England and Wales Court of Appeal (Criminal Division) Decisions

Royal Courts of Justice

The Strand

London WC2

Friday 20th December 1996

B E F O R E:

LORD JUSTICE POTTER

MR JUSTICE OWEN

and

HIS HONOUR JUDGE MARTIN TUCKER QC

Acting as a Judge of the Court of Appeal Criminal Division)

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R E G I N A

-v-

KWASI OKANTA

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Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited

180 Fleet Street, London EC4A 2HD

Tel No: 0171 831 3183 Fax No: 0171 831 8838

(Official Shorthand Writers to the Court)

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MR R REES appeared on behalf of the CROWN

MISS NIGHTINGALE appeared on behalf of the APPELLANT

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JUDGMENT

(As Approved )

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Friday 20th December 1996

LORD JUSTICE POTTER: In this case, for reasons stated in the draft judgment handed down and now available in the court for any member of the public to see, we allow the appeal in this case and the verdict of the jury will be set aside.

MISS NIGHTINGALE: My Lords, might I ask for defendant's order in this matter?

LORD JUSTICE POTTER: I think we indicated it was not necessary. Yes, you may.

Friday 20th December 1996

LORD JUSTICE POTTER : On 6th December 1995 at the Crown Court at Worcester before H.H. Judge Clarke QC and a jury the appellant was convicted of obtaining property by deception contrary to S.15(1) of the Theft Act 1968. On 8th December 1995 he was fined £400 with 14 days imprisonment in default and ordered to pay £600 towards the prosecution costs.

The case was one of fraud upon the Alliance and Leicester Building Society ("the Society"), the deception alleged being the false representation by the appellant in a letter to the Society to the effect that the annual income of one Miss Willetts was in excess of £21,000 and that she had been employed by J. & D. Consultants (Kidderminster) Limited ("J & D") for the preceding 2 1/2 years.

Leave to appeal against conviction was granted by the Full Court on 1st November 1996 on the argument of counsel, following refusal by the Single Judge of an application which had been drafted personally by the appellant.

The grounds of appeal fall under two distinct heads. First, this is one of the many appeals coming forward in Building Society fraud cases following the decision of the House of Lords in R -v- Preddy (1996) 3 WLR 255. Second, certain criticisms are made of the Judge's summing up which it is suggested may have confused the jury in understanding, distinguishing and applying the concept of recklessness in relation to the deception on the one hand, and the overall requirement of dishonesty on the other. In this connection, it is said also that the Judge may have misled the jury as to the extent and effect of the formal admission made by the defence that the representation was false.

The brief facts of the case were that, at the material time, the appellant worked as a self-employed accountant. One of his clients was J. & D., the Managing Director of which was a man called Hodgetts, Miss Willetts being another employee.

In September 1990 Hodgetts attempted to assist Elizabeth Willetts, with whom he was having an affair, to secure a mortgage with the Society. Miss Willetts, whose salary for the year beginning March 1990 was in reality £8,500, falsely stated on her application form that it was £21,750. Hodgetts confirmed this in writing on 3rd September 1990 but was unable thereafter to furnish the Society with a P60 form to show what her earnings had been in the previous year.

The appellant became involved when, acting in his professional capacity at Hodgetts' request, he faxed a letter to the Society on 26th September 1990 which contained a representation to the effect set out above. Acting on that representation, on 4th October 1990 the Society released the sum of £56,955 to the solicitors acting on behalf of Elizabeth Willetts.

It was the prosecution case that the appellant had acted dishonestly in making his representation and that he had done so either deliberately or recklessly. The appellant's case in a nutshell was that he was an innocent dupe, having relied on and trusted Hodgetts to tell him the truth without further enquiry.

Hodgetts and Elizabeth Willetts were jointly indicted with the appellant. They both pleaded guilty to obtaining property by deception.

By way of evidence for the prosecution, a representative of the Society described the procedure for granting mortgages, indicating that a decision would be based partly on the value of the property and partly on the applicant's income. He pointed out that if Miss Willetts were self-employed (as she had later informed the Society she was) an accountant's letter was required. He said she would have been unlikely to have got a loan if she had not been able to prove her earning capacity.

It was not in dispute that, on the morning of 26th September, Hodgetts had sent the appellant a fax in which he set out precisely what he wanted the applicant to write to the Society for the purposes of satisfying them as to Miss Willetts' income. The applicant thereafter sent the fax, virtually in identical terms to the fax which he had received. In interview, and in his evidence, the appellant said that he had spoken on a number of occasions to Hodgetts who had told him that Miss Willetts worked for J. & D., that they had arranged a mortgage for her with the Society and that the Society needed written confirmation from an accountant as to her salary. The appellant agreed to write a letter, Hodgetts faxing him the information required to be included. The appellant said he would normally have inserted a disclaimer, but Hodgetts told him not to worry about it as the wording of the letter had all been agreed with Society's manager. He insisted he had acted in good faith, saying he had a gentleman's relationship with J. & D. and felt he could trust Hodgetts.

In cross-examination he said he did not think that he was doing a lender's reference as such. He thought the building society had already made a decision and simply wanted a "back-up" letter.

It is conceded by the prosecution that, following the decision in Preddy, the Crown cannot demonstrate that an obtaining of property occurred in this case. However, it is contended that the appeal should be dismissed under S.3 of the Criminal Appeal Act 1968, because a verdict of furnishing false information contrary to S.17(1)(b) of the Theft Act may properly be substituted to the effect that, in furnishing information intended to be relied on by the Society, with a view to gain for another or with intent to cause loss, the appellant produced an accounting reference which to his knowledge was or might be misleading.

In that respect, the position is as follows.

S.3 of the Criminal Appeal Act 1968 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 the facts which proved him guilty of the other offence.

(Emphasis added).

(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 the recent case of R -v- Graham and conjoined Appeals , (CA, 25th October 1996), an approved transcript of the judgment in which is before us, the Court made clear that the jurisdiction does not depend upon whether the Judge summed up on the alternative basis, but whether the jury must have been satisfied of the facts which proved him guilty of that other offence. At the same time, the fact that the jury never had a proper direction as to the alternative offence is a very relevant consideration in deciding whether to exercise the jurisdiction (see R -v- Caslin (1961) 45 Cr App R 47).

Further, whether the jury could on the indictment have found the defendant guilty of some other offence, turns upon S.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 .., the jury may find him guilty of that other offence or of an offence which he could be found guilty on an indictment specifically charging that other offence".

In R -v- Wilson (1984) AC 242, Lord Roskill said (P.258)

"... There seems 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 sub section be correct, it avoids any consideration of 'necessary steps' or of 'major' or 'lesser' offences, and further avoids reading into the sub section words which were never used by the draftsman".

In the various cases before the court in R -v- Graham the prosecution relied upon Lord Roskill's third and fourth possibilities and did not suggest that the allegations in the indictment expressly or impliedly amounted to allegations of another offence.

When looking at the question of what may be regarded as relevant alternative offences for consideration in mortgage fraud cases the court in Graham had specific regard to Section 17(1)(b).

That section provides:

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

(b) In furnishing information for any purpose produces or makes use of any account, or any .. record or document [made or required for any accounting purpose] which to his knowledge is or may be misleading, false or deceptive in material particular;

He shall, on conviction on indictment, be liable to

imprisonment for a term not exceeding 7 years."

The only observations offered upon its general ambit were as follows:

"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.

In the instant appeal, Mr. Barr for the prosecution has relied upon the case of R -v- Mallett in support of his contention that, in supplying the Society with a letter attesting the level of Miss Willett's income, the defendant was furnishing information made or required for an accounting purpose. In Mallett, a hire-purchase agreement form completed by a car dealer with a false statement that the hirer had been a company director of a named company for 8 years, was forwarded to a finance company. It was assumed, without argument on the point, to be a document made or required for an accounting purpose.

Mr. Barr has argued that it may similarly be assumed in this case that the Society required the information for an accounting purpose in that it was not simply required for the purpose of deciding whether to make the loan or not, but would inevitably have been used internally by the Society for the purpose of compiling its internal accounting records or, at the very least, by the Society's auditors in preparing and/or checking the accounts.

We do not accept that submission.

The evidence called from the Society in this case was, of course, directed simply towards the reliance placed by the Society on the appellant's letter when deciding whether to make the advance in fact made. In relation to a criminal charge of this kind, we do not feel justified in making any assumption beyond the scope of the evidence called. If there were room for the making of any such assumption, we would be inclined to assume (in the absence of evidence on the topic) that, whereas a Building Society relies upon a "reference" or confirmatory letter of the kind signed by the appellant for the purpose of deciding whether to make a loan (which we do not think amounts in itself to an accounting purpose), the calculation of the instalments for repayment or the rates of interest to be charged are based simply on customary or "tariff" rates of the Society which have regard to the particular period and type of advance made.

The decision in Mallett was directly concerned with the question of how far it was necessary to show that the false statement made in the document was a material particular, assuming it was established that it was contained in a document made or required for an accounting purpose. In that respect Lord Roskill said (p.822E -F):

"The material particular in question does not have to be one which is directly connected with the accounting purpose of the document. The document itself has to be made or required for an accounting purpose. But, once the document qualifies in that relevant respect - and it has not been argued that this hire-purchase agreement was not such a document - then, if that document contains a false statement in a material particular, the person who is guilty of dishonesty furnishing that information for any purpose is, in our view, guilty of an offence against the Section."

In the Attorney General's Reference it was stated in respect of a personal loan proposal form sent to a finance company and used in their accounting process:

"The proposal forms when received by the finance

company were considered and accepted. The

information set out on the reverse side of the forms

was used by the company to make up its accounts on

the computer".

In that case, the trial Judge had ruled that the proposal form was not made or required for an accounting purpose on the grounds that it was not required for such purpose until after it had been received and considered by the finance company and after the decision had been reached to grant a loan. He further observed that there was no duty to account until after this decision had been made. Reversing the effect of that ruling the Lord Chief Justice stated:

"In the present circumstances the borrower would be making the document for the purpose of his loan proposal to be considered, whereas, at the same time, the document might be "required" by the finance company for an accounting purpose. Can it be said that the document is so required when the proposal may upon consideration by the company be rejected? We think it can. The purpose, or at any rate one of the purposes, of the figures on the reverse side of the form was in due course to provide the necessary information for the computer.

The fact that the necessity might not arise in the event does not, it seems to us, mean that the information was not required in the first instance for the eventual accounting purpose ... for these reasons we think that the learned Judge was wrong in the conclusions which he reached".

Finally, in the case of R -v- Graham , when dealing with the case of the appellant Kansal, the court considered the possibility of substituting an alternative offence under S.17(1)(b) of the Act, pursuant to S.3 of the 1968 Act. In that connection the Lord Chief Justice observed:

"Furnishing false information might have been charged on the facts of this case ...

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".

Similar considerations appear to us to arise in this case. It does not seem to us that any of the four possibilities enunciated by Lord Roskill in R -v- Wilson has been demonstrated in relation to the indictment in this case. Nor on the limited evidence put before the jury, could they have found the appellant guilty of an offence under S.17(1)(b).

Accordingly, no substituted verdict is available or appropriate.

That being so, it is not necessary to consider the criticisms made of the Judge's summing-up on the question of recklessness and dishonesty.

The appeal will be allowed and the verdict of the jury set aside.