DPP (Cth) v Neamati

Supreme Court of NSW|2007-07-12|Before: Howie J

CITATION : DPP (Cth) v Neamati [2007] NSWSC 746

DECISION : 1. The appeal is allowed. 2. The orders of the Magistrate dismissing the six charges the subject of these proceedings and the order for costs are quashed. 3. The proceedings are remitted to the Local Court to be heard before a different magistrate conformably with this judgment. 4. The defendant is to pay the plaintiff's cost of this appeal but is to have the benefit of a certificate under the Suitor's Fund Act if otherwise entitled.

CATCHWORDS : Criminal Law - Practice and Procedure - Prosecutor's appeal from a finding of no prima facies case and dismissal of informations - whether error of law - finding that prosecution failed to prove a fact that was not an element of the offence - error as to standard of proof at prima facie level - costs order against prosecutor unreasonable.

Criminal Code (Cth) 1995 - ss 5.3, 5.4, 5.4(4), 5.6(1), 5.6(2), 135.2(1), Chapter 2 Crimes (Appeal and Review) Act 2001 - s 56(1) LEGISLATION CITED : Financial Transaction Reports Act (Cth) 1992 Customs Act 1901 Criminal Procedure Act 1986 - s 214(1)(c)

Lodhi v R [2006] NSWCCA 121 Lee v R [2007] NSWCCA 71 R v JMR (1991) 74 A Crim R 39 CASES CITED : Torrance v Cornish (1985) 79 FLR 87 He Kaw Teh v The Queen (1985) 157 CLR 523 Ianella v French (1968) 119 CLR 84 Latoudis v Casey (1990) 170 CLR 534

PARTIES : The Director of Public Prosecutions (Cth) v Parham Neamati

COUNSEL : L. Crowley - Plaintiff S. Hodges - Defendant

SOLICITORS : Commonwealth DPP - Plaintiff S. Hodges - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

2007/11165 THE DIRECTOR OF PUBLIC PROSECUTIONS (CTH) v PARHAM NEAMATI

JUDGMENT 1 HIS HONOUR : The defendant was before the Local Court charged with six offences contrary to s 135.2(1) of the Criminal Code (Cth) (the Code) of obtaining a financial advantage knowing or believing that he was not eligible to receive that advantage. The plaintiff was the prosecutor. In essence the allegation was that the defendant had obtained payments of Youth Allowance by deliberately understating the amount of money he was earning. The six charges related to six periods when it is said this conduct had occurred. The allegation was that he had over a period from May 2002 to September 2005 obtained an overpayment of $19,798.27. 2 The defendant pleaded not guilty and came before the Magistrate for hearing. The evidence was uncontroversial and was made up largely of documents emanating from the government agency administering the payment of the benefit. There was no issue that the defendant had received the benefit or that he had misstated his income over the relevant period. The only issue was whether the prosecution had proved beyond reasonable doubt that the defendant knew or believed that he was not entitled to the whole of the benefit he received at the time he misstated the extent of his income. 3 The defendant had declined to participate in an interview with police. There was some material about him personally in the forms that he had filled out at various times in relation to the benefits he received. But the prosecution case was clearly a circumstantial one as there was no direct evidence of the state of the defendant's knowledge or belief as to his entitlement to benefits at the time he made the false statements about his earnings. 4 The prosecution intended to prove the requisite knowledge or belief from five circumstances: the defendant's conduct in reporting his income as required; his conduct in misstating the extent of his income in relation to his claim for the benefit he obtained; the letters sent to him advising him of his obligation to report changes in his circumstances including his income; letters notifying him of his obligation to report his income once every two weeks; and evidence of publicity about the duties and obligation of persons receiving benefits from the Federal Government. 5 At the end of the prosecution case the defence made a no prima facie case submission. The addresses were not transcribed. At their conclusion the Magistrate adjourned the proceedings to consider the submissions. About five days later the Magistrate delivered her judgment. She concluded that there was no prima facie case as there was no evidence on the element of knowledge. She later made an order that the plaintiff pay the defendant's costs. 6 The plaintiff has appealed to this Court pursuant to s 56(1) of the Crimes (Appeal and Review) Act (NSW). There is no dispute about the Court's jurisdiction to hear the appeal or make the orders sought by the plaintiff setting aside the Magistrate's orders and returning the matter to the Local Court to be heard by another magistrate. Ultimately it was conceded on behalf of the defendant that there was an error of law in the reasons of the Magistrate. The issue that was argued before this Court was whether there was a prima facie case on the evidence. If there were not, then clearly the Court would not allow the appeal as the Magistrate's orders would be correct but for the wrong reason. 7 The plaintiff relied upon the following grounds of appeal:

"1. That the learned Magistrate erred in law in finding that the Prosecution must prove that the defendant knew that what he was doing was a criminal act;

That the learned Magistrate erred in law in finding that there was no prima facie case;

That the learned Magistrate misinterpreted and misapplied He Kaw Teh v The Queen (1985) 157 CLR 523" 8 Grounds 1 and 3 were argued together and are in effect the same complaint. There were further particulars of the complaint made under these grounds asserting that the Magistrate erred in dismissing the charges by:

"a. Misdirecting herself as to the essential elements of the offence that the Prosecution were required to prove. In determining the 'no case' application, her Honour erroneously considered that it was an essential element of the offences charged for the prosecution to prove beyond reasonable doubt that the Defendant knew that his acts and/or omissions amounted to a criminal offence;

b. On the basis of this misdirection, erroneously concluding that the Prosecution was unable to establish sufficient evidence at a prima facie level on this 'element' of the offences; and

c. Failing to consider all the Prosecution evidence with respect to the proper elements of the offence, and in particular the evidence relevant to proof of the knowledge of the Defendant, when determining there was insufficient evidence adduced by the Prosecution upon which the Defendant could be convicted of the offences." 9 As has been noted, the offences alleged were breaches of the Code. In such a case the court will be required to apply the provisions of Chapter 2 of the Code in order to understand what the prosecution must prove in order to make out the offence. In some cases this can be a complex exercise, not so much because of any difficulty associated with understanding and applying Chapter 2, but because of the difficult way some of the more recent offences have been drafted. Examples can be found in Lodhi v R [2006] NSWCCA 121 dealing with terrorism offences under the Code and Lee v R [2007] NSWCCA 71 dealing with offences under the Financial Transaction Reports Act (Cth). 10 But no such difficulty arose in this case. Section 135.2(1) provides:

(1) A person is guilty of an offence if: (a) the person engages in conduct; and (aa) as a result of that conduct, the person obtains a financial advantage for himself or herself from another person; and (ab) the person knows or believes that he or she is not eligible to receive that financial advantage; and (b) the other person is a Commonwealth entity. Penalty: Imprisonment for 12 months. (1A) Absolute liability applies to the paragraph (1)(b) element of the offence. 11 The only element of the offence in dispute was (ab). Chapter 2 would have operated on the offence in this way. Subsection (a) was a physical element of conduct. Because there is no fault element set out for that physical element, s 5.6(1) applied and the default element for that physical element was intention. The conduct engaged in was giving false information to the agency as to the defendant's income. There was no dispute that the defendant intended to engage in that conduct. Subsection (aa) was a physical element of the result of conduct. The result in this case of the defendant misstating his income was the obtaining of a financial advantage for himself. There is no fault element in respect of that physical element of result. In that case s 5.6(2) applies and the default element is recklessness. But here there was no dispute that the defendant intended by his conduct to obtain a benefit. Reckless for the purposes of the Code is defined in s 5.4 and s 5.4(4) provides that proof of knowledge or intent will satisfy that fault element. 12 Subsection (aa) is a physical element of circumstance combined with a fault element of knowledge or belief. Section 5.3 provides:

5.3 Knowledge A person has knowledge of a circumstance or a result if he or she is aware that it exists or will exist in the ordinary course of events. The physical element of circumstance in (aa) was that the defendant was not eligible to receive the benefit. Section 5.3 applied so that knowledge was made out if the defendant was aware of the existence of this circumstance, that is of his lack of eligibility, or was aware that it will exist in the ordinary course of affairs, that is that in the ordinary course of affairs he will not be eligible for the benefit that he intended to gain by his conduct. 13 I doubt that in this case much is to be gained from the definition in s 5.3. This is because it does no more than define "knowledge" in the way that it would be construed in normal parlance. Further the fault element was not confined to knowledge, because belief of his lack of eligibility would be enough. Again I do not believe that this added anything to the issues before the Magistrate on the facts and circumstances before her. In any event the issue was fought on the basis of whether the prosecution had adduced evidence of knowledge by the defendant of his lack of eligibility for the benefit he received as a result of misstating his income. 14 On its face, therefore, the law should not have presented any difficulty for the Magistrate. The issue simply stated at the prima facie level was had the prosecution adduced evidence from which an inference reasonably arose that the defendant knew at the time of misstating his income that he was not entitled to the full benefit he received as a result. Because this was a circumstantial case, at the close of the prosecution's evidence the prosecution had only to show that an inference consistent with guilt reasonably arose on the evidence. It did not have to prove that this was the only inference that arose or that there was no inference arising from the evidence inconsistent with guilt: R v JMR (1991) 74 A Crim R 39; Torrance v Cornish (1985) 79 FLR 87. It did not matter at this point how tenuously that inference arose provided that it was reasonably open on the evidence. 15 As has been noted the Magistrate reserved at the end of the no case submissions to consider the evidence. Her judgment in upholding the submission and dismissing the charges takes about two and half pages of typed transcript, the largest part of which was taken up by a consideration of the decision of the High Court in He Kaw Teh and it was upon a statement made in that decision that the Magistrate found the prosecution case wanting. 16 With the greatest respect to the Magistrate I do not understand how a common law case concerned with the construction of a statutory offence could assist her in the task of considering the evidence adduced by the prosecution in respect of an element of an offence under the Code. This was not a case of having to construe a provision of the Code that was ambiguous or where some doubt was raised as to what were the elements of the offence. Nor did the definition of "knowledge" in the Code present any difficulty. Even had the Magistrate interpreted the structure of the offence in a manner different to the way that I have done, it could not have made the slightest difference having regard to the simple issue that was before her. 17 He Kaw Teh should be understood for what it is. It was not a decision concerned with the proof of knowledge. It was a case concerned with the application of common law principles to determine whether certain offences in the Customs Act were offences of strict liability or were offences of full mens rea. True it is that much of Chapter 2 of the Code was derived from the discussion of the principles of criminal liability found in that decision and particularly in the judgment of Brennan J. But the principles espoused in that decision are not identical with those adopted under the Code. In any event all that the Magistrate needed to determine this case was clearly set out in the Code and was not in dispute. 18 In order to understand the Magistrate's reasons, such as they were, it is necessary to refer to one part of the prosecution evidence, the only part to which the Magistrate referred. Some of the documents tendered were letters sent by the agency to the defendant setting out his obligations in respect of reporting information to the agency. It contained the following statement (my underlining):

"The rate of your Youth Allowance may need to be adjusted if there are changes in your circumstances. If you are paid too much allowance because you don't tell us when you are required to do so, we may recover money from you. There are also penalties for not telling us when required "

The letter goes on to indicate the type of matters to be reported to the agency, one of which is "income changes". 19 The Magistrate at the start of her judgment referred to the relevant provisions of the Code including the definition of "knowledge" contained in s 5.3. She correctly, with respect, observed "the critical issue in this matter is one of awareness of knowledge". She then went on:

"Last week when the matter came before this court, madam prosecutor was at pains to point out to the court that a number of letters had been sent to the accused in this matter. They are in fact copies of form letters which I suppose are amended or adjusted in some way in addressing the particular circumstances of any particular beneficiary, if one can be referred to recipients of these monies as a beneficiary. Part of the form letter actually states that 'The rate of your allowance' - and I am just skimming over that aspect because there are different types of payments, but the information or the statement made to the recipient is in the same terms in relation to all of them - 'The rate of your allowance may need to be adjusted if there are changes in your circumstances. If you are paid too much allowance because you do not tell us when you are required to do so, we may recover money from you. There are also penalties for not telling us when required', and so on.

Indeed, in the same form letters that are sent to beneficiaries or recipients of these payments, a number of matters are detailed as to what must be advised to the authority including changes in their living circumstances, their family circumstances, income and so forth, health. There is a very large range of matters which are all set out. The prosecution case is that those letters contain sufficient information to put a person on notice that he is required to advise the authority according to the terms of those letters and that as a consequence of that, where a person does not advise or only advises in part of certain changes and continues to receive the allowance at the rate it was previously paid, then that person must know or have the requisite knowledge in respect of the offence that is subsequently charged." 20 The Magistrate then referred to the decision in He Kaw Teh as "being instructive" and quoted the following passage, which is actually taken from Ianella v French (1968) 119 CLR 84:

"Assume his mind to be sufficiently normal for him to be capable of criminal responsibility. It is also necessary at common law for the prosecution to prove that he knew that he was doing the criminal act which is charged against him, that is, that he knew all the facts constituting the ingredients necessary to make the act criminal were involved in what he was doing." 21 The Magistrate then went on:

"When I reviewed the evidence, I have to say that there was nothing in the evidence which indicated that the prosecution was in a position to, let alone was able to, prove that the accused knew that it was doing a criminal act in that he knew all the facts constituting the ingredients necessary to make the act criminal………." 22 Pausing there, the only criticism that could be made of the Magistrate's judgment is to ask why she thought it necessary in this particular case and in light of the simple issue before her, to consider a general statement of criminal responsibility at common law and seek to apply it to the facts of this case. The real vice of referring to, and seeking to apply, this principle is that the Magistrate was likely to mislead herself in determining the real issue that was before her. Unfortunately this is what then occurred. 23 After the passage just quoted, the Magistrate went on as follows:

"Indeed all of the advices that are indicated to persons in the position of the present accused in this matter, or the accused in the present matter, indicate that whilst penalties may be imposed, it is not suggestive of any criminal act being committed. It is a matter of common knowledge, and is certainly a matter of which this court can take judicial notice, that there are any number of administrative penalties which might attach to defalcations or other conduct on the part of the recipient such as to attract some sort of sanction, but those are a long way from being criminal offences. There is nothing which qualifies this issue of the attraction of penalties by a recipient in the position of the accused in the present case.

It simply is not sufficient, and I think I have said this in previous cases, if that is what the prosecution relies on, it simply is not sufficient to establish beyond reasonable doubt the element of knowledge, and it is a necessary element of these offences. Therefore it has to be proved beyond reasonable doubt even at the prime facie stage. 24 It is impossible in my view to interpret these reasons in any other way than that the Magistrate determined that the prosecution had to prove beyond reasonable doubt that the defendant knew that he was committing a crime. There is no other way of understanding the Magistrate's discussion about penalties and whether they amounted to a criminal sanction or not. The comments were irrelevant to any issue before the Magistrate. It should be obvious that the prosecution never has to prove that a person knew his or her acts were criminal because generally speaking a defendant's knowledge about the criminal law is irrelevant. The passage quoted from He Kaw Teh is merely stating that it is for the prosecution "to prove that he knew that he was doing the criminal act charged against him" not that the prosecution has to prove that he knew that the act charged against him was criminal. 25 The prosecution were not attempting by the letters to which the Magistrate referred at the start of judgment to prove that the accused knew he was committing a crime because a sanction might be imposed upon him for failing to report relevant information. All the prosecution was seeking to have inferred from those letters was that the defendant must have known that the information he was obliged to report to the agency was relevant to the amount of benefit he was to receive and, therefore, he knew that by giving false information about his income, he was to receive more benefit than he would have done had he told the truth. The letters to which the Magistrate was referring were simply one of a number of circumstances that the prosecution were relying upon to support an inference that the accused must have known that, by falsely reporting the extent of his income, he would obtain in the ordinary course of affairs a benefit to which he was not entitled. 26 There was clearly an error of law in the Magistrate's reasons for determining that there was no prima facie case because she held that the prosecution had not proved a fact that it did not have to prove. As I have noted, the solicitor appearing for the defendant conceded in oral argument before this Court that he could not support the Magistrate's reasoning. 27 There was a further obvious error in the Magistrate stating, "….[knowledge] has to be proved beyond reasonable doubt even at the prime facie stage". Nothing has to be proved beyond reasonable doubt at the prima facie stage. It is enough that the evidence in the prosecution case taken at its highest is capable of proving the elements of the offence beyond reasonable doubt. The only question is what should now be done. 28 I was addressed at length on whether there was a prima facie case. That matter is not free of complication and needs a thorough investigation of the evidence, a course not adopted by the Magistrate. There were competing arguments made to me both in written submissions and orally about what the documentary material reveals on its face. Of course there is no evidence as to the defendant's understanding or lack of understanding of any of the material he received, but it appears he had enough understanding to comply to some degree with his obligations. This is where it is important to bear in mind on a no case submission that the prosecution case is to be accepted at its highest, so that even weak or tenuous evidence is sufficient at law to give rise to a prima facie case. In a circumstantial case the only issue is whether the evidence led by the prosecution is capable of supporting a reasonable inference of guilt. 29 On its face the following facts would seem to me to give rise to a prima facie case: the defendant was receiving benefits from an agency; he was informed by that agency that he had to report certain circumstances, including changes to his income; he apparently complied with those obligations but knowingly gave false information as to his income to the agency by understating it; and as a result he received further benefits at a level commensurate with the stated income. On those facts, there is in my view a reasonable inference that, when the person received those benefits, he knew that he was not entitled to them. Why else would the person give false information about his income to the agency in fulfilment of his obligation to provide such information in order to obtain further benefits? He is informed that failure to comply with his obligations might mean that benefits he received would be recovered. He is also informed incidentally that penalties might apply. He can be taken as understanding the seriousness of complying with his obligation and its connection with any benefit he will receive in the future. There might be another answer to the question I posed or other answers might emerge from the defence evidence. But that is not a relevant consideration at the prima facie case level. 30 My initial reaction was that there was clearly a prima facie case but as the arguments emerged in oral submissions there was a question in my mind as to whether the evidence gave rise to an inference of knowledge or only an inference of recklessness in the sense that that concept is used in the Code. An inference of recklessness would not be sufficient to sustain the charge. In any event it seems to me that I should not bind another magistrate by a decision on that question. There may be a very subtle distinction between an inference of knowledge on the one hand and an inference of recklessness on the other. At the present time I am unpersuaded that there is not a prima facie case and, therefore, the appropriate order is to return the matter to the Local Court. 31 I do not intend to return the matter to the same Magistrate. One of the reasons for this decision was her determination to impose costs against the prosecutor. In my opinion that order was unreasonable. 32 With respect, the reasons given by the Magistrate supporting the costs order rather put a gloss on the reasons given for accepting the no case submission. I have already quoted almost the entirety of the Magistrate's reasons for dismissing the information. It is beyond argument in my opinion that the Magistrate thought that the failure of the prosecution's case was found in its inability to prove that the defendant knew that what he did was a crime. Otherwise most of her reasons are merely irrelevant musings on the nature of penalties. 33 In her reasons for awarding costs against the prosecutor the Magistrate revisited He Kaw Teh. She referred to the fact that it had been brought to her notice that Brennan J had made it clear that it was not a defence that the accused did not know that his act was criminal. The Magistrate went on to state that she did not find anything said by Brennan J in the passage referred to her as inconsistent with her reasons on the no case submission. Unfortunately I cannot agree with that view. Further the explanation given in the costs judgment for dismissing the informations is not consistent with that she gave in her reasons. In addition the Magistrate referred to evidence to justify the dismissal of the informations to which no reference was made in her judgment on the no case submission. 34 The Magistrate then proceeded to analyse some of the correspondence from the agency to the defendant in a way that she did not do in her reasons for dismissing the charges but apparently in an attempt to justify her earlier decision. But in my view the Magistrate fell into the very same error into which she fell in her earlier judgment. The Magistrate stated:

"………..But far more importantly, nowhere is a person advised that a failure to report such incomes accurately may result in prosecution or criminal sanction.

This is a matter of complete irrelevance to anything the prosecution had to prove. The issue was whether the defendant knew that he was not eligible to the benefits he would receive as a result of giving false information to the agency. That issue had nothing to do with whether he also knew that by giving such false information he might incur a penalty, let alone that the penalty was a criminal sanction. 35 The Magistrate then went on to mistake, once again, what it was the prosecution had to prove at a prima facie level by holding that the prosecution had failed to prove an element beyond reasonable doubt. 36 Up to this stage the decision was based upon a number of errors of law. It now becomes unreasonable. The Magistrate noted that she could not award costs against the prosecutor unless "the prosecutor unreasonably failed to investigate…..any matter of which it………..ought reasonably to have been aware….which suggested that the accused person might not be guilty…….": see s 214(1)(c) of the Criminal Procedure Act. 37 The Magistrate quotes a largely irrelevant passage from Latoudis v Casey (1990) 170 CLR 534 and then states:

"Having regard to the fundamental issue which was at the core of the Court's decision on prima facie, and is at the core of this consideration I am of the view that the Prosecution unreasonably failed to investigate a matter of which it should have been aware, and accordingly I am prepared to allow the claim on the basis of s 214(1)(c)" 38 The Magistrate does not indicate what matter it was of which the prosecutor should have been aware. It cannot be the fact that it did not have a prima facie case. The magistrate acknowledged earlier in the judgment that the failure to make out a prima facie case was not sufficient to justify the ordering of costs against the prosecutor. But even if it were, how did the prosecutor unreasonably fail to investigate whether it had a prima facie case? The matter to which she is referring could not possibly be the defendant's knowledge that he was not eligible for the benefits. How should the prosecutor have been aware of that matter? Nor could it have been the fact that the defendant was unaware that he was not eligible for the benefits? That was not proved to be a fact, let alone was it shown that the prosecutor ought to have been aware of it. 39 But in any event the Magistrate fails to disclose how the prosecutor unreasonably failed to investigate any matter, whatever it might be, where the only issue was the defendant's state of knowledge of a particular fact? The police sought to interview the defendant but he declined. What more might they have done to investigate his knowledge except to try to ascertain it from his actions in light of the information provided to him by the agency? 40 There was reference in the judgment to statements made by the defence solicitor to the effect that the defendant arrived from Iran in 1999 "only a few days prior to making his application for a Commonwealth Youth/Student allowance; that he had little knowledge of the Australian social security system or regime and little facility in English". There was absolutely no evidence before the court of the defendant's knowledge of the social security system in Australia or of the English language. In any event the alleged offences commenced in a period from May 2002 through to 2005. 41 As I have already indicated, in my view the order for costs was unreasonable and was based upon findings of the Magistrate that are either undisclosed or incomprehensible. The result is that the appeal must be allowed and the orders of the Magistrate set aside. There should be an order that the defendant pay the plaintiff's costs. This is regrettable because, as a result of a ruling of the Magistrate that could not even be supported by the defendant in this Court, the defendant has been put to the possibility of paying costs in this Court as well as paying his own costs in the proceedings before the Magistrate. 42 The orders are: 1. The appeal is allowed.

The orders of the Magistrate dismissing the six charges the subject of these proceedings and the order for costs are quashed.

The proceedings are remitted to the Local Court to be heard before a different magistrate conformably with this judgment.

The defendant is to pay the plaintiff's cost of this appeal but is to have the benefit of a certificate under the Suitor's Fund Act if otherwise entitled. **********

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At a glance

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Judgment (34 paragraphs)

Parties

Cases Cited (6)