Roberts v Ludlow Justices

Queen's Bench Division (Crown Office List)

CO/1573/91, (Transcript:John Larking)

HEARING-DATES: 16 July 1993

16 July 1993

COUNSEL:
The Applicant appeared in person; P Walker appeared as amicus curiae

PANEL: Mann LJ, Sedley J

JUDGMENTBY-1: MANN LJ

JUDGMENT-1:
MANN LJ: There is before the Court an appeal by way of case stated. The appellant, Jonathan Howard Roberts, appears on his own behalf. The respondents are the Ludlow Justices who do not appear. The case is stated by the Justices themselves in respect of their adjudication as a Magistrates' Court sitting at Ludlow on 5th March 1993.

We have been assisted by Mr Paul Walker of Counsel instructed on behalf of the Lord Chancellors' Department at the Court's request.

The background to the matter is that on 16th July 1990 Mr Roberts pleaded guilty at the Southwark Crown Court to three counts of obtaining property by deception contrary to section 1 of the Theft Act 1968. He was tried on one further count of conspiracy and was convicted. The offences related to multiple applications in privatisation share issues. Mr Roberts was not sentenced until 30th November 1990 when His Honour Judge Laurie sentenced him as follows:

"Conspiracy -- 12 months' imprisonment forthwith and "25,000 fine or and 6 months' imprisonment in default.

Obtaining by deception -- 6 months' imprisonment forthwith consecutive "25,000 fine or 6 months' imprisonment in default.

Obtaining by deception -- 6 months' imprisonment forthwith concurrent and "25,000 fine or 6 months' imprisonment in default.

Obtaining by deception -- 6 months' imprisonment forthwith concurrent and "25,000 fine or 6 months' imprisonment in default."

Thus there was, in total, a sentence of 18 months' imprisonment and a total financial penalty of "100,000. The fines were to be paid in full by 1st March 1991 and a sentence of 2 years' imprisonment was imposed in default of payment. There was also an order of "30,000 costs, but upon that I need not dwell because there is no longer any live issue in relation to it.

Mr Roberts served 6 months of the term before being released upon licence. No part of any of the four fines has been paid. The enforcement of fines was on 1st June 1992, transferred to the Ludlow Magistrates' Court. That transfer was consequent upon a removal of Mr Roberts' place of residence.

On 4th June the Ludlow Court informed Mr Roberts that the fines were to be paid forthwith. Mr Roberts met this demand with an application for a remission.

By virtue of section 32(4) of the Powers of Criminal Courts Act 1973, a Magistrates' Court cannot remit a fine imposed by the Crown Court except with the consent of that Court.

An application was made to His Honour Judge Laurie for consent. He expressed the view which seems to me to be plainly right, that this need for consent only arises after the Magistrates have decided upon a remission. However, he indicated that the proceedings before the Magistrates should be attended by a representative for the Crown Prosecution Service in order that the Justices should receive assistance in their task.

On 13th January there came before the Ludlow Justices first, proceedings in respect of non-payment and second, proceedings in respect of remission. The statutory power as to remission is contained in section 85, as substituted, in the Magistrates' Court Act 1980 which provides so far as material:

"Where a fine has been imposed on conviction of an offender by a magistrates' court, the court may, on inquiring into his means or at a hearing under section 82(5) above, remit the whole or any part of the fine if the court thinks it just to do so having regard to a change in his circumstances since conviction."

As to enforcement, the material provisions are in section 82 of the Act of 1980. In particular, subsections (3) and (4). Subsection (3), so far as material, provides:

"It shall not thereafter" [it being a Magistrates' Court]" issue a warrant of commitment for any such default or for want of a sufficient distress to satisfy such a sum unless --

(a) he is already serving a term of imprisonment or detention in a detention centre; or

(b) the court has since the conviction inquired into his means in his presence on at least one occasion."

Subsection 4 provides:

"Where a magistrates' court is required by subsection (3) above to inquire into a person's means, the court may not on the occasion of the inquiry or at any time therefore issue a warrant of commitment for a default if paying any such sum unless --

(a) in the case of an offence punishable with imprisonment, the offence appears to the court to have sufficient means to pay the sum forthwith; or

(b) the court --

(i) is satisfied that the default is due to the offender's wilful refusal or culpable neglect; and for

(ii) has considered or tried all other methods of enforcing payment of the sum and it appears to the court that they are inappropriate or unsuccessful."

The Justices heard evidence from Mr Roberts on 13th January, 5th February and 5th March. That evidence was complex. It was complex because Mr Roberts is a man who invests in property and has a diverse portfolio. He does not conduct his affairs in a very orderly manner and the Justices observed in this case:

"No proper audited personal, company or trust accounts were ever produced to us. Copy statements and passbooks produced did not cover the entire period in question, being the 30th November, 1990 to the 5th February 1993. Business and personal finances were inextricably mixed and were dealt with as one entity by him."

There was a transcript of the proceedings. Having looked at it, my sympathies are entirely with the two lady Justices who were confronted with a task which they must have seldom if ever before encountered. They applied themselves to their task throughout the three days and came to these conclusions. First, that although there had been a change of circumstances since the date of conviction it would not be just to remit a part of the fine. Secondly, that the non-payment of the fine was due to Mr Roberts' culpable neglect. Accordingly, they activated the sentence of 2 years' imprisonment in default which had been imposed at the Crown Court. Mr Roberts is currently serving that term.

I come, first, of the Justices' approach to change of circumstances and remission. At the conclusion of his trial, in November 1990, Mr Roberts said this to the court:

"The assets I do own -- and I have mentioned three of them in particular -- I think, in their entirety are owned jointly with my wife. I have merely a 50% beneficial interest in those assets. They are not all mine. As to reference to the 500 properties in the north of England, I think I made this plain, ad nauseam that those are, in fact, ground rents. I am only entitled to possession of those properties in something like 970 years time. The current market value of them would be somewhere in the region of 50,000, and there is an outstanding loan of about 20,000."

This was to be proven by events, a gross over estimate of asset value. That it was an over-estimate is, of itself, not a change of circumstances. The Justices did, however, find three matters which did amount to a change of circumstances. They were, the recession, the fall in property values and Mr Roberts wife's liability for losses incurred at Lloyds. Those losses appear to have reacted upon Mr Roberts because they are met by drawing upon a Barclays Bank facility which is ultimately secured by a charge to which he is a party.

The finding of those three changed circumstances are findings of fact. However, notwithstanding them, the Justices went on to say, in effect, that it would not be just to remit. I say, "in effect" because the conclusion is expressed in these words:

"Having had the benefit of hearing the Appellant give his evidence on oath over a long period we decided that it would not be just to remit fines in whole or in part due to the Appellant's conduct and attitude during the relevant period."

The reference to attitude and conduct can, in context, I think, be referred only to their conclusion that he had not paid fines by reason of culpable neglect. If that be so, and if their conclusion as to culpable neglect -- to which I shall come -- is flawed, then so also is the exercise of their discretion in regard to remission. I turn then to culpable neglect. The Justices were of the opinion:

"The Appellant had the means to pay fines and his default was due to culpable neglect."

The factual basis for that opinion must, I think, be the findings which are set out at paragraph 5(x). That paragraph reads as follows:

"The Appellant had in his possession and control, property and other assets which could have been liquidated in addition he expended money necessarily on other items instead of paying fines and costs.

ASSETS WHICH COULD HAVE BEEN LIQUIDATED . . ."

There are then set out five items with a realisation price which in total comes to 138,000. There is then set out expenditure which, inferentially, could have been avoided, which in total comes to 13,600. That is followed by proceeds and profit which, inferentially, were realised; proceeds from fixtures and profits from sheep totalling together 21,200. It may be observed that the item "profit from sheep" sits unhappily with a previous item in respect of the purchase of sheep. If the purchase price of the sheep had been devoted in other directions, there could not have been profit from sheep available to be devoted in other directions. At all events, the total of these items was expressed to be £172,800.

It can, at once, be observed that no allowance is made for the fact that one-half of the assets which as the Justices recognised are held in community, would belong to Mr Roberts' wife.

However, there is a more fundamental difficulty, as Mr Walker has pointed out. Mr Walker has submitted that in order to make a finding of culpable neglect, the Justices must satisfy themselves that there was, at some material time, a course of action which would have enabled the offender to pay the fine in question, which the offender could and ought to have taken.

It is essential in Mr Walker's submission -- and I think rightly so -- that the step which the Justices consider should have been taken is one which would have enabled the fine to be paid. It is only if the step would have enabled the fine to be paid and was not taken, that the way is open to a finding of culpable neglect.

Mr Walker drew our attention, helpfully, to some analogous provisions which have been considered by the Courts and which also employ the phrase "wilful neglect". The first, was the decision of the Court of Appeal, on appeal from Webster J in R v Manchester City Justices Ex parte Davies [1989] QB 631, [1989] 1 All ER 90. In that case it was the occurrence of the phrase "wilful refusal" or "culpable neglect" in section 103 of the General Rate Act 1967 which was under consideration. The Justices had found that the rate-payer was guilty of culpable neglect because he had not followed the business advice of his accountant. O'Connor LJ said at page 636H:

"The justices came to the conclusion that he -- that is a rate-payer -- had been guilty of culpable neglect in failing to take his accountant's advice, but again as Webster J pointed out that had nothing whatsoever to do with his failure to pay the rates. There was no casual connection between rejecting the advice of his accountant and the non-payment of the rates; for this reason Webster J quashed the decision. It follows that the only opinion open to the court was that the failure to pay was not due either to wilful refusal or culpable neglect and in the result there was no power to imprison."

Neill LJ, at page 643, referred, without criticism, to what Webster J said. The passage which was recited is this:

"They appear to have paid no regard to the necessity of it being established, before they have a power to commit anyone to prison, that the failure to pay the rates demanded was due to that culpable neglect and none of the evidence is evidence of a conclusion, which was a necessary pre-condition of a committal order, that the applicant's failure to pay the rates due was due to his culpable neglect in failing to take his accountant's advice. Indeed, without a much more extensive inquiry as to his financial position than actually occurred, it would have been impossible to have made such a finding and any such finding would have been unsustainable in law. For instance, if the applicant had taken the accountant's advice as one of the justices had expressed it, and had gone bankrupt, it is improbable in the extreme that the rates would have been paid in full and quite possible, I imagine, that less would have been recovered from the bankruptcy than was in fact paid and, for these reasons alone, the committal order must be quashed."

A similar approach is implicit in the decision of this Court in R v York City Justices, Ex parte Farmery [1988] 153 JP 257 and is also to be found expressed in the decision of this Court in R v Poole Magistrates, Ex parte Benham 31 RVR 217. That latter was a case under the Community Charges (Administration and Enforcement) Regulations 1989, which at regulation 41(3) permits the issue of a warrant of commitment if the Justices are of the opinion that a chargepayer's failure to pay the charge was due to his wilful refusal or culpable neglect. Potts J, delivering the first judgment, said this:

"As to the appellant's culpable neglect to pay the charge between April 1990 and August 1990, the evidence before the justices was that at that time the appellant was not working, had no income and personal assets. Counsel for the appellant has submitted that in the context of the regulations it is a pre-requisite for a finding of culpable neglect that when the liability order was made the debtor had (or had previously had) the means to pay the sum due and had so organised his finances as to neglect to pay . . .

The justices, having found that the appellant had no assets or income during the relevant period, took the view that he was guilty of culpable neglect because he had the potential to earn money so as to discharge his obligation to pay the community charge. The essence of the justices' findings are contained in para 3 of the case stated:

'We are of the opinion that the appellant's failure to pay, which led to the liability order being made against him, was due to his culpable neglect as he clearly had the potential to earn money to discharge his obligation to pay.'"

The judge continued:

"In my view, the finding was wrong on the evidence available to the justices. In certain circumstances a failure on the part of the debtor to work and put himself in funds to pay the community charge might constitute culpable neglect. In my judgment however, before such a finding could be sustained, at the very least there would have to be clear evidence that gainful employment, for which he was fit, was on offer to the debtor and that he rejected or refused that offer. There was no such evidence in this case. In my judgment, the justices' findings of culpable neglect cannot be sustained on the evidence adduced before them."

Lord Justice Nolan agreed.

I entertain no doubt that a similar approach is required by the Magistrates Courts Act. Such an approach requires Justices who are considering culpable neglect to examine whether the course of action which they regard as having been neglected was one which, if followed, would have provided an ability to pay the fine. I emphasise "the fine" because the statutory language requires that each fine, if there be a variety, be considered separately.

The Justices must also, I think, by reason of the use of the word "culpable" -- which imports as my Lord suggested in argument at least a degree of blame-worthiness -- consider the reasons which deflected the defaulter from taking the route which the Justices suggest he ought to have taken. A consideration of those reasons would throw light upon the question of culpability.

It will seems to me that the Justices here did not consider whether realisation of the assets and devotion of income -- such as is suggested by paragraph 5(x) -- would have led to the payment of fines. Without such an examination and a conclusion upon it, it was not, in my judgment, open to them to conclude as they did that there was, here, culpable neglect. It accordingly follows that their determination was wrong and that when they ask in the case the question:

"Whether any Court, properly directing itself on the relevant law and acting reasonably, could have found (as was found) that non-payment of the fine and costs was due to the Appellant's culpable neglect to pay."

must be answered, "no" on the material contained in the case.

The conclusion as to wilful neglect makes it also, in my judgment, difficult to sustain the conclusion as to the justice of remission. Accordingly, in answer to the question:

"Whether any Court, properly directing itself on the relevant law and acting reasonably, could have wholly refused the application to remit the fine, given the evidence of change of the Appellant's circumstances and ability to pay since conviction."

must also be answered, "no" on the material in the case.

In regard to the Justices' finding that there was no other method of enforcing payment, I entirely concur. However, it follows from what I have said that the Justices' decision must be quashed on both the question of a remission and on the question of enforcement. The further consequence is that the matter has to be remitted to them to determine the outstanding matters which are now before them. There is no other course open to this Court. I think the matter should be determined by different Justices. These two Justices plainly took an unfavourable view of Mr Roberts. I think, also, it would be highly desirable that the Crown Prosecution Service are again represented before the Justices in order to give the Justices help in analysing the material which is put before them before Mr Roberts. It is plainly material which it is not easy to comprehend.

JUDGMENTBY-2: SEDLEY J

JUDGMENT-2:
SEDLEY J: I agree. I would not want it to be thought that the more Byzantine a defendant's affairs, the more chaotic his records and accounts. The more incoherent his explanation and his economic situation, the greater will be his chance of defeating the procedure for the enforcement of fines. Anybody with the varied business interests and assets which the appellant has or has had and who has not paid a penny of the fines imposed on him for the better part of three years ago must expect to be rigorously scrutinised on a means enquiry.

I too would pay a tribute to the detailed and painstaking work done by the Justices in attempting to unravel the tangled web presented to them and to form an intelligible picture of the appellant's finances which the appellant, himself, singly failed to present. In the event, however, it seems to me that the appellant, as well as this Court, owes a debt of gratitude to Mr Paul Walker for his clear analysis of the necessary elements of the statutory process.

Like my Lord I am satisfied that the Justices' reasoning in the case stated fails to follow the strict course chartered by sections 85 and 82 and that a differently constituted bench will now have to undertake this task. Upon the performance of that task, provided the Justices ask themselves the right questions, as this Court's answer to the questions posed shows that they did not do on the first occasion, no available conclusion on the evidence will be precluded by our decision.

DISPOSITION:
Application allowed

SOLICITORS:
Treasury Solicitor