Loone and Loone v Tasmania [2008] TASSC 7

Loone and Loone v Tasmania [2008] TASSC 7 - TASSC 2008 case summary — Zoe

[10]

1 The appellants are brothers. Mr Peter Loone is the younger of the two. They were both employed by Holymans Limited, a transport company. In 1999 Patrick Corporation purchased the Holyman group of companies, including one which was subsequently renamed Patrick Tasmania.

2 The appellants were employees of Holymans Limited at the time of the takeover. After the takeover they were both employed by Patrick Tasmania, Mr Peter Loone as the company's general manager and Mr Malcolm Loone as its national purchasing officer.

3 The appellants were arraigned upon an indictment that charged them both with 12 counts of dishonestly obtaining a financial advantage. The complainant on count 1 was Holyman Limited. The pleading alleged that the crime was committed on 28 September 1999. The complainant on the remaining eleven counts was "Patrick's Tasmania Ltd" [sic]. The indictment alleged that these eleven crimes were committed on different dates between 15 February 2001 and 14 April 2003. Eleven of the counts alleged that the dishonestly acquired financial advantage was related to a boat called "Sobraon". This boat belonged to Mr Peter Loone. Count 5 alleged that the financial advantage related to a boat owned by Mr Steven Wallace, another employee of Patrick Tasmania. Counts 1 to 4 inclusive, and 6 and 7, concerned work done to, and materials for, Sobraon, and count 5 related to work done and material supplied to Mr Wallace's boat. Counts 8 to 12 inclusive concerned fuel alleged to have been supplied to Sobraon.

4 Each count pleaded that each appellant "by means of a deception, namely by invoicing Patrick's Tasmania Ltd for ..." and in each case there follows a few words describing the work done and materials supplied or fuel delivered, and the value of the financial advantage alleged to have been acquired.

5 The nub of the Crown case was that the work done, the materials supplied, and the fuel delivered, were all paid for by Patrick Tasmania but should have been paid for by Mr Peter Loone.

6 At trial, neither appellant disputed that Patrick Tasmania made the payments, but each denied any dishonesty. Put shortly, the defence case was that Sobraon was used for the purpose of entertaining staff and clients of Patrick Tasmania, and Mr Peter Loone made no charge for such use. From time to time he "arranged" for Patrick Tasmania to pay for work done and fuel and materials supplied as a "contra" for hire charged. It was claimed that it was within his general authority as manager to do that. The defence with respect to count 5 was different, but as there was no finding of guilt on that count there is no need to refer to the facts relevant to it.

[16]

13 Crown counsel led evidence from Mr Criggie with respect to the above exhibits and tendered them. She did not then proceed to lead evidence from Mr Criggie as to why he had raised the credits and issued fresh invoices for the same amount, omitting therefrom all reference to anything that would indicate that work had been done on a boat engine or engines. Instead, Crown counsel moved straight on to lead evidence with respect to count 4 and then count 6. I regret setting out all this detail, but it is necessary to do so otherwise a short passage in Mr Criggie's evidence to which I wish to refer will not be understood.

14 Count 4 concerns another invoice (P10). It is dated 25 June 2002. The letterhead belongs to Cummins and the invoice is addressed to Patrick Tasmania. It comprises three pages and is for a total of $38,531.53. It commences, "As quoted your order No 13576" and there follows a detailed description of repair work done on, and parts supplied to, a fork lift truck belonging to Patrick Tasmania. Amongst the detail there appears an entry, "3349230 - Vibration isolat (4), $1,492.20". In his evidence, Mr Criggie said that was a reference to "rubber mounts that's under a marine engine to stop it vibrating through the boat". Also listed in the invoice is "7406471 - supply controls (1) $8,400". Mr Criggie's unchallenged evidence was that that entry was a reference to supply controls for a boat. He said that he ordered the controls at the request of Mr Malcolm Loone who rang him from a boat show in Queensland and asked him to order and install the controls in Mr Peter Loone's boat. He said that in the course of the conversation, Mr Malcolm Loone told him that he was at the boat show with Mr Peter Loone and some others. Mr Criggie's evidence was that as a result of Mr Malcolm Loone's phone call, he ordered the controls "and some additional controls".

15 The additional controls are the subject of count 6 and invoice P11. This invoice is dated 11 March 2003. Again it appears on a Cummins letterhead, although the format of the invoice is a redesign of earlier invoices. It is addressed to Patrick Tasmania. It reads:

[36]

35 The indictment, upon which the jury returned its verdicts, pleaded the deception as "Invoicing Patrick's Tasmania Ltd for [maintenance of the vessel Sobraon - count 3], [labour and parts for the vessel Sobraon - count 4] and [for an electronic marine synchroniser for the vessel Sobraon - count 6]". Thus, before the jury could convict either appellant on counts 3, 4 and 6, it had to be satisfied beyond reasonable doubt that Mr Malcolm Loone invoiced Patrick Tasmania.

36 During the course of submissions on the hearing of the appeal it became apparent that errors of law attended the summing up. Counsel for the respondent conceded that this was so. As the notice of appeal relied on the single "unsafe or unsatisfactory" ground, it was decided to adjourn the further hearing to give counsel for the appellants an opportunity to consider whether he wanted to amend the notice of appeal to plead error of law. Upon the resumption of the hearing of the appeal, counsel for the appellants declined to make any application. He submitted that Gipp v R (1998) 194 CLR 106 was authority for the proposition that verdicts were unsafe or unsatisfactory if they were tainted by errors of law that resulted in a miscarriage of justice. I doubt whether Gipp is authority for that proposition, but as events have turned out it is unnecessary to go into that question. However, in case this notion gathers momentum and in result, appellate pleading is, in all cases, reduced to the single ground of unsafe or unsatisfactory, it is useful to look at M v R [1994] HCA 63; (1994) 181 CLR 487, confirmed by the majority in Jones v R (1997) 191 CLR 430, and at a very helpful decision of the Full Court of the Federal Court in Tran v R [2000] FCA 1888; (2000) 118 A Crim R 218. For my part, I should add that it is important to remember that an appellate conclusion that a verdict is unsafe or unsatisfactory does not necessarily result in an acquittal. The Code, s404, clearly gives the Court a power to order a new trial regardless of the ground that established the miscarriage of justice. Naturally if the miscarriage is of the kind referred to in M v R, the only proper outcome is an acquittal, but if an error of law causes a verdict to be unsafe or unsatisfactory and a miscarriage of justice, then a retrial is usually the appropriate order.

[63]

47 "The fundamental obligation of the judge in a criminal trial is to explain the relevant law to the jury, and in particular to explain, by reference to the relevant evidence, the elements of the offence"; per Kirby J in Crampton v R (2000) 206 CLR 161 at 192, and cases cited there by his Honour. In my respectful view, this obligation is not discharged by merely handing the jury a written memorandum with the advice that it would not be explained or elaborated upon, but if on a later reading (which may or may not have happened in the case of every juror) questions asked would be answered.

48 The memorandum is confusing. It was never part of the Crown case that either appellant instigated or carried out the deception, as asserted in par11 of the written memorandum. Further, it was no part of the Crown case that each appellant "aided each other to different degrees in the carrying out of that deception". It is unclear to which count and to what conduct her Honour was referring when she wrote that in par12 of the memorandum. With respect to the alleged secondary liability of Mr Peter Loone, the written memorandum does not make it clear that in the case of counts 2, 3, 4 and 6, the jury had to first be satisfied to the requisite degree, that Mr Malcolm Loone engaged in the pleaded deception dishonestly, and that it caused Mr Peter Loone to acquire a financial advantage, before turning to consider whether knowing the intended acts that constituted the commission of the crime, Mr Peter Loone encouraged his brother to do those acts with a dishonest state of mind. It was erroneous to write that "Peter Loone and Malcolm Loone aided each other to different degrees in the carrying out of that deception" as it is not possible for a principal offender to aid himself to carry out an element in a crime. Elsewhere in the memorandum, the learned trial judge set out the terms of the Code, s3, including the part that defines instigation. However, there was no need to set out the section insofar as it referred to aiding and abetting, because aiding and abetting was not in issue on this trial. To have done this, and to have referred to aiding in her written memorandum, amounted to a misdirection.

49 It appears that her Honour equated evidence at the trial that indicated a dishonest intention by one or both appellants as parts of the deception, and in her summing up, this led to the fundamental failure to clearly identify the words or conduct as to fact or law alleged to have been the deception. Errors such as those just referred to are likely to result in an order for a retrial, regardless of the ground relied upon to identify it. However, as I have mentioned more than once, in the case of each count in respect of which there was a finding of guilt the indictment pleaded that the conduct constituting the deception was invoicing Patrick Tasmania. Further, in the written memorandum given to the jury the learned trial judge wrote:

[82]

"Nevertheless, criminal proceedings could not retain their adversarial nature if it were the duty of trial judges and courts of criminal appeal to take every step that they thought was appropriate to protect the accused's interests at the trial or on appeal. It is one thing to say that, when all the evidence is in, a trial judge has a duty to direct the jury that they must consider a matter that the accused has not raised in his or her defence. It is not surprising that, in furtherance of the requirement that there should be a trial according to law, appellate courts modified the adversary system to impose this duty on trial judges. The trial judge has heard the evidence. It therefore imposes no great burden on the judge to require him or her to direct the jury on all 'defences' that are legally open on the evidence.

But it is quite a different matter to say that an appellate court has a duty to examine the whole record and determine whether that record contains error requiring the quashing of the accused's conviction notwithstanding that the appellant has not relied on an issue or on evidence. Courts of criminal appeal would no longer be courts of appeal; they would be tribunals for the judicial review of criminal convictions. Their role would cease to be that of an appellate court deciding issues selected by the Crown and the accused. They would necessarily become active parties in the proceedings; the members of an appellate court would become judicial ombudsmen whose function was to investigate the records of criminal trials to determine whether convictions should be set aside because of some factual or legal error on the part of the trial judge whether or not the appellant had raised the error. Inevitably, the investigatory function of the 'court' would break down the doctrine of separation of powers and result in appellate courts becoming part of the executive branch of the State, as they effectively are in many jurisdictions that reject the adversary system of justice.

Such a change in the nature of criminal proceedings in this country would also have consequences in this Court whose jurisdiction to hear appeals is given by s 73 of the Constitution. The appellate jurisdiction of this Court is premised on two basic propositions. First, an appeal to this Court is an appeal in the strict sense and not an appeal by way of rehearing (Victorian Stevedoring and General Contracting Co Pty Ltd and Meakes v Dignan [1931] HCA 34; (1931) 46 CLR 73; Mickelberg v The Queen [1989] HCA 35; (1989) 167 CLR 259). That proposition has the consequence that the Court cannot admit fresh evidence on a civil (New Lambton Land and Coal Co Ltd v London Bank of Australia Ltd and Others [1904] HCA 23; (1904) 1 CLR 524; Ronald v Harper [1910] HCA 43; (1910) 11 CLR 63; Grosglik v Grant [1947] HCA 1; (1947) 74 CLR 355; Crouch v Hudson [1970] HCA 25; (1970) 44 ALJR 312) or criminal (Davies and Cody v The King [1937] HCA 27; (1937) 57 CLR 170 at 172; Mickelberg [1989] HCA 35; (1989) 167 CLR 259) appeal to the Court. If this Court decided an appeal on a ground that was not before the court from whose order the appeal is brought, the appeal would be by way of rehearing and this Court would be exercising original not true appellate jurisdiction (Werribee Council v Kerr [1928] HCA 41; (1928) 42 CLR 1 at 20 per Isaacs J; Davies and Cody [1937] HCA 27; (1937) 57 CLR 170 at 172). Appellate jurisdiction is conferred on this Court to determine only whether the judgment, the subject of the appeal, was correct on the materials before the court which gave that judgment (Ponnamma v Arumogam [1905] AC 383 at 388; Craig v The King [1933] HCA 41; (1933) 49 CLR 429 at 444; Davies and Cody [1937] HCA 27; (1937) 57 CLR 170 at 172; Mickelberg [1989] HCA 35; (1989) 167 CLR 259 at 267-268, 274, 298). Second, this Court can only make the orders that could have been made by the court from whom the appeal is brought."

[89]

" ... two or more pretences can ... be laid in an indictment charging an attempt and it would be enough to sustain a conviction if one such pretence made with the necessary intent be proved. So in this case the appellant would be rightly convicted if the jury found each statement relied upon to be false and each made with the necessary intent or if they found one or other of them to have been false and to have been made with the necessary intent. But the question is, would it be enough to sustain a conviction that some but not all of the jury found one and only one of the statements to have been false and made with the necessary intent and the remainder of the jury found the other statement relied upon, and only that statement, to have been false and to have been made with the necessary intent.

Upon that question there is said to be no direct authority but the answer to it is, I think, clear. The cases say that it is enough to sustain a conviction if the making of one false pretence and for the purposes of the completed offence reliance upon it be 'proved' and that, I think, in the case of a trial by jury can only mean proved to the satisfaction of the jury. If the jury at the end of the day do not join in finding a particular false pretence to have been made then the making of that false pretence, as it seems to me, has not been 'proved'. The making of the false pretence is an element of the offence charged and proof of that element has not been achieved unless all members of the jury or, in the case of a majority verdict, ten of the jury join in saying so. It is different, of course, when the fact to be proved is not an element of the offence charged. So, to take an illustration from a recent case (Attorney-General's Reference No 4 of 1980 [1981] 2 All ER 617) if the element of the offence of manslaughter is that the accused caused the death of the deceased that element is 'proved' if the jury are all agreed that he caused the death but are not agreed upon or are unable to decide upon by which of two acts he did so."

[93]

"That leaves the prosecutor's contention, mentioned earlier in these reasons, that the prosecution case was run upon the basis that the matters alleged in the particulars established a course of conduct by which the jury could be satisfied that each appellant had engaged in deceit or fraudulent means and that the particulars were consequently 'akin to the overt acts of a conspiracy, some of which may and some of which may not be established by the evidence'. In a conspiracy case the essential ingredient is the conspiracy to defraud and overt acts are particularised only for the purpose of identifying the acts upon which the prosecutor relies to invite the jury to infer that there was a dishonest agreement and that a particular defendant was party to it: Hancock [1996] 2 Cr App R 554 at 559 - 560 per Stuart-Smith LJ, speaking for the Court of Appeal; Walsh at [58] per Phillips and Buchanan JJA. However, no conspiracy was charged in this case and, for the reasons I have given, the prosecutor was obliged to prove one or other of the particular deceitful or fraudulent means alleged by the State in each case (see Infirri at 134; Walsh at [57]; KBT at 423). In any event, I would not be prepared to accept that the State ran its case in the manner suggested. Certainly, this was not the way in which the case was left to the jury by the trial Judge. He made it plain (without objection) that the State's case was based on a number of allegations in the alternative and that the jury could convict each appellant by different routes.

I am consequently satisfied that this is a case in which the trial Judge was required to direct the jury that in each case each of the jurors had to base his or her decision to convict on the same route or routes. Because that direction was not given, it seems to me to follow inevitably that the convictions are unsafe and should be set aside. I should add that there was, rightly, no submission on behalf of the respondent that this was a case for the application of s 30(4) of the Criminal Appeals Act 2004 (WA) (formerly the proviso to s 689(1) of the Criminal Code): see, in this respect, KBT at 424 - 425, 433 - 436."

[95]

"Now in relation to what I might call procedures for accounting the evidence of Ms Leyton who was the former Patrick's employee and Mr Davies was that if reimbursement for entertainment expenses was sought then a form needed to be completed and approved by a person's direct manager. If, for example, a hall were to be hired for a company function then it would be expected that an invoice would be presented and passed for payment. The issue in this case appears to be that at no time did Peter Loone commit any of the details of the arrangements relating to payment of boat expenses to writing. He said with hindsight he probably should have but he didn't. He said that what he did was that when there were a number of charters of the boat they'd been done and if he had an expense that needed to be paid for, for the boat, he would just have the company pay the invoice. And Peter Loone told you that he did not do anything dishonest, he didn't deceive anybody, he just continued a practice which was effectively started at Holymans and that he had authority to incur the expenditure without further approval.

...

Now the Crown says to you that the very nature of these transactions were such that they showed there was a deception and with dishonest intent because it seemed, they say, that Peter Loone was trying to hide these transactions. Peter Loone says of course, 'I didn't try and hide anything'. He says, 'I didn't alter any codes or invoices so they'd go through the system'.

And what the Crown says to you in relation to that is therefore you should ask yourselves well why were the body of certain invoices altered to remove references to marine items because there was also evidence that Holyman/Patricks didn't own a boat. So the Crown is asking you to infer that from the circumstances in which various invoices were raised and dealt with that they showed a deception was carried out and for a dishonest purpose, namely to have private boat expenses paid for by the company.

They're also asking you to infer from Peter Loone's role in the company and the fact that his signature appeared on authorisations in some part and from the fact that Lisa Leyton told you that he and his brother were the ones that authorised invoices for payment that he knew exactly what was going on, that he set it up, and that he was an active participant in this arrangement. But they are asking you to infer that from all those other facts because there is no direct evidence that Peter Loone did any of that. And as I said to you earlier where you are asked by the Crown to draw that sort of an inference in a circumstantial case as this is that inference has to be the only rational inference that can be drawn from the other facts that you've heard."

[105]

"MS BROWN (Resuming): If I can take you to 7412146, which is after the next blank page, you'll see on that there's a, in the bottom half there's a stamp. Did you have anything to do with placing that stamp on?.............No.

The document underneath that stamp is one of your invoices?.............Yes that's correct.

And in relation to this invoice, it says, well can you tell us what it says it's for?.............It's for a overhaul of an engine that's in a forklift at the, at Holyman's Patrick's. It's a V903 Cummins Engine, hence our repair.

On-. I'd ask that that be asked P-.

HER HONOUR: It's P10.

MS BROWN: 10 your Honour.

HER HONOUR: How many pages?

MS BROWN: Three.

HER HONOUR: Right. It's invoice number 7412146 will be P10, three pages.

EXHIBIT #P10 - INVOICE NO 7412146 - TAKEN IN

MS BROWN (Resuming): If I can take you to page 2 of that and the bottom entry on that page, the '3349230 vibration isolate for $1,492.20' can you tell me what that refers to?............They're rubber mounts that's under a marine engine to stop it vibrating through the boat.

And if I can take you to the third page of P10? We have '7406471 supply controls one, eight thousand four hundred'. Can you tell us anything in relation to that?..........They are controls, but they're controls for the boat.

Okay. When you say 'the boat' which boat are you referring to?...........Yeah, Peter's boat.

And how is it that-? Did you order those parts?..........Yes I did.

At whose request?..............At Malcolm's.

Was that in, did he request that in person or by way of a-?...........A telephone call.

On the telephone. Did he tell you where he was?...........Yeah, he was at Sanctuary Cove Boat Show.

Did he say who he was with? ......He was with Peter and some other people.

During that conversation, when he asked you to order these parts, was there a request to order any, anything else? ......We ordered the controls for Peter's boat and some additional controls as well, as a result of the phone call, yeah."

[111]

"The trial judge here defined intellectual impairment for the jury. It would have been better, however, if he had sought to relate each of the necessary components of the definition directly to the evidence in the case so as to emphasize to the jury that the appellant's defence, the onus lying upon him, could succeed if they were satisfied on the balance of probabilities that the appellant believed that the complainant was not intellectually impaired. In this regard the jury's attention would need to be drawn to the apparently normal conversations that the appellant had had with the complainant, that is to say her not substantially reduced capacity for communication, her mature appearance, her ability to interact with him, and the absence, so far as he was aware, of her need for support, and in particular his evidence in cross-examination about these matters that we have set out.

There are varying degrees of belief just as there are varying degrees of consciousness, cognition, awareness, sophistication, experience, maturity, gullibility and naivety. A person may understand some matters very well and others barely at all. In general, people are entitled to believe what they have no reason to suppose to be otherwise or what it would not occur to them to question. The presence or absence of a belief may be a matter of inference. In Jiminez v The Queen [1992] HCA 14; (1992) 173 CLR 572 at 575 per Mason CJ, Brennan, Deane, Dawson, Toohey and Gaudron, 585 per McHugh JJ. The majority judgment of this Court pointed out that the absence of a warning that a person was too fatigued to drive and might fall asleep, laid a foundation for an honest and reasonable belief that it was safe for an accused driver to continue driving [1992] HCA 14; (1992) 173 CLR 572 at 583-584. Here the appellant's evidence was that he thought the complainant to be fine. He denied that he had reason 'to believe, to understand, to apprehend, to comprehend, to realize that [the complainant] was an intellectually impaired person'. She conversed with him about her interests and invited him to her house. She was physically mature. She spoke normally except for a slight accent and lisp. On the appellant's version she invited sexual overtures. This evidence did lay a foundation for a submission and directions of the explicit kind to which we have referred, as to a belief of the appellant that the complainant was not intellectually impaired. Having regard to the failure of the appellant's counsel to seek any redirections at trial, we do not consider that it is necessary for us to decide whether an appeal would be allowed on a challenge to the trial judge's directions on this issue. However, on any retrial, depending upon how the evidence falls out, directions should be given which give effect to what we have said.

The ground concerning the trial judge's directions with respect to the defence of honest and reasonable mistake of fact that the complainant did have the cognitive capacity to consent is not sustainable. The directions with regard to that defence were adequate.

As we have foreshadowed, the appellant's submission that acquittals should be entered has not been made out. There was evidence upon which a properly directed jury could reach the verdicts that they did. However, they could only do this in a fair trial that met the high standards required by the law both of a prosecutor and of a trial judge presiding over it."

[112]

87 In its judgment delivered some four days earlier than that in Libke (AJS v R [2007] HCA 27; (2007) 171 A Crim R 436), the High Court rejected an appeal based on a claim that the Victorian Court of Appeal had erred in ordering a retrial rather than a verdict of acquittal. The court considered that the power of the Court of Appeal was not confined to the crime which was the subject of conviction, but extended to a crime for which the appellant could have been convicted at trial. The appellant had contended that the Court of Appeal was obliged to choose between directing a judgment and verdict of acquittal on the charge which was the subject of the appeal, or directing that a new trial of that charge be held. That argument was rejected on a number of bases which included the power to order a new trial for an offence for which the appellant could have been convicted at the first trial, with Gleeson CJ, Hayne, Heydon and Crennan JJ referring, in their joint reasons, to the earlier cases of Kelly v The King [1923] HCA 46; (1923) 32 CLR 509; Callaghan v R [1952] HCA 55; (1952) 87 CLR 115 and R v Miller [1951] VicLawRp 49; [1951] VLR 346. Here the indictment alleged the crime of dishonestly acquiring a financial advantage. The particulars represented the manner of acquisition, but both the evidence and the basis on which the case was presented was the use of a process which resulted in the generation of a false or deceptive invoice to be provided to, and paid by, the company. It is open for the case to be remitted for trial, rather than this Court substituting a verdict of acquittal.

88 In Fermanis (supra), the court substituted verdicts of acquittal but did so on an evaluation of the evidence as a whole. Here the evidence concerning the provision of parts and the cost of installation was capable of supporting verdicts of conviction (Weiss (supra)).

89 Here I would order a retrial rather than propose the substitution of the entry of a verdict of acquittal.

90 That said, it is appropriate that these counts be remitted for trial.

91 I would quash the convictions and order that the first appellant be remanded for trial with respect to counts 3, 4 and 6 and the second appellant in respect of counts 3 and 4.

File No CCA 9/2007

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Loone and Loone v Tasmania [2008] TASSC 7 (25 February 2008)

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