R v Smith (Ruling No 1)
[2012] VSC 244
•12 June 2012
| IN THE SUPREME COURT OF VICTORIA | Not restricted | |
AT MELBOURNE
CRIMINAL DIVISION
No. S CR 2011 0036
| THE QUEEN |
| v |
| JULIAN ALEXANDER SMITH |
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JUDGE: | WHELAN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 5 June 2012 | |
DATE OF RULING: | 12 June 2012 | |
CASE MAY BE CITED AS: | R v Smith (Ruling No 1) | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 244 | |
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CRIMINAL LAW – Section 184(2)(a) Corporations Act 2001 (Cth) - Test of dishonesty – Test in Peters v The Queen continues to apply notwithstanding application of Chapter 2 of Criminal Code (Cth).
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APPEARANCES: | Counsel | Solicitors |
| For the Crown | Dr G Lyon SC Mr P Doyle | The Commonwealth Director of Public Prosecutions |
| For the Accused | Mr M Regan Mr P Smallwood | Victoria Legal Aid |
HIS HONOUR:
Mr Smith is charged with two offences under s 184(2)(a) of the Corporations Act 2001 (Cth). The charges concern transactions entered into by three companies of which he was a director in March 2008. The three companies are Opes Prime Group Ltd (“OPGL”), Opes Prime Stockbroking Ltd (“OPSL”) and Leveraged Capital Pty Ltd (“Leveraged Capital”). What is alleged is that he used his position as a director of OPGL (count 1), and as a director of OPSL (count 2), dishonestly with the intention of directly or indirectly gaining an advantage for Leveraged Capital.
The conduct which constitutes the use of position is the role the accused played, and the steps he took, in the entry by OPGL, OPSL and Leveraged Capital into arrangements with the ANZ Bank in March 2008.
I have been taken through a draft opening address by senior counsel for the prosecution and have been taken to what the prosecution says are the relevant key documents. A detailed defence response to an earlier version of the opening has been filed and I have heard counsel for the accused outline the relevant issues. The prosecution opening is presently being revised in the light of issues which arose in the course of that process.
As matters presently stand, there will be no controversy about the fact that the accused was a director of the three companies concerned, that the three companies did enter into the relevant arrangements in March 2008, and that the accused was one of the directors responsible for that.
As I understand the case at present, that there will also be no controversy as to the propositions that one effect of the transactions in March 2008 was that OPSL and OPGL undertook additional obligations and gave security for those obligations, that the terms of pre-existing arrangements between OPSL and ANZ were altered in a way which was to ANZ’s advantage and OPSL’s detriment, and that the transactions enabled Leveraged Capital to meet an obligation which it had and which it would otherwise have been unable to meet.
It seems to me that there is likely to be an issue as to whether the prosecution can prove beyond reasonable doubt that Mr Smith’s intention was to directly or indirectly gain an advantage for Leveraged Capital, but the central area of controversy will be whether the accused’s conduct was dishonest.
A preliminary legal issue has been argued before me in relation to what the prosecution is required to prove in order to establish dishonesty on these charges.
The prosecution says it is required to prove that the accused’s conduct was dishonest by the standards of ordinary, decent people. In argument this was referred to as the “Peters’ test”, a reference to the High Court decision in Peters v The Queen.[1]
[1](1998) 192 CLR 493 (“Peters”).
Counsel for the accused contend that the prosecution must prove that the accused was dishonest according to the standards of ordinary people and that his conduct was known by him to be dishonest according to the standards of ordinary people, being the definition of dishonesty provided for in five sections of the Commonwealth Criminal Code. The five sections are ss 73.9(3), 130.3, 470.2, 473.2, and 480.2. Four of those sections were in the Criminal Code when it was first enacted as a schedule to the Criminal Code Act 1995 (Cth), although the provision now in s 473.2 was then in s 474.1. Section 130.3 was the section most commonly referred to in argument. It was introduced into the Criminal Code by the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Act 2000 (Cth). The definitions of dishonesty in the Criminal Code reflect or embody what is referred to as the “Ghosh test”, a reference to the English Court of Appeal decision in R v Ghosh.[2] The revised explanatory memorandum for the Criminal Code Amendment (Theft, Fraud, Bribery and Related Offences) Bill 2000 explained that a considered decision had been made to prefer the Ghosh test to the Peters’ test.
[2][1982] QB 1053; [1982] 2 All ER 689 (“Ghosh”).
The point to be determined is whether on these charges the test for dishonesty is the Peters’ test or the Ghosh test.
The relevant legislation
Section 184(2) of the Corporations Act relevantly provides as follows:
“A director … commits an offence if they use their position dishonestly:
(a)with the intention of directly or indirectly gaining an advantage for … someone else … .”
Because the issue in controversy before me concerns whether it must be proved that the accused knew that he was behaving dishonestly according to the standards of ordinary people, it is relevant to also note the terms in which s 184(1) is expressed. That section provides:
“A director or other officer of a corporation commits an offence if they:
(a)are reckless; or
(b)are intentionally dishonest;
and fail to exercise their powers and discharge their duties:
(c)in good faith in the best interests of the corporation; or
(d)for a proper purpose.”
Reference should also be made to s 184(3) concerning use of information. That section is expressed in terms relevantly similar to s 184(2).
Section 1308A of the Corporations Act is also relevant. It provides:
“Subject to this Act, Chapter 2 of the Criminal Code applies to all offences against this Act.”
The reference to the Criminal Code is a reference to the Commonwealth Criminal Code introduced by the Criminal Code Act 1995 (Cth). Chapter 2 sets out the general principles of criminal responsibility.
Section 2.2 of the Criminal Code relevantly provides as follows:
“(1) This Chapter applies to all offences against this Code.
(2)… this Chapter applies on and after 15 December 2001 to all other offences.”
Section 3.1 of the Criminal Code provides that an offence “consists of physical elements and fault elements”.
Section 3.2 provides:
“In order for a person to be found guilty of committing an offence the following must be proved:
(a)the existence of such physical elements as are, under the law creating the offence, relevant to establishing guilt;
(b)in respect of each such physical element for which a fault element is required, one of the fault elements for the physical element.”
Section 4.1 of the Criminal Code provides that the physical element of an offence may be conduct, or a result of conduct, or a circumstance in which conduct, or a result of conduct, occurs.
Section 5.1 provides that a fault element for a particular physical element may be intention, knowledge, recklessness or negligence but that a law that creates an offence may specify “other fault elements for a physical element of that offence”.
Specific provisions deal with intention, knowledge, recklessness, negligence and offences that do not specify fault elements.
There was no controversy before me that, given the provisions of s 2.2(2) of the Criminal Code and s 1308A of the Corporations Act, the provisions of Chapter 2 apply in relation to the charges against Mr Smith.
The five sections of the Criminal Code which define dishonesty in terms reflecting the Ghosh test are not in Chapter 2. They are in Chapters 4, 7 and 10.
Ghosh and Peters
Before turning to the specific submissions made, it is necessary to say something more about the decisions in Ghosh and in Peters.
Ghosh concerned an appeal from convictions for obtaining property or money by deception and attempting to obtain money by deception. The offences were under the Theft Act 1968 (UK). Lord Lane CJ, delivering the judgment of the Court, articulated the issue in the following terms:[3]
“This brings us to the heart of the problem. Is ‘dishonestly’ in section 1 of the Theft Act 1968 intended to characterise a course of conduct? Or is it intended to describe a state of mind? If the former, then we can well understand that it could be established independently of the knowledge or belief of the accused. But if, as we think, it is the latter, then the knowledge and belief of the accused are at the root of the problem.”
[3][1982] QB 1053, 1063.
Lord Lane CJ went on to explain that if dishonesty is something in the mind of the accused then there cannot be dishonesty if the accused’s mind is honest, and accordingly the court rejected what was described as the “simple uncomplicated approach” of assessing dishonesty purely objectively. Lord Lane explained that this did not mean that honesty was assessed by reference to each individual accused’s own moral standards. He said:[4]
“In determining whether the prosecution has proved that the defendant was acting dishonestly, a jury must first of all decide whether according to the ordinary standards of reasonable and honest people what was done was dishonest. If it was not dishonest by those standards, that is the end of the matter and the prosecution fails.
If it was dishonest by those standards, then the jury must consider whether the defendant himself must have realised that what he was doing was by those standards dishonest. In most cases, where the actions are obviously dishonest by ordinary standards, there will be no doubt about it. It will be obvious that the defendant himself knew that he was acting dishonestly. It is dishonest for a defendant to act in a way which he knows ordinary people consider to be dishonest, even if he asserts or genuinely believes that he is morally justified in acting as he did.”
[4][1982] QB 1053, 1064.
Peters concerned an appeal from a conviction on a charge of conspiracy to defraud the Commonwealth Commissioner of Taxation. The trial judge had instructed the jury in accordance with the Ghosh test. The judgment which has come to be accepted as correctly stating the law is the joint judgment of Toohey and Gaudron JJ.
Toohey and Gaudron JJ held that dishonesty is not a separate element of the common law offence of conspiracy to defraud, notwithstanding that “dishonesty is a characteristic of the means agreed to be employed to effect the fraud and is also descriptive of what is involved in the fraud”.[5]
[5](1998) 192 CLR 493, 501.
Their Honours considered Ghosh, concluding that the test propounded there was likely to confuse rather than assist. The critical passage in their joint judgment then follows. They said:[6]
“In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. Necessarily, the test to be applied in deciding whether the act done is properly characterised as dishonest will differ depending on whether the question is whether it was dishonest according to ordinary notions or dishonest in some special sense. If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people.”
Their Honours indicated that the Victorian Court of Appeal decision in R v Salvo[7] was an example of a legislative provision using “dishonest” in a special sense.
[6](1998) 192 CLR 493, 504.
[7][1980] VR 401.
Toohey and Gaudron JJ accordingly concluded that the jury in that case should not have been instructed in accordance with the test adopted in Ghosh. They said that ordinarily it would be sufficient to instruct the jury as to the facts they needed to find for the agreed means (in a conspiracy case) to be characterised as dishonest, or it would be sufficient to instruct them that if they were satisfied of certain facts they would then be satisfied that the agreed means were dishonest. They suggested that it would only be in a “borderline case” where it would be necessary for the question whether the means are to be characterised as dishonest to be left to the jury. They observed that it was only in this area (ie leaving that issue to the jury) where they differed from the judgment of McHugh J, with whom Gummow J agreed.[8]
[8](1998) 192 CLR 493, 510.
McHugh J also rejected the proposition that the prosecution had to prove that the accused person knew that they were acting dishonestly.
It does seem to me, however, that McHugh J’s approach somewhat reflected that of Lord Lane in what he had described as “the heart of the problem”. McHugh J said:[9]
“The real question arises, however, whether dividing the elements of conspiracy into an actus reus and a mens rea serves any useful purpose. … One of the difficulties in dividing the offence of conspiracy into the traditional elements of an actus reus and a mens rea is that the agreement of the parties to pursue a common and unlawful design is traditionally regarded as the actus reus of the offence. Yet such an agreement, assuming it to be voluntary, necessarily includes a mental element. At the very least, there must be an intention to enter into the agreement, and the present state of the authorities suggests there can be no conspiratorial agreement unless the accused and his or her co-conspirators also intend that the common design should be carried out.”
[9](1998) 192 CLR 493, 515-516.
McHugh J suggested that on a conspiracy charge it was for the trial judge, not the jury, to determine whether the facts relied upon, if proved, established an agreement to use dishonest means. This was the point upon which he differed from Toohey and Gaudron JJ. But McHugh J also said that “dishonesty” was an ordinary English word, the meaning and application of which in a statute were questions of fact, and that in a criminal trial involving a statute that made dishonesty an element of the offence it would be for the jury to determine whether the conduct of the accused was dishonest.[10]
[10](1998) 192 CLR 493, 531.
The High Court returned to the issue in Macleod v The Queen.[11]
[11](2003) 214 CLR 230 (“Macleod”).
Macleod concerned an appeal from convictions on offences under s 173 of the Crimes Act 1900 (NSW). The relevant provision created an offence where a director of a body corporate fraudulently took or applied for his own use or benefit property of the body corporate.
In the joint judgment of Gleeson CJ, Gummow and Hayne JJ the elements of the relevant offence were said to be the following:[12]
“(i)the taking or application of company property by a director, officer or member; (ii) for his own use or benefit, or any use or purpose other than the use or purpose of the company; and (iii) that the taking or application was fraudulently made.”
[12](2003) 214 CLR 230, 240.
The term “fraudulently” was said to have a meaning which was interchangeable with “dishonestly”.[13]
[13](2003) 214 CLR 230, 241.
It is necessary to pause at this point to note that Macleod accordingly deals with the position where fraud, interchangeable with dishonesty, is a separate element of the offence.
Gleeson CJ, Gummow and Hayne JJ quoted and adopted what I have described as the critical passage in the judgment of Toohey and Gaudron JJ in Peters.[14] Their Honours then concluded:[15]
“Adopting the reasoning in Peters, as we do, and applying it to the offences now under consideration, there is no requirement that the appellant must have realised that the acts in question were dishonest by current standards of ordinary, decent people.”
[14](2003) 214 CLR 230, 242.
[15](2003) 214 CLR 230, 245.
McHugh J relevantly took the same approach, applying the analysis of Toohey and Gaudron JJ in Peters to the position arising in Macleod.[16]
[16](2003) 214 CLR 230, 256.
Callinan J’s judgment in Macleod dealt with the appeal in a different way. He held that the appellant had been shown to have acted fraudulently no matter how that word was to be understood. He did also quote the critical passage from Toohey and Gaudron JJ in Peters, to which I have referred, describing that approach as “apposite”.[17]
[17](2003) 214 CLR 230, 264-265.
Other relevant matters
Before setting out the submissions made, it is necessary to briefly refer to some other matters.
When the Criminal Code was introduced corporations legislation was not a law of the Commonwealth (other than in relation to the ACT). The offences dealt with by the Criminal Code are offences against laws of the Commonwealth.[18] Corporations legislation became a law of the Commonwealth after the previous scheme, involving interrelated State and Commonwealth legislation, was held to be unconstitutional.[19]
[18]See the definition of “offence” in the Dictionary.
[19]Re Wakim; ex parte McNally (1999) 198 CLR 511.
The offence with which Mr Smith is charged became a Commonwealth offence when the Corporations Act 2001 commenced operation on 15 July 2001. Chapter 2 of the Criminal Code applied to the offences in the Corporations Act 2001 as from 15 December 2001 pursuant to both s 2.2(2) of the Criminal Code, and pursuant to s 1308A of the Corporations Act 2001 which was introduced by an amending Act later that same year.
Before me, both the prosecution and the defence accepted that prior to 15 December 2001 the test of dishonesty for the offence provided for in s 184(2)(a) of the Corporations Act 2001 was the Peters’ test, as confirmed in Macleod. Both sides also accepted that Chapter 2 applies to the offence provided for in s 184(2)(a) from 15 December 2001. The issue is whether the application of Chapter 2 alters the test of dishonesty in s 184(2)(a).
In Kwok v The Queen[20] the New South Wales Court of Criminal Appeal proceeded on the assumption that it did. In that case the conduct alleged to constitute the offence straddled 15 December 2001. It seems that the Crown took the view both at trial and in the Court of Appeal that the Peters’ test applied prior to 15 December 2001 and that the Ghosh test as set out in s 130.3 of the Criminal Code applied on and after 15 December 2001. At trial the potential confusion which was perceived to exist as a result of that position was addressed by the prosecution being permitted to amend the indictment so as to confine the offence to the period up to 14 December 2001. There were a number of appeal grounds relied upon in the Court of Criminal Appeal concerning that course, but the underlying proposition that the test had indeed changed on 15 December 2001 was not the subject of controversy. The Court of Criminal Appeal appears to have accepted that the test had changed. Santow JA, with whom Hidden and Howie JJ agreed, observed:[21]
“It remains to consider whether, notwithstanding the words of s 2.2 of the Code, s 130.3 applied to the whole of the events comprehended by the charge merely because the proceedings brought against the accused post-dated 15 December 2001.
I agree with the Crown’s submissions that there is no basis in the relevant legislation to give retrospective effect to the modified definition of dishonesty, as incorporated in subsection 184(2).”
[20][2007] NSWCCA 281; (2007) 175 A Crim R 278 (“Kwok”).
[21][2007] NSWCCA 281 at [68]-[69].
Before leaving Kwok, it is also necessary to refer to an observation made by Santow JA that the wording of s 184(1) in using the expression “intentionally dishonest” stands in contrast to the wording of s 184(2) and that that contrast might support the adoption of the Peters’ approach in subsection (2).[22]
[22][2007[ NSWCCA 281 at [70].
Very recently an appeal against convictions for offences under s 184(2)(a) came before the New South Wales Court of Criminal Appeal in Krecichwost v The Queen.[23] No issue was raised in that appeal as to whether the Peters’ test is the appropriate test but it is clear from the judgment that that is the test which the trial judge had directed the jury to apply.[24] It is also clear that dishonesty was a central issue in that case, and three of the grounds of appeal (grounds 4, 7 and 8) addressed the dishonesty issue. Just as the Court in Kwok appears to have assumed that the test had changed, the Court of Criminal Appeal in Krecichwost appears to have assumed that it had not.
[23][2012] NSWCCA 101 (“Krecichwost”)
[24][2012] NSWCCA 101 at [63].
The only other decision which counsel were able to bring to my attention was a ruling from the District Court of Queensland by Judge Martin SC in R v Kemp.[25] Judge Martin ruled that the test of dishonesty under s 184(2) had changed. He reached this conclusion relying on Kwok.
[25]A transcript of the proceedings was handed to me. An oral ruling was delivered on 29 May 2012.
Otherwise it seems that there is no authority which is of assistance.[26]
[26]The issue is addressed in Ford’s Principles of Corporations Law at [9.288] but not in terms which assist.
Submissions
Counsel on behalf of the accused did not attempt to perpetuate the misconception apparently held by counsel for both the accused and the prosecution in Kwok that s 130.3 of the Criminal Code expressly altered the test of dishonesty under s 184(2)(a).[27] Such a submission would be untenable as the only part of the Criminal Code which applies to s 184(2)(a) is Chapter 2, and Chapter 2 does not contain the definition of dishonesty in s 130.3 or elsewhere in the Criminal Code.
[27]Santow JA set out what seems to have been the joint position of counsel in Kwok at [63]-[64].
The submissions put on the part of the accused can be summarised as follows:
(1)On analysis, Peters is a decision addressing the issue of dishonesty in circumstances where dishonesty is not a separate element, that is the ‘mens rea’ required before the offence can be proven, but rather where dishonesty is part of the relevant conduct, the actus reus. Ghosh, on the other hand, does deal with a situation where dishonesty is part of the requisite mens rea. Chapter 2 requires differentiation between physical elements, which may be equated with the actus reus, and fault elements, which may be equated with mens rea.
(2)The application of Chapter 2 to section 184(2)(a) means that use of position is a physical element and ‘dishonestly’ is a fault element. The judgment of the New South Wales Court of Criminal Appeal in Lee v The Queen[28] explains the importance of the characterisation of elements into physical elements and fault elements and emphasises that this characterisation means that authorities on the mental element of an offence based on common law principles are no longer applicable and are indeed dangerous as a point of reference.[29] In the circumstances, Peters should now be put to one side. Ghosh is the appropriate test when dishonesty is the fault element.
(3)The Commonwealth Parliament has clearly expressed its preference for the Ghosh test over the Peters’ test. It has done so in the provisions of the Criminal Code which embody or reflect the Ghosh test, in the explanatory memoranda to the relevant legislation, and in provisions recently introduced to the Corporations Act itself, being sections 1041F and 1041G. Those sections, creating offences in the context of financial services and markets, expressly define dishonesty in the same terms as the definitions in the Criminal Code, reflecting or embodying the Ghosh test. It would be more than anomalous (inconceivable was suggested) that a different test would apply under section 184(2)(a).
(4)The decision in Macleod is not an impediment to adoption of the Ghosh test because the offence under consideration there was not an offence to which the Criminal Code applies and no analysis in terms of physical elements and fault elements was either necessary or undertaken.
(5)The suggestion by Santow JA in Kwok that there may be significance in the different wording between section 184(1) and section 184(2) cannot be sustained. There is no rational basis upon which the two circumstances could be distinguished. Santow JA’s observation is premised on a misconception that ‘dishonestly’ was part of the physical element of use of position.
[28][2007] NSWCCA 71; (2007) 170 A Crim R 287 (“Lee”).
[29][2007] NSWCCA 71 at [29].
The submissions made on behalf of the prosecution may be summarised as follows:
(1)The Peters’ test as adopted in Macleod must apply absent a special statutory meaning and there is no special statutory meaning here.
(2)The instances where Parliament has legislated for a test which reflects or embodies the Ghosh test reveal that Parliament has determined not to address the issue generally but to do so in specific contexts.
(3)There is no definition of dishonesty in Chapter 2, which is the only chapter which applies to the Corporations Act. The Ghosh definitions are in other chapters, each confined to their specific context.
(4)Likewise, the offences recently added to the Corporations Act, ss 1041F and 1041G, confine by their express terms the Ghosh definitions of dishonesty to the particular offences provided for. This is not only another instance of the Ghosh definitions being expressly confined but it also shows that Parliament was alive to the need to define dishonesty in those specific contexts.
(5)It is of no assistance to say that the Commonwealth Parliament has shown a general preference for the Ghosh test over the Peters’ test, as the issue is what is the meaning of the words in the relevant statutes not what Parliament’s general view might be.
(6)As to the basis upon which Peters is said to be distinguishable, the defence analysis is incorrect for two reasons. First, the key passage in Peters which has been adopted and applied ever since (being the passage in the judgment of Toohey and Gaudron JJ which I quoted earlier) is clearly intended to be of general application and to apply whenever the issue of dishonesty arises, absent a special meaning. Secondly, the analysis in Peters was adopted in Macleod, and in Macleod “fraudulently” (interchangeable with “dishonestly”) was a separate element.
(7)As to Santow JA’s observations in relation to s 184(1), that use of “dishonestly” in s 184(1) may well be an instance of a special meaning, expressly countenanced in Peters and in Macleod.
As to the Chapter 2 characterisation of the elements in this case, after hearing the submissions on behalf of the accused and after having had time to further consider the matter, it was submitted on behalf of the prosecution that in this case the physical element constituted by use of position has what was described as a “compound” fault element, being both dishonesty and the intention to gain an advantage. Defence counsel adopted that characterisation.
Analysis and conclusion
The application of Chapter 2 does alter the analysis of how the elements of an offence under s 184(2) are to be characterised. The characterisation of elements into physical elements and fault elements is not always easy, as the judgments in Lee well illustrate,[30] but Chapter 2 requires that the analysis be in those terms.
[30]The Commonwealth Attorney-General’s guide for practitioners on the Commonwealth Criminal Code published in March 2002 observes that “a degree of strain or arbitrariness is inevitable when elements of an offence must be divided between categories of physical and fault elements”: 3.1C.
The submissions on the judgments in Peters and in Ghosh put forward on behalf of the accused are correct in identifying the fact that Peters addressed dishonesty in the context of actus reus, whereas Ghosh addressed it in the context of mens rea. That might have been significant, but I cannot rely upon it as a basis for distinguishing Peters for two reasons. First, Toohey and Gaudron JJ also expressed themselves in terms which were general and which were not confined to that context, and the passage in which they did that is the one which has since been cited and relied upon.[31] Secondly, and more importantly, the suggested basis of distinction does not apply to Macleod. Fraud, which is interchangeable with dishonesty, was a separate element there. The High Court still adopted the Peters’ approach.
[31]The passage has become the accepted formulation of the test, in the absence of a special meaning, in both the criminal context (see, for example, Bourke’s Criminal Law, at [7480.105]) and the civil context (see, for example, Harle v Legal Practitioners Liability Committee [2003] VSCA 133).
The Commonwealth Parliament has shown a clear preference for the Ghosh test over the Peters’ test, but the Parliament has not expressly enacted the Ghosh test in relation to s 184(2), as it has done in other specific contexts.
The specific occasions in which the Commonwealth Parliament has legislated for the Ghosh test can be seen as giving support to the prosecution position at least as much as to the defence position. Whilst it is true that those occasions reveal a preference for the Ghosh test, they also reveal that the Parliament has chosen to legislate for the Ghosh test, not generally, but in specific instances, and also that Parliament apprehended the need to introduce a statutory definition into the Corporations Act for specific offences where the Ghosh test was to apply (s 1041F and s 1041G).
Finally, the contrast between the term “intentionally dishonest” in s 184(1) and “dishonestly” in s 184(2) is, in the context, a stark one. It is perhaps anomalous that the tests should be different. The history of the provisions was not explored before me but an explanation may be found there.[32]
[32]A difference between s 184(1) and s 184(2) may be anomalous but it may not be surprising, given the history of the provisions. I did not hear argument on the issue but the relevant history reveals circumstances which may explain the difference. The predecessors of s 184(1) are to be found in s 124(1) of the uniform Companies Act 1961 (Vic), in s 229(1) of the Companies (Victoria) Code, in s 232(1) of the Corporations Law before the Corporate Law Reform Act 1992, in s 232(1) and s 1317FA of the Corporations Law after the Corporate Law Reform Act 1992, and finally in s 184 as introduced into the Corporations Law by the Corporate Law Economic Reform Program Act 1999 (“CLERP”) and then re-enacted in the Corporations Act 2001 (Cth). The interaction between the general duty of honesty, derived from and existing under the general law, and a criminal offence for contravention, was always an area of contention and confusion (see, for example: V. Mitchell: “The concept of “honesty” under Section 232(2) of the Corporations Law”, (1994) 12 C & SLJ 231, which was written before Peters). The Explanatory Memorandum to the CLERP Act discusses these issues at some length when explaining why s 232(2) and s 1317FA were rewritten as s 181 and s 184. The history may provide an explanation for the divergence, if not a satisfactory reason for it.
It was not argued before me that dishonesty in s 184(2) has a special meaning. Such an argument would necessarily have had to proceed on the basis that Peters never applied to s 184(2) and its predecessors.
My conclusion is that I am bound to continue to apply the Peters’ test in relation to dishonesty under s 184(2)(a) of the Corporations Act 2001.
In relation to characterisation of the elements, I suspect that counsel before me characterise the fault element as being “compound” because of a view, perhaps drawn from Lee, that each physical element can have only one “matching” fault element. I have not heard argument on the issue, but it seems to me that s 5.1(2) of the Criminal Code perhaps suggests that it is possible to have two fault elements for the one physical element. In any event, as I apprehend it, there is no practical significance in whether there are two fault elements or one compound fault element.
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