Byrnes v Burgess and Anor [1999] NSWSC 419 (5 May 1999)

Last Updated: 7 May 1999

NEW SOUTH WALES SUPREME COURT

CITATION: BYRNES v BURGESS & ANOR [1999] NSWSC 419

CURRENT JURISDICTION: Civil

FILE NUMBER(S): 11481/98

HEARING DATE{S): 8 April 1999

JUDGMENT DATE: 05/05/1999

PARTIES:

James Warren Byrnes (Plaintiff)

Damien Burgess (First Defendant)

Patricia Staunton (Second Defendant)

JUDGMENT OF: Adams J

LOWER COURT JURISDICTION: Local Court

LOWER COURT FILE NUMBER(S):

LOWER COURT JUDICIAL OFFICER: Staunton S M

COUNSEL:

Mr W Baffsky (Plaintiff)

Mr G A Farmer (Defendant)

SOLICITORS:

Martin Ricci (Plaintiff)

Commonwealth DPP (First Defendant)

I V Knight, Crown Solicitor (Second Defendant)

CATCHWORDS:

Bankrupt failing to disclose bankruptcy

Bankruptcy Act ss 269(1)(ac), 269(1)(ad)

meaning of "obtain goods"

attempt to obtain goods

whether established when goods can be obtained only when purchase price paid

rendering services

whether alone

significance of involvement of company

ACTS CITED:

Bankruptcy Act 1966

DECISION:

Conviction quashed.

JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

11481/98

ADAMS J

WEDNESDAY 5 MAY 1999

BYRNES v BURGESS & ANOR

JUDGMENT

1 ADAMS J: On 20 May 1998 the plaintiff was convicted of attempting to commit the offence prescribed by s 269(1)(ac) and committing an offence under s 269(1)(ad) of the Bankruptcy Act 1966 (the Act).

2 Section 269(1)(ac) is as follows -

"(1) An undischarged bankrupt shall not:

(ac) either alone or jointly with another person, obtain goods or services from a person by promising to pay that person or another person an amount of, or amounts aggregating, $3,000 or more without informing that person that he or she is an undischarged bankrupt; ..."

The prosecution case was a simple one. Between 24 May 1994 and 9 July 1994, the Bloomfield Galleries in Sydney conducted an exhibition of original works by Norman Lindsay. The plaintiff attended the exhibition and informed Ms Bloomfield, the director of the gallery, that he wished to buy two pencil drawings, one etching and a pen and ink drawing for a total price in excess of $28,100. The plaintiff was informed that a 10% deposit was required with the balance payable at the end of the exhibition and it was clear that the works would not be delivered until payment in full had been made. A deposit of $2,810 was paid, representing 10% of the proposed purchase price. It was conceded that at all relevant times the plaintiff was an undischarged bankrupt.

3 The Oxford English Dictionary (2nd edition) defines "obtain" as "to come into the possession or enjoyment of (something) by one's own effort, or by request; to procure or gain, as the result of purpose and effort; hence, generally, to acquire, get". In my view, the phrase "obtain goods" in s 269(1)(ac), to adopt the language of Street CJ in R v Petronius-Kuff [1983] 3 NSWLR 178 at 181 when discussing R v Arnold (1883) 4 LR (NSW) 347, is not directed to the concept of technical property, but rather to physical custody of objects; to "obtain goods" is to effect the translation of physical custody in an object.

4 In this case, the plaintiff had placed himself in a position where, on payment of the purchase price, he might obtain the works. If the payment accompanied the obtaining of the goods, they would have been obtained, not by virtue of any promise to pay but rather by the payment itself. It is said, however, that the promise to pay, in the absence either of obtaining the works or seeking to obtain them, amounted to an attempted commission of the offence prescribed by s 269(1)(ac).

5 It is clear that in order that an attempt be established it is a necessary prerequisite to establish that there be an intention to commit the substantive crime: R v Mohan [1976] QB1; DPP v Stonehouse [1978] AC 55; Giorgianni v The Queen [1985] HCA 29; (1985) 156 CLR 473; Trade Practices Commission v Tubemakers of Australia Limited [1983] FCA 93; (1983) 47 ALR 719 at 737; Trade Practices Commission v Mobil Oil Australia Limited [1984] FCA 238; (1984) 55 ALR 527. The mere fact that the plaintiff had entered into an agreement to purchase the works could not justify the inference that he intended, when he obtained the paintings, to do so by promising to pay for them as distinct from actually paying for them, let alone by promising to pay for them without informing Ms Bloomfield that he was an undischarged bankrupt.

6 It was submitted, however, that the plaintiff did an act towards the commission of the offence charged which went beyond mere preparation and consequently that an attempt was committed. However, such an act would only constitute an attempt where it "cannot reasonably be regarded as having any purpose other than the commission" of the crime intended to be committed: Mai & Tran (1992) 60 A Crim R 49 at 59.

7 It was argued that the section is clearly aimed at protecting persons from unwittingly doing business with bankrupt persons and (implicitly) that, even if there was no relevant intention, the offence was one of strict liability and therefore an attempt might nevertheless have been committed. This submission cannot be accepted. In the circumstances of this case, if the plaintiff were in a position to obtain the works by the payment of cash or, perhaps, by barter of his property, and intended to do so, I do not think that he would have committed the substantive charge. The use of the word "goods" rather than "property" indicates that what must be obtained is a tangible chattel rather than a chose in action. No doubt, it was for this reason that the charge of committing the substantive offence was not pressed in the Local Court.

8 It is important to note that the obligation to disclose does not arise when arrangements (to use a neutral term) are made to obtain goods or services. The mere fact that, in one sense, such an arrangement may be characterised in ordinary parlance as an attempt to obtain goods does not mean that an attempt to commit an offence under s 269(1)(ac) has occurred. A promise to purchase goods is not, by itself, an attempt to obtain goods without informing the person providing them that he or she is an undischarged bankrupt.

Accordingly, the conviction must be quashed.

9 Section 269(1)(ad) is in the following terms -

"(1) An undischarged bankrupt shall not:

(ad) either alone or jointly with another person, obtain an amount of, or amounts aggregating, $3,000 or more from a person by promising to supply goods to, or render services for, that person or another person without informing that person that he or she is an undischarged bankrupt; or..."

10 In late August 1992 a Mr Malcolm John Newstead saw an advertisement in the Financial Review newspaper headed "Need Finance?" and inviting interested persons to "phone now and discuss your needs with one of our representatives". On the following line appeared, in small but nevertheless easily readable print, "RANCHCAMM PTY LTD T/A" and on the next line in much bolder and larger font "JAMES W BYRNES". Mr Byrnes' name was very much more prominent than that of the company. Nevertheless, the advertisement made it clear enough that the company was trading as James W Byrnes. Mr Newstead said that he telephoned the number given in the advertisement and spoke to one Mr Delaney who made an appointment for him at an address in North Sydney. Mr Newstead attended those premises and, after a brief conversation with Mr Delaney, was introduced to Mr Byrnes who, in effect, said that he was a broker and obtained details from Mr Newstead relating to his financial position and the proposed borrowing. He was told that he needed to provide certain other information, essentially of a financial kind relating to his company, and that "an upfront fee" was payable amounting to 1% of the total loan, described by Mr Byrnes as "a commitment fee". Mr Newstead said that Mr Byrnes told him that the payment of this fee was "an act of good faith ... to show that I was interested" and that it would have to be paid before he would proceed with any attempts to obtain finance. Mr Newstead said that no mention was made by Mr Byrne of any company, in particular, Ranchcamm Pty Limited (Ranchcamm) or Barroleg Pty Limited (Barroleg). Over objection, Mr Newstead was permitted to give evidence that his understanding at the time of the conversation was that Mr Byrnes would act on his behalf in attempting to arrange for finance (implicitly, acting as a principal rather than an agent). Several days later, Mr Newstead returned with bank cheques totalling $17,625 made out in favour of J W Byrnes & Associates. He was given a receipt on the letterhead of J W Byrnes & Associates in the following terms -

"This receipt is to confirm that cheques to the total of $17,625 have been received from Malcolm Newstead on the above date."

He was also handed a letter at the same time on the letterhead of J W Byrnes & Associates referring to an application for finance "which we have received" and stating "we are undertaking to organise the finance on your behalf". The letter was signed, simply, "J W Byrnes". In cross examination, Mr Newstead was asked whether he was told by Mr Delaney that he was dealing with a company. His answer was -

"No I wasn't told. The words may have been there but it wasn't explained that I was dealing with a company so which do you want, whether it was explained to me or was it told to me in a way that I didn't grasp."

He conceded that it was possible that he had been told by Mr Delaney that he was dealing with a company. He said that, when he saw the advertisement, he did not notice the name Ranchcamm. The cheques handed over by Mr Newstead were banked into a trading account of Ranchcamm. Company extracts from the Australian Securities Commission show that at the relevant time there was one director of Barroleg namely Jacqueline Byrnes. One James Warren Burns was a director between 31 May 1989 and 28 May 1992. June Edithe Byrnes was the secretary of the company. It appears that June Edithe Byrnes and Jacqueline Byrnes each held one share and that there were no other shareholders. The information disclosed by the company extracts from the Australian Securities Commission in relation to Ranchcamm is not materially different. Tendered to the Local Court was a record of interview between Sergeant Hume and the plaintiff of 28 August 1995. Mr Byrne said that he had registered Barroleg and, prior to his bankruptcy was a director of it. June Byrnes was his mother and Jacqueline, his ex-wife, was also a director. He said in his interview that James W Byrnes & Associates became a registered trading name owned by Barroleg but on licence to Ranchcamm. Barroleg is the trustee of an entity known as the Barroleg Trust as, indeed, Ranchcamm was the trustee of the Ranchcamm Trust. The beneficiaries of this latter trust comprise Barroleg and Mr Brynes' mother, his ex-wife and any children that Mr Byrnes might have. Mr Byrnes claimed that he was an employee of Ranchcamm. Mr Byrnes described his work as "just to go and earn money for the company and make sure it gets paid in". Mr Byrnes said that whilst a bankrupt he did not do any business for himself but was employed for the whole of the period working for the company.

11 The information charged the plaintiff for "being an undischarged bankrupt did alone obtain from Malcolm Newstead an amount in excess of $3,000 namely the sum of $17,625 by promising to render services to the said Malcolm Newstead without informing Newstead that he was an undischarged bankrupt" (emphasis added). The case was argued before the learned magistrate, as before me, on the basis that that the plaintiff acted alone was an element of the offence, not merely an immaterial averment.

12 A business names' extract shows that James W Byrnes & Associates was registered on 27 July 1992 carrying on the business of equipment hire, that Barroleg ceased carrying on business as James W Byrnes & Associates on 30 June 1993 and that Ranchcamm commenced carrying on the business using that business name on 1 July 1993.

13 The magistrate found that the plaintiff was so inextricably intertwined in the affairs of Ranchcamm trading as James W Byrnes & Associates that "he is unable to stand apart from it as it were". I have not set out the reasoning of the learned magistrate which led her to this conclusion, but it demonstrates to my mind that that conclusion was not only reasonable, it was inevitable. The fundamental difficulty with this line of reasoning, so far as the conviction is concerned, however, is that if, indeed, Ranchcamm had an independent legal personality apart from the plaintiff (or the state of evidence was such that this fact could not be excluded beyond reasonable doubt) it followed that the plaintiff and the company acted together rather than that Mr Byrne acted alone. If the issue was whether the plaintiff was dealing with Mr Newstead personally or whether in such dealings he was simply acting as Ranchcamm's agent (see Maharaj (1995) 85 A Crim R 374 at 380) the learned magistrate found, upon ample evidence, that he was not acting personally. The learned magistrate was not asked to conclude, and there was at all events no basis for concluding, that Ranchcamm was a mere sham or facade. At the material time, as I have pointed out, the evidence showed that the directors were persons other than the plaintiff who, also, held no shares in the company. There was no evidentiary basis for concluding (and it appears the prosecution did not at all events contend) that the company was a mere emanation or alter ego of the plaintiff. But, even if it were, that would not suffice to ignore its legal existence: see R v Goodall (1975) 11 SASR 94, per Bray CJ at 100, 101; Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121. Metaphors can be misleading and obscure rather than elucidate legal principle.

14 In Denis Wilcox Pty Limited v Federal Commissioner of Taxation (1988) 79 ALR 267 the Federal Court of Australia cited with approval the observation by Young J in Pioneer Concrete Services Pty Limited v Yelnah Pty Limited (1986) 11 ACLR 108 that the separate legal personality of a company is to be disregarded only if the court can see that there is, in fact or in law, or that there is a mere sham or facade in which the company is playing a role, or that the creation or use of the company was designed to enable a fiduciary obligation to be evaded or a fraud to be perpetrated.

15 Of course, if there was a partnership between Ranchcamm and the plaintiff with respect to the transaction in question then the plaintiff was not acting alone. On the other hand, there was no evidence capable of leading to the conclusion that Ranchcamm was a mere sham or facade nor that its use was designed to enable a legal obligation to be evaded or a fraud to be perpetrated. The learned magistrate was not asked, at all events, so to conclude. The matter is not resolved by Mr Newstead's expression of opinion as to the person with whom he was dealing. In effect, the submission before me on behalf of the defendant is that the learned magistrate's finding to the effect that the plaintiff had acted jointly with Ranchcamm was wrong and that the evidence permitted the conclusion that Ranchcamm had nothing whatever to do with the transaction and accordingly, the ultimate conclusion of the learned magistrate that the plaintiff acted alone was justified by the evidence.

16 Upon the facts found by the learned magistrate it seems to me, as I have mentioned, that the inevitable conclusion was that the plaintiff must have been acquitted. Not to have done so is, in my opinion, a fundamental error of law. I am not persuaded that the learned magistrate's findings were mistaken. In fact, I consider that they were inevitable. Indeed, counsel for the defendant in this court does not submit that the learned magistrate's decision on the facts was wrong but rather that the evidence permitted the opposite decision which, because of the jurisdiction exercised by the Supreme Court in these applications, did not have to be determined by me beyond reasonable doubt. A number of difficulties stand in the way of acceptance of this submission. However, the most obvious is that it cannot be suggested that the magistrate's determination of the relationship between the plaintiff and the company was so flawed as to amount to an error of law (indeed, it is not even submitted that it is an error of fact, merely that another conclusion was open) and the only error of law that can be demonstrated is that the finding of the magistrate upon the facts as found by her must have led to acquittal rather than conviction.

17 In these circumstances, I consider that the conviction must be quashed. I should, however, observe that the question of the relationship between the plaintiff and Ranchcamm, which was a fundamental issue in the case, was made obvious, if for no other reason, by the wording of the advertisement which led to Mr Newstead's seeking assistance. In these circumstances, there is no reason why the information could not have alleged that the plaintiff was acting either alone or jointly with Ranchcamm. It is surprising that this course was not adopted.

18 The plaintiff must have his costs.

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LAST UPDATED: 05/05/1999