![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales Court of Appeal (Criminal Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Criminal Division) Decisions >> Say, R. v [2021] EWCA Crim 520 (13 April 2021) URL: https://www.bailii.org/ew/cases/EWCA/Crim/2021/520.html Cite as: [2021] WLR(D) 198, [2021] EWCA Crim 520 |
[New search]
[Context]
[View without highlighting]
[Printable PDF version]
[View ICLR summary: [2021] WLR(D) 198]
[Help]
ON APPEAL FROM THE CROWN COURT AT CHELMSFORD
His Honour Judge Morgan
T20160061
Strand, London, WC2A 2LL |
||
B e f o r e :
MR JUSTICE SPENCER
and
HIS HONOUR JUDGE FIELD QC
(sitting as a Judge of the Court of Appeal (Criminal Division))
____________________
The Queen |
Respondent |
|
- and – |
||
![]() ![]() ![]() | Appellant |
____________________
James Waddington QC (instructed by the Crown Prosecution Service)
for the Respondent
Hearing date: 26th March 2021
____________________
Crown Copyright ©
Covid-19 protocol: This judgment will be handed down by the Court remotely, by circulation to the parties' representatives by email and, if appropriate, by publishing on www.judiciary.uk and/or release to BAILII. The date and time for hand down will be deemed to be Tuesday 13th April 2021 at 10.30 am. The Court Order will be provided to Chelmsford Crown Court for entry onto the record.
Mr Justice Spencer:
Overview and procedural history
The factual background
4 (1) A person is in breach of this section if he -
(a) occupies a position in which he is expected to safeguard, or not
to act against, the financial interests of another person,
(b) dishonestly abuses that position, and
(c) intends, by means of the abuse of that position
(i) to make a gain for himself or another, or
(ii) to cause loss to another or expose another to a risk of loss.
The indictment
Statement of offence
Fraud, contrary to section 1 of the Fraud Act 2006.
Particulars of offence
Darren
![]()
Say,
between 1st April 2010 and 20th January 2016, dishonestly and intending thereby to make a gain for himself or expose another to a risk of loss, abused his position as a Financial Advisor, in that he acted against the financial interests of Noisnep SIPP holders by using money allocated to self invested personal pensions (SIPPS) in their names for his personal use, in breach of section 4 of the Fraud Act 2006.
Statement of offence
Fraudulent Trading, contrary to section 993(1) of the Companies Act 2006
Particulars of offence
Darren
![]()
Say,
between 1st April 2010 and 20th January 2016, carried on the business of Noisnep Ltd. for a fraudulent purpose, namely, the application of money allocated to self invested personal pensions (SIPPS) in the names of Noisnep SIPP holders to his own use, by concealing from the holders of the pensions and the administrator of the pensions, Stadia Trustees Ltd., that he was spending this money on himself rather than investing it for the clients.
The Noisnep scheme
The trial
The judge's summing up
Route to verdict
Please follow the order of the questions below.
Count 1
Question 1
Are we sure that DS occupied a position in which he was expected to safeguard, or not act against, the financial interests of investor clients of Noisnep Ltd?
Not in dispute. Go to question 2.
Question 2.
Are we sure he abused that position, intending to make a gain for himself or expose the investor members to the risk of loss?
If you are sure he abused his position go to question 3. If you conclude that he did not or may not have abused his position, then your verdict would be Not Guilty.
Question 3.
Are we sure that DS was acting dishonestly?
If you are sure, then your verdict would be Guilty of Count 1. If you conclude he was not acting dishonestly or may not have been then your verdict would be Not Guilty.
NOTE.
1. To answer question 2, you will need to examine (a) whether money obtained from the RAS remained that of the investor and (b) whether the D spent monies belonging to investors on himself. Abuse is not defined by the FA but is an everyday word understood by you all. To spend money belonging to another may amount to an abuse depending on the circumstances as you find them to be. Gain does not mean profit. Loss need not be an actual loss, all that is required is an intent to expose another to the risk of loss. In respect of the RAS the prosecution does not have to prove that every pound belonged to the investor whose case you are considering, only a part thereof.
2. The above Note is there to guide you it is not an exhaustive list of questions. Facts are for you as are relevant questions.
Count 2
Question 1
Are we sure that DS carried on the business trading as Noisnep Ltd?
Not in dispute. Go to question 2.
Question 2
Are we sure that investor money put into the Noisnep SIPP for investment was applied for his own use?
If you are sure go to question 3. If you conclude he did not or may not have applied investor money for his own use your verdict would be Not Guilty.
Question 3
Are we sure that he concealed from SIPP members and Stadia that he was spending the money for investment on himself?
If you are sure go to question 4. If you conclude he did not or may not have conceal that fact your verdict would be Not Guilty.
Question 4.
Are we sure that this was fraudulent in the sense of being dishonest?
If you are sure that DS was dishonest your verdict would be Guilty. If you conclude that he was not or may not have been acting dishonestly your verdict would be Not Guilty.
NOTES.
1. Your findings in respect of 'ownership of the SIPP money' (question 2, count1, Note 1) will assist you in answering this question.
2. Your findings in respect of dishonesty in respect of Count 1 will assist you in answering question 4.
3. I emphasise all matters of fact are for you to determine.
Ground 3: as originally advanced, with leave
(a) the higher rate tax relief which the investors paid over to Noisnep, amounting to some £435,000;
(b) the sum of £200,000 introduced into Noisnep by the investors from the failed WCP project;
(c) that part of the RAS paid over to Noisnep by Stadia which represented Noisnep's fees legitimately deducted in accordance with the terms of the agreement set out in the documentation provided to and accepted by the investors, said to amount to some 60% of the total RAS of £900,000.
"Whether the defendant was entitled to claim fees from [the] RAS and in what amounts is arguably a matter of law to be determined by reference to the scheme documents and not necessarily a matter for the jury at all. I cannot clearly see from the material before me how this was addressed. It does appear to me that it is arguable that this issue was not addressed with the clarity it deserved and that given the amounts involved it might perhaps have made a difference to the outcome. For this reason I grant leave to argue the fees issue only, which involves three questions:
1. whether the judge correctly determined the legal position in relation to the [defendant's] entitlement to fees;
2. if so, whether he directed the jury correctly in relation to fees; and
3. if not, whether that renders the convictions unsafe."
The Single Judge had earlier referred to the appellant's submission in the grounds that the failure to withdraw from the jury the amount represented by the fees rendered the conviction unsafe, "… because the defendant may have been able to justify extracting that smaller sum on the basis of investments which were made, or at least on the basis that it was not dishonest."
"I refuse leave on the submission of no case. It was common ground that the applicant has used the money paid to his companies for the purposes of the scheme as if it were his own money. From that point onward it was a matter for the jury to decide whether, in so acting, he committed the offences charged."
(a) not deciding as a matter of law Noisnep's contractual entitlement to fees; and
(b) not deciding as a matter of law that there was no restriction on the appellant's entitlement to spend as he wished what remained of the RAS after deduction of the fees legitimately charged under his contracts with the investors.
Thus, Mr Furlong submits, the judge was also wrong to reject the submission of no case to answer. He submits that what was lacking was a proper analysis of the legal basis for the fees and charges levied by the appellant pursuant to both statute and the trust documents which underpinned the pension scheme. He submits that without that assistance the picture presented to the jury was incomplete, to the point that the appellant's convictions are plainly unsafe.
"In respect of the relief at source, the prosecution does not have to prove that every pound belonged to the investor … whose case you are considering and that is so because, as you know, the defendant's contention is that these investors, when they read the paperwork or not, understood that at least 60 per cent of the relief at source would go towards some fees; and hesays,
'in those circumstances, the fees are mine. I am the company, so I can do with them what I want.' Well, that is a matter that you will have to look at; but there is, of course, the remaining 40 per cent, which the defendant concedes would remain the investors' but he
says
they were invested onto the face value of the loan notes; so a loan for £40,000 would, in fact, be reflected on the loan note issued at the point of investment in specie contribution as £43,750."
Ground 3 (expanded) and Ground 2 (application to renew)
"The defendant's duty was no more than to use his best endeavours to secure the advertised return on the loan note over the period of the pension scheme by the use of the assets which the defendant had put into the pension scheme and any other assets he chose to put into the scheme subsequently."
"The principal defence relied upon by the defendant was that, once a Fixed Return Loan was issued, he did not manage investors' money (as would be the case, for example, in a managed fund), but they were nevertheless entitled to expect him to pursue a strategy likely to realise the promised long-term returns. So long as he had sufficient asset backing, he was in a position to do this."
"…And that relief at source, as you can see, provided the liquidity for the company throughout the whole of this period of time; it was the only generation of income on the papers that we have seen. And liquid or cash in a bank account is as much an asset of the company as any other asset, physical or otherwise. Well you can do that exercise and it means that, subject to any arguments in relation to fees and what was understood by the clients, you will always come down to a figure which is the proportion left of the RAS after fees, which is about 40 per cent of any RAS claim. And that, ladies and gentlemen, is one of the issues as to who that belongs to. Well, on the face of it, it belongs for investment to the investor. The Crownsay,
in short, the defendant knew that, he had no right to spend it on himself and also, by way of supplementary argument, it could only be invested in what the investor understood and was told was to be the investment. The defendant
says,
'No, that's not right; and even where I have spent it in that way, I've not done so dishonestly. As we shall see, he
says that, 'Had I not stopped trading, I could have met all liabilities. However, I spent the money.' "
"The defendant was the directing mind of the RGP and Noisnep companies, with primary responsibility for the Noisnep investment strategy and for issuing the Loan Notes. By virtue of this… it is accepted that he occupied a position in which he was expected to safeguard, or not to act against, the financial interests of Noisnep SIPP holders."
"The reason it is not in dispute is that the defendant accepts that he stood in a professional capacity as an IFA [independent financial adviser] and, indeed, as head of Noisnep Limited, and he also had a connection with Wealth Connection Management, did he not, and the IFAs who were operating from there, giving advice and seeking the investment from clients."
"The funds raised through the issue of the Note are to be used to facilitate long term investments by the Company to achieve the key objectives of the Strategy. The Company must secure long term asset commitment from its investments which continue to support the risk free capital made available to investors of the Strategy."
(a) sure that investor money put into the Noisnep SIPP was applied for the appellant's own use (question 2);
(b) sure that the appellant concealed from SIPP members and Stadia that he was spending the money for investment on himself (question 3);
(c) sure that this was fraudulent in the sense of being dishonest (question 4).
(a) sure that what the appellant had done amounted to an abuse of his position (question 2);
(b) sure that he intended to make a gain for himself or expose the investor members to the risk of loss (question 3);
(c) sure that he was acting dishonestly (question 4).
New ground: non- disclosure (application for leave)
The appellant's own grounds of appeal
Abuse of proces
Inadequacy of trial counsel and solicitors
Other non-disclosure and failures to investigate
Fresh evidence of subsequent HMRC and FSCS assessments
Conclusion on appeal against conviction
Appeal against sentence