R v Cook; ex parte Director of Public Prosecutions (Cth)

[1996] QCA 66

IN THE COURT OF APPEAL	[1996] QCA 066
SUPREME COURT OF QUEENSLAND

C.A. No. 471 of 1994

Brisbane

[R. v. Cook; ex parte Cwth DPP]

THE QUEEN

v.

MAXWELL LEONARD COOK

REFERENCE BY COMMONWEALTH DIRECTOR
OF PUBLIC PROSECUTIONS
UNDER S.669A OF THE CRIMINAL CODE

Davies J.A. Moynihan J. Ambrose J.

Judgment delivered 22/03/1996

Judgment of the Court

IN ANSWER TO THE QUESTIONS IN THE REFERENCE UNDER S.669A OF THE
CRIMINAL CODE:

1. THE LEARNED TRIAL JUDGE WAS WRONG IN DIRECTING AN ACQUITTAL ON THE BASIS OF S.24 OF THE CRIMINAL CODE.

2.         NO.

3.         IT IS NOT APPROPRIATE TO ANSWER THIS QUESTION.

CATCHWORDS: Civil - power of Commonwealth Director of Public Prosecutions to refer matters under s.669A Criminal Code - criminal responsibility for contravention of s.232(6) Corporations Law not excused or excluded by belief that conduct in the best interests of the company - relevance of s.24 Criminal Code to this offence.

Counsel:	Mr. T. Carmody for the Commonwealth Director of Public
Prosecutions
Mr. G. Long as amicus curiae
Solicitors:	Commonwealth Director of Public Prosecutions Legal Aid Office as amicus curiae
Hearing Date:	27 April 1995
REASONS FOR JUDGMENT - THE COURT

Judgment delivered the 22nd day of March 1996

This is a reference by the Commonwealth Director of Public Prosecutions purportedly made under s.669A of the Criminal Code. The circumstances giving rise to it are taken from the reference.

The accused, who was a director and chairman of Portfolio Holdings Limited ("Portfolio Holdings"), was acquitted at the direction of the trial Judge of one count on an indictment that he did, on 14 January 1991, make "improper use of his position as an officer of Portfolio Holdings to gain directly an advantage for himself". The accused was also chairman of the Family Security Friendly Society ("the Friendly Society"). In January 1991, the affairs of the Friendly Society came under investigation by the State and Federal police and the Australian Securities Commission. As part of that investigation a search warrant was executed on the offices of the Friendly Society on 11 January 1991. The search warrant did not relate to the affairs of Portfolio Holdings.

On 14 January 1991, the accused arranged for Chase AMP Bank to transfer $199,000 from the account of Portfolio Holdings to an account which he and his wife conducted also with Chase AMP ("the joint account"). This was the act alleged to constitute the improper use. He also arranged for another sum of money to be transferred from the account of his private company, Lawford Investments Pty. Ltd. to the joint account. He indicated to the bank that his reasons for transferring the funds pertained to the situation with Friendly Society in that he was concerned that the funds in his own companies may become frozen. He also told the bank that the funds being transferred would be used as working capital until the dispute with the Friendly Society was resolved.

On 16 January 1991, he arranged for the funds held in the joint account to be transferred to another joint account operated by his wife and him at a different bank.

At the end of the Crown case, counsel for the accused made a submission that there was no case to answer. The learned trial Judge acceded to this submission. He said that the evidence adduced by the Crown was capable of establishing that, viewed objectively, the accused made improper use of his position as an officer of Portfolio Holdings and that he did so with an intent to gain directly an advantage for himself. But his Honour said that the evidence suggested clearly that the accused believed he was acting in the interests of the corporation and that this belief gave rise to a defence under s.24 of the Criminal Code and therefore directed the jury to acquit.

The questions asked in the reference are:

1.        did the trial judge have the power or legal obligation to direct the jury to acquit;

2. does a belief on the part of an accused person that his or her conduct was in the best interests of the corporation exclude or excuse criminal responsibility for an offence against s.232(6) of the Corporations Law; and

3. is the criminal responsibility of a person being tried in a court in Queensland
exercising federal jurisdiction for an offence against s.232(6) of the Corporations
Law to be determined by applying common law principles or solely in accordance
with the provisions of Chapter V of the Criminal Code 1990?
There is a preliminary question, on which the Court invited submissions, of

whether the Commonwealth Director of Public Prosecutions may refer to this Court a point of law pursuant to s.669A of the Criminal Code. This Court has jurisdiction under s.669A only to hear a reference by the Attorney-General. "Attorney-General" in s.669A is the State Attorney-General: s.35(1) of the Acts Interpretation Act 1954. Accordingly, s.669A does not permit the Commonwealth Director of Public Prosecutions to refer a question to this Court.

However s.68(2) of the Judiciary Act 1903 (Cth) gives jurisdiction to the State Supreme Courts in relation to "... the hearing and determination of appeals arising out of any ... trial or conviction", with respect to an offence against the laws of the Commonwealth committed within the State, which appeal is brought by the Commonwealth Attorney-General (or by the Commonwealth Director of Public Prosecutions: Rhode v. D.P.P. (1986) 161 C.L.R. 119).

Two questions arise under that section:

(a)      is an offence against the Corporations Law (Qld) an offence against the laws of the Commonwealth for its purposes; and

(b) is a reference on a point of law an "appeal" within it? In regard to (a), s.7 of the Corporations (Queensland) Act 1990 provides that the

Corporations Law applies as a law of Queensland. Thus, as the Law is the product of an enactment of the Queensland Legislature, it is a Queensland law: Chew v. R. (1992) 173 C.L.R. 626 at 649. Therefore, prima facie, a contravention of a provision of that Law as enacted by the Queensland Act is not an offence against the laws of the Commonwealth. However, the Corporations Act 1989 (Cth) provides that for the purposes of a law of the Commonwealth, an offence against the provisions of a law of a jurisdiction other than the Capital Territory is taken, firstly to be an offence against the laws of the Commonwealth, in the same way as if those provisions were laws of the Commonwealth, and secondly, not to be an offence against the laws of that jurisdiction. In our opinion, this effectively means that a breach of a provision of the Corporations Law (Qld), is an offence against a law of the Commonwealth for the purposes of s.68(2) of the Judiciary Act: see generally Registrar, Court of Appeal v. Craven (N.S.W. Court of Appeal, unreported, 11 November 1994, C.A. No. 40130 of 1994 at 13).

With regard to (b), s.2 of the Judiciary Act provides "appeal includes ... any proceedings to review or call in question the... decision of any Court or Judge." A reference on a point of law, though not an appeal in the ordinary sense of the word, in that it does not seek to affect the outcome of the case decided below, is an "appeal" for the purposes of s.2 of the Judiciary Act: it "calls into question the decision of the judge": Questions of Law (No.2 of 1993) (1993) 61 S.A.S.R. 1 at 3.

For those reasons we would conclude that s.68(2) of the Judiciary Act confers in this Court jurisdiction to hear a reference under s.669A.

It is convenient to discuss the questions in the reference by discussing question 2 first, then question 1 and finally question 3.

Question 2 asked whether a belief on the part of an accused person that his conduct was in the best interests of the corporation excluded or excused criminal responsibility for an offence against s.232(6) of the Corporations Law. That section provided:

“An officer or employee of a relevant body corporate shall not make improper use of his or her position as such an officer or employee, to gain, directly or indirectly, an advantage for himself or herself or for any other person or to cause detriment to the body corporate.”

The respondent submitted that this was not a proper matter to be dealt with on a s.669A reference. The first argument in this regard was that this question raised "potentially far reaching considerations in relation to criminal responsibility for offences under the Corporations Law". In our opinion, the question is narrowly defined in its scope: any determination on it will only directly affect the operation of s.232(6). In any event, even if the question did involve far reaching considerations, we would not consider that factor as a reason not to answer it: the s.669A procedure is capable of concerning a point involving a principle of general application: R. v. Lewis; ex parte Attorney-General [1991] 2 Qd.R. 294 at 300.

The second argument on this preliminary question was that, because the law as at 14 January 1991, the date of the alleged offence, was not the same as the current law, it was not appropriate for this Court to determine the question. However, as the changes made to s.232 on 1 February 1993 did not alter in any way the substantive elements of s.232(6), this submission must fail. The fact that the amendments of 1993 imposed a civil penalty for contravention of s.232(6) (s.232(6B)) which may or may not have criminal consequences (ss.1317DA and 1317FA) does not have the effect that a reference under s.669A is unable to be made.

We turn now to the substantive question. Although s.232(6) has not been the subject of judicial exegesis, s.229(4) of the Companies (Queensland) Code 1961 which is the predecessor to s.232(6), and is in all relevant respects the same, has been considered on a number of occasions. In Chew the majority of the Court (Mason C.J., Brennan, Gaudron and McHugh JJ.) at pp.633-4 said of s.229(4) that:

(a)      the word "to" in the phrase "make improper use of his position ... to gain ... an advantage ..." is purposive; the accused officer must make the improper use of his position for the purpose of gaining an advantage for himself (or for another person) or of causing a detriment to the company;

(b)      the act constituting the improper use must be a willed or deliberate act; and

(c)       "the accused's state of mind is relevant not only to the requirement of purpose but also to the element of improper use of his position. If, for example, an accused person reasonably but mistakenly believed that a particular transaction which he authorised was genuinely for the benefit of the corporation, that belief may, in an appropriate case, be material in determining whether the accused person can be held criminally responsible for using his position in a manner which would objectively be seen to be improper."

The meaning of the last passage was explained in the majority judgment (Brennan, Deane, Toohey and Gaudron JJ.) in R. v. Byrnes & Anor. (A38, 39 and 17 of 1994, 23 August 1995, unreported). They said that an accused's

"appreciation of the circumstances may be relevant not only to the purpose
for which he acted but also as to the propriety of the use he made of his
position in acting as he did.
...
The passage above cited from the majority judgment in Chew points out
that a single state of mind with which an act is done might establish both
impropriety in the use of position and the proscribed purpose (or intention)
with which the position was improperly used.
...
Impropriety does not depend on an alleged offender's consciousness of
impropriety. Impropriety consists in a breach of the standards of conduct
that would be expected of a person in the position of the alleged offender
by reasonable persons with knowledge of the duties, powers and authority
of the position and the circumstances of the case. When impropriety is
said to consist in an abuse of power, the state of mind of the alleged
offender is important: the alleged offender's knowledge or means of
knowledge of the circumstances in which the power is exercised and his
purpose (or intention) in exercising the power are important factors in
determining the question whether the power has been abused. But
impropriety is not restricted to abuse of power. It may consist in the doing
of an act which a director or officer knows or ought to know that he has no
authority to do."

The answer to this question, if treated as a hypothetical one, is therefore that it depends on the circumstances. Where the alleged impropriety is abuse of power then such a belief may be relevant in determining whether the conduct was improper. But in the present case the alleged impropriety was an act done without authority and plainly one which the accused should have known he had no authority to do. Question 2 should therefore be answered "no".

We turn now to question 1 which asked whether the trial Judge had the power or legal obligation to direct the jury to acquit? The respondent submitted that this was also a question which it was not competent for the Court to answer under a s.669A reference on the basis that it is a question of fact.

However it follows from the answer to question 2 that the learned trial Judge was wrong in directing an acquittal based upon s.24 or, for that matter, its common law equivalent. Impropriety was established by the unauthorised payment which was also made for the purpose of gaining an advantage for the accused. It was irrelevant to that offence that the accused believed he was acting in the interest of the corporation. This question should therefore be answered by saying that the learned trial Judge was wrong in directing an acquittal on the basis of s.24.

Question 3 asked whether the criminal responsibility of a person being tried in a court in Queensland exercising federal jurisdiction for an offence against s.232(6) of the Corporations Law should be determined by applying common law principles or solely in accordance with the provisions of Chapter V of the Criminal Code (Qld).

The respondent argued that this was not a proper question for a reference on the basis that s.24 of the Criminal Code was not in issue at trial. It is true that the learned trial Judge, in the course of delivering his reasons for taking the course which he proposed of discharging the jury, referred specifically to and relied on s.24. In that sense its application to this offence arose in the trial. However the point raised by question 3 did not arise at the trial and could not have arisen for the reasons given in the answer to question 2. Neither s.24 nor its common law equivalent could have had any operation in this case. Accordingly it is not appropriate to answer this question.