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Court of Criminal Appeal 28 August 2013

Rundle v R

[2013] NSWCCA 200

Fraud & dishonesty
CRIMINAL LAW APPEAL CONVICTION CHARGES PROVED BEYOND REASONABLE DOUBT APPEAL DISMISSED

Citation: Rundle v R [2013] NSWCCA 200
Court: Court of Criminal Appeal, New South Wales
Date: 28 August 2013
Judges: Simpson J at [1]; Fullerton J at [118]; Davies J at [146]

Background

The appellant was the Chief Financial Controller of the Westpoint Group, a property development enterprise. He was convicted after a six-week jury trial in the District Court on two counts of obtaining a financial advantage by false or misleading statements, contrary to s 178BB(1) of the Crimes Act 1900 (since repealed). The conviction arose from a letter he wrote on 31 May 2004, which the Crown alleged contained two false or misleading statements made with intent to obtain a financial advantage for a company called Scots Church Development Pty Ltd.

The letter was directed to Capital Finance Australia Ltd (CFAL), a lender from which the Westpoint Group was seeking approximately $70 million in senior debt finance for the redevelopment of a Sydney church site into a mixed commercial and residential complex known as "Portico." The two statements in the letter were described at trial as "the mezzanine charge" and "the profit charge," each relating to different representations about the financial position of the project.

The appellant did not give or call evidence at trial. His defence relied on the argument that the statements were not false or misleading when read in the context of the extensive prior correspondence and dealings between the parties, and that even if they were, he did not know them to be so.

  • Whether the jury's verdicts were unreasonable or could not be supported by the evidence, specifically:
  • Whether the two statements in the letter were false or misleading in a material particular
  • Whether the appellant knew the statements to be false or misleading
  • Whether the statements were material within the meaning of s 178BB(1)

Decision

The sole ground of appeal was that the verdicts were unreasonable or could not be supported by the evidence. The court applied the test from M v The Queen (1994) 181 CLR 487, which asks whether, upon the whole of the evidence, it was open to the jury to be satisfied beyond reasonable doubt of the appellant's guilt. All three judges concluded that it was.

On the mezzanine charge and the profit charge, the court found ample evidence supporting the jury's conclusions. The letter contained statements about the mezzanine funding structure and the profitability of the project, and the court was satisfied that the jury could reasonably have found those statements to be false or misleading in material particulars, given the documentary record placed before it.

Davies J addressed the question of materiality in some detail. His Honour noted that the queries giving rise to the letter were raised expressly in the context of submitting a credit application to CFAL's parent, the Halifax Bank of Scotland in Scotland. The appellant's responses were unqualified and were not framed by reference to any prior agreed understanding of terms between himself and CFAL's representative. Senior CFAL and HBoS personnel had each given evidence that they did not wish to be involved in a loss-making project, and one senior officer had raised concerns about reputational risk and potential double-counting as early as December 2002. This evidence supported a finding that the profit-related statement was material to the lending decision.

The court rejected the appellant's contextual argument. Whatever the prior dealings between the parties, the representations in the 31 May 2004 letter were made at a critical moment in the finance application process, and the jury was entitled to find that the appellant knew their content was false or misleading. The appeal against conviction was dismissed. The appellant had not sought leave to appeal against the non-custodial sentences imposed.

Orders Made

  • The appeal against conviction was dismissed.

Key Takeaways

  • In dismissing the appeal, the Court of Criminal Appeal confirmed that extensive prior correspondence between parties does not automatically qualify or contextualise a later written statement for the purposes of s 178BB(1) of the Crimes Act 1900, particularly where that statement is made unqualified and in a critical decision-making context.
  • Under s 178BB(1) (now repealed), a statement is "false or misleading in a material particular" where it touches on matters that the recipient regards as relevant to their decision, such as project profitability in a commercial lending context.
  • A conviction under s 178BB(1) requires proof that the accused knew the statement to be false or misleading; however, that knowledge can be inferred from the surrounding documentary record without the accused giving evidence.
  • The applicable test on an unreasonable verdict appeal remains that stated in M v The Queen (1994) 181 CLR 487: the question is whether, upon the whole of the evidence, it was open to the jury to be satisfied beyond reasonable doubt of guilt.
  • Sufficient evidence existed here in the form of internal communications and witness testimony from lender personnel to support the jury's findings on both falsity and materiality.

Legislation and Cases Referenced

Legislation:
- Crimes Act 1900 (NSW), s 178BB(1) (since repealed): obtaining money or financial advantage by false or misleading statements

Cases:
- M v The Queen (1994) 181 CLR 487 (High Court of Australia): the standard applied when assessing whether a jury verdict is unreasonable or unsupported by evidence