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[2001] WASCA 393
appellant. Appeal allowed. The convictions appealed against were set aside, and the applicant was remanded for retrial on the relevant counts: [34].
The appeal succeeded because the jury may have been led to treat the applicant's belief as relevant only if it was reasonable. The Court said that, for intent to defraud, a belief can matter even if it is unreasonable, provided it was genuinely held. The directions risked confusing that question with the separate statutory defence in s 24. Because the Court could not rule out that this confusion affected the verdicts, it set aside the convictions appealed against and ordered a retrial.
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Markarian v The Queen [2001] WASCA 393 concerned applications for leave to appeal against conviction and sentence. The Court of Criminal Appeal of Western Australia comprised Wallwork J, Steytler J and Olsson AUJ. Wallwork J and Steytler J agreed with Olsson AUJ's reasons and conclusion that the trial had miscarried [1]-[4].
No linked legislation citations have been extracted yet.
The applicant, Azad Markarian, was a practising podiatrist who practised under the business name Morley Podiatry, apparently through WA Podiatry Pty Ltd [7]. He faced 37 counts: 36 alleging that he intended to defraud by deceit or fraudulent means and thereby obtained money, contrary to s 409(1)(a) of the Criminal Code, and one alleging that he induced a person to sign a transfer, contrary to s 409(1)(e) [5], [9].
The Crown alleged that, from 1992 to late 1996, Markarian told false stories to elderly patients, friends and business associates to gain sympathy and persuade them to part with money. The judgment records Crown allegations of about $165,000 from small finance brokers and about $438,500 from patients, friends and acquaintances [8]. It also records the Crown's assertion that he was addicted to gambling and that the jury was invited to infer that much of the money was dissipated through gambling [10]. These are described as the Crown's case, not findings independently made by the appeal court.
The jury convicted Markarian on 29 counts and acquitted him on the others on 21 December 2000. He was sentenced to 10 years' imprisonment on 22 February 2001 [6]. At trial, Markarian's position, as summarised by the judge, was that he believed he could repay loans, and that he honestly believed he had title to the Rolls Royce and could deal with it, or that his business had value and equity [15], [17].
The appeal centred on how the jury was directed about intent to defraud and s 24 of the Criminal Code. The Court allowed the appeal, set aside the convictions appealed against and ordered a retrial on the relevant counts [34].
The central distinction was between the specific intent required for the charged offences and the statutory rule in s 24. Section 24, as reproduced in the judgment, concerns a person who acts under an honest and reasonable, but mistaken, belief in a state of things. The applicant argued that the judge's reference to an “honest and reasonable belief” wrongly introduced reasonableness into the distinct question of intent to defraud [19]-[26].
The judgment relied on Mathews v The Queen [2001] WASCA 264. As quoted in Markarian, Mathews explained that under s 409 the relevant concepts are “intent to defraud” and “fraudulent means”. It said a judge should identify the knowledge, belief or intent relied on and direct the jury to decide whether the accused had it, and whether the conduct was done with intent to defraud and by fraudulent means. The passage also warned that s 24 generally should not be introduced where it would add an unnecessary reasonableness question and confuse the jury [23].
Olsson AUJ accepted that the directions created the problem identified by the applicant. The judge had presented the applicant's evidence as an assertion of an “honest and reasonable belief” about repayment, title to the Rolls Royce and the value of his business, and then explained s 24 [15]-[18]. The appeal judgment concluded that this treatment risked transferring the statutory reasonableness requirement into the s 409 inquiry [25]-[27].
The Court's key statement was that whether the applicant's state of mind was reasonable was irrelevant to intent to defraud. It adopted Mathews' proposition that even an unreasonable belief, if genuinely held, could “suffice to repel a suggestion of intent to defraud” [27]. The point was not that a claimed belief must be accepted. Rather, the jury had to decide whether it was genuinely held and whether the Crown had proved the required intent, without treating the belief's reasonableness as the test.
The Court rejected the Crown's contention that the guilty verdicts necessarily meant the jury had found that Markarian lied with intent to defraud, making the directions immaterial [28]. It reasoned that an appellate court could not know what led the jury to its verdicts. Jurors might instead have decided that any belief about repayment was “patently unreasonable” and treated that as the end of the matter [29]. That would have used a legally irrelevant shortcut.
The risk was not confined to a narrow group of transactions. The Crown argued that the concern related only to some counts involving the Rolls Royce. The Court accepted there was some technical force in that argument, but concluded that the trial judge's general language could have conveyed that honest and reasonable belief was relevant to all counts [31]. It also considered that general directions about how to infer intent compounded the risk [32]. The Court therefore found the trial had miscarried [33].
The judgment presents the relevant legal framework through s 409, s 24 and Mathews. It does not set out a comprehensive history of the law or identify a change to the statutory text. Instead, it applies the distinction articulated in Mathews to the trial directions before it.
Before the appeal decision, as described in the judgment, the jury had to consider the elements of the particular s 409 offence, including intent to defraud and the relevant deceit or fraudulent means [5], [11]-[14], [22]-[23]. The judgment also reproduces s 24, which addresses an honest and reasonable mistake of fact [21]. Mathews had warned that reasonableness under s 24 could be confusing if transferred into the s 409 inquiry [23].
The decision's contribution in this case was to apply that warning to the directions actually given. It held that the reasonableness of the applicant's asserted belief was irrelevant to intent to defraud, and that the jury risked confusing the two inquiries [27]-[30]. The remedy was appellate and procedural: the appealed convictions were set aside and the applicant was remanded for retrial [34].
The judgment does not say that s 24 can never be relevant to a prosecution under s 409. The Mathews passage quoted in it says that if a s 24 direction is required in a particular case, great care is needed to avoid confusion [23]. Accordingly, the decision is grounded in the risk created by these directions and this trial context, rather than a categorical exclusion of s 24 in every such case.
At [21], the judgment reproduces s 24. In plain English, the provision addresses criminal responsibility where a person acts under an honest and reasonable mistaken belief about the circumstances. The Court's concern was that this test includes reasonableness, whereas the intent-to-defraud inquiry described in the judgment did not.
At [23], the judgment quotes Mathews' guidance that the jury should be directed to decide whether the accused had the relevant knowledge, belief or intent, and whether the conduct was done with intent to defraud and by fraudulent means. In plain English, the jury's focus should be on the accused's actual state of mind and the statutory elements, not on whether a claimed belief was objectively sensible.
At [27], Olsson AUJ said: “Whether the applicant's state of mind is reasonable or not is irrelevant to consideration of the element of intent to defraud.” This is the clearest statement of the distinction applied in the appeal. An unreasonable belief may still be relevant if it was genuinely held, because it may be inconsistent with an intent to defraud.
At [29], the Court explained that it did not know what reasoning produced the jury's verdicts. The concern was that jurors may have reasoned that the asserted belief was plainly unreasonable and stopped there. In plain English, a verdict alone could not show that the jury had applied the right test.
At [30], the Court described the possibility of that shortcut as a “very real risk”. This language explains why the Court did not regard the error as harmless. It could not exclude the possibility that the jury used the wrong standard.
At [33]-[34], the Court concluded that the trial miscarried and set aside the appealed convictions, ordering a retrial on the relevant counts. The appeal court did not determine whether Markarian committed the offences; its disposition required the relevant matters to be tried again.
The judgment is most directly relevant to a criminal trial involving an offence under s 409 where the prosecution must prove intent to defraud and the accused's defence relies on an asserted belief about the transaction. The case involved claims that money was borrowed as loans, with an asserted belief in the capacity to repay, as well as asserted beliefs about property and business assets [15], [24]-[26].
The key trigger is a jury direction that frames the accused's belief as needing to be both honest and reasonable when the jury is deciding intent to defraud. If the directions bring s 24 into that inquiry without clearly distinguishing the statutory mistake-of-fact question from the specific intent question, Markarian identifies a risk of confusion [25]-[27].
The judgment also indicates that the risk may extend beyond a count directly involving the particular asset that generated the asserted belief. Here, general wording was capable of conveying that “honest and reasonable belief” applied to all counts, and the Court did not confine the problem to Rolls Royce transactions [31]. The relevant assessment depends on the wording and context of the directions, including any general instructions about inferring intent [32].
Markarian does not establish that every reference to s 24 in a s 409 trial necessarily invalidates the trial. The Mathews passage reproduced in the judgment recognises that a s 24 direction may be required in a particular case, while warning that care must be taken to prevent reasonableness concepts from being transferred into the s 409 elements [23]. The judgment's concern was the real risk of that transfer in the directions before it.
The supplied judgment text does not provide any later decisions applying, distinguishing, following or reconsidering Markarian. It is therefore not possible, from this source alone, to describe how later courts have treated the decision.
Within Markarian itself, the Court applied Mathews v The Queen [2001] WASCA 264, referring to its discussion of the elements under s 409, the irrelevance of reasonableness to intent to defraud, and the risk of confusing the jury by introducing s 24 [23], [27], [32]. Markarian is thus presented as applying that reasoning to a concrete set of trial directions and finding a miscarriage because a legally irrelevant reasoning process could not be excluded.
The judgment's citations section lists other cases, but the reasons supplied do not discuss their principles or apply them to the issue decided. This account therefore does not infer any broader precedent relationships from that list.
The judgment does not determine whether s 24 would have been required on different facts or under different directions. It acknowledges, through the Mathews passage, that a direction under s 24 may be required in a particular case, but it does not specify the circumstances in which that would occur [23].
Nor does the decision decide whether Markarian genuinely held the beliefs he asserted. The appeal was resolved because of the risk that the jury had applied a mistaken legal approach, not because the appellate court made findings about his actual state of mind [29]-[34].
The judgment does not identify which individual counts were affected by the jury's possible reasoning, beyond concluding that the judge's general language was capable of applying the concept across the counts [31]. The retrial order was for the “relevant counts”, without further detail in the supplied reasons [34].
Finally, the supplied text does not disclose the result of any retrial or later appellate treatment. Those matters cannot be determined from this judgment alone.
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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION : MARKARIAN -v- THE QUEEN [2001] WASCA 393
Appeal against conviction and sentence - Intent to defraud - Directions to jury - Leave to amend grounds of appeal against conviction - Honest and reasonable belief - Proof of intent - Trial miscarried
Balcombe v DeSimoni [1972] HCA 9; (1972) 46 ALJR 141
Clemesha v The Queen [1978] WAR 193
Lewis v The Queen (1998) 20 WAR 1
Postiglione v The Queen [1997] HCA 26; (1997) 189 CLR 295
R v Birch (1993) 69 A Crim R 181
R v Grein [1989] WAR 178
R v Olbrich [1999] HCA 54; (1999) 199 CLR 270
R v Peters [1998] HCA 7; (1998) 96 A Crim R 250
R v Sivandran, unreported; CCA of WA; Library No 960154; 22 March 1996
R v Tait (1979) 46 FLR 386
Tan v The Queen [1979] WAR 149
Wilde v The Queen [1988] HCA 6; (1988) 164 CLR 365
1 WALLWORK J: I agree with the reasons for judgment and the conclusions of Olsson AUJ.
3 STEYTLER J: I have had the advantage of reading the reasons for decision to be published by Olsson AUJ. I agree with them and with his Honour's conclusion that the trial miscarried. I would accordingly grant leave to appeal, allow the appeal, set aside the convictions appealed against and order that the applicant be remanded for retrial on the relevant counts.
4 OLSSON AUJ: These are applications for leave to appeal against both conviction and sentence.
5 The applicant stood trial in the District Court on a total of 37 different counts. He pleaded not guilty to 36 counts of intending to defraud by deceit or fraudulent means, thereby obtaining a specified sum of money, contrary to s 409(1)(a) of the Criminal Code; and one count of intending to defraud by deceit or fraudulent means, thereby inducing a named person to do an act which he was lawfully entitled to abstain from doing, contrary to s 409(1)(e) of the Code.
6 On 21 December 2000, after a lengthy trial, the jury returned guilty verdicts in relation to 29 counts. The applicant was acquitted as to the others. He was sentenced, on 22 February 2001 to a term of 10 years' imprisonment, with eligibility for parole.
7 The applicant was, at the relevant times, a practising podiatrist. He pratised under the business name "Morley Podiatry", apparently through a corporate entity "WA Podiatry Pty Ltd".
8 The essential thrust of the Crown case was that, between 1992 and late 1996, the applicant repeatedly devised false stories which he told to various elderly patients, friends and business associates to gain their sympathy and persuade them to part with their money. It was said that, by those means, he unlawfully obtained about $165,000 from small finance brokers and about $438,500 from patients, friends and acquaintances.
9 The individual counts spanned a wide variety of separate transactions. It is unnecessary to describe these in detail, save to say that count 6 related not to direct money transactions, but to the inducing of a person called Moorman to sign a transfer, by means of which WA
Podiatry Pty Ltd became the registered proprietor of real estate at Bedford.
10 It was asserted by the Crown that the applicant was addicted to gambling. The jury was invited to infer that much of the money procured by the applicant was dissipated in that type of activity.
11 In summing up to the jury, the learned trial Judge pointed out that, in relation to each count, the Crown bore the onus of proving beyond reasonable doubt that the applicant obtained the relevant property or money by deceit with a specific intent to defraud.
12 She explained that to deceive someone is to induce that person to believe something to be true when it is in fact not true, but false. She then went on to say that intention to defraud refers to an intention to deprive someone of something in a dishonest way or to practice a fraud on someone in such a way as to cause them to act in a manner which is to their detriment or prejudicial to them.
13 She explained the legal notion of dishonesty to the jury and told them that it was irrelevant that the applicant may have intended to ultimately give value for the property or benefit gained by means of any deceit.
14 The learned trial Judge later dealt with the concept of intent to defraud in these terms (AB 1493 - 1494):
"The crown must also prove that the accused obtained property or money with intent to defraud. Now, I have previously explained to you what intent to defraud means according to our law but I repeat that the crown must prove that the accused had a specific intent to cause or induce the particular complainant concerned to give him the money in question. The fraud lies in the means of obtaining or getting the money and prima facie there is an intent to defraud where money is obtained by false pretences, so in that sense the concept involves deception as I have said.
Now you can't look inside the head of anyone, including the accused, to see what his intent was at the relevant time. You can't come to court and draw a picture of intent. You can't tender intent into evidence as an exhibit the way you have seen many documents tendered in evidence in this case. To determine the accused's intent relevant to this concept of intent to defraud you have to look at all of the relevant evidence both in oral and documentary form in relation to the particular charge in question. From that you then drawn an inference as to what the accuser's intention was at the time, so a critical characteristic of intent to defraud is proof that the accused acted in a manner so as to prejudice the rights of another, being the person or complainant or entity nominated in the indictment in question.
The words 'with intent to defraud' make it necessary that the accused should have made a false pretence with the intention of inducing the complainant to take a course of action which that complainant would not have taken otherwise, that is, there must be an intention on the part of the maker of the false representations if you find those representations to have been made and if you find them to have been false, to induce the particular complainant or entity in question to take a course of action which that person or entity would not otherwise have taken.
...
Now, to some extent, the elements of obtaining property by deceit and with intent to defraud overlap but I will touch on them separately in a little more detail for you.
In the circumstances of this case the crown can prove that the accused had an intent to defraud if it satisfies you beyond a reasonable doubt of a number of things: that the accused made a deliberately false representation or representations to the person or entity from whom he obtained the property or the money; the accused made that deliberately false representation or representations for the purpose of inducing the complainant to part with the money or property and at the time of making the allegedly false representations, the accused believed that without making the false representation or representations the other person, being the complainant or the entity, would not part with the money."
15 Having related her conceptual explanations to the factual circumstances of certain of the counts, the learned trial Judge gave the following direction (AB 1500):
"Now, in each instance that the accused borrowed money from a complainant he said that at the time he always had an honest and reasonable belief that he had the financial capacity to repay those loans and indeed repay them in many instances with interest and even hopefully on some occasions within a particular time frame. He gave a number of complainants' documentation to this effect, he said, in the form of IOUs or he arranged for more formal documents to be prepared by his lawyers acknowledging the debt to the particular complainant concerned. He said he believed that funds from successful gambling and his ability to earn money as a podiatrist as well as perhaps borrowing more money to pay out existing loans would enable him to achieve his aim of repayment.
In the instances where he pledged his Rolls Royce as security for particular loans he told you that he honestly believed that he had title to that motor vehicle for the reasons he explained in his evidence and that this therefore meant as far as he was concerned that it was his property and he could deal with it as he wished; for example, by pledging it as security for a loan.
When he pledged his business as security in some instances, to be sold if he defaulted on the loan repayment in question, he said he believed in effect that it was a worthwhile asset in which he had equity; for example, in the form of substantial goodwill, and that he could therefore deal with the business in that particular way."
16 She then proceeded to give the jury an explanation of the possible significance of s 24 of the Criminal Code, as she perceived it, in such a setting.
17 Later in her summing up the learned trial Judge further summarised the general effect of the applicant's evidence by saying (AB 1586):
"He denied ever making any sort of false representation in order to deceive any of the complainants in any way and he said that on each occasion at all times when he borrowed the money he honestly and reasonably believed that he had the capacity to repay the loans. Whenever he pledged his Rolls Royce or his business and its assets as security he again said he honestly and reasonably believed that they were his property to deal with as he wished."
18 This was an obvious reference to the s 24 concept.
19 On the hearing of the applications for leave the applicant sought and was granted leave to amend his proposed grounds for appeal against conviction. In their amended form they read as follows:
"1. (a) The learned trial judge directed the jury at AB 1500 to the effect that the accused's evidence amounted to an assertion of an honest and reasonable belief that at the time he obtained the money he had the capacity to repay it.
(b) The accused's evidence should have been characterised as a denial of the element of intent to defraud, in addition to an assertion of honest claim of right on some counts.
(c) As a consequence of the error comprised by (a) and (b) above, the jury were required to determine whether the accused's state of mind, namely lack of intent to defraud, was reasonable on each count.
(d) Whether an accused's state of mind is reasonable or not is irrelevant to consideration of the element of intent to defraud.
2. (a) The learned trial Judge directed the jury at AB 1493 and AB 1494 that the accused's intention was to be inferred. The inference could be drawn in various ways. The learned trial judge did not specifically direct the jury to also take into account what the accused said himself about his intention. (AB 1494) The learned trial judge should have done so.
(b) If the jury did take into account the accused's oral evidence on the subject of his intention, (AB 1493), the jury would necessarily still have approached the matter wrongly because of the error referred to in ground 1 herein."
20 The essence of the complaint in ground 1 is that the learned trial Judge erred in inviting the attention of the jury to the provisions of s 24 of the Criminal Code in the context to which I have referred above.
"24. Mistake of fact
A person who does or omits to do an act under an honest and reasonable, but mistaken, belief in the existence of any state of things is not criminally responsible for the act or omission to any greater extent than if the real state of things had been such as he believed to exist.
The operation of this rule may be excluded by the express or implied provisions of the law relating to the subject."
22 Counsel for the applicant pointed out that each count, inter alia, requires proof of both the elements of intent to defraud and the obtaining of money or a benefit by deceit or fraudulent means. Each involves a separate mental element (Mathews v The Queen [2001] WASCA 264 at par [17]).
"Under s 409(1), the relevant concepts are 'intent to defraud' and 'fraudulent means', rather than dishonesty. But the proper course for a trial judge is of the same kind: the knowledge, belief or intent said to reveal an intent to defraud and fraudulent means should be identified by the judge, and the jury should be instructed to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, what was relevantly done by the accused was so done with an intent to defraud and by fraudulent means. Generally, since s 24 requires the accused's state of mind, if he is to be exculpated, to be reasonable, introducing a consideration which is unnecessary to innocence under s 409, it will be inappropriate and confusing to direct the jury about s 24, and the judge should not do so. If, in a particular case, a direction under s 24 is required, great care will have to be taken to avoid confusion through a transference of concepts of reasonableness from the statutory defence to the crime under s 409."
24 It was stressed by counsel for the applicant that evidence of his client on each count was to the effect that the moneys obtained were loans to be repaid by him. The initial issue was, therefore, whether, at the time of obtaining moneys, he genuinely believed that he had the capacity to repay them, however unreasonable that belief may have been. If it remained a reasonable possibility that he had the belief asserted, then the Crown would not have proved the element of intent to defraud. (cf Mathews, par [11] and par [12]).
25 That being so, it was argued on behalf of the applicant that the interpretation of a discussion of s 24, in the manner adopted by the learned trial Judge, had the practical effect of an impermissible infusion of the concept of reasonableness from the statutory defence to the crimes charged, in the manner adverted to by Burchett AUJ, or, at least, there was a serious danger that the jury would have been confused by the reference to the section.
26 In this regard attention was invited to the above recited excerpt from the summing up as recorded at AB 1500 - in particular, to the reference to "an honest and reasonable belief". This was, counsel contended, a clear misdirection which deflected attention from a characterisation of the applicant's defence of a denial of the existence of a specific intent to defraud. The distinction between the concept of intent to defraud and situations attracting the operation of s 24 was never made clear to the jury. On the contrary, the jury would have been left with the impression that s 24 had to be considered in all cases involving that intent.
27 In my opinion this criticism has been made good. It was emphasised in Mathews (par [17]) that an intent to defraud is not to be equated with carelessness; and that even an unreasonable belief, if genuinely held, will "suffice to repel a suggestion of intent to defraud". Whether the applicant's state of mind is reasonable or not is irrelevant to consideration of the element of intent to defraud (Mathews, par [19]).
28 Mr Tavener, counsel for the Crown, conceded that the incorporation of the references to s 24, in context, amounted to a misdirection. However, he argued that this could not have had any impact on the conclusions of the jury verdicts. He asserted that the verdicts necessarily implied that the jury was satisfied that, in the case of each guilty verdict, the applicant had told lies with intent to defraud. This, in effect, rendered the issue of any reasonable belief irrelevant.
29 In my view the situation is by no means as simple as that, for the reason expressed by Burchett AUJ in Mathews. This Court simply does not know what led the jury to the decisions which it made. There is an ever present danger that they may, in light of the discussion of s 24, simply have reasoned that, whatever the applicant may have thought or believed, any belief that he had the capacity to repay, or would be able to repay was patently unreasonable; and that was the end of the matter.
30 The possibility that such an irrelevant shortcut reasoning process may have intruded into the jury deliberations, because of confusion engendered by the s 24 discussion, cannot be excluded. On the contrary, I consider that there was a very real risk that this occurred.
31 Mr Tavener, counsel for the Crown, sought to argue that, if such a risk existed, then, logically, it only arose in relation to a small number of counts which related to the transactions involving the Rolls Royce motor vehicle. Technically, there is some force in that contention. However, the problem which arises is that, as appears from the excerpts of the summing-up recorded at AB 1500 and 1586, the learned trial Judge used the most general expressions -which may well have conveyed to the jury that the concept of honest and reasonable belief had relevance to all counts before them. At the very least the directions were capable of that connotation.
32 Moreover, I agree with the contention of Mr Hogan, counsel for the applicant, that the problem above identified was compounded by the general directions given as to how the jury ought to divine intent from the evidence. The comments of Burchett AUJ in Mathews (at par [22]) in this regard are apposite to the present case.
33 That being so the inevitable conclusion must be that the trial miscarried.
34 I would therefore grant leave to appeal, allow the appeal, set aside the convictions appealed against and order that the applicant be remanded for re-trial on the relevant counts.
Markarian
The Queen [2001] WASCA 393
(1972) 46 ALJR 141
(1997) 189 CLR 295
(1999) 199 CLR 270
(1988) 164 CLR 365
(1998) 20 WAR 1
(1979) 46 FLR 386
Appeal allowed. The convictions appealed against were set aside, and the applicant was remanded for retrial on the relevant counts: [34].