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Court of Criminal Appeal 14 September 2001

R v Macleod

[2001] NSWCCA 357

Fraud & dishonesty
CRIMINAL LAW COMPANIES (NSW) CODE SS 169, 570(1) CORPORATIONS LAW, SS 780, 232(6), 101A(1) 1064(1), 1311(1) SECURITIES INDUSTRY (NSW) CODE, S 43

Citation: R v Macleod [2001] NSWCCA 357
Court: NSW Court of Criminal Appeal
Date: 14 September 2001
Judge(s): Mason P; Simpson J; Newman AJ

Background

The appellant was a director of three companies through which he conducted an enterprise purportedly making films and videos, inviting public investment on the basis of available taxation advantages. Several thousand investors contributed more than $6 million in total. Only $718,000 was actually used to produce films, while more than $2 million was applied to the appellant's personal benefit, including the purchase of a Queensland property in his own name. Investors received false income statements designed to create the illusion that films were being produced and generating profits.

When the Australian Securities Commission began investigating the enterprise in late 1991 or early 1992, the appellant instructed his office manager to remove company records to a storage facility so they would not be found by investigators. He was subsequently charged with 25 counts, of which 19 resulted in convictions. The charges arose under a range of State and Commonwealth statutory provisions. The appellant appealed against both conviction and sentence.

  • Whether a director who has dominant control of a company can rely on that control to defeat a charge of fraudulently applying company property under s 173 of the Crimes Act 1900 (NSW), on the basis that any transfer of funds necessarily has the company's consent
  • Whether the Director of Public Prosecutions (Cth) had authority to prosecute charges laid under State legislation
  • Whether the District Court of NSW had jurisdiction to try charges dependent on s 5 of the Crimes Act 1914 (Cth)
  • Whether counts 12 and 13, charged under s 780 of the Corporations Law, were summary offences beyond the District Court's jurisdiction
  • Whether the trial judge's directions on dishonesty, fraudulent intent, claim of right, and consciousness of guilt were adequate
  • Whether the overall sentence was manifestly excessive

Decision

The Court rejected the appellant's reliance on R v Roffel [1985] VR 511 for the proposition that a director in total control of a company cannot commit fraud against it because any application of funds is necessarily consensual. All three judges held that, even if Roffel is to be followed elsewhere, it should be confined strictly to its particular statutory context involving the meaning of "appropriation" in a theft provision. Dominant control of a company provides no defence to a director who fraudulently applies company property for personal benefit.

On the prosecution authority and jurisdiction questions, the Court held that the relevant NSW legislation incorporates s 5 of the Crimes Act 1914 (Cth) by reference, that the District Court had jurisdiction to try the charges under s 55 of the Corporations (NSW) Act 1990, and that the Commonwealth Director of Public Prosecutions had the necessary authority to prosecute all charges, following R v Hughes (2000) 171 ALR 155.

Counts 12 and 13, however, presented a different outcome. Those counts were charged under s 780 of the Corporations Law, which carries a maximum penalty of 50 penalty units or one year's imprisonment. The Court held these were summary offences and the District Court therefore lacked jurisdiction to try them. The convictions on those two counts were quashed.

The Court upheld the trial judge's directions on dishonesty, fraudulent intent, claim of right, and consciousness of guilt as adequate in the context of the charges. On sentence, the Court found no error in the accumulation of fixed terms or in the overall sentence, characterising the offending as deliberate, persistent, serious, and wilful, involving large sums of money and practised deceit over an extended period.

Orders Made

  • Counts 12 and 13: appeal against conviction allowed; convictions quashed
  • All other counts: appeal against conviction dismissed
  • Leave to appeal against sentence granted
  • Appeal against sentences on counts 12 and 13 allowed; those sentences quashed
  • Appeal against sentence on all other counts dismissed

Key Takeaways

  • A director's dominant or total control of a company does not provide a defence to a charge of fraudulently applying company property under s 173 of the Crimes Act 1900 (NSW). The Court of Criminal Appeal expressly disapproved of R v Roffel being applied beyond its specific statutory context.
  • Where NSW corporate legislation incorporates Commonwealth provisions by reference, the Commonwealth Director of Public Prosecutions may have authority to prosecute charges laid under State legislation, and State courts may have jurisdiction to hear them.
  • Summary offences prosecuted as indictable matters can result in convictions being quashed for want of jurisdiction, even where the underlying conduct is otherwise established. The District Court's jurisdictional limits remain strictly applicable.
  • Adequate jury directions on dishonesty, fraudulent intent, claim of right, and consciousness of guilt must be assessed in the context of the specific charges and their statutory elements, not in isolation.
  • In sentencing for large-scale investor fraud conducted over an extended period, the deliberate and persistent nature of the deception, the sums involved, and the number of victims can collectively justify a substantial overall term without amounting to manifest excess.

Legislation and Cases Referenced

Legislation:
- Crimes Act 1900 (NSW), s 173
- Crimes Act 1914 (Cth), s 5
- Corporations Law, ss 780, 232(6), 101A(1), 1064(1), 1311(1)
- Corporations (New South Wales) Act 1990, ss 8, 13(2), 55, Pt 8
- Corporations Act 1989 (Cth), s 82
- Securities Industry (NSW) Code, s 43
- Companies (NSW) Code, ss 169, 570(1)
- Director of Public Prosecutions Act 1983 (Cth)
- Criminal Procedure Act 1986 (NSW)

Key Cases:
- R v Roffel [1985] VR 511
- R v Glenister [1980] 2 NSWLR 597
- Attorney-General's Reference No 1 of 1985 (1985) 19 A Crim R 436
- R v Hughes (2000) 171 ALR 155
- Australian Securities and Investments Commission v Vis (2000) 77 SASR 490
- Hamilton v Whitehead (1988) 166 CLR 121
- Byrnes v The Queen (1999) 199 CLR 1
- Tesco Ltd v Nattrass [1972] AC 153
- Peters v R (1998) 192 CLR 493
- Cassell v The Queen (2000) 201 CLR 189