//
[2009] ACTSC 145
General information, not legal advice.
Supreme Court of the ACT
2009-11-09
Marshall J
Original judgment source is linked above.
1. The accused is charged with 230 counts of theft of various sums of money arising from her alleged use, for her own purposes, of trust funds held by in her capacity as trustee for five beneficiaries. The beneficiaries were her three children and two nieces.
2. Each of the charges arises under s 89 of the Crimes Act 1900 (ACT), as in force at the relevant time.
3. For the purposes of the trial, the prosecution sought and gained the following admissions from the accused. These admissions appear as agreed to by the accused, and any errors of expression were contained in the document provided to the Court:
"1. The accused is the daughter of the late Mr Victor Prineas (born 23/3/1917) who died on 5 April 1997 and the late Chrisoula Prineas (born 5/2/1920) who died on 2 December 1998. The late Mr Victor Prineas and the late Mrs Chrisoula Prineas had two other children, Phillip Prineas (born 6/6/1942) and Theodore Prineas (born 5/7/1947).
In about July 1994 Mr Victor Prineas and Mrs Chrisoula Prineas entered into a property settlement to distribute the assets of their marriage. One of the assets of the marriage was 'Victor Lodge' which was a Motel located at 29 Dawes St Kingston ACT. This property had in 1993 been leased for a period of 10 years to Graham and Leanne Vickers ('Vickers'). The annual rental of the property was $54 000 which was paid by equal monthly instalments of approx $4567.50.
It was agreed between Mr Victor Prineas and Mrs Chrisoula Prineas that the property would be transferred to the accused by way of a deed of trust and it was to be held on trust for the benefit of the then grandchildren namely Christina Prineas (born 26/1/1977) and Antigony Prineas (born 9/8/1978) the children of Phillip Prineas, and Jacqueline Hawcroft (born 5/11/1982), James-Thomas Hawcroft (born 18/6/1985) and Michael Hawcroft (born 3/9/1986) the children of the accused.
On 8th July 1994 a trust deed was signed by Mr Victor Prineas, Mrs Chrisoula Prineas and the accused as trustee. The terms of the trust included the following; 1. the beneficiaries were the grandchildren, the vesting date was the last occurring of; 1. the death of Victor Prineas, or 2. the date the youngest beneficiary (Michael born 3/9/1986) attaining the age of 25, 2. the payment to Mr Victor Prineas of $1500 per month from the income derived from Victor Lodge, 3. the payment of the instalments required by the lending institution in relation to the monies as borrowed to comply with orders of the Family Court, 4. invest trust assets in any manner allowed by the trustee, and accumulate the whole or any part of the income from the trust until the vesting date. 5. that the trustee shall hold the trust assets on trust for the beneficiaries in equal shares to vest in them on the vesting date.
On or about 9 December 1994 'Victor Lodge' was transferred to the accused and from on or about that time the 'Vickers' were directed to pay all rent monies from 'Victor Lodge' directly into the accused's Westpac bank account number 50-2582. At the time of the transfer a mortgage in the sum of $200 000 was taken out to effect the terms of the property settlement agreed to by Mr Victor and Mrs Chrisoula Prineas. The mortgage was taken out with Howard Mortgage Trust and the financier was Permanent Trustee Australia Limited. The monthly instalments for the mortgage initially was $1323.29. The rental income received from 'Victor Lodge' exceeded the funds which were required to pay the monthly mortgage payments, the monthly amount to be paid to Mr Victor Prineas until his death and any further commitments for payment of insurance, rates, land tax, administration fees, general repairs and any other ongoing costs associated with 'Victor Lodge' not payable by the 'Vickers'.
On 5 April 1997 Victor Prineas died and from the time of his death the rental income from "Victor Lodge" continued to be paid into the account operated by the accused. (50-2582)
The accused made payments on the mortgage as required however at some point prior to May 1999 failed to make the required payments which resulted in the mortgagee commencing proceedings for the recovery of the arrears. Up until that time the 'Vickers' were paying to the accused the monthly lease payments of approx $4567.50.
From about May 1999 to about September 2000 there were negotiations between the accused, her solicitors and the mortgagee's solicitors as to the payment of the arrears due on the mortgage. At some point during this time the 'Vickers' were directed to pay the monthly lease payment to the mortgagee and this continued until the 3 September 2000. At this time the accused made arrangements for the payment of the arrears owed in respect of the mortgage and the 'Vickers' were directed to again pay the monthly lease payments direct to the accused.
On 11 September 2000 the accused's solicitors were advised that the mortgage on the property had expired and the mortgagee was not going to renew. The accused was required to payout the mortgage, which at that stage was $215 000, by 2 October 2000 however this was later extended to the 31 October 2000.
The accused approached 'Vickers' and an agreement was reached whereby the accused would sell "Victor Lodge" for $700 000. At the time the sale was negotiated the accused had not and did not obtain an independent valuation of "Victor Lodge". A subsequent valuation was conducted on behalf of 'Vickers' and "Victor Lodge was valued at $915 000.
Settlement of the sale occurred on or about the 13 November 2000. The total amount paid on settlement was $749 257.99 after a number of adjustments and charges were made. From that amount after deductions for legal and other fees the balance was payable as follows; Permanent Trustee Australia Limited - $223 190.61 and K Hawcroft - $ 503 498.53.
On 14 November 2000 the accused was paid a cheque from her solicitors in the amount of $20000 which was the deposit which had been paid by 'Vickers'.
The accused as trustee received $523 498.53 from the sale of "Victor Lodge'.
On 15 November 2000 the accused deposited this amount into an account at the Westpac Bank - Belconnen namely,
Address c/- Discount Gallery 55 Oatley Court Belconnen -
15A. At the end of December 2000 the balance of that account, 732778-642555, not including interest earned, was $336 488.70
From about January 2001 to March 2001 the accused withdrew a further $62066 from account 732778-642555 in cheques of varying amounts.
On 2 April of 2001 the accused withdrew $275 000 from account 732778-642555 leaving a balance of $2922.86. The $275 000 was deposited it into a 'Westpac Money Market Fund' account in the name of 'Katherine Hawcroft'.
On the 8 May 2001 the accused redeemed $140 000 from the 'Westpac Money Market Fund' account and re-paid it into account 732778-642555.
The accused between 9 May 2001 and 15 May 2001 withdrew $14000 by cheques from account 732778-642555 and deposited $10000 into that account which she had redeemed from the 'Westpac Money Market Fund account.
From 15 May 2001 until 5 April 2002 the accused redeemed the balance of the 'Westpac Money Market Fund' account in varying amounts.
On 5 April 2002 the balance of the 'Westpac Money Market Fund was $1770.92.
On 14 August 2003 the accused authorised the balance of the 'Westpac Money market Fund' account, $1854.21 to be paid into the account of 'Zipsony Pty Ltd' (account number 032-778-137 637).
The accused is the sole director of Zipsony Pty Ltd.
On 17 May 2001 the accused withdrew $132314 from account number 732778-642555 and opened an investment account through Westpac Financial Services Limited.
The details of that investment are as follows;
Fund Allocation - 100% All Australian Tax Effective Share Fund (ATESF)
Payment method - Direct deposit- BSB 032 778, Acc - 624555 - Acc name - K Hawcroft
During the period 9 April 2002 to 16 April 2003 the accused redeemed approximately $103 500 from the 'ATESF' account which she paid into the account of 'Zipsony Pty Ltd'.
During the period 9 April 2002 to 16 April 2003 the accused redeemed approximately $25 000 from the 'ATESF' account which she paid into her account - 732778 - 642555.
On 16 April 2003 the accused directed that the balance of the 'ATESF' account be paid into account 732778 -642555.
On 22 April 2003 an amount of $1589.78 was deposited into account 732778 -642555. from the 'ATSEF' account.
By on or about 16 August 2003 the funds received from the sale of 'Victor Lodge' and deposited by the accused on 15 November 2000 together with interest earned on the deposits had been dissipated.
From about April 1998 to about August 2000 the accused was a member of the Canberra Labor Club (member no 14411). During that period the accused visited the club on 246 days, played 407422 games and had a 'turnover' in the club's gaming machines of $811,191.93
On 10 August 2000 the accused 'self-excluded' herself from the Canberra Labor Club.
From about July 1998 the accused was a member of the West Belconnen Leagues Club (member number -7555).
Between about July 1998 and 2007 the accused is estimated to have lost $187,515.66 whilst gambling at the West Belconnene [sic] Leagues Club.
From about February 2001 the accused became a member at Canberra Casino (member number - 2096) and at some point after that became a VIP member (1449). The accused attended the Canberra Casino on at least four occasions in 2001 and her total net loss for these visits was approximately $9300.
From about May 1998 to about September 1999 the accused made a number of withdrawals by 'eftpos' from her account, number 50-2582, at the Canberra Labor Club, the West Belconnen Leagues Club and the Canberra Tradesmen's Union Club."
3. Counsel for the accused submits that the charges are not capable of being made out. He contends that if it is alleged that the accused used trust funds for her own purposes she did not steal sums of money, but rather, choses in action. In doing so, he relied on the judgment of the Court of Appeal in Martiniello v The Queen [2006] ACTCA 28.
4. In Martiniello, the appellant had been convicted of charges of stealing choses in action belonging to a credit union. The Court of Appeal set aside the convictions after considering the form of the charges.
5. The credit union, in Martiniello, had provided the appellant with a credit card. Under an agreement between Australia Post and the credit union, credit card holders could use the Australia Post Bill Pay system to transfer funds from their bank accounts to their credit card accounts. Under that system, Australia Post remitted the sums in question to the credit union by an electronic transfer and sought to recoup the funds from a nominated bank account under an agreement with the relevant bank. If there were insufficient funds in the nominated bank account, an agreement between Australia Post and the credit union allowed for the reversal of any transfer of funds.
6. The counts in Martiniello all concerned withdrawals by use of a credit card of amounts standing to the appellant's credit by reason of transfers from his bank. As the Court of Appeal said at [3]:
"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 [the credit union] or the appellant."
"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."
"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..."
9. Counsel for the appellant in Martiniello submitted that the credit union never owned the relevant choses in action. The Court of Appeal accepted that submission. It also noted at [8] the concession of the appellant's counsel 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."
10. The Court of Appeal in Martiniello at [10] referred to the judgment of the Queensland Court of Appeal in R v Capewell [1995] 2 Qd R 64 in support of the proposition that a customer had a chose in action against a bank to the amount standing to the customer's credit in her account even though the majority of the funds had been credited to that account in error.
11. Counsel for the accused in the present case submits that the property alleged to be stolen must be identified correctly in the counts in the indictment. He contends that the right of the accused to draw on the amounts the subject of the counts should have been charged rather than the theft of the amounts themselves. Counsel refers to the distinction between "money" and "choses in action". Counsel submits that each of the alleged thefts of money is, in reality, a diminution in a chose in action.
12. In response, counsel for the prosecution submits that the sum of $523,498.53, which the accused received from the sale of Victor Lodge and deposited into account number 732778-642555 in her name, belonged to the beneficiaries of the trust as an equitable interest. He contends that the value of that equitable interest was drawn down by the accused dealing with the trust money as if it were her own which equated to stealing the monetary value of these equitable interests.
13. For the purposes of resolving this issue, I will focus on the initial withdrawal from account number 732778-642555 in the sum of $2,000 on 16 November 2000, which is the subject of count 1 in the indictment.
14. On 16 November 2000, the accused withdrew $2,000 from the trust funds held by her as trustee on behalf of the five beneficiaries. The withdrawal consisted of $1,850 in cash and $150 to another account. If the accused had no entitlement to that $2,000, and otherwise no basis to withdraw those sums, the question is did the withdrawal of these sums amount to stealing $2,000 or stealing a chose in action to the value of $2,000?
"It is now well settled that the relation between banker and customer in operating a current account is that of debtor and creditor. Money banked to the credit of the account is not held by the banker as agent or trustee for the customer but becomes the property of the bank... The debt owed by the bank to the customer is a chose in action which is "property" within the meaning of s 408C(3)(a) [the relevant provision of the Queensland Criminal Code] and as such capable of being stolen, [or] misappropriated...
The sum, if any, for which a bank is indebted to a customer on current account varies according to amounts deposited to and withdrawn from the account. It is, however, the credit balance in the account from time to time that constitutes the customer's chose in action."
16. The Queensland Court of Appeal followed the analysis in Capewell in R v Rigney-Hopkins [2005] QCA 275; (2005) 154 A Crim R 433 at [43] per Jerrard JA (with whom Williams and Keane JJA agreed). Justice of Appeal Jerrard emphasised (including by a footnoted reference to Capewell) that a sum standing to the credit of a person in a bank account constitutes a chose in action; Rigney-Hopkins at [43]. A similar analysis was adopted by Lord Lane CJ in Attorney General's Reference (No 1 of 1983) [1984] 3 All ER 369 at 371. On 22 May 2007, the High Court refused special leave to appeal from Rigney-Hopkins noting that "[n]o error is apparent in the reasons of the Court of Appeal", see Rigney-Hopkins v The Queen [2007] HCA Trans 209 at 2.
17. Applying Capewell and Rigney-Hopkins and by analogy, Martiniello, the correct analysis of count 1 is that if the accused stole something on 16 November 2000 when she withdrew $2,000 from account number 732778-642555, she stole a chose in action which belonged to the beneficiaries. The accused did not steal the $2,000 as charged in the indictment. The $2,000 was not the property of the beneficiaries but that of the bank. The beneficiaries' property was a chose in action in respect of the sum of $523,498.53 of which $2,000 was a part.
18. The accused could have been properly charged with stealing a chose in action in the sum of $2,000 belonging to the beneficiaries. It could also be arguable that the accused may have been charged with stealing the $2,000 from the bank when she had no entitlement to withdraw the funds for her own use. Ultimately, however, if the accused stole anything, it was a chose in action and not the actual $2,000. Whatever the situation, in the current circumstances, no actual money can be said to have been stolen from the beneficiaries.
19. In Martiniello at [14], the Court of Appeal recognised that the problem caused by the credit union never having had a chose in action in respect of the relevant funds was capable of being avoided by laying charges concerning the funds from Australia Post. The Court of Appeal observed that it was only concerned with the charges on which the appellant was tried. It held that convictions on those charges could not be sustained.
20. Here, the accused cannot be convicted on any of the 230 counts in the indictment as framed. That is because she did not steal the sums alleged from the beneficiaries, as a matter of law, for the reasons explained above.
21. It is no answer to say, as submitted by counsel for the prosecution in reply, that in many instances funds were transferred between accounts held by the accused. In each case, provided all other elements of the relevant offence can be proved, the accused may be said to have stolen a chose in action where she had drawn down on the trust funds held by her for the benefit of the beneficiaries.
22. Charges must be framed with precision to identify correctly and allege properly the property to be stolen, in cases such as this one, in accordance with the principles of banking law discussed in Capewell and Rigney-Hopkins.
23. Each of the other 229 counts contained in the indictment allege thefts of money relating to the beneficiaries by the accused. Each suffer from the same defects as these discussed in the context of the $2,000 withdrawal which is the subject of count 1.
24. I direct that the accused be acquitted on all charges.
I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Marshall.
Solicitor for the Crown: ACT Director of Public Prosecutions
R
KATHERINE HAWCROFT [2009] ACTSC 145