R v Pettett

[2017] QCA 102

SUPREME COURT OF QUEENSLAND

CITATION:	R v Pettett [2017] QCA 102
PARTIES:	R v PETTETT, Trevor Frank (appellant)
FILE NO/S:	CA No 181 of 2016 DC No 150 of 2015
DIVISION:	Court of Appeal
PROCEEDING:	Appeal against Conviction
ORIGINATING COURT:	District Court at Brisbane – Date of Conviction: 29 June 2016
DELIVERED ON:	26 May 2017
DELIVERED AT:	Brisbane
HEARING DATE:	31 March 2017
JUDGES:	Morrison JA and Mullins and Flanagan JJ Separate reasons for judgment of each member of the Court, each concurring as to the order made
ORDER:	Appeal dismissed.
CATCHWORDS:	CRIMINAL LAW – APPEAL AND NEW TRIAL – PARTICULAR GROUNDS OF APPEAL – MISDIRECTION AND NON-DIRECTION – where the appellant was convicted of one count of fraud – where the appellant was previously ordered to pay damages to the complainant in a civil judgment relating to the same conduct – where the civil judgment was a formally admitted fact in the criminal trial – where the appellant submits that the learned trial judge should have warned the jury that they could not use the civil judgment to assess and determine dishonesty – where the appellant submits that failure to give such a direction resulted in a miscarriage of justice – where the prosecutor did not attempt to use the civil judgment as evidence of dishonesty during the trial – whether the formal admissions before the jury caused the jury to impermissibly reason guilt of the appellant – whether a specific direction about the use of the civil judgment was required
COUNSEL:	L Ackermann for the appellant D L Meredith for the respondent
SOLICITORS:	Fisher Dore for the appellant Director of Public Prosecutions (Queensland) for the respondent

1. MORRISON JA:  I have read the reasons of Flanagan J and agree with those reasons and the order his Honour proposes.

2. MULLINS J:  I agree with Flanagan J.

3. FLANAGAN J:  After a five day trial in the District Court at Brisbane the appellant was found guilty and convicted of one count of fraud of a value more than $30,000.  The actual amount involved was approximately $2.7 million.

4. He appeals against his conviction.

5. Leave was granted, without objection,[1] for the appellant to argue the following substituted amended ground of appeal:

   “A miscarriage of justice occurred by reason of the learned trial Judge failing to adequately direct the jury about the evidence of the judgment by Justice Applegarth on 19 June 2009 ordering the Appellant to pay to the Complainant the sum of $2.7 million.”

   [1]Submissions on behalf of the Appellant, [3]; Outline of Submissions on behalf of the Respondent, [2.1].

6. The judgment referred to in the ground of appeal is a civil judgment given by Applegarth J in favour of the complainant, Wilfred Henry Duhs, ordering the appellant to pay him the sum of $2.7 million. The existence of the civil judgment was a formally admitted fact between the prosecution and the appellant at trial pursuant to s 644 of the Criminal Code (Qld).[2]

   [2]Exhibit 28, AB 932.

7. The appellant submits that the learned trial Judge should have warned the jury that they could not use the evidence that Mr Duhs obtained a civil judgment against the appellant for $2.7 million in assessing whether the appellant had acted dishonestly.

8. The issue is whether such a direction was required in the circumstances of this case.  It is necessary in determining this issue, to appreciate how the relevance of the civil litigation arose in the course of the appellant’s trial.

   Background

9. The count on which the appellant was convicted was that on divers dates between 1 September 2004 and 17 July 2009 he dishonestly applied to his own use money and/or bank credits in his possession subject to a direction and/or condition.  The yield to the appellant from the dishonesty was of a value of more than $30,000.

10. In 2004 and 2005 the appellant received from Mr Duhs funds totalling $2.7 million, being proceeds of the sale of blocks of land owned by Mr Duhs.

11. On the Crown case the money was given by Mr Duhs to the appellant on a condition and/or direction it would be invested for the benefit of Mr Duhs and interest would be paid on the investment.

12. The Crown alleges two alternative bases as to the direction and/or condition to which the money was subject.  These alternative bases were identified by the learned trial Judge in an Elements Sheet provided to the jury as an aid to his Honour’s oral directions:[3]

    [3]AB 438-441.

    “3.The direction is contained in a Joint Venture Agreement dated 7 January 2005 which provided:

    (a)The money was to remain under the control of the complainant (para 6).

    (b)The money was to be placed in a non-depletion account with a bank (para 6).

    4.The direction is further contained in a Private Placement Agreement dated 7 January 2005 which provided:

    (a)The funds to be placed into a prearranged investment Portfolio at Alliance International Company Ltd (para 1).

    (b)The funds would be held in a bank rated in the top 50 banks in Europe (para 1).

    (c)The funds were not to leave this account without the complainant’s written authority and the complainant would receive monthly statements of the progress (para 1).

    (d)The agreement would last for 5 years (para 4).

    (e)The funds were to remain to the sole benefit of the complainant (para 7).

    …

    6.Alternatively to paragraphs 3 and 4, the written agreement between the complainant and the defendant was a sham and was void and in the circumstances the funds were held on trust by the defendant for the benefit of the complainant and could not be distributed without the authority of the complainant.”

13. It was not disputed at trial that the bulk of the $2.7 million transferred to the appellant by Mr Duhs was applied to the appellant’s own use.  Apart from $70,000 paid by the appellant to Mr Duhs (which he understood to be interest on the investment), Mr Duhs recovered none of the funds.  Of the funds provided to the appellant, $352,000 was converted to Euros and transferred overseas with the balance of the money largely spent by the appellant on vehicles, wages and farm equipment.[4]

    [4]Submissions on behalf of the Appellant, [8]; Outline of Submissions on behalf of the Respondent, [1.3].

14. The parties accept that the principal issue at trial was whether the appellant acted dishonestly.  The Crown’s case in respect of dishonesty was summarised by his Honour in the Elements Sheet as follows:[5]

    [5]AB 440.

    “8.The dishonesty can be concluded because:

    (a)All of the funds were not invested for the benefit of the complainant (whether as required under the Joint Venture Agreement or Private Placement Agreement or under the terms of the trust); and/or

    (b)Much of the fund was distributed to payees without authority from the complainant; and/or

    (c)In fact most of the funds were expended for the benefit of the defendant or entities with which he was associated and not for the benefit of the complainant; and

    (d)The $2,700,000.00 has not been repaid to the complainant.

    9.The crux of the crown case is that many of the funds were dishonestly spent for the defendant’s benefit without authority from the complainant.”

15. The Defence case was that there was no dishonesty on the part of the appellant because the $2.7 million constituted an investment which involved a transfer of shares in FAA Ltd.  The fact that the investment went “bad” was not the fault of the appellant as there is a risk with all investments.[6]

    [6]AB 441, Elements Sheet.

16. The civil proceedings were first raised by the Crown Prosecutor with Mr Duhs in evidence-in-chief.  The issue was raised in the context of Mr Duhs having engaged lawyers in an attempt to recover his money.  Civil proceedings were commenced for this purpose.[7]  Defence counsel cross-examined Mr Duhs on the basis that when he was unable to recover his money through civil proceedings, a complaint was made to the police.[8]

    [7]AB 53, lines 10-33.

    [8]AB 60, lines 30-35.

17. The civil proceedings included Mr Duhs obtaining freezing orders in respect of the assets of the appellant and entities associated with the appellant.  Orders made on 26 November 2008 also required the appellant to file affidavits providing information of assets in Australia or elsewhere and how he disbursed the $2.7 million.  Witnesses who were called at the appellant’s trial also produced affidavits for the civil proceedings.  Documents were led at trial without objection, which were identified as having been exhibited to affidavits produced by witnesses in the civil proceedings.

18. A number of prosecution witnesses gave evidence of attempts to recover Mr Duhs’ money.  Mr Morris, a chartered accountant, gave evidence of having told the appellant that Mr Duhs wanted his money returned.[9]  Mr Bray, a solicitor, gave evidence that he was retained by Mr Duhs in around August 2006.  He produced correspondence from November and December 2006 to and from the appellant, relating to the location of the funds.[10]  Mr Barr, also a solicitor, gave evidence of being engaged by Mr Duhs and sending a letter of demand to the appellant for the return of the outstanding $2.7 million and of the email response received from the appellant.[11]  A number of prosecution witnesses, including Mr Morris, were cross-examined about the contents of their affidavits which had been filed in the civil proceedings.  The affidavits sworn by the appellant and filed in the civil proceedings were tendered by the Crown Prosecutor without objection.

    [9]AB 132, lines 44-45.

    [10]AB 143, line 23 – AB 147, line 37.

    [11]AB 149, exhibits 15 and 16; AB 555-557.

19. It may therefore be accepted that prior to the tendering of exhibit 28 which incorporated the admission of the civil judgment in the sum of $2.7 million, there was a substantial body of evidence before the jury that Mr Duhs had commenced civil proceedings, but had failed to recover any money from the appellant apart from $70,000.

20. The admission in respect of the civil judgment was made in the following circumstances.  The appellant did not give evidence at his trial.  His wife, Maria Pettett, was the first witness called in the Defence case.  The civil proceedings were first mentioned in her evidence-in-chief.  Ms Pettett explained that she and the appellant had lost their farm at Kooralbyn due to the civil proceedings brought by Mr Duhs.[12]  Her answer was clarified through the next question that the loss of the farm was due to legal costs.[13]

    [12]AB 202, lines 31-32.

    [13]AB 202, line 34; Outline of Submissions on behalf of the Respondent, [3.2].

21. Ms Pettett was cross-examined in relation to the civil proceedings.  She was aware that the $2.7 million had been banked into an account of a company controlled by her husband.[14]  Ms Pettett explained the circumstances in which the appellant had transferred the shares from one of his companies, Tolteca Pty Ltd, into Ms Pettett’s name and made her director and secretary of the company.  She explained that after the freezing order was issued in respect of the appellant he received certain legal advice.  This advice was to the effect that as he could be bankrupted because of the proceedings he would not thereafter be able to hold the office of a director.  It was therefore decided that Ms Pettett would become the director of Tolteca Pty Ltd.[15]  Ms Pettett was cross-examined in relation to losing the farm:

    “MS RANKINE:  Sorry.  And you’ve had to sell the farm?--- The farm has to – we didn’t sell it.  The farm was repossessed.

    Yes?---  Yep.

    Okay.  And that was a result of a judgment in favour of Mr Duhs in relation to this 2.7 million?---  No.”[16]

    [14]AB 220, lines 14-24.

    [15]AB 220, lines 40-47.

    [16]AB 222, lines 27-34.

22. Defence counsel objected to this question.  The objection was dealt with in the absence of the jury.  The basis of the objection, as identified by defence counsel, was that the question suggested that there was a judgment in favour of Mr Duhs suggesting that there had been an adjudication of that issue and a court finding.[17]  The learned trial Judge expressed the following concern to the Crown Prosecutor:

    “HIS HONOUR:  Ms Rankine, I am concerned that the implication is a judge has found against Mr Pettett’s credit and in favour of Mr Duhs.  That’s not the case.  There were conditions on defence, as I understand it from Mr Godbolt, with a default judgment entered because the conditions were not met.  Is that – am I right about that?

    MR GODBOLT:  Yes.”[18]

    [17]AB 224, lines 35-37.

    [18]AB 225, lines 8-14.

23. When the jury returned, the evidence of another defence witness was interposed.  Prior to Ms Pettett’s cross-examination recommencing there was a further exchange between counsel and the learned trial Judge that ultimately resulted in the admissions concerning the civil judgment (exhibit 28).  The effect of this exchange was that defence counsel indicated that in respect of the questioning of Ms Pettett he had no difficulty with questions being asked as to the course of the civil litigation.  Defence counsel emphasised however, that it was important to ensure that the questioning did not leave the jury with a wrong impression.  His Honour suggested that prior to Ms Pettett’s cross-examination recommencing a document with any necessary admissions should be agreed.  The learned trial Judge was particularly concerned that no negative inference be drawn about the civil litigation.[19]

    [19]AB 261, lines 1-26.

24. Prior to the recommencement of Ms Pettett’s cross-examination exhibit 28 was read to the jury.  Exhibit 28 states:

    “Pursuant to s.644 Criminal Code (1899), it is formally admitted between the parties that:

    1.On 26^th November 2008 Court ordered:

    a.Freezing of assets of

    ●Mr Pettett

    ●Kea Watts and Associates Pty Ltd

    ●Rathdowney Developments

    b.Provision of information regarding:

    i.Provision of information of assets in Australia or elsewhere

    ii.Disbursement of $2.7M received by him from Mr Duhs.

    2.On 6^th May 2009 Justice Applegarth dismissed summary judgement and ordered a trial conditional on payment of $540,000.00 to be paid by Mr Pettett within 28 days, failing which the Plaintiff (Duhs) be at liberty to enter judgement for the amount of his claim.

    3.On 14^th June 2009, Mr Duhs filed bankruptcy notice to Pettett.

    4.On 19^th June 2009 Justice Applegarth gave judgement to Mr Duhs ordering Mr Pettett to pay him the sum of $2.7 million.

    4A.On 16^th July 2009, Justice White made an order in the same terms as paragraph 1.

    5.On 14^th December 2009, Defendant declared bankruptcy.”[20] (sic)

    [20]AB 932.

25. In re-examination Ms Pettett was asked, by reference to exhibit 28, whether the appellant had been able to come up with the funds required by the order of Justice Applegarth, to which she answered in the negative.[21]

    [21]AB 281, lines 17-34.

26. From this background it may be accepted that any concerns expressed by defence counsel and the learned trial Judge were resolved as between the parties by the making of the admissions reflected in exhibit 28.  After the admissions were read to the jury the learned trial Judge instructed the jury that they might understand that the importance of the admissions was to make sure there was no confusion between the parties as to what orders had been made in the Supreme Court.[22]  The jury had before it evidence from Ms Pettett that the appellant had been unable to pay the sum identified in paragraph 2 of exhibit 28.

    [22]AB 274, lines 5-10.

    The Summing Up

27. In the course of the summing up the learned trial Judge emphasised that the central issue was whether the appellant, in applying the $2.7 million, acted dishonestly.[23]

    [23]AB 331, lines 22-25 and AB 334, lines 1-2.

28. Whilst his Honour made the general reference to admissions made in the trial as constituting evidence, no specific reference was made to exhibit 28.  The civil proceedings were referred to by his Honour in summarising the address of the Crown Prosecutor:

    “By January ‘07 Mr Duhs engaged the solicitors and there was no real response to Mr Bray’s letters.  Bear in mind, in February ’07 he alleged there was no paperwork.  He didn’t really respond to Mr Barr in any meaningful way.  Solicitors changed in September ’08 and then in November ’08 the Supreme Court civil action commenced on behalf of Mr Duhs.  Explanations were ordered by the Court and Ms Rankine submits that it was during the ligation in 2009, about four or five years later, that the first time documents were produced and a purported explanation was given as to where the funds had gone and the accounts of this foreign company were not produced until July ’09 but it was not until November ’09 that this so-called offset ledger entry was disclosed.”[24]

    [24]AB 346, lines 15-25.

29. None of the questions asked by the jury after the summing up concerned exhibit 28.  Importantly for present purposes, defence counsel did not request any redirection as to how the jury could use the evidence that Mr Duhs had obtained a civil judgment against the appellant for $2.7 million in assessing whether the appellant had acted dishonestly.  It is not surprising that such a redirection was not sought.  First, as is evident from his Honour’s summary of the addresses of the Crown Prosecutor and defence counsel, neither referred to the civil judgment in the context of assessing the appellant’s dishonesty.  Neither the Crown Prosecutor or defence counsel referred to exhibit 28 in the course of their addresses.  Secondly, as I have already observed, the learned trial Judge did not make any reference to exhibit 28 in the summing up.  Thirdly, as is evident from the Elements Sheet given to the jury, the element of dishonesty was addressed primarily by reference to how the appellant dealt with the $2.7 million and the fact that the money had not been repaid to Mr Duhs.[25]

    [25]AB 438 at 440, [8].

    Consideration

30. In light of the evidence of Ms Pettett and the circumstances in which exhibit 28 came to be provided to the jury, there was no risk that the jury might have misunderstood paragraphs 2 and 4 of exhibit 28 to mean that there had been a civil trial on the merits resulting in a judgment in favour of Mr Duhs.  The admissions in exhibit 28 were the product of the joint work of the Crown Prosecutor and defence counsel.  As the admissions were structured with paragraph 2 coming before paragraph 4, it was sufficiently evident that any trial was conditional on payment of $540,000 by the appellant within 28 days.  The jury had the benefit of the evidence of Ms Pettett to the effect that the appellant was unable to raise this sum.  Paragraph 4 of exhibit 28 may therefore be read as a judgment entered as a result of the appellant failing to comply with the condition identified in paragraph 2.  In my view, the circumstances of the present case did not require the learned trial Judge to warn the jury that they could not use the fact of the civil judgment in assessing whether the appellant had acted dishonestly.

31. The requirement for such a direction also did not arise because there was no attempt by the prosecution to use the fact of the civil judgment as either a direct or indirect consideration for the jury in assessing the element of dishonesty.  Exhibit 28 only arose because of the suggestion by the Crown Prosecutor to Ms Pettett that the farm had to be sold as a result of the civil judgment in favour of Mr Duhs.  This suggestion was not accepted by Ms Pettett.  In all the circumstances, it cannot be accepted that the jury may have, in the absence of a direction, impermissibly reasoned the guilt of the appellant from the contents of exhibit 28.[26]  This conclusion is reinforced by the fact that experienced defence counsel did not seek any such redirection.

    [26]Outline of Submissions on behalf of the Respondent, [4.4].

    Disposition

1. The appeal against conviction should be dismissed.