Director of Public Prosecutions v Lal

[2006] NSWLC 18

Local Court of New South Wales

CITATION:	DPP V Lal [2006] NSWLC 18
JURISDICTION:	Criminal
PARTIES:	Director of Public Prosecutions Stanley Lal
FILE NUMBER:
PLACE OF HEARING:	Parramatta Local Court
DATE OF DECISION:	02/24/2006
MAGISTRATE:	Magistrate R Brown
CATCHWORDS:	Obtain property by deception - Cheque defined - electronic transer of funds - impugned funds - Dishonesty - R v Smith (1987) 7 ACrim R 437 (CCAV) - Peters v The Queen [1998] HCA 7
LEGISLATION CITED:	s 178 BA Crimes Act 1900 s 81 Crimes Act 1958 (VIc)
CASES CITED:	R v Gilmartin [1983] QB 953 Winston Hamilton (1990) 92 Crim App R 54 R v Beattie Unreported 22 June 1973 R v Simmonds Unreported 29 October 1992 Kennison v Daire (1986) 160 CLR 129
REPRESENTATION:	Thompson - DPP Molloy - Defendant
ORDERS:	I find Mr Lal not guilty on all counts

Reasons for Decision

1 The defendant Stanley Lal is charged on 6 counts of obtaining property by deception contrary to s 178BA of the Crimes Act 1900. This section provides:

“178BA Obtaining money etc by deception
(1) Whosoever by any deception dishonestly obtains for himself or herself or another person any money or valuable thing or any financial advantage of any kind whatsoever shall be liable to imprisonment for 5 years.
(2) In subsection (1):
“ deception ” means deception (whether deliberate or reckless) by words or conduct as to fact or as to law, including:
(a) a deception as to the present intentions of the person using the deception or of any other person, and
(b) an act or thing done or omitted to be done with the intention of causing:
(i) a computer system, or
(ii) a machine that is designed to operate by means of payment or identification,
to make a response that the person doing or omitting to do the act or thing is not authorised to cause the computer system or machine to make.”

The facts are not significantly in dispute: the law, however, is hotly contested.

2 The defendant agreed with another person X to allow X to make certain deposits to D’s bank account. When requested to by X, D made withdrawals from that account, and paid the money over to X, receiving a commission for these transactions. It is common ground that D had no part in the transactions whereby the funds were credited to D’s account: again, there is little disagreement that those transactions were dishonest on the part of X.

3 The charges assert that the accused “did dishonestly obtained [sic] for the said Stanley Lal money, to wit, $7500 [or some other sum] by deception, namely receiving cash money from an unauthorised transaction where money was withdrawn from the account belonging to Stanley Lal of funds that he was not lawfully entitled to.” (It seems probable that, on the agreed facts, any obtaining was on behalf of X and not for D, but nothing turns on this).

What was the Deception?

4 Uninstructed by authority, these charges would seem to have little prospect of success. The only possible source of any alleged deception by D is the presentation to the bank teller of a withdrawal slip, drawn by D on his own bank account, requesting the withdrawal of a certain amount of money. Having received this slip, the teller no doubt checked the account balance, and found that D had sufficient funds standing in his account to permit the withdrawal without the account becoming overdrawn. The teller therefore paid out the money requested.

5 Prima facie, D has made no representation as to any “legal entitlement” to any cash at all. First, the cash is given to him in full or part discharge of the debt to him appearing in the bank’s account records. D clearly makes no claim to any particular notes or identifiable non-fungible property.

6 Secondly, the bank is not concerned about the source of the funds standing to D’s credit in his account: all that matters is that the funds have been deposited to that account by some apparently legitimate means, and any waiting period (such as a cheque clearance period) has expired without objection from the depositor or institution from which the deposit has come. Should the funds have been incorrectly credited to the account, subsequent recovery action may have to be undertaken by the bank but in circumstances where the incorrect credit was the result of action by someone other than the account holder, recovery action would normally lie, at least initially, against the depositor and not against the account holder in the absence of the bank being able to establish some collusion of the account holder in the incorrect deposit.

7 Insofar as the bank was concerned, there were funds standing to D’s credit in his account. In that state of knowledge, the bank would have had no lawful right to refuse to pay the amount sought on the withdrawal slip. At the time of payment, D was lawfully entitled to payment out of the funds standing to his credit, and the bank has been in no way deceived.

8 The authorities are quite difficult of application as none fits precisely the facts of this case. In R v Gilmartin [1983] QB 953 the accused, whose account was heavily overdrawn, obtained goods, paying for them by post dated cheques. No money was paid into his account thereafter and the cheques were dishonoured on presentation The accused was convicted of obtaining property by deception and the conviction was affirmed by the Court of Appeal. The court held that simply by giving a cheque, whether post-dated or not, the drawer has impliedly represented that the state of facts existing at the date of delivery was such that in the ordinary course of events that cheque would, on presentation for payment on or after the date specified in the cheque, be met See C R Williams, Property Offences (3rd ed, LBC, 1999), at 174-5..

9 In Winston Hamilton (1990) 92 Crim App R 54., the accused drew a forged cheque which he paid into his own account. He subsequently presented withdrawal slips to the bank and withdrew a large part of proceeds of the cheque. The Court of Appeal held that, by presenting the signed withdrawal slip the appellant made demand for cash payment of the amount stated therein and he thereby represented that the bank was indebted to him for that amount. In this case, the court relied on the fact that the accused sought to take advantage of an entry in the bank's records which he knew was dishonestly obtained, and so obtained by his own actions.(58). Their Lordships commented, "Our conclusion is that by presenting the signed withdrawal slip the appellant made demand for cash payment of the stated amount and he thereby represented that the bank was indebted to him in that amount. This is in substance, the representation alleged in the particulars of offence. Its falsity and his dishonesty in making it were found by the jury to be proved.” (59)

10 This case is clearly distinguishable on the basis that the accused had been the source of the invalid credit to his account on the basis of the bank accepting the forged cheques. Because the accused had concocted the prior false cheques, the bank was not indebted to the accused in the amounts represented by those cheques. As I have already indicated, there is no evidence in the present case to suggest that the accused took any part in the transactions which added the impugned credit to his account.

11 A different view of the matter had been taken earlier by the New South Wales Court of Criminal Appeal in R v Beattie Unreported, 22 June 1973. In this case, the appellant's bank incorrectly credited him with the sum of $605.51 and he presented a cash cheque and drew $312 from the account. Lee J commented, “Did he make any representation at all, and, if so, what was it? It might be suggested that the representation made was that he had funds, or reasonably believed he had funds, to his credit to the amount of the cheque, but it seems to me that, as the bank keeps its own records of the state of one's account, the act of presenting one's own cheque to one's own bank to cash cannot be given this significance. Such an act, standing alone, in my view, is not to be regarded as a representation as to the state of one's mind in any way at all, but is to be regarded only as a claim or request made to the bank for the amount of the cheque. When one has an account with the bank, the obtaining of funds from the bank requires the making of a request to or claim upon the bank for funds, and the cheque drawn upon the bank to pay “cash” or the like is the form in which that request or claim will be received by the bank. No representation as to the state of one's account or one's overdraft, if one has such an arrangement, is involved, nor would I have thought any representation as to the state of one's belief on these matters."

12 These decisions were considered by the Victorian Court of Appeal in R v Simmonds Unreported, 29 October 1992. Beattie’s case was distinguished on the basis that, in Simmonds, the funds were withdrawn on the basis of a withdrawal slip and not, as in Beattie, on the basis of a cheque. Vincent J commented,

“the argument, adopted by the court in Beattie's case, was clearly based upon the character of a cheque as a genuine and available order for the payment of a sum of money and the perceived incongruity of regarding such an order as a false pretence when presented to the bank itself. Whether or not the bank on the cheque did not necessarily depend on whether there were sufficient funds in the account upon which it was drawn to meet it. The presentation of a withdrawal slip implies the assertion of a right to withdraw the amount claimed, in my opinion, and is, accordingly, quite different. The evidence indicates that the appellant knew or, at least, anticipated that ordinary banking practices relating to the checking of account balances would be carried out before any money was advanced. That, of course, common sense would indicate, was the purpose underlying the creation of false balances in the first place. By the presentation of the withdrawal slip, he asserted a right to withdraw the amount set out in the slip, anticipating, as a right result of his own actions, that the teller would accept that the account was in credit to a greater sum.”

13 Simmonds case is much more closely aligned with Hamilton because in both cases the accused deposited valueless cheques creating false credits in his account. This enabled him to present withdrawal slips and thereby obtain money to which he was well aware he was not entitled.

14 It would appear, was the greatest respect, that none of these decisions is directly applicable to the present case. On the evidence, the accused had no part in the creation of the inflated credits to his account. Having conducted the checks it considered appropriate, the bank paid out funds to the proper account holder on a proper withdrawal slip claiming the amount shown which was within the existing credit balance of the account.

15 It is, with respect, somewhat unrealistic to suggest that a person who presents a withdrawal slip to a bank in respect of funds standing to the credit of that person's account makes any representation as to the legality or otherwise of the source of those funds. Whilst the section expressly provides that a representation of law can constitute a deception for the purposes of section s 178BA, the legality of the source of funds is simply not in issue when a withdrawal is made. A drug dealer who deposits the proceeds of illegal drugs sales to his bank account and subsequently withdraws those funds could hardly be prosecuted for obtaining by deception as if he were somehow asserting that every cent in his account was necessarily obtained by lawful means. An ordinary taxpayer who deposits his tax refund cheque to his bank account, knowing that he has understated his income or over claimed deductions so that he is not legally entitled to a portion of funds credited to the account would supposedly be in the same position.

16 Nor can it matter if the transaction providing the impugned funds was a manual deposit of cash or cheques or an electronic funds transfer.

17 The distinction drawn in Simmonds between withdrawal by cheque and withdrawal by withdrawal slip also seems to lack substance in the situation where a person is presenting a request for a cash withdrawal from that person’s own account. S 10 of the Cheques Act 1986 (Cth) simply provides,

“10 Cheque defined
(1) A cheque is an unconditional order in writing that:
(a) is addressed by a person to another person, being a financial institution; and
(b) is signed by the person giving it; and
(c) requires the financial institution to pay on demand a sum certain in money.”

In the situation where a person fills out a withdrawal slip or a cheque in a bank for the purpose of immediate cash payment to himself or herself, the only significant difference would seem to be that a withdrawal slip may be a request to pay the money rather than a requirement to do so, but this seems be an irrelevant difference in the present context.

18 It seems that Simmonds and Hamilton concentrate excessively on the question of dishonesty, implicitly concluding that if the accused acted dishonestly, there must have been some sort of deception practiced by him. This concern with pursuing the dishonest seems to lead these courts into constructing elaborate and ill-defined representations implied in the accused’s actions that can then be held to amount to deceptions for the purposes of the section.

19 It may be that there was some contractual obligation of disclosure on the defendant as part of his banker-customer relationship with the Commonwealth Bank. Such a contract was relied on by the High Court of Australia in Kennison v Daire *** (1986) 160 CLR 129. However, there was no evidence before me as to the terms of any contract between the defendant and the Commonwealth Bank.

20 It seems to me that when a person presents a withdrawal slip to his or her bank the person represents (1) that he or she is the person named on the withdrawal slip, (2) that any signature on the withdrawal slip belongs to that person, (3) and that the account details shown on the withdrawal slip are correct and relates to an account owned by that person. In line with the decision in Beattie, there is no representation that the amount sought on the withdrawal slip currently stands to the credit of the account: all sorts of the deposits and withdrawals may have taken place, particularly via electronic banking, since the person last access to the account. It may be that the withdrawal slip amounts to a representation as to the person's belief regarding the credit balance of the account.

21 However, it is a difficult in these circumstances to see how the person is making any representation as to the legality of the source of funds in the account. Few people making bank withdrawals would believe that they were making any such assertion, assuming, as we all do, that the bank will only give us access to funds when it is satisfied that we are entitled to them. It is easy to imagine the difficulties such an implied representation might create for both banks and customers in cases where there are disputed joint accounts, such as in family law proceedings. And, as between bank and customer, there is no deception: the bank has credited certain funds to the account and the customer was entitled to withdraw those funds.

22 Neither the bank teller, nor the bank as a corporate entity, is deceived in any way. It is not to the point that some third party might have had a legal claim against D to recover the funds paid into D’s account by X: such a claim would be of no interest to, nor have any direct effect upon, the bank. An action to recover the money would be taken against X or D, and not against the bank

23 Furthermore, whatever the terms of any implied representations in the defendant’s conduct towards the bank, the prosecution must prove in accordance with the section that the defendant’s deception was deliberate or reckless. In R v Smith (1987) 7 A Crim R 437 (CCAV). the Victorian Court of Criminal Appeal held that conduct could be characterised as "reckless" within the meaning of the Victorian equivalent of s 178BA Crimes Act 1958 (Vic), s 81. if the accused either knew or recognised that there was a substantial risk that statements he was making might turn out to be untrue.

Dishonesty

24 Should this conclusion be wrong, it is necessary to turn to the question of whether the accused acted “dishonestly” in presenting the several withdrawal slips to the bank. As the High Court has indicated Peters v The Queen [1998] HCA 7., “dishonesty” is a term not readily subject of definition, and it is generally what reasonable people would consider to be dishonest. Toohey & Gaudron JJ put the matter thus:

“[18] In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people.”

25 Like all other elements of the offence, the accused’s dishonesty must be proved by the Crown beyond reasonable doubt. As mentioned above, in this case it would appear that “dishonesty” is inextricably bound up with “deception”. If there was no deception on D’s part, his withdrawal of funds from his bank was not dishonest, even though he was suspicious of the ultimate source of the funds coming from X. If, on the other hand, there was at law and in fact a knowing or reckless deception perpetrated on the bank by D, I think that ordinary decent people would conclude that his action was dishonest.

26 However, given my conclusion that there was no deception by D, and consequently no dishonesty on his part, I find Mr Lal not guilty on all counts.