R v Griffiths

[1994] QCA 455

IN THE COURT OF APPEAL [1994] QCA 455

SUPREME COURT OF QUEENSLAND

C.A. No. 146 of 1994

Brisbane

[R. v. Griffiths]

T H E Q U E E N
v.
JOHN HENRY GRIFFITHS

(Appellant)

_______________________________________________________________

Fitzgerald P.
Davies J.A.

Williams J.

_______________________________________________________________
Judgment delivered 02/11/94

Joint reasons for judgment of the President and Williams J.; Davies J.A. separately. All concurring as to the orders to be made.

APPEAL AGAINST CONVICTION DISMISSED. APPLICATION FOR LEAVE TO
APPEAL AGAINST SENTENCE REFUSED
________________________________________________________________

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CATCHWORDS:  CRIMINAL LAW - CONVICTION - EVIDENCE - appellant convicted of offences of obtaining property by wilfully false promises, false pretences and misappropriation - appellant controlled company operating retirement village scheme - approved prospectus given to prospective lessees provided that moneys received from them was payable to, and would be deposited in, a solicitor's trust account - moneys in fact deposited into account controlled by appellant and his wife - whether evidence of transactions other than those directly involved in the offences charged was admissible - whether dishonest intent could be inferred from course of conduct - whether admissible evidence should have been rejected as a matter of discretion

CRIMINAL LAW - CONVICTION - MISDIRECTION - whether trial judge erred in telling jury that agreement between the appellant and mortgagee was irrelevant - relevance to issue of dishonest intent - whether misstatement of evidence by trial judge -whether miscarriage of justice

CRIMINAL LAW - SENTENCE - offences motivated by financial difficulties - no prior convictions - cynical and deliberate breaches of trust - no loss suffered by intending lessees - deterrence

- whether sentence manifestly excessive

Counsel:	Mr K. Fleming QC for the appellant Mr J. Hunter for the respondent
Solicitors:	Witheriff Nyst for the appellant Director of Prosecutions for the respondent
Date of Hearing:	3 August 1994

JOINT REASONS FOR JUDGMENT
FITZGERALD P. AND WILLIAMS J.

Judgment delivered 02/11/1994

The circumstances giving rise to this appeal are set out in the reasons for judgment of Davies J.A.

The material period is between April 1991 and January 1992. On any view of the matter, during that period the appellant received sums of money from lessees or prospective lessees which were required to be paid into a trust account and retained there until the material leases had been endorsed with the mortgagee's consent and lodged for registration. Further, the appellant had represented and promised to lessees, including the complainants or their solicitors, that the money would be dealt with in that manner. That was not what occurred. No money was paid to the mortgagee, whose consent was not endorsed on any leases, and no leases were lodged for registration. On the other hand, the appellant withdrew money, which was in an account, not being a trust account, which he controlled, and used it for his, or his private company's, purposes.

The appellant's first complaint was that the evidence of what occurred in the material period was not confined to the transactions directly involving the complainants. That would have been impossible in practice, at least without presenting a distorted picture, and preventing the jury from any realistic assessment of the honesty or dishonesty of the appellant's actions. Indeed, the impugned evidence was essential if the appellant's contention (which, of course, he was not required to establish) that he had acted honestly was to be fairly considered by the jury. The sums obtained from the complainants were paid into an account where they were mixed with other moneys, and it was appropriate to see whether withdrawals could have been referable to moneys to which the appellant was lawfully entitled.

Further, as Davies J.A. points out, the evidence was material to the jury's decision whether, even if the appellant's actions were unjustifiable, his intent was honest or dishonest.

We agree with his Honour that the evidence complained of was admissible and properly admitted in the exercise of the trial judge's discretion.

The appellant drew attention to three other matters; firstly, that he had authority from the mortgagee, Ling, to endorse his consent on the leases, which was not disputed; secondly that, in August 1991, Ling was informed by the appellant that he, the appellant, had $850,000.00 in his trust account and the appellant offered Ling half of that amount (which was considerably less than Ling's entitlement if his mortgage was to be released in favour of those who had made payments to the appellant); and, thirdly, that Ling was paid $850,000.00 in late 1991 or early 1992.

Insofar as there was evidence of these matters, the appellant was entitled to have them considered by the jury in its assessment of the honesty or dishonesty of his conduct and intent. Thus, for example, the jury might have been influenced by such considerations to have a reasonable doubt as to whether the appellant was dishonest or merely incompetent or inefficient; although entitled to put the leases in appropriate condition and lodge them for registration as he was required to do, he had omitted to do so. The point is significant because, despite his breaches of the legislation and his misstatements, the jury might not have been satisfied beyond reasonable doubt of the appellant's dishonesty if the leases had in fact been lodged for registration; and an omission to do so through inefficiency or incompetence might have been considered insufficiently different for the purpose of an assessment of honesty or dishonesty. Indeed, the matters referred to as relied on by the appellant seem to us to provide part of the context which justified the prosecution's proof of the full circumstances relating to the activities associated with the account into which the appellant paid the money from lessees or prospective lessees.

In the course of his summing-up, the trial judge said:
"The second general matter to which I wish to refer is that

there is no charge whatsoever, that Mr Ling has been defrauded. I have to emphasise this in view of a lot of the remarks which are made from the Bar table, there is no charge that Mr Ling was defrauded. If there was an agreement of any kind between the accused and Ling, and Ling was a complainant, if there was some charge that Ling was supposed to have been defrauded, then that would be relevant.

However, I do not see, myself, how some secret agreement made between Ling and the accused, could affect the public documents. It is as simple as that. If the accused is going to go around shovelling out public documents to the people who are going to buy into his home, it does not matter if he has some secret agreeement with Ling or whether he has not. So, I do not care whether you accept Ling or whether you do not, because I just do not see the relevance of what it is all about.

However, his Honour's directions to the jury have to be seen in the context of the evidence. The appellant did not give evidence, so that the matters on which he relied had to be raised, if at all, through other witnesses.

As has earlier been noted, the appellant did have authority from Ling to endorse his consent as mortgagee upon leases to be lodged for registration, but in a context which the jury would have considered required payments to Ling or at his direction. The only evidence that Ling had been offered half of $850,000.00 in the account controlled by the appellant was given by a Mr Ellis, who said he had been present at a meeting between Ling and the appellant when he made the offer; Ling denied the conversation and, unfortunately for the appellant, at the time selected by Ellis for the meeting there was nothing like $850,000.00 available; the all-up total was only about $310,000.00. It was not until much later that it exceeded $850,000.00. Finally, there was no evidence whatsoever that the appellant paid Ling $850,000.00. When that was put to Ling he denied it, and the books and records showed no trace of such a payment.

We do not agree with the trial judge's assertion that the arrangements between Ling and the appellant were irrelevant, and we consider that, in that respect, he misdirected the jury. However, in the absence of any evidentiary basis for the matters upon which the appellant sought to rely, we consider that there was no substantial miscarriage of justice.

We agree with what Davies J.A. has said on the remaining matters, and with the orders which he proposes.

R EASONS FOR JUDGMENT - DAVIES J.A.

Judgment delivered 02/11/94

The appellant was convicted and sentenced on 18 March 1994 of eight offences involving dishonesty. They consisted of two counts of obtaining property by a false promise, four counts of misappropriation of property with circumstances of aggravation and two counts of false pretences. For the offences of obtaining property by false promises, and those of false pretences, the appellant was sentenced to five years imprisonment, and for the misappropriation offences seven years' imprisonment, with a recommendation that he be eligible for release on parole after having served two years. He has appealed against those convictions and also seeks leave to appeal against the sentences imposed.

The convictions arose out of the appellant's conduct in the operation of a retirement village development scheme. The appellant was a director and principal shareholder in Palm Springs Village Pty Ltd (the company) which was the owner of a property and promoter of a retirement village scheme. There was a mortgage over that property in favour of one Noel Ling to secure a loan of $2,400,000 made to the company. There had been a second mortgage over the property, but that was discharged in April 1991, leaving Ling as the sole mortgagee.

Such retirement village schemes are regulated by the provisions of the Retirement Villages Act 1988 (Qld). The object of that legislation is to provide security of tenure for residents, and to protect the funds which they have invested. In order to obtain approval of a scheme an intending promoter must submit to the registrar a prospectus, called a public information document, which must contain specified information for those who may become residents of the retirement village. Approval of a scheme is a condition precedent to the making of a residence contract. The contents of the public information document are then deemed to form part of any contract made with a prospective resident. Variations to that document can only be made by the submission to, and approval by, the registrar of an amended document. The company's public information document was approved on 1 June 1990. It bore the registrar's stamp and a certificate of approval signed by the deputy registrar. To it was annexed an instrument of approval, pursuant to the Retirement Villages Regulations, signed by the deputy registrar, which stated that the annexed public information document had been approved and a schedule to that instrument stated that the annexed public information document was not to be altered in any way unless and until a fresh document had been considered and approved by the registrar. No relevant variations to it were ever approved.

The form of scheme employed involved prospective residents lending to the company sums of money in return for which they would receive long leases. Upon the death of a resident the loan moneys, less an adjustment based on the duration of residency, would be returned to the estate of the deceased resident. The first step in the scheme would be to send a copy of the public information document to an interested party. It contained an application which would be forwarded to the company's solicitor, one John Kinna, who was also named in the public information document as the trustee of moneys received from prospective residents. When the company accepted an application, copies of the lease document would be sent to the prospective resident for execution. The executed copies would be returned to Kinna with moneys payable in the manner provided by cl. 7.3 of the public information document.

Cl. 7.3 relevantly provided:

"To protect the interests of the residents the amount of the loan in full will be paid into the trust account of the owner's solicitor, Messrs John C. Kinna & Associates, the trustee ... and held on trust for the residents and the owner, until the residents' rights have been fully secured by lodgement of the lease for registration...

Payments are to be made by bank cheque and made payable to John C. Kinna and Associates, Palm Springs Trust Account."

The way in which the moneys received were to be disbursed by the trustee was prescribed by cl. 3.4 of the standard form lease which provided:

"If...

(e)the first mortgagee and the second mortgagee have each endorsed their consent to this lease in such a way as to allow for registration of the same..., and

(f)the lease and the relevant certificate of

title have been lodged for registration

Then the Trustee shall pay the loan... to the following

parties in the following manner..."

The effect was that once the mortgagee's consent to registration had been endorsed and the lease and certificate of title had been lodged for registration the funds would be available for distribution. Twenty-six or 27 leases were entered between June 1990 and April 1991. The moneys received were dealt with according to cl. 7.3 and cl. 3.4 to which I have referred. In each case Ling, as mortgagee, endorsed his consent to the registration of each lease, and received repayment under his mortgage. As part of the arrangement by which the company was enabled to discharge the second mortgage it was agreed between the appellant and Ling that from April 1991 Ling was entitled to receive amounts varying from $45,000 to $47,500 of every $50,000 received from the grant of every lease.

From about April 1991 Kinna no longer received lease applications. Ling received his last repayment on 20 June 1991. The appellant told Kinna in about June that thereafter he was going to arrange leases himself. Kinna told him that he would have to have an amended public information document approved by the registrar to change the trustee arrangements. He made it clear that on his ceasing to be trustee another would have to be appointed pursuant to the Act. No attempt was made to alter the arrangements as set out in the public information document. According to Kinna's evidence the appellant had often complained that Ling's demands were having an adverse effect on the company's operations as there was virtually no cash flow. The Crown alleged that the appellant, motivated by the company's financial difficulties, had devised and implemented a scheme whereby Ling would not find out about any leases granted and thereby repayments to him could be avoided or delayed.

From April 1991 to January 1992, in respect of 29 leases granted, instead of paying the moneys received into Kinna's trust account as required by the approved cl. 7.3, loan moneys from prospective residents totalling $1.29 million were paid into accounts, the "Palm Springs Village Trust Account" or the "Prestige Real Estate Trust Account" which were controlled by the appellant and his wife. On appeal it was common ground that Kinna was unaware of this, and that there was evidence which the jury was entitled to accept that Ling was also unaware. Further, during this period Ling had not endorsed his consent to the registration of any of these leases. And while Ling had given the appellant authority to endorse such consent there was no evidence that the appellant had ever done so. Therefore none of the lease agreements entered between April 1991 and January 1992 were registered before police intervened.

Out of these events the appellant was charged with the eight counts to which I have referred. Two of these (counts 1 and 5) arose from the appellant allegedly having made wilfully false promises to the solicitors of prospective residents that the moneys received would be dealt with in accordance with cl. 7.3 by the inducement of which those moneys had been obtained. The solicitors had advised their clients on the basis that the representation in cl. 7.3 was true. Following that advice the prospective residents were induced to enter into leases and to authorise payment of settlement moneys. Counts 2, 3, 4 and 6 related to the banking of money received. It was alleged that there had been a dishonest application of the money as the cheques received had been made out to J. C. Kinna and Associates, Palm Springs Trust Account, generally in accordance with cl. 7.3, (which required payment to be made to John C. Kinna & Associates, Palm Springs Trust Account), whereas in fact they were deposited into the Prestige Real Estate Trust Account.

No authority had been given by or on behalf of any of the prospective residents to pay these cheques into an account other than that of the payee. Counts 2 and 6 were in respect of the moneys obtained as a result of the wilfully false promises the subject of counts 1 and 5. Counts 7 and 8 alleged that the appellant had obtained moneys by false pretences. It was alleged that after the appellant had terminated Kinna's services, he had produced an altered cl. 7.3 which had been inserted into the public information document. Although in terms similar to the approved cl. 7.3, it incorporated a material change, stating that the amount of the loan in full would be paid into the owner's trust account, Palm Springs Village Trust Account, and there held on trust for the resident and owner. No alteration of the trustee arrangements had ever been approved, yet the altered public information documents appeared to bear the registrar's stamp and certificate of approval signed by the deputy registrar. Acting on the truth of the statements contained in the public information document each of two prospective residents paid over sums to the order of that account.

The appellant was convicted on each count. He appeals against those convictions on a number of grounds. It is convenient to consider these by reference to the submissions made to this Court.

The main complaint of the appellant relates to the admissibility of evidence of transactions which were not the subject of the counts on the indictment. Evidence that money received in respect of other transactions had been banked into accounts other than the trust account required by cl. 7.3 was led in order to prove that at the relevant times, moneys had been obtained or applied with a dishonest intent. The Crown's case was that the existence of a dishonest intention, relevant to proof of dishonest application for the purpose of counts 2, 3, 4 and 6, could be inferred at the relevant time by reference to the course of conduct in which the appellant had engaged. That there had been no intention to deal with the money as promised in cl. 7.3 could be inferred from the overall course of conduct, revealed by the evidence of transactions preceding and subsequent to those which were the subject of those counts. This evidence showed that the moneys received from the sale of leases had consistently been deposited into accounts other than that represented in cl. 7.3. The appellant submitted that, as the Crown was required to prove that the appellant had an intention to defraud at the relevant time, there was no case for the admission of prejudicial evidence as to the events other than those the subject of the charges. While it was conceded that in some cases it may be appropriate for evidence of events other than those the subject of an indictment to be admitted, it was submitted that this was not such a case. As I understand the submission this was because, although the evidence of the further transactions was to the effect that moneys obtained were banked into other accounts, it did not show that the moneys had been obtained by false promises.

However, in my view, even if it be accepted that the evidence of the further transactions did not show that the moneys had been obtained by false promises, it proved more than that the money received on subsequent occasions was banked into other accounts.

In the light of the fact that all transactions were governed by the public information document, the evidence of moneys being banked into accounts other than the one referred to in the public information document proved that the appellant had engaged in a course of conduct in which the moneys received were consistently and systematically dealt with in a manner other than in accordance with the promise contained in the public information document. From this it was open to the jury to infer that he never intended to deal with the money as promised:

R v. Finlayson (1912) 14 CLR 675, 678, 679; R v. Francis [1874] LR 2 CCR 128, 131, 132; R v. Rhodes [1899] 1 QB 77, 82. It went beyond merely being evidence of a propensity to engage in conduct of a criminal character. That is the basis on which the learned trial judge explained its relevance to the jury. I would therefore reject this contention.

There was a further submission that even if this evidence was admissible, it should have been rejected as a matter of discretion in that it left the jury with the impression that the appellant had stolen the moneys obtained and that they would deal with the offences in that way. It was not satisfactorily explained why the jury would be likely to draw that inference from that evidence, rather than the more obvious inference that the appellant intended, contrary to the terms of the public information document, to pay the moneys the subject of counts 2, 3, 4 and 6, into an account over which he had control. I see no substance in this ground.

The appellant then contended that the trial miscarried because of a misdirection during the course of summing up. The Crown had introduced evidence that from April 1991 to January 1992 29 leases were entered into and that $1.29 million received from purchasers of those leases was deposited into the accounts controlled by the appellant. The purpose of this evidence was, as I have said, to prove that the appellant never intended to deal with moneys the subject of the indictment as promised in the public information document. During cross-examination of the mortgagee Ling counsel for the appellant put to him that in August 1991 the appellant told him that he, the appellant, had $850,000 in his trust account, that he offered to pay Ling one half of that and that Ling declined. Ling said that he could not remember any mention of $850,000 but that if he had known that the appellant had any money to which he was entitled he would certainly have asked for it. It was also put to him that in late 1991 or early 1992 he received $850,000 from Prestige Real Estate. He denied this. The appellant, although he did not give evidence, called evidence from a Mr Ellis who said that he was present at a meeting between the appellant and Ling in about August 1991 when the appellant told Ling that he held $850,000 in a trust account.

Very early in his summing-up the learned trial judge made the point that the appellant was not charged with defrauding Ling. He said that consequently what took place between the appellant and Ling was irrelevant to the question of his guilt or innocence of the charges the subject of the indictment. He said that therefore Ling's evidence was irrelevant. His Honour then went on to explain, correctly and in detail, the nature of each of the charges and what they involved. During the course of this explanation his Honour referred to the defence claim of a secret agreement with Ling and repeated that that was irrelevant to the question whether the appellant was guilty of the charges; a point which his Honour made again later.

Mr Fleming QC for the appellant criticised his Honour's directions in this respect. He submitted that Ling's evidence was relevant to the question whether or not there had been an arrangement between the appellant and Ling with respect to $850,000 which would have negated any inference that that sum had been misappropriated by the appellant. However, whether or not the appellant had an oral arrangement with Ling with respect to $850,000 was irrelevant to the question whether the appellant had first applied the prospective residents' money to his own use. That was proved by his payment of that money into one of two accounts controlled by him, instead of into the approved trust account. His Honour's direction was therefore correct.

His Honour then took the jury to ex. 71 which showed the total payments made into the Palm Springs Village Trust Account and the Prestige Real Estate Trust Account over the relevant period and made the point that the difference between what the appellant was supposed to have, and what he had in fact, kept getting bigger and bigger. In other words there was a deficit in these accounts which increased over the relevant period. There was also evidence of some of the payees of cheques from the Palm Spring Village Trust Account; Bairstow (an employee of the appellant), Queensland Newspapers, Department of Transport, Telecom, cash, Palm Springs Management, American Express, Barclays, Mastercard, Citibank, Bond University, Prestige Real Estate, wages, Land Titles, Brisbane City Council, S.E.Q.E.B., Suncorp, R.A.C.Q., Gold Coast City Council. Although his Honour did not specifically advert to this evidence it had been referred to by the Prosecutor in his address and it, in my view, justified his Honour's comment that the appellant spent some of this money on his own purposes. However, as I understand the appellant's submission, no complaint is made about any part of this direction.

It was after again referring to the irrelevance of any
arrangement between the appellant and Ling that his Honour
referred to the sum of $850,000. He said:
"The only other aspect of the case which has been mentioned at any length is this alleged $850,000. It is suggested, or has been suggested in cross-examination, that the accused man simply got all this money together and then paid over the $850,000 to Ling anyway. Ling said he never got it. What you think of Mr Ling is a matter for you. Whether you would like Mr Ling to own your soul or have you in his power is a matter for you also. You might well imagine Mr Ling applying the screws once he had Mr Griffiths getting some money in. Be that as it may, where is the record anywhere of $850,000?
You have certain financial documents in front of you; they are bank accounts, cheques, bank statements. The former Detective Fersman said extensive searches had failed to find any such sum in any account whatsoever associated with the accused. There is no evidence in Court in any of the financial documents that that sum ever existed. There is no record in Exhibit 71 that he ever had that sort of money in trust anyway, in what he would call a trust, around August 1991.

There is no record of any payment of any $850,000, there is no cheque, no bank draft, no record anywhere of any payment over $850,000. I really do not see it has got much to do with the case at all but it is a matter for you."

Mr Fleming also criticised this passage on the basis that it implied wrongly that the appellant had misappropriated $850,000 whereas in fact an amount exceeding that sum remained in the two accounts. The passage referred to two events, referred to above, which were put to Ling in cross-examination by the appellant's counsel, the first of which was also deposed to by Ellis. The first was an alleged conversation in about August 1991 in which the appellant is said to have told Ling that he held $850,000 in trust and offered to pay half to him. The second was the alleged payment by the appellant to Ling, in late 1991 or early 1992 of the $850,000. In respect of these alleged events his Honour made two points. The first was that there was no record of $850,000 ever being paid to Ling. That was correct. Mr Firman, a former detective said that there was no document which suggested a payment of any such sum by the appellant to Ling. His Honour's second point, which was also correct, was that in about August 1991, when the conversation was said to have taken place, there was no record in Ex. 71 of $850,000 being in anything which the appellant would have asserted was a trust account. The total of the two accounts referred to did not in that month exceed $310,000. It was not until much later that it exceeded $850,000. Read in the context of the evidence, which had only recently been given, the passage which I have quoted did not amount to a misdirection.

The final submission for the appellant, although, it must be said in fairness, one made without a great deal of enthusiasm, was that counts 1 and 2 and counts 5 and 6 subjected the appellant to punishment twice for the same act contrary to s. 16 of the Criminal Code. It was said that the obtaining by false promise was effected by paying into the appellant's accounts and that the dishonest application was the same act, the payment into the appellant's accounts. That was not correct. The relevant acts the subject of the first counts were the obtaining of money. The relevant acts the subject of the second were the application of that money by paying the cheques into his own account. The submission must therefore be rejected.

The appeal against conviction must be dismissed.

The effective term of imprisonment imposed on the appellant was one of seven years with a recommendation that he be eligible for release on parole after having served two years for that term.

The appellant was 60 years of age, having been born on 6 April 1934 and had no previous convictions. Moreover it was said on his behalf that the offences were precipitated by financial difficulties. Also fortunately none of the prospective residents the subject of the charges in the end lost their leases.

Nevertheless, his conduct constituted cynical and deliberate breaches of trust upon members of a section of the community who were in need of protection. There is a strong need for deterrence of offences such as this.

The seriousness of the offences and the need to deter offenders such as the appellant justified, in my view, the sentence imposed. And the recommendation for early parole reflected the appellant's previous good record, his age and state of health and the fortunate fact that none of the potential lessees lost their leases.

The application for leave to appeal against sentence should therefore be refused.