B e f o r e :
LORD JUSTICE EDIS MR JUSTICE CALVER ____________________
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Simon Farrell KC and Rosa Bennathan for the Appellant Trevor Archer (instructed by the Serious Fraud Office) for the Respondent Hearing dates: 18 November 2025 ____________________
HTML VERSION OF APPROVED JUDGMENT ____________________
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Lord Justice Edis and Mr Justice Calver:
This is the judgment of the court to which we have both contributed.
This is an appeal to this court by case stated from a decision of the Crown Court, which lies pursuant to section 28(1) of the Senior Courts Act 1981, unless the decision of the Crown Court related to trial on indictment [1] . It concerns the meaning and enforceability of a Deferred Prosecution Agreement dated 22 October 2019 ("the DPA") agreed between the Serious Fraud Office ("SFO") and Guralp Systems Limited ("GSL"). On the same day, 22 October 2019, the Crown Court (the late William Davis J as he then was) declared further to paragraph 8(1) of Schedule 17 to the Crime and Courts Act 2013 ("Schedule 17") that (a) the DPA was in the interests of justice and (b) the terms of the DPA were fair, reasonable and proportionate. By paragraph 8(3) of Schedule 17 the DPA came into force on the making of that declaration.
On 20 November 2024 the SFO made an application pursuant to paragraph 9 of Schedule 17 for a determination by the court that GSL was in breach of the DPA ("the DPA Application").
On 31 January 2025 William Davis LJ, as he had become, gave his decision on that application in writing. He was then asked by GSL to state a case, which he did on 14 February 2025. The questions of law which he posed in it for the High Court are as follows:-
William Davis LJ expressly said that he was stating that case for the opinion of the High Court on the assumption that the High Court will conclude that it has jurisdiction pursuant to section 28(1) of the Senior Courts Act 1981. The first question is whether that assumption was correct.
The jurisdiction of the High Court to hear this appeal
Sections 28(1) and (2) of the 1981 Act, so far as relevant, are in these terms:-
The effect of a DPA is set out in paragraph 2 of Schedule 17:-
Mr Trevor Archer, on behalf of the SFO, accepts that the High Court has jurisdiction to hear this appeal and this is therefore common ground. However, he made succinct submissions to explain why the SFO takes this position in order that we might determine the matter in case it arises again.
Mr Archer submits that the principles to be applied can be found in Re Smalley [1985] AC 622 and R v Manchester Crown Court ex p H and D [2000] 1 Cr App R 262 and that their application can be seen in other decisions which it is not necessary to cite. The meaning of the phrase " relating to trial on indictment " was further considered by the House of Lords in In re Sampson [1987] 1 WLR 194. The effect of the two principal decisions of the House of Lords on this issue was succinctly summarised by Richards LJ in R (Crown Prosecution Service) v Crown Court at Bolton (General Council of the Bar intervening) [2013] 1 WLR 1880 at [13]:-
These are decisions concerning section 29(3) of the 1981 Act (or its predecessor, namely section 10(5) of the Courts Act 1971) rather than 28(2) but the exclusionary words are the same and the meaning of the exclusion must be the same in relation to appeals by case stated as it is in relation to judicial review.
In R v Manchester Crown Court ex p H and D Rose LJ referred to the number of "not always apparently reconcilable decisions" which have been made about the meaning of the "exclusionary words in section 29(3)". He considered that the stage in the proceedings when a decision is made will often be relevant to deciding whether judicial review is excluded or not.
In our judgment this is not a marginal case where it is necessary to analyse the appropriate test any further. Whichever way the test is formulated, the answer is the same.
The effect of a DPA is to prevent a trial on indictment from ever taking place, provided its terms are complied with. If they are not, then the enforcement measures available in the event of breach may allow such a trial to proceed if the agreement is terminated by the court under paragraph 9(3)(b) of Schedule 17, and the prosecutor then applies to lift the suspension of the criminal proceedings under paragraph 2(3). Once a DPA has been approved by the court and until the consequent suspension is lifted a trial on indictment is impossible.
A judicial decision about a DPA taken during the period of suspension does not, in these circumstances, "relate to a trial on indictment". This gives effect to the natural meaning of those words. It also produces a sensible result in line with the statutory purpose, which is to give exclusive jurisdiction to the Crown Court in dealing with trials on indictment and matters relating to them, while allowing an effective remedy for those aggrieved by other decisions it may make. If it were otherwise, the prosecutor could never challenge an adverse judicial decision made during the time when criminal proceedings are suspended by a DPA, and a defendant would only be able to do so if there were a subsequent trial and conviction. There is no purpose to be served by interpreting the exclusionary words so that they have this effect and, in our judgment, Mr Archer is right to submit that the High Court does have jurisdiction to consider this appeal by case stated.
The substantive appeal
We turn next to the substantive appeal. It is convenient to set out part of the stated case. In it, William Davis LJ said:-
The judgment handed down on 22 October 2019 sets out the circumstances which caused the SFO and GSL to reach an agreement that they would proceed to a DPA under Schedule 17. That is a Crown Court judgment and such judgments are not generally published in the National Archives. The judgment of 31 January 2025 is also a Crown Court judgment, although it has a Neutral Citation Number which might suggest otherwise. This judgment will not be comprehensible without access to these earlier judgments and these are accordingly attached as Annex 1, the 2019 judgment, and Annex 2, the 2025 judgment and the case stated.
The issue
The documentation required for the DPA Application included a draft indictment and a Statement of Facts. This concerned the admitted misconduct of GSL. The draft indictment was treated in the way required by paragraph 2 of Schedule 17, see [7] above. The DPA says:-
The DPA required a number of things of GSL. First, the company was required to co-operate with the SFO by Section A, paragraphs 9-12. Paragraph 10 creates a disclosure obligation "during the Term of this Agreement" to supply information relevant to individuals being investigated in relation to the conduct described in the draft indictment and the Statement of Facts. Secondly, by Section B, GSL agreed to disgorge profits to the SFO in the sum of £2,069,861. Paragraphs 13-17 established a machinery for payment of this sum and paragraphs 25-26 laid down a mechanism for dealing with breaches. Thirdly, by Section C, paragraphs 19-24 ("Corporate Compliance Programme") GSL was required to review and maintain its existing programme for compliance with the Bribery Act 2010 and other applicable anti-corruption laws. This required annual reports to the SFO during the Term of the DPA.
The only allegation of breach of the DPA which is made is that GSL has failed to pay any of the £2,069,861. This is agreed, but GSL contends that no enforcement action can now be taken because the DPA expired on 22 October 2024. The application to the court was made by the SFO 30 days later, on 21 November 2024.
The critical paragraph in considering that contention is paragraph 4:-
Other paragraphs which are relevant to the interpretation of the DPA with a view to deciding whether the DPA was in force at the time when the application was made are 7, 13-17, and 25-26.
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Schedule 17
Paragraph 5(2) of Schedule 17 says:-
Paragraphs 9(1)-(3) of Schedule 17 provide:-
Paragraphs 10(1)-(3) of Schedule 17 provide:-
Paragraphs 11(1), (2) and (4) are in these terms:-.
The submissions on this appeal
Mr. Farrell KC, appearing with Ms Rosa Bennathan for GSL, submits that the issue is a straightforward matter of construction, as follows. Paragraph 5(2) of Schedule 17 requires that an expiry date must be specified in the DPA and the place where that is done is in paragraph 4. That provides that the term of the DPA ends " on or before 22 October 2024, when the financial terms set out in Paragraphs 13-14 below have been fully satisfied (the Term) ". Action for breach of the DPA (under paragraph 9 of Schedule 17) can only be taken when the DPA is in force, see paragraph 9(1) thereof. It follows that 21 November 2024, when the SFO purported to take such action, was too late. This means that the provisions of paragraph 11(1) of Schedule 17 apply and the criminal proceedings against GSL "are to be discontinued".
Mr Farrell has taken us to the correspondence which passed between GSL and the SFO on and before 22 October 2024 to show that GSL has been open about its inability to pay the disgorgement of profits because of unforeseen circumstances which have adversely affected its business. These include the COVID pandemic and the war in Ukraine. He also relies on the correspondence to show that both parties were of the view, at least until a late change of position by the SFO on 22 October 2024, that the expiry date of the DPA was indeed 22 October 2024.
Mr Trevor Archer, for the SFO, makes the submissions which found favour with William Davis LJ in his January 2025 judgment. He submits that paragraph 4 of the DPA is to be construed alongside paragraphs 7, 13-17 and 25-26 which clearly envisage that enforcement action may be taken in the event of breach. The natural and ordinary meaning of the words in clause 4 are that if GSL complied with the financial terms then the DPA would expire on or before 22 October 2024. Clause 4 did not specify a specific expiry date in the event that GSL failed to settle the financial terms by that deadline. However, in the event of such a breach the expiry date must, at the very least, cater for the 30-day notice period set out in paragraph 25 of the DPA.
Mr. Archer accordingly submits that since the deadline for payment did not expire until midnight on 22 October 2024 there was no breach until that point. The enforcement provisions clearly mean that it was agreed that the DPA would not expire at 22 October 2024 and the application of the 30 day notice period means that the DPA was still in force when the breach application was issued on 21 November 2024.
Discussion
This is an issue of construction. Did the DPA expire at 22 October 2024 if GSL had not paid the whole of the sum required, or did it continue in force so that enforcement action could be taken in relation to the non-payment?
The agreement concerned is not a commercial contract negotiated between commercial organisations. It is an agreement of a kind which was created by statute and which is intended to operate in the public interest. It can only be made between a designated prosecutor and a body corporate, a partnership or an unincorporated association. The power to reach such an agreement arises when the designated prosecutor is considering prosecuting such a person for an offence listed in Part 2 of Schedule 17. That list includes a large number of offences which may be compendiously described as "financial or corporate crime". The Director of Public Prosecutions and the Director of the Serious Fraud Office are both designated prosecutors. They have jointly published the Deferred Prosecution Agreement Code of Practice ("DPA Code") pursuant to paragraph 6(1) of Schedule 17. This makes it clear that they are required to consider the public interest in deciding whether to propose a DPA, and gives detailed guidance about factors which may determine where the public interest lies in any case. This kind of agreement cannot be reached by a private prosecutor acting in its own commercial interest. The agreement cannot come into force unless the court makes the declaration under paragraph 8 of Schedule 17 that it is, among other things, in the interests of justice.
The declaration under paragraph 8 has no parallel in ordinary commercial negotiations leading to the formation of a contract. It has a number of purposes, among them the protection of the integrity of the criminal justice system. The DPA allows a person who admits wrongdoing (including committing a crime) to avoid a conviction by meeting stringent conditions, which typically consist of or include a significant financial penalty. Parliament clearly intended that this should only occur where the Crown Court considers the proposed DPA at a public hearing and is satisfied that it is an appropriate way of dealing with the case. DPAs will usually at least provide for the recovery by the state of the proceeds of crime and may also require the payment of additional sums by way of penalty and costs. They may frequently include terms designed to ensure that the governance of the person concerned is enhanced so that it complies with the law in the future. They may be more effective in securing payment and future good conduct than the sentencing process following conviction. In this case, as in others, the court when deciding whether to make the paragraph 8 declaration, took into account the possibility that a fine calculated in accordance with guidelines may put the company out of business. In that event, innocent employees may lose their jobs and the state would not recover the fine. Accordingly, the public interest and the interests of justice receive careful consideration by the designated prosecutor and by the court.
The point of setting out these considerations in this case is to make the point that the ordinary principles of contractual construction need to be applied to the construction of a DPA such as the one in the present case with them in mind.
The court made its declaration in this case under paragraph 8, having carefully read the proposed DPA. There is no suggestion that its understanding of what it meant was not, at that time at least, shared by the SFO and GSL. The judge certainly thought that the DPA was enforceable in the event that the money was not paid. No doubt the SFO did as well. GSL, it is to be remembered, joined with the SFO in inviting the court to make the declaration. The judge stated his understanding of the consequences of breach in paragraph 41 of his reasons for making the declaration:-
Counsel then appearing for GSL did not tell the judge that he had misunderstood the contract because the only remedy in the event of non-payment was an application to vary its terms under paragraph 10. Machinery for that to happen was provided by paragraph 17 of the DPA, see [21] above. That enables, but does not require, such an application to be made before the 22 October 2024. However, the judge clearly thought that in the event of non-payment by the expiry date the SFO could take steps to remove the suspension of the indictment and to proceed with its prosecution. GSL has not served any evidence to suggest that it did not share this reading of the DPA at the time it was concluded; there is no suggestion that it had any different reading and deliberately kept silent about that fact (which would have involved a failure to deal with the court and the SFO in good faith, in this context). In these circumstances it appears that all parties to the hearing in October 2019 understood that if the money was not paid by the expiry date the SFO could take the steps which it has now taken to renew the criminal proceedings. They invited the court to take an important step in criminal proceedings on that basis. That is a relevant matter in the construction of this DPA which finds no parallel in commercial negotiations.
The legal principles by reference to which a commercial contract is to be interpreted were summarised by Lord Neuberger in Arnold v Britton [2015] AC 1619 at [15]:
The court's task is accordingly to ascertain the objective intention of the parties and not their subjective intentions, which are inadmissible. It is also well settled that it is not legitimate to use as an aid to the construction of a contract anything which the parties said or did after it was made: James Miller and Partners Ltd v Whitworth Street Estates (Manchester) Ltd [1970] AC 583. In particular, the correspondence to which we were referred passing between the parties long after the DPA was concluded, of their subjective understanding as to how the contract was intended to operate, is inadmissible. We do not consider that it assisted in determining the proper construction of the DPA in any event.
The documents which were before William Davis J in October 2019, and his judgment of 22 October 2019 in which he granted a declaration that the DPA is likely to be in the interests of justice and that the proposed terms of the DPA are fair, reasonable and proportionate, were clearly part of the background knowledge reasonably available to the parties at the date when the DPA was concluded (also on 22 October 2019). Moreover, they explain the overall purpose of the DPA, and show the facts and circumstances known or assumed by the parties at the time that the document was executed. They are accordingly admissible material in construing the DPA. They also underline that the context here was (i) the desire of the SFO and the court to ensure that the DPA constituted an effective means of furthering the interests of justice in a way which was fair reasonable and proportionate, and (ii) the agreement of GSL to the proposed course to achieve that goal.
The background facts to which we have adverted in paragraphs [34]-[35] and [38] strongly suggest that a reasonable person would have understood the (objective) intention of the parties to be, in answer to the question in paragraph [30], that the DPA should continue in force after 22 October 2024. Very clear words would be required to show that it was the intention of the parties that GSL would be relieved of any obligation to pay any part of the disgorged profits which remained unpaid at 22 October 2024. There are no such clear words; indeed, that construction would be quite contrary to the interests of justice which the hearing in October 2019 had been concerned to promote.
Moreover, in paragraphs 39-40 of the judgment, immediately before the passage quoted in [34] above, William Davis J stated:-
It follows that it was known to the parties that the purpose of the DPA was to obtain the disgorgement of the gross profit of by GSL by (at the latest) the fifth anniversary of the DPA (i.e. 22 October 2024). However, it was also known to them that there was a possibility that GSL would not be able to meet the disgorgement figure within those 5 years. That could, of course, only be definitively established by the end of the fifth year (i.e. at midnight on 22 October 2024).
As the Judge made clear, it must also have been known to the parties that the two possible consequences of GSL failing to meet the terms of the agreement by midnight on 22 October 2024 were that (i) an application might be made under Paragraph 10 of Schedule 17 to vary the agreement and that in order to for that to happen necessarily the DPA had still to be in force; and (ii) GSL might be prosecuted. In the latter case that would require the SFO to make an application to the court for the termination of the DPA, which would again require the DPA still to be in force under Paragraph 9 of Schedule 17.
Accordingly the parties knew that the duration of the agreement was to be for a full five years in order to allow for full payment by GSL by that date, but if full payment was not made by the end of five years, the DPA would remain in force thereby enabling the SFO to take further steps to seek to obtain full payment, whether by way of variation of the DPA or by way of an application to the court to terminate the DPA.
Unsurprisingly, the terms of the DPA itself are consistent with this being the objective intention and purpose of the agreement, as described by William Davis J.
By clause 4 the DPA will cease to have effect on or before 22 October 2024 if the financial terms are satisfied by GSL. In other words, in accordance with paragraph 5(2) of Schedule 17 (see [22] above), the DPA specifies an expiry date, being the date when the financial terms are satisfied (i.e. full payment is made of the disgorgement sum); and the DPA is accordingly effective for five years provided that the financial terms have been fully satisfied by GSL.
This is put beyond any doubt by clause 7 of the DPA (see [21] above), which expressly provides that if GSL fully complies with all of its obligations under the DPA (in particular full satisfaction of the financial terms by 22 October 2024), then: (i) the SFO agrees not to continue the criminal prosecution against GSL and (ii) the Agreement expressly expires on the specified expiry date. It is a necessary corollary of this fact that if the financial terms have not been fully satisfied by GSL by 22 October 2024 then (i) the SFO is free to continue to prosecute GSL and (ii) the DPA remains in force.
As William Davis J explained in the passage set out in [34] above, it is necessary for the DPA to remain in force for the purpose of dealing with GSL's breach of contract. The SFO can either (i) vary the terms of the DPA in the case of unforeseen circumstances (in order to allow for an extended payment timetable) or (ii) make an application to the court by reason of GSL's breach of contract in failing fully to satisfy the financial terms by 22 October 2024: see clause 14 set out at [21] above.
Clauses 25 and 26 then provide the procedure to which SFO must adhere, as a matter of fairness, before it makes any application to the court when GSL is in breach of the Agreement. In order to give efficacy to the DPA as an instrument of justice in the way we have described, the SFO is afforded a reasonable period of time in order to determine whether to make such an application to the court and if it determines to do so, to make it. At the expiry of that reasonable time, if no application has been made to address the breach, the DPA will expire. The application by the SFO in this case was certainly made within a reasonable time and it is not necessary to consider how much longer may have been available before the DPA would have expired. On the making of such an application, the court has power by paragraph 9(3) of Schedule 17 to determine whether GSL has failed to comply with the terms of the DPA, and, if so, to invite the SFO and GSL to agree proposals to remedy that failure, or terminate the DPA.
The case now advanced by Mr Farrell KC on behalf of GSL involves reading clause 4 of the DPA in isolation both from the rest of the DPA and from its context. Clause 14, in particular, makes it clear that failure to pay the disgorged profits by the 22 October 2024 is a breach of the DPA. Clauses 25 and 26 then specify the machinery for enabling the SFO to determine what action to take. Construing the DPA so that it remains in force for the purposes of those paragraphs and allows effective action in the interests of justice, is a conclusion which follows from the correct approach to construing commercial contracts as explained in Arnold v Britton . Furthermore, the particular context of the creation of a DPA in the context of a criminal prosecution, and of the DPA in the instant case, only serves to strengthen that conclusion.
Conclusion
For these reasons, we would answer the first question posed by William Davis LJ as follows:-
The second question appears to be a reformulation of the first. It reads:-
The jurisdiction of the Crown Court depends on whether the application was issued at a time when the DPA was in force. The answer to the first question is that it was. Accordingly, the answer is the same. The proceedings instituted by the SFO application are validly constituted and the Crown Court has jurisdiction to proceed to determine them.
Note 1 See section 28(2)(a) of the Senior Courts Act 1981. [Back]
Note 2 i.e. the disgorgement to the SFO of the £2,069,861 [Back]