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[2000] WASCA 191
Court of Appeal (WA)
2000-07-28
Ms J, Wheeler J
Original judgment source is linked above.
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : FERRARI -v- NEENAN [2000] WASCA 191
Justices - Appeal - Omission to perform statutory duty - Application of defences under Criminal Code 1913 (WA) - Mistake - Whether reasonable
Pawnbrokers and Second Hand Dealers Act 1994, s 41(e), s 43(e)
McKinnon v Weir; unreported; FCt SCt of WA; Library No 970251; 21 May 1997
Milstead v Cream, unreported; FCt SCt of WA; Library No 8648; 19 December 1990
O'Brien v Ostrowski [1999] WASCA 184
St Vincent's Hospital Toowoomba Ltd v Hardy, unreported; SC QLD CA; BC9801870; 6 May 1998
Starling v Ostrowski [2000] WASCA 173
Tomazin v Ward, unreported; FCt SCt of WA; Library No 970023; 6 February 1997
Turner v Trevorrow & Anor [1994] FCA 1091; (1994) 126 ALR 263
1 WHEELER J: The appellant appeals against 17 convictions for offences under s 41(e) and s 43(e) of the Pawnbrokers and Second-Hand Dealers Act 1994 ("the Act") on 15 March 2000. On conviction, the learned Magistrate ordered that the appellant pay an aggregate fine of $1,700 ($100 on each charge) and costs. He ordered that the convictions be spent pursuant to s 45 of the Sentencing Act 1995. There is no appeal against the sentence, which was a lenient one (justifiably so, having regard to the appellant's excellent character).
2 The appellant was at all material times a person licensed under the Act as a registered pawnbroker and second-hand dealer who carried on business in Victoria Park trading under the franchise name "Cash Converters". On 12 October 1999, his premises were entered by police officers who conducted an audit of all transactions carried out at the business during a 12-day period. At the time of the audit the appellant was absent from the State. He was not certain in his evidence whether he had been absent from the State for part or the entirety of the period during which the audited transactions were conducted. During the course of the audit, the police discovered, it was alleged, a total of 18 significant discrepancies between the relevant items of property and the description of those items entered in the transaction record kept by the business. They were the subject of 18 complaints, one of which was dismissed. None of these entries had been made by the appellant, but rather by persons employed by him. A number of different people had made the entries. During the course of evidence, the investigating officer said that there were approximately the same number again of very minor discrepancies picked up during the course of the audit which were not the subject of charges.
3 The defence at trial was conducted on a number of bases. Reference was made in particular to s 23 of the Criminal Code and s 88 of the Act. It is common ground that neither of those sections was really in issue in this case. Although it is submitted that his Worship erred in having regard to, in particular, s 88 of the Act, that error appears to have no bearing on this appeal. It was apparently considered by his Worship that a defence pursuant to that section (to which further reference will be made later) might have been open to the appellant in law, but his Worship rejected it as a matter of fact. The gist of the appeal is that his Worship erred in failing to consider a defence pursuant to s 24 of the Criminal Code, which was as a matter of law available to the appellant. Although the defence of mistake was not the subject of any argument by counsel for the appellant, it is common ground on this appeal that if it was available as a matter of law and was open on the evidence, it should have been considered by his Worship.
4 Two issues therefore arise in relation to s 24 of the Criminal Code. The first is whether it was available as a matter of law in relation to a breach of s 41(e) and s 43(e) of the Act and the second is whether it was then as a matter of fact the case that there was evidence which could have led his Worship to have a reasonable doubt as to whether an honest and reasonable mistake of fact had been made by the appellant.
5 Turning to the first question, the relevant principle was enunciated by Hale J, delivering the judgment of the Full Court, in the case of Geraldton Fishermen's Co-op v Munro [1963] WAR 129 in the following terms:
"... it is now accepted that s 36 of the Criminal Code means exactly what it says and that the provisions of Chapter V apply to all statutory defences. It follows that where there is no express exclusion then s 24 and the section creating an offence must, if possible, be read together, and s 24 can not be treated as excluded by implication, unless on a fair reading of the penal section (read of course in the context of the whole Act in which it stands) it is seen that the penal section is inconsistent with the co-existence of s 24 so that effect cannot be given to both at the same time: ...".
6 It is desirable to refer also to the way in which the Full Court in that case analysed the interaction between s 24 and s 24A of the Fisheries Act. Immediately following the quoted passage, the court further said:
"Now the mere fact that s 24A is couched in absolute language cannot by itself be an implied exclusion of s 24 of the Criminal Code : it this were so, s 24 would never apply unless a penal section itself indicated that s 24 was to apply, and this would be an inversion of what is enacted by s 24. And, in my opinion, it is not permissible to find an implied exclusion by regarding the subject-matter of the particular statute. The most that such an examination can show is that it would be quite reasonable for Parliament in the particular case as a matter of policy to have excluded s 24: but if on a fair interpretation of the words used it can be seen that the two sections can stand together, then the fact that an exclusion would have been reasonable, or even the fact that an exclusion might have been expected, cannot, in my opinion, justify the adoption of gloss on the words used so as to bring about such a result."
7 The relevant sections of the Act read as follows:
"41 A pawnbroker must ensure that the following details are recorded in relation to each contract as soon as the information become available to the pawnbroker -
(e) a description of each of the goods to be pawned including, where applicable to the goods, the type, size, colour, brand, serial number and any distinguishing feature;
43 A second-hand dealer must ensure that the following details are recorded in relation to each contract as soon as the information becomes available to the dealer -
(e) a description of each of the goods accepted by the dealer including where applicable to the goods, the type, size, colour, brand, serial number and any distinguishing feature;"
8 It is convenient to deal with the arguments of the respondent in relation to this issue in the order in which they are to be found in the very full and helpful outline of submissions.
9 First, it is said that the word "ensure" should be construed as having its ordinary meaning of guaranteeing, securing or making certain. It is said that it imposes a non-delegable duty to ensure that prescribed details are in fact recorded. Reference was made to Hansard to illustrate the proposition that these sections lie at the heart of the scheme created by the Act of regulating the business of pawnbroking and second-hand dealing so as to ensure that the trade in stolen goods through those businesses is eliminated and that any stolen goods which may come into possession of pawnbrokers and second-hand dealers can be readily identified.
10 Accepting all of these propositions as true, the effect nevertheless seems to me to amount to no more than that the section on its face imposes a duty in "absolute terms" and that the duty imposed is one of importance to the community as a whole. Neither of these considerations persuaded the Full Court in the Geraldton Fisheries Co-op case to the view that s 24A of the Fisheries Act impliedly excluded the operation of s 24 of the Criminal Code, and it seems to me that the same reasoning must apply to these provisions. The reference made by the respondent to the scope and purpose of the Act does not, in my view, carry the matter any further. No doubt, the elimination of transactions in stolen goods and the facilitation of recovery of goods are important objects, but in the absence of anything to suggest that those objects will be frustrated by the availability of a defence pursuant to s 24 of the Criminal Code, it appears to me that those considerations on their own cannot point to the conclusion that s 24 must be impliedly excluded. This is particularly so, when one recalls that s 24 has operation in relation to the offences created by the Criminal Code itself, including the most serious offences such as unlawful killing and sexual assault.
11 Next it is suggested that the legislation would be rendered largely ineffective if a pawnbroker or second-hand dealer were able to avoid liability by relying on s 24 of the Criminal Code. I do not accept this submission. It is necessary in each case in which s 24 has operation for there to be evidence to found a reasonable doubt.
12 Further, it seems to me that this proposition was founded on an error which infected the submissions of both the appellant and the respondent. The availability of s 24 does not have the effect of transforming the relevant sections of the Act from a duty to "ensure" into a duty to take "reasonable steps to ensure". Rather, in order for a defence to be available there must in each case be evidence of an honest and reasonable mistake with respect to a particular transaction. It appears to me that this can either be based upon a memory of the actual circumstances of the transaction or, as cases such as Geraldton Fishermen's Co-op demonstrate, upon the existence of a system which gives rise to such a belief. Where a system exists, it must be a system which is capable of giving rise to a belief that in the particular case in question, the provisions of the Act have been complied with. I do not see how such a belief can arise based merely upon a system which is sufficient only to found a reasonable belief that mistakes will be minimised, or will not usually occur, or will usually occur only in a small number of cases. A belief of that kind cannot, it seems to me, found a belief that in any particular case the requirements of the Act have been complied with; rather, it can only found a belief, at best, that it is probable that the requirements of the Act will have been complied with. This, in my view, is placing a gloss on the words of s 24.
13 Of course, one must accept that having regard to human fallibility, mistakes can never be eliminated. Inexplicable breakdowns in even the best system will occur for reasons which cannot be foreseen. However, in my view, a belief of the relevant kind, where founded upon a system, must necessarily be founded upon a system which has been designed so as to eliminate, rather than merely to minimise, the occurrence of error. Understood in this way, it appears to me that the scheme of the Act will not be compromised if there is available a defence to those who may have made an honest and reasonable mistake of the type which I have described.
14 Finally, the respondent referred to s 88 of the Act as possible support for the contention that the legislature understood that the scheme which it had created excluded the operation of s 24. This was based upon the proposition, which I accept, that the existence of specific defences for some offences under an Act may tend to support the conclusion that other defences were intended to be excluded: McPherson v Cairn [1977] WAR 28 at 31. However, s 88 reads, relevantly, as follows:
"(1) Where a licence is held by a natural person and an employee or agent of the licensee commits an offences against this Act for which the licensee would have been liable had it been committed by him or her, the licensee is to be treated as having committed an offence ...
(b) it is a defence, proof of which is on the licensee, that the licensee had taken reasonable steps to prevent the commission of the offence."
15 It is accepted that s 88 is a true vicarious liability section, dealing not with the liability of the pawnbroker for his or her own act or omission, but for the acts or omissions of others. It may at first blush appear odd that for a vicarious liability offence, the onus is cast on the pawnbroker to show diligence but that in respect of his or her own acts or omissions the pawnbroker may only have to raise a reasonable doubt, should s 24 be applicable. However, the types of offences to which s 88 would appear to apply would be those such as s 46 of the Act, which deals with tampering with records so as to render them false or misleading, or s 75, which deals with failure to comply with requirements of police officers wishing to inspect goods pursuant to the Act. These would appear to be directed at the sorts of conduct which would be, to anyone with the merest acquaintance with the relevant legislative provisions, a very clear breach of the Act and in relation to which it would appear unlikely in the ordinary run of cases that any mistake could be made. It may therefore have been thought appropriate to cast the onus of showing due diligence upon the employer of those who contravene the Act is such an obvious way. I would not, therefore, regard s 88 as decisive. Further, vicarious liabilities are often seen as a particular and unusual category of offences in relation to which it is not unusual that specific defences be provided: see Jackson v Dyball (1993) 74 A Crim R 10.
16 It is my view that s 24 has not been impliedly excluded by the provisions of s 41 and s 43 of the Act. Clearly, it has not been expressly excluded. However, the question arises as to whether there is, in this case, evidence which is capable of raising a reasonable doubt as to an honest and reasonable mistake.
17 The prosecution appears to have been conducted not on the basis of challenging the credibility of the appellant; rather there was a question of the adequacy of the system employed by him. Similarly, it appears that his Worship had no hesitation in accepting the appellant's evidence. This is not, therefore, a case in which there may be an issue, based on questions of credibility, as to whether the belief, if held by the appellant, was an honest one. Rather, the focus is on whether any belief, which may have been held by him, is capable as a matter of law of amounting to a reasonable belief. In that situation, it was conceded by the appellant that this Court is in as good a position as his Worship was to consider that question.
18 The appellant's belief was described by him in his evidence in chief as that he was "doing everything possible that I thought to make sure there were no errors". He explained that when he employed new employees they went through a four-week training course. The details of the course, which can be gleaned from the two pages of type sheet setting out its objectives and from his evidence, was that that course covered the full range of the employee's duties from greeting customers and using the telephone through to compliance with the requirements of the Act. A substantial proportion of the course appears to have consisted of observation of already trained employees carrying out transactions.
19 After that, the appellant supervised his employees by a system of random sampling of transactions, usually sampling on Friday, 15 or 20 transactions from that week. His evidence was that an average day would contain 30 to 40 transactions. The random sample, therefore, would have represented about 1/14th of the week's transactions (the evidence being that the business traded every day). He said that if on such a random sample he found that there were mistakes, he would sit down with the staff member and go through what was acceptable and what he considered they needed to change. He agreed that there were situations where, notwithstanding repeated counselling, staff had not improved and had continued to make mistakes and on those occasions they had been dismissed. He gave evidence in respect of a particular employee, who was apparently responsible for two of the transactions the subject of these complaints, and his evidence was that that particular employee had made so many mistakes on one occasion that he had found it necessary to check the employee's transactions for a period until he had been convinced that the employee's performance had sufficiently improved. Subsequent to these offences he had engaged another employee whose sole function it was to check each of the transactions after they had been entered into the computer, so that the system now, post these complaints, was that each transaction was the responsibility of at least two staff members.
20 The evidence of the transactions the subject of the particular complaints suggested that, while some of the discrepancies might be described as not of a particularly gross kind, others were very clear examples of failure to comply with the requirement to describe goods. For example, certain items of jewellery were recorded simply as "jewellery" without reference to the material of which they were composed, or the type of jewellery which they were, or to any other distinguishing features. Failures to record distinguishing features of other items included failures to record what appeared to be the name of an owner marked very clearly on a drill, and failure on one occasion to open a toolbox so as to be able to describe its contents (in relation to this last transaction, the evidence was that the same customer had pawned that particular toolbox on other occasions and an assumption was apparently made as to its contents).
21 The types of errors which were made by the appellant's employees were in some cases of kind which suggested that a system which produced them was unlikely to be a system which could be regarded as one which would avoid mistakes; however, this is not decisive, since the possibility of inexplicable breakdown of an adequate system cannot be ruled out. However, it is clear from the evidence of the appellant himself that he was aware that under the system which he had instituted, mistakes were made. He found them on his random samples and he counselled employees about them. He was aware that employees did not always improve their performance in this respect, notwithstanding counselling. It was inherent in his system that some employees would make mistakes and would continue to do so even after counselling. It is my view that it would be fair to describe the system which he had instituted as one which was designed to reduce the numbers of mistakes; however, having regard to the appellant's own experience with the system he could not reasonably have believed that mistakes would not occur under such a system. In the absence of any reasonable belief that mistakes would not occur, it appears to me that it cannot be said that in respect of any particular transaction the appellant could have held a reasonable belief that the recording of an item would be made in accordance with provisions of the Act.
22 Notwithstanding that his Worship's attention was directed to a somewhat different legal issue, he seems to have reached a similar conclusion in finding that the offences were committed "due to there not being proper supervision of staff or proper training of staff or both". His Worship specifically described the training and supervision conducted by the appellant as "unreasonable".
23 I accept that based upon the evidence of the appellant he had put in place a system which he honestly and reasonably believed was likely to ensure that compliance with the Act would take place in the general run of cases. However, it appears to me that on the appellant's evidence, and having regard to the circumstances of these offences, if he held a belief that each of the relevant transactions must have been properly completed, such a belief could only be regarded as an unreasonable one. In my view, therefore, the appeal should be dismissed.
# Ferrari
Neenan \[2000\] WASCA 191
(1994) 126 ALR 263