Secretary of State for Trade v Markus; R v Markus
| Jurisdiction | England & Wales |
| Judge | Lord Wilberforce,Viscount Dilhorne,Lord Diplock,Lord Kilbrandon,Lord Salmon |
| Judgment Date | 19 March 1975 |
| Judgment citation (vLex) | [1975] UKHL J0319-1 |
| Date | 19 March 1975 |
| Court | House of Lords |
[1975] UKHL J0319-1
House of Lords
Lord Wilberforce
Viscount Dilhorne
Lord Diplock
Lord Kilbrandon
Lord Salmon
Upon Report from the Appellate Committee, to whom was referred the Cause Secretary of State for Trade (Respondent) against Markus (Appellant) (on Appeal from the Court of Appeal (Criminal Division)), That the Committee had heard Counsel, as well on Monday the 10th, as on Tuesday the 11th, days of February last, upon the Petition and Appeal of Edward Jules Markus praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal (Criminal Division) of the 24th of July 1974, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen in Her Court of Parliament, might seem meet; and Counsel having been heard on behalf of the Secretary of State for Trade, the Respondent to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal (Criminal Division), of the 24th day of July 1974, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Costs incurred by the Appellant in respect of the said Appeal be paid out of Central Funds in accordance with the provisions of the Costs in Criminal Cases Act 1973, such Costs not to include his Costs of the Petition for leave to appeal to this House, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
I have had the benefit of reading in advance the speech of my noble and learned friend Lord Diplock. I agree that the appeal should be dismissed.
My Lords,
The Appellant was convicted at the Central Criminal Court on the 6th November, 1973 on 12 counts. The first charged him with conspiracy to cheat and defraud such persons as might be induced to invest in "Agri-Fund" by false pretences and fraudulent devices. Eight charged him with conniving at a corporation fraudulently inducing the investment of money in "Agri-Fund" contrary to sections 13(1 )(6) and 19 of the Prevention of Fraud (Investments) Act, 1958 (as amended by the Protection of Depositors Act, 1963, sections 1 and 21): one with conniving at a corporation attempting fraudulently to induce the investment of money in "Agri-Fund" contrary to those sections and two with conniving in the distribution of circulars contrary to sections 14(1) and 19 of that Act.
The Appellant operated from 44, Green Street, London, through a number of companies. He was at all material times a director of a Panamanian company called Agricultural Investment Corporation S.A. (hereinafter referred to as A.I.C.S.A.) and a director or chief executive of First National Investment Corporation S.A., of Agri-International S.A. and of Agri-International (U.K.) Limited. Those companies acted as agents for A.I.C.S.A. which had its headquarters at 44, Green Street.
A prospectus was printed by A.I.C.S.A. It described "Agri-Fund" as "A new concept in mutual funds, or as they are also called, investment trusts" and represented that A.I.C.S.A. was genuinely carrying on an honest business and that monies invested in "Agri-Fund" were immediately redeemable at the option of the investor.
Salesmen in West Germany were employed to try to induce, with the aid of the prospectus, persons in that country to offer to subscribe to one or other of two Plans. One was called the "Fully Paid Plan" and a subscriber to that made only one payment; the other was called the "Beneficial Payment Plan" and provided for the payment by the subscriber of instalments.
No effort was made to induce persons in this country to offer to subscribe, and all the charges preferred against the Appellant relate to the inducement or the attempted inducement of persons in West Germany who were not British nationals to offer to subscribe.
The salesmen had with them a form for the person they approached to complete and sign. The form began with the words "I hereby apply for the Plan described below". The applicant then had to complete the form showing which Plan he had selected and the amount he was willing to subscribe.
The application was addressed to the First National Investment Corporation S.A. at 44, Green Street, London and, when completed, was handed to the salesman with, in some cases, a cheque for the amount to be subscribed, and in other cases with an I.O.S. share certificate and a completed form of assignment of the I.O.S. shares. We were not told how many of the counts on which the Appellant was convicted related to cases in which the salesman had been given an I.O.S. share certificate and a form of assignment, and how many to cases in which cheques were given.
The completed forms, cheques and I.O.S. certificates were sent by the salesman to 44, Green Street, and there "processed". It was only after the cheques had been banked in a Swiss bank account and after the I.O.S. certificates had been cashed and the proceeds banked in Switzerland that confirmation, followed later by a share certificate, was sent to the subscriber.
Section 13(1) of the Prevention of Fraud (Investments) Act, 1958 , as amended, made it an offence for any person my misleading, false or deceptive statements, etc. to induce or to attempt to induce another person
"( a) to enter into or offer to enter into an agreement of the kind specified:" or
( b) to take part or offer to take part in any arrangements with respect to property other than securities
being arrangements of the kind described in the sub-section or
( c) to enter into or offer to enter into an agreement"
the purpose or pretended purpose of which was to secure a profit on the fluctuations in the value of any property other than shares.
Unlike the offence of obtaining money by false pretences and many other offences, the obtaining of money or other property as the result of the inducement was not an ingredient of the offences created by this section. All that has to be proved is that by false statements, etc. a person has been induced to do one of the acts specified in paragraphs ( a), ( b) and ( c). Once it is proved that such an act has been induced, the offence is complete. Where the charge is of attempting to induce such an act, then the nature of the act which it sought to induce has to be determined.
In this case all the acts of the person induced took place in West Germany, and it was consequently contended for the Appellant at the trial, before the Court of Appeal and in this House that he had not connived at the commission of any offence to which the laws of this country apply.
Judge Lawson at the Central Criminal Court on a submission of no case, ruled that if the inducement was to make an offer, there was no offence committed in this country, but that as acceptance of the offer took place in this country, an element of the offence was committed in this country and so there was jurisdiction to try the Appellant.
His appeal to the Court of Appeal was dismissed, Lord Widgery C.J. holding that the applicant for shares in "Agri-Fund" did not take part in the "Agri-Fund" arrangements until his application had been received in London and had been "processed" and so that the offences were committed in England.
The Court of Appeal certified that the following question
"Whether upon the true construction of section 13(1)( b) of the Prevention of Fraud (Investments) Act, 1958, (as amended by the Protection of Depositors Act, 1963, sections 1 and 21) the offence of fraudulently inducing a person to offer to take part in an arrangement with respect to property other than securities is an offence separate and distinct from the offence under the same paragraph of fraudulently inducing a person to take part in an arrangement with respect to such property so that if the facts disclose the former offence it is not open to the prosecution to charge the latter offence by reason of the subsequent acceptance of the victim's offer"
was a point of law of general public importance but refused leave to appeal to this House. The Appellant now appeals, with the leave of this House, and advances the same contentions as in the Court of Appeal.
In my opinion section 13(1)( b) creates a number of separate offences. In each case it is necessary to prove that by a false statement, etc., a person was induced to do certain acts. If he was induced to enter into an agreement of the kind described that is one offence; if he was induced to offer to enter into such an agreement that is a separate and distinct offence. Similarly, if he was induced to enter into an arrangement of the sort described, it is one offence and if he was induced to offer to enter into such an arrangement, it is another.
Section 13, both before and after its amendment, requires one to consider what it was that the victim was induced to do. As the section did not make it an ingredient of the offence that money or property should be obtained as the result of the inducement, cases such as R. v. Ellis [1899] 1 Q.B. 230, where the English court was held to have jurisdiction when the property was obtained in England though the false pretences were made in Scotland, are of no assistance. In that case the crime was not completed until the goods were obtained. In cases under section 13 the...
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