R v Preddy

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Mackay of Clashfern L.C.,Lord Goff of Chieveley,Lord Jauncey of Tullichettle,Lord Slynn of Hadley,Lord Hoffmann
Judgment Date10 July 1996
Neutral Citation[1996] UKHL 13
Date10 July 1996

[1996] UKHL J0710-2

HOUSE OF LORDS

(ON APPEAL FROM THE COURT OF APPEAL) (CRIMINAL DIVISION)

The Lord Chancellor

Lord Goff of Chieveley

Lord Jauncey of Tullichettle

Lord Slynn of Hadley

Lord Hoffmann

Regina
and
Preddy
(Appellant)
Regina
and
Slade
(Appellant)
(Consolidated Appeals)
Regina
and
Dhillon
(Appellant)
(Conjoined Appeals)
1

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT IN THE CAUSE

Lord Mackay of Clashfern L.C.

My Lords,

2

I have had the privilege of reading in draft the speech to be delivered by my noble and learned friend Lord Goff of Chieveley. For the reasons he gives I would allow these appeals and quash the convictions of the appellants.

Lord Goff of Chieveley

My Lords,

3

There are before their Lordships appeals from two decisions of the Court of Appeal. In the first, [1995] Crim.L.R. 564 the Court dismissed appeals by John Crawford Preddy and Mark Slade, and in the second (unreported) they dismissed an appeal by Rajpaul Singh Dhillon, against conviction on a number of counts of obtaining or attempting to obtain property by deception, contrary to section 15(1) of the Theft Act 1968. All three were sentenced to terms of imprisonment, but each had been released before his appeal came before your Lordships' House. I propose immediately to set out the relevant terms of section 15, which provides as follows:

"15(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 imprisonment not exceeding ten years.

(2) For 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.

(4) For purposes of this section '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."

4

To this I must add that, by section 4(1) of the Act (applied to section 15(1) by section 34(1)), it is provided that property includes money and all other property, real or personal, including things in action and other intangible property.

5

The cases before your Lordships are both concerned with what are usually called mortgage frauds. The appellants applied to building societies or other lending institutions for advances which were to be secured by mortgages on properties to be purchased by the applicant. In relation to each count, the mortgage application or accompanying documents contained one or more false statements, the applicant knowing the statements to be false. The statements related to, for example, the name of the applicant; his employment and/or income; the intended use of the property; or the purchase price. Some of the counts related to mortgage applications which were refused, in which event the applicant was charged with an attempt to obtain property by deception. The remaining counts related to successful applications, the applicant then being charged with the full offence.

6

At the trial of Preddy and Slade, the Crown relied on some 40 transactions between October 1988 and August 1989 involving advances from various lending institutions, in some cases to one or other individually, in some cases to them both together, the advances totalling a sum in excess of £1 million. Preddy was convicted of eight counts alleging the full offence, and seven attempts; Slade was convicted of five counts alleging the full offence, and four attempts. It is plain from the dates that all the advances were sought during the period of the property boom. Both appellants accepted that the applications were supported by false representations. But they were confident that the advances would be repaid because, in the economic climate at that time, the houses could and would be resold at a price higher than the purchase price and, even if there were a shortfall, this would be covered by an endowment policy taken out at the time of the advance. Indeed the lenders appear to have been more interested in the value of the property in question than in the personal details of the applicant.

7

Dhillon was tried on an indictment containing 7 counts of obtaining or attempting to obtain mortgage loans by deception. In his case, the misrepresentations related to the intended occupancy of the properties in question (which in all cases were subsequently let to tenants); failure to declare the existence of other mortgage commitments; or particulars of employment. This appellant's case also was that he intended to honour his obligations. Again the lending institutions were not really concerned with his personal details, but rather with the value of the property in question which in each case was more than enough to cover the debt if the property were sold.

8

The central point in each appeal was whether, having regard to the nature of the transactions, the appellants were properly charged with and convicted of obtaining property by deception contrary to section 15(1). At both trials, submissions were made that no property of the lending institutions had been obtained, or attempted to be obtained, by the appellants. I shall return to the precise basis of this submission at a later stage. The submissions were in each case rejected by the judge, and the appellants were then convicted. The same submissions formed the principal ground of the appeals before the Court of Appeal. The Court of Appeal first heard the appeals of Preddy and Slade, and gave a reasoned judgment in which they dismissed their appeals. It was recognised by counsel for Dhillon that, if the appeals of Preddy and Slade were dismissed, Dhillon's appeal, which raised the same points of law. must inevitably fail; and so the Court then gave a formal judgment dismissing his appeal. The Court refused all three appellants leave to appeal to your Lordships' House, but certified certain questions as fit for consideration by your Lordships, to which I will refer in a moment. Leave to appeal was granted by this House.

9

Such, in outline, is the factual background against which the appeals arose. Mr. Krolik, in his powerful argument on behalf of Preddy and Slade, submitted however that it was essential, for the purposes of addressing the points of law which arose on the appeal, to have regard to the precise circumstances in which mortgage advances are made. With that submission I agree, and I will next set out a summary which owes much to the assistance provided to the Appellate Committee by Mr. Krolik.

10

The typical mortgage transaction

11

(1) Agreement to purchase. P agrees to purchase Blackacre from V for an agreed price, subject to mortgage.

12

(2) The nature of the advance. P applies to BS for an advance to be secured by a mortgage over Blackacre. The advance, if made, will be repayable over a period of time; and the mortgage will frequently be an endowment mortgage, whereby P pays only instalments of interest to BS, but in addition pays regular premiums on a life assurance policy taken out with an insurance company. The life policy is charged to BS as additional security. On expiry of the mortgage term, the capital sum advanced by BS will be redeemed from the proceeds of the insurance policy payable on its maturity.

13

(3) The nature of the application. P's application to BS requires him to furnish information on a number of matters, e.g. his personal finances: Blackacre; the intended use of Blackacre. BS will use this information to ascertain whether the loan falls within its lending criteria, and whether P is likely to be able to meet his obligations to BS. BS also requires a personal reference for P, and a valuation of Blackacre; and it is usual for P to be required to nominate a solicitor who will act for him in the transaction.

14

(4) The transaction proceeds. If BS approves P's application, it submits a written offer of an advance to P, and obtains his agreement. P then instructs S as his solicitor, and BS usually instructs S to act as its solicitor too. S will open negotiations with V's solicitor: exchange purchase contracts; and investigate title. S will report on title to BS. and notify it of the anticipated completion date.

15

(5) Payment. A few days before completion, BS will put S in funds to complete the mortgage transaction. This is generally by cheque or electronic transfer.

16

(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 was no evidence in the case of the present appeals.

17

(b) If the money is transferred electronically, there will be a simultaneous debit of BS's bank account and credit of S's bank account. If the money is transferred by cheque, S's bank will on receipt of the cheque immediately credit S's bank account, and BS's bank account will be debited when the cheque is presented to its bank.

18

(c) On receipt of the money, S will ordinarily place it in his client account. In the present cases, there was no evidence as to how S held the funds pending completion of the mortgage transaction.

19

(6) Completion V executes a deed of transfer or conveyance, which is held by S in escrow pending completion; P executes a mortgage deed in favour of BS; S transmits the purchase price to V's solicitor. The purchase price comprises the funds received by S from BS, but may also include funds provided by P, and will usually be transmitted to V's solicitor by banker's draft. S will register P's interest, and BS's legal mortgage. In the present cases, there was no evidence of completion.

20

(7) ...

To continue reading

Request your trial
182 cases
  • R v Williams (Roy)
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • Invalid date
  • Pearson v R
    • Cayman Islands
    • Court of Appeal
    • 2 Mayo 2000
    ...(1997), 97 A Crim R 267; on appeal, sub nom. Parsons v. R.UNK(1999), 73 A.L.J.R. 270; 160 Aust. L.R. 531, followed. (4) R. v. Preddy, [1996] A.C. 815; [1996] 3 All E.R. 481, distinguished. (5) R. v. Shivpuri, [1987] A.C. 1; [1986] 2 All E.R. 334, applied. Legislation construed: Interpretati......
  • R v Graham
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 25 Octubre 1996
    ...been listed and heard together because they raise a number of common questions prompted by the recent decision of the House of Lords in R v Preddy [1996] 3 WLR 3Mrs Graham was convicted by a jury of attempting to obtain property, namely monies, by way of a mortgage loan from a building soc......
  • R v Horsman
    • United Kingdom
    • Court of Appeal (Criminal Division)
    • 13 Junio 1997
    ...sentenced to 15 months imprisonment. A further two counts were left to remain on the file. Following the decision of the House of Lords in R v Preddy [1996] 2 Cr.App.R. 524, the appellant applied for an extension of time for appealing his conviction, the decision in Preddy (as is now common......
  • Request a trial to view additional results
1 firm's commentaries
  • The Fraud Act 2006: Has It Had Any Impact?
    • United Kingdom
    • Mondaq United Kingdom
    • 19 Noviembre 2008
    ...15 of the Theft Act 1968 (obtaining property belonging to another by deception) came under judicial scrutiny in the case of Preddy [1996] AC 815. The case concerned good fashioned mortgage fraud in which the defendants had obtained mortgages from lenders on the basis of false representation......
17 books & journal articles
  • Subject Index, Volume 77, 2004
    • United Kingdom
    • Police Journal: Theory, Practice and Principles Nbr. 77-4, November 2004
    • 1 Noviembre 2004
    ...97 Cr App R 99 143R v Patrascu, October 2004, CA (Crim) 334–339R v Pollock, September 2004, CA (Northern Ireland) 272–276R v Preddy (1996) AC 815 76, 77R v Rowley [1991] 1 WLR 1020 242R v Secretary of State, ex p. Northumbria Police Authority [1988] 2WLR 590 142R v Sed, May 2004, CA (Crim) ......
  • The Fraud Act 2006—Some Early Observations and Comparisons with the Former Law
    • United Kingdom
    • Journal of Criminal Law, The Nbr. 71-3, May 2007
    • 1 Mayo 2007
    ...his account was a newly created debt owed by his bank to him, notproperty belonging to another.46 [1977] AC 177.47 [1982] AC 449.48 [1996] AC 815.The Journal of Criminal This problem continues in the modern context with the increase ininternet fraud, particularly ‘phishing’. Phishers send a......
  • Smuggling, Confiscation and Forfeiture
    • United Kingdom
    • The Modern Law Review Nbr. 65-5, September 2002
    • 1 Septiembre 2002
    ...16 of the Theft Act 1968 (Cmnd 6733, 1977); Theft Act 1978;RvLambie [1981] 1 WLR 78; [1981] 1 All ER 332; Theft Act 1978; RvPreddy [1996] AC 815;[1996] 3 All ER 481; Theft (Amendment) Act 1996.September 2002] RvSmith (David Cadman)ßThe Modern Law Review Limited 2002 reason for the repeal of......
  • Are Tax Evasion Offences Predicate Offences for Money‐Laundering Offences?
    • United Kingdom
    • Journal of Money Laundering Control Nbr. 4-4, February 2001
    • 1 Febrero 2001
    ...Turner [1974] AC 357; Ray [1974] AC 370; MPC v Charles [1977] AC 177; Lambie [1981] 1 WLR 78; [1981] 1 All ER 332; Theft Act 1978; Preddy [1996] AC 815; [1996] 3 All ER 481; Theft (Amendment) Act 1996. (21) Tighe [1996] 1 CAR(S) 314. (22) R v Allen [2000] 2 All ER 142, on appeal from R v Di......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT