R v Kohn

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeLORD JUSTICE GEOFFREY LANE
Judgment Date28 Jun 1979
Judgment citation (vLex)[1979] EWCA Crim J0628-1
Docket NumberNo. 839/A/77

[1979] EWCA Crim J0628-1

IN THE COURT OF APPEAL

CRIMINAL DIVISION

Royal Courts of Justice

Before:

Lord Justice Geoffrey Lane

Mr. Justice Swanwick

and

Mr. Justice Eastham

No. 839/A/77

Regina
and
David James Kohn

MR. A. TYRRELL, Q.C. and MR. G. ROSE appeared on behalf of the Appellant.

MISS GODDARD appeared on behalf of the Crown.

LORD JUSTICE GEOFFREY LANE
1

On 19th January 1977 at the Central Criminal Court, this appellant, David James Kohn, was convicted of eight counts of theft and on the following day he was convicted of ten further similar counts. He was found not guilty by direction of two other thefts (counts 1 and 2) and he was acquitted of nine more counts (counts 17, 18, 21, 22 and counts 25 to 29).

2

He was sentenced to varying concurrent terms of imprisonment: on counts 3, 5, 7, 9, 13, 19, 20, 23 and 24 to three years' imprisonment; on count 15 to two years' imprisonment; on count 11 to eighteen months' imprisonment; and on counts 4, 6, 8, 10, 12, 14 and 16 to twelve months' imprisonment.

3

He now appeals against conviction on points of law.

4

The background of the case in general, without going into particulars for the moment, was this. The appellant is a qualified accountant, who had a variety of business interests. By 1972 he had become a shareholder and director in a company which was called Panelservice Ltd. That company had been incorporated in about 1970. The chairman and majority shareholder was a man called Mr. Aust, who had been a friend of the appellant for some considerable time. The company dealt in plastic lighting material. The appellant's task in the campany was to act in charge of the finances, while Mr. Aust dealt with the sales side.

5

Not long after these events, namely in about the summer of 1973, Mr. Aust decided to go to Rome in order to stay there, with a view to taking Holy Orders. Some arrangement was made between the two of them as to the conduct of Panelservice affairs whilst Mr. Aust was away. Unfortunately there was no legally drawn agreement. Certain things were clear. First of all Mr. Aust did not wish to relinquish entirely his interest in the company. But as to the rest, there was a dispute as to the precise arrangement which the two of them had made to cover Mr. Aust's absence.

6

Mr. Aust came back from Borne on more than one occasion, and certainly in June 1974, because on that occasion, on his return he examined the books of the company and he was plainly worried by what he there saw. He told the appellant of his fears and he said that he thought the police should be informed. One of the matters of appeal was the fact that the appellant then was reported to have said "I may go to prison for all this". As will emerge in a moment, complaint is made about the way in which the Judge dealt with that fact. However in the upshot Mr. Aust engaged the services of a firm of accountants in order to examine the books, and then the accountants, so the prosecution alleged, found that there were a large number of payments which had been made by the appellant, which appeared to have been made not for the benefit of Panelservice, but for the benefit of the appellant himself. There was a document which came to be known as 'Appendix A', which again figured in the trial. That was so to speak an addendum to 'the accounts prepared by this firm of accountants and in that document appear the various matters which are alleged by the prosecution to have been misappropriations, to use a general term, by the appellant.

7

The way the indictment was drawn was, broadly speaking, with one or two exceptions which need not concern us at this stage, was to allege each alleged defalcation by way of two counts. The first of the two counts in each case alleged the theft of a thing in action, namely a debt in the sum of £x owed by the National Westminster Bank Ltd. to Panelservice Ltd; and the other of the two counts in each case alleged that the defendant on or about such and such a date stole a cheque No. so and so, the property belonging to Panelservice Ltd.

8

The counts, as appears from what I have already stated, alleged these events on various dates and, not surprisingly, the state of the particular account at the National Westminster Bank varied from time to time, with the result, again as will emerge when one comes to examine the notice of appeal in detail, that some of the cheques were drawn or presented at a time when the account was in credit, some of the cheques were drawn or presented when the account was in overdraft but within the limits of the overdraft facility, and there was one count, count 7, in which the cheque was drawn or presented at a time when the account was first of all in overdraft, and secondly beyond the agreed limit of the overdraft, that is to say the limit agreed between the bank and Panelservice.

9

Turning to the particular counts with which we are involved, counts 1 and 2: the learned Judge directed the jury to return verdicts of not guilty on those two counts and we can accordingly dismiss those from our consideration.

10

Counts 3 to 10 dealt with certain transactions between the defendant and two companies: Environmental Products Ltd., a company which figures in the story, and Happy Pets Ltd. Three payments were ostensibly made to Environmental Products Ltd., of which the defendant was a director, and one payment was made for the acquisition of the other company, Happy Pets, which was a company in which Environmental Products were interested. Those payments were between January and March 1973.

11

Counts 11, 12, 15 and 16: These were alleged as the payment of personal debts by the defendant involving a company called Alerexion Ltd. which was incorporated in November 1971. The defendant was a director of that company. In May 1973, so the allegation went, he paid a debt of £183, which was owed by Alerexion and paid it out of Panelservice funds. In September of that year, it was said, he paid a £250 debt out of Panelservice funds.

12

The next counts were 13 and 14: In July 1973, so it is said, the appellant paid F.J. Edwards £1500 out of the company's funds.

13

Counts 19, 20, 23 and 24 were alleged to be payments to an associated firm, Sylvmore. The defendant was a director of that company. In November 1973 and January 1974, it was said, he paid a total of £1530 to that company out of Panelservice money. It was said that the money was used to pay interest on a loan which the defendant had guaranteed.

14

The prosecution case, broadly speaking, was that these sums were dishonestly abstracted and accordingly were stolen. Further the books of the company and the accounts had been so drawn as to hide or to attempt to hide the fact that these defalcations had been made. The defence, again broadly speaking, on the other hand was that, so far as Environmental Products counts were concerned, these had been legitimate trade investments made by the defendant on behalf of Panelservice Ltd., there was nothing dishonest about it. Although perhaps Mr. Aust had not been told what was going on, nevertheless they were legitimate attempts by the defendant to forward the interests of Panelservice by making investments which it was hoped would be profitable to Panelservice. So far as the remainder of the counts were concerned, although it was conceded that these payments had been made, nevertheless, went the defence, it was perfectly legitimate, because by arrangement with Mr. Aust the defendant was entitled to certain sums from the company. Those sums had been accumulated in one way or another and accordingly he was entitled to make use of the money in the way that he did, because it was in effect his to use.

15

The dispute in short between the two sides was this. First of all, so far as Environmental Products was concerned, the prosecution alleged that the defence was simply an excuse in an endeavour to cover up what was plainly a removal of funds for his own purposes. Secondly, so far as the use of the accumulated funds was concerned, (a) there were no such funds available for him under the terms of the agreement between the two men and/or (b) even if this was wrong, what the defendant was using was not accumulated funds which stood to his name, but the company's funds. That, alleged the prosecution, was plain from the way in which the books were kept, or more accurately speaking were not kept, the defendant being a qualified accountant. That realty was the basis of the case. There was a mass of detail which had to be examined, and the case took something over 30 working days at the court below.

16

The situation with regard to the various counts now requires somewhat closer investigation. So far as counts 3 to 10 are concerned, those, as already indicated, involve the relationship between, and transactions between, the defendant and Environmental Products. In June 1972, that is to say after he became a full-time director of Panelservice, the defendant became a director of Environmental Products (to whom I shall refer in future as "E.P."). In that he had a 25 per cent holding. It was a £100 company and apparently the defendant thought that it had good potential for success in the future. The circumstances surrounding the company were perhaps, at first blush, not very promising. The general manager of the company, Mr. Stone, was a bankrupt and his wife, Mrs. Penelope Stone, became a director of the company in October of that year. In February 1973 the defendant became the Secretary of the company. Very shortly afterwards, namely on 23rd February of that year, he guaranteed a loan of no less than £17,000, the loan being made to Mrs. Penelope Stone by a concern known as Alton Finance.

17

On 27th February 1973, at a time when the...

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