Citation: Salvatore Arcuri v Regina [2017] NSWDC 173
Court: District Court of New South Wales
Date: 26 April 2017
Judge: Judge AC Scotting
Background
The appellant was an accountant who, in late 2013, was subject to a Personal Insolvency Agreement (PIA) under the Bankruptcy Act 1966. A PIA is a formal arrangement between a debtor and creditors, here requiring the appellant to pay approximately $679,000 within 12 months. By October 2013 he was unable to meet that obligation and needed around $120,000 to secure a six-month extension.
The prosecution case arose from a transaction involving a prospective investor, Mr Taylor, who was setting up a self-managed superannuation fund (SMSF) to advance $240,000 to a property development company, Beechworth Land Estates. The appellant was engaged to establish the SMSF structure for that investment. In the course of facilitating the transaction, a sum of money was diverted and applied toward the appellant's PIA obligations rather than being paid to its intended destination.
The appellant was convicted in the Parramatta Local Court of obtaining a financial advantage by deception, contrary to s 192E(1)(b) of the Crimes Act 1900. He appealed that conviction to the District Court, where the central question was whether he had acted dishonestly, or whether there was a reasonable possibility that he held a genuine and honest belief he was entitled to the money under a claim of right.
Legal Issues
- Whether the appellant acted dishonestly within the meaning of s 192E(1)(b) of the Crimes Act 1900
- Whether there was a reasonable possibility that the appellant held an honest and genuine belief in a claim of right to the funds, negating the dishonesty element of the offence
- Whether the Magistrate erred in the conduct of the original hearing, including in refusing to admit certain evidence
Decision
Judge Scotting conducted a rehearing of the matter on appeal under s 18(1) of the Crimes (Appeal and Review) Act 2001. The central legal question was dishonesty: for the offence under s 192E(1)(b) to be made out, the prosecution must prove beyond reasonable doubt that the accused acted dishonestly. A genuine belief in a legal claim of right to the property or funds involved, even if that belief turns out to be wrong in law, can negate dishonesty.
The court found that the appellant had consistently maintained, including in writing shortly after the events, that he had been promised the relevant funds by associated entities (Rockcliffe and a Mr Huxley) in connection with his PIA. The email chain between the appellant and Mr Spencer showed the appellant was openly pressing for payment of what he regarded as money owed to him throughout the transaction. That conduct was consistent with a person who believed he had a legitimate entitlement, rather than someone acting with covert dishonest intent.
Judge Scotting accepted that the appellant honestly and genuinely believed he could recover the money from Beechworth because it was substantially owned by Rockcliffe, and that Mr Huxley was directing the flow of funds through the relevant companies while himself a bankrupt. Although the appellant's claimed legal basis for entitlement may not have been recognised at law, that did not defeat the defence: the test is whether the belief was honestly held, not whether it was legally correct.
On that basis, the court was not satisfied beyond reasonable doubt that the appellant had acted dishonestly. The prosecution had therefore failed to establish all elements of the offence to the required standard, and the conviction could not stand.
Orders Made
- Appeal against conviction allowed
- Conviction and penalty imposed by the Magistrate set aside
Key Takeaways
- A genuine and honest belief in a claim of right to funds can negate the dishonesty element of an offence under s 192E(1)(b) of the Crimes Act 1900, even where that claimed legal entitlement is not ultimately recognised by law.
- The District Court emphasised that the test is whether the belief was honestly and genuinely held, not whether it was well-founded or legally correct.
- Where a defendant's conduct is consistent throughout a transaction with openly asserting an entitlement, and where admissions were made candidly and maintained, those factors may support a finding that a claim of right was genuinely held.
- The prosecution's failure to call an expected witness (Mr Huxley) was noted by the court in assessing the overall evidentiary picture.
- On a conviction appeal conducted as a rehearing, the District Court may set aside a conviction and penalty where it is not satisfied beyond reasonable doubt that all elements of the offence have been proven.
Legislation and Cases Referenced
Legislation
- Crimes Act 1900 (NSW), s 192E(1)(b)
- Crimes (Appeal and Review) Act 2001 (NSW), s 18(1)
- Bankruptcy Act 1966 (Cth)
- Trustee Act 1925 (NSW)
Cases
- Gianoutsas v Glykis [2006] NSWCCA 137
- Charara v R [2006] NSWCCA 244
- Fox v Percy (2003) 214 CLR 118
- Dyason v Butterworth [2015] NSWCA 52
- AG v Director of Public Prosecutions [2015] NSWCA 218
- Bandana v Director of Public Prosecutions [2016] NSWCA 140
- Englebrecht v Director of Public Prosecutions [2016] NSWCA 290
- Fuge v R [2001] NSWCCA 208
- Mahmood v Western Australia (2008) 232 CLR 397
- Louizos v R (2007) 194 A Crim R 233
- Watson v Foxman (1995) 49 NSWLR 315
- R v Macleod (2001) 52 NSWLR 389
- Park Trent Properties Group Pty Limited v Australian Securities and Investments Commission [2016] NSWCA 298