Darroux v The Crown

For theft of a bank-account credit balance, the prosecution must prove an appropriation of the account-holder’s chose in action. A dishonest act which merely causes an authorised payroll agent to instruct payment from the account does not itself amount to an assumption of an owner’s rights. Causation alone is insufficient, especially where the defendant has no authority to operate or control the account.

Such conduct may amount to fraud by false representation under the Fraud Act 2006, but a theft conviction cannot be sustained by treating an uncharged fraud as theft. The availability of an alternative verdict is constrained by section 3 of the Criminal Appeal Act 1968, including whether the jury could have convicted of that offence on the indictment.

The appellant was a senior manager of a housing association with responsibility for submitting payroll, overtime and holiday-payment forms to its payroll contractor, PCS. The prosecution alleged that she dishonestly inflated claims, causing payments from the association’s bank account into her own account.

At the Crown Court at Wood Green, she was convicted on six counts of theft and sentenced to 16 months’ imprisonment. The jury found specified sums had been dishonestly taken. On appeal, the issue was whether submitting the forms amounted to an appropriation of the association’s bank-account credit balance for the purposes of the Theft Act 1968. If it did not, the court also had to decide whether convictions for fraud could be substituted.

1. Appeal allowed. The convictions for theft were unsafe and were quashed.

2. The relevant property was the housing association’s credit balance with its bank, a chose in action. The court distinguished the separate chose in action created when payment was credited to the appellant’s own bank account. The real issue was therefore whether she appropriated the association’s credit balance within section 3(1) of the Theft Act 1968.

3. A person who has direct, authorised control of an account and dishonestly instructs payments from it may assume an owner’s rights. That was the position in Kohn [1979] 69 Cr App. R 395 and Hilton [1997] 2 Cr. App. R 445. The appellant had neither authority to instruct the bank nor control over the association’s account. Her payroll forms were not equivalent to cheques and conferred no right over the account.

4. PCS was the association’s authorised payroll agent, not the appellant’s agent. There was no evidence that PCS had to process her forms automatically or without checking them. Her dishonest submission of the forms was causally effective in procuring payment, but it was too remote to constitute her assumption of an owner’s rights. It induced the association, through PCS, to make the payment; it did not appropriate the association’s chose in action.

5. The court treated the broad statements in Naviede [1997] Crim LR 662 and Briggs [2004] 1 Cr. App. R 34 as capable of being correct in many cases, but not as inflexible propositions. Whether deception inducing payment amounts to appropriation depends on the circumstances. The court also rejected aspects of the reasoning in Briggs which suggested that appropriation necessarily requires a physical act.

6. The facts could have supported a charge of fraud by false representation under the Fraud Act 2006, but that offence had not been charged. The court declined to substitute fraud convictions under section 3 of the Criminal Appeal Act 1968. Theft and fraud are not coterminous; the jury could not have convicted of fraud on the indictment, and the charging choice could have affected the conduct of the defence.

• Court of Appeal (Criminal Division). Allowed the appeal and quashed the theft convictions: [2018] EWCA Crim 1009.

• Crown Court at Wood Green. Convicted the appellant on six counts of theft and imposed a sentence of 16 months’ imprisonment.