No: 98/0667/X5, 98/0668/X5

IN THE COURT OF APPEAL
CRIMINAL DIVISION
 
                               Royal Courts of Justice
                               The Strand
                               London WC2
 
                               Friday 3rd April 1998
 
                    B E F O R E :
 
                 LORD JUSTICE EVANS

                  MR JUSTICE CURTIS
 
                         and

                  MR JUSTICE FORBES
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                     R E G I N A

                       ‑ v ‑

               ANDREW MICHAEL SAMPSON
                SAMANTHA JANE SAMPSON
 
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   Computer Aided Transcript of the Stenograph Notes of
           Smith Bernal Reporting Limited
          180 Fleet Street, London EC4A 2HD
    Tel No: 0171 421 4040   Fax No: 0171 831 8838
        (Official Shorthand Writers to the Court)
              ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑ ‑
 
MR M LEVETT appeared on behalf of the Appellants
MR I WINTER appeared on behalf of the Crown
 
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                      JUDGMENT
             (As approved by the Court)
 
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                   Crown Copyright 
                               Friday 3rd April 1998
LORD JUSTICE EVANS:  On 12th January 1998, after a trial in the Chelmsford Crown Court before his Honour Judge Watling QC and a jury, the appellants, Andrew Michael Sampson and his wife, Samantha Jane Sampson, were each convicted of an offence under section 17 of the Theft Act 1968.  Section 17(1) makes it an offence to falsify a document which is required for an accounting purpose. The only issue raised by this appeal is whether the document in question was proved to have been of that kind.  They now appeal against their convictions with the leave of the single judge.
      It is unnecessary therefore to say more about the issues raised at their trial, except that their defence was that they completed the document in question, a mortgage application form, under the guidance of, and with the advice of, an unnamed and otherwise unidentified person, who claimed to be a broker or salesman of one kind or another.  The learned judge was quite clear at the conclusion of the case that the jury's verdict meant that the jury had disbelieved that account which the appellants had given.
      The relevant facts were these.  The appellants completed a mortgage application form addressed to the Abbey National Building Society in June 1993.  They  sought an advance for property which they intended to buy at 19 Bredfield Road, Woodbridge, Suffolk.  The application form required them to give their present address, which was 48 Ashdown Way, Ipswich, Suffolk, and their previous address, which they gave as 188 Kiln Road, Thundersley, Benfleet, Essex.  The form required them to answer the present question under the heading  "Present Housing":
"Have you (or any person applying for the mortgage with you) ever owned a property before?" 
They answered "No".  If that answer had been truthful, it would have been "yes", and they would have had to go on to give details of the property which they had owned before, of the lender who had been the mortgagee of that property and how much was remaining due on that mortgage.
      In fact they did own a property at that time at 70 Queensway, Manningtree.  They had bought that house with the assistance of a mortgage from the Halifax Building Society.  They had had to move from it because Mr Sampson being a police officer was required to live in Suffolk and he was living in police accommodation. It was a time of great difficulty for them because their own house, 70 Queensway, had a negative equity and the Halifax Building Society were pressing for repayment. 
      The reason why they decided to buy the property in Woodbridge was that there was a likely change in the police regulations under which they were then living in rented accommodation and the change would make it advantageous for them to have their own house in Suffolk.
      The form therefore misstated the position when it failed to reveal that they were the owners of a house which was mortgaged to the Halifax Building Society and in respect of which a substantial sum was owing by them to that building society.
      The application was received on behalf of Abbey National by a Mrs Carol Felgate, who gave evidence at the trial.  She was then working in the Ipswich branch and employed as a financial advisor.  She gave evidence that when the form was received by her she took the decision to authorise a mortgage loan to them.  The amount, of course, would depend upon a survey and upon the information provided as to the appellants' income being checked.  However, it appears that she was responsible for the decision to grant the mortgage in the amount which was sought.  In her evidence she said this in cross‑examination:
"Q.       The forms that you have talked about
    now, the mortgage application form
    that you have signed and agreed in
    principle, is dealt with by you at
    the initial stages?
A.  Yes.
  
Q.  It does not go into an accounting
    system?
A.  No, it doesn't.
 
Q.  Because no one has actually granted
    the mortgage?
A.  No, that is right.
 
Q.  Even when you have dealt with the
    Quality Assessment form, that does
    not go into the accounting system yet
    because someone has to consider it again?
A.  No, they haven't.
 
Q.  So that is when the mortgage is
    granted, is it?
A.  Yes, the mortgage is authorised by
    me.  Harlow have no authorities on
    granting a mortgage." 
Then she added later:
"It is authorised subject to survey on the property and subject to the income references." 
      Harlow was referred to because that was the office which she described as the mortgage centre.  She went on to say what the reason was for forwarding the documents there.  The judge asked:
"THE JUDGE:  So what happens to these
    documents that you have authorised
    the mortgage when they get to Harlow,
    what happens to them?
A.  Harlow do the actual processing of
    the application.  They are purely
    a processing ‑‑
 
THE JUDGE:  Yes, I understand that.  As a
    result of their processing the
    document this offer is produced?
A.  Yes, so long as the income reference
    comes in to what it shows on the
    mortgage application, so long as it
     all ties in they produce an offer.
 
THE JUDGE:  These figures 413, 39, 363, 45,
    etcetera and the cheque would be for
    £51,675.  Who works out those figures? A.          The mortgage centre.
 
THE JUDGE:  The documents we have been
    looking at go to Harlow, Harlow
    process the application, work out the
    figures and produce this document
    which is sent to the applicant?
A.  Yes." 
Then a little later the judge said:
"THE JUDGE:  I dare say somebody may
    want to ask you about that, what I am
    really concerned about is you authorise
    the application, it goes to Harlow,
    Harlow does the processing, works out
    the figures, whether they are right
    or whether they are wrong, and then
    sends out this offer?
A.  That is right.
 
THE JUDGE:  That is done at Harlow so that
    presumably the application and the
    supporting documents that you sent to
    Harlow become part of their accounting
    process?
A.  That is right.
 
THE JUDGE:  Thank you very much, that is
    what I want to know." 
      The only document with which we are concerned is the mortgage application form.  Two other documents were referred to in that evidence.  The first was called the "Quality Assessment form".  That was an internal document completed apparently by Mrs Felgate when she dealt with this mortgage application.  It shows that she had checked the application and "accepted responsibility  for the status of the borrowers in accordance with the details recorded below".  The form shows that she had taken the income figures given on the form, multiplied them by three to produce a total of £58,200 and, beneath that, entered "amount of overall loan agreed" as £53,000.  The inference is that she had checked that the figures provided for income were such as to justify the advance of £53,000 which was sought in accordance with the building society's regulations.  The other document referred to is a formal letter of offer, which was dated 13th July 1993, and that, as the evidence showed, proceeded from the Harlow office.
      There was one other aspect of the form and of the Quality Assessment form which is important.  Having answered the question asking whether he had ever owned a property before in the negative, Mr Sampson was classified as a first‑time buyer.  There was space on the form for that to be made clear, and the evidence was that Mrs Felgate ticked it appropriately in view of the answer that was given.  That same fact appears on the Quality Assessment form which bears her tick in the appropriate box "FTB" .  What is clear, as a matter of inference, if not expressly, is that the status of the applicant as a first‑time buyer was material to his application and would be material, in particular, to  assessing the appropriate interest rate.  The fact that he claimed not to be the owner of any other property and not to be indebted to any other mortgagee would also be material to the question whether the advance which was claimed should be allowed in that amount.
      On that basis the issue raised in the present appeal, as it was raised at the trial, is whether the document is within the statutory definition in section 17(1) of the Theft Act 1968.  The terms of that section are these:
"17(1) Where a person dishonestly, with a view to gain for himself or another or with intent to cause loss the another‑‑‑
 
(a) destroys, defaces, conceals or falsifies any account or any record or document made or required for any accounting purpose; or
(b) in furnishing information for any purpose produces or makes use of any account, or any such record or document as aforesaid, which to his knowledge is or may be misleading, false or deceptive in a material particular;
 
he shall, on conviction on indictment, be liable [to certain penalties]." 
      The authorities show, first, that the document is within the statutory definition if it is one which is either made or required "for any accounting purpose". They also show that a document of this nature, which is completed by, in this case, an intended borrower, may have a dual purpose.  On any view it is the basis on which the application for a loan or other advance is  made and will therefore be material as regards the lender's decision whether or not to make the advance. However, the fact that it is for that purpose does not prevent it from having a separate accounting purpose; and if it does, that document comes within the scope of the subsection.
      That was established in a number of authorities. First, Attorney‑General's Reference No 1 of 1980 [1981] 1 WLR 34; secondly, in R v Mallett [1978] 1 WLR 820 and then in two unreported judgments which have been put before us: the judgment of the Queen's Bench Divisional Court in Adesola Osinuga v DPP (October 21, 1997, CO/2060/97) and the judgment of this Court in Okanta (December 20, 1996, 96/0161/W4).
      The judgment in Mallett was concerned with an application for a hire‑purchase advance; Attorney‑General's Reference No 1 of 1980 was concerned with a personal loan proposal form; Osinuga with a housing benefit claim form; and Okanta with a different kind of document altogether, a letter which was forwarded by way of reference in support of an application that was made. Those authorities show that the question whether the document in question is one that is required for an accounting purpose depends, first, upon the nature of the document itself, and secondly, upon the evidence as  to the use for which it was made or required in the particular case.  Mr Levett has referred us to passages from those authorities which make it abundantly clear that the question is one which was to be considered by reference to the document and to the evidence in the particular case.
      He submitted in the present case that there was no case for his client, Mr Sampson, to answer, and the learned judge rejected that submission.  His first contention before us is that the learned judge was wrong to do so.  For reasons which will become apparent, we will deal with that objection first.  The learned judge ruled on the submission in the following terms:
"I am satisfied, having listened to counsels' submissions, that this is a document which is made or required for an accounting purpose.
 
It is quite clear that it does not just contain personal details of the applicants, their present address and the details of the property they want to buy, but it does also contain a whole page, sections 21‑25 of their financial details and at the end the declaration which they signed is in these words:  'I declare that the answers given on this form are correct and they will be the basis of a loan Abbey National may agree to make.'
 
I take the view that on the face of the document, and certainly in light of the other evidence, this is a document made or required for an accounting purpose." 
The declaration which the learned judge referred to appears at the end of the document adjacent to the appellant's signature. 
      The judgment of Kennedy LJ in Osinuga draws a clear distinction between the purpose which a document such as this may have, that is to say for providing the basis for the decision by the other party whether to make the advance or not and, on the other hand, the separate purpose which it may have as a document made or required for an accounting purpose.  We should read this paragraph from his judgment:
"The proposition which Mr Fidler seeks to advance is that the information in the housing benefit claim form was required to enable the local authority to adjudicate and to determine (and I deliberately use both of the words which he used) whether or not the applicant is entitled to housing benefit but not to calculate what benefit he is entitled to.  In reality, the evidence before the justices, as is clear from that part of the case which I have already referred to, showed that so far as this claim form was concerned it was serving a dual purpose.  In the first place, certainly the local authority had to decide whether or not the applicant was entitled to any housing benefit.  But if it came to the conclusion that he was entitled to housing benefit, then (and I quote again from paragraph 7 of the Case Stated): '...to calculate whether a person is entitled to Housing Benefit, income must be compared to outgoings...'  That is something which was done, it would seem, by reference to the form which was submitted, there being no other source of information." 
Kennedy LJ later in his judgment said this:
"In those circumstances I, for my part find it quite impossible to see how it can be said that the application form is not itself a document required for an accounting purpose." 
That was in the absence of any direct evidence that it was required for such a purpose.  As Kennedy LJ put it  in that case, where magistrates were the tribunal:
"There was, as they make clear, sufficient evidence for them to be able to come to the conclusion that it was being used for such a purpose.  I am satisfied for my part that they were entitled to draw an inference that the document in question was a document required for an accounting purpose, having regard to the contents of the document and the evidence..." 
which was given in that case.
      For the sake of completeness, we should quote what he said subsequently at a passage to which I have already referred:
"Whether it would be always be so must be a matter to be decided in the terms of the evidence which is before the magistrates in any other case." 
      In so far as the learned judge relied in his ruling on the declaration at the end of the application form, we would agree with Mr Levett's submission that he was wrong to do so.  It seems to us that that is directed primarily at the first of the questions referred to by Kennedy LJ, that is whether or not the application should be granted, or, as Mr Levett succinctly puts it, as to the merits of the application. That declaration does not necessarily refer, in our judgment, to the use of the form (if it is so used) for an accounting purpose.
      However, proceeding to consider this form and the evidence of Mrs Felgate which has already been quoted, it seems to us abundantly, indeed totally, clear that  this can only properly be regarded as such a document. It was required, certainly for the purposes of enabling the building society to decide the application on its merits, but it was also required by them for the purpose of assessing, among other factors, what the amount of the loan should be and what the appropriate rate of interest was.  There can be no question but that the amount of the loan authorised by Mrs Felgate would depend, no doubt in very large measure, upon a calculation derived from the income figures that were given.  It is equally clear even though as a matter of inference that the rate of interest charged would or might be affected by treating the applicant as a first‑time buyer.  It was the very misrepresentation with regard to Mr Sampson's status in that respect which meant that this particular document was false.
      We therefore find ourselves in the same position as did Kennedy LJ in the Osinuga case, and we find it quite impossible to see how it could be said that the application form was not a document required for an accounting purpose.  Certainly we have no hesitation in holding that the learned judge's ruling was correct, even though not for the reason which he gave.
      We come, therefore, to the second part of the appeal, which is based upon the way in which this issue  was summed up to the jury.  The learned judge, it must be said, dealt with this matter in a way which came very close to withdrawing the issue from them, and it was an issue for them to decide.  He said, first, that the terms of the declaration were relevant ‑ and for the reasons already given, we think that he was wrong in law to direct them to that effect.  He then went into what can only be called as a discursus which was not justified by the evidence and which he ought not to have done.  We read the following passage:
"The building society, you may think, is relying upon the applicant to state accurately on here the answers to the questions." 
We interpose: no objection to that.  But then this follows:
"If the society agrees to grant a loan it will have to justify to its auditors the making of the loan, because it has happened in the past that managers and directors of building societies have made out bogus mortgages and taken the money.  I remember very well a case many years ago of that kind.  This document goes to Harlow.  The figures are worked out and a loan is made.  What do you then suppose happens to this?  It goes into the records of the building society and when the auditors come along and say 'you made out a cheque for £51,675 for a firm of solicitors called Watkins Stuart, how did that come about?' Is the inference not that this document would be produced, because it shows that the mortgage was made and if the auditors say, 'Well, how do we know this is genuine?' all they have to do is say 'Right, you go and ask Mr and Mrs Sampson about it' and they say 'Yes, and here is our mortgage document and here is our repayment book and look here is our bank account'." 
None of that passage was justified by any of the  evidence given in the case.  It is, moreover, in our view, either of no relevance or, at best, of doubtful relevance.  The question was not what auditors might or might not have wanted to see, not what answers they might or might not have been given to whatever questions they asked: the question was for what purpose or purposes was this document required by the building society?  It seems to us very much to be regretted that the learned judge introduced that irrelevant and questionably accurate matter into his summing‑up.
      Moreover, Mr Levett is entitled to submit, as he does, that by continuing as he did the learned judge coloured the way in which he left this matter to the jury to the extent that he did.  He said:
"Members of the jury, I could give you direction in law, but I am not going to.  You may think it is unquestionably the case that this is a document required for an accounting purpose.  Of course it is the document on the basis of which the society decides whether to make a loan or not, but once that decision has been made, you may think ‑ although it is a matter for you ‑ that this document going to Harlow, as it does, then goes into the, if you like, process of the company and is there to be examined by the auditors later if any enquiry arises as to how this mortgage has progressed, whether it is genuine and so on, but it is a matter for you.  You may think on the facts that this clearly is a document made or required for an accounting purpose." 
      It is unnecessary for us to say more than that the direction, in our view, was unjustified and did leave the jury with the very clear impression that this was  effectively a matter of law and, in any event, one where the judge was telling them what the legal position was.
      In that situation an anxious question arises as to whether the conviction should stand.  Our duty is to consider whether the conviction is safe or not.  We have already expressed the view that it is impossible to argue, gallantly although that Mr Levett has made his submissions, that this document is anything other than a document required for an accounting purpose.  The fact that it is also required as the basis of the society's decision to make the loan does not prevent it from having that status, as the authorities make clear.
      The remaining authority to which reference has already been made is the decision in Okanta, where the document in question was not an application form but a letter by way of reference.  It was also concerned with the question of substitution of an alternative verdict following the allowing of an appeal against a conviction on a charge of obtaining property by deception under section 15(1) of the line of so‑called Preddy cases. What can be derived from that judgment is the statement by Potter LJ:
"In relation to a criminal charge of this kind, we do not feel justified in making any assumption beyond the scope of the evidence called." 
That is followed by a passage in which Potter LJ indicates  that it might not be proper to assume that a building society necessarily does rely upon a mortgage application form for an accounting purpose.  But he makes no reference there to one feature at least which is present in this case, that is the classification of Mr Sampson as a first‑time buyer.  It does seem to us clear beyond argument, for the reasons given, that this was a document required for an accounting purpose, and it may be ‑ although this matter seems not to have been explored at the trial ‑ that the accounting purposes were carried out in part by Mrs Felgate, who made the decision as to the amount of the loan and effectively as to the rate of interest to be charged for it.  However that may be, it is equally clear that the document was forwarded to Harlow, where the relevant information was part of its accounting processes.
      For those reasons, it seems to us that, notwithstanding the criticisms made of the summing‑up, which in our view are entirely justified, nevertheless we cannot say that this conviction was unsafe, and the appeal must be dismissed.
 
(Submissions re appeal against sentence followed.)
 
LORD JUSTICE EVANS:  We now have to consider appeals  against sentence both by Mr Sampson and his wife.  The sentences passed after their trial were, in his case, six months' imprisonment and, in hers, four months' imprisonment suspended for twelve months.  The learned judge, in his sentencing remarks, indicated that he was considerably affected by the fact that the appellants, on the jury's verdict, had maintained a false defence by suggesting that they had relied upon what the judge called a "fictitious financial advisor" .  He said:
"Whilst I do not increase for one day, Andrew Sampson, particularly in your case, the course which your conduct has taken I cannot put out of my mind the impression that is left by you as a police officer going into the witness box and swearing to the jury that this man existed and that it was all his fault.  For the purposes of passing sentence I do not increase the sentence by one day but you are not entitled, as you would have been if you had pleaded guilty, to the leniency and the mercy which you seek." 
      So far as Mrs Sampson was concerned, the learned judge referred to the fact that she had two small children to look after and he did not think that community service was the appropriate penalty.
      It seems to us that the learned judge was wrong in deciding that this was a case where a custodial sentence was inevitable.  We bear in mind that the first appellant was a serving police officer.  On the other hand, both he and his wife were otherwise of good character.  The circumstances of this particular offence  are remarkable.  The application for a loan in respect of the Suffolk property which they wished to buy was made necessary for reasons connected with his status as a police officer in the Suffolk constabulary.  He was not permitted by regulations to continue living outside that county.  It was thought that regulations affecting his status or his housing which would come into force would affect his right to remain in rented police accommodation and it became desirable for him, if he could, to buy a Suffolk property.  His house in Essex was sold, leaving him with a substantial debt to the Halifax Building Society.  There is no suggestion that that debt has not been or will not be paid.
      So far as the Abbey National are concerned, who made this advance in 1993, they have not sought to raise the charge which resulted in these proceedings against Mr and Mrs Sampson.  They have not suffered any loss. They do not intend to call in the mortgage loan, so far as the evidence before us goes.  How it came about that the appellant nevertheless were prosecuted for this offence is not known to us.  What is clear, however, is that the first appellant has been, or will be, the subject of disciplinary proceedings with the police force.
      It is a serious offence for a police officer to  have committed, but in our clear view neither appellant was in a situation where a custodial sentence was inevitable.  For those reasons we quash the sentences passed by the learned judge.
      So far as the second appellant is concerned, Mrs Sampson, having regard to the judge's observations, it seems to us that the appropriate penalty is a conditional discharge for a period of twelve months.
      With regard to the first appellant, had we been sentencing him at the time, we would have thought that this was an appropriate case for a community service order, perhaps a combination order.  As of now, however, he has served more than two months of the sentence that was passed and on any view of the matter he has been amply punished for the offence and has amply repaid his debt to society by reason of this offence.  We think therefore that it would be wrong the impose any further punishment upon him, and in his case also we make an order for conditional discharge for a period of twelve months.
      What that means, Mr and Mrs Sampson, if you would both stand please, is that provided you commit no further offences during the period of twelve months you will not be subject to any further punishment for these offences.  On the other hand, if you do get into  trouble, which I am sure is most unlikely, then it will be open to the courts to sentence you for these offences, as well as for any others you may have committed.  Do you both understand that?
MR SAMPSON: Yes.
MRS SAMPSON:  Yes.
LORD JUSTICE EVANS:  To that extent, the appeals against sentence are both allowed.