England and Wales Court of Appeal (Criminal Division) Decisions

Royal Courts of Justice

The Strand

London WC2

Friday 25 October 1996

B e f o r e:

THE LORD CHIEF JUSTICE OF ENGLAND

(Lord Bingham of Cornhill )

MR JUSTICE BLOFELD

and

MR JUSTICE CRESSWELL

__________________

R E G I N A

- v -

HEMAMALI GRAHAM

R E G I N A

- v -

RUPE LAL KANSAL

R E G I N A

- v -

SAJID PASHA ALI

R E G I N A

- v -

TERENCE COLIN MARSH

GARRY ALLAN GRAHAM

PAUL GRAHAM PRICE

DAVID BRAMICH

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__________________

J U D G M E N T

(As Approved by the Court )

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A P P E A R A N C E S

For the appellant: MR IVAN KROLICK

For the Crown: MR ANDREW RADCLIFFE

For the appellant: MR IVAN KROLICK

For the Crown: MR WILLIAM COKER QC

For the appellant: MR ANTHONY ARLIDGE QC

and MISS ROSAMUND HORWOOD-SMART QC

For the Crown: MISS JANE SULLIVAN and MR E BROWN

GARRY ALLAN GRAHAM

PAUL GRAHAM PRICE

DAVID BRAMICH

For the appellants: MR RICHARD LISSACK QC

and MR JAMES COUNSELL

For the Crown: MR BRUCE HOULDER QC and MR DAVID PERRY

MR PHILIP MOTT QC and MR TOM LEEPER

THE LORD CHIEF JUSTICE: These applications and appeals have been listed and heard together because they raise a number of common questions prompted by the recent decision of the House of Lords in R v Preddy [1996] 3 WLR 255.

Mrs Graham was convicted by a jury of attempting to obtain property, namely monies, by way of a mortgage loan from a building society by deception. Her application for leave to appeal against conviction has been adjourned to this court.

Mr Kansal was convicted by a jury on five counts of obtaining sums of money by deception contrary to section 15(1) of the Theft Act 1968. He appeals against conviction with the leave of this court.

Mr Ali was convicted by a jury of attempting to steal a credit of £1,000,000 belonging to National Westminster Bank. He appeals against conviction with leave of the single judge and a certificate of the trial judge.

Messrs Marsh, Graham, Price and Bramich were convicted by a jury on various counts of obtaining or attempting to obtain property by deception. In each count the property was specified to be a cheque in a stated sum, some of the cheques being drawn by finance companies and some by insurance companies. The trial judge granted each of these applicants a certificate that his case was fit for appeal under section 1(2) of the Criminal Appeal Act 1968 as amended by section 1(1) of the Criminal Appeal Act 1995, but none of the applicants had given notice of appeal against conviction within 28 days from the date of conviction as required by section 18(1) and (2) of the 1968 Act. The applicants accordingly ask the court to extend their time for giving notice under the section.

Section 15(1) of the Theft Act 1968 provides:

"A person who by deception dishonestly obtains property belonging to another, with the intention of permanently depriving the other of it, shall on conviction on indictment be liable to imprisonment for a term not exceeding ten years".

In recent years those who dishonestly make false representions to lending institutions and thereby induce those institutions to make loans which they would not otherwise have made have been prosecuted under this section. Many mortgage lenders have been victims of such misrepresentations, and in such cases the offence has become known as mortgage fraud.

Preddy and others were alleged to have committed mortgage fraud. They were prosecuted under section 15 and convicted. Their convictions were upheld by this court. But on further appeal their convictions were quashed by the House of Lords. The essential ground for allowing the appeals, based on a close and accurate analysis of the procedures involved when a mortgage lender makes a loan, was that the borrower (or his solicitor) does not obtain any property which has ever belonged to the lender:

".... when the bank account of the defendant (or his solicitor) is credited, he does not obtain the lending institution's chose in action. On the contrary that chose in action is extinguished or reduced pro tanto, and a chose in action is brought into existence representing a debt in an equivalent sum owed by a different bank to the defendant or his solicitor. In these circumstances, it is difficult to see how the defendant thereby obtained property belonging to another, i.e. to the lending institution....

.... In truth the property which the defendant has obtained is the new chose in action constituted by the debt now owed to him by his bank, and represented by the credit entry in his own bank account. This did not come into existence until the debt so created was owed to him by his bank, and so never belonged to anyone else" (at 264 D, F).

The House reached this conclusion on the assumption that the bank accounts of both lender and borrower were in credit, but if either was not in credit a charge under section 15 was even more inappropriate. The same difficulty arose if payment were made by cheque (rather than by telegraphic transfer or under the CHAPS system) and the defendant charged with obtaining by deception the sum for which the cheque was drawn. A charge based on obtaining the cheque form by deception would fare no better:

".... there can have been no intention on the part of the payee permanently to deprive the drawer of the cheque form, which would on presentation of the cheque for payment be returned to the drawer via his bank" (at 266H).

I. Common Issues :

1. The role of the Court of Appeal (Criminal Division)

Section 2(1) of the Criminal Appeal Act 1968, as amended, provided:

"Except as provided by this Act, the Court of Appeal shall allow an appeal against conviction if they think --

(a) that the conviction should be set aside on the ground that under the circumstances of the case it is unsafe or unsatisfactory; or

(b) that the judgment of the court of trial should be set aside on the ground of a wrong decision of any question of law; or

(c) that there was a material irregularity in the course of the trial,

and in any other case shall dismiss the appeal: Provided that the Court may, notwithstanding that they are of opinion that the point raised in the appeal might be decided in favour of the appellant, dismiss the appeal if they consider that no miscarriage of justice has actually occurred".

Following the Royal Commission on Criminal Justice, the Criminal Appeal Act 1995 repealed this subsection and replaced it with a shorter and simpler provision:

"Subject to the provisions of this Act, the Court of Appeal --

(a) shall allow an appeal against conviction if they think that the conviction is unsafe; and

(b) shall dismiss such an appeal in any other case".

This new provision, the subject of a penetrating analysis by Sir John Smith QC in [1995] Crim LR 920, is plainly intended to concentrate attention on one question: whether, in the light of any arguments raised or evidence adduced on appeal, the Court of Appeal considers a conviction unsafe. If the court is satisfied, despite any misdirection of law or any irregularity in the conduct of the trial or any fresh evidence, that the conviction is safe, the court will dismiss the appeal. But if, for whatever reason, the court concludes that the appellant was wrongly convicted of the offence charged, or is left in doubt whether the appellant was rightly convicted of that offence or not, then it must of necessity consider the conviction unsafe. The court is then subject to a binding duty to allow the appeal. It can make no difference that the appellant might, if duly indicted, have been rightly convicted of some other offence. Where the condition in section 2(1)(a) as it now stands is satisfied, the court has no discretion to exercise.

For the Crown it was submitted that the amendment of section 2 had effected no change in the law: the crucial question is whether a miscarriage of justice has occurred; and where the criminality of the defendant is clearly established the practice of the court has been and should be to hold that there has been no miscarriage merely because the offence had been misdescribed in the indictment.

In support of this submission reliance was placed on four cases. In R v McHugh (1977) 64 Cr App R 92 the defendant was convicted of theft. On appeal it was suggested that he might have been guilty of obtaining by deception. The court considered it (at 95) "a purely technical question whether at the end of the day the proper offence is one of theft or obtaining by deception" and concluded that even if the point was a good one there could have been no miscarriage of justice. It accordingly applied the proviso. In R v Molyneux (1981) 72 Cr App R 111, a statutory conspiracy was misdescribed as a common law conspiracy; the particulars of the offence were properly set out but a reference to the relevant statute was omitted. The court held (at 116) that the defect was favourable to the defendant and made not the slightest possible difference. There had been no miscarriage of justice and the proviso was applied. In R v Ayres [1984] AC 447, the defendant was charged upon indictment with a common law conspiracy. It was held that the only proper charge was of conspiracy to obtain by deception. The defendant was convicted upon an indictment which did not charge him accurately with the only offence for which he could properly be indicted. The House held (at 462B) that "The misdescription of the offence in the statement of offence as a common law conspiracy to defraud had in the circumstances not the slightest practical significance" and that there had been no actual miscarriage of justice. The defendant in R v Pickford [1995] 1 Cr App R 420 pleaded guilty to inciting a boy who might have been under 14 at the time to commit incest with the boy's mother. On appeal it was argued that the defendant had pleaded guilty to an offence unknown to the law, since if the boy had been under 14 at the time he was conclusively presumed to be incapable of intercourse. It was however accepted that the indictment could have been framed so as to charge the defendant with inciting the mother rather than the son. The court accordingly applied the proviso (at 429E) "on the footing that the [defendant] was plainly guilty of an offence with which, on the undoubted facts, he could have been charged upon an indictment somewhat differently drawn".

These decisions were made at a time when, under section 2 of the 1968 Act, the court could think that a conviction should be set aside on the ground that under all the circumstances it was unsafe but dismiss an appeal because the court considered that no miscarriage of justice had actually occurred. In these four cases the court did not find that the convictions were safe: it considered that no miscarriage of justice had actually occurred and applied the proviso. But now there is no proviso. Our sole obligation is to consider whether a conviction is unsafe.

We would deprecate resort to undue technicality. A conviction will not be regarded as unsafe because it is possible to point to some drafting or clerical error, or omission, or discrepancy, or departure from good or prescribed practice. We would, for example, expect R v McVitie [1960] 2 QB 483 to be decided under the new law in the same way as under the old.

But if it is clear as a matter of law that the particulars of offence specified in the indictment cannot, even if established, support a conviction of the offence of which the defendant is accused, a conviction of such offence must in our opinion be considered unsafe. If a defendant could not in law be guilty of the offence charged on the facts relied on no conviction of that offence could be other than unsafe.

2. The power to substitute conviction of alternative offences

The prosecution contend in each of the present appeals that if the court is otherwise minded to allow the appeals it should instead exercise the power in section 3 of the 1968 Act to substitute verdicts of guilty of other offences said to be expressly or impliedly included in the counts of which the appellants were convicted.

The power of this court to substitute a verdict of guilty of an alternative offence is found in section 3 of the Criminal Appeal Act 1968 which provides:

"(1) This section applies on an appeal against conviction, where the appellant has been convicted of an offence and the jury could on the indictment have found him guilty of some other offence, and on the finding of the jury it appears to the Court of Appeal that the jury must have been satisfied of facts which proved him guilty of the other offence.

(2) The Court may, instead of allowing or dismissing the appeal, substitute for the verdict found by the jury a verdict of guilty of the other offence, and pass such sentence in substitution for the sentence passed at the trial as may be authorised by law for the other offence, not being a sentence of greater severity."

In R v Caslin (1961) 45 Cr App R 47 at 55 Lord Parker CJ said of section 5(2) of the Criminal Appeal Act 1907 which was in similar terms to section 3(1) of the 1968 Act:

".... the jurisdiction of this court does not depend upon whether the judge did in fact sum up on the alternative basis, but upon whether the jury must have been satisfied of facts which proved him guilty of that other offence. No doubt, therefore, this is a jurisdiction which must be exercised with great caution, and the fact that the jury never had a proper direction as to the alternative offence, in this case false pretences, is a very relevant consideration".

In R v Deacon (1973) 57 Cr App R 688 Lord Widgery CJ emphasised at pages 693-4 that the court did not have power to substitute a verdict on more general grounds i.e. when it was satisfied that the alternative verdict would have been inevitable had the case been properly presented to the jury.

In considering section 3(1) of the 1968 Act and in particular the words "and the jury could on the indictment have found him guilty of some other offence" it is necessary to have regard to section 6 of the Criminal Law Act 1967 which provides:

"(3) Where, on a person's trial on indictment for any offence except treason or murder, the jury find him not guilty of the offence specifically charged in the indictment, but the allegations in the indictment amount to or include (expressly or by implication) an allegation of another offence falling within the jurisdiction of the court of trial, the jury may find him guilty of that other offence or of an offence of which he could be found guilty on an indictment specifically charging that other offence.

(4) For purposes of subsection (3) above any allegation of an offence shall be taken as including an allegation of attempting to commit that offence; and where a person is charged on indictment with attempting to commit an offence or with any assault or other act preliminary to an offence, but not with the completed offence, then (subject to the discretion of the court to discharge the jury with a view to the preferment of an indictment for the completed offence) he may be convicted of the offence charged notwithstanding that he is shown to be guilty of the completed offence".

In R v Lillis [1972] 2 QB 236 a five judge Court of Appeal, in a judgment delivered by Lawton LJ, described the purposes and effect of section 6(3) as follows, at page 240:

"Before the passing of the Criminal Law Act 1967 the law applicable to the kind of problem which presented itself to the trial judge in this case was partly to be found in the common law and partly in a number of statutes. At common law on an indictment charging felony the accused could be convicted of a less aggravated felony of which the ingredients were included in the felony charged and similarly as regards misdemeanours: but except under statute a conviction for a misdemeanour was not allowed on a charge of felony. The object of section 6(3) of the Criminal Law Act 1967 was to provide a general rule continuing and combining the rules of common law and the provisions of most of the statutes which enabled alternative verdicts to be returned in specific cases or types of cases."

In R v Wilson [1984] AC 242 the House of Lords held that the allegations in a charge under section 20 of the Offences against the Person Act 1861 or under section 9(1)(b) of the Theft Act 1968 impliedly included allegations of assault occasioning actual bodily harm and that accordingly, on a charge of inflicting grievous bodily harm contrary to section 20 of the 1861 Act or on a charge of burglary contrary to section 9(1)(b) of the 1968 Act it was open to the jury to return a verdict of not guilty as charged but guilty of assault occasioning actual bodily harm contrary to section 47 of the 1861 Act. At page 258 Lord Roskill said:

".... there seem to me to be four possibilities envisaged by [section 6(3)]. First, the allegation in the indictment expressly amounts to an allegation of another offence. Secondly, the allegation in the indictment impliedly amounts to an allegation of another offence. Thirdly, the allegation in the indictment expressly includes an allegation of another offence. Fourthly, the allegation in the indictment impliedly includes an allegation of another offence. If any of these four requirements is fulfilled, then the accused may be found guilty of that other offence. My Lords, if that approach to the construction of the subsection be correct, it avoids any consideration of 'necessary steps' or of 'major' or 'lesser' offences, and further avoids reading into the subsection words which were never used by the draftsman. .... There is, in my view, a clear antithesis in the subsection between 'amount to' and 'include'; the word 'or' which joins those two words is clearly disjunctive and must not be ignored. If either limb of the phrase is satisfied, then the stated consequences can follow. Thus, in Lillis [1972] 2 QB 236 the allegation of burglary plainly expressly included (my emphasis) the allegation of theft. Rex v O'Brien (1911) 6 Cr App R 108 is another example of one charge being expressly included in another. The charge was of riot but that charge included an allegation of assault. The appellant was acquitted of riot but convicted of common assault and the conviction was upheld. Rex v Hollingberry (1825) 4 B & C 329, which was followed in O'Brien, is another and much earlier example of the application of the same principle. These are examples of the so-called 'red-pencil' rule. The rule was that all the facts charged in the indictment need not be proved; provided those facts proved constituted an offence of which by law the offender might be convicted on the indictment. These cases today would plainly fall within that particular limb of section 6(3). In the present case, the issue to my mind is not whether the allegations in the section 20 charge, expressly or impliedly, amount to an allegation of a section 47 charge, for they plainly do not. The issue is whether they either expressly or impliedly include such an allegation. The answer to that question must depend upon what is expressly or impliedly included in a charge of 'inflicting any grievous bodily harm.'"

At page 260H he continued:

"I am content to accept, as did the full court [of the Supreme Court of Victoria], that there can be an infliction of grievous bodily harm contrary to section 20 without an assault being committed. The critical question is, therefore, whether it being accepted that a charge of inflicting grievous bodily harm contrary to section 20 may not necessarily involve an allegation of assault, but may nonetheless do so, and in very many cases will involve such an allegation, the allegations in a section 20 charge 'include either expressly or by implication' allegations of assault occasioning actual bodily harm. If 'inflicting' can, as the cases show, include 'inflicting by assault', then even though such a charge may not necessarily do so, I do not for myself see why on a fair reading of section 6(3) these allegations do not at least impliedly include 'inflicting by assault.' That is sufficient for present purposes though I also regard it as also a possible view that those former allegations expressly include the other allegations."

R v Wilson was followed in R v Savage [1992] 1 AC 699 and applied in R v Mandair [1995] 1 AC 208.

The prosecution contend in each of the present appeals that the court should exercise the power in section 3 of the 1968 Act to substitute verdicts of guilty of other offences said to be expressly or impliedly included in the counts of which the appellants were convicted. Thus the prosecution rely on Lord Roskill's third and fourth possibilities and do not suggest that the allegations in the indictments expressly or impliedly amounted to allegations of another offence.

Before this court could substitute a conviction of an alternative offence the prosecution would have to establish two requirements: (1) that the jury could on the indictment have found the appellant guilty of some other offence (offence B) and (2) that the jury must have been satisfied of facts which proved the appellant guilty of offence B.

As to (1) it would be sufficient if looking at the indictment (not the evidence) the allegation in the particular count in the indictment expressly or impliedly included an allegation of offence B. A count charging offence A impliedly contains an allegation of offence B if the allegation in the particular count would ordinarily involve an allegation of offence B and on the facts of the particular case did so.

As to (2) this court has only the verdict of the jury to go on. The fact that the jury did not have a proper direction as to offence B is a highly relevant consideration, as is the question whether there are reasonable grounds for concluding that the conduct of the defence would have been materially affected if the appellant had been charged with offence B.

Examination of previous practice indicates that the power in section 3 of the 1968 Act has usually been exercised in relation to offences of violence or public order offences by substituting a lesser offence for the offence charged, there being in such instances a clear hierarchy of offences at common law or by statute.

3. Relevant alternative offences

We were asked to consider six alternative offences, for one or more of which (it was argued) convictions could be substituted in these appeals if (contrary to the Crown's main contention) we considered these convictions, or some of them, unsafe. These were:

(1) Theft

By section 1(1) of the Theft Act 1968,

"A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it...."

"Property" is defined in section 4 to include money and things in action and other intangible property. "Appropriates" is defined in section 3 to include any assumption by a person of the rights of an owner.

The words "property belonging to another" appear both in section 15 and in section 1. If in any case the reasoning in Preddy is fatal to a conviction under section 15, it is likely to be fatal to a conviction under section 1 also unless, in the case of a chose in action, it can be shown that the chose in action appropriated was at the time of appropriation the property of another. For reasons given in Preddy, this will not ordinarily be so where the result of the defendant's dishonesty is the creation of a new chose in action which the victim did not at the time of appropriation own and had never owned. It is also, plainly, necessary to identify an act which in law amounts to appropriation.

(2) Section 17 of the Theft Act 1968

Section 17 of the Theft Act 1968 provides:

"(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another, --

(a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or

(b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular;

he shall, on conviction on indictment, be liable to imprisonment for a term not exceeding seven years."

It is plain from R v Mallett [1978] 1 WLR 820 and from Attorney General's Reference (No.1 of 1980) (1981) 72 Cr App R 60 that the effect of this section is not to be whittled down, and we are not for our part persuaded that knowledge of the purpose for which any record or document is made or required forms any part of the mens rea of the offence. It is nonetheless clear that the section focuses on the existence of an account or record or document made or required for an accounting purpose, and these are essential ingredients of the offence.

(3) Evasion of liability by deception

Section 2(1)(a) of the Theft Act 1978 provides:

"Subject to subsection (2) below, where a person by any deception --

(a) dishonestly secures the remission of the whole or part of any existing liability to make a payment, whether his own liability or another's; or ....

he shall be guilty of an offence."

Where, as in the Preddy type of case, a defendant by deception induces a lender to make him an advance, it is suggested that the defendant thereby secures a remission of the liability of the lender's banker to the lender.

We cannot regard this as a realistic way of analysing cases such as Preddy, since in no ordinary case could the defendant contemplate or seek to "secure" a reduction of the liability of the lender's bank. Nor would the analysis be apt if the lender owed money to its bank.

(4) Procuring the execution of a valuable security

Section 20(2) of the Theft Act 1968 provides:

"A person who dishonestly, with a view to gain for himself or another or with intent to cause loss to another, by any deception procures the execution of a valuable security shall on conviction on indictment be liable to imprisonment for a term not exceeding seven years; and this subsection shall apply in relation to the making, acceptance, endorsement, alteration, cancellation or destruction in whole or in part of a valuable security, and in relation to the signing or sealing of any paper or other material in order that it may be made or converted into, or used or dealt with as, a valuable security, as if that were the execution of a valuable security."

In subsection(3) "valuable security" is defined to mean:

"any document creating, transferring, surrendering or releasing any right to, in or over property, or authorising the payment of money or delivery of any property, or evidencing the creation, transfer, surrender or release of any such right, or the payment of money or delivery of any property, or the satisfaction of any obligation."

The focus of this offence is on the execution of a valuable security as defined. It is however necessary to identify with some care the valuable security on which the charge is founded. While it cannot be doubted that a cheque is a valuable security within the section, it has been held in R v Manjdadria [1993] Crim LR 73 that a telegraphic transfer of funds is not. In R v King [1992] QB 20 a CHAPS (clearing house automated payment system) order was held to be a valuable security, but the court in Manjdadria considered that this might be going to the extreme limits of what amounts to a valuable security. Unless the means by which funds are to be transferred are clearly and specifically identified, it cannot be assumed that procuring the transfer would necessarily involve procuring the execution of a valuable security. The proliferation of new and sophisticated ways of transferring money means that some care is needed to identify the means by which payment was, or was to be, made in the particular case: see, generally, Law of Bank Payments, ed. Brindle and Cox, 1996.

(5) Obtaining services by deception

Section 1 of the Theft Act 1978 provides:

"(1) A person who by any deception dishonestly obtains services from another shall be guilty of an offence.

(2) It is an obtaining of services where the other is induced to confer a benefit by doing some act, or causing or permitting some act to be done, on the understanding that the benefit has been or will be paid for."

The practical utility of this section has been greatly limited by the decision of this court given on 15 July 1982 in R v Halai (see [1983] Crim LR 624). The defendant in that case visited his solicitor, who was also an agent of a building society, in order to try and raise a mortgage on a house which he wished to buy. The solicitor-agent produced a mortgage application form and filled up the document at the dictation of the defendant. The defendant gave details in the form which were false and intended to induce the building society to make an advance. He signed the document. He was charged with dishonestly attempting to obtain from the building society a service, namely a mortgage advance, by deception. He was convicted. On appeal this conviction was quashed. The court said:

"In our judgment, a mortgage advance cannot be described as a service. A mortgage advance is the lending of money for property and can properly be charged under section 15 of the 1968 Act, if the facts support it. This count should never have been in the indictment".

Not surprisingly, this decision has discouraged prosecutors from relying on section 1 of the 1978 Act in situations such as the present. But the decision has been the subject of sustained doubt and criticism, as noted by the House of Lords in Preddy at page 269E. Moreover, the scope of the decision has been restricted in later cases. In R v Widdowson (1986) 82 Cr App R 314 the defendant made dishonest representations in a document which might, at a later stage, have led to a hire purchase agreement. The court allowed the defendant's appeal on two grounds not now relevant, but in doing so said (at 318):

"We should add that we reject the suggestion that the obtaining of a hire purchase agreement cannot amount to the obtaining of services. In Halai supra this Court held that a mortgage advance cannot be described as a service. It is suggested that a hire purchase agreement is indistinguishable. We disagree. As we have just said, a hire purchase agreement (at least in the ordinary form) is the hiring of goods with various options given to the hirer, who in turn agrees to pay the instalments, maintain the vehicle and so on. In our view the hire purchasing of a vehicle on some such terms can be regarded as the conferring of some benefit by doing some act, or causing or permitting an act to be done, on the understanding that the benefit has been or will be paid for, this being the definition of services in section 1(2) of the Theft Act 1978. The finance company confers a benefit by delivering possession of the vehicle to the hirer (or by causing or permitting the garage to do so) on the understanding that the hirer has paid or will pay a deposit and subsequent instalments."

In Preddy the House was invited to hear argument on the correctness of Halai but declined to do so. Lord Goff indeed expressed some doubt (at 269G) whether the criticisms made of Halai were fully justified. He appears to have been concerned that, if section 1 of the 1978 Act were to be construed as suggested, its effect would be very wide; that it was not altogether natural to think of the simple making of a loan upon interest as itself constituting a service; and that the construction contended for could lead to considerable overlap between section 1 of the 1978 Act and sections 15 (1) and 20 (2) of the 1968 Act. Sir John Smith QC has responded to these doubts, in our judgment persuasively, in [1996] Crim LR 726 at 728-9.

For years now the decision of this court in Halai has lain like a sunken wreck, impeding navigation but difficult, laborious and expensive to remove. It amounts, on this point, to mere assertion, unsupported by reasoning. Lord Lane CJ in R v Teong Sun Chuah [1991] Crim LR 463 at 464 considered the decision to bear all the hallmarks of being decided per incuriam. There is no reason to restrict the meaning of "services" in section 1 of the 1978 Act, "services" being wide enough to embrace professional services (as the court accepted elsewhere in its judgment in Halai), and commercial services and financial services, the essential conditions being that a service must confer a benefit and be rendered on the understanding that it has been or will be paid for. The time has in our judgment come when the ruling in Halai quoted above should no longer be regarded as good authority, and it should no longer be followed. So to hold does not in our view remove the need for remedial legislation, to which we refer below; but it may in the short term provide a basis for indicting those responsible for at least some fraudulent transactions.

(6) Conspiracy to defraud

There can be no doubt that, on appropriate facts, defendants who dishonestly deceive mortgage lenders into making loans can be charged and convicted of conspiracy to defraud. The essence of the offence does, however, lie in the existence of an agreement by two or more conspirators.

(7) Attempts

Section 1 of the Criminal Attempts Act 1981 provides:

"(1) If, with intent to commit an offence to which this section applies, a person does an act which is more than merely preparatory to the commission of the offence, he is guilty of attempting to commit the offence".

Subsection (2) provides that a person may be guilty of attempting to commit an offence to which the section applies even though the facts are such that the commission of the offence is impossible. By subsection (3) the defendant's intentions are to judged on the basis of the facts as he believed them to be. It is established law that the mental element required to show that a defendant was guilty of an attempt to commit an offence may be greater than that required for the full offence: see Archbold, Volume 2 (1996), para. 17-53.

4. Retrial

Section 7 of the Criminal Appeal Act 1968 as amended provides:

"(1) Where the Court of Appeal allow an appeal against conviction and it appears to the Court that the interests of justice so require, they may order the appellant to be retried.

(2) A person shall not under this section be ordered to be retried for any offence other than --

(a) the offence of which he was convicted at the original trial and in respect of which his appeal is allowed as mentioned in subsection (1) above;

(b) an offence of which he could have been convicted at the original trial on an indictment for the first-mentioned offence; or

(c) an offence charged in an alternative count of the indictment in respect of which the jury were discharged from giving a verdict in consequence of convicting him of the first-mentioned offence".

It is apparent that the conditions which permit the court to order a retrial are twofold: the court must allow the appeal and consider that the interests of justice require a retrial. The first condition is either satisfied or it is not. The second requires an exercise of judgment, and will involve consideration of the public interest and the legitimate interests of the defendant. The public interest is generally served by the prosecution of those reasonably suspected on available evidence of serious crime, if such prosecution can be conducted without unfairness to or oppression of the defendant. The legitimate interests of the defendant will often call for consideration of the time which has passed since the alleged offence, and any penalty the defendant may already have paid before the quashing of the conviction. The offences for which a defendant may be ordered by the court to be retried are, however, strictly limited by section 7(2).

II. The present appeals

Before turning to consider the individual cases it is necessary to make a general comment about the prosecution's contentions that the court should (if it finds an existing conviction to be unsafe) exercise the power in section 3 of the 1968 Act to substitute verdicts of guilty of other offences in each of the appeals. In the typical case where this court is asked to exercise the power in section 3 the alternative offence is a lesser offence, where there is a clear hierarchy of offences at common law or by statute (e.g. manslaughter for murder or affray for violent disorder). In the present appeals the prosecution have put forward a number of candidate offences for substitution. We list below the candidate offences relied on in each of the appeals. The approach adopted by the various counsel for the respondents has not always been consistent. Further, we have not been provided with a draft count in respect of any of the offences which are said to be candidates for substitution.

On 13 March 1995 at Inner London Crown Court before His Honour Judge Fordham this appellant Mrs Graham was convicted of attempting to obtain property by deception. On 3 April 1995 she was sentenced to 6 months' imprisonment. She applied for leave to appeal against conviction and sentence. The single judge granted her leave to appeal against sentence but refused her leave to appeal against conviction. She renewed her application for leave to appeal against conviction to the full court. On 16 May 1995 the full court determined the appeal against sentence, allowed the appeal, quashed the sentence of 6 months' imprisonment and substituted a conditional discharge for 12 months. That court then adjourned her application for leave to appeal against conviction pending the decision of the House of Lords in Preddy. We grant leave to appeal against conviction.

The original indictment contained one count of attempting to

procure the execution of a valuable security by deception contrary to section 1(1) of the Criminal Attempts Act 1981. At the commencement of the trial that indictment was amended by substituting a count of attempting to obtain property by deception as follows:

"Statement of Offence

Attempting to obtain property by deception, contrary to Section 1(1) of the Criminal Attempts Act 1981.

Particulars of Offence

Hemamali Krishnajina Graham on or about the 14th day of December 1992 attempted dishonestly to obtain property, namely monies by way of a mortgage loan from the Yorkshire Building Society with the intention of permanently depriving the Yorkshire Building Society thereof by deception, namely by falsely representing

i that this was the first time she had bought a house

ii that she was then a tenant at 33 Westhall Road,[sic] Streatham, London SW16

iii that she did not already own a property to be mortgaged

iv that she had no dependant children

v that she did not have an existing or previous mortgage."

The appellant is a solicitor by profession. In 1984 she and her husband purchased a property at 33 Westwell Road in Streatham. The purchase price was £55,000, of which £35,000 was advanced by the Nationwide Building Society. That mortgage loan was still in force at the time of the alleged offence. The payments were made monthly from her husband's bank account and were entirely in order and up to date. In 1984 the appellant was in partnership with Mrs Peries in the firm of Graham Peries and Co. Five years later, in February 1989, the appellant and Mrs Peries purchased the next door property, number 35, by means of a joint mortgage from the Abbey National Building Society. The payments for that mortgage were also entirely in order and up to date. In August 1992 the appellant and Mrs Peries applied for a loan in respect of 35 Westwell Road from the National and Provincial Building Society. They requested an advance in the sum of £162,000 but withdrew that application shortly thereafter. Then they made an application (the subject of the indictment) to the Yorkshire Building Society ("the Yorkshire") requesting an advance of some £118,000. The Yorkshire wrote back advising they were only prepared to advance £91,000. The Yorkshire then received a number of further documents confirming the appellant's address and other details. They also received a letter from the firm of solicitors in which she was a partner setting out the extent of her professional income from the practice. On 7 January 1993 the appellant faxed to the Yorkshire a letter in which she gave the name of her alleged landlord and the solicitors who collected the rent from her on his behalf. The Yorkshire wrote to the appellant on 18 January 1993 requesting further information before they could process the application form. They received no reply and, after a reminder, they cancelled the application. Part of the evidence called by the prosecution came from Mrs Burford, a supervisor at the Yorkshire. She completed a process sheet. Under the heading "special conditions" was the entry "CHAPS". Meanwhile on 5 January 1993 the Woolwich Building Society received from the appellant an application for a mortgage relating to 35 Westwell Road which stated that there was a current mortgage of 33 Westwell Road but did not refer to the mortgage of 35 Westwell Road. The Woolwich Building Society was satisfied with the application and made an advance to the appellant's solicitors on 18 February 1993.

The appellant was interviewed about these matters. She said

that the "rent" amounted to repayments in respect of a loan. She said that her husband made the repayments regularly in respect of the mortgage on number 33. She said she had written to the Yorkshire correcting the misleading information and had also told them she was not taking a mortgage with them because she had arranged one with the Woolwich Building Society. This was contrary to the evidence of the prosecution witnesses. A submission of no case to answer was rejected. The appellant did not give evidence at her trial.

(1) Is the conviction safe ?

The conviction of attempting to obtain property by deception cannot stand in the light of Preddy. The appellant could not in law be guilty of the offence charged on the facts relied on. For the reasons set out above we do not consider that the conviction can be regarded as safe. The conviction is accordingly quashed.

(2) Substitution of an alternative offence pursuant to section 3 of the 1968 Act ?

The prosecution submit that the court should exercise the power in section 3 of the 1968 Act to substitute a verdict of guilty of one of the following offences:

1. Attempted theft (section 1 Theft Act 1968);

2. Attempting by deception to secure the remission of an existing liability to make payment (section 2(1)(a) Theft Act 1978);

3. Furnishing false information (section 17(1)(b) Theft Act 1968).

It is necessary to consider first which of the alternative offences contended for might have been charged on the facts of this case, and (if any of these offences might have been charged), secondly whether the court can and should exercise the power to substitute a verdict of guilty of such alternative.

As to which of the alternative offences contended for might have been charged on the facts, we refer to the general consideration of these offences set out above. We do not consider that attempted theft or attempting by deception to secure the remission of an existing liability to make payment would have been appropriate charges on the facts. As to theft the reasoning in Preddy as to "property belonging to another" applies equally in the case of section 1 of the Theft Act 1968 and this difficulty remains where an attempt is charged. As to attempting by deception to secure the remission of an existing liability to make payment, for the reasons set out above this would not be a realistic charge on the facts.

An offence of furnishing false information might have been charged on the facts of this case (although in considering the ingredient "made or required for any accounting purpose" it is to be remembered that no mortgage advance was in fact made).

As to substitution of a verdict of guilty of furnishing false information, looking at the indictment in this case we do not consider that the first requirement of section 3 (that the jury could on the indictment have found the appellant guilty of furnishing false information) is satisfied. The allegation in the count did not expressly or impliedly include an allegation of producing or making use of any record or document made or required for any accounting purpose. A count charging obtaining property by deception does not ordinarily involve an allegation of producing or making use of any such record or document. Further for completeness we note that the second requirement of section 3 (that the jury must have been satisfied of facts which proved the appellant guilty of furnishing false information) is not satisfied either. Although the verdict of the jury necessarily embraced a finding of dishonesty, the jury were not directed as to all the ingredients of furnishing false information and we are not satisfied that all the evidence necessary to prove this offence was adduced.

For the reasons set out above we do not consider that there is any basis for substitution of any alternative verdict in this case.

(3) Other grounds

For completeness we should refer to the other grounds argued on behalf of this appellant.

It was submitted that the direction on character was insufficient. The character direction is set out at page 43 of the summing up. It deals properly with both credibility and propensity in accordance with the authorities and so this ground fails.

It was further submitted (i) that there was insufficient evidence to go before the jury that this was an attempt as the evidence indicated that the acts done by the appellant were not more than merely preparatory to the commission of the full offence (ii) that the judge failed to direct the jury as to the false statements contained in the mortgage application form and (iii) that in the summing up the judge referred to the evidence about the Woolwich Building Society in an inaccurate and incomplete manner. There is no substance in any of these further grounds of appeal

(4) Retrial

We do not consider it appropriate to order a retrial in this case.

On 25 November 1994 at Northampton Crown Court before His Honour Judge King this appellant Mr Kansal was convicted of five counts of obtaining property by deception.

On 16 December he was sentenced as follows:

Count 1 30 months' imprisonment

Count 2 18 months' consecutive

Counts 3-5 18 months' on each concurrent

In addition he was disqualified under the Company Directors Disqualification Act 1986 for a period of 7 years.

He appeals against conviction by leave of the full court granted on 19 July 1996. The full court then granted the appellant unconditional bail.

In April 1986 the appellant and his brother Raj Kansal incorporated a company Childcare Plc. Raj Kansal took some part in the company's affairs until July 1987 when he resigned his directorship. Thereafter the appellant was the sole effective controller of the company. He had from its inception been at the heart of the business. The company's business consisted of the manufacture of disposable nappies at its premises in Corby. Corby was in an area that qualified for regional development grant administered by the Department of Trade and Industry (DTI).

It is convenient to deal with counts 2 to 5 of the indictment before we deal with count 1. This appellant was convicted of dishonestly obtaining from the DTI sums by way of regional development grant by deception on four separate occasions. Signed application forms were sent to the DTI. In the case of counts 2 and 3 the application forms claiming the grant were signed by Raj Kansal but the contents were alleged to be known to the appellant. In the case of counts 4 and 5 the application forms were signed by the appellant. In each case the false representation relied upon was that a sum of money had been paid by Childcare plc in respect of a nappy making machine. We set out Count 2 by way of example:

"Count 2

Statement of Offence

Obtaining property by deception, contrary to Section 15(1) of the Theft Act 1968.

Particulars of Offence

Rupe Lal Kansal on a day between the 1st day of March 1987 and the 30th day of April 1987 dishonestly obtained from the Department of Trade and Industry the sum of £15,000 with the intention of permanently depriving the Department of Trade and Industry thereof by deception namely by falsely representing that an instalment of £100,000 had been paid by Childcare PLC in respect of a nappy making machine."

Childcare originally negotiated for a reconditioned machine from Rainworth. But those negotiations ended when the appellant found two machines in Germany which Childcare could purchase and have modified and reconditioned in Italy. A German company Peltz had two secondhand reconditioned nappy making machines. These were seen by the appellant in April 1987. In June 1987 a sales agreement was drawn up to sell these two machines to Childcare for £45000. The agreement was signed and returned by the appellant on 4 July. These machines remained in Germany until 1988. In January 1988 Childcare paid Peltz £20,000 for the first machine. It was shipped to Italy for modifications by a company called 2M. In May 1988 2M invoiced Childcare for £51,561 for modifications to that machine. It was delivered to Childcare in December 1988. In February 1989 Childcare paid 2M a further £12,000 for further work on that machine. At some stage Childcare came into possession of a second machine from Peltz but this second machine does not feature in the indictment. All the counts are concerned with the first machine. This appellant supplied the DTI with documentation indicating that 2M had issued an invoice to Childcare for a nappy making machine in the sum of £780,000. But the evidence from 2M was that this invoice was bogus.

The scheme by which grants were paid by the DTI was that they were only payable on new machines. It was the prosecution case that at all times the appellant was falsely representing to the DTI that the machine on which Childcare were claiming a grant was new.

Counts 2 to 5 charged obtaining sums from the DTI by way of grant. In each of the first two of these counts the false representation alleged was that Childcare had paid a substantial sum in respect of a nappy making machine when no such sum had ever been paid. In respect of count 4 the false representation alleged was that the sum of £51,761 had been paid towards the purchase of a new machine. Count 5 related to a claim in the application form for which the bogus invoice in the sum of £780,000 had been raised. Included on the application form signed by the appellant were the words "new 2M diaper machine 10/2/89 £478,239". That was alleged to be wholly false. In each case payment was made by the DTI by payable order.

We now turn to count 1. In 1987 a Mr Hirst, who then worked for Forward Trust, met the appellant and discussed possible financing for the purchase of a disposable nappy making machine. Mr Hirst went to work with Socgen Lease Limited where the matter was then discussed further with the appellant. On the appellant's instructions Mr Hirst prepared a proposal form for finance, describing the machine as a new Italian nappy machine manufactured in 1988 net cost £750,000. That proposal was declined by Socgen Lease Limited. Mr Hirst then prepared a second proposal on the appellant's instructions. The second proposal was the subject of count 1. The false representation in this proposal was that the appellant had purchased at a cost of £750,000 a new nappy making machine from an Italian company called 2M. On the strength of that false representation Socgen Lease Limited paid to the appellant the sum of £399,750 following a telegraphic transfer instruction.

The appellant's case in respect of the earlier transactions relating to the DTI, namely counts 2 and 3, was that he was not concerned and that in any event the payments alleged had actually been made. In respect of count 4 his defence was that the payment of £51,761 was in fact for reconditioning work on an old machine and that that was a true figure. In respect of count 5 the appellant's defence was that the DTI had never paid the sum alleged. As far as count 1 was concerned his defence was that he had not represented that the machine was new and that Mr Hirst and through him Socgen Lease Limited had known that £780,000 represented the value of the machine not its actual price. The jury's verdicts make plain that these explanations were rejected.

(1) Are the convictions safe ?

The convictions of obtaining property by deception cannot stand in the light of Preddy. The appellant could not in law be guilty of the offences charged on the facts relied on. For the reasons set out above we do not consider that the convictions can be regarded as safe. The convictions are accordingly quashed.

(2) Substitution of an alternative offence pursuant to section 3 of the 1968 Act ?

The prosecution submit that the court should exercise the power in section 3 of the 1968 Act to substitute a verdict of guilty of one of the following offences:

In the case of count 1:-

1. Furnishing false information (section 17(1)(b) Theft Act 1968);

2. Procuring the execution of a valuable security by deception (section 20(2) Theft Act 1968);

3. Theft (section 1 Theft Act 1968);

4. By deception securing the remission of an existing liability to make payment (section 2(1)(a) Theft Act 1978).

In the case of counts 2-5:

The offences in 1-3 above but not 4 above.

It is necessary to consider first which of the alternative offences contended for might have been charged on the facts of this case, and (if any of these offences might have been charged), secondly whether the court can and should exercise the power to substitute a verdict of guilty of such alternative(s).

As to which of the alternative offences contended for might have been charged on the facts, we refer to the general consideration of the four offences set out above. We do not consider that theft (in the case of counts 1-5) or by deception securing the remission of an existing liability to make payment (in the case of count 1 only) would have been appropriate charges on the facts. As to theft the reasoning in Preddy as to "property belonging to another" applies equally in the case of section 1 of the Theft Act 1968. As to by deception securing the remission of an existing liability to make payment, for the reasons set out above this would not be a realistic charge on the facts.

Furnishing false information might have been charged on the facts of this case but the ingredient "made or required for any accounting purpose" would have had to be satisfied in each instance.

As to procuring the execution of a valuable security by deception, in the case of count 1 we have seen a telegraphic transfer instruction (exhibit bundle page 80) addressed by Socgen Lease Ltd to Barclays Bank Plc which reads "we would be grateful if you could effect the transfer of £399,750... with value of 3rd July 1989 as follows:

Payee Bank: Bank of Credit and Commerce International...

Payment Method: Telegraphic Transfer

Beneficiary: Childcare Plc...

Please debit our account number..."

On the assumption that the payment method in fact used was accurately described as telegraphic transfer it was held in Manjdadria supra that a telegraphic transfer of funds is not a valuable security. We emphasise the need in the case of any charge under section 20(2) of the Theft Act 1968 to identify with care the method by which funds are transferred. As to procuring the execution of a valuable security by deception in the case of counts 2-5 the DTI apparently provided a payable order in each case. We suspect that such instruments probably fall within the definition found in section 4(2)(c) of the Cheques Act 1957 -- "(c) any document issued by a public officer which is intended to enable a person to obtain payment from the Paymaster General or the Queen's and Lord Treasurer's Remembrancer of the sum mentioned in the document but is not a bill of exchange". Such an instrument would in our view constitute a "valuable security" within the meaning of section 20(3) of the 1968 Act. We have not however seen the payable orders (nor did the jury). We would first need to see the payable orders before saying whether this offence might have been charged on the facts relied on in support of counts 2-5.

As to substitution of verdicts of guilty of furnishing false information, looking at the indictment in this case we do not consider that the first requirement of section 3 (that the jury could on the indictment have found the appellant guilty of furnishing false information) is satisfied. The allegation in the particular counts did not expressly or impliedly include an allegation of producing or making use of any record or document made or required for any accounting purpose. A count charging obtaining property by deception does not ordinarily involve such an allegation. Further for completeness we note that the second requirement of section 3 (that the jury must have been satisfied of facts which proved the appellant guilty of furnishing false information) is not satisfied either. Although the verdicts of the jury necessarily embraced findings of dishonesty, the jury were not directed as to all the ingredients of furnishing false information.

For the reasons set out above we do not consider that there is any basis for any substitution of any alternative verdicts in this case.

(3) Other grounds

For completeness we should refer to the other grounds argued on behalf of this appellant.

It was submitted (i) that the judge erred in law in directing the jury that the appellant's intention of repaying the money advanced by Socgen (count 1) was relevant only to dishonesty and not to his intention permanently to deprive (ii) that the judge gave an inadequate direction in respect of Mr Lonis' reports in the claims forms which were the relevant documents in counts 2 to 5 and (iii) that the judge should have directed the jury that there was no evidence of any involvement by the appellant in making the claims that were the subject matter of counts 2 and 3. There is no substance in any of these further grounds of appeal.

(4) Retrial

We do not consider it appropriate to order a retrial in this case.

On 25 June 1996 at Middlesex Crown Court before His Honour Judge Copley this appellant Mr Ali was convicted of attempted theft. On 2 August he was sentenced to 4 years' imprisonment. A co-defendant Mark Delphin was acquitted of attempted theft but on re-arraignment pleaded guilty to handling stolen goods and was sentenced to 18 months' imprisonment. The appellant appeals against conviction by leave of the single judge and also by virtue of the trial judge's certificate. The point of law certified by the trial judge was:

"Where a forged bankers' draft drawn on Bank A is presented to Bank B and as a result Bank A, through the clearing bank system, creates a credit in favour of Bank B, has the presenter of the draft appropriated that credit for the purpose of the Theft Act?"

The appellant also applies for leave to appeal against sentence. That application has been referred to this court by the Registrar.

On about 3 December 1994 an associate of the appellant on the appellant's instructions tried to open a bank account in the name of the Gehlin Corporation with the National Bank of Pakistan (NBP) at their Edinburgh office. The bank did not then open the account because although the application named this appellant as a director of the Corporation, a company search revealed that he had resigned. The manager did, however, give the associate the number for an account in case one was opened later.

On 8 December 1994 the appellant presented to NBP at their head office in Finsbury Circus London four bankers' drafts each for £250,000 drawn on the National Westminster Bank (NWB). The drafts had gone missing from NWB between October 1992 and May 1993 and the purported signatures of two NWB officials were forged. On the paying-in slip he put the account number which had been given by the NBP manager in Edinburgh to his associate. NBP passed the drafts to Lloyds Bank (LB) who passed them to the NWB. When the drafts were received by NWB they recognised them as forgeries. The appellant was arrested on 16 January 1995. He said in interview that he had never seen the application for a loan sent to NWB by Miss Gehlin. No evidence was called by the prosecution as to the mechanism by which the draft would have been dealt with had it been valid. No evidence was called as to the existence or identity of any account which held a credit balance which could have been appropriated. Originally the particulars of the count alleged that:

"Mark Guy Delphin and Sajid Pasha Ali on the 8th day of December 1994 attempted to steal £1,000,000 belonging to National Westminster Bank plc."

After a submission of no case to answer at the close of the prosecution case, the indictment was amended by the insertion of the words "a credit of" before the figure of £1,000,000.

The appellant's defence was that he believed the drafts to be genuine because his business partner Miss Gehlin had told him that NWB had agreed a loan on the basis of a business plan she had submitted on their behalf.

(1) Is the conviction safe ?

The conviction of attempting to steal "a credit of £1 million belonging to" NWB cannot stand in the light of Preddy. The

reasoning in Preddy demonstrates why the reference to "a credit of £1 million belonging to" NWB does not identify "property belonging to another". The appellant could not in law be guilty of the offence charged on the facts relied on. For the reasons set out above we do not consider that the conviction can be regarded as safe. The conviction is accordingly quashed.

(2) Substitution of an alternative offence pursuant to section 3 of the 1968 Act ?

The prosecution submit that the court should exercise the power in section 3 of the 1968 Act to substitute a verdict of guilty of "an attempt to steal a chose in action, namely a debt owed to the Gehlin Corporation by the National Bank of Pakistan". This proposal is plainly inapposite. It does not represent a realistic way of analysing this case nor is it consistent with the indictment.

We note for completeness that it appeared to be common ground between counsel for the appellant and counsel for the prosecution that, on the prosecution's case on the facts, this appellant might have been charged with using a forged instrument contrary to section 3 of the Forgery and Counterfeiting Act 1981. No submission was made (or could have been made) that the court should exercise the power in section 3 of the 1968 Act to substitute a verdict of guilty of an offence contrary to section 3 of the 1981 Act, and so we have not given any further consideration to section 3 of the 1981 Act.

(3) Other grounds

For completeness we should refer to the further ground argued on behalf of this appellant.

The further ground was that the judge failed at page 4A of the summing up to give the jury any adequate direction as to the meaning of appropriation or as to the nature or description of the property belonging to another which it was alleged the appellant attempted to appropriate. This ground is so closely related to the principal Preddy ground that it does not require further consideration, beyond saying that in any event the direction was inadequate.

(4) Retrial

We do not consider it appropriate to order a retrial in this case.

It is unnecessary in the circumstances to address the application for leave to appeal against sentence.

On 17 May 1996 at Bournemouth Crown Court before His Honour Judge Wiggs:

Mr Marsh was convicted of 6 counts of obtaining property by deception (counts 7, 10, 12, 13, 14 and 16) and one count of attempting to obtain property by deception (count 15).

Mr Graham was convicted of 4 counts of obtaining property by

deception (counts 2, 4, 7 and 12).

Mr Price was convicted of counts of obtaining property by

deception (counts 7 & 9).

Mr Bramich was convicted of one count of obtaining property by deception (count 9) and one count of attempting to obtain property by deception (count 17).

Marsh was acquitted by direction of the judge of one count of obtaining property by deception (count 9). He further pleaded not guilty to two counts of obtaining property by deception on a second indictment. Those counts were ordered to remain on the file on the usual terms.

Graham pleaded not guilty to two further counts of obtaining property by deception (counts 5 & 9) and not guilty verdicts were entered on the direction of the judge. He was acquitted by the jury of three further counts of obtaining property by deception (counts 1, 10 and 16) and one count of attempting to obtain property by deception (count 11). Not guilty verdicts were recorded under section 17 of the Criminal Justice Act 1967 on two further counts of obtaining property by deception (counts 13 and 14) and one count of attempting to obtain property by deception (count 15). He pleaded not guilty to count 1 of the second indictment (obtaining property by deception) and this count was ordered to remain on the file on the usual terms.

Marsh was sentenced to 12 months' imprisonment concurrent on each of the seven counts.

Graham was sentenced to 12 months' imprisonment concurrent on each of the four counts. He also fell to be sentenced on two further indictments for three offences of obtaining credit while a bankrupt and four offences of perjury. In respect of the offences the subject of the two further indictments he was sentenced to a further 9 months' making his total sentence 21 months.

Price was sentenced to 150 hours' community service on each of the two counts of obtaining property by deception and ordered to pay £500 towards prosecution costs.

Bramich was sentenced to 200 hours' community service concurrent on counts 9 and 17 and ordered to pay £300 towards prosecution costs.

There were two further co-defendants. Mr Willett was convicted of two counts of obtaining property by deception (counts 10 and 16) and one count of attempting to obtain property by deception (count 11). He was fined £300 on each count with 14 days' imprisonment in default and ordered to pay £500 towards prosecution costs.

Mr Jonathan Smith pleaded guilty to seven counts of obtaining property by deception (counts 2, 3, 4, 5, 6, 18 and 19) and to one count of attempting to obtain property by deception (count 17). He was sentenced to 18 months' imprisonment concurrent on each count, suspended for 2 years.

All four applicants apply for an extension of time in which to lodge an appeal against conviction by way of certificates of fitness for appeal granted by the trial judge. The court will in the ordinary way be slow to extend time for seeking leave to appeal where a defendant has deliberately omitted to take the necessary steps within the time allowed, even where a later change in the understanding of the law affords grounds of appeal not appreciated by the defendant and his advisers at the time of conviction: see R v Hawkins , The Times, 6 August 1996. Here, the applicants did not give notice of appeal or notice of application for leave to appeal in time, but did raise their challenge at the time of sentence and at that time obtained the certificate of the trial judge under section 1(2) of the Criminal Appeal Act 1968. Counsel for the Crown indicated that he would be reluctant to rely on this time ground alone. In those circumstances we consider that it is appropriate to grant these applicants the necessary extension of time under section 18(3) of the 1968 Act and we accordingly do so.

Marsh also applied for leave to appeal against sentence. That application was referred to the Full Court by the Registrar. Graham has also recently applied for leave to appeal against sentence.

All four appellants were involved in different motor vehicle

businesses: Marsh and Graham in a second hand car sales business called Gables Garage; Price and the co-defendant Smith at APB Repair Services; Bramich as the proprietor of DB Cars. The co-defendant Willett was the driver of a JCB and also broke up cars for spares. Two of the appellants (Marsh and Graham) and the co-defendant Smith had access to records at HP Information plc (HPI) which has records relating to finance, stolen vehicles and write-offs, which may be traced via vehicle registration numbers. The prosecution case was that each of the appellants was involved in the dishonest obtaining of cheques from finance and insurance companies in various sums by giving false information about the condition of or the existence of motor vehicles. All the offences were committed between March 1990 and the end of June 1991. A number of different schemes were used. We list them.

1. Wreck revival.

Vehicles were acquired that had been either burnt out or wrecked. Once acquired, finance agreements were entered into in respect of these vehicles as if they were in proper working order. The prime false representation was that the vehicle was in proper working order when it was not.

2. Vehicle impersonation.

The registration numbers and details of genuine cars from other garage forecourts were used on applications for finance although the relevant vehicles were not owned or possessed by any of the appellants.

3. Double finance.

A vehicle was originally purchased under a finance agreement. This vehicle's registration plates were then changed by means of the purchase of a cherished number plate and then a fresh application for finance was made to a different finance company, the false representation being that the appellant concerned had title to the vehicle when in fact it was already owned by the previous finance company.

4. Bogus theft of vehicle.

Here a false allegation of the theft of the vehicle was made and a bogus insurance claim pursued.

Marsh was convicted of four instances of wreck revival, two of vehicle impersonation and one of bogus theft (attempted). Graham was convicted of two instances of wreck revival and two of double finance. Price was convicted of one instance of wreck revival and one of bogus theft. Finally Bramich was convicted of two instances of bogus theft (one an attempt). Although the precise representations varied in each case the appellant or appellants concerned dishonestly made false representations and in respect of the completed offences received cheques from finance or insurance companies.

The trial began with each count in the indictment alleging the actual or attempted obtaining of a particular sum. At the conclusion of the prosecution case it was submitted on behalf of the appellant Price that the indictment was defective because it charged him with obtaining money when if anything had been obtained it was the cheque and not money. These submissions were supported by Bramich and Graham. The prosecution then applied for leave to amend the indictment by adding in the words "a cheque in" before the words "the sum of" in each count of the indictment. The Judge acceded to these applications and granted leave so to amend each count in the indictment.

We set out by way of example count 7:

"Statement of Offence

Obtaining property by deception, contrary to Section 15(1) of the Theft Act 1968

Particulars of Offence

Gary Alan GRAHAM, Terence Colin MARSH and Paul Graham PRICE between 1st March and 31st May 1990 dishonestly obtained from Southern Finance Company Limited a cheque in the sum of £14,0 00 with the intention of permanently depriving Southern Finance Company Limited thereof by deception, namely by falsely representing that:

a a Range Rover motor car, registration number VSU 116, was the subject of a bona fide sale by Gables Garage Car Sales at a price of £21,500; and

b Paul Graham PRICE had paid a deposit of £7,500 to Gables Garage Car Sales for the car; and

c the car was in good and proper working order"

(1) Are the convictions safe?

The convictions of obtaining property by deception and attempting to obtain property by deception cannot stand in the light of Preddy. The appellants could not in law be guilty of the offences charged on the facts relied on. For the reasons set out above we do not consider that the convictions can be regarded as safe. The convictions are accordingly quashed.

(2) Substitution of an alternative offence pursuant to section 3 of the 1968 Act ?

The prosecution submit that the court should exercise the power in section 3 of the 1968 Act to substitute verdicts of guilty of one of the following offences:

1. Obtaining services by deception (section 1 Theft Act 1978);

2. Procuring the execution of a valuable security by deception (section 20(2) Theft Act 1968);

and in the case of certain counts

3. Conspiracy to defraud.

It is necessary to consider first which of the alternative offences contended for might have been charged on the facts of this case, and (if any of these offences might have been charged), secondly whether the court can and should exercise the power to substitute a verdict of guilty of such alternative(s).

As to which of the alternative offences contended for might have been charged on the facts, we refer to the general consideration of the these offences set out above. As to obtaining services by deception we refer to the analysis of this offence set out above. Charges of obtaining services by deception might well have been open to the prosecution. Charges of procuring the execution of a valuable security by deception would have been open to the prosecution where a cheque was obtained. As to conspiracy to defraud this offence might have been open to the prosecution in certain instances but the prosecution have never alleged any agreement or identified the agreement or agreements relied on and so there can be no question of substitution of such a verdict.

We turn to consider whether the court can and should substitute verdicts of guilty of procuring the execution of a valuable security by deception. It is to be noted that the draft indictment/committal charges contained a number of counts which charged procuring the execution of a valuable security by deception (albeit that the particulars differed from those in the indictment before the jury).

There can be no question of substitution where an attempt was charged (where no cheque was obtained). It does not follow that the insurance companies concerned would necessarily have provided cheques and the conduct of the defence might well have differed if an attempt to procure the execution of a valuable security had been charged.

In all other instances where a cheque was in fact obtained we consider that the court can and should substitute verdicts of guilty of procuring the execution of a valuable security by deception. When we look at the indictment we find that the allegations in the particular counts impliedly included allegations of an offence contrary to section 20 (2) of the 1968 Act. The essential ingredients of an offence of obtaining a valuable security by deception are found in each of the counts as follows:

Section 20 (2) Counts in the indictment

( Section 15 (1))

A person who ...............

dishonestly dishonestly

with a view to gain with the intention of

for himself or another permanently depriving...

or with intent to cause thereof

loss to another

by any deception by deception namely by

falsely representing

that .....

procures the execution obtained from ...a cheque

of a valuable in the sum of ......

security .......

The judge directed the jury that they must be sure that "the cheque was drawn and obtained because of the deception" and that the deception charged "was what caused the cheque to be drawn and passed on to whoever obtained it" (summing up page 10 D-F). The conduct of the defence would have been no different if the appellants had been charged with obtaining a valuable security by deception.

We accordingly rule that the existing convictions of these appellants of the completed offence under section 15 be quashed and convictions under section 20(2) substituted. We so order. We invite counsel to make appropriate submissions on sentence if so advised.

In view of this conclusion we do not need to consider substitution under section 1 of the 1978 Act.

(3) Retrial

We do not consider it appropriate to order a retrial in this case.

We conclude by voicing our strong support for the plea made by Lord Goff in the closing sentences of his speech in Preddy (at 270 D-F). All of these appellants have been convicted of dishonesty by juries, and it would surprise and dismay any layman to learn that most of the convictions on these indictments cannot be supported. There can be no doubt that Preddy has exposed a glaring anomaly in this important area of the criminal law. We note that the Law Commission have acted very promptly to propose remedial legislation: Law Com. No. 243, 14 October 1996. We hope that appropriate legislation will be enacted with all deliberate speed.

We are conscious that there is quite a lot to assimilate and it may be that everybody would like to go away and assimilate.

MR KROLICK: My Lord, on behalf of Mrs Graham, since your Lordship has quashed her conviction, the only application I would have is an order for the defendant's costs here and below. On behalf of Mr Kansal, the only application I would have to make is that he be discharged immediately because technically he has surrendered to custody.

THE LORD CHIEF JUSTICE: It would seem to us that must certainly follow.

MR KROLICK: Then I say no more about it.

THE LORD CHIEF JUSTICE: You may have to if somebody wants leave to appeal or there is the formulation of a question in the case.

MR COKER: My Lord, yes. I respond in the case of Kansal. I would welcome the opportunity to reflect on whether or not a further application will be made. I am conscious of the time limits. I wonder what the most convenient approach would be?

THE LORD CHIEF JUSTICE: Both my Lords will be in London for the next fortnight. What I would suggest, if this is convenient, is that, having formed a judgment as to roughly how long you will need, we will arrange a meeting before the court sits one morning when any ancillary questions can be raised. We are very conscious of the importance of the judgment and the very prickly questions that are raised.

MR KROLICK: My Lord, forgive me for rising again. I had forgotten that in the case of Mr Kansal, although he was legally aided at the trial and legally aided on the appeal, whether, when the initial application was made for leave to appeal, he was in receipt of legal aid?

THE LORD CHIEF JUSTICE: He should have his costs out of central funds.

MR KROLICK: I am most grateful.

MISS HORWOOD-SMART: My Lord, in the case of Mr Ali the court has received yet another certificate showing that he is in hospital.

THE LORD CHIEF JUSTICE: Yes, we have seen that.

MISS HORWOOD-SMART: I would ask that he be discharged in his absence.

THE LORD CHIEF JUSTICE: Yes.

MISS HORWOOD-SMART: And with some trepidation, in the absence of Mr Arlidge who is sick and cannot be here today, I do make application for legal aid to be extended to include me too.

THE LORD CHIEF JUSTICE: Just remind me. This matter was referred to before?

MISS HORWOOD-SMART: It was, my Lord, and your Lordship suggested that it should be raised at the end of the appeal.

THE LORD CHIEF JUSTICE: Yes, and the position was?

MISS HORWOOD-SMART: Legal aid was granted for one counsel. I was in the court below, my Lord, and this is a case where, as your Lordship has seen, there have been a large number of people appearing.

THE LORD CHIEF JUSTICE: Yes. I do not suppose anybody wishes to say anything about that? Yes, we think that legal aid should be extended to two counsel.

MISS HORWOOD-SMART: I am obliged.

MR LISSACK: My Lord, may I mention two matters? First, may we join with the prosecution generally in seeking some time to consider our position?

THE LORD CHIEF JUSTICE: Yes.

MR LISSACK: It is the second point, the sentence, which your Lordships catered for on page 43 of your unrevised judgment.

THE LORD CHIEF JUSTICE: Yes.

MR LISSACK: My Lord, in the light of the reality of the position, I think it right to bring to your Lordships' attention once again that Mr Marsh has a timely appeal against his sentence. Would your Lordships entertain hearing that appeal against sentence this morning, or would your Lordships think it more appropriate to wait the short time until we decide what we are going to do?

THE LORD CHIEF JUSTICE: I think it is better to deal with it on the return occasion which I think is bound to occur.

MR LISSACK: Yes. Thank you.

MR KROLICK: My Lord, dealing with that administratively, your Lordships made the point in the judgment that no draft of any substituted grounds have been provided -- my learned friend's and mine. That is the only one where the substituted offences arise. Would your Lordships wish to have a draft, as it were, of the offence to be able to put on record? I have never come across it before to know whether a simple naming of the counts is sufficient, or whether the grounds should be set out.

THE LORD CHIEF JUSTICE: I do not really think so. In the ordinary, much more familiar case where a conviction under section 47 is substituted for one of section 20, I do not think a draft is necessary.

MR KROLICK: My Lord, all other details as to dates and representations would be the same.

THE LORD CHIEF JUSTICE: We appreciate that. I think strictly speaking, so far as Marsh and Graham are concerned, their convictions have been quashed; they have not been re-sentenced, but it is clear, in our view, that they should remain in custody. We so order. You do not resist that?

MR LISSACK: No.

MR COKER: My Lord, one final matter so far as Mr Kansal is concerned. As your Lordships will anticipate, Mr Kansal has been on bail since January of this year. Your Lordships do have power under section 37(1) of the Criminal Appeal Act in relation to extending his bail pending application for leave to appeal to the House of Lords. The application that has now been made on behalf of Mr Kansal is that he now be discharged. I wonder whether in these circumstances your Lordship thinks that is the appropriate order?

THE LORD CHIEF JUSTICE: If bail were refused, and if the House of Lords substituted a conviction or found a conviction to be unsafe, there would be no impediment if he had been discharged?

MR COKER: I think there would, yes. That might be difficult. It was a matter which, I understand, was raised in Preddy.

THE LORD CHIEF JUSTICE: Mr Krolick, this is a question of holding the ring. It is not going to affect Mr Kansal's position. Quite clearly we ought to, at this stage, keep open the possibility that there will be an appeal to the House of Lords.

MR KROLICK: That may well be so. That provision sounds very much like a defendant applying for bail in his appeal to the House of Lords because if your Lordship had quashed his conviction I question what right the court has to impose any custody upon him? It is not as if he is charged with an offence and is bailed. This man has had his conviction quashed and I question whether your Lordship has any power --

THE LORD CHIEF JUSTICE: We had better look at it. What is the relevant section?

MR COKER: My Lord, yes, it is section 37 of the 1968 Act, to be found in the first volume of Archbold, paragraph 7-255.

MR KROLICK: I see. Yes. I accept it does apply apparently.

MR COKER: My Lord, over the page at 7-257 one finds further guidance.

MR KROLICK: I withdraw what I have just said to your Lordship. I was clearly wrong.

THE LORD CHIEF JUSTICE: It certainly seems appropriate. Then, pending any further order of the court, Mr Kansal will remain on bail.

MR PERRY: My Lord, in the case of Mrs Graham, I simply join in the application for time for reflection?

THE LORD CHIEF JUSTICE: Of course. Very well. What would be helpful, I think, is if someone would coordinate the making of arrangements for further a hearing. We clearly do not want four further hearings.

MR COKER: My Lord, I am perfectly content to take responsibility for that.

THE LORD CHIEF JUSTICE: Could you do that? If you make contact with my clerk, we will do our best to make sure that there is a convenient hearing as soon as possible. Thank you very much.

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