England and Wales Court of Appeal (Criminal Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM MAIDSTONE CROWN COURT
HIS HONOUR JUDGE MACDONALD QC
T20060613

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/04/2008

Lord Justice Thomas:

1. On 2 January 2007 the appellant pleaded guilty at the Crown Court at Maidstone to two counts of theft. Each theft was of £15,000 from HFC Bank. On the second count he was jointly indicted with Daniel O'Reilly, his sister's partner, who also pleaded guilty. The appellant was sentenced to 20 months and one week imprisonment by HH Judge MacDonald QC. Subsequently on 11 June 2007 Judge MacDonald QC made a confiscation order under the Proceeds of Crime Act 2002 (POCA 2002) in the sum of £22,000 with a period of 18 months imprisonment in default. The appellant appeals with the leave of the single judge against the confiscation order.

The facts

2. The oral hearing of the appeal was brought on quickly as it was the appellant's submission that the case turned on a difficult point of law. The facts on which it was said this point arose were not clear. It became necessary for the court to ask for further information about the underlying facts (as presented at the original sentencing hearing before Judge MacDonald QC). We received further written submissions, the last of which was served on 4 March 2008.
3. The facts, as appear from the sentencing and confiscation hearings, were:

i) The appellant was an employee of the HFC Bank at Ashford, Kent. He dealt with home loan applications, speaking to customers with a view to their borrowing from HFC Bank. He was in a position to give computerised instructions, as a result of which the bank would issue loan facilities. He used his position at the bank to steal two amounts of £15,000 from the bank.

ii) Count 1: In March or April 2005, the appellant decided in agreement with Mr Atkinson, a car dealer, to steal £15,000 from HFC Bank under an arrangement under which he would receive a car from Mr Atkinson in return as his share of the proceeds. A cheque for £15,000 drawn in favour of G Atkinson on Royal Bank of Scotland was paid into Mr Atkinson's account. HFC bank established that the cheque had been stolen from a book at the Ashford branch; it had been made out to G Atkinson. The signatures had been forged; the payee and the amount for which the cheque was payable typed in. The appellant had sent the cheque to Mr Atkinson and Mr Atkinson had provided the appellant with a blue Mercedes motor car valued at about £10,000.

iii) Count 2: In April 2005 the appellant agreed with Daniel O'Reilly, his sister's partner, that he would obtain a cheque for £15,000 from HFC Bank, give it to Daniel O'Reilly and they would split the proceeds for the benefit of members of the family who were in financial difficulties. The appellant searched the bank's computer systems and found a customer with the name of David O'Reilly. He then created a fictional loan facility for £15,000 in the name of the David O'Reilly with the address in Coventry. He then printed off a cheque for £15,000 in the name of David O'Reilly. The appellant amended the payee to D O'Reilly and gave the cheque to Daniel O'Reilly who paid it into his account; the cheque was honoured; the signatories were genuine. The money was used for the family; the appellant stated he received £7,000; he gave half to his mother, £2,000 to his step father and used the rest to pay bills.

iv) The two offences were committed within a week of each other.

4. At the confiscation hearing, the court decided the appellant did not have a criminal lifestyle. The court therefore proceeded to make its confiscation order under s.6 (4)(c) of POCA 2002, under which it was required to decide whether the appellant had "benefited from his particular criminal conduct". If the court decided that the appellant had benefited from the conduct, then it was required to decide the recoverable amount and to make an order requiring him to pay that amount under s.6(5).

The issue

5. It was the prosecution case that the benefit for these purposes was a total of £30,000 – the full value of the funds stolen from HFC Bank by the appellant. The appellant's case was that the benefit was not that.

i) On count 1 it was the value of the Mercedes car, as his "consideration for sending the cheque to Mr Atkinson" was the Mercedes car; the value of the car was put forward as £10,000.

ii) On count 2, the benefit was said to be "the defendant's consideration for arranging to send this cheque to Mr O'Reilly" - £7,000 in cash which Mr O'Reilly gave to him; it was not the value of the cheque.

The points which the appellant contended arose on the statutory provisions

6. The relevant statutory provisions of POCA 2002 can be summarised:

i) The recoverable amount for the purpose of the order under s.6 is an amount equal to the defendant's benefit from the conduct concerned (s.7(1)).

ii) Conduct and benefit are defined in s.76. There was no dispute that the criminal conduct of the appellant was his participation in the two offences of theft.

S. 76 (4) - (7) provide:

"(4) A person benefits from conduct if he obtains property as a result of or in connection with the conduct.

"(5) If a person obtains a pecuniary advantage as a result of or in connection with conduct, he is to be taken to obtain as a result of or in connection with the conduct a sum of money equal to the value of the pecuniary advantage.

(6) References to property or a pecuniary advantage obtained in connection with conduct include references to property or a pecuniary advantage obtained both in that connection and some other.

(7)If a person benefits from conduct his benefit is the value of the property obtained."

7. The appellant's argument on the difficult issue of law (which he contended arose) was presented in two separate parts:

i) A number of decisions of this court and in particular the decision of the Court of Appeal in Jennings v CPS [2005] EWCA Civ 746 on the meaning of "obtain" in previous legislation were wrongly decided. The meaning so decided had been wrongly applied to POCA 2002 by this court in Byatt [2006] EWCA Crim 904, [2006] 2 Cr App R (S) 116 and Stanley [2007] EWCA Crim 2857. It was wrong to construe "obtain" so that it covered the case of a defendant who was instrumental in getting property out of the crime and whose actions had been a cause of that being done; it should have been decided that it was necessary that he received the property.

ii) Even if those cases were correctly decided, s.84(2)(b) of POCA 2002 (which is new and not found in the previous legislation) made a critical difference. That subsection provided:

"(2) The following rules apply in relation to property -

(b) property is obtained by a person if he obtains an interest in it"

This sub-section had, it was said, in terms maintained the legal position as it was before the decision in Jennings – that a person who did not receive the property did not obtain it – as Parliament had enacted the provision when the law to that effect was clear. Furthermore, as there was no corresponding provision to this in the earlier legislation, this court was free to decide afresh the position on the basis of s. 84(2)(b), an argument foreshadowed in Glatt [2006] EWCA Crim 605.

8. Although the argument was developed with great skill and diligence before us by Mr Paul Jarvis and in his subsequent written submissions, we were troubled by the approach we were asked to take. It amounted to being invited to construe s.84(2)(b) of POCA 2002 on the assumption that another related provision, s.76(4), was to be interpreted on the basis that decisions made on indistinguishable wording in earlier legislation were correctly decided, when the House of Lords was shortly going to consider the correctness of those decisions. This was particularly so where it was contended that (1) in the decisions made up to 2002 it was clear that in order to obtain property, a person had to receive it; and (2) that Parliament intended by s. 84 (2) (b) of POCA 2002 to preserve this position by inserting into the legislation a definition of "obtaining property" which encapsulated the receipt of property.
9. It seemed to us that it was only possible to address the argument on s. 84(2)(b) by looking at the whole of the statute. It could be argued that the interpretation of s. 76(4) to the effect that a person only obtained property if he received it (as for example was decided by Buxton J in Gokal (1997) unreported and by Langley J in Saia (1999) unreported) would be supported by the construction of s. 84(2)(b) advanced by the appellant. If, however, the previous legislation was correctly interpreted in Jennings, then the argument that s.84(2)(b) was intended to effect a significant change would be much more difficult to advance.
10. Although we were invited to consider and decide the appeal on the ground advanced under s.84(2)(b) on the basis that the meaning of "obtain" as set out in Jennings was correctly decided, if it had been necessary to do so, we would have deferred handing down our decision until the outcome of the appeal to the House of Lords in Jennings was known.

Our approach

11. However, we do not think it necessary to address the argument under s. 84(2)(b), as, in our view it does not arise on the facts.
12. The appellant accepted that under both POCA and the earlier legislation a person obtained a benefit if

i) He received property, even if he did not retain it (see Currey [1995] 16 Cr App R (S) 421, Simpson [1998] 2 Cr App (S) 11, Patel [2000] 2 Cr App R (S) 10), or

ii) The property was in fact controlled by another on his behalf or controlled by that other for him and that other jointly (see May [2005] EWCA Crim 97, [2005] 1 WLR 2902); he would if such facts were established have received it.

13. On the facts, it was first of all clear that each of the cheques was received by the appellant when each passed through his hands before they were sent to Mr Atkinson and Mr O'Reilly. The fact he did not retain them does not matter. He therefore obtained them within the meaning of s.76 (4) on the basis of the interpretation which was not disputed.

i) On Count 1, he sent the cheque on which the signature had been forged to Mr Atkinson. On Count 2, the appellant altered the name of the payee and gave the cheque to Mr O'Reilly.

ii) We do not accept the appellant's submission that no property came into existence until the proceeds of the cheques were respectively credited to the bank account of Mr Atkinson and Mr O'Reilly. The cheques (which were property within the meaning of s.102) were received by the appellant before they were passed onto Mr Atkinson and Mr O'Reilly; it mattered not whether he retained them. The appellant had an interest in each when it passed through his hands.

iii) The question then arose as to the value of the cheques. On their face these cheques appeared to be good for their face value. They were both so honoured.

a) We consider that they therefore had that value; the fact that if the true facts had been known, neither would have been honoured makes no difference in a case where they were in fact honoured. For example, the cheque the subject of count 1 bore a forged signature and therefore was unenforceable under s.24 of the Bills of Exchange Act, but it was in fact honoured. In Patel [2000] 2 Cr App (S) 10, cash which the defendant obtained fraudulently was passed on to the co-defendant; the defendant was held to have obtained the benefit of the whole. In our view it should make no difference that instead of cash, a cheque was passed on in circumstances where that cheque was in fact honoured for the full amount. The fact that the appellant only received a car valued at £10,000 for the cheque that was the subject of count 1 does not mean that the value of the cheque was £10,000.

b) In Wille (1988) 86 Cr App R 296, the trial judge directed the jury that when a person dishonestly drew a cheque on another's account and caused the bank to pay out on the cheque, that person stole a thing in action - the right of the customer to recover from the bank the amount of the cheque. Woolf LJ considered that the defendant had assumed the rights of the owner of the cheque and appropriated the amount for which the cheque had been drawn. That decision was followed in Hilton [1997] 2 Cr App R 445 where this Court held that the instructions of the defendant had caused the bank to make the transfers and therefore the defendant had appropriated the customer's credit balance by assuming the customer's right to the balance. The appellant plainly pleaded guilty to theft of each of the amounts of £15,000 on this basis; again this supports our view as to the value of the benefit obtained.

iv) The Crown in written submissions to us contended that the decision in R v Rose and Whitwam [2008] EWCA Crim 239 made clear at paragraph 87 that the decision in Ashcroft [2003] EWCA Crim 2365 ([2004] 1 Cr App R 56) applied to the corresponding provisions in POCA – that property was to be valued at its economic cost to the loser. This, in our view, further supports the conclusion to which we have come as to value.

14. There was a second basis, where again the interpretation of s.76(4) of POCA was not disputed, for concluding on the facts that the appellant obtained property of the value of £30,000. When the cheques were passed on to Mr Atkinson and Mr O'Reilly, it seems clear that they were passed on to them under a prior arrangement under which they acted as conduits to obtain the actual funds and were ultimately paid part of the proceeds for their services:

i) As we have set out, the appellant accepted before us that if A arranged for property to be transferred to B who was acting as his nominee or as his conduit and the property remained under A's control, then A had obtained an interest in it. It did not matter that the rights could be enforced at law, provided there was in fact control.

ii) In the present case, it is clear that the funds received by Mr Atkinson and Mr O'Reilly were received by them as the nominee of the appellant or at all events on behalf of them and of the appellant jointly.

a) In the case of Mr Atkinson, the funds were to be used by Mr Atkinson to provide a car for the appellant, with Mr Atkinson retaining £5,000 for his services

b) In the case of Mr O'Reilly the agreement was that Mr O'Reilly would receive the funds for use by them both; he was to use half for himself and pass half back to the appellant.

15. In these circumstances it is not necessary to consider the interesting argument skilfully advanced by Mr Paul Jarvis that arises under s. 84(2)(b) which must await a case where it arises on the facts and the outcome of the appeal in Jennings. The appeal must be dismissed.