Gdansk Regional Court (Polish Judicial Authority) v Ulatowski [2010] EWHC 2673 (Admin)

[2010] EWHC 2673 (Admin)

Case No CO/8035/2010

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 26/10/2010

Before

MR JUSTICE RODERICK EVANS

Between

Gdansk Regional Court (Polish Judicial Authority)Appellant

Bartlomiej UlatowskiRespondent

(Transcript of the Handed Down Judgment of

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Miss M Westcott (instructed by the Crown Prosecution Service) for Appellant

Mr J Blake (instructed by Lawrence & Co) for Respondent

Hearing Hearing date: 5 th October 2010

Judgment

The Proceedings

[1]This is an appeal against a decision of District Judge Purdy made on 21st July 2010 at the City of Westminster Magistrates' Court. The District Judge considered whether the offences specified in a European Arrest Warrant (EAW) seeking the extradition of the respondent to Poland were extradition offences for the purposes of the Act. He concluded that the offences were not extradition offences and discharged the respondent pursuant to s.10(3) of the Act.

[2]The sole issue in this appeal is whether that decision of the District Judge is correct i.e. whether the conduct described as constituting the two offences to which the EAW relates would constitute an offence under the law of England and Wales (see s.65(3)(b) of the Act).

Background

[3]The EAW was issued on 21st May 2009 by Anna Hodysz, a judge at the District Court dedicated to the Regional Court in Gdansk. The decision on which the warrant is based is described as a valid judgment of the District Court in Gdynia dated 30th June 2003 and the penalty imposed by the court is 3½ years imprisonment of which all but one day remains to be served.

[4]The detailed description of the two offences given in the warrant is as follows:

“(a) In the period from November 2000 to January 2001 in Gdynia, in a premeditated action taken together with Katarzyna Ulatowski and with the intention of misappropriating it, he drew PLN 63,542.89 in cash from the savings and settlement account number 10201853-401458-270-41 maintained by the Polish Public Savings Bank, Branch 1 in Gdynia to the detriment of that bank. (b) In the period from July 2000 to January 2001 in Gdynia in a premeditated action taken with the intention of misappropriating it, he drew PLN 252,500.86 in cash from the account number 10201853-625346-270-1 maintained by the Polish Public Savings Bank, Joint Stock Company, Branch 1 in Gdynia i.e. property of substantial value, to the detriment of the Polish Public Savings Bank.”

[5]Under the heading “Nature and legal classification of the offences” on the EAW appear references to the Polish Penal Code as follows:

“Article 278.1 of the Penal Code in conjunction with Article 12 of the Penal Code and Article 294.1 of the Penal Code (penal Code Act of 6June 1997: Journal of Laws No. 88, it.553).”

[6]The provisions of the main articles referred to are to be found (in translation) in the Judicial Authority’s Opening Note prepared for the hearing before the District Judge. No exception has been taken to the translation: Article 278.1 “Whoever, with the purposes of appropriating, wilfully takes someone else’s moveable property shall be subject to the penalty of deprivation of liberty for a term of between 3 months and 5 years.” Article 294.1 “Whoever commits the offence specified in Article 278.1….with regard to property of considerable value shall be subject to the penalty of deprivation of liberty for a term of between 1 and 10 years.”

[7]The EAW was certified by the designated authority, the Serious Organised Crime Agency, on 6th March 2010 in accordance with s.2(7) and (8) of the Act and the certificate states that the warrant is seeking the arrest of the respondent “for two offences of fraud”. “Fraud” is one of the “framework offences” listed in the Council Framework Decision of 13th June 2002 as being one of the offences sufficiently serious to warrant extradition without the need to meet the dual criminality test. The list of these “framework offences” is set out in the EAW but despite the content of the certificate, all the offences in that list, including fraud, are struck through as not being applicable. The dual criminality test must, therefore, be applied.

[8]Following sight of the EAW the Crown Prosecution Service made a request to the Polish Judicial Authority for further information. They sought answers to the following questions:(i) Whose accounts was the money taken from re both offences?

(ii) What actions did Mr Ulatowski make in order to withdraw the money?

(iii) Did he make any misleading statements?

(iv) Had he been informed that he was not to withdraw the money from the accounts?

(v) Is it alleged he was dishonest in making the withdrawals?

[9]Further information about the offences is set out in a letter dated 9th April 2010 from Anna Hodysz. The information provided is as follows:

“1. The account number 10201851-401458-270-41 belonged to Bartlomiej and Katarzyna Ulatowski and it was their checking and current account opened by the said persons in 1995. There were two Visa Classic Debit Cards issued to accompany the account, one for Katarzyna Ulatowski and the other one for Bartlomiej Ulatowski and the owners committed themselves to making monthly contributions. The last monthly payment was made in December 2000. Additionally on 16th November 1999 the account owners signed with PKO Bank Polska SA an agreement for revolving credit facilities, the limit of which amounted to 20,000 zloty. That amount constituted the admissible overdraft that the named persons were allowed to draw on their account and on which interest was accrued in accordance with a credit agreement. The level of the overdraft allowed was exceeded in November 2000 and since January 2001, as a result of withdrawals of money being made by the named persons by means of their debit cards, the amount overdrawn amounted to 63,542.89 zloty. 2. The account number 10201853-625346-270-1 was opened in Oddzial PKO Bank Polska SA on 5th December 1999 for the current servicing of a trade and service company named Kodeks-Bis, the owner of which was Bartlomiej Ulatowski. To this account a European MasterCard Debit Card was issued with a limit of 50,000 zloty on a monthly basis. The said person was obliged to settle the debit balance created, but from July 2000 until February 2001 he feigned that obligation by paying into the account the total amount of 156,448 zloty, with the payments being made, however, only in the period from July and November 2000. On the other hand, over the same period i.e. from July 2000 to February 2001, he withdrew from the account 409,126.26 zloty. In the opinion of the court, he was aware of acting to the detriment of the bank and against the provisions of the agreement relating to that account. He maintained the banks view on him as a good debtor by making payments to the account, yet despite the deepening debit on the account, he did not close the account and by doing so he committed a larceny of money. In both cases it is the bank that closed the account.”

[10]It will be seen that in relation to the first offence the account number is somewhat differently described in the translated version of the additional information from the number given in the EAW. It is plain from looking at the original Polish version that this is merely a typographical error. In relation to the second offence the additional information gives a different and larger figure for the sum withdrawn from the account and extends the period to February 2001. However, the parties agree that nothing turns on these differences.

The hearing before the District Judge

[11]In its opening note the judicial authority argued that the respondent’s conduct, had it occurred in England and Wales, would have amounted to theft contrary to s.1 of the Theft Act 1968. That submission was maintained in the judicial authorities closing submissions but it was also submitted that the conduct would have amounted to obtaining a pecuniary advantage by deception contrary to s.16 of the 1968 Act.

[12]On behalf of the requested person the District Judge was referred to Kohn

(1979) 69 Cr App R 395

and Preddy

[1996] AC 815

it was argued that the withdrawal of sums of money from one’s own bank account in excess of an agreed overdraft did not constitute theft; while the balance in an account is a chose in action and is “property”, it is the property of the person in whose account that chose in action lies. In this case the money was withdrawn from the requested person’s own account and was not, therefore, “property belonging to another.”

[13]Having heard argument the District

Judge concluded:

“The prosecution do not deny this area of substantive domestic law has been fraught with difficulties especially at the material time of the instant conduct. To my mind Blackstone’s is wise in counselling against theft charges. The enactment of the Fraud Act 2006 “solved”, if that is the correct expression, many of the difficulties that bank credits and chose in action were found to have caused the substantive criminal law of theft. As I read the conduct specified in the instant EAW the complaint is not of a fraud ab initio but of manipulating the account to try and maintain credit facilities by drawing more than agreed and paying in somewhat less. I feel driven to conclude on the instant information the particularised conduct is not such as, at the material time, would/could have been an offence charged under the law in this jurisdiction.”

The Appeal

[14]It is common ground between the parties that:(a) before extradition can be ordered the court must be satisfied to the criminal standard that the conduct complained of or relied upon in the EAW and the further information would have constituted an offence at the time under the law of England and Wales;

(b) the requesting state does not have to prove the guilt of the respondent of the domestic offence but only that the conduct, if proved, would constitute an offence;

[15]It is helpful to identify from the information in the EAW and the further information in the letter of 9th April 2010 the conduct of the respondent which is relied upon. There is no suggestion in respect of either count that the opening of the accounts and the obtaining of the credit/overdraft facilities were fraudulent or dishonest from the start. In respect of each account the bank provided a debit card and on each account the respondent was given overdraft or credit facilities – an overdraft limit of 20,000 zlotys on account 1 and a monthly limited of 50,000 zlotys on account 2. The credit agreements between the bank and the respondent required the respondent to make “monthly contributions” (account 1) and to “settle the debit balance created” (account 2). When the overdraft limit had been reached on account 1 the respondent used a debit card to withdraw cash from that account. In respect of account 2 the respondent continued to pay money into the account although less than he should have but such payments were enough to ensure that the bank continue to regard him as a good risk. At the same time, however, he withdrew a substantial amount of cash from that account. It is not specifically stated that he used a debit card to do this but Miss Westcott for the judicial authority submits that it is clear from the information available that the debit card was used. I agree. The parties agree that there were two methods by which the respondent could have withdrawn cash from the bank. Firstly, he could have done so by attending at a bank (his own or another) and obtained cash from the bank employee (method 1) and secondly he could have done so by using a debit card at an ATM (cash point) and obtained cash without the need to interact with a bank employee (method 2).

[16]Addressing method 1 Miss Westcott maintains her submissions made before the District Judge that the respondent’s conduct amounts to theft, contrary to s.1 of the Theft Act 1968 and obtaining a pecuniary advantage by deception contrary to s.16(2)(b) of that Act. Indeed in paragraph 4(a) of the grounds of appeal it is submitted that the conduct specified in the European Arrest Warrant would constitute two offences of obtaining a pecuniary advantage by deception contrary to s.16 of the Theft Act 1968. However, the appellant’s primary submission before me has been that the conduct of the respondent would amount to offences of obtaining services by deception contrary to s.1 of the Theft Act 1978. Section 1 provides:

“1. Obtaining services by deception (i) A person who by any deception dishonestly obtains services from another shall be guilty of an offence. (ii) It is an obtaining of services where the other is induced to confer a benefit by doing some act or causing or permitting some act to be done on the understanding that the benefit has been or will be paid for. (iii) Without prejudice to the generality of sub-section (2) above, it is an obtaining of services where the other is induced to make a loan, or to cause or permit a loan to be made on the understanding that any payment (whether by way of interest or otherwise) will be or has been made in respect of the loan.” (i) A person who by any deception dishonestly obtains services from another shall be guilty of an offence. (ii) It is an obtaining of services where the other is induced to confer a benefit by doing some act or causing or permitting some act to be done on the understanding that the benefit has been or will be paid for. (iii) Without prejudice to the generality of sub-section (2) above, it is an obtaining of services where the other is induced to make a loan, or to cause or permit a loan to be made on the understanding that any payment (whether by way of interest or otherwise) will be or has been made in respect of the loan.”

[17]Sub-section 3 was added with effect from the 18th December 1996 and was, therefore, in effect at the relevant time.

[18]The service or services which Miss Westcott submits the respondent obtained is the benefit of the bank’s participation in the banking system and in that submission she relies on the words of May LJ in R v Sofroniou [2004] 1CAR 35 at paragraph 2:

“ … In our judgment, there should no longer be any doubt but that dishonestly inducing a bank or other organisation to issue a credit card constitutes obtaining services. We also consider that the dishonest operation of a bank or building society account over a period and a dishonest use of a credit card over a period constitutes obtaining services within the section. We reach this conclusion … seeing no proper distinction between the opening of a bank account and its subsequent operation. What the bank provides in each instance is the benefit of their participation in the banking system which can, in our judgment, properly be described as a service or services. We do not need to decide for the purposes of the present appeal whether dishonestly inducing a bank to negotiate a single cheque or the dishonest use of a credit card on a single occasion would constitute obtaining services within the Section. Mr Counsens was inclined to concede that it would and we can see logically it might, given our earlier decisions.”

[19]Miss Westcott goes on to submit for the purposes of sub-section (2) that there would have been a common understanding that the services of the bank were not being provided gratuitously.

[20]In argument she developed her submission that in addition to obtaining services the respondent also obtained a pecuniary advantage under s.16(2)(b) of the 1968 Act, the pecuniary advantage being an improvement of the terms upon which he was allowed to borrow by way of overdraft. In support of this submission she relied upon the cases of R v Kovacs

[1974] 1WLR 370

, R v Charles

[1977] AC 177

and R v Bevlin (1987) 84 CAR 143 and in the light of a concession made by Mr Blake during argument to which I shall return it is not necessary to refer further to these cases.

[21]“Deception” for the purposes of s.1 of the 1978 Act and s.16 of the 1968 Act has the same meaning as in s.15(4) of the 1968 Act which provides:

“Deception means any deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person.”

[22]The deception would have taken place, Miss Westcott contends, when the respondent sought a withdrawal of cash from a bank employee and falsely represented, impliedly or implicitly, that he was entitled and authorised to withdraw money and/or to use the debit card and/or that he was complying with and maintaining payments under the agreement which existed between the bank and him.

[23]As to the necessary element of dishonesty for both the s.1 and s.16 offences Miss Westcott submits that the words used in the information provided make it plain that the conduct of the respondent was dishonest: “to the detriment of the bank”, “he was aware he was acting to the detriment of the bank”, “he feigned that obligation” and “he committed a larceny of money” all import the necessary state of mind.

[24]Mr Blake for the respondent makes the preliminary point that it is regrettable that the appellant’s primary submission on this appeal that the respondent’s conduct equates to obtaining services by deception was not made before the District Judge. That fact together with the multiplicity of offences to which the appellant says the respondent’s conduct equates (obtaining services by deception, obtaining a pecuniary advantage by deception, obtaining property by deception and theft) undermine the appellant’s case and illustrate the complexity of this area of domestic law.

[25]That complexities have arisen in this area is beyond doubt. Stanley Burnton J (as he then was) referred to them in his judgement in In re Holmes

[2004] EWHC 2020

(Admin) at paragraph 28 where he also emphasised the need for the court to look realistically at the information provided for the purposes of extradition. “We make two final points. First, this case again demonstrates the unnecessary technicality of English law of theft and fraud particularly in relation to funds in bank accounts and bank transfers. Offences under the Theft Act 1968 are perhaps the most common offences, and the law on them should be the most simple rather among the most technical. Secondly, it is scarcely surprising that information provided by foreign courts and prosecution authorities, which established an offence or offences under their own law, does not address specifically the technical requirements of English law … The conduct alleged in the German Arrest Warrant is very obviously criminal conduct of a most serious nature, and it would have been highly regrettable if extradition were not available … These points highlight the need for the court to consider the information provided for the purposes of extradition proceedings realistically rather than over critically.”

[26]Mr Blake submits that this case is simply about the respondent’s breaching a term of a contract which existed between the bank and him. The respondent’s conduct might be morally reprehensible but it is not criminal; it produced a civil debt but cannot constitute a crime in England and Wales.

[27]However, Mr Blake concedes that by obtaining cash from a bank employee the respondent obtained a pecuniary advantage within the meaning of s.16(2)(b) as submitted by Miss Westcott and he does not strenuously take issue with the appellant’s assertion that services within the terms of s.1 of the 1978 Act were obtained. His fundamental point in relation to these offences is that it is not clear from the EAW or the further information that any deception occurred or is alleged to have occurred and that there is nothing to support an inference of dishonesty.

[28]I reject Mr Blake’s submissions on these matters. I am satisfied to the criminal standard that when the respondent withdrew cash by method 1 he obtained both a pecuniary advantage and services and that he did so by deceiving the bank employee into believing that he, the respondent, was entitled to do so when in fact he was not. As to dishonesty, it is correct that the judicial authority did not specifically state in response to the request made of them whether it was alleged that the respondent was dishonest in making the withdrawals. However, from the description of the respondent’s conduct contained in the EAW and the further information, dishonesty can be readily inferred. It is not necessary for the requesting authority to identify or specify in terms the relevant mens rea of the English offence. “It is sufficient if it can be inferred by the court from the conduct that is spelled out in the warrant and further information.” Per Richards LJ in Zak and Poland2008 EWHC 470 (Admin) at paragraph 16.

[29]I, therefore, find that the respondent’s conduct in withdrawing money by method 1 would constitute both an offence of obtaining services by deception and of obtaining a pecuniary advantage by deception. In the light of this conclusion it is not necessary to consider further in the context of method 1 offences of obtaining property by deception or theft.

[30]Obtaining money from an ATM or cash point would, Miss Westcott submits, also constitute an offence of obtaining a pecuniary advantage or obtaining services by deception. In support of her submission that a deception can be practiced on a machine she relies on the comments of Stanley Burnton J in the case of In re Holmes supra at paragraph 12: “Davies v Flackett [1973] RTR 8 is not binding authority for the proposition that deception of a machine or computer is not deception for the purposes of the Theft Act. Ackner J so stated in terms in his judgment in that case. We nonetheless accept that “The prevailing opinion is that it is not possible in law to deceive a machine”: see Smith, The Law of Theft, 8th ed (1997) p97 para 4-12 and Griew, The Theft Acts 1968 and 1978, 7th ed (1995), p148, paras 8-12 and 8-13”.

[31]Professor Sir John Smith QC maintained “the prevailing opinion” in Smith and Hogan Criminal Law 10th Edition (2002). At page 590 he stated:

“Deceit can be practised only on a human mind. Where D obtains property or a pecuniary advantage as the result of some dishonest practice on a machine, without the intervention of a human mind, he cannot be guilty of an obtaining offence.”

[32]For the purposes of this case I am prepared to assume, without deciding the point, that a deception cannot be practised on a machine. Miss Westcott’s secondary submission is that, in any event, an offence of theft would be committed when money is obtained from a machine. She submits that all the ingredients of theft would be made out; the respondent would appropriate property, the cash, which belonged to the bank and the intention permanently to deprive and dishonesty can be inferred from the available information.

[33]Mr Blake, however, submits that theft cannot be made out on the information available. Dishonesty and the necessary intention cannot be inferred from the information provided by the judicial authority but, in any event, the property i.e. the cash, is not “property belonging to another”. He submits that where there is a withdrawal of cash beyond the permitted overdraft limit, there is no obligation on the bank to provide the sum of money requested. However, if the bank provides the money requested it transfers a sum of money into the account holder’s account, the new balance in the account belongs to the account holder and the cash withdrawn is the property of the account holder. It follows, says Mr Blake, that when the respondent obtained cash from the machine it was his own cash.

[34]Mr Blake goes on to submit that in Preddy the House of Lords held: “That where a bank transferred a sum into another account the new bank balance in the receiving account did not represent property belonging to another. Although the amounts may have been the same (in the sense that that one account’s balance diminishes by £100 while the other increases by £100) what in fact occurred in such a situation was that the chose in action held by the bank in their balance was diminished or extinguished pro tanto. At the same time a new, fresh chose in action was created in the receiver’s account of the equivalent value. In short it was not the same property. When money was withdrawn from the Respondent’s account that was in excess of his overdraft limit the money itself is still withdrawn from the Respondent’s account, hence why the bank balance diminishes. It follows, therefore, that the instant case is governed by the analysis in Preddy and the application of the ratio in that case leads to the conclusion that the chose in action belonging to the bank has not been appropriated; it has been extinguished and a new chose in action has been created, vested in the bank but held against the Respondent”.

[35]I am unable to accept the submissions of Mr Blake. The property appropriated by the respondent, the cash produced by the machine, had never been in the respondent’s bank account. It is true that the request for and the withdrawal of the cash beyond the overdraft limit would create a further debit on the respondent’s account but that does not retrospectively create any right of property in the respondent; see R v Kohn supra at page 408 per Geoffrey Lane LJ. Norcan it mean that the cash belonged to the respondent. Dishonesty and the necessary intention can be inferred from the information available and I am satisfied that withdrawing cash from the machine would amount to an offence of theft.

[36]Accordingly, I am satisfied that the conduct described in the EAW and the further information amounts to offences in this jurisdiction.

The Order

[37]I find, therefore, that the District Judge wrongly answered the question whether dual criminality was proved in this case. I quash the order discharging the requested person and remit the case to the District Judge directing him to proceed as he would have been required to do had he found dual criminality proved.

[38]I remand the respondent on bail on the existing terms and require him to surrender himself to the Magistrates’ Court when called upon to do so.