Stokes v Woods[2010] QDC 330

DISTRICT COURT OF QUEENSLAND

1. [1]
   This is an appeal under section 222 of the Justices Act 1886 (the Act) against a decision of the Magistrates Court made on July 17, 2009. After a 7-day trial, the appellant was convicted of 2 counts of carrying on an investment advice business whilst unlicensed (or not exempt), contrary to sections 781(a) and 1311(1) of the Corporations Act 2001 (Cth) (the Corporations Act). The appellant was sentenced to a suspended term of 4 months imprisonment.

2. [2]
   The appellant relied upon a number of grounds, the first of which was that the magistrate erred in permitting the Commonwealth prosecutor to amend the charges after the prosecution had closed its case. The appellant was convicted of the amended charges.

3. [3]
   Originally, the charges alleged that at all relevant times and places, the appellant held out that he was an investment adviser whilst unlicensed (or not exempt), contrary to sections 781(b) and 1311(1) of the Corporations Act.

4. [4]
   The amendment to the charges (which was opposed by the appellant before the magistrate) was made under section 48 of the Act, which authorises an amendment where there is a “variance” between the complaint and the supporting evidence adduced at the hearing.

5. [5]
   In Felix v Smerdon (1944) 18 ALJ 30, the High Court held that:

“A variance exists when an offence which is charged is established with some variation or difference in detail; but where the offence is really a different offence, then the term ‘variance’ is not applicable’.

6. [6]
   Factual examples illustrate the application of this principle.

7. [7]
   In Hayes v Wilson, ex parte Hayes [1984] 2 QdR 114, the Full Court (Macrossan J, as he then was, dissenting) held that there was an amendable variance between a charge of driving a motor vehicle and the “cognate” offence of being in charge of a motor vehicle. That was because, as Campbell CJ said (at 128), “a person who is driving a motor vehicle is ‘in charge’ of it when driving”.

8. [8]
   Similarly, in Mbuzi v Torcetti (2008) 50 MVR 451, the Queensland Court of Appeal held that there was an amendable variance between a charge of driving across a single white centre line and one of driving across double white centre lines. That was because, as the Court said (at [28]), the original and substituted offence each concerned “a driver’s general obligation to keep to the left … [and] not to cross a marked boundary on the road surface.” Thus they were cognate offences.

9. [9]
   By way of contrast, in Surman v Police (1996) 65 SASR 42, the Supreme Court of South Australia held that there was an unamendable difference―and not an amendable variance―between a charge of attempting to put in motion a motor vehicle and one of driving a motor vehicle.

10. [10]
    Similarly, in Wade v Evans (2003) 39 MVR 301, the ACT Supreme Court held that there was an unamendable difference―and not an amendable variance―between a charge of driving while licence cancelled and one of driving while disqualified. Connolly J said: [emphasis added]

“[14] … [c]ounsel for the respondent submitted that the amendment ‘did not change the factual matrix’, rather it changed the legal matrix as to how the offence was generated. Both the original charge and amended charge allege that the appellant was driving. The amendment simply corrected the legal basis as to why the appellant was committing an offence by driving.

[15] It seems to me that this submission overlooks the importance to the criminal justice system of requiring the prosecution to prove the particular charge against a defendant. An accused person is entitled to prepare for trial on the basis of the offence with which he is charged, and to allow the prosecution to charge a different offence at the close of the prosecution case, when it becomes apparent that the offence with which he has been charged cannot be made out, carries the real risk of injustice. …

…

[18] … The proper course at the time would have been to have dismissed the incorrect charge, and to have allowed the prosecution, if it wished, to begin afresh with a charge on the appropriate offence. …”

11. [11]
    Those are very powerful considerations, in my opinion.

12. [12]
    There is an essential difference between a person’s holding himself out, as opposed to carrying on, business. “Holding out” means to represent (OED 2d, VII, 299 (41d)), whereas “carrying on” business means to manage (OED 2d, II, 920 (22a)) or conduct some form of commercial enterprise, systematically and regularly, with a view to profit, and implicit in this idea are the features of continuity and system: Hyde v Sullivan (1956) 56 SR (NSW) 113, 119. Self-evidently, each term focuses upon particular (but different) conduct or activities.

13. [13]
    Specifically, “investment advice business” is defined in sections 9, 77 and 92(1)(c) of the Corporations Act as, relevantly, a business of advising other persons about interests in a managed investment scheme―broadly, a scheme where people make financial contributions which are then pooled to produce financial benefits, but where the member/contributors do not have day-to-day operational control of the scheme.

14. [14]
    In the former case (holding out), the allegation will be that the person represented to others by doing various acts and things that he was an investment adviser―and thereby held himself out as an investment adviser. For example, he may have maintained a listing as an investment adviser in a telephone or business directory, or expressed a willingness to accept clients, or used a letterhead indicating activity as an investment adviser, or the like.

15. [15]
    In the latter case (carrying on business), the prosecution will focus upon the acts and things that the person allegedly did to conduct or manage the business―and thereby to carry on an investment advice business. For example, he may have sold investment advice, or exchanged letters or phone calls with clients and others, or developed, analysed and managed financial plans and client portfolios, or made investments for members, or received financial contributions or fees for services, or the like.

16. [16]
    The respondent Commonwealth submitted that although the complaint was amended, the conduct alleged against the appellant remained the same, as did the evidence and the particulars―although the particulars set out on pages 10 and 11 of the magistrate’s reasons seem to relate only to “carrying on a business”. It also submitted that the appellant was afforded the opportunity to further cross-examine the prosecution witnesses but chose not to do so. Thus, it was said, the appellant was not prejudiced by the amendment.

17. [17]
    If the first part of that submission implies that the original and substituted offences were really just alternatives and that that supported the amendment, it is important to note that in summary proceedings, charges may not be brought in the alternative: Hayes v Wilson (supra) at 114 per Macrossan J. Further, even if the same factual circumstances gave rise to each of the alleged offences, the offences were different from each other and possessed separate and “distinct aspects”: cf Lloyd-Groocock v Police (2008) 102 SASR 465, per Doyle CJ at [58]. That is quite unlike the cognate offence examples of driving or being in charge of a motor vehicle, or driving across single or double white lines―where there was no real difference or distinct aspects involved in the offences concerned.

18. [18]
    Finally, the amendment to the charge substituted an essentially different (and not cognate) offence, in my opinion, from that which was originally charged. Accordingly, the operation of section 48 was not properly enlivened and the “no prejudice” argument is not relevant.

19. [19]
    This case differs from Paulger v Hall [2003] 2 QdR 294 (CA), where such a “no prejudice” argument was accepted (see at [36])―but in circumstances where the antecedent question of whether there was an amendable variance was answered in the affirmative. Moreover, no example was cited of the “no prejudice” argument being accepted where there was also an unamendable difference between the original and substituted offences.

20. [20]
    It follows that the appeal will be allowed and the conviction and sentence quashed. In the circumstances, it is not necessary to consider the appellant’s other grounds of appeal.

Orders:

1. Appeal allowed.
2. Conviction and sentence quashed.