Regina v Williams (Roy) (2000) The Times, October 25, Court of Appeal
The Statute
Section 1 of the 1968 Act provides:
"(1) A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it..."
Theft Act 1968, s. 15
(4)For purposes of this section ‘deception’ means any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person.
The Facts
The counts of theft arose from dealings by Williams, a builder, with over twenty properties, whereby he dishonestly overbilled for work done. In many cases the alleged theft was of a chose in action involving payment to Williams by way of cheque on a bank account in credit.
The judge rejected a submission of no case to answer, holding that Williams acquired property belonging to another when he presented for payment, or caused to be presented for payment, cheques drawn by another person upon the credit balance of the drawer’s account. Williams contended that the judge’s approach was wrong in light of Preddy.
The Law
MR JUSTICE TURNER, giving the judgment of the court, said that the principle in Preddy did not apply in the present class of case. A conviction for theft required appropriation of property belonging to another to be shown, but Preddy concerned offences of obtaining by deception under section 15 of the 1968 Act; and in that case it had been difficult to discover the relevant obtaining of property belonging to another where on the facts a new chose in action had come into existence upon presentation of the relevant cheques. By contrast, in a case of theft and appropriation the issue was that of "assumption of the rights of an owner": section 3(1) of the 1968 Act.
The appropriation in this case took place upon presentation of the drawer’s cheque by, or on behalf of, Williams: see R v Kohn (1979) 69 Cr App R 395) and R v Hallam The Times May 27, 1994;(1995) Crim LR 323.
Those cases were decided before Preddy but were cited and not disapproved by the House of Lords. Further, in the later case of R v Graham, Ali and Others (1997) 1 Cr App R 302, 325C, the Court of Appeal, applying Preddy, suggested that its reasoning applied equally in the case of theft under section 1 of the Act; but in a later addendum commented that it was not casting doubt upon Kohn or the principle that "theft of a chose in action may be committed when a chose in action belonging to another is destroyed by the defendant’s act of appropriation as defined in section 3(1) of the Act".
There was a difference between "appropriation" and "obtaining". If the defendant or his agent caused the diminution in the relevant bank balance, he stole it; if the defendant was paid by a cheque which he presented and which was honoured, it seemed clear that he did appropriate the balance.
Unless the processing of the cheque was fully automated, the actions of one or more persons would intervene, but they were in effect innocent agents.
However, where funds were transferred by electronic transfer or CHAPS order, as in Preddy itself, the position was less clear because the defendant did not personally initiate the process by which the victim’s account was debited: see the commentary of Professor Sir John Smith on Graham’s case at (1997) Crim LR 344. The judge was thus fully entitled to hold that there was a case to answer and that Preddy did not apply.
The Decision
In a case of theft, reliance could not be placed upon the reasoning in R v Preddy (1996) AC 815, whereby the defendants in that case could not in law be found guilty of obtaining property by deception since no "property of another" could be identified.
A distinction was to be drawn between "appropriation", by assumption of the rights of an owner, and "obtaining" for the respective offences under sections 1 and 15 of the Theft Act 1968.
The Court of Appeal, Criminal Division, so stated in dismissing the appeal against conviction and sentence of Williams following convictions on counts of fraudulent trading and theft returned at Crown Court between March 1 and 4, 1999, for which he was sentenced to a total of five years and six months imprisonment and compensation and confiscation orders were imposed.
Comment
In Kohn, the facts were that over a period of 18 months, the defendant made out to various third parties cheques drawn on the bank account of P Ltd., of which he was a director. It was alleged that the payments were intended for the benefit of the defendant and not of P Ltd. The defendant was arraigned on an indictment containing counts in pairs, of which one alleged, in regard to each incident, the theft of a chose in action, namely, a debt owed to P Ltd. by the bank, and the other charged the theft of a cheque, the property of P Ltd. Some of the drawings occurred when the account was in credit, some when it was overdrawn but within the agreed facility, and one (to which count 7 related) when it was over the agreed limit. The defendant was convicted on all counts and appealed on the grounds, inter alia, that theft of a bank debt could not in law constitute theft of a chose in action, and that the defendant had not appropriated, or had the intention permanently to deprive P Ltd. of, the cheques qua pieces of paper.
Held, dismissing the appeal, (1) that where the account was either in credit or overdrawn within the agreed limit, the bank had an obligation to meet cheques drawn on it. The customer could enforce that obligation by action, and he therefore had a right of property which could properly be described as a chose in action. The defendant had stolen such choses in action by means of the cheques. The theft was not complete until the transaction had run its full course. Per contra, if a cheque was drawn when the overdraft was over the permitted limit, the bank was entitled to dishonour it and the customer had no rights and therefore no chose in action. The conviction on count 7 alone would be quashed.
(2) Cheques were not bare pieces of paper; they had special features. In the course of the defendant's filling in of each cheque, there was a process of appropriation of the company's rights as owner. The defendant had dealt with the cheques not as an authorised company agent but as if they were his own. When a cheque was sent to the payee, it became a bill of exchange and order to pay, and at that point the defendant made the cheque his own, and the offence was complete. It did not matter whether the account was in credit or not, or what happened to the cheque thereafter. The argument that -there was no intention permanently to deprive was unsustainable: Duru [1974] 1 W.L.R. 2, 8, per Megaw L.J.
The commentary in Criminal Law Review at [1979] Crim LR 676, said, inter alia, "The decision on point (1) is the first on the point under the Theft Act and is in line with the law as stated in Griew. The Theft Acts 1968 and 1978 (3rd ed.), paras. 211 and Smith, Law of Theft (3rd ed.), para. 95."
In Kohn, K's convictions of theft on other counts were quashed because the account on which the cheques were drawn was already overdrawn beyond the agreed limit: there was nothing in the account to steal. It would seem that today, whatever the position then, K might be convicted of an attempt - it is the same in principle as attempting to steal from an empty pocket.
It is appropriate to remind ourselves of the decision in Preddy. Preddy resulted in a change in the law, see Theft (Amendment) Act 1996 which created a new s.15a of the 1968 Act to fill the lacuna caused by Preddy.
The three appellants obtained a substantial number of mortgage advances from building societies or other lending institutions for the purchase of houses during a rising market. The advances were secured by mortgages on the purchased properties. In each case the mortgage application or accompanying documents contained false statements as to such matters as the name of the applicant, his employment and/or income, the intended use of the property or the purchase price.
They were charged under s 15(1) of the Theft Act 1968 with obtaining or attempting to obtain mortgage loans by deception from a number of lending institutions. The appellants accepted that their mortgage applications had been supported by false representations but submitted that they had not committed the offence of ‘by any deception dishonestly obtaining] property belonging to another’ under s 15, because they had always intended to repay the advances in full when the properties were resold at a profit on the strength of the rising property market and no property belonging to the lending institutions had been obtained or attempted to be obtained. The trial judge rejected their submissions and the appellants were convicted.
They appealed to the Court of Appeal which dismissed their appeals. They then appealed to the House of Lords where the questions arose:(i) whether the debiting of a bank account and the corresponding credit of another’s bank account brought about by dishonest misrepresentation amounted to the obtaining of property within s 15; and (ii) whether the position was different if the account in credit was that of a solicitor acting in a mortgage transaction.
.Held - A person who obtained a mortgage advance by deception did not commit the offence of dishonestly obtaining property belonging to another, contrary to s 15 of the 1968 Act, despite the deception involved, since s 15 did not legislate for, and was inapt to cover, deception which involved the debiting of one person’s bank account and the corresponding crediting of another’s bank account as in those circumstances no property ‘belonging to another’ was obtained by the person practising the deception. In the case of a mortgage advance obtained by deception, when the defendant’s or his solicitor’s bank account was credited with the amount advanced by the lending institution he did not obtain the lending institution’s chose in action, since that chose in action was extinguished or reduced pro tanto, and a chose in action was brought into existence representing a debt in an equivalent sum owed to the defendant or his solicitor by a different bank (i.e. the bank where the defendant’s or his solicitor’s account was credited). That was so whether the credit transfer was by electronic or telegraphic transfer, and where the payment of the mortgage advance was by cheque, similarly the chose in action represented by the cheque came into existence when the defendant or his solicitor received the cheque from the lending institution and belonged to the defendant as payee and never belonged to the lending institution as drawer. Where the advance was transferred to a solicitor acting for both the lending institution and the mortgagor, any chose in action which came into existence, both on receipt of the advance by the solicitor acting as agent and trustee for the lending institution, and on the solicitor’s release of the money with the lending institution’s authority, could never have belonged to another, and the lending institution’s equitable interest in the money was simply extinguished, being replaced in due course by the lending institution’s rights as mortgagee. The appeals would therefore be allowed.
Rob Jerrard