England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
DIVISIONAL COURT

		Royal Courts of Justice Strand London WC2
		5 February 2007

1. LORD JUSTICE LEVESON: This is an appeal by way of case stated from a decision of Justices sitting for the County of Hertfordshire who dismissed informations brought against the respondents, which charged them with theft and false accounting on the basis that they were not satisfied beyond reasonable doubt that by the standards of reasonable and honest people, the respondents had acted dishonestly. The question posed for this court is whether any bench of justices, properly directed on the facts and the law, could have found the respondents not to have been dishonest or, to put the same question another way, whether the acquittals were perverse.
2. The facts can be stated shortly, although the formulation of those facts in the case essentially takes the form of a complete rehearsal of the evidence, notwithstanding that the primary facts are not in dispute. Gary Walsh was the manager and Kishorsinh Gohil the assistant manager of an outlet of HSS Hire Group Limited in Welwyn Garden City, which hired plant and equipment to customers for a fee. In short, contrary to the procedures of HSS Hire Limited (procedures of which they were well aware), they had allowed customers to borrow items of equipment belonging to their employers without charge. Although the hire was recorded on the computer record of the shop, when the equipment was returned shortly after it had been taken, that is to say within two hours which was a period allowed by the company for return of goods as either faulty or incorrectly chosen, the computer was altered so that it appeared that the equipment had only been reserved and never collected or, alternatively, fell within the limited provision to which I have returned so that no hire charge was payable or indeed paid. Instead, those customers who were afforded this privilege tipped £5 or £10 which the two men generally split, spending the proceeds on a drink or lunch. The Crown accepted that the number of occasions when this took place were few and the personal profits low.
3. When interviewed on tape, Gary Walsh said that it happened about 20 times at most and always with known customers. Furthermore, payment of the cash had always been instigated by the customer, who would say something like "I only need it for half an hour. Can you sort me out and I'll get you a drink". He went on that he knew it was wrong but that the company would have lost the hire, and in the long run had lost nothing. He agreed that the customers would have been aware that it was against company policy because all had hired equipment before. He also agreed that the money he accepted belonged to the company, as did the equipment. He was aware that he would lose his job.
4. Mr Gohil gave an account that was broadly similar. He said it was a small thing and that he and the manager "let it go ... sort of a favour because of their custom basically, but not for our personal gain". He said that "a tenner here and there is not going to fill our pockets as it were ... we actually think it enhances the business because it keeps the customers". He did not consider it as theft but good customer service. It was not that the company had lost the hire fee because the customers would not bother, but would probably know someone from whom they could borrow the equipment or get it somewhere cheaper. I pause to observe that if they had known someone from whom they could borrow the equipment, it is perhaps surprising that they ever came to this company. He went on: "Fair enough I guess its dishonest to the company", and further "it's not honest but ... we weren't doing it as a profit scheme".
5. Both men gave evidence. Mr Walsh explained that when he arrived at the store it was underperforming, but that he had built up a good customer base. He said that they offered free hire to keep custom, but if the work took longer than estimated, the customer would be charged as normal when the item was brought back. He said: "I do not know the legal definition of dishonesty, but I was doing it to build a good level of customer service so they would come back to me", and went on that although the practice did not fit what he called the company profile, he believed that he would have leeway. When cross-examined he accepted that to make an entry in the computer to the effect that there had been no hire as if the item had never left the shop was a lie. He did not consider the payment of a tip as corrupt: they did not always give money, and if the customer was spending £5,000-£10,000 with the company in a year, he would have done it even if they gave him no money. He said he was unsure whether the company permitted the acceptance of tips, but accepted that he had done wrong because he had not followed procedures, and that the records would indeed deceive anyone looking at them.
6. Mr Gohil said that free hiring was always a part of HSS policy. If a customer hired equipment and it was faulty or parts were missing, free hire could be arranged for the same or a different machine or, if they were not sure the equipment was right for the job, a two-hour window for exchange was available. He said that if at the end of the hire a customer was happy and had done a good job, he could get £5-£10, which generally he would refuse but ultimately accept out of politeness. He explained his remarks to the police on the basis that, by then, he had been interviewed by the company who had impressed on him that he had done something wrong. Cross-examined, he accepted that what he had done was not by the book because the book did not allow for discretion, but the purpose of free hire was customer service. The money was reluctantly taken, not for their benefit, but to placate the customer. They were entitled to it as a tip. By dishonest in interview, he had meant "not by the book". When re-examined he said:

"If we did free hire we could write a message on the screen why it was free hire. Because we were using the two-hour window for free hires and it was supposed to be for people who took the wrong or faulty equipment, it might be considered dishonest because that is not why it was there. To have put the wrong explanation on the screen would have been consciously dishonest."

When asked for a clarification, he explained that, prior to interview by the company and the police, he did not consider that what he had done was dishonest.

7. The magistrates were correctly referred to the leading authority of R v Ghosh [1982] QB 1053. Delivering the judgment of the Court of Appeal, Criminal Division, Lord Lane CJ put the test (at page 1064E) in this way:

"In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.

If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did. For example, Robin Hood or those ardent anti-vivisectionists who remove animals from vivisection laboratories are acting dishonestly, even though they may consider themselves to be morally justified in doing what they do, because they know that ordinary people would consider these actions to be dishonest."

One might say the same for making inaccurate entries into a computer record so that the loss of a hire fee did not show up.

8. In this case, the justices made it clear that the respondents had accepted money themselves when items had been returned within two hours and had altered the record on the till to show that the hire had not taken place but that little money had been received. There were few such transactions and business promotion was their main objective. They went on to express their conclusions in this way:

"The issue was whether the respondents believed the money received was payment due the company or a tip to them personally. We accepted that they believed it was a tip which they were entitled to keep. We were of the opinion that the comments which the respondents made in interview and which the prosecution asked us to accept as evidence of dishonesty were made after they had been interviewed by company representatives, arrested by the police, and had spent several hours in police custody, and were affected by that experience. We were not satisfied beyond reasonable doubt that by the ordinary standards of reasonable and honest people the respondents had acted dishonestly and accordingly were to be acquitted on both charges."

It is perhaps pertinent to observe that their conclusions in relation to the tip do not necessarily cover what conclusions they could have reached, or perhaps should have reached, in relation to the alteration of the computer record.

9. Mr Patrick Fields, on behalf of the Crown Prosecution Service, accepted that there was a heavy burden upon him to establish that no reasonable bench of justices could have decided the question of dishonesty as this bench did (see Bracegirdle v Oxley [1947] KB 349 at 353). He went on to submit that, if the bench had decided the respondents had offended against the standards of reasonable and honest people, but that they had not realised that they had done so, however difficult it might have been to accept, that conclusion might not be assailable as perverse. Finding that by the ordinary standards of reasonable and honest people, they had not acted dishonestly, however, was a different proposition and clearly outside the range of any reasonable decision. Quite apart from what was said in interview about dishonesty, neither respondent had justified the deliberate alteration of the company record or the misuse of the facility which existed to bring incorrect or faulty equipment back within a short time to allow for use without payment.
10. On behalf of the respondents, Mr Michael Nelson has submitted that issues of fact were for the justices, and by reference to the well-known direction as to the difference between law and facts, submitted that the justices reached a conclusion of fact which should not be assailable in this court.
11. In my judgment, it is quite impossible to justify the proposition that the ordinary standards of reasonable and honest people would not find dishonest the deliberate falsification of a company record to permit a customer, however valued, to borrow equipment without charge in a business that exists solely to hire such equipment for payment, particularly where the procedures of the company did not permit such alteration to the record in any event.
12. Further, although receipt of a tip for good service would not be so characterised if it is made in addition to the payment of the appropriate hire charge, when proffered specifically because the charge has not been levied, whether or not that is dishonest is itself a discrete issue. Whatever view the magistrates were entitled to reach as to the reasons for the clear admissions in interview based upon their assessment of credibility, the conclusion that they could not be sure that by the ordinary standards of reasonable and honest people the conduct of the respondents was not dishonest is one that satisfies the hurdle of perversity.
13. What then is the outcome of the stated case? In my judgment, the questioned posed by the justices must be split into two. Were they entitled to conclude that by the ordinary standards of reasonable and honest people the respondents had not been proved to have acted dishonestly must be answered in the negative. The second question is whether the respondents themselves must have realised that what they were doing was by those standards dishonest. In the light of the evidence and the way in which Mr Fields puts the matter, it is quite clear that that is not a conclusion which we can reach on the case stated.
14. Mr Fields accepts that, as a result, the matter must be remitted to the justices for further consideration. In those circumstances, I would allow this appeal, answer the question identified in the statement of the case in the way that I have indicated, and remit the case to a new bench of justices to reconsider these charges afresh.
15. MR JUSTICE LLOYD JONES: I agree.