O & H, R v [2010] EWCA Crim 2233

Case No 201002935 and 6 B5[2010] EWCA Crim 2233IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM the Crown Court sitting at Wood Green
His Honour Judge Carr
T2009 0945/0100
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13/10/2010
Before
LORD JUSTICE HOOPERMR JUSTICE OWENMR JUSTICE RODERICK EVANS
Between
The QueenAppellantO and HRespondents
Mr. W. Cranston-Morris for Appellant.Mr. I. Krolick for Respondent “O”.Mr. P. Spreadborough for Respondent “H”.Hearing Hearing dates : 24/09/2010
JudgmentLORD JUSTICE HOOPER :
[1]The prosecution seek leave to appeal a terminating rule ruling made by HHJ Carr on 20 May 2010 that there was no case to answer on counts 1 to 11. We grant that leave.[2]Counts 1, 2, 4, 5, 7 charged the respondent O with furnishing false information contrary to section 17 (1) (b) of the Theft Act 1968. Counts 3 and 7 charged H, O’s wife, with two similar offences. Counts 1-7 concern allegedly false but successful mortgage application forms.[3]Counts 8-11 charged offences in relation to criminal property pursuant to section 327 (1) of the Proceeds of Crime Act 2002. If there was no case to answer on counts 1 to 7 there was no case to answer on counts 8-11 because the property would not have been criminal.[4]The particulars of offence in count 1 state: O on the 21st July 1998 in furnishing information for a mortgage application to purchase 6 Hanover Lodge, Ruislip, dishonestly and with a view to gain for himself or another or with intent to cause loss to another produced a document made or required for an accounting purpose, namely a mortgage application form, which to his knowledge was or may have been misleading false or deceptive in a material particular in that he therein purported to be “F”, date of birth 10/10/62 with a national insurance number NZ 39 51 63 C[5]Although the count refers to “a document made or required for an accounting purpose”, it is agreed that the relevant word is “required” and that the prosecution had to show in this case that the document was “required” by the particular mortgage lender “for an accounting purpose”.[6]Counts 2-7 are in similar form albeit that the material particulars alleged to be misleading were different. Whereas in some counts it is alleged that the wrong names and accompanying details were used, in other counts it is alleged that false details relating to employment and previous history were used.[7]The charges came about following a routine stop of O whilst driving and the discovery then and later of various items linking the respondents with various properties the subject of mortgages. The unsuspecting mortgage lenders only became involved after the police had contacted them.[8]The judge held that there was no evidence that the mortgage lenders required the applications for an accounting purpose. Although the mortgage applications had been produced by employees of the mortgage lenders (who ritually said that the mortgages would not have been granted had it been known that the particularised details were false), none of them explained (nor were asked to explain) how if at all the applications were required for an accounting purpose.[9]Mr Cranston-Morris for the appellant submits that no such explanation was necessary. Counsel for the respondents submits that it was.[10]Section 17 of the Theft Act 1968 provides:(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss to another, - (a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or (b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular; he shall, on conviction on indictment, be liable to imprisonment for a term not exceeding seven years.(2) For purposes of this section a person who makes or concurs in making an account or other document an entry which is or may be misleading, false or deceptive in a material particular, or who omits or concurs in omitting a material particular from an account or other document, is to be treated as falsifying the account or document.[11]We add, in parenthesis, that the use of section 17 is likely to decline in the light of the Fraud Act 2006. In the instant appeal all the alleged offences relating to the mortgage application forms were committed before the coming into force of this Act.[12]It will be noted that section 17 refers to “any accounting purpose.”[13]The enactment of section 17 followed the 8th Report of the Criminal Law Revision Committee. The Report does not help on the issues which we have to decide. Although Mr Krolick has tracked down the debates in Parliament, there is, he tells us, nothing in them of significance for the purposes of this appeal. Whilst preparing the judgment, we have looked at passages in the textbooks including Smith’s Law of Theft 9th Edition and Arlidge and Parry on Fraud, 3rd Edition but, as helpful as they are in identifying the relevant case law, they do not further assist us in resolving the issues with which we are concerned.[14]The leading authority on section 17 is Reference by the Attorney-General under Section 36 of the Criminal Justice Act 1972. (No 1 of 1980) (1981) 72 Cr. App. R. 60. We take the facts from the reserved judgment given by Lord Lane CJ: The accused man was engaged at the material times in selling domestic appliances to householders. For that purpose, he gave to householders personal loan proposal forms addressed to a finance company to enable the householders to borrow money to pay for the appliances. So that the proposals would be accepted by the finance company, he advised some of the householders to give false particulars on their proposal forms. Two examples were proved. In the first the householder, at the suggestion of the accused, understated the number of his dependants and falsely stated that he had no outstanding instalment commitments. In the second, the householder was induced by the accused man similarly to understate the number of his dependants and to state falsely that he had a National Savings Bank account. 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. The relevant forms were exhibited at the trial and were similar to each other. They are headed with the name of the finance company and are entitled “Personal Loan Proposal Form.” There then follows a section entitled “Particulars of Proposer,” the particulars to be supplied including the name and address of the proposer, his nationality, personal details of his marital and family circumstances, including the number of his dependants, his employer's name and address and other personal details. Also included in this section on the form is a space in which the proposer is required to state the details of other hire purchase commitments then existing. It was this section of the form which contained the false answers in the present case. The next section requires details of the house in which the equipment is to be installed, including any relevant mortgage details. Finally, the form on its face contains a section “For office use only” in which the finance company would enter the details needed to be fed into their computer. At the bottom is a space designated “signature of witness.” At the head of the reverse side of the forms is a request signed by the proposer and addressed to the finance company requesting the loan “for the purpose described below” and certifying the truth of the particulars given. Beneath this request is a section in which the purpose for which the loan is required is stated. There then follow details of the cash price of the equipment and the amount of the initial payment, the amount of the advance, the interest charged and the total sum due and the number of the monthly instalments by which the loan is to be paid and the amount repayable on each instalment. Finally, there are blank forms for direct debit authority and promissory note.[15]The trial judge directed an acquittal. The Attorney-General referred a point of law for the opinion of the Court in the following terms: Whether a person who dishonestly falsifies a personal loan proposal form in material particulars which he sends thereafter to a Finance Company, and which they use in their accounting process, falsifies a document “required for an accounting purpose” contrary to section 17 (1) (a) of the Theft Act 1968 .[16]The trial judge had based his decision to direct an acquittal on the basis:(1) that the document was not required for an accounting purpose until after it had been received and considered by the finance company and after the decision had been reached to grant a loan; and(2) that there was no duty to account until after this decision had been made.[17]The Court rejected both reasons saying: As to the second ground, it does not seem to us that the moment at which any duty to account arose had any relevance to the question of whether the document was or was not required for an accounting purpose. As to the first ground, it is to be observed that section 17 (1) (a) in using the words “made or required” indicates that there is a distinction to be drawn between a document made specifically for the purpose of accounting and one made for some other purpose but which is required for an accounting purpose. Thus it is apparent that a document may fall within the ambit of the section if it is made for some purpose other than an accounting purpose but is required for an accounting purpose as a subsidiary consideration. 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.[18]The Court went on to say that: 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. It was, as we have seen, on the reverse side of the form that were set out details of the cash price of the equipment and the amount of the initial payment, the amount of the advance, the interest charged and the total sum due and the number of the monthly instalments by which the loan is to be paid and the amount repayable on each instalment. It was this information which, on the evidence, was used by the company to make up its computerised accounts.[19]It was also submitted on behalf of the accused that ... that the part of the form which was falsified (that is the obverse side) was not in any way required for an accounting purpose. It was only the reverse side which was material for accounting, and consequently no offence was committed. We do not think that the words of the section permit of that interpretation. This was one entire document; it was as to part required for an accounting purpose; it was as to part falsified. The fact that these two parts were not the same does not exonerate the man who was responsible for the falsification. Indeed, the reverse side containing the figures also carries the borrower's signature and declaration.[20]The Court concluded its judgment in this way: It follows from what we have said that much will turn in a case of this sort upon the precise nature and content of the proposal form in question. In giving the answer “Yes” to the question posed in the Attorney-General's reference, we add the proviso that the answer might well be different were the form which has been falsified to be materially different from that which we are considering here.[21]The mortgage application forms with which we are concerned in this case did not include the kind of detail about repayments which we have described above in paragraph 17.[22]We turn to the earlier case of Mallett (1978) 67 Cr. App. R. 239. The appellant was charged with false accounting in a count which alleged that he and his co-defendant: ... dishonestly and with a view to gain for themselves in furnishing information to Lloyds and Scottish Finance Limited, produced a document required for an accounting purpose, namely a Hire Purchase Agreement which to their knowledge was misleading or false in a material particular in that it purported to show that Adrian Miller had been a Company Director ... for eight years.[23]The Court said: 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 dishonestly furnishing that information for any purpose is, in our view, guilty of an offence against the section. In short, the purpose for which the information is furnished is not limited to an accounting purpose; the document itself has to be made or required for an accounting purpose but once that is satisfied then any statement that is false in a material particular is sufficient to justify a conviction once the other requirements of the section are also satisfied. (Emphasis added) In the light of the emphasised words Mallett is only of limited value as Potter LJ made clear in Okanta Court of Appeal Criminal Division, 20 December 1996, No: 9600161/W4; [1994] Crim. L.R. 451.[24]Okantawas one of a number of cases following the decision of the House of Lords in Preddy [1996] AC 895 (the effect of which was to place severe limitations on the use of the offence of obtaining property by deception in cases where funds were transferred as a result of a deception) in which the Court of Appeal Criminal Division considered whether it should substitute for a conviction for obtaining property by deception, a conviction for another offence. The facts in Okanta were, as set out by Potter LJ in the judgment: ... 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 [Building] 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.[25]The only relevant evidence from the Building Society was that the Society would not have granted the mortgage had they known about the lie about her income. The Court refused to substitute a conviction for false accounting for a conviction for obtaining property by deception. ... 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.[26]Mr Cranston-Morris relies upon a short passage from the judgment of Lord Bingham CJ in Graham and others (1997) 1 Cr. App. R. 302, the leading case in the Court of Appeal Criminal Division dealing with substitution following Preddy. The facts in Graham were very similar to the facts in the instant appeal. He points to the fact that Lord Bingham said that an offence of furnishing false information might have been charged on the facts of the case. But the Court in Graham went on to say: 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.[27]He also relies on Hawkins [1997] 1 Cr. App. R. 234 another decision of this Court presided over by Lord Bingham. The facts are very similar to the facts of the instant appeal. The applicant had pleaded guilty to count 15 which charged him under section 17 (1) (b) with furnishing false information to a Building Society for a mortgage and another similar count (count 5). The false information alleged in count 15 consisted of a letter from a non-existent firm that certain work had been completed on the house the subject matter of the application, when it had not been. On the application for leave to appeal on the ground that there was a formal defect in the two counts, namely an omission to state that the document was required for an accounting purpose, Lord Bingham, rejecting the application, said that there was no suggestion that the letter was not a document required for an accounting purpose.[28]Both Hawkins and Graham, show, it can be said, that Lord Bingham had no “instinctive difficulty” in concluding that mortgage application forms are documents which can properly be described as being required by the lender for an accounting purpose in the absence of evidence as to the use made of them.[29]We turn to Cummings-John, Court of Appeal Criminal Division 28th February, 1997, [1997] EWCA Crim 594 the transcript of which (as Mr Krolick discovered) is available on BAILII. The solicitor appellant had submitted a Report on Title to a building society in connection with a client’s application for a re-mortgage and in count 7 was charged with false accounting in respect of the Report. The Report on Title omitted the fact that the property was subject to three charges, making the Report “defective” as the Court held. It was submitted in the Court of Appeal (albeit not at trial) that there was no evidence that the Report on Title was a document required for an accounting purpose. The Court rejected this argument saying: The submission in the present case is complicated by the fact that, as recorded in the passage from the summing-up already read, it was not suggested at the trial that this was not an accounting document within section 17. There was evidence from a representative of the building society, Mr Fairclough, which was to the effect that the document was one which was required to "trigger payment" by the building society. Therefore, Mr Narayan [for the appellant] submits, bearing in mind the warning in Okanta's case that the evidence should be directed to the precise issue whether the document was required for an accounting purpose or not, this Court should set aside the conviction in the present case in the absence of any such evidence. He would add, if necessary, that evidence that the document triggered payment does not necessarily mean that the document was required for an accounting purpose also. We say that this is a complicating factor because it seems to us that this is not solely a question of law; it is a mixed question of law and fact which lies at the heart of Mr Narayan's submission. He says that the necessary evidence was not produced before the jury. Why was it not produced? The answer is that there was no issue taken. No doubt if issue had been taken on that issue of fact, then the evidence would have been expanded to deal with it accordingly. In those circumstances it seems to us singularly unmeritorious to suggest that the conviction on count 7 should be set aside on this ground. We can, however, go further and say that in the circumstances of this case it again seems wholly unreal to suggest that a document of this nature, having regard to the evidence as to the role which it played in a transaction of this sort, was not required for an accounting purpose. It is enough for us to say that we are entirely satisfied that the conviction on count 7 was safe, notwithstanding this suggested legal objection to it.[30]The next case is one upon which Mr Cranston-Morris places much reliance, Osinuga v Director of Public Prosecutions Divisional Court 21 October 1997. [1997] EWHC Admin 902 (available on BAILII) cited with approval in Lancaster [2010] EWCA Crim 370; [2010] 2 Cr App R 7. The appellant had been convicted in a Magistrates Court of dishonestly and with a view to gain for himself produced a housing benefit claim form, a document required for an accounting purpose, which to his knowledge was misleading, false or deceptive in a material particular, namely that his employment and income details were false contrary to s 17(1)(b) of the Theft Act 1968. One of the issues on appeal was whether the form was, in the absence of any direct evidence, required for an accounting purpose.[31]In the words of Kennedy LJ, with whom Smith J agreed,: 4. The position here was that the housing benefit claim form submitted by the applicant was in a fairly familiar form. It was exhibited to the court and has been exhibited to us. It is a document covering several pages, and on that document the applicant is required to give a variety of types of information: his name, his address, his date of birth, and (on page 3 of the document) his employers, the amount of money which he earns gross each week, his net pay after deductions, whether or not he has any other forms of employment (to which the appellant's answer was "No", and it is not an issue but that that was a falsehood), and also the name of the person who is the owner of the property where he lives and the amount which he pays by way of total rent each week. He then signs the form, subject to a warning that if he gives false information he may be prosecuted.[32]Mr Fidler for the appellant advanced the proposition that the information in the housing benefit claim form was only required to enable the local authority to adjudicate and to determine whether or not the applicant was entitled to housing benefit but not to calculate what benefit he is entitled to. Kennedy LJ disagreed: In reality, the evidence before the justices, as is clear from that part of the case which I have already referred to, showed that so far as this claim form was concerned it was serving a dual purpose. In the first place, certainly the local authority had to decide whether or not the applicant was entitled to any housing benefit. But if it came to the conclusion that he was entitled to housing benefit, then (and I quote again from paragraph 7 of the Case Stated):
"... to calculate whether a person is entitled to Housing Benefit, income must be compared to outgoings.."
That is something which was done, it would seem, by reference to the form which was submitted, there being no other source of information.[33]Kennedy LJ concluded, after examining various authorities: 14. ... I for my part find it quite impossible to see how it can be said that the application form is not itself a document required for an accounting purpose.[34]Kennedy LJ appears to have concluded that the form was required for an accounting purpose because some of the information on the form was used to calculate whether the appellant was entitled to Housing Benefit. He did not say, as he might have done, that the form was required for an accounting purpose because (if successful) it would lead to the payment of the benefit and thus to the opening of an account to show what has been paid and when.[35]We turn to Manning [1998] 2 Cr. App. R. 461. Manning ran a maritime insurance businesscalled Scott Lee Insurance. He was instructed by a Greek company, Concorde Marine, in which a Captain Tingas was the active force, to place insurance for one of the company's vessels. The prosecution case was that Manning placed insufficient cover, through a broker, and falsely stated to Tingas that certain respectable companies had accepted the full risk. Counts 1–3 charged false accounting in respect of the cover notes which contained this false information and which were given to Tingas. Buxton LJ, giving the judgment of the Court, said: The sole issue before us was whether it had been sufficiently established before the jury, in terms on which the jury could act, that the cover notes were required for an accounting purpose. It is well accepted that such purpose can be merely an incidental, and not necessarily the principal, purpose of the document: Attorney-General's Reference (No. 1 of 1980) ...[36]He continued: No evidence was called by the Crown to explain the actual use made of such cover notes by the persons to whom they were sent; nor was such evidence sought to be elicited from Mr Manning in cross-examination. In his summing-up the judge, after properly directing them that the present question was one of fact, for them to decide, carefully took the jury through the cover notes that had been exhibited, and indicated the elements in them from which they could conclude, if so minded, that they were indeed required for an accounting purpose. The cover notes set out the insured and the insurer, the period and the interest covered. They also, however, state the rate to be paid and the dates at which premiums have to be paid:
“within 45 days of due dates as per Debit Notes”
. We have no doubt that the cover notes would play a role in the accounting process of Scott Lee's clients: the question is whether the jury were entitled on the material before them to come to that conclusion. A similar problem has been considered in two recent unreported cases in this Court, Okanta (December 20, 1996) and Sundhers (January 23, 1998). We were particularly pressed with the latter case, since it involved an issue close to that before us. In Sundhers the dishonest document was a claim form under an insurance policy. The judge told the jury, as is the case, that such a form would on occasion be looked at by the auditors of the insurance company. There was, however, no evidence to that effect; and this court held that merely by looking at the claim form the jury could not be expected, by drawing on their general experience and knowledge of the world, to reach that conclusion for themselves. The cover note is a different sort of document from a claim form. As we have said, it clearly sets out what the client has to pay and how he has to pay it. Although we have not found this issue an easy one, and regard it as being close to the borderline, we think on balance that it would be open in this case to a reasonable juror to conclude, simply by looking at the document, that it was required for an accounting purpose, in that it sets out what the client owes. It differs from the claim form in Sundhers, from which any such conclusion could not be drawn without knowledge of audit practice: which the jury cannot be assumed to possess without evidence to that effect. We therefore reject this ground of appeal. We are bound to say, however, that such arguments can be avoided, and the use of court-time that they generate can be saved, by prosecutors calling evidence, of brief and probably unchallenged nature, as to how documents on which they rely under section 17(1)(a) are in fact used; and we hope that this prudent step will be taken in future cases of this type.[37]We have already looked at Okanta.[38]Sundhers, 23rd January 1998 No: 97/2435/Y2 (available on BAILII), to which Buxton LJ refers in this passage, was a decision of the Court of Appeal Criminal Division also presided over by him. The appellant had allegedly taken out home insurance policies with three separate insurance companies and had submitted claim forms to each of those companies in respect of the same damage. The forms stated that he had not made a claim of a similar nature within the last five years and that he did not have other insurances for the items claimed: when in fact he already had insurance policies on which he had made claims in 1991, 1992 and 1994. At the end of the prosecution case the defence had unsuccessfully submitted that the claim forms upon which the prosecution relied had not been shown by the prosecution to be made or required for an accounting purpose. The Court held that the judge was wrong to have rejected the submission. Buxton LJ said: The learned Recorder ruled on that matter as follows, in his ruling at page 2F:
"...it seems to me that the evidence that is before the jury, namely that claim forms were completed making claims in respect of certain amounts of money in relation to damaged good or other items of loss, and that those claims forms were at least part of the basis upon which the insurance companies decided whether to make payment and how much, of itself constitutes evidence to go before the jury and from which the jury could, if it is so minded, properly infer that the documents were required at least in part for an accounting purpose, and so for those reasons I am not able to withdraw these counts from the jury."
It would seem that in making that ruling the Recorder considered at least at that stage of the trial, that the "accounting purpose" was a decision whether to make a payment in response to the claim forms. He did not have, because he could not have had, the benefit, of the unreported case in this court of R v Okanta decided on 20th December 1996. "...it seems to me that the evidence that is before the jury, namely that claim forms were completed making claims in respect of certain amounts of money in relation to damaged good or other items of loss, and that those claims forms were at least part of the basis upon which the insurance companies decided whether to make payment and how much, of itself constitutes evidence to go before the jury and from which the jury could, if it is so minded, properly infer that the documents were required at least in part for an accounting purpose, and so for those reasons I am not able to withdraw these counts from the jury."[39]Buxton LJ set out the facts of Okanta and the passage from the judgment which we have already set out above (paragraph 25). Buxton LJ continued: We cite that passage for two reasons. First, because the court drew attention to a need for evidence upon which the jury can act; and secondly, the court took the view that a decision whether to make a loan, which appears to be the matter to which the Recorder was referring in his ruling in our case, did not in itself amount to an accounting purpose.[40]Buxton LJ continued: That, however, is not the end of the matter because the Recorder necessarily had to return to this matter when he directed the jury. He properly directed them that it was a question for them, as a question of fact, whether the claim forms were required for an accounting purpose. He first of all said, as would no doubt be obvious, that from the policy holders' point of view they were the vehicle for claiming the amount allegedly owed under the policy. Then the Recorder said this at page 7D:
"From the insurer's point of view who is in receipt of it, it is obviously evidence of a claim made on it by a policy holder. It would be the justification for beginning some kind of investigation of the incident alleged to have taken place, and ultimately it would be part of the history justifying the payment of the policy holder's loss entitlement. It forms part of the basis of the assessment of his loss."
So far the Recorder had referred, as it seems to us, solely to the matters that he referred to in his ruling. He then went on, however:
"And if auditors or accountants or others need some evidence or to look at some records of why payments had been made out, why debits had been made in an insurer's accounts, made out, paid out to policy holders, the claim form would be perhaps quite an important part of the history showing why those payments had been made out. It starts the ball rolling, does it not, which culminates in a payment if the claim is justified... I believe they all record the amounts claimed by the policy holder, sums of money, I think all four do."
In his concise and very helpful submissions Mr Rickarby for the prosecution draws the court's attention to that passage. He says that the claim forms of themselves were evidence from which the jury could conclude that they were required for an accounting purpose. He draws attention to section 221 of the Companies Act, which requires a company to keep accounting records, and requires in particular a record of all monies expended by the company and the matters in respect of which that expenditure takes place. He conceded, however, and in our judgement rightly, that the claim forms were not themselves part, or could not be assumed themselves to be part, of those records as stipulated by the Companies Act. They were however material upon which those records would be based, and material that the auditors or accountants might well wish to scrutinise as and when they checked the accuracy of those accounts. For those reasons he said it could be assumed, and it was right to leave to the jury, the question of whether or not those claim forms were required for that accounting purpose, that is to say required for the purpose of making up the books of the company. That is a purpose quite different from deciding whether to make the loan in the first place, and therefore does not fall under the view of this court in the case of Okanta that deciding whether to make a loan is not in itself an accounting purpose. That was a sensible and robust submission which in common sense terms has a great deal to commend it. It also, in our judgement, represents what we believe - again without evidence but on the basis of experience - is in fact the case. It would be, it seems to us, almost certain that such records would be retained, one of the reasons for retaining them being to enable the books to be properly audited. The difficulty however is this. The question that the jury had to answer was, as is conceded, a question of fact, otherwise it would not be going to the jury at all. There was no actual evidence before the jury to demonstrate to them that that is what in fact is done with claim forms. We have to say that that is a matter that was put before them by the learned Recorder, and perhaps in one way understandably so. But it was not a matter that was based upon evidence, either evidence given by the representatives of the company concerned, who said no more than that the claim forms would be retained without stating for what purpose, nor of course was it the subject of any form of expert evidence. That means, therefore, that if the jury were to form a conclusion simply on the face of the claim form and of its nature, they could only form such a conclusion without specific evidence by drawing, as a jury often has to, on its general knowledge and experience of the world. That is something that juries can usefully do when they are dealing with matters that do fall and can be assumed to fall within the general experience of the members of the jury. But we regret to say that that assumption cannot be made in respect of a matter such as accounting practice. It no doubt seems self-evident to lawyers, and possibly to most of the people sitting in this court, but for this approach to be justified we would have to be satisfied, and simply as a matter of common sense we feel we cannot be satisfied, that this was a matter, this matter of accounting practice, that the jury could draw on from their own knowledge and experience rather than by dint of evidence. In our judgement therefore there was not evidence before the jury from which they could properly conclude that these documents were required for an accounting purpose, nor could they draw that conclusion from such evidence as they did have, that is to say the nature and form of the claim forms. We well understand the difficulty that this point caused below, and certainly would not seek to criticise the learned Recorder for the approach he took, but we have to say that with the benefit of the further reflection and the benefit of the submissions that we have received both orally and in writing we cannot agree that he took the right approach. "From the insurer's point of view who is in receipt of it, it is obviously evidence of a claim made on it by a policy holder. It would be the justification for beginning some kind of investigation of the incident alleged to have taken place, and ultimately it would be part of the history justifying the payment of the policy holder's loss entitlement. It forms part of the basis of the assessment of his loss." "And if auditors or accountants or others need some evidence or to look at some records of why payments had been made out, why debits had been made in an insurer's accounts, made out, paid out to policy holders, the claim form would be perhaps quite an important part of the history showing why those payments had been made out. It starts the ball rolling, does it not, which culminates in a payment if the claim is justified... I believe they all record the amounts claimed by the policy holder, sums of money, I think all four do."[41]The decision in Sudhers was central to the (reluctant) decision of the trial judge in the instant appeal to direct an acquittal and is relied upon by counsel for the respondents.[42]The next case which we need to consider is R. (on the application of David Baxter) v. Governor of Brixton Prison, [2002] EWHC 300 (Admin), an extradition case. Auld J gave the judgment of the Divisional Court with which Gage J agreed.[43]Auld J said; 17. Charge 4 concerns the alleged furnishing by Mr. Baxter on 14th November 1998 of misleading information giving rise to his investment, the subject of charge 3, made three days later. In summary, the charge is one of furnishing false information by providing a misleading document, namely the Certificate of Divisible Interest which referred to Zenith Insurance Limited as having issued a Letter of Credit for US$100 million. The appropriate offence in this country is provided by section 17(1)(b) of the Theft Act 1968, of furnishing misleading information in a document “made or required for any accounting purpose”.[44]It was submitted that the document was not one made or required for an accounting purpose. Rejecting this argument Auld J said, in so far as relevant to the issues in this appeal: 21. There is no statutory definition of the term “document made or required for any accounting purpose”; nor, as Mr. Hardy submits, do the authorities indicate any exhaustive or all-purpose restrictive interpretation of it. It is not a technical term and should clearly be given its ordinary and natural meaning, according to the nature and contents of the document, the circumstances giving rise to its creation and/or the potential purpose for which it may be required. 22...23. It follows, in my view, that a misleading document created by a fraudster, setting out the terms of an investment he is soliciting from private individuals, or which purports to record for their benefit the nature and status of the investment made by them, is capable of being a document required by them for potential use as an accounting document. I say “potential use” because it is not necessary for the prosecution to prove actual use by the maker or the recipient of the document as an accounting document. For an individual who receives it, say, in his personal capacity as a potential or established investor or lender, it may, as Mr. Hardy puts it, be the sort of document he might wish to put in his wall safe rather than the wastepaper basket.24. There is therefore no basis, on the words themselves, for restricting accounting documents for this purpose to those having a forensic accounting purpose, as Mr. Knowles suggests; i.e. to those that an accountant or an auditor would require when investigating the matter. The matter is put beyond doubt by the words in section 17(1)(b) “for any purpose”, so as to make it an offence for a person to furnish another for any purpose with such a false accounting document.25. In the end, the question whether a document is made or required for an accounting purpose is a mixed question of law and fact and will be significantly coloured by the surrounding circumstances. Nor is it always necessary for there to be direct evidence of a document's purpose in false accounting cases. It depends on the nature of the document and on the circumstances, as the Court of Appeal said in R. v. Manning [1999] Q.B. 980 at 986. ... 26. ... It is plain from the application package, of which the certificate formed part, and the circumstances in which it was sent, that it was a document of potential accounting importance to Mr. and Mrs. Orlosky, whether or not, as trustees, they proceeded with the transaction. Putting the matter at its lowest, I am satisfied that the available evidence is sufficient for a jury to conclude that it was made or required for an accounting purpose.[45]It is understandable why, having briefly discussed a number of these cases, the editors of Smith’s Law of Theft 9th Edition say (para. 4.11):
“Unfortunately, the Courts have failed to adopt a consistent approach.”
[46]Mr Cranston-Morris submits that there is a simple solution to the issues raised in these cases. An application made by a person for a mortgage is a document required for an accounting purpose because, if successful, it will lead to the lender providing funds and thus the opening of a mortgage account in favour of the applicant in the books of the lender. That account will inevitably include the name and address of the applicant as set out on the form (whether truthfully or not) and any bank details supplied by the applicant. It will be inevitable (so the jury could find) that the account forms part of the accounting records of the lender. No direct evidence is required to prove that.[47]Counsel for the respondents submit, in effect, that, if this is right, then many of the cases which we have discussed would have led to a different result or to different and simpler reasons for those that were given. They refer to the A-Gs Reference(No 1 of 1980) (different reasons), Okanta (different result), Osinuga (different reasons)and Sundhers (different result).[48]It is very difficult if not impossible to reconcile all the cases on the point. We see much force in the submission made by Mr Cranston-Morris. Support for it can be found in the decisions of Mallett, Graham, Hawkins and Cummings-John albeit that it all cases it was assumed without argument that documents such as applications for a loan or a mortgage can properly be treated as documents required for an accounting purpose without further evidence. Nothing to be found in the judgment in the A-G’s Reference is inconsistent with the submission. Applications for a mortgage or loan to commercial institutions will, if successful, lead to the opening of an account which will show as credits in favour of the borrower funds received from the borrower and as debits funds paid out by the lender to, or on behalf, of the borrower.[49]In our view and without any further direct evidence of the accounting practices of the lender, a jury is entitled to come to the conclusion that an application for a mortgage or a loan made to a commercial institution is a document required for an accounting purpose. We should add that it is important not to overlook the requirement of materiality: see Lancaster, above para. 30.[50]In these circumstances the appeal is allowed and we set aside the ruling made by HHJ Carr finding that there was no case to answer in the absence of direct evidence of the accounting practices of the mortgage company.[51]We add this. The judge in his ruling was critical of the manner in which counsel for the respondents had conducted the case in so far as the issue which we have been considering is concerned. We have not considered whether that criticism was justified or not.