Fermanis v The State of Western Australia
[2007] WASCA 84
•23 APRIL 2007
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: FERMANIS -v- THE STATE OF WESTERN AUSTRALIA [2007] WASCA 84
CORAM: STEYTLER P
ROBERTS-SMITH JA
McLURE JA
HEARD: 23 NOVEMBER 2006
DELIVERED : 23 APRIL 2007
FILE NO/S: CACR 179 of 2005
BETWEEN: PETER FERMANIS
Appellant
AND
THE STATE OF WESTERN AUSTRALIA
Respondent
FILE NO/S :CACR 187 of 2005
BETWEEN :CLIFFORD WILBUR MITCHELL
Appellant
AND
THE STATE OF WESTERN AUSTRALIA
Respondent
FILE NO/S :CACR 206 of 2005
BETWEEN :PETER FERMANIS
Appellant
AND
THE STATE OF WESTERN AUSTRALIA
Respondent
FILE NO/S :CACR 207 of 2005
BETWEEN :CLIFFORD WILBUR MITCHELL
Appellant
AND
THE STATE OF WESTERN AUSTRALIA
Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram :MACKNAY DCJ
File No :IND 1180 of 2002
Catchwords:
Appeal - Criminal law - Fraud - Jury unanimity - Where prosecution case run on several alternative basis - Unanimity required on all essential elements or ingredients of offence - Jurors must rely on same allegation of "deceit or fraudulent means" in deciding to convict - Trial Judge failed to give required direction - Unsafe convictions
Criminal law - Fraud - Criminal Code (WA) s 409(1) - Test for reliance
Successful appeal - Discretion to order retrial - Co-accused acquitted at trial - Inconsistent verdicts if convictions based on particular allegations - Strength of remainder of prosecution case - Health problems and age of one appellant - No retrial ordered
Legislation:
Criminal Code (WA), s 409(1)
Result:
Appeals against conviction allowed
No retrial ordered
Category: A
CACR 179 of 2005
Counsel:
Appellant: Mr M T Trowell QC & Mr S G Scott
Respondent: Mr M Mischin
Solicitors:
Appellant: Stables Scott
Respondent: State Director of Public Prosecutions
CACR 187 of 2005
Counsel:
Appellant: Mr M J McCusker QC & Ms B A Ayling
Respondent: Mr M Mischin
Solicitors:
Appellant: Legal Aid WA
Respondent: State Director of Public Prosecutions
CACR 206 of 2005
Counsel:
Appellant: Mr M T Trowell QC & Mr S G Scott
Respondent: Mr M Mischin
Solicitors:
Appellant: Stables Scott
Respondent: State Director of Public Prosecutions
CACR 207 of 2005
Counsel:
Appellant: Mr M J McCusker QC & Ms B A Ayling
Respondent: Mr M Mischin
Solicitors:
Appellant: Legal Aid WA
Respondent: State Director of Public Prosecutions
Case(s) referred to in judgment(s):
Australian Steel & Mining Corporation Pty Ltd v Corben [1974] 2 NSWLR 202
Brown (1984) 79 Cr App R 115
Bruce v The State of Western Australia [2006] WASCA 236
Chew v The Queen (1991) 4 WAR 21
Chew v The Queen (1992) 173 CLR 626
Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627
Environment Protection Authority v Sydney Water Corporation Ltd (1997) 98 A Crim R 481
Gould v Vaggelas (1985) 157 CLR 215
Hancock [1996] 2 Cr App R 554
Henville v Walker (2001) 206 CLR 459
Holland (1993) 68 A Crim R 176
Infirri (1981) 5 A Crim R 132
KBT v The Queen (1997) 191 CLR 417
Lloyd v The Queen (1995) 15 WAR 117
M v The Queen (1994) 181 CLR 487
MacKenzie v The Queen (1996) 190 CLR 348
Mathews v The Queen (2001) 24 WAR 438
More (1988) 86 Cr App R 234
Nicholas v Thompson [1924] VLR 554
R v Agbim [1979] Crim LR 171
R v Bartlett [1996] 2 VR 687
R v Lawrence [1982] AC 510
R v Mead [2002] 1 NZLR 594
Rabey v The Queen [1980] WAR 84
Samuels v Western Australia (2005) 30 WAR 473
Walsh (2002) 131 A Crim R 299
STEYTLER P: The appellants in these four appeals, Mr Clifford Mitchell ("Mitchell") and Mr Peter Fermanis ("Fermanis") were tried together with a third man, Mr Ronald O'Connor ("O'Connor"), on six counts of fraud. Mitchell and Fermanis were convicted on all counts on 16 September 2005. O'Connor was acquitted on all counts. On 28 October 2004 Fermanis was sentenced to concurrent terms of 1 year and 4 months' imprisonment on each count. On the same day Mitchell was sentenced to concurrent terms of 2 years' imprisonment on each count. Both were made eligible for parole. Each of them has appealed against his convictions and also against the sentences imposed.
Circumstances giving rise to the charges
Each of the fraud charges arose in relation to the funding of the purchase of the Katanning Unit Hotel ("hotel"). The hotel was purchased by Pridecrest Pty Ltd ("Pridecrest") from Ness Holdings Pty Ltd ("Ness Holdings"). The directors of Pridecrest were then Michael and Maureen Doyle. They had earlier sought advice from Mitchell, who was a business adviser. They wanted assistance in restructuring their finances. They told Mitchell that they wanted to buy and run a country hotel. Mitchell told the Doyles that he could assist them with finding a suitable hotel and by raising the necessary financial resources for its purchase. He told Mr Michael Knight ("Knight"), a real estate agent with whom he shared office space, that the Doyles were looking to purchase a country hotel and referred Mrs Doyle to him.
The Doyles also made their own inquiries. They discovered that the hotel was for sale. A brochure had been prepared in respect of it by a business broker, Mr Raymond Pitcher ("Pitcher"). Mrs Doyle obtained a copy of the brochure from Pitcher. It recorded that the hotel was "averaging 11 kegs per week and growing". The purchase price was $800,000. Mrs Doyle spoke to Mitchell about the hotel after inspecting it at some time during August or September 1997.
O'Connor, who was a licensed valuer, was asked by Mrs Doyle to provide a valuation of the hotel. He inspected the hotel in about October 1997 with Mitchell. Also, Mitchell approached Fermanis, a finance broker, in relation to raising finance for the purchase of the hotel.
O'Connor produced a draft valuation in October 1997. This valued the hotel at $1,502,222. The valuation was based on projected trading figures. On 24 October 1997, Mitchell faxed part of the draft valuation to Fermanis. By return fax, Fermanis told Mitchell that a valuation based upon projected results was not acceptable. He said that the hotel should be valued on the basis of its current trading. He also said that lending would be "on this basis of current trading" (emphasis in original). He said that the lending ratio would be 60 per cent of value.
On 27 October 1997 O'Connor completed a valuation based on the hotel's current trading figures. This valued the hotel (encompassing the land and the business, inclusive of stock) on a "walk‑in, walk‑out" basis at $1,500,000. That figure was said to represent "a value around below replacement cost of the existing structure".
On 1 November 1997 Pridecrest entered into two written agreements. The first was for the purchase of the hotel land for $583,000. The second was for the purchase of the hotel business for $252,000. At some stage the purchase price of the land was increased by $75,000 to $658,000 when an additional strip of vacant property was added to the land sold. Consequently, the total price to be paid for the hotel, after the addition of the extra strip of land, was $910,000.
In about mid or late November 1997 O'Connor revised his valuation to take account of the extra strip of land. The revised valuation report suggested that the additional vacant land could be developed commercially and that it was proposed to create additional motel units on the site. Based upon this proposal, the revised report said the vacant land was "considered to have a current market value of $100,000". The "current fair market value" of the hotel, including the vacant land, was said to be $1,600,000.
A copy of the revised valuation report was given to Fermanis. He set about arranging finance for the purchaser. He posted a copy of the revised valuation to potential investors. So far as they are relevant, the covering letters and enclosed reports appear to have been sent between 2 January 1998 and 21 January 1998. He arranged for six investors ("investors") to lend money to Pridecrest in exchange for a first mortgage over the hotel. They advanced a total of $992,000 to Pridecrest. However, there was deducted from that sum an amount equal to one year's interest at a rate of 12 per cent per annum. This interest was payable to the investors in advance. Consequently, the total amount of money made available to Pridecrest, after the deduction of the interest payments, was $872,960. This left a shortfall in the funds needed to satisfy the purchase price and other disbursements to be paid on settlement. In order to cover this shortfall, Ness Holdings agreed to provide vendor finance in an amount of $180,000. This was secured by a second mortgage over the property.
Settlement in respect of the purchase of the hotel was effected on 29 January 1998. The Doyles took possession on the following day. The hotel soon ran into financial difficulties. Mrs Doyle, who had managed the hotel, left it on 29 June 1998 and did not return. Pridecrest went into voluntary administration and was subsequently placed in liquidation. The hotel was ultimately sold, in April 1999, for around $320,000.
The six charges of fraud that were brought against each of Mitchell, Fermanis and O'Connor, related to the money lent to Pridecrest by the investors. Each charge related to the money lent by one of the six investors. The charges were all framed as follows:
"Between 30 November 1997 and 31 January 1998 at Perth and elsewhere Peter Fermanis, Clifford Wilbur Mitchell and Ronald Graeme O'Connor, with intent to defraud, by deceit or fraudulent means gained a benefit, namely [amount of the loan from that particular investor], for Pridecrest Pty Ltd."
Particulars of the fraud charges
Prior to the trial, the prosecutor provided particulars of the charges in a letter dated 7 June 2005. That letter alleges, amongst other things, that:
"Mitchell, O'Connor and Fermanis each contributed, either directly or indirectly, to the making of a representation to each complainant … that the total amount of money being loaned to Pridecrest for the purchase of the … [hotel] was about 62% of the true market value of the … [hotel] ("the Representation").
The Representation was made through a combination of the communication to each complainant of written documents and oral statements."
The particulars go on to allege a number of false representations said to have been made by Fermanis to the investors either orally or in writing.
The prosecutor's opening and further particulars
The trial commenced on 31 August 2005. In opening, the prosecutor said (transcript 211 ‑ 212):
"In choosing to invest their money into that deal … [the investors] relied upon Fermanis's status, his professionalism, as a finance broker … They also relied on several things that he told them about the hotel and about the people purchasing it that persuaded them that the investment that they were entering into was a prudent one and a low risk one.
Among the things that they relied upon, of course, was the valuation that had been prepared by O'Connor saying that the current fair market value of the hotel and business was $1.6 million. That meant that their $992,000 was well covered by what the value of the hotel and the business were … but there were also several other things that he didn't tell them or that they didn't know or that he misled them about.
One was that the $992,000 that they were all collectively sinking into the deal was more than 100 per cent of the purchase price of the hotel, that the valuation of $1.6 million … was grossly inflated, that some of what Fermanis had told them about the hotel's trading and the number of kegs, for example, that it would turnover on average in a week was wrong, that the Doyles in fact had no experience in running a hotel and in fact the Doyles were in a poor financial position, so poor a financial position … that the seller of the hotel was having to provide vendor finance to the tune of $180,000, to allow the deal to go through."
Counsel for O'Connor, having heard this opening, submitted that the case had been opened on a basis different to that particularised. He pointed to the fact that, in his opening, the prosecutor had said that the deceit or fraudulent means allegedly made use of by the three accused men included omissions on their part, when the particulars had alleged only positive actions or assertions. The trial Judge ordered the prosecutor to provide further particulars by the following morning.
The prosecutor did so. These read as follows:
"'Deceits or fraudulent means' include:
(i)the valuation by the accused O'Connor;
(ii)representations that the $992,000 being loaned to Pridecrest for the purchase of the … [hotel] was about 62% of the 'current fair market value' of the property and business, rather than more than 100% of the actual purchase price …
(iii)concealment from investors that the valuation of $1.6M was greatly inflated (something like twice the real value of the property) …
(iv)misrepresentations, or failures to inform investors of the true position, concerning the hotel's trading (for example, the number of kegs consumed per week) …
(v)misrepresentations, or failures to inform investors of the true position, concerning the Doyles' experience in running a hotel, and the soundness of their financial position …
(vi)failure to inform investors that in order for Pridecrest [to] buy the hotel, the seller was extending credit to Pridecrest in the sum of $180,000, in return for a second mortgage …
(vii)failure to inform investors that a significant amount of the moneys advanced by them would be used to meet a variety of disbursements at settlement, including … 'brokerage fees', and 'irrevocable debt' in favour of … Mitchell, and that pre‑paid interest would be [paid] out of the total amount borrowed … "
The prosecutor had not mentioned his intention to rely upon the failure alleged in particular (vii) in the course of his opening (although the particulars originally provided had mentioned this alleged failure as a factor demonstrating an intention to defraud on the part of the appellants). Nor, in the course of opening, did the prosecutor say how he intended to link the alleged misrepresentations or omissions on the part of Fermanis to Mitchell. He said, in this last respect, only that each had "played a part in deceiving or dishonestly inducing the investors to put their money into the purchase of the … [hotel] by Pridecrest" (transcript 212). He also said that Mitchell "worked to enable the Doyles to purchase the hotel and put them in contact with O'Connor and instructed Fermanis in terms of gathering finance from the private investors" (transcript 212). He did not say what acts or omissions were alleged to constitute deceit or fraudulent means on Mitchell's part.
The prosecutor's closing address
In closing, when discussing the element of "deceit or fraudulent means", the prosecutor said:
"[The investors] were told, for example, by Fermanis, a turnover of kegs per week … What they weren't told was that so far as the sales brochure was concerned, it was only about 11 kegs a week. What they weren't told [was that], as far as … [the vendor] was concerned, it was less than that. They were told, either by way of explicitly saying that the … [Doyles] were experienced in hotel management, they were at least led to believe ‑ whether by an act of telling of a lie or by a half truth or by a concealment ‑ that the Doyles had some experience in business, were good, sound business people. They were told that they had the means to go guarantors [as they had done] for the amount that was borrowed. Well they didn't …
They were told a number of other things. They were told, or at least made to believe, that theirs would be the only security over the land. They weren't told ‑ even though Fermanis admits now that he knew about it ‑ by him that, in fact, there was going to be a second security over the land, a second mortgage … "
These allegations correspond broadly with those made in particulars (iv), (v) and (vi).
Next, the prosecutor said:
"[The investors] weren't told … what the purchase price of the hotel actually was. Now, whether … they were told that the purchase was $1.6 million, or whether it was simply that they were led to believe it because Fermanis didn't tell them what the purchase price was, they fell into the trap, the assumption if you like, that they were lending what was needed to purchase ‑ as opposed to more than what was needed to purchase … "
This appears to address the allegation in particular (ii), albeit imprecisely.
Then, the prosecutor discussed the valuation. He said that the value of the hotel was significantly less than the figure of $1.6 million arrived at by O'Connor. He suggested that it was no coincidence that the amount that could be borrowed, using the required lending to value ratio, corresponded with the amount needed to purchase the property.
When he came to discuss the role played by Fermanis, the prosecutor said that Fermanis had not revealed "certain things". He went on to say:
"I've already mentioned the disparity between the actual and the purported keg rate, and it doesn't much matter where the information comes from; whether it was through the alleged liar Doyle or through nice Mr Mitchell. It doesn't matter what the source of information was."
The prosecutor said that Fermanis "might" have made inquiries, to protect the interests of his clients, before telling the investors that the Doyles were "good experienced business people", or words to that effect, and before telling them that the Doyles were willing to put their house up as security without adding that the house was heavily mortgaged (propositions which, of course, fall well short of establishing a fraud of any kind). He said that some of the investors had said that Fermanis told them, or had at least led them to believe, that Pridecrest was borrowing 62 per cent of the sale price rather than 62 per cent of the valuation. He said that Fermanis had not bothered to tell the investors about the second mortgage when he found out about it (a proposition which, again, falls short of one of fraud). He also said that Fermanis had not even bothered to look at the sales brochure in order to see what was the property that his clients were going to be "lending against" (yet again, falling short of an allegation of fraud). He mentioned that Fermanis had not found O'Connor's first valuation to be satisfactory and that he had asked for "certain things" to change. He questioned whether Fermanis could have believed in the accuracy of the valuation when "nothing much" in it had since been altered.
When discussing Mitchell's role, the prosecutor described him as "the spider at the centre of the web" and "the dealmaker". He said that "it" had all been done through him. He went on to say:
"At the very least Mitchell provided the information that was necessary to Fermanis and O'Connor. By implication, from the way things turned out and from the evidence available, he would have to have seen that this happened and to keep it on rails. If he didn't, it wouldn't have come to the end that it did. It wouldn't have happened. They had to have been provided with some sort of assurance and some sort of information in order to do their bits and to coordinate their bits, so that O'Connor didn't do something that would cause Fermanis's end to fail and Fermanis didn't do something that would cause O'Connor embarrassment, such as people asking questions about the valuation, and that everything meshed. Only one person was in the position to do that. The man who had the client that was the purchaser."
The trial Judge's summing up of the prosecution case
In his summing up, the trial Judge told the jury that the State did not allege that O'Connor's valuation was "faulty" or "negligently drawn" or "incorrect". Rather, he said, the State's allegation was that the valuation was a sham, in the sense that it "was not in truth a valuation" but was "dressed up to look like a valuation in order to enable funds to be advanced to Mrs Doyle" (transcript 1237).
When dealing with the State's case against Fermanis, the trial Judge told the jury that there were three limbs to that case. The first was that "Fermanis sent the valuation to each investor knowing the valuation to be false or believing the valuation to be false" and that the valuation was "indeed false, not in the sense of being inaccurate but in the sense of really being a pretend valuation" (transcript 1248 ‑ 1249). He went on to say:
"It's alleged that by sending the valuation to a particular investor Fermanis was representing the valuation as being something that was true. It's alleged that a benefit was gained to Pridecrest and … that the conduct of Fermanis in sending out the valuation to a particular investor was a material cause of the gain of that benefit. And … it's alleged that Fermanis had an intent to defraud, that is, it's alleged that in so acting, Fermanis was guilty of deceit and that he practiced that deceit with the intention of inducing the investor to provide the benefit.
Now, if you were satisfied as to all of those things you would be satisfied, I think, that Fermanis was guilty of deceit. If you were not satisfied as to all or some of those things, it would follow that you would not be satisfied that Fermanis was guilty of deceit."
The trial Judge identified the second limb (transcript 1250) as being that "Fermanis gave other information to the investors about the transaction, about the Doyles, about the hotel which was false" and which he knew or believed to be false. He referred, in particular, to the number of kegs the hotel was said to have turned over each week, to the Doyles' experience in running hotels and to the Doyles' financial position.
As to the third limb, he said (transcript 1250 ‑ 1252):
" … [T]he State alleges that Fermanis refrained from giving information to the particular investor in each case and that by refraining from giving information to the investor, that that made what the investors were told false and … had the effect of amounting to … fraudulent conduct and in that regard the State … relies in particular on allegations that Fermanis was aware of the purchase price at the time the valuation was sent to each particular investor and that by not revealing the purchase price, Fermanis was acting in a way which an ordinary decent person would regard as dishonest.
…
Fermanis, of course, says that he was not aware of the purchase price at the point the valuation was sent out. It's for the State to satisfy you that he was aware of the purchase price at that time and unless you are satisfied he was aware of the purchase price at that time then that allegation could not … be made good. Similarly … the State says that Fermanis was aware that a second mortgage was going to have to be obtained by the Doyles and that Fermanis refrained from giving that information to the investor in each particular case and that by sending out the valuation with the accompanying letter in circumstances where he was aware that a second mortgage would have to be obtained by the Doyles that made the conduct fraudulent."
He went on to say (transcript 1252), in this last respect, that:
"Unless you were satisfied that … [Fermanis] was aware of the second mortgage prior to the valuation going out of course, this matter would not arise. If you were satisfied as to that and if you were satisfied that to refrain from advising the investors in the circumstances of the intended taking out of the second mortgage when the valuation was sent out and the letter was sent out was conduct which an ordinary decent person would regard as dishonest, that is that it was fraudulent conduct, and if you were satisfied that as a result of that fraudulent conduct that was a material cause of the gain of the benefit and if you are satisfied that it was practiced by Fermanis with the intention of inducing the particular investment [sic] to provide the benefit it would follow with [sic] those elements would have been made out."
The trial Judge also told the jury (transcript 1256) that the prosecutor had said that Fermanis ensured that the transaction went ahead; that he would have received nothing had it not; that it beggared belief that he did not know the purchase price; that anyone with Fermanis's experience would at least suspect that things were not as they appeared; that Fermanis was either grossly negligent or did not want to turn his mind to reality; and that Fermanis knew the valuation was false.
When dealing with the case against Mitchell, the trial Judge identified only two limbs. The first of these related to the valuation. He said, in this respect (transcript 1252 ‑ 1253), that the State's case against Mitchell was that:
"[He] knew or believed the valuation to be false, that the valuation was false, that to give the valuation to Fermanis for the purpose of having him transmit it to investors amounted to a representation indirectly by Mitchell to the investors of [sic] the valuation, the false valuation, is something that was true and that his conduct in giving it to Fermanis for that purpose was a cause of the gain of the benefit to Pridecrest and that by doing that Mitchell had the intention of inducing the particular investor to provide a benefit and that a benefit was gained."
As to the second limb, the trial Judge said (transcript 1254):
"The second basis on which the State puts its case against Mitchell … is … that Mitchell gave certain other information to Fermanis, in particular in relation to the number of kegs sold per week and the ranking of the hotel. As I understand the State's case it's alleged that Mitchell gave that information to Fermanis; that Mitchell knew that information was not true and he gave it to Fermanis knowing it to be false or believing it to be false, and that by doing that he had the purpose that it go forward before the investors and that it was therefore a representation by Mitchell indirectly of those things which were false as something which was true and that his conduct in doing that was the cause of the gain of the benefit, and in doing that he had an intention of inducing the particular investor as a result to provide a benefit."
The trial Judge went on to tell the jury (transcript 1256) that the prosecutor contended that Mitchell was at the centre of the deal, that he had communicated with Fermanis, that he had received at least $30,000, that he had provided information to O'Connor and Fermanis and that he "kept the deal on the rails and made sure everything meshed".
Grounds of appeal against conviction
In each appeal against conviction there are three grounds of appeal. In addition, each appellant has sought the leave of the Court to add an additional two grounds.
In each case ground 1 contends that the verdicts were unreasonable. This is said to be because, insofar as they might have rested on the representations as to the valuation of the hotel, they were inconsistent with the acquittal of O'Connor and because there was no evidence upon which a reasonable jury, properly directed, could have convicted each appellant on the basis of the other "deceit or fraudulent means" particularised by the prosecutor on the second morning of the trial.
The second ground of appeal in each case is that the jury's verdict cannot be supported having regard to the evidence. The particulars provided in support of this ground essentially contend that the verdicts of guilty could not have been based on particulars (i), (ii) or (iii) because this would make the verdicts inconsistent with the acquittal of O'Connor and that there was insufficient evidence to support guilty verdicts on the basis of any of particulars (iv), (v), (vi) and (vii). In addition, in his appeal against conviction Fermanis contends that, if O'Connor's valuation was a sham, there was no evidence that he (Fermanis) knew it to be so.
The third ground in each appeal is that the jury's verdict is unsafe and unsatisfactory and that there was a miscarriage of justice. The appellants contend by way of particulars that, in his directions to the jury, the trial Judge failed clearly to identify the evidence or the lack of evidence relating to each of the particulars provided by the prosecutor, other than in respect of the valuation. This is said to have resulted in an unfair trial. Each of the appellants raises an additional point. Fermanis contends that, the trial Judge having formed the view that there was insufficient evidence to enable the jury to return a verdict of guilty against him by reason of the particulars other than that relating to the valuation, erred in not directing the jury that they could not return a verdict of guilty against him based on the evidence pertaining to those other particulars. Mitchell contends that there was a miscarriage of justice because it was never put to him in cross‑examination that he knew O'Connor's valuation to be false or a sham.
The two grounds of appeal that each appellant seeks to add by way of amendment read as follows:
"4.The learned trial judge failed to direct the jury that it needed to be unanimously agreed in finding that at least one of the alleged misrepresentations was false and known by the accused to be so and made with an intention to defraud.
5.The learned trial judge failed to direct the jury that before it could convict the accused of knowingly making a false representation with an intention to defraud, it must be satisfied that it was a material representation relied on by the complainant."
I propose to deal first with ground 4.
Ground 4
In order to sustain a conviction the State is required only to establish the essential elements of the offence charged. It is not required to prove all provided particulars: Environment Protection Authority v Sydney Water Corporation Ltd (1997) 98 A Crim R 481 at 484 ‑ 485. The offence of fraud is constituted by s 409(1) of the Criminal Code (WA) which provides that:
"(1)Any person who, with intent to defraud, by deceit or any fraudulent means ‑
…
(c)gains a benefit, pecuniary or otherwise, for any person;
…
is guilty of a crime … "
Clause 5(2) of Sch 1 to the Criminal Procedure Act 2004 (WA) (given effect by s 85 of that Act) provides that it is sufficient to describe an offence in the words of the written law that creates it. Clause 6(10) of Sch 1 provides that a "charge that alleges an offence involving deceit, fraud or dishonesty … need not allege the details of the deceit, fraud or dishonesty". These provisions consequently permitted the broad generality of the terms in which each count against the appellants was framed, although s 131(3) of the Criminal Procedure Act provides that a court may order a prosecutor to give the accused further particulars of a charge.
I have earlier said what were the particulars which were ultimately provided, on the second day of the trial. I have also outlined the manner in which the prosecutor put his case in closing and that in which the trial Judge summarised the prosecution case. It is plain, from what I have said, that the jury was left with a number of different acts or omissions which, the prosecutor contended, could satisfy the element, in each count, of "deceit or any fraudulent means". However, although the jury were told that any verdict must be unanimous, they were not told that they had to be unanimous in their agreement as to the particular act(s) or omission(s) found by them to amount to deceit or fraudulent means in each case.
Since the hearing of the appeal, each of the parties has filed supplementary written submissions in respect of this ground. Both appellants submit that the acts or omissions particularised by the prosecutor as amounting to deceit or fraudulent means go to an essential element or ingredient of the crime charged, with the consequence that the jury could not convict unless they were agreed upon the particular act(s) or omission(s) that constituted that element. They contend that, because the jury was not directed in those terms, the verdict must be regarded as uncertain.
On the other hand, the prosecutor contends that the prosecution did not proceed upon the basis that each of the particulars gave rise to a separate offence. Rather, he contends that the particulars "illustrated a course of conduct that the prosecution alleged induced the investors to supply the alleged benefit". He also suggests that the particulars were akin to the overt acts of a conspiracy, some of which may, and some of which may not, be established by the evidence. He says that these particulars "merely identified the evidence that would be pointed to by the prosecution as demonstrating deceit or fraudulent means that induced the complainants to give a benefit to Pridecrest". He argues that they "were not elements of or an element of the offences charged" and that there "was no requirement that the jury be directed that all must be satisfied of one or more of the particulars to find a deceit or fraudulent means".
Because the issue raised by this ground (which was one of considerable importance to the possible outcome of the trial) plainly satisfies s 27(2) of the Criminal Appeals Act 2004 (WA) (as to which see Samuels v Western Australia (2005) 30 WAR 473), and because the respondent has had an opportunity to make full submissions in respect of it, I would grant leave to each of the appellants to amend his grounds of appeal to add this ground.
The issue raised by ground 4 has been considered in a number of cases in England, Australia and New Zealand. I will start with three English cases.
In R v Agbim [1979] Crim LR 171, the appellant was convicted on six counts of dishonestly procuring the execution of a valuable security by deception. He appealed to the Court of Appeal. Lawton LJ, delivering the judgment of that court, said (in an extract quoted in the later case of Brown (1984) 79 Cr App R 115 at 118):
"When a jury retire to consider their verdict they must decide whether on the evidence put before them the charge or charges in the indictment have been made out … Each juror … does not have to take the same view about the details of the evidence as every other juror. One juror may accept one piece of evidence; another may reject it. What they all have to be agreed about, if the verdict is unanimous, is that the prosecution have proved the charge or charges. The jury in this case said they were sure. We can see no reason for quashing any of the verdicts. The judge was not at fault in omitting to direct the jury that in respect of each count they all had to be agreed about at least one of the pieces of evidence relied upon by the prosecution to prove that the claim forms were not correct."
In Brown, the appellant had appealed against his conviction on four counts of fraudulently inducing the investment of money and one count of attempting to do so. Each count contained particulars of a number of different statements relied on by the prosecution as constituting the inducement. The trial judge, in answer to questions from the jury, had said that it did not matter if some of the jurors were satisfied that one of the various statements was made out and others were not satisfied about that statement but were satisfied that another was made out, as long as all were satisfied that there was a dishonest inducement made and that it operated upon the mind of a person to whom it was made and caused him to act in a way that he did. The Court of Appeal found that this was a misdirection. It held (at 117) that it was a fundamental principle that, in arriving at their verdict, the jury must be agreed that every single ingredient necessary to constitute the offence had been established. It also held that the false statement was an essential ingredient.
The court in Brown did not regard Agbim as being authority for any contrary proposition, saying (at 117) that that case was authority for the proposition only that the jury need not be agreed as to the parts of the evidence which led them to the conclusion that the ingredients of the offence had been made out. The judges, in the course of discussing the first count in Agbim, said (at 118):
"The false statement was that £1383.20 had been paid when it had not. The other false statements were the means by which the accused had sought to convince the National Health Authorities of the truth of that statement. They were themselves statements, but not the statement relied upon as an ingredient in the offence. They were matters which on investigation would help to prove the falsity of the figure of £1383.20, and also go to prove knowledge and the dishonesty of the accused."
The court acknowledged that one of the counts in Agbim had contained two allegations, but said, in this respect (at 119):
"However, the jury were not told, as the jury were in the present case, that they could arrive at their verdict even though they differed as to the statement in the particulars on which they relied as having been the inducement. The judge directed the jury that they did not have to be satisfied that both statements were proved, but in no way indicated that the jury could differ as to the statement if they relied upon only one."
The judgment in Brown concluded with the following summary of relevant principles:
"1. Each ingredient of the offence must be proved to the satisfaction of each and every member of the jury (subject to the majority direction). 2. However, where a number of matters are specified in the charge as together constituting one ingredient in the offence, and any one of them is capable of doing so, then it is enough to establish the ingredient that any one of them is proved; but (because of the first principle above) any such matter must be proved to the satisfaction of the whole jury. The jury should be directed accordingly, and it should be made clear to them as well that they should all be satisfied that the statement upon which they are agreed was an inducement as alleged."
The principles outlined in Brown were elaborated upon by Neill LJ, Jupp and Hodgson JJ in More (1988) 86 Cr App R 234 at 244, as follows:
"It seems to us … that it will only be necessary to give a direction on the lines set out in Brown in the comparatively rare cases where it emerges at some stage in the course of the trial, or as the result of a question asked by the jury, that there is a risk of disagreement between the members of the jury as to whether a particular ingredient of the offence has been proved. In Brown itself the direction became necessary because the jury's question focussed attention on the fact that some members might be satisfied as to one of the statements alleged to have been made, whereas other members might not have been satisfied as to that statement but satisfied as to one of the other statements alleged. The Court of Appeal accordingly laid down that in such a case the jury should be directed as to the necessity of unanimity. Such a direction will also be necessary where there is a discernible risk in, for example, a case involving obtaining property by deception by a number of representations, that the jury might fail to be unanimous as to the making, falsity and efficacy of at least one of the representations. But, in our judgment, it is important that the scope of the ruling in Brown should not be exaggerated … "
In the subsequent appeal to the House of Lords, the court (Lord Keith, Lord Elwyn‑Jones, Lord Brandon, Lord Templeman and Lord Ackner) found it unnecessary to consider the correctness of the Court of Appeal's decision in this respect, saying (at 252) that the rival contentions advanced by counsel in that respect were irrelevant to the determination of the appeal. However, the court went on to say (also at 252):
"Clearly each ingredient of an offence must be proved to the satisfaction of each and every member of the jury (subject to the majority direction). It is equally essential that a jury be directed in a manner that is easily comprehensible and devoid of unnecessary complications. Whether or not a particular direction adequately expresses to the jury the obligation of the prosecution to prove to the jury's satisfaction each ingredient of the offence must depend essentially upon the precise nature of the charge, the nature of the prosecution's case and the defence and what are the live issues at the conclusion of the evidence."
In this State, the issue has been considered on a number of occasions.
In Infirri (1981) 5 A Crim R 132, the appellant was convicted on an indictment of attempting to obtain a sum of $66,227 from a company with intent to defraud "by falsely pretending to an agent of [that company] that a quantity of jewellery wholly owned by him and valued at $66,227 had been stolen". The offence charged was one under s 409(1) of the Code, which read:
"Any person who by any false pretence or by any wilfully false promise or partly by a false pretence and partly by a wilfully false promise, and with intent to defraud, obtains from any other person anything capable of being stolen … is guilty of a crime … "
A false pretence was defined in s 408 of the Code as meaning any representation made by words or otherwise of a matter of fact which was false and which the person making it knew to be false or did not believe to be true. As will be apparent from the terms of the indictment the false pretences relied upon by the Crown were misrepresentations to the effect that the appellant owned a quantity of jewellery worth $66,227 and that the jewellery had been stolen. On an appeal against conviction, Burt CJ (Wallace and Smith JJ agreeing) said (at 134):
" … two or more pretences can … be laid in an indictment charging an attempt and it would be enough to sustain a conviction if one such pretence made with the necessary intent be proved. So in this case the appellant would be rightly convicted if the jury found each statement relied upon to be false and each made with the necessary intent or if they found one or other of them to have been false and to have been made with the necessary intent. But the question is, would it be enough to sustain a conviction that some but not all of the jury found one and only one of the statements to have been false and made with the necessary intent and the remainder of the jury found the other statement relied upon, and only that statement, to have been false and to have been made with the necessary intent.
Upon that question there is said to be no direct authority but the answer to it is, I think, clear. The cases say that it is enough to sustain a conviction if the making of one false pretence and for the purposes of the completed offence reliance upon it be 'proved' and that, I think, in the case of a trial by jury can only mean proved to the satisfaction of the jury. If the jury at the end of the day do not join in finding a particular false pretence to have been made then the making of that false pretence, as it seems to me, has not been 'proved'. The making of the false pretence is an element of the offence charged and proof of that element has not been achieved unless all members of the jury or, in the case of a majority verdict, ten of the jury join in saying so. It is different, of course, when the fact to be proved is not an element of the offence charged. So, to take an illustration from a recent case (Attorney-General's Reference No 4 of 1980 [1981] 2 All ER 617) if the element of the offence of manslaughter is that the accused caused the death of the deceased that element is 'proved' if the jury are all agreed that he caused the death but are not agreed upon or are unable to decide upon by which of two acts he did so."
In Chew v The Queen (1991) 4 WAR 21, the appellant had been convicted of four offences of making improper use of his position as chairman of directors to gain an advantage for himself and to cause detriment to the company contrary to s 229(4) of the Companies (Western Australia) Code ("Companies Code"). On appeal, it was contended that the convictions were uncertain because "the prosecution relied on numerous detriments and numerous advantages to support each count". The trial judge's directions left it open to different members of the jury to come to different conclusions as to which particular benefits and detriments were proved. The majority (Malcolm CJ and Murray J, Wallwork J dissenting) found that the trial judge had made no error in this respect.
Malcolm CJ said (at 39 ‑ 40) that the gaining of an advantage or the causing of a detriment was an element of the statutory offence rather than merely a matter of particulars. However, he went on to say that the facts, matters or things constituting the advantage or detriment were a matter of particulars. He compared an advantage or detriment to damages in the context of the law of tort, saying that, while damages are an essential element in a claim for negligence, the nature of the damage "is a matter for particulars which may be made up of a series of items". He went on to say (at 44):
"If the observations of Burt CJ in Infirri … were to be applied it would be said, if the jury at the end of the day do not join in finding a particular advantage or detriment to have been the purpose of the improper use of position then the relevant advantage or detriment has not been proved. It would also be said that in the circumstances it is not possible to say which of the various advantages or detriments alleged were found by the jury to have been proved.
In my opinion, however, the element sought to be proved in the present case is by nature one capable of being satisfied by different particulars as is the cause of death in manslaughter. It might be objected that death is a result and that single result may be caused by different acts whereas advantage or detriment is the result itself and that result must be identified by a specified particular. In my opinion the nature of the present offence is such that the relevant act is that which constitutes the improper conduct, such as authorising a payment to be made for a collateral purpose. That act may have various consequences. It may result in a detriment to the corporation in that it is unable to perform three separate contracts with A B and C. In such circumstances, so long as all the members of the jury are agreed that an advantage was gained or a detriment caused, (or in this case both an advantage and a detriment) it is immaterial whether individual jurors found that this was so on a different factual basis from others, so that there was no unanimous agreement on the particular advantage or detriment or combination of them."
Murray J (at 65) concluded that it was irrelevant for the purpose of the offence defined by s 229(4) of the Companies Code what the precise result created by the offender's improper conduct was. He said that all that mattered was that the impropriety caused a result which might be described as an advantage or a detriment and (at 66) that the "description of a particular result as an advantage or a detriment … would truly be a particular of this element of the offence". As to the contention that the verdict was uncertain in respect of which detriment or advantage had been found to be proved in each case, he said (at 67 ‑ 68):
" … here the allegation properly understood is not in my view that each conviction might reflect the satisfaction of individual jurors about any one of a number of separate offences, but the complaint is that individual jurors might have found the one offence, of which they all convicted, to have been constituted by different factual circumstances comprising that element of the offence which I have categorised as the causing of a result of detriment or advantage.
Upon that view of the offence, neither is this a case of uncertainty such as might have arisen in Infirri … There … the Court concluded that the indictment alleged two separate false pretences ‑ two separate allegations of this element of the offence. And so it was held that, had the jury not been directed to find both pretences operative as an inducement for the obtaining, then the conviction would necessarily have been quashed upon the basis that it would have been uncertain whether the jury agreed upon one of the two false pretences alleged."
Then, having referred to the distinction drawn by Burt CJ in Infirri between facts which are elements of the offence charged and facts which are merely particulars, Murray J said (at 68):
"Transposing that reasoning into the context of this case, I have concluded that there is no question here that the jury were agreed upon the establishment of that element of the offence which was the gaining of an advantage or the causing of a detriment (or in fact both) as the jury were directed. And it matters not which particular facts individual jurors might have chosen from among those suggested as constituting this particular element.
This is a case where the matter may be tested in my view by reference to a matter which was debated, and attracted various comments from members of the High Court, in S v The Queen. One may test the position by imagining what answer a court would give, if a further indictment was now brought in respect of any particular act of improper conduct, which was the subject matter of each of the counts on this indictment, alleging at the same time a particular advantage or detriment as the result, whether one of those suggested as being open to the jury by the Crown in this case, or not. In my view, such a charge would be properly and inevitably met by the plea autrefois convict under the Criminal Code, s 17 in that it would be pleaded that the accused 'has already been tried, and convicted … upon an indictment on which he might have been convicted of the offence with which he is charged … '. The conviction on each count is quite general and comprehensive. Upon the indictment as framed, the question thus posed would permit of only one answer. And upon that basis in my view, there can be no suggestion of uncertainty in the conviction recorded."
Wallwork J, in his dissenting judgment, said (at 82) that it was essential for the offence charged under s 229(4) that it be proved that the alleged offender gained an advantage for himself or for any other person or caused a detriment to the corporation. He said that it could not be ascertained, in that case, whether the members of the jury agreed on any particular advantage or detriment with respect to any of the four counts in the indictment. He consequently considered that none of the four counts had been proved.
The case was appealed to the High Court: Chew v The Queen (1992) 173 CLR 626. However the argument in that court was confined to the question whether, as a matter of construction of s 229(4) of the Companies Code, the accrual of an advantage or the suffering of a detriment was an element of the offence or whether (as a majority in the High Court found) the section required proof only that the offender's action had the purpose of gaining an advantage or causing detriment.
Subsequently, in the third of this trilogy of Western Australian cases, Lloyd v The Queen (1995) 15 WAR 117, Malcolm CJ (Franklyn and Anderson JJ agreeing) reconsidered what he had said in Chew in the light of the High Court's decision. He said (at 127) that, insofar as what he had said in Chew was based upon the proposition that the gaining of an advantage or the causing of a detriment were elements of the offence created by s 229(4), that proposition must be regarded as having been overruled by the High Court. He went on to say (at 127 ‑ 128):
"In Chew [in the High Court] (at 634 ‑ 635) their Honours indicated that the trial judge:
' ... should have isolated the element of purpose as a distinct element of which the jury should be satisfied before it could bring in a verdict of guilty. However, what he said was sufficient to alert the jury to the fact that the improper use of position must be for the purpose or purposes prescribed.'
In this context, the word 'purpose' was used in the sense of intention, namely an intention to bring about a specific result, as the relevant element of the offence. In my view, where (at 634) their Honours referred to 'to gain ... an advantage' and 'to cause detriment' as 'elements' they were using that term in a different sense because their Honours had earlier made it clear that the gaining of the advantage or the causing of a detriment were not elements of the offence. What the High Court decision means is that there must be an intention to bring about a certain result. In my view, that result is a matter of particulars."
A related issue was considered by the High Court in KBT v The Queen (1997) 191 CLR 417. The appellant had been charged with the offence, under s 229B(1) of the Criminal Code (Qld), of maintaining an unlawful sexual relationship with a child. That offence involved proof that the offender had done an act defined to constitute an offence of a sexual nature in relation to the child on three or more occasions: s 229B(1A). Evidence was led of a large number of incidents amounting to offences of a sexual nature in relation to the child. However, the trial judge did not instruct the jury that they were required to be of the unanimous opinion that the appellant had done the same three acts, each constituting an offence of a sexual nature against the child. The respondent conceded that such a direction should have been given and the court found that the concession was correctly made: at 422 per Brennan CJ, Toohey, Gaudron and Gummow JJ, at 431 per Kirby J. Brennan CJ, Toohey, Gaudron and Gummow JJ also said (at 423) that if, in such a case, the prosecution simply led evidence of a general course of sexual misconduct "it is difficult to see that a jury could ever be satisfied as to the commission of the same three sexual acts".
Since then, the issue has been considered by the Victorian Court of Appeal in Walsh (2002) 131 A Crim R 299 at [39] ‑ [58]. In that case, the appellant had been convicted on one count of conspiracy to defraud and on three counts of perverting the course of justice. On the appeal it was submitted that the counts were "bad for duplicity or tainted by latent uncertainty; or, as each count alleged more than one discrete act by the applicant, that the jury were not directed sufficiently on the need for unanimity, and so the trial miscarried" (at [39]). The court (Phillips and Buchanan JJA, Ormiston JA agreeing), after mentioning the difficulty that may arise of discerning unanimity in the jury on what is critical to conviction went on to say (at [43]):
"In this context unanimity refers only to the need for the jurors to agree among themselves; it has nothing to do with whether the verdict is ultimately delivered by 12 jurors or by a majority, when such is permitted. The problem (if such it be) is different from that of duplicity in the charge and uncertainty in the verdict, in that both of those relate to there being more than one offence, either charged or proved. The question of unanimity can arise when only one offence is charged and only one offence is proved but the jury is presented through the evidence led with more than one route by which to determine guilt. The question which has then arisen, in a number of cases now, is whether the jury must be directed to be unanimous, not only in the verdict, but also in the route by which that verdict is reached."
After examining the cases, the court identified two currents of authority (at [45]). The first involved cases of murder, manslaughter and the like. In those cases, the court considered that the jury was obliged to have regard to the whole of the accused's conduct and to decide on the basis of it all, and from among a number of different possibilities, which of the elements of the offence charged are proved. The court gave as an example a case in which it was alleged that the victim was killed by the accused either personally or by an aide, the evidence leaving it unclear which, saying that in such a case it is enough if the jury agreed that it was one or the other (at [45]). The second current of authority identified by the court concerned crimes of dishonesty and, in particular, obtaining property by means of a false misrepresentation (at [51]). The court considered, amongst other cases, Agbim, Brown and More before arriving at the following conclusions (at [57]):
"To sum‑up the foregoing, it seems that the cases give rise to two situations at least (and if there be tension between them, this is not the case to resolve it, for it is only the second with which we are now concerned). The first is that exemplified by the cases concerning murder and manslaughter, where, when alternative legal bases of guilt are proposed by the Crown but depend substantially upon the same facts, there is no need for a direction on 'unanimity' about one or other or more of those bases, at least if they do not 'involve materially different issues or consequences' … The second situation is where one offence is charged, such as obtaining property by deception, but a number of discrete acts is relied upon as proof and any one of them would entitle the jury to convict. If those discrete acts go to the proof of an essential ingredient of the crime charged, then the jury cannot convict unless they are agreed upon that act which, in their opinion, does constitute that essential ingredient. In this type of case, much will depend 'upon the precise nature of the charge, the nature of the prosecution's case and the defence and what are the live issues at the conclusion of the evidence'. When the charge is obtaining property by deception by means of misrepresentation, the making of the misrepresentation has been regarded as an essential ingredient of the crime charged. It is otherwise, however, where the crime is conspiracy to defraud and the means agreed upon by the conspirators to achieve that end is the making dishonestly of false representations. The agreement to make any particular representation is not regarded as an essential element of the crime, but merely a path to arriving at the objective of the conspirators, namely, obtaining an advantage by fraud."
The court, in Walsh, was concerned with a charge of conspiracy to defraud. Consequently it held that the several representations relied upon were not an essential element of the offending but that dishonesty was, and the jury might be satisfied of dishonesty by accepting different pieces of evidence.
The New Zealand Court of Appeal considered the issue in R v Mead [2002] 1 NZLR 594. That case involved the offence of wilfully ill‑treating a child contrary to a provision of the Crimes Act 1961 (NZ). Thomas J held (at [70]) that the form that the ill‑treatment took was not an ingredient of the offence. He considered (at [73]) that the core of the offence lay in the cruelty and that the jury was required to be satisfied only that the child had been wilfully ill‑treated in a manner likely to cause unnecessary suffering, not that a particular form of ill‑treatment had occurred. He said (at [77]) that while particulars of ill‑treatment were required to be provided, they were not ingredients of the offence. He considered (at [82]) that the decision in Brown was distinguishable, but went on to say (at [90]) that, if necessary, he would be prepared to hold that that case was wrongly decided. It is obvious from his judgment that Thomas J relied heavily on the fact that various forms of physical and mental abuse had been established in evidence and that, in their assessment of whether or not the accused's conduct amount to ill‑treatment, individual jurors would focus on different aspects of his conduct (at [70] ‑ [71], [76], [87]).
Anderson J (at [103]) agreed generally with Thomas J. He also relied upon the fact that no particular form of ill‑treatment was required and upon the fact that, in the case of a broad offence of this kind, it was "inevitable that collective conclusions in respect of the essential elements will be informed by individual perceptions as to why a domestic regime will or will not be regarded as ill‑treatment or neglect, or will or will not have the potential for the proscribed harm" (at [108]). He distinguished Brown, saying (at [110]):
"In … [Brown] each 'particular' was an act which if proved in fact would constitute an essential ingredient. Each statement could support a discrete count and did not involve a conclusion as to a course of conduct. In my view the decision of the English Court of Appeal is responsive to the injustice of five alleged discrete offences being rolled up into one count in the indictment. An alleged course of cruelty, such as the present, is clearly distinguishable from that type of situation."
In her dissenting judgment, Elias CJ said (at [14] ‑ [20]):
"A jury must be unanimous as to the essential ingredients of the offence. This principle, so fundamental as to be generally assumed without need for authority, is affirmed in R v More (1987) 86 Cr App R 234 (HL) at p 252 per Lord Ackner. But it does not of itself answer the question: What are the essential ingredients upon which there has to be unanimity?
It is not necessary that jurors be in agreement about the evidence. They can arrive at the same point by different reasoning. But the essential points upon which they must agree are not simply a conclusion based upon the statutory criteria for the offence. The statutory elements will need to be anchored to the facts relied upon by the prosecution as the basis of liability and put in contention by the defence. The jury must be agreed upon the factual basis on which they find the accused guilty: R v Giannetto (1997) 1 Cr App R 1 (CA) at p 8 per Kennedy LJ and R v Carr (2000) 2 Cr App R 149 at p 158 per Lord Bingham CJ. Without such agreement there is no common foundation for the verdict.
…
What elements are essential to criminal liability in the particular case and require jury unanimity is a practical question, not a technical one. It turns not only upon the legal elements of the offence but also the factual elements essential to the cases put for the prosecution and defence:
'It is important to emphasise that the criteria [for establishing what are the "essential elements of the case"] are not directly concerned with the legal constituent elements of the offence charged but with the actual issues which are prerequisites to a guilty verdict in the particular circumstances of the individual case.' (R v Leivers and Ballinger [1999] 1 Qd R 649 at p 662 per Fitzgerald P and Moynihan J.)
In many cases, any particulars contained in the count are likely to assist in identifying elements in the case which are essential. Particulars ensure that an accused is given notice of the case against him …
Such requirements are essential to fair process. Where allegations of fact in a count identify the transaction or conduct upon which the prosecution bases the case for criminal liability and where they remain in issue at trial, they may normally be expected to identify essential ingredients of the case upon which jury unanimity will be required. But what is essential turns upon the substance of the case at the end of the trial.
…
Where a number of specific incidents or transactions or courses of conduct are included in the same count, there is a risk that all jurors will be satisfied of the proof of one, but not necessarily the same one. The risk of division is increased when the legal ingredients of the offence require additional assessments of degree or quality … "
Elias CJ considered (at [25]) that Brown was correctly decided. She did not understand the decision to have been doubted in subsequent cases. She held that a Brown direction should have been given. She said (at [28]):
" … It is an inadequate identification of the essential elements of the charge upon which unanimity is required to say that it is 'ill‑treatment'. That is a conclusion required as part of the legal definition of the offence of cruelty here in issue. The conduct specified constitutes (separately or in combination) the ill‑treatment alleged and is an essential element of the case in the same way that the statement specified in Brown constituted (separately or together with the other statements) the fraudulent inducement alleged. In each case, the members of the jury had to be unanimous as to the conduct or statement relied upon. It was open to the jury to find cruelty or fraudulent inducement on the basis of one or more of the particulars (provided that the agreed basis fulfilled the other statutory standards). But in each case there had to be a common foundation. Without it, the jury could not be unanimous and guilt to the criminal standard could not be attained."
That brings me back to this case. In order to convict the appellants, the jury had to be satisfied, amongst other things, that each of the alleged benefits conferred on Pridecrest was obtained by each appellant's deceit or fraudulent means. The jury could be satisfied of this last element by proof of any one of the particulars of deceit or fraudulent means that had been provided by the prosecutor. This, and the need for the jury to be satisfied that the deceit or fraudulent means was a material cause of the gaining of the benefit for Pridecrest and that each appellant had an intention to defraud when acting in that deceitful or fraudulent way, was generally explained by the trial Judge. However, as I have said, he did not direct the jury that, in each case, each juror had to base his or her decision to convict on the same particular or particulars of deceit or fraudulent means. The issue, of course, is whether he should have done so.
Some things are plain from the cases to which I have referred. Subject to s 114 of the Criminal Procedure Act, which provides in certain circumstances for a verdict by 10 or more of the jurors (the verdicts in this case were majority verdicts), the jury must be unanimous on all essential elements or ingredients of an offence: Infirri at 134; Chew at 37 per Malcolm CJ, at 68 per Murray J, at 82 per Wallwork J; Walsh at [57]; Brown at 117, 119. Also, it seems to me that there is a plain distinction between a factual conclusion as regards the existence of an essential element of an offence, on the one hand, and factual conclusions as regards the evidence which is led for the purpose of proving that essential element, on the other. Jurors do not have to be unanimous in relation to the evidentiary route by which they make a finding with respect to an essential element of the offence. Next, it seems to me that the essential elements of an offence are not necessarily determined merely on the wording of the statute creating the offence. That is to say, the fact that the statute requires, for example, that there be deceit or fraudulent means rather than any particular form of deceit or fraudulent means does not mean that it is not essential for the jury to agree upon the particular form of deceit or fraudulent means relied upon by the prosecutor. As Elias CJ put it in Mead (at [15]), in the extract quoted above, "The statutory elements will need to be anchored to the facts relied upon by the prosecution as the basis of liability". Finally, it appears from the cases that it will be relevant, in deciding the extent to which unanimity is required in a case run by the State on alternative bases, how the charge against the accused is formulated. That is apparent from the manner in which the court in Brown distinguished and explained the decision in Agbim. It also appears from what was said by Phillips and Buchanan JJA in Walsh (at [54]) as follows:
"In Price [[1991] Crim LR 465] the appellant was charged with dishonestly obtaining property by deception, in count 4 by making three specific representations, any one of which would have supported the offence charged. As in Brown, it was accepted that the jury had to be unanimous about at least one, and the same one, of the representations; but, as in Brown, that was no doubt because the charge itself appears to have included the making of a representation as an essential ingredient. At all events that was how the matter was approached … "
In this case, each charge does not identify any particular form of deceit or fraudulent means. As I have said, there was no need for this to be done: cl 6(10) of Sch 1 of the Criminal Procedure Act. However, the State was, quite properly, required to give particulars of the deceit or fraudulent means relied upon. As I have made plain, it then identified, in the particulars, a number of different deceitful or fraudulent means, proof of any one of which would suffice to satisfy that essential ingredient of the charge. There was consequently a number of routes by which that essential element of the offence could be established. In my opinion, these routes were not merely evidentiary. Rather, the fact to be found, namely the particular form of deceit or fraudulent means used, is an essential ingredient of the offence and the jury was required to be unanimous in finding that ingredient proved. Of course, that does not mean that they had to be unanimous in their acceptance of evidence which led to that finding. So, for example, each accused could not properly be convicted in circumstances in which the deceit or fraudulent means was found by six of the jurors to be representation A, and by the other six to be representation B. They had to be unanimous in finding either or both of representations A and B proved. However, each might rely upon different evidence in finding that representation proved.
Any other conclusion seems to me to be objectionable in principle. So, for example, in a case in which two different representations are relied upon, it seems to me that there would be a very real risk of injustice if a person could be convicted in circumstances in which each representation was found by half of the jury not to have been proved. While I recognise that there is some danger, also, in a system which permits individual jurors to rely upon different evidence in reaching their conclusion as to the making of a representation, it seems to me that the risk of injustice is much higher if the posited course should be regarded as permissible. (See, in this respect the commentary to the report of Agbim at 171 ‑ 172, in which, after giving as an example a case in which the indictment alleges 12 separate false statements and every juror is satisfied in respect of only one allegation with each allegation being disbelieved by 11 jurors, the author suggests that it would be a "travesty" to say that the jury, as opposed to each individual juror, was satisfied that the defendant was guilty of obtaining or procuring by deception. See also J C Smith, "Satisfying the Jury" (1988) Crim LR 335 at 335 ‑ 336.)
More importantly, perhaps, it seems to me that this conclusion is supported by the preponderance of authority. While it might be thought to be inconsistent with the holding in Chew (see Malcolm CJ at 44 and Murray J at 68 and cp Wallwork J at 82), it is plainly consistent with Infirri, Brown, More and Walsh. I should add, in passing, that I am in respectful disagreement with Murray J's suggestion in Chew (at 68, and see also Malcolm CJ at 45) that a question of this kind might be tested by asking whether or not a later charge, relying upon a different particular, would be met with a plea of autrefois convict. In my opinion, unanimity might be required in respect of a specific route to conviction in a case in which separate charges could not properly have been brought in respect of each route. As was pointed out in Walsh (at [43]), there is a distinction between the issue of latent uncertainty arising in a case in which evidence is led of more than one incidence of offending (and where the prosecutor could have charged two offences) and the question whether unanimity is required in a case in which the prosecutor puts forward alternative routes to conviction but in which the prosecutor could not have charged two offences. (There is, in this last respect, also a distinction between a case in which more than one factual basis for the crime charged is alleged, but the evidence establishes that, if it was not one it must have been the other ‑ in which event unanimity as regards the particular basis is not required ‑ and a case in which more than one factual basis is alleged but the evidence does not establish that one or other of them must have been present: see Smith at 344.)
That leaves the prosecutor's contention, mentioned earlier in these reasons, that the prosecution case was run upon the basis that the matters alleged in the particulars established a course of conduct by which the jury could be satisfied that each appellant had engaged in deceit or fraudulent means and that the particulars were consequently "akin to the overt acts of a conspiracy, some of which may and some of which may not be established by the evidence". In a conspiracy case the essential ingredient is the conspiracy to defraud and overt acts are particularised only for the purpose of identifying the acts upon which the prosecutor relies to invite the jury to infer that there was a dishonest agreement and that a particular defendant was party to it: Hancock [1996] 2 Cr App R 554 at 559 ‑ 560 per Stuart‑Smith LJ, speaking for the Court of Appeal; Walsh at [58] per Phillips and Buchanan JJA. However, no conspiracy was charged in this case and, for the reasons I have given, the prosecutor was obliged to prove one or other of the particular deceitful or fraudulent means alleged by the State in each case (see Infirri at 134; Walsh at [57]; KBT at 423). In any event, I would not be prepared to accept that the State ran its case in the manner suggested. Certainly, this was not the way in which the case was left to the jury by the trial Judge. He made it plain (without objection) that the State's case was based on a number of allegations in the alternative and that the jury could convict each appellant by different routes.
I am consequently satisfied that this is a case in which the trial Judge was required to direct the jury that in each case each of the jurors had to base his or her decision to convict on the same route or routes. Because that direction was not given, it seems to me to follow inevitably that the convictions are unsafe and should be set aside. I should add that there was, rightly, no submission on behalf of the respondent that this was a case for the application of s 30(4) of the Criminal Appeals Act 2004 (WA) (formerly the proviso to s 689(1) of the Criminal Code): see, in this respect, KBT at 424 ‑ 425, 433 ‑ 436.
The conclusion that ground 4 should be upheld raises the question whether there should be a retrial. It is consequently necessary for me to make some evaluation of grounds 1 and 2, as the strength of the case against each appellant is a relevant consideration in answering that question: Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627 at 630.
Ground 1
I have said that the prosecution case was that the valuation prepared by O'Connor was, to the knowledge of all three accused, a sham or, as the trial Judge described it, "a pretend valuation". That being so, and the jury having acquitted O'Connor on all counts, it seems to me to be plain that the jury could not have arrived at their guilty verdicts against the appellants upon the basis that the valuation was the deceit or fraudulent means by which each benefit for Pridecrest was gained. If the jury were not satisfied that O'Connor, as the person who prepared the valuation, knew it to be a sham it is difficult to see how they could have been satisfied that either appellant knew it to be so. Surprisingly, it was never put to either appellant that he knew that the valuation was a sham or even that he knew that it did not have a reasonable basis.
Counsel for the respondent suggested that the inconsistent verdicts might be explained upon the basis that the jury concluded that O'Connor knew that his valuation was a sham but was not aware that it would be used to defraud the investors. That could not be right. The valuation acknowledges that it had been prepared "for mortgage finance purposes". Also, O'Connor testified that he knew why his valuation was wanted by Mrs Doyle and that it was, in due course, likely to be shown to a lender or lenders (transcript 1124, 1145). Consequently, if he knew it to be a sham he must have known that it would be used to defraud investors.
Counsel for the respondent also suggested that the jury might have found that O'Connor had merely been negligent, but that the appellants had intentionally misused his valuation, knowing it to have been negligently prepared. However, the evidence did not establish that either appellant knew that the valuation had been negligently prepared. Nor was any suggestion of that kind ever put to either appellant. This conclusion was consequently not reasonably open to the jury.
Next, counsel for the respondent advanced the contention that the jury may have found that the valuation itself was not misleading but that the appellants nevertheless misused it. It is difficult to understand how that could be so. In any event a case of this kind was never advanced by the prosecutor at the trial or left with the jury by the trial Judge.
Finally, counsel for the respondent submitted that the jury might have acquitted O'Connor upon the basis of a disclaimer which appeared at the end of his valuation report. This submission echoes a conclusion arrived at by the trial Judge when sentencing the appellants. He sentenced them upon the basis that the valuation was a sham (transcript 1341 ‑ 1342). He said (transcript 1342) that this was not inconsistent with the acquittal of O'Connor because the jury might have decided that the disclaimer gave rise to a reasonable doubt whether the case against him had been proved. The disclaimer read as follows:
"In accordance with standard practice, I state that this report has been prepared for the party to whom it is addressed and no liability is accepted for any use of the report or its contents by any third party, and damage, howsoever arising out of the use by any third party is accepted [sic].
I certify that I am the maker of this Valuation, that I have no interest present or prospective in the property valued and that the valuation is honestly estimated and represents my opinion as maker thereof."
After the jury had retired for the purpose of deliberating upon their verdicts, they returned to ask the question, "Does the disclaimer get him [O'Connor] out of his responsibilities?" (transcript 1290). This question appears to have arisen as a result of evidence given by O'Connor (transcript 1133 ‑ 1134) to the effect that his disclaimer meant that he was not accepting any liability for his report (although there was evidence that O'Connor had agreed to an extension of liability so as to encompass liability to each investor ‑ ex 29). The trial Judge responded to the question as follows:
"Now, the second element of each offence alleged against Mr O'Connor and indeed each of the accused persons, members of the jury, is as I told you yesterday, that there was deceit or other fraudulent means, and in relation to deceit, that you would have to be satisfied as to four things, and one of those four things was that there was a false representation, and relevantly a false representation in the valuation. Now, the question that you ask is, therefore, as I would understand it, a matter of fact and one for you.
You must obviously look at the document as a whole and the question is whether or not you are satisfied beyond reasonable doubt that the valuation is a false representation. I trust that answers your query. The question is one about which I am not completely sure of what it was that you did wish further direction on and if that does not answer your inquiry, then again obviously it's open to you to address some further communication dealing with the direction that you desire."
The jury did not ask for further clarification.
It seems to me, with respect, that the question asked by the jury might better have been answered with the word "No". However, the jury would have understood from what was said to them that it was for them to decide whether or not the valuation, read as a whole, amounted to a false representation. It is most unlikely that they would have found that it did not, merely because of the existence of the disclaimer. It seems to me to be a matter of common sense that a representation does not cease to be false merely because the maker sought to disclaim any liability in respect of it. I am not prepared to assume that the jury reached a verdict that does not accord with common sense.
I have mentioned, in relation to count 2, that Lawrance annotated the letter dated 20 January 1998, sent to him by Fermanis, by writing, amongst other words, the word "guarantors" with a question mark. He said that he subsequently asked Fermanis about the guarantors and that Fermanis told him (in the course of a telephone conversation) that they had "considerable other property" and were experienced in property ownership (transcript 868 ‑ 869). He said that it would have "considerably" influenced his decision to invest if he had known that the Doyles did not have the means or financial capacity to be guarantors for the loan (transcript 874).
Mr Michailides (count 3) said that Fermanis told him over the telephone that the people who wanted to purchase the hotel had so much faith in it that they "were willing to put their house down as a guarantee" (transcript 614, 627). He said that Fermanis did not tell him anything about how much the house was worth (transcript 614). He said that he would not have invested if he had known that the purchasers did not have the financial capacity to be personal guarantors for the loan (transcript 628).
Mrs Michailides (count 4) said that she was told that the Doyles had "a certain amount of money" to put into the deal (transcript 884). She said that she had probably got this information from her husband. She did not indicate what impact this had on her decision. Nor did she say that she knew that the Doyles were to be personal guarantors.
Reid (count 5) said that Fermanis "assured" him that the Doyles had "other property", but did not go into any detail about it (transcript 847). However, he said that Fermanis "indicated that they would personally guarantee the loan and that they were people of substance who could do that" (transcript 847). He said that the Doyles' capacity to guarantee the loan was one of the factors that persuaded him to lend his money to Pridecrest (transcript 855). He also said that he would not have taken up the mortgage if he had known that the Doyles did not have the financial means to be guarantors (transcript 856).
Smith (count 6) said that he could not remember any discussion with Fermanis in relation to a guarantee (transcript 644, 647). He gave no evidence in relation to any representation made by Fermanis with respect to the Doyles' financial position.
The effect of this evidence is that count 6 could not have been made out upon the basis of any deceit or fraudulent means concerning the Doyles' financial position and that it would be difficult to obtain a conviction on either of counts 3 and 4 on that basis (the jury would have to find that there had been a deliberate failure to tell Mr Michailides the truth about the Doyles' financial position, with intent to defraud him and his wife, and, in the case of Mrs Michailides, that she would have followed her husband's lead in declining to invest if she had known the truth). The evidence of the investors in respect of counts 1, 2 and 5 appears to me to have been capable of acceptance and, given the information which Fermanis acknowledges he had, if the jury found that he made the representations ascribed to him, it was open to them to find that he must have known that they were untrue. It was also open to them to find that the representations were deliberately false and made with intent to defraud.
There is no direct evidence to support a finding that Mitchell intended that Fermanis should misrepresent the Doyles' financial position to investors. The evidence establishes that he knew that the Doyles did not have sufficient assets to guarantee repayment of the loan. Also, the information passed on to Fermanis by him revealed this. However, it seems to me that there is insufficient in the evidence to enable a reasonable jury, properly instructed, to draw the inference, as the only reasonable inference available, that Mitchell intended Fermanis to misrepresent the position to investors.
Particular (vi) ‑ failure to inform investors of the second mortgage
I have said that it is necessary to consider particular (vi) only in respect of Fermanis. Indeed, even that is true only if this particular formed an independent part of the case against him. There was some debate during the hearing of the appeal concerning the question whether the trial Judge intended to leave this aspect of the case to the jury only as evidence going to credit and not as an independent matter capable, by itself, of amounting to deceit or fraudulent means: see in this respect pars 51 to 53 of the respondent's written submissions and appeal transcript 137 ‑ 138, 167, but cp appeal transcript 171, and see also trial transcript 1203 ‑ 1204, 1208, 1210. However, it seems to me that the issue was in fact left to the jury as an independent matter (transcript 1252) and I will deal with it upon that basis.
There is no doubt that vendor finance was discussed at an early stage. Mitchell's evidence was that the need for it was apparent as early as late October and early November 1997. He said that vendor finance was initially negotiated between Pitcher, Mrs Doyle and Summers. He only became involved towards the end of January 1998 (transcript 1051 ‑ 1052, 1073, 1076 ‑ 1077). The vendor finance initially sought had, by then, been increased to the amount of $180,000 ultimately agreed upon (transcript 1051 ‑ 1052, 1073).
Mrs Doyle's evidence in this respect differed from that of Mitchell. She said that the settlement originally set for 15 December 1997 did not go ahead because the purchaser was short of $180,000 and that Mitchell then suggested that the vendor provide finance against a second mortgage (transcript 454).
Summers' evidence was that he had discussions with Mitchell concerning the provision of vendor finance (transcript 426 ‑ 427) and that the amount initially asked for was $80,000, but this increased to $125,000 and then to $180,000 (transcript 427). The figure of $125,000 is that which appears in ex 15, the fax dated 30 October 1997 to which I have earlier referred.
There is no doubt that the investors were not told that the vendor was extending credit to Pridecrest in an amount of $180,000 in return for a second mortgage. That was the uncontradicted evidence of Gregory (transcript 607), Lawrance (transcript 873), Mr Michailides (transcript 627 and 632) (Mrs Michailides knew only what her husband had told her and could consequently not have been told of the existence of the second mortgage), Reid (transcript 855) and Smith (transcript 646). Nor is there any real doubt that that information was material to the decision of each of the investors whether or not to invest. Each of Gregory (transcript 605), Mr Michailides (transcript 627 and 632) and Reid (transcript 856) said that he would not have invested in the mortgage if he had known that the vendor was financing $180,000 of the purchase price against a second mortgage. Lawrance said that this was a matter which would have "considerably" affected his decision (transcript 874). Smith said that this information would have influenced his decision and that he would have made further inquiries and "thought hard about it" (transcript 646), although he also said that he never saw the valuation or asked to see it, that it had been a traumatic time for him (his wife had recently died) and that he trusted Fermanis's judgment in respect of the investment. Mrs Michailides did not comment on the issue, although it might reasonably be inferred from her evidence that she would have been guided by her husband.
However, the case that was left with the jury against Fermanis in this respect was, as I have said, that he knew, at the time of sending the valuation to the investors, that the vendor was extending credit to Pridecrest in the sum of $180,000 against the security of a second mortgage and failed to inform the investors of this at that time. Fermanis acknowledged that he did not at any time tell any of the investors that there was to be a second mortgage. His evidence was that, so far as he was aware at the time of sending out the valuation, there would be none (transcript 904). I have previously mentioned that he said that he first became aware of the second mortgage about a week prior to settlement when he was telephoned and told of this by Hayles and that he was also then told that the purchase price was $910,000 (transcript 994). I have also mentioned that Fermanis said that he told Hayles that he (Hayles) was the solicitor for the mortgagees and should do whatever was required to notify them; that Hayles asked for a copy of the valuation, saying that he wanted to think about the matter; and that Hayles got back to him a day or so later and told him that settlement would go ahead. Fermanis said that he did not then tell any of the investors about the second mortgage because he left that to the solicitor (transcript 995). After the initial conversation in which Hayles told Fermanis about the second mortgage, Fermanis had assumed that the "deal was dead" having regard for the way in which Hayles had spoken to him (transcript 1016).
Hayles again offered a different version of events. He said that in late December 1997 Mitchell had asked him to act on behalf of the purchaser of the hotel, Pridecrest. Not long afterwards, Fermanis rang Hayles and asked him to act, also, for the mortgagees (transcript 290). He agreed to do so. Hayles said that, close to settlement, Fermanis told him that the purchaser was short of $30,000 and that there was to be a second mortgage for a sum greater than that. Hayles accepted instructions to prepare the second mortgage (transcript 311). He did not speak to the investors about the second mortgage as Fermanis always dealt with them. As I have previously mentioned, Hayles said that Fermanis told him by telephone that his clients, the first mortgagees, approved of the second mortgage (transcript 324). Hayles said that his only contact with the investors was when some of them came into his office to deposit their money. He said that Fermanis had been acting as their agent and always referred to them as his clients (transcript 312 ‑313). Hayles denied that he rang Fermanis and told him that he was going ahead with the settlement and that he was preparing a second mortgage (transcript 327). He also denied that he had any conflict of interest (transcript 328).
As was the case with the issue concerning the purchase price of the hotel, the resolution of this conflict between the evidence of Fermanis and that of Hayles seems to me not to be determinative. While it is true that, if accepted, Hayles' evidence establishes that Fermanis knew of the second mortgage, it leaves open the prospect that this was at a time shortly before settlement and after sending out the valuation to investors.
Earlier, when dealing with particular (ii), I referred to exhibits 12 and 15, respectively an undated draft agreement for the purchase of the hotel and a copy of a fax dated 30 October 1997 from Summers to Pitcher. The first of those documents provides that an amount of $100,000 is to be "carried as 2nd Mortgage". The figure $100,000 has been crossed out and "125" has been handwritten in its place. Clause 15 of the draft agreement provides that the vendor is "to provide a second mortgage to the value of … $100,000" plus stock to the value of $50,000, subject to specified conditions. Attached to the draft is a set of typewritten notes which records, amongst other things, that there is to be vendor finance of $125,000. The second document, the fax dated 30 October 1997, records that vendor finance of $125,000 is to be provided. The fax is dated about a month earlier than the date of the first of the letters sent by Fermanis to investors enclosing copies of the valuation. However, there is, as I have previously mentioned, nothing to indicate when Fermanis obtained a copy of either document. I have also said that Fermanis was not cross‑examined in respect of either document.
Consequently, so far as this particular is concerned, although there is evidence that is sufficient to establish that Fermanis knew of the vendor finance and of the need for a second mortgage but did not tell the investors about either, the evidence does not establish, to the required standard of proof, that he became aware of these things prior to sending out the valuation to investors. It follows, when regard is had to the way in which the case against Fermanis was left to the jury in this respect, that the jury could not reasonably have convicted him upon this basis.
Conclusions ‑ Grounds 1 and 2
It follows from what I have said in respect of grounds 1 and 2 that in my opinion, when regard is had to the evidence and to the way in which the case was brought, and left, against Mitchell, his conviction was unreasonable and cannot be supported. I would consequently uphold grounds 1 and 2 in his case.
So far as Fermanis is concerned, I am prepared to conclude that it was reasonably open to a jury, properly directed, to convict him on each of the 6 counts, depending upon the view that they took of the evidence. However, it seems to me that this could only have been done upon the basis that one or other, or in some cases both, of the limbs of particular (v) was or were proved against him. Moreover, I would not regard the case against Fermanis as having been strong in those respects.
Ground 3
It is unnecessary for me to consider ground 3. Success with that ground, as with ground 4, raises the question whether there should be a retrial. That question is answered by reference to the same considerations as arise out of success on ground 4. However, I should say that there seems to me to be considerable substance to ground 3, to the extent that the ground is common to both appellants.
The obligations of a trial judge are appropriately summarised by Lord Hailsham in R v Lawrence [1982] AC 510 at 519 (approved by the High Court in Holland (1993) 68 A Crim R 176 at 183 ‑ 184) as follows:
"A direction to a jury should be custom built to make the jury understand their task in relation to a particular case … [I]t should … include a succinct but accurate summary of the issues of fact as to which a decision is required, a correct but concise summary of the evidence and arguments on both sides, and a correct statement of the inferences which the jury are entitled to draw from their particular conclusions about the primary facts."
As will be apparent, the task of the jury in this case included consideration of the question whether each benefit was gained, with intention to defraud, by deceit or fraudulent means on the part of each appellant. In Mathews v The Queen (2001) 24 WAR 438 at [17] ‑ [19] Burchett AUJ said:
"But s 409(1) [of the Criminal Code] itself contains a mental element, which may involve a question whether an accused person has a belief in the existence of a state of things, by virtue of the words 'with intent to defraud'. Also, perhaps, by virtue of the words 'by ... any fraudulent means'. Fraud wears many disguises, and the shapes it may take are multiple. It is therefore necessary, in any case of fraud, to analyse the facts in order to identify the aspect of them which is alleged to reveal a fraud. If there is a fraud, there must have been an intent to defraud. That intent may be revealed by knowledge, such as knowledge that a bank account being drawn upon is devoid of funds. However, since Derry v Peek (1889) 14 App Cas 337, it has been established that an intent to defraud is not to be equated with carelessness; so even an unreasonable belief, fortified by no inquiries, that the account is good for the cheques drawn on it, will suffice to repel a suggestion of intent to defraud. In J C Smith and B Hogan, Criminal Law (5th ed, 1983) at p 508, the learned authors, speaking of crimes of fraud in England, take this for granted. 'Clearly', they write, 'there would be no offence where D represents as true that which he believes to be true but which, as he ought as a reasonable man to have known, is false.' Similarly, Glanville Williams stated, in his Criminal Law, The General Part (2nd ed, 1961) in s 34:
'The question of intent to defraud is essentially subjective: it is a question of what the accused intended, not of what a hypothetical reasonable man would have intended, though the intent may be inferred from behaviour.'
And, later in the same section, the distinguished author remarked that 'it is accepted legal principle that a person who honestly (though negligently) believes in the truth of his statement does not intend to deceive and therefore does not intend to defraud'.
In the context of a conspiracy to defraud within ss 86(1)(e) and 86A of the Crimes Act 1914 (Cth), Toohey and Gaudron JJ said in Peters v The Queen (1998) 192 CLR 493 at 504:
'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.'
Their Honours re-emphasised this proposition (at 508).
Under s 409(1), the relevant concepts are 'intent to defraud' and "fraudulent means", rather than dishonesty. But the proper course for a trial judge is of the same kind: the knowledge, belief or intent said to reveal an intent to defraud and fraudulent means should be identified by the judge, and the jury should be instructed to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, what was relevantly done by the accused was so done with an intent to defraud and by fraudulent means … "
The present case is one in which the jury was required to give close attention to each of the particulars of deceit or fraudulent means relied upon as against each of the appellants in respect of each count. I have already said that the jury was required, subject to s 114 of the Criminal Procedure Act, to be unanimous in respect of each of the particulars relied upon by them in bringing in a verdict of guilt. Also, it was fundamental to a conviction upon the strength of one or more of the particulars that the act(s) or omission(s) relied upon materially contributed to the making of the investment by the investor concerned. Consequently, in order to undertake their task, the jury was obliged, in the case of each appellant, to consider which, if any, of the particulars or deceit or fraudulent means (made use of with the required intention) relied upon against that appellant in respect of a particular count, was proved and whether, in each case, the deceit or fraudulent means in question materially contributed to the decision to invest.
Plainly, the jury would have been greatly assisted in fulfilling their obligations in this respect if the trial Judge, in his summing up, had separately identified the evidence concerning the matters required to be proved in the case of each count as against each of the appellants, including evidence of the causative effect of the act or omission in question. Unfortunately, he did not do this. What he did (and this seems to me to have been a product of the general way in which the case was advanced against the appellants by the State) was to summarise, in general terms, the evidence of each of the witnesses, without distinguishing between the various counts and the various particulars offered in support of each count (save as regards the valuation), then tell the jury that they were required to look at the evidence in relation to each count against each of the accused separately (referring only very broadly to the evidence in that respect), before turning to the elements of the offence charged and, finally, summarising, in general terms, the prosecution case against the three accused men and the defence case of each.
I have earlier set out the way in which the trial Judge summarised the prosecution case. I have said that, in Fermanis's case, the trial Judge suggested that there were three limbs of the case against him, the first resting upon the valuation, the second resting upon information provided by Fermanis to investors "about the transaction, about the Doyles, about the hotel … which he knew or believed to be false" and the third being his failure to inform investors of the purchase price and of the existence of the second mortgage at the time of sending out the valuation. He did not identify for the jury what evidence was available against Fermanis, in the case of either of the second or third limbs, in respect of each count, whether as regards each of the alleged forms of deceit or fraudulent means relied upon, encompassing evidence of intention to defraud, or as regards the causative effect of the deceit or fraudulent means in question.
The same is true of the trial Judge's summing up in respect of the second limb of the case against Mitchell. There was no separate identification of the evidence which was said, in the case of each count, to establish his knowledge of the falsity of any of the information supplied by him to Fermanis, or of other fraudulent intent on his part, in respect of either of the two matters identified by the trial Judge, being the number of kegs sold by the hotel per week and the ranking of the hotel. Nor was there any separate identification of the evidence concerning the causative effect of any fraudulent or deceitful activity engaged in by him in respect of each count.
Ground 5
For the reasons given when dealing with ground 3, it is unnecessary for me to consider ground 5. However, because that ground, too, has been fully dealt with in submissions by the respondent, and because I am prepared to accept that it has a reasonable prospect of succeeding in the sense discussed in Samuels at [56] (at least if considered together with ground 3), I would give leave to each of the appellants to add it to his grounds of appeal.
I should mention, as regards this ground, that the test for reliance is that which I have mentioned earlier, when dealing with particular (ii) (the alleged failure to reveal the purchase price) in the context of ground 2. Moreover (as regards the contention, in ground 5, that the trial Judge should have required the jury to satisfy themselves that each alleged false representation was material), a representation will be material, in the context of fraud, if it is made for the purpose of inducing the representee and if the representee was thereby induced, in the sense described earlier in these reasons: Nicholas v Thompson [1924] VLR 554 at 576; Australian Steel & Mining Corporation Pty Ltd v Corben [1974] 2 NSWLR 202 at 207 per Hutley JA (Moffitt P and Samuels JA agreeing); Seddon N C and Ellinghaus M P, Cheshire and Fifoot's Law of Contract (8th Aust ed, 2002) at [11.40]. No other direction was needed in that respect.
Should Fermanis be retried?
It remains for me to consider whether or not there should be a retrial. The High Court in Fowler said (at 630):
"The power to grant a new trial is a discretionary one and in deciding whether to exercise it the court which has quashed the conviction must decide whether the interests of justice require a new trial to be had. In so deciding, the court should first consider whether the admissible evidence given at the original trial was sufficiently cogent to justify a conviction, for if it was not it would be wrong by making a order for a new trial to give the prosecution an opportunity to supplement a defective case … Then the court must take into account any circumstances that might render it unjust to the accused to make him stand trial again, remembering however that the public interest in the proper administration of justice must be considered as well as the interests of the individual accused."
So far as Mitchell is concerned, I have already concluded that the evidence against him was not sufficiently cogent to justify a conviction on any of the counts. That of itself leads me to conclude that there should be no new trial in his case.
Fermanis's situation is more complex. It requires the evaluation of a number of circumstances. Among those that will be taken into account at the second of the stages referred to in Fowler are the strength of the case against the accused (if the admissible evidence at the original trial was sufficiently cogent to justify a conviction), the fact that the accused person has already been required to undergo the rigors, stress and expense of a trial, the seriousness of the alleged offending and the sentence that was imposed by the trial Judge (as to all of which see Rabey v The Queen [1980] WAR 84 at 95 ‑ 96) as well as other factors pertaining to his present circumstances, including his age and current state of health (as to which see R v Bartlett [1996] 2 VR 687 at 698).
I have said that the case against Fermanis at the trial was not strong. There is no reason to be confident that he would be convicted on the same evidence, by a properly directed jury, on a retrial. It is noteworthy that, when the trial Judge came to sentence the appellants upon the basis that the valuation had been a sham (I have mentioned that he saw no inconsistency with the jury's acquittal of O'Connor), he went on to say (transcript 1343):
"I think it unlikely that the jury would have returned verdicts of guilty in relation to either of you on the basis of the other material put forward. It seems to me and I ought to say in the circumstances perhaps that the representations in relation to the kegs and the hotel ranking and so on were the subject of a number of pieces of evidence which did leave the likelihood of some doubt as to whether or not the jury would be satisfied that you in particular, Mr Fermanis, made a false representation in relation to all or any of that material."
Moreover, counsel for the respondent, in the course of his submissions on the appeal, appeared to go so far as to accept (if a little half‑heartedly) that, if the only rational explanation for the jury's acquittal of O'Connor was that they were not satisfied beyond reasonable doubt that the valuation was a sham, then there was no sufficient basis for a conviction (appeal transcript 166 and see also appeal transcript 181).
The acknowledged lack of a strong case, coupled with the fact that Fermanis has already been required to undergo a lengthy trial, must be considered together with the fact that he is elderly and suffers from serious health problems. He is 74 years old. He has, for more than 10 years, suffered from type 2 diabetes. In October 2004, after suffering a heart attack, he underwent angioplasty and stenting of two vessels. Some 10 days after being discharged from hospital he was re‑admitted with an acute gastrointestinal haemorrhage. He suffered a cardiovascular collapse and required admission to the intensive care unit. After recovering, he underwent a subtotal gastrectomy. He was found to have a lymphoma localised to his stomach. He suffers from coronary artery disease, from vertigo and also from early cognitive impairment attributed to a diffuse neuro-degenerative disorder such as Alzheimer's disease. In October 2005 he suffered a recurrence of the lymphoma in his abdomen and commenced chemotherapy with associated medication. He requires close medical supervision. His consultant physician, Dr Michael McComish, suggests that there is a danger that his imprisonment will result in a gradual worsening of his cognitive impairment.
Taking all of these circumstances into account (and the others to which I have referred), it seems to me that this is a case in which a retrial is inappropriate, even allowing for the public interest in the proper administration of justice. I would consequently decline to order one.
Conclusion
I would grant each of the appellants leave to amend his grounds of appeal in accordance with the minute provided, uphold each appeal against conviction and set aside all of the convictions appealed against. I would decline to order a retrial. It follows that I would direct that verdicts of acquittal be entered in respect of each appellant. This conclusion makes it unnecessary for me to consider the appeals against sentence, although it necessarily follows from my conclusion on ground 1 that the trial Judge sentenced each of the appellants upon a basis that was not open to him.
ROBERTS-SMITH JA: I agree with the President.
McLURE JA: I agree with Steytler P.
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