Ilich v The Queen

Ilich v The Queen - [1987] HCA 1 - HCA 1984 case summary — Zoe

[24]

It has been quaintly said, "that the reason why money can not be followed is, because it has no ear-mark:" but this is not true. The true reason is, upon account of the currency of it: it can not be recovered after it has passed in currency. So, in case of money stolen, the true owner can not recover it, after it has been paid away fairly and honestly upon a valuable and bona fide consideration: but before money has passed in currency, an action may be brought for the money itself. More recently, in Banque Belge v. Hambrouck [10] , Scrutton L.J. said: At common law, a man who had no title himself could give no title to another. Nemo potest dare quod non habet. To this there was an exception in the case of negotiable chattels or securities, the first of which to be recognized were money and bank notes: Miller v. Race; and if these were received in good faith and for valuable consideration, the transferee got property though the transferor had none. But both good faith and valuable consideration were necessary Different considerations apply when the coins or notes are not dealt with as currency, but as articles having a special value because, e.g., of their rarity (see Moss v. Hancock [11] ), but we are not concerned here with that question or with the rules regarding tracing. In the present case, although the applicant could have transferred the property in the money to a third person who took it as currency, it does not follow that he himself got title to the amount which he received in excess of the $1,176 which Mr. Brighton intended to pay him, i.e. to the $530 for which he did not give valuable consideration. Mr. Brighton did not, on any version of the facts, pay the applicant $1,706) (or $1,776) mistakenly thinking that the applicant was entitled to that amount; he made no mistake as to the amount of money which he was bound to pay to the applicant but (on the applicant's version of events) he was mistaken as to the quantity of money which he in fact paid over. Mr. Brighton had no intention to transfer to the applicant the property in any amount greater than $1,176 and in my opinion he did not do so. 1. [1758] 1 Burr. 452, at pp. 457-458 [97 E.R. 398, at p. 401]. 2. [1921] 1 K.B. 321, at p. 329. 3. [1899] 2 Q.B. 111.

[25]

It is not material that Mr. Brighton could not have sued for conversion of the $530 which, although it had originally been in a separate envelope, could not possibly be separately identified (see Orton v. Butler [12] ; Foster v. Green [13] ; Sinclair v. Brougham [14] ) although he could have recovered the money in an action for money had and received as having been paid under a fundamental mistake of fact: see Morgan v. Ashcroft [15] ; Porter v. Latec Finance (Qld.) Pty. Ltd. [16] . The rules relating to conversion in tort do not all apply to the criminal law (see Rogers v. Arnott [17] and Reg. v. Hansford [18] ) and particularly not to the Criminal Code. It was argued that in a case of this kind, where the accused has allegedly fraudulently taken or converted to his own use money which was never intended to be given to him, the accused cannot be convicted of stealing because it is not possible to prove which particular notes were stolen - in the present case it would not be possible to identify the very notes which exceeded the amount of $1,176. Such an argument would, if accepted, allow dishonesty to escape punishment because of a technicality, but I agree with the view of Professor Rupert Cross that a requirement that there can be no conviction of larceny unless the prosecutor is able to produce the very note alleged to have been stolen "is not necessitated by any doctrine of common sense, criminal law or procedure": see [1958] Crim. L.R. 529, at p. 532. A similar question appeared to create no difficulty in Reg. v. Gilks [9] , a case of dishonest appropriation of money which, on this aspect of the matter, is consistent with other decisions on the dishonest appropriation of goods: R. v. Tideswell [10] ; Russell v. Smith [11] ; see also Pilgram v. Rice-Smith [12] . Further, although the applicant would, on his version of events, not have been liable to be convicted for larceny as a bailee (see Slattery v. The King [13] and R. v. Ward [14] ), the question of bailment simply does not arise in the present case. Since stealing under s. 371 may be constituted by a conversion as well as by a taking, the difficulties created by such cases as, on the one hand, Reg. v. Ashwell [15] and, on the other, Moynes v. Coopper [16] and Reg. v. Potisk [17] are not relevant to a consideration of the effect of the Code.

[70]

In the circumstances of this case this aspect of negotiability is of less importance - since Brighton had title in the money - than the rule that when money passes into currency property goes with possession. Whether money only passes in currency when it is negotiated, i.e., when it is used for payment bona fide and for value, or whether money may pass in currency in other circumstances when it is not delivered in specie, is something which it is unnecessary to examine here. Definitions of currency tend to speak in terms of it being a medium of exchange, but this nevertheless imports the notion of payment: see Moss v. Hancock [43] ; Mann, The Legal Aspect of Money, 4th ed. (1982), p. 8. Upon any view money passes into currency when it is negotiated and in this case, upon the applicant's version of the facts, the transaction in which the money changed hands was both bona fide and for value. He was unaware of the overpayment when it was made and consequently there was no reason to doubt the bona fide character of the transaction. Thus the notes or coins ceased to be the subject of specific title as chattels and passed as currency, that is to say, passed "from hand to hand in point, not merely of possession, but of property": Sinclair v. Brougham [44] , per Viscount Haldane L.C. We do not think that it is possible to say that only the correct amount was paid for valuable consideration and that the amount of the overpayment passed hands for no consideration and hence as mere chattels rather than currency. Apart from the insuperable difficulty of identifying the notes or coins which constituted the overpayment, it is the transaction itself which characterizes the payment. The transaction between the applicant and Brighton was bona fide and for value. The payment, which was part of that transaction, was also of that character. It is not possible, in our view, to apportion the consideration to some of the chattels comprising the notes or coins transferred and not to others.

[98]

A person cannot be guilty of stealing property which he owns and in which no other person has a proprietary right that is infringed by his dealing with it. That is as true of stealing under the Code as it is of larceny at common law. But, to establish larceny at common law, it was necessary to prove, inter alia, that the thing said to have been stolen was taken from the possession of the prosecutor. There had to be a trespass: Reg. v. Ashwell [56] . Consequently, as Griffith C.J. pointed out in Slattery v. The King [57] , "a person entrusted with property to hold for another, who converted that property to his own use, could not be charged with larceny, because he did not wrongfully take it away, having had it lawfully in his possession". And thus a bailee could not be guilty of larceny at common law of the property bailed so long as the bailment continued: R. v. Ward [58] . But the Code provisions are broader than the common law of larceny, notably in two respects: first, the Code imposes criminal liability on a person who, having acquired possession of property lawfully, fraudulently converts it; and secondly, the Code creates a number of offences relating to the misappropriation of money or other property received in such circumstances that the person receiving it is not entitled to it absolutely: see ss. 373, 374, 375. When Sir Samuel Griffith drafted the provisions now enacted as ss. 370 and 371 in Western Australia (ss. 390 and 391 in Queensland) he embraced in the definition of stealing "all cases of fraudulent conversion of movable property", following, for the most part, the proposals contained in the Draft Code prepared by the Commissioners of 1878 in England: see his covering letter of 29 October 1897, pp. xii and xiii; Brisbane, 1897. This was a radical innovation for, as he explained judicially in Slattery [59] , the general rule at common law was that the "fraudulent misappropriation of property was not a criminal offence if the possession of it was originally honestly obtained". Thus, in Kennison v. Daire [60] , King C.J. put the question in this way:

[105]

where the dominus has voluntarily parted with the possession, intending to part with the property in the chattel, it has never yet been held that larceny was committed, whatever fraud may have been used to induce him to do so, nor whatever may be the mistake he committed; because in such case the dominus is not invitus. So also where the possession has been parted with in such way as to give the bailee a special property: It is not necessary that the property should pass, the intent it should is enough: see Rex v. Coleman [East's Pleas of the Crown (1803) Vol. II, p. 672]. That view was rejected by the majority. Seven of the judges including Blackburn J. said [69] : In the present case the finding of the jury, that the prisoner, at the moment of taking the money, had the animus furandi and was aware of the mistake, puts an end to all objection arising from the fact that the clerk meant to part with the possession of the money. In Reg. v. Potisk [70] , Bray C.J. pointed out that Middleton had not been adopted in Australia and preferred the dissenting views which followed what Blackburn J. had said in Prince . And he referred to R. v. Goodrick [71] , where Nicholls C.J., to whom Middleton was cited, said: I am unable to say that there is any case reported or any principle laid down by which a man can be held guilty of larceny of goods which have been willingly and intentionally transferred to him without any fraud on his part by the owner of those goods, the owner knowing what he is doing and what the goods are and to whom he is delivering them. In Kennison v. Daire [72] , King C.J., with whose judgment this Court expressed substantial agreement, followed the approach of Bray C.J. in Potisk . And so the weight of Australian authority supports the minority view in Middleton as stating the common law in this country. At common law the intention of the owner was treated as critical to proof of the trespass, but the common law inquiry as to whether the dominus is invitus to the taking has no relevance to stealing by conversion under the Code. However, when an owner of movable property delivers possession of it to another with an intention that ownership should be transferred to the other - the intention which Blackburn J. in Prince and the minority in Middleton regarded as inconsistent with larceny - the delivery with that intention is ordinarily effective to transfer ownership of the property and the transfer of ownership precludes liability for fraudulent conversion. For the purposes of the crime of stealing by conversion under the Code, the inquiry into the intention of the person who is said to be the owner of the property is undertaken in order to determine whether ownership of the property has passed to the person charged, not to determine whether the property was taken invito domino. 1. (1873) L.R. 2 C.C.R. 38. 2. (1873 L.R. 2 C.C.R., at pp. 48, 55, 62, 70. 3. (1873) L.R. 2 C.C.R., at pp. 54-55. 4. (1873) L.R. 2 C.C.R., at p. 55. 5. (1873) L.R. 2 C.C.R., at p. 43. 6. (1973) 6 S.A.S.R. 389. 7. (1922) 18 Tas. L.R. 36, at p. 37. 8. (1985) 38 S.A.S.R., at p. 407.

[111]

It is true that in general the test of intention in the formation of contracts and the transfer of property is objective; that is, intention is to be ascertained from what the parties said or did. But proof of mistake affirmatively excludes intention. It is, however, essential that the mistake relied on should be of such a nature that it can be properly described as a mistake in respect of the underlying assumption of the contract or transaction or as being fundamental or basic. To determine whether a mistake is fundamental, one must properly identify the transaction and the relationship of the mistake to it: Porter v. Latec Finance (Qld.) Pty. Ltd. [82] . When the relevant transaction is the transfer of possession or ownership of property, a fundamental mistake must relate to the knowledge of the owner of the property as to what he is doing, what the property is, and to whom he is transferring possession or ownership (to adapt the test applied by Nicholls C.J. in Goodrick [83] ). Of course, minds may differ on the character to be attributed to a particular mistake. Take Ashwell [84] , for example. There the prosecutor, intending to lend Ashwell a shilling, gave him a sovereign by mistake. Ashwell thought it was a shilling but when he later discovered it to be a sovereign, he kept it for himself. The present relevance of the case is in the opinion of the judges that Ashwell fraudulently converted the coin, presumably on the ground stated by Cave J. [85] "as there was a mistake as to the identity of the coin no property passed". But it is at least arguable that the relevant transaction was not the loan of a shilling but the delivery of the coin the value but not the identity of which was mistaken. In Potisk [86] , Bray C.J. observed: though there was no mistake as to the identity of the particular metal disc handed over, there was a mistake about its value and perhaps about its kind. A sovereign may be different in kind from a shilling. I think that some of the Judges thought it was. On the applicant's version of what happened, there was no fundamental mistake in this case. Brighton simply handed notes to the applicant in payment of what he owed. There was no evidence of Brighton being mistaken as to what he was doing, or what he was handing to the applicant or who the applicant was. The only mistake was as to the number or value of the notes needed to discharge the debt owed to the applicant. That was not a fundamental mistake: it did not vitiate Brighton's intention that the applicant should have as his own the notes which Brighton put on the table in payment. When a debtor pays out money to discharge his debt, he has but one intention with respect to the money paid, namely, to transfer ownership in discharge of the debt. It is artificial to ascribe to a debtor an intention to tranfer ownership of some only of the notes and coins he pays. In any event, when there is a commingling of the notes and coins in an overpayment, none is identifiable as a note or coin delivered in overpayment, and assuming all else in favour of the prosecution none could be identified as a thing which has been stolen: cf. Lacis v. Cashmarts [87] . 1. (1964) 111 C.L.R. 177, at p. 183. 2. [1934] A.C. 455, at p. 463. 3. (1964) 111 C.L.R., at p. 187. 4. (1922) 18 Tas. S.R. 36. 5. (1885) 16 Q.B.D. 190. 6. (1885) 16 Q.B.D., at p. 201. 7. (1973) 6 S.A.S.R., at p. 395. 8. [1969] 2 Q.B. 400, at p. 411.

[118]

On this version of what happened, the three bundles were treated by both Mr. Brighton and the applicant as being simply the components of the one collection of notes of which Mr. Brighton delivered possession to the applicant with the plain intention of passing the property in all of them to the applicant in payment of the outstanding debt. It is impossible to identify any particular notes in the applicant's possession as constituting the overpayment. It could scarcely be (and has not been) suggested that the property in none of the notes passed with the result that the applicant was bound to return all of them to Mr. Brighton. From the applicant's point of view, what was involved at that stage was the honest receipt of currency which was delivered and received as representing, in its entirety, payment of an outstanding debt. That being so, the conclusion seems to me to be inevitable that, on the applicant's account, the legal property in all of the notes passed to him by and on delivery and receipt. In that regard, I would note my general agreement with what is said by Wilson and Dawson JJ. in their judgment in the present case and by Bray C.J., with whom Mitchell J. agreed, in his judgment in Reg. v. Potisk [1] . True it is that Mr. Brighton could have sued the applicant at law in an action for money had and received for the amount of the overpayment and that equitable relief may have been available in the form of a declaration that the applicant was a trustee of part of the actual money which he had received. The basis of such an action for money had and received or such a declaration of trust (if it were available) would not, however, have been that the legal property in particular notes representing the amount of the overpayment had not passed. To the contrary, the basis of such a legal action or declaration of trust would have been that the applicant had actually obtained the legal property in all of the moneys, including the amount of the overpayment, as a result of a mistake of fact. In summary, the effect of the applicant's account of what occurred was that, by reason of a mistake of fact which was not induced by the applicant, Mr. Brighton paid and passed the property in a larger sum of money than he and the applicant had intended with the legal consequence that the applicant became liable at law to pay to Mr. Brighton an amount equal to the overpayment.

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