Perverting course of justice – Third party being subject to restraint order

R v Kenny: Court of Appeal, Criminal Division: 30 January 2013

Until 2006, the defendant had been a director of AFC, a company whose business was to finance other possibly insolvent businesses. After stepping down as a director, the defendant remained on the payroll and maintained the day-to-day management of AFC. OS ran a profitable payroll business that had operated as a vehicle for large scale tax fraud. The operation was run through a company, M. In February 2008, the Crown Prosecution Service obtained orders under the Proceeds of Crime Act 2002 (POCA) restraining OS and two other directors of M from disposing of the assets of the company and restraining OS from disposing of his own personal assets. OS and others were subsequently arrested. The restraint order made no allowance for using the restrained funds to pay legal fees. However, it was permissible for a third party to use their own money to meet a legal bill if it was a genuine gift and not a loan dressed up as a gift. OS approached the defendant for the purpose of obtaining a loan through AFC to pay his legal fees. In March 2008, OS entered into a 12 month loan agreement to borrow £170,000 from AFC. The loan was secured by way of a payment of £145,000 from a company, RB into the account of AWIC, a company the defendant had previously been a director of. Subsequently, £145,000 was transferred by AFC its solicitors, ESN. Eight days later and upon OS's instructions, ESN forwarded £50,000 to KP, the solicitors acting for M. OS and the defendant met again where he was informed that OS was subject to a restraint order. OS wanted funds transferred to P, the solicitors representing him, but informed the defendant that the funds would only be accepted by P if they were a gift. In May 2008, ESN transferred £95,000 to P. That same month, a representative of P (Mr H) visited AFC's offices and was informed by the defendant that the funding had been a gift. On that basis, P accepted the money from ESN. Subsequently, a solicitor from ESN informed Mr H that the money had not been a gift but a loan. Mr H insisted that it had been a gift. Thereafter, repayments of the loan to AFC had been made indirectly via one of the co-accused. In January 2009, a company linked to the co-accused transferred £300,000 to AWIC, who, in turn, paid over the £145,000 owed to AFC. The defendant was subsequently charged with conspiracy to pervert the course of public justice. The defendant originally pleaded not guilty. Thereafter, the judge made a ruling which stated, amongst other things, that it had been proper, at least in the instant case, to charge a simple breach of a POCA restraint as acts tending to pervert the course of justice. Following that ruling the defendant changed his plea to guilty. The defendant was sentenced to 13 months' imprisonment. The defendant appealed.The matter which fell to be determined was whether a breach of a restraint order made under POCA involving no illegality beyond the breach of the order itself was capable, without more, of constituting the offence of perverting the course of justice. The defendant contended that to justify prosecution for perverting the course of justice, there had to be some free-standing criminality apart from the breach of the restraint order simpliciter. The Crown contended that, by a deliberate act, the defendant had diminished the assets available for confiscation. Accordingly, it was difficult to think of a more obvious way of perverting the course of justice. Consideration was given to the ruling in R v Ludlam (unreported, 11 October 2011) (Ludlam) and the decision of the Jersey Court of Appeal in Justin Michel v the Attorney General of Jersey[2011] JCA 145 (Michel). Consideration was also given to the European Convention on Human Rights.The appeal would be dismissed.The state of the law concerning the offence of perverting the course of justice could be summarised as follows: (i) there was no closed list of acts which might give rise to the offence; (ii) that said, any expansion of the offence should only take place incrementally and with caution, reflecting both common law reasoning and the requirements of art 7 of the Convention; (iii) so far as concerned the offence generally, neither authority nor principle supported confining the requisite acts to those giving rise to some other independent criminal wrongdoing; and (iv) if there was no such limitation generally, then there was no basis for importing such a restriction, as a matter of law, into the elements of the offence where it arose in the context of a breach of a restraint order. Accordingly, a breach of a restraint order made under POCA involving no illegality beyond the breach of the order itself was capable, without more, of constituting the offence of perverting the course of justice (see [35], [41] of the judgment).In the instant case, the central plank of the defendant's argument disappeared with the court's inability to accept the correctness and/or applicability of the ruling in Ludlam. There had been no basis for interfering with the judge's ruling that the prosecution had been entitled, as a matter of law, to charge perverting the course of justice. Nor so far as factual or discretionary considerations were at all relevant, had it been inappropriate for perverting the course of justice to have been charged. The defendant's actions had formed part of a carefully orchestrated and planned series of measures designed to frustrate the intended effect of the restraint order. That had been determined and sophisticated criminal conduct (see [39], [40] of the judgment).R v Kellett [1975] 3 All ER 468 considered; R v Machin [1980] 3 All ER 151 considered; Justin Michel v the Attorney General of Jersey [2011] JCA 145 considered; R v Ludlam (unreported, 11 October 2011) distinguished.Per curiam: By way of postscript, we underline that the question of whether any particular breach of a restraint order does give rise to the offence of perverting the course of justice depends on the facts and circumstances of the individual case. In the present case, it will be recollected that the appellant changed his plea to guilty following the judge's ruling as to law (see [42] of the judgment).

Gary Bell QC (instructed by Stephen Lickrish & Associates Ltd) for the defendant.David Farrer QC and Andrew Wheeler (instructed by the Crown Prosecution Service) for the Crown.