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Court of Criminal Appeal 1 December 2016

Moore v R

[2016] NSWCCA 260

Fraud & dishonesty
CRIMINAL LAW APPEAL AGAINST CONVICTION CRIMES ACT 1900 (NSW) S 192E(1)(B) CONVICTION QUASHED

Citation: Moore v R [2016] NSWCCA 260
Court: Court of Criminal Appeal, NSW
Date: 1 December 2016
Judge(s): Leeming JA at [1]; Fagan J at [51]; N Adams J at [59]

Background

The appellant opened a "Complete Freedom" savings account with St George Bank in March 2010 with a zero balance. The account began receiving small Centrelink payments and, from mid-2010, sustained a series of debits that pushed the balance into negative territory. The bank's systems continued to honour each transaction, charging a $9 "Payment Honour Fee" per debit and accumulating interest at approximately 20% per annum on the negative balance.

Over roughly two years, the negative balance grew to exceed $2.1 million. Large debits recorded as "RHG Mortgage Cor" and later as "PayPal Australia" drove the balance steadily downward. Funds were transferred through a National Australia Bank account and used to purchase luxury items including an Aston Martin DB7, a Maserati, a Hyundai, an Alfa Romeo, and a boat.

The appellant was convicted by jury in the District Court on one count of dishonestly obtaining a financial advantage by deception under s 192E(1)(b) of the Crimes Act 1900 (NSW), and one count of dealing with the proceeds of crime under s 193B(2). He appealed both convictions.

  • Whether the terms and conditions of the bank account, properly construed, authorised the appellant to cause the bank's computer systems to process transactions that took the account into, or deeper into, a negative balance.
  • Whether, if such authorisation existed under the contract, the extended statutory definition of "deception" in s 192B(1)(b) of the Crimes Act was satisfied.
  • Whether s 192B(1)(b) operates as a deeming provision that removes the need for any deception in the ordinary sense, or whether some element of deception beyond mere unauthorised conduct remains required.
  • Whether the conviction on the proceeds of crime count could survive if the primary conviction fell.

Decision

The central question was whether the appellant was "authorised" to cause the bank's systems to make the responses they did. All three judges agreed that this question turned on the proper construction of the contract between the appellant and the bank.

Leeming JA, with whom Fagan J and N Adams J agreed on the outcome, found that the terms and conditions of the "Complete Freedom" account permitted the appellant to request funds to be lent to him beyond the account balance, whether by cash withdrawal, periodical payments, or direct debit. The bank's systems accepted those requests, and the bank charged fees and interest consistent with lending on a consensual basis. Because the contract authorised the conduct, the statutory element of deception under s 192B(1)(b) was not established.

Two judges went further to consider whether s 192B(1)(b) operates purely as a deeming provision, or whether some form of deception in the broader sense is still required. Fagan J and N Adams J each expressed the view, having considered the text, context, and the Second Reading Speech to the amending legislation, that the section does not remove the element of deception from the offence entirely. The Second Reading Speech expressly stated that the provision was intended to ensure "only people that have been deceptive and dishonest will be prosecuted." The majority resolved the appeal on the authorisation point without needing to finally determine this second question.

Because the proceeds of crime conviction was wholly dependent on the primary conviction, it could not stand once the first count was quashed.

Orders Made

  • Leave to appeal granted.
  • Appeal allowed.
  • Convictions on counts 1 and 2 quashed.
  • The appellant acquitted on both counts.
  • Application for leave to appeal against sentence became unnecessary and was not determined.

Key Takeaways

  • A conviction under s 192E(1)(b) of the Crimes Act 1900 (NSW) for dishonestly obtaining a financial advantage by deception requires proof of deception; dishonest conduct alone, without more, does not satisfy the offence.
  • Under s 192B(1)(b), whether a person was "authorised" to cause a computer or electronic device to make a particular response is determined by the contractual terms governing the relevant transaction, not simply by reference to the account holder's subjective intent or the bank's commercial expectations.
  • Where a bank's terms and conditions permit a customer to request funds to be lent beyond the account balance, and the bank's systems honour those requests, the customer's conduct in making such requests may fall within contractual authorisation even if the borrowing was plainly unwise and irrecoverable.
  • Fagan J and N Adams J each indicated, without the Court needing to finally resolve the point, that s 192B(1)(b) was not intended to operate as a pure deeming provision stripping all requirement for deception from s 192E offences.
  • A proceeds of crime conviction that is entirely dependent on an underlying dishonest-obtaining conviction cannot survive the quashing of that primary conviction.

Legislation and Cases Referenced

Legislation
- Crimes Act 1900 (NSW), ss 192B(1)(b), 192E(1)(b), 193B(2)
- Bail Act 2013 (NSW), s 22

Cases
- R v Moore [2015] NSWSC 1262
- Croton v The Queen (1967) 117 CLR 326
- David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353
- Russell v Scott (1936) 55 CLR 440
- Commissioner of Police for the Metropolis v Charles [1977] AC 177
- Director of Public Prosecutions v Ray [1974] AC 370
- R v Evenett (1987) 24 A Crim R 330
- Ho v R; Szeto v R (1989) 39 A Crim R 145
- Moylan v Western Australia [2007] WASCA 52; (2007) 169 A Crim R 302
- R v Clarkson [1987] VR 962; (1987) 25 A Crim R 277
- R v Kovacs (1974) 58 Cr App R 412
- R v Smith (1982) 7 A Crim R 437
- Duncan v Independent Commission Against Corruption [2016] NSWCA 143