Lewis, Christmas, Foot and Cameron v Attorney General

JurisdictionJersey
CourtCourt of Appeal
JudgeNutting and Nugee, JJ.A. and Collas, Bailiff of Guernsey
Judgment Date18 April 2013
Date18 April 2013
COURT OF APPEAL
Nutting and Nugee, JJ.A. and Collas, Bailiff of Guernsey

O.A. Blakeley for the first appellant;

S. Chiddicks as amicus for the first appellant;

R.J. MacRae for the second appellant;

R. Tremoceiro for the third appellant;

T.V.R. Hanson, assisted by C.M. Marr, for the fourth appellant;

G. Baxter as amicus for the fourth appellant;

M.T. Jowitt, Crown Advocate, for the Attorney General.

Cases cited:

(1) Aladesuru v. R., [1956] A.C. 49 ([1955] UKPC 29); [1955] 3 W.L.R. 515; (1955), 39 Cr. App. R. 184; [1955] UKPC 29, applied.

(2) Att. Gen. v. Capuano, 2003 JLR 623, referred to.

(3) Att. Gen. v. Edmond-O'Brien, 2006 JLR 133, considered.

(4) Att. Gen. v. Renouf, Royal Ct., May 30th, 2001, unreported, considered.

(5) Att. Gen. v. Speck, [2004]JRC100; Royal Ct., June 7th, 2004, unreported, considered.

(6) Att. Gen. v. Young, 1998 JLR 22; on appeal, 1999 JLR 17, applied.

(7) Barton v. Att. Gen., [2007]JCA172; C.A., September 11th, 2007, unreported, referred to.

(8) Bhojwani v. Att. Gen., 2011 JLR 249, applied.

(9) Burton v. Law Officers, 2011 12 GLR 438, referred to.

(10) Caboz v. Att. Gen., 2004 JLR 80, referred to.

(11) Chan Fat Chu v. HKSAR, [2009] HKCFA 23; (2009), 12 HKCFAR 775, applied.

(12) Chan Wing-Siu v. R., [1985] A.C. 168; [1984] 3 W.L.R. 677; [1984] 3 All E.R. 877; (1984), 80 Cr. App. R. 117; [1984] UKPC 27, referred to.

(13) Channel Islands Knitwear Co. Ltd. v. Hotchkiss, 2001 JLR 570, referred to.

(14) Cooper v. Att. Gen., 2001 JLR N [2], referred to.

(15) Guest v. Law Officers, 2003 04 GLR N [1]; Guernsey C.A., January 9th, 2003, applied.

(16) Hamilton v. Att. Gen., 2010 JLR 313, applied.

(17) Harrison v. Att. Gen., 2004 JLR 111, considered.

(18) Hui Chi-Ming v. R., [1992] 1 A.C. 34 ([1991] UKPC 29); [1991] 3 W.L.R. 495; [1991] 3 All E.R. 897; (1991), 94 Cr. App. R. 236, referred to.

(19) Lau Pak Ngam v. R., [1966] Crim. L.R. 443, considered.

(20) R. v. Barrick (1985), 81 Cr. App. R. 78; 7 Cr. App. R. (S.) 142, applied.

(21) R. v. Boakye, English C.A., March 12th, 1992, unreported, considered.

(22) R. v. Brown (1983), 79 Cr. App. R. 115; [1984] Crim. L.R. 167, referred to.

(23) R. v. Brown, [1998] Crim. L.R. 196, considered.

(24) R. v. Brown, [2002] 1 Cr. App. R. 5; [2001] Crim. L.R. 675; [2001] EWCA Crim 961, considered.

(25) R. v. Clinton, [1993] 1 W.L.R. 1181; [1993] 2 All E.R. 998; (1993), 97 Cr. App. R. 320, applied.

(26) R. v. Day, [2003] EWCA Crim. 1060, applied.

(27) R. v. Donnelly, [1998] Crim L.R. 131, considered.

(28) R. v. Dossi (1917), 13 Cr. App. R. 158, applied.

(29) R. v. Galbraith, [1981] 1 W.L.R. 1039; [1981] 2 All E.R. 1060; (1981), 73 Cr. App. R. 124; [1981] Crim. L.R. 648, applied.

(30) R. v. Hopkins-Husson (1949), 34 Cr. App. R. 47, applied.

(31) R. v. Hulusi (1973), 58 Cr. App. R. 378, applied.

(32) R. v. Kray (1969), 53 Cr. App. R. 412, considered.

(33) R. v. Matthews (1983), 78 Cr. App. R. 23, applied.

(34) R. v. Mendez, [2011] Q.B. 876; [2011] 3 W.L.R. 1; [2010] 3 All E.R. 231; [2011] 1 Cr. App. R. 10; [2010] Crim. L.R. 874; [2010] EWCA Crim 516, considered.

(35) R. v. Richardson, [1971] 2 Q.B. 484; [1971] 2 W.L.R. 889; [1971] 2 All E.R. 773; (1971), 55 Cr. App. R. 244, applied.

(36) R. v. Shippey, [1988] Crim. L.R. 767, applied.

(37) R. v. Stringer, [2012] Q.B. 160; [2011] 3 W.L.R. 1243; [2011] 3 All E.R. 119; [2011] 2 Cr. App. R. 24; [2011] EWCA Crim 1396, considered.

(38) R. v. Taylor (1994), 98 Cr. App. R. 361, considered.

(39) R. v. Thomas, [2009] EWCA Crim 1682, considered.

(40) R. v. West, [1996] 2 Cr. App. R. 374, considered.

(41) R. v. Westwell, [1976] 2 All E.R. 812; (1976), 62 Cr. App. R. 251; [1976] Crim. L.R. 441, considered.

(42) Snooks v. United Kingdom, 2002 JLR 475, considered.

(43) Styles v. Att. Gen., 2006 JLR 210, applied.

(44) Taylor v. Law Officers, 2007 08 GLR 207, applied.

(45) Teeluck v. Trinidad & Tobago, [2005] 1 W.L.R. 2421; [2005] 2 Cr. App. R. 25; [2005] UKPC 14, referred to.

(46) Tilley v. Law Officers, Guernsey C.A., November 27th, 1973, unreported (Guernsey C.A. Judgments, 1964 1989, 88), considered.

(47) Trade Secy. v. Markus, [1976] A.C. 35; [1975] 2 W.L.R. 708; [1975] 1 All E.R. 958; (1975), 61 Cr. App. R. 58, applied.

(48) Waite v. Att. Gen., [2007]JCA170; C.A., September 11th, 2007, unreported, referred to.

(49) Wicks v. Law Officers, 2011 12 GLR 482, referred to.

Legislation construed:

Court of Appeal (Jersey) Law 1961 (Revised Edition, ch.07.245, 2013 ed.), art. 26(1): The relevant terms of this paragraph are set out at para. 101.

art. 26(3): The relevant terms of this paragraph are set out at para. 365.

Criminal Offences (Jersey) Law 2009 (Revised Edition, ch.08.415, 2010 ed.), art. 1(1)(a): The relevant terms of this sub-paragraph are set out at para. 177.

Investors (Prevention of Fraud) (Jersey) Law 1967 (Revised Edition, ch.13.450), art. 2: The relevant terms of this article are set out at para. 3.

Text cited:

Simester & Sullivan's Criminal Law, 4th ed., at 205 (2010).

Financial Services — investor protection — fraudulent inducement to investors — inducement by misleading, false or deceptive statements "to take part" in arrangements with respect to property (Investors (Prevention of Fraud) (Jersey) Law 1967, art. 2(c)) — point of time when offence complete depends on facts of individual case — taking part can include wide variety of acts done over period of time — Jurats entitled to conclude that inducement of investor included oral inducements and signing of joint venture agreement

Financial Services - investor protection - fraudulent inducement to investors - joint enterprise - party to joint enterprise fraudulently to induce investment (contrary to Investors (Prevention of Fraud) (Jersey) Law 1967, art. 2(c)) who countersigns joint venture agreement after signature of investor and payment of money, liable as secondary party as participation assists and encourages principal

The appellants were charged in the Royal Court with fraudulent inducement to invest, contrary to art. 2 of the Investors (Prevention of Fraud) (Jersey) Law 1967.

Under art. 2(c) of the Investors (Prevention of Fraud) (Jersey) Law 1967, it was an offence to induce or attempt to induce, by any statement, promise or forecast which the person knew to be misleading, false or deceptive or by recklessly making a statement, promise or forecast that was misleading, false or deceptive, another person to take part in arrangements with respect to property. Under art. 2(a)(i) it was an offence fraudulently to induce another person to lend money.

In 2003, the first and second appellants decided to invest in the then-flourishing US property market. They formed a company ("De Lec") through which to do so. They intended to reserve off-plan properties and hoped to sell them for a large profit after a few years. The first, third and fourth appellants ("the Sunstone appellants") set up another company ("Sunstone"), as a vehicle for similar investments. The Sunstone appellants had traded together for several years in Jersey as regulated financial advisers under the name of Goldridge Stone. The second appellant had been the Island's Assistant Magistrate since 2001 and had little business experience.

Between 2004 and 2008, the appellants reserved or purchased many properties in the United States, mostly funded by mortgages from US banks but, to a lesser extent, also by Jersey investors. The majority of those investors were the appellants' Goldridge Stone clients, who trusted the Sunstone appellants as their financial advisers. The investors were not financially sophisticated. Many were elderly; some were infirm. Many of them were induced to invest sums of money which they could not afford to lose.

The investments were obtained as follows: One of the appellants, usually the one who knew the investor as his client from Goldridge Stone, would approach him or her and suggest investing in the US property market. If the investor was interested, a joint venture agreement would be drawn up recording the parties to the joint venture as the investor and the first and second appellants (in the case of the De Lec counts) or the investor and Sunstone (in the case of the Sunstone counts). The agreement would also identify the property in which the parties were to have a joint interest and record the investment, which it was said was to be used to pay a deposit on the property. The agreement would then be signed by all the parties (i.e. in the case of the De Lec counts by the investor and both the first and second appellants; and in the case of the Sunstone counts by the investor and, almost invariably, by more than one of the Sunstone appellants on behalf of the company).

The more property the appellants reserved or purchased, however, the greater the associated costs as well as the profit and interest payable to the investors. The companies' property portfolios were expensive to maintain and the operating losses were considerable. Unknown to the investors, their money was not used, as specified in the joint venture agreements, to pay deposits on particular properties. It was in fact quickly spent on the companies' running costs and on the Sunstone appellants themselves. The first appellant benefited personally in the sum of £83,502; the third appellant in the sum of £117,249; and the fourth appellant in the sum of £123,389 (no money was paid to the second appellant).

The US property market crashed in 2007. The appellants could neither sell the properties at the prices necessary to recover their costs, nor make a profit, nor could they remortgage them. Nonetheless, the Sunstone appellants continued to induce investors to provide funds until they were forced to stop as a result of a civil action brought against them by one of the investors.

The appellants had raised a total of £5,337,000 from 57 Jersey investors, of which £4.2m...

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