Summary of Court of Appeal Judgment (Anonymised)

Factual and Procedural Background

This is an appeal by the Appellant against conviction and sentence following a jury trial in the Crown Court before Judge Fuller. On 6 August 2024 the Appellant was convicted on two counts of fraudulent trading contrary to section 993(1) of the Companies Act 2006, in respect of Company A and Company B, of which the Appellant was the sole director in the indictment period (1 January 2017 to 19 September 2018). A co-accused was acquitted of other charges. On 18 June 2025 the trial judge sentenced the Appellant to 6½ years' imprisonment for count 1 and a concurrent term of 3 years for count 2. Ancillary orders (director disqualification, confiscation and a Serious Crime Prevention Order) remained outstanding. The prosecution alleged that the companies used systematic unfair commercial practices and dishonest sales to consumers; the defence denied that the business was carried on fraudulently and asserted lack of knowledge of any systematic misconduct.

Legal Issues Presented

1. Whether the judge misdirected the jury about the meaning of "for any fraudulent purpose" in section 993(1) (Ground 1).
2. What role admitted breaches of the Consumer Protection from Unfair Trading Regulations 2008 play in assessing fraudulent purpose and dishonesty (Ground 2).
3. Whether the jury was properly directed as to the knowledge element (mens rea) required for the Appellant to be "knowingly a party" (Ground 3).
4. Whether the judge misdirected the jury on the law of dishonesty and the relevance of industry standards (Ground 4).
5. Whether the judge inadequately answered a jury question about ignorance of the law and borderline legality (Ground 5).
6. Whether the sentence of 6½ years' imprisonment was manifestly excessive and misapplied sentencing principles.

Arguments of the Parties

Appellant's Arguments (Attorney Jarvis)

• Ground 1: The judge failed to require the jury to identify specific misconduct constituting the company's fraudulent purpose; the directions treated dishonesty as sufficient without specifying the misconduct that employees/agents were to carry out as a corporate purpose.
• Ground 2: The judge conflated breaches of the 2008 Regulations with fraudulent purpose and failed to explain when breaches could be taken into account (e.g. whether proof of criminal breach was required rather than mere contravention or inadvertence).
• Ground 3 / 5: The jury directions and answers to a jury question failed to make clear that the Appellant had to know of some specific fraudulent misconduct; the response about "ignorance of the law" risked suggesting the Appellant could be guilty despite genuine doubt about fraudulent purpose.
• Ground 4: The direction allowing consideration of "industry standards" risked equipping the jury to treat industry knowledge or regulatory knowledge as determinative of dishonesty.
• Sentence: The sentence was excessive by comparison with authorities (e.g. Mackey, Ali, Rattu); the judge did not adequately explain the basis for 6½ years; mitigation and the fact that goods were supplied should have reduced the term.

Respondent's Arguments (Attorney Norman)

• Ground 1: No authority requires the jury to be directed that "misconduct" is a separate element distinct from the requirement of a fraudulent (dishonest) purpose; the judge's directions accurately described fraudulent purpose consistent with authority.
• Ground 2: The 2008 Regulations were placed before the jury by agreement and were relevant background; the judge properly told the jury breaches could assist in assessing dishonest purpose but were not essential.
• Grounds 3–5: The judge's directions and answers to the jury were correct; knowledge and dishonesty were properly distinguished and Ivey was correctly applied.
• Sentence: The sentencing judge correctly applied relevant sentencing considerations (including Mackey and analogous guidelines) and the sentence was within the proper range on the facts.

Table of Precedents Cited

Court's Reasoning and Analysis

The court conducted a multi-part analysis dealing first with the meaning of "fraudulent purpose" under s993 and the adequacy of the jury directions. It applied the authority in R v Hunter and earlier authorities (Re Patrick & Lyon, Welham, R v Grantham, R v Philippou) to conclude that dishonesty is an essential ingredient of "fraudulent purpose" but that deception is not a necessary constituent. The court held that the statutory language requires only that a business or part of it be carried on for a fraudulent (i.e. dishonest by ordinary decent business standards) purpose; there is no separate statutory requirement to prove a particular discrete form of misconduct as an additional element. Misconduct may furnish evidence of fraudulent purpose (including by a patchwork of acts and omissions) but is not itself an ingredient of the offence.

On the relevance of the 2008 Regulations, the court observed that those Regulations were placed before the jury by agreement and constitute relevant background and industry standard. The judge correctly directed that breaches of the Regulations need not be proved to establish fraudulent trading, but that proven breaches may assist in deciding whether the business was acting beyond the bounds of honest commercial conduct. The court rejected submissions that the judge conflated regulatory contraventions with criminal dishonesty, finding the directions, taken as a whole, kept the regimes distinct and made proof requirements clear by reference to standard directions on burden and standard of proof.

Regarding knowledge and the jury question, the court upheld the judge's directions that the jury must be satisfied of the Appellant's actual state of mind as to the facts (knowledge of the fraudulent purpose) and that negligence or ignorance of law is not equivalent to knowledge. The court applied Ivey to confirm that, once the defendant's factual belief is established, dishonesty is judged against the objective standards of ordinary decent people; there is no requirement that the defendant appreciated his conduct was dishonest.

On alleged misdirection about dishonesty and industry standards, the court held the judge correctly allowed the jury to consider industry standards as relevant background without making them the test of dishonesty. The court found no arguable misdirection in the judge's wording.

In sentencing analysis, the court reviewed the judge's careful consideration of culpability and harm, applying the factors identified in Mackey and accepting the use of fraud-guideline material by analogy (as in McCrea). The court concluded the offending was at the top end of the fraudulent trading spectrum given the systematic targeting of vulnerable victims, the scale and planning, the Appellant's central management role, substantial personal gain, and lack of remorse; these features justified the sentence imposed.

Holding and Implications

Core Rulings:

• The appeal against conviction is dismissed (the court refused leave on Ground 4 and dismissed the other conviction grounds).
• The appeal against sentence is dismissed (leave to appeal sentence was granted but the sentence was upheld).

Implications: The Appellant's convictions and custodial sentences were affirmed. Ancillary matters (director disqualification, confiscation, Serious Crime Prevention Order) remained to be determined by the trial court. The court treated the case as applying existing authorities on fraudulent purpose, dishonesty and sentencing; it did not purport to establish a new legal principle beyond endorsing the correct application of established authorities (notably R v Hunter and Ivey) to the facts.