Lorraine Ina Noble v SA Police No. SCGRG 93/1896 Judgment No. 4366 Number of Pages 9 Criminal Law and Procedure (1994) 70 a Crim R 560

[1994] SASC 4366

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA MATHESON J

CWDS
Criminal law and procedure - offences against property - forgery and uttering of cheque - charges found proved and without convictions being recorded appellant was released on bond and ordered to make restitution and to pay costs - whether defence of claim of right should have been rejected in the light of findings of fact - appeal allowed - orders set aside and information remitted for rehearing. The Queen v Lopatta (1983) 35 SASR 101; The Queen v Langham (1984) 36 SASR 48 and The Queen v Kastratovic (1986) 42 SASR 59, applied.

HRNG ADELAIDE, 16 December 1993 #DATE 21:1:1994
Counsel for appellant:     Mr R N H Mayne
Solicitors for appellant:    Sykes Bidstrup
Counsel for respondent:     Ms M Panagiotidis
Solicitors for respondent: Crown Solicitor

ORDER
Appeal allowed.

JUDGE1 MATHESON J The appellant was charged on an information for that:
    "1 On the 14TH day of DECEMBER,1992 at ROSE PARK OR ANOTHER
    PLACE in the said State WITH INTENT TO DEFRAUD, FORGED A CHEQUE
    NUMBER 000170 DRAWN ON THE NATIONAL AUSTRALIA BANK FOR THE SUM
OF $21,000. SECTION 214 OF THE CRIMINAL LAW CONSOLIDATION ACT,
    1935 This offence is designated as a Minor Indictable offence.
    2 On the 14TH day of DECEMBER, 1992 at ROSE PARK OR ANOTHER
    PLACE in the said State WITH INTENT TO DEFRAUD UTTERED THE
    CHEQUE MENTIONED IN THE FIRST COUNT OF THIS INFORMATION KNOWING
TO BE FORGED. SECTION 214 OF THE CRIMINAL LAW CONSOLIDATION
    ACT, 1935 This offence is designated as a Minor Indictable
    offence." 2. The charges were heard by Mr Ackland SM in the Magistrates Court. He rejected her defence of claim of right, as it is commonly known in its abbreviated form. He found both charges proved, and without recording convictions, discharged the appellant upon her entering into a bond to be of good behaviour for a period of three years. It was a term of the bond that she pay to the Registrar for transmission to Financial Engineers Pty Ltd the amount of $12,482.98 by way of restitution within eighteen months. She was also ordered to pay the Criminal Injury Compensation Act levy of $80, and to pay $300 towards the cost of the prosecution. She was given four months to pay. 3. Financial Engineers Pty Ltd was registered on 30 June, 1992. Its subscribers were the appellant, Ms. Freda Mary Reinboth and Mr Ian Fehlberg, and they were the sole directors. Financial Engineers Pty Ltd was the trustee for a unit trust in which the three subscribers were the unit holders. The execution of the trust deed was not actually completed until 18 January, 1993. The appellant (who was a qualified accountant), Reinboth and Fehlberg operated, under the name Financial Engineers Pty Ltd and as franchisee, a financial planning business, the franchisor being Money Technology Limited based in New South Wales. 4. Financial Engineers Pty Ltd had an account with National Australia Bank. All three directors were signatories, but two signatures were required on cheques. On the date charged, the appellant made out a cheque payable to cash for $1,000. She signed the cheque and got Reinboth to countersign it. Subsequently, she inserted the word "twenty" before the words "one thousand dollars", and the figure "2" before the figure "1" in the figures. She paid the cheque into the account of Kranz Investments Pty Ltd., a company in which she had an indirect interest. She said in evidence that she believed that she was lawfully entitled to transfer that sum of money into that account. 5. The learned Magistrate summarised the facts as follows:
    "Before 15 December (1992) it was understood by all
    concerned that Mrs Noble wished to withdraw to set up a similar
    business with her children. I have no doubt that as the time
    for the dissolution of their business arrangements grew nearer,
    the working relationship between Fehlberg and Reinboth on the
    one hand, and Mrs. Noble on the other, once harmonious became
    more and more strained. There had been amicable discussions
    between Fehlberg and Reinboth on the one hand, and Mrs Noble on
    the other about - may I use Fehlberg's words - assisting the
    defendant with funds to set up her business. Fehlberg says that
    in his discussions with Mrs Noble prior to 14 December, a figure
    of $20,000 was mentioned but 'in the context that they did not
    know the final figure as the company accounts had not been
    prepared'. 'We knew the creditors' he said 'but didn't know
    what the profit would be.' His evidence is that in his mind the
    figure of $20,000 was, as he described it, a guestimate, a
    figure out of the air. Reinboth came to know that Mrs Noble had
    unsuccessfully asked for $30,000 from Money Technology in
    Sydney. Their relationship was then a pleasant one and Reinboth
    offered to try to get money from Money Technology, some of which
    at least would then be available to help Mrs Noble set up her
    new business. On any interpretation of the evidence it must be
    held that the idea that Mrs Noble was seeking money to which she
    believed she was entitled was abroad well before 14 December
    1992. That may be so says the complainant, but as at 14
    December, 1992 the extent of Mrs Noble's entitlement to a share
    of monies owing by Money Technology to Financial Engineers Pty
    Ltd was uncertain. That is because the company accounts had not
    been completed and the profit available for distribution had not
    been calculated. Neither Mrs Noble nor Fehlberg nor Reinboth
    knew what, if anything, Mrs Noble's entitlement would be. Now,
    says the complainant, the accounts have been completed. They
    show that Mrs Noble was entitled to her share of the profit
    $8,682.65 but they also show a debit in her loan account of
    $22,969.66 including the $20,000 that she took it upon herself
    to withdraw from the Financial Engineers Pty Ltd account.
    Incidentally, it's fair to say now that, as I understand Mrs
    Noble, she says that she doesn't trust and without a proper
    audit would not trust those figures. Mrs Noble accepts that by
    agreement between her and Fehlberg and Reinboth, the clients
    that had been serviced by Financial Engineers Pty Ltd up to 15
    December were divided between her and the successor to Financial
    Engineers Pty Ltd To me her claim that she believed that she was
    entitled to a substantial amount for good will is unconvincing
    and probably expedient. Mr Fehlberg tells me that Mrs Noble
    left on the understanding that no amounts were due to her for
    work done in December. He was at pains to emphasize that there
    was no entitlement to money from Money Technology until the work
    was done. He says that no invoices were raised prior to 15
    December and billings for December were due to the successor to
    Financial Engineers Pty Ltd I did not find entirely convincing
    his assertion that no further monies were due to Mrs Noble when
    she left. He was most anxious that I understand that claims by
    Financial Engineers Pty Ltd against Money Technology in Sydney
    depended on the performance of the work that was the subject of
    the claim. Client fees were paid directly to Money Technology,
    Sydney, then disbursed to Financial Engineers Pty Ltd in
    accordance with a variable and apparently rather arbitrary
    formula. Given that the time of the performance of an item of
    work for a particular client was unpredictable, I was left with
    the impression that the formula used appeared to be capable of
    predicting the unpredictable. With that impression, had I been
    Mrs Noble, I might have left the company believing that some
    money was due to me for work I had already done. I accept Mrs
    Noble may well have had such a belief. Moreover, I accept that
    in the atmosphere of distrust and ill-feeling that prevailed in
    the last few weeks, particularly the last few days of Mrs
    Noble's time at Financial Engineers Pty Ltd she felt rightly or
    wrongly that Fehlberg and Reinboth would not co-operate in the
    calculation of, let alone the payment of, any amount to which
    she remained entitled. I accept those things, but that, I
suggest, is not the end of the matter." 6. I merely observe at this stage that his Honour's findings go a long way towards a conclusion that the appellant's defence of claim of right was a reasonable possibility. 7. Mr Mayne, counsel for the appellant, said that the nub of the appeal was the manner in which the learned Magistrate dealt with the claim of right defence. He argued that his Honour incorrectly inferred an intention to defraud and/or an absence of claim of right from a finding that the appellant well knew she was acting dishonestly in altering the cheque. For the relevant law, Mr Mayne relied on three decisions of this court. Counsel for the respondent did not dispute the relevance of those cases, or that the defence of claim of right was open on these charges. Unlike Mr Mayne, I will refer to these cases chronologically, and the first is The Queen v. Lopatta (1983) 35 SASR 101. The facts are set out in the judgment of White J at p 105:
    "The unusual facts were that the appellant admitted breaking
    into his former employer's warehouse at Dry Creek in the
    northern suburbs of Adelaide and taking therefrom 20 large drums
    of oil worth about $5,000, his estimated value of holiday and
    other pay and expenses which, he said, his former employer owed
    him but was neglecting or refusing to pay. At his trial, the
    appellant gave evidence on oath and said that he did not have
    the dishonest intention of stealing the 20 drums of oil. On the
    contrary, he said that he took the drums honestly believing that
    he had a claim of right to them as a measure of self-help. He
    admitted that as he looked at the incident with the benefit of
    hindsight that he had been foolish and wrong-headed, but he
    insisted at all times in evidence that at the time he honestly
    believed in his claim of right. He intended to sell the drums
    of oil; the taking was, therefore, not merely a taking in order
    to hold the oil as security for what he regarded as his just
    claim against his former employer. It was a taking for sale.
    It may be that his claimed state of mind was just as relevant to
    another element of larceny, namely, the element of fraud.
    However, in the light of the aggravating circumstances of
    breaking and entering prior to the larceny, the defence of
    honest belief in a claim of right was, in my opinion, an
    appropriate one. That was the defence pursued at the trial, a
    defence which the prosecution conceded was appropriate and open
    on the facts." 8. At p.107, White J said:
    "If the accused was to have any chance of acquittal, the
    jury had to take a reasonably favourable view of his general
    honesty and his credibility as a witness because his conduct was
    unlawful and even bizarre. Nevertheless, an accused person
    charged with a crime of dishonesty may be heard to say that he
    honestly believed in a claim of right even if there is no
    foundation in fact or law for that wrong-headed belief ...
    insistence upon reasonableness in the grounds as well as honesty
    in the belief is not and never has been the law." (See also per
Legoe J at pp.116-118.) 9. The second case is The Queen v. Langham (1984) 36 SASR 48. King CJ, with whose decision Johnston J agreed, summarised the facts at pp 48-49:
    "In March 1983 the appellant purchased from Super Elliott's
    Sports Store in Rundle Street, Adelaide, a cross-bow for $675.
    The cross-bow did not meet his purposes and he returned it to
    the store on 13th April. He was told that it was not the policy
    of the store to give cash in exchange for returned goods but
    that he would be given a credit which he could use in order to
    make other purchases. There were discussions then and
    subsequently about his purchasing an alternative cross-bow.
    Subsequently, as a consequence of a car accident, he expressed
    his wish to the departmental manager to have the amount of his
    credit in cash, but this request was refused. Later there was
    some trouble where he was residing and he decided that it was
    necessary for him to move and to set himself up in a flat. This
    strengthened his desire to have the cash. On 10th June the
    appellant went to the store and purchased a shotgun using part
    of his credit for the purpose. This left a balance of $301.
    Later in the day he returned carrying the shotgun and menaced
    the departmental manager and an assistant. He pointed the gun
    at them and demanded the balance of his credit in cash. He was
    handed $300 and then demanded and received the additional dollar
    to exhaust the full amount of the credit. It appears that the
    gun was unloaded. The appellant went to a doctor and caused
    the doctor to ring the store to ascertain whether the store
    intended 'to press charges'. The appellant gave evidence on
    oath. He maintained that he believed that he was entitled to
    have the money which he took. He said in effect that he had
    become exasperated by the failure of the store to pay him what
    considered to be due to him. He needed the money urgently as a
    result of his domestic position. He decided to frighten the
    departmental manager into paying him what he considered to be
    due to him." 10. At p.49, King CJ said:
    "It is beyond question that the law does not require that an
    appellant's belief in his claim of right be reasonable, but
    only that it be bona fide. There are many cases to this
    effect, but it is necessary to refer only to the judgments
    of White J and Legoe J in The Queen v Lopatta (1983) 35
    SASR 101." 11. Later, his Honour said at p.53:
    "A claim of right, in order to negative fraud and
    dishonesty, must be genuine, but it need have no foundation in
    law or fact. Fraud and dishonesty are negatived by a genuine
    belief in a legal entitlement to the property taken. Reg. v.
    George (1890) ll LR (N.S.W.) (L) 373 shows that even when
    there is no belief as to entitlement to the property taken,
    dishonesty may nevertheless be negatived by a genuine belief in
    a legal right to take the property. In my opinion, however, the
    cases cited above show that where there is a genuine belief in a
    legal entitlement to the property taken, it is not necessary
    that the belief should extend to a legal right then and there to
    take the property either by the means adopted or at all. It is
    neither necessary nor desirable for the law to be specific as to
    the nature of the right or legal entitlement of which there must
    be a bona fide claim. The essential notion is that the claim of
    right must be of such a nature as to negative fraud or
dishonesty in the taking of the property." 12. The third case is The Queen v. Kastratovic (1986) 42 SASR 59. The rather complicated set of facts are set out in the headnote as follows (although I have taken the liberty to correct faulty reporting in the last paragraph of the quotation):
    "K. was charged before a Judge and jury with having, with
    intent to defraud, demanded from C. money to the amount of
    $500,000 by virtue of a forged guarantee, knowing the same to be
    forged. The facts were that K. had been interested in mining
    ventures and held certain mineral leases. In 1980 a company was
    formed to take over the leases, the directors and shareholders
    being K., C., and W.C. and W. each contributed $12,500 in cash
    and received credit for that amount in loan accounts in the
    company's books. K was credited with $500,000 in a loan
    account in his name in the books of the company as his
    consideration for the transfer of the mineral leases on which he
    had expended capital and labour over a period of years. In 1983
    C received a demand for payment of $500,000 alleged to be due
    under a document, the effect of which was that C undertook a
    personal obligation to pay K the sum of $500,000 in
    consideration of his transfer of the mineral leases to the
    company. The document bore a signature purporting to be that of
    C. There was evidence at the trial of K. that the signature
    was a forgery but no evidence that K. was the forger. K was
    convicted and appealed on the ground that the trial Judge had
    misdirected the jury in that he did not tell them that a genuine
    belief on the part of K. that C. was indebted to him would
negative an intent to defraud on K.'s part." 13. The Court of Criminal Appeal, (King CJ, White and Millhouse JJ), unanimously held that the trial Judge had failed adequately to direct the jury upon the question whether a genuine belief by K that C was indebted to him in the sum of $500,000 would negative the intent to defraud required to establish an offence against s.234 of the Criminal Law Consolidation Act. The appeal was allowed and a new trial ordered. 14. At pp.65-66, King CJ said:
    "It would seem then that an intent to do no more than
    procure the payment of a debt which is presently due and payable
    to the accused, or which the accused believes to be presently
    due and payable, by the alleged victim is not an intent to
    defraud and is not converted into an intent to defraud by the
    employment of dishonest means or the means which are forbidden
    by the statute. That proposition, however, should not be
    understood in a wider sense than intended. It can apply only to
    a belief that the debt is presently due and payable. An intent
    to procure by dishonest means the payment of a debt at a date
    which is earlier than the due date to the detriment of the
    debtor would be an intent to defraud. Moreover I think that the
    proposition must be confined to a state of mind which excludes
    any belief that there is a genuine dispute about or reasonably
    available defence to the accused's claim. In The Queen v.
Langham (1984) 36 SASR 48 I took the view that it is a
    sufficient claim of right to negative a charge of larceny or a
    charge of which stealing is an element, for the accused person
    to believe that he is legally entitled to have the money or
    property paid or transferred to him notwithstanding that his
    belief does not extend to a right to deprive the alleged victim
    of possession of the money or property against his will. The
    content of the legal concept of claim of right which negatives
    the crime of larceny, the essence of which crime is deprivation
    of possession, may not be identical with the legal concept of
    'intent to defraud' which is an element of crimes of obtaining
    money or property. The essence of these crimes is the procuring
    of the transfer by the victim of the legal ownership of the
    money or property and different considerations may apply.
    Whether a belief as to legal entitlement, which is qualified by
    a further belief that there is a genuine dispute or reasonably
    available defence, is a bona fide claim of right which negatives
    larceny does not have to be decided in this case. I think that
    the intent to deprive a person of the opportunity of having a
    genuine dispute or a reasonably available defence properly
    adjudicated upon would be an intent to defraud for the purpose
    of the offences based upon obtaining money or property by
    dishonest or forbidden means. An intent by dishonest means to
    convince the supposed debtor that a defence which the accused
    believes the debtor to consider to be reasonably available to
    him, is without merit, and thereby to procure the payment of the
    claim would be an intent to defraud notwithstanding that the
    accused might genuinely believe that the defence should not be
    sustained and that his claim is just. An intent to substantiate
    by dishonest means a claim which the accused believes to be
    genuinely disputed is an intent to defraud. An intent to

    obtain, by dishonest means, the payment of a sum in excess of
    what the accused believes to be due to him would amount, of
    course, to intent to defraud: R. v. Parker (1910) 74 JP
    208." 15. At p.69, White J said (and Mr Mayne understandably stressed the words I have underlined):
    "The deceitful means used to demand (and thus to attempt to
    obtain) the money by using a forged instrument in support,
    knowing it to be forged, was admitted for the purposes of the
    appeal. Whilst the use of that discreditable and admittedly
    dishonest means was in itself evidence of the appellant's
    dishonest frame of mind in that regard, that aspect of his
    dishonesty did not necessarily preclude the possibility of the
    appellant having an honest belief in his claim of right in law
    to demand and obtain that sum from Dr. Chapman. The dishonest
    means used by the appellant to achieve, or attempt to achieve,
    his desired end of obtaining the money, would no doubt create
    difficulties for him and provide arguments for the prosecution
    in the final process of persuading the jury about the existence
    of any such genuine belief in the claim of right, but it is
    clear law that dishonesty about the means is not necessarily
    conclusive of dishonesty about the end even though some of the
    authorities tend to lose sight of that fact." 16. At p.91, his Honour said:
    "... It should be borne in mind that it was assumed for the
    purposes of the appeal that the Crown had failed to exclude the
    appellant's honest belief in his claim of right. The cases of
    Lopatta, Langham, Smith, Salvo, Brow, and Bonollo and many
    others constitute clear authority for the proposition that
    honest belief in a claim of right is a complete defence and
    entitles the accused to an acquittal, if that claim is accepted
    as a reasonable possibility by the jury, no matter how
    extravagant or unreasonable or dishonest the means used." 17. Mr Mayne argued that the learned Magistrate, having found that the appellant may well have had a belief that some money was due to her for work she had already done when she left the company and that she thought that Fehlberg and Reinboth would not co-operate in its calculation, let alone pay her any amount to which she remained entitled, then mis-directed himself in the following passage:
    "I ask myself this. Did Mrs Noble believe when she altered
    and used the cheque that she was lawfully entitled to transfer
    (for the purpose of this question by whatever means) $20,000
    from the account of Financial Engineers Pty Ltd to (and I use
    and emphasize her words) 'put her family trust in a much better
    bargaining position to obtain the money that was owed.'
    Arguably, it seems to me, (and I don't base my conclusions on
    this argument) the defendant's claimed belief was not in any
    event inconsistent with an intent to defraud, an intent to bring
    about a disadvantage to Financial Engineers Pty Ltd Arguably, it
    seems to me, and I repeat I do not base my conclusions on this
    argument, her claimed belief was not a bona fide claim of right
    at all." 18. Let me say immediately that I agree with Mr Mayne that whether it was a reasonable possibility that the appellant's "claimed belief was a bona fide claim of right at all" was the very question his Honour had to determine, and that to find her guilty as he did without determining whether it was a reasonable possibility amounts to a fatal misdirection. I also agree with Mr Mayne that in posing the question in terms of a "transfer", the Magistrate appears to have failed to distinguish and separate the distinct aspects of the belief to an entitlement to the money and the means used to obtain the money. His Honour appears to have determined the issue of intent to defraud/claim of right upon a statement by the appellant to the effect that she hoped to better the bargaining position of her family trust by transferring the $20,000, but the appellant's case was plainly that whilst the taking of the money might have placed her in a better bargaining position, her belief was that money in excess of $20,000 was owed. The claim of right defence attaches to the belief in the entitlement to the money. 19. Mr Mayne also complained of that part of his Honour's judgment where he "offered" what he called the "analogy" of a hypothetical client coming to the appellant as an accountant and asking her a hypothetical question. His Honour said:
    "Mrs Noble is not and was not a confused amateur. She is
    and was an experienced professional accountant. I offer this
    analogy. If a client had come to Mrs Noble and said 'Mrs Noble,
    I know you're not a lawyer, you're an accountant, but I am in
    the process of a rather unpleasant dissolution of a partnership.
    I believe that when the books are done if they're done properly
    they will show that I have an entitlement to a share of the
    profit, but the way my estranged partners are behaving, I
    believe that they will not help me to determine the amount of my
    entitlement. I'm not sure how much there is in the partnership
    accounts at the moment but I do know I can get my hands on
    $20,000 of it as a sort of security. The way I see it, Mrs
    Noble, once I have that money out of the partnership account and
    in my account, it will put me in a much better bargaining
    position. The way I see it, it will become much easier to make
    the partners see my point of view when we haggle, as surely we
    will about their entitlements, about the accuracy of the
    figures, about the amounts owing creditors and about my
    entitlement, including my claim for goodwill, a claim,
    incidentally, that I haven't mentioned to them yet. Now, Mrs
    Noble, if it transpires that my security is more than my
    entitlement, I shall repay the excess. Do you think I'm legally
    entitled to transfer that money to improve my bargaining
    position?' Looking at it that way, I have no doubt at all that
    Mrs Noble's answer to that question from the client would have
    been 'No'. I have no doubt at all that the advice she would
    have given to that client is the advice that she privately gave
    to herself. Regretfully I say that I do not think it reasonably
    possible that Mrs. Noble believed that she was lawfully
    entitled to transfer $20,000 from the company account to an
    account of which she had control to put her family trust in a
    much better bargaining position to obtain the money that was
    owed. It is a shame that she didn't take her own advice." 20. Mr Mayne pointed out that none of this was ever put to the appellant in cross-examination, and there was no evidence upon which his Honour could make findings that the passages I have underlined indicate he was making. I agree with Mr Mayne that in posing the question in the way he did, there is a real possibility that his Honour crossed over the distinction drawn by White J between what might be a dishonest means on the one hand and a belief in a lawful entitlement to the money on the other hand which is the claim of right. It is clear law that dishonesty about the means is not conclusive of dishonesty about the end. Thus the hypothetical answer that the appellant might give in answer to a hypothetical client might well indicate a knowledge that the use of forgery as a means is dishonest, but it does not necessarily determine the question of the existence of a claim of right or lack of intent to defraud. 21. Finally, Mr Mayne argued that his Honour did not take into account, in finding the charges proved, the appellant's previous good character. She said in evidence that she had never been before a court charged with a criminal offence, that she was a member of the National Institute of Accountants and had practiced as an accountant and tax agent, and thus put her character in issue. Mr Mayne argued that in a case of this sort, evidence of good character was an important factor, and the fact that his Honour did not refer to it in his reasons indicates that he did not give it adequate or proper consideration. This omission in his Honour's reasons would certainly not be fatal in itself, but the cumulative effect of the defects therein, in what I agree was a difficult and unusual case, have led me to the conclusion that the appeal should be allowed. The orders of the learned Magistrate will be set aside. I order a rehearing of the information.