Martiniello v R [2006] ACTCA 28

1. On 30 October 2006 we heard an appeal against the appellant’s conviction on forty-three counts of stealing choses in action in various sums allegedly belonging to Credit Union Services (Australia) Limited (“Cuscal”) on various dates between 2 July 2000 and 3 July 2001. After hearing argument directed to the form of the charges, we ordered that the appeal be upheld, that all convictions be set aside, and that, in lieu thereof, verdicts of acquittal be entered.

2. We now provide our reasons for those orders.

3. The relevant circumstances can be briefly explained. Cuscal had provided the appellant with a credit card referred to as “Mycard”. There was an agreement between Cuscal and Australia Post pursuant to which Mycard holders could use the Australia Post Bill Pay system (“Bill Pay”) to effectively transfer funds from their bank accounts to their credit card accounts. Upon a cardholder contacting Bill Pay to make the necessary arrangement, Australia Post would remit the amount in question to Cuscal by electronic transfer and seek recoupment from the nominated bank account pursuant to an agreement with the relevant bank. The agreement between Australia Post and Cuscal provided for the reversal of any transfer of funds in the event that a cardholder’s bank subsequently indicated that there were insufficient funds in the nominated account to permit the intended recoupment. The counts on the indictment all related to withdrawals from the appellant’s Mycard account of amounts that had been standing to his credit by reason of such transfers. In each case there had been insufficient funds in the nominated bank accounts to permit recoupment of the sums transferred but, for reasons that were not explained, Australia Post had never sought to recover any of the funds from either Cuscal or the appellant.

4. The respondent alleged that the appellant’s persistent use of the Billpay system to arrange for successive transfers of funds from Australia Post could not have been attributable to a succession of honest mistakes that the appellant had made about the state of his bank accounts, but rather reflected a sustained course of dishonesty. If sustained, that may have supported charges of theft or misappropriation of funds from Australia Post but the appellant was not charged with offences of that character but only with stealing choses in action from Cuscal.

5. A chose in action is, of course, simply a right enforceable by legal action and charges of this kind have inevitably raised questions about how an alleged offender may steal an incorporeal right, as distinct from money or chattels that may be picked up and carried away. It is clear, for example, a person will not be deprived of a chose in action against a bank merely because of a misappropriation of funds facilitated by, say, the presentation of a forged cheque drawn on his or her account. Such a transaction is simply a nullity as between the customer and the bank and the customer is entitled to insist upon the unauthorised debit to the account being reversed: see Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80. This conceptual difficulty has been overcome in some jurisdictions by statutory provisions. For example, in Chan Man-sin v Attorney-General of Hong Kong [1988] 1 WLR 196 the Privy Council upheld convictions for the theft of similar choses in action on the basis of Hong Kong legislation to the effect that an assumption of the rights of an owner of property amounted to an appropriation

6. In the present case, the respondent sought to sustain the charges and subsequent convictions by reliance upon certain provisions of the Crimes Act 1900 (ACT) then in force that similarly expanded the concept of theft beyond that recognised by the common law. The term “property” was defined by s 93 to mean any real or personal property, including “a chose in action …”. Section 95 provided that property should be taken as belonging “to any person who has possession or control of it or who has any proprietary right or interest in it (other than an equitable interest arising only from any agreement to transfer or grant an interest)”. Most significantly, s 96(1) provided that a person should be taken to have appropriated property if, inter alia “he or she adversely interferes with or usurps any of the rights of an owner of the property”.

7. Accordingly, Mr Champion SC, who appeared for the respondent with Mr Clynes, argued that the appellant had been liable to conviction upon proof that he had adversely interfered with or usurped any of the rights that Cuscal had enjoyed as owner of the choses in action referred to in the various counts in the indictment.

8. Mr Pappas, who appeared for the appellant, did not challenge the logic of this argument but contended that the Crown case had been fundamentally misconceived because Cuscal had never owned the choses in action alleged. He conceded that Australia Post may have had choses in action consisting of rights to recover from the appellant the monies remitted to Cuscal on his behalf, but submitted that Cuscal had not had any choses in action in relation to that money. The credits raised in the appellant’s Mycard account simply represented amounts that had been transferred to Cuscal on the appellant’s behalf and made available for him to draw upon. No matter how dishonestly he may have acted in obtaining them from Australia Post, once they were deposited to his credit, Cuscal became indebted to him and he acquired choses in action against it in respect of those funds. Cuscal did not acquire any choses in action against him but merely held the funds on his behalf pending any instruction he might give for their withdrawal or application.

9. Mr Champion employed considerable ingenuity in his attempts to defend the form of the indictment but none of the rights that he suggested might have been enjoyed by Cuscal could have constituted choses in action of any kind, let alone ones that answered the descriptions contained in the various counts in the indictment.

10. The contention that Cuscal had possessed some continuing right to the funds because the appellant had never become entitled to lawfully deal with them was obviously untenable. The remarks of Macrossan J in R v Capewell [1995] 2 Qd R 2 64 that were cited in support of this contention did not, in fact, suggest the existence of any such right in a bank but rather reflected the principle that a bank is indebted to a customer for the amount standing to his or her credit in the bank’s records. Indeed, both Macrossan J (at 67) and McPherson J (at 73) affirmed that a customer had had a chose in action against a bank for the amount standing to her credit in her account even though the bank had subsequently discovered that the bulk of the funds had been credited to the account in error. In any event, it is clear that, in the absence of a court order or agreement authorising such a course, neither a bank nor any other financial institution has a right to withhold payment of monies owed to a customer on the ground that he or she may have illegally obtained amounts deposited. It is true that Cuscal may have been entitled to re-debit relevant amounts if Australia Post had sought reversal of the transfers and that, in that event, Cuscal might have had a chose in action against the appellant for reimbursement of the funds withdrawn. However, that did not occur.

11. It was suggested that Cuscal had enjoyed a “right to control the credits” but no discrete right of this kind was identified and the term seemed to have been used as a compendious description of various entitlements that it no doubt possessed but that could not have constituted the choses in action alleged and could not have been infringed by the withdrawal of the relevant funds. For example, Cuscal was obviously entitled to record the debts that it owed to its customers in any way it considered appropriate, but it could not have maintained an action against the appellant to vindicate its right to do so and the withdrawals did not interfere with or usurp any such entitlement. It is true that Cuscal possessed certain contractual rights and common law rights, such as the right to a reasonable time to credit funds before permitting the customer to draw upon them and the right to correct errors. However, none of these rights were shown to have had any relevance to the transactions in question. Furthermore, the appellant was not charged with infringing rights of that kind but with the theft of choses in action in the sums of money specified. There is a vast difference between stealing someone’s right to a sum of money and recovering a debt in a manner that might require the debtor to correct its records.

12. Mr Champion was ultimately driven to argue that the surrounding circumstances suggested the existence of some right that may have been stolen by the appellant, even if its precise nature could not be identified. We were unable to accept this argument. Even if such right had existed, it could not have constituted a chose in action because Cuscal could not have maintained an action to enforce a right so ephemeral as to defy articulation or description and Mr Martiniello could not have been shown to have stolen it.

13. Regrettably, a somewhat similar approach was taken at the trial. The Crown prosecutor did not attempt to identify the choses in action allegedly stolen, but merely alluded to the surrounding circumstances and vaguely suggested that Cuscal must have had some enforceable right to each of the relevant sums of money. This was quite unsatisfactory. It is, of course, necessary for any prosecutor who accuses a person of theft to specify what has allegedly been stolen and this may need to be done with particular clarity when the object of the alleged theft is not some item of corporeal property but a chose in action. It is also necessary for the acts allegedly constituting the theft to be specified and, at least when the relevant property is a chose in action, how such acts are said to have usurped or interfered with the relevant rights of the owner. In the present case neither of these contentions had been adequately explained and we found it difficult to imagine how they could have been.

14. Despite the analytical skill brought to the submissions for the respondent, we were obliged to conclude that Cuscal had never had any chose in action in any of the sums specified in the indictment and that the appellant had been convicted of stealing things that had never existed. This problem might have been avoided by charges relating to the derivation of funds from Australia Post but we were, of course, concerned only with the charges on which he was tried and the convictions on those charges could not be sustained. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court. Associate: Date: 15 December 2006

Counsel for the Appellant: Mr J Pappas

Solicitor for the Appellant: Myer Vandenberg

Counsel for the Respondent: Mr Champion SC with Mr Clynes

Solicitor for the Respondent: ACT Director of Public Prosecutions

Date of hearing: 30 October 2006

Date of judgment: 30 October 2006

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