Rosemarie Dempsey v Regina

Facts

1. Between about February 1997 and about July 2011 the appellant was the financial controller of Haps Hotels Pty Ltd (HAPS), a company that operated a number of hotels. The appellant's role included the payment of the company's expenses and recording those payments in the MYOB accounting software. From time to time, the appellant supervised staff employed by HAPS to assist her.
2. The appellant reported to the General Manager of HAPS. Between 1997 and 2007 the General Manager was Mike Kilkeary and between 2007 and 2011 the General Manager was James Hannan.
3. The system for payment of business expenses by cheque was that upon receipt of an invoice, the accounts payable clerk or the appellant would check that the goods had been received by the relevant hotel. The expense would be entered into the MYOB general journal as a debit under the relevant category, and allocated to a credit account to reflect the source of the payment.
4. Further data entry was required on the 'spend money screen' of MYOB, including the amount of the payment, the payee of the cheque and the date. The system would then print out an A4 sheet with perforations comprising of the cheque, a remittance advice and a cheque butt.
5. The cheque butts were then attached to the invoices and were given to the appellant to sign the cheques in batches. They were then forwarded to Mr Kilkeary or Mr Hannan to countersign. This method allowed the signatory to satisfy themselves that the cheques drawn related to the invoices received.
6. After the cheques were signed, the cheque butts were removed and filed sequentially. The invoices were filed in the category of expenses. The clerk stamped the invoices as 'PAID' with the date.
7. The details of cheques were kept in the MYOB system to enable the details of a cheque to be sourced without looking for the cheque butt.
8. When Mr Kilkeary was away he left a number of signed blank cheques for the appellant to pay the expenses of HAPS in his absence. This was necessary because some suppliers, particularly the brewers, had short payment terms. This system continued when Mr Hannan took over as General Manager.
9. On 25 July 2011, Mr Hannan employed Cleo Choi an accountant on a 3 month contract to do the work of the appellant. Ms Choi commenced by attempting to complete a bank reconciliation for June 2011 in MYOB. This was necessary to allow her to make entries for the 2012 financial year. In the course of that work, she decided to perform a bank reconciliation for the 2011 financial year. In the course of performing that yearly bank reconciliation Ms Choi overwrote a number of the entries and changed the information stored in MYOB.
10. Ms Choi first identified that cheque number 56176 in the bank statement for 31 August 2010 in the sum of $33,548.97 had not been entered correctly in MYOB. The entry for that cheque had a different payee, date and amount. At her request, Mr Hannan printed off a copy of the cheque from the Combiz program which he had access to. The cheque was deposited into the appellant's ANZ Visa account on 31 August 2010. The cheque was signed by the accused and counter-signed by Mr Kilkeary, who had retired in late 2007. The cheque butt, and the 3 preceding it, could not be located by Mr Hannan at the Hornsby archive.
11. Ms Choi identified a second cheque not entered in MYOB; cheque 66102 for $29,653.15, payable to the accused and deposited in her account on 13 January 2011. The cheque was apparently counter-signed by Mr Hannan, who was confident in his evidence that it was not his signature.
12. Ms Choi identified a third cheque in that year which was not recorded in the MYOB system; cheque 54687. It was dated 18 April 2011 and made out to the accused for $24,678.67 and deposited into her Visa account. It was noted that these three cheques were out of sequence, and so bank statements for the preceding years were inspected for cheques drawn on the HAPS bank account out of sequence. A further 24 cheques were identified; all but one made payable to the accused, deposited to the accused's Visa card. The exception being a cheque payable to Liberty Developments, a company with which the appellant's husband was associated.
13. The details for each of the impugned cheques did not correspond with the actual payee (the appellant), the date or the amount. None of the cheque butts were located by Ms Choi in the office, but she did not go to the Hornsby archive.
14. In about December 2011 the matter was referred to the police.
15. The appellant's case at hearing and on appeal was that the payments made by her to her ANZ Visa account represented reimbursement for expenses she had paid on behalf of HAPS and for which she was entitled to reimbursement. Her method was to stockpile receipts for such expenses until they were substantial enough to be repaid. The receipts and the cheque butts were kept in envelopes and stored with the paper records of the company.
16. The expenses paid by her were of a general nature that were not commonly recorded in an expense category, but were recorded in the general ledger, where things like petty cash would be recorded. The appellant conceded that Mr Kilkeary and Mr Hannan were not aware that she was drawing cheques to herself in reimbursement, but there were occasions when they knew she did so.
17. At the end of each financial year the appellant would submit to Goss and Clarke Accountants, the accounting firm retained by HAPS, a trial bank reconciliation based on the MYOB entries to be audited by Goss and Clarke and thereafter form the basis of the preparation of the relevant taxation returns for the company.
18. The appellant was also responsible for administering a number of other related companies.

The relevant law

1. The applicable principles to be applied in determination of the appeal are as follows.
2. Section 18(1) Crimes (Appeal and Review) Act 2001 provides that the appeal is a rehearing on the certified transcripts of evidence, obviously as supplemented by reference to the exhibits tendered in the Local Court and is not an appeal de novo: Gianoutsas v Glykis [2006] NSWCCA 137 at [24]-[31].
3. The principles governing appeals from judges sitting without a jury apply in that the appellate judge is to form his or her own judgement of the facts while recognising the advantage enjoyed by the magistrate who saw and heard the witnesses called and observing the natural limitations stemming from proceeding wholly or substantially on the transcript record: Charara v R [2006] NSWCCA 244 at [17]-[22].
4. Whilst the magistrate's reasons are not part of the certified transcripts referred to in section 18(1), recourse may be had to them since the appellate function could not properly take place without reference to them: Charara [23]-[24].
5. The Court is obliged to give the judgement which in its opinion ought to have been given in the first instance: Fox v Percy (2003) 214 CLR 118 at [23].
6. The powers of the District Court are exercisable where the appellant demonstrates that the order the subject of the appeal is the result of a legal, factual or discretionary error in which event the appellate court can substitute its own decision based on the facts and law as they then stand: Dyason v Butterworth [2015] NSWCA 52 at [28].
7. The issue of whether or not error is strictly required before the District Court can intervene was considered but not decided in AG v Director of Public Prosecutions [2015] NSWCA 218. I have proceeded on the basis that I am bound by the law as it is stated in Dyason and other subsequent decisions including Bandana v Director of Public Prosecutions [2016] NSWCA 140 at [10] and Englebrecht v Director of Public Prosecutions [2016] NSWCA 290 at [91].
8. The term "error" has no precise meaning. It refers broadly to the satisfaction of the appellate judge that the trial judge was wrong and should be corrected. Put negatively, it means that the judgment of the trial judge will not be set aside unless the appellate judge is satisfied that the judgment is wrong. How that state of satisfaction is achieved will depend on a range of factors. A miscarriage of justice warranting intervention may occur in the absence of "error" in the ordinary meaning of that term: AG at [34] per Basten JA.
9. The elements of the section 192E offence are: 1. the accused; 2. dishonestly; 3. by deception; 4. obtained a financial advantage or caused a financial disadvantage; and, 5. (if a claim of right is sufficiently raised on the evidence) the accused was not conducting himself in accordance with a legitimate claim of right.
10. In Fuge v R [2001] NSWCCA 208. Wood CJ at CL reviewed the relevant authorities relating to claim of right and summarised the principles from them as follows: 1. the claim of right must be one that involves a belief as to the right to property or money in the hands of another; 2. the claim must be genuinely, i.e. honestly, held, whether well founded in fact or law or not; 3. while the belief does not have to be reasonable, a colourable pretence is insufficient; 4. the belief must be one of a legal entitlement to the property and not simply a moral entitlement; 5. the existence of such a claim, when genuinely held, may constitute an answer to a crime in which the means used to take the property involved an assault, or the use of arms; the relevant issue being whether the accused had a genuine belief in the legal right to the property rather than a belief in a legal right to employ the means in question to recover it; 6. the claim of right is not confined to the specific property or banknotes which were once held by the claimant, but can also extend to cases where what is taken is their equivalent in value, although that may be qualified when, for example, the property is taken ostensibly under a claim of right to hold them by way of safekeeping, or as security for a loan, yet the actual intention was to sell them; 7. the claim of right must, however, extend to the entirety of the property or money taken. Such a claim does not provide any answer where the property or money taken intentionally goes beyond that to which the bona fide claim attaches; 8. in the case of an offender charged as an accessory, what is relevant is the existence of a bona fide claim in the principal offender or offenders, since there can be no accessorial liability unless there has in fact been a foundational offence, and unless the person charged as an accessory, knowing of the essential facts which made what was done a crime, intentionally aided, abetted, counselled or procured those acts; and, 9. it is for the Crown to negative a claim of right where it is sufficiently raised on the evidence, to the satisfaction of the jury.
11. The Court has inherent jurisdiction to stay proceedings that constitute an abuse of process: Walton v Gardiner (1993) 177 CLR 378, 392-3; Jago v District Court of New South Wales (1989) 168 CLR 23; Barton v The Queen (1980) 147 CLR 75.
12. The power is discretionary and will only be used to stay criminal proceedings in the most exceptional circumstances: Barton at 116; Jago at 31 per Mason CJ, at 75 per Gaudron J.
13. The phrase 'abuse of process' encapsulates all cases in which the processes and procedures of the court may be used as instruments of injustice or unfairness: Walton at 393. The question the Court must answer is whether, in all the circumstances, the continuation of proceedings would involve unacceptable injustice or unfairness: Walton at 392.
14. Fairness or unfairness defies analytical judgment and involves a large content of intuitive judgment: Jago at 57. The onus is on the applicant to show that the disadvantage or prejudice that they will suffer is unacceptable to the extent that a trial would be unfair: Barron v Attorney-General (1987) 10 NSWLR 215.
15. The categories of factual situations in criminal proceedings which may warrant a consideration of the possibility of abuse of process are not closed: Walton at 393.
16. A permanent stay in criminal proceedings will only be justifiable where there is a fundamental defect going to the root of the trial of such a nature that there are no measures that a trial judge can take in the conduct of the trial to relieve against its unfair consequences: Barton at 111; Jago at 34 per Mason CJ, 49 per Brennan J, and 77-78 per Gaudron J.
17. The power to grant a stay must be exercised in accordance with two fundamental policy considerations: 1. That the public administration of justice requires the Court to protect its functions by preventing abuse of process and 2. That unless the court does so there will be an erosion of public confidence in the Court: Williams v Spautz (1992) 174 CLR 509, 520.
18. In determining the question of whether to grant a permanent stay the Court must balance the interests of the accused, the public interest of the community that those charged with serious criminal offences are bought to trial and those guilty are convicted, and the need to maintain public confidence in the administration of justice: Walton at 395-6; Jago at 33 per Mason CJ, and at 49-50 per Brennan J.
19. If a trial judge finds that it would offend common humanity to require the accused to stand trial, it is open to the judge to stay the proceedings However, it will be rare that illness, or the physical or mental condition of the accused, will lead the court to such a conclusion: . Hakim v R (1989) 41 A Crim R 372 at 377.

Analysis of the Magistrate's reasons

1. The Magistrate set out the law and the background facts which I have generally adopted.
2. The Magistrate accepted Mr Kilkeary and Mr Hannan as witnesses of truth. That finding was not challenged on the appeal.
3. On the crucial claim of right issue, the Magistrate accepted that it was for the prosecution to prove beyond reasonable doubt that the appellant had no claim of right. The Magistrate then stated: However, it is a balance of evidence issue. The accused has to do something more than assert in oral evidence that she used her [credit] card and cash drawn from the card to buy items required by the business.There is no documentary or electronic evidence at all to support the accused's claim. The evidence is all the other way. The accused said she removed herself as a payee of the cheques in the MYOB system after the cheque was printed.
4. It should be noted at this point that the Magistrate had on 20 August 2013 set aside a subpoena issued by the appellant to HAPS for the production of the MYOB records and a subpoena to Goss and Clarke Accountants, a firm that provided accounting and auditing services to HAPS. All that was provided in response to the HAPS subpoena was a bundle of entries from MYOB for three distinct periods, purportedly said to be the MYOB records relating to the 27 impugned cheques. Nothing was produced in response to the Goss and Clarke subpoena. The Magistrate decided that there was no legitimate forensic purpose in the subpoenas because they could not identify the transactions in MYOB that were relevant to the cheques and as such they were too wide and constituted a 'fishing expedition'.
5. MYOB records were produced for 3 limited periods, being; 30 September 2007 to 31 October 2007, 15 January 2008 to 28 February 2008 and 1 November 2010. The records contained multiple deletions.
6. The prosecution did not seek to introduce the MYOB files or any of the documents forwarded to Goss and Clarke by the appellant in the course of her duties. There was no evidence in the Local Court that the accounts of HAPS did not balance.
7. In fact, the fresh evidence led on the appeal demonstrated that accounts did balance. The figures produced by the appellant for each financial year were consistent with the MYOB entries, they followed a pattern as to the amount of the relevant expenses incurred even to the extent that they were in accordance with earlier years in which there were no impugned cheques and the Goss and Clarke analysis of those figures did not demonstrate any significant discrepancies.
8. Further, in cross-examination Mr Hannan accepted that there were expenses that could have been paid by the appellant and for which she would have been entitled to reimbursement and that it would have been appropriate for her to stockpile those claims before seeking payment for example at the end of a quarter. Mr Hannan could not say how those matters may have been entered in MYOB. When asked if it was possible that the cheques that were paid to the appellant were justifiable, Mr Hannan answered that he would have to look at the invoices underlying them or the receipts for petty cash expenditure in the relevant periods. Mr Hannan gave evidence that he did not look for those invoices or receipts. He accepted that he could not deny the appellant's claim of right without looking at those documents.
9. Mr Kilkeary gave similar evidence, accepting that the appellant would have been entitled to reimbursement for any amount paid on behalf of the company if she had the supporting documentation. Mr Kilkeary had left the company and was not in the same position that Mr Hannan was, in that he could not have looked for that documentation prior to giving evidence or during the investigation. Mr Kilkeary accepted that the appellant had provided the company with $2,000 in cash on one occasion at his request.
10. It should be noted that those documents cannot now be produced by HAPS.
11. Mr Hannan also accepted that there were occasions when the cheque details recorded in MYOB were deleted after the cheques were issued, to protect the publication of the payments made to other staff, including the payment of bonuses and the payment of dividends to Mr Hannan's wife. In other words, there was precedent for the deletion cheque details and that did not automatically reflect dishonesty.
12. The Magistrate fell into error in the passage I have set out by reversing the onus of proof or alternately failing to understand that the prosecution had not tendered or made available to the appellant the documentation that was capable of proving or disproving her claim of right.
13. The prosecution also alleged that some of the signatures on the cheques were not those of Mr Kilkeary or Mr Hannan. The Magistrate noted that the implication was that the appellant had forged the signatures on a number of the impugned cheques, which she did not identify. It is unclear from the Magistrate's findings if she made that finding. The evidence on these claims was weak and the Magistrate rejected relevant questions of Mr Hannan as to the appearance of his signature on other documents in evidence. In the circumstances it was unfair to the appellant for the Magistrate to make any findings on this issue.
14. Finally, the Magistrate rejected that the appellant suffered from bipolar disorder, because the diagnosis made was based on the appellant's own report of her symptoms and that her suicide attempts were a manifestation of a consciousness of guilt on her part. The prosecution conceded that the Magistrate was in error by making these findings. The extent of that error is significant. First, the 2 eminent forensic psychiatrists called to give evidence in the Local Court agreed that the appellant suffered from bipolar disorder. Second, the Magistrate accepted or at least did not reject the independent evidence concerning the appellant's behaviour at the relevant time. Third, it was not put to the appellant in cross-examination or against her in submissions that she had invented her symptoms to obtain a psychiatric diagnosis. In fact, the police prosecutor submitted that the appellant suffered from bipolar disorder that was 'rapid cycling' and demonstrated by 'significant changes in mood'. The findings constituted a serious denial of procedural fairness and are suggestive of prejudgment of the appellant's credit. The findings were intended to demonstrate that the appellant was dishonest, but they were not open to be made. I am satisfied that the Magistrate misused the advantage of hearing and seeing the appellant's evidence and that I can place little if any weight on the Magistrate's findings of dishonesty.

Consideration

1. Having conducted an independent assessment of the evidence before the Local Court for the purpose of determining the stay application, I have a reasonable doubt as to the appellant's guilt of the offences of which she was found guilty. I do not consider that the magistrate's finding is explicable by her advantage in seeing and hearing the witnesses. I am not satisfied beyond reasonable doubt that the prosecution has disproved the appellant's claim of right for the following reasons.
2. First, the material in the prosecution case was unable to disprove beyond reasonable doubt the appellant's claim of right which was clearly raised on the evidence. At no time in the Local Court did the prosecution produce all of the MYOB records or any of the primary documentation, which on the prosecution evidence was required to determine the appellant's claim of right. Mr Hannan's evidence was that he could not deny the appellant's claim of right, without reviewing the invoices and or receipts that were relevant to the expenses identified by the appellant. Prior to being cross-examined he had not sought out or reviewed that documentation. Ms Choi's bank reconciliation of the 2011 financial year materially changed the entries in MYOB for that year. In other words, the original MYOB accounts for that year were altered from a date before the prosecution commenced. Finally, the appellant was not given access to the entirety of the MYOB records for the relevant period (2005-2011). The appellant on her case required access to that information to identify the entry of expenses in the general journal that were paid by her and for which she sought reimbursement.
3. Second, the prosecution did not call any evidence from any person at Goss and Clarke who worked on the accounts of HAPS. The evidence was that the accounts were reviewed and perhaps audited by Goss and Clarke on a yearly basis prior to the preparation of the company taxation returns. There was no evidence in the Local Court that Goss and Clarke detected any discrepancy in the accounts prepared by the appellant.
4. Third, the fresh evidence led in the appeal proves that the figures provided by the appellant to Goss and Clarke were accepted by them because the accounts balanced. Accordingly, it was an essential fact in the prosecution case that the prosecution had to prove beyond reasonable doubt that the appellant had made false entries in the general journal relating to the expenses of HAPS to enable her to draw the impugned cheques in the amounts that she did, or else the accounts would not have balanced. The prosecution did not seek to lead that evidence.
5. Fourth, the evidence supports that the appellant was suffering significant mental symptoms from about 2005 onwards. This is capable of providing some explanation for the paucity of the system adopted by her

Conclusion

1. Based on these findings it is not necessary to decide the stay application.
2. The orders I make are as follows: 1. Appeal against conviction allowed. 2. I set aside the conviction and the penalty imposed by the Magistrate.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 December 2017