R v Richardson[2013] QCA 241

SUPREME COURT OF QUEENSLAND

[1] MUIR JA:  Introduction The appellant was convicted of fraud after a five day trial in the District Court.  The indictment alleged that the appellant had “dishonestly gained sums of money for RMC COOLOOLA PTY LTD or another” on various dates between 11 January 2009 and 26 February 2009, with the aggravating circumstance that the value of the property was more than $30,000.  The appellant appeals on the ground that the verdict of the jury is against the weight of the evidence.  An application for leave to appeal against sentence was not pursued and it was ordered that the application be refused.

[2] In 2002, a company controlled by the appellant established the Fraser Shores Medical Centre in Hervey Bay by acquiring appropriate premises and engaging Dr Omowaire, a general medical practitioner trained in Turkey, to provide the requisite medical services.  The appellant, or a company associated with the appellant, then acted as the doctor’s sponsor for visa purposes and continued to do so until about 2007.  Dr Omowaire purchased the Fraser Shores Medical Centre with effect from 1 August 2005.

The appellant’s evidence

[3] The appellant gave evidence to the effect that companies controlled by him then established, by a similar process, medical practices in Gympie and Biloela.  The acquirer of the Gympie practice centre was RMC QLD Pty Ltd, which subsequently changed its name to RMC (Cooloola) Pty Ltd.  The identity of the company which established and operated the Biloela practice is unclear.

[4] RMC (Cooloola) sold a 50 per cent interest in the Gympie Family Medical Centre to Dr Newbold and other investors two to three years after the date of the centre’s acquisition.  That was the effect of the evidence, but it is likely that Dr Newbold and other investors obtained shares in RMC (Cooloola) and a promise of a return of 20 per cent per annum on the monies paid by them at the appellant’s direction, rather than any direct interest in the medical centre business or its assets.

[5] At a time not established by the evidence, another company controlled by the appellant, RMC (North West) Pty Ltd, established the Tamworth Medical Centre with funds obtained from private investors such as Dr Newbold.  The appellant initially borrowed for the purpose of establishing the Tamworth Medical Centre before obtaining monies from investors.

[6] On 5 December 2008, the appellant dined with Dr Omowaire in Hervey Bay.  During dinner he raised with Dr Omowaire the prospect of the acquisition by himself or one of his entities of the Fraser Shores Medical Centre.  Dr Omowaire did not reject such a possibility and there was some discussion of the gross billings of Dr Omowaire and the other medical practitioners employed in the practice.  Dr Omowaire told him that the other doctor was paid a salary equal to 60 per cent of his gross billing and that he was trying to engage another doctor.  Referring to what passed between the two men near the conclusion of the dinner, the appellant said:

“We talked about … and I told him that, you know, we’d have a look at it, maybe we can buy something off him.  He did mention, ‘Well, maybe the management.’ I said, ‘Well, look at what we’re doing with the other centres.  You know, let’s look at their – look at the overall proposal.’  He then said he’d be interested in maybe looking at a shareholding in Gympie, if that was going to be available.  So, that was pretty much it.  Enjoyed a bottle of red and probably another glass of wine and, yeah.

All right.  How was it all left with him at that meeting, that dinner?-- I was to get back to him.  He was going to discuss the proposal with his wife, even though as he said, you know, the decision is his, but no, he was – he was – he was fairly keen.”

[7] He telephoned Dr Omowaire the following week and asked if he had spoken to his wife.  Dr Omowaire said, “No, look, give me the proposal, let’s have a look at it”.

[8] He heard in the first week of January 2009 that Australian Medical Centres, referred to by him as AMC, which had about 26 medical centres, predominantly on the Sunshine Coast, was in financial difficulties.  He was approached by AMC’s managing director in January and had discussions with him regarding the provision of a rescue package.  He also spoke to Mr Metropolis, a person with whom he had earlier had discussions concerning the provision of finance for future acquisitions of medical practices by companies controlled by the appellant.

[9] In order to finance the acquisition of medical centres from AMC, the appellant arranged borrowings of “up to $1 million” from a company, The Esplanade One Pty Ltd, controlled by Mr Metropolis.  The borrowings were to be secured by fixed and floating charges over RMC Management Group Pty Ltd and the other companies in the RMC Group, including RMC (Cooloola).

[10] The instrument of charge granted by RMC (Cooloola) to The Esplanade One Pty Ltd was executed on 4 March 2009.  By this time, the Cooroy Family Medical Centre and the Burleigh Medical Centre had been acquired from AMC.  Mr Metropolis and the appellant became directors of three or four new companies, which were set up with a view to acquiring further medical centres from AMC and employing the medical and other staff for the centres.  Fraser Shores Medical Centre was to be “taken under the umbrella”.

[11] Mr Metropolis and/or his companies advanced a total of perhaps $160,000 but failed to make further advances.  Mr Metropolis then claimed to be owed approximately $80,000 interest on the agreed advances.  Mr Metropolis had arranged as a condition of his advancement of money that all the Medicare monies from the various medical centres went into an account controlled by him.  The appellant thus lost the control and use of these monies.

[12] The Cooroy and Burleigh medical practices operated for only six to eight weeks after their respective acquisitions and closed due to a lack of working capital.  Esplanade One Pty Ltd made demand under its securities and claimed that the appellant and his wife owed it $334,000, including default interest.  Whilst these events were unfolding, Mr Metropolis had been negotiating with the landlords of the premises occupied by some of the RMC operated medical centres in New South Wales with a view to taking over the leases from the RMC companies.  As a result of this conduct, the landlords of the premises leased in respect of the Tamworth, Cessnock and Morpeth practices terminated their leases.

The appellant’s dealings with investors

[13] In total, the appellant, through companies controlled by him, obtained approximately $2,500,000 from persons or corporations on the basis that such persons would have a contractual right to a return of 20 per cent per annum on their respective investments.

[14] Against this background, it is convenient to turn to the appellant’s dealings with Dr Newbold, Mr Jeavons and Mr Campbell (“the Investors”), the three persons directly involved in the matters alleged in the indictment.

[15] In an email to Dr Newbold, sent on 5 January 2009, the appellant listed the “investments” made by Dr Newbold and his wife in respect of medical centres owned or operated (or proposed to be owned or operated) by companies controlled by the appellant.  Practices at Tamworth, Gunnedah, Quirindi and Murrurundi were listed under RMC (North West) Pty Ltd.  “Gympie” was referred to as the only practice associated with RMC QLD Pty Ltd and under RMC Hunter Rural Pty Ltd, “Raymond Terrace”, “Morpeth” and “Cessnock” appeared.  No medical practice was listed under “RMC NTH QLD Pty Ltd”.  The email noted, “All of the Jeavons (sic) investments are in the name of the Super Fund and yours are as detailed by you”.  The email further stated:

“I was just in the process of sending out emails to current investors as we have finally been able to get the Hervey Bay one. Dr Omowaire is finding Gov’t red tape almost impossible (surprise surprise,) and his wife recently had twins so he has 5 under 6 to attend to. He has full registration and his other GP has him as Supervisor, so even though [there] will be no necessity for you to take that on you would be an ‘alternate supervisor’ and the other overall communication would be useful.

If you and Laurence [Jeavons] are interested I will forward the usual documentation. The amount is $36 000 each.” (emphasis added)

[16] In an email of 7 January 2009 to Dr Newbold, the appellant asked whether he had had a chance to talk with “Laurence [Jeavons] about the Hervey Bay centre”.  Dr Newbold advised the appellant, in an email later that day, that the Jeavons Superannuation Fund and the Newbold Superannuation Fund would each take “a $36000 shareholding in Hervey Bay”.  Also on 7 January 2009, the appellant emailed Dr Newbold a “letter of offer and application form” and requested that the documentation be checked to ensure “that the information is correct”.  He asked if it was “ok” to send the Jeavons’ documentation to Dr Newbold.

[17] The application form attached to the 7 January email to Dr Newbold was an application for:

“THIRTY SIX THOUSAND ($36 000) Ordinary ‘B’ Class (Dividend) Shares

In R M C Cooloola Pty Ltd at $1.00 each subject to the provisions of the Company (sic) Constitution and as detailed in the Offer Document …”

[18] The document specified a Bank of Queensland account in the name of RMC (Cooloola) into which payment of $36,000 was to be made.  The following appeared in a box at the foot of the application form:

“Please arrange for income distributions to be:

*Credited to my/our account:

Name of the Account:NEWBOLD SUPERANNUATION FUND

BSB Number: [*** ***]Account Number: [*** ***]”

[19] The letter of offer on the letterhead of RMC (Cooloola) relevantly stated:

“RMC (Cooloola) Pty Ltd has been negotiating to purchase the Fraser Shores Medical Centre at Hervey Bay.  This part of a strategy to expand the operations of the Company from owning the Gympie Family Medical Centre to establishing medical centres at Maryborough and Hervey Bay in the north and Bribie Island and Ningii in the south …

Interest will be paid on the same basis as the other investments, i.e. 20% per annum and will be shown separately on the monthly transfers.

I am presuming that you may want to take up this offer and for you to participate in this expansion your investment would be as follows to keep your shareholding at the pro rata level of other investors:

• B Class Shares$ 32 000

I have attached an Application for Shares which you will have to print out and forward back to me at P O Box 2244 WELLINGTON POINT QLD 4160.

Could you also advise when your bank transfer has been made so we can confirm back to you.

If for some reason you do not wish to participate please contact my office so that the shares can be offered to other shareholders.

Once the Offer is closed then new Share Certificates will be forwarded to you together with Deed of Priority to cover your investment which gives you first right of security.  We are working with our Chartered Accountants Bell Partners to further streamline communication and reports and thank you for your patience in this regard.”

[20] The letter also referred to the contemplated expansion of the Fraser Shores Medical Centre by the addition of another general practitioner and to the contemplated acquisition of a medical centre sites in Maryborough and Bribie Island as well as a satellite centre in Ningi.  Similar documentation was provided by the appellant, directly or indirectly, to Mr Jeavons and Mr Campbell.

[21] The evidence does not disclose in detail what happened with the Jeavons’ documentation, but $36,000 was paid in respect of the proposed Jeavons’ investment into the bank account of RMC (Cooloola) on 19 January 2009.  A form of application for “THIRTY SIX THOUSAND ($36,000) Ordinary ‘B’ Class (Dividend) Shares” in RMC (Cooloola) Pty Ltd signed on behalf of “THE TRUSTEES JEAVONS SUPER FUND” was in evidence.

[22] On 12 January 2009, $36,000 paid by the Newbold Superannuation Fund was banked to the credit of RMC (Cooloola)’s account.  The trustees of the Margaret Campbell Trust, a superannuation fund controlled by Mr Campbell, paid $36,000 into RMC (Cooloola)’s bank account on 25 February 2009.

The application of the Investors’ funds

[23] The following transfers from RMC (Cooloola)’s account, into which the investors’ funds were deposited, to the account of RMC (North West) were made: 13 January 2009 – $36,000; 20 January 2009 –$35,000; and 27 February 2009 – $28,000.  The following transfers from RMC (Cooloola)’s account to the account of RMC Management Trust were made: 3 February 2009 – $2,600; 5 February 2009 – $2,500; 18 February 2009 – $2,200; and 25 February 2009 – $4,000.  By 27 February 2009, RMC (Cooloola)’s bank account had a debit balance of $202.66.

[24] The credit balance of the RMC (North West) account on 24 February 2009 was $177.48.  Its credit balance on 3 March 2009 was $27.48.  The opening balance of the RMC Management Trust Account on 8 January 2009 was a debit of $3,744.01.  The account was $1,457.96 in credit on 6 February 2009 and $5,193.01 in credit on 27 February 2009.

The appellant’s contentions

[25] Counsel for the appellant’s submissions were to the following effect.  The evidence of Dr Omowaire showed that discussions had taken place concerning the purchase of the Fraser Shores Medical Centre by RMC (Cooloola).  The appellant swore that it was his intention to purchase the Centre.  The evidence supports that assertion.  Apart from the evidence of Dr Omowaire and the appellant, the evidence shows that the appellant approached the Investors, who already held shares in one or more of the companies within the RMC Group, stating that “RMC (Cooloola) Pty Ltd has been negotiating to purchase the Fraser Shores Medical Centre at Hervey Bay”.  Documentation was provided to the Investors to enable them to subscribe for shares in RMC (Cooloola).

[26] The fact that the monies obtained from the Investors were rapidly paid out of RMC (Cooloola)’s account is explained by the appellant’s evidence that the North West account was “the only interest bearing account that the group had at [that] particular stage”.

[27] In response to the question, “What was the purpose of transferring into other accounts?” the appellant said, “[Within] the group there [were inter] company loans, that’s the way that the company worked”.  Although no money was applied in the purchase of the Fraser Shores Medical Centre, the appellant’s failure to pursue negotiations for the acquisition of the practice is explained by the diversion caused by the collapse of the RMC Group, the appellant’s acquisition and attempted acquisition of some of its assets, the time and energy expended by the appellant in financing arrangements and the precipitate financial decline in the fortunes of the RMC Group as explained in paragraphs [11] to [12] above.

Consideration

[28] The primary judge listed the following particulars of the appellant’s alleged statements or representations to investors in his summing up:

1. That 20 per cent interest would be paid on monies put in.

2. That the money they put in would be used to purchase the Fraser Shores Medical Centre.

3. That RMC (Cooloola) Pty Ltd was in a position to purchase the Fraser Shores Medical Centre at a price which would allow a return of 20 per cent.

4. That a certain number of shares in the company would be issued.

[29] There was no criticism of the summing up.

[30] In an email to Dr Newbold of 5 January 2009, the appellant said of the Fraser Shores Medical Centre, “we have finally been able to get the Hervey Bay one”.  That was plainly false, even on the appellant’s own version of events.  Dr Newbold gave evidence that his statement in an email to the appellant sent on 17 November 2009 that:

“You have accepted money from me with regard to the purchase of a medical practice at Hervey Bay.

You, yourself, have admitted that the purchase did not proceed.

I have indicated to you that I wish to have the money refunded.  You have claimed that it is being held up by the other side.”

referred to a telephone conversation in which the appellant had said that “the sale had fallen through, that he had paid [monies] in deposit to the doctors at Hervey Bay and they were refusing to repay the money”.  Dr Newbold added that the appellant informed him that “one doctor had indicated that he might refund the money, the other one was not going to”.

[31] In cross-examination, the appellant admitted that what he had told Dr Newbold was untrue.  He admitted also that he had probably said to Mr Campbell words to the effect that he had “paid the investment over to doctors selling the practice without carrying out a thorough check on the practice”, that this “was a serious error” and that he was “endeavouring to get the funds back”.  He admitted also that he had said words to the effect that “one of the doctors was prepared to return the funds and the other refused”.  There had never been an agreement entered into by RMC (Cooloola) Pty Ltd for the purchase of Dr Omowaire’s Fraser Shores Medical Centre in Hervey Bay and no money had been paid by RMC (Cooloola) in respect of any proposed or contemplated sale.

[32] In cross-examination, the appellant agreed with the proposition that “all of the medical centres were profitable”.  He accepted that he was “so confident in this that [he] wanted to expand”.  He later accepted that, as at January 2009, although he was paying “20 percent interest to persons … who had put money into the companies” which had responsibility for the medical practices at Innisfail, Raymond Terrace, Murrurundi and Quirindi, the Innisfail practice had not been opened and that the other practices had never operated.

[33] The evidence of Dr Omowaire, if accepted, also disproved the appellant’s claim that RMC (Cooloola) “has been negotiating to purchase the Fraser Shores Medical Centre”.  Even if the appellant’s own evidence in this regard were to be accepted, his limited discussions with Dr Omowaire were of the nature of tentative preliminary discussions with a view to ascertaining whether an offer to purchase would be entertained rather than “negotiations to purchase”.

[34] It is apparent from the matters just discussed, as well as from the following discussion, that the jury was entitled to reject any evidence of the appellant that was not corroborated.

[35] In cross-examination, Dr Omowaire accepted that, over dinner at Hervey Bay on 5 December 2008, the appellant had asked him if he wanted to sell the practice back to him.  He had replied “No” to the request.  Dr Omowaire said that he had invited the appellant to dinner in order to sign a document and that there was “nothing serious about those discussions”.  He accepted that he may have used the words, “Well, let me discuss it with my wife”, but said that this would have been in order to avoid giving offense to the appellant.

[36] Dr Omowaire denied ever having had a desire to acquire any interest in the Gympie medical practice “because … things were pretty hectic in terms of administration and [his] having five children”.

[37] Asked if matters were left on the basis that the appellant would put some offer to Dr Omowaire “at some stage”, the doctor responded:

“He may have said that, but, I mean, he choose (sic) to say – I mean, I can’t force him to – I mean, to say what he wants to say.  It’s up to me to act on what has been said or not.”

[38] Just before this exchange, the doctor had made the point that there was nothing official, formal or lengthy about the discussion.  It was not suggested to Dr Omowaire that the profitability of the practice or a possible sale price were touched upon in the course of the dinner discussion or in the later telephone conversation.  Nor was it suggested that the appellant had contacted the doctor after the December telephone call.

[39] A projected profit and loss account for the year ended February 2010 for the Fraser Shores Medical Centre was put in evidence by the prosecution in the course of Mr Campbell’s evidence-in-chief.  Mr Campbell thought that the document may have been provided to him when he received the offer document and application form.  The document sets out: the expected gross earnings on a monthly basis for each of Dr Omowaire, an employed doctor and, after May 2009, for a second employed doctor; the wages of the employed doctors on a monthly basis; and various expenses including alarm monitoring, bank fees, cleaning, computer costs, electricity, insurance, management fees, petty cash, purchases, rent, staff wages and superannuation.

[40] It was not suggested to Dr Omowaire that he provided any of the figures contained in the document, that he had had any discussion about its preparation or that he had knowledge of its existence.  Neither Dr Newbold nor Mr Jeavons was referred to it.  The appellant said in his evidence that the document was a “projection” for the “12 month period up until February 2010 because that’s when [he] anticipated the Fraser Shores Medical Centre purchase would have been completed”.

[41] The evidence relevant to the representations that the investors’ money would be used to purchase the Fraser Shores Medical Centre and that the appellant was in a position to purchase it at a price which would allow a 20 per cent return may be summarised as follows.  The appellant gave evidence to the effect that he intended to purchase the centre but had not got around to making an offer to purchase, let alone determining a purchase price acceptable to him or obtaining any clear intimation that a reasonable offer was likely to be accepted.  The appellant gave no evidence of how he would have set about determining the purchase price or of how he could be satisfied that the purchase price payable would provide for a 20 per cent return on investors’ money.

[42] The jury were aware that investors were being paid a 20 per cent return on funds invested in respect of medical centres which had never been established.  They were aware also that the investors’ monies had been speedily paid out of the RMC (Cooloola) account and that the monies had then been promptly dissipated.  It was obvious to the jury that a false explanation had been given by the appellant for reasons for the transfer of the monies from the RMC (Cooloola) account.

[43] In the light of the circumstances described above, it was well open for the jury to accept beyond reasonable doubt that when the relevant representations and statements were made, the appellant knew that RMC (Cooloola) was not in a position to purchase the Fraser Shores Medical Centre at all or “at a price which would allow a return of 20 per cent”.  They were entitled also to conclude that the appellant did not intend that the money provided by investors would be used to purchase that centre.  The obvious inference was that the appellant’s intention throughout was that monies obtained from the investors would be deployed at his discretion within the RMC Group.

Conclusion

[44] For the above reasons, I would order that the appeal be dismissed.

[45] GOTTERSON JA:  I agree with the orders proposed by Muir JA and with the reasons given by his Honour.

[46] PHILIP McMURDO J:  I agree with Muir JA.