A. Introduction
Mr Zeroual (the applicant), a (now former) secure tenant of the London Borough of Hammersmith & Fulham, was convicted on 18 December 2018 of two counts of fraud, contrary to section 1 of the Fraud Act 2006:
- Count one – dishonestly failing to disclose information that he was under a legal duty to disclose “namely that he had sub-let part of the premises” of the flat in breach of the tenancy conditions.
- Count three – dishonestly failing to disclose that his wife was living with him between 2010 and 2013 (before their later separation), which meant that he was no longer eligible for the single person’s discount in respect of council tax payable for the flat.
He was acquitted on count two which alleged that he had dishonestly failed to disclose a change in circumstances (i.e. that he no longer lived at his flat as his only or principal home) in relation to his application to purchase the flat under the Right to Buy.
The sentence passed down on 23 January 2019 was:
- 18 months imprisonment suspended for 18 months,
- with a 30 day Rehabilitation Activity requirement;
- in July 2020 he was ordered to pay £89,074 (of which £17,500 was to be paid as compensation to the council) pursuant to the Proceeds of Crime Act 2002.
B. The Appeal
The ground of appeal on count one focused on the directions given in relation to sub-letting and whether they were sufficient to deal with the issue of exclusive possession and whether any persons staying in the flat were rather and ’merely’ lodgers.
With respect to count three, which wasn’t originally appealed, it was argued both that the Judge failed to properly direct the jury as to the elements required to convict him and that it should not have been left to the jury because the failure to disclose information charged under this count was not a failure to disclose information which he was under a legal duty to disclose for the purposes of the Fraud Act 2006.
C. The decision
In R v Zeroual [2022] EWCA Crim 288 the Court of Appeal (Criminal Division):
(a) refused an application for an extension of time to appeal in light of the merits of the substantive appeal;
(b) refused permission to appeal on count 1;
(c) refused the application to vary the grounds of appeal to challenge the conviction on count 3 because the judge’s directions were sufficient and the evidence showed that there was a case to answer;
(d) refused the new applications for permission to appeal against sentence, the confiscation order and the costs order because there were no arguable grounds of appeal.
D. Reasons
The applicant’s case at trial on count one had been that he had always lived at the relevant flat but from time to time had lodgers. However, the jury clearly rejected his evidence that he was living at the flat, which had been a central blank of the prosecution’s case. It therefore followed that if he had been found to have moved out of the flat the occupants remaining had exclusive possession and there had been a clear sub-letting of part.
Complaint as to the failure of the judge to explain the terms dishonesty and gain was not made out given that it had been common ground that if sub-letting was made out then the applicant was intending to make a gain and was acting dishonestly.
As for count three, it was the applicant’s case that he had made an application to the local authority for a 2-bedroom property (rather than his 1-bedroom demised premises) because his wife was pregnant and that should have been sufficient notification that she was living with him. He hadn’t realised, he said, that he needed specifically to inform the Council Tax department and he was not acting dishonestly.
However, it was common ground that there was a legal duty to inform the local authority of any relevant change of circumstances, as confirmed by regulation 16 of the Council Tax (Administration and Enforcement) Regulations 1992, and there was therefore no basis for allowing a late variation to the grounds of appeal to allow this issue to be raised.
Interestingly the applicant had been acquitted on count two (see above) following the trial judge’s direction to the jury that they had to be sure he no longer had the intention to use the flat as his only or principal home against the backdrop of his intention to exercise the right to buy (remembering that the allegation was of sub-letting of part not all of the flat).
E. Conclusion
You often hear the comment that fraud is not a victimless crime but it would seem in this case that this would extend to the applicant himself, albeit the consequences follow on from his actions. As Lord Justice Dingemans explained at paragraph 9 of the judgment:
“He has been evicted from the flat, which he had intended to purchase under the right to buy scheme. He has lost his job with the civil service. His family circumstances have deteriorated. His savings have been confiscated. The applicant has suffered mental health problems being severe reactive depression, requiring treatment.”