R v Gardner

[1994] QCA 366

IN THE COURT OF APPEAL [1994] QCA 366

SUPREME COURT OF QUEENSLAND

C.A. No. 252 of 1994

Brisbane

Before Davies J.A.
McPherson J.A.
Mackenzie J.

[R. v. Gardner]

BETWEEN

T H E Q U E E N

v.

BRUCE STEPHEN GARDNER

Appellant

Davies J.A.
McPherson J.A.

Mackenzie J.

Judgment delivered 15/09/94

Reasons for judgment by the Court

APPEAL AGAINST CONVICTION DISMISSED.

CATCHWORDS: CRIMINAL LAW - MISAPPROPRIATION OF PROPERTY - Town Clerk dishonestly applied corporate credit card - Card utilised for private purposes not connected with official duties - Whether terms of employment conferred right to use card for private expenses - Whether honest belief in right to use card for private expenses - Whether Council had ownership of credit card.

Counsel:T. Rafter for the appellant

M. Byrne Q.C. for the Crown

Solicitors:Legal Aid Office for the appellant
Director of Prosecutions for the Crown
Hearing Date: 2 September 1994
The appellant was convicted at his trial in the District REASONS FOR JUDGMENT - THE COURT

Judgment delivered the Fifteenth day of September 1994

Court at Cairns of 35 counts of dishonestly applying to his own use a Westpac Bank Mastercard the property of the Cairns City Council. The offences were committed on dates between 9 July 1991 and 6 December 1991, and involved the use of the card to withdraw amounts of cash totalling $28,500 from a Mastercard account maintained by the Bank in the name of the city mayor.

The appellant was employed as the Town Clerk from 2 July 1990 until his resignation on 17 December 1991. In that capacity he was issued with a "corporate card" which gave him access to the Mastercard account. The prosecution case at the trial was that, whereas the appellant was entitled to use the card for out-of-pocket expenses incurred in the course of his employment or for which he had the right to be reimbursed, he had withdrawn the money for private uses not connected with his

duties as Town Clerk.

The appellant himself did not give evidence at his trial; but at a meeting with the mayor and senior council officers on

16 December 1991, and in the course of tape recorded interviews with investigators from the Criminal Justice Commission, he gave explanations for what he had done. Evidence of what he had said on those occasions was admitted at the trial. From this and the course of the trial it appears that his defence essentially was that the terms of his employment conferred on him the legal right to use the card to draw money for the purpose of meeting private expenses; or, if not, that he believed that they did, so that in either event he had not applied the Mastercard dishonestly.

Much therefore depended on the terms of the appellant's employment or on what he believed them to be. There was an initial letter of appointment dated 25 May 1990 (ex. 3), which in para. (a) provided that his salary and conditions would be in accordance with the relevant award, and at a current base salary of $76,623. The letter also included in para. (d) a statement of his right to full private use of a Council owned motor car. On or about 28 May 1991 the mayor signed a memorandum (ex. 4) from the appellant dealing with his remuneration, which

contained the statement that it was to be operative for three years from 28 March 1991. It contained in cl.(d) of Part C a term confirming the right to the private use of a Council owned motor vehicle, "to Ford Fairlane standard", adding however that the appellant might "opt for a lesser valued vehicle as approved by the Mayor, without diminishing the value of the remuneration

package". Part C also incorporated at para.(h) the following

provision:

"Out-of-pocket expenses directly related to the duties of

... Town Clerk will be paid by Council under a
Corporate Card."

There were some later relevant variations of or additions to the appellant's terms of employment. One was contained in a memorandum (ex. 5) dated 12 August 1991, also signed by the mayor, which stated, for the amount of $5,000 out of pocket expenses included in the remuneration package under cl.(h) in ex.4, "now read $10,000". The other dated 2 December 1991 (ex.7), which again was countersigned by the mayor, was

accompanied by an attachment detailing "remuneration package amounts ... at cost to the employer". Item (d) was "out-of-pocket Expenses - Entertainment, etc. - $10,000". The increase from $5,000 to $10,000 came about because of the appellant's ineligibility to become a member of the relevant superannuation scheme. In the result, the contribution that would have been made by the Council to that scheme on behalf of the scheme was used to increase the out-of-pocket allowance in cl.(h) of Part C in ex.4.

Whether the appellant had the right he asserted to use the Mastercard to defray private expenses involved, on one view of the evidence, an initial question whether anything of that kind was ever agreed on, followed by a further question whether, on the proper interpretation of his employment contract or its terms, any such right was conferred. Strictly speaking, the first question was one of fact; the second one of law:

cf. Andrews and Hirst, Criminal Evidence, §2.05, at 15. In fact, the trial judge left both matters to the jury, directing them overall that "it is for you to decide what any document means". His Honour's direction to the jury in that regard was not made the subject of any application for redirection to the trial judge, nor was it a ground of appeal before us. In the circumstances of the case, it can have had no effect on the outcome. The only material on which the appellant could be held at law to have the right he asserted has already been set out, and it is plainly not capable of having the effect contended for. On no view of exs. 3, 4, 5 and 7 can it be said that "out

of pocket expenses" included private expenses incurred by the appellant that had no connection with his employment or duties as Town Clerk.

Whether or not the appellant believed that he had such a right was another matter, and it became the principal question for the jury to decide. In prosecutions under s.408C courts in Queensland have adopted the test of dishonesty applied in cases

under the Theft Act 1968 in England and elsewhere. It involves a two-stage inquiry: first, whether the action in question was dishonest according to ordinary community standards; and

secondly whether the accused himself realised it was dishonest according to those standards. See R. v. Laurie [1987] 2 Qd.R. 762; R. v. Allard [1987] 2 Qd.R. 762. However, when as in the

present case the accused claims he believed he had a right to do the act in question, the two-stage inquiry has tended to be telescoped into the single question whether he honestly (i.e. genuinely) held such a belief. No doubt the reason for this is that in such circumstances the accused is ordinarily claiming the benefit of s.22 or sometimes of s.24 of the Criminal Code. Since both sections operate to exculpate only someone whose state of mind was "honest", an accused who is found to have applied property dishonestly is necessarily denied the benefit of either provision. See R. v. Sitek [1988] 2 Qd.R. 285, 293 (de Jersey J. with whom Connolly J. agreed).

The present case is one of that kind. Surprisingly, the trial judge here ruled that s.22 of the Code had no application.

That conclusion cannot be sustained. The fact that, properly
interpreted, the appellant's employment contract gave no such

right in law did not exclude the operation of s.22. See R. v. Pollard [1962] Q.W.N. 13, per Gibbs J., at 29, approved in Walden v. Hensler (1987) 163 C.L.R. 561, 568-569, 593, 600, 606.

The appellant's use of the Mastercard was an act done with respect to property; and if, in using it to draw money for private purposes, he did not intend to defraud the Council but to assert a right which he believed he had under the terms of his employment, then he was entitled to the benefit of s.22. To

secure an acquittal, it would of course have been enough for the jury to have entertained a reasonable doubt about the state of

his belief on that matter.

Fortunately, although the trial judge's ruling was not legally correct, it had no practical effect on the form of

summing up. His Honour was careful throughout to direct the jury that before finding the appellant guilty they must be

satisfied that he did not believe he had the right to a "discretionary allowance". That was a phrase used at the trial to describe an allowance that an employee was entitled to receive and to use however he wished as if it formed part of his salary and not simply an indemnity for out-of-pocket expenses incurred in connection with his duties. Any doubt the jury may have had concerning the appellant's dishonesty was probably laid

to rest when a Mr B.L. Byrnes gave evidence at the trial. He was the financial controller employed by the Marrickville Municipal Council, where the appellant had been employed as Town Clerk before going to Cairns in 1990. Byrnes gave evidence that at Marrickville the appellant was entitled to an out-of-pocket allowance, which was used to reimburse him for expenditure connected with his duties, but not for anything else. It was this condition of his engagement at Marrickville that the appellant had put forward as the model for the terms of his later employment at Cairns.

The appellant was therefore not disadvantaged in any way by the trial judge's ruling excluding s.22. The point it raised was subsumed in the summing up with respect to the element of dishonesty in s.408C.

The only other legal matter of any apparent consequence was whether the Crown had succeeded in proving that the Mastercard was, as the indictment averred, the property of the Cairns City Council. There was no direct evidence to that effect at trial, and counsel for the appellant protested when the judge initially told the jury that property in the card was not in doubt. His Honour then redirected the jury to the effect that they might consider that the Council at least had an equitable interest in the Mastercard.
Credit cards commonly serve various functions and they assume a variety of forms. At the most elementary level the card links the cardholder with a numbered account maintained by the credit provider against which the cardholder claims to draw or to debit the liability which he or she is incurring either personally or on behalf of someone else. In this sense the card functions as a token of the underlying contractual right or set

of rights that regulate operations on the account. The underlying contractual right constitutes a chose in action, which is a form of "property" within the terms of the definition of that word in s.408C(3)(a) of the Code.

Plainly enough, it was in this sense that the Mastercard was described in the indictment as the "property" of the Cairns City Council. It was not the physical plastic card or token as such that was alleged to have been misapplied but the rights conferred by the card or, more accurately, by the underlying contract between the Council and the Bank. As appears from what was said in Re Charge Card Services Ltd. [1989] Ch. 497, 509, there are ordinarily two contracts involved where a consumer buys goods or services and proffers a credit card in payment.

Omission to prove both or either of them where that is necessary in the circumstances may sometimes be fatal to the prosecution

case: cf. R. v. Evenett, ex parte Attorney-General [1987] 2 Qd.R. 753, 759-760. Here the contract between the Council and

the Bank was not put in evidence. But the transaction was of the simplest kind. By using the card the appellant was able to draw cash from an account with the Bank that was kept in funds

by the Council. As against the Bank, the card itself served

simply to authenticate his authority to make the withdrawal or right, the evidence at the trial was all one way. The documents setting out the appellant's conditions of employment mentioned his being issued by the Council with a corporate card.

cash advance as it was called.

Correspondingly, the Mastercard statements from the Bank describe it as a "corporate card", which seems to mean no more

than that it was issued to a corporation rather than to the individual who would be using it. The various withdrawals

giving rise to each of the counts in the indictments, and the amounts withdrawn in each case, were the subject of formal admissions at the trial. It was to the Council that the applicant was required to and did in fact account for the expenditure involved. The form of certification (ex.11) that was used was signed by the appellant and incorporated the customer copy of the cash advance voucher received from the Bank, bearing the imprint of the card including the names of the Council, the appellant, the branch of the Bank, and the account number. The name and postal address of the Council appear both there and on the monthly Mastercard statements, and the statements were evidently delivered to that address. Payments in satisfaction or reduction of the indebtedness on the account

were made by the Council, which then looked to the appellant to verify or "vouch" for the expenditure incurred. To those present at the meeting on 16 December 1991 he acknowledged that, if he had been mistaken about his right to draw on the account

for private expenses, he would be bound to and would reimburse

the Council. contractual right to the Mastercard, or, in popular language, the card itself, belonged to and was the property of the Council. The power to use it was exercisable by the appellant for the purpose only of his duties as employee, but the card,

meaning the rights it conferred, remained the property of the Council his employer. In so far as the question was not put to the jury in precisely these terms, it admits of only one answer.

Despite the omission, the proviso to s.668E(1) of the Code

operates to sustain the convictions. and may be shortly disposed of. Most of them involve points of admissibility of evidence. It was said that details of what the appellant said at the meeting on 16 December 1991 ought not to have been allowed into evidence because they constituted a

self-serving statement made by the appellant in his own favour.
This can scarcely be considered as producing a miscarriage of

justice requiring rectification on appeal. Somewhat

inconsistently as it may be thought, counsel for the appellant

at trial also sought to have the appellant's statements at the meeting excluded on the grounds of unfairness. The basis of the unfairness alleged was that the appellant had made the statements to avert the threat of suspension from office. In fact, the appellant resigned on the following day. Having heard

evidence from the appellant on voir dire, the learned judge admitted the statements. There is no reason for supposing that his discretion miscarried, or that injustice resulted from his doing so.

It was also objected at the trial that evidence ought not to have been admitted of the appellant's financial position at the time. The evidence showed that the appellant had over-committed himself for mortgage repayments on the substantial house he had bought as his residence in Cairns. Meeting the monthly repayments ($945 per week) absorbed almost the whole of his monthly earnings ($1164 per week). The evidence demonstrated a compelling motive on the part of the appellant for taking the course he did of making withdrawals on the Mastercard account. The judge nevertheless warned the jury that "Just because a man is short of money, in no way proves that he has been dishonest". The evidence was plainly admissible, and the warning prudent.

The Mastercard monthly statements were objected to on the ground that the character of the legitimate expenditure they showed was liable to prejudice the jury against the appellant. There is, however, no reason to suppose that the jury were led by the level or nature of expenditure disclosed in the

statements to disregard their duty of returning a proper verdict on the evidence before them. The case was one in which there was ample material on which they could find the appellant guilty of dishonest misappropriation in using the Mastercard to withdraw cash sums for private purposes. There is no basis for regarding the verdicts as unsafe.

The other grounds in the written notice of appeal lack substance and were not pursued in this Court. The appeal against conviction must be dismissed.