money … was the proceeds of crime, was criminal property.  Property in this case, and that means money, is criminal property if it constitutes or represents a person’s benefit from criminal conduct.  Criminal conduct is conduct which constitutes, or would constitute, an offence in any part of the United Kingdom.  …  [T]hat … the money referred to in charge 5 that they say went to the entities mentioned … represents, or constitutes, the benefit which someone has made from criminal activity, in this case MTIC fraud. 

Second, the Crown must prove that the accused knew or suspected that the money constituted such a benefit.  A person benefits from conduct if he obtains property or an interest in it as a result of, or in connection with, the conduct.

And, third, the Crown must prove that the accused transferred the money in the knowledge that it was criminal proceeds, or criminal property.  So the Crown have to prove that the accused deliberately, that is intentionally, transferred the money which he knew came from criminal activity, and those three elements must all be present before you could convict ...”.

 

Submissions

The appellant

[20]      In an oral submission, which represented a substantial modification of the terms of the written Case and Argument, the appellant maintained that the ground of appeal was, essentially, that there had been a “misdirection by omission”.  The nature of MTIC fraud had been described “elsewhere” as a remarkably simple process, but that was only so for the fraudster.  It was “a sophisticated attack on the VAT system” (Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174, Lord Hope at para 6) given the number of steps taken to make it difficult for HMRC to follow the chain of events.  There had been a substantial body of expert evidence to explain it at the trial.  Nevertheless, the trial judge had considered that no direction or guidance had been required and he had thus not attempted to explain the nature of the offences or the evidence adduced from the experts. 

[21]      Although the length of the trial was not decisive, a number of features of the evidence had required direction.  These were that: (i) MTIC fraud required an EU supplier to generate a zero-rated import; (ii) the UK importer was, or was most likely to be, the defaulter;  (iii) the existence of buffer companies could be consistent with fraud or innocence; (iv) the fraudulent transactions commonly involved high value goods traded frequently, yet often sitting in a warehouse; (v) the transactions needed an element of discounting in order to avoid the goods becoming unmarketable; (vi) the companies would frequently trade at a loss; (vii) instructions were given to pay third parties, with whom the trader had no contractual relationship, rather than to pay suppliers direct; (viii) in cases where it was sought to identify the UK importer by reference to third party payments to EU suppliers, it was possible that other companies existed between the companies identified; (ix) “hijacked” companies, which had had their VAT registration numbers appropriated, and “missers”, being companies which had simply failed to make VAT returns, had to be distinguished from “defaulters”; (x) “layering”, being essentially the frequent movement of funds, could be genuine; and (xi) whilst VAT returns were generally made quarterly, input tax incurred outwith the quarter could not be offset against the output tax liability for that quarter.  “Regulation 25” letters might bring forward the date for payment. 

[22]      Those features were all relevant to the appellant’s case.  His Spanish companies, namely Ibiplace and Treesandland, did not trade with UK companies.  They were not EU suppliers, as required for a MTIC fraud.  Cortachy Wholesales were said to be a buffer, yet they had defaulted on a comparatively small VAT liability.  This did not fit the profile of a MTIC fraud.  None of the appellant’s companies (under exception of Happyhillock, infra) traded at a loss or applied a discount on any single transaction. 

[23]      Mr Bell had indicated that the third party payments could simply have been a speedier means, at least in 2003, of transferring money and avoiding bank charges.  No such payment instructions had been issued by the appellant’s companies; even if Glam Entertainments had followed such instructions.  The jury ought to have been directed on the existence of alternative explanations for following such instructions.  The appellant had formed three companies for the purpose of receiving payments from his other companies, and of making payments to the appellant, his brother and other third parties.  If those activities constituted “layering”, it was in its most primitive and transparent form.  The appellant was identifiable as the account holder and the director of those companies.  Thus, the process of layering required explanation.  Happyhillock had ceased trading within two days of the end of the quarter.  Following service of a regulation 25 letter, it had been unable to pay its VAT liability.  Nonetheless, Mr Bell had said that the company could have met its liability, had it continued trading up to the point when the VAT would ordinarily have become due.  All of these issues had been raised in the respective speeches of counsel. 

[24]      A trial judge could not leave the responsibility of dealing with matters of law to counsel.  It was not a proper reflection of the entire evidence to present the case as a straightforward question of whether or not the appellant had been lying about being knowingly involved in fraudulent trading.  It was usually necessary to refer to the evidence to which relevant directions in law were to be applied.  The extent of such references was admittedly a matter for the discretion of the trial judge (Shepherd v HM Advocate 1996 SCCR 679 at 684).  However, where there was expert evidence, it was incumbent on the trial judge to explain its purpose.  Without guidance on the common features of MTIC fraud, the jury could not have reached a reasoned conclusion on whether the appellant’s activities were consistent only with fraud or whether some innocent explanation was tenable.  The judge had failed even to give a standard direction on the purpose of expert evidence.  Whilst there was no real dispute between the experts as to the common features of MTIC fraud, and those matters had been “continually rehearsed” before the jury over a number of days, the jury ought to have been reminded of the relevant features (R v Ravjani [2012] EWCA Crim 2519). 

[25]      This was a case of “complicated forensic accountancy”.  The appellant had been involved in three different roles; EU supplier, UK importer, and buffer company.  The case fell within the “extreme” category, involving complex and technical evidence (Hainey v HM Advocate 2014 JC 33; Liehne v HM Advocate 2011 SCCR 419, paras [46] and [47]; Younas v HM Advocate 2014 SCCR 628, para [54] et seq).  By its very nature, MTIC fraud is intended to be difficult to trace, and necessarily involves complicated evidence.  The case required “special treatment” (cf Younas v HM Advocate 2014 SCCR 628, para [68]).  The extreme, complex and technical nature of the evidence was vouched by the mere fact that the Crown had been unable to lead the evidence in a more concise form.  The lengthy treatment of it by the Crown did not absolve the judge from his responsibility to give appropriate directions.  The obligation to ensure a fair trial required the judge to remind the jury of the salient evidential features (R v Amado-Taylor [2000] 2 Cr App R 189).

 

The Crown

[26]      The advocate depute submitted that whether the trial judge was required to address the evidence was a matter for his discretion, in the context of the trial (Shepherd v HM Advocate 1996 SCCR 679).  There was no duty upon him to “rehearse” the evidence (Liehne (supra), para 46).  Liehne (supra) and Hainey (supra) were to be distinguished as dependent upon the opinion of medical experts.  It was not the case that the trial judge had given no consideration to whether or not he should summarise the evidence.  He had given reasons for deciding that it had not been necessary to do so.

[27]      Where the Crown had considered it helpful to provide the jury with introductory evidence on the operation of the VAT system and MTIC fraud, it did not follow that the evidence was difficult to understand.  The nature of the VAT system had been explained, including how quarterly VAT forms would be completed and the differences between input and output tax.  The jury were quite capable of understanding the requirements to submit returns and to remit sums to HMRC.  The jury had heard a great deal of evidence in this regard and it was to be assumed that it had been understood.  Similarly, the essential components of MTIC fraud were not difficult to grasp.  Whilst it took time to explain them, none were complex in a manner comparable to the medical opinions adduced in Liehne and Hainey. 

[28]      The operation of the VAT system, and MTIC fraud, were matters of fact.  A great deal of Mr O’Hagan’s evidence was neither in dispute nor evidence of opinion.  The function of Mr O’Hagan had been to analyse the trading activity, which had been demonstrated by proof of the documentation recovered by HMRC, and to link it with invoices, purchase orders and bank records.  Having done so, he had produced hundreds of diagrams showing the activity of each company associated with the appellant.  Subject to some differences, there were hundreds of chains showing a number of the typical features of MTIC fraud.  There was no dispute that MTIC frauds normally operated in this way.  Any areas of disagreement were about whether there could be an honest explanation for the repeated occurrence of those features.  There was no complex scientific evidence or conflicting opinion.  The issue was whether the appellant was knowingly involved in MTIC fraud.

[29]      Having regard to the lengthy evidence and speeches, there was a danger in the trial judge rehearsing these matters.  The trial judge had advanced cogent reasons for deciding not to summarise the evidence.  It had not been demonstrated that any miscarriage of justice had occurred.  Accordingly, the appeal should be refused.

 

Decision
[30]      The court is not persuaded that the trial judge erred in omitting to direct the jury in respect of the eleven matters advanced by the appellant.  The issue of the degree to which a trial judge requires to delve into the evidence, including expert and opinion evidence, was recently revisited in Younas v HM Advocate 2014 SCCR 628, under reference to the relevant authorities, as follows:

“[55]    … As was recently said in D’Arcy v HM Advocate ([2013] HCJAC 173):

‘[14]     In general terms, there is no requirement upon a trial judge to rehearse or summarise the evidence in a charge to the jury.  Where, however, the resolution of the central issue or issues requires consideration of competing expert evidence of a complex technical nature, the trial judge may require to give the jury some guidance on how to approach that evidence in relation to the central factual matters for their determination.  This will often be designed to provide a framework within which the jury can reach a reasoned verdict (Liehne v HM Advocate 2011 SCCR 419, LJG (Hamilton) at para [47] and also Hainey v HM Advocate 2014 JC 33, Lord Clarke at para [52]).’

The evidence is for the jury to analyse and assess.  A judge should take care not to trespass upon the jury’s province in that regard.

[56]      It remains primarily for the parties to address the jury on what parts of the evidence are, or are not, significant and to make such submissions on credibility and reliability as they think appropriate.  The trial judge may react to any submissions made.  He does not, however, require to conduct an independent audit of the evidence in order to extract all the main points which he considers might be regarded by the jury as favouring one verdict or another.  …[T]he degree to which a judge enters into this area of fact must be very much a matter for his judgment, based upon his unique understanding of the true issues of fact in contention during the trial.

…

[58]      …even in Liehne, the court (LJG (Hamilton) at para [46] following Shepherd v HM Advocate 1996 SCCR 679, (at 684) and Hamilton v HM Advocate 1938 JC 134 (at 144)) emphasised that the primary duty of a trial judge is to direct upon the law.  He has no duty to “rehearse the evidence” or “summarise in chronological order the testimony of the witnesses”.  It did state (ibid at para[47]) that in order for a verdict to be seen as proceeding upon a reasoned basis, the trial judge may require to provide a framework for the jury.  However, it said only that in “some circumstances, and in particular in long complicated cases, there may be an obligation to refer to some of the evidence – so that the jury may be focused on the critical issues for their decision” (Black v HM Advocate 1974 JC 43, Lord Cameron at 49).

…

[67]      …  It has to be borne in mind at all times that, for directions to a jury to be effective, they must be delivered in a manner which the jury will grasp.  Care must be taken not to be condescending or patronising to juries by rehearsing evidence to them which they have not only already heard but have also been told specifically is for them, and not the judge, to assess.  The risk of inducing boredom and thus promoting a lack of concentration should not be underestimated (see McPhelim v HM Advocate 1960 JC 17, LJC (Thomson) at 21).  It is also not to be lightly assumed that a jury will suddenly suffer from collective memory loss relative to evidence presented in recent weeks during the course of a trial (Snowden v HM Advocate (supra) at [57]).

[68]      It is common ground that a charge should be such as to enable the informed observer, who has heard the proceedings at trial, to understand the reasons for the verdict.  In certain cases, and this may have been one, the trial judge may require to focus the issues of fact sufficiently in order to provide a route or path to a verdict. …”.

 

[31]      There was very little of a technical nature spoken to by the experts and even less by way of any dispute between them.  Despite the length of the trial, most of the facts in relation to the trading carried on by the appellant and the various witnesses were not challenged.  The issue, and it was a straightforward one, was the proper inference to be drawn from that trading.  The Crown experts spoke to the nature of the trading being typical of MTIC fraud.  This was not seriously in dispute.  Rather, the question was whether, nevertheless, as the appellant maintained in his evidence, there was room for doubt about whether the appellant might simply have been a dupe in the conspiracies of others and naïve in his approach to what was going on.

[32]      The central issue involved no technical or complex evidence requiring interpretation according to the conflicting opinions of experts in the field.  In this state of the evidence, where the issue of fact was so clear, there is no difficulty understanding the jury’s route to verdict.  It was simply that they accepted that the nature of the trading and the appellant’s participation in it was such that he was proved to have deliberately engaged in the fraudulent evasion of VAT and the transfer of criminal property.

[33]      This was not a case in which there was any ground of appeal complaining of imbalance in the trial judge’s charge.  The appellant certainly came close to submitting that the trial judge’s omission to deal with the evidence meant that the nature of the defence was not placed fairly before the jury.  In doing so, he argued that there could be no shifting of the obligation incumbent upon the trial judge to counsel in relation to the proper treatment of the evidence before the jury.  To that extent, the appellant’s position proceeds upon a misunderstanding of the respective functions of the judge and counsel. 

[34]      In assessing what he should say about the testimony, a trial judge will necessarily take account of the content of counsel’s speeches.  That does not mean that the content of the speeches diminish his responsibility to ensure a fair trial (cf R v Amado-Taylor [2000] 2 Cr App R 189, at 191).  Nevertheless, whatever the position may be in other jurisdictions, it remains a matter primarily for the parties to determine the appropriate manner in which to present their respective cases, including any significant evidential issues, to the jury.  It is not for the court to presume to advise parties on the extent to which their speeches might address questions of evidence, such as by giving notice of any anticipated, yet not determined, terms of a charge.  Indeed, to do so in advance of hearing counsel’s speeches would be difficult, at least without some circularity.  Where the issues of fact are clear, the prosecution may elect to deal with the evidence in short compass.  Defence counsel may wish to say very little about the evidence.  Subject to the demands of professional ethics, that is a matter for him/her.  The trial judge may do likewise; subject to the demands of fairness.  That, too, is primarily a matter for him/her to gauge in light of his unique understanding of the case.  There is no duty upon the trial judge to “summarise” the evidence (cf in England, Criminal Procedure Rules (2014 No 1610) rule 38.14(b)) or, indeed, to “remind” the jury of what they have heard already (Younas v HM Advocate (supra)). 

[35]      A party should not rely on a trial judge to address the evidence in any particular manner, especially where that party has declined to do so, beyond that which is necessary to ensure a fair trial.  Beyond the requirement that the judge directs the jury on the law which must be applied to the case, a trial will normally be regarded as fair in a general sense (in the absence of a positive misdirection) where the directions are such that the reasons for the resultant verdict can be understood by the hypothetical informed observer.  The extent of any duty to address the evidence will be a matter primarily for the discretion of the trial judge, exercised in that light and the whole circumstances of the particular trial, with which the appeal court will not lightly interfere.  In this case, it may well be, for example, that, by the time he came to consider the content of his charge, the trial judge had decided (as appears to have been the case) that the jury’s collective mind had already firmly grasped the essentials of MTIC fraud.

[36]      It was an underlying theme of the appellant’s submission, as it came to be ultimately formulated, that various features of the appellant’s trading, that were admittedly commonly associated with MTIC fraud, were equally consistent with genuine trading.  It was emphasised that the expert evidence demonstrated a difference of opinion as to the proper interpretation of the facts.  Whereas the Crown contended that the facts gave rise to an inference of criminality, the defence had contended that the same facts permitted an innocent explanation.  It was said to be significant that there was expert opinion to support the position taken by the appellant in his own evidence.  Notwithstanding the professional standing of the witnesses, however, it is important to recognise that they were speaking to matters of fact, rather than opinion.  The underlying facts were not, of themselves, in dispute.  As a matter of fact, certain features of the appellant’s trading were commonly associated with MTIC fraud.  Features of apparently genuine trading could also be features of MTIC fraud and vice versa.  It was accepted that it was often not possible to tell whether the goods in question were real or fictional.  It was not suggested that either genuine or fraudulent trading was the necessary inference to be drawn from the established facts.  That being so, whether the appellant was engaged in fraudulent trading or not was a matter of inference at large for the jury.  It was not something dependent upon an intricate analysis of disputed expert opinion. 

[37]      There may be differing degrees of sophistication in the perpetration of MTIC fraud (Sarwar v HM Advocate 2011 SCCR 159, LJG (Hamilton) at para 4: “a remarkably simple piece of criminal conduct”; cf Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174, Lord Hope at para 6: “a sophisticated attack on the VAT system”).  Nonetheless, the nature of MTIC fraud is not difficult to grasp.  The examples given were reasonably straightforward; proceeding as they did upon largely undisputed facts meticulously set out in Mr O’Hagan’s schedules.    

[38]      Notwithstanding the extreme length of time it took the Crown to adduce the evidence, neither party had any difficulty in presenting his case to the jury in a relatively succinct form.  Each speech was completed within about one half of a court day; even if the judge elected to spread the speeches and his remarkably short charge over three separate days.  The advocate depute covered what his principal witness, Mr Stone, had said were the typical elements of an MTIC fraud.  Thereafter, in respect of each charge, he dealt with the individual transactions which were detailed in Mr O’Hagan’s schedules.  The Crown’s approach, not surprisingly given the apparent volume of the trading, was to dismiss the idea that it was real as essentially preposterous.

[39]      The appellant’s solicitor advocate did not feel it necessary to rehearse the evidence.  He simply wanted to make certain “points”, which he displayed in writing on a screen.  He attempted to paint a picture of the appellant as an enthusiastic, risk-taking entrepreneur, rather than a criminal.  He emphasised the open nature of the trading.  He maintained that there was nothing sinister in the appellant developing a multi-million pound business from nothing by way of working capital or premises, stressing the advantages of the internet as a promoter of world-wide trade.  He maintained that the Crown had failed to demonstrate that the appellant had been aware of the fraudulent nature of the transactions and the criminal nature of their proceeds.  He spent some time dealing with the facts relative to particular transactions, stressing the legality of third party payments.  One of the very few points of particular dispute, which the appellant raised in relation to the views of the experts, was the conflict about whether there could be any innocent party in the context of a demonstrated MTIC fraud.  That matter was dealt with in a few sentences. 

[40]      Even when it came to dealing with his own expert’s evidence, the solicitor advocate “simply” asked the jury to accept it.  He did not go into its significance at all; no doubt rightly conscious of the fact that the jury had heard Mr Bell’s testimony very recently.  The judge’s decision not to explore the testimony of Mr Bell has to be seen in that context.  Only a few days earlier, Mr Bell had told the jury about all the matters which the appellant now maintains should have been repeated ad longum in the charge.

[41]      Whilst it would undoubtedly have been desirable for the trial judge to have said something about the nature of the evidence, the court is not satisfied that his failure to do so amounted to a material misdirection.  He could have focused matters in a more helpful way for the jury.  It is regrettable that he did not do so.  However, the fact that he elected not to do so does not, of itself, constitute a miscarriage of justice.  In that regard, the evidence, whilst voluminous in a physical sense, was repetitive rather than convoluted.  Further repetition by the judge in the matter desiderated by the appellant might reasonably be classified as otiose.    Accordingly, the appeal against conviction in respect of charges (1), (3), (4) and (5) is refused.

 

Sentence
[42]      No written submissions were contained in the Case and Argument to support the grounds of appeal against sentence.  The grounds are that the trial judge placed insufficient weight on the appellant’s personal circumstances and imposed custodial sentences of an excessive length.  The sentence imposed on charge (5) was said to be both excessive and inappropriate.  The relevant conduct was, to a large extent, encompassed in charges (1), (3) and (4).  The commission of the further money laundering offence was incidental to the commission of the primary offences and did not materially add to culpability.  The appellant had been diagnosed with cancer in 2006, but it appeared that it was no longer progressive following treatment.  The appellant had three children, aged 15, 14 and 3 years.  During the last three years, the appellant had been running a restaurant and milkshake bar in Dundee.  He employed 16 people.  He had served approximately 10 months in custody following withdrawal of bail at the close of the evidence.

[43]      At the appeal hearing, it was submitted first that the imposition of concurrent sentences entitled the court to consider the impact of quashing one of those sentences (on charge (2)) on the “overall” sentence.  This was not part of the grounds of appeal, nor was the second submission that it was not clear whether the trial judge had taken into account the delay in prosecution.  Investigations had commenced in 2004, but the charges had not been proffered until 2012.  This had not been alluded to directly or indirectly in the trial judge’s published sentencing statement.

[44]      Given that there were individual sentences on each charge and that custodial disposals were inevitable, the court is unable to understand the submission that the trial judge’s sentence of charge (2) might have affected his selection of appropriate terms on the remaining charges.  The judge has explained that it had no such effect.

[45]      The apparent significant delay in the prosecution of these offences would undoubtedly have been an important consideration to take into account in the sentencing process.  However, it was not raised in the grounds of appeal and the court does not therefore have the trial judge’s comment on whether, and to what extent, he took account of it.  Despite the terms of the published sentencing statement, which makes no mention of it as a factor, it would certainly be surprising if the judge had not taken it into account, at least if it had been prayed in aid in mitigation.  Be that as it may, it is far too late to introduce this point at this stage.  The appellant had sufficient time in which to formulate his grounds of appeal against sentence.  No doubt, he had an opportunity, at the stage of framing the written Case and Argument and at the subsequent Procedural Hearing, to reconsider the matter.  However, at no stage prior to the appeal hearing itself was there any application to amend the grounds.  Were such an application to be made now, it would inevitably require a remit to the trial judge at a point 2 years on from the sentencing diet.  The court does not consider that it is in the interests of justice to adopt such a course, having regard to the need to balance the appellant’s interests with those of the public in maintaining a system of appeals whose rules are followed, other than in exceptional circumstances.

[46]      The trial judge characterised the charges as “serious … involving a persistent course of dishonest conduct over a prolonged period of time”.  The loss to the Treasury, and therefore the public, was, on any view, very substantial.  The judge took account of the mitigatory factors advanced, namely that: the appellant had not beached his bail conditions and had complied with all court requirements during the 8 year period of investigation prior to commencement of trial.  He had been very seriously ill.  A significant number of character references vouched the appellant’s standing in his community.  He was a good father.  He contributed to the general benefit of society through voluntary work.  The appellant had not previously served a term of imprisonment and did not have a substantial record of previous offending.  According to a Criminal Justice Social Enquiry Report, he presented a low risk of reoffending and no danger to the community. 

[47]      The court is unable to hold that the sentences were excessive.  Having regard to the deliberate and repeated nature of the conduct and to the level of loss to the UK Treasury, substantial custodial sentences were inevitable.  The prevalence of this type of conduct and its effect on UK Government funds would have justified even longer custodial terms, but for the mitigating factors.  The appeal against sentence must accordingly also be refused.