Court quashes mortgage fraud convictions

LAW REPORT 30 October 1996

Regina v Graham (HK) and others; Court of Appeal (Criminal Division) (Lord Bingham of Cornhill, Lord Chief Justice, Mr Justice Blofeld and Mr Justice Cresswell) 25 October 1996

If the particulars of offence specified in an indictment could not, even if established, support a conviction for the offence of which the defendant was accused, a conviction for such an offence must be considered unsafe and therefore quashed. A conviction for another offence could only be substituted where such an allegation was expressly or impliedly included in the original count.

The Court of Appeal (Criminal Division) allowed appeals by (i) Hemamali Krishna Graham, (ii) Rupe Lal Kansal, (iii) Sajid Pasha Ali, (iv) Terence Colin Marsh, (v) Garry Allan Graham, (vi) Paul Graham Price and (vii) David Bramish, against convictions for various offences of obtaining or attempting to obtain property by deception.

In cases (i)-(iii), which involved mortgage fraud, the court held that the convictions were unsafe, that no conviction for an alternative offence could properly be substituted, and that a retrial would not be appropriate.

In cases (iv)-(vii), which involved obtaining cheques from finance or insurance companies, the court held there could be no substitution where only an attempt had been charged, but for those counts that charged the appellants with actually obtaining property by deception, convictions should be substituted for alternative offences under section 20(2) of the Theft Act 1968 (procuring the execution of a valuable security by deception) allegations for which had impliedly been included in the original counts.

In each case the original convictions could not be sustained following the House of Lords' decision in R v Preddy (Law Report, 17 July 1996; [1996] 3 WLR 255), that the debiting of a mortgage lender's bank account and the corresponding crediting of the mortgagor's account as a result of the latter's dishonest misrepresentation did not amount to the "obtaining" by the mortgagor of "property belonging to" the lender within section 15 of the Theft Act.

The Crown argued that the should exercise its power under section 3 of the Criminal Appeal Act 1968 to substitute verdicts of guilty to other offences said to be expressly or impliedly included in the counts on which the defendants had been convicted.

For the appellants: (i) and (ii) Ivan Krolik (Macauley Slowe, and Louis Glatt & Co); (iii) Anthony Arlidge QC and Rosamund Horwood-Smart QC (assigned by the Registrar of Criminal Appeals); (iv)-(vii) Richard Lissack QC, who did not appear below, and James Counsell (assigned by the Registrar). For the Crown: (i) Andrew Radcliffe, (ii) William Coker QC, (iii) Jane Sullivan, (iv)-(viii) Bruce Houlder QC and David Perry (all instructed by Crown Prosecution Service).

Lord Bingham LCJ said that under section 2(1) of the Criminal Appeal Act 1968 as amended by the Criminal Appeal Act 1995, if the Court of Appeal concluded that an appellant had been wrongly convicted of the offence charged, or was left in doubt whether the appellant had been rightly convicted of that offence, then it must of necessity consider the conviction unsafe. The court was then subject to a binding duty to allow the appeal.

Before the court could substitute a conviction for an alternative offence, the prosecution had to establish: (1) that the jury could on the indictment have found the appellant guilty of some other offence (offence B), and (2) that the jury must have been satisfied of facts which proved the defendant guilty of offence B.

As to (1) it would be sufficient if, looking at the indictment (not the evidence), the allegation in the particular count expressly or impliedly included an allegation of offence B.

As to (2) the appeal court had only the verdict of the jury to go on. The fact that the jury did not have a proper direction as to offence B was a highly relevant consideration, as was the question whether there were reasonable grounds for concluding that the conduct of the defence would have been materially affected if the appellant had been charged with offence B.

In the typical case where the appeal court was asked to exercise the power under section 3, the alternative offence was a lesser offence, where there was a clear hierarchy of offences at common law or by statute, eg manslaughter for murder or affray for violent disorder.