R v Jack [2002] ACTSC 90 (3 September 2002)

Last Updated: 5 September 2002

THE QUEEN v JUDITH KAY JACK [2002] ACTSC 90 (3 September 2002)

CATCHWORDS

CRIMINAL LAW - indictment alleging theft of choses in action consisting of debts from bank to customer - whether evidence capable of proving commission of such offences - whether acts alleged constituted thefts of debts or of money belonging to bank.

Crimes Act 1900, ss 83, 84, 85, 86, 87

Chan Man-sin v Attorney-General of Hong Kong [1988] 1 WLR 196

R v Morris [1984] 1 AC 320

R v Thompson [1984] 3 All ER

Arlidge & Parry on Fraud, 2^nd Ed at [3-007]

No. SCC 34 of 2002

Judge: Crispin J

Supreme Court of the ACT

Date: 3 September 2002

IN THE SUPREME COURT OF THE )

) No. SCC 34 of 2002

AUSTRALIAN CAPITAL TERRITORY )

THE QUEEN

v

JUDITH KAY JACK

Judge: Crispin J

Date: 3 September 2002

Place: Canberra

R E A S O N S F O R R U L I N G

1. During the trial of this matter an issue arose as to the manner in which the first, third, fifth, seventh and eighth counts in the indictment had been pleaded.

2. All alleged that the accused stole choses in action consisting of debts owed by the Australia and New Zealand Banking Group Limited ("the Bank") to customers. The chose in action referred to in the first count was the property of Mr Christopher Alderson and those referred to in the third, fifth, seventh and eighth counts were the property of Ms Pirkko Turunen.

3. In essence, the Crown alleged that the accused, who was a bank officer, had created new accounts in the names of the customers and had transferred into those accounts funds that had been standing to their credit in existing accounts. She then issued to herself transaction cards linked to the new accounts, allocated a personal identification number ("PIN") to those cards and progressively withdrew sums of money from the accounts.

4. During the course of the Crown case an issue was raised as to the manner in which these counts had been pleaded. Mr Livingstone, who appeared for the accused, argued that the actions of the accused, even if proven to the requisite standard, could not amount to thefts of the debts. The bank continued to be indebted to the customers to the extent of the amounts that would have been due to them had the alleged thefts not occurred. Hence, any thefts would have been thefts of money that belonged to the bank rather than thefts of debts owed to customers.

5. As the Crown pointed out, this issue has been discussed in Arlidge & Parry on Fraud, 2^nd Ed at [3-007]:

A person who in fact has no authority to draw on the account may nevertheless succeed in having it debited, eg. by forging and presenting a cheque, or by deceiving the bank into transferring funds to another account. In this case his conduct will probably not reduce the amount owed by the bank to the account-holder, who will be entitled to insist that the missing funds should be re-credited to the account if and when he discovers what has happened; and it is therefore debatable whether the fraudster's conduct can fairly be described as an appropriation of those funds, or whether he can be said to have the necessary intention to permanently deprive the holder of them. But it has been held that this too can be theft of the funds debited to the account.

6. The Crown nonetheless submitted that the counts were maintainable and, in support of that submission, adverted to various sections in the Crimes Act 1900 ("the Crimes Act") which effectively expand the concept of theft beyond that recognised by the common law.

7. At the time of the alleged offences s 84 of the Crimes Act provided that:

For the purposes of this part, a person shall be taken to steal if he or she dishonestly appropriates property belonging to another person with the intention of permanently depriving that other person of that property.

8. The term "property" is defined by s 83 which is in the following terms:

Property means any real or personal property and includes -

(a) a chose in action and any other intangible property, other than an incorporeal hereditament; and

(b) a wild animal that is tamed or ordinarily kept in captivity; and

(c) a wild animal that is not tamed nor ordinarily kept in captivity but that is -

(i) reduced into the possession of a person who has not lost or abandoned that possession; or

(ii) in the course of being reduced into the possession of a person.

9. Section 85 provides that:

(1) For the purposes of this part, property shall be taken as belonging to any person who has possession or control of it or who has any proprietory right or interest in it (other than an equitable interest arising only from any agreement to transfer or grant an interest).

(2) Where any property is subject to a trust, a person having a right to enforce the trust shall be taken, for the purposes of this part, to be a person to whom the property belongs and an intention to defeat the trust shall be treated as an intention to deprive any person having that right to the property.

(3) Where a person receives any property from or on account of another person and is under a legal obligation to that other person to retain and deal with that property or its proceeds in a particular way, the property or proceeds shall, for the purposes of this part, be taken (as against the firstmentioned person) to be property belonging to that other person.

(4) Where a person obtains any property by the mistake of another person and is under a legal obligation to make restoration, in whole or in part, of the property or of the value of the property, the property or its proceeds shall, for the purposes of this part, be taken (to the extent of that obligation and as against the firstmentioned person) to belong to the person entitled to the restoration and an intention not to make restoration shall be treated as an intention to deprive that person of that property.

(5) The property of a corporation sole shall, for the purposes of this part, be taken to belong to the corporation notwithstanding any vacancy in the corporation.

10. Section 86 provides that a person shall be taken to have appropriated property if, inter alia:

(1) For the purposes of this part, a person shall be taken to have appropriated property if -

(a) he or she obtains by deception the ownership, possession or control of the property for himself or herself or for any other person; or

(b) he or she adversely interferes with or usurps any of the rights of an owner of the property.

11. The concept of an intention to permanently deprive the other person of his or her property is expanded by s 87 which provides that:

(1) A person who appropriates property belonging to another person shall be taken, for the purposes of this part, as having the intention to deprive the other person of that property permanently if his or her intention is to treat the property as his or her own to dispose of regardless of the rights of the other person.

(2) For the purposes of subsection (1), a person shall be taken to have an intention to treat property as his or her own to dispose of regardless of the rights of any other person to whom the property belongs if he or she borrows or lends the property for such a period and in such circumstances as to make the borrowing or lending equivalent to treating the property as his or her own.

(3) Without limiting the generality of subsection (1), where a person who has possession or control (whether lawfully or not) of any property belonging to another person parts with that property for his or her own purposes and without the authority of the other person under a condition as to its return, being a condition that the firstmentioned person may not be able to perform, the firstmentioned person shall, for the purposes of this part, be taken to have treated the property as his or her own to dispose of regardless of the rights of the other person.

(4) Notwithstanding anything in this section, a person who appropriates a sum of money belonging to another person shall not be taken to have intended to deprive the other person of the money permanently by reason only of the fact that he or she did not, at the time of the appropriation, intend to return the money in specie.

12. The Crown relied upon a number of authorities including Chan Man-sin v Attorney-General of Hong Kong [1988] 1 WLR 196. In that case the appellant had been convicted of ten counts of the theft of choses in action consisting of debts owed by a bank to two companies. The thefts were by forged cheques drawn upon their accounts. The Privy Council explained the argument in the following terms:

The argument for the defendant is a simple one and is founded upon the proposition that a bank is not entitled in law, as against its customer, to debit the customer's account with the amount of any cheque which the bank has not, in fact, any authority from the customer to honour. Thus, it is said, if the bank honours a forged cheque and debits the customer's account accordingly, the transaction is, quite simply, a nullity as a matter of law so far as the customer is concerned and the customer, on discovering the unauthorised debit to his account, is entitled to insist upon its being reversed. For this proposition reliance is, quite rightly, placed upon the decision of their Lordships' Board in Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80. Starting out from this foundation, the defendant argues that the presentation of the 10 forged cheques in respect of which the defendant was convicted produced, as a matter of legal reality, no diminution at all of the respective credit balances of the companies. The bank simply made unauthorised debits to their accounts which they were entitled to have reversed upon demand. Thus, it is argued, although the defendant was no doubt guilty of offences of forgery and obtaining a pecuniary advantage by deception with which he was not charged, he could not have been guilty of the offences with which he was charged, namely, theft of Merit's or Hunter's choses in action. . . .

13. Their Lordships said that this argument had had an appealing simplicity but pointed out that it ignored what they described as the artificial definition of "appropriation" contained in the relevant Hong Kong legislation, which provided that:

"Any assumption by a person of the rights of an owner amounts to an appropriation, and this includes, where he has come by the property (innocently or not) without stealing it, any later assumption of a right to it by keeping or dealing with it as owner."

14. This definition proved to be decisive. Their Lordships observed that:

The owner of the chose in action consisting of a credit with his bank or a contractual right to draw on an account has, clearly, the right as owner to draw by means of a properly completed negotiable instrument or order to pay and it is, in their Lordships' view, beyond argument that one who draws, presents and negotiates a cheque on a particular bank account is assuming the rights of the owner of the credit in the account or (as the case may be) of the pre-negotiated right to draw on the account up to the agreed figure.

15. Their Lordships proceeded to hold that the transactions facilitated by the forged cheques constituted an assumption of the rights of the owner and, consequently, an appropriation. An alternative submission that the accused had not been shown to have possessed the necessary intention to permanently deprive the owners of the property was dismissed on the ground that there was ample evidence to support an inference to that effect. Accordingly, the appeal was dismissed.

16. It may be noted that there is a potentially crucial distinction between the language of the relevant Hong Kong provision and that employed in s 86 of the Crimes Act. Under the Hong Kong enactment it is sufficient for the offender to assume the rights of an owner whilst under the corresponding provision of s 86 an offender must adversely interfere with or usurp such rights. A person may assume the rights of another by acting as if he or she possesses them. Hence, as the Privy Council held, a person who draws, presents and negotiates a cheque on a particular account may be said to be assuming the rights of the owner to the credit in the account. However, s 86 applies only when an offender "adversely interferes with or usurps" the rights of the owner of the property.

17. The Crown submitted that the acts of the accused would, if proven, involve at least such an adverse interference with or ursurpation of the rights of the customers because the bank would have been unwilling to reinstate the credits or permit them to draw funds from their account at least until an investigation had been completed and of the unauthorised nature of the transactions established.

18. The Crown also relied upon R v Morris [1984] 1 AC 320 in which the House of Lords held that by removing goods from the shelves of a supermarket and replacing the price labels attached to them with others showing lower prices the accused had adversely interfered with or usurped the rights of the owners to ensure that the goods were sold and paid for at the proper prices. In the present case, however, the property in question was not goods but debts and, if one may reason by analogy from the situation that confronted the House of Lords, what was "moved" and "re-labelled" was not the debts themselves but records of the amounts credited to the customers' accounts reflecting such debts. Hence any misappropriation of funds thereby facilitated should have resulted in a loss to the bank and not to those who might be described as the owners of the debts.

19. Nonetheless, in my opinion it would be open to a jury to conclude that a bank officer had adversely interfered with or usurped rights of customers by closing their bank accounts without their knowledge or authority and purporting to transfer the credit balances to other accounts that the bank officer had opened for the purpose of gaining access to funds up to the limits of the transferred credit balances. It may be true that the customers' legal rights would not have been affected but a jury could find that their ability to exercise those rights had been interfered with or even wholly frustrated until such time as the bank accepted that the debts were still subsisting and re-credited the amounts to the customers' accounts or they were able to obtain legal redress. The term "usurp" means merely to seize wrongfully and I think it would also be open to the jury to find that, by acting in the manner alleged by the Crown, the accused had usurped rights of customers to maintain and operate their accounts.

20. Mr Livingstone relied upon the decision in R v Thompson [1984] 3 All ER in which the English Court of Appeal held that fraudulently created credit balances in a bank account could not be described as a chose in action. However, the basis for that conclusion was that there had been no actual debt equivalent to the credit balance and that any action to enforce the apparent liability would have been capable of immediate defeasance as soon as the fraud was discovered. In the present case it is not disputed that the amounts that had been standing to the credit of the customers in the account they maintained prior to their closure reflected debts genuinely owed to them by the bank. In my opinion such debts clearly constituted choses of action properly falling within the definition of "property" contained in s 83.

21. The only remaining issue was whether it was open to the jury to conclude that the accused had intended to permanently deprive the customers of the debts. As the Crown pointed out, s 87 provides that an accused person should be taken to have had such an intention if his or her intention was to treat the property as his or her own to dispose of regardless of the rights of the other person.

22. As a matter of law, the accused plainly lacked the legal capacity to divest the customers of the benefit of the relevant debts whether by extinguishment or assignment to others. However, in my opinion it would be open to the jury to find that, in acting as she did, the accused intended to treat choses of action as if they were her own to dispose of regardless of the customers' rights. On the Crown case, the credit balances which constituted the most obvious record of the debts had been effectively transferred to new accounts for the express purpose of enabling the accused to treat the debts as if they were her own by drawing upon sums of money ostensibly paid in pro tanto discharge of them.

23. Both Mr Alderson and Ms Turunen were elderly and neither had made deposits to or withdrawals from their accounts for extended periods. Ms Turunen had lived overseas for many years. It would be open to the jury to find that the accused had intended that the defalcations remain undiscovered and that the loss occasioned by her actions ultimately be borne, as a matter of practical reality, by the customers or their estates even though, unbeknown to the bank, the debts had not been repaid. However, in my opinion under s 87 the Crown is not required to prove that the accused's intention went that far. The question posed by the section is not concerned with the likely impact of the conduct in question upon the legal position of the owner of the property but with the intention of the accused to treat the property in a particular manner. In this context evidence that she transferred the credit balance and subsequently obtained funds in ostensible repayment of such debts would appear to be sufficient for the Crown to prove that she intended to treat the debts as her own to dispose of regardless of the rights of the customers. I was satisfied that there was ample evidence to leave this issue to the jury.

24. Accordingly, I ruled that the accused was not entitled to verdicts by direction in respect of these counts.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 3 September 2002

Counsel for the Crown: P De Veau

Solicitor for the Crown: ACT Director of Public Prosecutions

Counsel for the accused: R Livingstone

Solicitor for the accused: ACT Legal Aid Office

Date of hearing: 27 August-3 September 2002

Date of judgment: 3 September 2002