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District Court 8 December 2017

Rosemarie Dempsey v Regina

[2017] NSWDC 353

Fraud & dishonesty
CRIMINAL LAW CONVICTION APPEAL ELEMENTS OF OFFENCE DETERMINATION OF GUILT DEFENCE CLAIM OF RIGHT APPEAL

Citation: Rosemarie Dempsey v Regina [2017] NSWDC 353
Court: District Court of New South Wales
Date: 8 December 2017
Judge: Judge AC Scotting

Background

The appellant was employed as a financial controller of a hotel operating company for approximately 14 years, from 1997 to 2011. Her responsibilities included paying company expenses, entering transactions into MYOB accounting software, and preparing records for the company's external accountants.

In 2011, a newly engaged contract accountant identified a series of cheques drawn on the company's bank account that had been made payable to the appellant and deposited into her personal Visa account. The entries in MYOB for those cheques recorded different payees, dates, and amounts. A total of 27 such cheques were identified across several years, with the matter ultimately referred to police.

The appellant faced 23 counts of obtaining a financial advantage by deception under s 192E(1)(b) of the Crimes Act 1900. She pleaded not guilty, arguing that the cheques represented reimbursement for company expenses she had personally paid and was legitimately owed. She was convicted by a magistrate following a hearing spanning more than 20 days over two years. She appealed to the District Court.

  • Whether the magistrate's conviction was correct, given the central question of whether the appellant had acted dishonestly or whether a genuine claim of right negated the dishonesty element of the offence
  • Whether the prosecution had adduced sufficient evidence to exclude beyond reasonable doubt the appellant's claim that she was entitled to reimbursement for company expenses
  • Whether the proceedings should be permanently stayed on the basis that the appellant had been denied access to evidence necessary to establish her claim of right and to support a Mental Health (Forensic Provisions) Act application
  • Whether fresh evidence from psychiatrists, not admitted below, should be received on appeal

Decision

Judge Scotting approached the appeal as a rehearing on the certified transcripts, guided by the principles applicable to appeals from judges sitting without a jury. The Court was required to form its own view of the facts while giving appropriate weight to the magistrate's advantage in seeing and hearing witnesses, and to give the judgment that ought to have been given at first instance.

The Court identified four significant evidentiary deficiencies in the prosecution case. First, the prosecution never produced the complete MYOB records or the primary documentation that would have been required to test the appellant's claim of right. The key prosecution witness, Mr Hannan, conceded in cross-examination that he could not deny the appellant's claim without reviewing the relevant invoices and receipts. Furthermore, the original MYOB records for the 2011 financial year had been materially altered by the contract accountant before the prosecution commenced, and the appellant had not been given access to the full MYOB records for the 2005 to 2011 period.

Second, the prosecution called no evidence from the company's external accounting firm, Goss and Clarke, even though that firm had reviewed the accounts annually before preparing the company's tax returns. There was no evidence that Goss and Clarke had detected any discrepancy in the accounts the appellant prepared. Third, fresh evidence adduced on appeal established that the figures the appellant provided to Goss and Clarke had been accepted because the accounts balanced. This meant the prosecution was required to prove beyond reasonable doubt that the appellant had made false entries in the general journal to allow the impugned cheques to be drawn without the accounts showing a discrepancy. The prosecution did not lead that evidence. Fourth, evidence supported that the appellant was experiencing significant mental health symptoms from around 2005, which the Court considered capable of providing some explanation for the irregular method she used.

On those findings, the Court allowed the appeal and set aside the conviction without needing to determine the stay application.

Orders Made

  • Appeal against conviction allowed
  • Conviction and penalty imposed by the Magistrate set aside

Key Takeaways

  • A conviction for dishonestly obtaining a financial advantage by deception requires the prosecution to negate beyond reasonable doubt any genuine claim of right raised by the evidence; here the prosecution's failure to produce records sufficient to test the appellant's reimbursement claim was fatal to the prosecution case.
  • Where a defendant asserts a claim of right requiring examination of financial records, the prosecution carries the burden of adducing evidence capable of excluding that claim, and cannot rely on the defendant's failure to disprove it.
  • Fresh evidence on appeal that demonstrated the company's accounts had balanced was treated as an essential element the prosecution was required but failed to prove, illustrating the significance of accounting evidence in fraud and deception matters.
  • The District Court confirmed that, on a conviction appeal under s 18(1) of the Crimes (Appeal and Review) Act 2001, the appellate judge must form an independent view of the facts while giving appropriate weight to the magistrate's advantage in assessing witness credibility.
  • Alteration of primary records (here, the MYOB database) before the commencement of a prosecution can have significant consequences for the strength of the prosecution case, particularly where those records were central to testing a defence.

Legislation and Cases Referenced

Legislation
- Crimes Act 1900 (NSW), s 192E(1)(b)
- Crimes (Appeal and Review) Act 2001 (NSW), s 18(1)
- Mental Health (Forensic Provisions) Act 1990 (NSW), s 32

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
- Walton v Gardiner (1993) 177 CLR 378
- Jago v District Court of New South Wales (1989) 168 CLR 23
- Barton v The Queen (1980) 147 CLR 75
- Barron v Attorney-General (1987) 10 NSWLR 215
- Williams v Spautz (1992) 174 CLR 509
- Hakim v R (1989) 41 A Crim R 372
- Duncan v Crews [2001] NSWSC 376