THE LAW REFORM COMMISSION

AN COIMISIÚN UM ATHCHÓIRIÚ AN DLÍ

(LRC 43–1992)

REPORT

ON

THE LAW RELATING TO DISHONESTY

IRELAND

The Law Reform Commission

Ardilaun Centre, 111 St Stephen's Green, Dublin 2

c Copyright The Law Reform Commission 1992

First Published September 1992

Cover: The Courthouse, Washington Street, Cork.

(photo courtesy of “Cork Examiner”)

THE LAW REFORM COMMISSION

The Law Reform Commission was established by section 3 of the Law Reform Commission Act, 1975 on 20th October, 1975. It is an independent body consisting of a President and four other members appointed by the Government.

The Commissioners at present are:

John F. Buckley, Esq., B.A., LL.B., Solicitor;

William R. Duncan, Esq., M.A., F.T.C.D., Barrister-at-Law, Associate Professor of Law, University of Dublin;

Ms. Maureen Gaffney, B.A., M.A. (Univ. of Chicago), Senior Lecturer in Psychology, University of Dublin;

Simon P. O'Leary, Esq., B.A., Barrister-at-Law.

The Commission's programme of law reform, prepared in consultation with the Attorney General, was approved by the Government and copies were laid before both House of the Oireachtas on 4th January, 1977. The Commission has formulated and submitted to the Taoiseach or the Attorney General forty two Reports containing proposals for the reform of the law. It has also published eleven Working Papers, five Consultation Papers and Annual Reports. Details will be found on pp363–367.

Ms. Clíona Kimber, LL.B., LL.M., Mr. James Kingston, LL.B., LL.M., Barrister-at-Law, Ms. Julianne O'Leary, B.A., LL.B., Barrister-at-Law and Mr. Oisín Quinn, B.C.L., LL.M., Barrister-at-Law are Research Assistants.

Further information from:

The Secretary,

The Law Reform Commission,

Ardilaun Centre,

111 St. Stephen's Green,

Dublin 2.

Telephone: 715699.

Fax No: 715316.

This Report was submitted on 28th September 1992 to the Attorney General, Mr. Harold A. Whelehan, S.C., under section 4(2)(c) of the Law Reform Commission Act, 1975. It embodies the results of an examination of and research in relation to the law relating to Dishonesty which was carried out by the Commission at the request of the former Attorney General, Mr. John Rogers, S.C., together with the proposals for reform which the Commission was requested to formulate.

While these proposals are being considered in the relevant Government Departments the Attorney General has requested the Commission to make them available to the public, in the form of this Report, at this stage, so as to enable informed comments or suggestions to be made by persons or bodies with special knowledge of the subject.

PART I: THE PRESENT LAW

CHAPTER 1: INTRODUCTION

1.1

On the 6th March, 1987, the then Attorney General, Mr John Rogers SC, requested the Law Reform Commission to formulate proposals for the reform of the law in a number of areas. These included the law relating to certain criminal offences, including in particular the laws relating to dishonesty, malicious damage and offences against the person, and matters having a direct bearing on the criminal law. The Commission has already reported on receiving stolen goods, rape, malicious damage, child sexual abuse, sexual offences against the mentally handicapped, the confiscation of the proceeds of crime, the indexation of fines and oaths and affirmations. A Discussion Paper on non-fatal offences against the person has been circulated.

1.2

We began by preparing a Discussion Paper on the subject of Dishonesty which set out the existing law and the difficulties to which it appeared to give rise, examined the law in other jurisdictions, set out the policy considerations which appeared to arise and made provisional recommendations for alterations in the law in a number of areas. This Discussion Paper was circulated among a number of persons and bodies having particular expertise in this area, including judges, barristers, solicitors, academics, accountants, financial institutions, the Irish Bankers' Federation, the Director of Public Prosecutions' Office, the Department of Justice and the Gardai. As a result, the Commission received a number of detailed and helpful commentaries in writing on the Discussion Paper and, in addition, a meeting was held at the Commission's Offices in September 1991, at which there was a large attendance of those interested. We are most grateful to all who assisted us in these ways. A list of those who sent us submissions is to be found in Appendix A.

1.3

We have since reviewed the entire subject in the light of these consultations. The present Report contains our final recommendations for reform of the law.

1.4

In this Part we examine the present law relating to offences of misappropriation. The law is a somewhat unhappy amalgam of judicial¹ and statutory contributions over the centuries, revealing a curious reluctance on the part of the courts or the legislature to address the basic policy issues underlying the several specific offences.

1.5

We shall consider the offences separately. It is as well to record at the outset that they cannot properly be understood in isolation: to a large extent one offence grew out of another. This historical process has left the law in an asymmetrical state, with overlaps between offences and gaps where clearly dishonest conduct falls outside the criminal sanction.

CHAPTER 2: LARCENY¹

2.1

Section 1 of the Larceny Act, 1916 provides as follows:

As we shall see, this is far from the whole story,² but at least it starts us on the way.

The Thing Stolen must be “Capable of Being Stolen”

2.2

The expression “anything capable of being stolen” codifies the common law rules on the subject. “Briefly stated, the thing must be tangible, moveable, of value and the property of somebody.”³

(i) The thing must be tangible

A thing may be tangible, however slight its density. Thus, gas,⁴ when contained,

may be stolen; similarly water⁵; so also, in principle, may electricity.⁶

(ii) The thing must be the subject of human ownership

2.3

Some things are not the subject of human ownership at all, and thus cannot be stolen. These include human corpses,⁷ at all events before they have undergone natural or artificial changes.

One cannot be guilty of “theft of or from the environment”, by misappropriating air or sea-water, for example; where such phenomena have been collected and contained in some way by humans, however, it seems that they may be stolen.⁸ Thus one may be convicted of larceny of water supplied by a water company to consumers, and standing in the company's pipes.⁹

Derelict things, having no owner, cannot be the subject of larceny.¹⁰ Whether or not goods have been abandoned is sometimes a more difficult question than might at first appear.

2.4

The law distinguishes between animals mansuetae naturae and those ferae naturae so far as they may be the subject of larceny. Animals in the former category may be stolen,¹¹ as may their produce (such as their wool or eggs). Animals in the latter category, by and large, are not the subject of larceny, unless they have come under human control.

Control may be found to exist where the wild animals have been tamed, for example, or caught¹² or in cases where they are so young that they cannot escape from the landowner's control.¹³

Where animals e.g. hens and ducks, are not closely confined but nonetheless, after being free to wander, have the habit of returning to a particular place, they may be the subject of larceny.¹⁴

2.5

It should be noted that statute has intervened¹⁵ to make criminal the taking of certain such animals, including deer,¹⁶ hares or rabbits in warrens at night,¹⁷ and fish from waters on land adjoining or belonging to dwellinghouses.¹⁸

Section 1(3)(b) of the 1916 Act provides that the carcase of a creature wild by nature and not reduced into possession while living is not capable of being stolen by the person who has killed the creature, unless after killing it he has abandoned possession of the carcase. A similar provision¹⁹ applies to the larceny of things severed from the realty. We will examine the notion of abandoning possession in these two contexts presently.

(iii) The thing must have an owner

2.6

The thing stolen must have an owner.²⁰ Ownership here is broadly construed, extending to the degree of possession sufficient to warrant a claim in trespass.²¹ It appears that, notwithstanding the “wide and vague words”²² of section 1(2)(iii) of the 1916 Act, this minimum requirement is still part of the law.²³

(iv) The thing must neither be realty nor savour of realty

2.7

Land has never been the subject of larceny. However, section 8(1) makes it punishable as in simple larceny to steal (or, with intent to steal, to rip, cut, sever or break):

Moreover, section 11 deals with the larceny of ore from mines; this constitutes felony with a maximum term of imprisonment of two years.

Section 1(3)(a) provides that things adhering to the realty may be stolen after severance therefrom, provided that (save as specified in sections 8 and 11):

A similar provision,²⁶ as we have seen, applies to the larceny of the carcase of an animal ferae naturae.

Title Deeds

2.8

Legal fictions got in the way of common-sense in relation to the larceny of title-deeds. Since they were “identified”, with the land, they were not larcenable.²⁷ Section 7(1) of the 1916 Act abolished this exemption, making the theft of these documents a felony carrying a maximum penalty of five years' penal servitude.

Documents Relating to Choses in Action

2.9

At common law there was an “artificial principle”²⁸ that the documentary evidence of a right was identified with the right itself, so that, “if the subject of the right could not be stolen then equally the document could not be stolen”.²⁹ On this basis, documents or instruments evidencing the right to a chose in action – such as promissory notes – were not larcenable.³⁰ Other justifications for this rule were that the documents were either “of no intrinsic value”³¹ or of indeterminate value, such that it was not possible to say whether or not they were worth more than the 12d – which marked the boundary between

petty and grand larceny.³²

2.10

Statutes have long since modified the position. Section 6 of the Larceny Act, 1916 provides that the larceny of a will, codicil or other testamentary instrument, either of a deed or of a living person, is a felony, punishable by penal servitude for life. And section 7 deals (as we have seen) with the larceny of documents of title to land. It also prohibits the larceny of judicial records and documents and other official papers and documents.

Moreover, sections 27 to 30 of the Larceny Act, 1861 punish the destruction, obliteration or cancellation for a fraudulent purpose, of documents of title, choses in action, wills and records.

(v) The thing must have some value

2.11

If a thing taken lacks any value it cannot be the subject of theft. For the purpose of the law of larceny, “only economic value (and not, for example, sentimental or artistic value) is taken into account”.³³

This judicial approach has greatly facilitated prosecutors over the years; they have been able to obtain convictions for dishonest conduct largely falling outside the scope of the offences against property by framing indictments for the larceny of items of infinitesimally small value, such as the paper of cancelled bank notes³⁴ and of a worthless cheque.³⁵

It may perhaps be noted here that it is not a good defence to a charge of larceny that the accused left by way of exchange something of a value equal to, or in excess of, the value of the thing taken. The only defence open to the accused would be a possible lack of mens rea, either because he believed that the owner consented or because he believed he had a legal right to take the thing.³⁶

Taking and Asportation

2.12

Section 1(1) of the 1916 Act, as we have seen, provides that a person steals who “... takes and carries away ...” the stolen item; and section 1(2)(ii) provides that the expression “carries away” includes “any removal of anything from the place where it occupies ...”. There are thus two essential elements in this aspect of the actus reus: taking and asportation.

The taking constitutes a trespass to the article stolen.³⁷ As regards the asportation, the courts have not required that the extent of the distance be substantial.³⁸

Possession

2.13

Larceny has always been conceived as an offence against possession.³⁹ This approach is reflected in section 1(2)(iii) of the 1916 legislation, which defines “owner” as including “any ... person having possession or control of, or a special property in”, anything capable of being stolen.

The notion of possession in larceny is far from simple. The courts have developed refined distinctions between “physical” and “legal” possession: larceny is committed against those with legal rather than merely physical possession. These distinctions can best be understood as reflecting robust policy decisions rather than as giving effect to any deep theoretical structure.

As Kenny notes:

(i) Servants' possession

2.14

It is worth noting briefly how servants gradually become enmeshed in criminal liability for disposing of their masters' goods. The doctrine of the master's legal possession initially extended only to the control by the servant of the article while still on the master's land or premises.⁴¹ Moreover, prior to statutory clarification⁴² in 1542, it appeared doubtful whether a servant could be guilty of theft, even within the master's premises, where the article had been expressly committed to his charge.⁴³

Gradually, however, the scope of the servant's legal possession was constricted until finally the rule became that the servant never had legal possession of his master's property which he controlled by virtue of his position as servant. To this there was an exception: property given to the servant by a third party to pass on to his employer was regarded as conferring legal possession on the servant.⁴⁴

(ii) Delivery of goods for a temporary, special or limited purpose⁴⁵

2.15

A series of cases has held that the owner of an article retains legal possession where he parts company with it briefly in circumstances where he would reasonably assume that the person exerting temporary control over the article would hand it back virtually immediately. It is very difficult to construct a convincing principled rationale for treating this kind of case differently from one of bailment or trust.

(iii) Bailees' possession

2.16

The general rule originally was that a bailee who misappropriated the property entrusted to him was not guilty of larceny, since he had taken the property into his possession and carried it away with the consent of the owner.⁴⁶

Later the notion of “breaking bulk” emerged: if the bailee broke into the “unit of property”⁴⁷ entrusted to him, he was considered to have brought the bailment to an end and thereby lost possession of the property. Any subsequent asportation by the “former” bailee would thus constitute larceny.⁴⁸

Kenny puts it bluntly:

Statute⁵⁰ intervened in 1857 and, as we have seen, the “absurd reasoning of the common law invention”⁵¹ has no place in the Larceny Act, 1916, the proviso to section 1(1) of which is to the effect that a person may be guilty of stealing something notwithstanding that he has lawful possession of it if, being a bailee (or part owner) of it, he fraudulently converts it to his own use or the use of any person other than the owner.

Who Is a Bailee?

2.17

We must now consider the question as to how and when a bailment is created. The essence of the concept is that of delivery of goods on a condition or trust that they are to be restored to the transferor or according to his directions as soon as the purpose for which the goods are delivered has been achieved.⁵² It is not necessary that the bailment be supported by a valid, enforceable contract.⁵³

Cases not usually amounting to a bailment include the receipt of purchase money by an auctioneer from a purchaser or of rent by a land-agent from a tenant. Where the recipient is a clerk or servant of his principal – a bus conductor or shop assistant, and he is required to hand over to his employers all money received in the course of employment, he may be liable either for embezzlement (where the money is appropriated before it passes into the employer's possession) or larceny at any time thereafter. Where no such duty exists, he may be charged with fraudulent conversion.⁵⁴

Conversion By Bailee Constitutes Larceny

2.18

It will be recalled that the proviso to section 1(1) of the Larceny Act, 1916 (reproducing with modifications section 4 of the Punishment of Frauds Act, 1857) provides that a person may be guilty of stealing something as a bailee (or part owner) if he “fraudulently converts the same to his own use or the use of any person other than the owner”. In Rogers v Arnott,⁵⁵ the English Queen's Bench Division held that the attempted larceny of a tape-recorder by a bailee amounted to fraudulent conversion and that thus the defendant had been rightly acquitted of attempted larceny since he was guilty of the complete offence of larceny. Donovan J (with whom Lord Parker CJ and Davies J concurred) rejected the argument that there had been no fraudulent conversion because the owner had been deprived of nothing “and, as in the case of the civil tort of conversion, some detriment to the owner is essential to the commission of the wrong”.⁵⁶ Donovan J said:

2.19

Donovan J approved of Turner's view, expressed in Kenny and Russell, both of which works Turner edited. Kenny⁵⁸ had stated:

And in Russell⁵⁹ the author had this to say:

Larceny by a Trick

2.20

If a misappropriation by a bailee amounted to “breaking bulk”, the courts had no hesitation in characterising this as larceny. But cases could occur where the bailee had clearly acted dishonestly but had not “broken bulk”. In Pear,⁶⁰ in 1779, the defendant had hired a horse in London, giving an address to the livery-stable-keeper beforehand and saying that he would ride the horse to a destination in Surrey and return the horse by 8 p.m. In fact he sold the horse that day; the jury found that at the time of the hiring, he had no intention of going to Surrey and that at this time he had intended to sell the horse. The Judges of the Court for Crown Cases Reserved “differed greatly in opinion”.⁶¹ The majority thought that the question as to the original intention of the prisoner in hiring the horse had been properly left to the jury; and as they had found that his view in so doing was fraudulent, “the parting with the property had not changed the nature of the possession, but that it remained unaltered in the [owner] at the time of the conversion; and that the prisoner was therefore guilty of felony”.⁶²

2.21

It seems clear that Pear can be understood properly only if it is regarded as involving a naked policy determination, indefensible in terms of civil law notions of contract where they impinge on the issue. In Du Jardin v Beadman Bros Ltd,⁶³ in 1952, Sellers J accepted and adopted Russell's views on Pear, which, Sellers J noted, had been “so clearly expressed and so well supported by authority and argument”.⁶⁴Russell⁶⁵ had stated:

2.22

Following the 1857 legislation, there was no longer any need for the prosecution to try to show that the defendant had the intention from the beginning of misappropriating the article coming under his control.

In the meantime Pear's case proved an effective authority for prosecuting as larceny several fraudulent schemes such as ring dropping, whereby a ring was “discovered” by a cheat close to the intended victim; the cheat would manage to convince the victim that the ring was valuable and that they both should share in its value if only the victim would give the cheat some security in return for being given the ring to dispose of.⁶⁷

The requirement that from the beginning of the bailment, the bailee should have the intention to steal was emphasised in the Irish case of Rogers.⁶⁸ The defendant was convicted of larceny where he had ordered a suit of clothes from a draper and took the draper to an inn in order (as he claimed) to obtain the money for the suit from the defendant's brother, who he said was there. Having taken the draper to a room upstairs, the person left the room, ostensibly to locate his brother. He never returned. He was later found some distance away, with the suit under his arm.

Crampton J, in charging the jury,⁶⁹ stressed that the question they had to try was whether, from his conduct, they could:

2.23

In Buckmaster,⁷¹ in 1887, a welshing bookmaker was held guilty of

larceny in spite of the fact that the person who had placed the bet with him had intended to part finally with the coins he had handed over to the bookmaker. If this person had intended to pass property, rather than mere possession, in the coins, the relevant offence would have been false pretences⁷² rather than larceny.

Lord Coleridge CJ was of opinion that the conviction ought to be affirmed for two reasons. First, a parting with the property in goods could be effected only by contract; here “there was nothing in the shape of a contract by which the property could pass, for if the prosecutor meant to part with the money, it was on the terms that the prisoner should do something with it, that is, should return the money to the prosecutor if the horse won. But the prisoner did not do so, and never intended to do so”.⁷³ Secondly, the Chief Justice considered that:

2.24

Kenny is strongly critical of the decision. He notes that the English Court for Crown Cases reserved:

The better approach to the problem of the welshing bookmaker today may be to treat the case as one of fraudulent conversion rather than larceny.⁷⁶

treat the case as one of fraudulent conversion rather than larceny.⁷⁶

Consent

2.25

As has been mentioned, section 1(1) of the Larceny Act, 1916 provides that, to commit larceny, the defendant must have taken and carried away the thing that is stolen.

The concept of consent is a difficult one in this context. The courts have attempted to do two things at the same time: to discern the presence or absence of actual psychological willingness as a matter of fact, on the part of the owner that the thing be taken, and to develop what might be called the legal notion of “constructive consent”, whereby the limits of the owner's consent are determined by legal factors which do not ultimately involve reference to the owner's actual psychological state. Thus, on the latter approach, an owner may be held not to have consented to a taking when in fact the owner never had any view, one way or the other, as to the limits of the consent he was giving to the taking of the item.

The relationship between these two approaches will be examined presently. First it is desirable to consider the issue of consent in four specific contexts: obtaining possession by a trick, intimidation, mistake and larceny by finding.

(i) Obtaining possession by a trick

2.26

As we have seen, section 1(2)(i) of the 1916 Act provides that the expression “takes” includes obtaining the possession by any trick. The requirement in section 1(1) that the taking be without the owner's consent continues to apply. The crucial distinction here drawn by the courts is between consent to transfer the ownership in the goods which, if induced by a trick, may render the wrongdoer guilty of obtaining the goods by false pretences,⁷⁷ and consent to transfer possession in them, which, if similarly induced, may render the wrongdoer guilty of larceny.⁷⁸

As the contract cases⁷⁹ dealing with fraud as to personalty show, it can be far

from easy to say whether the owner intended to pass ownership to the wrongdoer: he may in one sense have “intended to contract with” the wrongdoer, as the physical entity across the counter, but in another sense, he may have “intended to contract with” the individual the wrongdoer pretended to be, especially where that individual possessed a characteristic (such as wealth or a skill) not shared by the wrongdoer.

2.27

A more straightforward case of larceny by a trick is where a wrongdoer, by “ringing the changes”, or other similar scheme confuses the owner into handing over property.

Although from the owner's actions he may seem to be consenting to transfer of the ownership of the property, closer examination of the facts shows that this is not the case.⁸⁰ The borderline between larceny and false pretences is difficult to draw in certain instances. Some courts have adopted a robust approach and have upheld the conviction of the defendant for larceny; others have examined the issue more analytically and found that the facts justify false pretences rather than larceny. What the courts have yet to do is provide a coherent analytic rationale for finding of larceny in this type of case.

An example of the above approach is Hollis.⁸¹ The defendants by a series of tricks fraudulently induced a barmaid to pay over money to them. The essence of the fraud was that they succeeded in convincing her that she had merely given change out of a half-sovereign for a small purchase, while in fact she finished up handing over the change plus a half-sovereign. Their convictions for larceny were affirmed.

Lord Coleridge LCJ (Denman, Hawkins, Williams and Mathew JJ concurring) reduced the issue to very simple terms:

2.28

In contrast in Williams,⁶³ the defendant, a customer in a shop, had pretended to place two shillings in the till when in fact he only placed a shilling there. The shop assistant, believing that two shillings had gone in, gave him change of that amount. The defendant was acquitted. Martin B during argument, observed that the shop assistant appeared “to have laid the money

down upon the counter for the prisoner to take up; that amounts to a parting with the property in it, and there cannot be a conviction for larceny”.⁸⁴ He also said:

So also in Thomas,⁸⁶ the defendant and another man had been drinking together in a beer house. The landlady was unable to give change for the man's sovereign; the defendant offered to go out and get change. The man gave him the sovereign. The defendant left and later misappropriated it.

The defendant was acquitted. Coleridge J having conferred with Gurney B said:

2.29

A person may be guilty of larceny by a trick, not only where he induces another to part with the possession of goods in a state of psychological confusion but also where he interferes with a vending machine so as to release from it a product which quite clearly the owner would not have intended the machine to disgorge in such circumstances. As Kenny⁸⁸ observes:

In Hands⁸⁹ the defendant used a brass disc, the size and shape of a penny, to obtain a cigarette from a cigarette vending machine. On the fact of the box there were two inscriptions, one stating: “Only pennies, not halfpennies”, the other stating: To obtain [a ....] cigarette place a penny in the box, and push the knob as far as it will go”.

The English Court of Crown Cases Reserved affirmed the conviction for larceny.

It appeared to Lord Coleridge, CJ (Pollock B, Stephen, Mathew and Wills, JJ concurring) that

We will examine later in this paper the question whether this principle extends to the abstraction of materials from computers.

(ii) Larceny by intimidation

2.30

Section 1(2)(i)(b) of the Larceny Act, 1916, as we have seen, extends the expression “takes” to obtaining possession by intimidation. This reflects the previous law.

In Lovell,⁹¹ a travelling grinder, given six knives to grind, demanded of the woman who owned the knives that she pay over four times the going rate. When she refused, he “assumed a menacing attitude, kneeling on one knee, and threatened [her], saying, 'You had better pay me, or it will be the worse for you'; and 'I will make you pay'.”⁹² The woman “was frightened, and in consequence of her fears gave the sum demanded”.⁹³

The English Court for Crown Cases Reserved upheld the conviction for larceny, considering that McGrath⁹⁴ was “conclusive” of the matter“.⁹⁵

(iii) Larceny by obtaining under mistake of owner

2.31

Section 1(2)(i)(c) of the Larceny Act, 1916, as we have seen, provides that the expression “takes” includes obtaining the possession “under a mistake on the part of the owner with knowledge on the part of the taker that possession has been so obtained”.

This provision is “the child of”⁹⁶ the difficult decision of Middleton⁹⁷ in 1873, where the English Court for Crown Cases Reserved held that defendant who had received a payment from a Post Office clerk of an amount higher than that to which he was entitled, was guilty of larceny. The clerk had consulted the wrong letter of advice and the defendant was aware of the error. The Court was of opinion that the clerk had passed possession rather than ownership of the money either because he had no authority to pass ownership or because, if he had such authority, this mistake meant that he had not consented to do so.

The decision has been widely criticised. As Kenny observes:

2.32

There is some uncertainty as to the nature of the mistake which falls within the scope of section 1(2)(i)(c). A mistake can of course range from one as to the person to one as to the nature, quality or value of the property. On one view Middleton can be interpreted as involving a mistake as to identity;⁹⁹ on another, it might be considered a case of mistake as to the amount of money to be paid.¹⁰⁰Smith & Hogan contend that, save where the person mistakenly transfers ownership of the goods, “the kind of mistake is irrelevant”.¹⁰¹Kenny, who, as we have seen, criticises Middleton on the basis that the clerk's mistake “related to his reason for doing”¹⁰² what he did, goes on to state:

In Moynes v Cooper,¹⁰⁴ an employee, having received an advance on his wages, later was paid the full amount of his wages by the wages clerk, in ignorance of the advance. When he received these wages from the clerk, the employee was not aware of the error, but he later opened the packet containing the wages, discovered the error, and kept the contents.

The Queen's Bench Division held that the employee should not have been convicted of larceny.

Lord Goddard, delivering the judgment of the majority, noted that the 1916 Act “was not intended to alter the law and had not done so. Section 1(2)(i)...(c) affirms the common law that the taker must have animus furandi at the time when he takes the property. The defendant had no such animus at the relevant time”.¹⁰⁵

(iv) Larceny by finding

2.33

As we have seen, section 1(2)(i)(d) provides that the expression “takes” includes obtaining the possession “by finding, where at the time of the finding the finder believes that the owner can be discovered by taking reasonable steps”. This provision is unhappily drafted. As Kenny points out, “it uses the word 'finding' as meaning 'taking after having found'”.¹⁰⁶ This is because “[a] man 'finds' a thing when he discovers exactly where it is, even though he does not move or even touch it, still less 'take and carry it away'”.¹⁰⁷ Moreover, the provision deals with the easy case of when a person will clearly be guilty rather than seeking to remove the cloud of uncertainty surrounding the question of when obtaining property some time after the finding should constitute larceny.¹⁰⁸

Consent of the Owner Implied when Lost Goods are Found¹⁰⁹

2.34

It has for long been accepted¹¹⁰ that an honest finder does not commit trespass to the goods found, while he is preserving them for the owner. This absence from liability may be based on the presumed consent of the owner;¹¹¹ as well as the fact that the finder does not intend to deprive the owner of the goods.

The mental state of the finder is of cardinal significance. Thus, the test is not whether in fact the owner could easily be found but rather whether the finder, at the time of the finding, believed that he could be so found.¹¹²

In Deaves¹¹³ in 1869, the Irish Court of Criminal Appeal, by a 4–3 majority, quashed the conviction of the defendant whose young daughter had given her six sovereigns she had found on a street in Cork city. The defendant had counted the sovereigns and told a companion that she would give the companion a treat of porter. She later went with the child to where the child had found the money and there found another half sovereign and a bag. The owner of the property, a poor woman, was met by a friend of the defendant about two hours later, lamenting the loss of the sovereigns. The friend told this to the defendant, and told her where she believed the owner lived, but the defendant told her friend to mind her own business. The next day she gave her half a sovereign of the money for herself.

2.35

Although the Court was narrowly divided as to the inferences to be

drawn from the facts, there was no disagreement as to the relevant legal principles. Whiteside CJ for the majority said:

Fitzgerald J, dissenting, thought that there was:

It is worth noting that O'Brien J, for the majority, while feeling constrained by authority, including Thurborn,¹¹⁶ to quash the conviction, expressed the view that “[t]he legislature ought to interfere, as it has already done in the case of bailees”.¹¹⁷

This is an interesting point, worth highlighting, as it shows that, at all events by 1869, the courts looked to the legislature to improve the law so as to make the law coincide with accepted moral norms. This would suggest that by then the days of bending legal rules to secure convictions were coming to an end.¹¹⁸

As we have seen, section 1(2)(i) of the Larceny Act, 1916 provides that the expression “takes” includes obtaining the possession:

The Property of Husband and Wife

2.36

In several respects, the common law adopted the metaphor of the convergence into one legal person of husband and wife.¹¹⁹ Thus, for example, the crime of conspiracy could not be committed by husband and wife alone¹²⁰; nor did the publication of a defamatory statement by one spouse to the other constitute actionable defamation.¹²¹ As Kenny notes:

As an exception to this rule, a person with whom the wife committed adultery could be convicted of larceny where he assisted her in taking goods from the husband.¹²³

2.37

Section 9 of the Married Women's Status Act, 1957 provides as follows:

As we have noted in our Report on Receiving Stolen Property,¹²⁴ the English Court of Criminal Appeal construed¹²⁵ an equivalent statutory provision as meaning, not simply that a spouse falling within its scope could not be prosecuted, but that no crime was committed by that spouse. Thus the person receiving goods which would have been stolen goods save for that provision was held not guilty of the offence of receiving since they were not stolen goods. The decision is in some respects a technical one, and there is always the possibility that an Irish court would come to a different conclusion in the light of a consent-based analysis.

It should perhaps be noted here that, in Walsh¹²⁶ in 1981 the Supreme Court held that the presumption of marital coercion was inconsistent with the Constitution. Thus the old law¹²⁷ on the subject of marital coercion and larceny has been rendered redundant.

Mens Rea

2.38

The mens rea of the offence of larceny has given rise to some difficulty. As we have seen, three elements are involved: the taking and carrying away must be done (i) fraudulently, (ii) without a claim of right made in good faith, and (iii) with the intent, at the time of the taking, permanently to deprive the owner of the thing stolen. Each of these elements requires separate examination.

(i) “Fraudulently”¹²⁸

2.39

Until recently the courts did not trouble themselves with the question whether the defendant's conduct had been fraudulent. It may have seemed beyond argument that a person who took another's property without claim or right, intending to deprive him of it permanently, could not be considered to have been acting other than fraudulently.

At one time it was considered that larceny would be committed only where the defendant took the item for the purpose of personal gain to himself.¹²⁹ This seems to have been the result of a loose statement by Blackstone,¹³⁰ to the effect that the taking and carrying away:

2.40

In Cabbage¹³¹ in 1815, a different approach gained prominence. The defendant, convicted of larceny, had taken away a gelding and destroyed it to protect a friend who had already been charged with larceny, “the object being that the horse might not contribute to furnish evidence against”¹³² the friend. The majority of the Court for Crown Cases Reserved upheld the conviction. Six¹³³

Five judges¹³⁵ thought the conviction wrong. Their reasons are not stated in the report.

Kenny explains that:

2.41

In Williams,¹³⁸ in 1953, the English Court of Criminal Appeal sought to inject meaning into the word “fraudulently” in section 1(1) of the 1916 Act. Lord Goddard CJ said:

Kenny was not won over by this analysis:

In a supporting footnote, Kenny¹⁴² states:

2.42

In Halloway,¹⁴³ Parke B suggested that the phrase “wrongful and fraudulent” in East's Pleas of the Crown“probably means 'without claim of right'”.

Once the latter element is specifically mentioned in section 1 of the 1916 Act in conjunction with “fraudulently” this may indicate either (a) that Parke B's explanation was not correct; (b) that it was correct but is no longer correct since the passage of the 1916 Act; or (c) that it was, and still remains, correct, in which case the inclusion of “fraudulently” may be considered surplusage.

2.43

In Wallace,¹⁴⁴ a fifteen year old boy was indicted for stealing a jacket, vest and trousers, the property of the guardians of the Newtownards Union. He had been admitted into the workhouse as a pauper. At the time of his admission his own clothes had been taken from him and the articles of clothing in question given to him by the workhouse officer. After spending about a fortnight as an inmate, he had applied to the guardians for his discharge and the restoration of his own clothes. They had refused, alleging that he was too young to be discharged. Shortly afterwards the defendant had surreptiously left the workhouse, wearing the clothes supplied there to him.

Brady CB directed an acquittal, stating:

This statement offers no clear conceptual basis for the directed acquittal. The reference to harshness may suggest that the Chief Baron proceeded ex misericordia but his unqualified statement that the guardians had had no right to act as they had done implies a more principled justification. We can only speculate as to what that should be: perhaps necessity,¹⁴⁶ the lack of fraudulent conduct on the part of the defendant or (more weakly) a claim of right.

(ii) Claim of right

2.44

Section 1(1) of the Larceny Act, 1916, as we have seen, provides that a person is guilty of larceny only where he takes the item “without a claim of right made in good faith”. It has from the earliest of times been accepted that an honest belief by the defendant that he has the right to take the item affords him

a defence even where this belief is unreasonable.¹⁴⁷

Kenny gives the following instances of a successful bona fide claim of right:

The fact that the defendant acted openly may afford support to his defence based on a bona fide claim of right.¹⁴⁹

Where the defendant believed that he was entitled as partially-unpaid vendor of a horse, to fetch it back, he was held to have been improperly convicted.¹⁵⁰

2.45

Winstanley v Caravan¹⁵¹ is a troublesome decision. Prosecutions were brought against two workmen for the larceny of several pairs of unfinished boots, worth £3.10.0, the property of their employer Mr Winstanley. They had pawned the goods entrusted to him. It was argued on their behalf that their conduct amounted to a breach of contract only, in that their employer held in respect of each of the defendants an indemnity from a Guarantee Society, to an amount of £10 for work and materials entrusted by him to the defendants.

Mr Barton, who tried the case, held that the proper approach was for the defendants to be prosecuted for the summary offence¹⁵² of unlawful disposition of an employer's work or materials of a value not exceeding £5. He made it clear, however, that he saw no objection to a conviction by reason of the existence of the indemnity. It is worth recording in full his observations on this issue:

The case makes no reference to the question of a claim of right, though it is difficult to see why it should not be relevant in view of “the existence of much doubt and confusion” as to the legal effect of inducements and the impression which “existed widely among operatives” that they were free to pawn goods (as the defendants had done) if covered by such an indemnity.

(iii) The intent permanently to deprive the owner of the thing stolen

2.46

The requirement in section 1(1) of the 1916 Act that the accused should intend permanently to deprive the owner of the thing taken, reflects the common law as it had developed in the nineteenth century.¹⁵⁴

In Cabbage¹⁵⁵ in 1815, six of the judges “thought a taking fraudulently, with an intent wholly to deprive the owner of the property sufficient”. Yet in a decision thirty four years later, the slow development of the law on this matter is apparent.

In Holloway,¹⁵⁶ the defendant had moved certain dressed skins from one place to another in a tannery where he was employed the (unsuccessful) aim being to mislead his employer into paying him for work on the skins which he had not done. The English Court for Crown Cases Reserved reversed his conviction for larceny.

Lord Denman CJ said:

Parke J was of the same opinion:

Coltman J said:

2.47

This principle was accepted in the Irish decision of Breen,¹⁶¹ in 1843, where the defendant who found an envelope containing cheques and a bank note dallied in returning it to their owner in the hope of getting a reward, writing an anonymous letter to the owner stating that a person had found the envelope. Brady CB thought that, if the jury believed that the defendant found the letter and kept it with such a hope, they should acquit, but that if he had taken (rather than found) the envelope with the same intent, or for the purpose of extorting money from the holder, they should convict. (The jury acquitted the defendant).

If this case suggests that a person is not guilty of a crime who takes property with the intention of returning it to the owner whether or not the owner pays a “reward”, but with the intention of trying to induce him to pay such “reward”, then the case would appear to be contrary to the present law.

2.48

Even in cases where the defendant has not the moral status of a finder, the courts will be reluctant to characterise as larceny the holding on to property with the intention of abstracting a reward for its return.

Where a person, wrongfully takes something and sells it to another, it is clear that he will be guilty of larceny even though that other may in turn sell or give it back to the true owner. Kenny comments that:

In Beecham,¹⁶³ a railway porter was charged with the larceny of two railway tickets. It was argued on his behalf that, even if he had taken the tickets with a view to their use, he must have intended that they should be returned to the railway company at the end of the journey (as would be the case in the normal course of business), and that there thus had been no such absolute taking away without an intention of restoration as was necessary to constitute a felony. Patteson J responded that in his opinion, it was a question for the jury to say whether the defendant had taken the tickets “with an intention to convert them to his own use and defraud the company of them”.¹⁶⁴ In charging the jury he

is reported as having told them:

The jury acquitted.

The case is difficult to interpret. On one view Patheson J could be considered to have dispensed with the requirement that there be an intention to deprive the owner of the goods permanently. The stress on the alleged conversion of the tickets to the defendant's own use suggests that this, rather than such an intention, was perceived to afford the relevant test. On another view, Patteson J may be considered to be offering a particular solution – perhaps policy-based – to the problem of the furtum usus.

It is interesting that Patteson J engaged in no metaphysics. Contrast this to the judicial handling of the theft of cheques. Kenny¹⁶⁶ states that a distinction:

Statutory Modifications

2.49

From what has been said above it will be clear that it is not larceny to take another person's car and drive away in it unless one has the intention of depriving him of it permanently. Joyriders are thus not normally guilty of larceny.¹⁶⁷ Statute has, however, intervened. Section 12 of the Road Traffic Act, 1961, as amended by section 65 of the Road Traffic Act, 1968 and section 3 of the Road Traffic (Amendment) Act, 1984, deals with the position. A person must not “use or take possession of” a mechanically propelled vehicle without the consent of its owner or other lawful authority.¹⁶⁸ Where possession of a vehicle has thus been taken, a person who knows of the taking is not to allow himself to be carried in or on it without the consent of its owner or other lawful authority.¹⁶⁹ A similar offence applies in respect of the use or taking possession of a pedal cycle without its owner's consent.¹⁷⁰

It is a good defence to a charge for any of these offences for the defendant to show that, when he did the act alleged to constitute the offence, he believed on

reasonable grounds that he had lawful authority for doing that act.¹⁷¹

“At the Time of Such Taking”¹⁷²

2.50

As we have seen, section 1(1) of the Larceny Act, 1916 requires that the intent permanently to deprive the owner of the thing stolen must exist “at the time of” the taking.¹⁷³ This requirement is in harmony with the approach of the courts in older cases. Thus the finder of property which he believed at the time of the finding to have no traceable owner and who later found out who owned the property but then resolved to keep it was not guilty of larceny for having succumbed to this temptation.

Difficulties – verbal, conceptual and by way of policy – arose in cases where a person acquired property in circumstances where the physical reception of the property preceded by some time his mental appreciation that he had actually done so. The matter was complicated where the recipient knew from the outset that he had received something, but was initially mistaken as to its nature, qualities or value. Locked in the definition of larceny is troublesome linguistic question of whether it can properly be said that a person “takes” property (i) at the time when he physically receives it, in ignorance of its existence, true nature or qualities or (ii) at the time when he actually becomes aware of its existence, true nature or qualities. Neither option is totally satisfactory, since the notion of taking is premised in ordinary linguistic usage on a temporal coincidence between physical acquisition and mental appreciation of what is being acquired.

The definition of larceny as involving “taking” thus proved to be inadequate, not because it let guilty men go free but because it failed even to address the question of the criminality of a particular range of dishonest conduct.

2.51

Courts were conscious of the policy implications of holding in such cases, either that the “taking” was at the time of physical acquisition or that it was at (or shortly after) the time the recipient became aware of the true position. The former holding would exempt the recipient since it would mean that at the time he took the property he had no fraudulent intention; the latter holding would make him guilty of larceny. The former solution suffered from the difficulty that it involved ascribing to an individual an act of “taking” where he had, and could have had, no such intention at the time of physical acquisition. The latter ascribed the act of “taking” to what was essentially a mental act – it was thus described as a case of larceny, not by finding, but by finding out.

The courts struggled with the issue, the leading cases involving fundamental divisions among the judges.

As a threshold to our analysis we must first mention the distinct case of appropriation following conduct which amounted to a trespass to the owner's property.

2.52

In Riley,¹⁷⁴ the defendant had left 29 lambs overnight in another person's field, with that person's permission, at the price of one penny per head. Early the following morning, he removed, as he believed, the 29 lambs, but later an intended purchaser, with whom he was negotiating to sell the flock, pointed out that it comprised 30 lambs. Realising that he must have innocently misappropriated a lamb belonging to another party, the defendant resolved immediately to dispose of the lamb to the intended purchaser, who thereupon bought the 30 lambs.

The English Court for Crown Cases Reserved held unanimously that the defendant had properly been convicted of larceny of the lamb. Pollock CB accepted that it might “reasonably be said not to be a violation of any social duty” for a man who finds a lost article to take it home for the purpose of finding out the true owner”; if he does this honestly in the first instance, and afterwards, though he may have discovered the true owner, is seduced into appropriating it to his own use, he is not guilty of larceny, though he does wrong”.¹⁷⁵ In all the cases where the courts had excused a subsequent misappropriation the original possession had not been wrongful:

Parke B said:

Riley has been applied in the later English decision of Ruse v Read¹⁷⁸ where the defendant who took a bicycle when too drunk to have the mens rea to steal, having sobered up and discovered that it was not his own, took steps indicating a clear intention to appropriate it. Australian decisions are in substantial accord.¹⁷⁹

In Ireland, Riley was referred to in Hehir¹⁸⁰without complaint.

2.53

We now must consider the cases that do not involve an initial trespass. Judicial analysis has been complicated by the intrusion of the notion of legal possession into the discussion of what constitutes “taking”. In Cartwright v Green¹⁸¹ and Merry v Green,¹⁸² the principle had been accepted that one could not possess something of whose existence one was unaware.

The English Court for Crown Cases Reserved addressed the issue in Ashwell,¹⁸³ in 1885. The defendant asked a drinking companion in a public house for a shilling, saying that he would repay him the following morning. The companion agreed, and, putting his hand in his pocket, pulled out what both of them believed to be a shilling. Shortly afterwards the defendant discovered that it was in fact a sovereign; he thereupon fraudulently appropriated it to his own use. He was convicted of larceny of the sovereign. The judges of Court for Crown Cases Reserved were equally divided, so the conviction stood.

2.54

In Flowers¹⁸⁴ a year later the same Court distinguished Ashwell. The defendant, who had on opening the bag containing his wages discovered that he had been underpaid. Having taken the money from the bag, he returned the empty bag to his employer's cashier's clerk and asked for the balance due to him. The clerk gave him the money due, together with a bag which he believed to be the defendant's bag but which was in fact that of another employee. It contained money which the defendant later appropriated. The case stated by the Recorder

did not make clear how much time elapsed between the transfer of the bag and its subsequent fraudulent appropriation but it appears from the evidence that it was very short.¹⁸⁵ The question for the Court, on the basis of the jury's findings, was whether such a subsequent appropriation could constitute larceny, the jury not having found affirmatively that the defendant had the animus furandi at the time of the receipt of the bag.

The Court held that the conviction should be affirmed on the basis that there was a clear distinction between it and Ashwell.

Kenny is not alone among commentators in challenging Lord Coleridge's statement that there was “a most substantial difference” between the two cases. He states:

2.55

If the English Court for Crown Cases Reserved revealed uncertainty and internal divisions on the question of initially “innocent” taking, the Irish Court for Crown Cases Reserved experienced no less difficulty. In Hehir¹⁸⁷ in 1895, an employer gave his employee what both of them believed to be two pound notes and nine shillings. In fact one of the notes was a ten pound note. There was evidence that the employee, some considerable time after receiving this note, discovered its true value and fraudulently appropriated it to his own use. The question reserved by Palles CB for the Court was whether he ought to have directed a verdict of acquittal by reason of the prisoner's not having had the animus furandi when his employer handed him the ten pound note. The majority¹⁸⁸ of the Irish Court for Crown Cases Reserved held that the employee's conviction should be quashed.

Larceny from the Person

2.56

Section 14 of the Larceny Act, 1976 provides that the offence of larceny from the person is punishable by penal servitude not exceeding fourteen years.¹⁸⁹

In the Court of Criminal Appeal decision of Mills,¹⁹⁰ in 1955, Davitt P, for the

Court, said that he considered it clear from the authorities that:

Punishment

2.57

Formerly, the law distinguished between “petty” and “grand” larceny.¹⁹² Where the thing stolen was worth no more than twelve pence, the offence was merely that of “petty” larceny, which, though a felony, was not a capital offence. “Grand” larceny, of things of a higher value, was for centuries a capital offence, though the full rigour of the law was moderated by benevolent fictions as to the value in specific cases, as well as the rules of “benefit of clergy”.¹⁹³

Echoes of the distinction between “petty” and “grand” larceny may be found in the present discussion between “simple” and “aggravated” larceny. Section 2 of the Larceny Act, 1916, as we have noted, specifies that certain conduct “shall be larceny and a felony”, punishable with penal servitude for up to five years. In Bryant,¹⁹⁴ however, it was said that:

The 1916 legislation prescribes several enhanced penalties for different cases of aggravated larcenies.

2.58

Larceny from a dwelling house of any chattel, money or valuable security is a felony with a penalty of up to fourteen years' penal servitude if the property has a value of at least five pounds or the thief by any menace or threat puts any person in the dwelling-house in bodily fear.¹⁹⁵ The same maximum penalty attaches to the larceny of goods from ships, barges or boats, from docks, wharves

or quays and from vessels in distress, wrecked, stranded or cast on shore.¹⁹⁶

2.59

Larceny from the person warrants up to fourteen years' penal servitude.¹⁹⁷ Robbery – an assault with intent to rob – carries a maximum penalty of life imprisonment.¹⁹⁸

2.60

Larceny by a clerk or servant,¹⁹⁹ or a person employed in the public service²⁰⁰ carries a maximum penalty of fourteen years, “owing to the opportunities of dishonesty which are necessarily placed within the reach of all persons thus employed, and to the breach of confidence which is involved in taking advantage of them”.²⁰¹ Postal employees who steal a postal packet in the course of transmission by post face a penalty of penal servitude for life if the packet contains “any chattel, money or valuable security” and penal servitude for a term of up to seven years in all other cases.²⁰²

2.61

Section 12 prescribes a penalty of penal servitude for life for theft from the mail by persons, whether or not postal employees. It provides as follows:

2.62

Larceny of a will, codicil or other testamentary instrument, either of a dead or of a living person, carries a penalty of penal servitude for life.²⁰³ Larceny of goods in the process of manufacture warrants a maximum penalty of fourteen years' penal servitude.²⁰⁴ Larceny of a horse, cattle or sheep warrants the same penalty.²⁰⁵

2.63

The 1861 and 1916 Acts contain a wide range of what Kenny calls “quasi-larcenies,”²⁰⁶ involving the appropriation of movables which fell outside the old law of larceny, such as certain animals and plants.

CHAPTER 3: EMBEZZLEMENT

3.1

An employee who misappropriates goods placed in his possession before they come into his employer's possession is not guilty of larceny. This was clearly stated in Bazeley¹ in 1799. A statute² enacted later that year made such misappropriation (“embezzlement”) an offence.

Section 17 of the Larceny Act, 1916 now provides as follows:

Who is a “Clerk or Servant”?

3.2

The criminal law, like tort law,⁴ distinguishes between a “servant”⁵ and

an “independent contractor”.⁶ The master-servant relationship involves a much greater degree of control by the master of the servant's work than does a contract for services with an independent contractor. The master “can tell [the servant] not only what to do but also how to do it”.⁷

The courts traditionally have had regard to such as the following:

In Negus⁹ in 1873, Bovill CJ said:

And Blackburn J said:

3.3

More recently, in cases of tort and other employment, less emphasis has

been placed on the control test. “Thus, factors such as the form of remuneration, the payment of tax and social insurance, the risk of profit and loss and the ownership of equipment and materials have been taken into account. It can be expected that the criminal law will likewise broaden its definition of who is a clerk or servant.”¹¹ Although there is no necessary coincidence of social policies as between tort law and criminal law so far as the definition of “servant” is concerned, it seems that the courts in criminal cases are content to take their lead from torts cases. Thus, in the Court of Criminal Appeal decision of Warren,¹² in 1944, Gavan Duffy J referred to a decision¹³ in tort law as to whether a rate collector was a servant of the local authority, and observed:

Whether courts in prosecutions for embezzlement would today favour the same approach may be debated. Certainly the decision of Moynihan v Moynihan¹⁴ has given pause for thought.

There the Supreme Court held that a mother was vicariously liable, as head of the household, for the negligence of her daughter in the provision of hospitality for other members of the family who visited the mother's home. Walsh, J noted that:

3.4

Now it is clear that a person may be guilty of embezzlement even in the absence of a contract of service. In Faulkes,¹⁶ where a son was convicted of embezzling from his father, Cockburn CJ said:

It is worth noting also Pollock B's statement that:

These judicial observations may seem in close harmony with Moynihan, but it must surely be the case that, in a prosecution for embezzlement, the Court should not too readily characterise as a de facto service relationship one that has received this characterisation in tort litigation. It would be naive to view Moynihan as having been decided in a policy vacuum; similarly the findings of a de facto service relationship between brother and sister in the context of proceedings for seduction¹⁸ must also be regarded as serving policy goals which have no necessary counterpart in prosecutions for embezzlement.

3.5

The requirement that the servant or clerk should receive property “for or on account of” his master has not yet been analysed in any recent Irish case dealing with embezzlement.¹⁹ In Lawless,²⁰ where the appellant had been acquitted of embezzlement but convicted of fraudulent conversion, the Court of Criminal Appeal was content to rely on an English decision²¹ dealing with embezzlement when determining the meaning of this phrase. In the context of fraudulent conversion, it was subsequently decided in Cowan,²² approving the English decision in Grubb,²³ that a person may be entrusted with property “for or on account of” another person notwithstanding that the property is not delivered to him directly by the owner and that the owner does not know of his existence and has no intention of entrusting the property to him because his receipt of the property gives rise to a duty or obligation to account for it to such other person. It seems safe to predict that, in prosecutions for embezzlement as well as fraudulent conversion, the approach favoured in Cowan will prevail.

3.6

The mere failure to account for or the inaccurate recording of, transactions involving the receipt of property by a servant for or on his master's account does not constitute embezzlement, though it may amount to an offence under section 2 of the Falsification of Accounts Act, 1875.²⁴ However, such a

failure may warrant an inference of an intent to defraud the master, in which case a conviction for embezzlement may be sustained.²⁵ As to the meaning of “fraudulently”, in relation to embezzlement, it seems that a claim of right is inconsistent with fraud in this context.

The Court of Criminal Appeal so held in Grey,²⁶ in relation to a prosecution for fraudulent conversion. In view of the similar language in sections 17(1)(6) and 20(1), and in view of O'Byrne J's judgment²⁷ in Grey, it may be argued that the logic of the holding in Grey applies also to the context of embezzlement.²⁸

3.7

As regards proof of the offence, it appears that this may be satisfied by evidence of false entries and general deficiencies in the books, where the jury can properly infer that the defendant must have embezzled the missing amounts.²⁹ No Irish case dealing with embezzlement has yet decided whether a general deficiency count is permissible in cases where it is impossible to split up an aggregate sum and to trace individual items.³⁰ The English decision of Tomlin³¹ has held that this solution is permissible; and the Irish decision of Singer³² is an authority in favour of this approach in a prosecution for fraudulent conversion.

CHAPTER 4: FALSE PRETENCES

4.1

Section 32 of the Larceny Act, 1916 provides that a person is guilty of a misdemeanour when, by any false pretence,

In the Court of Criminal Appeal decision of Bristow (No. 2),² O Dalaigh CJ summarised the ingredients of the offence succinctly. To establish an obtaining of money by false pretences, the prosecution had to establish:

The Right Obtained

4.2

Kenny⁴ states:

It is necessary to stress the distinction here drawn between the owner's intention to pass property in the goods (in which case the prosecution should be for false pretences) and his intention merely to pass possession (in which case the prosecution should be for larceny). Deciding which was the owner's intention may be very difficult in some cases. The owner may have no sophisticated understanding of the difference between ownership and possession; even if he does, he may genuinely be uncertain as to what his precise intention was in the circumstances of the case.

The Subject Matter

4.3

It is not entirely certain what the words “chattel, money or valuable security” embrace. There is some authority for the view that they should be read subject to the implied qualification that they must also be capable of being stolen.⁵ It is interesting to note that section 10 of the Criminal Justice Act, 1952, which in substance reenacts section 32 of the 1916 Act, uses the expression “anything capable of being stolen” rather than “chattel, money or valuable security”.

What Constitutes A Pretence

4.4

A pretence involves human conduct where there is an untrue communication. The conduct usually is any language, written or spoken; but this is not essential, once a communicative dimension may be discerned. Thus, for a man in Oxford to wear a cap and gown was considered capable of amounting to a representation on his part that he was a student at the University.⁶

In Finkel v Levine⁷ in 1951, the defendants had been involved in a transaction whereby counterfeit dollar bills were given by one of them to a third party in exchange for sterling at a price of six pence per dollar above the normal exchange rate. At the time there was in force an Emergency Regulation forbidding the sale of dollars between private persons. They were convicted of conspiring together to obtain money by false pretences, and of obtaining that money by false pretences.

In their appeals, the defendants argued that there had been no evidence that either of them had ever made any false statement as to a matter of fact in relation to the dollar bills and that therefore neither had made any false pretence. Moreover, they argued, there was no evidence that they knew the bills were counterfeit or that the third party had parted with his money as a result of the misrepresentation alleged. This argument was rejected by the Court of Criminal Appeal.

Maguire CJ (for the Court) said:

It was the opinion of the Court that, if the Emergency Regulation had not been in operation, there would have been “ample evidence to justify the jury in concluding that all the ingredients necessary to constitute the charge of false pretences were present and particularly to establish guilty knowledge.”⁹

The False Pretence Must Be One Of Past Or Present Fact

4.5

The false pretence must be one of past or present fact.¹⁰ Much judicial attention has concentrated on false promises. The courts¹¹ have held that a false promise should not involve the promisor in liability for obtaining money by false pretences. Why should this be? In one sense, of course, a false promise necessarily contains a false representation of fact, namely, that the promiser intends to keep his promise. But the courts regard a promise as being of a different order to an ordinary representation of fact.

Several reasons may be suggested for this approach. An extension of the offence to all cases of fraudulent breach of promise would cast the shadow of criminal law too far over the law of contract. All statements about the future should be treated with caution, especially statements relating to intention. Moreover, a promise is a “speech act”: one generally does not enter into a mutually binding promise without doing so by communication; yet a promise is a human act of a different moral order to a factual representation. Breach of a promise should not necessarily be treated in the same way as an untrue factual representation, even if the promisee shares with the party to whom a representation has been made the experience of disappointed reliance. Whereas the latter can say “I relied on the truth of the what I was told”, the former can say “I relied on the moral integrity of the promisor that he would keep his promise”.

4.6

In Murphy¹² in 1876, the defendant had obtained two separate

quantities of goods by sending in the post half notes in payment for one of these quantities from one merchant and by sending the corresponding halves to the other merchant for the other quantity.¹³ Her counsel argued unsuccessfully that the indictment could not be maintained as the false pretence was not one of fact but merely a promise to send the other halves. The case was left to the jury, who convicted.

Lawson J reserved the case for the Court for Crown Cases Reserved. Counsel for the defendant contended first that the sending was merely a promise to pay for the goods on delivery. Palles CB was unimpressed, asking:

Counsel replied that the promise had not been to pay by sending the second half notes, but “to pay in some manner, and the half notes were sent merely to a security for the observance of the promise”.¹⁵ To this O'Brien, J rejoined:

Counsel then sought to argue that the sending of the money was “not a false pretence [but] merely a security”.¹⁷ It was quite possible that the prisoner had made a mistake in sending the half notes. The evidence was “at most ... consistent with the innocence of the prisoner.¹⁸ Keogh, J conceded that “[t]hat might be, but for evidence which appeared from the cross-examination of one of the merchants who had said that the defendant had told him she had sent the half notes corresponding to those he had reserved to some one else”.¹⁹

Morris CJ stated that the Court was unanimously of the opinion that the conviction should be affirmed.

4.7

In Cloran²⁰ in 1870, the defendant had induced a debtor languishing in the Four Courts Marshalsea to part with a promissory note for £60 in reliance on his assurance that he would apply this sum to secure her release. He later claimed that he had destroyed the note but in fact he had passed it to a bank for his own benefit.

Counsel for the defendant argued that there was no case to go to the jury, since “there was nothing but a promise to get the amount of a promissory note, and that was merely a promise in the future, and not within the measuring of the statute”.²¹ There was no evidence of a false pretence, as it was impossible to provide that the defendant was unable to advance £60 when he procured the note.

Counsel for the prosecution contended that “the statement made by the [defendant] that he was at the time in a state of power to do a certain thing, or if from the tenor of his conversation it was fair to infer that the idea of his existing power was created in the mind of [the debtor] ..., taken in connexion with the promise made to procure a sum of money was sufficient evidence to support the indictment as to the pretences; and that the fact of the defendant procuring the note under the circumstances, and passing same to the bank for his benefit, while he wrote a note stating he had destroyed it, was in the absence of any evidence adduced by the [defendant] to rebut same, prima facie evidence of the inability of the [defendant] to perform that which he represented he was able to do”²².²³

Pigot CB said:

The jury convicted. Pigot, CB had “no doubt whatever”²⁵ on his mind that would justify him in volunteering a reservation of the question to the Court of Criminal Appeal.

The False Pretence must Induce the Transfer of Ownership

4.8

The false pretence must have induced the change of ownership; it need not have been the only factor provided it was a material one.²⁶ The fact that the victim is credulous or careless is not a reason for acquittal.²⁷

In Carty & Carty,²⁸ the defendants were convicted of (i) conspiracy to defraud by a false representation that one of them was then entitled to sell and deliver a greyhound bitch named New Doll, and (ii) obtaining money by falsely pretending that one of them was thus entitled.

Counsel for the defendants on appeal submitted that the judge should have told the jury that the name of the animal was of no real consequence and that, if they believed that the person who sought to buy the greyhound promised by the defendants would in fact have accepted any 1952 greyhound bitch that had run 550 yards in 31.05 seconds, they should acquit. The Court of Criminal Appeal was not receptive to this argument for two reasons. First, there was evidence that the defendants had mentioned the animal's name to the purchaser on several occasions. Second, the animal they actually preferred had not complied with the qualifications as to age, time and distance.

The Court did, however, accept that:

4.9

This raises the interesting issue of misrepresentation as to identity as opposed to quality or qualities. Here the only information important to the prospective purchaser appears to have related to age, time and distance; the name of the bitch appears to have been irrelevant. It is true that there was indeed an animal named New Doll, owned by another person, which one of the defendants tried unsuccessfully to buy after agreeing the sale. But the judgment gives no clear support for the inference that the prospective purchaser was aware of the existence of that animal, so that there is no reason to believe that it played any part in his deliberations as to whether to buy.

The Court appears, correctly, to have accepted that a misrepresentation as to what it calls “name”need not give rise to liability. It is only where the name carries with it connotations that may affect the deliberation of a prospective purchaser (or other victim) that it will be of relevance.³⁰

Direction to Jury need not refer Expressly to Requirement of Inducement where Evidence is Clear

4.10

In Bristow (No 2),³¹ in a prosecution for false pretences arising out of the giving of a cheque that bounced, the trial judge did not in express terms tell the jury that the injured party must have been induced by the representation to part with his money. The Court of Criminal Appeal held that, on the facts of the case:

Proof of the Falsity of the Pretence

4.11

The indictment must specify the pretence alleged and it is that pretence which must be shown to be false.

This principle was endorsed in Kelleher,³³ although its application to the facts of the case is not easy to understand. The Court for Crown Cases Reserved held bad an indictment for obtaining money by false pretences where it stated that the defendant knowingly and designedly falsely pretended that he was another person who had money deposited in the Cork Savings Bank, and who had a book of his bank with a statement of his account in it, which book he presented to the cashier of the Bank when representing himself to be that other person, by means of which false pretence he obtained £10 of the other person's money, with intent to defraud, whereas in truth he was not that person, nor had he any authority to present the book for the purpose of drawing out money; neither had he any authority from the other person to draw money from the bank.

May CJ, for the Court said:

The difficulty in this case is that the indictment did allege that the defendant had pretended that he was the person named in the Bank book: it stated “... which said book he the said Michael Kelleher presented to the said EJ Julian at the time he represented himself to be the said James Goulding by means of which said false pretence he, the said Michael Kelleher, did there and then obtain from the said ... [etc]”. It is possible that the view of the Court was that, although the indictment stated the prisoner pretended he was X, who, as a matter of fact, was

the owner of the book, it did not state expressly that he pretended to be the owner of the book. This seems a very narrow a distinction to draw.

Intent to Defraud

4.12

An intent to defraud “may of course be inferred from the facts of the case”.³⁵ In Sullivan,³⁶ where the defendant, a midwife charged with attempting to obtain money by false pretences, had submitted false reports of provision of service, the Supreme Court by a majority³⁷ held that this “amounted to prima facie evidence that her actions in this regard were consistent only with an intent to defraud, subject however to her establishing that she had good reason for having the cases attended by other midwives”.³⁸

In Shanahan,³⁹ the defendant paid for two tractors with a cheque which he knew would be met only if a cheque from a third party was lodged beforehand to his account. The latter cheque was dishonoured, and the cheque for the tractor accordingly bounced. When interviewed by a member of the Garda Siochana, the defendant intimated that he had stopped the cheque because of a dispute with the vendors arising from the non-delivery of documents associated with the tractor. He did indeed have such a dispute, since the tractor had not received customs clearance, but, as has been mentioned, the reason the cheque for the tractor bounced was because of the absence of sufficient funds in the defendant's account.

The defendant's appeal against conviction for false pretences was successful, the Court of Criminal Appeal ordering a new trial. Counsel for the defendant conceded that, where the prosecution established the issuing of a cheque and the complete absence of funds or of any permitted overdraft facility to meet it, this would discharge the onus of establishing a fraudulent intent as a prima facie proof. He argued unsuccessfully that there was in this case a further onus of proof on the prosecution in establishing a prima facie case to prove the circumstances of the dishonouring of the cheque issued to the defendant by the third party and the fact that the defendant was aware of its worthlessness when he issued his own cheque.

In rejecting this submission, the Court of Criminal Appeal expressed the view that the Guard's evidence constituted prima facie evidence of the fraudulent intent necessary to convict. However, it is worth recording O'Higgins CJ's statement that:

As McCutcheon⁴¹ notes, “[a]lthough proof of the accused's knowledge of the falsity of the representation supports a prima facie case of intent to defraud, such proof is not always sufficient.”

4.13

In Thompson alias Morrison⁴² in 1960, the defendant was convicted of obtaining a car by false pretences and of conspiracy with another to defraud the owner of the car by obtaining it from him by false pretences. He had obtained the car on 3rd February in exchange for a cheque dated the following day. There was only £10 in his account at the time of the sale. His secret intention (he later claimed in his unsworn statement from the dock) was to meet this cheque by lodging the proceeds to be derived from a quick sale of the car to another dealer. As matters worked out (he claimed), he was unable to reach those dealers in time, so his colleague sold it at a small loss to a third party who gave a cheque for it which the defendant lodged to his account and which would (with the £10) have afforded sufficient funds to meet the cheque given to the car owner the previous night. Unfortunately for the defendant, the third party dishonoured his cheque, resulting in the dishonouring of the original cheque.

The Court of Criminal Appeal quashed both convictions and ordered a new trial on both counts. This was because the direction of the trial judge, which had laid particular emphasis on the drawing of the cheque, “could well have masked the other ingredient, namely the intent to defraud by reason of the false pretence, without which there could not be a conviction”.⁴³

Walsh J for the Court, addressed the issue of false pretences, in a most important passage:

As regards the role of the trial judge in guiding the jury, in Bristow,⁴⁵ O Dalaigh CJ observed:

Punishment

4.14

Although obtaining by false pretences is a misdemeanour, the maximum punishment for the offence – five years imprisonment⁴⁶– is as severe as for simple larceny.⁴⁷

Larceny and False Pretences Distinguished

4.15

The conceptual difference between the offences of larceny and false pretences is clear, but in practice the evidence in some case may be far from plain as to whether the victim intended to pass ownership or possession. Formerly, this could result in guilty defendants being acquitted since it was not possible to join felonies and misdemeanours in the same indictment.⁴⁸

These difficulties are addressed by section 44 of the Larceny Act, 1916, subsections (3) and (4) of which provide as follows:

Kenny warns that:

CHAPTER 5: FRAUDULENT CONVERSION AND FALSE ACCOUNTING

1. Fraudulent Conversion

5.1

The common law did not impose a criminal sanction on servants who acquired full ownership in money or goods in circumstances where it was their plain duty to pass them over to their master. An action for breach of trust might indeed be available, or perhaps a restitutionary remedy such as the quasi-contractual claim for money had and received; but the common law was slow to characterise a breach of trust as a criminal offence.¹Kenny notes that “[s]till less did it attach any criminal liability to acts done by one whose fiduciary duty was less well defined than that of a recognized trustee”.² Various enactments in the nineteenth century provided some degree of criminal sanction against these types of breach of trust; but it was not until the Larceny Act, 1901 that wide-ranging liability was prescribed. The matter is now dealt with by section 20 of the Larceny Act, 1916,³ which (re-enacting section 1 of the 1901 Act) provides as follows:

5.2

Fraudulent conversion must be distinguished from obtaining money by false pretences:

5.3

There is a major disagreement among the commentators as to whether section 20(1)(iv) should be interpreted as extending, not only to cases where ownership is passed, but also to cases where something less is transferred. In favour of the broad interpretation, Smith⁶ argues that section 20(1)(iv) embraces conduct amounting to larceny by a bailee,⁷ larceny by a clerk or servant⁸ and embezzlement.⁹

The language of the provision itself contains no limitation; the cases¹⁰ give some support for the wide interpretation and the historical argument¹¹ relating to the aims of the Larceny Act, 1916, in Smith's view, presents no difficulty. As against this, Turner is of the view that, in order to satisfy section 20(1)(iv), it is necessary to establish that the defendant received the ownership of the property he fraudulently converted.¹² Section 20 as a whole deals with cases in all of which “the offender stands in a special relation to the property, such that, apart from the provisions of this section, he could not be criminally prosecuted for misapplying it.”¹³ To read section 20(1)(iv) as in part duplicating other clear provisions in the 1916 Act would involve an absurdity.¹⁴

The matter has not yet been resolved finally by an Irish court. O Dalaigh J's reference in Singer¹⁵ to “fiduciary ownership” suggests support for Turner's view – an interpretation enhanced by his reference immediately afterwards to Turner's “admirabl[e] summar[y]”¹⁶ of the history of the offence in Kenny's Outlines of Criminal Law.¹⁷ As against this, O Dalaigh J was addressing the narrow

question of the relationship between fraudulent conversion and false pretences, so it would seem wrong to place much weight on this endorsement of Kenny's view. It is interesting to note that the Court of Criminal Appeal delivered judgment in Singer on 23 June 1961, five months before the first part of Smith's celebrated attack¹⁸ on Kenny's views was published.

5.4

It should also be noted that a passage from the Court of Appeal's decision in Reynolds,¹⁹ quoted presently, could, on one view, be interpreted as implying that a conviction for fraudulent conversion may be sustained even where it is not clear that the accused obtained ownership of the money or property. The judgment can perhaps be better understood as going no further than warning that an undue concentration on the precise moment at which possession or ownership passed may deflect the jury from the more important task of determining whether the property was received for and on account of another; yet the reference to the passing of possession, without a clear statement that ownership must also pass, may be considered to give some support to Smith's view.

Section 20(1)(4)(a) deals with two different cases: entrustment of property for retaining in safe custody (in paragraph (a)) and receiving of property “for or on account of” any other person (in paragraph (6)).

In Reynolds, the Court of Criminal Appeal was not receptive to the argument that section 20(1)(iv)(a) referred to two separate offences of an essentially different nature, depending on whether the property was entrusted for safe custody or otherwise. Maguire CJ said:

5.5

As regards section 20(1)(iv)(b), Hanna J, in the Court of Criminal Appeal decision of Lawless,²⁰ in 1930, said:

5.6

As a preliminary to consideration of the important but difficult decision of Heald,²¹ it may be useful to note the following passage from Kenny:²²

5.7

In Heald,²⁵ the defendant was a matron and effectively the manager of a convalescent home run by an order of nuns. She had a very wide discretion in relation to the collection of fees from the patients and its expenditure. She received lump sum payments from two prospective patients, which she represented to them would entitle them to be patients in the home for their respective lives. In fact, this payment had, to her knowledge, been discontinued. She applied the money to her own purposes. She was charged with fraudulent conversion and larceny, and was convicted on the first charge.

The Court of Criminal Appeal quashed her conviction. The Court thought it necessary for the prosecution to have shown that the applicant had in fact authority to receive this money on behalf of the nuns. Maguire CJ for the Court

said:

Now it is of course true that a person may be obliged to receive property for or on account of another even where the donor of the property is unaware of that obligation. But it does not necessarily follow that a person who receives property for a specific purpose, clearly understood and specified (expressly or impliedly) by the donor may not be convicted of an offence under section 20(1)(iv)(b) by reason merely of the fact that the recipient had not been given authority to receive property for this purpose by those whom the donor intended to benefit.

5.8

Before examining the fate of Heald in the Supreme Court decision of Cowan²⁸ in 1958, it is worth noting briefly an unreported decision of the Court of Criminal Appeal, delivered the same year as Cowan.

In Kavanagh,²⁹ the defendant was convicted of fraudulent conversion of £300 entrusted to him. The charge of larceny of this sum by a trick was struck out. The Court of Criminal Appeal affirmed the conviction. The defendant was an agent of the Royal Liver Society. He accepted £300 from one Fiore Macari as a payment to secure the purchase of a house through the Society. He returned the money to Mr Macari and obtained instead a cheque for the same sum from Mrs Macari. He used the cheque to discharge a liability arising under an entirely independent transaction. Thereafter, over a period of several months, he failed either to return the money or to secure a house for the Macaris.

Counsel for the defendant, on appeal, argued that, if the defendant was guilty of any offence, it was that of larceny as a bailee rather than fraudulent conversion. He argued that an innocent obtaining of the property alleged to have been converted was a prerequisite of the offence of fraudulent conversion, and that,

since the defendant had no authority from the Society or otherwise, to accept the money as a deposit, and was dishonest from the start, there was therefore no entrusting of the money and consequently no subsequent fraudulent conversion. The Court rejected this argument:

The line of defence had been that Mr Macari had trusted the defendant as a business adviser as well as an agent and that it was on this basis that he had paid him the £300 as a deposit. In the opinion of the Court:

The judgment went on:

5.9

We now turn to examine the Supreme Court decision of Cowan.³³ In

that case a solicitor was held to have received money on his client's account even though his client, in signing a bank draft, was not aware that this action made it possible for the solicitor to cash or lodge to his credit the sum for which it was drawn. The essence of the defendant's defence was that since the client had been “tricked” into endorsing the draft which enabled him to collect the sum due, it could not be said that this sum had been received “for or on account” of the client.

The Court of Appeal rejected this argument. Maguire CJ delivering the judgment of the Court, noted that the facts in Heald were “very different” from those in Cowan. He considered that the use in Heald of the words “had authority to receive” the money:

The Chief Justice quoted from Lord Reading CJ's judgment in Grubb:³⁵

5.10

On further appeal to the Supreme Court, Lavery J said that Heald was “clearly distinguishable”.³⁷ He referred³⁸ appropriately to the words of Maguire CJ in the Court of Criminal Appeal. Lavery J stressed the notion of an implied authority to collect, based on the relationship of solicitor and client, as

well as on the client's statement that he had relied on his solicitor to act in his interests and to protect him:

O'Daly J confined Heald more clearly into its special facts:

O'Daly J noted that it had been submitted that Heald laid it down that there could not be a receipt of property for or on account of another (within section 20(1)(iv)(b)) unless it was shown that the accused had authority to receive the property for or on account of that other. He could:

Later in his judgment, O'Daly J engaged in a more direct onslaught on Heald. Noting that the Court of Criminal Appeal in Heald had apparently not been referred in argument to Grubb, he started:

5.11

In view of Cowan's treatment of Heald, and especially O Daly J's judgment, it would seem very difficult to place reliance on Heald, save as a precedent dealing with its very special facts. Even in this context, it is hard to see how a prosecution should fail (assuming that the case were not to be viewed as one essentially of false pretences) in the light of the language of section 20(1)(iv)(a) – as opposed to section 20(1)(iv)(b), which was invoked in Heald (and Cowan); section 20(1)(iv)(a) deals with a case where a person is entrusted with property in order that “he may ... apply ... for any purpose or to any person, the property or any part thereof or any proceeds thereof”. This language surely would apply to the facts of Heald, without any need to enter into the more complicated question of whether, under section 20(1)(iv)(b), a person may be held to have received property “for or on account of” one who has given him no such authorization.

5.12

The questions of fraudulent conversion can arise in relation to money entrusted to a company. The Court of Criminal Appeal addressed the subject in Singer.⁴⁴ The defendant had been charged with fraudulent conversion (among other charges), the indictment stating that, being a director of Shanahan's Stamps Auctions Ltd, he had been entrusted with money by members of the public for the purchase and sale of stamps and the return of this money with any profit thereon and had fraudulently converted it to the use and benefit of the company. His defence, in part, was that no money had been entrusted to him, and that whatever there was of entrustment was to the company.

O Dalaigh CJ for the Court of Criminal Appeal noted that in Grubb,⁴⁵ it had been:

The Court of Criminal Appeal accepted “the principle of Grubb's case”.⁴⁷ It noted that the jury's attention ought to have been directed to the material question of fact to warrant a conviction on this basis, namely, whether the defendant had had such control of the affairs of the company as to have in fact become entrusted with the money, although it had normally been delivered to the company or paid into its banking account. This had not been done.

5.13

Fraudulent conversion may of course be proved in a straight- forward case by showing a specific act of misappropriation on the part of the defendant, but circumstantial evidence may suffice.⁴⁸

In Murphy⁴⁹ Davitt P (for the Court) said:

5.14

A “general deficiency” count may be permitted “where it is impossible for the prosecution to trace specific items or to split the aggregate sum into identifiable amounts”.⁵⁰