Cross v Peebles[2014] QDC 270

DISTRICT COURT OF QUEENSLAND

1. [1]
   On 22 October 2013 the appellant was found guilty of 31 counts of breaching s 591(2) of the Property Agents and Motor Dealers Act 2000 pertaining to the period between 19 March 2002 and 12 June 2003 that at the Gold Coast in the Magistrates Court District of Southport as an executive officer of Cross Country Realty Pty Ltd (the corporation) he failed to ensure the corporation complied with s 138(1)(c) of the Act.

2. [2]
   The grounds of appeal are that the learned Magistrate erred in finding the appellant failed to prove on the balance of probabilities that he took all reasonable steps to ensure the corporation complied with s 138(1)(c) of the Act.

3. [3]
   There was no dispute that at the material times the appellant and his daughter Kellie Cross were the executive officers of the corporation.

4. [4]
   Section 138(1)(c) of the Act provided:

“138Disclosures to prospective buyer

1. (1)
   A residential property agent for the sale of residential property must disclose the following to any prospective buyer of the property –

[…]

3. (c)
   The amount, value or nature of any benefit any person has received, receives, or expects to receive in connection with the sale, or for promoting the sale, or for providing a service in connection with the sale, of the property.”

5. [5]
   The corporation had been prosecuted for failing to adequately disclose to prospective purchasers of residential properties, amounts that were expected to be received by Park Trent Investments Pty Ltd (and other associated entities) in connection with the sale of properties concerned.

6. [6]
   Section 591(1) of the Act provided:

“591Executive officers must ensure corporation complies with Act

1. (1)
   The executive officers of a corporation must ensure that the corporation complies with this Act.”

7. [7]
   A trial of the complaints issued against the corporation, the appellant and his daughter was heard over a period of eight days in August 2010 and February 2011 in the Southport Magistrates Court.

8. [8]
   On 4 March 2011 the learned Magistrate dismissed the complaints on the basis that there was no case to answer.  His Honour’s decision was partly overturned on appeal after being heard by the Court of Appeal of Queensland, the result being the matter was remitted back to be heard by the learned Magistrate according to law in respect of the second limb of prosecution case, namely, that the corporation failed to disclose what Park Trent was to receive from the various sales of residential properties (Cross & Ors v Peebles [2013] QCA 26).

9. [9]
   On 22 October 2013 the corporation pleaded guilty and was convicted of 31 breaches of s 138(1)(c) of the Act.  The effect of s 591(1) of the Act was to attribute the same criminal responsibility to the executive officers of the corporation.

10. [10]
    Regarding the appellant and his daughter s 591(4) of the Act was relevant to be considered.  That subsection provided:

“(4) However, it is a defence for an executive officer to prove that –

1. (a)
   If the officer was in a position to influence the conduct of the corporation in relation to the offence – the officer took all reasonable steps to ensure the corporation complied with the provision; or
2. (b)
   The officer was not in a position to influence the conduct of the corporation in relation to the offence.”

11. [11]
    On 22 October 2013 the learned Magistrate found the appellant’s daughter had taken all reasonable steps to ensure the corporation complied with the Act.  However he found as far as the appellant was concerned there was no evidence he took any steps whatsoever in relation to compliance with the Act and therefore he did not make out the defence pursuant to s 591(4).

12. [12]
    Schedule 2 to the Act defines an executive officer for a corporation to mean:

“any person, by whatever name called and whether or not the person is a director of the corporation, who is concerned, or takes part, in the management of the corporation.”

13. [13]
    There is no dispute that both the appellant and his daughter were executive officers of the corporation as that term is defined in schedule 2 to the Act.  A formal admission was made during the proceedings (T6-53 and 54).

14. [14]
    Neither the appellant nor his daughter gave evidence in the proceedings before the learned Magistrate.  However the learned Magistrate examined the evidence that had been given by other witnesses.

15. [15]
    Warren Evans gave evidence.  He was employed by the corporation at the relevant time.  He was familiar with the way the corporation worked and the systems of the corporation.  He agreed that there was a culture within the corporation described as “part of the organisation ethos” for important matters such as compliance, legal advice would be sought.  He agreed that it was inevitably the case that where there were issues such as compliance with disclosure, someone would not just make up a form; lawyers would be consulted.  He agreed again in relation to the culture there would be strict compliance by the corporation through him with the disclosure obligations.  He referred to the forms that would be signed.  He agreed everyone at the corporation, particularly the management, were concerned with this to be done properly.  In addition he agreed that Ms Cross was in some position of management at the corporation.  Also that one of her particular tasks in management was to ensure compliance with the obligations in relation to form 27B.  Further that she gave specific instructions to the staff to use the Annexure A attached to the 27B at the time.  Further that even if a developer had their own annexure to the form that there were a number that did have that.  Further that Ms Cross gave a direction that the Annexure A that she gave to the staff was also to be included.  He agreed that was consistent with the advice she had received.  He agreed that was consistent with the legal advice because he told her that.

16. [16]
    The learned Magistrate also referred to the evidence of William John Myers.  He was another real estate agent employed by the corporation.  The learned Magistrate noted he was asked questions about his familiarity with the form 27B and how solicitors were involved with various transactions which he was involved in.  The learned Magistrate noted he was asked questions.  He said none of the solicitors ever said anything adverse to the form 27B.  He said he was told by Ms Cross to use the form 27B, particularly the annexure.  He said he knew that itself came from a solicitor.  He said that Ms Cross did say that she had had legal advice on it so that was the one to use.

17. [17]
    Despite the prosecution criticising that evidence the learned Magistrate concluded that in the absence of evidence to the contrary he was prepared to accept that what they said was correct.  Therefore he concluded that Ms Cross did attain legal advice, that she acted on that advice in preparing the form, which is consistent with what those persons said.  Further she insisted that that form be used in all transactions involving the corporation.

18. [18]
    Up to that point the learned Magistrate asked the question whether that still satisfied the test of taking all reasonable steps.  He said it would not be a defence unless the officer took all reasonable steps to ensure the corporation complied with the provision.

19. [19]
    Consequently in addition to the evidence I have just referred to the learned Magistrate considered evidence from other developers who had at the relevant time prepared annexures to go with their form 27B.  He noted these annexures were also expressed in terms of a formula.  He noted evidence that similar types of forms were apparently used by the witnesses Cadwallader, van Asperen and Penell.  He noted each of those persons were developers of some sort.  Each of those had appended a form 27B.  Each of those had an annexure to the form, which had a formula in it in relation to the benefits received by various entities.  The learned Magistrate accepted that these persons gave evidence that they sought legal advice, and did in compliance with their legal advice they prepared annexures consistent with the ones that where annexed to their form 27B.  He said those witnesses said their lawyers had a hand in drafting the forms themselves.

20. [20]
    The learned Magistrate then dealt with the argument that if everybody else was doing this, and thought that their formula was good enough, then Ms Cross could be excused for thinking that what she did was reasonable.  Further that her steps were reasonable in the circumstances.  The learned Magistrate accepted this argument.  He said it seemed that it is reasonable.  He was satisfied that Ms Cross took all reasonable steps, and that she made out a defence based upon ss 4 of s 591.

21. [21]
    With respect to the appellant the learned Magistrate noted the argument that there was a culture of compliance, and the several passages in the evidence where that had been pointed out by different witnesses.  He noted the argument was that if he could be satisfied Ms Cross obtained legal advice, then he (the appellant) being involved in the management of the company did not need to do everything that Ms Cross had done; he could rely upon what she did.  He noted the argument was that it was not necessary for him to do anything other than that.

22. [22]
    However the learned Magistrate said that he thought the difficulty with this approach is that it is a defence for an executive officer to prove that the officer took all reasonable steps to ensure the corporation comply with the provision.  However, the learned Magistrate said there is simply no evidence that the appellant took any steps to comply with the provision.  Unlike Ms Cross, whom the learned Magistrate said there is some evidence that she sought legal advice.

23. [23]
    The learned Magistrate then concluded it was not sufficient to simply say there is a culture of compliance and that management was generally on the ball about these things.  He said that failed to address the onus of proof placed upon the appellant to prove, on the balance of probabilities, that he took all reasonable steps.  The learned Magistrate said he might have done that had there been evidence from him that he did speak to somebody or did something, that might have been the case.  The learned Magistrate said in simple terms, it is not open to the Court to speculate about what might be the case.  The learned Magistrate said there was simply no evidence that the appellant took any steps whatsoever in relation to these things.  Therefore he found the appellant had not made out the defence.  He therefore found the appellant guilty.

24. [24]
    Regarding the taking of reasonable steps the respondent referred me to the decision of McGill DCJ in Younan v Queensland Building Services Authority [2010] QDC 158 where at page 9 his Honour said in the context though of a different statute:

“What were reasonable steps depended on what was reasonable for the individual concerned in the circumstances in which he found himself, with such information as he then had.  It is not a question of whether he did everything possible to prevent these circumstances from arising, or whether they would not have arisen if he had acted differently.  The reasonableness of his behaviour must be assessed by reference to what was known by him at the time, without the benefit of hindsight.”

25. [25]
    This is an appeal by way of rehearing (s 223(1) Justices Act 1886).  Therefore the appellant must demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error (Allesch v Maunz (2000) 203 CLR 172, 180).  Therefore I am obliged to conduct a real review of the trial and of the learned Magistrate’s reasons.  I am not excused from the task of “weighing conflicting evidence and drawing my own inferences and conclusions, though I should always bear in mind that I have neither seen nor heard the witnesses, and should make due allowance in this respect (Fox v Percy (2003) 214 CLR 118, 126).  Of such an appeal I should afford respect to the decision of the Magistrate and bear in mind any advantage he had in seeing and hearing the witnesses give evidence, but I am required to review the evidence, to weigh the conflicting evidence and to draw my own conclusions (Mbuzi v Torcetti [2008] QCA 231 para 17).

26. [26]
    This is not a case of conflicting evidence or credibility of witnesses.  What the appellant submits is that the reasoning and decision of the learned Magistrate was inconsistent with the evidence and the applicable law.

27. [27]
    The respondent submits that there was simply no evidence that the appellant took any reasonable steps and the evidence does not permit for a conclusion to be reached that he took all reasonable steps in the circumstances.

28. [28]
    The appellant referred me to the decision of the High Court in Braysich v R [2011] HCA 14.  At paragraph 36 the majority said that if a trial judge has to consider whether, at the close of the evidence in a criminal trial, a particular defence should be left to the jury, the question which the trial judge will have to ask himself or herself will be:

“ […]

1. 2.
   In a case in which both the legal burden and the evidential burden rests upon the accused – is there evidence which, taken at its highest in favour of the accused, could lead a reasonable jury, properly instructed, to conclude on the balance of probabilities that the defence had been established?”

29. [29]
    A little later in paragraph 37 the majority said:

“The appellant was not required to produce evidence of his subjective purpose or purposes in order to meet the legal burden of establishing the statutory defence.  The legal burden on him was to prove on the balance of probabilities that he lacked the prescribed purpose.  One way of doing that was to adduce or point to evidence inconsistent with the proposition that he had that purpose.  He did not have to point to evidence of his actual purpose in order to invoke the defence.  Any evidence that could support an inference that the appellant did not have the prescribed purpose was relevant to the statutory defence.  The question whether he had discharged the ‘evidential burden’ was to be answered accordingly.”

30. [30]
    While the passages from Braysich to which I was taken to do not determine the present matter I took the appellant to submit these passages support the view that the appellant seeking to establish this defence on the balance of probabilities can point to evidence from any source that could support an inference the appellant took all reasonable steps.

31. [31]
    The respondent submitted that at no time did the appellant produce or elicit any evidence regarding the nature of his role within the corporation or his knowledge as to the actions of the other executive officer, such that it was impossible to tell if he was in a position to rely on the decisions, judgment or actions of Ms Cross.  Further the respondent submitted it should be noted that for a period of the offending the appellant was not in fact a director of the corporation.  He became a director in October 2003.  The period of the offending was alleged to have taken place in the period from 2002 to 2003.

32. [32]
    Although there was no direct evidence from the appellant that he did something or relied upon his daughter to do something nevertheless in my opinion there was evidence there was an organisation ethos for compliance and the evidence that led the learned Magistrate to conclude Ms Cross satisfied the onus of proof that she took all reasonable steps.
33. [33]
    Further, Mr Evans gave evidence at p 247/40 that in terms of the day to day operations of the company the appellant’s daughter oversaw the operations by managing the staff and liaising with developers and that while he was answerable firstly to the appellant’s daughter after her he would be answerable to the appellant.  He agreed that effectively the appellant was his boss.

34. [34]
    In my opinion for the appellant to prove on the balance of probabilities he took all reasonable steps he did not have to show that he took some actual step.

35. [35]
    In my opinion the learned Magistrate erred in his evaluation of the evidence that was before him when he did not accept the appellant could rely on the evidence of what his daughter had done, namely she sought legal advice.

36. [36]
    In my opinion the evidence before the learned Magistrate which included the evidence of what the appellant’s daughter had done supported an inference that the appellant took all reasonable steps to ensure compliance.

37. [37]
    In my opinion the learned Magistrate should have found on the evidence the appellant satisfied the onus of proof that he had taken all reasonable steps to ensure the corporation complied with the Act.

38. [38]
    Therefore on the evidence before the learned Magistrate I conclude that the learned Magistrate ought to have found the appellant not guilty.

39. [39]
    Therefore I allow the appeal.  I order the convictions against the appellant are set aside and findings of not guilty are entered.