Flack v R

The Ground of Appeal 8The Applicant relies upon a single ground of appeal: "His Honour erred in rejecting the no case submission and dismissing the application for a directed verdict." 9By Notice of Abandonment filed on 10 March 2011, the Applicant abandoned his appeal against sentence.

The Trial 10The Applicant stood trial with a co-accused, Kenneth Grindrod ("Grindrod"), upon an indictment containing five counts of obtaining financial advantage by deception contrary to s.178BA Crimes Act 1900 . The first count was in the following terms: "Between 1 January 2003 and 7 February 2003 at Sydney and elsewhere in the State of New South Wales, by a deception, namely by falsely representing that a bus with Engine No: F0206691 and Chassis/VIN: 1BAGNBXA32F207843 existed to the Bank of Western Australia, dishonestly obtained for Willowstar Pty Limited trading as Australian Autobus financial advantage, namely $279,400.00." 11The second to fifth counts alleged offences which may be summarised as follows: Count Date Alleged Deception Entity to Which Representation Made Quantum of Financial Advantage 2 Between 1 January 2003 and 21 February 2003 Existence of Bus with Engine No. F0206792 and Chassis/VIN: 1BAGNBXA32F215683 UFJ Finance Australia Limited $286,000.00 3 Between 1 January 2003 and 1 March 2003 Existence of Bus with Engine No: F0207933 and Chassis/VIN: 1BAGNBXA32F223387 Capital Finance Australia Limited $289,300.00 4 Between 1 January 2003 and 7 March 2003 Existence of Bus with Engine No. F0203977 and Chassis/VIN: 1BAGNBXA32F227831 Orix Australia Corporation Limited $294,800.00 5 Between 1 January 2003 and 3 April 2003 Existence of Bus with Engine No. F0209311 and Chassis/VIN: 1BAGNBXA32F223567 Orix Australia Corporation Limited $394,900.00

12It was the Crown case at trial that the Applicant and Grindrod were involved jointly and severally in various companies. The evidence at trial was that the Applicant and Grindrod made false representations to financial institutions to obtain loans for purchasing buses identified by engine and chassis/VIN numbers from a bus building company, Willowstar Pty Limited. The loan documents were all hire/asset purchase agreements. 13Prior to the commencement of the trial, there was discussion between counsel and the trial Judge concerning issues that might arise during the trial and directions that the Judge may need to give to the jury. The Crown Prosecutor indicated that there may need to be an inference direction covering the position of employees (T19). 14The Crown Prosecutor opened to the jury that it was essential that the jury be satisfied that the deception caused the financial institution to pay money (T57). She indicated to the jury that they would hear from officers of the financial institutions as to receipt of documents and the payment of money by those institutions (T57). 15The Applicant's counsel opened to the jury that they should focus upon why the financial institutions lent the money, and suggested that it was not caused by the behaviour of the Applicant or his co-accused (T58-60). 16As a result of an enquiry by the trial Judge, the Crown Prosecutor indicated that it was the Crown case that the financial institutions would not have handed over the money had they known that the representations in the documents that the buses existed were false (T93). The Applicant's counsel indicated that there was a question over the capacity of the witnesses from the financial institutions to give this evidence (T96). 17During the course of the Crown case, trial counsel for the Applicant stated that a no-case submission would be made, with reliance to be placed upon the decision of this Court in R v Ho; R v Szeto (1989) 39 A Crim R 145 (T572). 18The trial Judge heard submissions, in the context of an objection to the capacity of an officer of the relevant financial institution to give evidence as to whether the financial institution would have approved the loan, when that officer was not the one who originally dealt with the application. The initial objection was directed to a witness, Julie Begg, giving evidence concerning the procedures and practices of Capital Finance Australia Limited (the third count). The trial Judge ruled in favour of the Crown on the admissibility of the evidence of Ms Begg, and similar evidence to be given by other persons regarding the other financial institutions (the first, second, fourth and fifth counts). 19Evidence was given by an officer of each of the financial institutions that, had his or her company been aware that no bus existed (contrary to what had been particularised in the application), then the company would not have approved the loan. Evidence to this effect was given by: (a) Gavin Black, Manager of Business Recoveries with the Bank of Western Australia (first count) (T653); (b) Graham Phillips, Fraud Investigator with the Bank of Queensland - UFJ Finance Australia Limited had changed its name to BOQ [Bank of Queensland] Equipment Finance (second count) (T733); (c) Julie Begg, Senior Manager in the Fraud Protection Area at Capital Finance Australia Limited (third count) (T607); and (d) John Brown, General Manager of the Client Services Division of Orix Australia Corporation Limited (fourth and fifth counts) (T695). 20There was no challenge on appeal to his Honour's decision to allow this evidence to be given by each of these persons from the relevant financial institutions. 21The Crown closed its case on 25 February 2009 (T857). Thereafter, counsel for the Applicant made a no-case submission, contending that the officers from the financial institutions were not qualified to give evidence about whether the loan would have been approved, if no bus existed. It was submitted that there was a complete lack of any evidence which could lead to an inference that the cause of the handing over of the money to Willowstar Pty Limited was a present belief, by any bank or financial institution employee, that the buses existed at the time the money was sent (AB657). It was submitted that the Crown had not called to give evidence the person who approved the loan in each case, and whose mind had been deceived. As a result, it was submitted that there was no nexus between the deception and the payment (AB661). 22On 26 February 2009, the trial Judge rejected the no-case submission and refused the application by the Applicant for a verdict by direction. 23In the course of his judgment rejecting the no-case submission, the trial Judge said (AB28): "In relation to each count, a representative of each of the financial institutions said that the particular institution would not have made the loan had buses not existed. In some cases, for example in the contracts with Orix (counts 4 and 5), the documents stated that the goods were located at Bathurst. This evidence is subject to challenge by the Defence which asserts that the relevant officers cannot give this evidence - particularly where those officers in some cases had not been employees of the relevant institutions at the relevant time. I over-ruled this objection on the basis that the employee witnesses were authorised by their relevant institutions to appear and give evidence from the business records of the organisation and knowledge of the business practices of the particular institution." 24The trial Judge indicated that, where the deception was upon an institution and not an individual, the actual person who approved the loan was not a necessary witness. His Honour observed that the deception was on the institution, and evidence had been given as to the practices of all the institutions and the documentation on which each relied (AB32). 25His Honour's reasons for rejecting the Applicant's no-case submission included the following conclusions (AB33): "In my view the evidence is such that the jury could be satisfied that there was a deception on the relevant institutions by the total course of conduct of the accused. There is evidence which, if accepted, could support an inference that, on each count, there was a representation which was deceptive and that the respective financial institution acted on it to advance the monies which were then utilised by the accused. The applications as transmitted to the financial institutions contained a great deal of particularity as to what might be inferred was an existing bus (including the engine, chassis and VIN numbers) as well as associated documentation such as insurance cover documentation which would support the view that the particular bus was in existence. The determination of the final issue will in large measure depend on the jury's assessment of the evidence of Mr King and the relevant documentation as well as the course of conduct of the employees of Willowstar and the accused, particularly concerning the provision of the invoices. But in my view, at the end of the Crown case, there is sufficient evidence on which the jury could come to such a view that, on each count, there was a deception and that the financial institution acted on the basis of the representations made." 26The Applicant and Grindrod did not give evidence in the trial. The jury convicted the Applicant of each of the five offences. 27In the course of passing sentence upon the Applicant and Grindrod, the sentencing Judge said ( R v Flack; R v Grindrod [2009] NSWDC 94 at [2]-[4], [11]): "2 The particulars for each count were substantially the same. The offences all occurred within a three/four month period between January and April 2003. The offences involved false representations about various identification numbers for buses. Those numbers were obtained by the offenders using their knowledge of the vehicle financing industry and the systems of the entity, Willowstar Pty Ltd. ('Willowstar'), by whom the buses were to be constructed. The buses were never constructed. No evidence has been adduced to show they existed. 3 As a result of those representations, the offenders obtained a financial advantage for Willowstar in each of the five counts on the indictment for amounts ranging from $297,000 to $394,000. In turn, Willowstar, through its officers, directed those payments, less a deposit, to a company of which the offender, Flack was a director, with which Grindrod was associated. Grindrod received a commission based on each of the transactions. 4 The amounts alleged in forensic accounting evidence was given in the trial by Mr John Fogarty, a Fraud Squad officer, showed that the offenders received benefits of the order of $1,544,000. The amount repaid was $512,787, which is approximately 30%. ... 11 The offenders falsely represented to five financial institutions that five buses with particular engine numbers and particular chassis and engine numbers existed. At no stage did the buses exist and the details of the buses as stated by the offenders to the financial institutions were fictional. The offenders knew the falsity of both those matters." 28No challenge is made in this Court to any of the directions given to the jury. Nor is it contended that the verdicts were unreasonable or not supported by the evidence.

Submissions in this Court 29Mr Coyne, counsel for the Applicant, submitted that, whilst it was not necessary to establish that it was the person deceived who suffered the loss, there must be a causal connection between the deception and the obtaining of the financial advantage. It was an essential ingredient of an offence under s.178BA that the cause of the payment was the deception used: R v Ho; R v Szeto . 30In the circumstances of this case, Mr Coyne submitted that, without evidence from the persons responsible for the approval of the loans, the Crown could not show that the cause of the various loan approvals were the deceptions of the Applicant. It was further submitted that, notwithstanding the legal identity of the entity responsible for the loan, there was still a requirement in this case for a person to have been deceived. 31The Crown submitted that inferences were plainly open in the circumstances of this case that the deceptive statements concerning the existence of the buses were relied upon for the purpose of extending the relevant loan facilities to the Applicant. In addition, the Crown submitted that there was direct evidence from officers of each of the four lending entities with respect to the significance of the deceptive statements to the giving of the loans. 32The Crown submitted that it was not the case that this element of the charges could only be established by calling evidence from the persons who played an active part in the approval of the relevant loans.

Decision 33The sole ground of appeal falls to be determined upon the basis that it raises a question of law alone. In R v Serratore [1999] NSWCCA 377; 48 NSWLR 101, Dunford J (Greg James J agreeing) said at 130 [127]: "In determining whether there is a case to answer, the question to be decided is not whether on the evidence as it stands, the accused ought to be convicted, but whether on the evidence as it stands, he could lawfully be convicted: May v O'Sullivan (1995) 92 CLR 654 at 658. In considering such an application, the judge does not consider the probative value of the evidence as a whole, but only that evidence which, if believed and uncontradicted, could be accepted as proof of the Crown case: R v Towers (1984) 14 A Crim R 12 at 14, Doney v The Queen (1990) 171 CLR 207 at 214-215, R v R (1989) 18 NSWLR 74; and in a case of circumstantial evidence, such as the present, a finding of no case to answer is not open if there is evidence in support of the Crown case upon which the accused can be convicted, even though a reasonable hypothesis consistent with innocence can be postulated: R v JMR (1991) 39 A Crim R 39 at 44." 34To make good this ground, it is necessary for the Applicant to establish that there was no case to answer in accordance with these principles. 35Section 178BA Crimes Act 1900 was repealed upon the commencement of the Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2009 , which commenced on 22 February 2010. The successor offence to s.178BA is now contained in s.192E Crimes Act 1900 . 36On a prosecution for an alleged offence under s.178BA Crimes Act 1900 , it is not necessary for the Crown to establish that it was the person deceived who suffered the relevant loss: R v Ho; R v Szeto at 147. 37What must be established, however, is a causal connection between the deception used and the financial advantage obtained. The deception must have been the means whereby the financial advantage was obtained, or the effective cause of the financial advantage being obtained. It is an essential ingredient of an offence under s.178BA that the cause of the giving of the financial advantage was the deception used by the accused person: R v Stanhope (NSWCCA, unreported, 10 September 1987, pages 6-8); R v Clarkson [1987] VR 962 at 980; R v Ho; R v Szeto at 147. 38The question whether the deception was an operative cause of the obtaining of financial advantage, falls to be answered as a question of fact by the members of the jury applying their commonsense: R v King [1987] 1 QB 547 at 553. 39As the Crown submitted in this Court, commonsense and inferences had a role to play in this case. The loan documents required identification details of the "goods involved" . This was by way of engine and VIN numbers. There needed to be a certificate of currency for the "goods" . There was also a requirement for the "goods" to be insured. There were in fact insurance policies taken out for each of the five "goods" , separately identified by individual VIN and engine numbers. The evidence revealed that these policies were for existing property (T767). There was a requirement, for at least some of the loans, that there be an acknowledgement that the "goods" had been inspected by the borrower. 40The applications to the financial institutions in each case contained considerable details which could be inferred as identifying a particular bus which was in existence, including insurance coverage for an identified bus. The representations contained in the documentation supporting the applications were available to establish that those representations were deceptive, and were an operating factor on the conduct of the financial institutions in approving the loans. This inference was available with respect to each of the five counts. It was not necessary that the actual person who processed the loan give evidence. 41Support for this approach may be found in the decision of the High Court of Australia in National Commercial Banking Corporation of Australia Limited v Batty [1986] HCA 21; 160 CLR 251, a decision relied upon by the Crown at trial. In that case, Brennan J said at 273: "Yeldham J found that Davis had been guilty of fraud, though there was no direct evidence that a bank officer had been induced to collect the cheques or pay money in reliance on any representation that Davis had made. The absence of such evidence was not necessarily a bar to recovery, however, for inducement may be inferred from the doing of something after the making of a representation calculated to induce the doing of that thing: Smith v Chadwick (1884) 9 App Cas 187 at 196. Whether inducement should be inferred is a question of fact dependent on all the circumstances, not a question of law." 42Brennan J observed, at 273, that such an inference may be drawn in criminal as well as civil cases, as the House of Lords had held in R v Lambie [1982] AC 449. 43Again, in National Commercial Banking Corporation of Australia Limited v Batty , Gibbs CJ (Wilson J agreeing) said at 258: "In the present case it is right to conclude that loss was caused to the bank by the wrongful act of Mr Davis. By lodging the cheques for deposit, Davis impliedly represented to the bank that he was entitled to do so - in other words, his conduct implied that he either was the owner of the cheques or was acting with the authority of the owner: cf R v Lambie [1982] AC 449 at 460. It was, of course, necessary for the bank to prove that it had been induced by the implied representation to act to its detriment by collecting the proceeds of the cheques. The bank called no evidence that it relied upon the representation but it may be inferred that it did so. In Smith v Chadwick (1884) 9 App Cas 187 at 196, Lord Blackburn said: 'I do not think it is necessary, in order to prove this, that the plaintiff always should be called as a witness to swear that he acted upon the inducement. At the time when Pasley v Freeman [2 Sm LC 66, 73, 86 (8th ed)] was decided, and for many years afterwards, he could not be so called. I think that if it is proved that the defendants with a view to induce the plaintiff to enter into a contract made a statement to the plaintiff of such a nature as would be likely to induce a person to enter into a contract, and it is proved that the plaintiff did enter into the contract, it is a fair inference of fact that he was induced to do so by the statement.' It was a fair inference of fact in the present case that the bank collected the proceeds of the cheques because it was induced to believe that Davis was entitled to deposit them. If it had known that Davis had no authority to deposit the cheques it is inconceivable that it would have collected the proceeds: cf R v Lambie ." 44In the leading judgment in R v Lambie , Lord Roskill, at 460, referred to difficulties if convictions could: "... only be obtained if the prosecution are able in each case to call the person on whom the fraud was immediately perpetrated to say that he or she positively remembered the particular transaction and, had the truth been known, would never have entered into that supposedly well-remembered transaction, the guilty would often escape conviction. In some cases, of course, it may be possible to adduce such evidence if the particular transaction is well remembered. But where as in the present case no one could reasonably be expected to remember a particular transaction in detail, and the inference of inducement may well be in all the circumstances quite irresistible, I see no reason in principle why it should not be left to the jury to decide, on the evidence in the case as a whole, whether that inference is in truth irresistible as to my mind it is in the present case." 45Mr Coyne sought unsuccessfully in this Court to distinguish these cases on the facts. To my mind, the principles expressed in these decisions have application to the present case. 46The question for the trial Judge, at the end of the Crown case, was whether there was, as a matter of law, a case to answer on each of the counts contained in the indictment. The Crown case involved a combination of inferences to be drawn from the documentary evidence, and the direct evidence of the officers of each of the relevant financial institutions. 47Applying the principles referred to at [33] above, there was a clear case to answer on each of the five counts. His Honour was correct to reject the no-case application and to decline to direct verdicts of acquittal with respect to each count against the Applicant.

Conclusion 48The sole ground of appeal relied upon by the Applicant is, in my view, without merit. As the ground advanced lacks merit, the application for an extension of time to appeal should be refused. 49The order which I propose is that an extension of time to appeal against conviction should be refused.

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