R v Crooks & Harvey

[1994] QCA 429

IN THE COURT OF APPEAL [1994] QCA 429

SUPREME COURT OF QUEENSLAND

C.A. No. 207 of 1994 C.A. No. 206 of 1994

Brisbane

[R. v. Crooks and Harvey]

THE QUEEN
v.
RICHARD LAWRENCE CROOKS
and
PAUL JAMES HARVEY

(Appellants)

______________________________________________________________

Fitzgerald P
Pincus JA

Cullinane J

______________________________________________________________
Judgment delivered 25/10/94
Separate reasons for judgment of Fitzgerald P., Pincus J.A.
and Cullinane J. jointly. All concurring as to the orders to
be made.

______________________________________________________________

APPEALS AGAINST CONVICTION DISMISSED. APPLICATIONS FOR LEAVE
TO APPEAL AGAINST SENTENCES REFUSED.

______________________________________________________________

CATCHWORDS:  CRIMINAL LAW - dishonest application of
property to the use of a company - section
408C(2)(d) of the Criminal Code - appeals
against conviction - whether trial Judge
misdirected jury concerning the issue of
dishonesty.

CRIMINAL LAW - sentence - each appellant a man in his 40s with

no previous convictions - whether 4 years
imprisonment with no recommendation for early
release on parole in each case was manifestly

excessive.

Counsel: Mr JA Jerrard QC and Mr AJ Rafter for the appellants.

Mr J Costanzo for the Crown.

Solicitors: John M O'Connor & Co. for the appellants.

Director of Prosecutions for the Crown.

Hearing Date:28 September 1994

REASONS FOR JUDGMENT - FITZGERALD P.

Judgment delivered 25/10/94

The circumstances giving rise to this appeal are set out in the reasons for judgment of Pincus J.A. and Cullinane J. and need not be repeated.

Most of the points sought to be relied on appeal were not made below or even originally raised in the notice of appeal. Some of the original grounds were abandoned, and the remainder little pressed. Overall, the appeal was sought to be constructed out of a few bits and pieces scattered throughout the record of a 4 to 5 week trial.

One of the original grounds of appeal, at least in its expanded form, was that the trial judge was not fair to the appellants because of (i) questions which he asked in the course of evidence and (ii) a failure to put the defence case adequately. A perusal of the transcript reveals a total lack of basis for either complaint, and neither was made below. There was some intervention by the trial judge, but it was well within permissible bounds; there is no indication that it was intended to do more than clarify the evidence for the jury, or that, in either its purpose or effect, it revealed unfairness to the appellants.

As for the summing-up, I agree with Pincus J.A. and Cullinane J. that it was detailed and careful, and that it adequately summarised both the lengthy prosecution case and the briefer case for the appellants. Indeed, in a critical respect, referred to below, it was unduly favourable to the appellants.

The other original ground related to a response by the trial Judge to a question from a juror. Again, what his Honour said did not form the basis of a complaint or request for redirection at the trial. The Judge told the jury, in answer to a question apparently based on a misconception (as seemed to be conceded here), that they were concerned not with the legal efficacy of the appellant's conduct but with whether it was dishonest. That was correct.

One of the grounds added by leave, which was not raised at the trial, was that a brief direction to the jury with respect to lies by the appellants, while correct in law (Edwards v. R (1993) 178 CLR 193), was insufficient because (i) alleged lies by the appellant Crooks were not sufficiently identified and (ii) there might not have been any lie, especially by the appellant Harvey, who did not give evidence. It is plain that the prosecution alleged that lies had been told by Crooks in court and by both out of court, and that there was substantial foundation for that submission. The trial judge's direction was favourable to the appellants. It would have disadvantaged them if his Honour had elaborated on his direction on the subject of lies. What he did was give them the best direction, from their point of view, available in the circumstances.

The main ground of appeal, which was added by a late amendment, again involved departure from the course of the trial. The appellants' submission depended on a premise that the trial Judge had instructed the jury that dishonesty was to be assessed by reference to the effect of the material transaction on the creditors of the insolvent company, not its effect on the "crew members" for whom the appellants had promised that it would hold the money on trust. This premise in turn depended upon an inference to be drawn by the jury from what was said (or not said) in the summing-up, coupled with an implication said by the appellants to be contained in a question asked by the Judge a week or more before the close of the evidence. The argument was fanciful in all its elements. The Judge, quite properly as was conceded, correctly told the jury that, in assessing whether or not the appellants had acted dishonestly, they were entitled to take into account the financial position of the company, Expo Tours Pty. Ltd., from which they transferred $191,000.00 to another company which they controlled. He did not invite them to consider the effect of insolvency on the creditors of Expo Tours Pty. Ltd. Indeed, incorrectly but favourably to the appellants, he referred to the financial position of Expo Tours Pty. Ltd. in the context of telling the jury that, unless they were satisfied that it was insolvent, they could not convict the appellants.

I agree with Pincus J.A. and Cullinane J. that there is no foundation for a submission that the sentences were manifestly excessive, even when regard is had to the appellants' respective personal circumstances.

I also agree with the orders which their Honours propose.

JUDGMENT - PINCUS J.A. & CULLINANE J

Judgment delivered 25/10/94

The appellants were convicted, after a month-long trial,

of dishonestly applying to the use of a company, Expo
Experience Pty Ltd, to the extent of $191,000, property being
a thing in action belonging to another company, Expo Tours Pty
Ltd. A circumstance of aggravation provided for in
s. 408C(2)(d) of the Criminal Code was alleged namely that the
value was in excess of $5,000.

Each was sentenced to four years imprisonment.

The appellants appeal against the conviction and seek

leave to appeal against sentence.

The notice of appeal contained some five grounds. Two

further grounds were added by leave on the hearing of the

appeal.

The appellants abandoned grounds 1B, 1C and 2.

The primary ground relied upon before us was ground 4,

which was added by leave.

This ground is as follows:

"The learned trial Judge misdirected the jury in his

directions concerning the apprehended insolvency of
the Company, Expo Tours Pty Ltd as the creditors of
that Company would have no claim on the $191,000 the
subject of the transaction in the indictment."
Before turning to that ground and the other grounds of

appeal, it is appropriate to say something about the
circumstances of the offences.

The parties, at the request of the Court, prepared summaries of their respective cases and the evidence in support thereof.

The summary prepared by the Crown is an extensive review

of the evidence adduced on behalf of the Crown and it was accepted as accurate by senior counsel for the appellants before us.

The appellant, Crooks, was a director of the two

companies concerned. The appellant, Harvey, was involved in
the management of Expo Tours Pty Ltd, but was not a director
because he was an undischarged bankrupt. Expo Experience Pty
Ltd was incorporated on 6 December 1991, some three days
before the transaction out of which the charges arose
occurred. The company had paid up capital of $2.00. There
were two shares, one held by a trustee of a discretionary
trust of which the appellant Crooks and his family were
beneficiaries, and one held by a trustee of a discretionary
trust of which the appellant, Harvey and his family were

beneficiaries.

In summary, Expo Tours Pty Ltd proposed to undertake a

project which involved the sale of tours and accommodation to
persons wishing to travel to the Universal Exposition in
Seville, Spain, in 1992. It was proposed that these persons
would be accommodated aboard two ships moored in the
Guadalquivir River near the Expo site. One ship was to be a
five star standard vessel and the other a budget or backpacker
style.

The second part of the project related to the crewing of

the vessels. Advertisements were placed seeking applicants
who were interested in becoming members of the crew of these
vessels who would wait upon the tourists and generally perform
the tasks associated with the vessels. Applicants were
required to pay a fee of $2,500 in return for which it was
proposed Expo Tours Pty Ltd would provide return air fares to
Europe, certain training, meals and accommodation and meet
other outlays including uniforms. The crew were to be paid a
modest wage. A refund was to be permitted to applicants who
did not wish to proceed with their involvement. This refund
was to be allowed up to 40 days prior to certain allocated
departure dates.

Although it is not necessary to go into the details of

this evidence, it appears that discussions took place with
certain sponsors and some degree of success was achieved. The
appellants relied upon their expectations in this regard as

tending to exclude the element of dishonesty.

It appears that the proposal attracted some adverse

publicity which led to a meeting of persons who had applied to
become members of the crew, and families of such persons, at
the Tower Mill Motel in Brisbane. Both appellants attended
and according to evidence placed before the jury of persons
who were present, an undertaking was given that all of the
moneys paid by persons who had applied to become crew members,
would be paid into a trust account and would not be withdrawn
without the prior approval of the crew members.

The transaction out of which the charge arose occurred on

9 December 1991 and involved the following:
a)A debit to an account which was referred to as a trust

account which is also described as No. 3 Cash Management
Account, and into which moneys which had been obtained by
Expo Tours Pty Ltd from potential members of the crew had

been placed (ex. 19).

b)The transfer of $191,000 in consequence of (a) to the credit

of Expo Experience Pty Ltd (ex. 94).

c)An immediate debit to Expo Experience Pty Ltd of $191,000

(ex. 20 - signed by the appellant, Harvey), and credit to
ANZ Bank cheque account (ex. 21) - to the use of Expo

Experience Pty Ltd.

d)A bank cheque was drawn payable to Aussales for $191,000

(ex. 61).

e)These moneys were used to settle the purchase of a ship

named the Cap Don.

It was the case for the Crown that at the time of the

transaction, Expo Tours Pty Ltd was insolvent or at least in
serious financial difficulties. Evidence was placed before
the jury of the financial position of this company at the
relevant time. This evidence came from a number of sources
but was placed in significant detail in documents prepared by
an officer of the Australian Securities Commission, one

Bearkley. See amongst other documents, exs. 97 and 98.

Documents were prepared which purported to relate that

Expo Experience Pty Ltd would perform certain services for Expo Tours Pty Ltd and that it was in satisfaction of a liability for such services that the moneys were transferred to Expo Experience Pty Ltd. See exs. 54 and 55.

At the time of the transfer of the moneys, Expo

Experience Pty Ltd had no assets.

As we have said, the appellant, Crooks, gave evidence.

The appellant, Harvey did not. Evidence was also given by one McCoy who advised that the proposed transaction should be entered into. He is described in evidence as an accountant, although the evidence discloses that he was not a certified practising accountant notwithstanding that he had apparently represented himself as such in certain documents.

For the appellants, considerable reliance was not

surprisingly placed upon what McCoy had said in support of
their defence that they had not acted dishonestly. McCoy also
gave evidence that, in his opinion, Expo Tours Pty Ltd was not
insolvent.

The learned trial Judge instructed the jury, at p. 833-4,

as to the appropriate test to applied in deciding whether
conduct was dishonest in terms which were appropriate and to
which no objection is taken. The learned trial Judge also
told the jury that "as a matter of law" the account into which
the moneys were placed was not in law a trust account.

The learned trial Judge in the course of an extensive

summing up, referred to the financial position of Expo Tours
Pty Ltd at the time of the transaction of 9 December 1991.

At p. 811 of the record, the learned trial Judge said at

an early stage of his summing up:
"But unless you are satisfied that on 9 December the

company was either insolvent or facing insolvency,
you ought not to find dishonesty and that is so
important that I will repeat it. Unless you are
satisfied that the company was either insolvent on 9
December or facing insolvency on that date, you

ought not to find dishonesty."

The learned trial Judge repeated this at p. 930:

"I said to you earlier, and I emphasis it again, that in

deciding whether or not the accused were acting
dishonestly you have to have regard to the solvency
of the company and you ought not to find either
accused guilty of dishonesty unless you are
satisfied beyond reasonable doubt that Expo Tours
was either insolvent or facing insolvency as at 9
December."

At pp. 930-4, he gave redirections to the jury which in summary had the effect of telling them that unless they were satisfied beyond a reasonable doubt that Expo Tours Pty Ltd was "either insolvent or facing insolvency as at 9 December" and that the applicants knew this, they should be acquitted.

Finally, the learned trial Judge, after a request by the jury for assistance, summarised the Crown case. In the course
of doing so he stated at pp. 941-2:

"Now, if you look at that flow chart, Exhibit 99, and you

think about the position on 9 December, now the
Crown case is that at that time the company, Expo
Tours, was either insolvent or facing insolvency and

it is for you to decide whether you accept that.

But suppose on that date each of the accused went to the

bank and drew out $191,000 and went down to the race
track and spent all that money on the races and
backed the wrong horses. Well, if each of them knew
that the company, Expo Tours, was either insolvent
or facing insolvency at that date, then it would
clearly be dishonest for each of them. Now, the
Crown case is that on that date there were two sham
invoices presented from a $2 company, Expo
Experience Incorporated, three days earlier and
$191,000 was paid over to Expo Experience for what
were two sham invoices and that payment was
dishonest because each of the accused knew that the
company was either insolvent or facing insolvency on
that date.

And the Crown case is, and it is for you whether or not

you accept it, that each of the accused was aware
that monies had been obtained from members of the
public by assurances that the monies they paid over
would go into a trust account and would not be
released from that trust account without their
written authorisation, and there was a refund policy
whereby they could get a refund up to 40 days before
the departure date."

As to ground 4, it was the appellants' argument that the

moneys were the subject of a trust in favour of the persons
who paid the moneys and thus the dishonesty of the appellants
was to be determined by reference to their dealings with those
moneys, and the financial position of the company was
irrelevant. It was said that the appellants' criminal
responsibility would be the same if the company was in a sound
financial position as it would be if the company was insolvent
or facing insolvency.

It was conceded that it would have been open to the jury

to find that the appellants had acted dishonestly by
transferring funds, the subject of such a trust, to another
company but that it was also open to them to entertain a doubt
as to whether the appellants had acted honestly in doing so.
It was suggested that a jury might not be satisfied beyond a
reasonable doubt that the appellants had not done so in the
honest belief that they were furthering the purposes for which
the moneys had been paid to them and were acting in the
interests of the beneficiaries. Senior counsel for the
appellants accepted that appropriate directions had been given
to the jury as to obligations of the appellants not to use the
moneys paid by potential crew members without their authority
and conceded that a conviction on this basis could not be
challenged. Apart from the passage set out above the learned
trial Judge had referred to the evidence on this subject in
considerable detail including legal advice on the one hand and
McCoy's advice on the other. However, it was said that the
jury was diverted from its task by the emphasis which the
learned trial Judge placed upon the insolvency or difficult
financial circumstances of the company, and that the
consequence was that the appellants were deprived of the
possible opportunity of an acquittal by reference to the
considerations already referred to.

It is the appellants' case that the only basis upon which

the case ought to have been left to the jury was the
unauthorised dealings with trust monies and that the
directions about the company's financial position tended to
divert them from a consideration of the dishonesty of the
actions of the appellant by reference to that matter.

We cannot accept this submission. In our view, the

financial position of the company was a relevant factor. If
moneys held on trust are transferred without authorisation to

another person, the dishonesty of the actions may be apparent.

On the other hand, the conclusion that the trustee was acting

dishonestly may be more readily drawn where, because of the
financial position of the trustee, its inability to make good
such funds or meet any claim by the beneficiaries for breach
of trust is clear.

In our view, the insolvency of Expo Tours Pty Ltd at the

time the moneys were transferred to Expo Experience Pty Ltd
was a matter of considerable importance on the question of
dishonesty.

To the extent that the learned trial Judge directed the

jury that they ought not to convict unless they were satisfied
that the company was insolvent or facing insolvency and that
the appellants were aware of this, this represented a
direction which was more favourable to the appellants than
they were entitled to as was conceded by senior counsel for
the appellants.

We are satisfied that when the summing up is viewed as a

whole, the jury were not distracted from relevant
considerations. we are satisfied there is no substance to the
claim that the appellants were denied the opportunity of a
possible chance of acquittal for this reason.

A further ground of appeal, added by leave, was that the
learned trial Judge inadequately directed the jury as to the
significance of lies told by the appellants. It was said that
the relevant direction did not meet the test laid down in
Edwards v. The Queen (1993) 178 C.L.R. 193. The directions
appear at pp. 927-8 of the record.

Before us the primary complaint on this subject was that

the learned trial Judge referred to alleged lies by the
appellant, Crooks, without identifying them. It is apparent
from the record that Crooks who, as we have said, gave
evidence, gave an account which was substantially challenged
and that the veracity of that account and, in particular, his
belief that he was entitled to effect the transaction, was
challenged as untrue. It is said that so far as Harvey is
concerned, the particular matter referred to by the learned
trial Judge was not clearly shown to be a lie.

The jury could not have been under any misapprehension as
to what was being referred to in the case of either appellant.
It is to be noted that no objection was taken at the time to
this direction and, indeed, counsel who appeared for both
appellants seems to have suggested the form which the
redirection might take. The redirection was sought by counsel

for the Crown.

The remaining two grounds of appeal are grounds 1A and

1D.
The effect of the former is that the summing up was unbalanced in that it favoured the Crown to a degree not justified by the relevant strengths of the respective cases. In written submissions the appellants appear to have extended this to include questions asked by the learned trial Judge of the appellant, Crooks, in the course of his evidence. A reading of the evidence of the appellant, Crooks, shows that whilst his Honour did, from time to time, ask questions of him, the nature and extent of the questioning does not go beyond what was permissible on the part of a presiding Judge.

A judge conducting a trial is always entitled to question a

witness not only to clear up ambiguities but also for the
purpose of testing his evidence where this is appropriate.
See Hoare J. in R. v. Gardiner [1981] Qd.R. 394.

As to the complaint that there was some imbalance in the

summing up, we are satisfied that this also is without
substance. The evidence was very extensive and the summing up
was a detailed and careful one. By the very nature of the
respective cases, it was necessary when the learned trial
Judge summarised the cases for the Crown and the defence, that
his reference to the former would be more extensive than his
reference to the latter. However, a perusal of the summing up
satisfies us that the case for the appellants was put fairly
and fully.

As to ground 1D, the jury plainly had some difficulty in

their deliberations and sought assistance from the learned
trial Judge. What occurred appears at pp. 490-1. It seemed
to be common ground between us that the foreman's request was
to be understood as an inquiry whether if the steps taken were
effective in law to transfer the moneys from one company to
the other, this would preclude a finding of dishonesty.

His Honour in responding to the request, did no more in our view than direct the jury to the relevant considerations and away from what would plainly have been an irrelevant one.

The appeals against conviction should be dismissed.

As to the applications for leave to appeal against

sentence, each appellant was a man in his 40s who had not been
previously convicted. It was however conceded that the
sentence which his Honour imposed was within the range of a
sound sentencing discretion. It was suggested that the Court
ought to have made a recommendation that the appellants be

eligible for parole after serving 12 to 18 months.

When the circumstances of the offence are considered it

is impossible to conclude that the sentences imposed were
manifestly excessive.

The appeals against conviction should be dismissed.

Leave to appeal against sentence should be refused.