R v Hopwood; R v Byrnes

[1994] HCATrans 451

LT lA 1

IN THE HIGH COURT OF AUSTRALIA	1
2
ADELAIDE	3 4
CORAM: BRENNAN, DEANE & DAWSON JJ	5 6
No. A15/94 & A16/94	7 8 9

10

11

12 13 14

THE QUEEN	APPLICANT	15 16
V	17
18

TIMOTHY PAUL HOPWOOD & MARTIN FRANCIS BYRNES - RESPONDENTS	19 20 21
22
23 24 25 26
27
TRANSCRIPT OF PROCEEDINGS	28
29
THURSDAY, 25 AUGUST 1994 AT 11.35 A.M.	30 31
MR M.S. WEINBERG Q.C., WITH HIM MR D. CHAPMAN, FOR APPLICANT	32
MR K. BORICK, WITH HIM MR J. HICKS, FOR RESPONDENT HOPWOOD	33
MR S.W. TILMOUTH, WITH HIM MS M. PERRY, FOR THE RESPONDENT	34
BYRNES	35 36

37

LT lA	2	APPLICANT ADDRESS
MR WEINBERG:	Notwithstanding the obvious complexity	1

of the factual issues in this case, it is our submission	2
that the point of principle which gives rise to the case	3
for special leave is a relatively simple one, in short	4
compass, and it is to be found in the actual reasons for	5
judgment of the Court of Criminal Appeal at pp.-175 to	6
180 of the application book.	7

At those pages, after setting out the facts of the 8

case, as found by the learned trial judge, the Court of	9
Criminal Appeal gave its reasons for quashing the	10
convictions in each case, and those reasons are very	11
simple:	12

Firstly, that the trial judge had found that the 13

entire enterprise was not a scam. Your Honours will see 14

at the top of p.175, that what had been criticised by	15
the Crown, or attacked by the Crown, was not the fact	16

. that the company, . Magnacrete ~ s, .monies . were · being used 17

to.support-the:shortfall in a convertible bond issue for	18
the company, Jeffcott, but the manner in which that had	19
been done; that is, without the approval of the board,	20
and deliberately withholding information from the	21
directors, who should have been the ones who made that	22

decision. So, it was the manner of the way in which the 23

conduct had occurred, rather than the actual securing of	24
the guarantee by Magnacrete, which was said to be	25

attacked by the Crown. That was said.to be significant. 26

The third point raised by the court of criminal 27

Appeal was that a distinction had to be drawn between	~8
what the civil law sees as improper, and what the	29
criminal law sees as improper.	30

CONTINUED 31 32 33 34 35 36 37

CP lB 3 APPLICANT ADDRESS

That is at the bottom of p.175. What the court 1

should be concerned with is what is said to be criminal 2

impropriety. The court then summarised the reasons why 3

the trial judge had found that there had been improper	4
use of position by these directors at the bottom of	5
p.176 and the top of p.177, and noted that the-trial	6
judge had found that there was a conflict of interest by	7
each of the directors, the position in which they acted;	8
that each had actively promoted the interest of	9
Jeffcott, the company in which they had a personal	10
interest, against the interest of Magnacrete, which he	11
had a duty to protect.	12

Each was well aware of that conflict of interest and 13

that they had usurped the rights of the other directors	14
of Magnacrete to make the decision as to whether or not	15
to risk Magnacrete's money in guaranteeing this	16

particular venture.	The trial judge had also .found that	17
~the,purpose·for which these actions took place was to	.	18
maximise their own benefit, for the benefit of Jeffcott,	19
which was their own company.	20

They had no right to usurp the function of the other 21

directors. They had done so deliberately. They had 22

withheld the information deliberately, and those were	23
the findings which Bollen J·said at p.177 read like	24
particulars of negligence, or a breach of duty, as	25
understood by the civil, the common law.	26

We submit, of course, they don't read like 27

particulars of negligence. They certainly read like 28

particulars of breach of duty, which is exactly what	29
they were, and that is exactly what the crown case was.	30
This was a case of breach of fiduciary duty which	31
constituted the improper use of position as a director.	32

Bollen J then went on to say that s.229(4) is not an 33

offence of absolute liability, and his Honour referred	34
to two sentences in the judgment of this court in Chew v	35
R, two sentences and a judgment of four members of the	36
court, which are ~et out at p.177 and drew from those	37
two sentences that the state of mind of the accused is	38

CP lB 4 APPLICANT ADDRESS

relevant to the element of improper use and, as his	1
Honour said at the bottom of p.177, it is relevant	2
because it may determine whether a person is criminally	3
responsible: that is, guilty of the offenc·e created by	4
s.229(4) for conduct which is objectively seen as	5
improper:	6
'That is to say, once the conduct which is objectively	7
improper has been proved beyond reasonable doubt, you	8
turn to consider the intention of the actor to see if	9
civil impropriety is translated into criminal	10
impropriety.'	11

That is the approach that Bollen J said had to be 12

adopted. First he found objective impropriety. Then 13

you look to the intention of the Act to see if that	14
converts into criminal impropriety.	15

His Honour then noted that the trial judge had 16

found, as a fact, that neither of these accused~ntended 17

...	·to cause·.harm to-,Magnacrete. · Indeed,· they might have	·	18
believed that the transaction had some benefit, or was	19

for the benefit of that company. At p.179 after making 20

that finding and the finding that they might not have	21
been mistaken in that belief, his Honour went on to say	22
that those findings were inconsistent with criminal	23

intention on the part of either appellant.	That is at	24
p.179 line 40:	25

'Intention is, I repeat, relevant. If we return to the	26
first quoted finding above, ·which begins "While	27

accepting ... ", we see that.his Honour has travelled to 28

conclusion by the road of "moral blameworthiness".	And	29
he has assessed that objectively.	In my opinion, both	30

the use of that road and the assessing of moral	31
blameworthiness (if it has any place here) was	32

erroneous. The question was not whether there had been 33

moral blame but whether, even granting the intention to	34
do the relevant acts, either accused had the relevant	35
mens rea, the relevant criminal intention.'	36
His Honour went on to say the findings, or lack of	37

intent to cause harm, negated that mens rea. What we 38

CP lB 5 APPLICANT ADDRESS

say about those pages and those passages is that for a	1
long time it was thought that we understood what s.229	2
sub-s. (4) required of the Crown: that the element of	3
improper use of position was to be viewed objectively,	4
and there was long line of authority for that	5
proposition, supported also by statements by your Honour	6
Dawson Jin Chew's case; supported by what Toohey J had	7
said expressly in Chew's case, most recently supported	8
by the decision of the Court of Appeal in Yuill's case,	9
which I shall come to in just a few moments.	10

This judgment, in our respectful submission, changes 11

what has long been understood to be the way in which the	12
Crown is required to approach the element of improper	13
use of position by converting, in effect, that element	14
into an element which requires a specific form of mens	15
rea, but not one that is described or designated by the	16
Court of Criminal Appeal in South Australia.	17

,,.-The .. short·,:point .is, .·-we .don't ·know now, as a result . 18

of this judgment, or these observations, positively what	19
it is that the Crown must prove in order to establish	20

this element of this offence. We know what may operate 21

in an appropriate case to negate it, but we are told	22
that something else must exist to transfer or translate	23
objective impropriety, civil impropriety into criminal	24

impropriety. We don't know what that is. 25

That obviously, in our submission·, is a cause for 26

concern because just as certainty is important to any 27

person charged with an offence, so certainty is 28

important to the Crown. It-is important that the Crown 29

knows what it has to prove for the purpose of	30
establishing the conditions of this offence.	31
It is our submission that, given the findings of fact that were made by the trial judge, namely, actual	32
33
conflict of interest, knowledge of that conflict of	34
interest, acting against the interests of the company,	35
acting for the benefit of a company in which the	36
directors themselves had an interest, doing what they	37
did for the purpose of benefitting the company in which	38

CP lB 6 APPLICANT ADDRESS

they had an interest, all those findings of fact which	1
were not controverted by the court because the court	2
didn't find it necessary to deal with the factual issues	3
in this case, it simply assumed those facts for the	4
purpose of determining the legal consequences,	5
constitute, on any view, improper use of position.	6

That is the heart of the offence: conflict of 7

interest, putting one's self in a deliberate conflict of	8
interest, and acting against the interests of the	9
company to which one has a primary duty.	10

DAWSON J:  Do you accept that an honest and 11

mistaken belief that the actions are in the interests of	12
the company is an offence?	13

MR WEINBERG:  No, we don't we accept that their honest 14

and reasonable mistake of fact may, in certain	15
circumstances, constitute a defence. For example, an	16
honest and reasonable belief that the actions were	17

_;ratified·. by ·:the·,,directors, . we· do ,_accept is a defence, · 18

but we do not accept that a mere belief that what you	19
are doing is in the general interests of the company	20
constitutes an answer to improper use of position.	21

This is not an offence about intent to defraud. 22

That is plain from the elements of the offence itself 23

because the offence has two·a1ternative limbs. One is 24

to intend to cause harm to the company, and the other is 25

to intend to gain a benefit for another. Once you have 26

those two alternative purposive limbs built into the 27

section, then the section must, as a matter of logic, in	28
our submission, contemplate-that you can be convicted of	29
this offence, even if you did not intend to cause harm	30
to the company.	31

That is the very heart of this offence, in our 32

submission.	It is not an offence which attaches itself	33
to particular conduct, as such.	It is an offence which	34

attaches to people who put themselves in the position of	35
conflict of interest.	36

BRENNAN J:  Yuur answer to Dawson J is a bit too 37

broad, isn't it? If there is a directors' meeting and a 38

CP lB 7 APPLICANT ADDRESS

decision is taken which, objectively looked at, or	1
looked at by the court, is not for the benefit of the	2
company, but there is a genuine belief on the part of a	3
director that it was, then that is relevant, surely.	4

MR WEINBERG:  I was answering the question in the 5

context of the facts in this case: that is, wh~re these	6
directors deliberately withheld from other directors.	7

BRENNAN J:  I understand if you are answering it 8

that way. 9

MR WEINBERG:  Your Honour is quite right in saying 10

that my answer was too general regarding that context. 11

BRENNAN J:  That was the very purpose of Chew's 12

proposition. 13

DAWSON J:	It is, in an appropriate case.	14
MR WEINBERG:	In an appropriate case, yes. This is	15

not an appropriate case, in our respectful submission,	16
but more importantly, perhaps, in terms of why this is a	17
_:very_,exceptional ,.case and .relevant for the granting of ·	18
special leave, is the decision of the Court of Appeal in	19

Yuill. If I may hand to the court copies of the 20

unreported decision in Yuill, because we say that there	21
is now a clear disparity, clear discrepancy, between the	22
way in which the law relating to s.229(4) is understood	23
in South Australia by the court of Criminal Appeal, and	24
the way in which the Court of Criminal Appeal - Court of	25
Appeal in New South Wales has dealt with the matter.	26

The heart of it lies perhaps at p.30 of the 27

decision.	It is a very recent decision handed down by	28
.

the Court of Criminal Appeal on 29 June 1994 ,· and it	29
referred to this case of Hopwood and Byrnes, and	30
purported to distinguish it. But if your Honours look	31
at the bottom of p.29 -	32

BRENNAN J:  Turn to p.31. 33

MR WEINBERG:  It is p.30 which has been reversed. If. 34

Your Honours go to p.30 your Honours will see the way in	35
which the Court of Criminal Appeal in New South Wales	36
deals with the matter:	37
'The jury should be directed in relation to the	38

CP lB 8 APPLICANT ADDRESS

accused 1 s state of mind that:	1
(1) They should first consider the issue from a purely	2

objective standard, as to whether the use made by	3
the accused of his position is improperly	4
inconsistent with the particular duties and	5
responsibilities of that position.	6

(2) If they are satisfied beyond reasonable doubt that 7

the use made by the accused of his position was	8
improper from that purely objective standard, the	9
reasonable possibility that the accused believed	10
that what he was doing was in the best interests of	11
the company is irrelevant to that issue, and it will	12
not mean that Crown has failed to prove that	13
such use of his position was improper.	14

(3) It is only if they are not satisfied beyond 15

reasonable doubt that the use made by the accused of	16
his position was_improper from a purely.objective	17

_./standard.that they ·may .consider whether the · 18

accused's state of mind made that use improper. 19

(4) The relevant state of mind in that situation may be 20

of varying kinds_, etc. 21

So what we have is the South Australian Full Court	22
saying, in effect, that once you have objective	23

impropriety you then consider state of mind. So much is 24

made perfectly clear by the top of p.178 of the 25

Application Book. The New South Wales Court of Criminal 26

Appeal is saying once you find objective impropriety, 27

you don 1 t consider the state of mind at all.	That is	28
the end of the matter.	You only consider state of mind	29

when objective impropriety has not been established by	30
the crown.	31
That, having two State courts, courts of criminal appeal, approaching this very important section in this	32
33
very different way in the face of a number of major	34
trials which are to be heard in the relatively near	35
future in this country concerning the way in which this	36
section is to be ·interpreted, is a matter which, in our	37
submission, rendered this case a very exceptional case,	38

CP lB 9 APPLICANT ADDRESS

and one proper for the grant of special leave. What the 1

Court of Criminal Appeal has done in this case, in our	2
submission, is to take the two sentences of the judgment	3
of the four members of the court in Chew's case which,	4
with great respect, we say was certainly dicta because	5
they had nothing whatever to do with the case,- had	6
nothing to do with the element of the improper use.	7

The case was about the other limb of s.229 sub-s.(4) 8

and the members of the Court of Criminal Appeal of South	9
Australia have treated, in effect, those two sentences	10
as changing a long-understood line of authority, that	11
the approach to improper use is to be viewed	12

objectively.	The state of mind may be relevant in	13
various ways.	One was the example that I gave to the	14

court of an honest and reasonable belief that there was	15
approval or ratification.	16
Of course, that.state of .mind is relevant, and we do .not.:·contend ·.this is. an .·offence of ·absolute liability.	17
18
It is plain that there has been an intention to do the	19
acts which are said to constitute the improper use, but	20

in our submission that is as far as it goes.	That has	21
always been the law under s.229(4).	It is no longer the	22
law in South Australia in relation to s.229(4).	It is	23

still the law in relation to s.229(4) in N!:::!W South	24
Wales, unless the crown fails to establish objective	25
impropriety.	26

DAWSON J:  I do not want to interrupt your time, 27

but look at step (3) in Yuill's case: I am not sure I	28
understand how that works.	29

MR WEINBERG:  'It is only if they are not satisfied 30

beyond reasonable doubt-'. What the court seems to be 31

saying is: if the Crown fails to establish the conduct	32
was objectively improper, nonetheless the crown may	33
still succeed in establishing improper use, if the Crown	34
can show that there is an improper purpose.	35

DAWSON J:  I do not really understand that what he 36

did was not improper but that he thought it was 37

improper. That makes all the difference. 38

CP lB	10	APPELLANT ADDRESS RESPONDENT HOPWOOD ADDRESS
MR WEINBERG:	That is what the court seems to be	1

suggesting. If the court pleases, those are our	2
submissions as to why this matter merits special leave.	3

MR BORICK:  In our submission, the Court of Criminal 4

Appeal correctly, at p.177 of the transcript, stated the	5
obvious proposition from Chew: that the state of mind is	6
relevant to the element of improper use.	7

BRENNAN J:  No, it is not. That is not what Chew 8

said, is it? 9

MR BORICK:  By state of mind, I would suggest that 10

what was meant was, and understood to be meant, was the 11

reasonable belief. That was found to exist here: that 12

what they were doing was in the interests of the company	13
Magnacrete and it was that state of mind which is the	14
relevant state of mind.	15

BRENNAN J:	Is it?	16
MR BORICK:	That is our submission.	17

_. BRENNAN .J:  Why ~do ,you say that? Do ·you ·mean that . 18

if you think that you are doing something for the	19
benefit of the company, you are under no obligation to	20
your fellow directors?	21

MR BORICK:  Yes, you are under an obligation to your 22

fellow directors, and all that was found - 23

BRENNAN J:  You execute·instruments on behalf of the 24

company without their authority? 25

MR BORICK:  That was a finding made by the learned 26

trial judge, but that was under dispute. It was never 27

dealt with by the Court of Criminal Appeal, which we	28
concede is a complicating factor in this case, but even	29
so, many other matters were not dealt with by the court.	30
Our submission is that, based upon what was said in	31
Chew, and referring particularly to the expression an	32
accused person reasonably but mistakenly believed that a	33
particular transaction which he or she authorised was	34
generally for the benefit of the corporation, that	35
belief may, in an appropriate case, be relevant, and in	36
this case that was precisely what the trial judge found.	37

He found that that belief did exist and, in addition, 38

CP lB 11 RESPONDENT HOPWOOD ADDRESS

with respect to Dr Hopwood, the judge found - and it is	1
referred to at p.179 of the transcript at line 20 - that	2
the fact that he, Dr Hopwood, expected there would be a	3
subsequent board meeting before the money was taken by	4
Vicksburg from the Commonwealth Bank shows he did not	5
then believe there was a proper formal approval of the	6

directors for what was being done.	Rather, he believed	7
that it was ultimately put before the board.	Young and	8

Paior were likely to approve it, even if Hill opposed	9
it.	10

In other words, he believed that Hopwood had a 11

belief that the majority of the broad would ratify what	12
had been, by what I understood from my friend's	13
argument, precisely what he said as being one of the	14

examples where a state of mind is relevant. So that the 15

combination of the states of mind, that found by the	16
learned trial judge, that Dr.Hopwood believed and had	17
· ,.~good .reason,;tO .believe ·that :it was a· reasonable belief,•	18
was in the interests of Magnacrete; and that he believed	19
that it would be ratified by the majority of the board	20
is a relevant state of mind for the purpose of s.229(4)	21

Therefore, the learned trial judge, having made 22

various other findings, some of which are contradictory	23
of each other, said, in effect: 'Well, this is not an	24
appropriate case to bring into play the state of mind,	25

the belief, of the accused'.	The Court of Criminal	26
Appeal said differently.	27

Even though the Court of criminal Appeal in the 28

passages under attack from pp.177-179 use the· word	29
'intention' but if the court just changes that to 'state	30
of mind'- and by 'state of mind' the states of mind I	31
have just referred to - then it is our submission that	32
this judgment of the South Australian court does not	33
make the substantial alteration which has been	34
contended for.	35

We simply say that it is a situation where it was an 36

appropriate case,·and that is all that our court has 37

said. The applicant asks in his written outline about 38

CP 1B 12 RESPONDENT HOPWOOD ADDRESS

such a belief, if it be relevant in circumstances where	1
the accused has knowingly and actively promoted the	2
interests of another against the interests of the	3
corporation which it is under a duty to protect, and it	4
is our submission that, from the very beginning, what	5
was really being alleged here, despite the way- in which	6
the information or charges was framed, is that this	7
really was a case where they were saying what was	8
happening was against the interests of Magnacrete.	9
If that is correct, that·is what should have been charged, and the case would have proceeded far more	10
11

simply than what it did. By electing to take the other 12

limb, and perhaps presumably because the prosecution	13
thought that it would be easier to take the other limb	14
of s.229(4), it is our submission that caused a great	15
deal of the difficulties that were occasioned in this	16
case.	17

With:;respect .. to the judgment of Yuill, the New South 18

Wales Court purported to, as I understand it,	19
distinguish Hopwood and Byrnes very much along the lines	20
which I have put to the court this morning, namely, that	21
in that case, the Court of Criminal Appeal found it to	22
be an appropriate case and was limited to that, and that	23
it would not be now appropriate for Dr Hopwood to have	24
the acquittal which he received from the Court of	25
Criminal Appeal set aside because of a different view	26
about the way in which s.229(4) operates taken by the	27

New South Wales court subsequent to his case. 28

In our submission, it would be harsh and oppressive 29

to, first of all, have his acquittal set aside because	30
of a judgment which, with respe~t, is difficult to	31

follow, particularly at the third stage of it. Then 32

there is the further practical difficulty here where, if	33
this court granted special leave, and there were a large	34
number of outstanding factual issues which would not be	35
appropriate for this court to resolve, there is the	36
difficulty that the case would have to be sent back to a	37
Court of Criminal Appeal in South Australia, to be a	38

CP lB 13 RESPONDENT HOPWOOD ADDRESS
RESPONDENT BYRNES ADDRESS

freshly constituted court because Legoe J has retired.	1
It is our submission that it would be an extremely	2
difficult task to have to go back and re-argue the whole	3
thing, and then for matters, a couple of instances, the	4
passage with respect to Byrnes, the other respondent,	5
that his views were distorted by his belief in-his own	6
innocence.	7
That is a very important issue not touched upon: The very important issue of the fact that the two	8
9
accused were supposed to have separate consideration of	10

their cases but they never did. Obviously at this 11

stage, I cannot develop those arguments, but they were	12
two of the extremely important matters which we say	13
were, on the face of the judgment of Judge Lunn, where	14
error has occurred.	15

So that we would be in a position of having to, in a 16

sense, assist in any difficulties which may or may not .17

exist -from .that .passage ·in, Chew, ·then have to go back	.	18
and have our whole case reheard.	There is not	19

sufficient importance, in our submission. The case is	20
not exceptional, applying the Van Den Bemd principles.	21
It is a matter of interpretation of s.229(4).	22
It should be interpeted in favour of the individual, as was put in that case, albeit it was a different	23
24
section and, for those reasons, we say that special	25
leave to appeal should be refused.	26

BRENNAN J:  Thank you, Mr Borick. Yes, Mr Tilmouth? 27

MR TILMOUTH:  May it please the court, in my 28

submission, the important thing that the Court of	29
Criminal Appeal identified at p.177 of its judgment in	30
relation to the primary findings of his Honour Judge	31
Lunn, was that when his Honour at first instance came to	32
direct himself as to the appropriate elements and	33
expressly referred to Chew's case, his Honour in fact	34
left out the passage, the first sentence of the passage	35
which is quoted at p.177.	36

In other words, the original quote is at p.99 but 37

when his Honour at first instance came to direct himself 38

CP lB 14 RESPONDENT BYRNES ADDRESS

as to the appropriate elements of the offence, he	1
referred to Chew's case and began his self-direction, so	2
to speak, at the passage beginning 'If, for example, an	3
accused person reasonably but mistakenly believed' etc.	4
But what his Honour left out was the very vital	5
preliminary sentence:	6
'The accused's state of mind is relevant not only to the	7
requirement of purpose, but also to the element of	8
improper use of his or her position.'	9
Bollen J acknowledged that that was an important -	10
significant, indeed - omission at lines 45 and those	11
which follow at p.177.	12

so, in my submission, it is important to recognise 13

that the Court of criminal Appeal identified a 14

significant misdirection on this vital matter. However, 15

if the court pleases, more than that, when one looks at	16
the primary findings of Judge Lunn, ,as,Bollen J did at	17

.. PP .'.17 7 :.and .17 8 ,,. and ~indeed over to 179 , as Mr Weinberg . 18

has pointed out, those primary findings, which were not	19
overturned by the Court of Criminal Appeal, were that	20
the conduct, objectively viewed, was not improper, in my	21
submission. Line 1, for example, on 178:	22
'Once the conduct which is objectively improper has been	23
proved beyond reasonable doubt you turn to consider the	24
intention of the actor to see if civil impropriety is	25
translated into criminal impropriety.·'	26
That is Bollen J, but his Honour then catalogues the	27

primarily findings which show that the learned trial	28
judge had found that the conduct was not objectiveLy	29

improper. Hence at line 20 on p.178 it was not a scam. 30

DAWSON J:  What is it that translates a civil 31

impropriety into criminal impropriety? 32

MR TILMOUTH:  His Honour, at first instance, said, in 33

effect, that it was sufficiently morally blameworthy.	34
In my submission, the same kind of thing was happening	35
at first instance: simply different words were used.	36
All his Honour Bollen J, in my submission, is saying is:	37
if there is a breach of a civil law it still must	38

CP lB 15 RESPONDENT BYRNES ADDRESS

be serious enough to attract the intervention of the 1

criminal law.	In my submission, he is saying no more	2
than that.	3

DAWSON J:  How do you decide whether it is serious 4

or not? 5

MR TILMOUTH:  That is another matter. I suppose it is 6

a matter for the jury, if it is a jury, or the judge, as 7

it was here when trial by judge alone. In my submission 8

all that has happened in Bollen J's reasoning is the	9
word 'intent' has been substituted for 'state of mind'.	10
If one simply puts 'state of mind' back in where his	11
Honour refers to intent, what his Honour has had to say,	12
with respect, is perfectly acceptable, according to	13
Chew.	14

Returning to the submission, the primary findings 15

were in the quoted part on p.178 line 35:	16
'While accepting .that each.accused believed that what	17

-was ,done ·by·.him was·.•not :harming:·Magnacrete ·and was	.	18
likely to be for its ultimate financial profit, I am	19
satisfied that each accused had significantly breached	20
his fiduciary duty -' etc.·'·	21
Then:	22
'Each were sufficiently morally blameworthy.'	23
That is my further answer to Dawson J that, at first	24
instance, the same kind of exercise had happened, just	25
different words were used to describe it.	The next	26
finding at lines 49 and 50:	27

'I accept that each accused·believed that it would be in	28
the financial interests of Magnacrete to enter into the	29
Vicksburg transaction-' etc.	30
Then, line 55:	31
'They were reinforced in such a belief by at least	32
informal advice from Chapman.'	33

Then there is further reference there. If I can just 34

take your Honours finally to 179, still quoting from and	35
accepting the primary findings, and in the passage	36
emphasised by underlining by Bollen Jin the Court	37
of Criminal Appeal, line 5:	38

CP lB 16 RESPONDENT BYRNES ADDRESS

'6n the evidence I am not prepared to find that Byrnes	1
and Hopwood were mistaken in this belief that at the	2
time of the transaction it was a good thing for	3
Magnacrete.'	4
In my submission those findings, in sum, mean that at first instance there were findings that it was not	5
6

objectively improper, as Judge Lunn put it. It was the 7

way in which it was done, if at all, that might have 8

caused difficulty in terms of the criminal law. If the 9

court pleases. 10

BRENNAN J:  Can you explain why it was, having 11

regard to the way in which it was done, the directors	12
were not acting improperly?	13

MR TILMOUTH:  It is a long story, with respect, but 14

essentially it was because his Honour, at first	15
instance, found that the other directors were kept in	16
the dark. There were other factors too, of course, but	17

one of,.the,major ,factual issues was -their degree of	.	18
knowledge.	19

BRENNAN J:  The other directors were kept in the 20

dark? 21

MR TILMOUTH:	Yes.	22
BRENNAN J:	And the company seal was used and	23

documents were executed by the defendant directors	24
without the knowledge of the co-directors?	25

MR TILMOUTH:  On the primary findings, yes. They are 26

disputed, of course. That ls a matter for the other 27

appeal. 28

BRENNAN J:  Yes, given those facts, if they are 29

correct, was that an improper use of directors'	30
positions?	31

MR TILMOUTH:  Those factors clearly would count in 32

that direction. I would hesitate to accept that that 33

necessarily means it was by those reasons alone improper	34
use, but I accept that they are incriminating facts.	35 36 37

JRB lC	17	RESPONDENT BYRNES ADDRESS
DEANE J:	What if you add the trial judge's	1

findings set out on p.176, which were also accepted by	2
the Court of Criminal Appeal in paragraph (a)?	3

MR TILMOUTH:  The (a), (b), (c) and (d) findings, may 4

it please your Honour? 5

DEANE J:	P.176 paragraph (a).	6
MR TILMOUTH:	They clearly are factors capable of	7

indicating improper use of position, that is to say? 8

DEANE J:  Are they capable of indicating anything 9

else? 10

MR TILMOUTH:  They are certainly not exculpatory, with 11

respect. Could I take you to Yuill's case because, in	12
my submission, the Court of Criminal Appeal decision in	13
Yuill is perfectly explicable and reconcilable with this	14
case on the very point that I am putting to your	15
Honours.	16

At p.26 of the copy I have, the.third.line begins: 17

: : 'A- third·· suggestion .as how .the .:state. of mind :of ·the accused may be relevant ... '	.	18
19

Your Honours will see that four lines thereunder, the	20
court in Yuill considers the Hopwood decision which is	21

the decision of the Court of Appeal in this case. It 22

then goes on to discuss the facts, and I don't t~ouble	23
your Honours with that, but could I take your Honours to	24

the next page, p.27. Six lines down after the quote 25

there, the court goes on to talk of Hopwood and Byrnes 26

that the conviction was accordingly quashed. Then they 27

went on, and this is my precise point, if the court	28
pleases:	~29
'We do not have to decide whether the process of	30
reasoning there expressed is correct; it is sufficient	31
for us to say that we do not interpret that judgment as	32
suggesting that a particular state of mind on the part	33
of the accused towards the impropriety of his actions	34
must be established in every case; in that case, it also	35
arose only because the accused's actions could not be	36
themselves be said to be (criminally) improper from a	37
purely objective standard.'	38

JRB lC	18	RESPONDENT BYRNES ADDRESS
APPLICANT REPLY

In other words, the Court of Criminal Appeal in Yuill	1
has distinguished the case before this court on the very	2
point and in the way I say the Court of Criminal	3
Appeal's judgment should be interpreted and, in my	4
submission, if that is so, the cases are perfectly	5

reconcilable. If the court pleases. 6

DEANE J:  Mr Tilmouth, what do you say is the 7

relevance of the alterations in the law as from February	8
of last year?	9

MR TILMOUTH:  That was dealt with in my learned 10

friend's outline, but not addressed by him orally.	It	11
must be conceded, if the court pleases, that largely,	12
the same words as in 229(4) of the Code have been	13
translated into 232(6) of the Corporations Law.	14

DEANE J:	I had in mind 13 l 7FA.	15
MR TILMOUTH:	Yes, my argument would be that the	16

current section under review here must be re-	17
. interpreted .in . the ~ight. .of the ~express ·enactment in th!=	18
criminal sanctions part of the Corporation Law in 1317FA	19
because, of course, that now requires a very high state	20
of mens rea.	21

It is wrong to say, in my submission, that the 22

argument for the director is - well, the words of_the	23
old 229 have been translated virtually the same in the	24
civil section because that ignores the fact that they	25

now appear in a completely different context. That will 26

be my answer to that if that was the argument raised, if 27

the court pleases.	28
Obviously, if the court pleases, we would resist the grant of special leave.	29
30

BRENNAN J:	Yes, Mr Weinberg.	31
MR WEINBERG:	If special leave were granted, we	32

accept, at the end of the day, we would not be asking 33

this court to substitute a conviction. There are 34

plainly factual matters that would then have to be dealt	35
with and the matter then could only be remitted to the	36
Court of Criminal_ Appeal.	37

In relation to the point of distinction in Yuill's 38

JRB lC 19 APPLICANT REPLY

case, we submit that when the court in Yuill's case said	1
that Hopwood's case was to be distinguished because in	2
Hopwood's case it could not be said that the accused's	3
actions were criminally improper from a purely objective	4
standard, that falls foul of what the court in Hopwood's	5
case said itself. The court was accepting, in- our	6
submission, that there was objective impropriety by	7
saying that other factors were at play and those factors	8
negated criminal responsibility.	9
We do submit there is a difference of approach in principle between the 2 judgments, which is very	10
11
fundamental.	12

In answer to your Honour Deane J's question about 13

the effect of the changes, we accept the law in relation	14
to offences committed after the date of the relevant	15
amendments which, I think, is February of 1993, is	16
different, but we say that there.are, ,necessarily, many	17
,cases .still to be. resol ved_·.under · the ,existing provisionp;	18

of s.229(4) because they have not been repealed. All 19

conduct which took place before February of 1993 remains	20
to be dealt with by s.229(4), not by the new provisions,	21
and, necessarily, with a case of this kind, as the court	22
will appreciate, it takes sometimes a very long time for	23
investigations to be completed, charges to be laid and	24
there are, as we have submitted, many cases of very	25
great complexity, difficulty and great cost to the	26
community still to be run under the existing s.229(4).	27

There is also a problem.about the possible 28

construction of the civil contravention version of the	29
post February 1993 provision and the way in which	30
Hopwood and Byrnes might impact upon that.	31

So far as the other points which were raised by my 32

learned friend, Mr Borick, are concerned, we did not say	33
that an honest and reasonable belief would, in the	34
future, ratify - would constitute or could constitute a	35

defence to this charge.	We say, was there an honest,	36
reasonable belief that it had been ratified?	There is -a	37

very great distinction because if our submission is 38

JRB lC 20 APPLICANT REPLY

correct, the offence is complete when the directors	1
usurp the rights and functions of those directors who	2
are the only ones who are legitimately entitled to	3
participate in the decision to expose Magnacrete moneys	4

to risk, not these 2 directors.	They were not entitled	5
to participate in that decision, they did.	They were	6

not entitled to withhold deliberately, as the trial	7
judge found, that information from the other members of	8
the board and it was all the other members of the board,	9
who, under the articles, were required to participate in	10
that decision.	11

Those are the only matters in reply. 12

BRENNAN J:  By majority, Deane J dissenting, there 13

will be a grant of special leave in these cases. 14

MR WEINBERG:	If the court pleases.	15
BRENNAN J:	Mr Weinberg, I take it for the purposes	16

of appearing, with the appeal book, we wouldn't need to 17

be _troubled by the mass of evidence. . 18

MR WEINBERG:  No, your Honour, there will be no 19

arguments at all about the facts. The appeal books will 20

be essentially in the same,£orm as they are before this	21
court in support of the application.	22

BRENNAN J:  Is that the situation so far as yqu are 23

concerned, Mr Borick? 24

MR BORICK:  Yes, I think so your Honour. It just 25

depends upon how much we go into the facts of the	26
matter.	27

BRENNAN J:  Special leave is obviously granted to 28

raise the question of principle. 29

MR BORICK:  In this case, I think I have to agree 30

with what Mr Weinberg has said. 31

MR TILMOUTH:	On that basis, I agree.	32 33
34
35 36 37