R v Barry Johnston Scc [1986] ACTSC 106 (2 December 1986)

SUPREME COURT OF THE ACT

R. v. BARRY JOHNSTON
S.C.C. No. 22 of 1986
Criminal Law - Procedure - Jury

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Miles C.J.(1)

CATCHWORDS

Criminal Law and Procedure - accused charged with 24 counts of fraudulent misappropriation under s.178A of the Crimes Act 1900 of New South Wales in its application to the Australian Capital Territory - jury trial - application by accused for acquittal by direction at conclusion of prosecutor's opening address to jury.

Criminal Law and Procedure - fraudulent misappropriation - accused in sole control of company - whether receipt of payments by company receipt by accused himself - whether receipt by company employee on behalf of company or receipt by company via employee amounted to receipt by accused.

Criminal Law and Procedure - fraudulent misappropriation - meaning of "fraudulent" within Crimes Act 1900 New South Wales (in its application to the Australian Capital Territory) s.178A.

Jury - application by accused for acquittal by direction at conclusion of prosecutor's opening address to jury.

R v. Grubb (1915) 2 KB 683

R v. Praast (1975) 2 NZLR 248

R v. Stephens [1978] HCA 35; (1978) 139 CLR 315

HEARING

CANBERRA
2:12:1986

DECISION

Mr. Horler, of Counsel, who appears for the accused, moves for an acquittal by direction at the end of the prosecutor's opening address to the jury. The accused faces 24 counts of fraudulent misappropriation under section 178A of the Crimes Act 1900 of New South Wales in its application to the Australian Capital Territory. That section was repealed on 1 January 1986. The grounds of application are that on the factual material alleged in the prosecution opening, it would not be open to the jury to find (1) that there was a receipt by the accused of the moneys or securities that are the subject of the several counts or (2) that the accused acted fraudulently in his handling of the balance of the moneys or proceeds of the valuable securities.

2. If a voir dire hearing involves a trial within the trial, the present application involves a trial before the trial. I did not keep an exact note of the prosecutor's opening address and a transcript is only recently to hand. Nevertheless, it is desirable to give judgment on the application forthwith.

3. The prosecution case, common to each count, is as follows. I probably over-simplify the prosecution case in the way in which I now summarise it. However, this is how I understand it.

4. The accused was at all relevant times a director and had the sole control of a company called Title Nominees Pty. Limited which traded in the Australian Capital Territory as Canberra Motor Insurance. The company carried on business as an insurance broker and accepted payment of premiums for the issue of insurance policies or the renewal of insurance policies by specified insurers. The system was that a customer would pay the premium by handing a cheque, credit card voucher or cash to a company employee, a Miss Cahill, at the company's premises. The employee would cause a company bank account, designated as a premium account, to be credited with the amounts so paid by the customer.

5. By arrangement between the company and the insurer a cheque would be drawn on the premium account within two weeks or so for payment of the premium to the insurer for the issue or renewal of the policy in respect of which the customer had made the initial payment to the company. The amount paid over to the particular insurer was the amount paid by the customer less a commission for brokerage retained by the company.

6. In earlier times the employee prepared the cheques drawn on the company premium account in favour of the insurer who was to issue or renew the policy. But during the period in which the offences are alleged to have occurred, the accused himself caused the amounts paid over by the customers to be moved from the premium account to another general account of the company which was overdrawn. He did not cause the amounts paid by the customers to be paid to the specified insurer, and the insurance cover for which the customer had paid was not obtained.

7. It was submitted on behalf of the accused that receipt by the company was not receipt by the accused himself. But, accepting the prosecution's contention that the accused was in sole control of the company and bearing in mind the general circumstances as already outlined, the distinction, in my view, cannot be maintained in view of strong judicial authority contained in R v. Grubb (1915) 2 KB 683, a decision of the Court of Criminal Appeal of England; R v. Praast (1975) 2 NZLR 248, a decision of the Court of Criminal Appeal of New Zealand; and R v. Stephens [1978] HCA 35; (1978) 139 CLR 315. In that decision of the High Court Gibbs J., as he then was, said at p 332:

"The sole point taken on behalf of the applicant is

that there was no evidence on which the jury were
entitled to find that he was entrusted with the
moneys within the meaning of the section. No
reliance is placed on the circumstances that the
moneys were in all cases intended to be paid to
Seatoun, and that in some cases they were not
handed to the applicant personally. A person may
be entrusted with property within the meaning of
the section notwithstanding that it is not
delivered directly to him by the owner, and that
the owner does not know of his existence and has
no intention of entrusting it to him; if the
accused has obtained or assumed the control of the
property of another under circumstances whereby he
becomes entrusted, and he fraudulently converts it,
he commits an offence against the section."

8. Counsel for the accused sought to distinguish these cases on the basis that the statutory provisions with which they were concerned referred to the entrusting of money, whereas s. 178A refers to the receiving of moneys by the accused person. It was submitted that receipt by Mrs. Cahill on behalf of the company, or receipt by the company via Mrs. Cahill, could not amount to receipt by the accused. Without further factual material, that submission might be correct. But as a matter of principle, the cases just mentioned establish, in my view, that receipt by a company and receipt by an individual employee or officer are not necessarily exclusive for the purpose of the law of fraudulent conversion. The same principle must apply to cases of fraudulent misappropriation, the distinction between the two statutory offences, if any, being minimal.

9. Each case will have to depend upon its circumstances. Indeed, in Praast it was held that the appellant was entitled to be acquitted on one of several counts where the payment of a cheque into a branch of a bank in a distant town without the knowledge or assent of the accused could not amount to receipt by him. As to the remaining counts, however, it was held that the accused was rightly regarded as receiving the property if he personally assumed control of it, even though his receipt might also have been the receipt of the company.

10. On the facts outlined by the prosecution, I am of the view that it is open to the jury in this case to conclude (1) that the affairs of the company were under the general control of the accused; (2) that the accused knew of the receipt by the company of the proceeds of the cheques the subject of the charges, and that such proceeds were credited to its premium account; (3) the accused knowingly assumed control of the premium account and dealt with the proceeds credited to that account. Accordingly, it is open to the jury, in my view, to conclude that he received the proceeds of those securities and those cheques.

11. The second submission on behalf of the accused is that it is not open to the jury to find that the act of the accused in moving the credit balances from one account to the other was done fraudulently; that is to say, that the jury could not find that the accused acted with intent to defraud. In the United Kingdom, the term "fraudulent" has come to have a particular meaning in recent years in the light of legislation there, and Archbold, 42nd edition at page 1181, outlines the law in that country.

12. However, for the purposes of section 178A itself, I think that the decision of the Court of Criminal Appeal in New South Wales in R v. Glenister (1980) 2 NSWLR 597 is in point although that case was concerned precisely with s. 193 of the same Crimes Act. In that case it was decided that "fraudulently" means simply "dishonestly", and that decision was followed by the Court of Criminal Appeal in Victoria in R v. Smart, (1983) VR p 265 and particularly at pages 292 to 295. I refer also to the commentary by Archbold on page 1181.

13. It is also of assistance to refer to s. 96 of the Crimes Act as it now stands, since it was amended by Crimes Amendment Ordinance No. 4 of 1985 which, it might be said, incorporates at least one view of the common law, such as that of Mr. Justice McGarvie, which was expressed in R v. Bonollo (1981) VR 633, and that is that to act dishonestly in the context of the present charges is to adversely interfere with the rights of the owner of property without a belief that such interference will not cause any significant practical detriment to the interests of the owner.

14. Bearing those principles in mind and applying them to the facts outlined by the prosecutor in his opening address to the jury in the present case, I am led to the conclusion that it is open to the jury to find that in withdrawing from the premium account and paying into the overdrawn general account of the company the accused was knowingly putting at risk the proceeds of the cheques and securities received by the company, which proceeds had been received on terms requiring that they be paid to the specified insurer.

15. Therefore, in my view, the accused is not entitled to an acquittal by direction at this stage.