Godwin v Police No. Scgrg-98-1655 Judgment No. S51

GODWIN v POLICE
[1999] SASC 51

Magistrates Appeal
Nyland J

This is an appeal against conviction. The appellant was charged on information with two counts of embezzlement. The charges arose in the context of the appellant’s employment with Varnfield Pty Ltd. Varnfield is a real estate business which operates under a franchise agreement with L J Hooker at Flagstaff Hill. Ian Varney is the managing director.
The appellant was employed by the company as a property manager from mid 1993 to 30 August 1996. The appellant was responsible for managing all business associated with the company’s rental properties. This included such matters as interviewing and selecting tenants, advertising properties for lease, attending to the relevant paperwork and starting the computer files. The appellant was not primarily responsible for collecting rent but did, on occasion, receive money on and off the premises from tenants. One of the appellant’s responsibilities was to enter data on to a computer system to record cash and cheques which were placed by various staff members into an unlocked tin behind the reception desk in the office. Handwritten receipts in duplicate copy receipt books were generally used to record the receipt of cash and cheques at the reception desk. The standard procedure was for the person receiving the money to place the cash or cheque into the tin and to include the address of the property or the name of the tenant on a piece of paper which would then be attached to the cash or cheque with a paper clip. It was not disputed that on occasions, errors were made in describing what had been received and that on occasion bundles of cash were disturbed and re-arranged when a tenant required change.
It was acknowledged by the prosecution that once money was received and placed into the tin, the unlocked tin was sometimes kept in an unlocked cupboard in the office overnight before being banked. There was also evidence that cash was sometimes taken home by the directors of the business and returned at a later time. It was also acknowledged that several members of staff, casual employees, friends of the directors and their children, had access to the area in which the cash tin was stored. Some of these individuals also receipted money from tenants from time to time.
The procedure adopted by the appellant when entering tenant payments on to the computer was to take out the bundles from the tin and rely upon what was written on the tags to describe each bundle. At the conclusion thereof, a computer print-out of the amounts entered on to the computer was obtained and given to Mr Varney, together with the cash for banking. The money was then banked by Mr Varney.
Amounts of money which were received and described on the tags as bond money were entered on to the computer in a different manner to rental amounts. Additionally, the computer program, at the relevant time, provided a system of listing all tenants where bonds had been paid and where bond forms had to be lodged with the Residential Tenancies Tribunal within 28 days of receipt of bond money. In this way, the property manager did not have to rely upon memory to identify which bonds had to be lodged with the tribunal within the legally required 28 day period. It did not appear to be disputed that if bond money was received but somehow misdescribed on a tag in the cash tin, lost or misappropriated by someone prior to the computer entering process, no entry for bond would be made on the computer and the bond lodgment form could easily be overlooked unless the computer operator had a specific memory of receiving the bond money.
The two charges against the appellant related to cash she was alleged to have received from two tenants, that is, Wayne Hawker and Mark Goulding. In Hawker’s case it was alleged that the appellant had received the sum of $960, of which $640 was described as bond money. There appeared to be no equivalent entry on the computer, nor any bond lodgment form lodged with the Residential Tenancies Tribunal for that amount. In Goulding’s case, it was alleged that the appellant had received the sum of $400, consisting of $190 rent and $210 part-bond, but there was no computer entry recording the receipt of the $210 bond money, nor as was the case with Hawker, any bond lodgment form lodged with the Tribunal.
In order to prove the charges against the appellant, the prosecution was required to prove, firstly, that the appellant had received the property into her possession on account of her employer and secondly, that she fraudulently misappropriated the property.
Hawker did not give evidence. The prosecution case relied on Exhibit P1 and Exhibit P3. P3 is an undated duplicate receipt contained in a cash receipt book. The entry appears to be signed by the appellant and refers to the receipt of $960 described as rent $320, bond $640, 30 Matthew Street, O’Halloran Hill.
Exhibit P1 is described as a “tenant payment history”. It commences with an entry “19/01/1995 ADD Tenant T0316 Mr W Hawker by SARAH”. Immediately thereunder is a further entry showing the sum of $640 described as “rent 04/01/1995 to 31/01/1995”. The defence objected to the admission of P3, in the absence of Hawker giving evidence, but I consider that it was properly admitted into evidence. The appellant did not dispute that she was the author of P3. The document was both relevant and admissible as an original document and is consistent with the appellant having received the money. Exhibit P1 is also consistent with the appellant having been aware of the receipt of an amount of at least $640. There was therefore evidence which enabled the magistrate to be satisfied beyond reasonable doubt that the appellant received the Hawker money.
In Goulding’s case, the prosecution relied on Goulding’s evidence that he attended at the appellant’s home at Parkside and handed to her the sum of $400. He said at that time she pulled out a business card and wrote on the back that he had paid the amount of $400 in part-bond and rent. That document was admitted in evidence as P7. The appellant, in evidence, was unable to recall giving P7 to Goulding but agreed that he had given some money to her in relation to the rental property and she agreed that it was her handwriting which appeared on P7. There was, therefore, evidence upon which the magistrate could be satisfied that the appellant had received the Goulding money into her possession.
As to the second issue, that is, whether the appellant had fraudulently misappropriated the property, the prosecution case was purely circumstantial. The learned stipendiary magistrate was invited to infer from alleged discrepancies between the handwritten receipts and the computer entries that the appellant had fraudulently misappropriated the funds. His Honour was invited to draw an inference that the appellant had attempted to “cover her tracks” by disposing of receipt books before resigning her position from the firm. It was also suggested with respect to each charge that the appellant created a delay between the receipt of the money and the computer entry to accumulate rental amounts to make them look like bond amounts on the computer system should anyone care to look at the computer screen. It was also suggested that as the appellant was the only person skilled at operating the computer at the relevant times, she was responsible for misappropriating the money.
In considering these matters, the magistrate was only entitled to draw inferences that were reasonably open on all of the facts found proved.
On the hearing of the appeal, Ms Sheppard for the appellant referred to a number of significant errors of fact made by the magistrate from which adverse inferences were drawn against the appellant. Those matters are set out in the appellant’s outline of argument. Ms Sheppard submitted that those inferences, which were unsupported by the evidence, led the learned magistrate into error in finding the appellant guilty of both charges. In resolving these issues it is necessary to review the evidence to ascertain whether there was evidence before the magistrate from which he could properly conclude beyond reasonable doubt that the appellant was guilty of the charges against her.
On the prosecution case, the appellant had extensive experience as a property manager prior to commencing her employment with this firm. She had worked in the office of Varnfield for two to three years prior to the date of the first alleged offence. She was experienced in the day to day procedures of the office, including the receiving of money and obtaining computer records and must therefore have been alert to the need to maintain proper and accurate records.
P3, the receipt which relates to Hawker, is undated, but by reference to the receipts immediately before and after it in the book, it can be inferred that the receipt was issued on either 3, 4 or 5 January 1995. P1, the tenant payment history, shows the first entry dated 19/01/1995. The name “Sarah” recorded thereon is consistent with the appellant having made the entry and that possibility was not denied by her. If the original payment was made by Hawker on or about 4 January 1995, then there would appear to be a delay between the receipt of that money and the entry into the computer on 19 January 1995. In the case of Goulding, P4 commences with an entry 17/03/1995 and shows the sum of $190 paid for rent for 05/03/1995 to 18/03/1995. The preceding entry on the same day states “ADD Tenant T0328 Mr M Goulding by SARAH”. This also is consistent with the appellant having made that entry and that was not denied by the appellant. There is, however, no reference to the sum of $210 which was described as part bond in P7.
The appellant gave evidence on oath. As far as Hawker was concerned, she was unable to explain the apparent discrepancy between the undated manual receipt P3 and the computer record in P1. The appellant had no specific recollection of receiving the money from Hawker and no recollection of entering the data in relation to his payment on to the computer on 19 January 1995. She recalled, however, that there was an arrangement with Hawker for some repair work on the property and suggested that this arrangement may have caused some alteration to the nature of the rental and/or bond payment.
In Goulding’s case the appellant conceded she would have received the $400 cash from him and that she must have given him a receipt in the form of P7. Her recollection was that it occurred on a Thursday evening after shopping. At the time she had been in new premises at Parkside for only a week. She said that that she had moved into those premises on either 11 or 12 March 1995 and she disputed Goulding’s evidence that the visit to her home occurred earlier, that is, on about 4 or 5 March 1995.
The appellant said she would have taken the cash to work the next day and put it in the tin. As only half the bond amount was paid she said she would not have entered it on to the computer as the 28 day time constraint would be activated. She had no recollection of the remainder of the bond money being paid and was unable to explain why the amount of $210 was unaccounted for.
The magistrate in the course of his reasons, said that he could not “fault any witnesses for the prosecution” without conducting any analysis of their evidence. In the case of Goulding, however, there were a number of matters which should have caused him to have some doubt about his reliability. Goulding conceded that about a week before he gave evidence he believed that he had paid the remainder of the bond money to Hookers. When he gave evidence, he accepted that he had not done so. He was questioned at some length about the date on which he gave the money to the appellant. He appeared to fix it by reference to his birthday, which was on 4 March 1995. He agreed that the payment had been made to the appellant at her house at Parkside and that the appellant appeared still to be unpacking. He had a clear memory that it was mid-week as opposed to the weekend. When a calendar was produced which showed that 4 March 1995 was a Saturday, he accepted that he could not have gone to the appellant’s house on that date. When it was suggested that the date was on or about 16 March 1995, he referred back to his lease which had commenced on 5 March 1995. This clearly indicated that he was endeavouring by him to reconstruct the course of events. The magistrate found that the payment was made on 5 March 1995 but in so doing he purported to rely on P7, the business card receipt given to Goulding. This, however, is one of the errors identified by the appellant as P7 is undated. In contrast, the evidence of the appellant as to the date was much more precise than that of Goulding. If the appellant is correct in her belief as to the later date then there was no inordinate delay between the receipt of the money and the first entry in to the computer.
The prosecution case relied on the apparent discrepancy between the two hard copy receipts and the computer records to establish that the money was missing. There was, however, no actual proof that was the case. The magistrate appeared to find that the money was missing as a result of Mr Varney’s reimbursement of the trust account. In so doing, the magistrate appeared to have insufficient regard to the financial system which operated in the office. The magistrate rejected the submission made by Ms Sheppard that the financial system was fundamentally flawed, but appeared to overlook the undisputed tagging system relied upon by the appellant when entering data on to the computer. This matter was the subject of evidence from Mr Nicholls, the director of the computer software company which provided the software to Varnfield. Mr Nicholls was a completely independent witness whose evidence was to the effect that such a system was a major concern. Mr Nicholls also gave evidence that the appellant had expressed her dissatisfaction about it and had raised with him the possibility of having triplicate receipt books. This was a busy office. There appeared to be six full-time members of staff and other people who came and went on a casual basis. There were any number of people who gave out receipts. The money was kept in an unlocked box in a relatively public area. The rent money was used to give change and shortfalls had been found from time to time. The cash tin was kept unlocked, occasionally overnight in an unsecured cupboard, to which the cleaners had access. Cash was also taken off the premises from time to time by Mr Varney before being returned next day. This movement of cash raises a strong possibility of error with respect to the tagging system used by the appellant to enter the data into the computer.
Mr Nicholls also supported the appellant to the extent that he said that he would have expected some evidence of the appellant covering her tracks but in looking at the computer network he located no such thing. The magistrate inferred an attempt by the appellant to cover her tracks as a result of what he described as “common ground”, that is, that the appellant had suggested the destruction of the receipt books. There is, however, a conflict in the evidence on that topic. Mr Varney said that the appellant and Vikki Dabinet collectively had a discussion with him which he thought was about the disposal of the books. The appellant denied she had ever suggested their destruction but said there had been a discussion as to storage to create more office space.
The learned magistrate, in reaching his conclusions described the appellant as a competent, impressive witness although he went on to say that she faltered a couple of times when awkward questions were put to her and prevaricated in her answers, at times giving very long answers. It is not clear from his reasons whether those matters were of any substance. There was, however, some very strong character evidence called on behalf of the appellant, which needed to be put into the scales in reaching a conclusion as to whether the case against her had been proved to the requisite degree.
In view of her prior good character, and her long experience with management of properties, this did appear to be an unusual crime to commit. There was evidence that when leaving the firm, she pointed out a bond matter relating to another tenant which needed to be investigated. There was also a dispute as to whether she had in fact pointed out a discrepancy with respect to Goulding’s bond. It would also seem that detection was inevitable as the deficiency with respect to the bond would come to light as soon as the lease expired, which in the case of Hawker was 12 months and Goulding, six months. At the time that it is alleged that the appellant misappropriated the bond money she would not have known whether there would be any extension.
Hawker, as it happened, was an erratic payer of rent and fell into arrears at the end of his second tenancy. The appellant wrote arrears letters to him which, if acted upon, would have had the effect of terminating the lease and requiring the matter of the bond to be considered.
The discrepancies between the accounts is obviously suspicious. In my opinion, however a close analysis of the evidence does not place it any higher than that. The appellant gave a possible explanation for the discrepancy with respect to Hawker. Hawker did not give any evidence to refute what she had to say. The evidence of Goulding raises a doubt as to the actual date upon which the first payment was made. The tagging system raises the possibility of error with the financial records. There is also the possibility that the money might have been lost, mislaid, or stolen by others who had access to the unlocked tin. It was not for the appellant to provide an explanation as to what had happened to the money, although the magistrate commented that it “would have helped her case if she had been able to do so”. The circumstantial evidence relied upon by the prosecution, in my view, was incapable of supporting a conclusion that the guilt of the appellant was the only rational inference reasonably open on all of the proven facts. In those circumstances, the appeal will be allowed and the conviction quashed. I do not consider that it is appropriate to order a re-trial.

[1999] SASC 51

19 February 1999