REGINA v Ali

Factual and Procedural Background

These appeals arise from convictions and sentences imposed following a trial at the Crown Court at Blackfriars on 26th November 2018. The appellants were each convicted of one count of fraudulent trading contrary to section 993 of the Companies Act 2006, relating to their roles in businesses operating under the trading name "Crestons," which comprised various companies including Company A and Company B. The prosecution stemmed from a Trading Standards investigation into malpractice involving failure to protect tenancy deposits, misappropriation of rent payments, and failure to refund deposits.

Company A and Company B operated letting businesses where tenancy deposits were not properly protected as required by law, rent was taken from tenants but not passed on to landlords, and holding deposits were sometimes not returned. The total estimated losses were approximately £29,500 in relation to Company B and £71,290 in relation to Company A. The companies were wound up and placed into liquidation in 2015.

The appellants held managerial roles at the businesses and were responsible for operations at various addresses used by Crestons. Trading Standards officers conducted visits, uncovering misleading information about deposit protection and membership of tenancy deposit schemes. The appellants were sentenced on 17th January 2019 to 28 months' imprisonment each by the sentencing judge.

Legal Issues Presented

1. Whether the sentences of 28 months' imprisonment imposed on the appellants for fraudulent trading were manifestly excessive.
2. The extent to which sentencing guidelines for fraud offences should be applied to offences of fraudulent trading, given the absence of definitive guidelines for fraudulent trading.
3. Whether there was an unjustifiable disparity in sentencing between the appellants, particularly between those with differing financial values of fraudulent trading attributed to them.
4. Whether the sentencing judge erred in failing to properly consider the authority of the case of R v Mackey and in giving disproportionate weight to current fraud sentencing guidelines.
5. Whether the sentencing judge erred in declining to impose suspended sentences.

Arguments of the Parties

Appellants' Arguments

• The sentences imposed were too high and manifestly excessive when compared to relevant sentencing principles and the leading authority of R v Mackey.
• There was an unacceptable disparity in sentencing, particularly between Appellant One and Appellant Three, given the difference in the financial value of fraudulent trading attributed to them.
• Excessive reliance was placed on sentencing guidelines for fraud offences, which are not directly applicable to fraudulent trading, leading to an unduly harsh sentence and precluding consideration of suspended sentences.
• The sentencing judge failed properly to consider the mitigating factors and the authority of R v Mackey.

Prosecution's Arguments

• The Sentencing Council's guidelines for fraud offences, while not definitive for fraudulent trading, provide a helpful framework for assessing harm and culpability.
• The sentencing judge was entitled to treat the offences as involving high culpability due to deliberate, reckless trading over a sustained period with abuse of trust and significant harm to vulnerable victims.
• Sentences of 28 months' imprisonment were appropriate and not manifestly excessive, given the nature and extent of the fraudulent conduct.
• There was no unjustifiable disparity in sentencing among the appellants, as all played leading roles and shared similar culpability.

Table of Precedents Cited

Court's Reasoning and Analysis

The court acknowledged the absence of definitive sentencing guidelines specific to fraudulent trading offences and considered the relevance of the Sentencing Council's fraud guidelines as a useful framework, as supported by prior case law. It noted that fraudulent trading offences cover a broad spectrum of culpability and harm, ranging from reckless trading in financial difficulty to deliberate fraudulent conduct aimed at profiting at creditors' expense.

Applying the principles from R v Mackey and R v Smith and Palk, the court distinguished the present case as involving deliberate, reckless trading over a sustained period with high culpability. The appellants knowingly failed to discharge liabilities, engaged in dishonest conduct, abused trust, and caused significant financial harm to numerous victims, including vulnerable tenants and landlords.

The court found that the sentencing judge properly assessed culpability and harm, appropriately applied the fraud sentencing guideline factors, and justifiably rejected the appellants' submissions regarding disparity and the appropriateness of suspended sentences. The judge's decision to impose identical sentences on the appellants was supported by their similar leading roles and shared responsibility for the fraudulent trading.

Holding and Implications

The appeals against sentence are DISMISSED.

The court upheld the sentences of 28 months' imprisonment imposed on each appellant for fraudulent trading. This decision confirms the application of fraud sentencing guidelines as a relevant tool in the absence of specific guidelines for fraudulent trading and affirms the sentencing judge's assessment of high culpability and harm in cases of deliberate, sustained fraudulent trading conduct. No new precedent was established beyond these clarifications, and the direct effect is the maintenance of the custodial sentences imposed on the appellants.