Fazio v Interim Advance Corporation Pty Ltd

[2007] WASC 108

FAZIO -v- INTERIM ADVANCE CORPORATION PTY LTD & ANOR [2007] WASC 108

Link to Appeal :

[2008] WASCA 140 [2008] WASCA 140(S)

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2007] WASC 108
Case No:	SJA:1128/2005	Heard:	23 MARCH 2007
Coram:	HASLUCK J	Delivered:	11/05/07
No of pages:	40	Judgment Part:	1 of 1
Result:	Appeal allowed Matter remitted to primary court
Category:	B
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Parties:	MICHAEL LAWRENCE FAZIO INTERIM ADVANCE CORPORATION PTY LTD OLIVER GEORGE DOUGLAS
Catchwords:	Debt collection Definition of "debt collector" Franchisor suing for debt due to a third party franchisee Franchisor's reliance upon power of attorney provision Whether function being performed was collection of a debt on behalf of another Chose in action as a form of property Whether a "gain" can include intangible benefits Defence of honest claim of right Acquittal of franchisor and its principal director quashed on appeal
Legislation:	Criminal Code (WA), s 22, s 24 Debt Collectors Licensing Act 1964 (WA), s 4, s 5, s 23 Legal Practice Act 2003 (WA), s 4, s 123
Case References:	Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277 Chamberlain v The Queen (No 2) (1984) 153 CLR 521 Devries v Australian National Railways Commission (1993) 177 CLR 472 Garrett v Nicholson (1999) 21 WAR 226 Hamilton v Whitehead (1988) 166 CLR 121 Harling v Hall (1997) 94 A Crim R 437 Johnson v Miller (1937) 59 CLR 467 Ostrowski v Palmer (2004) 218 CLR 493 Pickett v The State of Western Australia [2004] WASCA 291 Re Arthur Average Association for British Foreign & Colonial Ships (1875) LR10ChApp 542 Re Commonwealth Homes & Investment Co Ltd [1943] SASR 211 Re Riverton Sheep Dip [1943] SASR 344 Saraswati v The Queen (1991) 172 CLR 1 South Australian Commissioner for Prices & Consumer Affairs v Charles Moore (Aust) Ltd (1977) 51 ALJR 715 Sydney City Council v Paul Dainty Corporation Pty Ltd [1984] 3 NSWLR 104 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 Vrisakis v Australian Securities Commission (1993) 9 WAR 395 Walden v Hensler (1987) 163 CLR 561 Warren v Coombes (1979) 142 CLR 531

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION : FAZIO -v- INTERIM ADVANCE CORPORATION PTY LTD & ANOR [2007] WASC 108 CORAM : HASLUCK J HEARD : 23 MARCH 2007 DELIVERED : 11 MAY 2007 FILE NO/S : SJA 1128 of 2005 MATTER : Criminal Appeals Act 2004 (WA) Pt 2 BETWEEN : MICHAEL LAWRENCE FAZIO

Appellant

AND

INTERIM ADVANCE CORPORATION PTY LTD
OLIVER GEORGE DOUGLAS
Respondents

ON APPEAL FROM:

Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA

Coram : MAGISTRATE T J McINTYRE

File No : PE 24744 of 2005, PE 24745 of 2005, PE 24746 of 2005, PE 24747 of 2005, PE 24748 of 2005, PE 24749 of 2005, PE 24750 of 2005, PE 24751 of 2005, PE 24752 of 2005, PE 24753 of 2005, PE 24754 of 2005, PE 24755 of 2005

(Page 2)

Catchwords:

Debt collection - Definition of "debt collector" - Franchisor suing for debt due to a third party franchisee - Franchisor's reliance upon power of attorney provision - Whether function being performed was collection of a debt on behalf of another - Chose in action as a form of property - Whether a "gain" can include intangible benefits - Defence of honest claim of right - Acquittal of franchisor and its principal director quashed on appeal

Legislation:

Criminal Code (WA), s 22, s 24

Debt Collectors Licensing Act 1964 (WA), s 4, s 5, s 23
Legal Practice Act 2003 (WA), s 4, s 123

Result:

Appeal allowed

Matter remitted to primary court

Category: B

Representation:

Counsel:

Appellant : Mr N C Monahan
Respondents : Mr E M Corboy

Solicitors:

Appellant : State Solicitor for Western Australia
Respondents : Talbot & Olivier

Case(s) referred to in judgment(s):

Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277
Chamberlain v The Queen (No 2) (1984) 153 CLR 521
Devries v Australian National Railways Commission (1993) 177 CLR 472
Garrett v Nicholson (1999) 21 WAR 226
Hamilton v Whitehead (1988) 166 CLR 121

(Page 3)

Harling v Hall (1997) 94 A Crim R 437
Johnson v Miller (1937) 59 CLR 467
Ostrowski v Palmer (2004) 218 CLR 493
Pickett v The State of Western Australia [2004] WASCA 291
Re Arthur Average Association for British Foreign & Colonial Ships (1875) LR10ChApp 542
Re Commonwealth Homes & Investment Co Ltd [1943] SASR 211
Re Riverton Sheep Dip [1943] SASR 344
Saraswati v The Queen (1991) 172 CLR 1
South Australian Commissioner for Prices & Consumer Affairs v Charles Moore (Aust) Ltd (1977) 51 ALJR 715
Sydney City Council v Paul Dainty Corporation Pty Ltd [1984] 3 NSWLR 104
Tesco Supermarkets Ltd v Nattrass [1972] AC 153
Vrisakis v Australian Securities Commission (1993) 9 WAR 395
Walden v Hensler (1987) 163 CLR 561
Warren v Coombes (1979) 142 CLR 531


(Page 4)

HASLUCK J:

Introduction

1 The appellant, Michael Lawrence Fazio, has appealed against a ruling made in the Magistrates Court at Perth. The effect of the ruling was to acquit the respondents of certain charges brought pursuant to provisions of the Debt Collectors Licensing Act 1964 (WA). I understand that the appellant is a police officer who was responsible for laying the charges.

2 The questions raised by the appeal are whether the first respondent, Interim Advance Corporation Pty Ltd ("Interim Advance"), exercised a function of a debt collector in a manner that infringed the Act, and whether the second respondent, Oliver George Douglas, was liable as a director of the company.

3 I will turn to the grounds of appeal in due course. I note also that the respondents have filed and served a notice of contention.

The charges

4 The relevant proceedings were commenced by a complaint lodged by the appellant on 28 April 2005 pursuant to provisions of the Justices Act 1902 (WA). The subject complaint referred to six matters in respect of which it was said that Interim Advance had exercised a function of a debt collector. The matters complained of were essentially the same in each case. Accordingly, with a view to avoiding unnecessary repetition, I will set out only the particulars of the complaint in the first of the six matters, being a matter concerning Michael Kenneth Clark.

5 It appears from the schedule attached to the subject complaint that the Clark complaint (PE 24744/05) in respect of Interim Advance was expressed in this way:

"1/6 On or about 30 April 2004 at Tuart Hill, INTERIM ADVANCE CORPORATION PTY LTD (ACN 094 743 843) exercised a function of a debt collector, when Interim Advance Corporation Pty Ltd was not the holder of a licence under the Debt Collectors Licensing Act 1964; contrary to section 5 of the Debt Collectors Licensing Act 1964.

(Page 5)

Particulars

On or about 30 April 2004, employees or agents acting for Interim Advance Corporation Pty Ltd prepared, signed and sent to Susan Macdonald and Malcolm Macdonald a Local Court summons dated 30 April 2004 naming Interim Advance Corporation Pty Ltd as plaintiff and naming Michael Kenneth Clark as defendant and claiming, in part, on behalf of Susan Macdonald and Malcolm Macdonald, what was a debt owing to others, namely Susan Macdonald and Malcolm Macdonald trading as Aussie Cash Northam, in the expectation of gain."

6 The appellant lodged a second complaint on 28 April 2005 in order to initiate legal proceedings against Mr Douglas in respect of the same six matters.

7 The Clark complaint (PE 24750/05) in respect of Mr Douglas was expressed in this way:

"1/6 On or about 30 April 2004 OLIVER GEORGE DOUGLAS was a director of Interim Advance Corporation Pty Ltd (ACN 094 743 843) when that Corporation committed an offence against the Debt Collectors Licensing Act 1964; contrary to sections 5 and 23 of the Debt Collectors Licensing Act 1964.

Particulars of Offence committed by Corporation

On or about 30 April 2004 at Tuart Hill Interim Advance Corporation Pty Ltd exercised a function of a debt collector, when Interim Advance Corporation Pty Ltd was not the holder of a licence under the Debt Collectors Licensing Act 1964; contrary to section 5 of the Debt Collectors Licensing Act 1964.

Further Particulars

On or about 30 April 2004 employees or agents acting for Interim Advance Corporation Pty Ltd prepared, signed, filed and sent to Susan Macdonald and Malcolm Macdonald a Local Court summons dated 30 April 2004 naming Interim Advance Corporation Pty Ltd as plaintiff

(Page 6)

and naming Michael Kenneth Clark as defendant and claiming, in part, on behalf of Susan Macdonald and Malcolm Macdonald, what was a debt owing to others, namely Susan Macdonald and Malcolm Macdonald trading as Aussie Cash Northam, in the expectation of gain."

8 It will now be useful to look at the scheme of the Act and the statutory provisions mentioned in the Clark complaint.

Debt Collectors Licensing Act

9 The Debt Collectors Licensing Act is described as an Act to provide for licensing of debt collectors, and for incidental and other purposes. By s 4, it is said that the provisions of the Act do not apply to any of certain specified persons including a certificated practitioner (within the meaning of the Legal Practice Act 2003 (WA)), a public accountant acting in the course of his professional calling as such, a sheriff, a bailiff, a bank, a friendly society, a trustee company or a liquidator, receiver, or trustee acting in pursuance of his duties as such. Further, it does not apply to a person who is an officer, employee or clerk of any person, body or authority employed by or acting for such persons.

10 Section 5(1) concerning licensing of debt collectors reads as follows:

"(1) After the expiration of 3 months after the coming into operation of this Act a person shall not -

(a) exercise or carry on;

(b) advertise, notify or state that he carries on or is willing to exercise or carry on; or

(c) in any way hold himself out to the public as ready to exercise or carry on,


the business or any of the functions of a debt collector, unless he is the holder of a licence under this Act."

11 The term "debt collector" is defined by s 3 of the Act. The relevant definition reads as follows:

"'debt collector' means a person (whether or not he carries on any other business) who on behalf of any other person and for or in expectation of any gain, fee or reward whatever, by

(Page 7)

whomsoever paid or payable and either on his own account or in conjunction with another, carries on the business of collecting requesting or demanding payment of debts or who advertises or notifies that he carries on that business;"

12 Section 23 of the Act provides that where an offence against this Act is committed by a corporation any person who at the time of the commission of the offence was a director or manager of the corporation is liable to the penalty or punishment provided by the Act for the offence, unless he proves that the offence was committed without his knowledge or that he used all due diligence to prevent the commission of the offence.

13 At a later stage, I will look at the line of defence referred to in s 23 of the Act. The burden of proof under that provision is to be discharged by a director of a corporation that is found to have committed an offence.

14 I note in passing, as a matter that was emphasised by counsel for the respondents at the hearing, that in the present case the subject charges were expressly limited to the allegation that the services allegedly provided by Interim Advance were "in the expectation of gain"; that is, it was not said that they were provided for a "fee" or reward.

The hearing

15 The matter was brought on for hearing before Magistrate McIntyre at the Magistrates Court at Perth on 21 and 22 November 2005 for trial. The respondents were represented by counsel and pleaded not guilty to the charges. Again, for ease of exposition, I will focus upon the Clark complaints. I will identify any disparity between those complaints and the other matters of complaint where necessary.

16 I note in passing that early on counsel for the appellant applied to amend the particulars to each of the six complaints by deleting the word "filed", and this application was allowed.

17 It follows that in the case of the Clark complaint the central allegation was that on or about 30 April 2004 employees or agents acting for Interim Advance prepared, signed and sent to Susan Macdonald and Malcolm Macdonald a Local Court summons dated 30 April 2004 naming Interim Advance as plaintiff and naming Michael Clark as defendant and claiming, in part, on behalf of Susan Macdonald and Malcolm Macdonald, what was a debt owing to others, namely, Susan Macdonald and Malcolm Macdonald trading as Aussie Cash Northam, in the expectation of gain.

(Page 8)

18 It was common ground at the hearing that in respect of the Clark complaint the summons which was said to have been prepared by Interim Advance and sent to Mr and Mrs Macdonald, as the proprietors of Aussie Cash Northam for filing in the Local Court at Northam, was a summons in which Interim Advance of Aussie Cash, 87 Wanneroo Road, Tuart Hill was named as plaintiff and Michael Kenneth Clark of 27 Hopetown Avenue, Northam was named as defendant.

19 It appears on the face of the Clark summons that the amount or value of the claim was $357.14. The particulars of the claim were presented in this way:

"For payment of the sum of $357.14 being the balance due and owing by Michael Kenneth CLARK to the Plaintiff being the holder of a dishonoured promissory note issued by the Defendant pursuant to a discount facility agreement between the parties and together with interest on the sum of $357.14 at the rate of 782.14% per annum pursuant to the facility agreement between the parties from 25/11/2003 until payment or judgment and costs."

20 It is apparent from the summons that the total amount to be paid by the defendant in order to dispose of the summons was $428.34 made up of $357.14 being the amount of the claim; $51.20 being "Court Fees (inc Post Fee)"; $18 "Service Fee"; $2 "Travelling" and $0.00 "Solicitors Costs". It follows that the fees on the summons amounted to $69.20 in respect of Court fees and service fee and to a total of $71.20 in all.

Overview of prosecution case

21 In the course of opening the case, counsel for the prosecution provided an overview of the circumstances giving rise to the subject complaints. He put the position contended for by the prosecution in this way.

22 It was said that Interim Advance traded as Aussie Cash, a business that made cash advances of $100 to $1000 to its customers in exchange for discounted promissory notes. The promissory notes each embodied an obligation to repay the cash advanced during a period of up to three months together with interest.

23 Interim Advance also operated as a franchisor to a number of independent franchise Aussie Cash stores throughout the State. It was said that pursuant to the franchise agreements, Interim Advance was

(Page 9)

entitled to 20 per cent of all the interest collected on cash advances that were ultimately repaid to franchisees. At the time of the alleged offences, Susan and Malcolm Macdonald, trading in partnership as Aussie Cash Northam, operated a store in Northam as an independent franchisee of Interim Advance.

24 It was said that in the ordinary course of business, Aussie Cash Northam made cash advances to their clients using their own money. No money for this purpose came from Interim Advance or from anyone else for that matter.

25 Cash advances were made in this way. Clients would make an application and, if successful, Aussie Cash Northam purchased a promissory note issued by the client. The promissory note embodied an obligation on the part of the client to repay its face value with the promissory note being purchased by Aussie Cash Northam for less than its face value. The difference between the face value of the promissory note and the purchase price represented the interest due to Aussie Cash Northam. Twenty per cent of that interest was to be paid to Interim Advance as franchisor.

26 Counsel said that the principal means of collecting repayments was by way of direct debiting the client's bank account. Interim Advance, as franchisor, provided the direct debiting service to Aussie Cash Northam under the franchise agreement entered into between the parties. Interim Advance would deduct the Interim Advance share first and remit the balance to Aussie Cash Northam as franchisee.

27 When particular customers of Aussie Cash Northam defaulted on their repayment obligations, Aussie Cash Northam instructed Interim Advance to recover the debts on Aussie Cash Northam's behalf in return for specified fees pursuant to the terms of the franchise agreement. Interim Advance looked to defaulting clients for the collections costs eventually, but Aussie Cash Northam was charged in the first instance, being reimbursed in due course in the event of recovery action proving successful.

28 In other words, Interim Advance was to recover from the defaulting client the debt owed with interest plus collection charges. Moneys recovered were then to be remitted to Aussie Cash Northam less collection charges and less 20 per cent of the interest collected.

29 It was said that in the course of recovering debts on behalf of Aussie Cash Northam in accordance with this practice, on or about 30 April

(Page 10)

2004, Interim Advance prepared and signed six Local Court summonses. It was alleged in the subject complaints that this amounted to claiming "in part" debts owed to Aussie Cash Northam. The significance of the words "in part" in the context of the present case was that Interim Advance was always entitled to retain its collection charges and 20 per cent of the interest collected under and by virtue of the terms of the franchise agreement. The rest was to go back to Aussie Cash Northam. It follows that as only a part of the total amount being claimed would finish up with Aussie Cash Northam that the amount claimed was appropriately described in the subject complaints as a claim "in part" for a debt owing to Mr and Mrs Macdonald.

30 The prosecution case was that employees of Interim Advance forwarded the Clark summons and the other summonses with a cheque for the filing fees to Aussie Cash Northam. It was Aussie Cash Northam's responsibility to process the summonses through the Northam Local Court and serve the summonses on the six defaulting clients. Counsel foreshadowed that Malcolm Macdonald would give evidence to that effect in the course of the hearing.

31 Counsel for the prosecution went on to say that pursuant to the terms of the franchise agreement, and at the request of Aussie Cash Northam, Interim Advance prepared, signed and sent the summonses to Aussie Cash Northam in the expectation of a "fee" of $75. At the relevant time, the Northam Local Court charged $51 to issue each summons (in round figures). Thus, on the prosecution case, Interim Advance had an expectation of an effective "fee" of $24 per summons less postage (being the difference between the figure of $75 payable under the franchise agreement and the figure of $51 being the amount charged by the Northam Local Court).

32 Further, on the prosecution case, the six summonses claimed debts owing to Aussie Cash Northam notwithstanding the fact that Interim Advance was apparently entitled to deduct 20 per cent of the interest collected together with collections costs. For that reason, after notionally making an allowance for the deduction, it was appropriate to describe what was being claimed by Interim Advance as part of a debt due to another.

33 On the prosecution case, Mr Douglas was at all material times the sole director of Interim Advance. He allegedly developed and oversaw the implementation of the systems and procedures whereby the debts of independent franchisees would be collected by Interim Advance on behalf

(Page 11)

of the franchisees in the expectation of reward. It was said that the two statutory defences under s 23 of the Act required Mr Douglas to prove on the balance of probabilities either that the offence was committed without his knowledge or that he used all due diligence to prevent the commission of the relevant offence.

Elements of the offences

34 Counsel for the prosecution submitted that, having regard to the relevant statutory provisions, the elements of the subject offences were that Interim Advance was acting on behalf of another person; that it was acting for or in the expectation of gain; that it was carrying on the business of collecting, requesting or demanding the payment of debts, and that it was not the holder of a licence under the Act. He noted that it was common ground between the parties that Interim Advance was not the holder of a licence under the Act.

35 It followed from all of this that, in essence, the prosecution case was that in the preparation, signing and sending of the summonses in question in the expectation of gain or reward, Interim Advance exercised the functions of a debt collector without a licence, contrary to s 5 of the Act. Mr Douglas was liable simply by virtue of his being the sole director of Interim Advance and his involvement with the acts complained of.

36 I pause to observe that much of the information provided in the prosecutor's opening address as to the existence of a franchise arrangement between Interim Advance and Aussie Cash Northam, and the modus operandi of the respective businesses, was established by the evidence at the hearing or was not disputed. I will turn to and identify the principal areas of controversy later. However, at this stage, it will be useful to look at the evidence given by various witnesses at the hearing.

The evidence of Mr Anderson

37 In the course of his evidence-in-chief Vaughan Geoffrey Anderson said that, having been interviewed by Mr Douglas, he commenced working for Aussie Cash in late May 2003 as a process server. He also undertook other tasks around the office. He was eventually promoted to the position of Collections Manager. This involved him in contacting clients who were in default under the original promissory note or contract with Aussie Cash. This might lead to the issuing of letters of demand or even a summons in the Local Court. As far as he was aware Mr Douglas "was in charge of the whole operation". Mr Anderson said that he finished working with Aussie Cash in May 2004.

(Page 12)

38 Mr Anderson was taken to documents reflecting exchanges with Mr Malcolm Macdonald who was the owner of a franchise at Northam. These documents had a bearing upon the franchise relationship in that they showed the way in which the franchisee made a request for services of the franchisor and was charged for those services. Aussie Cash Northam was to be invoiced for the costs of issuing a summons. It was in this context that Mr Anderson described the preparation of the subject summonses and the sending of them to Mr Macdonald in Northam. Mr Anderson's practice was to prepare a standard form request to collect debt and have that signed by the franchisee as happened in the present case.

39 Mr Anderson referred to the costs of the services being provided. He said (AB 57):

"Well, basically, there was no set amount for telephone calls and those kind of things, but the letter of demand cost which was for $10, the summons and that which was initially $75, but I think went up to $85, and then the judgment summons, if they went to that stage, which is about $110."

40 Mr Anderson confirmed in the course of his evidence that after his appointment to the position of Collections Manager in November 2003 his direct supervisor was Mr Douglas, and that was the position in April 2004. He liaised with Mr Douglas quite often. He always sought his permission to proceed further with recovery action. He said that the Court fees for issuing summonses were covered by a cheque from the first respondent; that is, Interim Advance.

41 Under cross-examination, Mr Anderson agreed that if recoveries were to be pursued on behalf of Interim Advance, he would take instructions from the director of that company, Mr Douglas, but as to outstanding moneys in relation to a franchisee such as Aussie Cash Northam, he would communicate with the franchisee, being in the case of Aussie Cash Northam, Mr Macdonald or his wife.

42 Mr Anderson said that he probably prepared the summons in relation to Clark. He said that the summons fee being charged by Interim Advance of $85 was for the summons itself. The sum of $10 was charged for the prior letter of demand. He said that: "The general $85 was again for the $51.20", this being a reference to the Court fee of $51.20 noted on the summons.

(Page 13)

43 Mr Anderson was asked whether in regard to the six subject summonses, he ever paid any regard to the content of the franchise agreement that had been entered into between Head Office and the Northam franchisee. He said that he did not really take too much interest in that side of the matter.

44 Under re-examination, he said in regard to the $85 mentioned on the standard form request to collect a debt that this figure, which was originally $75, was a "fixed cost". He was told by a superior, probably Mr Pucard, that this was the amount to charge.

The evidence of Mr Macdonald

45 Mr Macdonald said that as a result of seeing an advertisement he and his wife commenced discussions with Mr Oliver Douglas about the franchise for a money advance system known as Aussie Cash. He adduced in evidence a statutory franchise disclosure document (Exhibit J/AB214) and an Aussie Cash franchise agreement dated 9 August 2003 entered into between Interim Advance as franchisor and Susan and Malcolm Macdonald as franchisee (Exhibit K/AB227).

46 These documents reflected the arrangements between the parties described in earlier discussion including provision for a commission or royalty to be paid to the franchisor calculated by reference to amounts collected by the franchisee.

47 Clause 10.1 of the franchise agreement is of particular relevance in the circumstances of the present case. Clause 10.1 provided that the franchisee irrevocably appointed the franchisor and the franchisor's officers jointly and severally as the true and lawful attorneys of the franchisee to execute all documents and do all acts and things as the franchisor deemed necessary for the due performance and observance on the part of the franchisee of all the terms and conditions of the franchise agreement. I will call this the "cl 10.1 power of attorney provision".

48 Mr Macdonald said that his business opened on 11 November 2003 and remained open under the name Aussie Cash Northam until 11 August 2004. I note in passing that in the course of Mr Macdonald's evidence a concession was made by counsel for the respondents that each of the six promissory notes the subject of the present proceedings, were at all material times held by and were the property of the proprietors of Aussie Cash Northam.

(Page 14)

49 Mr Macdonald described the process by which the customers of his business applied for an advance, obtained the cash payment the subject of the advance, and left with Aussie Cash Northam a signed promissory note. He went on to describe the process in the case of Clark whereby he requested Interim Advance as the franchisor at "Head Office" to issue a letter of demand. Later, he received a summons from Head Office concerning that matter which he filed at the Court. He paid the filing fee with a cheque received from Head Office.

50 He went on to describe the events and documents bearing upon the other claims in question. He referred also to various settlement vouchers which reflected the accounting between the parties.

51 The effect of his evidence was that a fee of $10 was charged for the letter of demand and $75 for the summons, although that went up to $85 in April 2004. A difference of opinion arose between the parties in respect of those situations in which Mr Macdonald attended to service of the summons.

The evidence of Mr Douglas

52 Defence counsel made a submission of no case to answer at the close of the prosecution case, bringing into issue a number of the points of law that are the subject of this appeal. There is no need to dwell upon the points of law at this stage. Suffice it to say that the learned Magistrate held that there was a case to answer. Accordingly, defence counsel then called Oliver George Douglas to give evidence on behalf of the first respondent and on his own behalf.

53 Mr Douglas said that he set up the business known as Aussie Cash in Western Australia in October 2000. As at the date of the hearing, Interim Advance had 14 outlets in Western Australia and through an associated company another six outlets on the east coast. Fourteen stores were owned by the company and six were franchised.

54 Mr Douglas said that Aussie Cash could be described as a micro-lender. It provided cash advances by discounting promissory notes to individuals for amounts of $100 to $1000 on the spot. It would give the customer up to three months to repay. It also exchanged foreign currency for tourists. He said that the company took legal advice as to the franchise agreement.

55 Mr Douglas referred to the Exhibit J disclosure document and the provision at page 15 whereby the franchisor was to manage the franchise

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business and would do all things necessary to ensure that the business operated and was commercially viable. This would include the procurement of loan funds to the franchisee's business when necessary and the provision of debt collection services at the expense of the debtors of the franchisees.

56 Mr Douglas was taken to Annexure B at page 21 of the document headed "Franchisee Turnover, Royalty Fees and Costs Reimbursements". The annexure, or schedule, contains three columns headed respectively "Item", "When Payable" and "Amount or Rate". The first six lines on the schedule indicate that a percentage rate of 20 per cent would be payable upon collection and payment of certain amounts by a debtor or otherwise, as to cheque cashing or overseas money transfers or foreign currency exchanges, as at the seventh day of each month. When asked about these entries, Mr Douglas said that: "These are amounts to be paid to the franchisor in the form of royalty payments for those particular functions, sir, that are identified under the heading 'Item'" (TS 79).

57 Mr Douglas was then taken to the heading "Costs Reimbursements" and explained that the figure of $75 purportedly payable as at the seventh day of each month in respect of a "summons issued" was in the nature of "the costs reimbursed to us for the expenditure incurred in performing that function" (AB 110). That was for the whole function of preparation, paying the Court costs and paying for the travel involved in service of the document. Mr Douglas said also in the course of his evidence that a similar schedule was incorporated in the Exhibit K franchise agreement.

58 Mr Douglas was asked whether he had any understanding as to the capacity of Interim Advance to issue legal proceedings in its own name to recover moneys the subject of promissory notes held by a franchisee such as Aussie Cash Northam. This, in effect, invited a response as to his understanding of the cl 10.1 power of attorney provision. As to that matter, this exchange occurred (AB 111):

"Can you tell his Honour what understanding you have as to the capacity of Interim Advance Corporation in that respect?---Our understanding is that any legal work that we did by the issuing of summonses was pursuant to this power of attorney - - that we were able to do that under this power of attorney.

And how did you come to that understanding?---Well, in my discussions with the two solicitors that were involved in the preparation as franchise agreement, the - - the explanation of

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debt collection and the actual system, etcetera, was explained to them and I was advised that this power of attorney would cover that situation as per the functions as set out in the statutory disclosure document then on our - - on our - - on our obligations as - - as the franchisor managing the business."

59 While still in the course of his evidence-in-chief, Mr Douglas was invited by defence counsel to make some further observations about this matter and as to the basis upon which he considered that Interim Advance was entitled to issue summonses in its name even though the customer's promissory note was held by and in the name of a franchisee. He said this (AB 112):

"… Yes. We only issued summonses as upon request of Aussie Cash Northam - - Mr and Mrs McDonald. We didn't do so for every debt that they had to collect. When they did so, we assumed the role of holder in - - in due course under the power of attorney and - - and therefore, we became the holder in due course of that promissory note in order to collect it under the power of attorney.

And where did you get that understanding?---From my own knowledge of the - - the Bills of Exchange Act and from my discussions with the two solicitors that prepared the statutory - - sorry, they prepared the franchise agreement and reviewed the statutory disclosure document."

60 I pause here to note that at this point both counsel referred to the nature of the concession that had been made previously; that is, that the six subject promissory notes were at all material times held by and were the property of Aussie Cash Northam. Defence counsel made it clear that the evidence that had just been given was directed not to the position in law, properly understood, but to the position of the witness' understanding.

61 Mr Douglas was asked about the summons between Interim Advance and Michael Kenneth Clark. He gave evidence to the effect that he did not prepare the summons, he did not give instructions for it to be prepared, he did not know that it had been prepared and he did not sign it. He did not send it to the Macdonalds or ask anyone else to send it to them. He gave evidence to the same effect, in a rolled up form, in respect of the other summonses.

(Page 17)

62 Mr Douglas was taken to cl 4 of the franchise agreement which obliged the franchisee to conduct the business in a proper and efficient manner and which, in a case of sickness or disability, the franchisee purported to authorise the franchisor to install a temporary manager to conduct the business on behalf of the franchisee. This exchange with defence counsel then occurred (AB 116):

"Did you give consideration to that clause in terms of the power of attorney?---Yes.

Can you tell his Honour what your state of mind was in relation to the operation of that clause based on any advice you received?---Yes. It was explained to me that the operation of the franchise as part of the group needed to happen even if the franchisee was sick or wasn't around or was unable to perform a particular function due to training problems where we as the franchisor have to step in to ensure the continuity and the operation of that full business in the event that the franchisee was unable to perform a particular task or operate the business.

Generally speaking, did the company, Interim Advance Corporation Pty Ltd - - was it generally asked to collect or to pursue the payment of debts by franchisees?---No.

Was that the exception?---No. The - - the franchisees collected their own debts most of the time and it was only on occasions where they could no longer collect a particular debt that they'd turn to the franchisor for assistance to take further action which they themselves did not know what to do or how to do it and ask us to intervene, because of the experience that we had in operating the collection process within our own corporation and on the six occasions we were asked by Mr McDonald to perform that particular function, because he was unable to take the matter further with any of the customers and was at a loss at what to do.

MR GILMOUR: Did - - when the company did engage in issuing proceedings in the name of the company, that's in the name of Interim Advance Corporation Pty Ltd?---Yes.

Was there any expectation of making a profit in relation to the issue of legal proceedings?---No. No. The - - there was certainly no - - no money to be made out of it. It was basically a rescue situation for a promissory note that had in fact - - was

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- - was worthless, because the franchisee had already attempted to collect as best they could and couldn't do so and then turned to the franchisee to take further - - further steps. So, in fact, I consider that the promissory note was pretty much worthless."

63 A little later Mr Douglas affirmed that he considered that the company was entitled by reference to the power of attorney provisions in the franchise agreement to pursue recovery proceedings as though it were the holder of the promissory note, and to do so in the name of the company. He said that he had discussed that matter broadly with solicitors and this was a view he held honestly (AB 118).

The cross-examination of Mr Douglas

64 Under cross-examination Mr Douglas confirmed that Mr Anderson took over from Mr Pucard as Manager of Collections. Mr Anderson was employed to call defaulting clients for both Interim Advance and franchisees. His role included the preparation, signing and delivery of letters of demand and Local Court summonses. He said that franchisees "just plugged into the existing framework that we had there" (AB 122).

65 Mr Douglas said that he was aware that Mr Anderson was preparing and issuing summonses for the franchisees because Mr Anderson reported to him. Mr Anderson spoke to him about such matters every now and then but most of the time there was no need to do so because he just followed a set routine that he had been taught to do. He knew that under the franchise agreement if a summons had to be issued, Interim Advance as franchisor would be charging $75 for the service. He agreed that payments were received from the Macdonalds of this kind and that early in 2004 the $75 fee became $85. He accepted that $85 was to be charged in respect of each of the subject summonses. He accepted that the practise of the Court was to charge $51 for such a summons. He could not recall any complaint being made by Mr Macdonald about being charged for summonses that he himself was serving.

66 When pressed, Mr Douglas acknowledged that the relevant documents set out an arrangement whereby if there was a need for the Northam Court to serve the summons, a franchisee such as Mr Macdonald would be charged $75 for the summons and then, on top of that, would be charged the service fee levied by the Court.

67 Mr Douglas was asked whether it was the case that each of the summonses were executed by Interim Advance on behalf of Aussie Cash Northam. He said no to that and asserted that they were executed by

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Interim Advance as holder in due course. He said that the first thing that had to happen under the power of attorney was for Interim Advance to become the holder in due course in order to collect the bill of exchange. Unless a person was the holder in due course of a bill of exchange, the person could not collect it. He agreed that the relationship between the parties was that they were in the role of independent contractors being franchisee and franchisor.

68 Mr Douglas agreed under cross-examination that as to Mr Clark the amount claimed of $357.14 included the letter of demand cost, being a cost of Aussie Cash Head Office, and included a collections costs of $59.52. He said that Mr Clark could walk in after receiving a letter of demand and pay Aussie Cash Northam $357.14 and that would be the end of it. However, he acknowledged that Interim Advance as franchisor would get 20 per cent of all the interest on the subject debt. Further, it would levy $10 in respect of the letter of demand and $75 if a summons had been issued. His evidence as to this aspect of the matter would be the same in respect of all the subject summonses.

Reasons for decision

69 The learned Magistrate reserved his judgment. He handed down his reasons for decision a few days after the hearing on 29 November 2005.

70 His Honour began by referring to the nature of the franchise arrangement between the parties and to the preparation of the subject complaints by Interim Advance on behalf of Aussie Cash Northam. He referred also to the relevant statutory provisions and summarised the evidence before him. He noted that the prosecution case was based not just on oral testimony, but on the inferences which could be drawn from the reference in the franchise documents to the debt collection service mentioned at page 15 of the franchise disclosure document (Exhibit J) and at page 62 of the franchise agreement (Exhibit K).

71 It was against this background that his Honour returned to the definition of "debt collector" and concluded that it should be read as applying only to tangible financial gain in the form of the payment of money, or perhaps, payment in kind. That was because the definition contained the words "by whomsoever paid or payable", indicating, in his Honour's view, a transfer of something to the alleged debt collector.

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72 His Honour then made these observations (TS 7):

"In my view the definition is not sufficiently wide to cover a situation such as existed between head office and its franchisees, that is, the provision of a service involving the preparation and possible service of a summons for little or no reward, perhaps at a loss, in circumstances where such a service could be regarded simply as a means by which head office seeks to ingratiate itself with its franchisees.

In making these comments I refer again to the fact that this legislation – that is the debt collectors legislation – was enacted in 1964, a time when the legislature could not possibly have anticipated the emergency and proliferation of lending organisations such as Aussie Cash and their ilk.

For the sake of completeness, I should say that if the prosecution could prove that Aussie Cash – that is IAC – charged its franchisees not only for court fees, service fees, staff time, stationery, telephone calls, use of motor vehicles and so on, and then, on top of that, levied a fee of 75 of $85, the case would, of course, bearing a different complexion.

I find on the evidence that IAC in preparing, signing and sending the summonses to McDonald was not exercising a function of debt collector. I accept it is, in a sense, a gratuitous service."

73 His Honour then turned to the question of how s 23 of the Act applied to the circumstances of the case. He made these observations (TS 8):

"Finally, I should deal with section 23, so far as those provisions apply to Oliver Douglas. I've already referred, in detail, to the provisions of section 23 and I do not accept for a moment that Douglas has proven, even on a balance of probabilities, that he can avail himself of this provision. IAC head office was a small organisation, whose collections manager, Vaughan Anderson, reported directly to Mr Douglas and on issues related to summonses, other legal proceedings, I find that the accused knew exactly what was going on, that he did nothing to stop it and if charges against IAC had been made out, Douglas would also have been guilty."

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74 His Honour went on to say that he did not believe that in the light of his earlier findings he needed to consider the application of s 22 of the Criminal Code (WA). On the basis of the evidence in front of him he was not satisfied that the prosecution had discharged the onus of proof with respect to any of the complaints. It was against that background that the respondents were acquitted and orders were made for the payment of costs.

75 In summary, the reasons for decision given by the learned Magistrate show that as to the matters in issue in this appeal he made findings as follows:

1. that Aussie Cash Northam was charged $75 in relation to each summons;

2. that the amount which was charged by Interim Advance could not be regarded as a "fee" (or "gain" or "reward");

3. that it was relevant, in that respect, to consider what costs would be incurred by Interim Advance in providing that service (including the costs of serving the summons);

4. that it was necessary to identify a "profit margin", over and above such costs, before an amount charged could be a "fee" (or "gain" or "reward");

5. that in the absence of such an identifiable "profit margin" the service was provided "gratuitously and not for a "fee" (or "gain" or "reward");

6. that a "gain, fee or reward" had to be tangible and consist of a payment of money (or perhaps in kind) to Interim Advance.

76 I note in passing that although an amount of $75 was specified in the franchise agreement and was charged initially there was clear evidence from Mr Anderson that this went up and Interim Advance charged Aussie Cash Northam a "fee" of $85 in relation to each summons. It was an issue in the appeal as to whether Interim Advance had an "expectation of gain" in the form of the potential royalties (of 20 per cent) on any amount which was collected as a result of court action; and in the form of the intangible commercial advances to its business from contributing to the ongoing viability of Aussie Cash Northam and maintaining good business relations with its franchisee.

77 The reasons disclose also that the learned Magistrate approved a construction of the Act which would exclude from "collecting" any action within the scope of "legal practice" as defined in the Legal Practice Act.

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This conclusion does not seem to have been a ground on which the learned Magistrate based his decision to dismiss the charges. However, it is an issue before me as to whether this conclusion involved an error of law.

Subsequent events

78 The appellant filed and served a notice of appeal dated 23 December 2005 seeking leave to appeal against the dismissal of the subject charges upon the grounds specified in the notice of appeal.

79 I will set out and address the various grounds of appeal and the supporting particulars in due course. However, described in general terms, issues were raised as to whether the amount payable to Interim Advance by Aussie Cash Northam in relation to each summons could be regarded as a fee, gain or reward within the meaning of the definition of "debt collector" in the Act. Further, an issue was raised as to whether the learned Magistrate erred in fact and law in failing to find that Interim Advance did the acts alleged of preparing, signing and sending the summonses for or in expectation of a fee, gain or reward.

80 An issue was raised also as to whether the learned Magistrate erred in law in determining that any action which was within the scope of "legal practice" as defined in the Legal Practice Act would be excluded from "collecting" within the meaning of the definition of "debt collector".

81 On 11 January 2006 the appellant was granted leave to appeal in respect of all of the grounds contained in the notice of appeal. Orders and directions were also made as to the filing and serving of various documents to facilitate the hearing of the appeal.

82 As a consequence of those orders and directions the respondents filed a notice of contention dated 27 April 2006. Leave to amend the terms of the notice of contention was granted at the hearing of the appeal. The respondent's position is now reflected in the amended notice of contention dated 22 March 2007 whereby the respondents contend that the verdict of the learned Magistrate should be affirmed upon certain additional grounds which are expressed in this way:

"1. the conduct of the respondents in the preparation, signing, filing and sending of Local Court Summonses was not a function of, nor part of the business of, a 'debt collector' for the purpose of section 5 of the Debt Collectors Licensing Act 1964 (WA) having regard to the terms of

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the Legal Practice Act 2003 (WA) (particularly sections 4 and 123), further or alternatively having regard to the proper construction of sections 3 and 5 of the Debt Collectors Licensing Act 1964 (WA) and in particular, the meaning of 'collecting requesting or demanding payment of debts', and the Learned Magistrate should have so found;

2. the defence of Honest Claim of Right under s22 of the Criminal Code was established, it having been raised by the respondents but not negatived by the appellant, and the Learned Magistrate should have so found."

83 I note in passing that s 22 of the Criminal Code appears in that part of the Criminal Code concerning criminal responsibility. Section 22 reads as follows:

"Ignorance of the law does not afford any excuse for an act or omission which would otherwise constitute an offence, unless knowledge of the law by an offender is expressly declared to be an element of the offence.

But a person is not criminally responsible, as for an offence relating to property, for an act done or omitted to be done by him with respect to any property in the exercise of an honest claim of right and without intention to defraud."

84 It emerges, then, that having regard to the matters raised by the appellant's notice of appeal and the respondents' amended notice of contention, there are issues to be resolved as to whether the learned Magistrate erred in his approach to the interpretation of the relevant provisions of the Debt Collectors Licensing Act and in his application of the provisions in question to the facts and matters before him. There is also an issue to be resolved as to the effect of s 22 of the Criminal Code and certain provisions of the Legal Practice Act.

85 When one turns to the position of the second respondent, Mr Douglas, there is an issue to be resolved as to whether the conduct complained of can be excused, having regard to s 23 of the Debt Collectors Licensing Act and s 22 of the Criminal Code, upon the basis of the understanding he claims to have had that it was permissible for Interim Advance to act as it did. This issue brings with it a need to consider whether Interim Advance was seeking to collect the debt (or part thereof) of another, namely Aussie Cash Northam, or whether the effect of

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the franchise arrangements was to authorise or enable Interim Advance to proceed upon the basis (as the form of claim on the summons in each case implies) that it was seeking to recover the subject debt on its own behalf.

86 It will now be useful to look at the statutory provisions and legal principles bearing upon an appeal of this kind.

Statutory provisions and legal principles

87 Appeals from courts of summary jurisdiction were formerly governed by the Justices Act 1902 (WA) but are now covered by Pt 2 of the Criminal Appeals Act 2004 (WA).

88 By s 14 of the Criminal Appeals Act the Supreme Court may dismiss or allow the appeal, or set aside or vary the decision, or remit the case for rehearing. Further, if the Court considers that no substantial miscarriage of justice has occurred, it may dismiss the appeal notwithstanding that a ground of appeal has been decided in favour of the appellant.

89 It is apparent from s 39 of the Criminal Appeals Act that an appeal court must decide the appeal on the evidence and material that were before the lower court, but this does not prevent consideration of any evidence that the lower court refused to admit. By s 40 an appeal court may admit other evidence.

90 A Magistrate is generally required to set out the relevant findings of fact and the reasons for his or her decision. The reasons must disclose adequately the intellectual process which has resulted in a particular determination: Garrett v Nicholson (1999) 21 WAR 226.

91 A failure by a decision-maker to mention a matter expressly does not reasonably give rise to an inference that it was not considered. It is to be assumed that the decision-maker has taken all relevant matters into account: Pickett v The State of Western Australia [2004] WASCA 291 at [10].

92 Generally, an appellate court will refrain from interfering with findings of fact based upon the credibility of witnesses unless it appears that the judicial officer has failed to use or palpably misused the advantage of seeing and hearing the witnesses or acted on evidence which was inconsistent with facts incontrovertibly established by the evidence or which was glaringly improbable: Devries v Australian National Railways Commission (1993) 177 CLR 472 at 479.

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93 In Vrisakis v Australian Securities Commission (1993) 9 WAR 395 Ipp J observed at 448 that primary findings of fact will not ordinarily be interfered with. Nevertheless, when findings as to the primary facts are attacked, and the inferences drawn from the primary facts are said to be wrong, it remains the task of an appellate court in an appeal by way of rehearing to embark on an analysis of the evidence, documents and objective facts in order to determine the issues afresh.

94 It has been said that in general an appeal court is in as good a position as the trial Judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial Judge. In deciding what is the proper inference to be drawn, the Appeal Court will give respect and weight to the conclusion of the trial Judge but, once having reached its own conclusion, will not shrink from giving effect to it: Warren v Coombes (1979) 142 CLR 531 at 551.

95 The question on appeal will often be not whether the Court would have formed a different view but whether the Magistrate's approach and view of the evidence was defensible: Chamberlain v The Queen (No 2) (1984) 153 CLR 521. The finding of guilt is not to be reached simply by rejecting the case put forward by the accused. The Court has to positively believe beyond reasonable doubt the evidence presented by the prosecution: Harling v Hall (1997) 94 A Crim R 437.

96 It will now be useful to turn to the various grounds of appeal and to the issues raised by the notice of contention. However, before doing so, I must commence by making some general observations.

General observations

97 Mr Douglas said in evidence at the hearing that he was given to understand by advice from his solicitors that the cl 10.1 power of attorney provision permitted Interim Advance to sue for a debt due to a franchisee (under one of the latter's promissory notes).

98 When Mr Douglas was asked about this he said: "Our understanding is that any legal work we did by the issue of the summonses was pursuant to this power of attorney – that we were able to do that under this power of attorney" (AB 11/TS 81). He went on to say that: "We only issued summonses as upon request of Aussie Cash Northam" and "we assumed the role of holder in due course" of the promissory note "in order to collect it under the power of attorney" (AB 112/TS 82).

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99 This testimony bears upon the question of whether Mr Douglas believed that Interim Advance was not collecting a debt on behalf of another (in this case Aussie Cash Northam) but seeking to recover its own debt; that is, a debt due directly to Interim Advance.

100 Documentary evidence before the Magistrate was said to underpin this line of thought because the Local Court summonses prepared in respect of the Clark complaint and other complaints described Interim Advance as the plaintiff, and the particulars spoke of a sum due and owing "to the plaintiff being the holder of a dishonoured promissory note issued by the defendants".

101 To my mind, these passages from the evidence of Mr Douglas have an important bearing upon the resolution of the present case. First, his use of the plural "our understanding" and "we assumed the role of holder" leads me to infer that Mr Douglas was actively involved in the running of the business and that his understanding was reflected in the Interim Advance procedures. In the circumstances of this case, I consider that in speaking about and acting upon his understanding, Mr Douglas can be regarded as a person who is the directing mind and will, and thus the embodiment of Interim Advance: Tesco Supermarkets Ltd v Nattrass [1972] AC 153 at 170; Hamilton v Whitehead (1988) 166 CLR 121.

102 Second, in speaking of the work to be performed, Mr Douglas says that in his belief "we were able to do that under the power of attorney". To my mind, in this and other passages he is referring to the capacity or power to act on behalf of another (which, even to the mind of a layman, is the common understanding of the authority conferred by a power of attorney) rather than asserting a claim to ownership of the item of property in question; that is, the rights associated with the promissory note including the right to enforce it.

103 Third, the view I have just expressed is reinforced by his assertion in these passages of the transcript that the work being performed was a collection of the subject debt ("in order to collect it under the power of attorney") and that Interim Advance and its employees were acting upon request of a third party, namely, Aussie Cash Northam ("we only issued summonses as upon request of Aussie Cash Northam"). This leads me to infer that the function being performed was collection of a debt on behalf of another.

104 It is against this background that I turn to the nature of the promissory note and the question of ownership of the chose in action. I

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proceed from the premise that a chose in action of this kind can be characterised as a form of property.

105 The promissory note signed by Michael Clark is dated 17 November 2003 and forms part of Exhibit M. It was brought into existence as a consequence of an application for a loan of $200 submitted to Aussie Cash Northam and was signed by Mr Clark. The borrower says "I undertake to pay to the order of Aussie Cash Northam at 187 Fitzgerald Street the sum of two hundred and sixteen dollars 03 cents" by fortnightly instalments. It says that: "In default of payment of any instalment the whole amount payable under this note is to become immediately payable".

106 On its face, the subject promissory note does not purport to be a bill of exchange and it makes no explicit provision for the note, or for the liability to be assigned to another. The conditions attached to the application form signed by Mr Clark said simply that: "Aussie Cash will prepare and purchase your Promissory Note from you at a discounted figure equal to the cash advance amount approved". Mr Douglas did not suggest in his evidence that Interim Advance was the party that outlaid the funds required to purchase the note from Mr Clark. The evidence of Mr Macdonald established that it was purchased by Aussie Cash Northam.

107 Counsel for the respondent acknowledged at the hearing before the Magistrate that, in strict legal analysis it could not be held that Interim Advance owned the promissory note. He conceded, by implication, that the cl 10.1 power of attorney provision was expressed in general terms. It enabled the franchisor to assist a franchisee in the running of his business but there was nothing in the clause which amounted to a purported assignment to the franchisor of any debt due to a franchisee, or made provision for the franchisor to be regarded as a holder in due course.

108 Put shortly, then, the evidence did not include any document which could arguably be regarded as an assignment of the subject debts and the promissory notes themselves did not suggest that this was intended, or that Interim Advance was to be characterised as a holder in due course.

109 Moreover, other facets of the evidence weighed heavily against any finding being made that as to the six matters of complaint, including the Clark complaint, Interim Advance was simply collecting its own debt, as suggested by Interim Advance being named in the subject proceedings as plaintiff.

110 In addition to the matters mentioned earlier, the description of the recovery process given by Mr Anderson and by Mr Macdonald

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established that Interim Advance was essentially responding to a request that an Aussie Cash Northam debt be collected. Indeed, Mr Douglas in his evidence spoke of the franchisees "plugging in" to the system that Interim Advance had. His comments suggested that the franchisees were in the nature of outsiders and in a different category to Interim Advance itself. This is consistent with the relevant documents including the franchise agreement

111 In my view, it follows from this review of the franchise agreement and related evidence that the subject matter of the recovery action reflected in the Clark summons was a debt due to Aussie Cash Northam. Quite clearly, the recovery of the debt depended on action being taken by Interim Advance in response to a request for action by Aussie Cash Northam. The objective was to apply pressure to the debtor with a view to obtaining payment of an amount outstanding. The steps taken might be confined to a letter of demand but could, and in the Clark case in fact did, extend to the preparation and issuing of a summons. It can be inferred from the terms of the summons and nature of the collection process that the expectation of the parties was that payment of the amount claimed in the summons would be made to Interim Advance and distributed by the franchisor to the franchisees, after deduction of the Interim Advance entitlement.

112 I consider that activities of this kind clearly fall within that part of the definition of the term "debt collector" which refers to collecting, requesting or demanding payment of debts on behalf of any other person.

113 I pause here to say that my preceding observations about the true nature of the cl 10.1 power of attorney provision and the activities of Interim Advance do not necessarily deprive Mr Douglas of a defence under s 23 of the Act. That provision, and s 22 of the Criminal Code are directed not to the correct characterisation of the relevant activities in law, in strict analysis, but to the nature of an accused person's understanding. In certain circumstances, conduct that might otherwise be criminal can be excused by a mistaken understanding. I will come back to these issues in due course.

Further observations

114 It follows from my general observations to this point that the next question in the present case is whether the activities by Interim Advance, which I have characterised as collecting debts on behalf of another (in this case Aussie Cash Northam), amounted to carrying on the business of collecting "in the expectation of any gain" by whomsoever paid or

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payable. In response to the persuasive submissions put to me by counsel for the respondent, I accept that the prosecution is bound by the particulars of the subject complaints: Johnson v Miller (1937) 59 CLR 467 at 497; Vrisakis v Australian Securities Commission (1993) 9 WAR 395. This means that the matter in issue was whether the work performed was in "expectation of any gain" being the words used in the definition of "debt collector".

115 As to this issue, I am of the view that the arrangements for collection whereby, as Mr Douglas put it (AB 122), the franchisees plugged into the existing framework for collection, meant that Interim Advance stood to gain from the collection activities. By providing the framework or service it preserved and fostered its relationship with the franchisee. By doing so, in respect of those debts due to the franchisee which might otherwise have been lost (unless the collecting was undertaken) Interim Advanced aimed to secure certain income by way of the agreed percentage on debts received that might otherwise have not come to it.

116 I give weight to the authorities relied upon by counsel for the appellant that the word "gain" is apt to describe anything of value to the recipient; that is, anything thought to be worth having which was not previously available to the recipient. The word "gain" has a broader scope than that described by the word "fee", in particular the words do not describe a situation which necessarily involves the receipt of a monetary sum. See Re Arthur Average Association for British Foreign & Colonial Ships (1875) LR10ChApp 542; Re Riverton Sheep Dip [1943] SASR 344 at 347; Re Commonwealth Homes & Investment Co Ltd [1943] SASR 211 at 228; South Australian Commissioner for Prices & Consumer Affairs v Charles Moore (Aust) Ltd (1977) 51 ALJR 715 at 723.

117 Further, and in any event, contrary to the conclusion arrived at by the Magistrate, I do not consider that it was necessary for the prosecution to establish or demonstrate the presence of a profit margin for a service in order for that service to be described as being undertaken for a fee. As a matter of ordinary language, the fee which a person is charged for a service is what they are required to pay or provide in order to have the service performed. A fee is not the sum notionally remaining after the other party has paid third parties and covered its own costs. To my mind, the same can be said of an expectation of any gain. Recompense of any kind will be sufficient.

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118 It follows from this, in my view, that in circumstances where the amount payable by the franchisee of $75 initially, or $85 eventually, exceeded the Court charges and other outgoings, as it clearly did, Interim Advance was working for or in the expectation of gain, even though its overall recompense for the circumstances provided might have been small.

119 For these reasons I consider that on the evidence before the Court concerning the Clark complaint, Interim Advance was exercising the functions of a debt collector in the manner alleged in the subject charge contrary to s 5 of the Debt Collectors Licensing Act. I arrive at the same conclusion in respect of the other charges. Accordingly, I consider that, prima facie, the Magistrate erred in acquitting Interim Advance of the subject charges.

General observations as to the Douglas charges

120 As to the charges brought against Mr Douglas, it becomes apparent that one of the bases for acquitting him falls away immediately, having regard to the finding I have just made. His acquittal depended essentially on the absence of any finding of fault against the company. However, for my part, now that such a finding has been made, I must go on to give consideration to the defence raised on behalf of Mr Douglas at the hearing before the Magistrate and before me under s 23 of the Act, in which respect the burden of proof lies upon Mr Douglas.

121 In the end, I am not satisfied that he has discharged the burden that lies upon him of proving that the offence was committed without his knowledge or that he used all due diligence to prevent commission of the offence.

122 To my mind, the evidence of Mr Douglas himself reveals a comprehensive knowledge of the framework into which franchisees could "plug in". The evidence of Mr Douglas and other witnesses leads to an inference that Mr Douglas was directly and actively involved in the running of the collection system at the relevant time. Mr Anderson said that he was in the habit of referring to and taking instructions from Mr Douglas. It follows from my general observations concerning the cl 10.1 power of attorney provision that Mr Douglas had a scant factual basis for contending that Interim Advance had taken an assignment of the subject debts or was a holder in due course of the same. A finding can be made, and should be made, in my view, that, notwithstanding the form of the Clark and other summonses in which Interim Advance was described as the creditor, at all material times Mr Douglas knew that the function

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being performed was the collection of a debt belonging to a third party franchisee, namely, Aussie Cash Northam, at the request of the franchisee, in the expectation of gain.

123 Moreover, when I review the facts of the matter bearing upon this issue, I consider that I am also entitled to give weight to the observations and findings of the Magistrate, who had the advantage of seeing the witnesses. His Honour observed that the subject business was a small office and Mr Douglas knew exactly what was going on. To my mind, the uncorroborated evidence of Mr Douglas that he had received legal advice about this matter, and believed he was proceeding lawfully, is outweighed by the other matters I have mentioned. Accordingly, I am not prepared to hold that he discharged the burden of proof upon him.

124 It follows that, in my view, prima facie, the learned Magistrate erred in acquitting Mr Douglas. There was sufficient evidence before the Court to warrant his conviction.

General observations about the Notice of Contention

125 This brings me to the issues raised by the respondent's notice of contention. In earlier discussion concerning my views, I used the words "prima facie" advisedly, being aware that a final conclusion cannot be arrived at until the issues raised by the Notice of Contention have been considered.

126 The first ground in the notice of contention to some extent raises a number of the issues I have already covered. There is no need to go over them again. The only new issue of any significance is the proposition put to the Magistrate, and on appeal, that the terms of the Legal Practice Act (particularly s 4 and s 123) prevented any criminal liability being attached to the respondents in the circumstances of the present case. As I indicated in earlier discussion, the Magistrate approved a construction of the Act which would exclude from "collecting" any action within the scope of "legal practice" as defined by the Legal Practice Act.

127 Let me begin by saying that there is no reason in principle why two statutes cannot bear upon the same subject matter. The same conduct can be made an offence by separate statutory enactments: Australian Oil Refining Pty Ltd v Cooper (1987) 11 NSWLR 277 at 281; Sydney City Council v Paul Dainty Corporation Pty Ltd [1984] 3 NSWLR 104 at 108. Further, there is nothing in the provisions of the Legal Practice Act concerning misconduct to suggest that such provisions were intended to cover the field exclusively. It follows from all of this that I am not

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persuaded that any part of the Debt Collectors Licensing Act has been impliedly repealed.

128 In Saraswati v The Queen (1991) 172 CLR 1 at 204 Gaudron J made these observations:

"It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support that implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other."

129 These observations reinforce the views I have expressed that two statutes can bear upon the same subject matter. However, as I understand it, counsel for the respondents at the hearing before me did not see this as being the point in contention. The respondents' submission was that the preparation, signing, filing, and sending of Local Court summonses was engaging in legal practice contrary to s 123 of the Legal Practice Act which provides that a person must not engage in legal practice unless the person is a certificated practitioner. It was said that the subject activities could therefore not constitute a function of a debt collector as the Legal Practice Act provided that such a function could only be performed by a legal practitioner. In effect, this was the finding made by the learned Magistrate, and it was a finding that justified the acquittal of the respondents.

130 This line of argument proceeds from the premise that the Legal Practice Act makes it unlawful for any person who is not a legal practitioner to prepare a Local Court summons. The functions of a debt collector must refer to functions that can be lawfully performed provided that the person performing the functions is a licensed debt collector. Consequently, it cannot be a function of a debt collector to prepare and sign a summons.

131 To my mind, the premise relied upon is questionable. Section 4 of the Debt Collectors Licensing Act makes it clear that the provisions of the Act do not apply to a certificated legal practitioner (and various other persons). This recognises that there may be an overlap in the operation of that Act and the Legal Practice Act; that is, certain activities undertaken by a legal practitioner could arguably fall within the concept of debt

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collection with the result that an immunity has to be provided to a legal practitioner in such a case. It follows that a person who engages in the preparation of court documents as a facet of debt collection may be subject to the restrictions of both Acts. The statutes in question operate concurrently. This is consistent with the reasoning of Gaudron J in Saraswati (supra).

132 I am not persuaded that the acquittal of the respondents can be justified on the first ground.

133 It is said in the second paragraph of the notice of contention that the respondents should be excused from liability by the defence of honest claim of right under s 22 of the Criminal Code. This was said to be a matter that was raised before the Magistrate at the hearing but which was not ruled out or negatived by the prosecution.

134 I referred to s 22 of the Criminal Code in earlier discussion. That provision lies within ch V of the Criminal Code concerning criminal responsibility. It provides that ignorance of the law does not afford any excuse for criminal conduct. Section 22 then provides in its second part:

"But a person is not criminally responsible, as for an offence relating to property, for an act done or omitted to be done by him with respect to any property in the exercise of an honest claim of right and without intention to defraud."

135 In a recent decision of the High Court, Ostrowski v Palmer (2004) 218 CLR 493 Gleeson CJ and Kirby J observed at 503 that s 22 must be read with s 24 of the Criminal Code which provides that a person is not criminally responsible for an act done under an honest and reasonable, but mistaken, belief in the existence of a state of things.

136 It was in this context that their Honours' approved observations in previously decided cases to the effect that it is necessary for the prosecution to prove that the accused knew that he was doing the criminal act which is charged against him, that is, that he knew that all the facts constituting the ingredients necessary to make the act criminal were involved in what he was doing. If this be established, it is no defence that he did not know that the act which he was consciously doing was forbidden by law, because ignorance of the law is no excuse. However, it is a good defence, if he displaces the evidence relied upon as establishing his knowledge of the presence of some essential factual ingredient of the crime charged.

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137 Counsel for the respondents relied upon the reasoning of the High Court in Walden v Hensler (1987) 163 CLR 561 in support of a proposition that where the law prescribes conduct which is not self-evidently wrong, or in which ordinary people, uninstructed in the law, might think that they had a right to engage, the second limb of s 22 operates to restrict the net of criminal responsibility and prevent injustice. The second limb is often shortly referred to as "an honest claim of right".

138 Deane J made these observations in Walden v Hensler (supra) at 580:

"The phrase 'honest claim of right' has no defined meaning for the purposes of the Code. Its connotation in s 22 must be determined in the context of the opening provision of that section that ignorance of the law does not of itself afford any excuse for an action or omission which would otherwise constitute an offence and against the background of general common law principle to that effect. Plainly, the fact that a person can honestly say that he thought he was entitled to do the relevant act because he was unaware that it was proscribed by the criminal law does not suffice to provide him with a defence of honest claim of right under s 22. Nor does an honest belief of some special entitlement to do the particular act with respect to property necessarily constitute such a defence. An honest belief of a special entitlement to do the act with respect to the property, such as belief of ownership, will only constitute a defence under s 22 of the Code if that entitlement would, if well founded, preclude what was done from constituting breach of the relevant criminal law which an accused is assumed to know: see, generally, Adams, Criminal Law and Practice in New Zealand, 2nd ed. (1971), pp 24-26. In other words, it is not to the point to establish an honest belief of a special relationship with property which, even if it existed, would not constitute an answer to the offence charged. "

139 Deane J went on to make these further observations at 581:

"It should be apparent from the foregoing that the answer to the question whether an honest belief of entitlement to act in a particular way with respect to property constitutes a defence of honest claim of right under s 22 of the Code can only be ascertained by reference to the elements of the alleged offence. If actual knowledge of criminality is an element of the offence,

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a defence of claim of right will be available to negate that element of the offence if the claim of right results in the absence of such knowledge. In the ordinary case where knowledge of the criminal law is assumed however, a defence of claim of right will not be well founded unless what was claimed or believed would, if it were the fact, have negatived an element of the actual offence or provided a good defence to it."

140 These observations permit one to say that the paradigm example of an honest claim of right which does not give rise to criminal responsibility is stealing. In other words, a mistaken belief in ownership of the object taken excuses the conduct because the relevant act is done in the exercise of a right which, although it does not exist, would have made the conduct innocent if it did exist. The relevant question is therefore whether the "entitlement" the subject of the mistaken belief would, if it had existed at the time of the offence, have made proof of the relevant element impossible.

141 The conduct element to which s 5 of the Debt Collectors Licensing Act attaches liability is the carrying out of a debt collecting function for gain without a licence. Therefore, the relevant property must be the "chose in action" which is "a debt owned by some other person".

142 In this context there was only one right which could operate to excuse the relevant act of pressing for payment of the Clark debt at the time of the offence, namely, an actually held belief on the part of Mr Douglas in Interim Advance's ownership of the subject Aussie Cash Northam debt, bearing in mind that the Magistrate found that Mr Douglas knew exactly what was going on in relation to debt recovery. I have held in earlier discussion that Mr Douglas can be characterised as representing the will of the company.

143 However, it follows from my general observations that, in my view, there is insufficient evidence to support a finding that Mr Douglas believed that Interim Advance had a legal entitlement as owner of the Clark debt at the time the debt collecting acts were done.

144 It emerges from earlier discussion that there is no documentary evidence of any assignment of the subject debt to Interim Advance or that it was the holder in due course of a bill of exchange. As I have indicated, upon a close analysis of Mr Douglas' evidence it emerges that he was not truly asserting a claim of ownership to the subject debt but, at best, held the belief that pursuant to the power of attorney he was able to enforce

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payment of the debt by using the name of Interim Advance as plaintiff, and as the apparent creditor. Nonetheless, the surrounding evidence leads to a conclusion that he knew, and thus the company knew, that it was claiming the debt at the request and on behalf of another party that it knew to be the true owner of the debt, namely, Aussie Cash Northam.

145 In my view, it follows from this that, on the evidence before the learned Magistrate, it was incumbent upon the Magistrate to find that the prosecution had negatived or ruled out the honest claim of right defence based upon s 22 of the Criminal Code, because there was insufficient evidence before the Court that the respondents had asserted an honest claim of right to the Clark debt and the other subject debts at the time the offences were committed. Accordingly, I am not persuaded that the acquittals can be justified upon this further ground.

146 Let me now turn to the various specific grounds of appeal.

The first ground of appeal

147 The first ground of appeal is that the learned Magistrate erred in fact in determining that Aussie Cash Northam, or "ACN" was charged $75 in relation to each summons, when the evidence established that the amount payable was $85.

148 The particulars provided in support of this ground of appeal are as follows:

"(a) the evidence was that the franchise agreement specified an amount of $75 as payable for the service of 'issue summons';

(b) however, Vaughn [sic] Anderson gave uncontradicted evidence that this had changed by February 2004 to an amount of $85;

(c) the documentation prepared on behalf of the First Respondent in relation to the six debts also recorded that amount as being $85."

149 I accept that the learned Magistrate erred in regard to this matter, and by February 2004 the amount being charged had in fact been increased to $85. However, the thrust of my general observations is that on either view of the matter the prosecution case would have been made out because recompense of either kind would have been sufficient to establish that Interim Advance was acting in the expectation of gain. Accordingly,
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as I see it, very little turns upon this point of controversy, and I do not consider that it is necessary for me to dwell upon this issue at length. It is sufficient to say that I will allow the appeal on this ground.

The second ground of appeal

150 The second ground of appeal is that the learned Magistrate erred in fact and law in determining that the amount payable (of $85) in relation to each summons could not be regarded as a fee, gain or reward within the meaning of the definition of "debt collector" in s 3 of the Debt Collectors Licensing Act.

151 The particulars provided in support of this ground of appeal are as follows:

"(a) the learned Magistrate erred in considering that it was relevant, in that respect, to consider what costs would be incurred by the First Respondent in providing that service (including the costs of serving a summons);

(b) the learned Magistrate erred in considering that it was necessary to identify a 'profit margin', over and above such costs, before an amount charged could be a 'fee', 'gain' or 'reward';

(c) the learned Magistrate erred in considering that in the absence of an identifiable 'profit margin' the service was provided 'gratuitously' and not for a 'fee', 'gain' or 'reward'."

152 It follows from my general observations that, in my view, the learned Magistrate erred in determining that the amount payable in relation to each summons could not be regarded as a fee or gain within the meaning of the definition of "debt collector". As I have indicated, having regard to the way in which particulars of the charge were presented, the issue to be addressed was whether Interim Advance had acted in expectation of a gain. In my view, there was evidence before the Court sufficient to justify a finding that Interim Advance had acted in the expectation of gain. It was not necessary for there to be a demonstrated or identifiable profit margin in respect of the service provided, and in that respect also the learned Magistrate erred. I consider that the appeal should be allowed on the second ground.

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The third ground of appeal

153 The third ground of appeal is that the learned Magistrate erred in law in determining that a gain or reward for the purposes of the definition "debt collector" in s 3 of the Act had to be tangible and consist of a payment of money (or perhaps a payment in kind) to the First Respondent.

154 The particulars provided in support of this ground of appeal are as follows:

"(a) the authorities establish that a 'gain' or 'reward' can be intangible, and need not consist of a payment of money;

(b) the words 'by whomsoever paid or payable' in the definition of s 2 of the Act do not alter the position established by the authorities, because on their proper construction they are intended to apply only to a 'fee', or to a 'gain' or 'reward' consisting of a monetary payment, and are intended to put beyond doubt that in that situation the source of the money is irrelevant."

155 It follows from my general observations that a "gain" within the definition of "debt collector" can include intangible benefits such as the fostering of a relationship with a franchisee. Accordingly, I consider that the appeal should be allowed on this ground also.

The fourth ground of appeal

156 The fourth ground of appeal is that the learned Magistrate erred in fact and law in failing to find that the First Respondent did the acts alleged of preparing, signing and sending the summonses for or in expectation of a fee, gain or reward.

157 The particulars provided in support of this ground of appeal are as follows:

"(a) the First Respondent charged ACN a 'fee' of $85 in relation to each summons (which also represented a 'gain' to, or 'reward' received by, the First Respondent);

(b) the First Respondent had an an [sic] expectation of a 'gain' or 'reward':

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(i) in the form of the potential royalties (of 20%) payable on any amount which was collected from defaulting debtors;

(ii) in the form of the intangible commercial advantages to its business from contributing to the ongoing viability of ACN and maintaining good business relations with ACN."

158 It follows from my general observations, including my observations about the binding effect of the subject particulars, that I consider the appeal should be allowed upon the fourth ground.

The fifth ground of appeal

159 The fifth ground of appeal is that the learned Magistrate erred in law in determining that any action which was within the scope of legal practice as defined in the Legal Practice Act would be excluded from collecting within the meaning of the definition of "debt collector" in s 3 of the Act.

160 The particulars provided in support of this ground of appeal are as follows:

"(a) on its proper construction, the Act operates concurrently with the LP Act in relation to any matters which may be within the scope of 'legal practice' as defined in the LP Act;

(b) a debt collector commits two offences if the 'collecting' is done without a licence under the Act and in a manner which contravenes the LP Act."

161 As appears from my general observations, I am of the view that the learned Magistrate erred in law in determining that any action which was within the scope of legal practice as defined in the Legal Practice Act would be excluded from collecting within the meaning of the definition of "debt collector" in s 3 of the Act. I consider that upon its proper construction the Debt Collectors Licensing Act operates concurrently with the Legal Practice Act in relation to any matters which may be within the scope of legal practice as defined by the latter Act. To the extent that it is necessary, I consider that the appeal should be allowed on this ground.

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The sixth ground of appeal

162 The sixth ground of appeal is that the learned Magistrate erred in fact and law in not convicting the Second Respondent.

163 The particulars provided in support of this ground of appeal are as follows:

"(a) the Second Respondent was liable upon proof that the First Respondent had committed the offence alleged;

(b) the First Respondent committed the offences as alleged."

164 It follows from my general observations that the sixth ground of appeal should be allowed. In circumstances where I have found it was open to the learned Magistrate to convict Interim Advance, it was then also open to him to convict Mr Douglas subject to consideration of the line of defence allowed for by s 23 of the Act. However, for the reasons I have given previously, having regard to the evidence before the Magistrate, I do not consider that it was open to the Magistrate to excuse Mr Douglas pursuant to that provision.

Summary

165 It follows from my general observations and my specific responses to the various grounds of appeal that I consider that the learned Magistrate erred in fact and law in the manner previously indicated in acquitting the respondents. I do not consider that the issues raised in the respondents' amended notice of contention are sufficient to justify the acquittal. It follows that the appeal is to be allowed. When I turn to the question of the appropriate form of relief, I am provisionally of the view that the proper course is to remit the matter to the primary Court for a further hearing. I will hear from the parties as to the form of any orders and directions that are to be made.