United Kingdom House of Lords Decisions

Parliamentary Archives,
HL/PO/JU/18/241

Die Jovis 25° Junii 1981

Upon Report from the Appellate Committee to whom
was referred the Cause Regina against Lambie, That
the Committee had heard Counsel on Wednesday the
3rd day of this instant June upon the Petition and
Appeal of William George McKenzie Sutherland Chief
Constable, County Police Headquarters, Bedfordshire
praying that the matter of the Order set forth in the
Schedule thereto, namely an Order of Her Majesty's
Court of Appeal (Criminal Division) of the 31st day
of July 1980 might be reviewed before Her Majesty the
Queen in Her Court of Parliament and that the said
Order might be reversed, varied or altered or that the
Petitioner might have such other relief in the premises
as to Her Majesty the Queen in Her Court of Parliament
might seem meet; and Counsel having been heard on
behalf of Shiralee Ann Lambie the Respondent in the
said Appeal; and due consideration had this day of
what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual
and Temporal in the Court of Parliament of Her
Majesty the Queen assembled, That the said Order of
Her Majesty's Court of Appeal (Criminal Division) of
the 31st day of July 1980 complained of in the said
Appeal be, and the same is hereby, Reversed so far as
regards the words " allowed the appeal against
conviction on count 2 " and that the conviction of the
Respondent by Bedford Crown Court on the 2nd day
of August 1979 on the said count 2 of the indictment
be, and the same is hereby, Restored: And it is further
Ordered, That the Costs of the Appellant in this
House and in the Court of Appeal (Criminal Division)
be paid out of Central Funds pursuant to section 10 of
the Costs in Criminal Cases Act 1973, the amount
thereof to be certified by the Clerk of the Parliaments:
And it is also further Ordered, That the Cause be, and
the same is hereby, remitted back to the Court of
Appeal (Criminal Division) to do therein as shall be just
and consistent with this Judgment.




HOUSE OF LORDS

REGINA (APPELLANT)

v,
LAMBIE (RESPONDENT)

(ON APPEAL FROM THE COURT OF APPEAL
(CRIMINAL DIVISION))

Lord Diplock
Lord Fraser of Tullybelton
Lord Russell of Killowen
Lord Keith of Kinkel
Lord Roskill




Lord Diplock

my lords,

I have had the advantage of reading in draft the speech prepared by
my noble and learned friend. Lord Roskill. I agree with it and would
allow the appeal.

Lord Fraser of Tullybelton
MY LORDS,

I have had the advantage of reading in draft the speech prepared by
my noble and learned friend, Lord Roskill. I agree with it and for the
reasons stated therein I would answer the certified question in the negative
and allow this appeal.

Lord Russell of Killowen

my lords,

I have had the advantage of reading in draft the speech prepared by
my noble and learned friend. Lord Roskill. I agree with it and that this
appeal should be allowed.

Lord Keith of Kinkel
my lords.

For the reasons given in the speech of my noble and learned friend.
Lord Roskill, which I have had the opportunity of reading in draft and
with which I entirely agree, I too would allow the appeal.

Lord Roskill

my lords,

On the 20th April 1977 the respondent was issued by Barclays Bank
Limited (" the bank ") with a Barclaycard (" the card "). That card was
what today is commonly known as a credit card. It was issued subject
to the Barclaycard current conditions of use, and it was an express condition
of its issue that it should be used only within the respondent's credit
limit. That credit limit was £200 as the respondent well knew, since that
figure had been notified to her in writing when the card was issued. The
then current conditions of use included an undertaking by the respondent,
as its holder, to return the card to the bank on request. No complaint
was, or indeed could be, made of the respondent's use of the card until
the 18th November 1977. Between that date and the 5th December 1977
she used the card for at least twenty-four separate transactions, thereby
incurring a debt of some £533. The bank became aware of this debt and
thereupon sought to recover the card. On the 6th December 1977 the
respondent agreed to return the card on the 7th December 1977. She
did not, however, do so. By the 15th December 1977 she had used the
card for at least forty-three further transactions, incurring a total debt to
the bank of £1005.26.

2

My Lords, on the 15th December 1977 the respondent entered into the
transaction out of which this appeal arises. She visited a Mothercare shop
in Luton. She produced the card to a departmental manager at
Mothercare named Miss Rounding. She selected goods worth £10.35.
Miss Rounding completed the voucher, checked that the card was current
in date, that it was not on the current stop list and that the respondent's
signature on the voucher corresponded with her signature on the card.
Thereupon, the respondent took away the goods which she had selected. In
due course, Mothercare sent the voucher to the bank and were paid £10.35
less the appropriate commission charged by the bank. On the 19th December
1977 the respondent returned the card to the bank.

My Lords, at her trial at Bedford Crown Court, on the 1st and 2nd
August 1979, before His Honour Judge Counsell and a jury, the respondent
faced two charges of obtaining a pecuniary advantage by deception
contrary to section 16(1) of the Theft Act 1968. These were specimen
charges. The first related to an alleged offence on the 5th December 1977,
and the second to the events which took place at the Mothercare shop at
Luton which I have just related. The particulars of each charge were that
she dishonestly obtained for herself a pecuniary advantage " namely, the
" evasion of a debt for which she then made herself liable by deception,
" namely, by false representations that she was authorised to use a
" Barclaycard ... to obtain goods to the value of £10.35 ".

The jury acquitted the respondent on the first charge. She was, however,
convicted upon the second. The evidence of dishonesty in relation to the
Mothercare transaction which was the subject of the second charge was
overwhelming, and before your Lordships' House learned counsel for the
respondent did not seek to suggest otherwise. Presumably the acquittal
on the first count was because the jury were not certain that at the earlier
date, 5th December 1977, the respondent was acting dishonestly.

My Lords, during the hearing in this House your Lordships enquired of
counsel for the appellant prosecutor why no count of obtaining property
by deception on the 15th December 1977 contrary to section 15 of the
Theft Act 1968 had been included in the indictment. Your Lordships
were told that such a charge had indeed been preferred at the magistrates'
court during the committal proceedings, but had been rejected by the
magistrates upon a submission made on behalf of the respondent during
those proceedings. My Lords, if this be so, I find it difficult to see upon
what basis such a submission could properly have succeeded, or what
defence there could have been had such a charge been the subject of a
further count in the indictment once the jury were convinced, as they were,
of the respondent's dishonesty on the 15th December 1977. Had that
course been taken, the complications which in due course led to the Court
of Appeal (Criminal Division) quashing the conviction on the second
count, and consequently, to the prosecutor's appeal to this House, with
your Lordships' leave, following the grant of a certificate by the Court of
Appeal (Criminal Division), would all have been avoided. But the course
of adding a count charging an offence against section 15 of the Theft Act
1968 was not followed, and accordingly your Lordships have now to
determine whether the Court of Appeal (Criminal Division) was correct in
quashing the conviction on the second count. If it was, then as that court
recognised in the concluding paragraph of its judgment, a gateway to
successful fraud has been opened for the benefit of the dishonest who in
circumstances such as the present cannot be proceeded against and
punished at least for offences against section 16 of the Theft Act 1968.

My Lords, the committal proceedings were what is sometimes called " old
" fashioned ", that is to say, that advantage was not taken of section 1 of
the Criminal Justice Act 1967. Witnesses were called in the magistrates'
court and cross-examined. These witnesses included Miss Rounding, the
departmental manager. Your Lordships were shown a copy of her
deposition. Miss Rounding was not called at the trial at Bedford Crown
Court. Her deposition was read to the jury. It emerged from her evidence,

3

and other evidence given or read, that, as one would expect, there was an
agreement between Mothercare and the bank. That agreement does not
appear to have been properly proved at the trial, but by consent, your
Lordships were given a pro forma copy of what is known as a " merchant
"member agreement" between the bank and its customer, setting out the
conditions upon which the customer will accept and the bank will honour
credit cards such as Barclaycards.

My Lords, at the close of the case for the prosecution, learned counsel
for the respondent invited the learned judge to withdraw both counts from
the jury on, it seems, from reading the learned judge's clear ruling upon
this submission, two grounds, first, that as a matter of law there was no
evidence from which a jury might properly draw the inference that the
presentation of the card in the circumstances I have described was a
representation by the respondent that she was authorised by the bank to
use the card to create a contract to which the bank would be a party, and
secondly, that as a matter of law there was no evidence from which a jury
might properly infer that Miss Rounding was induced by any representation
which the respondent might have made to allow the transaction to be
completed and the respondent to obtain the goods. The foundation for
this latter submission was that it was the existence of the agreement between
Mothercare and the bank that was the reason for Miss Rounding allowing
the transaction to be completed and the goods to be taken by the respon-
dent, since Miss Rounding knew of the arrangement with the bank, so
that Mothercare was in any event certain of payment. It was not, it was
suggested, any representation by the respondent which induced Miss
Rounding to complete the transaction and to allow the respondent to take
the goods.

My Lords, the learned judge rejected these submissions. He was clearly
right to do so, as indeed was conceded in argument before your Lordships'
House, if the decision of this House in Commissioner of Police for the,
Metropolis v. Charles [1977] A.C. 177 is of direct application. In that
appeal this House was concerned with the dishonest use, not as in the
present appeal of a credit card, but of a cheque card. The appellant
defendant was charged and convicted on two counts of obtaining a pecuniary
advantage by deception, contrary to section 16 of the Theft Act 1968.
The Court of Appeal (Criminal Division) and your Lordships' House both
upheld those convictions. Your Lordships unanimously held that where
a drawer of a cheque which is accepted in return for goods, services or
cash, uses a cheque card he represents to the payee that he has the actual
authority of the bank to enter on its behalf into the contract expressed
on the card that it would honour the cheque on presentation for payment.

My Lords, I venture to quote in their entirety three paragraphs from
the speech of my noble and learned friend, Lord Diplock, at pages 182
and 183 of the report, which as I venture to think, encapsulate the reasoning
of all those members of your Lordships' House who delivered speeches:

" When a cheque card is brought into the transaction, it still remains
" the fact that all the payee is concerned with is that the cheque
" should be honoured by the bank. I do not think that the fact that
" a cheque card is used necessarily displaces the representation to be
" implied from the act of drawing the cheque which has just been
" mentioned. It is, however, likely to displace that representation at
" any rate as the main inducement to the payee to take the cheque,
" since the use of the cheque card in connection with the transaction
" gives to the payee a direct contractual right against the bank itself
" to payment on presentment, provided that the use of the card by
" the drawer to bind the bank to pay the cheque was within the
" actual or ostensible authority conferred upon him by the bank.

" By exhibiting to the payee a cheque card containing the under-
" taking by the bank to honour cheques drawn in compliance with
" the conditions endorsed on the back, and drawing the cheque
" accordingly, the drawer represents to the payee that he has actual




4

" authority from the bank to make a contract with the payee on the
" bank's behalf that it will honour the cheque on presentment for
" payment.

" It was submitted on behalf of the accused that there is no need
" to imply a representation that the drawer's authority to bind the
" bank was actual and not merely ostensible, since ostensible authority
" alone would suffice to create a contract with the payee that was
" binding on the bank; and the drawer's possession of the cheque card
" and the cheque book with the bank's consent would be enough to
"constitute his ostensible authority. So, the submission goes, the
" only representation needed to give business efficacy to the transac-
" tion would be true. This argument stands the doctrine of ostensible
" authority on its head. What creates ostensible authority in a person
" who purports to enter into a contract as agent for a principal is a
" representation made to the other party that he has the actual
" authority of the principal for whom he claims to be acting to enter
" into the contract on that person's behalf. If (1) the other party has
" believed the representation and on the faith of that belief has acted
" upon it and (2) the person represented to be his principal has so
" conducted himself towards that other party as to be estopped from
" denying the truth of the representation, then, and only then, is he
" bound by the contract purportedly made on his behalf. The whole
" foundation of liability under the doctrine of ostensible authority is
" a representation, believed by the person to whom it is made, that
" the person claiming to contract as agent for a principal has the
" actual authority of the principal to enter into the contract on his
" behalf."

If one substitutes in the passage at page 182G the words " to honour the
" voucher" for the words " to pay the cheque ", it is not easy to see why
mutatis mutandis the entire passages are not equally applicable to the
dishonest misuse of credit cards as to the dishonest misuse of cheque cards.

But the Court of Appeal in a long and careful judgment delivered by
Cumming-Bruce L.J. felt reluctantly impelled to reach a different conclusion.
The crucial passage in the judgment which the learned Lord Justice delivered
reads thus:

" We would pay tribute to the lucidity with which the learned judge
" presented to the jury the law which the House of Lords had declared
" in relation to deception in a cheque card transaction. If that analysis
" can be applied to this credit card deception the summing-up is
" faultless. But, in our view, there is a relevant distinction between
" the situation described in Charles and the situation devised by
" Barclays Bank for transactions involving use of their credit cards.
" By their contract with the bank, Mothercare had bought from the
" bank the right to sell goods to Barclaycard holders without regard
" to the question whether the customer was complying with the terms
" of the contract between the customer and the bank. By her evidence
" Miss Rounding made it perfectly plain that she made no assumption
" about the appellant's credit standing at the bank. As she said ' the
" 'Company rules exist because of the Company's agreement with

"' Barclaycard'. The flaw in the logic is in our view demonstrated
" by the way in which the Judge put the question of the inducement
" of Miss Rounding to the jury:

"'Is that a reliance by her, Miss Rounding of Mothercare,
"' upon the presentation of the card as being due authority within
"' the limits as at that time as with count one? '

" In our view, the evidence of Miss Rounding could not found a
" verdict that necessarily involved a finding of fact that Miss Rounding
" was induced by a false representation that the appellant's credit
" standing at the bank gave her authority to use the card."

I should perhaps mention, for the sake of clarity, that the person referred
to as the appellant in that passage is the present respondent.




5

It was for that reason that the Court of Appeal (Criminal Division)
allowed the appeal, albeit with hesitation and reluctance,
accordingly certified the following point of law as of general public
importance, namely:

" In view of the proved differences between a cheque card transac-
" tion and a credit card transaction, were we right in distinguishing
" this case from that of Commissioner of Metropolitan Police v. Charles
" [1977] A.C. 177 upon the issue of inducement? "

My Lords, as the appellant says in paragraph 9 of his printed case, the
Court of Appeal (Criminal Division) laid too much emphasis upon the
undoubted, but to my mind irrelevant fact that Miss Rounding said she
made no assumption about the respondent's credit standing with the bank.
They reasoned from the absence of assumption that there was no evidence
from which the jury could conclude that she was "induced by a false
"representation that the appellant's credit standing at the bank gave her
"authority to use the card". But, my Lords, with profound respect to
the learned Lord Justice, that is not the relevant question. Following the
decision of this House in Charles, it is in my view clear that the representa-
tion arising from the presentation of a credit card has nothing to do with
the appellant's credit standing at the bank but is a representation of actual authority
at the bank to make the contract with, in this case, Mothercare on the
bank's behalf that the bank will honour the voucher upon presentation.
Upon that view, the existence and terms of the agreement between the
bank and Mothercare are irrelevant, as is the fact that Mothercare, because
of that agreement, would look to the bank for payment. That being the
representation to be implied from the respondent's actions and use of the
credit card, the only remaining question is whether Miss Rounding was
induced by that representation to complete the transaction and allow the
respondent to take away the goods. My Lords, if she had been asked
whether had she known the respondent was acting dishonestly and, in
truth, had no authority whatever from the bank to use the credit card in
this way, she (Miss Rounding) would have completed the transaction, only
one answer is possible—no. Had an affirmative answer been given to this
question, Miss Rounding would, of course, have become a participant in
furtherance of the respondent's fraud and a conspirator with her to defraud
both Mothercare and the bank. Leading counsel for the respondent was
ultimately constrained, rightly as I think, to admit that had that question
been asked of Miss Rounding and answered, as it must have been, in
the negative, this appeal must succeed. But both he and his learned
junior strenuously argued that, as my noble and learned friend, Lord
Edmund-Davies, pointed out in his speech in Charles at pages 192 and
193 of the report, the question whether a person is or is not induced to
act in a particular way by a dishonest representation is a question of fact,
and since what they claimed to be the crucial question had not been
asked of Miss Rounding, there was no adequate proof of the requisite
inducement. In her deposition, Miss Rounding stated, no doubt with
complete truth, that she only remembered this particular transaction with
the respondent because some one subsequently came and asked her about
it after it had taken place. My Lords, credit card frauds are all too
frequently perpetrated, and if conviction of offenders for offences against
sections 15 or 16 of the Theft Act 1968 can only be obtained if the
prosecution are able in each case to call the person upon whom the fraud
was immediately perpetrated to say that he or she positively remembered
the particular transaction and, had the truth been known, would never
have entered into that supposedly well-remembered transaction, the guilty
would often escape conviction. In some cases, of course, it may be
possible to adduce such evidence if the particular transaction is well
remembered. But where as in the present case no one could reasonably
be expected to remember a particular transaction in detail, and the inference
of inducement may well be in all the circumstances quite irresistible, I
see no reason in principle why it should not be left to the jury to decide,
upon the evidence in the case as a whole, whether that inference is in

6

truth irresistible as to my mind it is in the present case. In this connection
it is to be noted that the respondent did not go into the witness box to
give evidence from which that inference might conceivably have been
rebutted.

My Lords, in this respect I find myself in agreement with what was
said by Humphreys J. giving the judgment of the Court of Criminal Appeal
in R. v. Sullivan (1945) 30 Cr. App. R. 132 at 136:

" It is, we think, undoubtedly good law that the question of the
" inducement acting upon the mind of the person who may be described
" as the prosecutor is not a matter which can only be proved by the
" direct evidence of the witness. It can be, and very often is, proved
" by the witness being asked some question which brings the answer:
" ' I believed that statement and that is why I parted with my money';
" but it is not necessary that there should be that question and answer
" if the facts are such that it is patent that there was only one reason
" which anybody could suggest for the person alleged to have been
" defrauded parting with his money, and that is the false pretence, if
" it was a false pretence."

It is true that in Reg. v. Laverty (1970) 54 Cr. App. R. 495, Lord
Parker C.J. said at p.498 that the Court of Appeal (Criminal Division) was
anxious not to extend the principle in Sullivan further than was necessary.
Of course, the Crown must always prove its case and one element which
will always be required to be proved in these cases is the effect of the
dishonest representation upon the mind of the person to whom it is made.
But I see no reason why in cases such as the present, where what
Humphreys J. called the direct evidence of the witness is not, and cannot
reasonably be expected to be available, reliance upon a dishonest represen-
tation cannot be sufficiently established by proof of facts from which an
irresistible inference of such reliance can be drawn.

My Lords, I would answer the certified question in the negative and
would allow the appeal and restore the conviction of the respondent upon
the second count in the indictment which she faced at Bedford Crown
Court.

213389 Dd 8208150 C2 6/81