ee Be 1N THL FEDERAL COURT GF AUSTRALTa ) ) 7 QUEENSLAND .......... DISTRICT! RUGLSTRY JQ1d. Ho. G.Lt.... of 1977 ) . GENERAL, ..... +... DIVISION ) On appeal from the Supreme Court of the Northern Territory of Australia. BETWEEN 2 cece cece c cece e nec ccer ence eeenes seceeeteseseeertenee Appellant' AND $e ec cece eee Se ee ras . DHE. QUEEN. eee seeaees Respondent QRDER JUDGE(S) MAKING ORDER : ST.JOHN, NORTHROP, TOOHEY JJ. DATE OF ORDER : 30 NOVEMBER, 1977 WHERE MADE ; DARWIN, N.T. SIE COURT ORDERS THAT: 1. The appeal be dismissed. 2. 3. Date Entered: DISTRICT KECISTRAR. CATCHWORDS Criminal Appeal - Fraudulent Conversion - written agreement - function of Judge and jury - content of unsworn statement - misdirection incapable of prejudicing appellant - discretion under Section 28 Federal Court of Australia Act 1976. Garry Bowden Stephens and The Queen Qld. No. G.1 of 1977 Before St.John J., Northrop J., Toohey J. Darwin, 30 November, 1977. IN THE FEDERAL COURT OF ) ) Qid. No. G.1 of 1977 OF AUSTRALIA ) GENERAL DIVISTON - On appeal from the Supreme Court of the Northern Territory of Australia. BETWEEN: GARRY BOWDEN STEPHENS Appellant - and - THE QUEEN Respondent REASONS FOR JUDGMENT : Ni Bae 72 2 Leen, P72 Coram: ST.JOHN J. NORTHROP J. TOOHEY J. woe The appellant appeals against his conviction on five counts of fraudulent conversion. The indictments were similarly framed, in each case alleging that between certain dates in 1975 the appellant, having been entrusted with property, viz. a cheque, "in order that he Garry Bowden Stephens apply or pay the proceeds thereof in accordance with a certain 'building agreement entered into with (the persons therein named, being the drawer or drawers of the cheque in question) fraudulently converted to his own use and benefit or the use or benefit of Seatoun Pty. Ltd." the sum mentioned in the indictment. Unfortunately the indictments were not included in the appeal books and the court was forced to rely upon a reconstruction based on 1unformation telephoned from Darwin to Brisbane. Subsequent examination of the indictments revealed that they were in the terms set out in the first paragraph herein. Each indictment alleged an offence against S.1(1)(a) of the Criminal Law Amendement Act 1902 of South Australia which is part of the received law of the Northern Territory. In broad terms that legislation requires for the commission of an offence that there be an entrustment of property to be retained in safe custody or applied, paid or delivered for any purpose or to any person and the fraudulent conversion - _ oc the use or banefit by the person so entrusted to his own use or benefit,oft another of that property. 2/2 The notice of appeal relied upon a number of grounds, but in the main they were based upon or at any rate depended upon showing that the evidence of "entrustment" was such that the case should not have gone to the jury or at least that there was a misdirection by the learned trial Judge on matters relating to entrustment. To understand the substance of the appeal it is necessary to refer to some extent to the evidence although much of it played no part in the hearing and indeed some had little relevance to the real issues before the Judge and jury at the trial. Seatoun Pty. Ltd. was incorporated in Queensland. Although it carried on business in the NorthernTerritory it was not registered as a foreign company. It was referred to at the trial as a "$2 company", a reference to its paid up capital. The appellant and his wife were the only directors and shareholders of the company and the appellant as the holder of A class ordinary shares was alone entitled to attend and vote at its meetings. Following the cyclone in December, 1974 there was an urgent need for accommodation in the Northern Territory. Seatoun entered into an arrangement with a Queensland company bearing the somewhat unusual name of Family Joy Enterprises Pty. Ltd., to supply prefabricated housing units, to be manufactured in Queensland and delivered to Seatoun in the Territory. Thereafter Seatoun entered into a number of --/3 bu2zlding agreements with persons in.the Territory including those whose money was alleged to have been fraudulently converted. In each case a cheque was drawn in: favour of Seatoun and was paid by the appellant into an account established by him with the Bank of New South Wales in Darwin in the name of Seatoun Pty. Ltd.. Because at a later stage the appellant established another account in the company's name with the same bank, which account was entitled Seatoun Pty. Ltd. No.2 account, the earlier account was often referred to during the trial as the No.1 account. As already mentioned, the indictments referred to "a certain building agreement entered into ...". Anyone reading those documents might be pardoned for thinking that the building agreements were entered into by the appellant but this was not so. On each occasion there was a written agreement made between Seatoun and the drawers of the cheques who were in all cases but one husband and wife. Not surprisingly at the time the cheques were handed over there was some conversation between the drawer or drawers or one of them and a representative of Seatoun. In the case of one of the indictments, that involving Graham David Mauger and Carol Frances Mauger, the discussion was with the appellant personally; in the others it was with an employee of Seatoun, Cuneen or Dwyer. The Maugers handed their cheque to the appellant. The others handed their cheques to Cuneen or Dwyer who in turn delivered them to the appellant. .-/4 Tt was the Crown's submission that it was only the written agreement that was relevant, the conversations being no more than that. It was the Crown's further submission that if the discussions should be regarded as having had some contractual effect it was not such as to extend in any way helpful to the appellant the scope of his authority to deal with the moneys in question. The appellant's argument was somewhat elusive in this respect. But in effect his submission was that whether or not the conversations were truly admissible they were admitted and that they threw light upon the intention of the contracting parties at the time the agreements were made. And, so the argument ran, they had the effect of broadening the appellant's authority and the learned trial Judge erred in failing to explain sufficiently to the jury the effect of those discussions. The significance to be attached to the conversations is tied up with another matter, the role of the Judge and of the jury in regard to the written agreements. Neither counsel for the appellant nor counsel for the Crown was prepared to say that the construction of each written agreement was a matter for the learned trial Judge. Counsel for the appellant was disposed to argue that 1f the document was capable of more than one meaning, those possible interpretations should be explained to the jury leaving it to them to determine the true meaning of the document. The approach of the Crown was to say rather that the meaning of the document was a matter for the jury except that if it was incapable of bearing a particular interpretation sought to ../5 be ascribed to it, the function of the Judge was so to direct the jury. In our view neither of those submissions was well founded. As we shall seek to explain, what was involved was not truly the interpretation of the written agreement, because the meaning of the words in it was not in doubt. What was in issue was the proper construction of the document, namely the effect of the words used. See Life Insurance Co. of Australia Ltd. v. Phillips (1925) 36 C.L.R. 60 at p.78. In our opinion in a jury trial, civil or criminal, it is for the Judge to determine the proper construction of a written document. "The construction of all written instruments belongs to the Court alone, whose duty it is to construe all such instruments, as soon as the true meaning of the words in which they, are couched, and the surrounding circumstances, if any, have been ascertained as facts by the jury: and at is the duty of the jury to take the construction from the Court, either absolutely, if there be no words to be construed as words of art, or phrases used in commerce, and no surrounding circumstances to be ascertained; or conditionally, when those words or circumstances are necessarily referred to them." Neilson v. Harford (1841)8 M. and W. 806 at p.823. See also R. v. Ward (1938) 38 S.R. (N.S.W.) 308 at p.316. If an agreement is said to be partly written and partly oral it is we think for the Judge as a question of law to determine whether the oral statements are capable of having contractual effect. It is then for the jury in the light of any directions ../6 given by the Judge as to the proper construction of the documents and the legal effect of the oral statements to determine what the agreement was. In Deane v. The City Bank Sydney (1905) 2 C.L.R. 198 at p.209 Griffith C.J. said: "It is another well known rule of construction, that, when a contract is partly in writing and partly verbal, all the circumstances may be looked at and considered for the purpose of construing the contract, and even to vary the written documents, and the whole matter is one for the jury. In the present case the first question is, what 1s the agreement? Is it the writing, or the verbal conversation, or is it to be gathered from the conversation and the letter with all the other circumstances? Possibly it was open to the jury to find that the agreement was contained in the writing, but whether it was or not was a preliminary question of fact for the jury to determine on the evidence." We do not think that what we have said regarding the Judge's function to decide whether oral statements are capable of having contractual effect is in conflict with that passage. And nothing we have said is intended to detract from the proposition that an accused's guilt or innocence is a matter for the jury. See the discussion in R. v. Yager (1977) 13 A.L.R. 247. There is no doubt that the learned trial Judge left to the jury as a matter entirely for it the terms of the agreement the subject of each indictment. See for instance pages 505, 506, 513 and 518 of the appeal book. It is enough to .-/7 mention two passages which read: "And I will then leave it to you to decide - to decide what was the true agreement — what was the bargain between the parties. And I will leave it for you to decide that on the documents, not as lawyers, but as ordinary people, using your commonsense,", and: "But in dealing with this subject, that is the interpretation of the agreement, I dq not wish to be regarded as directing you on the law. I want to leave it to you as ordinary people to assess in your own minds what that agreement means ...". Now the appellant does not complain that this matter was left to the jury: rather his concern is that the learned trial Judge failed to direct the jury as a matter of law how each of the written agreements might be interpreted, failed adequately to direct the jury as to how oral evidence might have clarified, qualified or widened the terms of the written agreements, and failed, as 1t is said, adequately to point to "exculpatory interpretations" and over emphasised ""inculpatory interpretations". To reach a decision as to the weight to be attached to those grounds of appeal it 1s necessary to construe the written agreement and then to determine whether there was in the evidence of conversations anythang that might be regarded as having some contractual operation. The written agreements recited that Seatoun, the builder, had agreed to erect a cyclone proof home on the owner's land within 10 weeks of written approval of the plans and specifications by the local authority. In each case the building owner required finance and clause (d) of the agreement ../8 obliged the owner to endeavour to obtain it. That clause then continued: "On approval of such finance, then both parties agree to be bound by this Agreement and its conditions therein. Should finance not be approved, then all moneys paid as deposit, will be refunded to the owners". Thus the arrangement entered into by the parties was subject toa condition precedent. In no case was finance approved. By clause (e) it was expressly agreed that immediately approval for finance had been given, "the builder will be given authority to use any funds held in trust for the purpose of fulfilling in part his obligations under the terms of the Contract". That is the only reference to funds being held "in trust". Clause (f). provided: "Notwithstanding anything herein contained, it is agreed that the builder is not bound to proceed with any portion of this Agreement until such time as he has been notified in writing that the owner's finance has been approved, save that he may, if he so desires, submit the plan and specification to the Local Authority in order to obtain approval."". By clause (g) it was agreed that should finance not be approved within 30 days either party might terminate the Agreement "anjall moneys paid by way of deposit will be refunded in full, except those moneys used for the preparation of plans etc. or incidental to obtaining approval ...". The agreement did not define "in trust" or "moneys paid by way of deposit". --/9 Clause (h) provided that "progress Revments will be made by the owner in the following manner:- ...". The clause had provision for the insertion of a sum of money to be paid "on the signing hereof". It then went on to specify percentages, presumably of the contract price. A curious feature of this clause is that the percentages specified total 100% so that the initial payment although described as a progress payment was in fact somethangover and above the contract price. The explanation for this seems to lie in a note at the end of clause (h) which read, "The amount shown in (1) above, paid as security deposit, shall be refunded to the owner on completion of the contract". Reading the document as a whole it is clear that the initial payment (and it should be said that this was the payment upon which each indictment was based) was to be refunded to the owner on completion of the contract. If these be "moneys paid by way of deposit", there being nothing else to answer that description, Seatoun was obliged in the event of finance not being approved within 30 days and the agreement being terminated, to refund those moneys in full except to the extent that they may have been used for the preparation of plans or "incidental to obtaining approval", presumably approval of the plans by the Local Authority. Presumably too on approval of finance those moneys would have been available to Seatoun to fulfill its obligations under the contract, they answering the description "any funds held in trust". It is hard to see what other moneys --/10 Re me CR ee eee ee 10. could have been envisaged by clause (e) although in the course of argument counsel suggested that a building owner intending to travel overseas might wish to lodge additional moneys with Seatoun against payments due under the contract. This, however, seems an unlikely contingency. Be that as it may and whatever the obligation of Seatoun once Finance had been approved, we are in no doubt that until it had been approved the initial payment made by each building owner imposed on Seatoun an obligation to earmark it and hold it separately from other moneys. It follows then that the learned trial Judge should have directed the jury as a matter of law that Seatoun received each cheque on the basis that it would be held in trust at least until finance had been approved subject only to a right 1n the company to use that money for the preparation of plans or for other purposes connected with obtaining the approval of the Local Authority. The appellant contended that evidence of conversations between the drawers of the cheques on the one hand and Cuneen, Dwyer and the appellant on the other was admissible to explain the written agreement, or by way of collateral agreement or as a further alternative by way of amendment to the written agreement. In our opinion this submission cannot be sustained. It is unnecessary to refer to the authorities dealing with the admissibility of extrinsic evidence of those dealing with collateral contracts or oral variations of written contracts. The evidence of Harold Law Gwynne, -/1L il. Ronald Mervyn Coon, Anthony Robert Tilley, 'Brian John Chase and Graham David Mauger, each of whom drew one of the cheques in question, did not on any view of it constitute an agreement or even an understanding that pending approval of finance the cheques might be used for any purpose other than the limited one to which I have just referred. It was not in issue that the moneys specified in the indictments were in fact withdrawn by the appellant and used by him for other purposes. S.1(1)(a) of the Criminal Law Amendment Act of 1902 renders liable to conviction "Whosoever - Being entrusted ..." fraudulently converts the entrusted property. The 1902 legislation repealed Ss. 199 and 200 of the Criminal Law Consolidation Act 1876 and by S.2 provides that S.1 "shall be deemed to be substituted for Ss. 199 and 200 of the Act -+-". Ss. 199 and 200 were among those sectiors preceded by a heading "Frauds by Trustees, Agents, Bankers or Factors" and S.1 of the 1902 legislation must be read in the same way. Both Ss. 199 and 200 used the expression "intrusted" and then specified categories of persons intrusted, be they banker, merchant, broker, attorney or agent. By 1876, at any rate, South Australia had sought to overcome a difficulty found at common law whereby larceny as a bailee was not committed by a person to whom property was entrusted, who had dealt with it in the manner contemplated and then misapplied it 1n the form to which it had been converted. See generally Howard: Australian Criminal Law (Second Ed.) 188-191. .-/12 12. An essential question for the jury was whether the appellant received each cheque under an obligation to deal with it an a particular way or whether his obligation was no more than to account for the money in the event that finance was not approved. In Russell On Crime Chapter 63 the Matter is put this way: "From the cases so far discussed it can be seen that it is essential that there should be a fiduciary element in the accused person's relation to the property alleged to have been fraudulently converted by him". See also R. v. Ward (supra) at p.317. The appellant did not seek to make anything of the fact that each cheque was made payable to Seatoun nor that it was Seatoun's account from which the money was withdrawn. He put his case fairly and squarely on the basis that whether each agreement made by Seatoun was wholly in writing or partly in writing and partly oral the arrangement under which each cheque was handed over unvolved no more than an obligation to account. As we have indicated such a case is not warranted by the evidence. In the view that we have taken of the proper construction of the written agreement and of the significance of the conversations there was ample evidence of entrustment for each case to go to the jury. In permitting the jury to reach its own conclusion as to the proper construction of the written agreements and in leaving it to the jury to treat the conversations as part of the agreement under which each cheque was paid, the learned trial Judge was in error but in no way was 1t an error prejudicial to the appellant. It could have operated only to his benefit having regard to what we have said regarding the written agreements and the conversations. --/13 13. We have considered whether the appellant could have suffered some prejudice by reason of the failure of the learned trial Judge to distinguish sufficiently between the agreements under which the moneys were paid and the appellant's state of mind which was highly relevant to the question of fraudulent conversion. But having considered the evidence we can see no prejudice in this regard. A further ground of appeal was that the learned trial Judge interrupted the appellant while he was making an unsworn statement. The learned trial Judge did interrupt the appellant with a view to persuading him to confine his statement to relevant matters. His Honour had earlier, in the absence of the jury, expressed his concern to the appellant's counsel about the need for the statement to be relevant and factual. The appellant's statement was lengthy, rambling and at times irrelevant to the issues which the jury had to determine. In making an unsworn statement an accused is not entitled to roam at large but must confine himself to what is relevant, R. v. Kilby (1970) 1 N.S.W.R. 158, R. v. Wyatt (1972) V.R. 902. In our view the learned trial Judge was more than indulgent to the appellant in permitting him to go on in the way in which he did. And His Honour's quite gentle admonitions were not of a nature of which the appellant can properly complain. The question now is, what should be 'done in regard to this appeal. Section 28 of the Federal Court of Australia Act ../14 1976 in which the powers of this court on appeal are set out confers a discretion although no doubt to be exercised judicially. The jury was misdirected but the errors could have operated only to the benefit of the appellant. Had the jury been properly instructed the same result was inevitable. It cannot be said that the appellant aid not have a fair trial in the sense discussed in R. v. Ireland (1970) 126 C.L.R. 321 and Leary v. R. (1975) W.A.R. 133. We are of the opinion that the appeal should be dismissed. acee