R v Zoneff No. Ccrm-98-98 Judgment No. S6977

R v ZONEFF

[1998] SASC 6977

Court of Criminal Appeal: Cox, Prior, Olsson JJ

COX J. In my opinion the appeal against conviction should be dismissed. I would allow the appeal against sentence and set aside the sentence orders of the District Court. Instead I would impose a single sentence of four years’ imprisonment for all of the offences. The appellant will not begin to serve that sentence until he has completed a previous sentence which still had three years, three months and twenty-six days to run when the present sentences were pronounced on 17 March 1998. For the total sentence I would fix a non-parole period of five years to run from 17 March 1998.
I agree with the reasons of Prior J.
PRIOR J: The appellant was tried in the District Court on an information containing seven counts, four of which charged him with false pretences, three with fraudulent conversion. A jury found him guilty of six of the seven charges. They returned a verdict of not guilty on the first count. That was an alternative charge to one of fraudulent conversion. The total amount of money involved was just under $73000.
In this appeal, the convictions and sentences imposed upon conviction are challenged.
The prosecution case was that the appellant took advantage of five people. The first two, referred to in the first and second counts, were Ms Sneath and Mr McKinnon. The other three were Mr and Mrs Dik and Ms Phillips. They each met the appellant when they went to purchase furniture from the Le Cornu Furniture Centre. The appellant was a sales person there. The prosecution alleged that the appellant ingratiated himself with these people, fostering their friendship to betray their trust by dishonestly dealing with their money.
Ms Sneath and Mr McKinnon said that the appellant persuaded them to pay the amount outstanding on their purchases to him, so that they could have the benefit of bonus points to which he was entitled as part of his employment conditions with Le Cornu. In their case, it was said that an additional discount of $720 was offered by the appellant if they sent the money they owed Le Cornu directly to him. Ms Sneath and Mr McKinnon said that they agreed with the appellant’s proposal, believing that he was acting in his capacity as an employee of Le Cornu and that he had authority to do what he was doing. Sneath’s evidence was that she paid $4068 into the appellant’s account with a building society, that sum being the amount she and McKinnon were indebted to Le Cornu less the discount the appellant had offered to them. Fraudulent conversion of this money was found proved. The evidence accepted by the jury established that the $4068 deposited by Ms Sneath into the appellant’s account was used to pay the appellant’s personal debts.
The other five charges were not put in the alternative. With respect to four of those Mr and Mrs Dik were involved. Like Ms Sneath and Mr McKinnon, they went to Le Cornu to buy furniture. They bought a large amount of furniture for a house they were building. The appellant kept in contact with them from their first attendance at Le Cornu in June of 1992, telephoning them to discuss things. In the course of that further contact, the appellant told the Diks of the substantial discount on their furniture if they paid their money to him. Their evidence was that they agreed with this proposal and that, in the course of one of his telephone conversations with them, he proposed that the three enter into a business venture together to build two units as an investment. An arrangement was made. The Diks went with the appellant to land at Brooklyn Park. After that they agreed with the appellant’s proposal, taking out a loan with a mortgage over their home for some $84000. Part of that loan was used to pay off an existing mortgage. The balance was used to write out three cheques. The Diks’ evidence was that those funds were for half the cost of the land and to commence building of the foundations for the units. Two of the cheques were the subject of the fraudulent conversion charges on the third and fourth counts. The evidence disclosed that once the appellant received the benefit of those cheques, he used the funds to satisfy his own debts.
The fifth and sixth counts were charges of false pretences. The evidence was that after the Diks had given the appellant the two cheques referred to in the third and fourth counts, for the land and foundations, there were discussions about the building plans, in the course of which the appellant told Mr and Mrs Dik of problems he was having in relation to his finances. Their evidence was that the appellant told him that he had a bank account frozen because of some other financial difficulties and that this was preventing him from accessing his half of the money required for their joint venture. The prosecution’s evidence was that the appellant sought and obtained from Mr and Mrs Dik a further $16600 to free up this bank account. This was a loan, so far as the Diks were concerned. Soon after this, the appellant spoke of continuing difficulties with his account. He sought and obtained a further sum of $6440 from them. This was the amount referred to in the sixth count. The relevant false pretence with respect to these two counts included an allegation that there was no bank account at the named bank where his funds had been frozen. The further false pretence alleged was that until funds were released the appellant was unable to continue with the plan to build the units.
The remaining count in the information named Ms Phillips as the victim of that offence. She too met the appellant at Le Cornu when purchasing a large amount of furniture in 1993. The prosecution’s case was that, at about the same time as the appellant was telling the Diks his funds were frozen, Ms Phillips went to Le Cornu, meeting the appellant and being subject to his persuasion. Her evidence was that the appellant raised with her the topic of obtaining a discount by using his employee bonus points after she had decided to buy furniture worth some $7700. Ms Phillips was reluctant to agree. The appellant discussed it with her further at her home when he proposed that she could have a $720 discount, because of the number of bonus points he then had in the Le Cornu Staff Incentive Scheme. The prosecution case was that the appellant then had a lot less by way of credit in the Scheme. The amount arising from the points he did have was more like $42 than $720. As a result of accepting the appellant’s proposal, Ms Phillips’ evidence was that she gave him a cheque for $5210, as a result of the appellant’s false pretence that he was authorised by Le Cornu to give her a discount by means of the Employee Commission Incentive Scheme and by his falsely pretending that he was acting in his capacity as a sales person for Le Cornu in doing so, being duly authorised to accept her cheque, when in fact he was not. After Ms Phillips had given her money to the appellant for the purposes identified, she had further contact with the appellant when he asked to borrow money from her. The jury was told that Ms Phillips agreed and lent the appellant a substantial sum on the promise of high interest, but that she was not paid back for the money so lent. There were no charges with respect to these later loans.
A statement of Neil Scott was read to the jury. That statement referred to four loans, totalling $22600, none of which was repaid. There were no charges with respect to these loans either.
The appellant gave evidence. He denied any false pretence, saying that the complainants were aware of the personal purpose to which their money was put. He insisted he had no intention of fraudulently denying the complainants the benefit of money loaned to him. Throughout the trial, he maintained that he had a genuine or bonafide belief that he was entitled to deal with the monies in the way in which he did. He denied making the pretences alleged. In the case of Ms Sneath, Mr McKinnon and Ms Phillips, the cheques they gave him were to be applied to assist with the settlement of units the appellant was purchasing from his father. In return for the benefit of the loan of their money he was to provide them with a discount on their purchase at Le Cornu and take liability for the balance of their accounts. The appellant particularly emphasised the fact that these people did not require their furniture immediately, so that by lending money they were to receive furniture when required, at a reduced price.
As for the Diks, he claimed that they had entered into a partnership arrangement with him in which they were to purchase land at Brooklyn Park and build units upon that land. He said the money they gave him was to assist in settling the purchase of units from his father.
The first ground of appeal relates to the direction given to the jury about matters not the subject of any charges then before the jury. In the course of his summing up, the trial judge referred to the evidence of Ms Sneath. That included references to other loans to the appellant, similar to those referred to by Ms Phillips. As to them, His Honour simply said that the evidence had been led about the further loans. He spoke of “these two loans”. This was clearly a reference to the loans by Ms Sneath, which were repaid. His Honour simply said that the jury were not concerned with them but the payment of $4068 referred to in the first counts.
On appeal it was argued that the evidence from Mr Scott and Ms Phillips was not relevant and should not have been admitted. Those loans were not repaid. Once that evidence was admitted it was said that the trial judge should have given “specific and immediate directions about possible use (if any) and the dangers of misuse of that evidence”. No directions were given. It was said that the fact that these loans were not repaid called for a direction. Reliance was placed upon the High Court authority of R v Gipp[1]. That case is much different from this one. In Gipp the evidence led was evidence of uncharged criminal conduct. It was evidence of other alleged incidents of sexual abuse admitted to place the complained sexual abuse into context. The evidence of other loans admitted in this case was not evidence of uncharged criminal conduct. It was evidence of loans made by persons to the appellant for purposes believed to be associated with the appellant’s purchases of property. The appellant’s case was that all loans were for legitimate purposes. He was seeking to develop the Brooklyn Park property in partnership with the Diks. It was not suggested, in the course of evidence, that in procuring other loans the appellant made false representations or sought to defraud the parties of those funds. The prosecution’s evidence established his financial circumstances and a failure to repay some of the monies advanced to him.
[1] (1998) 155 ALR 15
The fact of loans having been made by Phillips and Scott and not repaid was not disputed by the appellant. The evidence did not require a mandatory warning of the kind referred to in Gipp. The evidence of other loans was relevant to proof of the alleged offences in that it explained the appellant’s financial position, particularly by the time he left the State. It was with this purpose in mind that the Crown introduced the evidence. Its relevance was not outweighed by any possible prejudicial effect. There was no danger that the jury would use this evidence in an improper way given the clear direction to consider each charge quite separately, the evidence and address to the jury by the appellant before that and the reference to the appellant’s answers to the various charges. A direction was not mandatory as it would have been had the conduct been criminal or blameworthy and relevant only to some subsidiary issue[2]. I agree with the submission that, in all the circumstances, there was no risk that the jury misused the evidence of these other loans.
[2] cp Gipp at 19 par[10]
I would reject the first ground of appeal.
The other grounds of appeal relate to a lies direction and a complaint that the trial judge failed to properly summarise the appellant’s case sufficiently clearly.
The appellant was not represented at the trial but was upon submissions before sentence. In those circumstances there was a heavy burden upon the trial judge to ensure that the defence case was clearly put to the jury.   In my view, that burden was discharged by what the trial judge did put to the jury with respect to the appellant’s case. In relation to each of the charges the trial judge summarised the evidence for the prosecution and then reminded the jury of what the appellant had said about those allegations and how that related to each particular charge. His Honour also made reference to the appellant’s evidence and that of his witnesses. The substance of the defence case was sufficiently put to the jury. I reject the submission advanced in the course of the argument that the trial judge failed to direct the jury as to what was meant by dishonesty with respect to the fraudulent conversion charges. It was submitted that the members of the jury should have been told that if they thought the appellant may have had a genuine belief that he was entitled to put the money away as he did, no matter how ill-founded or unreasonable the jury might think that belief was, then the charge of fraudulent conversion was not made out. Reliance was placed upon Peters v R[3]. In that case the majority made plain that a trial judge must identify the knowledge, belief or intent which is said to render an 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[4].   In the course of his directions the trial judge made plain that the appellant was asserting that he did not at any time have any intention to defraud. He also made plain that the jury could not convict unless they were so satisfied. On the prosecution case, the issue with respect to fraudulent conversion was that funds entrusted to the appellant for a specific purpose were applied for a different purpose. That was a sufficient indication to the jury of how the prosecution sought to prove the charges of fraudulent conversion. The directions given made it sufficiently clear that the dishonesty alleged was the intention to use the funds for a purpose other than the entrusted purpose. I would reject the complaint that the appellant’s case was not adequately put to the jury.
[3]      Peters v R (1998) 151 ALR 51
[4]      cp Peters (supra) at 56, par18
This leaves the complaint about the direction given by the trial judge with respect to lies. It is complained that the direction given was not appropriate and that it could have prejudiced the appellant, whose credibility was crucial to his defence. In the trial, the prosecutor put to the appellant that in relation to certain aspects of his dealings with the alleged victims he had lied. It was also suggested to him that a number of his answers in the witness box, explanatory of what he said to the alleged victims, were lies. The prosecutor did not address the jury. It should have been obvious to the trial judge that the prosecution was not relying upon particular lies to prove guilt or add something to the case presented against the appellant. His credibility was being attacked. Early in his summing-up, the trial judge said:
“There have been some questions put to the accused that in fact he lied. At times it can be put to you by the Crown that if a person lies, really, it is out of what we call a consciousness of guilt. In effect, they are guilty and they are covering up, but I have to remind you, of course, that there are many, many reasons why people at times lie. Many of them, of course, not consistent with guilt.
They can do it out of panic. They can do it perhaps because they are covering up for someone and, indeed, there are many other reasons.
However, I think it important to look at whether a person is being deliberately untruthful. Of course, if you find they have, it may naturally affect that person’s credit, whether you believe what they are saying, but in all of these situations you have to look at the manner that that was put and what was said but, bearing in mind, of course, if perhaps some person has been misled. For instance, I think Mr Zoneff was very open about how salesmen do mislead people because what they have in mind is the ultimate sale. Consequently it can be seen in that light.
However, it does not detract you from looking at the Crown’s obligation, really, in each case, in each of these charges, to prove it; and, as to what was said by the accused, really is a matter for you to assess and, indeed, whether that goes to his credit, perhaps not to the question of his guilt.”
It was argued on appeal that there was no need for a lies direction to be given and that the direction given by the trial judge was both confusing and misleading. It was also submitted that there were no lies that could have been relied upon by the Crown as evidence of a consciousness of guilt and that the trial judge should not have made reference to this use of lies in his direction[5]. The prosecution was not relying upon a contention that the accused had lied as a basis for an inference of guilt. His general credibility was under attack. Whilst a particular direction may not be required as to the use to be made of particular lies, if there is a possibility that the evidence and course of the trial is such that a jury might pursue an improper line of reasoning unless assisted by a direction on lies, the trial judge must give the jury some assistance.   In this case it was submitted there was an obligation on the judge to ensure that the jury did not jump to a conclusion that an accused who has lied must be guilty.[6]
[5]      See Edwards v R (1993) 178 CLR 193 at 208 - 211
[6]      cp Harris v The Queen (1990) 55 SASR 321 at 324
The nature of the prosecutor’s cross-examination of the appellant in this case did not call for a lies direction. However, I do not think that the trial judge’s direction was of such a nature as to prejudice the appellant. Nor do I think it led the jury towards improper reasoning processes. The effect of the direction was to alert the jury to the fact that there are many reasons why people lie and, that if they found the accused was lying in the evidence given, that did not necessarily mean that the accused was guilty. To convict the appellant they had to disbelieve him in his denials. The directions given did not do the appellant’s case any harm. The directions were not of such a nature as to prejudice the accused or lead the jury towards improper reasoning processes.
I would dismiss the second ground of appeal. No miscarriage of justice has resulted from the imperfections in the trial judge’s directions.
There remains the appeal against sentence. The offences were committed whilst the appellant was on parole. This meant that any sentence of imprisonment imposed would be cumulative upon the unexpired portion of his previous sentence. That previous sentence was a sentence for similar offences. The sentencing judge imposed separate sentences for each of the six charges found proved. The total of those cumulative sentences was seven years and six months. The result of the operation of s31(2)(a) of the Criminal Law (Sentencing) Act 1988 was that the total period to be served was 10 years, 9 months and 26 days. With respect to that period, His Honour fixed a non-parole period of six years, taking into account 12 months that the appellant had already served in custody in relation to the offences found proved.
I think the appellant is correct in asserting that the total sentence of seven and a half years is manifestly excessive for the offences proved given the total sum of money involved and in light of the fact that the appellant had already spent twelve months in custody with respect to these charges. I would reduce the total sentence of seven and a half years to four years and invoke s18a of the Criminal Law (Sentencing) Act rather than impose separate sentences for the six offences found proved. For the total sentence of seven years three months and 26 days, I would fix a non parole period of five years[7]. The non‑parole is to date from 17 March 1998, when the appellant was sentenced to imprisonment for the offences found proved.
[7] See Criminal Law (Sentencing) Act 1988, s32(2)

OLSSON J. I have had benefit of reading the judgment of Prior J in draft and gratefully rely on his recitation of the relevant facts.
With respect I agree with his reasoning and conclusions as to the first and third grounds of appeal and the appeal against sentence. However, I have the misfortune to disagree with regard to the issue raised by ground 2.
In my view it was most unfortunate that the learned trial judge introduced the topic of the possibility of lies constituting evidence of consciousness of guilt. This had not been raised by the Crown.
Having raised the issue it was encumbent on the learned trial judge both to identify the lies about which he was speaking and then give a full direction in accordance with Edwards v The Queen (1993) 178 CLR 193. In particular it was essential that the jury be told that any lie could only be taken into account as exhibiting consciousness of guilt if they were satisfied, having regard to identified circumstances and events, that it revealed a knowledge of the offences or some aspect of them and that it was told because the accused knew that the truth of the matter about which he had lied would implicate him in the offences; and because of a realisation of guilt and a fear of the truth. It was also a requirement that attention be directed to specific aspects of the evidence (if any) which might indicate a reason for lying.
The problem in the instant case is that, the learned trial judge having raised the topic, it was largely left up on the air. There was a serious danger that the jury might, themselves, seek to identify relevant lies and then draw adverse conclusions from them in an uninformed and impermissible manner. The directions given fell far short of those mandated in Edwards v The Queen.
This situation necessarily gave rise to a mistrial. Despite what was, plainly, a very strong case against the appellant it seems to me that this court is bound to allow the appeal, set aside the convictions recorded and direct a retrial. I would order accordingly.

JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT

cp Gipp at 19 par[10]
2.      Peters v R (1998) 151 ALR 51
3.     cp Peters (supra) at 56, par18
4.     See Edwards v R (1993) 178 CLR 193 at 208 - 211

5. cp Harris v The Queen (1990) 55 SASR 321 at 324

[1998] SASC 6977

1 December 1998