R v Johnstone[2000] QCA 234

SUPREME COURT OF QUEENSLAND

1. THE COURT:  The appellant was convicted in the District Court at Brisbane on 27 October 1999 of three counts of misappropriation as an employee and acquitted on another five counts.  He appeals against his convictions on the grounds that the guilty verdicts are inconsistent and irreconcilable with the verdicts of not guilty.

2. The eight counts on the indictment each allege that on or about a date specified, the appellant -

"…dishonestly applied to his own use property namely a sum of money namely [an amount specified] the property of BRISBANE ASSOCIATED FRIENDLY SOCIETIES’ DISPENSARY.

And at the time aforesaid [the appellant] was an employee of the said Brisbane Associated Friendly Societies’ Dispensary and the property dishonestly applied belonged to the said Brisbane Associated Friendly Societies’ Dispensary …".

3. Section 408C of the Criminal Code (Qld) relevantly provides –

"(1) A person who dishonestly –

1. applies to his or her own use or to the use of any person –

1. property belonging to another; or

2. obtains property from any person; …

commits the crime of fraud".

4. At the times at which the subject counts of misappropriation are concerned the appellant was the accountant for the Friendly Care Chemists Friendly Society (Australia) Ltd, formerly called Brisbane Associated Friendly Societies' Dispensary ("the Society"). In the case of each count, the misappropriation was alleged to have taken place by means of the appellant's making out a cheque payable to himself on a cheque form in one of the Society's cheque books for an account of the Society with the Commonwealth Bank, and depositing the cheque in an account of the appellant with a bank or building society.  In each case, he completed the cheque butt to show a payee other than himself.

5. The following list sets out the particulars of the cheque and cheque butt corresponding with each count on the indictment –

6. The amount of $5,661.30 coincided with the amount of the monthly repayments made at relevant times by the Society to the United Friendly Societies’ Dispensary in Ipswich on a loan by that body to the Society. The appellant, purporting to repeat the words of Mr Hager, the Society’s managing director and the principal Crown witness, in relation to amounts which should be drawn down by a salary sacrifice said in evidence–

"Why don’t you make it the same as the loan account? That way I can explain to the auditors if they audit the books and go through it, also to the board, if anyone decides to question anything".

7. The appellant gave evidence in which he admitted that, as an employee of the Society, he –

1. made out the above eight cheques payable to himself and deposited them into his own bank and building society accounts; and

2. falsified the details on the cheque butts in order to deceive the auditor, the Society’s Board of Directors and the Taxation Department.

8. The appellant claimed to have been owed the subject moneys by the Society on account of accrued expenses ($10,790), two annual bonuses ($3,000) and additional income ($25,000) which were not disclosed in the records of the Society so as to avoid both payroll tax and personal income tax. The appellant explained in his evidence in chief that the moneys taken by him were payable to him by the Society by way of: moneys due as a result of "salary sacrifice"; the two bonuses; or the recoupment of moneys expended by him on behalf of the Society.

9. He explained the notion of "salary sacrifice" as, after a pay increase, continuing to draw a salary at the old rate, which would continue to be the salary shown in the Society’s books, but at a convenient time, drawing the additional salary "… for either expenses or, you know, whenever you require the money". This procedure, which the appellant said was recommended to him by Mr Hager, not surprisingly, had the effect of reducing the appellant’s income tax and the Society’s liability for payroll tax. The tax returns submitted by the appellant made no reference to the "salary sacrifice" arrangement or to the income alleged by the appellant to be the subject of "salary sacrifice".

10. The appellant swore that the two bonuses referred to above were dealt with by the "salary sacrifice" procedure.

11. In an interview with a police officer, the record of which went into evidence, the appellant did not mention "salary sacrifice", but asserted that the inconsistencies between the cheque butts and the cheques drawn in his favour were errors.

12. As for the expenses, his evidence was that over the relevant period he spent some $10,790 of his own moneys on behalf of the Society on account of matters such as: Directors’ lunches; evening meals for staff working late; staff breakfasts; taxi expenses; and for the replacement of minor items of equipment such as a hot water urn, baby change table, mobile phone and cutlery.

13. Mr Hager accepted that the appellant’s last salary increase from $50,000 per annum to $53,500, which came into effect on 10 September 1996, was not paid to the appellant and "could be classified as a salary sacrifice". His evidence was that no other sums were the subject of “salary sacrifice” by the appellant. He disputed the appellant’s evidence in relation to the accumulation of moneys expended on account of the Society. His evidence was to the effect that he could see no reason why any of the minor sums, for example those on account of lunches, would not have been met from petty cash. Furthermore, he swore that he was not aware of any expenditure on account of larger sums not being reimbursed by the Society against appropriate invoices. No sensible explanation for the appellant’s incurring substantial debts on the Society’s behalf and then reimbursing himself at infrequent intervals was put to Mr Hager for his comment in cross-examination or advanced by the appellant.

14. The evidence disclosed that the second of the two bonuses making up the sum of $3,000 claimed by the appellant was in fact payable at the end of October or beginning of November 1997. It thus did not become due to the appellant until after the last of the relevant cheques had been deposited by the appellant in his account.

15. The appellant was found guilty on counts 1 to 3 on the indictment and not guilty on counts 4 to 8.

16. Mrs Clare, who appeared for the Crown, conceded that the basis for the jury’s differentiating between the first three counts on the one hand, and the remainder on the other was not immediately obvious. The explanation she advanced was that until the date of the appellant’s salary increase on 10 September 1996, the Society’s payroll records in relation to the appellant’s salary accorded with Mr Hager’s evidence as to the amount of the salary. However, Mr Hager accepted that the appellant’s salary had been increased after that date and that this increase was not shown in the Society’s records.

17. Mr Harrison, who appeared for the accused, submitted that to differentiate between the counts on such a basis would be illogical and unreasonable. It was pointed out that counts 4 to 8 involved alleged misappropriations totalling $24,143.20, whereas the "salary sacrifice" in this period was only to the order of $3,500.

18. In Mackenzie v The Queen,^[1] Gaudron, Gummow and Kirby JJ, after propounding a test of “logic and reasonableness” in relation to the circumstances in which a jury’s verdict in a criminal trial may be set aside on the grounds of inconsistency, said -

"Nevertheless, the respect for the function which the law assigns to juries (and the general satisfaction with their performance) have led courts to express repeatedly, in the context both of criminal and civil trials, reluctance to accept a submission that verdicts are inconsistent in the relevant sense. See Mercer v Commissioner for Road Transport and Tramways (NSW) (1936) 56 CLR 580 at 595; Ward v Roy W Sandford Ltd (1919) 19 SR (NSW) 172. Thus, if there is a proper way by which the appellate court may reconcile the verdicts, allowing it to conclude that the jury performed their functions as required, that conclusion will generally be accepted. R v Wilkinson [1970] Crim LR 176. If there is some evidence to support the verdict said to be inconsistent, it is not the role of the appellate court, upon this ground, to substitute its opinion of the facts for one which was open to the jury. Hayes v The Queen (1973) 47 ALJR 603 at 604-605. In a criminal appeal, the view may be taken that the jury simply followed the judge's instruction to consider separately the case presented by the prosecution in respect of each count and to apply to each count the requirement that all of the ingredients must be proved beyond reasonable doubt. R v Andrews Weatherfoil Ltd (1971) 56 Cr App R 31 at 40. Alternatively, the appellate court may conclude that the jury took a "merciful" view of the facts upon one count: a function which has always been open to, and often exercised by, juries. R v Hunt [1968] 2 QB 433 at 436".

19. At the same reference, their Honours also quoted with apparent approval a lengthy passage from R v Kirkman,^[2] which included the following –

"Sometimes juries apply in favour of an accused what might be described as their innate sense of fairness and justice in place of the strict principles of law. Sometimes it appears to a jury that although a number of counts have been alleged against an accused person, and have been technically proved, justice is sufficiently met by convicting him of less than the full number. This may not be logically justifiable in the eyes of a judge, but I think it would be idle to close our eyes to the fact that it is part and parcel of the system of administration of justice by juries".

20. There was ample evidence to support the guilty verdicts. Having regard to the admission by Mr Hager that, in effect, the Society’s books of account did not accurately record the true state of the dealings between the appellant and the Society after 10 September 1996, when the appellant received a pay rise, the jury could properly conclude that it should not convict on all of counts 4 to 8.^[3]  Once such a conclusion was reached it would be but a short, and not irrational step, to conclude that it was impossible to tell which of the payments had been the subject of "salary sacrifice" in whole or in part and which had not.

21. It is the case that four of the five relevant payments exceeded $3,500, but it is impossible to know what conclusion the jury reached in relation to one or both of the bonuses and some of the other evidence about recoupment of expenditure. The fact remains that the first three payments were the only ones untainted by the problems introduced by Mr Hagar’s concessions concerning the unrecorded pay increase on 10 September 1996.

22. It is also difficult in circumstances such as these, where there is evidence that some irregular conduct has been condoned, and thus possibly encouraged by the complainant, to rule out the possibility of a "merciful verdict".

23. For the above reasons, the appellant has not discharged the onus of showing that "no reasonable jury who had applied their mind properly to the facts in the case could have arrived at the conclusion"^[4] reached by the jury.

24. Mrs Clare also submitted that this was a clear case for the application of s 668E(1A) of the Criminal Code.  In that regard she submitted that the learned trial judge, erroneously, left the defence of honest claim of right to the jury.  Section 22(2) of the Criminal Code relevantly provides –

"(2) But a person is not criminally responsible, as for an offence relating to property, for an act done or omitted to be done by the person with respect to any property in the exercise of an honest claim of right and without intention to defraud".

Mrs Clare points out that the appellant’s own evidence was that false records were prepared with a view to deceiving both the Society and the Commissioner of Taxation.  It was also argued that, contrary to the way in which the jury was directed by the learned trial judge, the section does not limit the relevant intention to an intention to defraud the complainant.  The submissions have substance but, having regard to the foregoing conclusions, we do not find it necessary to rule on them.

25. We would order that the appeal be dismissed.