Pennock & Anor, R. v

For fraud by abuse of position under section 4 of the Fraud Act 2006, the prosecution must prove the relevant position, its dishonest abuse, and the required intent concerning gain, loss or risk of loss. A joint account holder ordinarily has authority to withdraw funds unless the account mandate restricts that authority. A charge alleging an unauthorised withdrawal from a joint account may therefore disclose no case to answer if no restriction is evidenced.

Where a contributor retains an equitable interest in property, a transfer of the legal title to a volunteer does not extinguish that interest. A jury must be accurately directed on that legal position when deciding whether a fiduciary’s transfer was dishonest abuse of position. A material misdirection may render the conviction unsafe.

The appellants were convicted at Teesside Crown Court of two counts of fraud contrary to sections 1 and 4 of the Fraud Act 2006. The first count alleged that they transferred £100,000 from the complainant’s bank account without permission. The second alleged that they transferred the legal title to a property to their daughter without recognising or protecting the complainant’s interest.

The first appellant was a joint holder of the relevant bank account. The complainant’s £100,000 had contributed to the purchase of the property, whose legal title was initially held by the appellants. The appellants appealed their convictions, challenging the refusal of a submission of no case to answer, aspects of the summing-up, the absence of a direction on delay, and the judge’s questioning of defence witnesses.

The central issues were whether count 1 could stand as drafted and whether the jury had been properly directed about the complainant’s equitable interest when considering count 2.

1. Appeals allowed. The convictions on both counts were unsafe and were quashed. The court refused the Crown’s application for retrials.

2. Count 1 alleged an unauthorised transfer from the complainant’s bank account. The evidence established that the relevant account was a joint account held by the complainant and the first appellant. In the absence of a restriction on the first appellant’s authority to withdraw funds, he had authority as a joint account holder to make the withdrawal. The particulars did not allege that the subsequent use of the money to buy the property was itself the abuse. There was therefore no case to answer on count 1 as framed.

3. For count 2, the complainant had an equitable interest in the property because his money had contributed to its purchase and there was no suggestion of a gift. The court applied the principle illustrated by Westdeutche Landesbank Girozentrale v Islington LBC [1996] AC 669. Although the appellants transferred the legal title to their daughter without formally recording that interest, she gave no value. She was therefore not a bona fide purchaser for value without notice, and the equitable interest remained intact.

   The judge should have directed the jury on that legal consequence. Without it, the jury might wrongly have assumed that the complainant lost his entire equitable interest upon the transfer. That error could have affected its assessment of dishonest abuse of fiduciary position. The conviction on count 2 was consequently unsafe.

4. A retrial was not in the public interest. Count 1 could not be retried on its defective particulars. A retrial on count 2 would also be inappropriate because of the time already served and the complainant’s serious memory difficulties.

• Court of Appeal (Criminal Division) — by [2014] EWCA Crim 598, allowed the appeals, quashed both convictions and declined to order retrials.
• Crown Court at Teesside — a jury convicted both appellants on 11 December 2012 of two fraud offences. On 11 January 2013, Angela Pennock received concurrent 18-month sentences and Richard Pennock concurrent three-year sentences.