‘Obtaining property by deception’, mortgage fraud and funds transfer
| Pages | 88-91 |
| Published date | 01 January 1997 |
| Date | 01 January 1997 |
| DOI | https://doi.org/10.1108/eb024913 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
Journal of Financial Regulation and Compliance Volume 5 Number 1
'Obtaining property by deception', mortgage fraud
and funds transfer
R v Preddy & Others. (House of Lords: Lords Mackay, Goff, Jauncey, Slynn and
Hoffmann)
Date of Judgment: 10 July 1996
Reported at: 3 Weekly Law Reports 1996
p.255
THE FACTS
The appellants had made mortgage applica-
tions to building societies and other lenders
which contained false statements. The sums
obtained by the appellants by way of mort-
gage advances were actually paid to them by
means of telegraphic or electronic funds trans-
fer or by cheque.
THE ACTION
The appellants had been charged with and
convicted of obtaining or attempting to obtain
by deception property belonging to another
contrary to s 15 Theft Act 1968 which reads:
"(1) A person who by any deception
dishonestly obtains property belonging to
another, with the intention of permanently
depriving the other of it, shall on conviction
on indictment be liable for a term of impri-
sonment not exceeding 10 years. (2) For the
purposes of this section a person is to be
treated as obtaining property if he obtains
ownership, possession or control of it, and
'obtain' includes obtaining for another or
enabling another to obtain or retain. . . ."
s 4 of the same Act provides that "property"
in s15(1) includes money and all other prop-
erty real and personal including choses in
action and other intangible property. An
appeals against conviction to the Court of
Appeal failed but the House of Lords granted
leave to appeal further.
DECISION
The House of Lords allowed the appeals
against conviction under s15(1) Theft Act
1968.
The appellants' main argument was
essentially, that when the nature of the mort-
gage advances (especially the mode of funds
transfer) was carefully analysed it was not pos-
sible to point to any "property" belonging to
the lending institutions which was actually
obtained by the appellants and so the offence
of obtaining by deception property belonging
to another could not be established on these
facts.
Lord Goff gave the main judgment with
which his brethren all concurred and he began
by describing each stage of a typical mortgage
transaction including the crucial (for the pur-
poses of these appeals) "Payment" stage:
"Payment. A few days before completion,
BS [the Building Society] will put S [the
solicitor acting for P, the purchaser and
usually the BS too] in funds to complete the
mortgage transaction. This is generally by
cheque or electronic transfer. (a) BS's bank
account may be in credit, so that the effect
of the transfer is to deplete the credit
balance by the transfer; or it may be
overdrawn, in which event the debt is
increased by the transfer. P will be unaware
of the state of BS's bank account before the
transfer, as to which there is no evidence in
the case of the present appeals. (b) If the
money is transferred electronically, there
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