Claire Shaw is a solicitor at Magrath & Co.

The lacuna in the law of dishonesty left by the House of Lords' controversial decision in Preddy & ors (1996) 3 WLR 258 in July 1996 has already been rectified by legislation which received the Royal Assent on 18 December 1996.

Following the decision, and after just one month's "informal consultation process", the Law Commission published its report, Offences of Dishonesty: Money Transfers, on 15 October 1996.

The Theft (Amendment) Act 1996 represents the Commission's recommended Bill, attached to that report, almost without alteration.

The new Act creates two new offences, namely obtaining a money transfer by deception (Section 1) and dishonestly retaining a wrongful credit (Section 2), supplementing sections 15 and 24 of the Theft Act 1968.

The Act overcomes the problem posed by the Preddy decision, whereby property was said to have been extinguished and new property created by money transfer. This prevented "property belonging to another" from being appropriated, since the new property never belonged to "another".

The relevant account must be kept with a bank or with a person carrying on a business which receives money by way of a deposit which is then lent to others, or which is financed wholly or to any material extent out of the capital or interest from deposits (defined with reference to S.35 Banking Act 1987).

It is accepted, however, that not every circumstance will necessarily be accounted for, and further reviews may be necessary to address, for example, electronic share transfers, and transfers by inter- company accounting or Internet banking.

It is irrelevant for the purposes of the section 1 offence whether the debit and credit are for the same amount, how the transfer is effected or whether there is any delay, intermediate debits or credits, or whether the relevant accounts are overdrawn at the time.

There was a clear need for the issue of appropriation by electronic transfer of money to be addressed following the Preddy decision.

The Theft (Amendment) Act 1996 was passed as an emergency measure without the full consultation process which would normally precede such legislation.

However, the Law Commission is undertaking a full and much wider review of the law of dishonesty which will address in detail the intricacies of modern business practice and electronic banking, as well as important jurisdictional issues; that report is eagerly awaited.