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7
Court of Criminal Appeal 5 November 2021

Bazouni v R

[2021] NSWCCA 256

Fraud & dishonesty
CRIMINAL LAW APPEAL AGAINST CONVICTION FRAUD BY LOANS MANAGER OF BANK MISCARRIAGE OF JUSTICE ESTABLISHED WHETHER “THE PROVISO” CAN BE APPLIED

Citation: Bazouni v R [2021] NSWCCA 256
Court: NSW Court of Criminal Appeal
Date: 5 November 2021
Judges: Bell P, Rothman J (dissenting), Button J

Background

The appellant was a highly experienced loans manager at a major bank who had won awards for his performance. The Crown alleged he participated in a joint criminal enterprise to defraud the bank of millions of dollars by accepting fraudulent loan documents and fictitious identity documents connected to associates involved in the scheme.

He was convicted in the District Court of five counts of dishonestly obtaining a financial advantage by deception, and one count of attempting to do so, contrary to ss 192E(1)(b) and 344A(1) of the Crimes Act 1900 (NSW). He appealed on a single ground: that the trial judge had misdirected the jury on a critical element of the offence.

The misdirection concerned the mental element of dishonesty. The trial judge directed the jury that the Crown needed to prove the appellant knew, or was reckless as to, whether his conduct was dishonest by the standards of ordinary people. In fact, the law under s 4B of the Crimes Act requires proof of actual knowledge of that dishonesty, not mere recklessness.

  • Whether the trial judge's direction, which substituted recklessness for knowledge in the mental element of dishonesty, constituted a miscarriage of justice
  • If a miscarriage of justice was established, whether the Crown could nonetheless rely on "the proviso" under s 6 of the Criminal Appeal Act 1912 (NSW), meaning that no substantial miscarriage of justice actually occurred, such that the appeal should be dismissed without a new trial

Decision

On the misdirection: All three judges agreed that a legal error occurred and that a miscarriage of justice had been established. Section 4B of the Crimes Act requires the Crown to prove that the accused knew their conduct was dishonest by the standards of ordinary people. Recklessness is insufficient. Because this error touched every count on the indictment, it was so pervasive that the procedural rule in r 4.15 of the Supreme Court (Criminal Appeal) Rules 2021 had no role to play. The Crown did not contend otherwise.

On the proviso (majority: Bell P and Button J): The majority applied the proviso and dismissed the appeal. Examining the undisputed evidence, the disputed trial issues, and importantly the appellant's own evidence, the majority was satisfied beyond reasonable doubt that the appellant must have known his conduct was dishonest by ordinary community standards. Bell P noted that if the appellant appreciated he could lose his job by accepting kickbacks, there could be no reasonable doubt he understood the dishonesty inherent in the criminal enterprise. The majority held the misdirection, though serious, was not of a nature that precluded application of the proviso.

On the proviso (dissent: Rothman J): Rothman J would have ordered a new trial. His Honour considered the term "substantial" in the phrase "substantial miscarriage of justice" to be inherently ambiguous, but concluded that directing a jury to apply a legally unavailable test to determine guilt is among the most fundamental errors possible in a jury trial. In his Honour's view, inviting the jury to find dishonesty on the basis of recklessness rather than knowledge was precisely the kind of error that the proviso could not cure, and the appeal should have been allowed.

Orders Made

  • Appeal against conviction dismissed

Key Takeaways

  • Under s 4B of the Crimes Act 1900 (NSW), proving the mental element of dishonesty in a fraud offence requires actual knowledge on the part of the accused that their conduct was dishonest by the standards of ordinary people. Recklessness as to that question is insufficient.
  • A trial direction that reduces the knowledge requirement to recklessness is a legal error that constitutes a miscarriage of justice, and the error applies to every count where dishonesty is an element.
  • In dismissing the appeal by majority, the Court of Criminal Appeal confirmed that a serious misdirection on a mental element does not automatically preclude application of the proviso: the court must still assess, on the whole of the evidence, whether it is satisfied beyond reasonable doubt that the accused in fact possessed the required mental state.
  • The appellant's own testimony proved significant. The majority found that his acknowledged understanding that accepting kickbacks would cost him his job was powerful evidence that he knew his conduct was dishonest by community standards.
  • The dissent highlights the ongoing tension in proviso jurisprudence: where a jury has been directed to determine guilt by reference to a test that was legally unavailable, Rothman J considered the resulting miscarriage of justice too fundamental for the proviso to operate, a view that did not prevail on the facts here.

Legislation and Cases Referenced

Legislation:
- Crimes Act 1900 (NSW), ss 4B, 192B, 192E, 344A
- Crimes Amendment (Fraud, Identity and Forgery Offences) Act 2010 (NSW)
- Criminal Appeal Act 1912 (NSW), s 6
- Supreme Court (Criminal Appeal) Rules 2021 (NSW), r 4.15
- Criminal Code Act 1995 (Cth), ss 134.1, 134.2

Key Cases:
- Kalbasi v Western Australia (2018) 264 CLR 62; [2018] HCA 7
- Weiss v The Queen (2005) 224 CLR 300
- Cesan v The Queen (2008) 236 CLR 358; [2008] HCA 52
- Hofer v R [2019] NSWCCA 244
- Priday v The Queen [2019] NSWCCA 272
- Peters v The Queen (1998) 192 CLR 493; [1998] HCA 7
- R v Ghosh [1982] EWCA Crim 2
- R v Lockyer (1996) 89 A Crim R 457