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You are here: BAILII >> Databases >> The Law Commission >> Offences of Dishonesty: Money Transfers [1996] EWLC 243(4) (15 October 1996) URL: http://www.bailii.org/ew/other/EWLC/1996/243(4).html Cite as: [1996] EWLC 243(4) |
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FILLING THE LACUNA BY EXTENDING THE EXISTING OFFENCES
4.1 We originally envisaged that the Preddy lacuna would be filled by extending the offence of obtaining property by deception, contrary to section 15 of the 1968 Act. This seemed the most natural approach, since most people would regard the obtaining of funds transferred from anothers account as an obtaining of anothers property. It would also return the law to what it was generally assumed to be, and had been held by the Court of Appeal to be,(1) before Preddy. The draft Bill circulated for comment therefore adopted this approach, and provided (in effect) that, where funds are transferred from one account to another, the holder of the second account should for the purposes of section 15 be deemed to have obtained a sum of money from the holder of the first.
4.2 Some of those we consulted(2) suggested that this approach did not go to the heart of the matter, and that the fundamental problem (of which Preddy was only one symptom) lay in the difficulty of applying the concept of property to intangible property such as choses in action. It was argued that the cleanest solution to the problem would be to extend not section 15 of the Act but section 4(1), which defines "property" for the purposes of both section 15(3) and the offence of theft:(4)
"Property" includes money and all other property, real or personal, including things in action and other intangible property.
4.3 Although section 4 expressly includes things in action and other intangible property, it was suggested to us that there is in practice great difficulty in establishing whether funds moving between accounts can be described as property; and that it would greatly simplify the law if section 4 were amended so as to make it clear that they can. Such an amendment would apply for the purposes both of the offence of obtaining property by deception and of theft.
4.4 But, as we understand Preddy, it did not involve any narrowing of the concept of property: it merely decided that the transfer of funds from one account to another cannot be described as an obtaining, by the holder of the account credited, of the same property as that lost by the holder of the account debited. This appears to us to be a problem arising from the requirements of section 15(1), not from the concept of property.
4.5 We are of course very much concerned with the practical problems of applying the Theft Act to intangible property, and we hope to address these problems in our forthcoming consultation paper; but they have been well known for some time, and cannot be attributed to the decision in Preddy. We have concluded that it would be wrong, in the present exercise and without full consultation,(5) to recommend such a radical change to the conceptual framework of the Act.
4.6 Our consultation also revealed a number of difficulties in bringing the obtaining of funds by deception within the offence created by section 15. These difficulties arise from the structure of that offence. In addition to the elements of deception and dishonesty, it requires
(1) that certain property should exist,
(2) that that property should belong to another,
(3) that the defendant should obtain it, and
(4) that the defendant should act with the intention of permanently depriving the other of it.
4.7 The approach adopted in the draft Bill circulated for comment was, in effect, to deem the first three requirements to be satisfied in certain circumstances: the holder of the account to which the funds are transferred was to be regarded as having obtained a sum of money from the holder of the account from which they are transferred. This "sum of money" was purely notional: as Preddy makes clear, the transferee does not in fact obtain any money from the transferor at all. Some of those consulted(6) were troubled by the artificiality of this approach. The Serious Fraud Office, for example, wrote:
In the end, we have to agree that the use of deeming provisions and the references to a sum of money cause intractable difficulties.
4.8 We share these reservations. This Commissions objective in this exercise was to recommend legislation which is easy to understand and to apply.
4.9 As for the requirement of intention permanently to deprive, the consultation process convinced us that it would be wrong for the legislation to remain silent on the point, since there would be room for argument as to what the requirement was intended to mean in this context. In the ordinary case of theft, or the obtaining of tangible property by deception, it means only that the defendant must have intended not to return the very property that is appropriated or obtained: it is not a defence in itself (though it may of course be relevant to the issue of dishonesty) that the defendant intended to replace that property with other property of the same value. In the Preddy situation, where the victims chose in action is actually extinguished, it is hard to see how the requirement of intention permanently to deprive might not be satisfied. As Sir John Smith put it in his response,
[the victims] thing in action is necessarily destroyed in whole or in part by the fraud so he cannot but be permanently deprived of it. [T]here is necessarily an intention permanently to deprive, as in every case of intention to destroy the property of another. All the Kings horses and all the Kings men cannot put the thing in action together again. They might give [the victim] a new one, but that one is lost for ever.
4.10 Even so, on reflection it seemed to us undesirable to create a special form of the offence under section 15 in which the requirement of intention permanently to deprive either does not apply or is somehow deemed to be satisfied, which comes to the same thing. As the Serious Fraud Office put it,
such a solution would create strange anomalies, however "technical", between the situation of a defendant charged under [the extended version of section 15] and the situation of another defendant charged with a straightforward section 15 or theft. We would expect resistance to a complete abandonment of the requirement, even during the passage of the Bill.(7)
4.11 For these reasons we concluded that the approach of extending the offence under section 15 was not appropriate. Having identified a kind of conduct which at present may not be criminal but which clearly should be, we can most simply remedy the position by recommending a completely new offence which such conduct would constitute. Such an offence can be defined in whatever terms most simply describe the conduct in question. There is no need for the artificiality that is involved in deeming what has happened to fall within the requirements of section 15 when in fact it does not. We recommend the insertion into the Theft Act 1968 of a new section 15A, creating an offence of dishonestly obtaining a money transfer by deception. (Recommendation 1)
Footnotes to Part IV
(1) Williams and Crick, 30 July 1993, CA No 91/3265/W3.
(2) Eg Mr Justice Mitchell, Judge Rivlin QC and the Criminal Bar Association.
(3) See s 34(1).
(4) See s 1(3).
(5) See paras 1.11 1.14 above.
(6) Eg Professor Edward Griew.
(7) The SFO nevertheless saw this as "the most practicable way forward". The option of a new offence had not at this stage been canvassed.
