R v Brownlee

[2001] QCA 134

[2001] QCA 134

COURT OF APPEAL

McPHERSON JA
WHITE J
DUTNEY J

CA No 243 of 2000

THE QUEEN

v.

ANTHONY JOHN BROWNLEE  Appellant

BRISBANE

..DATE 06/04/2001

JUDGMENT

McPHERSON JA: This is an appeal against a conviction at a trial in the District Court at Southport at which the appellant was convicted of a single count of misappropriation contrary to section 408C(1)(b) of the Criminal Code.

Specifically, in the form to which it was amended at the trial, the indictment charged that between 17 and
26 November 1994 the appellant dishonestly applied to his own use property being a sum of money belonging to the appellant which was in his possession subject to a trust that it be applied for the purposes of a company named Merchants 2000 Pty Ltd.

The facts in summary are as follows:  Merchants 2000 Pty Ltd, to which I will refer as "the company", was described as the marketing arm of Bettercard Pty Ltd which was engaged in creating a credit card embodying an electronic chip of some kind.  The company had three directors, a Ms Barry, a Mr Gregory and a Mr Favell.  In November 1994, the first two directors began to suspect Favell of misappropriating corporate funds subscribed by investors.  A large sum of money had disappeared and only about $7,000 remained in the company's bank account.  To protect that balance from Favell, Ms Barry and Mr Gregory decided to move the funds and the books to accountants named McGregor Martin. 

Ms Barry was referred by some friends to the appellant as a reliable person.  She spoke to him by telephone on
15 November 1994 and made arrangements to see him at his home at Runaway Bay where she went on the following day which was 16 November.  Ms Barry went back there with Mr Gregory on 18 November and spent some hours in discussion with the appellant.  He described himself as a non-practising barrister and as an expert on company reconstructions.  His wife, Rhonda, who was present at the meeting, ran a company called The Company Keeper.  He advised the two directors to put the company money in a trust account where it would be out of the reach of Favell.
The appellant had control of a company named Stannard Noble Pty Ltd which had a trust account with the State Bank of New South Wales at Chevron Island.  He would, he said, deposit the money in that account until the directors reached a decision about what to do with it.

A cheque, Exhibit 1, for an amount of $7,054.30 representing the complainant company's money was drawn, signed and delivered to the appellant on 18 November.  The cheque was drawn in favour of Stannard Noble and Company's trust account on a CBA account in which the money had temporarily come to rest, and which was operated by a private company controlled by Mr Gregory.

November 18 was a Friday.  On the following Monday,
21 November, the appellant's wife, Rhonda, went to the State Bank at Chevron Island where Stannard Noble had its trust account.  She arranged for a special clearance of the cheque for $7,054 which enabled it to be deposited in the Stannard trust account with the Bank.  It was immediately then transferred to the credit of Stannard general account (which at the time was overdrawn in the sum of $144) and then drawn upon by two cheques, Exhibit 8, made out to cash in amounts totalling some $2,300.  In the nine or so days that followed, further cheques were drawn and presented on that account in amounts totalling more than the balance originally paid in.  By 1 December 1994, the Stannard general account was overdrawn in the sum of $641.20.  The money originally paid in was never repaid, or at least not until after the appellant's conviction in these proceedings.

To establish the appellant's guilt, the prosecution needed to prove that the money in the Stannard general account was in the possession of the appellant, subject to a trust that it would be applied for the purposes of the company, Merchants 2000 Pty Ltd; that the appellant had misapplied it; and that he had done so dishonestly. 

Some form of trust there clearly was; but at the trial there was some difference about its terms.  Ms Barry said that, at the meeting on 18 November 1994, the cheque for $7054 was delivered on terms that the money would be placed in the Stannard trust account until decisions had been made by the directors and shareholders of the company Merchants 2000 about what should be done with it.  The money might, she acknowledged in cross-examination, be going to be used to set up a new business to be conducted by one Susan Payne with a view to promoting the credit card project.  Alternatively, it might remain to be used for that purpose by Merchants 2000.  Mr Gregory did not entirely agree with this version of the conversation about what was to be done with the money.  He said that it was to be held in trust for the company to protect it from Favell and that it was not to be used for any other purpose.

The defence version was rather different from either versions given by the two prosecution witnesses.  The appellant did not give evidence at the trial.  However, Exhibit 2, dated 21 November 1994 and described as a "receipt" from Stannard, was tendered through Mrs Barry.  It describes the sum of $7054.30 as "funds payable to Stannard Noble Pty Ltd as fees due and payable in the course of establishing a corporate structure as per instructions previously tendered".  It was given to Ms Barry and
Mr Gregory in the course of the meeting on 18 November.  

The jury may well have viewed it, having regard to the verdict at which they arrived, as the inception of the fraud or dishonesty that was about to be perpetrated by the appellant.  It spoke of "fees due and payable" for establishing a corporate structure when no fees had yet been earned.  However that may be, even on Ms Barry's version, the appellant had no authority to appropriate the money for any purpose at all until the directors or shareholders had decided to establish a new corporate structure or, indeed, to appropriate it for any other purpose.  Mr Gregory was concerned about the terms of the letter, Exhibit 2, but received an assurance from the appellant at the meeting on 18 November that it was simply another step in ensuring that the money was safeguarded from Favell.

On any view of Exhibit 2, considered in the light of the prosecution evidence, the jury would have been entitled to conclude that it certainly did not authorise drawings on the money to its full extent in the ensuing week.  At the very least, the appellant would first have had to have done something to earn the right to apply it in that way before he could legitimately draw upon it.  When, on a subsequent occasion in December 1994, Ms Barry asked the appellant when he was going to start doing something, he said, "I have been so busy I didn't think it was important, so I haven't done anything."     

He did not explain that he had already used up the money without having done anything at all.  He certainly did not tell her or Mr Gregory that the money was no longer held in trust but was all gone.  In fact, a perusal of the cheques drawn on the Stannard general account shows that three of them were drawn in favour of Telecom in amounts of $500, $334 and $554, and most of the remainder of the money was drawn in the form of cash.  Despite requests the appellant never accounted for what he had done with the money, and in the end proved evasive.  He "kept house", as the saying goes, and warded off inquiries by Ms Barry.

It was nevertheless urged on behalf of the appellant that the evidence did not show that he had applied the money to his own use, and that the trial Judge should not have let the matter go to the jury.  Having regard to the matters to which I have referred, such an argument is untenable and it was not in fact pressed on appeal.  In addition to those circumstances, there was a further factor:  this was that five of the cheques used to draw from the Stannard general account (including two of the cheques to Telecom) were dated 15 November 1994, which was three days before the meeting
on 18 November at which the money was handed over and the trust constituted.  November 15, which was the date of
those cheques, was the day on which Ms Barry had had her first telephone conversation with the appellant and was,
of course, well before the trust was constituted on
18 November.

The jury would have been justified in finding that, at best for the appellant, the cheques had been drawn on 15 November for private purposes and were only presented later once the proceeds of the trust money were credited to the already overdrawn Stannard general account.  On the worst view of it, the appellant drew those cheques with the deliberate intention of using trust funds which he contemplated he was going to receive once they came to him in the next few days.

However the facts are viewed, the applicant applied those funds (or at least some of them) to his own use and not for the purpose for which they were intended, whether that purpose is identified as having been to keep them intact and safe from Favell; or to keep them until it was decided to start a new business in succession to Merchants 2000; or to pay himself fees for work he was going to do but never did in fact perform.  For the same reason, it was plainly open to the jury to use that and other evidence in order to form the conclusion which they did, that the appellant had acted dishonestly.

That is really the end of the matter except for two further points raised by the appellant.  One concerned proof of his signature on the nine cheques forming Exhibit 9 by means of which most of the money was withdrawn.  The other cheques on the account were apparently signed by the applicant's wife, Rhonda.  They were identified by a Mrs Pickford who was a teller at the paying bank in 1994.  She also identified two documentary requests for banking facility, Exhibits 3 and 4, relative to the two Stannard accounts.  The appellant's name, Anthony John Brownlee, and the description "director" with his address at Runaway Bay appears on each of them in the course of identifying him as an authorised signatory on the accounts. The other signatory was his wife, Rhonda Anne.

The appellant's signature is quite distinctive. Even to the untutored eye it is obviously the same signature as appears on those documents and cheques. The Bank treated it as such and it paid the cheques. The learned Judge directed the jury they were entitled to make a comparison of the signatures for the purpose of determining that the appellant had signed those in Exhibit 9. This course was authorised and justified by s.59 of the Evidence Act 1977.

The second and perhaps more important submission that falls to be considered concerns the admission, over objection by defence counsel at the trial, that the appellant had said he was a barrister, and also, in conjunction with it, the reception of evidence that he was not in fact a barrister.

An objection to the admission of this evidence was taken at the trial before any evidence was heard.  His Honour said that at this stage he was not ruling it to be irrelevant.  The objection was, according to my reading of the record, never distinctly renewed in the form of an objection. 

On appeal, it was submitted that the evidence ought to have been excluded as being irrelevant to the question of the terms on which the money was received by the appellant or at most as going only to propensity. But the prosecution was, under s.408C(1)(b) of the Code, required to prove as an ingredient of its case that the trust money was applied "dishonestly". Dishonesty is a state of mind. Setting out to induce Ms Barry and Mr Gregory to part with the money by paying it into the Stannard account was an essential first step on the path to enabling the appellant to misapply the money. It was a step in gaining control of the money preparatory to misapplying it. It is a legitimate process of reasoning to suppose that if he achieved the first step by dishonestly representing that he was a barrister in whom they might have confidence, he had some dishonest purpose in mind at the time when he applied the money as he did. It also went some way to rebutting the defence proposition that Exhibit 2 afforded an innocent explanation of his conduct.

Ever since the decision in R v. Rhodes [1899] 1 QB 77, evidence of prior or subsequent false representations has been admissible to prove fraudulent intent by a similar pretence on the occasion charged. It would be quite extraordinary if it were not admissible to prove fraud in the very offence being prosecuted. The point is,
I think, precisely covered by the decision of the High
Court in R v. Finlayson (1912) 14 CLR 675, where at 680, Griffith CJ, after referring to the decision of the Privy Council in Makin, said:

"An essential element of stealing is the fraudulent intention and any evidence to show the existence of that fraudulent intention is admissible.  It must not, of course, be too remote."

Both his Honour the Chief Justice and Isaacs J regarded the evidence in that instance as admissible in the Crown case to rebut a defence of innocence on the part of the person accused. 

It follows, in my opinion, that the evidence challenged here was both admissible and also not unfairly prejudicial to the accused in his trial on the offence charged.  In my opinion the appeal should be dismissed.

WHITE J:  I agree with the learned presiding  Judge that the appeal should be dismissed for the reasons which his Honour has expressed.

DUTNEY J:  I agree as well.

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