Bodnar v Townsend
[2003] TASSC 148
•23 December 2003
[2003] TASSC 148
CITATION: Bodnar v Townsend [2003] TASSC 148
PARTIES: BODNAR, Adrian
v
TOWNSEND, Peta Kerryl
TITLE OF COURT: SUPREME COURT OF TASMANIA
JURISDICTION: APPELLATE
FILE NO/S: LCA 97/2003
DELIVERED ON: 23 December 2003
DELIVERED AT: Hobart
HEARING DATES: 10 December 2003
JUDGMENT OF: Blow J
CATCHWORDS:
Banking and Finance – Non-bank financial institutions – Miscellaneous – Duties of confidentiality – Credit union.
Tournier v National Provincial and Union Bank of England [1924] 1 KB 461, referred to.
Aust Dig Banking and Finance [125]
Criminal Law – Evidence – Judicial discretion to admit or exclude evidence – Evidence unfair to admit or improperly obtained – Particular cases – Credit union statements – Breach of duty of confidentiality.
Evidence Act 2001 (Tas), s138(1).
Aust Dig Criminal Law [424]
REPRESENTATION:
Counsel:
Applicant: I M Arendt
Respondent: P E Barker
Solicitors:
Applicant: Director of Public Prosecutions (Commonwealth)
Respondent: Abetz Curtis & Worsley
Judgment Number: [2003] TASSC 148
Number of Paragraphs: 24
Serial No 148/2003
File No LCA 97/2003
ADRIAN BODNAR v PETA KERRYL TOWNSEND
REASONS FOR JUDGMENT BLOW J
23 December 2003
This is a motion for the review of a magistrate's order dismissing 50 charges of knowingly obtaining a payment that is not payable in breach of the Social Security (Administration) Act 1999 (Cth), ss215 and 217. The respondent had been receiving a disability support pension for some time. On 16 June 2000 she resumed full-time employment, with the result that she was no longer entitled to receive pension payments. A Commonwealth agency named Centrelink continued to make fortnightly pension payments into her credit union account until 21 May 2002. The charges related to 50 such fortnightly payments. At the hearing, defence counsel informed the learned magistrate that his client did not dispute the allegations that the payments were made and that she was not entitled to receive them, and that the only issue in controversy was whether the prosecution could demonstrate beyond reasonable doubt that she knew of receiving the payments. The evidence tending to prove such knowledge was entirely circumstantial. The learned magistrate held that the prosecution had failed to establish beyond reasonable doubt that the payment of the instalments of pension had been obtained knowingly, and dismissed the complaint. Counts 34 to 50 related to payments made after the amendment of s215 by the Family and Community Services Legislation Amendments (Application of Criminal Code) Act 2001, but were still treated in the same way as the counts relating to earlier payments. I think I need say no more about that. The notice to review contains four grounds of appeal. I will deal with them out of numerical order.
Ground 3 ¾ excluded evidence
At all material times the fortnightly pension payments were electronically credited to the respondent's account with the Island State Credit Union. Before the learned magistrate, the prosecutor called an officer of the credit union as a witness, and led evidence that the respondent had an account with that credit union, that Centrelink payments were automatically transferred into that account on a fortnightly basis, and that those payments were shown on statements generated by the credit union's computer. The prosecutor then sought to tender statements generated by the credit union's computer which the witness had brought to court. Defence counsel objected to their production. He said, "… the prosecution is simply not entitled to arrange for people to appear in a witness box bringing people's bank [sic] records without the sanction of a court process or some other statutory power to bring it about." He qualified that submission by saying that such an arrangement could be made by consent, but that consent had not been sought. The learned magistrate discussed the objection with the prosecutor. In particular, there was discussion as to the Evidence Act 2001, s36. The learned magistrate then proceeded to give a ruling to the effect that, as there was no order under that section and no compulsive process in the nature of a subpoena, the witness was not able to produce the documents. Ground 3 asserts that he thereby erred in law.
On the hearing of the motion to review, counsel for the respondent, Mr Barker, submitted that a bank owes its customers a contractual duty of confidentiality; that a similar contractual duty of confidentiality was owed by the credit union to his client as its customer; that the witness was therefore obliged to refuse to produce the credit union statements to the court in the absence of an order, a witness summons, or some other source of compulsion; and that the learned magistrate had therefore rightly excluded the evidence. The leading case as to a banker's duty of confidentiality is the English Court of Appeal's decision in Tournier v National Provincial and Union Bank of England [1924] 1 KB 461. In that case the appellant's employers were told by his bank manager that his account was overdrawn, and that one of his cheques had gone to the credit of a bookmaker's account. The employers refused to renew the appellant's employment. He sued the bank. It was held that the bank had breached an implied term of its contract with him. It is clear from the judgments in that case that, subject to certain exceptions, it is an implied term of the contract between a banker and his customer that the banker will not divulge to third persons, without the consent of the customer express or implied, either the state of the customer's account, or any of his transactions with the bank, or any information relating to the customer acquired through the keeping of his account. The exceptions were described by Bankes LJ in the following passage at 473:
"On principle I think that the qualifications can be classified under four heads: (a) Where disclosure is under compulsion by law; (b) where there is a duty to the public to disclose; (c) where the interests of the bank require disclosure; (d) where the disclosure is made by the express or implied consent of the customer."
So far as the second exception is concerned, the other members of the court, Scrutton and Atkin LJJ, did not speak in general terms of "a duty to the public to disclose". Scrutton LJ said, at 481, that a bank may make disclosure "to prevent frauds or crimes". Atkin LJ made a similar comment at 486.
It is clear from the judgments in Tournier that all members of the Court of Appeal regarded the existence of the implied term as to confidentiality as a consequence of the confidential nature of the relationship between banker and customer. It follows therefore that, in modern parlance, the implied term in question was one whose implication was necessary to give the contract between banker and customer business efficacy. The prerequisites for the existence of such an implied term were listed in B P Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 as follows:
"… for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
There does not appear to be a reported case as to whether a similar implied term exists in contracts between non-bank financial institutions and their customers. In Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97 at 115, Hill J suggested that a merchant bank might have a contractual duty of confidence to its clients as a result of an implied term. On the other hand, the following appears in The Laws of Australia, Ch21.4, par124:
"There are further inherent limitations on the scope of Tournier's case. It applies only to banks and is not regarded as having application to building societies, credit unions, or other financial institutions."
No authority is cited for the view there expressed.
The services provided by the credit union to the respondent in this case seem to have been very similar, if not identical, to the services routinely provided by Australian banks to their customers, and somewhat similar to services provided by the respondent in Tournier. I see no reason for distinguishing Tournier from the facts of this case, nor for holding that it applies only to banks, and not other institutions providing similar services to members of the public. The reasons for a credit union to keep its information about its customers' affairs confidential are just as compelling as those that gave rise to a banker's duty of confidentiality as discussed in Tournier. Subject to any express term to the contrary, the contract between a credit union and its depositor/customer must include an implied term that the credit union will not divulge to third persons, without the consent of the customer express or implied, either the state of the customer's account, or any of the customer's transactions with the credit union, or any information relating to the customer acquired through the keeping of the account, unless the credit union is compelled to do so by legislation or an order of a court, or the circumstances give rise to a public duty of disclosure, or the protection of the credit union's own interests requires it.
For the purpose of the proceedings before the learned magistrate, the applicant could have obtained a witness summons requiring the production of the credit union statements pursuant to the Justices Act 1959, s44(1), but that was not done. A power to compel the production of a document exists under the Social Security (Administration) Act, s192, but it appears from the evidence that the statements brought to court by the witness were brought voluntarily. There was evidence that some sort of communication had been received from a Centrelink officer; that the credit union responded by sending a set of statements to Centrelink; that those statements could not be found; that a second set of statements had been despatched by the credit union to Centrelink; and that those brought to court by the witness were a third set. There was no evidence as to whether the communication received by the credit union from Centrelink was a notice under s192 but, if it was, the documents brought to court were not the documents produced in response to the notice. Plainly, the witness was not compelled by legislation or by the order of a court to produce the statements that she had with her in the witness box.
In the decades since Tournier was decided, the courts have shed almost no light on the scope of the exception to the duty of confidentiality concerned with circumstances giving rise to a public duty of disclosure. It is clear from the passages I have referred to in the judgments of Scrutton and Atkin LJJ that such a duty can exist when it is necessary to divulge information in order to prevent frauds or crimes. However this case concerned allegations of past criminal conduct, whereas the exception applies only in relation to the prevention of future fraudulent or criminal conduct. It is certainly not "so obvious that it goes without saying" that there is a public duty to disclose information in order to assist in the administration of justice when well developed procedures exist for the obtaining of information by compulsive means for the purposes of investigations and court proceedings.
There was no evidence of any consent by the respondent to the credit union disclosing information about her account. It follows that the credit union was obliged by its contract with her not to produce the statements brought to court by the witness, and that the witness should have objected to their production, explaining that the credit union had a contractual duty not to produce them. When the prosecutor sought the production of the documents, and the witness apparently showed no sign of objecting to their production, it was appropriate for the respondent's counsel to object on the basis that the evidence had been improperly obtained: Evidence Act, s138(1). It was improper for the prosecutor to seek to tender the statements as an exhibit without first obtaining an order under s36 since she was thereby asking an officer of the credit union to do something that would involve a breach of contract by the credit union. (In saying that, I am not making a criticism of the prosecutor, who can certainly be forgiven for not having thought through all the matters that I have covered in the preceding paragraphs of this judgment.) However an objection on the basis of improper obtaining would have led to a discretionary decision as to the admission or exclusion of the evidence, whereas the learned magistrate took the view that the statements were simply inadmissible.
When a witness brings documents to court without compulsion, and willingly produces them to become exhibits, there is no need for an order under s36. There is no rule of law whereby a document or exhibit is inadmissible as evidence if the party producing it owes someone a contractual duty not to produce it. The only appropriate basis for an objection to have been taken to the tendering of the credit union statements was that they had been improperly obtained, and should be excluded in the exercise of the court's discretion. The learned magistrate therefore erred in law in excluding them as simply inadmissible, rather than making a discretionary decision as to their exclusion or admission in accordance with s138.
The credit union statements might or might not have been very significant as evidence as to the respondent's knowledge, depending on their contents. If, for example, they revealed that there was generally little money in the account, and that the proceeds of each fortnightly pension payment were routinely withdrawn within a day or so of the pension pay day, they would afford very damning circumstantial evidence of the respondent's knowledge. On the other hand, if they showed that there was generally a lot of money in the account, and that there was no pattern showing a temporal relationship between the withdrawals and the fortnightly pension payments, they would probably add nothing to the strength of the prosecution case, and tend to strengthen the defence case. It is therefore not appropriate to apply the proviso contained in the Justices Act, s110(2)(ab). This ground of appeal must succeed.
Ground 1 – circumstantial evidence
By this ground, the applicant asserts that the learned magistrate "erred in law in failing to consider or give sufficient weight to" certain documentary evidence comprising (a) copies of certain letters from Centrelink to the respondent, (b) her National Australia Bank statements, and (c) parts of the transcript of an interview of the respondent by Centrelink officers. In substance, it is asserted that the learned magistrate did not give proper weight to the circumstantial evidence tending to establish that the respondent knew that pension payments were continuing to be made to her credit union account. The circumstantial evidence in question comprised (a) evidence that she was sent a series of letters by Centrelink about the continuing payments; (b) evidence that she was sent the credit union statements, which would have recorded the crediting of the pension payments to her account; (c) evidence that she made limited admissions to Centrelink officers when they interviewed her; and (d) evidence as to her finances, including her National Australia Bank statements.
Evidence from Centrelink's records was produced and tendered, establishing the sending and contents of a number of letters to the respondent. On 5 October 2000, 16 January 2001 and 26 April 2001, she was sent letters that showed she was receiving fortnightly payments of disability support pension, with details of the amounts being paid. On 8 November 2000, 7 December 2000, 9 January 2001, 16 January 2001, 17 June 2001 and 9 July 2001, she was sent letters which revealed that she was being paid a fortnightly pensioner education supplement ¾something that would obviously not be paid if she were not a pensioner. There is a rebuttable presumption whereby a letter from a Commonwealth agency addressed to a person at a specified address is presumed to have been sent by prepaid post to that address on the fifth business day after its date: Evidence Act 1995 (Cth), s163(1). That section applies to all proceedings in Australian courts by virtue of s5 of that Act. No evidence was adduced to rebut the presumption. The learned magistrate was therefore obliged to conclude that each of those letters had been delivered, but it does not necessarily follow that the respondent opened, read or digested any of them.
When interviewed by Centrelink officers, the respondent stated her address. She gave the same address as the address to which the Centrelink letters had been mailed. She said she was not married or living with anyone. She said that her disability support pension had been paid into "an Island State account". She said she paid $140 per fortnight for a car loan, $210 per fortnight for rent, and about $250 per quarter for electricity. She said she put aside about $200 per fortnight for bills including car registration, contents insurance, telephone, electricity, and those sorts of things. She said she paid about $150 per fortnight off a Mastercard account, and $100 per fortnight off a Visa card account. She said she spent about $80 per fortnight on groceries, and that she was only buying for herself and her cats. She said petrol cost her about $50 to $60 per fortnight.
Wage records were tendered, showing that the fortnightly income of the respondent during the period to which the charges related varied between $1,113.43 and $1,230.81. An overpayment calculation was tendered, showing that the respondent received pension payments of $20,348.14 during the period of 100 weeks to which the charges related. The Centrelink correspondence revealed that her rent was paid directly by Centrelink to her landlord each fortnight. The fortnightly payments to the credit union amounted to at least $317.70 each after the deduction of the rent. The bank statements revealed that her earnings were credited to the bank account, and that she had transferred funds from that account to her Mastercard and Visa accounts, but not to her credit union account, though she had told Centrelink's interviewing officers that she had transferred funds from the bank account to the credit union account.
The prosecution case was that the respondent must have received correspondence from Centrelink over a period of months relating to the continuing payments of a disability support pension; that she must have received statements from her credit union showing the crediting of fortnightly payments of pension; that her routine expenditure substantially exceeded her earnings from her employment; and that these facts compelled the inference that she must have known at all material times that payments of disability support pension were continuing to be made into her credit union account. Since the question whether the respondent knew of the continuing payments was the critical question in the case, and since the evidence as to that issue was entirely circumstantial, the learned magistrate was obliged, as to each charge, to find it proven if the only rational inference that could be drawn from the circumstances was that the respondent knew the pension payments were continuing, but to acquit if there was any rational hypothesis consistent with innocence: Chamberlain v R (No 2) (1984) 153 CLR 521; Shepherd v R (1990) 170 CLR 573.
Evidence was admitted of attempts by the respondent to explain her innocence, first in a letter to Centrelink, and then in the interview that I have referred to. In her statement, she said she thought she had provided Centrelink "with all the relevant and up-to-date information about the changes in my circumstances by providing payslips, etc." In her interview, she said she thought she had done that at the Glenorchy branch of Centrelink, apparently referring to the time she resumed full-time work in June 2000. Essentially, her explanation was that she had not been paying proper attention to her finances, correspondence or credit union statements because of a number of stressful factors including a disabling medical condition, the fact that she had returned to full-time work contrary to medical advice, and very serious concerns about a number of relatives and her own well-being. She said she mostly just put her credit union statements in a drawer. To a degree her assertions were given credence by the evidence that she had been granted a disability support pension in the first place. There was also a body of evidence showing that the respondent had co-operated with Centrelink in the years prior to the period in question by providing information as to changes in her financial circumstances.
When told that Centrelink had no record of receiving such information, she apparently accepted that she must have been mistaken about that. The suggestion that she was mistaken in mid-2002 about having provided information to Centrelink in mid-2000 might well be credible, but it must be remembered that the 50 charges relate to payments spanning a period of nearly two years, commencing on 4 July 2000. The proposition that she was mistaken as at 4 July 2000 as to whether she had disclosed that she resumed full-time work on 16 June 2000 is far from credible. However there is another hypothesis that, in my view, the learned magistrate was entitled to regard as sufficiently rational and reasonable as to lead to verdicts of not guilty on all charges, namely that (a) the respondent in fact disclosed her resumption of full-time work to a Centrelink officer at Glenorchy, as she said she thought she had done; (b) that officer, through carelessness or oversight, failed to make any record of the respondent's change in circumstances; (c) her pension payments therefore continued; and (d) the respondent paid so little attention to her finances and correspondence after taking on the burden of full-time work, which she was not fit to do, that she did not realise at any material time that the payments were continuing.
I return to the specific pieces of evidence mentioned in ground 1. The interviewing Centrelink officers did not ask the respondent anything about the letters now relied on, nor did the prosecutor mention them to the learned magistrate in her closing submissions. He gave short oral reasons for his decision, and did not mention the letters. That does not necessarily mean he overlooked them or gave them inadequate weight. He was not obliged to mention every piece of circumstantial evidence. The other specific pieces of evidence referred to in ground 1 are the National Australia Bank statements and certain pages from the transcript of the respondent's interview covering discussion of her finances The learned magistrate referred to aspects of the respondent's finances in his reasons. He said, "She was clearly running several accounts; an account with NAB and an account with ISCU, a Visa card and a Mastercard, and I think it's fairly clear that she was spending a reasonable amount of money in each fortnight particularly clearing debts." Those comments summarised with reasonable thoroughness the significant aspects of the bank statements and transcript pages mentioned in ground 1.
All of this leads me to the conclusion that the learned magistrate did not overlook or attach inadequate weight to any or all of the documents listed in ground 1. That ground must fail.
Ground 2 ¾ respondent's knowledge of non-entitlement
The learned magistrate concluded his decision with the following sentences:
"There is an onus resting on the prosecution from the start to the finish of this case to show that what was done by this lady was knowingly done. Knowingly relates then to not only receiving of the payment but knowing that she's not entitled thereto. [My emphasis.]
I am not satisfied that the prosecution have discharged in their onus in that. I believe there are several inferences that could be drawn some of which would be consistent with innocence. I find that they have filed to discharge all the elements necessary in the charges and accordingly I dismiss the complaint."
By ground 2, the applicant contends that the learned magistrate erred in finding that the prosecution had not discharged the onus of proving that the respondent knew she was not entitled to the payments. This ground is based on the words that I have italicised in the above quotation. Reading the learned magistrate's reasons as a whole, it is clear that he accepted, as defence counsel had earlier conceded, that the respondent knew she was not entitled to the payments made to her account. It was unnecessary for him to restate, in the concluding sentences of his reasons, that the prosecution bore the onus of proving that the respondent knew she was not entitled to the payments. However a magistrate in a busy court of summary jurisdiction cannot be expected to craft every sentence of an oral decision with such care that all unnecessary comments are excluded. Ground 2 is based on a reading of the learned magistrate's words out of context. It must fail.
Ground 4 ¾ adequacy of reasons
This ground asserts that the learned magistrate erred in law in failing to give sufficient or adequate reasons for finding that the prosecution had not discharged the onus of proving that the respondent knew she had received the payments and was not entitled to them.
Although the learned magistrate's reasons were brief, it is clear from what he said that he treated the case as one involving circumstantial evidence, and considered whether there was more than one inference that he could rationally draw from the established facts. He reached a conclusion that there was a rational hypothesis consistent with innocence. He said the following:
"The defendant has indicated that with so much going on in her life, trying to pay bills for her mother, trying to cover her niece's expenditure, trying to look after herself, working full time against doctor's orders, attempting to run a family … she didn't get around to obviously checking thoroughly. Now does that amount to wilful blindness? Is that the only inference that I can draw in relation to her conduct? I think not. I am of the view that there appears to be on her part a genuineness, certainly prior to this particular period of time over which the offences occurred, to co-operate and advise Centrelink of any changes in her status and she has been adamant that she had believed ¾ told them yet again of this change."
The learned magistrate made it clear that he considered that there was a reasonable hypothesis consistent with innocence. He made it clear what that hypothesis was, and why he considered it reasonable. His reasons, though brief, were adequate. Ground 4 must fail.
Conclusion
Evidence that might have been very significant was excluded as if the learned magistrate had no discretion, whereas a discretionary decision should have been made as to its admission or exclusion. The interests of justice require that the dismissal of the complaint be set aside and that the complaint be determined according to law. In my view there is no reason why the matter should not go back to the same magistrate.
I therefore order that the motion to review be allowed, that the order dismissing the complaint be quashed, and that the matter be remitted to the magistrate by whom it was dealt with for determination according to law.
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