Stephens, Garry Bowden the Queen

On appeal from the Supreme Court of the

Northern Territory of Australia.

rmVTEH : ........ ........ ........ ........

........ ........ ........ .

GARRY BOWDEN STEPHENS

AppelTarit'

........ ........ ........ ........

Am	........ ........ ........ ........ .
-

........ ........ ........ ......

THE QUEEN

Respondent

........ ........ ........ ........

ST.JOHN, NORTHROP, TOOHEY JJ.

30 NOVEMBER, 1977

DARWIN. N.T.

' !

T:LE

CGVFiJ

ORDEIS TZAT:

1. The appeal be dismissed.

fiISTRIC1'

M C I S T R A R .

CATCHWORDS

Criminal Appeal - Fraudulent Conversion - wrltten

agreement - function of Judge and jury - content of

unsworn statement - misdirectlon incapable of

prejudicing appellant - dlscretlon under Section	28
Federal Court of Australla Act 1976.

Garry Bowden Stephens

and

The Queen

Qld. No. G.1 of 1977

Before St.John J.,

Northrop J., Toohey J.

Darwin, 30 November, 1977.

i	I
I

I N THE FEDEWL COURT OF

)

)	Qld. No. G.1 of 1977

OF AUSTRALIA

GENERAL DIVISION

On appeal from the Supreme Court

of the Northern Territory of

Australia.

B E T W E E N :

GARRY BOWDEN STEPHENS

Appellant

- and -

Respondent

REASONS FOR JUDGMENT

, .	Coram:	ST-JOHN J.
' I	NORTHROP J.
' I
TOOHEY J.

The appcllant appcals against his conviction on five counts of fraudulent conversion. The Indictments were similakly framed, in each case alleging that between certain dates in 1975 the appellant, having been entrusted with property,

viz. a cheque, "in order that he

Gamy Bowden Stephens

apply or pay the proceeds thereof in accordance with

certaln.bulldlng agreement entered into with (the persons

therein named, being the drawer or drawers of the cheque

in question) fraudulently converted to hls

own use and

benefit or the use or benefit of Seatoun Pty. Ltd." the

sum mentioned In the mdlctment.

Unfortunately the indictments were not included in the

appeal books and the court was forced to rely upon

reconstruction based on

mformation telephoned from Darwin

to Brisbane. Subsequent examination of the indictments

revealed that they were in the terms set out in the first

paragraph herein.

Each indictment alleged an offence against S.l(l)(a) of the

Crlminal Law Amendement Act

1902 of South Australia

whxh 1s

part of the

recaved law of the Northern Territory.

In broad terms that legislatlon requlres for the commisslon	i
of an offence that there be an entrustment of property

to be retained in safe custody or applied, paid	or delivered	I
I

for any purpose or to any person and the fraudulent conversion

the use or L

by the person

so entrusted to his

own use o r benefi

%Of

another of that property.

./2

. I

The notice

of appeal relled upon

a number of grounds, but

in the main they were based upon or at any rate depended

upon showing that the evidence of "entrustment" was such

that the case should not have gone to the jury or at least

that there was

a misdirection by the learned trial Judge

matters relatlng

to entrustment.

To understand the substance of the appeal it is necessary to refer to some extent to the evidence although much of

it played no part

In the hearmg and indeed some had llttle

relevance to the real lssues before the Judge and	pry at
the trial.

Seatoun Pty. Ltd. was incorporated in Queensland. Although

it carried on business in the NorthernTerritory it was not

registered.as a foreign company. It was referred to at the shareholders of the company and the appellant as the

trial as a "$2 company", a reference to its paid up capital.

holder of

A class ordinary shares was alone entitled to

attend and vote at its

meetmgs.

Following the cyclone In December,

1974 there was an urgent

need for accommodation in the Northern Territory. Seatoun

entered into an arrangement with

a Queensland company

bearing the somewhat unusual name of Family Joy Enterprises

Pty. Ltd., to supply prefabricated

housmg unlts, to be

manufactured in Queensiand and delivered to Seatoun In the

Territory. Thereafter Seatoun entered into

a number of

. .

3 .

bulldlng agreements with persons

m.the Terrltory lncludlng

those whose money was alleged to have been fraudulently

converted.

In each case

a cheque was drawn

in-

favour of Seatoun

and was paid by the appellant into an account established

by him with the Bank of New South Wales

in Darwin in the

name of Seatoun Pty. Ltd.. Because at

later stage the

appellant established another account in the company's name

with the same bank, whlch account was entitled Seatoun Pty.

Ltd. N0.2 account, the earlier account was often referred

to during the trial as the

No.1 account.

As already mentloned, the indictments referred to

"a certain

building agreement entered into

. . . l ' .

Anyone reading those

documents might be pardoned for thinking that the building

agreements were entered into by the appellant but this was

not so.

On each occasion there was

a wrltten agreement made

between Seatoun and the drawers of the cheques who were in

all cases but one husband and wife. Not surprisingly at the

time the cheques were handed over there was some conversatlon

between the drawer or drawers or one of them and

representative of Seatoun. In the case

of one of the

indictments, that involving Graham David Mauger and Carol

Frances Mauger, the dlscussion was with the appellant

personally: in the others it was with an employee of Seatoun,

Cuneen or Dhyer. The Maugers handed their cheque to the

appellant. The others handed their cheques to Cuneen or

Dwyer who in turn dellvered them to the appellant.

. /d

Jt was the Crown'

S sltbm, ssion that

I was qnly the written

agreement that was relevant, the conversations being no

more than that. It was the Crown's further submission that

if the discussions should be regarded as havlng had some

contractual effect it was not such as to extend in any way

helpful to the appellant the scope of his authbrity to deal

with the moneys in question. The appellant's argument was

somewhat elusive in this respect. But in effect his

submission was that whether or not the conversations were

truly admissible they were admitted and that they threw

light upon the intention of the contracting parties at the

time the agreements were made.

And, so the argument ran,

they had the effect of broadening the appellant's authority

and the learned trial Judge erred

m failing to explain

sufficlently to the jury the effect

of hose discussions.

The significance to be attached to the conversations is tied

up with another matter, the role of the Judge and of the jury

in regard to the wrltten agreements. Nelther counsel for

the appellant nor counsel for the Crown was prepared to say

, 1

that the construction

f each written agreement was

a matter

for the learned trlal Judge. Counsel for the appellant

was dlsposed to argue that

if he docurnent was capable

of more than one meaning, those possible interpretatlons

should be explained to the jury leaving it to them to

determine the true meaning of the document. The approach

of the Crown \?as to say rather that the meaning of the

document was a matter for the jury except that if it was

incapable of bearing

a particular interpretation sought to

./5

be ascribed to

It, the function of the Judge

was so to

direct the jury.

In our view nelther of those submlssions was well founded.

As we shall seek to explain, what was involved was not truly

the interpretation of the wrltten agreement, because the

meanlng of the words in it was not

m d ubt. What was In

lssue was the proper construction of the document, namely the

effect of the words used. See

Llfe Insurance Co. of

Australia

Ltd. v. Phillips (1925)

36 C.L.R. 60 at p.78. In our opinion

in a pry trial, civil or crlminal, it is for the Judge to

determine the proper construction of

a written document.

"The construction of all written Instruments belongs to

the Court alone, whose duty it is to construe all such

instruments, as soon as the true meaning of the words In

which they.are couched, and the

surroundmg circumstances,

if any, have been ascertained as facts by the jury: and

It is the duty of the jury to take the construction from the Court, elther absolutely, if there be no words to be

construed as words

of art, or phrases used in commerce, and

no surrounding circumstances to

be ascertained: or conditionally,

when those words or circumstances are necessarlly referred to

them." Neilson v. Harford (184118 M. and W. 806 at p.823.

See also

E-

v. e

(1938) 38 S.R. (N.S.W.) 308 at p.316.

If an agreement is said to be partly wrltten and partly oral

it is

we think for the Judge as

a questlon of law to

determme

whether the oral statements are capable

of having contractual

effect. It is then for the jury in the llght of any directlons

./6

glven by the Judge as to the proper constructlon

of the

documents and the legal effect of the oral statements

determme what the agreement was. In Deane

v. The City Bank

Sydney (1905)

2 C.L.R.

198 at p.209 Griffith C.J. said:

"It is another well known rule of construction, that, when

a contract is partly

m writing and partly verbal, all the

circumstances may be looked at and considered for the purpose

of construing the contract, and even to vary the written

documents, and the whole matter is one for the jury. In

the present case the first question

is, what 1 s the agreement?

Is it the writing, or the verbal conversation, or is it to

be gathered from the conversation and the letter wlth all

the other circumstances? Possibly it was open to the

pry

to find that the agreement was contained in the writing,

but whether it vas or not was

a preliminary question of fact

for the jury to determine on the evidence."

We do not think that what we have said regardlng the Judge's function to decide whether oral statements are capable of

having contractual effect is in conflict

\nth that passage.

And nothing

we have said is intended to detract from the

proposition that an accused's guilt or innocence is

a matter

for the jury. See the discussion in	E. v. Yaqer (1977)	13
A.L.R. 247.

There is no doubt that the learned trlal Judge left to the

, jury as

a matter entirely for it the terms

of the agreement

the subject of each mdlctment.

See for instance pages

505, 506, 513 and 518 of the appeal book. It is enough to

. /7

7 .

mention two passages which read:

"And I wlll then

leave it

t o you to declde

- to decide what was the t r u e agreement -

what was the bargain

between the pa r t i e s .

And I will leave

it f o r you t o decide that

on the documents, not as lawyers,

bu t

as ordinary people, uslng your

commonsense,",

and:

"But

in dea l ing wi th th i s

subject,

t h a t i s the

in te rpre ta t ion

of the agreement,

I do not wish t o be regarded as dlrecting

you

the law.

I want to leave

It t o you as ordinary

people to a s ses s

i n your own minds what

t ha t agreement

means

. . . ' I .

Now

the

appellant does not

complain

t h a t t h i s

matter

was

l e f t to the jury : ra ther

h i s concern

i s tha t the

l e a r n e d t r i a l

Judge

f a i l ed to d l r ec t t he ju ry a s

matter

of law how each of the written agreements

might be

interpreted,

fa i led adequately to direct the jury as to

how

oral evidence

might have

c l a r l f l ed , qua l i f i ed o r

widened

the terms

the

written agreements,and failed,

as It is said, adequately

to point to "exculpatory interpretat lons"

and

over emphasised

"inculpatory

interpretatlons".

reach a

decis ion as

the weight t o be attached to those

grounds of appeal it 1s

necessary to construe the written

agreement and

then t o

determine whether there

was i n the evidence

conversations

anythlng that might be

regarded as havlng

some contractual

' i

, I	operation.

The

wr i t t en

agreements

recited that Seatoun, the builder,

had agreed

t o erect a cyclone proof

home on the owner's

land

within

10 weeks of wrltten approval of the

plans

and

spocif icat lons by

the

local

authori ty .

I n

each

case

building ovmer required finance

and clause (d) of the agreement

S .

obliged the owner to endeavour to obtain it. That clause

then continued: "On approval of such flnance, then both

parties agree to be bound by this Agreement and its conditions

therein. Should flnance not be approved, then all moneys

paid as deposlt, will

be refunded

to the owners". Thus the

arrangement entered into by the parties was subject to

condition precedent. In no case was finance approved.

By clause (e) it was expressly agreed that immediately

approval

for

finance

had

been

glven,

"the

builder

will

I .

given authority to use any funds held in trust for the

purpose of fulfilling in part his obligations under the terms

of the Contract". That is the only reference to funds

being held "in trust".

Clause (f).provided: "Notwlthstanding anything

herem

contained, it is agreed that the builder is not bound to

proceed with any portlon of thls Agreement until such time

as he has been notified in writlng that the owner's finance

has been approved, save that he may, if he

so desires,

submit the plan and speclflcatlon to the Local Authority

in order to obtain approval.".

By clause (g) it was agreed that should finance not be

approved within

30 days either party mlght terminate the

' i

Agreement "ardall moneys paid by way of deposit will be

refunded in

full, except those moneys used for the preparation

of plans etc. or

mcidental to obtaining approval

_ . _ ' I .

The agreement dld not define

"in trust" or "moneys paid by

way of deposlt".

-/9

Clause (h) provided that "progress

pymsnts will be made

by the owner In the following manner:-

. . . ' l .

The clause had

provision for the insertion of

a sum of money to be pald

"on the signmg hereof". It then went on to specify

percentages, presumably of the contract price. A curious

feature of this clause

is that the percentages specified

total 100% so that the initial payment although described

as a progress payment was in fact

somethlqover and above

the contract price. The explanation for this seems to lie in

a note at the end of clause

(h)which read, "The amount shown

in (1) above, paid as security deposit, shall be refunded to

the owner on completion of the contract".

Reading the document as a whole it is clear that the initial payment (and it should be said that this was the payment

upon whyhlch. each indictment

was based) was

to be refunded to

the owner on completion of the contract. If these be "moneys

paid by way of deposit", there being nothing else to answer

that description, Seatoun was obliged In the event of

finance not belng approved within

30 days and the agreement

being terninated, to refund those moneys in full except

to the extent that they may have been used for the

preparation of plans

or "incidental to obtaining approval",

presumably approval of the plans by the Local Authority.

Presumably too on approval of finance those moneys would have been available to Seatoun to fulfil1 its obligations under the contract, they answering the description "any

funds held

In trust". It is hard to

see what other moneys

/l0

10.

,	.	L
I I

could have been envlsaged by clause

(e) although In the course

of argument counsel suggested that

a building owner intending

to travel overseas might wish to lodge addltlonal moneys with

Seatoun against payments due under the contract. This,	I
however, seems an unlikely contingency. Be that as it may
and whatever the obligation of Seatoun once finance had

been approved, we are in no doubt that until it had been

! .

approved the initial payment made by each building owner

imposed on Seatoun an obligatlon to ealmark it and hold it

separately from other moneys.

It follows then that the learned trial Judge should have

directed the jury as

matter of law that Seatoun received

I '

each cheque on rhe basis that it would be held in trust at

I '

least until

& ~ ~ n c e

had been approved subject only to

right zn tpe company to use that money for the preparation

of plans or for other purposes connected wlth obtaining the

approval of the Local Authority.

Th'e appellant contended that evidence of conversations between the drawers of the cheques on the one hand and Cuneen, Dwyer

I ,

and the appellant on the other was admissible to explain the

written agreement,

or by way of collateral agreement or as

a further alternative by way of amendment to the wrltten

agreement. In our oplnlon this submission cannot be

sustained. It is unnecessary to refer to the authorities

dealing with the

admissibility of extrlnsic evidence of

those dealing with collateral contracts or oral variations

of written contracts. The evidence of Harold Law Gv.ynne

. ./IS

Ronald Nervyn Coon, Anthony

Robert Tilley,'Brlan John

Chase

and Graham David Fiauger, each of vJhom drew one of

the cheques

in quest ion, did not

on any view of

it const i tute an

agreement

o r even an understanding that pending approval

finance

the

cheques might be used

f o r any purpose

other than the

l imited one t o which I have just referred.

It w a s not i n

issue tha t t he

moneys specifled In the indictments

were

i n f a c t withdrawn by	the appel lant	and used by hlm	fo r o the r
purposes.

S.l(l) ( a ) of

the Criminal

Law

Amendment

A c t of

1902 renders

l i ab l e t o conv ic t ion

"Whosoever

Being

entrusted

. .

. I '

fraudulently

converts

the entrusted property.

The

1902

legis la t lon repealed

S s . 199 and 200 of the Criminal

Law

Consolidation A c t 1876 and by 5 . 2 provides that

S.1

" sha l l

be deemed .to be subs t i tu ted for

S s . 199 and 200 of

the A c t

. . .

' I .

S s . 199 and 200 were

among those sectlorspreceded

by a heading "Frauds

by Trus t ees , Agents, Bankers

Factors" and

S.1

of the 1902 legislation must be read in the

same

way.

Both S s . 199 and 200 used

the

expression

"intrusted"

and then specified categories

of persons intrusted, be they

banker,

merchant,

broker,

attorney

agent.

1876,

a t any r a t e , South Australia had sought

t o overcome a

d i f f i c u l t y found a t common

law whereby

larceny as a bai lee

i	was not committed by	a person t o whom property w a s entrusted,
I

' I

who had dealt with

it i n t h e manner contemplated and then

misapplied it m the form t o which it had been converted.

See generally Howard: Australian Criminal Law (Second

Ed.) 188-191.

. ./l2

12.

. "

A n essential ques t ion fo r t he p ry

was

whether

the appellant

received each cheque under an obligation to deal with

In a

pa r t i cu la r way

or whether

h i s ob l iga t ion

was

no more

than t o account for the

money i n the event that flnance

was

not approved.

I n R u s s e l l On C r i m e Chapter

63 the

' _

matter

i s pu t t h i s

way:

"From

the cases

so far dlscussed

it can be

seen

t h a t it

i s essent ia l that there should

a f lduciary element i n the accused person's relation

t o

the property alleged to

have been

fraudulently converted

by him".

See a l so E.

Ward

( s u p r a ) a t p.317.

The appellant

did not seek to

make

anythmg of

the f ac t t ha t

each cheque

was made payable t o Seatoun nor

t h a t it was Seatoun's account

from which the money

was

withdrawn.

pu t h i s ca se f a i r ly

and

squarely on the bas i s tha t

whether each agreement

made

Seatoun was

wholly

i n wr i t ing o r par t ly

I n writ ing and

par t ly ora l the

arrangement under

which each cheque was

handed over mvolved no more than an obligation to account.

A s we have mdlcated such a case is not warranted by the

evidence.

I n the view t h a t we

have taken of the proper

constructlon

the

written

agreement and of

t he sqn i f l cance

of the conversations there

was ample evidence of entrustment

for each case

t o go t o the

jury.

I n permltt lng the

j u r y

t o reach

its own

conclusion as to the proper construction

the written agreements and

i n leaving it to the jury to

t reat the conversat ions as par t

the

agreement under

which

each cheque

was

pa id , t he l ea rned t r i a l

Judge was

i n e r ro r

b u t i n no way

was

e r ro r p re judx ia l t o t he appe l l an t .

I t could have operated only to 111s benefit having regard to

what we have said regarding the wrltten agreements and the

conversations.

/l3

13.

We have consldered whether the appellant could have suffered

some prejudlce by reason of the failure

of the learned trial

Judge to distinguish sufficiently between the agreements

under which the monsys were pald and the appellant's state

/ .

of mind which was highly relevant to the questlon

fraudulent conversion. But having consldered the evidence

we can see no prejudlce in this regard.

, '

A further ground

of appeal was that the learned trial Judge

interrupted the appellant whlk he was makmg an unsworn statement. The learned trial Judge did interrupt the

appellant with

a view to persuading him to confine his

statement to relevant matters. His Honour had earlier,

the absence of the jury, expressed his concern to the appellant's

counsel about the need for the statement to be relevant and

factual. The appellant's statement was lengthy, rambling

and at times irrelevant to the issues which the jury had

to determine. In making an unsworn statement an accused is

not entltled to roam at large but must

confme

himself to

what is relevant,

R. v. Kilbv (1970)

1 N.S.W.R.

158,

R. v. Wyatt (1972)

V.R.

902. In our view the learned trial

: I

Judge was more than indulgent to the appellant in permitting

him to

go on in the way In which he did. And His Honour's

quite gentle admonitions were not of	a nature of which the
appellant can properly complain.

The questlon now is., what should be 'done in regard to this

appeal. Section 28 of the Federal Court

of Australia Act

/l4

1976 i n which

the povers

t h i s coqr t

on appeal are set oxt

confers a dlscretion although no doubt to be exercised

judicial ly .

The

jury was misdlrected b u t the errors could

have operated only

to the benefit of the appellant.

Had

the jury

been properly instructed the

same r e s u l t was

inevitable.

It cannot be sald

that

the

appellant

did

not

have a f a l r trial i n t h e

sense discussed In

v. Ireland

(1970)

126

C.L.R.

321

and

Leary

v. E- (1975) W.A.R.

133.

are of

the opmion that the

appeal

should be dismissed.

' l

' I

' !

: I

! '	l
I j
i

[1977] FCA 88

30 Nov 1977