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District Court 8 October 2021

Armstrong v R

[2021] NSWDC 537

Fraud & dishonesty
APPEAL CRIME FRESH EVIDENCE CLAIM OF RIGHT

Citation: Armstrong v R [2021] NSWDC 537
Court: District Court of New South Wales
Date: 8 October 2021
Judge(s): Mahony SC DCJ

Background

The appellant was a co-founder of Women in Prison Advocacy Network (WIPAN), a not-for-profit organisation she helped establish in 2007. Between November 2016 and December 2017, she electronically transferred funds from WIPAN's bank accounts to her own accounts, to accounts of companies connected with a related business, and to her partner's account, using false payment descriptors and fabricated invoices to conceal the transfers. The total net loss to WIPAN across the eight charges was approximately $140,000.

On 21 October 2020, a Local Court magistrate found her guilty of eight offences involving dishonestly obtaining a financial advantage or property by deception, and dishonestly causing financial disadvantage by deception, contrary to the Crimes Act 1900 (NSW). The magistrate rejected the appellant's defence of claim of right, which was based on an alleged honest belief that WIPAN owed her unpaid wages.

The appellant appealed to the District Court by way of rehearing. On appeal, she admitted both the transfers and the use of false invoices to disguise them. The sole issue was whether the Crown had negatived her claim of right beyond reasonable doubt.

Legal Issues

  • Whether the appellant held a genuine and honestly held belief that she had a legal right to the monies she obtained from WIPAN's accounts.
  • Whether the sustained deception she employed in making the transfers negated any claim of right defence.
  • Whether fresh evidence, comprising an employment contract and minutes of a board meeting from 2009, was authentic and, if so, whether it supported her claim of right.
  • Whether a claim of right defence can extend to benefits obtained on behalf of a third party (raised but not ultimately decided).

Decision

Issue 1: The fresh evidence

The appellant sought to rely on two documents not before the magistrate: a written employment contract dated 29 November 2009 (Exhibit A) and minutes of a special WIPAN meeting held on 18 December 2009 (Exhibit 1). The Crown alleged both were fabricated for the purpose of the appeal. The court found Ms Petrou to be a reliable witness, but accepted that she was recalling events up to 13 years earlier. Critically, the Crown called no expert evidence about the documents or the signatures, and their provenance remained opaque. The court was not satisfied beyond reasonable doubt that either document was fabricated (at [123]-[124]).

Issue 2: Whether the fresh evidence supported the claim of right

Although the court did not find the documents were fabricated, it found they were irrelevant to the claim of right. The appellant herself confirmed she had no recollection of either document at the time she committed the offences, and neither document formed any part of her defence in the Local Court proceedings. Documents that were not in the appellant's mind at the time of the conduct cannot supply the honest belief required for a claim of right. The court also noted that the terms of the employment contract were so imprecise as to be unenforceable in any event (at [139]).

Issue 3: Whether the claim of right was established

The court found the appellant's evidence of entitlement rested on alleged oral conversations with "all the board members" in 2009, to the effect that she would be paid retrospectively once recurrent funding arrived. That evidence was not supported by any objective evidence and was directly contradicted by credible Crown witnesses including Ms Petrou (at [138]). Applying the principles in Watson v Foxman (1995) 49 NSWLR 315, oral representations of the kind alleged could not give rise to a legal entitlement (at [138]). The appellant had never raised any claim to unpaid wages in the recorded telephone call in which she was confronted by board members, nor in her subsequent email of apology, nor in her letter of demand until September 2018. The court characterised the letter of demand as "an ex-post-facto rationalisation" of the offending (at [141]).

Issue 4: Deception negating the claim of right

Applying Macleod v R (2003) 214 CLR 230 and Sigalla v R [2021] NSWCCA 22, the court held that where dishonesty is a specific element of the offence, proof of dishonesty typically negates a bona fide claim of right. The appellant's sustained course of deception across 50 separate transactions over 13 months, using false invoices, fabricated descriptors, and another person's authorisation dongle, was inconsistent with an honest belief in a legal entitlement. The court found the monies were not taken pursuant to an honestly held belief in a legal right, and the deception clearly negatived any such claim (at [143]-[144]). At most, the appellant held a sense of moral entitlement, which is insufficient to found the defence (at [143]).

Orders Made

  • The appeal as to conviction is dismissed.
  • The findings of guilty in respect of sequences 1 to 8 made by the learned magistrate on 21 October 2020 are confirmed.

Key Takeaways

  • A claim of right defence requires an honest belief in a legal right to the property at the time of the relevant conduct. Documents or alleged agreements that were not in the defendant's mind when the offending occurred cannot retrospectively supply that belief, even if those documents are later found to be authentic (at [139]).

  • Where dishonesty is a specific element of the charged offence, the District Court confirmed that proof of dishonesty will ordinarily negate a bona fide claim of right, following Macleod v R (2003) 214 CLR 230 and Sigalla v R [2021] NSWCCA 22 (at [143]-[144]).

  • A sustained and systematic pattern of deceptive conduct, including fabricated invoices, false payment descriptors, and the use of another person's authorisation credentials, is highly probative of the absence of genuine belief in legal entitlement (at [137], [143]).

  • Oral representations said to give rise to a legal entitlement require clear and reliable evidence; allegations of informal conversations with multiple people over many years, uncorroborated by any contemporaneous documentation, will not readily establish a legal right, applying the principles in Watson v Foxman (1995) 49 NSWLR 315 (at [135]-[138]).

  • No error was established in the magistrate's reasoning or verdicts. In dismissing the appeal, the District Court confirmed that a moral sense of entitlement based on unpaid contribution to an organisation does not satisfy the legal standard required for a claim of right defence (at [143], [145]).

Legislation and Cases Referenced

Legislation
- Associations Incorporation Act 2009
- Corporations Act 2001 (Cth)
- Crimes (Appeal and Review) Act 2001
- Crimes Act 1900
- Criminal Law Consolidation Act 1984 (SA)

Cases
- Carrier v Georges [2013] NSWSC 401
- Cooper v Phibbs (1867) LR 2 HL 149
- Dyason v Butterworth [2015] NSWCCA 52
- Lunney v DPP [2021] NSWCA 186
- Macleod v R (2003) 214 CLR 230; 77 ALJR 1047; 197 ALR 333; 140 A Crim R 343; [2003] HCA 24
- R v Fuge (2001) 123 A Crim R 310; [2001] NSWCCA 208
- R v Kastratovic (1985) 42 SASR 59
- R v Langham (1984) 12 A Crim R 391; 36 SASR 48
- R v Love (1989) 17 NSWLR 608
- Sigalla v R (2021) [2021] NSWCCA 22
- Walden v Hensler (1987) 163 CLR 561; 61 ALJR 646; 75 ALR 173; [1987] HCA 54
- Watson v Foxman (1995) 49 NSWLR 315