R v Ewing

Rent Act–Appeal against conviction under section 16 of the Theft Act 1968 (‘obtaining pecuniary advantage by deception’) raising questions of importance in regard to premiums etc under the Rent Act–Whether requirement of a returnable deposit and requirement as to payment of rent in advance constituted breaches of the prohibition of premiums and other payments under the Rent Act–Worthless cheque given by appellant to landlord in purported discharge of obligations in tenancy agreement to pay a sum of £48 as a deposit against payment of accounts for gas, electricity, telephone etc, and against breakages, and a further sum of £48, being four weeks’ rent in advance–Provisions in Part VII of Rent Act 1968 (now Part IX of Rent Act 1977)–‘Silk’ case and Liverpool case recalled–Held that in the circumstances neither the returnable deposit requirement nor the requirement to pay four weeks’ rent on the day before the tenancy began constituted unlawful premiums or ‘prohibited requirements’–Hence cheque had been given in purported payment of ‘debt or charge’ for which the appellant was liable and he was properly convicted under section 16 of the Theft Act 1968 This was an appeal by Terence Patrick Ewing against his conviction under section 16 of the Theft Act 1968 for obtaining a pecuniary advantage by deception. The facts are set out in the judgment of the court delivered by Lawson J. The submissions on behalf of the appellant raised questions of law not previously decided by a superior court, although the subject of magistrates’ decisions in Southampton City Council v Silk Estates (Developments) Ltd (1967) 203 EG 727 and Town Clerk of Liverpool v Glynne Evans (1969) 211 EG 1189. These questions were (a) Whether a returnable deposit in respect of such matters as breakages and liabilities for gas, electricity, telephone and similar accounts constituted an unlawful premium within section 85 of the Rent Act 1968 (now section 119 of the Rent Act 1977), and (b) Whether a requirement for the payment of four weeks’ rent in advance contravened section 91 of the 1968 Act (now section 126 of the 1977 Act). It was submitted on behalf of the appellant that he could not have been guilty of the offence charged if the cheque which he had given was in respect of payments which it was unlawful for him to make. Lord Gifford appeared on behalf of the appellant; W McKinnon appeared for the Crown. EDITORIAL NOTE: Although this case was decided in 1976 the judgment has only recently come to notice and it has been thought to be of sufficient importance to be reported now for the information of readers. Giving the judgment of the court, LAWSON J said: This is an appeal by leave of the single judge by Terence Patrick Ewing, a young man aged approximately 23, against his conviction on December 4 1975 at Knightsbridge Crown Court, when, after a trial, he was convicted of obtaining a pecuniary advantage, specifically the evasion of a debt, by deception. The facts can be very briefly stated. They are conveniently set out in the judgment–I use that word advisedly–of the trial judge, giving his reasons for certain directions in law given to the jury in the course of his summing up. These reasons were given after the jury had retired and before they had returned with their verdicts. He said: Very briefly, the facts are as follows, as shown by the evidence. On June 9 of this year he registered with an accommodation bureau, seeking a single flat. He returned to that office on June 13, which was a Friday, in the afternoon, and a flat had then come into the office which was offered to him. He was sent to the address in Holland Park Avenue, just round the corner from the bureau. He inspected the flat, agreed that it suited him, returned to the bureau and completed the various formalities. The bureau then provided a tenancy agreement, which was completed by a member of the staff, which he signed. He was also asked to pay, under the terms of that agreement, the sums of £48 as a deposit and of £48 being four weeks’ rent in advance. On paying, which he did by a cheque for £96, which constitutes the deception the subject of this trial, he was given a receipt which enabled him then to return to the flat, and on production of the receipt, to receive the key of the flat. In fact, he did that that evening, on his own evidence; he was given the key that evening and he actually moved in the next day. The tenancy agreement showed that it was a fixed-term tenancy for six months commencing on June 14–that is the Saturday, the day following his visit to the agency–and terminating on December 13 1975, and it reads as follows: ‘At a weekly rental of £12, payable four-weekly in advance, the first of such payments to be made on June 14 1975 and thereafter every four weeks in advance.’  The provision relating to the deposit reads: ‘A returnable deposit of £48 to be paid by the tenant shall become due upon the signing hereof’–that is on June 13–‘to be held by the landlord against service, accounts, gas, electricity, telephone etc, and further against breakage or damage in or to the property, and will be fully returned to the tenant on satisfactory discharge of such accounts and providing there be no breakage or damage. This returnable deposit may be paid to the landlord by weekly instalments during the first six weeks of the tenancy.’ As has been said, the appellant moved into the flat on the Saturday. On the following Monday he cancelled the cheque. His bank statements were produced during the trial. They showed that he used an account in the name of one L Healey, and the tenancy agreement was also in the name of L Healey, although his true name is Terence Patrick Ewing. The cheque for £96, which he handed over and which he ordered should not be paid, was in fact also drawn in the name of L Healey. There was in fact no money in the account on which this cheque was drawn, or insufficient money to meet this cheque, but he gave evidence that he had £150 at his home and he could have paid this into his account had it been necessary to do so. When he told the bank that he was going to stop this cheque and indeed another cheque drawn for the accommodation agency fee, he was told that there was no need for him to pay money into the account in order to meet those cheques, payment of which he had countermanded. 73 There were two main issues in the case: the first main issue which the judge properly and clearly left to the jury, and as to which no complaint is made, is whether the appellant was acting dishonestly when he handed over this cheque for £96 in discharge of these obligations which arose under the agreement which he had signed on June 13; the second issue in the case really depended upon the answers to certain questions of law, as to which the learned judge gave rulings which he directed the jury they must accept and follow. The points of law which are pursued by Lord Gifford, who has argued this case with great skill and tenacity on behalf of the appellant and has left nothing unsaid which should have been said in support of the grounds of appeal, follow really the same lines as were followed at the trial with certain modifications. The first point that seems convenient to deal with is that there was an amendment to the indictment at the outset of the trial and as put to the defendant, to which he pleaded. It read that he: on June 13 1975 dishonestly obtained for himself a pecuniary advantage namely the evasion of a debt to which he giving his name had made himself liable under the terms of the tenancy agreement dated June 13 1975 with Mrs O M Scott by deception, namely by a false representation to Gemma John of Around Town Flats Ltd, acting for and on behalf of the said O M Scott, cheque no 618495 dated June 13 1975 drawn on Barclays Bank Ltd in the name of L Healey was a good and valid order for the payment of £96. It is necessary to draw attention to that matter, because, in his final submission, Lord Gifford submitted that if he could establish that any part of the debt totalling £96 was not a debt or charge to which the appellant made himself or was or might have become liable, then the offence would not have been made out. This court does not accept that view. This court takes the view that if the prosecution were able to establish (and so far as matters of law are concerned, the judge was correct in directing the jury) that any part of the debt totalling £96 fell within the terms of section 16(2)(a) of the Theft Act 1968, then, even though the remaining part of the £96 total did not relate to a debt within the language of that section and subsection, the offence would be made out. It therefore is not strictly necessary for this court to consider whether possibly it might be that one part of the total obligation amounting to £96 was not a debt within section 16(2). The learned judge in giving his reasons for his ruling, to which I referred earlier, dealt with the matter in the following way. He said: The first submission simply relates to the £48 which was required under the tenancy agreement as a returnable deposit. It is submitted that this amounted to a premium and therefore was caught by section 85 of the 1968 Rent Act. That reads: ‘(1) Any person who, as a condition of the grant, renewal or continuance of a protected tenancy, requires, in addition to the rent, the payment of any premium . . ., shall be guilty of an offence under this section . . . (4) The court by which a person is convicted of an offence under this section relating to requiring or receiving any premium may order the amount of the premium to be repaid to the person by whom it was paid.’ ‘Premium’ is defined in section 92 of the Rent Act 1968 as follows: ‘In this Part of this Act’–that is a reference to Part VII, which contains a group of provisions which relate to excessive payments, premiums and loans–‘unless the context otherwise requires,–‘premium’ includes any fine or other like sum and any other pecuniary consideration in addition to rent.’ It is necessary to go into a little more refinement in considering this part of the case, because Lord Gifford has contended, in addition to the contention that this is a returnable deposit of £48 referred to in the clause in the tenancy agreement which I have read, that this was a ‘premium’ and/or a ‘loan of money.’  Section 85(1) of the Rent Act deals also with loans as it does with premiums, by saying ‘Any person who, as a condition of the grant, renewal or continuance of a protected tenancy, requires, in addition to the rent, the payment of any premium or the making of any loan (whether secured or unsecured) shall be guilty of an offence under this section.’  The same section goes on to say that it is an offence which attracts a penalty not exceeding £100 and the court can order the repayment of the premium. Oddly enough, subsections (2) and (4) of section 85 do not attract the consequences of orders to return the money where the case is one where a loan is made by the tenant in consideration of the grant of the tenancy. Lord Gifford has grasped the nettle and has submitted that the requirement of a deposit, albeit returnable, is a premium within the definition of section 92 of the Rent Act, because, he submits, it is ‘any other pecuniary consideration in addition to rent.’  The court finds no grounds on which it can be argued that the payment of £48 can be described as the payment of a loan. So far as that is concerned, it is unnecessary to say more. But on the question as to whether a returnable deposit falls within the language ‘any other pecuniary consideration in addition to the rent,’ the court has been directed to some authority. Elmdene Estates Ltd v White [1960] AC 528 is not directly an authority on the matter which falls to be decided in the present case, but the court does get help from the opinions of their Lordships in that case, the headnote of which is that ‘other pecuniary consideration’ is a phrase which excludes many payments but includes matters which are to the benefit of the landlord or to the detriment of the tenant which are capable of being evaluated or expressed in money terms. So far as that authority goes, therefore, Lord Gifford’s proposition really is undermined rather than supported by it. He referred us to two cases reported in ESTATES GAZETTE, one a Southampton case, Southampton City Council v Silk Estates (Developments) Ltd (1967) 203 EG 727, where the magistrates at Southampton held that a deposit of £20, which was partial security for rent, was an illegal premium, contrary to the provisions of the Act which then regulated the matter, section 2 of the 1949 Act as amended. It is in the same terms, so far as central matters are concerned, as the section in the 1968 Act which we are considering. Contrasted with that case is a case from Liverpool, Town Clerk of Liverpool v R Glynne Evans And Another (1969) 211 EG 1189, in which it was held that the deposit of less than two months’ rent, which was to be held in a building society account by the agents as trustees for the tenant was not an illegal premium under the same section of the Act. The learned stipendiary magistrate in that case took the view that moneys would not form a premium unless they wholly passed to the landlord and were lost. A premium and a fine are in fact out-and-out and once-and-for-all payments. These are the only authorities to which we have been referred on this particular point. In our judgment the payment of the returnable deposit, as it is described in the agreement, was not a premium. It was not either a fine or other like sum, and it was not ‘another pecuniary consideration in addition to rent.’  It was what it was specified to be, that is to say a deposit as against the tenant’s obligations to pay various accounts such as electricity, telephone and service accounts and other matters and in respect of any dilapidations, bearing in mind that this was a furnished tenancy. The argument which was dealt with by the judge in the court below was as follows. Having given the definition referred to in the section, he said: Overnight, I invited any authorities that counsel could find to help me to be brought forward, and I have been referred to no authority which is directly in point. I have to deal with this, therefore, on first principles, and I think the first principle is this–that each case has to be decided on its own facts, and the crux of the matter is, what is the true nature of the provision?  Was it truly a returnable deposit, or was it so penal that it could only74 be construed as part of the pecuniary consideration for the granting of the tenancy? Looking at the nature of this particular transaction, is there evidence here that this was other than a reasonable deposit to be held against the various matters that are referred to?  Bearing in mind that this was a letting to a single young man and it was a short letting, was this an unreasonable sum to ask as a deposit?  Was it unreasonable to ask for a deposit in the first place?  I would be surprised if the law does not permit a landlord, in the case of a letting such as this one was, to seek reasonable protection by insisting upon a deposit, returnable. It would seem to me to be a reasonably common form of arrangement between these two contracting parties. I cannot see that the asking of a deposit is unreasonable in itself. I have, therefore, to look and see if the deposit was excessive. Bearing in mind, for example, the cost of replacement of furniture, the cost of the most modest repair in anyone’s home at the moment, the risk of some damage that any landlord must have when letting to a young person, I do not feel and cannot hold that there was anything unreasonable in the sum of £48 that was asked in this case. There is no evidence, I find, upon which I could hold that it was therefore so unreasonable that the true nature of the term was not that it was a deposit but a penalty, or premium or fine. Taking it as a true deposit, does it come within the term of ‘any pecuniary consideration’?  This is difficult wording, but I do not think that it does come within the wording ‘pecuniary consideration’ as a condition of the grant. No part of the payment can fairly be attributable as a consideration for the grant itself to be added, as it were, to the rent as consideration for the letting such as might be the case, for example, if the deposit required was excessively onerous. There was one more case, which I omitted to mention, to which we were referred by Lord Gifford in connection with the nature of the deposit, and whether it was capable of constituting a ‘premium.’  It is a Scottish decision, decided by the sheriff-substitute, at the sheriff court at Lanark, Glasgow, MacDonald v John Laing & Sons 1954 SLT 77 (Sh Ct). In that case the sheriff-substitute asked two questions: first of all, was the deposit which was paid in that case–it is not necessary to go into the facts–prima facie a premium, and, if it was, then had the landlord established on the evidence in that case that it had not got the quality of a premium but had the quality of a proper deposit?  For the reasons which he set out at some length in the report of the case, the sheriff-substitute came to the conclusion that the landlord failed to show that the sum taken was a genuine deposit and he therefore held it was a premium and not therefore a genuine deposit. In this case so far as this point is concerned, the court takes the view that the learned trial judge adopted the right approach to the analysis of the problem from a legal point of view and reached the correct conclusion, which is the conclusion this court has reached. The next ground of appeal relates to the payment of £48 by way of rent in advance on June 13 1975. Lord Gifford submits that this was an illegal payment and relies on the provisions of section 91 of the Rent Act 1968, the relevant subsections of which are as follows: (1)  Where a protected tenancy which is a regulated tenancy is granted, continued or renewed, any requirement that rent shall be payable–(a) before the beginning of the rental period in respect of which it is payable, or (b) earlier than six months before the end of the rental period in respect of which it is payable (if that period is more than six months)– that situation does not arise in this case –shall be void, whether the requirement is imposed as a condition of the grant, renewal or continuance of the tenancy or under the terms thereof; and any requirement avoided by this section is, in the following provisions of this section, referred to as a ‘prohibited requirement.’  (2) Rent for any rental period to which a prohibited requirement relates shall be irrecoverable from the tenant. Subsection (3) imposes a penal sanction on a person who purports to impose any prohibited requirement, exposing him to a fine, and the court by whom such a person is convicted may order any amount of rent paid in compliance with the prohibited requirement to be repaid to the person by whom it was paid. Subsection (4) deals with the right of the tenant to recover the payments prohibited under section 91 from the landlord or his personal representative to whom the payments have been made, or, alternatively, these can be deducted from the rent payable. One should read section 92, because it contains a definition of a term used in section 91: ‘In this Part of the Act, unless the context otherwise requires . . . ‘rental period’ means a period in respect of which a payment of rent falls to be made.’ Lord Gifford takes two points in relation to what I would call the section 91 argument. The first point he takes is this: that since this requirement was made on the afternoon of June 13, which was the day before the tenancy commenced, it was a ‘prohibited requirement’ under section 91(1). The second point he takes under section 91 is that the ‘rental period’ here under this agreement was the period of a week and therefore, even though it might have been lawful, subject to the first point, for one week’s rent to be paid in advance, it was unlawful to pay four weeks’ rent in advance. Dealing with the second point first, in the judgment of this court the rental period under this tenancy agreement was quite clearly a period of four weeks. One cannot read this agreement, in this court’s view, otherwise than by saying that the period in respect of which payments of rent fall to be made are periods of four weeks. It is true that the agreement uses the expression ‘at a weekly rental of £12,’ but it goes on to say ‘payable four-weekly,’ which means that the rent which is calculated at the weekly rate of £12 does not in fact fall due to be paid except at four-weekly periods. As to the other point, that this was a day ahead, this court takes the view that what happened here was that a cheque was being handed over which operated as a conditional payment in respect of which it was made, provided of course that the payment was in fact made. There are observations indicating that this is the position in a judgment of Lord Denning MR in D&C Builders Ltd v Rees [1966] 2 QB 617 at p 623, to which we were referred by Lord Gifford. But the fact of the matter in this case, on the jury’s verdict, is that at the time when the appellant tendered and handed over this cheque for £96 he did not in fact intend that that cheque should ever be met. Therefore we cannot regard the handing over of the cheque for £96, which at the time it was handed over was, unknown to the person to whom it was handed, a worthless piece of paper from the appellant’s standpoint, as a payment in pursuance of a requirement for the payment of rent in advance contrary to section 91. It is not necessary to consider what the situation would have been had in fact cash been handed over on that occasion. In fact the question would not have arisen had cash been handed over so far as rent in advance was concerned, because that would have been an end of the matter, unless and until the tenant sought to deduct it from future rent or take proceedings for recovering it from the landlord. Without having to decide the matter on the basis of a payment of cash, what is the situation if rent in advance is paid a day before the tenancy is due to begin?  Here we have a situation in which the cheque is handed over latish in the afternoon on the Friday in respect of the tenancy agreement then signed, which will entitle the tenant to enter the premises on the last stroke of midnight on the same day. The situation would then be extremely artificial, if the court took the view in those circumstances that there was a breach of section 91 in relation to prohibited requirements. Finally Lord Gifford has submitted that since the returnable deposit is, as he submits, an unlawful premium contrary to section 85, and by definition of section 92(1) of the Act, and because the rent in advance was unlawfully required or was a prohibited requirement by reference to section 91 of the Act, it cannot be argued that there had been an offence committed75 under section 16(2) of the Theft Act 1968. This is because, he submits, payments possessing those characteristics, that is to say that it is unlawful to require these payments to be made and if they are made then they are recoverable, cannot constitute debts or charges within the meaning of section 16(2) of the Act. Since we take the view in this case that there was no breach of the requirements of section 85 in respect of the returnable deposit, and no breach of the requirements of section 91, the contrary must be true, that is to say that these obligations, the obligations to pay the rent in advance and the obligation to pay the returnable deposit, were in fact debts or charges to which he had made himself liable or to which he might become liable within the meaning of section 16(1) and (2). I am reminded to revert to the point on which this court has expressed no opinion at all. The learned trial judge, having dealt with the points in section 85 and the points in section 91, and rejected them in his rulings said: Finally, if I am wrong and the legislation did touch this sum in the way submitted, then I further hold that by section 16(2)(a) of the Theft Act there was still a debt for the purposes of this offence. ‘Debt’ is specifically under that subsection to include a debt not legally enforceable. There has apparently been some divergence of academic opinion as to whether these words can apply to void provisions or illegal provisions. I prefer the view–and I think it is the view of Professor Smith rather than the view of Professor Griew–that the wording means, for once, simply what it says and covers cases where by statute the term has become legally unenforceable whether or not it is supported by penal provisions or the term is specifically made void. It is to be noted that section 85, the premium provision, and section 91, the advance rent provision, are different in terms, but in my view the effect of this legislation comes within the phrase, ‘not legally enforceable.’ The court finds it unnecessary to express any view as to whether obligations which arise out of breaches of provisions of section 85 or the provisions of section 91, by landlords or their agents, do constitute debts or charges within the meaning of section 16(2) of the Act. Finally Lord Gifford on behalf of the appellant seeks leave to appeal against sentence of nine months’ imprisonment suspended for two years, coupled with a supervision order. In the view of this court we are here confronted with a young man who has four previous convictions within recent years. He has a conviction for attempted deception in September 1971. In May 1975 he was convicted of three cases of obtaining money by deception and two cases of making threats to cause damage–hoax telephone calls–with 72 other offences taken into consideration and was made subject to a hospital order under the Mental Health Act. In August of the same year for theft he was made the subject of an order under section 60 of the Mental Health Act, being ordered to be sent to Horton Hospital. On March 3 last year he was convicted of theft at Knightsbridge Crown Court and sentenced to three months’ imprisonment. In all the circumstances of this case, and specifically in view of the fact that the jury by their verdict conclusively took the view that the appellant on this particular occasion was guilty of a further offence of dishonesty, the court takes the view that this sentence cannot in any respect be criticised. Therefore it follows that the application for leave to appeal against sentence is refused.