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Status: Positive or Neutral Judicial Treatment
*665 R. v Philippou
Court of Appeal (Criminal Division)
5 April 1989
(1989) 5 B.C.C. 665
O'Connor L.J. , Caulfield and Eastham JJ.
Judgment delivered 5 April 1989
Theft—“Appropriation”—shareholder directors withdrew money from company bank account to purchase

property—Appellant charged with stealing debts owed by bank to company—Whether there was an
appropriation— Theft Act 1968, sec. 1–3 .
Fraudulent trading—“Carrying on any business of the company”—Failed travel companies had Air Travel
Organiser's Licences—Whether obtaining and renewing licence was carrying on business— Companies
Act 1948, sec. 332(3) . (now Companies Act 1985, sec. 458 ).
These were appeals against convictions for theft and fraudulent trading.
The appellant and his co-accused were the sole shareholders and directors of a group of three travel
companies. All three went into liquidation in 1984 with deficiencies.
In 1983–84, the appellant and his co-accused bought a block of flats in Spain with sums drawn from
the bank account of one of the companies on 16 occasions. They were charged with stealing a chose
in action on each occasion, consisting of the debt owed by the bank to the company.
The trial judge ruled against the appellant's submission at the end of the prosecution case that there
was no case to answer on the ground that withdrawing the money from the bank could not in law
amount to appropriation.
In relation to theft, the ground of appeal was that the judge was wrong in law to rule against the
submission of no case to answer: when the appellant and his co-accused, as sole shareholders and
directors, gave instructions to the bank to transfer money to Spain, the instructions were the
instructions of the company, so that the company had consented to the transfer in the sense that the
transfer could not be said to be adverse to any right of the company.
In relation to fraudulent trading, one issue on appeal was whether the companies' obtaining,
maintaining and/or renewing their Air Travel Organiser's Licences from the Civil Aviation Authority
constituted “carrying on any business of the company” within sec. 332 of the Companies Act 1948 .
Held , dismissing the appeals against conviction:
1 The order to the bank was only one part of a composite transaction; the other component was the
fact that the money was being used to put the block of flats into the pockets of the appellant and his
co-accused. Authority decided the matter against the appellant: there was no “consent” by the
company on which he could rely. Once the two components of the transaction were put together, the
drawing of the money from the bank *666 was seen to be adverse to the rights of the company and
there was an appropriation. ( Attorney-General's Reference (No. 2 of 1982) [1984] Q.B. 624 and R.
v. Morris [1984] A.C. 320, applied .)
2 It was an integral part of the companies' business to provide air travel for their customers: they
could not do so without Air Travel Organiser's Licences. It was part of the business to apply for,
maintain and renew the licence.
The following cases were referred to in the judgment of O'Connor L.J.:
Anderton v. Wish (1980) 72 Cr. App. R. 23 .

Attorney-General's Reference (No. 2 of l982) [1984] Q.B. 624 .
R. v. Lawrence [1972] A.C. 626 .
R. v. Morris [1984] A.C. 320 .
R. v. Roffel [1985] V.R. 511 .
Salomon v. A. Salomon & Co. Ltd. [1897] A.C. 22 .
Tesco Supermarkets Ltd. v. Nattrass [1972] A.C. 153 .
Representation
Mr. William F.C. Thomas (assigned by the Registrar of Criminal Appeals) for the appellant.
Mr. W.H.Dunn Q.C. and Mr. Peter Carter (Crown Prosecution Service) for the Crown.
JUDGMENT
O'Connor L.J.:
On 28 March 1988, in the Crown Court at Southwark, this appellant was convicted of two offences of
theft and two offences of fraudulent trading. He appealed against conviction by leave of the single
judge. We heard the appeal on 17 and 18 January 1989 and dismissed the appeal. We now give our
reasons for so doing.
The appellant and his co-accused, Panayides, were the sole directors of Budget Holiday Group in
London. The three principal companies in the group were Sunny Tours, incorporated in 1975,
Croneridge, incorporated in 1979, and Seatline, incorporated in, 1970. All three went into liquidation
on 23 October 1984 with deficiencies. In the previous ten months, Sunny Tours had, an estimated
turnover of just under £35m. Its deficiency was just under £11.5m.
The theft offences
For the purposes of this appeal, there is no dispute about the facts. In 1983–84, the appellant and
Panayides bought a block of flats in Spain which had been used by Sunny Tours to accommodate
customers. The flats were put into a Spanish company. Budget Espania S.A., of which the appellant
and Panayides were the sole shareholders and directors. The purchase price of £369,000 was paid
with money drawn from the account of Sunny Tours with Barclays Bank in London in 16 transactions.
It is for this reason that the particulars of the offences charged, Which are sample counts, are
framed to read:
“… stole a chose in action belonging to Sunny Tours Ltd., trading as Budget Holidays,
namely, a debt of £X owed by Barclays Bank pic to Sunny Tours Ltd.”
The first count was laid in respect of a transaction in January 1984 in the sum of £61,365.97 and the
second, count in respect of a transaction in August 1984 for £58,081.86.
Soon after the trial began, Panayides fell ill and the case continued against the appellant alone. At
the end of the prosecution case, Mr. Thomas, for the appellant, submitted that there was no case to
go to the jury on the ground that withdrawing the money from Barclays Bank could not in law
amount to appropriation. The judge ruled against the submission. The ground of appeal is that the
judge was wrong in law so to do.
On behalf of the Crown, Mr. Dunn has submitted that, at least in this court, the matter is concluded
against the appellant by the decision of this court in Attorney-General's Reference (No: 2 of 1982)
[1984] Q.B. 624 . The point of law referred to the court will be found at p. 625:
“Whether a man in total control of a limited liability company (by reason of his shareholding
and directorship) is capable of stealing the property of the company; and whether two men
in total control of a limited liability company (by reason of their shareholdings and
directorships) are (while acting in concert) capable of jointly stealing the property, of the
company.”
In that case, the two shareholder directors, with each other's consent, spent the company's money
oh themselves. Before the trial judge, the defence conceded that all the requirements of theft within
the meaning of the Theft Act 1968 had been established save that of dishonesty. The judge ruled
that no jury properly directed could regard it as dishonest for two directors who were also the
shareholders to draw money from their own company to pay private bills and he ordered an
acquittal.
In giving the judgment of the Court of Appeal, Kerr L.J. first of all set out (at p. 636) the relevant
parts of the first six sections of the Theft Act and we must do the same:
“Basic definition of theft
1
(1) A person is guilty of theft if he dishonestly appropriates property belonging to another
with the intention of permanently depriving the other of it; and ‘thief’ and ‘steal’ shall be
construed accordingly.
(2) It is immaterial whether the appropriation is made with a view to gain, or is made for
the thief's own benefit.
(3) The five following sections of this Act shall have effect as regards the interpretation and
operation of this section (and, except as otherwise provided by this Act, shall apply only for
purposes of this section).
‘Dishonestly’
2
(1) A person's appropriation of property belonging to another is not to be regarded as
dishonest–
(a) if he appropriates the property in the belief that he, has in law the right to
deprive the other of it on behalf of himself or of a third person; or
(b) if he appropriates the property in the belief that he would have the other's
consent if the other knew of the appropriation and the circumstances of it …
(2) A person's appropriation of property belonging to another may be dishonest

notwithstanding that he is willing to pay for the property.
‘Appropriates’
3
(1) Any assumption by a person of the rights of an owner amounts to an appropriation, and
this includes, where he has come by the property (innocently or not) without stealing it,
any later assumption of a right to it by keeping or dealing with it as owner.
‘Property’
4
(1) ‘Property’ includes money and all other property, real or personal, including things in
action and other intangible property.
‘Belonging to another’
5
(1) Property shall be regarded as belonging to any person having possession or control of
it, or having in it any proprietary right or interest (not being an equitable interest arising
only from an agreement to transfer or grant an interest).
*668
(2) Where property is subject to a trust, the persons to whom it belongs shall be regarded
as including any person having a right to enforce the trust, and an intention to defeat the
trust shall be regarded accordingly as an intention to deprive of the property any person
having that right.
(3) Where a person receives property from or on account of another, and is under an
obligation to the other to retain and deal with that property or its proceeds in a particular
way, the property or proceeds shall be regarded (as against him) as belonging to the other.
‘With the intention of permanently depriving the other of it’
6
(1) A person appropriating property belonging to another without meaning the other
permanently to lose the thing itself is nevertheless to be regarded as having the intention
of permanently depriving the other of it if his intention is to treat the thing as his own to
dispose of regardless of the other's rights; and a borrowing or lending of it may amount to
so treating it if, but only if, the borrowing or lending is for a period and in circumstances
making it equivalent to an outright taking or disposal.”
After citing Salomon v. A. Salomon & Co. Ltd. [1897] A.C. 22 , to establish that a company is a legal
entity separate from persons albeit that they are its sole shareholders and directors, Kerr L.J. said at
p. 637G:
“The case for the prosecution was accordingly that … there was a case to go to the jury,
since the evidence alleged all the necessary ingredients to support a charge of theft against
the defendants. The subject matter was ‘property belonging to another,’ the company,
within Section 5(1) of the Theft Act … Secondly, it was submitted that the defendants' acts
constituted an appropriation with in sections 1(1) and 3(1) . All that remained in issue was
therefore whether or not the defendants had acted ‘dishonestly’ and that was an issue
which should have been left to the jury. Further, it was submitted that the effect of sections
1 to 6 of the Theft Act 1968 is that the offence of theft compendiously replaces the whole
of the more complex series of offences comprised in the Larceny Act 1916 , including
fraudulent conversion.”
Kerr L.J. then set out the contentions for the defendants. He said at p. 638D:
“On behalf of the defendants much of this was unchallenged. In particular, it was conceded
that, with the exception of ‘dishonestly,’ all the ingredients of the definition of ‘theft’ were
prima facie satisfied, viz., the definitions of ‘appropriates’ under section 3 , of ‘property’
under section 4 and of ‘belonging to another’ under section 5 . No issue was raised on ‘with
the intention of permanently depriving the other of it,’ presumably since this was clearly
covered by section 6(1) . However, it was submitted that this failed to take account of the
relationship between the defendants and the companies, and it was pointed out that even
in relation to the offence of fraudulent conversion under section 20(1)(ii) of the Larceny Act
1916 , there was no reported case where the defendants were the sole shareholders and
directors of the company in question, as here.
It was submitted that since the defendants were the sole owners of the company and,
through their shareholding, the sole owners of all its property, they could not, in effect, be
charged with stealing from themselves. In particular, it was submitted that there was no
issue to go to the jury on the ingredient of ‘dishonestly.’ The defendants were the sole will
and directing mind of the company. The company was therefore bound to consent to all to
which they themselves consented. In the light of the decision of the House of Lords in Reg.
v. Lawrence (Alan) [1972] A.C. 626 , it was conceded that one ingredient of the former
offence of larceny, ‘without the consent of the owner,’ was no longer a necessary ingredient
of the new offence of theft, and that the judge had erred in referring to this aspect, as
mentioned below. However, it was said that the defendants were in any event bound to
succeed under section 2(1)(b) of the Theft Act 1968 , since consent to the appropriations
by the defendants necessarily involved consent by the company for the purposes of this
provision.”
At p. 639G, Kerr L.J. said:
“The basic fallacy in the submission on behalf of the defendants is the contention that, in
effect, in a situation such as the present a jury is bound to be directed that, when all the
members and directors of a company act in concert in appropriating the property of their
company, they cannot, as a matter of law, be held to have acted dishonestly; or that, on
such facts, any reasonable jury is bound to reach this conclusion. We entirely disagree with
both these propositions.”
The trial judge had relied on the speeches in the House of Lords in Tesco Supermarkets Ltd. v.
Nattrass [1972] A.C. 153 , but Kerr L.J. pointed out that the decision has no bearing on offences
committed against a company. He said at p. 640E:
“Where this is alleged the position is different, as illustrated by the decision of the civil
division of this court in Belmont Finance Corporation Ltd. v. Williams Furniture Ltd. [1979]
Ch. 250 . In that case it was alleged by the receiver of the company that its shareholders
and directors had unlawfully and dishonestly conspired to use the company's funds to
purchase shares in another company for an excessive price, and also to give financial
assistance to the shareholders of that other company to purchase its shares in
contravention of section 54 of the Companies Act 1948 . Foster J. dismissed the receiver's
claims for damages, breach of trust and misfeasance, on the ground that in these
circumstances the company must itself have been a party to the alleged conspiracy, with
the result that the receiver could not maintain the action in its name. His decision was
however unanimously reversed. Buckley L.J. said, at p. 261 (and Orr and Goff L.JJ. agreed
with him at pp. 270 and 271):
‘It may emerge at a trial that the facts are hot as alleged in the statement
of claim, but if the allegations in the statement of claim are made good,
the directors of the plaintiff company must then have known that the
transaction was an illegal transaction. But in my view such knowledge
should not be imputed to the company, for the essence of the
arrangement was to deprive the company improperly of a large part of its
assets. As I have said, the company was a victim of the conspiracy. I think
it would be irrational to treat the directors, who were allegedly parties to
the conspiracy, notionally as having, transmitted this knowledge to the
company; and indeed it is a well-recognised exception from the general
rule that a principal is affected by notice received by his agent that, if the
agent is acting in fraud of his principal and the matter of which he has
notice is relevant to the fraud, that knowledge is not to be imputed to the
principal. So in my opinion the plaintiff company should hot be regarded
as a party to the conspiracy, on the ground of lack of the necessary guilty
knowledge.”
So far as the authorities in the realm of the civil law are concerned, this decision directly
contradicts the basis of the defendants' argument in the present case. There can be no
reason, in our view, why the position in the criminal law should be any different. This is
also the view expressed in Glanville Williams, Textbook of Criminal Law 2nd ed. (1983), pp.
746, 747 and 811, and by G.R. Sullivan, ‘Company Controllers, Company Cheques and
Theft’ [1983] Crim. L.R. 512,514 *670 and 515, both of which criticise the decision which
has given rise to the present reference.”
Kerr L.J. then turned to the possible effect of sec. 2(1)(b) of the Theft Act . He said at p.641E:
“First, a defendant's belief that he would have the other's consent' under section 2(l)(b)
must itself be an honest belief, and it must be an honest belief in a true consent, honestly
obtained. In giving the judgment of this court in Reg. v. Lawrence (Alan) [1971] 1 Q.B. 373
, 377, Megaw L.J. said:
‘Of course, where there is true consent by the owner of property to the
appropriation of it by another, a charge of theft under section 1(1) must
fail. This is not, however, because the words ‘without consent’ have to be
implied in the new definition of theft. It is simply because, if there is such
true consent, the essential element of dishonesty is not established. If,
however, the apparent consent is brought about by dishonesty, there is
nothing in the words of section. 1(1), or by reason of any implication that
can properly be read into those words, to make such apparent consent
relevant as providing a defence. The prosecution have to prove the four

elements already mentioned, and no more. No inference to the contrary is
to be drawn from the words of section 2(l)(b), already quoted. That
reference does no more than show that the essential element of
dishonesty does not exist if the defendant when he appropriates the
property believes that the owner would consent if he knew the
circumstances. ‘The circumstances’ are, of course, all the relevant
circumstances. ‘The belief’ is an honest belief. That paragraph does not
give-rise to the inference that an appropriation of property is not theft
when there is a ‘consent’ – if it can be rightly so described – which is
founded upon the dishonesty of the defendant.’
We can see nothing in the speech of Viscount Dilhorne in the House of Lords [1972] A.C.
626 , with which the other members of the House agreed, to cast any doubt on the
correctness of this passage. But the essence of the defendants' argument in the present
case is that their consent must necessarily involve consent by the company. It must then
follow that unless they themselves had an honest belief that they were entitled to
appropriate the company's funds, they could not honestly believe that the company had
truly consented to the appropriations in question.”
After pointing out that a possible defence was available under sec. 2(1) (a) , Kerr L.J. answered the
questions put in the reference in the affirmative.
We have found it necessary to cite from this case at considerable length because we agree with the
submission made by Mr. Dunn that even though appropriation was conceded, it is quite clear that
the court can have been in no doubt that appropriation was established in these circumstances.
Mr. Thomas, on behalf of the appellant, accepts that this may well be so, but submits that we are not
bound by the decision because the meaning of “appropriation” was not argued and the decision of
the House of Lords, in R. v. Morris [1984] A.C. 320 , where appropriation was expressly considered,
shows that there has been no sufficient appropriation in cases such as the present. This submission
is supported by the majority judgments in R. v. Roffel in the Supreme Court of Victoria [1985] VR.
511 .
We must return for a moment to the decision in Lawrence . In that case, the facts are set out at the
beginning of Viscount Dilhorne's speech at pp. 627–628:
“On September 1,1969, a Mr. Occhi, an Italian who spoke little English, arrived at Victoria
Station on his first visit to this country. He went up to a taxi driver, the *671 appellant,
and showed him a piece of paper on which an address in Ladbroke Grove was written. The
appellant said that it was very far and very expensive. Mr, Occhi got into the taxi, took £l
out of his wallet and gave it to the appellant who then the wallet being still open, took a
further £6 out of it. He then drove Mr.Occhi to Ladbroke Grove. The correct lawful fare for
the journey was in the region of 10s. 6d. The appellant was charged with and convicted of
the theft of the £6.”
On behalf of the appellant, it was, contended that as Mr. Occhi had consented to the taking of the £6
there had been no appropriation because the section should be construed as if the words “without
the consent of the owner” appeared after the word “appropriates”. That was the position under the
Larceny Act 1916 . Viscount Dilhorne rejected the submission. He said at pp. 631–632:
“I see no ground for concluding that the omission of the words ‘without the consent of the
owner’ was inadvertent and not deliberate, and to read the subsection as if they were
included is, in my opinion, wholly unwarranted. Parliament by the omission of these-words
has relieved the prosecution of the burden of establishing that the taking was without the
owner's consent. That is no longer an ingredient of the offence.”
Viscount Dilhorne went on to deal with the case at p. 632B. He said.
“That there was an appropriation in this case is clear. Section 3(1) states that any
assumption by a person of the rights of an owner amounts to an appropriation. Here there
was clearly such an assumption. That an appropriation was dishonest may be proved in a
number of ways. In this case it was not contended that the appellant had not acted
dishonestly. Section 2(1) provides, inter alia, that a person's appropriation of property
belonging to another is not to be regarded as dishonest if he appropriates the property in
the belief that he would have the other's consent if the other knew of the appropriation and
the circumstances of it. A fortiori, a person is not to be regarded as acting dishonestly if he
appropriates another's property believing that with full knowledge of the circumstances that
other person has in fact agreed to the appropriation. The appellant, if he believed that Mr.
Occhi, knowing that £7 was far in excess of the legal fare, had nevertheless agreed to pay
him that sum, could not be said to have acted dishonestly in taking it. When Megaw L.J.
said that if there was true consent, the essential element of dishonesty was not established
I understand him to have meant this. Belief or the absence of belief that the owner had
with such knowledge consented to the appropriation is relevant to the issue of dishonesty,
not to the question whether or not there has been an appropriation. That may occur even
though the owner has permitted or consented to the property being taken. So proof that
Mr. Occhi had consented to the appropriation of £6 from his wallet without agreeing to
paying a sum in excess of the legal fare does not suffice to show that there was not
dishonesty in this case. There was ample evidence that there was.”
During the next decade, “appropriation” was considered in a series of cases in the Court of Appeal
arising from shop-lifting in supermarkets. The problem was did appropriation take place when the
defendant took the article from the shelf or only when it was taken past the check-out without
payment, in the label switching cases, whether appropriation took place when the label was switched
or when the wrong price was tendered or paid at the check-out?
Morris was a label switching case. In the Court of Appeal [1983] Q.B. 587 , the Lord Chief Justice
stated the problem, at p. 593:
“As to the meaning of the word ‘appropriation,’ there are two schools of thought. The first
contends that the word ‘appropriate’ has built into it a connotation that it *672 is some
action inconsistent with the owner's rights, something hostile to the interests of the owner
or contrary to his wishes and intention or without his authority. The second school of
thought contends that the word in this context means no more than to take possession of
an article and that there is no requirement that the taking or appropriation should be in any
way antagonistic to the rights of the owner. Support can be found for each of those two
points of view both in the authorities and also amongst the textbook writers.”
After reviewing the authorities, he concluded that the second school of thought was the right one.
Applying Lawrence , he said at p. 597:
“That being the emphatic view of their Lordships, it would, we think, be quite wrong in
effect to re-import into the offence the necessity of proving what amounts to absence of
consent on the part of the owner by saying that the word ‘appropriates’ necessarily means
some action contrary to the authority or interests of the owner and that that is one of the
requirements which the prosecution must prove.
Consequently in our view the taking the article from the shelf with a view to transporting it
to the check-out is an appropriation … If we may respectfully say so, we do not think that
the placing of the article in the shopper's bag rather than in the basket belonging to the
store is a sufficient ground for distinguishing Reg. v. McPherson [1973] Crim. L.R. 191 .
Such action on the part of a customer may have some relevance to the question of
dishonesty but not, for the reasons set out earlier, to the question of appropriation.”
Although dismissing the appeal, the House of Lords disagreed with the Court of Appeal on all three
of these matters. The only speech is that of Lord Roskill , with which the other members of the
House agreed. We must cite the relevant part of Lord Roskill's speech. After setting out the sections
of the Act, he said at p. 331:
“It is to be observed that the definition of ‘appropriation’ in section 3(1) is not exhaustive.
But section 1(1) and section 3(1) show clearly that there can be no conviction for theft
contrary to section 1(1) even if all the other ingredients of the offence are proved unless
‘appropriation’ is also proved.
The starting point of any consideration of Mr. Denison's submissions must, I think, be the
decision of this House in Reg. v. Lawrence (Alan) [1972] A.C. 626 . In the leading speech,
Viscount Dilhorne expressly accepted the view of the Court of Appeal (Criminal Division) in
that case that the offence of theft involved four elements, (1) a dishonest (2) appropriation
(3) of property belonging to another, (4) with the intention of permanently depriving the
owner of it. Viscount Dilhorne also rejected the argument that even if these four elements
were all present there could not be theft within the section if the owner of the property in
question had consented to the acts which were done by the defendant. That there was in
that case a dishonest appropriation was beyond question and the House did not have to
consider the precise meaning of that word in section 3(1) .
Mr. Denison submitted that the phrase in section 3(1) ‘any assumption by a person of the
rights (my emphasis) of an owner amounts to an appropriation’ must mean any assumption
of ‘ all the rights of an owner.’ Since neither respondent had at the time of the removal of
the goods from the shelves and of the label switching assumed all the rights of the owner,
there was no appropriation and therefore no theft. Mr. Jeffreys for the prosecution, on the
other hand, contended that the rights in this context only meant any of the rights. An
owner of goods has many rights – they have been described as ‘a bundle or package of
rights.’ Mr. Jeffreys contended that on a fair reading of the subsection it cannot have been
the intention that every one of the owner's rights had to be assumed by the alleged thief
before *673 an appropriation was proved and that essential ingredient of the offence of
theft established.
My Lords, if one reads the words ‘the rights’ at the opening of section 3(1) literally and in
isolation from the rest of the section, Mr. Denison's submission undoubtedly has force. But
the later words ‘any later assumption of a right’ in subsection (1) and the words in
subsection (2) ‘no later assumption by him of rights’ seem to me to militate strongly
against the correctness of the submission. Moreover the provisions of section 2(1)(a) also
seem to point in the same direction. It follows therefore that it is enough for the
prosecution if they have proved in these cases the assumption by the respondents of any of
the rights of the owner of the goods in question, that is to say, the supermarket concerned,
it being common ground in these cases that the other three of the four elements mentioned
in Viscount Dilhorne's speech in Reg. v. Lawrence (Alan) had been fully established.
My Lords, Mr. Jeffreys sought to argue that any removal from the shelves of the
supermarket, even if unaccompanied by label switching, was without more an
appropriation. In one passage in his judgment in Morris's case, the learned Lord Chief
Justice appears to have accepted the submission, for he said [1983] Q.B. 587 , 596:
‘it seems to us that in taking the article from the shelf the customer is indeed
assuming one of the rights of the owner – the right to move the article from
its position on the shelf to carry it to the check-out.’
With the utmost respect, I cannot accept this statement as correct. If one postulates an
honest customer taking goods from a shelf to put in his or her trolley to take to the
checkpoint there to pay the proper price, I am unable to see that any of these actions
involves any assumption by the shopper of the rights of the supermarket. In the
context of section 3(1) , the concept of appropriation in my view involves not an act
expressly or impliedly authorised by the owner but an act by way of adverse
interference with or usurpation of those rights. When the honest shopper acts as I have
just described, he or she is acting with the implied authority of the owner of the
supermarket to take the goods from the shelf put them in the trolley, take them to the
checkpoint and there pay the correct price, at which moment the property in the goods
will pass to the shopper for the first time. It is with the consent of the owners of the
supermarket, be that consent express or implied, that the shopper does these acts and
thus obtains at least control if not actual possession of the goods preparatory, at a later
stage, to obtaining the property in them upon payment of the proper amount at the
checkpoint. I do not think that section 3(1) envisages any such act as an
‘appropriation,’ whatever may be the meaning of that word in other fields such as
contract or sale of goods law.
If, as I understand all your Lordships to agree, the concept of appropriation in section
3(1) involves an element of adverse interference with or usurpation of some right of
the owner, it is necessary next to consider whether that requirement is satisfied in
either of these cases. As I have already said, in my view mere removal from the
shelves without more is not an appropriation. Further, if a shopper with some perverted
sense of humour, intending only to create confusion and nothing more both for the
supermarket and for other shoppers, switches labels, I do not think that that act of
label switching alone is without more an appropriation, though it is not difficult to
envisage some cases of dishonest label-switching which could be. In cases such as the
present, it is in truth a combination of these actions, the removal from the shelf and
the switching of the labels, which evidences adverse interference with or usurpation of
the right of the owner. Those acts, therefore, amount to an appropriation and if they
are accompanied by proof of *674 the other three elements to which I have referred,
the offence of theft is established. Further, if they are accompanied by other acts such
as putting the goods so removed and re-labelled into a receptacle, whether a trolley or
the shopper's own bag or basket, proof of appropriation within section 3(1) becomes
overwhelming. It is the doing of one or more acts which individually or collectively
amount to such adverse interference with or usurpation of the owner's rights which
constitute appropriation under section 3(1) and I do not think it matters where there is
more than one such act in which order the successive acts take place, or whether there
is any interval of time between them. To suggest that it matters whether the
mislabelling precedes or succeeds removal from the shelves is to reduce this branch of
the law to an absurdity.
My Lords, it will have been observed that I have endeavoured so far to resolve the
question for determination in these appeals without reference to any decided cases
except Reg. v. Lawrence (Alan) [1972] A.C. 626 which alone of the many cases cited in
argument is a decision of this House. If your Lordships accept as correct the analysis
which I have endeavoured to express by reference to the construction of the relevant
sections of the Theft Act , a trail through a forest of decisions, many briefly and indeed
inadequately reported, will tend to confuse rather than to enlighten. There are however
some to which brief reference should perhaps be made.
First, Reg. v. McPherson [1973] Crim.L.R. 191 . Your Lordships have had the benefit of
a transcript of the judgment of Lord Widgery C.J. I quote from page 3 of the transcript:
‘Reducing this case to its bare essentials we have this: Mrs. McPherson in
common design with the others takes two bottles of whisky from the stand,
puts them in her shopping bag; at the time she intends to take them out
without paying for them, in other words she intends to steal them from the
very beginning. She acts dishonestly as the jury found, and the sole question
is whether that is an appropriation of the bottles within the meaning of section
1 . We have no hesitation whatever in saying that it is such an appropriation
and indeed we content ourselves with a judgment of this brevity because we
have been unable to accept or to find any argument to the contrary, to
suggest that an appropriation is not effective in those simple circumstances.’
That was not, of course, a label switching case, but it is a plain case of appropriation
effected by the combination of the acts of removing the goods from the shelf and of
concealing them in the shopping bag. Reg. v. McPherson is to my mind clearly correctly
decided as are all the eases which have followed it. It is wholly consistent with the
principles which I have endeavoured to state in this speech.”
It will be seen that although Lord Roskill begins by pointing out that the definition of “appropriation”
in sec. 3(1) is not exhaustive, the rest of the passage which we have cited at length treats it as if it
were exhaustive and no reference is made to the use of the word “appropriates” in sec. 1(1) or to
the dictionary definition: the Shorter Oxford English Dictionary defines it as “to take for one's own,
or to oneself”. We do not have to consider the large number of difficulties and problems created by
Lord Roskill's speech. They will be found explored and considered at length in the dissenting
judgment of Brooking J. in Roffel , see pp. 526–531 in the report. We can find nothing in Morris that
persuades us that Lord Roskill considered that he was saying anything contrary to what Viscount
Dilhorne had said in Lawrence .
*675
It follows that when he says (at p. 332D):
“… the concept of appropriation in my view involves not an act expressly or impliedly

authorised by the owner but an act by way of adverse interference with or usurpation of
those rights.”
–he cannot be understood as saying that the prosecution must prove that the appropriation alleged was
without the authority of the owner, for that would be directly contrary to what was said in Lawrence . We
think it obvious that the House of Lord's in Morris was not inserting into the definition of theft in sec.
1(1) after the word “appropriates” the words “without the authority of the owner”. The express approval
by Lord Roskill of McPherson and Anderton v. Wish (1980) 72 Cr. App. R. 23 (a case in which he himself
gave the judgment of the Court of Appeal) shows that the fact from which dishonesty is established can
operate to make the act relied upon as constituting appropriation adverse. That this is what Lord Roskill
was saying is, we think, shown by the passage in his judgment (at p. 333) already cited:
“It is the doing of one or more acts which individually or collectively amount to such
adverse interference …”
Mr. Thomas submitted that the appellant and Panayides, as sole shareholders and directors, were
the mind and will of Sunny Tours. When they gave instructions to the bank to transfer money to
Spain, the instructions were the instructions of the company, so that the company had consented to
the transfer in the sense that the transfer could not be said to be adverse to any right of the
company. But the order to the bank is only one part of a composite transaction. The other
component is the fact that the money was being used to put the block of flats into the pockets of the
appellant and Panayides through the Spanish company. That component was the fact from which the
jury could infer not only that the transaction was dishonest, but was intended to deprive Sunny
Tours permanently of its money. For the reasons given by Kerr L.J in Attorney-General's Reference ,
there was no “consent” by the company on which the appellant can rely. His position is not improved
by substituting “authority” for consent. Once the two components are put together, the drawing of
the money from the bank is shown to be adverse to the rights of the company and there was an
appropriation.
In our judgment, appropriation was correctly conceded in Attorney-General's Reference . With great
respect to the judges giving the majority judgments in Roffel , we cannot agree that the decision in
Morris requires us to hold that appropriation was wrongly conceded in Attorney-General's Reference
. It follows that the judge was right to refuse to withdraw these two counts from the jury.
The fraudulent trading offences
Count 14 of the indictment reads:
“STATEMENT OF OFFENCE
Fraudulent Trading: contrary to sec. 332(3) of the Companies Act 1948 as amended by
sec. 96 of the Companies Act 1981 .
PARTICULARS OF OFFENCE
LEFTERIS PANAYIDES and CHRISTAKIS PHILIPPOU, between 1 July 1983 and 25 October
1984, were knowingly parties to the carrying on of the business of Sunny Tours Ltd.,
trading as Budget Holidays, for a fraudulent purpose or purposes, namely:
(a) Concealing from the Civil Aviation Authority that they and/or Sunny Tours Ltd. had
purchased 51 of the shares in Vantage Holidays and Travel Ltd.
(b) Transferring funds of Sunny Tours Ltd. from England beyond the reach of the creditors
and/or liquidators of Sunny Tours Ltd.
*676
Particulars of such transfers are:
(i) On or about 12 August 1983, £46,000 to Liechtenstein.”
Count 15 alleges that Croneridge concealed the Vantage transaction from the Civil Aviation Authority
(CAA) and from the Association of British Travel Agents (ABTA).
The facts are not in dispute. We consider counts 14 (a) and 15 first. In order to carry on their
businesses, Sunny Tours and Croneridge required licences issued by the CAA. This licence is an Air
Travel Organiser's Licence (ATOL) which has to be renewed annually. Sunny Tours was not a member
of ABTA; Croneridge was. Both the CAA licensing scheme and ABTA membership form parts of the
control on tour operators and travel agents for the protection of the customers of those businesses.
It is accepted that no different considerations arose under count 15 so we shall make no further
reference to Croneridge or ABTA.
The CAA issues licences under powers conferred on it by the Civil Aviation (Air Travel Organisers'
Licensing) Regulations 1972 (S.I. 1972 No. 223) made under the Civil Aviation Act 1971 . By reg.
3(2)(b) , the CAA has to be satisfied that:
“the resources of the applicant and the financial arrangements made by him are adequate
for discharging his actual and potential obligations in respect of the activities in which he is
engaged (if any) and in which he may be expected to engage if he is granted the licence.”
Regulation 3(1) permits the CAA to impose such terms as it thinks fit. In practice, the CAA exercises
a strict control on the financial affairs of licensees. Sunny Tours had to produce its audited accounts
and give information about its finances and control. In 1983, it was a term of its ATOL that it would
notify any change involving its corporate structure. It had agreed that it would, to the maximum
extent possible, retain profits in liquid form or use them to buy assets which had a clear borrowing
capacity.
In 1983, £400,000 of Sunny Tours' money was used to buy a controlling interest in Vantage. It is
unnecessary for us to set out the devious ways in which the money was transferred in two tranches
of £200,000 to pay for the 51 per cent holding so that the true transaction never appeared in the
accounts, because it is admitted that this transaction was concealed from the CAA. What is said is
that obtaining, maintaining and/or renewing the ATOL was not “carrying on any business of the
company” within the meaning of sec. 332 of the Companies Act 1948 .
So far as material, sec. 332 provides:
“(1) If in the course of the winding up of a company it appears that any business of the
company has been carried on with intent to defraud creditors of the company or creditors
of any other person or for any fraudulent purpose …
(3) Where any business of a company is carried on with such intent or for such purpose
as is mentioned in subsection (1) of this section, every person who was knowingly a
party to the carrying on of the business in manner aforesaid, shall be liable on
conviction on indictment to imprisonment for a term not exceeding two years or to a
fine not exceeding five hundred pounds or to both.”
Section 96 of the Companies Act 1981 provides:
“ Section 332(3) of the 1948 Act (criminal liability of persons concerned in fraudulent
trading by company) shall apply whether or not the company has been or is in the course
of being wound up.”
It will be seen that the words of subsec. (3) are very wide. It was an integral part of Sunny Tours'
business to provide air travel for its customers: it could not do so without an ATOL. We are in no
doubt that it was part of its business to apply for, maintain and renew its ATOL. It follows that the
concealment of the Vantage transaction from the *677 CAA could amount to a fraudulent purpose
and the judge was right in refusing to withdraw it from the jury.
As to count 14(b), Mr. Thomas submitted that there was no evidence that the sum of £46,000 was
used for any purpose other than the purchase of three Anstalts in Liechtenstein. The money was
sent out in August 1983, but the liquidation was in October. He submitted that no inference could be
drawn that the transaction had any fraudulent purpose. We cannot accept that submission. It was
not disputed that the money had been put beyond the reach of the creditors and/or the liquidator.
There was ample evidence of the dishonesty of the appellant and Panayides and the jury were quite
entitled to draw the inference that the true purpose of the transaction was as alleged. Once again,
the judge was right not to withdraw the matter from the jury.
Sentence
We gave the appellant leave to appeal against sentence, treated the application as the appeal with
the consent of counsel and reduced the totality of the sentence from three years to 21 months. Our
reasons, quite shortly, are that in October 1988, Panayides appeared before another judge and
pleaded guilty to four counts in the indictment of which the appellant had been acquitted by
direction of the judge. Those counts were two of false accounting (that is concealing the Vantage
transaction in the books of account) and two of theft (which were sample counts of a loss of
£150,000). The counts of which the appellant was convicted were left on the file. He received a total
of 18 months' imprisonment.
The judge, in passing sentence in this case, said that he thought Panayides was the more forceful
character and we do not think that the offences to which Panayides pleaded guilty are any less
serious than those of which the appellant was convicted. The appellant did not have the mitigation
flowing from a plea of guilty, but we came to the conclusion that in all the circumstances the total
sentence of three years could not stand.
(Order accordingly)
*678
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Status: Positive or Neutral Judicial Treatment

(1989) 5 B.C.C. 665

O'Connor L.J. , Caulfield and Eastham JJ.

Judgment delivered 5 April 1989

Theft—“Appropriation”—shareholder directors withdrew money from company bank account to purchase

Held , dismissing the appeals against conviction:

The following cases were referred to in the judgment of O'Connor L.J.:

Anderton v. Wish (1980) 72 Cr. App. R. 23 .

The theft offences

“Basic definition of theft

(2) A person's appropriation of property belonging to another may be dishonest

‘With the intention of permanently depriving the other of it’

At p. 639G, Kerr L.J. said:

relevant as providing a defence. The prosecution have to prove the four

Viscount Dilhorne went on to deal with the case at p. 632B. He said.

It follows that when he says (at p. 332D):

“… the concept of appropriation in my view involves not an act expressly or impliedly

The fraudulent trading offences

Count 14 of the indictment reads:

trading as Budget Holidays, for a fraudulent purpose or purposes, namely:

(i) On or about 12 August 1983, £46,000 to Liechtenstein.”

So far as material, sec. 332 provides:

Section 96 of the Companies Act 1981 provides:

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