Hickey v The State of Western Australia
[2014] WASCA 32
•11 FEBRUARY 2014
HICKEY -v- THE STATE OF WESTERN AUSTRALIA [2014] WASCA 32
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASCA 32 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACR:110/2012 | 3 DECEMBER 2013 | |
| Coram: | McLURE P PULLIN JA BUSS JA | 11/02/14 | |
| 21 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| A | |||
| PDF Version |
| Parties: | PETER ROBIN HICKEY THE STATE OF WESTERN AUSTRALIA |
Catchwords: | Criminal law Stealing by direction based on fraudulent conversion Construction of s 371, s 373 and s 378 of the Criminal Code (WA) Cheques deposited into company account under the control of appellant with directions that they be used for specific purposes Appellant withdrew money from company account with knowledge of the directions and used it for own purposes Whether offender must directly receive property under s 373 Whether trust deed capable of overriding directions |
Legislation: | Criminal Code (WA), s 1, s 371, s 373, s 378 Criminal Law Amendment Act 1902 (SA), s 1 Criminal Procedure Act 2004 (WA), s 178(2) Evidence Act 1906 (WA), s 32 Interpretation Act 1984 (WA), s 32(2) |
Case References: | Kahatapitiye v The Queen [2004] WASCA 189 Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 Parker v The Queen [1997] HCA 15; (1997) 186 CLR 494 R v Ayres [1984] 1 All ER 619 R v Birks (1990) 19 NSWLR 677 R v Clowes (No 2) [1994] 2 All ER 316 R v Grubb [1915] 2 KB 683 Stephens v The Queen (1978) 139 CLR 315 TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : HICKEY -v- THE STATE OF WESTERN AUSTRALIA [2014] WASCA 32 CORAM : McLURE P
- PULLIN JA
BUSS JA
- Appellant
AND
THE STATE OF WESTERN AUSTRALIA
Respondent
ON APPEAL FROM:
Jurisdiction : DISTRICT COURT OF WESTERN AUSTRALIA
Coram : BOWDEN DCJ
File No : IND 673 of 2011
Catchwords:
Criminal law - Stealing by direction based on fraudulent conversion - Construction of s 371, s 373 and s 378 of the Criminal Code (WA) - Cheques deposited into company account under the control of appellant with directions that they be used for specific purposes - Appellant withdrew money from company account with knowledge of the directions and used it for own purposes - Whether offender must directly receive property under s 373 - Whether trust deed capable of overriding directions
Legislation:
Criminal Code (WA), s 1, s 371, s 373, s 378
Criminal Law Amendment Act 1902 (SA), s 1
Criminal Procedure Act 2004 (WA), s 178(2)
Evidence Act 1906 (WA), s 32
Interpretation Act 1984 (WA), s 32(2)
Result:
Appeal dismissed
Category: A
Representation:
Counsel:
Appellant : Mr F M Douglas QC & Mr K G Robson & Mr J M Healy
Respondent : Mr M D Howard SC & Mr A L Troy
Solicitors:
Appellant : Evangel Legal Services
Respondent : Director of Public Prosecutions (Cth)
Case(s) referred to in judgment(s):
Kahatapitiye v The Queen [2004] WASCA 189
Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360
Parker v The Queen [1997] HCA 15; (1997) 186 CLR 494
R v Ayres [1984] 1 All ER 619
R v Birks (1990) 19 NSWLR 677
R v Clowes (No 2) [1994] 2 All ER 316
R v Grubb [1915] 2 KB 683
Stephens v The Queen (1978) 139 CLR 315
TKWJ v The Queen [2002] HCA 46; (2002) 212 CLR 124
1 McLURE P: The appellant appeals against his conviction on three counts of stealing. The precise terms of the counts in the indictment are relevant to one of the grounds. Count 1 relevantly provided:
Between 14 April 2005 and 5 May 2005 … Peter Robin Hickey stole the sum of $80,000 in money the property of Karen Maree Nelley and Peter Nelley, which money had lately been received by Cape Bonbon Pty Ltd as trustee for the Cedar Trust with a direction that the funds were to be used to purchase property that would be renovated/developed with a view to selling it for a profit, contrary to section 378(9)(b) of the Criminal Code (WA) (the Code).
2 Count 2 relevantly provided:
Between 10 May and 28 June 2005 … Peter Robin Hickey stole the sum of $72,762.65 in money the property of John Robert Matthews and Persida Matthews, which money had lately been received by Cape Bonbon Pty Ltd as trustee for the Cedar Trust with a direction that the funds were to be used to purchase property that would be renovated/developed with a view to selling it for a profit, contrary to section 378(9)(b) of the Code.
3 Count 3 relevantly provided:
Between 26 June and 8 July 2005 … Peter Robin Hickey stole the sum of $75,000 in money the property of Kane James Croese, which money had lately been by Cape Bonbon Pty Ltd as trustee for the Cedar Trust with a direction that the funds were to be used to purchase property that would be renovated/developed with a view to selling it for a profit, contrary to section 378(9)(b) of the Code.
4 The appellant's grounds of appeal (omitting headings) are in the following terms:
1. The trial miscarried by reason of the trial judge not directing the jury to acquit:
(a) in circumstances where the appellant was being tried for stealing on the basis of an indictment that did not properly plead the ownership of the property alleged to have been stolen;
(b) in circumstances where it was not proved that the individuals named in each of the counts as the owners of the property allegedly stolen, were in fact the owners of that property at the time it was allegedly stolen.
2. The learned trial judge erred in law by failing to withdraw the case from the jury, there being no case to answer.
2A. Trial counsel was instructed by the appellant to make a no case submission and failed to do so.
3 The learned trial judge erred in law by directing the jury that it was open to them to find as a fact that the complainants had each directed the appellant to use the funds in question for the purpose of property development. This finding was not personally open to them as a matter of law having regard to the terms of the Trust Deed.
Particulars
The evidence against the appellant was, at best, that:
(a) the appellant had made an oral representation that the subject funds were to be invested in real estate;
(b) the appellant had produced a compact disk demonstrating that the appellant had previously been successful in property development.
The complainants had later received and signed an Application for Units of the Cedar Trust 'the Trust' which contained an express agreement 'to be bound by the terms of that Deed [of Trust] as if I had executed the same under seal'.
The Deed in question expressly gave to the appellant the widest possible powers of investment, including an express power to make the investments complained of: See clause 11 in the Addendum.
3A. The learned trial judge erred in law by directing the jury that the direction to invest the moneys in a particular way was capable of being established by inference, whereas the prosecution case was at all times that the directions given by the complainants to the appellant were specifically articulated express directions as to the use of the moneys.
3B. The learned trial judge erred in law by failing to direct the jury to acquit the appellant on all counts.
5 The grounds of appeal do not clearly and with precision identify the alleged errors. The written submissions do little to enlighten the court on that score.
6 The evening before the scheduled hearing of the appeal on 3 December 2013, the appellant's solicitors emailed to the court a supplementary outline of submissions. At the commencement of the hearing of the appeal senior counsel for the appellant sought leave to amend the grounds of appeal to add ground 2B in the following terms:
The particulars of the charge specified that in each case the money was received by Cape Bonbon Pty Ltd as trustee of the Cedar Trust with a direction that the funds were to be used for the purpose or purposes specified by the charge, whilst section 378(9)(b) requires that for the charge to be valid, the money must be received by the offender with a relevant direction, in this case the appellant, and consequently the particulars in the indictment disclose no criminal offence known to the law.
7 Because of the ambiguity in the grounds of appeal and the written submissions, the court at the commencement of the hearing of the appeal requested senior counsel for the appellant to identify all the issues to be raised on behalf of the appellant for determination. They were identified as follows:
1. the indictment is a nullity because the offender, for the purpose of s 378(9)(b) and s 373 of the Code, must receive the relevant property (in this case the money) with the direction that it be applied to the specified purpose. Each count states that the relevant property was received by Cape Bonbon Pty Ltd (Cape Bonbon) with the relevant direction;
2. it was not proven at trial that the relevant property was the property of the complainants named in the indictment with the consequence that s 373 of the Code did not apply; and
3. there was a disconformity between the terms of the indictment and the way the prosecution case was run at trial. The appellant contends that the prosecution case at trial was effectively that the appellant received the money and the direction.
8 Most of the matters raised in this appeal were not raised by the appellant at trial. It is necessary to refer to the history of this appeal. It was originally listed for hearing in February 2013. The appellant sought and obtained an adjournment of that hearing on the basis that he had changed his solicitors and wished to amend his grounds of appeal. The original grounds of appeal included a claim that the verdicts were unsafe and unsatisfactory. It is apparent from the appellant's affidavit in support of his adjournment application that he has strong personal views as to the legal merits of the grounds he wished to advance.
9 At the hearing of the appeal senior counsel for the appellant withdrew three grounds of appeal (grounds 2A, 3 and 3A) (ts 24). Later in the course of his oral submissions, senior counsel sought a short adjournment indicating that he had received a request from his client to speak with him (ts 34). On resuming after the adjournment, senior counsel for the appellant made no application to reverse his position on the withdrawal of the three grounds of appeal.
10 After the court reserved its decision, it received a letter dated 16 December 2013 from the appellant informing the court that he was now acting for himself, that he had instructed his counsel not to abandon any of the grounds of appeal, requested the court to consider all of the grounds of appeal including proposed ground 2B, and sought to challenge the accuracy of some of the detail in the respondent's written submissions, none of which had been raised in oral submissions at the hearing of the appeal. I propose to deal with all grounds of appeal including 2B.
11 It is necessary to start with the relevant provisions of the Code.
The statutory framework
12 Although not addressed by the parties in their written submissions, issues of statutory construction were raised by the court at the hearing. These included (1) does s 378(9)(b) of the Code relate to penalty only; (2) do the opening two lines of s 378 create the offence of stealing; and (3) is the scope of s 373 confined (relevantly) to the 'elements' in s 378(9)(b).
13 Section 378, under the heading 'Penalty for stealing' relevantly provides:
Any person who steals anything capable of being stolen is guilty of a crime, and is liable, if no other punishment is provided, to imprisonment for 7 years.
Punishment in special cases
(1) - (8) …
(9) If the thing stolen is any of the things following, that is to say -
(a) Property which has been received by the offender with a power of attorney for the disposition thereof;
(b) Money received by the offender with a direction that the same should be applied to any purpose or paid to any person specified in the direction;
(c) The whole or part of the proceeds of any valuable security which has been received by the offender with a direction that the proceeds thereof should be applied to any purpose or paid to any person specified in the direction;
(d) The whole or part of the proceeds arising from any disposition of any property which have been received by the offender by virtue of a power of attorney for such disposition, such power of attorney having been received by the offender with a direction that such proceeds should be applied to any purpose or paid to any person specified in the direction;
the offender is liable to imprisonment for 10 years.
15 The definition of the term 'steal' is in s 371 which relevantly provides:
(1) A person who fraudulently takes anything capable of being stolen, or fraudulently converts to his own use or to the use of any other person any property, is said to steal that thing or that property.
(2) A person who takes anything capable of being stolen or converts any property is deemed to do so fraudulently if he does so with any of the following intents, that is to say -
(a) An intent to permanently deprive the owner of the thing or property of it or any part of it;
…
(f) In the case of money, an intent to use it at the will of the person who takes or converts it although he may intend to afterwards repay the amount to the owner.
17 'Money' is defined in s 1 of the Code to include 'bank notes, bank drafts, cheques, and any other orders … authorities, or requests for the payment of money'.
18 Section 373 relevantly provides:
When a person receives, either alone or jointly with another person, any money or valuable security, or a power of attorney for the … disposition, of any property, whether capable of being stolen or not, with a direction in either case that such money or any part thereof … or the proceeds or any part of the proceeds of such security … shall be applied to any purpose or paid to any person specified in the direction, such money and proceeds are deemed to be the property of the person from whom the money, security, or power of attorney was received, until the direction has been complied with.
19 Section 1 of the Code defines 'receives' to include obtains possession; and 'possession' to include having under control in any manner whatever, whether for the use or benefit of the person of whom the term is used or of another person.
Formal admissions and trial judge's direction
20 Section 32 of the Evidence Act 1906 (WA) provides:
An accused person, either personally or by his counsel or solicitor, in his presence, may admit on his trial any fact alleged or sought to be proved against him, and such admission shall be sufficient proof of the fact without other evidence.
21 In his opening for the defence, counsel for the appellant made formal admission pursuant to s 32 of the Evidence Act which became exhibit 1 in the appeal. Those admissions are as follows:
1. At all material times Peter Hickey was the sole registered director of Cape Bonbon Pty Ltd and Property Barron Pty Ltd.
2. On 1 April 2005 Cape Bonbon Pty Ltd atf The Cedar Trust ('the Cedar Trust') opened a bank account at the Commonwealth Bank of Australia, Kalamunda Branch ('the Cape Bonbon bank account').
3. Peter Hickey was the sole signatory to the Cape Bonbon bank account.
4. On 4 April 2005 Cape Bonbon Pty Ltd was appointed trustee of the Cedar Trust.
5. On 12 April 2005 Karen Nelley drew two separate cheques.
6. The cheques were to the value of $65,000 and $15,000 respectively.
7. Both cheques were made out in favour of Cape Bonbon Pty Ltd.
8. On 12 April 2005 both cheques were deposited into the Cape Bonbon bank account.
9. On 6 April 2005 Peter Hickey met with Robert Matthews.
10. On 6 May 2005 Robert and Persida Matthews drew a bank cheque.
11. The cheque was to the value of $75,000.
12. The cheque was made out in favour of Cape Bonbon Pty Ltd.
13. On 6 May 2005 the cheque was deposited into the Cape Bonbon bank account.
14. On 24 June 2005 Kane Croese drew a cheque.
15. The cheque was to the value of $75,000.
16. The cheque was made out in favour of Cape Bonbon Pty Ltd.
17. On 24 June 2005, the cheque was deposited in the Cape Bonbon bank account.
22 In his summing up, the trial judge provided to the jury a document setting out the elements of the offence of 'stealing by direction'. The document, which is consistent with the oral directions given by the trial judge, is in the following terms:
Elements of the offence
Each count must be considered separately. Before you can find Mr Hickey guilty on the count you are then considering the State must satisfy you beyond reasonable doubt of each of the following:
1. Cape Bonbon Pty Ltd as trustee for the Cedar Trust received the sum of money referred to in that count.
2. That sum of money was the property of at least one of the investor [sic] named in that count.
3. At least one of the investors named in that count gave a direction expressly or impliedly that the money was to be used to purchase property that would be renovated/developed with a view to selling it for a profit.
• A direction is an order or command to do a specific act or take a specific course, intended and understood to be binding and operative as between the person giving and receiving the direction.
• A direction can be express or tacit (inferred from all the circumstances and words used).
4. Mr Hickey was aware of that direction.
• Awareness can be inferred.
5. The accused stole the sum, or any part of it, referred to in that count.
• The prosecution must satisfy you beyond reasonable doubt that either the accused withdrew the money, or any part of it, from the Cape Bonbon account with the intent to use the money, or any part of it, at his will even though he may have intended to later repay it or with the intent to permanently deprive the owner of the money or any part of it.
23 The prosecution case at trial was consistent with the trial judge's directions. It was that, in each count, the complainants paid the money to Cape Bonbon; the inference to be drawn from the surrounding circumstances as a whole was that the money was paid by the complainants with a direction that it be used by Cape Bonbon for the purpose of purchasing land that would be renovated or developed with a view to selling it for a profit (the direction); the direction was known to the appellant; and the appellant fraudulently converted the moneys to his own use and the use of others.
24 The largely unchallenged evidence was that the appellant withdrew the moneys from Cape Bonbon's bank account (by cheque or transfer) and used it in ways that benefited the appellant and his wife only, including payments in reduction of the amount secured by mortgages of the appellant's two properties in Kalamunda, payments in reduction of credit card accounts and payment of other personal household expenses. The money the subject of count 1 was deposited into Cape Bonbon's bank account on 12 April 2005. All that money had been withdrawn by the time the money the subject of count 2 was deposited into the account on 6 May 2005. Most of that money had been withdrawn by the time the money the subject of count 3 was deposited on 24 June 2005. By 27 June 2005 there was a credit balance of $196 in the Cape Bonbon bank account.
25 The defence case on each count was that the complainants' belief as to the use to which their money would be put came from Craig and Debra Shields not the appellant; that the appellant did not have knowledge of any of the directions; and that the appellant's understanding was that the complainants paid the cheques to Cape Bonbon for the purpose of acquiring units in the Cedar Trust and that the appellant used those funds in accordance with the terms of the Cedar Trust Deed (the Trust Deed).
26 However, the appellant did not give, or call evidence in his defence at trial. Accordingly there is no evidence from the appellant at trial to support the claim as to his 'understanding' as to the effect of the Trust Deed. Moreover, it was not part of the appellant's case that the complainants were aware of the terms of the Trust Deed said to be the source of his understanding. Indeed, the objective and other evidence at trial of the appellant's understanding is only consistent with knowledge of the directions as to purpose. The objective evidence includes the appellant's document headed 'Cedar Trust Rules & Guidelines' provided to Mr Matthews (count 2) which identifies the mission of the Cedar Trust as being 'to acquire property in good growth suburbs in Perth that are undervalued then renovate them and revalue them and realize [sic] capital appreciation and/or profit for its beneficiaries'.
The case law
27 The leading case on s 373 of the Code is Parker v The Queen (1997) 186 CLR 494. In that case the appellant, a candidate for election to Parliament, operated a bank account into which cheques donated in support of his campaign for election were deposited. He withdrew money from the account for his own purposes. He was charged with 11 counts of stealing. The Crown case was that cheques were received from donors with a direction that the funds were to be used to meet campaign costs for his re-election or the campaign costs of the ALP. All the cheques received from donors were credited to a bank account which was only used to receive moneys raised as donations. The left-hand margin of the indictment indicated that the charge was under s 378(9)(b) of the Code. No issue was raised as to the correctness of that statement.
28 The Crown relied on s 373 of the Code. Referring to s 373, Ipp J in the Court of Criminal Appeal (CCA) said that the moneys deposited in the campaign account were deemed to be the property of the donors, the consequential effect being that the moneys were to be regarded as trust moneys in the hands of the recipient. The majority in the High Court (Dawson, Toohey & McHugh JJ) held that the CCA erred in treating s 373 as deeming money to which it applies to be trust moneys, saying the deeming language of s 373 is at odds with the idea of a trust. The majority noted that s 373 was involved because of the change of character of the property once a donors' cheque was paid into the campaign account. Further, there being no asportation (carrying away of goods), the charge was not one of fraudulent taking but of fraudulent conversion arising from the withdrawal of specific sums by cheque on the campaign account. That is, any fraudulent conversion was of the moneys standing to the credit of the appellant in the campaign account. That raised the question whether the expression 'such money' in s 373 extends not only to the cheque received with a direction but also to the credit in the campaign account consequent upon the deposit of the cheque. The majority answered that question in the affirmative. They said:
It is true that, once deposited, the 'money' represented by the cheque becomes a chose in action against the bank in which it is deposited …
The deeming aspect of section 373 is clearly intended to ensure that, for the offence of stealing, where a person receives money in the circumstances to which the section refers, the money notionally remains the property of the person from whom it was received until the direction has been complied with. The result is that a person who fraudulently converts the money to his own use commits the offence of stealing. In that regard the definition of money in section 1 is inclusive and extends to the form the money received takes when deposited in an account. The money received does not cease to be 'such money' in the terms of section 373 simply because it has undergone a conversion. The adjective 'such' identifies the money to which the opening words of the section refer but it is not confined to the money in the form in which it is received. To give the word or the provision in general such a restricted meaning would have odd results (518).
29 The majority in Parker referred with approval to the decision of the High Court in Stephens v The Queen (1978) 139 CLR 315. The accused in that case was a director and shareholder of a company which entered into written contracts to build houses. The company received deposit moneys from parties to contracts which were paid into its bank account. The company did not build the houses or return the deposits and the accused used the moneys for purposes unconnected with the contracts. He was convicted on five charges of fraudulent conversion under s 1(1)(a) of the Criminal Law Amendment Act 1902 (SA). Section 1(1) relevantly provided:
'Whosoever -
(a) Being entrusted … with any property in order that he may … apply, pay, or deliver for any purpose … the property or any part thereof, or any proceeds thereof; or
(b) Having … received any property for or on account of any other person: fraudulently converts to his own use or benefit, or the use or benefit of any other person …
shall be guilty of a misdemeanor.
30 On a charge of fraudulent conversion under that provision, three things had to be proved: first, that the money was entrusted to the accused for a particular purpose; second, that he used it for some other purpose; and third, that such misuse of the money was fraudulent and dishonest.
31 The majority (Gibbs, Jacobs & Murphy JJ) concluded that on the proper construction of the building contracts, the accused was obliged to apply the deposit in a particular way or to retain an equivalent sum in the company's possession or in a bank although there did not have to be a trust.
32 No issue in that case was taken with the fact that the moneys were in all cases intended to be paid to the company and that in some cases they were not handed to the accused personally. Gibbs J said:
A person may be entrusted with property within the meaning of the section notwithstanding that it is not delivered directly to him by the owner, and that the owner does not know of his existence and has no intention of entrusting it to him; if the accused has obtained or assumed the control of the property of another under circumstances whereby he becomes entrusted, and he fraudulently converts it, he commits an offence (332).
33 Gibbs J relied on R v Grubb [1915] 2 KB 683 as authority for that proposition. In Grubb the property in question was entrusted to or received by a company, not the appellant. The company was under the exclusive control and direction of the appellant. The court held that the words 'being entrusted' and 'having received' should not be read as being limited to the moment of the sending or delivering of the property by the owner but may cover any subsequent period during which a person comes entrusted with or receives the relevant property (689). The court also said that if the person directing and controlling the affairs of the company and by whose instructions the property has passed into possession of the company fraudulently converts the relevant property, he would be guilty of an offence. Moreover, if the company was used by the controlling person's directions as the instrument to enable him in the name of the company to become possessed of the property and by means of the company to convert it fraudulently to his own use or benefit, he would be guilty of an offence (690).
Indictment a nullity - issue 1/grounds 1(a) and 2B
34 Section 178(2) of the Criminal Procedure Act 2004 (WA) (CPA) requires that any objection by an accused to an indictment on the ground that it is defective must be made before the prosecutor's opening address. However, that requirement does not apply to an indictment that is a nullity: Kahatapitiye v The Queen [2004] WASCA 189; Russell v The State of Western Australia [2011] WASCA 246 [28].
35 An indictment will be a nullity if the counts in the indictment do not disclose a criminal offence known to the law: Kahatapitiye [9]; R v Ayres [1984] 1 All ER 619.
36 However, if the charge can be seen fairly to relate to, and be intended to charge a known and subsisting criminal offence but is pleaded in terms which are inaccurate, incomplete or otherwise imperfect, then the question is whether the particular error in the pleading prejudiced or embarrassed the accused in any way: Kahatapitiye [9], [22]; R v Ayres (626).
37 Assuming that s 378(9)(b) of the Code was the relevant offence creating provision, the appellant contended that on the proper construction of s 378(9)(b) the elements of the offence require that the accused receive directly from the owner of the relevant property both the property and the direction that it (the property) be applied to the specified purpose. As all counts in the indictment pleaded that the money and direction was received by Cape Bonbon as trustee for the Cedar Trust with a direction as to its use, it did not charge an offence known to the law.
38 There can be little doubt that the offence of stealing is created by the opening two lines of s 378 of the Code, not by s 378(9)(b) which identifies the maximum penalty for an offence in the circumstances described in par (b). Indeed, it appears that all of the paragraphs in s 378(9) relate to different circumstances in which there can be a stealing by direction under s 373 of the Code. However, the reference to s 378(9)(b) in the indictment does indicate that s 373 is relied upon. In particular, the prosecution case was not run on the basis that, from the time of receipt of the relevant moneys by Cape Bonbon (or the appellant as its agent) as trustee the complainants had a beneficial interest in the money until it was applied for the specified purpose.
39 In identifying the elements of the offence of stealing by direction based on fraudulent conversion, regard must be had to the opening lines of s 378, s 371 and s 373. An accused will be guilty of stealing money if he:
- takes or converts to his use or the use of any other person
- money
- with an intent to use it at his will although he may intend to afterwards repay the amount to the owner.
40 The requirement that there be a taking or conversion of property within the definition in s 371 requires that the accused not be the owner of the property at the time it was taken or converted. The purpose of s 373 is to prevent that issue arising in the circumstances where it applies.
41 Under s 373 when an accused:
- receives either alone or jointly with another person any money
- with a direction that such money shall be applied to any purpose
- then such money is deemed to be the property of the person from whom the money was received
- until the direction has been complied with.
42 As is clear from Parker, it is wrong to confine the focus to the receipt of the moneys in the form in which it was received from the relevant person. The expression 'such money' in s 373 is a reference to the money in the form it was received and as well as to any changes in the form of the property until the direction is complied with.
43 Accordingly, Cape Bonbon did not become the owner of the chose in action constituted by the bank account in which all the money was deposited. The owner of the chose in action in each count is the person(s) from whom the cheques were received (the investor(s)) by Cape Bonbon. Thus there was no change in ownership and the direction(s) still attached to the new form of property. As in Parker, this was a case of fraudulent conversion. When the appellant withdrew the investors' money from Cape Bonbon's bank account with knowledge of the direction applicable to it and used it for himself and his wife, at his own will, he fraudulently converted the money.
44 On this analysis, the direction attaches to the 'property' in its various forms until the purpose is performed. An offender may 'receive' (that is, obtain possession of) property under s 373 either directly or indirectly. There is no justification in the text or purpose of s 373 to confine it to the direct recipient of the property. The appellant received the money indirectly when he exercised control over Cape Bonbon's bank account to withdraw and apply the money. Thus, the counts in the indictment charged an offence known to the law.
45 Moreover, possession is widely defined to include control for the benefit of another person. Receipt of property by an individual that controls a company may also be receipt by the company and vice versa. In this case it was also open to plead that the money was received by the appellant with a direction. These various outcomes are consistent with Stephens and Grubb.
46 Whatever be the correct analysis, the indictment was not on any view a nullity. The appellant was convicted of an offence known to the law. Even if there was a defect in the indictment, it would not have caused the appellant any arguable prejudice or embarrassment.
Issue 2/ground 1(b)
47 The appellant contends that the evidence was incapable of establishing that the complainants named in the indictment were the owners of the property that was stolen by the appellant. I remain confused as to the basis relied on for this submission. It would seem that initially the appellant's legal advisers in the appeal did not appreciate the relevance of s 373 of the Code.
48 At the hearing of the appeal it was suggested that because the complainants were not proven to be the owners of the money (the cheques) in question, s 373 had no application. That submission raises an issue as to the proper construction of s 373 which does not need to be determined in this appeal because the submission is inconsistent with admissions made by the appellant at trial. It is sufficient for present purposes to note that s 373 nowhere refers to the 'owner' of the property the subject of a direction; instead it deems that the property (including any change in form to which it can be followed) is the property of the person from whom the property in its original form was received. The evidence established that the cheques and the associated directions the subject of each count were received from one or more of the complainants nominated in the counts.
49 There was a suggestion at the hearing of the appeal that the complainants were not the owners because the money was paid by one or more of the complainants for units held by them in their capacity as the trustee of a trust (see unit certificates at B/G 71, 73, 133). That submission is misconceived. A trust is not a separate legal entity and cannot be a party to a contract: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360, 367. The trustee in his or her personal capacity is the owner of the trust property.
50 The appellant also relied on evidence that part of the money the subject of count 1 ($65,000) was a cheque drawn by Jevsun Pty Ltd as trustee for the PA and KM Nelley Family Trust for units in the Cedar Trust registered in the names of the complainants as trustee for the Hoodya Trust. Even if ownership is an element of the offence and the State had failed to prove that the money the subject of the Jevsun cheque was the complainants', that would not alter the verdict on count 1 based on the balance of the money.
51 In any event, the trial was conducted by the defence on the basis that one or more of the complainants nominated in each count owned the money paid to Cape Bonbon. The appellant is bound by the way he conducted his defence. Formal admissions (5), (10) and (14) admit that one or both of the relevant complainants was the drawer of the cheque deposited into the account of Cape Bonbon.
52 Further, counsel for the appellant explained the defence case in opening as follows:
Where the money went from the Cape Bonbon account and what was done with the money is only relevant if there was a direction, as alleged by the prosecution. The payments that you've heard were made by the investors; that is, the complainants named in the indictment, went into the Cape Bonbon account. It’s the defence case that those payments were made solely for the purpose of purchasing unit holdings in the Cedar Trust (ts 58). (emphasis added)
53 Moreover, the prosecution evidence on the subject of ownership of the money deposited into the Cape Bonbon account was, because of the defence admissions, curtailed by the trial judge without objection on behalf of the appellant (ts 190). The trial judge confirmed the admissions on that subject in his summing up (ts 448) without objection from the appellant. Counsel for the appellant also repeated the admission in his closing address as follows:
Who was the person gathering up all of these investors? Was it Mr Hickey? Was Mr Hickey gathering up Kane and Reagan Croese? Was he chasing up Robert Matthews? Was he chasing up Karen Nelley? Because they're the complainants; they're the ones that are named in the indictment; they're the ones who invested (ts 40). (emphasis added)
54 For these reasons, I would dismiss issue 2 and ground 1(b).
Issue 3
55 It was contended on behalf of the appellant at the hearing of the appeal that there was a disconformity between the terms of the indictment which alleged that Cape Bonbon received the moneys, and the way the prosecution case was run at trial, which was that the appellant received the moneys.
56 The trial judge's direction to the jury in his summing up illustrates that this submission is without substance. In any event, the evidence established that the appellant was the controlling and directing mind of Cape Bonbon and received the moneys, indirectly and/or directly.
Grounds 2 and 2A
57 These grounds are without merit. As there was evidence on which a jury could lawfully convict, there was no proper basis in this case to make a no case submission. Trial counsel, being an officer of the court, must act in accordance with his or her professional judgment on an issue of law. As to matters of forensic judgment more generally, see TKWJ v The Queen (2002) 212 CLR 124 [8]; R v Birks (1990) 19 NSWLR 677. In any event, a failure to make a no case submission does not give rise to an appealable error unless it results in a miscarriage of justice. None is apparent in this case.
Ground 3
58 The appellant contends that it was not open on the evidence to find that the complainants had directed the appellant to use the funds to purchase property that would be renovated/developed with a view to selling it for a profit because that purpose was inconsistent with cl 11 of the Trust Deed. The ground claims that the complainants 'later received and signed an application for units' in the Cedar Trust. However, there was evidence that one of the complainants, Mr Matthews (count 2), signed the application at or before handover of the cheque.
59 In relation to each count the prosecution case was that the direction in question was an inference to be drawn from all the surrounding circumstances and accompanied the receipt of the moneys, being at the handover of the cheques to the appellant (counts 1 and 2), and the direct deposit of the cheque into the Cape Bonbon account (count 3).
60 However, I will proceed on the basis that an express or implied direction as to the purpose for which the money shall be applied may later be withdrawn provided the money had not been misused prior to the withdrawal of the direction.
61 The appellant's case in the appeal is that cl 11 of the Trust Deed is inconsistent with, and overrode, the direction. The proper construction of cl 11 of the Trust Deed is a matter of law for the trial judge not a question of fact for the jury: R v Clowes (No 2) [1994] 2 All ER 316.
62 The Cedar Trust is a unit trust established by Deed made on 4 April 2005. Clause 2.2 of the Trust Deed provides:
The Trustees HEREBY DECLARE that they will stand possessed of the Trust Fund upon trust for the Unit Holders from time to time upon the trusts and with and subject to the powers and provisions of this Deed.
63 The Trust Fund is defined to mean the Initial Sum ($2.00), or moneys to and accepted by the Trustees upon the issue of Units pursuant to cl 3 hereof.
64 Clause 3 relevantly provides:
3.1 The beneficial interest in the Trust Fund as originally constituted and as existing from time to time shall be vested in the Unit Holders for the time being.
65 Clause 11 is headed 'Investment Powers' and relevantly provides:
Notwithstanding the trusts hereinbefore declared and in addition to and without limiting the power and discretion vested in the Trustee by law the Trustee shall have the power to deal with the Trust Fund and attend to matters and act in such manner for the purpose or benefit of the Trust as if the Trustee were the absolute and beneficial owner of the Trust Fund and without limiting the generality of the foregoing shall have the following powers and discretions which may be exercised by the Trustee at any time and from time to time in the Trustee's uncontrolled discretion: -
11.1 To apply and invest all moneys at any time forming part of the Trust Fund in any such investments … and upon such terms and conditions as the Trustees shall in their absolute discretion think fit and to the intent that the Trustees shall have the same powers in all respects as if they were absolute owners beneficially entitled.
66 The essence of the appellant's submission is that Cape Bonbon was free to use the Trust Funds for any purpose unconstrained by the fact of its trusteeship. That construction is untenable. The controlling words of cl 11 are that the trustee shall have the power 'to deal with the Trust Fund and attend to matters and act in such manner for the purpose or benefit of the Trust'. The purpose of cl 11 is to widen the scope of the Trustee's powers not to free it from its obligations as a trustee. Moreover, cl 11 does not arguably entitle the Trustee to ignore a direction as to the purpose upon which a payment is tendered to and accepted by the Trustee.
67 In any event, the evidence established that the appellant in his personal capacity converted the Trust Funds for his personal benefit and that of his wife.
68 Ground 3 is without merit and should be dismissed.
Ground 3A
69 This ground is without merit. There is no foundation for the assertion that the prosecution case was at all times that the directions given by the complainants were 'specifically articulated express directions as to the use of the moneys'.
Ground 3B
70 This ground does not identify any separate or additional ground of appeal. It should be dismissed.
Conclusion
71 Leave was granted on grounds 1 and 3. As proposed ground 2B overlaps with ground 1(a), leave should be granted. For the reasons given above, these grounds should be dismissed. I would refuse leave to appeal on grounds 2, 2A, 3A and 3B all of which had no reasonable prospect of succeeding.
72 Accordingly, the appeal must be dismissed.
73 PULLIN JA: I agree with McLure P.
74 BUSS JA: I agree with McLure P.
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