England and Wales Court of Appeal (Criminal Division) Decisions

		Neutral Citation Number: [2002] EWCA Crim 1768
		Case No: 2001/02371/S4

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)

		Royal Courts of Justice Strand, London, WC2A 2LL
		11th July 2002

B e f o r e :

LORD JUSTICE KENNEDY
MR JUSTICE CURTIS
and
MR JUSTICE PITCHFORD
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	Attorney General’s Reference No 1 of 2001 under section 36 Criminal Justice Act 1972
	(G and S)

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(Transcript of the Handed Down Judgment of
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____________________

David Perry (instructed by Crown Prosecution Service for the Attorney-General)
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Lord Justice Kennedy :

The Reference.

1. When persons tried on indictment have been acquitted (in the present case on the direction of the trial judge) the Attorney-General may, if he desires the opinion of the Court of Appeal on a point of law which has arisen in the case, refer the point to this court, pursuant to section 36 of the Criminal Justice Act 1972, and this court is then required to consider the point, and to give its opinion upon it. The point of law which the Attorney-General has referred to the court in this case is –

“Whether on (a) a charge under section 3 of the Forgery and Counterfeiting Act 1981 and (b) a charge under section 17(1)(b) of the Theft Act 1968, where the accused has used a false instrument or furnished false information with a view to obtaining money or other property it is necessary for the prosecution to prove that the accused had no legal entitlement to the money or other property in question”

Facts.

2. Before turning to the law it is necessary to summarise the relevant facts as they emerged during the prosecution case at trial.
3. G and S are husband and wife. In February 1997 their daughter X was arrested abroad and was charged with a criminal offence. An appeal was launched by their friends and neighbours, principally to meet the travelling and other expenses which it was foreseen that the parents of X would incur. Initially an appeal committee was formed and most of the money came from fund raising activities in the locality. At first the money was held in an account at the Post Office. It was then transferred to “the X Appeal” account at the Co-operative Bank, and two members of the appeal committee were signatories to that account. From February 1997 onwards G and S spent much of their time abroad. They paid expenses by credit card, and were re-imbursed from the bank account on production of their credit card documentation.
4. In late October 1997 X was convicted by the verdict of a jury, but in early November the decision of the jury was set aside by the trial judge, who substituted a conviction for a lesser offence, and X was released. There remained an appeal against conviction, which was not determined until mid 1998. After October 1997 approximately £250,000 was sent by members of the public to either the organisers of the fund, G, S, X or Y (the youngest child of G and S). Unbeknown to both G and S, and without their consent, mail addressed to them, or either of them, was delivered by the Post Office to the organisers of the fund and opened by volunteers, who placed all monies received, without any consideration to the expressed intention of the donors, into the fund’s bank account. S then approached an accountant, Michael Jackson, who suggested the formation of a trust, and put her in contact with a solicitor, Paul Barrow. S met the solicitor on 18^th November 1997. He then prepared a draft Trust Deed which she approved when she met him again on 2^nd December 1997. On 7^th December 1997 the Trust Deed was executed by the five original trustees (the accountant and four others, who did not include either G or S). The Declaration of Trust begins with a reference to the arrest and trial, and the launch of the appeal, and it continues –

“4. The terms of the appeal as publicised in the news media and the appeal literature made it clear that the money raised by the appeal was to be used for the personal support of X and her family and (among other things) to meet travelling and other expenses, living expenses both abroad and in England, the cost of providing security against intrusion into their personal lives, and generally to give practical help to a hard-working family devasted by the misfortune which had happened to them.

5. Large sums of money have already been given in response to the appeal and it is expected that further sums will be given in the future.

6. The Original Trustees have agreed to act as trustees of the funds collected by the appeal, and they wish to set out in this Deed the trusts on which those funds are to be held.”

The Trust was named “the X and Family Trust” and “the Trust Fund” was defined by clause 2.1.4 as –

“All money which has already been given in response to the appeal; any additional monies or investments or other assets which may hereafter be paid or transferred to the Trustees to be held upon the trust and with and subject to the powers and provisions of this Deed; all accumulations of income and other capital accretions; and the money investments and assets from time to time representing the same respectively;”

The beneficiaries were named as X, G and S and “such other relatives or dependants of X or her mother or father as the Trustees from time to time determine.”

5. By clause 4.1 the trustees were authorised to hold the Trust Fund and income from it upon trust to pay or apply the same “to or for the benefit of all or any of the beneficiaries in such shares and in such manner as the Trustees in their absolute discretion shall from time to time decide and think fit.” The trustees were given the additional power in clause 5 to hold the Trust Fund or any part of it “to or for the benefit of such organisations, institutions or purposes, whether or not charitable, as the Trustees in their discretion may select and think appropriate as serving such needs and purposes in the spirit in which the Trust Fund was raised by the Appeal.”
6. Clause 7 entitled “Ultimate trusts for charity” provided that if the trustees determined that no further provision needed to be made for the beneficiaries out of the Trust Fund they –

“shall thereafter hold the Trust Fund (or such part of it) upon trust for such charitable purposes as the Trustees shall determine (and in the selection of such charitable purposes it is desirable that the Trustees, without being under any legal obligation in this respect, should select charitable purposes in ways consistent with and commemorative of the genorosity of those who responded to the Appeal or otherwise contributed to the Trust Fund).”

When cross-examined Mr Barrow said that when the Trust was set up there was no way of discriminating between personal donations made to X or to her parents and payments made to the appeal fund. The trial judge also found that at that stage no one warned G and S that they were entitled to some of the money which was transferred because it had “come directly to them”. Mr Perry, who has appeared before us for the Attorney-General, accepted that the evidence was silent as to whether S and G specifically consented to the transfer of all that had been collected into the Trust Fund, but, as he pointed out, S purported to act for herself and her husband, and she was kept fully informed. In discussion with Mr Barrow she expressed some concern that money sent for personal use was being mixed with appeal funds, but there was no evidence that she did more than express concern, and where S and G were able to produce documents to show that particular donations were for their unfetterred use the trustees released that money from the Trust Fund. The total thus released was only about £200, but it was and is accepted by the Crown that a great deal of the money in the Trust Fund may well have been donated to G and S without any qualification as to how the money was to be used.

7. On 21^st January 1998 S provided the accountant Michael Jackson, in his capacity as one of the trustees, with documents to support a claim for expenses incurred in 1997. The documents included an invoice apparently relating to accommodation expenses incurred by G and S between February and November 1997. At the trial the prosecution led evidence to show that the invoice was misleading, false or deceptive in that

“(1) it stated that accommodation had been charged for at the rate of $2200 per calendar month.

(2) It stated that accommodation had been provided from 1^st April 1997 to 15^th November 1997.

(3) It (together with the entry on the envelope accompanying it) implied by the stamp dated 27^th November 1997 that the sum of $15,400 had been paid to Elaine Whitfield Sharp in settlement of the said invoice.”

On 29^th January 1998, at a meeting of the trustees, the invoice was passed for payment without comment, and a cheque was then made payable to G in the sum claimed, £9,113.50.

Interview and arrest.

8. Seventeen months later, in May 1999, as a result of a complaint made by persons abroad who claimed to have provided accommodation without charge, G and S were interviewed under caution, in the presence of their solicitor, and denied that the invoice was a forgery. As Mr Perry pointed out, they did not say that they were entitled to the money because it was really theirs to use as they chose. Criminal proceedings were then commenced, and in July 2000, at Chester Crown Court, they stood trial on an indictment which contained two counts.
9. In count 1 the offence was using a false instrument contrary to section 3 of the Forgery and Counterfeiting Act 1981 and the particulars alleged that they –

“On or about the 21^st day of January 1998 used an instrument, namely a document purporting to be an invoice, which was and which they knew to be false, with the intention of inducing Michael Jackson and other trustees of the X and Family Trust to accept it as genuine and by reason of so accepting to authorise and execute a cheque in the sum of £9,113.50.”

Count 2 alleged furnishing false information contrary to section 17(1)(b) of the Theft Act 1968, and the particulars stated that on that day they –

“Dishonestly and with a view to gain for themselves, furnished information in a document produced to Michael Jackson, which to their knowledge was misleading, false or deceptive in material particulars namely -”

The three particulars set out are those reproduced in paragraph 7 of this judgment.

Submissions.

10. At the conclusion of the prosecution case counsel for G accepted for the purposes of his submission that there was evidence that the invoice was false in the respects alleged in count 2, but he invited the court to concentrate on the allegation that the defendants acted “with a view to gain for themselves”. He contended that because some money transferred to the trust was money originally donated to G and S to use as they chose the prosecution could not prove that the amount of money that was obtained on the invoice was not the money of G and S. Attention was invited to the definition of “gain” to be found in section 34(2)(a) of the Theft Act. Counsel submitted that –

“Even if the invoice is fraudulent they have not gained anything by the fraudulent invoice because all that has happened is that the trustees have passed over money which in fact is theirs”

11. As to count 1 counsel relied upon the wording of section 3 of the 1981 Act which makes it an offence to use an instrument known or believed to be false with the intention of inducing somebody to accept it as genuine “and by reason of so accepting it to do .... some act to his own or any other persons prejudice”. The act specified in the indictment was the authorising and executing of the cheque for £9,113.50. Prejudice is defined by section 10(1) of the 1981 Act, and counsel referred to that subsection before submitting that if the money “is theirs to start with in law and becomes theirs as a result of any act done by the trustees then they have not gained because it was always theirs and there was no advantage”.

Ruling.

12. The judge was persuaded that the jury could not convict of either count unless they were sure that “no money had found its way into the trust fund when in fact it ought to have gone to G and S”. Having briefly reviewed the evidence he concluded that some of the money in the trust fund “must have belonged” to G and S. He continued –

“It follows in my judgment that the invoice could not be said to have induced the trustees to act to the prejudice of the trust fund. They, on the evidence, were returning money which G and S were entitled to in any event. Nor could it be said that what G and S did was with a view to gain for themselves, on the evidence. It may well be that they were entitled to the sum in the indictment or even a greater sum, one does not know, but in the end my conclusion is that there is no evidence upon which the jury could properly convict upon either of these two counts.”

General Comment.

13. Both the submissions made to the trial judge and the ruling seem to us to betray some lack of appreciation of the legal effect of the creation of the trust and the payment into the Trust Fund of money some of which, perhaps even most of which, we accept, could have been withheld on the basis that it was donated to G or S or X to use as they chose. Once the money went into the Trust Fund it could not realistically be described as money which was owned by any member of the family. It was trust money which, subject to the supervision of the court, was under the exclusive control of the trustees. That remained the position even though it would have been open to G and S to either –

(a) Seek to persuade the trustees, or the court, to release part of the fund on the basis that it should never have formed part of the Fund or –

(b) Seek from the trustees an advance of Trust Funds in their capacity of beneficiaries.

14. On the facts this is not a case in which the trustees were administering a mixed fund, only part of which consisted of money subject to the trust.

Law.

15. Having clarified the status of the fund from which G and S were seeking to extract payment we turn now to the law, and look first at Count 1.
16. Section 3 of the 1981 Act provides –

“It is an offence for a person to use an instrument which is, and which he knows or believes to be, false, with the intention of inducing somebody to accept it as genuine, and by reason of so accepting it to do or not to do some act to his own or any other person’s prejudice.”

In this case no issue was raised as to the meaning of the section. It was accepted, at least for the purposes of the relevant submission, that G and S did use an instrument, namely an invoice, which they knew to be false, with the intention of inducing the trustees to accept it as genuine, and by reason of accepting it to do an act, namely authorising and executing a cheque in the sum of £9,113.50. The only issue raised was whether there was evidence to show that it was an act to their own or any other person’s prejudice, but as Mr Perry points out, there has been some dispute as to the intention that has to be shown. Is it sufficient for the prosecution to show that the defendant intended to induce somebody to accept the false document as genuine, or must the prosecution also show that the defendant intended his victim, by reason of accepting the document, to do or not to do some act to his own or any other person’s prejudice? The authorities, as we shall see, show that the double intention must be demonstrated.

17. Section 10(1), so far as is material, provides that an act intended to be induced is to a person’s prejudice if and only if it is one which if it occurs –

“(a) will result –

(1) in his temporary or permanent loss of property; or

(b) will result in somebody being given an opportunity –

(i) to earn remuneration or greater remuneration from him; or

(ii) to gain a financial advantage from him otherwise than by way of remuneration; or

(c) will be the result of his having accepted a false instrument as genuine, or a copy of a false instrument as a copy of a genuine one, in connection with his performance of any duty.”

In the circumstances of this case it is sufficient to focus on section 10(1)(c) because when the cheque was authorised and executed that was the result of the trustees having accepted a false invoice as genuine in connection their performance of their duty as trustees (c.f. R v Mary Sylvia Campbell [1985] 80 Cr App R 47).

18. Two other subsections of section 10 need to be considered, namely –

“(2) an act which a person has an enforceable duty to do and an omission to do an act which a person is not entitled to do shall be disregarded for the purposes of this Part of this Act.

(5) In this section ‘loss’ includes not getting what one might get as well as parting with what one has.”

The relevance of section 10(2) is not immediately apparent, but it seems that it was probably inserted to meet the point made in paragraph 34 of the Law Commission Report on Forgery and Counterfeit Currency 1973 (LC Number 55) which referred to R v Parker [1910] 74 JP 208 – a case in which a naval rating was convicted of having forged a letter from the Admiralty urging a fellow rating who owed him money to pay the debt. Paragraph 34 continued –

“In our view it should not be forgery to make a false instrument to induce another to do what he is obliged to do or refrain from doing what he is not entitled to do. Cases where the forged instrument contained menaces could be thought in appropriate cases by section 21 of the Theft Act 1968 as blackmail if the instrument were used. That we think is the stage at which such an offence should be prosecuted, the determining factor being whether the person believed that the use of the menaces was a proper means of reinforcing the demand.”

19. Having regard to the way in which the Trust Fund came into existence, and to the terms of the Declaration of Trust, we find it difficult to see how, at the close of the prosecution case, it could be said that the authorisation and execution of the cheque should be disregarded because it was an act which the trustees had an enforceable duty to do.

Authorities.

20. Returning to the question of double intention, which the prosecution must show to have existed for the purposes of section 3, the first authority which we need to consider is Tobierre [1986] 82 Cr App R 212. There the defendant had a wife and children living in St Lucia. He claimed child allowance, signed the child allowance vouchers in his wife’s name and received payments. He was charged with the offence set out in section 3. His defence was that he believed that he was entitled to the money, and on appeal he contended that the trial judge should have directed the jury that the Crown had to prove that he intended the Secretary of State to act to his prejudice. Tudor Evans J, giving the judgment of the court, said at 217 that when sections 3 and 10 are read together it is clear that proof of a double intention is necessary.
21. In Campbell (supra) the appellant was given a cheque by a friend, the cheque having been made out to a third party. She endorsed the cheque to herself and paid it into her account. When it was cleared she paid the proceeds in cash to her friend, who she believed to be entitled to the money. She was charged with forgery contrary to section 1 of the 1981 Act in that she forged the cheque with the intention that it should be accepted by the bank and with the intention that another person should thereby be prejudiced. Ackner LJ, giving the judgment of the court, reiterated the need for the double intention. In relation to section 10(2) he said at 49 –

“In our judgment that subsection provides no assistance to the appellant for this simple reason, that it was the bank’s duty to pay out only on a valid instrument and it is common ground in this case that that which was presented to the bank, and which was accepted by the bank, was a false instrument which it was not part of the bank’s duty to honour. On the contrary had the bank known of the true status of that document, they would have wholly rejected it.”

The same could be said of the trustees had they been under an enforceable duty to meet a valid claim for expenses, but in fact no such duty was imposed upon them.

22. In Garcia [1988] 87 Cr App R 175 the need for the double intention was underlined. First there must be an intention to induce the victim to accept the false document as genuine, then, as Russell LJ put it at 179, the question for the jury should have been whether the appellant was aware of the prejudice alleged, and whether he intended it.
23. The appellant in Ondhia [1998] 2 Cr App R 150 used false documents to obtain the release of goods from a pharmaceutical manufacturer. One issue raised on appeal was whether it had to be proved that the intended act resulted in actual prejudice to the manufacturer. That was rejected by this court, Judge LJ saying at 158 F that the language of section 10 addresses “the intended impact on the recipient of the document, and the intended result defined in section 10 rather than the achievement of that result.”
24. In the present case it could be argued that in order to prove the second intention (i.e. the intention to cause prejudice) the Crown had to displace the defence raised at trial (but not at interview) that G and S only intended to obtain the release of funds which were lawfully theirs, but the weakness of that argument, as it seems to us, is that it fails to have sufficient regard to the prejudice alleged, namely inducing by means of the false document the authorisation and execution of the cheque for £9,113.50. The fact that had there been a properly substantiated claim of right to a share in the Trust Fund, the trustees might have authorised and executed a cheque in that or some other sum cannot mean that they were not prejudiced by being induced to authorise and execute this particular cheque in reliance on a false document, and that, as it seems to us, must have been the prejudice which G and S intended.
25. In Winston [1999] 1 Cr App R 337 the defendant when claiming housing benefit used forged documents to show the rent he was paying. At trial he contended that although the documents did not emanate from his landlord the information in the documents was correct, and the local authority was therefore under an obligation to pay him the housing benefit claimed, so there was no prejudice. That was rejected both at trial and on appeal. At 343 A Hobhouse LJ said –

“It is necessary in every case of an offence charged under section 1 to follow through the steps required by that section

(1) Did the defendant make a false instrument,

(2) with the intention that it be used to induce another to accept it as genuine,

(3) and by reason of so accepting it to do or not to do some act,

(4) to that person or some other person’s prejudice?

At step (3) it must be asked whether the act is an act which must be disregarded under section 10(2). If it is, then no offence has been committed under section 1. At step (4) it must be asked whether the prejudice comes within the definition in section 10(1). If section 10(1)(c) is relied upon, it is the act and duty of the person whom the defendant intended to induce to accept the document as genuine and act upon such acceptance which must be looked at.”

26. As in the present case the offence alleged was contrary to section 3 of the 1981 Act steps (1) and (2) can be reformulated as –

“(1) Did the defendant use an instrument which he knew or believed to be false,

(2) with the intention of inducing another to accept it as genuine.”

As to steps (3) and (4), in the light of the earlier authorities, which do not appear to have been cited in Winston, it needs to be emphasised that the Crown must prove the double intention. As Russell LJ put it in Garcia, the Crown must show that when the false document was used the defendant was aware of the prejudice alleged and intended it. In some cases the demonstrated existence of a claim of right at the time when the false document was used may negative an intent to cause another to act to his prejudice, but where, as here, the prosecution evidence showed both an intention to induce the trustees to accept the false invoice as genuine, and an intention to cause them by reason of so accepting it to authorise and execute a cheque in the sum of £9,113.50, which in the circumstances it was their duty not to do, then, as it seems to us, both elements of the mens rea were present, and the defence submission should have not been allowed to succeed. It was irrelevant that G and S may have intended to deprive the Trust Fund of no more than they would have obtained if they had pursued their claim in another way.

Count 2.

27. The offence contrary to section 17(1) of the Theft Act is committed where persons dishonestly, with the view to gain for themselves, in furnishing information for any purpose, make use of a document which they know to be misleading, false or deceptive in material particulars. The successful submission focussed on the words “with a view to gain for themselves”. Gain is defined in section 34(2)(a) as including “a gain by keeping what one has as well as a gain by getting what one has not.” In relation to blackmail, which is also governed by section 34, the question has arisen whether a person demanding money undoubtedly owed to him did have a view to gain. In R v Parkes [1973] CLR 358 that question was answered by Judge Dean QC in the affirmative. As he put it, by intending to obtain hard cash as opposed to a mere right of action in respect of the debt the defendant was getting more than he already had, and in his commentary on that case Professor Smith submitted that gain means acquisition, whether at a profit or not. That was the intention of the Criminal Law Revision Committee (Command 2977) which in paragraph 121 of its report stated –

“The person with a genuine claim will be guilty unless he believes that it is proper to use the menaces to enforce his claim.”

In Lawrence and Pomeroy [1971] 57 Cr App R 64 the point does not seem to have been argued, but convictions were upheld where threats were made to recover a debt.

28. In our judgement Parkes was rightly decided, and it follows that on the facts of the present case, contrary to what was decided by the trial judge, there was clear evidence that G and S were acting with a gain for themselves. Even if they had a valid claim to some of the money in the Trust Fund on the basis that the money should never have gone into the fund, and even recognising that they were beneficiaries under the trust, makes no difference, because none of that relates to what they were doing at the material time. They were dishonestly making use of a false invoice to substantiate a claim for expenses, and thus to extract from the trustees a cheque for £9, 113.50. As Judge Dean put it in Parkes, they were seeking to obtain hard cash as opposed to a mere right to claim.

Conclusion.

29. Accordingly, as we indicated after hearing the submissions which were made to us, we answer in the negative the point of law which we have been asked to consider and we do so for the reasons set out in this judgment.