The Queen v Kontos[1997] QCA 206

IN THE COURT OF APPEAL

SUPREME COURT OF QUEENSLAND

C.A.  No. 84 of 1997

Brisbane

[R. v. Kontos]

THE QUEEN

v.

RICHARD ANTHONY STEPHEN KONTOS

Appellant/Applicant

McPherson JA

de Jersey J

Dowsett J

Judgment delivered 15 July 1997

Separate reasons for judgment of each member of the Court each concurring as to the orders made.

APPEAL AGAINST CONVICTION ALLOWED IN PART. RETRIAL ORDERED ON COUNTS 3, 5, 10 AND 12. VERDICT OF NOT GUILTY ENTERED ON COUNTS 2, 4, 6, 7, 8, 9, 11, 13 AND 14. APPLICATION FOR LEAVE TO APPEAL AGAINST SENTENCE GRANTED. APPEAL ALLOWED. SENTENCE TO BE SET ASIDE. IN LIEU THEREOF, APPELLANT TO BE SENTENCED TO IMPRISONMENT FOR A PERIOD OF FIFTEEN MONTHS.  PURSUANT TO S. 19AC THE COURT IS OBLIGED TO MAKE A RECOGNISANCE RELEASE ORDER IN TERMS OF S. 20(1)(b).  APPELLANT TO BE RELEASED IN HIS OWN RECOGNISANCE IN THE SUM OF $500 AFTER SERVING SIX MONTHS, CONDITIONAL UPON HIS BEING OF GOOD BEHAVIOUR FOR A PERIOD OF 3 YEARS FROM THE DATE OF HIS ORIGINAL SENTENCE IN THE DISTRICT COURT.

REASONS FOR JUDGMENT - McPHERSON J.A.

Judgment delivered 15 July 1997

I agree with the reasons for judgment of Dowsett J. in this matter.

The appeal against conviction on count 1 must be dismissed.  On each of counts 2, 3 to 10 and 12 to 14, the appeal against conviction is allowed and the conviction and verdict set aside.  On each of counts 3, 5, 10 and 12, a new trial is ordered. In respect of each of the remaining counts in the indictment, verdict and judgment of acquittal is entered.

The application for leave to appeal against sentence on count 1 is granted.  The appeal is allowed and the sentence set aside.  In lieu, a sentence of imprisonment for 15 months is imposed on count 1.  It is further ordered that, after serving imprisonment for six months, the appellant be released in his own recognisance in the sum of $500 conditional upon his being of good behaviour for a period of three years from the date of his original sentence in the District Court.  The Registrar is directed to give the appellant a written explanation of this order pursuant to s. 16F(2) of the Crimes Act.

REASONS FOR JUDGMENT - de JERSEY J

Judgment delivered 15 July 1997

I agree with the orders proposed by Dowsett J, and with the reasons he has expressed.

REASONS FOR JUDGMENT - J A DOWSETT J

Judgment delivered 15 July 1997

The appellant was convicted of 13 counts of obtaining credit without disclosing his bankruptcy contrary to s. 269(1)(a) of the Bankruptcy Act 1966.  He was acquitted by direction on one similar count, count 11, because the prosecution was unable to call the creditor in question.  The appellant became bankrupt on 5 December 1991.  He admitted, with respect to counts 1 and 3 to 14, that credit in the amounts alleged in the indictment had been obtained.  The issues left for determination in each case were whether or not it was the appellant who had obtained the credit and whether or not he had informed the creditor that he was an undischarged bankrupt. 

As best I can understand, prior to the early part of 1994 the appellant had developed a concept based upon either the letter P or the vegetable pea, or perhaps both.  The word "Peasville" was descriptive of the concept, which involved the developing and marketing of printed and associated promotional material for children.  Prior to 15 April, 1994 he was carrying on business, marketing this concept.  On that date he caused three companies to be incorporated, Peasville Trading Pty Ltd, Peasville Holdings Pty Ltd and Peasville Network Systems Pty Ltd.  He continued as the driving force behind the business, but as an undischarged bankrupt, he could not be involved as a director.  He therefore arranged for his wife (the witness Sheridan) and another man, the witness Barnes to so act.  There is little doubt, however, that they effectively acted at his direction, at least until late 1994.  One or more of the companies operated a bank account or bank accounts.  Charges 3 to 14 all arose out of transactions entered into in connection with a Peasville project.  In respect of these counts, the appellant asserted that whatever he did, he did on behalf of one or other of the companies.  Counts 1 and 2 occurred earlier in time and were not connected with the Peasville project.

The key to the resolution of this appeal is to determine what is meant by the words "obtain credit" in s. 269(1)(a).  Kitto J said, in Tilley v Official Receiver in Bankruptcy (1960) 103 CLR 529 at p. 534:

"The question upon which the appeal depends is whether it can be said a bankrupt 'obtains credit' in the sense in which s. 211(a) uses the expression, whenever he buys goods for which in the light of after events, it is found that he did not pay at once, or whether it is a necessary element in obtaining credit that the other party to the transaction has assented to payment being deferred.  In my opinion the latter is the correct alternative."

Menzies J agreed.  Dixon CJ did not deal with the matter in quite so precise a way, but it seems tolerably clear that his Honour held a similar view.  "Credit" means a deferred obligation to pay a debt.

Prima facie, one would have expected the prosecution to approach the case by seeking to prove that the appellant had dealt with the various trade creditors in such a way as to incur personal liability rather than liability on behalf of one of the companies.  In some cases, the evidence was to that effect.  However, with respect to counts 3 to 14, the prosecution sought to take a broader approach to the problem, alleging that the companies were a sham, designed to conceal the appellant's own trading activities.  The flavour of the case can be derived from some parts of the learned trial judge's charge to the jury.

At p. 342 of the record, his Honour referred to evidence that the appellant had said that his former wife was "trying to take my Peasville off me".  It was suggested that, "If you accept that as an admission, if you interpret it as an admission against interest, then it goes to the question of whether the parties were in truth dealing with Kontos as an individual".  This seems a little unrealistic.  It is not clear whether he was a shareholder in the companies or not, but even if he was not, it would be consistent with experience of corporate affairs that a person should speak about a business set up by him as being "his", even if the legal structure is otherwise.

At p. 346 his Honour said:

"The Crown case is that the real entity to whom credit was extended in each of these cases was Kontos himself.  It is said that he sought and received credit for himself.  It is said that the incorporation of the three companies on 15 April 1994 did not change the true position; it was always Kontos, says the prosecution, just the same."

A little later, his Honour said:

"The prosecution says that Kontos belatedly put up the companies as some sort of screen behind which he operated as he had done, just the same; nothing changed.  The prosecution asks you to look at the real position in each case, to look beyond the incorporation of these three companies.  On these facts, on this evidence you might well find that a conclusion to the effect which is advanced by the prosecution is open to you.":

At p. 347, his Honour posed the question in this way

"Is it possible to look behind the incorporation of these three companies and say to yourself, 'I'm satisfied beyond reasonable doubt that the companies in truth did not get the credit, it was Kontos himself?'"

At a later stage he said:

"... but when the notion of a separate legal entity is used to justify wrong, to protect deception or to defeat the purpose of a statute, the courts will regard the person or people behind the company and, as in a case such as this, look behind that veil in order to see who was the real entity with which creditors had dealt."

At p. 348 his Honour said:

"It is entirely a matter for you to determine in these cases whether you will pull off that mask of incorporation and regard Mr Kontos as the real recipient of the credit."

At a later stage, his Honour said:

"The Crown invites you to pull off that mask and says that the three companies formed on 15 April 1994 were mere ciphers, things of no importance, worth or effect used to enable Kontos to go on as though no bankruptcy order had ever been made against him, to allow him to go on running up credit without telling prospective creditors of the fact of his bankruptcy ...".

At p. 355 his Honour said:

"The big issue is whether or not these companies were set up as a sham in the sense that the prosecution says they were set up as a sham, for Mr Kontos to hide behind for the purpose of raising the funds in order to get the whole affair - this whole concept off the ground ...".

His Honour also pointed out that the appellant had asserted entitlement to the so‑called "intellectual property" associated with the Peasville project and that when relations between himself and the nominee directors broke down, he claimed that all assets of the companies had been transferred to another company.  Again, this fails to take account of the loose language often used in connection with corporate affairs.

Much of what his Honour said was reminiscent of propositions which were expressly disapproved by the House of Lords in Salomon v Salomon & Co, Limited [1897] AC 22.  For example at pp. 30-31 Lord Halsbury LC said:

"I will for the sake of argument assume the proposition that the Court of Appeal lays down - that the formation of the company was a mere scheme to enable Aron Salomon to carry on business in the name of the company.  I am wholly unable to follow the proposition that this was contrary to the true intent and meaning of the Companies Act.  I can only find the true intent and meaning of the Act from the Act itself; and the Act appears to me to give a company a legal existence with, as I have said, rights and liabilities of its own, whatever may have been the ideas or schemes of those who brought it into existence.

I observe that the learned Judge (Vaughan Williams J) held that the business was Mr Salomon's business, and no one else's, and that he chose to employ as agent a limited company; and he proceeded to argue that he was employing that limited company as agent, and that he was bound to indemnify that agent (the company).  I confess it seems to me that that very learned Judge becomes involved by this argument in a very singular contradiction.  Either the limited company was a legal entity or it was not.  If it was, the business belonged to it and not to Mr Salomon.  If it was not, there was no person and no thing to be an agent at all; and it is impossible to say at the same time that there is a company and there is not."

At pp. 42-43 Lord Herschell said:

"It is to be observed that both courts treated the company as a legal entity distinct from Salomon and the then members who composed it, and therefore as a validly constituted corporation.  This is, indeed, necessarily involved in the judgment which declared that the company was entitled to certain rights as against Salomon.  Under these circumstances, I am at a loss to understand what is meant by saying that A Salomon and Co, Limited is but an 'alias' for A Salomon.  It is not another name for the same person; the company is ex‑hypothesi a distinct legal persona.  As little am I able to adopt the view that the company was the agent of Salomon to carry on his business for him.  In a popular sense, a company may in every case be said to carry on business for and on behalf of its shareholders; but this certainly does not in point of law constitute the relation of principal and agent between them or render the shareholders liable to indemnify the company against the debts which it incurs."

His Lordship continued:

"The Court of Appeal based their judgment on the proposition that the formation of the company and all that followed on it were a mere scheme to enable the appellant to carry on business in the name of the company, with limited liability, contrary to the true intent and meaning of the Companies Act, 1862.  ...  Many industrial and banking concerns of the highest standing in credit have, in recent years, been, to use a common expression, converted into joint stock companies, and often into what are called 'private' companies, where the whole of the shares are held by the former partners.  It appears to me that all these might be pronounced 'schemes to enable' them 'to carry on business in the name of the company, with limited liability,' in the very sense in which those words are used in the judgment of the Court of Appeal.  The profits of the concern carried on by the company will go to the persons whose business it was before the transfer, and in the same proportions as before, the only difference being that the liability of those who take the profits will no longer be unlimited.  The very object of the creation of the company and the transfer to it of the business is, that whereas the liability of the partners for debts incurred was without limit, the liability of the members for the debts incurred by the company shall be limited.  In no other respect is it intended that there shall be any difference: the conduct of the business and the division of the profits are intended to be the same as before.  If the judgment of the Court of Appeal be pushed to its logical conclusion, all these companies must, I think, be held to be trustees for the partners who transfer the business to them, and those partners must be declared liable without limit to discharge the debts of the company."

At p. 51 Lord McNaughten said:

"The company is at law a different person altogether from the subscribers to the memorandum; and, though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the company is not in law the agent of the subscribers or trustee for them."

At p. 53 his Lordship said:

"It has become the fashion to call companies of this class 'one man companies'.  That is a taking nickname, but it does not help one much in the way of argument.  If its intended to convey the meaning that a company which is under the absolute control of one person is not a company legally incorporated, although the requirements of the Act of 1862 may have been complied with, it is inaccurate and misleading: if it merely means that there is a predominant partner possessing an overwhelming influence and entitled  practically to the whole of the profits, there is nothing in that that I can see contrary to the true intention of the Act of 1862, or against public policy, or detrimental to the interests of creditors."

The prosecution based the case on counts 3 to 14 upon an asserted broad power to "lift the corporate veil".  This is an expression used by legal writers to describe a small number of circumstances in which courts have, in varying degrees and for limited purposes, looked to the persons behind a company.  I am not aware of any general principle or authority which would justify that course in this case.  There is much in favour of the view expressed by Finlay J. in R. v Ditfort (1987) 89 FLR 427 at p. 433 that at least in criminal proceedings, it is Parliament which must decide whether the corporate veil is to be lifted.  See also the general discussion of this topic by Rogers A-JA in Briggs v James Hardy & Co Pty Ltd (1989) 16 NSWLR 549 at p. 567 and the approach adopted by Young J in Pioneer Concrete Services Ltd v Yelnah Pty Ltd (1986) 5 NSWLR 254 at p. 264.

However, since the decision in Salomon v Salomon, courts have recognised that it is possible for a corporation to act on behalf of one of its members, and even to carry on business as such an agent.  See, for example, Ebbw Vale UDC v South Wales Traffic Area Licensing Authority [1951] 2 K.B. 366, Pegler v Craven [1952] 2 Q.B. 69, Smith Stone and Knight Ltd v Birmingham Corporation [1939] 4 All E.R.116 and Firestone Tyre and Rubber Co v Llewellyn [1957] 1 WLR 464.  This situation is sometimes described as one example of "lifting the corporate veil". 

However, if the prosecution wished to prove that the various companies were carrying on business as agents for the appellant, then it had to accept the onus of proving it beyond all reasonable doubt.  This could be established as an inference from other established facts, but it would have to be the only inference reasonably open.  We did not have the benefit of detailed references to the evidence on this point, and the charge to the jury suggests that it was not an issue at the trial.  The charge rather created the impression that the jury had to decide whether the companies were the appellant's alter egos and if so, then he was guilty.  This was depicted as an almost discretionary exercise, the only suggested guideline being whether the appellant was the "real recipient" of the credit.  This terminology further exacerbated the problem.  The "recipient of the credit" sounds very much like the person deriving the ultimate benefit of the transaction.  This offence, however, is concerned with incurring a liability to pay.  In any event, there was, as far as I am aware, no evidence that the appellant derived any personal benefit from these transactions other than to the extent that benefit to the company may have benefited him.  Although there was some evidence that the appellant treated the business as his own, there was also evidence that he had deliberately chosen to trade using the companies.  It may be that either of two views was open; either he was using the companies as agents, or he had transferred his business to them.  Neither view could have been established beyond reasonable doubt in this case.

Thus the only available approach was for the prosecution to seek to prove that the appellant had dealt with the various creditors in such a way as to create binding agreements with them pursuant to which he undertook deferred liability to pay.  As was said in R v Godwin (1980) 71 Cr.App.R. 97 at p. 99:

"The critical question always is whether on the evidence the bankrupt holds himself out as the person for whom credit is sought, or whether it is for a genuine separate business and not a charade to disguise the fact that he is the person seeking the credit."

The English Court of Appeal dealt with the appropriate approach to the same problem in a different context in Ingram v Little [1961] 1 Q.B. 31 at p.66-7 where Devlin LJ said:

"In my judgment, the court cannot arrive at a satisfactory solution in the present case except by formulating a presumption and taking it at least as a starting point.  The presumption that a person is intending to contract with a person to whom he is actually addressing the words of contract seems to me to be a simple and sensible one and supported by some good authority.  ...

I do not think that it can be said that the presumption is conclusive, since there is at least one class of cases in which it can be rebutted.  If the person addressed is posing only as an agent, it is plain that the party deceived has no thought of contracting with him but only with his supposed principal; if then there is no actual or ostensible authority, there can be no contract. ... Are there any other circumstances in which the presumption can be rebutted?  It is not necessary to strain to find them, for we are here dealing only with offer and acceptance; contracts in which identity really matters may still be avoided on the ground of mistake.  I am content to leave the question open, and do not propose to speculate on what other exceptions there may be to the general rule.  What seems plain to me is that the presumption cannot in the present case be rebutted by piling up the evidence to show that Miss Ingram would never have contracted with H unless she had thought him to be P G M Hutchinson."

In Aitkin Transport Pty Ltd v Voysey [1990] 1 Qd.R. 510, the Full Court quoted with apparent approval a statement by McPherson J (as his Honour then was) in the unreported decision of Parsons and Rochella v Vance (App 7/1994) to this effect:

"The presumption is one of fact and so may be displaced by evidence of a contrary intention.  Such an intention must be ascertained by an objective assessment of the words and deeds of the parties in the light of all the evidence, as well as the actual knowledge of the party seeking to enforce the promise against the individual.  He cannot of course insist upon a contract with the individual if he in fact knows that that individual was acting as the representative of another, whether or not that other is a corporate entity or a natural person or firm.  But it lies with the person seeking to avoid that liability to show that there are circumstances, including such knowledge, sufficient to displace the prima facie inference that he is the one liable on the contract."

The prosecution was obliged to satisfy the jury beyond all reasonable doubt that the appellant acted in such a way as to incur personal liability to the creditor in question, using the test prescribed in Ingram v Little.  The question was not whether  the appellant was carrying on business on his own account or through a company but rather, who had, in each case,  incurred a deferred liability to pay as a result of his negotiations.

Count 1 charged obtaining credit from LFC International Pty Ltd between 1 January and 11 March 1993 in the amount of $11,1348.47.  This was prior to incorporation of the companies, and the count was unrelated to the Peasville concept.  The relevant evidence was that of Mr Tjoeng and Mr Du.  LFC International sold tools to somebody at the request of the appellant.  It was admitted that between 1 January 1993 and 11 March 1993, that company extended credit in the amount of $11,348.47.  On the uncontradicted evidence of those witnesses, the appellant made no suggestion that he was acting on behalf of any other person.  Initially, he was required to provide a cash deposit against which he could draw, but the deposit was subsequently exhausted, as was a "top up" deposit.  He continued to acquire goods on credit to the amount mentioned.  There was also evidence that the appellant did not disclose his bankruptcy.

Count 2 was somewhat different from the other counts.  It charged obtaining credit in the amount of $4,039.00 from Eileen DeZaayer between 1 February and 19 April 1993.  The prosecution case was that the appellant procured the complainant to deposit jewellery with LFC International Pty Ltd (the complainant in Count 1) to secure moneys owed or to become owing by the appellant to LFC.  Underlying this arrangement was another agreement pursuant to which Mrs DeZaayer and her husband were to purchase tools from the appellant with a view to on-selling them at a profit.  The appellant was to obtain the tools from LFC.  No authority was cited for the proposition that to procure another to give security for one's debts is to obtain credit.  I can see no basis for such a proposition.

Count 3 charged obtaining credit in the amount of $27,840 from Jason Michael Webb and Charles Glen Mitchell, trading as Promotion Pictures, between 1 January and 1 October 1994.  This period straddled the date of incorporation of the companies.  It is admitted that the firm in question extended credit during that period in the amount of $27,840.  Mr Mitchell dealt with the appellant and said that he was not told of any client other than him.  The relevant documentation (exs. 58-60) refers to Peasville Holdings, Peasville and Peasville Studios.  There was also a fax addressed to Peasville, but commencing "Dear Richard", apparently a reference to the appellant.  Mitchell said that he may have been asked to send invoices in those various names or he may have seen the names on business cards.  The evidence disclosed no mention of a corporation or of Kontos' bankruptcy.     

Count 4 charged obtaining credit in the amount of $64,918.06 from HBM Print Pty Ltd between 1 March and 23 June 1994.  Again, this period straddled the date of incorporation of the companies.  Mr Michael Wong said that he knew nothing of any companies, however there was substantial evidence that his company had such knowledge.  Exhibit 12 contained two documents.  One was a credit application in the name of Peasville Trading Pty Ltd with an ACN number.  The second was a guarantee from Linda Sheridan of the debts of Peasville Trading Pty Ltd in favour of HBM Print Pty Ltd.  These documents were dated 22 and 29 March 1994 respectively, prior to the incorporation of the company.  Exhibit 28 contained two documents - a quote in the name of Print Liaison Pty Ltd, addressed to Peasville and dated 21 February 1994, and another quote dated 29 April 1994 and addressed to Mr R Kontoss [sic] Peasville Holdings.

Exhibit 29 contained a number of documents, each headed "Invoice/Statement".  They appear to have been order forms from Peasville Trading to Print Liaison.  Exhibit 30 contained an invoice and a statement from the complainant addressed to Peasville Trading Pty Ltd t/a Peasville Studios.  The invoice related to an order dated 2 June 1994.  The statement related to debits dating from 28 April to 23 June 1994, including the amount mentioned in the invoice.  The sum owing at 30 September, 1994 was $58,068.00

Exhibit 12 suggests that the initial application for credit must have been made prior to the incorporation of the companies, although it is difficult to understand how there could have been an ACN number at that time.  The evidence suggests that the complainant must have known of the corporations at an early stage, notwithstanding Mr Wong's assertion that he was told nothing about a corporate structure.  A person who purports to contract on behalf of a non-existent corporation may, in some circumstances, incur personal liability.  See Black v Smallwood (1965-1996) 117 CLR 52.  However, in this case there was no suggestion that the appellant purported to act on behalf of the companies.

Count 5 was of obtaining credit in the amount of $43,135 from Savage Colour Pty Ltd between 1 March and 30 June, 1994. Mr R L Russell, who dealt with the appellant, said that there was no suggestion that the appellant was ordering on behalf of anybody else.  Exhibit 31 contained a number of documents headed "Invoice/Statement", which appear to have been order forms from Peasville Trading to Savage Colour.  They all bore dates in March 1994.  Exhibit 32 contained a statement from Savage Colour Pty Ltd to Peasville Trading which appears to have included most of the amount the subject of the present charge.  Mr Russell said that he was not told that the appellant was an undischarged bankrupt. 

Count 6 was of obtaining credit from Podlich Enterprises Pty Ltd in the amount of $30,926.22.  The relevant witness was Leonard George Marshall who met the appellant in early 1994.  Mr Marshall was asked, "Now, in that meeting was there any mention of a corporate structure?"  He replied, "I can't recall that type of detail actually".  He subsequently became aware of the existence of companies.  He agreed in cross‑examination that there may have been mention of a corporate structure at the initial meeting.

Exhibit 38 was a guarantee and indemnity dated 11 April 1994 by which Linda Kontos guaranteed the debts of Peasville Trading Pty Ltd trading as Peasville Studios.  Exhibit 39 was a document headed "Invoice/Statement".  However it appears to have been an order form from Peasville Trading to Podlich Enterprises.  It was dated 1 April 1994.  Exhibit 40 was a statement from Podlich Enterprises to Peasville Pty Ltd for October, but with no year shown.  It was in the amount of $25,426.22, said to be outstanding for three months or more.  From a very early stage, the complainant must have been aware of the existence or proposed incorporation of a company.  Mr Marshall was unable to exclude the possibility that he had been told this in advance.  

Count 7 charged obtaining credit from Wesley Taylor trading as Taylor Made Fashions in the amount of $55,056.79 between 7 March and 23 November, 1994.  Mr Taylor's evidence was that he met the appellant around 7 March 1994.  The latter sought a quotation for the production of printed T‑shirts.  Supply commenced some time thereafter and continued until October 1994.  Initially, the orders were COD but subsequently, credit was extended.  At some later stage, the appellant informed Mr Taylor that he had formed companies.  Taylor was not told that the appellant was an undischarged bankrupt.  He had been asked to send invoices in a "company name", probably Peasville Studios, or perhaps Peasville Trading.  The relevant exhibits were exs. 33 to 37.  They showed numerous invoices in March and April 1994, addressed to Peasville Trading and Richard Kontos, some of which were marked as "Paid".  There were subsequent invoices addressed to Peasville Studios and Richard Kontos, or Peasville Trading and Richard Kontos, dated from June through to November.  There were also documents bearing dates in May and indicating orders on behalf of Peasville Trading and Richard Kontos.  The difficulty in this case was to identify the time at which the complainant was advised of the formation of the companies and to determine whether he thereafter traded with them.  That the appellant may have told Mr Taylor that he had formed companies would not necessarily mean that Mr Taylor agreed to provide credit to them.  Indeed, he appears to have no real interest in them.  Clearly, credit was extended prior to the incorporation of the companies, but the evidence does not demonstrate that it was in the amount of $3,000 or more.  The problem is further exaggerated by the fact that a small sum, $500, was actually paid in advance. 

Count 8 charged obtaining credit from Crystal Craft Pty Ltd in the amount of $12,224.77 between 1 April and 27 October 1994.  Mr Vincent Gordon Beverly spoke to the appellant a couple of weeks before 21 April 1994.  He was not told that the appellant was an undischarged bankrupt.  The difficulty with this count was that the application for a 30 day trading account was made in the name of Peasville Trading Pty Ltd and included an indication that the business was conducted as a "pty ltd company".  The application was dated 21 April 1994.

Count 9 charged obtaining credit in the amount of $6,927.25 from David Letford trading as Pro Dub between 1 April and 11 November 1994.  Mr Letford met the appellant in late April 1994.  He became a distributor of Peasville products.  He understood the appellant was involved in a company with his wife and a commercial artist, Steven Barnes.  The appellant said that he, the appellant, was a director.  He subsequently produced video recordings at the appellant's request.  Mr Letford was not told that the appellant was an undischarged bankrupt.  The relevant exhibits were exs. 49 to 51.  Invoices were addressed to Peasville, Peasville Network Systems and Peasville Trading Pty Ltd.  There was also a "With Compliments" slip addressed to "Dear David".  Letterhead referred to "Mr Authorpeadick's Peasville Studios" and to Peasville Trading Pty Ltd with the ACN number.  There was an order form dated 2 November 1994 to Pro Dub from Peasville Studios and another letter from a company called "Mr Authorpeadick's Peasville Studios Pty Ltd" dated 23 November 1994.  The witness always understood that the business was operated by a company.

Count 10 charged obtaining credit in the amount of $8,750 from Graetz Enterprises Pty Ltd trading as Watch Out Concepts between 1 June and 23 September 1994.  The principal witness was Kevin Charles Graetz.  He met the appellant in "around May 1990".  He understood that he was the owner of a "company", although he said that he was not sure whether it was a trading business or a company.  It is by no means uncommon for lay people to refer to businesses as companies.  Indeed, the word "company" or an abbreviation thereof often appears in firm names.  He was not informed that the appellant was an undischarged bankrupt.  The relevant exhibits were exs. 41 and 42.  Exhibit 41 contained two order forms from Peasville Studios addressed to Watch Out Concepts.  Exhibit 42 was an invoice addressed to Peasville Studios and dated 2 September 1994. 

Count 11 was the subject of a directed verdict of not guilty.

Count 12 charged obtaining credit in the amount of $8,340.15 from Phillip Edward Levi trading as Levi Press between 1 July and 28 November 1994.  Mr Levi first met the appellant in 1990 and subsequently dealt with him again in mid - 1994.  He was not told that the appellant was an undischarged bankrupt.  He may have been told from time to time to put particular names on bills, including Peasville Trading and Peasville Studios.  The relevant exhibits were exs. 56 and 57.  They showed a series of invoices addressed to Peasville Trading, Peasville and Peasville Studios.  There was a letter addressed to the appellant and dated 28 October 1994 in which the complainant sought arrangements for payment.  There was also a statement dated 6 October 1994 addressed to Peasville Trading. 

Count 13 was of obtaining credit in the amount of $18,511.96 from Evangelist Literature Enterprises Limited between 14 September and 21 November 1994.  The relevant witness was Sidney Wayne Hunter.  He met the appellant around September 1994.  He was told nothing about any corporate structure.  At some stage he was told that "the company will pay".  That appears to have been at a very late stage after the entire bill had been incurred.  He was not told that the appellant was an undischarged bankrupt.  The relevant exhibits were exs. 47 and 48.  They included an invoice and a statement addressed to Peasville Trading Pty Ltd.  There was also a quote dated 15 September 1994, addressed to Richard Kontos.  Mr Hunter said that he was not told anything about a company at any relevant time.  Although his quote was consistent with this evidence, it seems that by the time the invoice and statement were delivered, somebody in the organisation was aware that they were to go to Peasville Trading Pty Ltd.  It may be that a contract was entered into between the complainant and the appellant and that it was later varied by somebody with authority to bind the complainant.  The alternative explanation is that a request was made that the bill be sent to Peasville Trading Pty Ltd, but the contractual arrangements were not changed.  This was the explanation offered by Mr Hunter, although he seemed to be surmising rather than giving his recollection of events. 

Count 14 charged obtaining credit in the amount of $21,749.23 from Quickopy Audio Recording Services Queensland Pty Ltd between 1 October and 21 November 1994.  The relevant witness was Evert Van Mannen.  He was first contacted in March 1994, but not by the appellant.  Orders were placed by other people. After he had sent a second invoice, he spoke to the appellant about payment and was given post‑dated cheques.  It is not clear whether the cheques were for work previously performed or for work in the future.

It is now necessary to determine what should happen with respect to each of the counts.

COUNT 1

This is a much simpler count than any of the others.  There was clear evidence sufficient to establish the charge.  There was no suggestion, either in the evidence-in-chief of the witnesses on behalf of the complainant or in their cross-examination, that there had been any dealings on behalf of a company.  The alleged offence predated the formation of the various Peasville corporate entities.  The only matter put in cross examination was that the appellant had in fact disclosed his bankruptcy.  This was denied by the witnesses.  The obtaining of credit in the amount alleged was admitted.  My only concern about this count has been that the true issues for determination may have been concealed from the jury by the Peasville issue.  In the end, however, I am satisfied that it was fairly put to them. 

At p. 353 His Honour said:-

The crown says to you that in regard to counts 1 and 2, the big issue is did he get the credit without disclosure?"

At p. 354, his Honour said:-

"In regard to Count 1 the prosecution says that he started with upfront payments and then began to order a lot of tools over and above the amount of money that he put down and that is when the credits started to get extended.  There were no companies involved at that stage and yet, says the prosecution, here he is not disclosing his bankruptcy.  Not telling anybody, did not tell Mr Tjoeng or Mr Du that he was an undischarged bankrupt. ..."

At p. 357 His Honour said:-

"The defence - the argument as to whether credit was extended to a bankrupt or to a company is for the jury to decide.  That's perfectly true.  It's a question of fact.  The questions are, did he hold himself out as the contractor or ultimately says the defence whether the business was a charade."

At page 360 His Honour said:-

"In regard to Count 1, the defence says to you the Crown have not shown Kontos didn't tell Mr Du he was an undischarged bankrupt, ..."

I am confident that the jury would have understood that they had to be satisfied beyond all reasonable doubt that the appellant had undertaken the obligation to repay.  This seems not to have been  seriously in dispute on this count.  In those circumstances, the appeal against conviction must be dismissed. 

COUNT 2

I have already explained my reasons for concluding that the appellant did not obtain credit in this case. The appeal against conviction must be allowed and the conviction quashed. A verdict of "not guilty" should be entered.

COUNTS 3 to 10 and 12 to 14

The basis upon which these counts were left to the jury was wrong in law. The proper case for consideration on each count was not explained to the jury in an appropriate way.  All of these convictions must be quashed.  The question arises as to whether there should be a new trial.  In DPP v Fowler (1984) 154 CLR 627 at p.630 the High Court said:-

"The power to grant a new trial is a discretionary one and in deciding whether to exercise it the court which has quashed to conviction must decide whether the interest of justice require a new trial to be had.  In so deciding, the court should first consider whether the admissible evidence given at the original trial was sufficiently cogent to justify conviction for if it was not it would be wrong by making an order for a new trial to give the prosecution an opportunity to supplement a defective case. ... Then the court must take into account any circumstances that might render it unjust to the accused to make him stand trial again, remembering however that the public interest in the proper administration of justice must be considered as well as the interests of the individual accused."

My analysis of the evidence in respect of each count discloses that on some of the counts, there was sufficient evidence to support a conviction but that on others, the evidence was such that a conviction was quite unlikely because of evidence establishing that the respective complainants were aware of the existence of the corporations at a relevantly early stage.  It would be technically possible for the prosecutor to mount prosecutions based upon the proposition that the companies were acting as agents for the appellant, but as they did not do this at the original trial, it would, in my view, be inconsistent with the decision in Fowler to allow them to do so at a retrial.

The evidence on counts 3, 5, 10 and 12 may have justified convictions and I would order retrial on those counts.  I would enter verdicts of "not guilty" on the other counts.

There remains only the question of the application for leave to appeal against sentence in respect of count 1.  The appellant was sentenced to imprisonment for a period of 3 years on each of the counts on which he was convicted.  This was the prescribed maximum penalty. Although that sentence may have been justified as the total sentence for 13 counts, it clearly cannot be justified for one count. He should have leave to appeal. He was born on 8 February 1949 and so is presently 48 years of age.  He had previously been convicted of wilful and unlawful destruction of property in the night time and wilful and unlawful damage to property, both of which offences were committed in July 1992. He was released on recognisance without a conviction being recorded. He was married in 1974 and has two children of that marriage, although it has been dissolved.  He subsequently married the witness Sheridan in 1993, but that marriage has also been dissolved, probably as a result of dealings canvassed at the trial.  He appears to have had gainful employment for most of his life, although some of it has been in connection with dubious ventures.

At the time of these offences, he was in the course of his third bankruptcy.  The first was from 23 July 1974 until 15 May 1980. No dividend was paid to creditors. The second was from 3 December 1984 to 4 December 1987. Again, no dividend was paid to creditors. Thus he has had substantial involvement in trading at the expense of others.  Whilst it is not possible to equate bankruptcy with previous criminal misconduct, nonetheless, a number of bankruptcies may demonstrate a tendency to trade without regard to the consequences for others. This is also a characteristic of the conduct which is the subject of the present charge.                We were referred to the decision of the Court of Criminal Appeal in R v Winston (CCA 86/197 - judgement delivered on 24 September 1986).  That applicant was charged with a number of offences similar to the present one. The total credit obtained was in excess of $88,000.  The applicant was a much younger man but had a very serious criminal history for offences of dishonesty. He had been to jail on one previous occasion.  He was sentenced to 2½ years imprisonment. This was not interfered with on appeal.

We were also referred to three decisions by judges at first instance. The first was Casey v Field, a judgment of White J in the South Australian Supreme Court. This was an appeal by the official receiver against the penalty imposed by a stipendiary magistrate on eight counts of obtaining credit totalling more than $20,000, without disclosing bankruptcy.  The offender was previously of good character and suffered from ill-health.  The bankruptcy during which he had committed the offences was completed before they were discovered, but he was again in bankruptcy at the time he was sentenced.  He had been an alcoholic at the time of the offences. He was sentenced to imprisonment for one month on each count, the sentences to be served concurrently, with an order for immediate release upon entering into a bond.

R v. Scott was a decision of Millhouse J in the South Australian Supreme Court.  There were two offences involving about $35,000.  The offender was female, aged 49 years and married to a service pensioner.  Her husband was not well.  She was sentenced to imprisonment for two years and six months to be released after 12 months on entering into a recognisance.  R v Allison was a decision of his Honour Judge Neesham in the Victorian County Court.  The offender pleaded guilty to five counts on indictment and four summary charges, all alleging breaches of the Bankruptcy Act.  He had previous convictions for minor theft.  The total indebtedness was very great.  He was aged 64 at the time of sentence.  The effective sentence imposed was imprisonment for two years and one month.  He was to be eligible for release on recognisance after serving 18 months. 

Storen v The Queen (1993) 115 FLR 210 was a decision of the Court of Criminal Appeal in South Australia concerning 13 separate offences against the Bankruptcy Act.  The total loss to creditors was almost $30,000, plus a further amount in unpaid rental of $5,550.  Taken into account on sentence were 59 admitted Social Security offences involving overpayments of almost $15,000.  The appellant was aged 45 years at the time of sentence.  He was sentenced to imprisonment for a total of four years with a non parole period of two years.

It is difficult to reconcile these sentences. It is important to keep in mind that as a result of the appellant's success in relation to the other counts, he is to be sentenced for only one offence.  He has no previous history of offences of dishonestly, but as I have said, he has previously been twice bankrupt. The amount involved in this offence was in excess of $11,000, which is a substantial amount. As demonstrated by the learned sentencing Judge, the first step which must be taken is to decide whether or not the Court is satisfied that no sentence other than one of imprisonment is appropriate in all the circumstances.  It was accepted at first instance that the current offence was a prescribed offence for the purpose of Section 17A, and I proceed accordingly.  I consider that the blatant nature of the offence and the amount of property involved render it inappropriate to impose a penalty other than one of imprisonment.  I take into account particularly that he had been previously bankrupt and so ought to have been aware of the consequences of his conduct.  The only inference reasonably open is that he acted with deliberate disregard for the Bankruptcy Act. 

Given that this offence must, for present purposes, be seen as an isolated incident, it would be inappropriate to impose the maximum sentence.  He should be treated as a first offender, and although I consider that a period of imprisonment is called for, the offence does not justify the maximum.  The appeal must be allowed and the sentence set aside.  In lieu thereof, I would sentence him to imprisonment for a period of fifteen months.  Pursuant to s. 19AC the court is obliged to make a recognisance release order in terms of s. 20(1)(b).  I would direct that he be released in his own recognisance in the sum of $500 after serving six months, conditional upon his being of good behaviour for a period of 3 years from the date of his original sentence in the District Court.

I would direct that the Registrar give to the appellant a written explanation of this order pursuant to s. 16F(2) of the Crimes Act.